SEC Filing | SIGA

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As filed with the Securities and Exchange Commission on March 10, 1997

Registration Statement No. ______

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SIGA PHARMACEUTICALS, INC.
(Name of Small Business Issuer in its Charter)

DELAWARE 2834 13-3864870

(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S.Employer
Incorporation or Organization) Classification Code Number) Identification No.)

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666 Third Avenue
New York, NY 10017
(212) 681-4970
(Address and Telephone Number of Principal
Executive Offices and Principal Place of Business)

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DAVID H. DE WEESE, PRESIDENT AND CHIEF EXECUTIVE OFFICER
SIGA PHARMACEUTICALS, INC.
666 Third Avenue
New York, NY 10017
(212) 681-4970
(Name, Address and Telephone
Number of Agent For Service)

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COPIES TO:

ADAM EILENBERG, ESQ. KENNETH KOCH, ESQ.
EILENBERG & ZIVIAN SQUADRON, ELLENOFF, PLESENT
666 Third Avenue & SHEINFELD, LLP
New York, NY 10017 551 Fifth Avenue
(212) 986-2468 New York, NY 10176
Facsimile (212) 986-2399 (212) 476-8362
Facsimile (212) 697-6686

Approximate date of commencement of proposed sale to the public: As soon
as practicable after this Registration Statement becomes effective. If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box: [X]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of earlier effective
registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration

statement number of the earlier effective registration statement for the same
offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]

Calculation of Registration Fee

Title of Each Class Amount Proposed Maximum Proposed Maximum Amount of
of Securities to be Registered to be Offering Price Aggregate Offering Registration Fee
Registered Per Unit(1) Price(1)

Common Stock, par value $.0001............ 3,250,000 $ 5.00 $16,250,000 $ 4,924
- --------------------------------------------------------------------------------------------------------------------

Underwriter's Warrants, each to purchase
one share of Common Stock(2)............. 325,000 0.001 325 --(3)
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Common Stock, par value $.0001(4)(6)...... 325,000 5.50 $ 1,787,500 $ 542
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Common Stock, par value $.0001(5)(6)...... 100,000 5.00 $ 500,000 $ 152
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Total: $ 5,618

(1) Estimated solely for the purpose of calculating the registration fee.
(2) To be issued to the Underwriter at the time of delivery and acceptance of
the securities to be sold to the public hereunder.
(3) No fee due pursuant to Rule 457(g) under the Securities Act of 1933.
(4) Issuable upon exercise of the Underwriter's Warrants.
(5) Issuable upon exercise of warrants (the "Bridge Warrants") issued to
certain persons in connection with a bridge financing completed on February
28, 1997.
(6) Also registered hereunder pursuant to Rule 416 are an indeterminate number
of shares of Common Stock which may be issued pursuant to the anti-dilution
provisions applicable to the Underwriter's Warrants and the Bridge
Warrants.

The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

SIGA PHARMACEUTICALS, INC.

Cross-Reference Sheet Showing Location in Prospectus of
Information Required by Items required by Part 1 of Form SB-2

Item Title of Item Caption in Prospectus
- ------ --------------------------- -------------------------------------------

1. Front of Registration
Statement and Outside
Front Cover of
Prospectus................. Front Cover Page
2. Inside Front and Outside
Back Cover Pages of
Prospectus................. Inside Front Cover Page
3. Summary Information and
Risk Factors............... Prospectus Summary; Risk Factors
4. Use of Proceeds............ Use of Proceeds
5. Determination of Offering
Price...................... Underwriting
6. Dilution................... Dilution
7. Selling Security Holders... Not Applicable
8. Plan of Distribution....... Front Cover Page; Underwriting
9. Legal Proceedings.......... Business
10. Directors, Executive
Officers, Promoters and
Control Persons............ Management
11. Security Ownership of
Certain Beneficial Owners
and Management............. Principal Stockholders
12. Description of Securities.. Description of Securities; Dividend Policy
13. Interest of Named Experts
and Counsel................ Legal Matters; Experts
14. Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities................ Description of Securities
15. Organization Within Last
Five Years................. Certain Transactions
16. Description of Business.... Business
17. Management's Discussion
and Analysis or Plan of
Operation.................. Plan of Operation
18. Description of Property.... Business
19. Certain Relationships and
Related Transactions....... Certain Transactions
20. Market for Common Equity
and Related Stockholder
Matters.................... Description of Securities; Shares Eligible
for Future Sale
21. Executive Compensation..... Management
22. Financial Statements....... Financial Statements
23. Changes In and Disagreements
With Accountants on
Accounting and Financial
Disclosure................. Not Applicable

Preliminary Prospectus, Subject to Completion, Dated March 10, 1997

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.

SIGA PHARMACEUTICALS, INC.
3,250,000 Shares of Common Stock

This Prospectus relates to an offering (the "Offering") by SIGA
Pharmaceuticals, Inc. (the "Company") of 3,250,000 shares of common stock, par
value $.0001 per share (the "Common Stock") (sometimes hereinafter referred to
as the "Securities"), to be sold on a "best-efforts, all-or-none" basis through
Sunrise Securities Corp. (the "Underwriter"). Prior to the Offering, there has
been no public market for the Common Stock. It is currently anticipated that
the initial offering price will be $5.00 per share. See "Underwriting" for
information relating to the factors considered in determining the initial
offering price.

The Company has applied for quotation of the Common Stock on The NASDAQ
SmallCap Market ("Nasdaq") under the trading symbol "____".

The Company is a development stage, biopharmaceutical company which has
suffered operating losses since its inception and which has received a going
concern opinion from its independent accountants. As of December 31, 1996, the
Company had an accumulated deficit of $2,269,176. The Company expects to incur
substantial additional operating losses in the development and commercialization
of its technologies.

THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK. ONLY INVESTORS WHO CAN BEAR THE RISK OF LOSS OF THEIR ENTIRE
INVESTMENT SHOULD INVEST. FOR A DESCRIPTION OF CERTAIN RISKS REGARDING
AN INVESTMENT IN THE COMPANY AND IMMEDIATE SUBSTANTIAL DILUTION, SEE
"RISK FACTORS" (PAGE 8) AND "DILUTION" (PAGE 19).
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESEN-
TATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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Underwriting
Discounts
Price to and Proceeds to
public Commissions(1) Company(2)
- --------------------------------------------------------

Per Share.. $ 5.00 $ .50 $ 4.50
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Total(3)... $16,250,000 $1,625,000 $14,625,000
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(footnotes appear on page 3)
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Sunrise Securities Corp.
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The date of this Prospectus is , 1997.

[Inside Front Cover Page]

[Photo and Text]

(1) Does not include additional compensation to the Underwriter consisting of
(i) a non-accountable expense allowance equal to 3% of the gross proceeds
of the Offering, of which $45,000 has been paid by the Company to date and
(ii) warrants entitling the Underwriter to purchase the number of shares of
Common Stock equal to 10% of the number of shares of Common Stock sold in
this Offering (the "Underwriter's Warrants"). The Company has also agreed
to indemnify the Underwriter against certain civil liabilities, including
those arising under the Securities Act of 1933, as amended (the "Securities
Act"). See "Underwriting."

(2) After deducting discounts and commissions payable to the Underwriter, but
before payment of the Underwriter's non-accountable expense allowance
($487,500) and the other expenses of the Offering payable by the Company
(estimated at $280,000). See "Underwriting."

(3) The 3,250,000 shares of Common Stock are being offered on a "best-efforts,
all-or-none" basis. Pending sale of all 3,250,000 shares, all proceeds of
this Offering will be held in a non-interest bearing escrow account at
[___________ Bank]. Unless all 3,250,000 shares are sold by [June 30,
1997], or by [September 30, 1997] if extended upon the mutual agreement of
the Company and the Underwriter (and after the expiration of an additional
10 business days to permit clearance of the funds in escrow), the Offering
will terminate and all funds collected will be promptly returned to the
subscribers without deduction or interest. During the escrow period,
subscribers will not be entitled to a return of their subscriptions. See
"Underwriting."

Prior to the Offering, there has been no public market for the Common

Stock, and there can be no assurance that any such market for the Common Stock
will develop after the closing of the Offering or that, if developed, it will be
sustained. Pursuant to Section 2720 of the National Association of Securities
Dealers, Inc. ("NASD") Rules of Conduct, the Common Stock is being offered at a
price no greater than the maximum price recommended by ______________, a
qualified independent underwriter. The offering price of the shares of Common
Stock was established by negotiation between the Company and the Underwriter and
does not necessarily bear any direct relationship to the Company's assets,
earnings, book value per share or other generally accepted criteria of value.
See "Underwriting."

Upon the consummation of the Offering, the Company's management and its
existing stockholders will, in the aggregate, own beneficially shares having
approximately 51% of the total voting power of the Company's outstanding stock.

This Prospectus also covers the offer and proposed sale by the Company of
an estimated 100,000 shares of Common Stock issuable upon the exercise by the
holders thereof of warrants (the "Bridge Warrants") to purchase an estimated
100,000 shares (the actual number of shares will be determined by dividing
$500,000 by the actual initial offering price per share) at an exercise price
per share equal to the actual initial offering price per share issued to certain
investors in connection with a private placement transaction completed on
February 28, 1997 (the "Bridge Financing"). The Bridge Warrants are not
exercisable until February 28, 1998. See "Plan of Operations--Bridge
Financing."

The shares of Common Stock are being offered by the Underwriter on a "best
efforts, all-or-none" basis. Subject to the provisions of the underwriting
agreement between the Underwriter and the Company, the Underwriter reserves the
right to withdraw, cancel or modify the Offering and to reject any order in
whole or in part. Any modification to the Offering will be made by means of an
amendment to this Prospectus. It is expected that delivery of certificates will
be made against payment therefor at the office of the Underwriter, 135 East 57th
St., New York, New York 10022, on or about , 1997.
___________________________

TO INVEST IN THESE SECURITIES, A CALIFORNIA RESIDENT MUST HAVE, AS A
MINIMUM, EITHER (i) A NET WORTH OF $250,000, EXCLUSIVE OF HOME, HOME FURNISHINGS
AND AUTOMOBILES, AND $65,000 OF GROSS INCOME DURING THE LAST TAX YEAR AND
ESTIMATED GROSS INCOME OF $65,000 FOR THE CURRENT TAX YEAR OR (ii) A NET WORTH
OF $500,000, EXCLUSIVE OF HOME, HOME FURNISHINGS AND AUTOMOBILES.

No dealer, salesperson or other person is authorized to give any
information or to make any representation other than as contained in this
Prospectus and, if given or made, such information or representation must not be
relied upon as having been authorized by the Company or any Underwriter. This
Prospectus does not constitute an offer to sell, or a solicitation of an offer
to buy, by any person in any jurisdiction in which it is unlawful to make such
an offer or solicitation. Neither the delivery of this Prospectus nor any sale
made hereunder shall, under any circumstances, create an implication that the
information contained herein is correct as of any time subsequent to the date
hereof.

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TABLE OF CONTENTS

Page
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Prospectus Summary............... 4
Risk Factors..................... 8
Use of Proceeds.................. 17
Capitalization................... 18
Dilution......................... 19
Dividend Policy.................. 20
Selected Financial Data.......... 21
Plan of Operation................ 22
Business......................... 25
Management....................... 38
Principal Stockholders........... 42
Certain Transactions............. 43
Description of Securities........ 43
Shares Eligible for Future Sale.. 45
Underwriting..................... 46
Legal Matters.................... 47
Experts.......................... 47
Available Information............ 47
Glossary......................... 48
Index to Financial Statements.... F-1

________________

Until ______________, 1997 (25 days from the date of this Prospectus), all
dealers effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a Prospectus.
This is in addition to the obligation of dealers to deliver a Prospectus with
respect to their solicitations to purchase the securities offered hereby.

As of the date of this Prospectus, the Company will become subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and, in accordance therewith, will file reports, proxy and
information statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy and information statements
and other information can be inspected and copied at the Public Reference
Section of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the following regional offices: New York Regional
Office, Suite 1300, 7 World Trade Center, New York, New York 10048, and Chicago
Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-
2511, and copies of such material may also be obtained from the Public Reference
Section of the Commission at prescribed rates. The Commission maintains a World
Wide Web site (http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants that file such
information electronically. The Company's Common Stock is expected to be quoted
on Nasdaq and such reports and other information can also be inspected at the
offices of Nasdaq Operations, 1735 K Street N.W., Washington, D.C., 20006. The
Company intends to furnish its stockholders with annual reports containing
audited financial statements and such other reports as the Company deems
appropriate or as may be required by law.

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Each prospective investor is urged to read this
Prospectus in its entirety. Unless otherwise indicated, the information in this
Prospectus does not give effect to the exercise of (a) the Underwriter's
Warrants and (b) other outstanding options and warrants to purchase an aggregate
of 761,017 shares of Common Stock (includes 100,000 Bridge Warrants based on the
assumed initial public offering price). The initial public offering price per
share of Common Stock is assumed to be $5.00.

The Company

The Company is a development stage, biopharmaceutical company focused on
the discovery, development and commercialization of vaccines, antibiotics and
novel anti-infectives for serious infectious diseases. The Company's lead
vaccine candidate is for the prevention of "strep throat." The Company is
developing a technology for the mucosal delivery of its vaccines which may allow
those vaccines to activate the immune system at the mucus-lined surfaces of the
body - the mouth, the nose, the lungs and the gastrointestinal and urogenital
tracts - the sites of entry for most infectious agents. The Company's anti-
infectives programs, aimed at the increasingly serious problem of drug
resistance, are designed to block the ability of bacteria to attach to human
tissue, the first step in the infection process. The Company's technologies are
licensed from The Rockefeller University ("Rockefeller").

Vaccine Candidates

The Company's lead vaccine candidate is for the prevention of group A
streptococcal pharyngitis or "strep throat," a recurrent infection affecting
between seven and 20 million children in the United States each year. Strep
throat remains the most common childhood disease for which there is no vaccine
available, and, if ineffectively treated, it can progress to rheumatic fever.
No vaccine has been developed because of the more than 80 different serotypes of
group A streptococcus, the bacterium that causes the disease. In order to be
effective, a vaccine would have to be based upon an antigen (a molecule that
triggers the immune response) common to most of the important serotypes. The
high incidence of the disease, the potentially serious consequences of
inadequate treatment and the recent emergence of drug-tolerant types of group A
streptococcus create an important medical need for an effective vaccine.

The Company's proprietary antigen, licensed from Rockefeller, addresses the
challenge of multiple serotypes in that this antigen is common to most types of
the bacteria that cause strep throat, including types that have been associated
with rheumatic fever. When a vaccine incorporating this antigen was orally
administered to animals, it was shown to provide protection against multiple
types of group A streptococcal infection. The Company's vaccine candidate for
strep throat utilizes this antigen.

The Company is collaborating with the National Institutes of Health and the
University of Maryland Center for Vaccine Development on the clinical
development of this vaccine candidate and expects to file an Investigational New
Drug Application ("IND") with the United States Food and Drug Administration
(the "FDA") in 1997.

The Company is also developing a proprietary mucosal vaccine delivery
system, also licensed from Rockefeller. Mucosally-delivered vaccines are
considered attractive because such vaccines may mobilize an immune response
concentrated at the site of infection and because they may activate both a
mucosal IgA antibody response as well as a systemic IgG response. The Company's
delivery system utilizes commensal bacteria (harmless bacteria that live in and
on the body) that have been genetically engineered to continually present
disease-associated antigens which stimulate an immune response at the body's
mucosal surfaces thereby preventing infection at the earliest possible stage. By
comparison, conventional vaccines primarily activate the slower-to-react
systemic (internal) immune system and can have significant limitations,
including variable efficacy and serious side effects. The Company believes that
mucosal vaccines developed using its proprietary commensal delivery technology
should provide a number of potential advantages over conventional vaccines,
including: more complete

protection; fewer side effects; the potential for single dose administration;
non-injectable administration; the potential for combination vaccine delivery;
and lower cost production.

The Company's mucosal vaccine technology is potentially applicable to any
infectious disease that begins at a mucosal surface. In addition to its strep
throat vaccine, the Company is also developing vaccines to prevent sexually
transmitted diseases.

Anti-Infectives and Antibiotics Therapy Candidates

The Company's anti-infectives program is targeted principally toward drug-
resistant bacteria and hospital-acquired infections. According to estimates
from the Centers for Disease Control, approximately two million hospital-
acquired infections occur each year in the United States at a cost of $4.5
billion.

The Company's anti-infectives approaches aim to block the ability of
bacteria to attach to and colonize human tissue, thereby blocking infection at
the first stage in the infection process. By comparison, antibiotics available
today act by interfering with either the structure or the metabolism of a
bacterial cell, affecting its ability to survive and to reproduce. No currently
available antibiotics target the attachment of a bacterium to its target tissue.
By preventing attachment, the bacteria would be readily cleared by the body's
immune system.

The Company's lead anti-infectives program targets fibrinogen binding
protein ("FBP"), a surface protein on staphylococcus aureus ("S. aureus")
enabling the attachment of this organism to indwelling devices, such as
catheters. S. aureus is the leading cause of hospital-acquired infections, and
more than 95% of S. aureus infections are caused by organisms that are resistant
to penicillin. Many strains of S. aureus are generally resistant to
antibiotics, responding only to one drug, vancomycin, which can have serious
side effects. Based on studies at Rockefeller, the Company believes antibodies
to FBP may be effective in preventing bacterial attachment and is developing
antibodies to FBP that will be evaluated for administration to patients at the
time of hospitalization to prevent infection by S. aureus.

The Company's second anti-infectives program is based on a novel target for
antibiotic therapy. The Company's founding scientists have identified an enzyme
utilized by most gram-positive bacteria to anchor certain proteins to the
bacterial cell wall. These surface proteins are the means by which certain
bacteria recognize, adhere to and colonize specific tissue. The Company's
strategy is to develop inhibitors to this enzyme. The Company believes this
anti-infectives target will have wide applicability to gram-positive bacteria in
general, including the increasing number of antibiotic resistant bacteria and a
broad range of serious infectious diseases including pneumonia, meningitis and
urinary tract infections. The Company intends to utilize a combination of
structure-based drug design and high-throughput screening procedures to identify
compounds that inhibit the anchoring process.

The Company was incorporated in Delaware in December 1995. The Company's
executive offices are located at 666 Third Avenue, New York, NY, 10017, and its
telephone number is (212) 681-4970.

The Offering

Securities offered......... 3,250,000 shares of Common Stock.

Offering price .......... $5.00 per share of Common Stock.

Common Stock outstanding
after the Offering(1)...... 6,617,182 shares of Common Stock

Use of Proceeds............ The net proceeds to the Company, aggregating
approximately $13,857,500, will be used to (i)
repay short-term indebtedness of $1,000,000 (plus
accrued interest) incurred in the Bridge Financing
and (ii) fund research and development activities,
and the balance

used for working capital and general corporate
purposes. See "Use of Proceeds."

Risk Factors............... The securities offered hereby involve a high degree
of risk and substantial immediate dilution to new
investors. Only investors who can bear the risk of
losing their entire investment should invest. See
"Risk Factors" and "Dilution."

Proposed Nasdaq symbol.... "____"

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(1) Excludes (i) 325,000 shares of Common Stock reserved for issuance upon
exercise of the Underwriter's Warrants; (ii) 333,333 shares of Common Stock
reserved for issuance upon the exercise of stock options which may be
granted pursuant to the Company's 1996 Incentive and Non-Qualified Stock
Option Plan (the "Plan") (options to purchase 33,334 shares of Common Stock
at an exercise price of $1.50 per share and 16,667 shares of Common Stock
at an exercise price of $3.00 per share have been granted and are
outstanding under the Plan); (iii) 461,016 shares of Common Stock reserved
for issuance upon the exercise of warrants granted to David H. de Weese,
the Chairman, President and Chief Executive Officer of the Company, at an
exercise price of $3.00 per share (the "de Weese Warrants"); (iv) 150,000
shares of Common Stock reserved for issuance upon the exercise of warrants
granted to Dr. Vincent Fischetti, the principal founding scientist of the
Company's technologies, at an exercise price of $1.50 per share (the
"Fischetti Warrants"); and (v) an estimated 100,000 shares of Common Stock
reserved for issuance upon the exercise of the Bridge Warrants. See "Plan
of Operation--Bridge Financing," "Management--1996 Incentive and Non-
Qualified Stock Option Plan" and "--Employment Agreements," "Certain
Transactions" and "Underwriting."

Summary Financial Information

The summary financial data set forth below is derived from and should be read in
conjunction with the audited financial statements, including the notes thereto,
appearing elsewhere in this prospectus.

December 28, December 28,
1995 (Date of 1995 (Date of
Inception) to Year Ended Inception) to
December 31, 1995 December 31, 1996 December 31, 1996
----------------- ----------------- -----------------

Statement of Operations Data:
Operating expenses:
General and administrative........ $ 1,000 $ 787,817 $ 788,817
Research and development.......... -- 662,205 662,205
Patent preparation fees........... -- 452,999 452,999
Stock option and warrant
compensation.................... -- 367,461 367,461
-------- ----------- -----------
Total operating expenses....... 1,000 2,270,482 2,271,482

Interest Income..................... -- 2,306 2,306
-------- ----------- -----------
Net loss....................... $ (1,000) $(2,268,176) $(2,269,176)
======== =========== ===========

Net loss per common share(1). -- $ (0.66)
======== ===========

December 31, 1996
-----------------
Pro Forma
Actual Pro Forma(2) As Adjusted(3)
------- ----------------- ------------

Balance Sheet Data:
Working capital..................... $232,050 $ 232,050 $14,195,238
Total assets........................ 580,918 1,580,918 14,428,418
Total liabilities................... 180,938 1,180,938 180,938
Stockholders' equity................ 399,980 399,980 14,247,480

- ----------------------------
(1) For information concerning the computation of net loss per share, see Note
2 of Notes to Financial Statements.
(2) Pro forma adjustments reflect the Bridge Financing, completed February 28,
1997, whereby the Company issued bridge notes (the "Bridge Notes") in the
principal amount of $1,000,000 net of estimated offering costs of $10,000.
The Bridge Notes bear interest at 10% per annum and are due and payable
together with accrued but unpaid interest, on the earlier of (a) the
closing of an initial public offering of the Common Stock or (b) six months
after the issuance of the Bridge Notes. In connection with the Bridge
Financing, the purchasers of the Bridge Notes received the Bridge Warrants.
See "Plan of Operation--Bridge Financing."
(3) As adjusted to (i) give effect to the sale of securities offered hereby,
net of expenses, at an assumed initial offering price of $5.00 per share of
Common Stock, (ii) repayment of the Bridge Notes in the principal amount of
$1,000,000 and accrued but unpaid interest thereon and (iii) the
recognition of the unamortized portion of the debt issuance costs
associated with the Bridge Notes as an expense.

RISK FACTORS

THE PURCHASE OF COMMON STOCK IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK
INCLUDING, BUT NOT NECESSARILY LIMITED TO, THE RISK FACTORS DESCRIBED BELOW.
COMMON STOCK SHOULD NOT BE PURCHASED BY INVESTORS WHO CANNOT AFFORD THE LOSS OF
THEIR ENTIRE INVESTMENT. PROSPECTIVE INVESTORS SHOULD CAREFULLY REVIEW AND
CONSIDER THE FOLLOWING RISKS AS WELL AS THE OTHER INFORMATION CONTAINED IN THIS
PROSPECTUS.

Limited Operating History; Accumulated Deficit; Operating Losses; Potential for
Future Losses; Going Concern Explanatory Paragraph in Accountant's Report

The Company, a development stage, biopharmaceutical company, was
incorporated in December 1995 and accordingly has a limited operating history.
As of December 31, 1996, the Company had an accumulated deficit of $2,269,176.
The Company expects to incur substantial operating losses over the next several
years and expects cumulative losses to increase as the Company's research and
development and clinical efforts expand. Revenues, if any, that the Company may
receive in the next few years will be limited to payments under research or
product development relationships that the Company may establish and payments
under license agreements that the Company may enter into. There can be no
assurance that the Company will be able to establish any such relationships,
enter into any such license agreements or generate revenues. To achieve
profitable operations, the Company, alone or with others, must successfully
identify and develop pharmaceutical products, conduct clinical trials, obtain
regulatory approvals and manufacture and market its pharmaceutical products or
enter into license agreements with third parties on acceptable terms. The
Company may never achieve significant revenues or profitable operations. The
report of independent accountants on the Company's financial statements included
herein contains an explanatory paragraph stating that the Company's financial
statements have been prepared assuming that the Company will continue as a going
concern while expressing substantial doubt as to the Company's ability to do so.
The Company's ability to continue as a going concern is dependent on its ability
to generate sufficient cash flow to meet its obligations as they become due. The
Company has suffered operating losses since inception and expects to incur
substantial additional operating losses in the development and commercialization
of its technologies. These and other factors discussed in Note 1 to the
financial statements raise substantial doubt about the Company's ability to
continue as a going concern. See "Plan of Operation" and Financial Statements
and Notes thereto.

Early Stage of Development; Absence of Products; No Commercialization of
Products Expected in Near Future

The Company's product candidates are in an early stage of development. The
Company has not completed the development of any products and, accordingly, has
not received any regulatory approvals, commenced marketing activities or
generated revenues from the sale of products. The Company's product candidates
will require significant additional development, pre-clinical and clinical
trials, regulatory approval and additional investment prior to
commercialization. The Company does not expect to market any products for
several years. In addition, the Company's product candidates are subject to the
risks of failure inherent in the development of products based on innovative
technologies. Accordingly, there can be no assurance that the Company's research
and development efforts will be successful, that any of the Company's product
candidates will prove to be safe, effective and non-toxic in clinical trials,
that any commercially successful products will be developed, that the
proprietary or patent rights of others will not preclude the Company from
marketing its product candidates or that others will not develop competitive or
superior products. As a result of the early stage of development of product
candidates and the extensive testing and regulatory review process that such
product candidates must undergo, the Company cannot predict with certainty when
it will be able to market any of its products, if at all. The Company's product
development efforts are based on unproven scientific approaches. There is,
therefore, substantial risk that these approaches may not prove to be
successful. See "Business."

Future Capital Needs; Uncertainty Of Availability Of Additional Funding

The Company will require substantial additional funds to conduct and
sponsor research and development activities, to conduct pre-clinical and
clinical testing, and

to market its products. The Company's future capital requirements will depend on
many factors, including continued scientific progress, progress with pre-
clinical testing and clinical trials, the time and costs involved in obtaining
regulatory approvals, the costs involved in filing, prosecuting and enforcing
patent claims, competing technological and market developments, the ability of
the Company to establish collaborative arrangements, effective commercialization
activities and arrangements and the purchase or development of additional
equipment and facilities. The Company expects the net proceeds of the Offering
and the interest earned thereon will be sufficient to fund the Company's
activities for at least 12 months. There can be no assurance, however, that
changes in the Company's research and development plans or other events
affecting the Company's operating expenses will not result in the utilization of
such proceeds prior to that time. The Company has no other current sources of
funding. As a result, the Company will need to raise substantial additional
funds before any of the Company's product candidates achieves regulatory
approvals, if at all. The Company intends to seek such additional funding
through collaborative arrangements and through public or private financings.
There can be no assurance that additional financing will be available, or, if
available, that such additional financing will be available on terms acceptable
to the Company. In addition, for a period of 12 months (6 months in the case of
any public offering under the Securities Act) after the date of this Prospectus,
the Underwriter's prior written consent is required if the Company seeks to
raise additional funds through the issuance of equity. This may result in the
Company being required to raise needed funding through the issuance of debt. If
additional funds are raised by issuing debt, the Company will incur fixed
payment obligations, which could delay the time, if any, when the Company may
achieve positive cash flow. If adequate funds are not available, the Company may
be required to delay, scale back or eliminate one or more of its principal
product candidates or obtain funds through arrangements with collaborative
partners or others that may require the Company to relinquish rights to certain
of its technologies, product candidates or products that the Company would not
otherwise relinquish. See "Use of Proceeds" and "Underwriting."

Management's Broad Discretion in Application of Proceeds

The Company intends to use approximately $1,000,000 (excluding accrued
interest), or 7.2%, of the net proceeds of the Offering to repay outstanding
indebtedness and the balance will be added to the Company's working capital and
will be available for general corporate purposes, including the funding of the
Company's research and development activities. As of the date of this
Prospectus, the Company cannot specify with certainty the particular uses for
the net proceeds to be added to its working capital. Accordingly, management of
the Company will have broad discretion as to the application of the net proceeds
of the Offering. See "Use of Proceeds" and "Plan of Operation."

No Assurance of Regulatory Approval; Need for Extensive Clinical Trials

The production and marketing of the Company's principal product candidates,
as well as certain of its research and development activities, are subject to
regulation by governmental agencies in the United States and other countries.
Any drug developed by the Company will be subject to a rigorous approval process
pursuant to regulations administered by the United States Food and Drug
Administration (the "FDA"), comparable agencies in other countries and, to a
lesser extent, state regulatory authorities. The approval process for any one of
the Company's product candidates is likely to take several years or more
depending upon the type, complexity and novelty of the pharmaceutical product
and will involve significant expenditures by the Company for which additional
financing will be required. The cost to the Company of conducting clinical
trials for any potential product can vary dramatically based on a number of
factors, including the order and timing of clinical indications pursued and the
extent of development and financial support, if any, from collaborators. Because
of the intense competition in the biopharmaceutical market and concern over the
safety of participating in clinical trials, the Company may have difficulty
obtaining sufficient patient populations or the support of clinicians to conduct
its clinical trials as planned and may have to expend substantial additional
funds to obtain access to such resources, or delay or modify its plans
significantly. There can be no assurance that the Company will be able to obtain
necessary clearances for clinical trials or approvals for the manufacturing or
marketing of any of its product candidates, that the Company will have
sufficient resources to complete the required regulatory review process or that
the Company can survive the inability to obtain, or delays in

obtaining, such approvals. Even if regulatory approvals are obtained, they may
provide for significant limitations on the indicated uses for which a product
may be marketed. As with all investigational products, additional government
regulations may be promulgated requiring that additional research data be
submitted that could delay marketing approval of any of the Company's product
candidates. The subsequent discovery of previously unknown complications or the
failure to comply with applicable regulatory requirements may result in
restrictions on the marketing, or the withdrawal, of products or possible civil
or criminal liabilities. In addition, the Company cannot predict whether any
adverse government regulation might arise from future administrative actions.
See "Business--Government Regulation."

As part of the regulatory review process, the Company must sponsor and
file, or obtain through others, an Investigational New Drug Application ("IND")
for each of its product candidates before the Company will be able to initiate
the clinical trials necessary to generate safety and efficacy data for inclusion
in an application for FDA marketing approval. The Company has not filed any INDs
to date. Although the Company anticipates filing its first IND in 1997, the
Company cannot predict with certainty when it might first submit any application
for any product candidates for FDA or other regulatory review. There can be no
assurance that clinical data from studies performed by the Company or others
will be acceptable to the FDA or other regulatory agencies in support of any
applications that may be submitted for regulatory approval and the FDA may,
among other things, require the Company to collect additional data and conduct
additional clinical studies prior to acceptance of any such applications.

Technologies Subject to Licenses

As a licensee of certain research technologies, the Company has a license
agreement with Rockefeller wherein the Company has acquired exclusive, worldwide
rights to develop and commercialize such research technologies. Certain
scientists at Oregon State University ("Oregon State") and Emory University
("Emory") are co-inventors of certain of such technologies and, therefore,
Oregon State and Emory joined in the license grant to the Company. The agreement
generally requires the Company to pay royalties on sales of products developed
from the licensed technologies and fees on revenues from sublicensees, where
applicable, and the Company is responsible for certain milestone payments and
the costs of filing and prosecuting patent applications. In addition, the
Company's research support agreements with Oregon State and Emory require that
the Company commit certain sums annually for research and development of the
licensed products and other technologies. Should the Company default on its
obligations to Rockefeller under the license agreement, its license would
terminate, which would have a material adverse effect on the Company's
operations and prospects. See "Business--Licenses and Collaborative Research."

Successful Development of Product Candidates

There can be no assurance that the Company's product candidates will be
successfully developed into drugs that can be administered to humans or that any
such drugs or therapies will prove to be safe and effective in clinical trials
or cost-effective to manufacture. Further, any product candidates developed by
the Company may prove to have adverse side effects.

Dependence on Others; Collaborations

The Company's strategy for the research, development and commercialization
of its product candidates will require the Company to enter into various
arrangements with corporate and academic collaborators, licensors, licensees and
others, and may therefore be dependent upon the subsequent success of these
outside parties in performing their responsibilities. The Company currently has
a license agreement with Rockefeller, Emory and Oregon State, research support
agreements with Emory and Oregon State and a consulting agreement with Dr.
Fischetti. There can be no assurance that the Company will be able to establish
other collaborative arrangements or license agreements that the Company deems
necessary or acceptable to develop and commercialize its product candidates or
that such collaborative arrangements or license agreements will be successful.
Moreover, certain of the collaborative arrangements that the Company may enter
into in the future may place responsibility for pre-clinical testing and
clinical trials and for preparing and submitting applications for regulatory
approval for product candidates on the collaborative partner. Should a
collaborative partner fail to develop or commercialize successfully any product
candidate to which

the Company has rights, the Company's business may be adversely affected. See
"Business--Licenses and Collaborative Research" and "Certain Transactions."

Uncertainty Regarding Patents and Proprietary Information

The Company's ability to compete effectively will depend, in part, on its
success in protecting its proprietary technology in the United States and
abroad. The patent positions of biopharmaceutical firms generally are highly
uncertain and involve complex legal and factual questions. No consistent policy
has emerged regarding the breadth of claims covered in biopharmaceutical
patents. As its research projects develop, the Company intends to file
additional patent applications with the United States Patent and Trademark
Office (the "PTO") and with corresponding foreign patent authorities. There can
be no assurance that the PTO or any foreign jurisdictions will grant the
Company's patent applications or that the Company will obtain any patents or
other protection for which application for patent protection has been made. No
assurance can be given that patents issued to or licensed by the Company will
not be challenged, invalidated or circumvented, or that the rights granted
thereunder will provide any competitive advantage. The Company will also rely on
trade secrets, know-how and continuing technological advancement in seeking to
achieve a competitive position. No assurance can be given that the Company will
be able to protect its rights to its unpatented trade secrets or that others
will not independently develop substantially equivalent proprietary information
and techniques or otherwise gain access to the Company's trade secrets.

In addition to protecting its proprietary technology and trade secrets, the
Company may be required to obtain additional licenses to patents or other
proprietary rights from third parties. No assurance can be given that any
additional licenses required under any patents or proprietary rights would be
made available on acceptable terms, if at all. If the Company does not obtain
required licenses, it could encounter delays in product development while it
attempts to design around blocking patents, or it could find that the
development, manufacture or sale of products requiring such licenses could be
foreclosed.

The Company could also incur substantial costs in defending any patent
infringement suits or in asserting any patent rights, including those granted by
third parties. The PTO could institute interference proceedings against the
Company in connection with one or more of the Company's patents or patent
applications, and such proceedings could result in an adverse decision as to
priority of invention. The PTO or others could also institute reexamination
proceedings with the PTO against the Company in connection with one or more of
the Company's patents or patent applications and such proceedings could result
in an adverse decision as to the validity or scope of any patents that the
Company may obtain or have the right to use. See "Business--Patents and
Proprietary Rights."

Lack of Manufacturing, Marketing or Sales Capabilities

The Company has not invested in the development of commercial
manufacturing, marketing, distribution or sales capabilities for any of its
product candidates. The Company currently lacks the facilities to manufacture
its product candidates in accordance with current Good Manufacturing Practices
as prescribed by the FDA or to produce an adequate supply of compounds to meet
future requirements for clinical trials. If the Company is unable to develop or
contract for manufacturing capabilities on acceptable terms, the Company's
ability to conduct pre-clinical and human clinical testing will be adversely
affected, resulting in delays in the submission of products for regulatory
approval and in the initiation of new development programs, which in turn could
materially impair the Company's competitive position and the possibility of
achieving profitability.

The Company will need to hire additional personnel skilled in clinical
testing, regulatory compliance, marketing and sales as it develops products with
commercial potential. There can be no assurance that the Company will be able
to hire such personnel, or establish third-party relationships to provide any or
all of these resources.

Technological Change; Competition and Market Risk

The biopharmaceutical industry is characterized by rapid and significant
technological change. The Company's success will depend on its ability to
develop and apply its technologies in the design and development of its product
candidates and to establish and maintain a market for its product candidates.
There also are many companies, both public and private, including major
pharmaceutical and chemical companies, specialized biotechnology firms,
universities and other research institutions engaged in developing
pharmaceutical and biotechnology products. Many of these companies have
substantially greater financial, technical, research and development, and human
resources than the Company. Competitors may develop products or other
technologies that are more effective than any that are being developed by the
Company or may obtain FDA approval for products more rapidly than the Company.
If the Company commences commercial sales of products, it still must compete in
the manufacturing and marketing of such products, areas in which the Company has
no experience. Many of these companies also have manufacturing facilities and
established marketing capabilities that would enable such companies to market
competing products through existing channels of distribution. See "Business--
Competition."

Uncertainty of Pharmaceutical Pricing; Healthcare and Related Matters

The levels of revenues and profitability of pharmaceutical companies may be
affected by the continuing efforts of governmental and third party payors to
contain or reduce the costs of healthcare through various means. For example, in
certain foreign markets, pricing of prescription pharmaceuticals is subject to
governmental control. In the United States, there have been, and the Company
expects that there will continue to be, a number of federal and state proposals
to implement similar government control. It is uncertain what legislative
proposals will be adopted or what actions federal, state or private payors for
healthcare goods and services may take in response to any healthcare reform or
legislation.

The Company cannot predict the effect that healthcare reforms may have on
its business, and there can be no assurance that any such reforms will not have
a material adverse effect on the Company. Further, to the extent that such
proposals or reforms have a material adverse effect on the business, financial
condition and profitability of other pharmaceutical companies that are
prospective collaborators for certain of the Company's potential products, the
Company's ability to commercialize its product candidates may be adversely
affected. In addition, in both the United States and elsewhere, sales of
prescription medical products are dependent in part on the availability of
reimbursement to the consumer from third party payors, such as government and
private insurance plans. Third party payors can indirectly affect the pricing or
the relative attractiveness of the Company's product candidates by regulating
the maximum amount of reimbursement that they will provide for the Company's
product candidates or by denying reimbursement. There can be no assurance that,
if and when marketed, the Company's product candidates will be considered cost-
effective by third party payors, that reimbursement will be available or, if
available, that such third party payors' reimbursement policies will not
adversely affect the Company's ability to sell its product candidates on a
profitable basis. Limitations on, or failure to obtain, reimbursement for use of
the Company's product candidates and changes in government and private third
party payors' policies toward reimbursement could have a material adverse effect
on the Company's ability to market its product candidates.

Dependence on Qualified Personnel and Consultants; Need for Additional Personnel

The Company's success is highly dependent on its ability to attract and
retain qualified scientific and management personnel. The Company is highly
dependent on its management, scientific staff, and consultants, including Dr.
Vincent A. Fischetti. The loss of the services of Dr. Fischetti or other
personnel or consultants could have a material adverse effect on the Company's
operations. The Company has only one full-time executive officer, David de
Weese, who holds the offices of President and Chief Executive Officer. Two of
the Company's officers, Dr. Joshua Schein and Judson Cooper, are also officers
of Virologix Corporation and Callisto Pharmaceuticals, Inc., privately held,
development stage, pharmaceutical companies, and devote substantial amounts of
their time to the three companies on a substantially equal basis. Although the
Company has entered into employment agreements with each of its key management
and scientific employees and consulting agreements with its key outside
scientific

advisors, any of such persons may terminate his or her employment or consulting
arrangement with the Company at any time on short notice. Accordingly, there can
be no assurance that these employees and consultants will remain associated with
the Company. The loss of the services of any of the Company's key personnel or
consultants may impede the Company's ability to commercialize its product
candidates.

The Company's planned activities may require additional expertise in areas
such as pre-clinical testing, clinical trial management, regulatory affairs,
manufacturing and marketing. Such activities may require the addition of new
personnel and the development of additional expertise by existing management
personnel. The Company faces intense competition for such personnel from other
companies, academic institutions, government entities and other organizations,
and there can be no assurance that the Company will be successful in hiring or
retaining qualified personnel. The inability of the Company to develop
additional expertise or to hire and retain such qualified personnel could have a
material adverse effect on the Company's operations.

Potential Product Liability and Availability of Insurance

The Company's business exposes it to potential liability risks that are
inherent in the testing, manufacturing and marketing of pharmaceutical products.
The use of the Company's drug candidates in clinical trials may expose the
Company to product liability claims and possible adverse publicity. These risks
will expand with respect to the Company's drug candidates, if any, that receive
regulatory approval for commercial sale. Product liability insurance for the
biotechnology industry is generally expensive, if available at all. The Company
does not have product liability insurance but intends to obtain such coverage if
and when its drug candidates are tested in clinical trials. There can be no
assurance, however, that the Company will be able to obtain insurance coverage
at acceptable costs or in a sufficient amount, if at all, or that a product
liability claim would not adversely affect the Company's business, operating
results or financial condition.

Lack of Research and Development Facilities

The Company does not maintain its own research and development facilities
and does not intend to construct such facilities in the future. The Company
sponsors research and development activities at Dr. Fischetti's laboratory at
Rockefeller and at Oregon State and Emory. The Company's research and
development efforts, therefore, are dependent upon its continued relationships
with Dr. Fischetti, Rockefeller, Oregon State and Emory. In the absence of such
relationships, the Company would need to develop a new research and development
arrangement with a third party, the availability of which there can be no
assurance. Any delay in finding suitable research and development facilities
would postpone commercialization of the Company's products. See "Business--
Human Resources and Facilities."

No Prior Public Market; Possible Volatility of Stock Price

Prior to this Offering, there has been no public market for the Company's

Common Stock. Accordingly, there can be no assurance that an active trading
market will develop or be sustained subsequent to this Offering. The initial
public offering price of the Common Stock will be determined by negotiations
between the Company and the Underwriter and may not be indicative of the prices
that may prevail in the public market. The Company has applied to have the
Common Stock quoted on Nasdaq, but there is no assurance that the Company's
future operating results will enable it to remain eligible for quotation on
Nasdaq. If the Company is unable to satisfy such listing criteria in the future,
the Common Stock may be delisted from trading on Nasdaq and consequently an
investor could find it more difficult to dispose of, or to obtain accurate
quotations as to the price of, the Common Stock. The stock market generally, and
the biotechnology sector in particular, have experienced and are likely in the
future to experience significant price and volume fluctuations which could
adversely affect the market price of the Common Stock without regard to the
significant fluctuations in response to variations in quarterly operating
results, shortfalls in sales or earnings below analyst estimates, stock market
conditions and other factors. There can be no assurance that the market price of
the Common Stock will not experience significant fluctuations or decline below
the initial public offering price.

Control by Management and Existing Stockholders

Upon consummation of the Offering, the Company's management and existing
holders of the Company's stock will, in the aggregate, own beneficially shares
having approximately 51% of the total voting power of the Company's outstanding
stock (without giving effect to the exercise of the Underwriter's Warrants,
options granted under the Plan, the de Weese Warrants, the Fischetti Warrants or
the Bridge Warrants). As a result, these stockholders, acting together, would be
able to effectively control most matters requiring approval by the stockholders
of the Company, including the election of all of the directors. See "Principal
Stockholders."

Potential Conflicts of Interest

Certain persons who are principal stockholders and executive officers of
the Company are involved in various relationships that could result in conflicts
between their interests and those of other stockholders of the Company. Dr.
Schein and Mr. Cooper have employment arrangements with two other operating
companies, one of which is also in the process of making its initial public
offering of securities, which could force one or both of them to compromise or
divert their business attention from the concerns of the Company from time to
time. Additionally, Dr. Schein and Mr. Cooper are principals of CSO Ventures
LLC ("CSO"), a privately held limited liability company which has a consulting
agreement with the Company. Under the terms of Dr. Schein and Mr. Cooper's
employment agreements with the Company, they are each entitled to the payment of
certain fees in connection with any sale of the Company. This provision,
together with lower prices paid by them for their shares of Common Stock
relative to the prices paid by investors in this Offering, could result in a
situation in which the purchase price paid in connection with any sale of the
Company represents a gain on their investment in the Company while
simultaneously representing a loss to investors in this Offering. See "Certain
Transactions" and "Management."

Lack of Dividends

The Company has not paid any dividends and does not contemplate paying
dividends in the foreseeable future. It is currently anticipated that earnings,
if any, will be retained by the Company to finance the development and expansion
of the Company's business. See "Dividend Policy."

Shares Eligible for Future Sale

Upon completion of this Offering, the Company will have outstanding
6,617,182 shares of Common Stock, without giving effect to shares of Common
Stock issuable upon exercise of (i) the Underwriter's Warrants, (ii) options
granted under the Plan, (iii) the de Weese Warrants, (iv) the Fischetti Warrants
or (v) the Bridge Warrants. Of such 6,617,182 shares of Common Stock, the
3,250,000 shares to be sold by the Company in this Offering will be freely
tradeable without restriction or further registration under the Act, except for
any shares held by "affiliates" of the Company within the meaning of the Act
which shares will be subject to the resale limitations of Rule 144 promulgated
under the Act.

The remaining 3,367,182 shares (the "Restricted Shares") were issued by the
Company in private transactions in reliance upon one or more exemptions
contained in the Act. 1,288,012 of the Restricted Shares were issued in
connection with two private placement transactions completed in March and
September 1996, respectively (the "Private Shares") and 2,079,170 of the
Restricted Shares were issued to the founders of the Company in December 1995
(the "Founders' Shares"). The Restricted Shares are deemed to be "restricted
securities" within the meaning of Rule 144 promulgated pursuant to the Act and
may be publicly sold only if registered under the Act or sold pursuant to
exemptions therefrom. Because the Founders' Shares and 1,038,008 of the Private
Shares acquired in the March 1996 private placement will have been held for more
than one year as of the date of this Prospectus, such shares will be eligible
for public sale in accordance with the requirements of Rule 144 (based on the
recent amendment to Rule 144 which is effective April 21, 1997). In addition,
the remaining 250,004 of the Private Shares will be eligible for public sale in
September 1997. However, certain holders of the Private Shares and the holders
of the Founders' Shares have agreed with the Underwriter not to sell or
otherwise dispose of such shares for a period of six months and 24 months,
respectively, after the date of

the consummation of the Offering. See "Shares Eligible for Future Sale" and
"Underwriting."

Dilution

This Offering involves immediate dilution of $2.85 per share between the
adjusted net tangible book value per share after the Offering and the per share
public offering price of $5.00 attributable to the Common Stock. Investors in
the Offering will contribute 88% of the aggregate consideration received for the
aggregate number of shares of Common Stock outstanding after the Offering, but
will only own 49% of the aggregate number of shares of Common Stock outstanding
after the Offering. See "Dilution."

Antitakeover Effect of Certificate of Incorporation

The Company's Certificate of Incorporation authorizes the Board of Directors
to determine the rights, preferences, privileges and restrictions of unissued
series of preferred stock, $.0001 par value per share (the "Preferred Stock"),
and to fix the number of shares of any series of Preferred Stock and the
designation of any such series, without any vote or action by the Company's
stockholders. Thus, the Board of Directors can authorize and issue up to
10,000,000 shares of Preferred Stock with voting or conversion rights that could
adversely affect the voting or other rights of holders of the Company's Common
Stock. In addition, the issuance of Preferred Stock may have the effect of
delaying, deferring or preventing a change of control of the Company, since the
terms of the Preferred Stock that might be issued could potentially prohibit the
Company's consummation of any merger, reorganization, sale of substantially all
of its assets, liquidation or other extraordinary corporate transaction without
the approval of the holders of the outstanding shares of the Common Stock. The
Company, however, has no intention of adopting a stockholder rights plan
("poison pill") in the foreseeable future. See "Description of Securities--
Preferred Stock."

Best-Efforts Offering; Escrow of Investors' Funds

This Offering is being made on a "best-efforts, all-or-none" basis. There
can be no assurance that any or all of the shares of Common Stock will be sold.
The Underwriter is offering the shares of Common Stock for a period of [90 days]
expiring on [June 30, 1997], which may be extended up to an additional [90 days]
to [September 30, 1997] by mutual agreement between the Company and the
Underwriter. Pending the sale of the 3,250,000 shares offered hereby, all
proceeds will be held in an escrow account at ________________ Bank. No
commitment exists by anyone to purchase all or any of the 3,250,000 shares of
Common Stock. Consequently, subscribers' funds may held in escrow for as long
as [180] days and returned without interest or deduction in the event all
3,250,000 shares are not sold within the offering period. Investors, therefore,
will not have the use of any subscription funds during the subscription period.
See "Underwriting."

Possible Delisting of Securities from Nasdaq

Following the Offering, the Company's Common Stock will meet the current
Nasdaq listing requirements and is expected to be initially included on Nasdaq.
There can be no assurance, however, that the Company will meet the criteria for
continued listing. Continued inclusion on Nasdaq generally requires that (i)
the Company maintain at least $2,000,000 in total assets and $1,000,000 in
capital and surplus, (ii) the minimum bid price of the Common Stock be $1.00 per
share, (iii) there be at least 100,000 shares in the public float valued at
$200,000 or more, (iv) the Common Stock have at least two active market makers
and (v) the Common Stock be held by at least 300 holders. The Nasdaq Stock
Market has recently announced proposals which would increase the listing
standards for inclusion on Nasdaq. If the listing standards are increased, the
Company may be unable to satisfy the listing requirements for inclusion on
Nasdaq.

If the Company is unable to satisfy Nasdaq's listing standards, its
securities may be delisted from Nasdaq. In such event, trading, if any, in the
Common Stock would thereafter be conducted in the over-the-counter market on the
so-called "pink sheets" or the NASD's "Electronic Bulletin Board."
Consequently, the liquidity of the Company's securities could be impaired, not
only in the number of securities which

could be bought and sold, but also through delays in the timing of transactions,
reduction in security analysts' and the news media's coverage of the Company and
lower prices for the Company's securities than might otherwise be attained.

Risks of Low-Priced Stock; "Penny Stock" Restrictions

If the Company's securities were delisted from Nasdaq (See "--Possible
Delisting of Securities from Nasdaq"), they could become subject to Rule 15g-9
under the Exchange Act, which imposes additional sales practice requirements on
broker-dealers which sell such securities to persons other than established
customers and "accredited investors" (generally, individuals with net worths in
excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together
with their spouses). For transactions covered by this rule, a broker-dealer
must make a special suitability determination for the purchaser and have
received the purchaser's written consent to the transaction prior to sale.
Consequently, such rule may adversely affect the ability of broker-dealers to
sell the Company's securities and may adversely affect the ability of purchasers
in the Offering to sell in the secondary market any of the securities acquired
hereby.

Commission regulations define a "penny stock" to be any non-Nasdaq equity
security that has a market price (as therein defined) of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require delivery, prior to any transaction in a penny stock, of a
disclosure schedule prepared by the Commission relating to the penny stock
market. Disclosure is also required to be made about commissions payable to
both the broker-dealer and the registered representative and current quotations
for the securities. Finally, monthly statements are required to be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks.

The foregoing required penny stock restrictions will not apply to the
Company's securities if such securities are listed on Nasdaq and have certain
price and volume information provided on a current and continuing basis or meet
certain minimum net tangible assets or average revenue criteria. There can be
no assurance that the Company's securities will qualify for exemption from these
restrictions. In any event, even if the Company's securities were exempt from
such restrictions, it would remain subject to Section 15(b)(6) of the Exchange
Act, which gives the Commission the authority to prohibit any person that is
engaged in unlawful conduct while participating in a distribution of a penny
stock from associating with a broker-dealer or participating in a distribution
of a penny stock, if the Commission finds that such a restriction would be in
the public interest. If the Company's securities were subject to the rules on
penny stocks, the market liquidity for the Company's securities could be
severely adversely affected.

Underwriter's First Initial Public Offering

The Underwriter has not previously acted as an underwriter in connection
with an initial public offering, though it has acted as a syndicate member, sole
placement agent, co-placement agent, selected dealer or sole participating
broker in more than 18 public and private offerings. Prospective purchasers of
shares of Common Stock offered hereby should consider the Underwriter's limited
experience in evaluating an investment in the Common Stock. See "Underwriting."

No Market Making Activity by Underwriter

The Underwriter has indicated that it does not intend to act as a market
maker in the Common Stock, which may adversely affect the price and liquidity of
the Common Stock.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the shares of Common Stock
offered hereby are estimated to be $13,857,500 after deducting the underwriting
discount and estimated offering expenses payable by the Company and assuming an
initial public offering price of $5.00 per share. The Company intends to use
approximately $1,000,000 (excluding accrued interest) of the net proceeds to
repay outstanding indebtedness incurred in the Bridge Financing. The Company
anticipates utilizing a majority of the remaining net proceeds to fund the
Company's research and development activities, including pre-clinical studies
and clinical trials for the Company's proposed products. The amounts and timing
of expenditures for each purpose will depend on the progress of the Company's
research and development programs, technological advances, determinations as to
commercial potential, the terms of any collaborative arrangements entered into
by the Company for development and licensing, regulatory approvals and other
factors, many of which are beyond the Company's control. The balance of the
proceeds will be added to working capital and used for general corporate
purposes.

The Company anticipates, based on currently proposed plans and assumptions
relating to its operations, that the proceeds of this Offering will be
sufficient to satisfy the Company's contemplated cash requirements for at least
12 months following the consummation of the Offering. In the event the Company's
plans change or its assumptions change or prove to be inaccurate or the proceeds
of the Offering prove to be insufficient to fund operations (due to
unanticipated expenses, delays, problems or otherwise), the Company could be
required to seek additional financing sooner than currently anticipated. The
Company has no current arrangements with respect to, or sources of, additional
financing and there can be no assurance that additional financing will be
available to the Company when needed on commercially reasonable terms or at all.
Any inability to obtain additional financing when needed would have a material
adverse effect on the Company, including possibly requiring the Company to
significantly curtail or cease its operations.

Until required for operations, the Company's policy is to invest its cash
reserves in bank deposits, certificates of deposit, commercial paper, corporate
notes, U.S. government instruments and other investment-grade quality
instruments.

CAPITALIZATION

The following table sets forth as of December 31, 1996 (i) the actual
capitalization of the Company; (ii) the pro forma capitalization of the Company
giving effect to the Bridge Financing; and (iii) the pro forma capitalization of
the Company as adjusted to give effect to the receipt and anticipated use of the
estimated net proceeds of this Offering. This table should be read in
conjunction with the Company's Financial Statements and Notes thereto, "Selected
Financial Data" and "Plan of Operation" included elsewhere in this Prospectus.

Pro Forma
Historical Pro Forma(1) As Adjusted(2)
---------- ------------ --------------

Bridge Notes....................... -- $ 1,000,000 --

Stockholders' equity:
Preferred Stock ($0.0001 par
value, 10,000,000 shares
authorized, none issued
and outstanding................. -- -- --
Common Stock ($0.0001 par value,
25,000,000 shares authorized,
3,367,182 shares issued and
outstanding on a historical
and Pro Forma basis; 6,617,182
shares issued and outstanding
as adjusted(3).................. $ 337 337 $ 662
Additional paid-in capital...... 2,668,819 2,668,819 16,525,994
Accumulated deficit(4)............ (2,269,176) (2,269,176) (2,279,176)
----------- ----------- -----------

Total stockholders' equity........ 399,980 399,980 14,247,480
----------- ----------- -----------

Total capitalization................. $ 399,980 $ 1,399,980 $14,247,480
=========== =========== ===========

_____________________

(1) Pro Forma adjustments reflect the Bridge Financing, completed on February
28, 1997, and the issuance of the Bridge Notes in the principal amount of
$1,000,000. See "Plan of Operation--Bridge Financing."
(2) Adjusted to reflect the sale of 3,250,000 shares of Common Stock offered
hereby. See "Use of Proceeds."
(3) Assumes (i) no exercise of the Underwriter's Warrants; (ii) no exercise of
options granted under the Plan; (iii) no exercise of the de Weese Warrants;
(iv) no exercise of the Fischetti Warrants; and (v) no exercise of the
Bridge Warrants. See "Plan of Operation--Bridge Financing," "Management--
1996 Incentive and Non-Qualified Stock Option Plan" and "--Employment
Agreements," "Description of Securities," "Underwriting" and "Certain
Transactions."
(4) As adjusted to give effect to the recognition of the unamortized portion of
debt issuance costs associated with the Bridge Financing as an expense.

DILUTION

As of December 31, 1996, the Company had a net tangible book value equal to
$399,980. See "Selected Financial Data." After giving effect to the sale of
the 3,250,000 shares of Common Stock offered by the Company pursuant to this
Prospectus at an assumed initial public offering price of $5.00 per share, net
of underwriting discounts and commissions and estimated expenses of the Offering
payable by the Company, and application of a portion of the estimated net
proceeds to repay the Bridge Notes as set forth under "Use of Proceeds," the pro
forma net tangible book value at such date would have been $14,247,480 or $2.15
per share. This represents an immediate increase in net tangible book value of
$2.03 per share to the existing stockholders and immediate dilution of $2.85 per
share (or 57%) to purchasers of the Common Stock offered hereby ("New
Investors"). If the initial public offering price is higher or lower, the
dilution to New Investors will be, respectively, greater or less. The following
table illustrates the dilution per share:

Assumed public offering price(1)......................................... $5.00
Net tangible book value per share at December 31, 1996(2)............. $ .12
Increase per share attributable to New Investors...................... 2.03
Pro forma net tangible book value per share after Offering............... $2.15
--------
Dilution per share to New Investors...................................... $2.85
========

- -------------------

(1) Before deduction of underwriting discounts and commissions and estimated
offering expenses payable by the Company.

(2) Net tangible book value per share represents the Company's total tangible
assets less its total liabilities divided by the number of shares of Common
Stock outstanding.

The following table sets forth, with respect to existing stockholders and
New Investors, a comparison of the number of shares of Common Stock acquired
from the Company, the percentage ownership of such shares, the total
consideration paid and the average price per share.

Shares Purchased Total Consideration Paid
--------------------- ----------------------------------------
Average Price
Number Percent Amount Percent Per Share
--------- -------- -------------- --------- -------------

Existing Stockholders.. 3,367,182 50.9% $ 2,308,248 12.4% $0.69

New Investors.......... 3,250,000 49.1% $16,250,000 87.6% $5.00
---------- ------- -------------- -------- -------------

Total............... 6,617,182 100.0% $18,558,248 100.0% $2.80
========== ======= ============== ======== =============

The information contained in the above table does not give effect to the
exercise of (i) the Underwriter's Warrants, (ii) options granted and outstanding
under the Plan to purchase 50,001 shares of Common Stock, (iii) the de Weese
Warrants, (iv) the Fischetti Warrants or (v) the Bridge Warrants. Exercise of
such options and/or warrants would result in further dilution to New Investors.

DIVIDEND POLICY

The Company currently anticipates that it will retain any future earnings
for use in its business and does not anticipate paying any cash dividends in the
foreseeable future. The payment of any future dividends will be at the
discretion of the Board of Directors and will depend, among other things, upon
the Company's future earnings, operations, capital requirements and financial
condition, general business conditions and contractual restrictions on payment
of dividends, if any.

SELECTED FINANCIAL DATA

The following selected financial data for the periods shown have been
derived from the Company's audited financial statements. This data should be
read in conjunction with the "Plan of Operation" and with the Company's
Financial Statements and the Notes thereto included elsewhere in this
Prospectus.

Statement of Operations Data:
Operating expenses:
General and administrative... $ 1,000 $ 787,817 $ 788,817
Research and development..... -- 662,205 662,205
Patent preparation fees...... -- 452,999 452,999
Stock option and warrant
compensation................ -- 367,461 367,461
------- ----------- -----------
Total operating expenses.. 1,000 2,270,482 2,271,482

Interest income................ -- 2,306 2,306
------- ----------- -----------
Net loss.................. $(1,000) $(2,268,176) $(2,269,176)
======= =========== ===========

Net loss per common
share(1)................. -- $ (0.66)
======= ===========

December 31, 1995 December 31, 1996
----------------- -----------------

Balance Sheet Data:
Working capital(deficit)....... $ (7,937) $ 232,050
Total assets................... 6,937 580,918
Total liabilities.............. 7,937 180,938
Stockholders' equity........... (1,000) 399,980

- ----------------------------
(1) For information concerning the computation of net loss per share, see Note
2 of Notes to Financial Statements.

PLAN OF OPERATION

The following discussion and analysis should be read in conjunction with
the financial statements and notes thereto appearing elsewhere in this
Prospectus.

Results of Operations

The Company is a development stage, biopharmaceutical company. Since its
inception in December 1995, the Company's efforts have been principally devoted
to research and development, securing patent protection and raising capital.
From inception through December 31, 1996, the Company has sustained cumulative
losses of $2,269,176, including non-cash charges in the amount of $367,461 for
stock option and warrant compensation expense. These losses have resulted
primarily from expenditures incurred in connection with research and
development, patent preparation and prosecution and general and administrative
activities. From inception through December 31, 1996, research and development
expenses amounted to $662,205, patent preparation and prosecution expenses
amounted to $452,999 and general and administrative expenses amounted to
$788,817.

The Company expects to continue to incur substantial research and
development costs in the future resulting from ongoing research and development
programs, manufacturing of products for use in clinical trials and pre-clinical
and clinical testing of the Company's products. The Company also expects that
general and administrative costs, including patent and regulatory costs,
necessary to support clinical trials, research and development, manufacturing
and the creation of a marketing and sales organization, if warranted, will
increase in the future. Accordingly, the Company expects to incur increasing
operating losses for the foreseeable future. There can be no assurance that the
Company will ever achieve profitable operations.

To date, the Company has not marketed, or generated revenues from the
commercialization of, any products. The Company's current drug candidates are
not expected to be commercially available for several years.

General and administrative expenses from inception through December 31,
1996, were $788,817, primarily due to personnel costs and associated operating
costs. The Company anticipates that general and administrative expenses will
increase substantially during the next 12 months as the Company increases its
staffing levels.

Research and development expenditures consist primarily of payments for
sponsored research and payments to its scientific consultants. Research and
development expenses from inception through December 31, 1996 were $662,205.
Through December 31, 1996, the Company had made advance payments of $392,708 for
research support to Rockefeller for the period ending January 31, 1998. The
Company has research support agreements with both Emory and Oregon State
pursuant to which the Company is obligated to fund research through January 31,
1998 in the aggregate annual amount of $183,320. The Company anticipates that
its research and development expenses will increase during the next 12 months as
the Company continues to fund research programs and pre-clinical and clinical
testing for its product candidates and technologies under development. See " -
Product Research and Development Plan."

During the year ended December 31, 1996, the Company recorded non-cash
compensation expense in the amount of $367,461 related to the issuance of
compensatory stock options and warrants to the President of the Company and the
consultant who serves as the Company's Chief Scientific Advisor. The warrants
issued to the consultant were to compensate him for his efforts in introducing
the Company to potential collaborative partners.

Liquidity and Capital Resources

1996 Private Placement Transactions

In March 1996, the Company completed a private placement transaction in
which it sold 1,038,008 shares of Common Stock for an aggregate gross
consideration of $1,557,000. In September 1996, the Company completed a private
placement transaction

in which it sold 250,004 shares of Common Stock for an aggregate gross
consideration of $750,000.

Bridge Financing

On February 28, 1997, the Company completed the Bridge Financing pursuant
to which the Company issued Bridge Notes in the aggregate principal amount of
$1,000,000 and Bridge Warrants to purchase an estimated 100,000 shares in
aggregate of the Company's Common Stock (the actual number of shares will be
determined by dividing one-half the principal of the Bridge Notes ($500,000) by
the actual initial offering price per share) at an exercise price equal to the
actual initial offering price per share. In the event an initial public offering
of the Common Stock is not completed prior to the maturity date of the Bridge
Notes, the holders of the Bridge Notes will receive Bridge Warrants to purchase
an aggregate of 100,000 shares of Common Stock at an exercise price of $5.00 per
share. The Bridge Notes bear interest at the rate of 10% per annum and are due
on the earlier of six months subsequent to the date of issuance or the closing
of the Offering. The Bridge Warrants, which are exercisable from February 28,
1998 until February 28, 2002, were issued to the Bridge Investors because the
interest rate on the Bridge Notes did not provide the Bridge Investors with a
sufficient rate of return given the risks associated with their investment in
the Bridge Notes. None of the Bridge Investors are affiliates of the Company.
The Company intends to use a portion of the proceeds of the Offering to repay
the Bridge Notes and the interest accrued thereon and will recognize a loss upon
completion of the Offering relating to the unamortized portion of the debt
issuance costs associated with the Bridge Financing.

Current Resources

The Company anticipates that its current resources, together with the net
proceeds of the Offering, will be sufficient to finance the Company's currently
anticipated needs for operating and capital expenditures for at least 12 months
from the consummation of this Offering. In addition, the Company will attempt
to generate additional working capital through a combination of collaborative
agreements, strategic alliances and equity and debt financings. However, no
assurance can be provided that additional capital will be obtained through these
sources. In addition, for a period of 12 months (6 months in the case of any
public offering under the Securities Act) after the date of this Prospectus, the
Underwriter's prior written consent is required if the Company seeks to raise
additional funds through the issuance of equity. If the Company is not able to
obtain continued financing the Company may cease operation and purchasers of the
Common Stock will, in all likelihood, lose their entire investment. See
"Underwriting."

The Company's working capital and capital requirements will depend upon
numerous factors, including progress of the Company's research and development
programs; pre-clinical and clinical testing; timing and cost of obtaining
regulatory approvals; levels of resources that the Company devotes to the
development of manufacturing and marketing capabilities; technological advances;
status of competitors; and ability of the Company to establish collaborative
arrangements with other organizations.

At December 31, 1996, the Company had $42,190 in cash and cash equivalents,
and working capital of $232,050. In accordance with the terms of the Bridge
Notes, the Company will utilize proceeds of approximately $1,000,000 upon
completion of the Offering to repay the principal of, and accrued interest
through consummation of the Offering on, the Bridge Notes. See "Use of Proceeds"
and Note 9 of Notes to Financial Statements.

Product Research and Development Plan

The Company's plan of operation for the 12 months following completion of
this Offering will consist primarily of research and development and related
activities including:

. formulation and further pre-clinical development of the Company's vaccine
candidate for strep throat, and if successful, the initiation of clinical
trials. See "Business -- The Company's Product Candidates and Research
and Discovery Programs -- Mucosal Vaccines."

. further development of the Company's anti-infectives programs aimed at
blocking the function or expression of certain bacterial surface
proteins. See "Business -- The Company's Product Candidates and Research
and Discovery Programs -- Anti-Infectives."

. continuing the funding of the research on mucosal vaccines and novel
anti-infectives currently being conducted at Oregon State and Emory. See
"Business--Licenses and Collaborative Research."

. continuing the prosecution and filing of patent applications. See
"Business--Patents and Proprietary Rights."

. hiring additional employees, including a new Chief Financial Officer.

The actual research and development and related activities of the Company
may vary significantly from current plans depending on numerous factors,
including changes in the costs of such activities from current estimates, the
results of the Company's research and development programs, the results of
clinical studies, the timing of regulatory submissions, technological advances,
determinations as to commercial potential and the status of competitive
products. The focus and direction of the Company's operations will also be
dependent upon the establishment of collaborative arrangements with other
companies, and other factors.

BUSINESS

Summary
- -------

Vaccine Candidates
------------------

The Company's proprietary antigen, licensed from Rockefeller, addresses the
challenge of multiple serotypes in that this antigen is common to most types of
the bacteria that cause strep throat, including types that have been associated
with rheumatic fever. When a vaccine incorporating this antigen was orally
administered to animals, it was shown to provide protection against multiple
types of group A streptococcal infection. Utilizing this antigen, the Company is
developing a mucosal vaccine for strep throat.

Anti-Infectives and Antibiotics Therapy Candidates
--------------------------------------------------

The Company's second anti-infectives program is based on a novel target for
antibiotic therapy. The Company's founding scientists have identified an
enzyme, termed "sortase," utilized by most gram-positive bacteria to anchor
certain proteins to the bacterial cell wall. These surface proteins are the
means by which certain bacteria recognize, adhere to and colonize specific
tissue. The Company's strategy is to develop inhibitors to sortase. The Company
believes this anti-infectives target will have wide applicability to gram-
positive bacteria in general, including the increasing number of antibiotic
resistant bacteria and a broad range of serious infectious diseases including
pneumonia, meningitis and urinary tract infections. The Company intends to
utilize a combination of structure-based drug design and high-throughput
screening procedures to identify compounds that inhibit the anchoring process.

Background
- ----------

Infectious Diseases
-------------------

Infectious diseases are the leading cause of death in the world. For most of
the twentieth century, the incidence of infectious disease has decreased
dramatically due to the use of antibiotics and the development of effective
vaccines to prevent many common diseases. In recent years, however, this trend
has reversed with the emergence of many new infectious diseases or the re-
emergence or increased incidence of known infectious diseases worldwide, a
public health issue which has become "a threat to global health and security".
There are many reasons for this emergence, including: (i) the intrusion of
humans into formerly unpopulated or isolated populations has provided exposure
to organisms previously unknown (e.g. Lyme disease, hantavirus, Ebola virus);
(ii) the spread of disease-causing organisms has increased due to the ease of
worldwide transportation; (iii) changes in human behavior, such as increased
sexual activity and intravenous drug abuse, have contributed to the spread of
diseases like human immunodeficiency virus ("HIV"), hepatitis, and chlamydia;
(iv) the widespread use of day care facilities has exposed a larger number of
children to infectious diseases and, as a result, their families; (v) the use of
immunosuppressive drugs, particularly for cancer treatment, has rendered
susceptible an ever growing number of people subject to infectious diseases
which in otherwise healthy individuals would be benign; (vi) past complacency of
public health officials has resulted in lowered surveillance of and reduced
prevention programs for infectious diseases leading to an inability to react
quickly to newly arising infectious threats; and (vii) increased antibiotic
resistance has resulted in a major threat from organisms which were effectively
and easily treated in the past.

As a result of these and other factors, the Centers for Disease Control and
Prevention has estimated that between 1980 and 1992, in the United States, the
mortality rate due to infectious diseases rose by 58%. Alarmingly, the age
group most affected, ages 25 to 44 years, has experienced over a six-fold
increase in infectious disease-related deaths during this period. Due to this
increase, infectious diseases are now the third leading cause of death in the
United States, following only cardiovascular and cancer-related deaths. The
financial burden to the public to treat or prevent infectious diseases has been
conservatively estimated to exceed $120 billion annually. The problem of
emergent infections, combined with the need to provide quality healthcare at a
reasonable cost, have led to a reexamination of the approaches used to combat
infectious diseases.

Immune System
-------------

The human immune system is a complex system of checks and balances, coupled
with an intricate network of cells and effector molecules, which has evolved to
stave off the intrusion of foreign elements into the body. To accomplish this
the body has developed a means to determine the difference between self and non-
self ("foreign"). Foreign substances include elements such as dust particles,
pollen grains, infectious agents and antigens (the surface of these other
structures generally are covered with antigens, or secrete them). Once the
determination has been made that a foreign intruder exists, the body's defenses
are triggered, beginning a cascade of events known collectively as the immune
response. The end result, in a healthy person, is the successful clearance or
elimination of the offending material. The immune response has been divided
into two arms based principally on the ultimate effector mechanism which will
fight the initial insult; these arms are known as the humoral and cellular
immune responses. The humoral immune system employs a family of molecules
circulating in the blood stream known as immunoglobulins, or antibodies, which
are secreted by immune cells called lymphocytes. In terms of infectious
diseases, these antibodies are very effective at combating invasions by
bacteria, protozoan parasites, and some viruses, as well as specific proteins
produced by these infectious agents. In contrast, a cellular immune response,
as the name implies, uses effector cells of the immune system to generally
target certain viruses and cancer cells.

A different delineation also exists within the immune system in terms of the
site of the induction and the response of the immune system. The systemic
immune system is generally regarded as that which is internal to the body,
including the antibodies in the blood stream and lymphatic system and the
cellular immune response in the tissues where foreign agents have encroached.
The other active site, and the focus of the Company's vaccine efforts, is the
mucosal immune system. This portion of the immune system is spread over the
tissues lining the cavities of the body and those involved in the secretions
which ultimately find their way to these cavities. Included in this vast
network are the linings of the oral and nasopharyngeal cavity, the respiratory
tract, the gastrointestinal tract, and the urogenital tract. This lining covers
an area of almost 450 square meters, an area equivalent to approximately 90% of
a basketball court. There are a number of physical barriers present which can
prevent the invasion of infectious agents into the mucosal lining. Among these
physical factors are: (i) the mucus which covers the lining of mucosal tissues;
(ii) the production of protein degrading enzymes (proteases) which digest
proteins either free in the mucosal environment or attached to infectious
organisms, thereby decreasing their ability to invade the mucosal tissues; (iii)
the peristaltic motion of the walls beneath the mucosa which function in moving
digested food and, consequently, infectious agents which are present, through
the digestive tract and out of the body; (iv) the motion of the cilia lining the
mucosal cavities which carry infectious organisms through the body; and (v) the
specialized cells which line the mucosa coupled with the tight junctions between
them also provide a strong barrier to the penetration of infectious organisms
into the deeper tissues.

The specific response which occurs in the mucosal immune system begins with
the uptake of the infectious agent or antigen generally by a specialized cell
lining the mucosa called an M cell. This cell facilitates the movement of the
antigen to cells underlying the epithelial layer which can efficiently prepare
the antigen and present it to cells of the immune system. Once stimulated,
these cells can migrate to various parts of the mucosal system where they can
either produce antibodies or induce effector cells specific for the offending
(or, in the case of vaccines, immunizing) agent. Due to this migratory nature
of the immune cells of the mucosal immune system, the entire system has been
termed the common mucosal immune system. As a result of

this trafficking of immune cells, induction of a mucosal immune response at one
site results in the expression of that specific response at multiple sites
within the mucosal system; i.e. induction of an immune response in the oral
cavity would lead to an immune response there, but also in the gut. The
weakness of this common mucosal system is that generally the immune response is
greater at the site of stimulation than at distant sites within the system, a
problem which the Company hopes to circumvent using the site-specific aspects of
its commensal vaccine delivery system.

The primary effector molecule of the mucosal immune response is an antibody
known as secretory immunoglobulin A (sIgA), which is found in saliva, tears, and
other secretions of the respiratory, gastrointestinal ("GI"), and urogenital
tracts. Given that the mucosal surface covers such a large area, it is not
surprising that the sIgA produced there accounts for greater than 75% of all the
antibody produced in the body. SIgA performs a variety of important functions,
including: (i) neutralization of viruses, toxins, and enzymes; (ii) inhibition
of adherence of microorganisms to mucosal surfaces; (iii) immune exclusion of
macromolecules and bacterial toxins; (iv) suppression of antibody-mediated
inflammatory responses at mucosal surfaces; (v) synergism with nonspecific
antibacterial factors, such as lactoferrin, peroxidase, and lysozyme; (vi)
clearance of adsorbed antigen from the circulation; and (vii) interference with
other infectious determinants. These factors, coupled with the non-specific
barriers described above, form a formidable obstacle to invading infectious
organisms.

Vaccines
--------

Vaccines prevent disease by stimulating the body to produce a protective
immune response to particular disease-causing organisms, or pathogens.
Conventional vaccines consist of killed microorganisms (e.g. pertussis vaccine),
live attenuated microorganisms (e.g. polio or smallpox vaccines) or components
of microorganisms, called subunit vaccines (e.g. hepatitis B vaccine). These
types of vaccines have been successful in many cases, as evidenced by the global
eradication of smallpox through immunization. However, conventional vaccines can
have significant limitations. For example, killed vaccines and component
vaccines can have variable efficacy and may require boosters to maintain
immunity. Attenuated vaccines, while generally more effective, can be associated
with certain medical complications, such as neurological damage, allergic
reaction, bleeding and infection. There are also a number of diseases for which
conventional approaches have not been able to evoke a protective immune
response. Aside from the oral polio vaccine, all of these vaccines are
administered via the systemic route, i.e. through a needle. The World Health
Organization has recently reported that in Eastern Europe 50% of the vaccine
centers gave unsafe vaccines or used vaccines of doubtful potency. While
clearly there are many factors contributing to this problem, one of the
solutions is to alter the manner in which vaccines are delivered.

Most infectious agents enter the host's body through and initiate infection
at one of the mucosal surfaces - the mouth, the nose, the lungs or the GI or
urogenital tracts. For example, the influenza virus usually enters the body
through the mouth or nose, salmonella through the GI tract and chlamydia through
the urogenital tract. The body's mucosal surfaces present a physical barrier to
pathogens and also possess a specific local immune system, which provides a
primary line of defense against invading organisms. While conventional vaccines
are designed to produce an effective systemic (internal) immune response, they
are relatively ineffective at stimulating the mucosal immune system. It is now
well recognized in the scientific and medical communities that the mucosal
immune system represents an important target for immunization and that vaccines
designed to activate the mucosal immune system may prevent a variety of diseases
for which conventional vaccines provide only limited protection or do not exist.

Anti-infectives and Drug Resistance
-----------------------------------

Since their introduction in the 1940s, antibiotics have been the first line
of defense against bacterial infections. Over the past few decades, however,
bacterial resistance to existing antibiotics has been increasing, rendering some
previously innocuous infections virtually untreatable. All current classes of
antibiotics function by interfering with either the structure or the metabolism
of a bacterial cell, affecting its ability to survive and to reproduce. For
example, penicillin prevents production of new bacterial cell walls,
tetracycline inhibits the synthesis

of new bacterial proteins, fluoroquinolones inhibit nucleic acid synthesis, and
polymyxin B disrupts the integrity of bacterial membranes. Within any given
population of infectious organisms, there are generally some cells which are not
susceptible to the antibiotic selected for treatment. Because this population
is so small, the host can usually remove the remainder of the resistant cells by
its normal clearance mechanisms. If, however, a population of pathogens is
given the opportunity to increase the percentage of resistant organisms within
its number, then eventually the resistant organisms will predominate. There are
several reasons for the recent emergence of antibiotic resistance in
microorganisms: (i) indiscriminate prescribing of antibiotics by physicians to
patients who do not require antibiotic treatment; (ii) non-compliance of dosing
regimens by patients leading to incomplete clearance of the infectious agent;
(iii) transfer of resistance genes from one organism to another; and (vi) the
widespread use of antibiotics in cattle.

Antibiotic resistance has become a problem with many medically important
bacteria, but has become particularly dangerous with respect to Mycobacterium
tuberculosis (which causes TB), Neisseria gonorrheae (gonorrhea), Pseudomonas
aeruginosa (infections in immunocompromised patients), S. aureus (hospital-
acquired and other infections), Streptococcus pneumoniae (pneumonia, otitis
media, meningitis), and Enterococcus spp. (bacteremia and GI tract infections).
While new generations of antibiotics have been developed with broad spectrum
activity, only one new class of antibiotics has been developed in the last two
decades. The need for new classes of antibiotics and new targets for their
action has become crucial to the health of the nation and the world.

The Company's Technologies
- --------------------------

Vaccine Technologies: Mucosal Immunity and Vaccine Delivery
-----------------------------------------------------------

Using proprietary technology licensed from Rockefeller, the Company is
developing certain commensal bacteria ("commensals") as a means to deliver
mucosal vaccines. Commensals are harmless bacteria that naturally inhabit the
body's surfaces - with different commensals inhabiting different surfaces,
particularly the mucosal surfaces. The Company's vaccine candidates utilize
genetically engineered commensals to deliver antigens from a variety of
pathogens to the mucosal immune system. When administered, the genetically
engineered ("recombinant") commensals colonize the mucosal surface and
replicate. By activating a local mucosal immune response, the Company's vaccine
candidates are designed to prevent infection and disease at the earliest
possible stage. By comparison, most conventional vaccines are designed to act
after infection has already occurred.

The Company's commensal vaccine candidates utilize gram-positive
bacteria, one of two major classes of bacteria. Rockefeller scientists have
identified a protein region that is used by gram-positive bacteria to anchor
proteins to their surfaces. The Company is using the proprietary technology
licensed from Rockefeller to fuse antigens from a wide range of infectious
organisms, both viral and bacterial, to the surface protein anchor region of a
variety of commensal organisms. By combining a specific antigen with a specific
commensal, vaccines can be tailored to both the target pathogen and its mucosal
point of entry.

To target an immune response to a particular mucosal surface, a vaccine
would employ a commensal organism that naturally inhabits that surface. For
example, vaccines targeting sexually transmitted diseases could employ
Lactobacillus acidophilus, a commensal colonizing the female urogenital tract.
Vaccines targeting GI diseases could employ Lactobacillus casei, a commensal
colonizing the GI tract. The Company has conducted initial experiments using
Streptococcus gordonii ("S. gordonii"), a commensal that colonizes the oral
cavity and that can potentially be used in vaccines targeting pathogens that
enter through the upper respiratory tract, such as the influenza virus.

By using an antigen unique to a given pathogen, the technology can
potentially be applied to any infectious agent that enters the body through a
mucosal surface. The Company's founding scientists have expressed and anchored a
variety of viral and bacterial antigens on the outside of S. gordonii, including
the M6 protein from group A streptococcus, a group of organisms that cause a
range of diseases, including strep throat, necrotizing fasciitis, impetigo and
scarlet fever. In addition, proteins from other infectious agents, such as HIV
and human papilloma virus have also been

expressed using this system. The Company believes this technology will enable
the expression of essentially any antigen regardless of size or shape. In animal
studies, the Company has shown that the administration of a recombinant S.
gordonii vaccine prototype induces both a local mucosal immune response and a
systemic immune response.

The Company believes that mucosal vaccines developed using its
proprietary commensal delivery technology should provide a number of advantages,
including:

More complete protection than conventional vaccines: Mucosal vaccines in
general may be more effective than conventional parenteral (injectable)
vaccines, due to their ability to produce both a systemic and local
(mucosal) immune response. By stopping infectious organisms at the earliest
stage, the immune response has no need to eliminate pathogens which have
already become established in the host.

Potential single dose administration: The commensal delivery has the
potential to allow for long term colonization of the host, eliminating the
need for boosters, while providing an extended exposure to the selected
vaccine candidate(s).

Safety advantage over other live vectors: A number of bacterial pathogens
have been genetically rendered less infectious, or attenuated, for use as
live vaccine vectors. Commensals, by virtue of their harmless nature,
offer a safer delivery without fears of genetic reversion to the infectious
state inherent in attenuated pathogens or their ability to cause similar,
although reduced, symptoms than the original organism.

Non-injectable administration: Oral, nasal, rectal or vaginal administration
of the vaccine eliminates the need for painful injections with their
potential adverse reactions.

Potential for combined vaccine delivery: The Children's Vaccine Initiative
has called for the development of combined vaccines, specifically to reduce
the number of needle sticks per child by combining several vaccines into
one injection, thereby increasing compliance and decreasing disease. The
Company believes its commensal delivery technology can be an effective
method of delivery through multi-component vaccines within a single
commensal organism that address multiple diseases or diseases caused by
multiple strains of an infectious agent.

Eliminating need for refrigeration: One of the problems with the effective
delivery of parenteral vaccines is the need for refrigeration at all stages
culminating in injection. The stability of the commensal organisms in a
freeze-dried state would, for the most part, eliminate the need for special
climate conditions, a critical consideration, especially for the delivery
of vaccines to developing countries.

Low cost production: By using a live bacterial vector, extensive downstream
processing is eliminated, leading to considerable cost savings in the
production of the vaccine. The potential for eliminating the need for
refrigeration would add considerably to these savings by reducing the costs
inherent in refrigeration for vaccine delivery.

Anti-Infectives Technology: Prevention of Attachment and Infectivity
--------------------------------------------------------------------

The bacterial infectious process generally includes three steps:
colonization, invasion and disease. The adherence of bacteria to a host's
surface is crucial to establishing colonization. Bacteria cells adhere through
a number of mechanisms, but generally by using highly specialized surface
structures which, in turn, bind to specific structures or molecules on the
host's cells or, as discussed below, to inanimate objects residing in the host.
Once adhered, many bacteria will invade the host's cells and either establish
residence or continue invasion into deeper tissues. During any of these stages,
the invading bacteria can produce the molecules (toxins) which result in the
outward manifestations of the disease. The severity of disease, while dependent
on a large combination of factors, is often the result of the ability of the
bacteria to persist in the host. These bacteria accomplish this persistence by

using surface molecules which can alter the host's non-specific mechanisms or
its highly specific immune responses to clear or destroy the organisms.

Unlike conventional antibiotics, as discussed above, the Company's
anti-infectives approaches aim to block the ability of pathogenic bacteria to
attach to and colonize human tissue, thereby preventing infection at its
earliest stage. The Company is pursuing two anti-infective strategies: (i)
inhibiting the expression of bacterial surface proteins required for bacterial
infectivity and (ii) blocking the tissue binding sites on bacterial surface
proteins. The Company believes that these approaches have promise in the areas
of hospital-acquired drug-resistant S. eeriest infections and a broad range of
other diseases caused by gram-positive bacteria.

Bacterial attachment to tissues can be blocked using antibodies against
their surface proteins. Antibodies, once bound to the bacterial surface
proteins, preclude attachment to tissue permitting clearance by the body's
natural defense mechanisms. S. eeriest, the causative agent in staph infections,
uses a surface protein, FBP, to attach to fibrin (a blood component that coats
foreign bodies) on the surfaces of indwelling catheters, prosthetic devices and
artificial heart valves, leading to infection and disease. The Company is
testing whether anti-FBP antibodies will block attachment of S. aureus to both
catheters and human cells. If so, such antibodies may be used to provide
preventive therapy against staph infections for patients entering the hospital
for invasive procedures.

Many special surface proteins used by bacteria to infect the host are
anchored in the bacterial cell wall. Scientists at Rockefeller have identified
an amino acid sequence and related enzyme, sortase, that are essential for
anchoring proteins to the surface of most gram-positive bacteria. Published
information indicates that this amino acid sequence is shared by more than 50
different surface proteins found on a variety of gram-positive bacteria. This
commonality suggests that sortase represents a promising target for the
development of a new class of antibiotic products for the treatment of a wide
range of infectious diseases. Experiments by the Company's founding scientists
at Rockefeller have shown that without this sequence, proteins cannot become
anchored to the bacterial surface and thus the bacteria are no longer capable of
attachment, colonization or infection. Such "disarmed" bacteria should be
readily cleared by the body's immune system. The Company is using a combination
of structure-based drug design and high throughput screening procedures to
identify compounds that inhibit sortase, thereby blocking the anchoring process.
If successful, this strategy should provide relief from many gram-positive
bacterial infections, but may prove particularly important in combating diseases
caused by the emerging antibiotic resistance of the gram-positive organisms S.
eeriest, Streptococcus pneumoniae, and the enterococci.

The Company's Product Candidates and Research and Discovery Programs
- --------------------------------------------------------------------

The following table lists the potential indications and current status of
the Company's product candidates and research and discovery programs. A more
detailed description of these product candidates and research and discovery
programs follows this table. The Company's product candidates are subject to the
risks of failure inherent in the development of products based on innovative
technologies. See "Risk Factors - Early Stage of Development; Absence of
Products; No Commercialization of Products Expected in Near Future."

Product Candidates/Program Indication Stage of Development*

Mucosal Vaccines
- ----------------------------

Streptococcal vaccine Strep throat Pre-clinical
HSV vaccine Herpes Research

Anti-infectives
- ---------------

Anti-FBP antibody Staphylococcal infections Research
Bacterial attachment blockers Bacterial infections Discovery

- ---------------

* "Research" activities include initial research and development related to
specific vaccine or antibiotic compounds or formulations and their
delivery.

"Pre-clinical" indicates that the Company is conducting pharmacology
testing, toxicity testing, formulation process development and/or
development of the manufacturing process prior to possible submission of an
IND.

"Discovery" indicates that the Company is conducting studies to validate
proof of concept and identify potential lead compounds.

Mucosal Vaccines
----------------

Development of the Company's mucosal vaccine candidates involves: (i)
identifying a suitable immunizing antigen from a pathogen; (ii) selecting a
commensal that naturally colonizes the mucosal point of entry for that pathogen;
and (iii) genetically engineering the commensal to express the antigen on its
surface for subsequent delivery to the target population.

Strep Throat Vaccine Candidate. Until the age of 15, many children suffer
recurrent strep throat infections. Up to five percent of ineffectively treated
strep throat cases progress to rheumatic fever, a debilitating heart disease
which worsens with each succeeding streptococcal infection. Since the advent of
penicillin therapy, rheumatic fever in the United States has experienced a
dramatic decline. However, in the last decade, rheumatic fever has experienced
a resurgence in this country. Part of the reason for this is the latent
presence of this organism in children who do not display symptoms of a sore
throat, and, therefore, remain untreated and at risk for development of
rheumatic fever. Based on data from the Centers for Disease Control and
Prevention, there are seven to 20 million cases of pharyngitis due to group A
streptococcus in the United States each year. While the incidence of rheumatic
fever remains relatively low in the United States, it is still an overwhelming
problem in developing countries, particularly in Southeast Asia, South America,
and India (where an estimated six million children suffer from this disease).
Worldwide, it is estimated that one percent of all school age children in the
developing world have rheumatic heart disease. Despite the relative ease of
treating strep throat with antibiotics, the specter of antibiotic resistance is
always present. In fact, resistance to erythromycin, the second line antibiotic
in patients allergic to penicillin, has appeared in a large number of cases.
There are over 32 million children in the principal age group targeted by the
Company for vaccination. Historically, this pathogen has also been an important
concern in the military population, which is also a primary target group for
this vaccine.

No vaccine for strep throat has been developed because of the problems
associated with identifying an antigen that is common to the more than 80
different serotypes of group A streptococcus, the bacterium that causes the
disease. The Company has licensed from Rockefeller a proprietary antigen which
is common to most types of group A streptococcus, including types that have been
associated with rheumatic fever. When this antigen was orally administered to
animals, it was shown to provide protection against multiple types of group A
streptococcal infection. Utilizing this antigen, the Company is developing a
mucosal vaccine for strep throat.

The Company is expressing the strep throat antigen on the surface of the
commensal, S. gordonii. Because S. gordonii lives on the surface of the teeth
and gums, the Company believes that a single oral dose of the vaccine may be
adequate to provide protection. Indeed, investigations at other institutions
have shown that organisms of this type can safely colonize in the human oral
cavity for up to two years. The Company is currently conducting pre-clinical
testing and is developing the manufacturing process for this vaccine candidate
in anticipation of filing an IND in the United States in 1997.

Herpes Vaccine Candidate. Genital herpes is one of the most prevalent
sexually transmitted diseases. In the United States, an estimated 40 million
people have tested positive for antibodies to herpes simplex virus type 2 (HSV-
2), indicating previous infection, and approximately one million new infections
occur each year. The disease caused by HSV-2 is an often latent and recurrent
infection leading to lesions on the genitalia and skin, as well as an
epidemiological association with cervical cancer.

Currently, no effective vaccine exists to prevent infection by HSV-2.
Two major surface proteins, designated gB and gD, facilitate binding of the
virus to human tissue. In animal studies, antibodies to these surface proteins
have been shown to

protect against infection and, therefore, show promise as vaccine candidates.
The Company intends to incorporate gB and gD into Lactobacillus acidophilus, a
commensal colonizing the female urogenital tract, for use as a herpes vaccine.
Because, gB and gD are subject to patent protection, the Company would be
required to license the right to use such proteins from the holders of the
patents, of which no assurance can be given. See "Risk Factors - Uncertainty
Regarding Patents and Proprietary Information."

Anti-Infectives
---------------

The Company intends to combat infections in the following ways: (i)
development of antibodies to prevent binding of antibiotic resistant S. aureus
to the surfaces of catheters and implanted medical devices and (ii) the
development of a new class of anti-infectives designed to circumvent the problem
of antibiotic resistance by crippling the infectious process in gram-positive
bacteria.

Anti-FBP Antibody. Infection with S. aureus can result in a wide variety of
disease manifestations, including skin and soft tissue infections, septic
arthritis, osteomyelitis, bacteremia, abscess formation in various organs,
scalded skin syndrome, and toxic shock syndrome. Approximately 25% of adults
harbor S. aureus as asymptomatic carriers in the nose or on the haired areas of
the skin. Indeed, S. aureus is the leading cause of hospital-acquired, or
nosocomial, infections, according to figures from the Centers for Disease
Control and Prevention's National Nosocomial Infections Surveillance System. In
the hospital setting, S. aureus can cause serious infections in surgical
patients, patients with indwelling or implanted devices (such as catheters and
joint replacements), burn patients, the elderly and immunocompromised patients.
More than 95% of S. aureus infections are due to organisms resistant to
penicillin and now up to 22% are resistant to methicillin. Many strains of S.
aureus are only sensitive to one drug, vancomycin, which can have serious side
effects.

The Company is focusing on the prevention of staph infections in at-risk
patients by inhibiting bacterial attachment. The Company has licensed rights to
technology based on FBP, a protein on the surface of S. aureus. This molecule is
responsible for the binding of S. aureus to the fibrin that becomes deposited on
the surface of indwelling catheters, prosthetic devices and heart valve
replacements as well as the endothelial cells lining blood vessels and the
heart. Once bound, S. aureus multiplies and secretes a variety of toxins, which
can result in widespread tissue damage and septic shock. Based on studies at
Rockefeller, the Company believes antibodies against FBP may be effective in
preventing attachment and is developing antibodies to FBP that will be evaluated
for administration to patients at the time of hospitalization to prevent staph
infections. The Company also intends to evaluate FBP as a vaccine to actively
immunize patients at risk of developing staph infections, such as those with
indwelling devices or those requiring frequent or long-term catheter use. To
date, the Company's studies have used anti-FBP antibodies prepared in rabbits.
The preparation of an anti-FBP antibody for use in human clinical trials will
require significant additional development.

Targeted Disablement of Bacterial Infectivity. More than two million
nosocomial infections occur each year. Of these, a large number are due to the
occurrence of pathogenic gram-positive bacteria. Many of these bacteria have
acquired antibiotic resistance and have become an increasing problem. The gram-
positive bacteria principally involved in these nosocomial infections include:
S. aureus, coagulase-negative staphylococci and enterococci. S. aureus has been
described above. The coagulase-negative staphylococci have become the leading
cause of nosocomial bacteremia and, alarmingly, have shown a higher percentage
of methicillin resistant strains (up to 78%) than S. aureus (up to 22%). The
enterococci have shown a disturbing propensity toward resistance to the
antibiotic of last resort, vancomycin. Even more alarming is the fact that in
certain cases where the last antibiotic of choice to treat a S. aureus or
coagulase-negative infection is vancomycin, some strains of enterococci have
evolved that may actually thrive on vancomycin, rendering the treatment
potentially life threatening. Another important gram-positive organism with an
increasing presence of antibiotic resistance is Streptococcus pneumoniae, an
organism responsible for pneumonia and meningitis, and which is the leading
cause of middle ear infections in children.

Scientists at Rockefeller have determined that many different surface
proteins from a variety of gram-positive bacteria are attached to the bacterial
surface via a common anchoring mechanism. These surface proteins are responsible
for a wide variety of functions essential to the successful establishment of
infection by the organism, including adherence, binding to serum proteins,
resistance to phagocytosis (ingestion and destruction by the host's cells),
cross-signaling between the bacterium and the host's cells, and various
enzymatic processes. The Company has identified an enzyme, sortase, utilized by
most gram-positive bacteria to anchor certain proteins to the bacterial cell
wall. The Company intends to identify compounds that will inhibit sortase,
thereby blocking the anchoring process and the ability of the bacteria to
initiate or prolong infection. In this process, the Company is using molecular
modeling to identify possible structures of the anchor region. Once these
structures are identified, natural and synthetic molecules that may inhibit the
anchoring process will be screened using an existing high throughput assay
developed by Rockefeller and licensed to the Company. The Company believes that
this approach represents a departure from conventional antibiotics and therefore
may afford a method to circumvent the resistance mechanisms already established
in many gram-positive organisms.

Licenses and Collaborative Research
- -----------------------------------

The Company has entered into license agreements and collaborative
research arrangements with the following universities:

Rockefeller University. The Company and Rockefeller have entered into an
----------------------
exclusive worldwide license agreement whereby the Company has obtained the right
and license to make, use and sell mucosal vaccines based on gram-positive
organisms and products for the therapy, prevention and diagnosis of diseases
caused by streptococcus, staphylococcus and other organisms. The license covers
two issued United States patents and one issued European patent as well as 11
pending United States patent applications and corresponding foreign patent
applications. The issued United States patents expire in 2005 and 2014,
respectively. The agreement generally requires the Company to pay royalties on
sales of products developed from the licensed technologies and fees on revenues
from sublicensees, where applicable, and the Company is responsible for certain
milestone payments and for the costs of filing and prosecuting patent
applications. Pursuant to the agreement, the Company has provided funding to
Rockefeller for sponsored research through January 31, 1998, with exclusive
license rights to all inventions and discoveries resulting from this research.

Emory. Emory is a party to the Company's license agreement with
-----
Rockefeller whereby the Company has obtained the right and license to make, use
and sell products for the therapy, prevention and diagnosis of diseases caused
by streptococcus. Because the license relates to the same United States patent
covered by the Rockefeller license, the Company has agreed to reimburse
Rockefeller for Emory's patent expenses and Rockefeller will remit such amounts
to Emory. Pursuant to a separate research support agreement with Emory, the
Company is providing funding for sponsored research through January 31, 1998,
with a right of first refusal to acquire exclusive license rights to all
inventions and discoveries resulting from this research.

Oregon State. Oregon State is also a party to the Company's license
------------
agreement with Rockefeller whereby the Company has obtained the right and
license to make, use and sell products for the therapy, prevention and diagnosis
of diseases caused by streptococcus. Because the license relates to the same
United States patent covered by the Rockefeller license, the Company has agreed
to reimburse Rockefeller for Oregon State's patent expenses and Rockefeller will
remit such amounts to Oregon State. Pursuant to a separate research support
agreement with Oregon State, the Company is providing funding for sponsored
research through January 31, 1998, with exclusive license rights to all
inventions and discoveries resulting from this research.

Manufacturing
- -------------

The Company does not intend to invest in large scale manufacturing
facilities unless and until its product candidates pass significant
developmental hurdles. The Company believes that all of its existing products
under development can be made using well understood manufacturing methods.
Nevertheless, the Company has no manufacturing experience and it may not be able
to develop reproducible and effective manufacturing processes at a reasonable
cost. In such event, the Company will have to rely on third

party manufacturers whose availability and cost are presently unknown. The
Company plans to contract with third party manufacturers to produce pre-clinical
and clinical lots of its biological products. No assurances can be given that
the Company will establish such relationships or manufacture its product
candidates successfully. See "Risk Factors--Lack of Manufacturing, Marketing or
Sales Capabilities."

Marketing
- ---------

The Company currently has no internal marketing and sales resources and
personnel. The Company recognizes the challenges associated with marketing and
sales in the pharmaceutical industry and anticipates undertaking these
activities only for products that address large but focused therapeutic markets
in which a small marketing organization can compete effectively. It is,
however, the Company's present intention to seek marketing partners to assist it
in later stages of regulatory and clinical development, process scale up,
production and marketing. No assurances can be given that the Company will
establish such relationships or market its product candidates successfully. See
"Risk Factors--Lack of Manufacturing, Marketing or Sales Capabilities."

Patents and Proprietary Rights
- ------------------------------

Protection of the Company's proprietary compounds and technology is
essential to the Company's business. The Company's policy is to seek, when
appropriate, protection for its lead compounds and certain other proprietary
technology by filing patent applications in the United States and other
countries. The Company has licensed the rights to two issued United States
patents and one issued European patent. The Company has also licensed the rights
to 11 pending United States patent applications as well as corresponding foreign
patent applications. The two issued United States patents expire in 2005 and
2014, respectively.

The Company also relies upon trade secret protection for its
confidential and proprietary information. No assurance can be given that other
companies will not independently develop substantially equivalent proprietary
information and techniques or otherwise gain access to the Company's trade
secrets or that the Company can meaningfully protect its trade secrets.

The Company requires its employees, consultants, outside scientific
collaborators and sponsored researchers and certain other advisors to enter into
confidentiality agreements with the Company. These agreements will provide that
all confidential information developed or made known to the individual during
the course of the individual's relationship with the Company will be kept
confidential and will not be disclosed to third parties except in specific
circumstances. In the case of employees, such agreements will provide that all
inventions conceived by the employee are the exclusive property of the Company.
There can be no assurance, however, that these agreements will provide
meaningful protection or adequate remedies for the Company's trade secrets in
the event of unauthorized use or disclosure of such information.

Government Regulation
- ---------------------

Regulation by governmental authorities in the United States and other
countries will be a significant factor in the production and marketing of any
products that may be developed by the Company. The nature and the extent to
which such regulation may apply to the Company will vary depending on the nature
of any such products. Virtually all of the Company's potential products will
require regulatory approval by governmental agencies prior to commercialization.
In particular, human therapeutic products are subject to rigorous pre-clinical
and clinical testing and other approval procedures by the FDA and similar health
authorities in foreign countries. Various federal statutes and regulations also
govern or influence the manufacturing, safety, labeling, storage, record keeping
and marketing of such products. The process of obtaining these approvals and the
subsequent compliance with appropriate federal and foreign statutes and
regulations requires the expenditure of substantial resources.

In order to test clinically, produce and market products for diagnostic
or therapeutic use, a company must comply with mandatory procedures and safety
standards established by the FDA and comparable agencies in foreign countries.
Before beginning human clinical testing of a potential new drug, a company must
file an IND and receive

clearance from the FDA. This application is a summary of the pre-clinical
studies that were conducted to characterize the drug, including toxicity and
safety studies, as well as an in-depth discussion of the human clinical studies
that are being proposed.

The pre-marketing program required for approval of a new drug typically
involves a time-consuming and costly three-phase process. In Phase I, trials are
conducted with a small number of patients to determine the early safety profile,
the pattern of drug distribution and metabolism. In Phase II, trials are
conducted with small groups of patients afflicted with a target disease in order
to determine preliminary efficacy, optimal dosages and expanded evidence of
safety. In Phase III, large scale, multi-center comparative trials are conducted
with patients afflicted with a target disease in order to provide enough data
for statistical proof of efficacy and safety required by the FDA and others.

The FDA closely monitors the progress of each of the three phases of
clinical testing and may, in its discretion, reevaluate, alter, suspend or
terminate the testing based on the data that have been accumulated to that point
and its assessment of the risk/benefit ratio to the patient. Estimates of the
total time required for carrying out such clinical testing vary between two and
ten years. Upon completion of such clinical testing, a company typically submits
a New Drug Application ("NDA") or Product License Application ("PLA") to the FDA
that summarizes the results and observations of the drug during the clinical
testing. Based on its review of the NDA or PLA, the FDA will decide whether or
not to approve the drug. This review process can be quite lengthy, and approval
for the production and marketing of a new pharmaceutical product can require a
number of years and substantial funding, and there can be no assurance that any
approvals will be granted on a timely basis, if at all.

Once the product is approved for sale, FDA regulations govern the
production process and marketing activities, and a post-marketing testing and
surveillance program may be required to monitor continuously a product's usage
and its effects. Product approvals may be withdrawn if compliance with
regulatory standards is not maintained. Other countries in which any products
developed by the Company may be marketed impose a similar regulatory process.

Competition
- -----------

The biotechnology and pharmaceutical industries are characterized by
rapidly evolving technology and intense competition. The Company's competitors
include most of the major pharmaceutical companies, which have financial,
technical and marketing resources significantly greater than those of the
Company. Biotechnology and other pharmaceutical competitors include Cubist
Pharmaceuticals, Inc., Microcide Pharmaceuticals, Inc., Oravax, Inc., Maxim
Pharmaceuticals, Inc., and Zynaxis, Inc. Academic institutions, governmental
agencies and other public and private research organizations are also conducting
research activities and seeking patent protection and may commercialize products
on their own or through joint venture. The Company is aware of certain
development projects for products to prevent or treat certain diseases targeted
by the Company. The existence of these potential products or other products or
treatments of which the Company is not aware, or products or treatments that may
be developed in the future, may adversely affect the marketability of products
developed by the Company.

Human Resources and Facilities
- ------------------------------

The Company currently has six employees. In addition, the Company has
consulting agreements with Dr. Vincent Fischetti, the principal founding
scientist and Chief Scientific Advisor of the Company and a Professor and Co-
Chairman of the Laboratory of Bacterial Pathogenesis and Immunology and Co-
Director of the Protein Sequence/Biopolymer Facility at Rockefeller, and Dennis
Hruby, a founding scientist of the Company and a Professor of Microbiology at
Oregon State. In addition, the Company and CSO have entered into a consulting
agreement under which CSO has agreed to provide certain business services to the
Company, including business development, licensing, strategic alliances and
administrative support. See "Certain Transactions."

The Company sponsors research and development activities in
laboratories at Rockefeller, Emory and Oregon State and does not maintain its
own research and

development facilities. The Company leases office space at 666 Third Avenue, New
York, New York, 10017. See "Risk Factors--Lack of Research and Development
Facilities."

Product Liability Insurance
- ---------------------------

The Company's business exposes it to potential liability risks that are
inherent in the testing, manufacturing and marketing of pharmaceutical products.
The Company does not have product liability insurance but intends to obtain such
coverage if and when its drug candidates are tested in clinical trials. There
can be no assurance, however, that the Company will be able to obtain insurance
coverage at acceptable costs or in a sufficient amount, if at all, or that a
product liability claim would not adversely affect the Company's business,
operating results or financial condition. See "Risk Factors--Potential Product
Liability and Availability of Insurance."

Legal Proceedings
- -----------------

The Company is not a party to any material legal proceedings.

MANAGEMENT

Directors, Executive Officers, Key Personnel and Consultants

The following table sets forth information concerning each of the
directors, executive officers, key personnel and consultants of the Company.

Name Age Position
- -------------------------------------- -----------------------------------------------

David H. de Weese 54 Chairman, President and Chief Executive Officer
Joshua D. Schein, Ph.D. 36 Executive Vice President, Chief Financial
Officer, Secretary and Director
Judson A. Cooper 37 Executive Vice President, Director
Vincent A. Fischetti 56 Consultant
Dennis G. Hruby, Ph.D. 45 Consultant
Kevin F. Jones, Ph.D. 44 Director of Bacterial Research

All Directors hold office until the next annual meeting of stockholders
and the election and qualification of their successors. Directors receive no
cash compensation for serving on the Board of Directors other than reimbursement
of reasonable expenses incurred in attending meetings. Officers are elected
annually by the Board of Directors and serve at the discretion of the Board,
subject to the provisions of certain employment agreements. See "Employment
Agreements."

David H. de Weese has served as Chairman of the Board of Directors,
-----------------
President and Chief Executive Officer of the Company since November 1996. Prior
to joining the Company, Mr. de Weese served as a director and a consultant to
Biovector Therapeutics, S.A., a developer of drug delivery technology based in
France, and as an advisor to Paul Capital Partners, L.P., a private equity
investment manager with whom he maintains a consulting relationship. From 1993
to 1995, Mr. de Weese was President, Chief Executive Officer and a Director of
M6 Pharmaceuticals, Inc, a biopharmaceutical company. From 1986 to 1992, Mr. de
Weese was the President, Chief Executive Officer, a Director and a founder of
Cygnus Therapeutic Systems (now Cygnus, Inc.), a developer and manufacturer of
transdermal drug delivery systems. Prior to that, Mr. de Weese co-founded
Medical Innovations Corporation, a medical device business currently a division
of Ballard Medical Products, Inc., and was Chairman of the Board, President and
Chief Executive Officer of Machine Intelligence Corporation, a developer of
computer software and hardware. Mr. de Weese received his M.B.A. from the
Harvard University Graduate School of Business.

Joshua D. Schein, Ph.D. has served as an Executive Vice President of the
-----------------------
Company since December 1996 and Chief Financial Officer, Secretary and a
Director of the Company since December 1995. Dr. Schein also serves as President
and Director of Virologix Corporation, a private biotechnology company
("Virologix"). Additionally, Dr. Schein serves as Chief Financial Officer and a
Director of Callisto Pharmaceuticals, Inc., a privately held, development stage,
pharmaceutical company ("Callisto"). Dr. Schein devotes substantial amounts of
his time to the Company, Virologix and Callisto on a substantially equal basis.
Dr. Schein has served as a Director of DepoMed, Inc., a private biotechnology
company, since January 1996. From October 1994 to December 1995, Dr. Schein
served as a Vice President of Investment Banking at Josephthal, Lyon and Ross,
Incorporated, an investment banking firm. From June 1991 to September 1994, Dr.
Schein was a Vice President at D. Blech & Company, Incorporated, a merchant bank
that invested in the biopharmaceutical industry. Dr. Schein received a Ph.D. in
neuroscience from the Albert Einstein College of Medicine and an MBA from the
Columbia Graduate School of Business. Dr. Schein is a principal of CSO Ventures
LLC ("CSO"), a privately held limited liability company. See "Certain
Transactions."

Judson A. Cooper has served as Executive Vice President of the Company since
----------------
November 1996 and a Director of the Company since December 1995 and served as
President from December 1995 until November 1996. Mr. Cooper also serves as
Chief Financial Officer and Director of Virologix. Additionally, Mr. Cooper
serves as President and a Director of Callisto. Mr. Cooper devotes substantial
amounts of his time to the Company, Virologix and Callisto on a substantially
equal basis. Mr. Cooper

has also served as a Director of DepoMed, Inc. since November 1995. Mr. Cooper
had been a private investor from September 1993 to December 1995. From 1991 to
1993, Mr. Cooper served as a Vice President of D. Blech & Company, Incorporated.
Mr. Cooper is a graduate of the Kellogg School of Management. Mr. Cooper is a
principal of CSO. See "Certain Transactions."

Vincent A. Fischetti, Ph.D. has served as a consultant to the Company since
---------------------------
January 1996. Dr. Fischetti is a Professor and Co-Chairman of the Laboratory of
Bacterial Pathogenesis and Immunology and Co-Director of the Protein
Sequence/Biopolymer Facility at Rockefeller. Dr. Fischetti specializes in the
research of group A streptococcus and streptococcal diseases. Dr. Fischetti is
the chairman of the Microbial Pathogenesis Division of the American Society of
Microbiology and was recently elected a fellow of the American Academy of
Microbiology. Dr. Fischetti is the editor-in-chief of Infection and Immunity, is
an editor of the Journal of Immunology and serves on the editorial board of the
Journal of Experimental Medicine. Dr. Fischetti has published approximately 100
research articles and is a contributing author to 60 textbooks. Dr. Fischetti
received a Ph.D. in microbiology from New York University.

Dennis G. Hruby, Ph.D. has been a consultant to the Company since January
----------------------
1996. From 1986 to the present, Dr. Hruby has been a Professor of Microbiology
at Oregon State University, and from 1990 to 1993 was Director of the Molecular
and Cellular Biology Graduate Program and Associate Director of the Center for
Gene Research and Biotechnology at Oregon State University. From 1993 to 1995,
Dr. Hruby served as Vice President of Research for M6 Pharmaceuticals, Inc. In
addition, Dr. Hruby currently serves as Professor of Biochemistry and Biophysics
at Oregon State University. Dr. Hruby is the author of numerous research and
review articles, book chapters and published abstracts. Dr. Hruby received a
Ph.D. in microbiology from the University of Colorado Medical Center and a B.S.
in microbiology from Oregon State University.

Kevin F. Jones, Ph.D. has been the Company's Director of Bacterial Research
---------------------
since January 1996. From 1992 to 1995, Dr. Jones served as Director of Bacterial
Research for M6 Pharmaceuticals, Inc. From 1990 until joining the Company, Dr.
Jones was a Senior Research Scientist at Lederle-Praxis Biologicals, Inc., a
vaccine company and division of American Cyanamid. Dr. Jones has written
numerous articles on the pathogenesis of group A streptococcal infection. Dr.
Jones is currently Adjunct Professor at Rockefeller. Dr. Jones received a Ph.D.
and an M.S. in immunology from Cornell University .

Board of Directors

The number of directors on the Board of Directors is determined from
time to time by the Board of Directors and is currently fixed at three.
Directors are elected at each annual meeting of stockholders by the holders of
the Common Stock and hold office until their successors have been duly elected
and qualified or until their resignation, removal from office or death. Officers
of the Company are appointed by and may be removed by the Board of Directors.
Upon the consummation of the Offering, the Company plans to appoint three
individuals not otherwise affiliated with the Company as directors.

Committees of the Board of Directors

Upon the consummation of the Offering, the Company will form an Audit
Committee and a Compensation Committee. The Audit Committee will be responsible
for reviewing audit functions, including accounting and financial reporting
practices of the Company, the adequacy of the Company's system of internal
accounting control, the quality and integrity of the Company's financial
statements and relations with its independent accountants. It is anticipated
that the Audit Committee will consist of two non-employee directors. The
Compensation Committee will be responsible for establishing the compensation of
the Company's directors, officers and employees, including salaries, bonuses,
commission, and benefit plans, administering the Plan, and other forms of or
matters relating to compensation. It is anticipated that the Compensation
Committee will consist of two non-employee directors.

Executive Compensation

The following table sets forth certain information with respect to
annual and long-term compensation paid by the Company to the Chief Executive
Officer and to the other executive officers.

Summary Compensation Table

Annual Compensation through 12/31/96 Long Term Compensation
-------------------------------------------- ---------------------------
Stock
Other Annual Underlying All Other
Name and Principal Position Year Salary Bonuses Compensation Options/ Compensation
- --------------------------- ---- --------- ------- ------------ ------------ ------------

David H. de Weese, Chairman, President 1996 $ 21,635(1) -- -- 477,683(2) --
and Chief Executive Officer

Joshua D. Schein, Ph.D., 1996 $153,116(3) -- --(5) 16,667 --
Executive Vice President,
Chief Financial Officer and Director

Judson A. Cooper, Executive Vice 1996 $153,116(4) -- --(5) 16,667 --
President and Director

- --------------------
(1) Mr. de Weese became Chairman, President and Chief Executive Officer of the
Company in November 1996. Mr. de Weese's annual salary is $225,000. See "-
Employment Agreements."
(2) Includes the 461,016 de Weese Warrants and options to purchase 16,667
shares of Common Stock held by Mr. de Weese. See "-Employment Agreements."
(3) Dr. Schein currently receives an annual salary of $150,000. This amount
does not include payments made to CSO. See "Certain Transactions."
(4) Mr. Cooper currently receives an annual salary of $150,000. This amount
does not include payments made to CSO. See "Certain Transactions."
(5) Aggregate amount does not exceed the lesser of $50,000 or 10% of the total
annual salary and bonus for the named officer.

The following table sets forth certain information concerning all stock
option grants to the Company's executive officers to date.

Option Grants

Common Stock % of Total
Underlying Options Granted Exercise Expiration
Name Options Granted(1) to Employees Price Per Share Date
- ---- ------------------ --------------- --------------- ----------

David H. de Weese.. 16,667 33.3% $3.00 11/18/06
Joshua D. Schein... 16,667 33.3% $1.50 1/1/01
Judson A. Cooper... 16,667 33.3% $1.50 1/1/01

- ------------
(1) All options were granted pursuant to the Plan.

The following table sets forth certain information concerning option
exercises and option holdings under the Plan as of December 31, 1996 with
respect to each of the Company's executive officers.

Aggregated Option Exercises and Values as of 12/31/96

Shares Number of Shares of Stock Value of Unexercised
Acquired Value Underlying Unexercised Options In-the-Money Options(1)
-------------------------------------- ---------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------------------- ---------------------------

David H. de
Weese(2)...... -- -- 16,667 -- $33,334 --

Joshua D.
Schein, Ph.D.. -- -- 16,667 -- $58,335 --

Judson A.
Cooper........ -- -- 16,667 -- $58,335 --

- --------------
(1) Based upon the assumed initial public offering price of $5.00 per share.

(2) Excludes the 461,016 de Weese Warrants exercisable at $3.00 per share.

Employment and Consulting Agreements

David H. de Weese, President and Chief Executive Officer of the Company, has
an employment agreement with the Company which expires in November 1999 and is
cancelable by the Company only for cause, as defined in the agreement. Mr. de
Weese currently receives an annual base salary of $225,000 and 16,667 stock
options per year, exercisable at the fair market value on the date of grant, and
is eligible to receive

additional stock options and bonuses at the discretion of the Board of
Directors. In addition, Mr. de Weese will receive a cash payment equal to 1.5%
of the total consideration received by the Company in a transaction resulting in
a change of ownership of at least 50% of the outstanding Common Stock of the
Company. In connection with Mr. de Weese's employment agreement, Mr. de Weese
received warrants to purchase 461,016 shares of Common Stock at $3.00 per share.
Warrants to purchase 25% of such shares are currently exercisable and the
remaining warrants become exercisable on a pro rata basis on the first, second
and third anniversaries of the agreement.

Dr. Joshua Schein, an Executive Vice President and Chief Financial
Officer of the Company, has an employment agreement with the Company which
expires in December 1998 and is cancelable by the Company only for cause, as
defined in the agreement. Dr. Schein currently receives an annual base salary
of $150,000 and 16,667 stock options per year, exercisable at the fair market
value on the date of grant, and is eligible to receive additional stock options
and bonuses at the discretion of the Board of Directors. In addition, Dr. Schein
will receive a cash payment equal to 1.5% of the total consideration received by
the Company in a transaction resulting in a change of ownership of at least 50%
of the outstanding Common Stock of the Company.

Judson Cooper, an Executive Vice President of the Company, has an
employment agreement with the Company which expires in December 1998 and is
cancelable by the Company only for cause, as defined in the agreement. Mr.
Cooper currently receives an annual base salary of $150,000 and 16,667 stock
options per year, exercisable at the fair market value on the date of grant, and
is eligible to receive additional stock options and bonuses at the discretion of
the Board of Directors. In addition, Mr. Cooper will receive a cash payment
equal to 1.5% of the total consideration received by the Company in a
transaction resulting in a change of ownership of at least 50% of the
outstanding Common Stock of the Company.

Dr. Kevin F. Jones, Director of Bacterial Research of the Company, has
an employment agreement with the Company which expires in December 1997 and is
cancelable by the Company only for cause, as defined in the agreement. Dr.
Jones currently receives an annual base salary of $90,000 and is eligible to
receive additional stock options and bonuses at the discretion of the Board of
Directors.

Dr. Vincent A. Fischetti, the Chief Scientific Advisor of the Company, has
entered into a consulting agreement with the Company under which Dr. Fischetti
has agreed to provide certain research and development services to the Company.
Pursuant to the terms of the agreement, Dr. Fischetti will receive an annual fee
of $75,000. The agreement expires December 31, 1998 and is cancelable by the
Company only for cause as defined in the agreement.

Dr. Dennis Hruby, a part-time Senior Scientific Advisor of the Company,
has a consulting agreement with the Company which shall be for a term of two (2)
years commencing as of January 1, 1996, and shall be automatically renewed for
up to three additional one (1) year periods unless either party notifies the
other according to terms of the agreement. Dr. Hruby currently receives an
annual consulting fee of $50,000, and is eligible to receive additional stock
options and bonuses at the discretion of the Board of Directors.

1996 Incentive and Non-Qualified Stock Option Plan

As of January 1, 1996, the Company adopted its 1996 Incentive and Non-
Qualified Stock Option Plan (the "Plan"), pursuant to which stock options may be
granted to key employees, consultants and outside directors.

Following the completion of the Offering, the Plan will be administered by a
committee (the "Committee") comprised of disinterested directors. The Committee
will determine persons to be granted stock options, the amount of stock options
to be granted to each such person, and the terms and conditions of any stock
options as permitted under the Plan. The members of the Committee have not yet
been appointed.

Both Incentive Options and Nonqualified Options may be granted under
the Plan. An Incentive Option is intended to qualify as an incentive stock
option within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"). Any Incentive Option granted under the Plan will have
an exercise price of not less than 100% of the fair market value of the shares
on the date on which such option is granted.

With respect to an Incentive Option granted to an employee who owns more than
10% of the total combined voting stock of the Company or of any parent or
Subsidiary of the Company, the exercise price for such option must be at least
110% of the fair market value of the shares subject to the option on the date
the option is granted. A Nonqualified Option (i.e., an option to purchase Common
Stock that does not meet the Code's requirements for Incentive Options) must
have an exercise price of at least the fair market value of the stock at the
date of grant.

The Plan provides for the granting of options to purchase 333,333 shares of
Common Stock, of which 33,334 options are outstanding at an exercise price of
$1.50 per share and 16,667 options are outstanding at an exercise price of $3.00
per share.

PRINCIPAL STOCKHOLDERS

The table below sets forth information as of the date of this
Prospectus and, as adjusted, assumes the sale of all of the Common Stock offered
pursuant to this Prospectus. The table also assumes, with respect to each
individual stockholder, the exercise of all warrants, options or conversion of
all convertible securities held by such stockholder. It does not assume the
exercise or conversion of securities held by any other holder of securities. The
table is based on information obtained from the persons named below with respect
to the beneficial ownership of shares of Common Stock by (i) each person known
by the Company to be the owner of more than 5% of the aggregate outstanding
shares of Common Stock, (ii) each officer and director and (iii) all officers
and directors as a group.

Amount and
Nature of Percentage
Names and addresses of Beneficial of Outstanding
Beneficial Owner(1) Ownership Shares Owned
- ---------------------------------------------------------------------
Prior to After
Offering Offering(2)
------------- -----------

David H. de Weese(3)......... 477,683 12.4% 6.7%
Judson Cooper(4)............. 477,683 14.1% 7.2%
Joshua D. Schein, Ph.D.(5) 477,683 14.1% 7.2%
Steven M. Oliveira(6)........ 461,016 13.7% 7.0%
Richard B. Stone(7)
135 East 57th St., 11th FL
New York, NY 10022........... 414,915 12.3% 6.3%
Vincent Fischetti, Ph.D.(8) 305,938 8.7% 4.5%
Nathan Low(9)
135 East 57th St., 11th FL
New York, NY 10022........... 179,436 5.3% 2.7%
All Officers and Directors
as a Group (three persons). 1,433,049 37.0% 20.1%
- ----------

(1) Unless otherwise indicated the address of each beneficial owner identified
is 666 Third Avenue, New York, NY 10017. Unless otherwise noted, the
Company believes that all persons named in the table have sole voting and
investment power with respect to all shares of Common Stock beneficially
owned by them.
(2) Excludes (i) 325,000 shares of Common Stock reserved for issuance upon
exercise of the Underwriter's Warrants; (ii) 333,333 shares of Common Stock
reserved for issuance under the Plan, pursuant to which options to purchase
50,001 of such reserved shares have been granted; and (iii) 711,016 shares
of Common Stock issuable upon the exercise of the de Weese, Fischetti and
Bridge Warrants.
(3) Includes shares underlying the 461,016 de Weese Warrants and 16,667 options
held by Mr. de Weese.
(4) Includes shares underlying 16,667 options held by Mr. Cooper.
(5) Includes shares underlying 16,667 options held by Dr. Schein.
(6) Mr. Oliveira is an employee of Rickel & Associates, Inc. See "Certain
Transactions."
(7) Mr. Stone is a managing director of the Underwriter. See "Underwriting."
(8) Includes shares underlying the 150,000 Fischetti Warrants.
(9) Mr. Low is a principal of the Underwriter. See "Underwriting."

CERTAIN TRANSACTIONS

The Company and CSO have entered into a consulting agreement under
which CSO has agreed to provide certain business services to the Company,
including business development, licensing, strategic alliances and
administrative support. Pursuant to the terms of the agreement, CSO receives an
annual fee of $120,000 and will be reimbursed for certain expenses. The
agreement expires on January 15, 1998 and is cancelable by the Company only for
cause as defined in the agreement. Mr. Cooper, Dr. Schein and Steven Oliveira
are the members of CSO. Mr. Oliveira is also an employee of Rickel &
Associates, Inc., which is acting as underwriter in connection with an initial
public offering of securities of Virologix Corporation, a corporation in which
CSO and Mr. Stone, a managing director of the Underwriter (See "Underwriting"),
each own more than ten percent of the outstanding shares of common stock.

In March 1996, Dr. Fischetti and the Company entered into an agreement
pursuant to which Dr. Fischetti was to receive options to purchase up to 150,000
shares of Common Stock upon the completion of collaborative agreements with
certain pharmaceutical companies. On September 15, 1996, such agreement was
cancelled and Dr. Fischetti received warrants to purchase 150,000 shares of
Common Stock at $1.50 per share as compensation for introducing the Company to
certain potential collaborative pharmaceutical companies.

The Company believes that the terms of the transactions described above were
no less favorable than the Company could have obtained from unaffiliated third
parties. The Company has adopted a policy, effective following the consummation
of this Offering, that all future transactions between the Company and its
officers, directors and affiliates must (i) be approved by a majority of those
members of the Company's Board of Directors that are not parties, directly or
indirectly through affiliates, to such transactions and (ii) be on terms no less
favorable to the Company than could be obtained from unrelated third parties.

DESCRIPTION OF SECURITIES

The Company is authorized to issue 25,000,000 shares of Common Stock,
par value $.0001 per share, and 10,000,000 shares of Preferred Stock, par value
$.0001 per share. As of the date of this Prospectus, there are 3,367,182 shares
of Common Stock outstanding and no shares of Preferred Stock outstanding.

The following summary description of the Company's Common Stock and
Preferred Stock is qualified in its entirety by reference to the Articles and
Bylaws, copies of which are included as exhibits to the Registration Statement
of which this Prospectus is a part.

Common Stock

Holders of Common Stock are entitled to one vote for each share held on
all matters submitted to a vote of stockholders and do not have cumulative
voting rights. Accordingly, holders of a majority of the shares of Common Stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of Common Stock are entitled to receive ratably
such dividends, if any, as may be declared by the Board of Directors out of
funds legally available therefor, subject to any preferential dividend rights of
any outstanding Preferred Stock. Upon the liquidation, dissolution or winding up
of the Company, the holders of Common Stock are entitled to receive ratably the
net assets of the Company available after the payment of all debts and other
liabilities and subject to the prior rights of any outstanding Preferred Stock.
Holders of Common Stock have no preemptive, subscription, redemption or
conversion rights. The outstanding shares of Common Stock are, and the shares
offered by the Company in this Offering will be, when issued and paid for, fully
paid and nonassessable. The rights, preferences and privileges of holders of
Common Stock are subject to, and may be adversely affected by, the rights of the
holders of shares of any series of Preferred Stock which the Company may
designate and issue in the future.

Preferred Stock

The Board of Directors has the authority, without further action of the
stockholders of the Company, to issue up to an aggregate of 10,000,000 shares of
Preferred Stock in one or more series and to fix or alter the designations,
preferences, rights and any qualifications, limitations or restrictions of the
shares of each such series thereof, including the dividend rights, dividend
rates, conversion rights, voting rights, terms of redemption (including sinking
fund provisions), redemption price or prices, liquidation preferences and the
number of shares constituting any series or the designation of such series.

The Board of Directors, without stockholder approval, can issue Preferred
Stock with voting and conversion rights that could adversely affect the voting
power of holders of Common Stock. The issuance of Preferred Stock may have the
effect of delaying, deferring or preventing a change in control of the Company.
The Company has no present plans to issue any shares of Preferred Stock.

Transfer Agent

The Company's transfer agent and registrar for the Common Stock is
American Stock Transfer & Trust Company.

Indemnification

The Certificate of Incorporation (the "Certificate") of the Company
provides that, to the fullest extent permitted by applicable law, as amended
from time to time, the Company will indemnify any person who was or is a party
or is threatened to be made a party to an action, suit or proceeding (whether
civil, criminal, administrative or investigative) by reason of the fact that
such person is or was director, officer, employee or agent of the Company or
serves or served any other enterprise at the request of the Company.

In addition, the Certificate provides that a director of the Company
shall not be personally liable to the Company or its stockholders for monetary
damages for breach of the director's fiduciary duty. However, the Certificate
does not eliminate or limit the liability of a director for any of the following
reasons: (i) a breach of the director's duty of loyalty to the Company or its
stockholders; (ii) acts or omissions not in good faith or that involve
intentional misconduct or knowing violation of law; or (iii) a transaction from
which the director derived an improper personal benefit.

The Company will purchase and maintain Directors' and Officers'
Insurance as soon as the Board of Directors determines practicable, in amounts
which they consider appropriate, insuring the directors against any liability
arising out of the director's status as a director of the Company regardless of
whether the Company has the power to indemnify the director against such
liability under applicable law.

The Company has been advised that it is the position of the Commission that
insofar as the foregoing provisions may be invoked to disclaim liability for
damages arising under the Securities Act, such provisions are against public
policy as expressed in the Securities Act and are, therefore, unenforceable.

Certain Certificate of Incorporation and Bylaw Provisions

In addition, certain provisions of the Company's Certificate and Bylaws
summarized in the following paragraphs may be deemed to have an anti-takeover
effect and may delay, defer or prevent a tender offer or takeover attempt that a
stockholder might consider in its best interest, including those attempts that
might result in a premium over the market price for the shares held by
stockholders.

Special Meeting of Stockholders

The Company's Bylaws provide that special meetings of stockholders of
the Company may be called only by the President of the Company, the Board of
Directors or holders of not less than 10% of the votes entitled to be cast at
the special meeting.

Authorized But Unissued Shares

The authorized but unissued shares of Common Stock and Preferred Stock
are available for future issuance without stockholder approval. These
additional shares may be utilized for a variety of corporate purposes, including
future public offerings to raise additional capital, corporate acquisitions,
poison pills and employee benefit plans. The existence of authorized but
unissued and unreserved Common Stock and Preferred Stock may enable the Board of
Directors to issue shares to persons friendly to current management which could
render more difficult or discourage an attempt to obtain control of the Company
by means of a proxy contest, tender, offer, merger or otherwise, and thereby
protect the continuity of the Company's management.

SHARES ELIGIBLE FOR FUTURE SALE

The remaining 3,367,182 Restricted Shares were issued by the Company in
private transactions in reliance upon one or more exemptions contained in the
Act. The 1,288,012 Private Shares were issued in connection with two private
placement transactions completed in March and September 1996 and the 2,079,170
Founders' Shares were issued to the founders of the Company in December 1995.
The Restricted Shares are deemed to be "restricted securities" within the
meaning of Rule 144 promulgated pursuant to the Act and may be publicly sold
only if registered under the Act or sold pursuant to exemptions therefrom.
Because the Founders' Shares and 1,038,008 of the Private Shares acquired in the
March 1996 private placement will have been held for more than one year as of
the date of this Prospectus, such shares will be eligible for public sale in
accordance with the requirements of Rule 144, as described below. In addition,
the remaining 250,004 of the Private Shares will be eligible for public sale in
September 1997. However, certain holders of the Private Shares and the holders
of the Founders' Shares have agreed with the Underwriter not to sell or
otherwise dispose of such shares for a period of six months and 24 months,
respectively, after the date of the consummation of the Offering.

In general, under Rule 144, as amended effective April 21, 1997,
subject to the satisfaction of certain other conditions, a person, including an
affiliate of the Company (or persons whose shares are aggregated with an
affiliate), who has owned restricted shares of Common Stock beneficially for at
least one year is entitled to sell, within any three-month period, a number of
shares that does not exceed the greater of one per cent of the total number of
outstanding shares of the same class or, if the common stock is quoted on
Nasdaq, the average weekly trading volume during the four calendar weeks
preceding the sale. A person who has not been an affiliate of the Company for
at least three months immediately preceding the sale and who has beneficially
owned shares of the Company for at least two years is entitled to sell such
shares under Rule 144 without regard to any of the limitations described above.

The Company intends to file a registration statement under the
Securities Act to register shares of Common Stock reserved for issuance under
the Plan, thereby permitting the resale of such shares by non-affiliates in the
public market without restriction under the Securities Act. The Company has
reserved up to 333,333 shares of Common Stock for issuance under the Plan. As of
the date of this Prospectus, options to purchase 50,001 of such reserved shares
of Common Stock were outstanding under the Plan. See "Management--1996 Incentive
and Non-Qualified Stock Option Plan."

Prior to this Offering, there has been no public market for the Common
Stock, and no predictions can be made as to the effect, if any, that sales of
the Common Stock will have on the market price of such securities from time to
time. Sales of substantial amounts of the Company's securities in the public
market could have a significant adverse effect on prevailing market prices and
could impair the Company's future ability

to raise capital through the sale of its equity securities. See "Risk Factors--
Shares Eligible for Future Sale."

UNDERWRITING

Subject to the terms and conditions set forth in the underwriting
agreement between the Company and the Underwriter (the "Underwriting
Agreement"), the Underwriter has agreed to use its best efforts to offer
3,250,000 shares of Common Stock to the public at a purchase price of $5.00 per
share. The shares of Common Stock are offered on a "best-efforts, all-or-none"
basis. The Underwriter has made no commitment to purchase or take down all or
any part of the shares of Common Stock offered hereby. The Underwriter is
offering the shares of Common Stock for a period of [90 days] expiring on [June
30, 1997], which may be extended by mutual agreement between the Company and the
Underwriter for an additional [90 days] ending [September 30, 1997] (and an
additional period of 10 business days thereafter to permit clearance of the
funds in escrow). The Underwriter will promptly send to each subscriber
confirmation of the subscriber's subscription with instructions to forward funds
to the order of _____________ Bank. All proceeds will be held in an escrow
account at ________________ Bank. If the 3,250,000 shares of Common Stock are
not sold by [June 30, 1997] (or [September 30, 1997], if extended) and the
offering is canceled, all funds held in the escrow account will be promptly
returned to the subscribers without interest or deduction. During the escrow
period, subscribers will not be entitled to a refund of their subscription.
Upon completion of the sale of all 3,250,000 shares of Common Stock, all funds
in the escrow account will be released to the Company. No affiliate of the
Company will purchase any shares of Common Stock in this Offering.

The Underwriter proposes to offer the shares of Common Stock at the
offering price set forth on the cover page. The Underwriter has advised the
Company that the Underwriter does not intend to confirm sales to any accounts
over which it exercises discretionary authority.

The Underwriting Agreement provides further that the Underwriter will
receive from the Company a non-accountable expense allowance of three per cent
of the gross proceeds of the Offering, of which $45,000 has been paid by the
Company to date. The Company has also agreed to pay all expenses in connection
with qualifying the shares of Common Stock offered hereby for sale under the
laws of such states as the Underwriter may designate, including expenses of
counsel retained for such purpose by the Underwriter.

The Company has agreed to sell to the Underwriter, for nominal
consideration, the Underwriter's Warrants to purchase 325,000 shares of Common
Stock. The Underwriter's Warrants will be nonexercisable for one year after the
date of this Prospectus. Thereafter, for a period of four years, the
Underwriter's Warrants will be exercisable at an amount equal to 110% of the
offering price of the Common Stock sold in this Offering. The Underwriter's
Warrants are not transferable for a period of one year after the date of this
Prospectus, except to officers and directors of the Underwriter, members of the
selling group and their officers and partners. The Company has also granted
certain demand and "piggyback" registration rights to the holders of the
Underwriter's Warrants.

For the life of the Underwriter's Warrants, the holders thereof are
given, at a nominal cost, the opportunity to profit from a rise in the market
price of the Common Stock with a resulting dilution in the interest of other
stockholders. Further, such holders may be expected to exercise the
Underwriter's Warrants at a time the Company would in all likelihood be able to
obtain equity capital on terms more favorable than those provided in the
Underwriter's Warrants.

Nathan Low, President of the Underwriter, beneficially owns an
aggregate of 179,436 shares of Common Stock (representing 5.3% of the
outstanding Common Stock) of the Company. In addition, Richard Stone, a managing
director of the Underwriter, beneficially owns an aggregate of 414,915 shares of
Common Stock (representing 12.3% of the outstanding Common Stock) of the
Company. As a result, this Offering is being conducted in accordance with the
applicable provisions of Section 2720 of the NASD Rules of Conduct.
Accordingly, the initial public offering price can be no higher than that
recommended by a "qualified independent underwriter" meeting certain standards.
______________ served as qualified independent underwriter in connection with
this Offering. ______________ has assumed the responsibilities of acting as
qualified

independent underwriter in pricing the Offering, has performed due diligence
with respect to the information contained herein and has participated in
preparing the Registration Statement. In its role as qualified independent
underwriter, __________________ will receive an aggregate fee from the
Underwriter of __________, ___________ of which has been paid and _________ of
which is to be paid upon consummation of the Offering. In addition,
_____________ will be reimbursed by the Underwriter for up to ________ for
certain expenses incurred in connection with its services, including its
independent counsel. ___________ is not purchasing Common Stock in this
Offering, [but it will participate in the Offering as a selected dealer of not
more than 10% of the Common Stock offered hereby.]

The Underwriting Agreement provides for reciprocal indemnification
between the Company and the Underwriter against liabilities in connection with
the Offering, including liabilities under the Securities Act.

The initial public offering price of the shares of Common Stock offered
hereby has been determined by negotiation between the Company and the
Underwriter, and within the parameters set forth above, and does not necessarily
bear any direct relationship to the Company's assets, earnings, book value per
share or other generally accepted criteria of value. Factors considered in
determining the offering price of the shares of Common Stock included the
business in which the Company is engaged, the Company's financial condition, an
assessment of the Company's management, the general condition of the securities
markets and the demand for similar securities of comparable companies.

The foregoing includes a summary of the principal terms of the
Underwriting Agreement and does not purport to be complete. Reference is made
to the copy of the Underwriting Agreement filed as an exhibit to the
Registration Statement of which this

Prospectus is a part.

LEGAL MATTERS

The validity of the securities offered by this Prospectus will be
passed upon for the Company by Eilenberg & Zivian, New York, New York. Eilenberg
& Zivian owns 3,334 shares of Common Stock and has from time to time represented
CSO and its members. Squadron, Ellenoff, Plesent & Sheinfeld, LLP, New York, New
York, has acted as counsel to the Underwriter with respect to certain legal
matters related to this Offering.

EXPERTS

The financial statements of the Company as of December 31, 1995 and 1996,
for the period from inception (December 28, 1995) through December 31, 1995, for
the year ended December 31, 1996, and for the period from inception through
December 31, 1996 included in this Prospectus have been so included in reliance
on the report (which contains an explanatory paragraph relating to the Company's
ability to continue as a going concern as described in Note 1 to such financial
statements) of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.

AVAILABLE INFORMATION

The Company has filed a Registration Statement on Form SB-2 under the
Act with the Securities and Exchange Commission with respect to the Common Stock
offered hereby. This Prospectus does not contain all of the information set
forth in the Registration Statement and the exhibits thereto: certain portions
have been omitted pursuant to rules and regulations of the Commission.
Statements contained in this Prospectus as to the contents of any contract or
other document are not necessarily complete and, in each instance, reference is
made to the copy of such contract or document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference. The Registration Statement, including the exhibits and
schedules thereto, may be inspected without charge, at the Public Reference
Facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, 1400 Citicorp Center, 500 West Madison, Chicago, Illinois 60661; and
7 World Trade Center, New York, New York 10048 and copies of all or any part
thereof may be obtained upon payment of the fees prescribed by the Commission.
Electronic registration statements made through the Electronic Data Gathering,
Analysis and Retrieval System are publicly available through the Commissions's
World Wide Web site at http://www.sec.gov.

GLOSSARY

ANTIBIOTIC. A substance, such as penicillin or streptomycin, produced by or
derived from certain fungi, bacteria, and other organisms, that can destroy or
inhibit the growth of other microorganisms. Antibiotics are widely used in the
prevention and treatment of infectious diseases.

ANTIGEN. A substance that when introduced into the body stimulates the
production of an antibody. Antigens include toxins, bacteria, foreign blood
cells, and the cells of transplanted organs.

COMMENSAL. An organism participating in a symbiotic relationship in which
one species derives some benefit while the other is unaffected.

EFFECTOR. A small molecule that when bound to the allosteric site of an
enzyme causes either a decrease or an increase in the activity of the enzyme.

ENTEROCOCCUS. A usually nonpathogenic streptococcus that inhabits the
intestine.

ENZYME. Any of numerous proteins or conjugated proteins produced by living
organisms and functioning as biochemical catalysts.

FIBRIN. An elastic, insoluble, whitish protein produced by the action of
thrombin on fibrinogen and forming an interlacing fibrous network in the
coagulation of blood.

FLUOROQUINOLONE. Chemical analogs of nalidixic acid, fluoroquinolones exert
their anti-microbial activity by inhibition of bacterial DNA gyrase (involved in
DNA coiling) and, generally, have a wide spectrum of antibiotic activity.

HUMORAL IMMUNITY. The component of the immune response involving the
transformation of B-lymphocytes into plasma cells that produce and secrete
antibodies to a specific antigen.

IMMUNE RESPONSE. An integrated bodily response to an antigen, especially
one mediated by lymphocytes and involving recognition of antigens by specific
antibodies or previously sensitized lymphocytes.

IMMUNE SYSTEM. The integrated body system of organs, tissues, cells, and
cell products such as antibodies that differentiates self from nonself and
neutralizes potentially pathogenic organisms or substances.

IMMUNOGLOBULIN. Any of a group of large glycoproteins secreted by plasma
cells in vertebrates that function as antibodies in the immune response by
binding the specific antigens. Immunoglobulins are found along the respiratory
and intestinal tracts, on mucosal surfaces, and in milk, saliva, tears, and
blood serum.

IMMUNOSUPPRESSION. Suppression of the immune response, as by drugs or
radiation, in order to prevent the rejection of grafts or transplants or control
autoimmune diseases. Also called immunodepression.

LACTOFERRIN. An iron-binding glycoprotein found in mucosal secretions and
blood neutrophils, which has antimicrobial activity.

LYMPHOCYTE. Any of the nearly colorless cells formed in lymphoid tissue, as
in the lymph nodes, spleen, thymus, and tonsils, constituting between 22 and 28
percent of all white blood cells in the blood of a normal adult human being.
Lymphocytes function in the development of immunity and include two specific
types, B cells and T cells.

LYSOZYME. An enzyme occurring naturally in egg white, human tears, saliva,
and other body fluids, capable of destroying the cell walls of certain bacteria
and thereby acting as a mild antiseptic.

METHICILLIN. A synthetic antibiotic, C\\17\\H\\19\\N\\2\\O\\6\\NaS, related
to penicillin and most commonly used in treatment of infections caused by
penicillinase-producing staphylococci.

MUCOUS MEMBRANE. A membrane lining all body passages that communicate with
the air, such as the respiratory and alimentary tracts, and having cells and
associated glands that secrete mucus.

PATHOGEN. An agent that causes disease, especially a living microorganism
such as a bacterium or fungus.

PENICILLIN. Any of a group of broad-spectrum antibiotic drugs obtained from
penicillium molds or produced synthetically, most active against gram-positive
bacteria and used in the treatment of various infections and diseases.

PEROXIDASE. Any of a group of enzymes that occur especially in plant cells
and catalyze the oxidation of a substance by a peroxide.

PHARYNGITIS. Inflammation of the pharynx, the section of the alimentary
canal that extends from the mouth and nasal cavities to the larynx, where it
becomes continuous with the esophagus.

RHEUMATIC FEVER. A severe infectious disease occurring chiefly in children,
characterized by fever and painful inflammation of the joints and frequently
resulting in permanent damage to the valves of the heart.

SEROTYPE. A group of closely related microorganisms distinguished by a
characteristic set of antigens.

SUBUNIT VACCINE. A vaccine consisting of purified or semi-purified
components of an infectious organism for which protection is desired.

STREPTOCOCCUS. A round to ovoid, gram-positive, often pathogenic bacterium
of the genus Streptococcus that occurs in pairs or chains, many species of which
destroy red blood cells and cause various diseases in human beings, including
erysipelas, scarlet fever, and septic sore throat.

SYSTEMIC. Of, relating to, or affecting the entire body or an entire
organism.

TETRACYCLINE. A yellow crystalline compound, C\\22\\H\\24\\N\\2\\O\\8\\,
synthesized or derived from certain microorganisms of the genus Streptomyces and
used as a broad-spectrum antibiotic.

TOXIN. A poisonous substance, especially a protein, that is produced by
living cells or organisms and is capable of causing disease when introduced into
the body tissues but is often also capable of inducing neutralizing antibodies
or antitoxins.

VACCINE. A preparation of a weakened or killed pathogen, such as a
bacterium or virus, or of a portion of the pathogen's structure that upon
administration stimulates antibody production against the pathogen but is
incapable of causing severe infection.

VANCOMYCIN. An antibiotic, C\\66\\H\\75\\Cl\\2\\N\\9\\O\\24\\, produced by
the actinomycete Streptomyces orientalis, found in Indonesian and Indian soil,
and effective against staphylococci and spirochetes.

VIRUS. Any of various simple submicroscopic parasites of plants, animals,
and bacteria that often cause disease and that consist essentially of a core of
RNA or DNA surrounded by a protein coat. Unable to replicate without a host
cell, viruses are typically not considered living organisms.

SIGA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

INDEX TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------

Page
----

Report of Independent Accountants..................................... F-2

Balance Sheet as of December 31, 1995 and 1996........................ F-3

Statement of Operations for the period from December 28, 1995
(inception) through December 31, 1995, for the year ended
December 31, 1996 and for the period from inception
through December 31, 1996......................................... F-4

Statement of Changes in Stockholder's Equity for the period
from inception through December 31, 1996.......................... F-5

Statement of Cash Flows for the period from inception through
December 31, 1995, for the year ended December 31, 1996 and
for the period from inception through December 31, 1996........... F-6

Notes to Financial Statements......................................... F-7

F-1

REPORT OF INDEPENDENT ACCOUNTANTS

March 3, 1997

To the Board of Directors and Stockholders
of SIGA Pharmaceuticals, Inc.

In our opinion, the accompanying balance sheet and related statements of
operations, of cash flows and of changes in stockholders' equity present fairly,
in all material respects, the financial position of SIGA Pharmaceuticals, Inc.
(a development stage company) at December 31, 1995 and 1996, and the results of
its operations for the period from inception (December 28, 1995) through
December 31, 1995, for the year ended December 31, 1996 and for the period from
inception through December 31, 1996, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements based on our audit. We conducted our audit of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company is a development stage company and has
suffered operating losses since inception. These and other factors, as discussed
in Note 1, raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

/s/ Price Waterhouse LLP
- ------------------------
Price Waterhouse LLP

F-2

SIGA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEET
- ------------------------------------------------------------------------------

December December
31, 1995 31, 1996
-------- --------
ASSETS

Current assets
Cash and cash equivalents - $ 42,190
Prepaid sponsored research (Note 7) - 370,798
Deferred offering costs (Note 2) - 115,688
----------- -----------

TOTAL CURRENT ASSETS - 528,676

Prepaid sponsored research (Note 7) - 30,208
Equipment, net (Note 3) - 21,425
Other assets $ 6,937 609
---------- -----------

TOTAL ASSETS $ 6,937 $ 580,918
========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
Accounts payable $ 7,937 $ 92,241
Accrued salaries - 22,260
Patent preparation fees payable (Note 7) - 66,437
---------- -----------

TOTAL LIABILITIES 7,937 180,938
---------- -----------

Commitments and contingencies (Notes 6, 7, 8 and 9) - -

Stockholders' equity
Preferred stock ($.0001 par value, 10,000,000
shares authorized, none issued and
outstanding) - -
Common stock ($.0001 par value, 25,000,000
shares authorized, 2,079,170 and 3,367,182
shares issued and outstanding at December 31, 1995
and 1996, respectively) (Notes 4 and 9) 208 337
Additional paid-in capital 1,040 2,668,819
Stock subscriptions outstanding (1,248) -
Deficit accumulated during the development stage (1,000) (2,269,176)
---------- -----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (1,000) 399,980
---------- -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,937 $ 580,918
========== ===========

The accompanying notes are an integral part of these financial statements.

F-3

SIGA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------

December 28, Year December 28,
1995 (inception) Ended 1995 (inception)
to December December to December
31, 1995 31, 1996 31, 1996
---------------- -------- ----------------

Operating expenses
General and administrative
(including amounts to related
parties of $444,000 for the year
ended December 31, 1996) $ 1,000 $ 787,817 $ 788,817
Research and development (including
amounts to related parties of
$75,000 for the year ended
December 31, 1996) - 662,205 662,205
Patent preparation fees - 452,999 452,999
Stock option and warrant compensation - 367,461 367,461
--------- ----------- -----------

TOTAL OPERATING EXPENSES 1,000 2,270,482 2,271,482
--------- ----------- -----------

Interest income - 2,306 2,306
--------- ----------- -----------

NET LOSS $ (1,000) $(2,268,176) $(2,269,176)
========= =========== ===========

NET LOSS PER COMMON SHARE - $ (.66)
========= ===========

WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 2,498,581 3,439,559
========= ===========

The accompanying notes are an integral part of these financial statements

F-4

SIGA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------

DEFICIT
ACCUMULATED
STOCK DURING THE
ADDITIONAL SUBSCRIP- DEVELOP- TOTAL
COMMON STOCK
----------------------- PAID-IN TIONS MENT STOCKHOLDERS'

SHARES PAR VALUE CAPITAL OUTSTANDING STAGE EQUITY (DEFICIT)
------ --------- ------- ----------- ----------- ----------------

Issuance of common stock at
inception 2,079,170 $ 208 $ 1,040 $(1,248) - -

Net loss - - - - $ (1,000) $ (1,000)
--------- -------- ---------- ------- ----------- ----------

Balances at December 31, 1995 2,079,170 208 1,040 (1,248) (1,000) (1,000)

Net proceeds from issuance
and sale of common stock 1,038,008 104 1,551,333 - - 1,551,437

Net proceeds from issuance
and sale of common stock 250,004 25 748,985 - - 749,010

Receipt of stock subscriptions
outstanding - - - 1,248 - 1,248

Issuance of compensatory options
and warrants - - 367,461 - - 367,461

Net loss - - - - (2,268,176) (2,268,176)
--------- -------- ---------- ------- ----------- ----------

Balances at December 31, 1996 3,367,182 $ 337 $2,668,819 - $(2,269,176) $ 399,980
========= ======== ========== ======= =========== ==========

The accompanying notes are an integral part of these financial statements.

F-5

SIGA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF CASH FLOWS
- ------------------------------------------------------------------------------

DECEMBER 28, YEAR DECEMBER 28,
1995 (INCEPTION) ENDED 1995 (INCEPTION)
TO DECEMBER DECEMBER TO DECEMBER
31, 1995 31, 1996 31, 1996
--------------- -------- ---------------

Cash flows from operating activities:
Net loss $ (1,000) $(2,268,176) $(2,269,176)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation - 7,249 7,249
Stock option and warrant compensation - 367,461 367,461
Changes in assets and liabilities:
Prepaid sponsored research - (401,006) (401,006)
Other assets (6,937) 6,328 (609)
Accounts payable and accrued
expenses 7,937 173,001 180,938
---------- ---------- ----------
NET CASH USED IN OPERATING
ACTIVITIES - (2,115,143) (2,115,143)
---------- ---------- ----------
Cash flows from investing activities:
Capital expenditures - (28,674) (28,674)
---------- ---------- ----------
NET CASH USED IN INVESTING
ACTIVITIES - (28,674) (28,674)
---------- ---------- ----------
Cash flows from financing activities:
Net proceeds from issuance of common
stock - 2,300,447 2,300,447
Receipt of stock subscriptions outstanding - 1,248 1,248
Deferred offering costs - (115,688) (115,688)
---------- ---------- ----------
NET CASH PROVIDED FROM
FINANCING ACTIVITIES - 2,186,007 2,186,007
---------- ---------- ----------

Net increase in cash and cash equivalents - 42,190 42,190
Cash and cash equivalents, beginning of
period - - -
---------- ---------- ----------

Cash and cash equivalents, end of period - $ 42,190 $ 42,190
========== ========== ==========

There were no cash payments for interest or income taxes for the periods ended
December 31, 1995 and 1996.
The accompanying notes are an integral part of these financial statements.

F-6

SIGA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1996
- --------------------------------------------------------------------------------

1. ORGANIZATION AND BASIS OF PRESENTATION

ORGANIZATION
SIGA Pharmaceuticals, Inc. (the "Company") was incorporated in the State
of Delaware on December 28, 1995. The Company is engaged in the discovery,
development and commercialization of vaccines, antibiotics, and novel
anti-infectives for the prevention and treatment of infectious diseases.
The Company's technologies are licensed from third parties and the Company
depends on third parties to conduct research on its behalf pursuant to
research and consulting agreements.

BASIS OF PRESENTATION
The Company's activities since inception have consisted primarily of
sponsoring research and development, performing business and financial
planning, preparing and filing patent applications, and raising capital.
Accordingly, the Company is considered to be a development stage company
and will require additional financing to achieve commercialization of its
technologies.

The accompanying financial statements have been prepared assuming the
Company will continue as a going concern. Since inception, the Company has
incurred cumulative net operating losses of $2,269,176 and expects to
incur substantial additional losses to complete the commercialization of
its technologies. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. The Company's ability to
continue as a going concern is dependent upon its ability to generate
sufficient cash flow to meet its obligations as they come due. Management
is actively pursuing various options which include securing additional
equity financing through an initial public offering and believes that
sufficient funding will be available to meet its planned business
objectives. The Company has entered into a non-binding letter of intent
with an underwriter to sell shares of the Company's common stock in an
initial public offering (the "IPO") pursuant to the Securities Act of
1933. The financial statements do not include any adjustments relating to
the recoverability of the carrying amount of recorded assets or the amount
of liabilities that might result from the outcome of these uncertainties.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH EQUIVALENTS
Cash equivalents consist of short term, highly liquid investments, with
original maturities of less than three months when purchased and are
stated at cost. Interest is accrued as earned.

F-7

SIGA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1996
- --------------------------------------------------------------------------------

EQUIPMENT
Equipment is stated at cost. Depreciation is provided on the straight-line
method over the estimated useful lives of the respective assets, none of
which exceeds three years.

DEFERRED OFFERING COSTS
In connection with the Company's proposed IPO, the Company has incurred
certain costs which have been deferred. In the event the proposed IPO is
not consummated the deferred offering costs will be expensed.

RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred and include costs
of third parties who conduct research and development, pursuant to
development and consulting agreements, on behalf of the Company. Costs
related to the acquisition of technology rights, for which development
work is still in process, and that have no alternative future uses, are
expensed as incurred and considered a component of research and
development costs.

INCOME TAXES
Income taxes are accounted for under the asset and liability method
prescribed by Statement of Financial Accounting Standard No. 109,
"Accounting for Income Taxes." Deferred income taxes are recorded for
temporary differences between financial statement carrying amounts and the
tax basis of assets and liabilities. Deferred tax assets and liabilities
reflect the tax rates expected to be in effect for the years in which the
differences are expected to reverse. A valuation allowance is provided if
it is more likely than not that some or all of the deferred tax asset will
not be realized.

NET LOSS PER COMMON SHARE
Net loss per common share is computed using the weighted average number of
common shares and common share equivalents assumed to be outstanding
during the period. Common share equivalents consist of the Company's
common shares issuable upon exercise of stock options and outstanding
warrants. Pursuant to the requirements of the Securities and Exchange
Commission, stock options, warrants and shares issued by the Company
within one year of the date of the initial public offering at prices below
the proposed offering price have been included in the calculation of
weighted average shares outstanding as if they were outstanding for all
periods presented using the treasury stock method.

ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the

F-8

SIGA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1996
- --------------------------------------------------------------------------------

reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements
and the reported amounts of expenses during the reporting period. Actual
results could differ from those estimates.

FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of cash and cash equivalents, and accounts payable and
accrued expenses approximates fair value due to the relatively short
maturity of these instruments.

3. EQUIPMENT

Equipment consisted of the following at December 31, 1996:

Computer equipment $ 28,674
Less - Accumulated depreciation (7,249)
----------

Equipment, net $ 21,425
==========

4. STOCKHOLDERS' EQUITY

In March 1996, the Company completed a private offering of 1,038,008 shares
of its common stock at the price of $1.50 per share, providing gross proceeds
of $1,557,000, and net proceeds, after deducting expenses, of $1,551,437. In
September 1996, the Company completed a second private offering of 250,004
shares of common stock at a price of $3.00 per share providing gross proceeds
of $750,000 and net proceeds, after deducting expenses, of $749,010.

REVERSE STOCK SPLIT
Effective December 1996, the Company implemented a one for six reverse stock
split (without changing the par value thereof) applicable to all issued and
outstanding shares of the Company's common stock. All fractional shares
resulting from such stock split were rounded up to the next whole share. All
common shares, stock options, warrants and related per share data, reflected
in the accompanying financial statements and notes thereto, have been
presented as if such change had occurred at December 28, 1995.

STOCK OPTION PLAN AND WARRANTS
In January 1996, the Company implemented its 1996 Incentive and Non-Qualified
Stock Option Plan (the "Plan") whereby options to purchase up to 333,333
shares of the Company's common stock may be granted to employees, consultants
and outside directors of the

F-9

SIGA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1996
- --------------------------------------------------------------------------------

Company. The exercise period for options granted under the Plan, except those
granted to outside directors, is determined by a committee of the Board of
Directors. Stock options granted to outside directors pursuant to the Plan
must have an exercise price equal to or in excess of the fair market value of
the Company's common stock at the date of grant and become exercisable over a
period of three years with a third of the grant being exercisable at the
completion of each year of service subsequent to the grant. The fair market
value of the Company's common stock is determined by a committee of the Board
of Directors. During the year ended December 31, 1996, the Company granted
options under the Plan to employees to purchase 33,334 shares of its common
stock at an exercise price of $1.50 per share and options to purchase 16,667
shares at an exercise price of $3.00 per share. All such grants were
outstanding at December 31, 1996 and were eligible for exercise. There were
no grants to outside directors during the year ended December 31, 1996.

In November 1996, the Company entered into an employment agreement with its
President and Chief Executive Officer. Under the terms of the agreement, the
employee received warrants to purchase 461,016 shares of common stock at
$3.00 per share. Warrants to purchase 25% of such shares were exercisable
upon issuance and the remaining warrants are exercisable on a pro rata basis
on the first, second and third anniversaries of the agreement (see Note 8).

The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," and related interpretations in accounting for
warrants issued to employees and stock options granted under the Plan. During
the year ended December 31, 1996, compensation expense of $57,627 has been
recognized for warrants issued to employees and $8,334 for options issued
pursuant to its stock-based compensation plan calculated based upon the
difference between the exercise price of the warrant or option and the fair
market value of the Company's common stock on the date of grant. Had
compensation cost for warrants issued and stock options granted been
determined based upon the fair value at the grant date for awards consistent
with the methodology prescribed under Statement of Financial Accounting
Standards No. 123 ("FAS 123"), "Accounting for Stock-Based Compensation," the
Company's net loss and loss per common share would have been increased by
approximately $73,000, or approximately $.02 per share.

In March 1996, the Company entered into an agreement with a consultant, who
is a stockholder, whereby the consultant would be granted options to purchase
150,000 shares of the Company's common stock, at an exercise price of $1.50
per share, contingent upon completion of collaborative agreements with
specified pharmaceutical companies. In September 1996, such agreement was
terminated and the consultant was issued warrants to purchase 150,000 shares
of its common stock, at an exercise price of $1.50 per share. The warrants
were exercisable upon issuance and expire on the twentieth anniversary of the
date

F-10

SIGA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1996
- --------------------------------------------------------------------------------

of issuance. The Company has recognized non-cash compensation expense of
$301,500 for the year ended December 31, 1996, based upon the fair value of
such warrants on the date of grant (see Note 6).

The fair value of the options and warrants granted to employees and the
warrants issued to the consultant during 1996 ranged from $.22 to $2.01 on
the date of the respective grant using the Black-Scholes option-pricing model
assuming (a) no dividend yield, (b) a risk-free interest rate ranging from
5.26% to 6.26% based on the date of the respective grant, (c) no forfeitures,
and (d) an expected life of three years. As permitted under the provisions of
FAS 123, and based on the historical lack of a public market for the
Company's common stock, no factor for volatility has been reflected in the
option and warrant pricing calculation.

5. INCOME TAXES

The Company has incurred losses since inception which have generated net
operating loss carryforwards of approximately $1,901,000 for federal and
state income tax purposes. These carryforwards are available to offset future
taxable income and expire in 2011 for federal income tax purposes. These
losses are subject to limitation on future years' utilization should certain
ownership changes occur.

The net operating loss carryforwards and temporary differences, arising
primarily from noncash compensation expense, result in a noncurrent deferred
tax benefit at December 31, 1996 of approximately $877,000. In consideration
of the Company's accumulated losses and the uncertainty of its ability to
utilize this deferred tax benefit in the future, the Company has recorded a
valuation allowance of an equal amount on such date to fully offset the
deferred tax benefit amount.

For the year ended December 31, 1996, the Company's effective tax rate
differs from the federal statutory rate principally due to net operating
losses and other temporary differences for which no benefit was recorded,
state taxes and other permanent differences.

6. RELATED PARTIES

CONSULTING AGREEMENTS

The Company has entered into a consulting agreement, expiring January 1,
2000, with CSO Ventures LLC ("CSO") under which CSO provides the Company with
business development, operations and other advisory services. Pursuant to the
agreement CSO is paid an annual consulting fee of $120,000. Two Executive
Vice Presidents of the Company are principals of CSO. The agreement is only
cancelable by the Company for cause, as defined in the

F-11

SIGA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1996
- --------------------------------------------------------------------------------

agreement. During the year ended December 31, 1996, the Company incurred
expense of $120,000 pursuant to the agreement.

In connection with the development of its licensed technologies the Company
has entered into a consulting agreement with the scientist who developed such
technologies, under which the consultant serves as the Company's Chief
Scientific Advisor. The scientist, who is a stockholder, shall be paid an
annual consulting fee of $75,000. The agreement, which commenced in January
1996 and is only cancelable by the Company for cause, as defined in the
agreement, has an initial term of two years and provides for automatic
renewals of three additional one year periods unless either party notifies
the other of its intention not to renew. Research and development expense
incurred under the agreement amounted to $75,000 for the year ended December
31, 1996. During the year ended December 31, 1996, the scientist was issued
warrants to purchase 150,000 shares of the Company's common stock at an
exercise price of $1.50 per share (see Note 4).

EMPLOYMENT AGREEMENTS
The Company has employment agreements, expiring in December 1998, with its
two Executive Vice Presidents ("EVPs"), who are principal shareholders of the
Company and principals of CSO, under which the EVPs are each to be paid
minimum annual compensation of $150,000. In addition, the Company granted
each of the EVPs options to purchase 16,667 shares of the Company's common
stock, at an exercise price of $1.50 per share, upon execution of the
respective agreements. During the term of the agreements the EVPs are each to
receive annual stock option grants to purchase 16,667 common shares
exercisable at the fair market value at the date of grant. Under the
provisions of the agreements the EVPs will each receive a cash payment equal
to 1.5% of the total consideration received by the Company in a transaction
resulting in a greater than 50% change in ownership of the outstanding common
stock of the Company. The Company incurred $324,000 of expense for the year
ended December 31, 1996 pursuant to these agreements.

UNDERWRITING AGREEMENT
As discussed in Note 1, the Company has secured a nonbinding letter of intent
with an underwriter to sell shares of the Company's common stock in an IPO.
At December 31, 1996, employees of the underwriter hold 594,351 shares or
approximately 18% of the Company's outstanding common stock.

7. LICENSE AND RESEARCH SUPPORT AGREEMENT

In January 1996, the Company entered into a license and research support
agreement with third parties. Under the terms of the agreement, the Company
has been granted an exclusive world-wide license to make, use and sell
products derived from the licensed technologies. In

F-12

SIGA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1996
- --------------------------------------------------------------------------------

consideration of the license grant the Company is obligated to pay royalties
equal to a specified percentage of net sales of products incorporating the
licensed technologies. In the event the Company sublicenses any technologies
covered by the agreement the third parties would be entitled to a significant
percentage of the sublicense revenue received by the Company. In addition,
the Company is required to make milestone payments, up to $225,000 per
product, for each product developed from the licensed technologies.

The Company has agreed to sponsor further research by the third parties for
the development of the licensed technologies for a period of two years from
the date of the agreement, in return for a payment of $725,000 to such third
parties. The period of sponsored research will automatically be renewed for
additional one-year periods unless terminated by the Company. Amortization of
prepaid sponsored research under this agreement was $332,292 for the year
ended December 31, 1996. The Company also agreed to reimburse the third
parties for costs associated with the preparation, filing and prosecution of
patent rights for the licensed technologies incurred prior to the execution
of the license and research support agreement. The agreement is only
cancelable by the Company for cause, as defined in the agreement. The Company
has expensed $310,986 of reimbursable patent preparation costs pursuant to
the agreement during the year ended December 31, 1996, of which $66,437
remains accrued at December 31, 1996.

In January 1996, the Company entered into research agreements with third
parties. Under the terms of the agreements, the Company has agreed to fund
two years of research in return for annual payments of $183,320. Research and
development expense under these agreements amounted to $175,024 for the year
ended December 31, 1996.

8. COMMITMENTS AND CONTINGENCIES

EMPLOYMENT AGREEMENT
The Company has an employment agreement with its Director of Bacterial
Research which expires in December 1997. Under the terms of the agreement,
the employee is to receive minimum annual compensation of $90,000. The
agreement is only cancelable by the Company for cause, as defined in the
agreement. During the year ended December 31, 1996, the Company incurred
$90,000 of expense pursuant to the agreement.

In November 1996, the Company entered into an employment agreement, expiring
in November 1999, with its President and Chief Executive Officer. Under the
terms of the agreement, the employee is to receive annual base compensation
of $225,000 and options to purchase 16,667 shares of the Company's common
stock, exercisable at the fair market value on the date of grant. Upon
execution of the agreement, the Company granted the employee options to
purchase 16,667 shares of its common stock at an exercise price of $3.00 per

F-13

SIGA PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1996
- --------------------------------------------------------------------------------

share. In addition, the employee was issued warrants to purchase 461,016
shares of common stock at $3.00 per share (see Note 4). Under the provisions
of the agreement, the President will receive a cash payment equal to 1.5% of
the total consideration received by the Company in a transaction resulting in
a greater than 50% change in ownership of the outstanding common stock of the
Company. During the year ended December 31, 1996, the Company incurred
$28,435 of expense pursuant to the agreement.

9. SUBSEQUENT EVENTS

In January and February 1997, in contemplation of its proposed IPO, the
Company issued bridge notes (the "Bridge Notes") in the principal amount of
$1,000,000, for which the Company received proceeds, net of offering costs,
of approximately $990,000. The Bridge Notes bear interest at 10% per annum
and are due and payable together with accrued but unpaid interest, on the
earlier of (a) the closing of an initial public offering of the Company's
common stock, or (b) six months after the date of execution of the Bridge
Notes. In conjunction with the issuance of the Bridge Notes, the Company
entered into warrant agreements whereby the purchasers of the Bridge Notes
will be issued warrants to purchase a number of shares of common stock
determined by dividing (i) one-half of the gross proceeds of the Bridge Notes
($500,000) by (ii) the IPO price per share. The warrants will provide for an
exercise price per share equal to the IPO price per share and will not be
exercisable for a period of one year subsequent to issuance. In the event
that prior to the maturity date of the Bridge Notes (i) the Company's
proposed IPO is not consummated, or (ii) the Company is acquired by another
corporation, the holders of the Bridge Notes will receive warrants to
purchase an aggregate of 100,000 shares of common stock at an exercise price
of $5.00 per share.

The offering costs, in the amount of approximately $10,000, incurred by the
Company in connection with the bridge financing, have been allocated to the
Bridge Notes and recorded as deferred debt issuance costs and are being
amortized over the six month term of the Bridge Notes. Upon completion of the
Company's planned IPO and repayment of the Bridge Notes from the net proceeds
of the offering, the unamortized portion of the debt discount will be
immediately expensed.

F-14

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 24. Indemnification of Directors and Officers.

In addition, the Certificate provides that a director of the Company shall
not be personally liable to the Company or its stockholders for monetary damages
for breach of the director's fiduciary duty. However, the Certificate does not
eliminate or limit the liability of a director for any of the following reasons:
(i) a breach of the director's duty of loyalty to the Company or its
stockholders; (ii) acts or omissions not in good faith or that involve
intentional misconduct or knowing violation of law; or (iii) a transaction from
which the director derived an improper personal benefit.

The Company will purchase and maintain Directors' and Officers' Insurance
as soon as the Board of Directors determines practicable, in amounts which they
consider appropriate, insuring the directors against any liability arising out
of the director's status as a director of the Company regardless of whether the
Company has the power to indemnify the director against such liability under
applicable law.

Item 25. Other Expenses of Issuance and Distribution.

SEC Registration Fee $ 5,618
Nasdaq-SCM Listing Fee $ 8,675
NASD Filing Fee $ 2,354
Accounting Fees and Expenses* $ 70,000
Printing and Engraving* $ 60,000
Legal Fees and Expenses* $ 75,000
Blue Sky Fees and Expenses $ 46,000
Transfer Agent and Registrar Fees* $ 2,000
Miscellaneous Expenses* $ 10,353
--------
Total $280,000
========

- -----------
* Estimated.

Item 26. Recent Sales of Unregistered Securities.

The following discussion gives retroactive effect to the one for 6 reverse
stock split effected on December 6, 1996. Since its organization in December
1995, the Company has sold and issued the following unregistered securities:

In December 1995, the Company issued 2,079,170 shares of Common Stock to
Judson A. Cooper, Steven M. Oliveira, Joshua D. Schein, Vincent A. Fischetti,
Kevin F. Jones, Dennis Hruby and Richard Stone for nominal consideration in
connection with the formation of the Company.

In March 1996, the Company sold 1,038,008 shares of Common Stock to
eighteen accredited investors for gross proceeds of $1,557,000 in cash.

II-1

In September 1996, the Company issued 250,004 shares of Common Stock to
twelve accredited investors and two non-accredited investors for $750,000 in
cash.

In February 1997, the Company entered into warrant agreements to issue
warrants to purchase an estimated 100,000 shares of common stock to eight
accredited investors in connection with a $1,000,000 bridge financing completed
on February 28, 1997.

Item 27. Exhibits.

Exhibit
Number Description of Exhibits
- ------ ------------------------

1 UNDERWRITING AGREEMENT
1(a) Form of Underwriting Agreement
1(b) Form of Underwriter's Warrant
1(c) Escrow Agreement by and among the Company, Sunrise Securities Corp.
and United States Trust Company of New York, dated as of
_____________, 1997
1(d) Form of Subscription Agreement to purchase shares of Common Stock of
the Company
3 ARTICLES OF INCORPORATION AND BY-LAWS
3(a) Articles of Incorporation of the Company, in effect as of the date
hereof
3(b) Bylaws of the Company, in effect as of the date hereof
4 INSTRUMENTS DEFINING THE RIGHTS OF HOLDERS
4(a) Form of Common Stock Certificate
4(b) 1996 Incentive and Non-Qualified Stock Option Plan(1)
4(c) Warrant Agreement dated as of September 15, 1996 between the Company
and Vincent A. Fischetti(1)
4(d) Warrant Agreement dated as of November 18, 1996 between the
Company and David de Weese(1)
4(e) Form of Bridge Loan Letter Agreement for Bridge Investors
4(f) Form of Promissory Note for Bridge Investors
4(g) Form of Warrant Agreement for Bridge Investors
4(h) Form of Registration Rights Agreement for Bridge Investors
5 OPINION RE: LEGALITY
5(a) Opinion of Eilenberg & Zivian
10 MATERIAL CONTRACTS
10(a) License and Research Support Agreement between the Company and The
Rockefeller University, dated as of January 31, 1996; and
Amendment to License and Research Support Agreement between the
Company and The Rockefeller University, dated as of October 1,
1996(2)
10(b) Research Agreement between the Company and Emory University, dated
as of January 31, 1996(2)
10(c) Research Support Agreement between the Company and Oregon State
University, dated as of January 31, 1996(2)
10(d) Employment Agreement between the Company and Dr. Joshua D. Schein,
dated as of January 1, 1996(1)
10(e) Employment Agreement between the Company and Judson A. Cooper,
dated as of January 1, 1996; and Amendment No. 1 to Employment
Agreement between the Company and Judson A. Cooper, dated as of
November 18, 1996(1)
10(f) Employment Agreement between the Company and Dr. Kevin F. Jones,
dated as of January 1, 1996
10(g) Employment Agreement between the Company and David de Weese, dated
as of November 18, 1996(1)
10(h) Consulting Agreement between the Company and CSO Ventures LLC,
dated as of January 1, 1996
10(i) Consulting Agreement between the Company and Dr. Vincent A.
Fischetti, dated as of January 1, 1996
10(j) Consulting Agreement between the Company and Dr. Dennis Hruby,
dated as of January 1, 1996

II-2

10(k) Letter Agreement between the Company and Dr. Vincent A. Fischetti,
dated as of March 1, 1996
11 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
11(a) Statement re: Computation of per share earnings
24 CONSENTS OF EXPERTS AND COUNSEL
24(a) Consent of Eilenberg & Zivian
24(b) Consent of Price Waterhouse LLP
___________________
1 These agreements were entered into prior to the reverse split of the
Company's Common Stock and, therefore, do not reflect such reverse
split.

2 Confidential information is omitted and identified by a * and filed
separately with the SEC pursuant to a request for Confidential Treatment.

Item 28. Undertakings.

- The undersigned Registrant in all instances will provide to the

Underwriter at the closing specified in the underwriting agreement certificates
in such denominations and registered in such names as required by the
underwriter to permit prompt delivery to each purchaser.

- Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the small business issuer pursuant to the foregoing provisions, or otherwise,
the undersigned Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the undersigned Registrant of expenses incurred or paid by a director, officer
or controlling person of the undersigned Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
undersigned Registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

- The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as
part of a registration statement in reliance upon Rule 430A and
contained in the form of prospectus filed by the undersigned
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act of 1933 shall be deemed to be part of the registration
statement as of the time it was declared effective; and

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.

- The undersigned Registrant hereby undertakes that it will:

(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:

(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;

(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in
the registration statement; and

II-3

(iii)Include any additional or changed material information on the
plan of distribution.

(2) For determining liability under the Securities Act, treat each post-
effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the
initial bona fide offering.

(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.

II-4

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the

undersigned Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form SB-2 and authorized this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, on the 10th day of March, 1997.

SIGA PHARMACEUTICALS, INC.

By: /s/ David H. de Weese
-------------------------------
David H. de Weese
Chairman, President, Chief Executive Officer and
Director

By: /s/ Joshua D. Schein
-------------------------------
Dr. Joshua D. Schein
Principal Financial Officer, Secretary and Director

By: /s/ Judson A. Cooper
-------------------------------
Judson A. Cooper
Executive Vice President and Director

II-5

INDEX TO EXHIBITS

Exhibit
Number Page
- ------- ----
1(a) Form of Underwriting Agreement.......................... E- 1
1(b) Form of Underwriter's Warrant........................... E-23
1(c) Escrow Agreement by and among the Company,
Sunrise Securities Corp. and United States
Trust Company of New York, dated as of
_____________, 1997..................................... E-42
1(d) Form of Subscription Agreement to purchase shares
of Common Stock of the Company.......................... E-56
3(a) Articles of Incorporation of the Company, in effect
as of the date hereof................................... E-61
3(b) Bylaws of the Company, in effect as of the date hereof.. E-70
4(a) Form of Common Stock Certificate........................ E-84
4(b) 1996 Incentive and Non-Qualified Stock Option Plan(1)... E-87
4(c) Warrant Agreement dated as of September 15, 1996 between the
Company and Vincent A. Fischetti(1)..................... E-103
4(d) Warrant Agreement dated as of November 18, 1996 between the
Company and David de Weese(1)........................... E-115
4(e) Form of Bridge Loan Letter Agreement for Bridge Investors....E-139
4(f) Form of Promissory Note for Bridge Investors.................E-144
4(g) Form of Warrant Agreement for Bridge Investors...............E-150
4(h) Form of Registration Rights Agreement for Bridge Investors...E-163
5(a) Opinion of Eilenberg & Zivian................................E-175
10(a) Rockefeller University, dated as of January 31, 1996; and
Amendment to License and Research Support Agreement between
the Company and The Rockefeller University, dated as of
October 1, License and Research Support Agreement between
the Company and The 1996(2)............................. E-177
10(b) Research Agreement between the Company and Emory University,
dated as of January 31, 1996(2)............................. E-201
10(c) Research Support Agreement between the Company and Oregon
State University, dated as of January 31, 1996(2)........... E-207
10(d) Employment Agreement between the Company and Dr. Joshua.D.
Schein, dated as of January 1, 1996(1)..................... E-215
10(e) dated as of January 1, 1996; and Amendment No. 1 to Employment
Agreement between the Company and Judson A. Cooper,
dated as of Employment Agreement between the Company and
Judson A. Cooper, November 18, 1996(1).................. E-221
10(f) Employment Agreement between the Company and Dr. Kevin F. Jones,
dated as of January 1, 1996............................. E-228
10(g) Employment Agreement between the Company and David de
Weese, dated as of November 18, 1996(1)................. E-236
10(h) Consulting Agreement between the Company and CSO Ventures
LLC, dated as of January 1, 1996......................... E-244
10(i) Consulting Agreement between the Company and Dr. Vincent A.
Fischetti, dated as of January 1, 1996.................. E-248
10(j) Consulting Agreement between the Company and Dr. Dennis
Hruby, dated as of January 1, 1996......................... E-255
10(k) Letter Agreement between the Company and Dr. Vincent A.
Fischetti, dated as of March 1, 1996...................... E-262
11(a) Statement re: Computation of per share earnings........... E-265
24(a) Consent of Eilenberg & Zivian............................. E-267
24(b) Consent of Price Waterhouse LLP........................... E-269
- -------------------
1 These agreements were entered into prior to the reverse split of the
Company's Common Stock and, therefore, do not reflect such reverse split.

2 Confidential information is omitted and identified by a * and filed
separately with the SEC pursuant to a request for Confidential Treatment.

II-6


 
                                                                    EXHIBIT 1(a)

                                      E-1

 
                         FORM OF UNDERWRITING AGREEMENT

                           SIGA PHARMACEUTICALS, INC.


                             UNDERWRITING AGREEMENT



                                                      ____________, 1997



Sunrise Securities Corp.
135 E. 57th Street
New York, New York  10022

Attention:  Nathan Low, President

Gentlemen:

     The undersigned, SIGA Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), hereby confirms its agreement with you (the "Underwriter") as
follows:

     1.  INTRODUCTION.
         ------------ 
 
     (a) Subject to the terms and conditions contained herein, the Company
proposes to issue and sell in the United States 3,250,000 shares (the "Shares")
of common stock, without par value of the Company (the "Common Stock"), with an
offering price per share of Common Stock of $5.00.
 
     (b) The Company is retaining the Underwriter as its exclusive agent in the
offering contemplated hereby (the "Offering") and understands that the
Underwriter is acting on a "best efforts" basis in connection with the Offering
and that the Shares will be sold on an "all or none" basis, such that no Shares
will be sold unless all of the Shares are sold.

     (c) The Company hereby agrees to pay to the Underwriter a commission equal
to 10.0% of the gross proceeds of the sale of the Shares in the Offering.

     (d) The Company hereby agrees to issue and sell to the Underwriter warrants
(the "Underwriter's Warrants") to purchase a number of shares of Common Stock
equal to 10% of the number of Shares sold to purchasers in the Offering (the
"Warrant Stock") for a purchase price of $.001 per warrant.  The Underwriter's
Warrants will be exercisable for the Warrant Stock for a period of four years,
commencing one year after the effective date of the Registration Statement (as
hereinafter defined) at an initial exercise price per share equal to 110% of the
price per Share in the Offering.  The Warrant Stock shall be identical to the
Shares.  The Underwriter's Warrants shall be substantially in the form filed as
Exhibit 1(b) to the Registration Statement.  The Underwriter's Warrants and the
Warrant Stock are sometimes hereinafter referred to collectively as the
"Underwriter's Securities."  The Shares and the Underwriter's Securities are
sometimes hereinafter referred to collectively as the "Securities."
 
     2.  REPRESENTATIONS AND WARRANTIES.  The Company represents and warrants
         ------------------------------                                      
to, and agrees with, the Underwriter that:

          (a) The Company has filed with the Securities and Exchange Commission
     (the "Commission") a registration statement, and may have filed one or more
     amendments thereto, on Form SB-2 (Registration No. 333-______), including
     in such registration statement and each such amendment a related
     preliminary prospectus, for the registration of the Securities under the
     Securities Act of 1933, as amended (the "Act").  As used in this Agreement,

                                      E-2

 
     the term "Registration Statement" shall refer to such registration
     statement, as amended, on file with the Commission at the time such
     registration statement becomes effective under the Act (including the
     prospectus, financial statements, exhibits, and all other documents filed
     as a part thereof, or incorporated by reference directly or indirectly
     therein (such incorporated documents being herein referred to as the
     "Incorporated Documents")); provided, however, that such Registration
     Statement, at the time it becomes effective, may omit such information as
     is permitted to be omitted from such Registration Statement when it becomes
     effective under the Act pursuant to Rule 430A of the General Rules and
     Regulations under the Act (the "Regulations"), which information (the "Rule
     430A Information") shall be deemed to be included in such Registration
     Statement when a final prospectus is filed with the Commission in
     accordance with Rules 430A and 424(b)(1) or (4) of the Regulations; the
     term "Preliminary Prospectus" shall refer to each prospectus included in
     the Registration Statement, or any amendments thereto, before the
     Registration Statement becomes effective under the Act, the form of
     prospectus omitting Rule 430A Information included in the Registration
     Statement when the Registration Statement becomes effective under the Act,
     if applicable (the "Rule 430A Prospectus"), and any prospectus filed by the
     Company with your consent pursuant to Rule 424(a) of the Regulations; and
     the term "Prospectus" shall refer to the final prospectus in the form first
     filed pursuant to Rule 424(b)(1) or (4) of the Regulations or, if no such
     filing is required, the form of final prospectus included in the
     Registration Statement.  Any reference in this Agreement to the
     Registration Statement, any Preliminary Prospectus or the Prospectus shall
     be deemed to refer to and include any documents filed after the effective
     date under the Securities Exchange Act of 1934, as amended (the "Exchange
     Act"), and the rules and regulations of the Commission thereunder that are
     deemed to be incorporated by reference therein.

          (b)   When the Registration Statement becomes effective under the Act,
     and at all times subsequent thereto up to and including the Closing Date
     (as defined in Section 3), and during such longer period as the Prospectus
     may be required to be delivered in connection with sales by you, and during
     such longer period until any post-effective amendment thereto shall become
     effective under the Act, the Registration Statement (and any post-effective
     amendment thereto) and the Prospectus (as amended or as supplemented, if
     the Company shall have filed with the Commission any amendment or
     supplement to the Registration Statement or the Prospectus), respectively,
     will contain all statements which are required to be stated therein in
     accordance with the Act and the Regulations, will comply with the Act and
     the Regulations, and will not contain any untrue statement of a material
     fact or omit to state any material fact required to be stated therein or
     necessary to make the statements therein not misleading, and no event will
     have occurred which should have been set forth in an amendment or
     supplement to the Registration Statement or the Prospectus which has not
     then been set forth in such an amendment or supplement; if a Rule 430A
     Prospectus is included in the Registration Statement at the time it becomes
     effective under the Act, the Prospectus filed pursuant to Rules 430A and
     424(b)(1) or (4) of the Regulations will contain all Rule 430A Information
     and all statements which are required to be stated therein in accordance
     with the Act or the Regulations, will comply with the Act and the
     Regulations, and will not contain any untrue statement of a material fact
     or omit to state any material fact required to be stated therein or
     necessary to make the statements therein not misleading; and each
     Preliminary Prospectus, as of the date filed with the Commission, did not
     contain any untrue statement of a material fact or omit to state any
     material fact required to be stated therein or necessary to make the
     statements therein not misleading; except that no representation or
     warranty is made in this Section 2(b) with respect to statements or
     omissions made in reliance upon and in conformity with written information
     furnished to the Company as stated in Section 8(b) with respect to the
     Underwriter by or on behalf of the Underwriter expressly for inclusion in
     the Registration Statement, any Preliminary Prospectus, or the Prospectus,

                                      E-3

 
     or any amendment or supplement thereto.  Each of the Incorporated Documents
     complies in all material respects with the requirements of the Exchange Act
     and the rules and regulations thereunder.

          (c) Neither the Commission nor the "blue sky" or securities authority
     of any jurisdiction has issued an order (a "Stop Order") suspending the
     effectiveness of the Registration Statement, preventing or suspending the
     use of the Registration Statement, any Preliminary Prospectus, the
     Prospectus, or any amendment or supplement thereto, refusing to permit the
     effectiveness of the Registration Statement, or suspending the registration
     or qualification of the Securities, nor has any of such authorities
     instituted or, to the knowledge of the Company, threatened to institute any
     proceedings with respect to a Stop Order.

          (d) Any contract, agreement, instrument, lease, or license required to
     be described in the Registration Statement or the Prospectus has been
     properly and accurately described therein.  Any contract, agreement,
     instrument, lease, or license required to be filed as an exhibit to the
     Registration Statement has been filed with the Commission as an exhibit to,
     or has been incorporated as an exhibit by reference into, the Registration
     Statement.

          (e) The Company has no subsidiary or subsidiaries (as defined in the
     Regulations).   The Company is a corporation duly organized, validly
     existing, and in good standing under the laws of the jurisdiction of its
     incorporation, with full power and authority, and all necessary consents,
     authorizations, approvals, orders, licenses, certificates, and permits of
     and from, and declarations and filings with, all federal, state, local, and
     other governmental authorities and all courts and other tribunals, to own,
     lease, license, and use its properties and assets and to conduct its
     business in the manner described in the Prospectus.  The Company is duly
     qualified to do business as a foreign corporation and is in good standing
     as such in every jurisdiction in which its ownership, leasing, licensing,
     or use of property and assets or the conduct of its business makes such
     qualification necessary, except where the failure to be so qualified does
     not amount to a  material liability or disability to the Company.

          (f) The authorized capital stock of the Company consists of 25,000,000
     shares of Common Stock, of which 3,367,182 shares are outstanding without
     giving effect to the issuance of the Shares and 10,000,000 shares of
     Preferred Stock, par value $.0001 per share, of which there are no
     outstanding shares.  Except as disclosed in the Prospectus, each
     outstanding share of Common Stock is validly authorized and issued, fully
     paid, and nonassessable, without any personal liability attaching to the
     ownership thereof, has not been issued and is not owned or held in
     violation of any preemptive rights of stockholders.   Except as may be
     Properly described in the Prospectus, or as is not required to be described
     in the Prospectus, there is no commitment, plan, or arrangement to issue,
     and no outstanding option, warrant, or other right calling for the issuance
     of, any share of capital stock of the Company or any security or other
     instrument which by its terms is convertible into, or exercisable or
     exchangeable for, capital stock of the Company.  There is outstanding no
     security or other instrument which by its terms is convertible into, or
     exercisable or exchangeable for, capital stock of the Company, except as
     may be properly described in the Prospectus.  The certificates evidencing
     the Common Stock are in proper form.

          (g) The financial statements of the Company included in the
     Registration Statement and the Prospectus fairly present, with respect to
     the Company, the balance sheets, the statements of stockholders' equity,
     the statements of operations, the statements of cash flows, and the other
     information purported to be shown therein at the respective dates and for
     the respective periods to which they apply.  Such financial statements have
     been prepared in accordance with generally accepted accounting principles
     (except to the extent that certain footnote disclosures regarding any stub

                                      E-4

 
     period may have been omitted in accordance with the applicable rules of the
     Commission under the Exchange Act) consistently applied throughout the
     periods involved, are correct and complete in all material respects, and
     are in accordance with the books and records of the Company.  Price
     Waterhouse LLP, the accountants whose report on the audited financial
     statements is filed with the Commission as a part of the Registration
     Statement, are, and during the periods covered by their report(s) included
     in the Registration Statement and the Prospectus were, independent
     certified public accountants with respect to the Company within the meaning
     of the Act and the Regulations.  No other financial statements are required
     by Form SB-2 or otherwise to be included in the Registration Statement or
     the Prospectus.  Since the date of the latest information set forth in the
     Registration Statement or the Prospectus, except as may be properly
     described in the Prospectus, there has at no time been a material adverse
     change in the financial condition, results of operations, business,
     properties, assets, liabilities or, to the best of its knowledge, future
     prospects of the Company.

          (h) There is no claim or litigation, arbitration, governmental or
     other proceeding (formal or informal), or investigation pending,
     threatened, or, to the best knowledge of the Company, in prospect (or any
     basis therefor) with respect to the Company or any of its operations,
     businesses, properties, or assets, except (i) as may be properly described
     in the Prospectus or (ii) such as individually or in the aggregate do not
     now have, and will not in the future have, a material adverse effect upon
     the operations, business, properties, or assets of the Company.  The
     Company is not in violation of, or in default with respect to, any law,
     rule, regulation, order, judgment, or decree, except:  (A) as may be
     properly described in the Prospectus or (B) such as in the aggregate do not
     now have, and will not in the future have, a material adverse effect upon
     the operations, business, properties, assets or net worth of the Company.
     The Company is not currently required to take any action in order to avoid
     any such violation or default.

          (i) The Company has good title to all properties and assets which the
     Prospectus indicates are owned by it, free and clear of all liens, security
     interests, pledges, charges, encumbrances and mortgages, except such as do
     not materially and adversely affect the value of such property and do not
     interfere with the use made or proposed to be made of such property by the
     Company (or except as may be properly described in the Prospectus).  No
     real property leased, licensed, or used by the Company lies in an area
     which is, or to the knowledge of the Company will be, subject to zoning,
     use, or building code restrictions which would prohibit, and no state of
     facts relating to the actions or inactions of another person or entity or
     his or its ownership, leasing, licensing, or use of any real or personal
     property exists or will exist which would prevent, the continued effective
     leasing, licensing, or use of such real property in the business of the
     Company as presently conducted or as the Prospectus indicates the Company
     contemplates conducting, with such exceptions as are not material and do
     not interfere with the use made or proposed to be made of such property and
     buildings by the Company (or except as may be properly described in the
     Prospectus).

          (j) Neither the Company nor, to the knowledge of the Company, any
     other party, is now, or is expected by the Company to be, in violation or
     breach of, or in default with respect to, any material provision of any
     contract, agreement, instrument, lease, license, arrangement, or
     understanding which is material to the Company, and each such contract,
     agreement, instrument, lease, license, arrangement, and understanding is in
     full force and effect and is the legal, valid, and binding obligation of
     the parties thereto and is enforceable as to them in accordance with its
     terms, subject to applicable bankruptcy and insolvency laws.  The Company
     enjoys peaceful and undisturbed possession under all leases and licenses
     under which it is operating.  Except as described in the Prospectus, the
     Company is not a party to, or bound by, any contract, agreement,

                                      E-5

 
     instrument, lease, license, arrangement, or understanding, or subject to
     any charter or other restriction, which has had, or may reasonably be
     expected to have, a material adverse effect on the financial condition,
     results of operations, business, properties, assets, liabilities or future
     prospects of the Company.  The Company is not in violation or breach of, or
     in default with respect to, any term of its certificate of incorporation
     (or other charter document) or by-laws.

          (k) All United States and foreign patents, patent applications,
     trademarks, trademark applications, trade names, service marks, copyrights,
     franchises, and other intangible properties and assets (all of the
     foregoing being herein called "Intangibles") that the Company owns or has
     pending, or under which it is licensed, are in good standing and
     uncontested, except as may be properly described in the Prospectus.  There
     is no right under any Intangible necessary to the business of the Company
     as presently conducted or as the Prospectus indicates it contemplates
     conducting, except as may be so designated in the Prospectus.  The Company
     has not infringed, is not infringing, or has not received notice of (or
     knows of any basis for) a third party claim of infringement with respect to
     asserted Intangibles of others, except as may be properly described in the
     Prospectus.  To the knowledge of the Company, there is no infringement by
     others of Intangibles of the Company.  To the knowledge of the Company,
     there is no Intangible of others which has had, or may in the future have a
     material adverse effect on the financial condition, results of operations,
     business, properties, assets, liabilities or future prospects of the
     Company, except as may be properly described in the Prospectus.

          (l) Neither the Company, nor any director, officer, agent, employee,
     or other person associated with the Company, in such capacity, or acting on
     behalf of, the Company has, directly or indirectly: used any corporate
     funds for unlawful contributions, gifts, entertainment, or other unlawful
     expenses relating to political activity; made any unlawful payment to
     foreign or domestic government officials or employees or to foreign or
     domestic political parties or campaigns from corporate funds; violated any
     provision of the Foreign Corrupt Practices Act of 1977, as amended; or made
     any bribe, rebate, payoff, influence payment, kickback, or other unlawful
     payment.  The Company's internal accounting controls and procedures are
     sufficient to cause the Company to comply in all respects with the Foreign
     Corrupt Practices Act of 1977, as amended.

          (m) The Company has all requisite power and authority to execute,
     deliver, and perform this Agreement, the Escrow Agreement (as hereinafter
     defined), the Subscription Agreements (as hereinafter defined) and the
     Underwriter's Warrants.  All necessary corporate proceedings of the Company
     have been duly taken effective the date hereof to authorize the execution,
     delivery and performance by the Company of this Agreement, the Escrow
     Agreement, the Subscription Agreements and the Underwriter's Warrants.
     Assuming due execution and delivery by the Underwriter, this Agreement has
     been duly authorized, executed, and delivered by the Company, is the legal,
     valid and binding obligation of the Company, and is enforceable against the
     Company in accordance with its terms.  Assuming due execution and delivery
     by any other parties thereto, the Underwriter's Warrants, the Escrow
     Agreement, and the Subscription Agreements have been duly authorized by the
     Company and, when executed and delivered by the Company, will be the legal,
     valid and binding obligations of the Company, enforceable against the
     Company in accordance with their terms.  No consent, authorization,
     approval, order, license, certificate, or permit of or from, or declaration
     or filing with, any federal, state, local, or other governmental authority
     or any court or other tribunal is required by the Company or the Subsidiary
     for the execution, delivery, or performance by the Company of this
     Agreement, the Escrow Agreement, the Subscription Agreements, or the
     Underwriter's Warrants (except such as have been obtained or filings under
     the Act which have been or will be made before the Closing Date, and
     consents, authorizations, approvals, orders, licenses, certificates,
     permits, declarations, or filings required under "blue sky" or securities

                                      E-6

 
     laws which have been obtained at or prior to the date of this Agreement).
     No consent of any party to any contract, agreement, instrument, lease,
     license, arrangement, or understanding to which the Company is a party, or
     to which any of their respective properties or assets are subject, is
     required for the execution, delivery, or performance of this Agreement, the
     Escrow Agreement, the Subscription Agreements, and the Underwriter's
     Warrants, except such consents as in the aggregate will not have a material
     adverse effect upon the operations, business, properties, assets or net
     worth of the Company.  The execution, delivery, and performance of this
     Agreement, the Escrow Agreement, the Subscription Agreements, and the
     Underwriter's Warrants will not violate, result in a material breach of,
     conflict with, result in the creation or imposition of any lien, charge, or
     encumbrance upon any properties or assets of the Company pursuant to the
     terms of, or (with or without the giving of notice or the passage of time
     or both) entitle any party to terminate or call a default under, any such
     contract, agreement, instrument, lease, license, arrangement, or
     understanding, or violate, result in a breach of, or conflict with any term
     of the certificate of incorporation (or other charter document) or by-laws
     of the Company, or violate, result in a material breach of, or conflict
     with any law, rule, regulation, order, judgment or decree binding on the
     Company or to which any of its operations, businesses, properties or assets
     are subject.

          (n) Each Share to be delivered on the Closing Date is validly
     authorized and, when issued and delivered in accordance with this
     Agreement, will be validly issued, fully paid, and nonassessable, without
     any personal liability attaching to the ownership thereof, and will not be
     issued in violation of any preemptive or similar rights of stockholders,
     and each purchaser will, upon payment therefor, receive good title to the
     Shares purchased by it from the Company, free and clear of all liens,
     security interests, pledges, charges, encumbrances, stockholders'
     agreements, and voting trusts.  The Warrant Stock is validly authorized and
     reserved for issuance and, when issued and delivered upon the exercise of
     the Underwriter's Warrants and payment therefor in accordance with the
     respective terms thereof, will be validly issued, fully-paid, and
     nonassessable, without any personal liability attaching to the ownership
     thereof, and will not be issued in violation of any preemptive or similar
     rights of stockholders.  When issued, the Underwriter's Warrants will
     constitute legal, valid, and binding obligations of the Company to issue
     and sell, upon exercise thereof and payment therefor in accordance with the
     respective terms thereof, the number and type of securities of the Company
     called for thereby and the Underwriter's Warrants will be enforceable
     against the Company in accordance with their respective terms.  The
     Underwriter will receive good title to the Underwriter's Warrants purchased
     by it, free and clear of all liens, security interests, pledges, charges,
     encumbrances, restrictions (other than restrictions under federal and any
     applicable state securities laws), stockholders' agreements, and voting
     trusts.

          (o) The Securities conform in all material respects to the
     descriptions thereof contained in the Registration Statement and the
     Prospectus.

          (p) Subsequent to the respective dates as of which information is
     given in the Registration Statement and the Prospectus, and except as may
     otherwise be properly described in the Prospectus, the Company has not (i)
     issued any securities or incurred any liability or obligation, primary or
     contingent, for borrowed money, (ii) entered into any transaction not in
     the ordinary course of business, (iii) declared or paid any dividend on its
     capital stock or (iv) experienced any adverse changes or any development
     which may materially adversely effect the condition (financial or
     otherwise), net assets or stockholders' equity, results of operations,
     business, key personnel, assets, or properties of the Company.

                                      E-7

 
          (q) Neither the Company nor any of its officers, directors, or
     affiliates (as defined in the Regulations), has taken or will take,
     directly or indirectly, any action designed to stabilize or manipulate the
     price of any security of the Company, or which has caused or resulted in,
     or which might in the future reasonably be expected to cause or result in,
     stabilization or manipulation of the price of any security of the Company,
     to facilitate the sale or resale of any of the Shares.

          (r) The Company has obtained from each of the Company's stockholders
     owning in excess of one percent of the outstanding securities of any class
     of the Company as of the effectiveness of the Registration Statement under
     the Act (the "Beneficial Owners"), and each officer, director and founder
     of the Company, his or its enforceable written agreement, in form and
     substance satisfactory to counsel for the Underwriter, that for a period of
     (i) six months from the date on which the Registration Statement becomes
     effective under the Act, with respect to the Beneficial Owners, and (ii) 24
     months from such date with respect to the directors, officers and founders
     of the Company, he or it will not, without the prior written consent of the
     Underwriter, issue, offer, sell, contract to sell, grant any option for the
     sale of, or otherwise dispose ("Dispose") of, directly or indirectly, any
     shares of Common Stock or other securities of the Company or any security
     or other instrument which by its terms is convertible into, exercisable
     for, or exchangeable for shares of Common Stock or any other securities of
     the Company, including, without limitation, any shares of Common Stock
     issuable under any employee stock options.  Each such agreement is a legal,
     valid, and binding obligation of the director, officer, or securityholder
     executing the same, and is enforceable as to such director, officer, or
     securityholder in accordance with the terms thereof.

          (s) The Company is not, and does not intend to conduct its business in
     a manner in which it would become, an "investment company" as defined in
     Section 3(a) of the Investment Company Act of 1940, as amended.

          (t) No person or entity has the right to require registration of
     shares of Common Stock or other securities of the Company because of the
     filing or effectiveness of the Registration Statement, except as properly
     and accurately described in the Prospectus.

          (u) Except as may be set forth in the Prospectus, the Company has not
     incurred any liability for a fee, commission, or other compensation on
     account of the employment of a broker or finder in connection with the
     transactions contemplated by this Agreement.

          (v) Neither the Company nor any of its affiliates is presently doing
     business with the government of Cuba or with any person or affiliate
     located in Cuba.  If, at any time after the date on which the Registration
     Statement is declared effective under the Act or with the Florida
     Department of Banking and Finance (the "Florida Department"), whichever is
     later, and prior to the end of the period referred to in the first clause
     of Section 2(b), the Company commences engaging in business with the
     government of Cuba or with any person or affiliate located in Cuba, the
     Company will so inform the Florida Department within 90 days after such
     commencement of business in Cuba, and, during the period referred to in
     Section 2(b), will inform the Florida Department within 90 days after any
     change occurs with respect to previously reported information.

          (w) Except as disclosed in the Prospectus, no officer or director of
     the Company has any affiliation or association with the National
     Association of Securities Dealers, Inc. (the "NASD") or any member thereof
     and upon inquiry of its stockholders beneficially owning five percent or
     more of the outstanding shares of Common Stock, the Company has been
     advised that no such stockholder has any such affiliation of association,
     except as disclosed in writing to the Underwriter.

                                      E-8

 
          (x) Except as disclosed in the Prospectus, the Company has filed all
     necessary federal, state, local, and foreign income and franchise tax
     returns and other reports required to be filed and has paid all taxes shown
     as due thereon; and there is no tax deficiency which has been, or, to the
     knowledge of the Company, might be, asserted against the Company.

          (y) All requirements for the use by the Company of a registration
     statement on Form SB-2 with respect to the Offering have been satisfied.

          (z)  The Common Stock is authorized for quotation on the Nasdaq
     SmallCap Market ("Nasdaq") and upon the Closing Date, all appropriate
     action will have been taken to include the Shares on Nasdaq.

                                      E-9

 
     3.   PURCHASE, SALE, AND DELIVERY OF THE SHARES.
          ------------------------------------------ 

          (a) On the basis of representations and warranties herein contained,
     but subject to the terms and conditions herein set forth, the Company
     hereby appoints you its sales agent and grants you the exclusive right to
     offer and sell the Shares during the Offering Period (as hereinafter
     defined) for the account and risk of the Company.  You accept such
     appointment and agree to use your best efforts as sales agent, following
     written or telegraphic receipt of notice of the effective date of the
     Registration Statement, to offer and sell such number of Shares as
     contemplated by this Agreement at the price stated in the Prospectus.

          (b) Each prospective purchaser of Shares will be required to complete,
     execute, and deliver to the Company a subscription agreement in the form
     filed as an exhibit to the Registration Statement (the "Subscription
     Agreement").  Prior to or concurrently with the delivery to the Company of
     any Subscription Agreement by any purchaser, funds sufficient to purchase
     the Shares subscribed for shall be wired to an escrow account to be
     maintained pursuant to an escrow agreement among the Escrow Agent (as
     hereinafter defined), the Company, and the Underwriter in the form filed as
     an exhibit to the Registration Statement (the "Escrow Agreement").  Except
     as provided in the first sentence of subparagraph (c) below, the Company
     shall not be entitled to reject, without the Underwriter's consent, any
     Subscription Agreement tendered to it prior to the Termination Date (as
     hereinafter defined) unless (i) the Subscription Agreement is not properly
     completed after the Underwriter and the Company have given the subscriber
     an opportunity to cure the defect or payment in full for the Shares
     subscribed for is not made in accordance with such Subscription Agreement
     or (ii) the subscriber submitting such Subscription Agreement is a resident
     of a jurisdiction in which the offering is not registered, qualified, or
     exempt from such registration or qualification.  The Company will forward
     to you copies of each Subscription Agreement accepted by it within three
     business days of receipt by the Company of such Subscription Agreement.

          (c) All subscriptions for Shares will be conditioned upon the
     acceptance by the Company of Subscription Agreements for all of the
     3,250,000 Shares (the "Subscriptions") on or prior to 30 days after the
     effectiveness of the Registration Statement, which is the last date on
     which the offering of Shares may be made, except that such last offering
     date may be extended by the Underwriter, in its sole discretion, to a date
     not later than 60 days after the effective date of the Registration
     Statement (the last date on which the offering of Shares may be made is
     herein referred to as the "Termination Date" and the period during which
     the offering of Shares may be made is herein referred to as the "Offering
     Period").  If the Subscriptions are not tendered to and accepted by the
     Company by the Termination Date, this Agreement shall, subject to the
     provisions of Section 10 hereof, terminate.  If at least the Subscriptions
     are tendered to and accepted by the Company on or before the Termination
     Date, a closing will be held at the offices of the Underwriter at a
     mutually agreed date (not later than five business days after the
     Termination Date) and time as soon as practicable after the delivery of the
     last of such subscriptions (the "Closing Date") and shall be subject to
     each of the conditions precedent to closing provided for in this Agreement.

          (d) On or prior to the Closing Date, all cash payments of purchasers
     received (unless and until returned to the purchasers pursuant hereto) will
     be placed in a segregated escrow account with United States Trust Company
     of New York (the "Escrow Agent") for the purchasers' benefit.

          (e) The purchase price paid by any prospective purchaser whose
     subscription is rejected, or is returned because the conditions to closing
     were not satisfied, shall be returned to such prospective purchaser,
     without any deduction therefrom or interest thereon.

                                      E-10

 
     (f) If, prior to the Termination Date, subscriptions for more than
     3,250,000 Shares are received, the Underwriter, in its sole and absolute
     discretion, may allocate the Shares among the subscribers as to whom a
     closing has not already been held in such manner as it shall see fit.

          (g)  As soon as practicable after the Closing Date, the Company shall
     deliver or cause to be delivered by mail to each purchaser of Shares on
     such Closing Date (i) a copy of an executed Subscription Agreement which
     indicates thereon the number of Shares such purchaser has purchased and
     (ii) a stock certificate representing such Shares, registered in such
     purchaser's name.

     4.   OFFERING OF THE SHARES ON BEHALF OF THE COMPANY.
          ----------------------------------------------- 

          (a) In offering the Shares for sale, you shall offer Shares as agent
     for the Company, and the Offering shall be made upon the terms and subject
     to the conditions set forth in the Registration Statement and Prospectus.
     The Underwriter shall commence offering the Shares for sale as agent for
     the Company as soon after the effective date of the Registration Statement
     as the Underwriter may deem advisable.

     5.   COVENANTS.  The Company covenants that it will:
          ---------                                      

          (a) Use its best efforts to cause the Registration Statement to become
     effective under the Act as promptly as possible and notify you immediately,
     and confirm such notice in writing, (i) when the Registration Statement and
     any post-effective amendment thereto become effective under the Act, (ii)
     of the receipt of any comments from the Commission or the "blue sky" or
     securities authority of any jurisdiction regarding the Registration
     Statement, any post-effective amendment thereto, the Prospectus, or any
     amendment or supplement thereto, (iii) of the filing with the Commission of
     any supplement to the Prospectus and (iv) of the receipt of, or its
     otherwise becoming aware of, any notification with respect to a Stop Order
     or the initiation or threatening of any proceeding with respect to a Stop
     Order.  The Company will use its best efforts to prevent the issuance of
     any Stop Order and, if any Stop Order is issued, to obtain the lifting
     thereof as promptly as possible.  If the Registration Statement has become
     or becomes effective under the Act with a form of prospectus omitting Rule
     430A Information, or filing of the Prospectus with the Commission is
     otherwise required under Rule 424(b) of the Regulations, the Company will
     file with the Commission the Prospectus, properly completed, pursuant to
     Rule 424(b) of the Regulations within the time period prescribed and will
     provide evidence satisfactory to you of such timely filing.

          (b) During the time when a prospectus relating to the Shares is
     required to be delivered hereunder or under the Act or the Regulations,
     comply with all requirements imposed upon it by the Act, as now existing
     and as hereafter amended, and by the Regulations, as from time to time in
     force, so far as necessary to permit the continuance of sales of, or
     dealings in, the Shares and in accordance with the provisions hereof and of
     the Prospectus.  If, at any time when a prospectus relating to the Shares
     is required to be delivered hereunder or under the Act or the Regulations,
     any event shall have occurred as a result of which, in the reasonable
     opinion of counsel for the Company or counsel for the Underwriter, the
     Registration Statement or the Prospectus as then amended or supplemented
     contains any untrue statement of a material fact or omits to state any
     material fact required to be stated therein or necessary to make the
     statements therein not misleading, or if, in the opinion of either of such
     counsel, it is necessary at any time to amend or supplement the
     Registration Statement or the Prospectus to comply with the Act or the
     Regulations, the Company will as promptly as practicable, and, in any event
     within one business day, notify you and promptly prepare and file with the
     Commission an appropriate amendment or supplement (in form and substance
     satisfactory to you) which will correct such statement or omission or which

                                      E-11

 
     will effect such compliance and will use its best efforts to have any such
     amendment declared effective under the Act as soon as possible.

          (c) Deliver without charge to you such number of copies of each
     Preliminary Prospectus as you may reasonably request and, as soon as the
     Registration Statement, or any amendment thereto, becomes effective under
     the Act or a supplement is filed with the Commission, deliver without
     charge to you or your counsel not less than two signed copies of the
     Registration Statement, including exhibits and Incorporated Documents, or
     such amendment thereto, as the case may be, and two copies of any
     supplement thereto, and deliver without charge to you such number of copies
     of the Prospectus, the Registration Statement, and amendments and
     supplements thereto, if any, without exhibits or Incorporated Documents, as
     you may request for the purposes contemplated by the Act.

          (d) Endeavor in good faith, in cooperation with you and your counsel,
     at or prior to the time the Registration Statement becomes effective under
     the Act, to qualify the Shares for offering and sale under the "blue sky"
     or securities laws of such jurisdictions as you may designate; provided,
     however, that no such qualification shall be required in any jurisdiction
     where, as a result thereof, the Company would be subject to service of
     general process or to taxation as a foreign corporation doing business in
     such jurisdiction to which it is not then subject.  In each jurisdiction
     where such qualification shall be effected, the Company will, unless you
     agree in writing that such action is not at the time necessary or
     advisable, file and make such statements or reports at such times as are or
     may be required by the laws of such jurisdiction.

          (e) Make generally available (within the meaning of Section 11(a) of
     the Act and the Regulations) to its securityholders as soon as practicable,
     but not later than 45 days after the end of its fiscal quarter in which the
     first anniversary date of the Registration Statement occurs an earnings
     statement (which need not be certified by independent certified public
     accountants unless required by the Act or the Regulations, but which shall
     satisfy the provisions of Section 11(a) of the Act and the Regulations)
     covering a period of at least 12 months beginning after the effective date
     of the Registration Statement.

          (f) For a period of 12 months (or six months, in the case of any
     public offering under the Act) after the date hereof, not, without the
     prior written consent of the Underwriter, which shall not be unreasonably
     withheld or delayed, Dispose of any shares of Common Stock or other
     securities of the Company (or any security or other instrument which by its
     terms is convertible into, or exercisable or exchangeable for, shares of
     Common Stock or any other securities of the Company), except for (i) the
     Underwriter's Warrants and the Warrant Stock; (ii) the shares of Common
     Stock issuable upon the exercise of options or warrants outstanding on the
     date hereof, which may not be sold until the lock-ups referred to in
     Section 2(r) expire; (iii) the grant or exercise of options under the plans
     existing on the date hereof or pursuant to a plan adopted by the Company
     with the consent of the Board of Directors and the stockholders, in the
     case of grants to officers and directors, shall provide that the underlying
     shares are not saleable until the lock-ups referred to in Section 2(r)
     expire; (iv) securities Disposed of in connection with any strategic
     alliance with a pharmaceutical company or in connection with the hiring or
     retention of key employees, consultants or directors; and (v) securities
     Disposed of in connection with commitments existing as of the date hereof;
     provided further that the Company may extend the exercisibility of
     outstanding options and warrants or replace them upon their termination or
     expiration with a like number of options or warrants.

          (g) During the Offering Period, without the prior written consent of
     the Underwriter, which shall not be unreasonably withheld or delayed, not
     consummate any stock dividend, stock split, recapitalization,

                                      E-12

 
     reorganization, reclassification, combination or any other similar event
     affecting the capital stock of the Company.

          (h) For a period of three years after the effective date of the
     Registration Statement, furnish you without charge the following:

               (i) within 90 days after the end of each fiscal year, three
          copies of financial statements certified by independent certified
          public accountants, including a balance sheet, statement of
          operations, and statement of cash flows of the Company and its then
          existing subsidiary or subsidiaries, with supporting schedules,
          prepared in accordance with generally accepted accounting principles,
          as at the end of such fiscal year and for the 12 months then ended,
          which may be on a consolidated basis;

               (ii) as soon as practicable after they have been sent to
          stockholders of the Company or filed with, or furnished to, the
          Commission or the NASD, three copies of each annual and interim
          financial and other report or communication sent by the Company to its
          stockholders or filed with, or furnished to, the Commission or the
          NASD;

               (iii)  as soon as practicable, two copies of every press release
          and every material news item and article in respect of the Company or
          its affairs which was released by the Company; and

               (iv) such additional documents and information with respect to
          the affairs of the Company and its then existing subsidiary or
          subsidiaries as you may from time to time reasonably request;
          provided, however, that such additional documents and information
          shall be received by you on a confidential basis, unless otherwise
          disclosed to the public, and shall not be used in violation of the
          Federal securities laws and the regulations promulgated thereunder.

          (i) Apply the net proceeds received by the Company from the Offering
     contemplated by this Agreement in the manner set forth under the heading
     "Use of Proceeds" in the Prospectus.

          (j) Furnish to you as early as practicable prior to the Closing Date,
     but no less than two full business days prior thereto, a copy of the latest
     available unaudited interim financial statements of the Company which have
     been read by the Company's independent certified public accountants, as
     stated in their letters to be furnished pursuant to Section 7(e).

          (k) File no amendment or supplement to the Registration Statement or
     Prospectus at any time, whether before or after the date on which the
     Registration Statement becomes effective under the Act, unless such filing
     shall comply with the Act and the Regulations and unless you shall
     previously have been advised of such filing and furnished with a copy
     thereof, and you and counsel for the Underwriter shall have approved such
     filing.  Until the later of (i) the completion by you of the distribution
     of the Shares (but in no event more than nine months after the date on
     which the Registration Statement shall have become effective under the Act)
     and (ii) 25 days after the date on which the Registration Statement becomes
     effective under the Act, the Company will prepare and file with the
     Commission, promptly upon the Underwriter's request, any amendments or
     supplements to the Registration Statement or the Prospectus which, in the
     Underwriter's sole opinion, may be necessary or advisable in connection
     with the distribution of the Shares.

          (l) File timely with the Commission and the NASD a report on Form 10-C
     in accordance with the rules and regulations of the Commission under the
     Exchange Act.

                                      E-13

 
          (m) Comply with all provisions of all undertakings contained in the
     Registration Statement.

          (n) Prior to the Closing Date issue no press release or other
     communication, directly or indirectly, and hold no press conference with
     respect to the Company or the financial condition, results of operations,
     business, properties, assets, liabilities of the Company, or the Offering,
     without the prior written consent of the Underwriter, (other than trade
     releases issued in the ordinary course of the Company's business or
     otherwise required by law, in which case deliver such release to the
     Underwriter for review prior to issuance).

          (o) Make all filings required, and otherwise use its reasonable best
     efforts, to maintain the inclusion of the Common Stock on Nasdaq for at
     least five years from the date of this Agreement.

          (p) On the Closing Date, sell to the Underwriter (or its designee),
     the Underwriter's Warrants at the price of $.001 per option, entitling the
     holder thereof to purchase a number of shares of Common Stock equal to 10%
     of the number of Shares sold on such Closing Date for an exercise price
     equal to 110% of the price per Share in the Offering.

          (q) Until expiration of the Underwriter's Warrants, keep reserved
     sufficient shares of Common Stock for issuance upon exercise of the
     Underwriter's Warrants.

          (r) Deliver to the Underwriter, without charge, within a reasonable
     period after the Closing Date, three sets of bound volumes of the
     Registration Statement and all related materials to the individuals
     designated by you or counsel for the Underwriter.

          (s) For a period of three years after the effective date of the
     Registration Statement, provide, at its sole expense, to the Underwriter
     copies of the Company's daily transfer sheets, if so requested.

          (t) For a period of five years after the Closing Date, supply to the
     appropriate parties such information as may be necessary or desirable, and
     otherwise use its best efforts, so that during such five-year period the
     Company will be listed in one or more of the securities manuals published
     by Standard & Poor's Corporation and Moody's Investors Service, Inc. and
     that, at all times during such period, such listing will, at a minimum,
     contain the names of the Company's officers and directors, a balance sheet
     as of a date not more than 18 months prior to such time and a statement of
     operations for either the fiscal year preceding such date or the most
     recent fiscal year of operations.

          (u) Comply with all registration, filing and reporting requirements of
     the Exchange Act, which may from time to time be applicable to the Company.

     6.   PAYMENT OF EXPENSES.
          ------------------- 

          (a) The Company hereby agrees to pay, whether or not the Offering is
consummated, all expenses (other than fees of counsel to the Underwriter, except
as provided in Sections 6(a)(iii) and 6(b)) in connection with (i) the
preparation, printing, filing, distribution, and mailing of the Registration
Statement and the Prospectus and the printing, filing, distribution, and mailing
of this Agreement, and related documents, including the cost of all copies
thereof and of the Preliminary Prospectuses and of the Prospectus and any
amendments or supplements thereto supplied to the Underwriter in quantities as
hereinabove stated, (ii) the issuance, sale, transfer, and delivery of the
Securities, including any transfer or other taxes payable thereon, (iii) the
registration or qualification of the Securities under state or foreign "blue
sky" or securities laws, including the costs of printing and mailing any "Blue
Sky Surveys" and the fees of counsel (in the amount of $35,000) for the
Underwriter

                                      E-14

 
and the disbursements in connection therewith, (iv) the filing fees payable to
the Commission, the NASD, and the jurisdictions in which such qualification is
sought, (v) any fees relating to the listing of the Securities on Nasdaq, (vi)
the cost of printing certificates representing the Securities and (vii) the fees
of the transfer agent for the Securities.

          (b) In addition, if the Offering is consummated, the Company hereby
agrees to pay to the Underwriter on the Closing Date (i) a non-accountable
expense allowance equal to 3.0% of the gross proceeds from the sale of the
Shares on such Closing Date, $45,000 of which has already been paid by the
Company; and (ii) a commission equal to 10.0% of the gross proceeds from the
sale of Shares on such Closing Date.

          (c) In the event that (i) this Agreement is terminated by the
Underwriter pursuant to Section 10 hereof, or (ii) the Subscriptions are not
received prior to the Termination Date, the Company hereby confirms that it will
pay within 10 days following the date of termination of this Agreement (in the
case of clause (i) above) and within 10 days following the Termination Date (in
the case of clause (ii) above), the amount of all of your actual accountable
out-of-pocket expenses, including, without limitation, the reasonable legal fees
and expenses, marketing and due diligence expenses, and travel expenses incurred
by you, but in no event to exceed the sum of $100,000, less amounts previously
paid to you in reimbursement for such expenses (including, without limitation,
the sum of $45,000 paid on or about July 23, 1996); and the Company will be
responsible for the payment of all other expenses relating to this Agreement and
the Offering, whether or not set forth in clauses (i) through (vii) of Section
6(a) hereof.

     7.   CONDITIONS OF UNDERWRITER'S OBLIGATIONS.   Your obligations hereunder,
          ---------------------------------------                               
and the right of the Company to obtain on the Closing Date the purchase price
for Shares to be purchased on such Closing Date, shall be subject to the
continued accuracy in all material respects, on the date hereof and on such
Closing Date, of the representations, warranties and agreements of the Company
and to the performance by the Company of its obligations hereunder to the
following terms and conditions:

          (a) The Registration Statement shall have become effective under the
Act not later than 6:00 p.m., New York City time, on the date of this Agreement
or such later date and time as shall be consented to in writing by you; on or
prior to the Closing Date, no Stop Order shall have been issued, and no
proceeding shall have been initiated or threatened with respect to a Stop Order;
and any request by the Commission for additional information shall have been
complied with by the Company to the reasonable satisfaction of your counsel.  If
required, the Prospectus shall have been filed with the Commission in the manner
and within the time period required by Rule 424(b) under the Regulations.

          (b)  On the Closing Date, the Underwriter shall have received the
opinions of Eilenberg & Zivian, counsel for the Company, dated the date of
delivery, addressed to the Underwriter, and [          ], patent counsel for the
Company, in form and substance satisfactory to counsel for the Underwriter.

          (c)  On or prior to the Closing Date, the Underwriter shall have been
furnished such information, documents, certificates, and opinions as they may
reasonably require in order to evidence the accuracy, completeness, or
satisfaction of any of the representations, warranties, covenants, agreements,
or conditions herein contained, or as the Underwriter may reasonably request.

          (d)  At the Closing Date, you shall have received a certificate of the
chief executive officer and the chief financial officer of the Company, dated
the Closing Date, to the effect that, (i) the conditions set forth in Section
7(a) have been satisfied, (ii) as of the date of this Agreement and as of the
Closing Date, the representations and warranties of the Company contained herein
were and are accurate and correct in all material respects, and (iii) as of the
Closing Date, the obligations to be performed by the Company hereunder on or
prior thereto have been fully performed in all material respects.

                                      E-15

 
          (e) At the Closing Date, you shall have received a letter, dated the
date of delivery, addressed to the Underwriter, from Price Waterhouse LLP,
independent certified public accountants for the Company:

          (i) confirming that they are, and during the period covered by their
report included in the Registration Statement and the Prospectus were,
independent certified public accountants with respect to the Company within the
meaning of the Act and the published Regulations;

          (ii) stating that, in their opinion, the consolidated financial
statements of the Company included in the Registration Statement examined by
them comply in form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations;

          (iii) stating that, on the basis of procedures (but not an examination
made in accordance with generally accepted auditing standards) consisting of a
reading of the latest available unaudited interim consolidated financial
statements of the Company (with an indication of the date of the latest
available unaudited consolidated interim financial statements), a reading of the
latest available minutes of the stockholders and Board of Directors of the
Company and committees of such Board of Directors, inquiries to certain officers
and other employees of the Company responsible for financial and accounting
matters, and other specified procedures and inquiries, nothing has come to their
attention that caused them to believe that: (A) any unaudited financial
statements of the Company included in the Registration Statement and Prospectus
do not comply in form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the related published rules and
regulations under the Act or the Exchange Act or are not fairly presented in
conformity with generally accepted accounting principles (except to the extent
that certain footnote disclosures regarding any stub period may have been
omitted in accordance with the applicable rules of the Commission under the
Exchange Act) applied on a basis consistent with that of the audited financial
statements appearing therein; (B) there was any change in the capital stock or
long-term debt of the Company or any decrease in the net current assets or
stockholders' equity of the Company as of the date of the latest available
monthly financial statements of the Company as of a specified date not more than
five business days prior to the date of such letter, each as compared with the
amounts shown in the latest balance sheet included in the Registration Statement
and Prospectus, other than as properly described in the Registration Statement
and Prospectus; or (C) there was any decrease in current assets or stockholders'
equity or increase in net loss during the period from the date of such balance
sheet to the date of the latest available monthly financial statements of the
Company or to a specified date not more than five business days prior to the
date of such letter, each as compared with the corresponding period in the
preceding fiscal year, other than as properly described in the Registration
Statement and Prospectus; and

          (iv) stating that they have compared specific numerical data and
financial information pertaining to the Company set forth in the Registration
Statement, which have been specified by you, to the extent that such data and
information may be derived from the general accounting records of the Company,
with the results obtained from the application of specified readings, inquiries,
and other appropriate procedures (which procedures do not constitute an
examination in accordance with generally accepted auditing standards) set forth
in the letter, and found them to be in agreement.

          (f) All proceedings taken in connection with the issuance, sale,
transfer, and delivery of the Securities shall be satisfactory in form and
substance to you and to your counsel.

          (g) The NASD, upon review of the terms of the public offering of the
Shares, shall not have objected to the Underwriter's participation in such
offering upon the terms and conditions provided for herein.

                                      E-16

 
          (h) Prior to the Closing Date, the Company shall have issued, in
accordance with this Agreement, the Underwriter's Warrants to the Underwriter in
the name or names and in such authorized denominations as the Underwriter may
request.

          (i) The Subscriptions shall have been tendered to the Company in
accordance with the terms hereof.

     Any certificate or other document signed by any officer of the Company and
delivered to the Underwriter or to counsel for the Underwriter shall be deemed a
representation and warranty by the Company hereunder to the Underwriter as to
the statements made therein.  If any condition to the Underwriter's obligations
hereunder to be fulfilled prior to or at the Closing Date, is not so fulfilled,
the Underwriter may terminate this Agreement or, if the Underwriter so elects,
in writing waive any such conditions which have not been fulfilled or extend the
time for their fulfillment.

     If any of the conditions specified in this Section 7 shall not have been
fulfilled or waived, this Agreement and all your obligations hereunder may be
cancelled, prospectively, by you at, or at any time prior to, the Closing Date.
Any such cancellation shall be without liability to you, and the obligations of
the Company pursuant to Sections 6 and 8 hereof shall nevertheless survive and
continue thereafter.  Notice of such cancellation shall be given to the Company
at the addresses specified in Section 11 hereof, in writing, or by telegraph or
telephone confirmed in writing.

     8.   INDEMNIFICATION AND CONTRIBUTION.
          -------------------------------- 

          (a) Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless the Underwriter, its officers, directors,
stockholders, employees, agents, and counsel, and each person, if any, who
controls the Underwriter within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, against any and all loss, liability, claim, damage,
and expense whatsoever (which shall include, for all purposes of this Section 8,
but not be limited to, attorneys' fees and any and all expense whatsoever
incurred in investigating, preparing, or defending against any litigation,
commenced or threatened, or any claim whatsoever and any and all amounts paid in
settlement of any claim or litigation) as and when incurred arising out of,
based upon, or in connection with, (i) any untrue statement of a material fact
or alleged untrue statement of a material fact contained in (A) the Registration
Statement, any Preliminary Prospectus, or the Prospectus (as from time to time
amended and supplemented), or any amendment or supplement thereto or (B) any
application or other document or communication (for purposes of this Section 8,
collectively referred to as an "application") executed by, or on behalf of, the
Company or based upon written information furnished by, or on behalf of, the
Company filed in any jurisdiction in order to qualify the Securities under the
"blue sky" or securities laws thereof or filed with the Commission or any
securities exchange; or any omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, unless such statement or omission was made in reliance upon, and
in conformity with, written information furnished to the Company by or on behalf
of the Underwriter as stated in Section 8(b) with respect to the Underwriter,
expressly for inclusion in the Registration Statement, any Preliminary
Prospectus, or the Prospectus, or any amendment or supplement thereto, or in any
application, as the case may be, or (ii) any breach of any representation,
warranty, covenant, or agreement of the Company contained in this Agreement.
The foregoing agreement to indemnify shall be in addition to any liability the
Company may otherwise have, including liabilities arising under this Agreement.

     If any action is brought against the Underwriter or any of its officers,
directors, stockholders, employees, agents, or counsel, or any person who
controls the Underwriter within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act (an "indemnified party") in respect of which indemnity
may be sought against the Company pursuant to the foregoing paragraph, such
indemnified party or parties shall within three business days notify the Company

                                      E-17

 
in writing of the institution of such action (but the failure so to notify,
including within such three-day period, shall not relieve the Company from any
liability it may have other than pursuant to this Section 8(a) and shall relieve
the Company from liability pursuant to this Section 8(a) only to the extent the
Company is materially prejudiced thereby), and the Company shall promptly assume
the defense of such action, including the employment of counsel (satisfactory to
such indemnified party or parties) and payment of expenses.  Such indemnified
party or parties shall have the right to employ its or their own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
such indemnified party or parties unless the employment of such counsel shall
have been authorized in writing by the Company in connection with the defense of
such action or the Company shall not have promptly employed counsel reasonably
satisfactory to such indemnified party or parties to have charge of the defense
of such action or such indemnified party or parties shall have reasonably
concluded that there may be one or more legal defenses available to it or them
or to other indemnified parties which are different from or additional to those
available to the Company, in any of which events such fees and expenses shall be
borne by the Company, and the Company shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties.  Anything
in this paragraph to the contrary notwithstanding, the Company shall not be
liable for any settlement of any such claim or action effected without its
written consent, which shall not be unreasonably withheld.  The Company shall
not, without the prior written consent of each indemnified party that is not
released as described in this sentence, settle or compromise any action, or
permit a default or consent to the entry of judgment in or otherwise seek to
terminate any pending or threatened action, in respect of which indemnity may be
sought hereunder (whether or not any indemnified party is a party thereto),
unless such settlement, compromise, consent, or termination includes an
unconditional release of each indemnified party from all liability in respect of
such action.  The Company agrees promptly to notify the Underwriter of the
commencement of any litigation or proceedings against the Company or any of its
officers or directors in connection with the sale of the Shares, the
Registration Statement, any Preliminary Prospectus, any Rule 430A Prospectus, or
the Prospectus, or any amendment or supplement thereto, or any application.

          (b) The Underwriter agrees to indemnify and hold harmless the Company,
each director of the Company, each officer of the Company who shall have signed
the Registration Statement, counsel of the Company and each other person, if
any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, to the same extent as the foregoing indemnity
from the Company to the Underwriter in Section 8(a), but only with respect to
statements or omissions, if any, made in the Registration Statement, any
Preliminary Prospectus, or the Prospectus (as from time to time amended and
supplemented), or any amendment or supplement thereto, or in any application in
reliance upon, and in conformity with, written information furnished to the
Company as stated in this Section 8(b) with respect to the Underwriter by or on
behalf of the Underwriter expressly for inclusion in the Registration Statement,
any Preliminary Prospectus, or the Prospectus, or any amendment or supplement
thereto, or in any application, as the case may be; provided, however, that the
obligation of the Underwriter to provide indemnity under the provisions of this
Section 8(b) shall be limited to the gross amount of the commission received by
the Underwriter of the Offering.  For all purposes of this Agreement, the
information relating to when the Underwriter registered and became a member of
the NASD and the Underwriter's participation in prior offerings constitute the
only information furnished in writing by the Underwriter expressly for inclusion
in the Registration Statement, any Preliminary Prospectus, or the Prospectus (as
from time to time amended or supplemented), or any amendment or supplement
thereto, or in any application, as the case may be.  If any action shall be
brought against the Company, or any other person so indemnified based on the
Registration Statement, any Preliminary Prospectus, or the Prospectus, or any
amendment or supplement thereto, or on any application, and in respect of which

                                      E-18

 
indemnity may be sought against the Underwriter pursuant to this Section 8(b),
the Underwriter shall have the rights and duties given to the Company, and the
Company and each other person so indemnified shall have the rights and duties
given to the indemnified parties, by the provisions of Section 8(a).

          (c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Sections 8(a) or
8(b) (subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such case or (ii) any indemnified or indemnifying party seeks
contribution under the Act, the Exchange Act, or otherwise, then the Company
(including for this purpose any contribution made by or on behalf of any
director of the Company, any officer of the Company who signed the Registration
Statement, any controlling person of the Company and counsel of the Company), as
one entity and the Underwriter (including for this purpose any contribution by
or on behalf of an indemnified party) as a second entity, shall contribute to
the losses, liabilities, claims, damages, and expenses whatsoever to which any
of them may be subject, in such proportions as are appropriate to reflect the
relative benefits received by the Company and the Underwriter; provided,
however, that if applicable law does not permit such allocation, then other
relevant equitable considerations such as the relative fault of the Company and
the Underwriter  in connection with the facts which resulted in such losses,
liabilities, claims, damages, and expenses shall also be considered.  The
relative benefits received by the Company and the Underwriter shall be deemed to
be in the same proportion as (x) the total proceeds from the Offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and (y) the underwriting discounts and commissions received by
the Underwriter, in each case as set forth in the table on the cover page of the
Prospectus and in the footnotes thereto.  The relative fault, in the case of an
untrue statement, alleged untrue statement, omission, or alleged omission, shall
be determined by, among other things, whether such statement, alleged statement,
omission, or alleged omission relates to information supplied by the Company or
by the Underwriter, and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement, alleged
statement, omission, or alleged omission.  The Company and the Underwriter agree
that it would be unjust and inequitable if the respective obligations of the
Company and the Underwriter for contribution were determined by pro rata or per
capita allocation of the aggregate losses, liabilities, claims, damages, and
expenses (even if the Underwriter and the other indemnified parties were treated
as one entity for such purpose) or by any other method of allocation that does
not reflect the equitable considerations referred to in this Section 8(c).  No
person guilty of a fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation.  For purposes of this Section 8(c),
each person, if any, who controls the Underwriter within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act and each officer, director,
stockholder, employee, agent, and counsel of the Underwriter shall have the same
rights to contribution as the Underwriter and each person, if any, who controls
the Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, each officer of the Company who shall have signed the Registration
Statement, each director of the Company and counsel of the Company shall have
the same rights to contribution as the Company, subject in each case to the
provisions of this Section 8(c).  Anything in this Section 8(c) to the contrary

                                      E-19

 
notwithstanding, no party shall be liable for contribution with respect to the
settlement of any claim or action effected without its written consent.  This
Section 8(c) is intended to supersede any right to contribution under the Act,
the Exchange Act, or otherwise.

     9.   REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY.  All
          --------------------------------------------------      
representations, warranties, covenants, and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants, and
agreements at the Closing Date, and such representations, warranties, covenants,
and agreements of the Company, and the Underwriter, including the indemnity and
contribution agreements contained in Section 8, shall remain operative and in
full force and effect regardless of any investigation made by, or on behalf of,
the Underwriter or any indemnified person, or by, or on behalf of, the Company,
or any person or entity which is entitled to be indemnified under Section 8(b),
and shall survive termination of this Agreement or the delivery of the Shares to
the purchasers and the Underwriter's Option to the Underwriter.  In addition,
the provisions of Sections 5(a), 6, 8, 9, 10 and 12 shall survive termination of
this Agreement, whether such termination occurs before or after the Closing
Date.

     10.  EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION THEREOF.
          -------------------------------------------------------- 

          (a) This Agreement shall become effective upon its execution except
that you, at your option, may delay the effectiveness of this Agreement until
the earlier of (i) 11:00 A.M. New York time on the first full business day
following the day on which the Registration Statement becomes effective under
the Act and (ii) the commencement of the public offering by you of the Stock.
In addition to the right to terminate this Agreement pursuant to Section 7
hereof, you shall have the right to terminate this Agreement at any time prior
to the Closing Date, by giving notice to the Company, (i) if any domestic or
international event, act, or occurrence has materially disrupted, or, in your
opinion, will in the immediate future materially disrupt, the securities
markets; or (ii) if there shall have been a general suspension of, or a general
limitation on prices for, trading in securities on the New York Stock Exchange,
the American Stock Exchange or in the over-the-counter market; or (iii) if there
shall have been an outbreak or increase in the level of major hostilities or
other national or international calamity; or (iv) if a banking moratorium has
been declared by a state or federal authority; or (v) if a moratorium in foreign
exchange trading by major international banks or persons has been declared; or
(vi) if there shall have been a material interruption in the mail service or
other means of communication within the United States; or (vii) if the Company
or the Subsidiary shall have sustained a material or substantial loss by fire,
flood, accident, hurricane, earthquake, theft, sabotage, or other calamity or
malicious act, whether or not such loss shall have been insured, or from any
labor dispute or court or government action, order, or decree, which will, in
your opinion, make it inadvisable to proceed with the offering, sale, or
delivery of the Shares; or (viii) if any material governmental restrictions
shall have been imposed on trading in securities in general, which restrictions
are not in effect on the date hereof; or (ix) if there shall be passed by the
Congress of the United States or any state legislature any act or measure, or
adopted by any governmental body, authoritative accounting institute or board,
or governmental executive any orders, rules, or regulations, which you believe
likely to have a material adverse effect on the business, financial condition,
or financial statements of the Company and the Subsidiary or the market for any
of the Company's securities; or (x) if there shall have been a material adverse
change

                                      E-20

 
in the market for the Company's securities or securities in general or in
political, financial, or economic conditions as in your judgment makes it
inadvisable to proceed with the offering, sale, and delivery of the Shares on
the terms contemplated by the Prospectus.

          (b) If you elect to prevent this Agreement from becoming effective, as
provided in this Section 10, or to terminate this Agreement, you shall notify
the Company promptly by telephone or telecopy, confirmed by letter.

          (c) Notwithstanding any election hereunder or any termination of this
Agreement, and whether or not this Agreement is otherwise carried out, the
provisions of Sections 5(a), 6, 8, 9, 10 and 12 shall not be in any way affected
by such termination or failure to carry out the terms of this Agreement or any
part hereof.

     11.  NOTICES.  All communications hereunder, except as may be otherwise
          -------                                                           
specifically provided herein, shall be in writing and shall be delivered
personally, transmitted by facsimile transmission confirmed in writing within
three business days thereafter, or sent by prepaid overnight air courier or
registered or certified mail, postage prepaid, return receipt requested, if sent
to you at 135 E. 57th Street, New York, New York 10022, Attention: Mr. Preston
Tsao, Facsimile: (212) 421-5944, with a copy to Squadron, Ellenoff, Plesent &
Sheinfeld, LLP, 551 Fifth Avenue, New York, New York 10176, Attention: Kenneth
R. Koch, Esq., Facsimile: (212) 697-6686; or if sent to the Company, at 666
Third Avenue, New York, New York  10017, Attention: Joshua D. Schein, Chief
Financial Officer, Facsimile: (212) 986-2399, with a copy to Eilenberg & Zivian,
666 Third Avenue, New York, New York  10017, Attention: Adam Eilenberg, Esq.,
Facsimile: (212) 986-2399.  All notices hereunder shall be deemed to have been
given (a) when delivered, if delivered personally, or sent by facsimile
transmission and, in the case of facsimile transmission, confirmed in writing
within three business days thereafter, or sent by prepaid overnight air courier
or (b) three business days following the mailing thereof, if mailed by
registered or certified mail, postage prepaid, return receipt requested, in any
such case at the address set forth in this Section 11, or such other address or
addresses as a party may have advised the other party in the manner provided in
this Section 11.

     12.  PARTIES.  This Agreement shall inure solely to the benefit of, and
          -------                                                           
shall be binding upon, the Underwriter, the Company, and the persons and
entities referred to in Section 8 who are entitled to indemnification or
contribution, and their respective successors, legal representatives, and
assigns (which shall not include any buyer, as such, of the Shares), and no
other person shall have or be construed to have any legal or equitable right,
remedy, or claim under or in respect of or by virtue of this Agreement or any
provision herein contained.

     13.  CONSTRUCTION.  THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
          ------------                                                       
THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS.
TIME IS OF THE ESSENCE IN THIS AGREEMENT.

     14.  CONSENT TO JURISDICTION.  THE COMPANY IRREVOCABLY CONSENTS TO THE
          -----------------------                                          
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF ANY FEDERAL COURT
LOCATED IN SUCH STATE IN CONNECTION WITH ANY ACTION OR PROCEEDING ARISING OUT
OF, OR RELATING TO, THIS AGREEMENT, ANY DOCUMENT OR INSTRUMENT DELIVERED
PURSUANT TO, IN CONNECTION WITH, OR SIMULTANEOUSLY WITH THIS AGREEMENT,
INCLUDING, WITHOUT LIMITATION, THE ESCROW AGREEMENT OR ANY SUBSCRIPTION
AGREEMENT, OR A BREACH OF

                                      E-21

 
THIS AGREEMENT OR ANY SUCH DOCUMENT OR INSTRUMENT.  IN ANY SUCH ACTION OR
PROCEEDING, THE COMPANY WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT, OR
OTHER PROCESS AND AGREES THAT SERVICE THEREOF MAY BE MADE IN ACCORDANCE WITH
SECTION 11.  WITHIN 30 DAYS AFTER SUCH SERVICE, OR SUCH OTHER TIME AS MAY BE
MUTUALLY AGREED UPON IN WRITING BY THE ATTORNEYS FOR THE PARTIES TO SUCH ACTION
OR PROCEEDING, THE COMPANY SHALL APPEAR OR ANSWER SUCH SUMMONS, COMPLAINT, OR
OTHER PROCESS.  SHOULD THE COMPANY FAIL TO APPEAR OR ANSWER WITHIN SUCH 30-DAY
PERIOD OR SUCH EXTENDED PERIOD, AS THE CASE MAY BE, THE COMPANY SHALL BE DEEMED
IN DEFAULT AND JUDGMENT MAY BE ENTERED AGAINST THE COMPANY FOR THE AMOUNT AS
DEMANDED IN ANY SUMMONS, COMPLAINT, OR OTHER PROCESS SO SERVED.

     If the foregoing correctly sets forth the understanding between you and the
Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between us.

                                    Very truly yours,

                                    SIGA PHARMACEUTICALS, INC.


                                    BY:
                                        -------------------------------
                                        NAME:
                                        TITLE:

ACCEPTED AS OF THE DATE FIRST ABOVE
WRITTEN IN NEW YORK, NEW YORK

SUNRISE SECURITIES CORP.



BY:
    ------------------------------------
    NAME:
    TITLE:

                                      E-22


 
                                                                    EXHIBIT 1(b)

                                     E-23

 
                         FORM OF UNDERWRITER'S WARRANT

Warrant No. ________



                                           Warrant to Purchase [        ] Shares



                             SHARE PURCHASE WARRANT

             To Purchase Shares of Common Stock (par value $0.0001)

                                       of

                           SIGA PHARMAECUTICALS, INC.
                             (Delaware corporation)



                           Expires [          ], 2002

                                      E-24

 
Warrant No. ________

NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE HEREOF MAY BE
TRANSFERRED EXCEPT IN A TRANSACTION REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR WHICH IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THAT ACT.


            VOID AFTER 5:00 P.M. NEW YORK TIME, ON [          ] 2002

                           SIGA PHARMAECUTICALS, INC.
                   Warrant to Purchase Shares of Common Stock


                                                                  325,000 Shares

     THIS CERTIFIES that, for good and valuable consideration received, Sunrise
Securities Corp. (the "Holder"), is entitled to subscribe for and purchase from
                       ------                                                  
SIGA PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), upon the
                                                         -------            
terms and conditions set forth herein, at any time or from time to time until
5:00 P.M. New York City time on [           ], 2002 (the "Expiration Date"), all
                                                          ---------------       
or any portion of 325,000 Shares of common stock of the Company, par value
$0.0001 per share, subject to adjustment as provided herein (the "Warrant
                                                                  -------
Shares"), at a price of $5.50 per share, subject to adjustment as provided
herein (the "Exercise Price").  This Warrant shall not be redeemable by the
             --------------                                                
Company.  The term "Shares" as used herein shall mean the Company's Shares of
                    ------                                                   
Common Stock, par value $0.0001 per share.  This Warrant may be sold,
transferred, assigned or hypothecated at any time and the term the "Holder" as
                                                                    ------    
used herein shall include any transferee to whom this Warrant has been
transferred.

     1.   Method of Exercise.  This Warrant may be exercised at any time prior
          ------------------                                                  
to the Expiration Date, as to the whole or any lesser number of Warrant Shares,
by the surrender of this Warrant (with the election at the end hereof duly
executed) to the Company at its office at 666 Third Avenue, New York, New York
10017 or at such other place as may be designated in writing by the Company,
together with a certified or bank cashier's check payable to the order of the
Company in an amount equal to the Exercise Price multiplied by the number of
Warrant Shares for which this Warrant is being exercised.  In lieu of the
payment of the Exercise Price, the Holder shall have the right (but not the
obligation), during the Exercise Period, to require the Company to convert this
Warrant, in whole or in part, into the Warrant Shares as provided for in this
Section (the "Conversion Right").  Upon exercise of the Conversion Right, the
Company shall deliver to the Holder (without payment by the Holder of the
Exercise Price) that number of shares of Common Stock equal to (i) the number of
Warrant Shares issuable upon exercise of the portion of the Warrant being
converted, multiplied by (ii) the quotient obtained by dividing (x) the value of
the Warrant (on a per Warrant Share basis) at the time the Conversion Right is
exercised (determined by subtracting the Exercise Price from the Current Market
Price (as determined pursuant to Section 5(e) below), for the shares of Common
Stock issuable upon exercise of the Warrant immediately prior to the exercise of
the Conversion Right) by (y) the Current Market Price of one share of Common
Stock immediately prior to the exercise of the Conversion Right.  The Conversion
Rights provided under this Section may be exercised in whole or in part and at
any time and from time to time while any Warrants remain outstanding.  In order
to exercise the Conversion Right, the Holder shall surrender to the Company, at
its offices, this

                                      E-25

 
Warrant accompanied by the form of Subscription Agreement duly filled in and
signed and a duly completed Conversion Notice in the form attached hereto.  The
presentation and surrender shall be deemed a waiver of the Holder's obligation
to pay all or any portion of the aggregate purchase price payable for the
Warrant Shares being issued upon such exercise of this Warrant.  This Warrant
(or so much thereof as shall have been surrendered for conversion) shall be
deemed to have been converted immediately prior to the close of business on the
day of surrender of this Warrant for conversion in accordance with the foregoing
provisions.  As promptly as practicable on or after the conversion date, the
Company shall issue and shall deliver to the Holder (I) a certificate or
certificates representing  the largest number of whole Warrant Shares which the
Holder shall be entitled as a result of the conversion, and (ii) if such Warrant
is being converted in part only, a new Warrant exercisable for the number of
Warrant Shares equal to the unconverted portion of the Warrant.  Upon any
exercise (which term, as used herein, shall include any exercise of the
Conversion Right) of this Warrant, in lieu of any fractional Warrant Shares to
which the Holder shall be entitled, the Company shall pay to the Holder cash in
accordance with the provisions of Section 5(d) hereof.

     2.   Issuance of Certificates.  Upon each exercise of the Holder's rights
          ------------------------                                            
to purchase Warrant Shares, the Holder shall, as of the close of business on
such day, be deemed to be the holder of record of the Warrant Shares issuable
upon such exercise, notwithstanding that the transfer books of the Company shall
then be closed or certificates representing such Warrant Shares shall not then
have been actually delivered to the Holder.  As soon as practicable after each
such exercise of this Warrant, the Company shall issue and deliver to the Holder
a certificate or certificates for the Warrant Shares issuable upon such
exercise, registered in the name of the Holder or its designee.  If this Warrant
should be exercised in part only, upon surrender of this Warrant for
cancellation, the Company shall execute and deliver a new Warrant evidencing the
right of the Holder to purchase the balance of the Warrant Shares (or portions
thereof) subject to purchase hereunder.

     3.   Recording of Transfer. Any warrants issued upon the transfer or
          ---------------------                                          
exercise in part of this Warrant shall be numbered and shall be registered in an
Warrant Register as they are issued.  The Company shall be entitled to treat the
registered holder of any Warrant on the Warrant Register as the owner in fact
thereof for all purposes and shall not be bound to recognize any equitable or
other claim to or interest in such Warrant on the part of any other person, and
shall not be liable for any registration or transfer of warrants which are
registered or to be registered in the name of a fiduciary or the nominee of a
fiduciary unless made with the actual knowledge that a fiduciary or nominee is
committing a breach of trust in requesting such registration or transfer, or
with the knowledge of such facts that its participation therein amounts to bad
faith.  This Warrant shall be transferable only on the books of the Company upon
delivery thereof duly endorsed by the Holder or by his or its duly authorized
attorney or representative, or accompanied by proper evidence of succession,
assignment or authority to transfer.  In all cases of transfer by an attorney,
executor, administrator, guardian or other legal representative, duly
authenticated evidence of his or its authority shall be produced.  Upon any
registration of transfer, the Company shall deliver a new warrant or warrants to
the person entitled thereto.  This Warrant may be exchanged, at the option of
the Holder hereof, for another warrant, or other warrants of different
denominations, of like tenor and representing in the aggregate the right to
purchase a like number

                                      E-26

 
of Warrant Shares (or portions thereof), upon surrender to the Company or its
duly authorized agent.  Notwithstanding the foregoing, the Company shall have no
obligation to cause this Warrant to be transferred on its books to any person if
counsel to the Company reasonably requests a legal opinion that such transfer
does not violate the provisions of the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations thereunder, unless such opinion is
- ----                                                                    
delivered.

     4.   Reservation of Shares.  The Company shall at all times reserve and
          ---------------------                                             
keep available out of its authorized and unissued Shares, solely for the purpose
of providing for the exercise of the warrants, such number of shares of Shares
as shall, from time to time, be sufficient therefor.  The Company covenants that
all shares of Shares issuable upon exercise of this Warrant, upon receipt by the
Company of the full payment therefor, shall be validly issued, fully paid,
nonassessable and free of preemptive rights.

     5.   Exercise Price Adjustments.  Subject to the provisions of this Section
          --------------------------                                            
5, the Exercise Price in effect from time to time shall be subject to
adjustment, as follows:

          (a) In case the Company shall at any time after the date hereof (I)
declare a dividend or make a distribution on the outstanding Shares payable in
shares of its capital stock or securities convertible into or exchangeable for
capital stock, (ii) subdivide the outstanding Shares, (iii) combine the
outstanding Shares into a smaller number of shares, or (iv) issue any shares by
reclassification of the Shares (other than a change in par value, or from par
value to no par value, or from no par value to par value), then, in each case,
                                                           ----               
the Exercise Price in effect, and the number of Shares issuable upon exercise of
the warrants outstanding, at the time of the record date for such dividend or at
the effective date of such subdivision, combination or reclassification, shall
be proportionately adjusted so that the holders of the warrants after such time
shall be entitled to receive upon exercise of the warrant the aggregate number
and kind of shares which, if such warrants had been exercised immediately prior
to such time, such holders would have owned upon such exercise and immediately
thereafter been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification.  Such adjustment shall be made successively
whenever any event listed above shall occur.

          (b) In case the Company shall distribute to all holders of Shares
(including any such distribution made to the stockholders of the Company in
connection with a consolidation or merger in which the Company is the surviving
or continuing corporation) evidences of its indebtedness, cash, or assets (other
than distributions and dividends payable as contemplated by Section 5(a) above),
or rights, options, or warrants to subscribe for or purchase Shares or
securities convertible into or exchangeable for Shares, then, in each case, the
Exercise Price shall be adjusted by multiplying the Exercise Price in effect
immediately prior to the record date for the determination of stockholders
entitled to receive such distribution by a fraction, the numerator of which
shall be the Current Market Price (as determined pursuant to Section 5(e)
hereof) per Share on such record date, less the fair market value (as determined
in good faith by the board of directors of the Company, whose determination
shall be conclusive absent manifest error) of the portion of the evidences of
indebtedness or assets so to be distributed, or of such rights, options, or
warrants or convertible or exchangeable securities, or the amount of such cash,
applicable

                                      E-27

 
to one share, and the denominator of which shall be such Current Market Price
per Share.  Such adjustment shall become effective at the close of business on
such record date.

          (c) Whenever there shall be an adjustment as provided in this Section
5, the Company shall within 15 days thereafter cause written notice thereof to
be sent by registered mail, postage prepaid, to the Holder, at its address as it
shall appear in the Warrant Register, which notice shall be accompanied by an
officer's certificate setting forth the number of Warrant Shares issuable
hereunder and the exercise price thereof after such adjustment and setting forth
a brief statement of the facts requiring such adjustment and the computation
thereof, which officer's certificate shall be conclusive evidence of the
correctness of any such adjustment absent manifest error.

          (d) The Company shall not be required to issue fractions of Shares or
other shares of the Company upon the exercise of this Warrant.  If any fraction
of a share would be issuable upon the exercise of this Warrant (or specified
portions thereof), the Company may issue a whole share in lieu of such fraction
or the Company may purchase such fraction for an amount in cash equal to the
same fraction of the Current Market Price of such Shares on the date of exercise
of this Warrant.

          (e) The Current Market Price per Share on any date shall be deemed to
be the average of the daily closing prices for the five (5) consecutive trading
days immediately preceding the date in question.  The closing price for each day
shall be the last reported sales price regular way or, in case no such reported
sale takes place on such day, the closing bid price regular way, in either case
on the principal national securities exchange on which the Common Stock is
listed or admitted to trading or, if the Common Stock is not listed or admitted
to trading on any national securities exchange, the highest reported bid price
for the Common Stock as furnished by the National Association of Securities
Dealers, Inc. through NASDAQ or a similar organization if NASDAQ is no longer
reporting such information.  If on any such date the Common Stock is not listed
or admitted to trading on any national securities exchange and is not quoted by
NASDAQ or any similar organization, the fair value of a share of Common Stock on
such date, as determined in good faith by the Board of Directors of the Company,
whose determination shall be conclusive absent manifest error, shall be used.

          (f) No adjustment in the Exercise Price shall be required if such
adjustment is less than $0.05; provided, however, that any adjustments which by
reason of this Section 5 are not required to be made shall be carried forward
and taken into account in any subsequent adjustment.  All calculations under
this Section 5 shall be made to the nearest cent or to the nearest thousandth of
a share, as the case may be.

          (g) Upon each adjustment of the Exercise Price as a result of the
calculations made in this Section 5, the warrants shall thereafter evidence the
right to purchase, at the adjusted Exercise Price, that number of Shares
(calculated to the nearest hundredth) obtained by dividing (i) the product
obtained by multiplying the number of Shares purchasable upon exercise of the
warrants prior to adjustment of the number of Shares by the Exercise Price in
effect prior to adjustment of the Exercise Price by (ii) the Exercise Price in
effect after such adjustment of the Exercise Price.

                                      E-28

 
  6.      (a)  Consolidations and Mergers.  In case of any consolidation with or
               --------------------------                                       
merger of the Company with or into another corporation (other than a merger or
consolidation in which the Company is the surviving or  continuing corporation
and which does not result in any reclassification of the outstanding Shares or
the conversion of such outstanding Shares into shares of other stock or other
securities or property), or in case of any sale, lease or conveyance to another
corporation of the property and assets of any nature of the Company as an
entirety or substantially as an entirety (such actions being hereinafter
collectively referred to as "Reorganizations"), there shall thereafter be
                             ---------------                             
deliverable upon exercise of this Warrant (in lieu of the number of Shares
theretofore deliverable) the kind and amount of shares of stock or other
securities, cash or other property  which would otherwise have been deliverable
to a holder of the number of Shares upon the exercise of this Warrant upon such
Reorganization if this Warrant had been exercised in full immediately prior to
such Reorganization.  In case of any Reorganization, appropriate adjustment, as
determined in good faith by the Board of Directors of the Company, shall be made
in the application of the provisions herein set forth with respect to the rights
and interests of the Holder so that the provisions set forth herein shall
thereafter be applicable, as nearly as possible, in relation to any shares or
other property thereafter deliverable upon exercise of this Warrant.  Any such
adjustment shall be made by and set forth in a supplemental agreement between
the Company, or any successor thereto, and the Holder and shall for all purposes
hereof conclusively be deemed to be an appropriate adjustment.  The Company
shall not effect any such Reorganization unless upon or prior to the
consummation thereof the successor corporation, or if the Company shall be the
surviving corporation in any such Reorganization and is not the issuer of the
shares of stock or other securities or property to be delivered to holders of
Shares outstanding at the effective time thereof, then such issuer, shall assume
by written instrument the obligation to deliver to the Holder such shares of
stock, securities, cash or other property as the Holder shall be entitled to
purchase in accordance with the foregoing provisions.

          (b) In case of any reclassification or change of the Shares issuable
upon exercise of this Warrant (other than a change in par value or from no par
value to a specified par value, or as a result of a subdivision or combination,
but including any change in the shares into two or more classes or series of
shares), or in case of any consolidation or merger of another corporation into
the Company in which the Company is the continuing corporation and in which
there is a reclassification or change (including a change to the right  to
receive cash or other property) of the Shares (other than a change in par value,
or from no par value to a specified par value, or as a result of a subdivision
or combination, but including any change in the shares into two or more classes
or series of  shares), the Holder shall have the right thereafter to receive
upon exercise of this Warrant solely the kind and amount of shares of stock and
other securities, property, cash or any combination thereof receivable upon such
reclassification, change, consolidation or merger by a holder of the number of
Shares for which this Warrant might have been exercised immediately prior to
such reclassification, change, consolidation or merger.  Thereafter, appropriate
provision shall be made for adjustments which shall be as nearly equivalent as
practicable to the adjustments in Section 5.

          (c) The above provisions of this Section 6 shall similarly apply to
successive reclassifications and changes of Shares and to successive
consolidations, mergers, sales, leases, or conveyances.

                                      E-29

 
          7.  Notice of Certain Events.  In case at any time any of the
              ------------------------                                 
following occur:

          (a) The Company shall take a record of the holders of its Shares for
the purpose of entitling them to receive a dividend or distribution payable
otherwise than in cash, or a cash dividend or distribution payable otherwise
than out of current or retained earnings, as indicated by the accounting
treatment of such dividend or distribution on the books of the Company; or

          (b) The Company shall offer to all the holders of its Shares any
additional shares of capital stock of the Company or securities convertible into
or exchangeable for shares of capital stock of the Company, or any option, right
or warrant to subscribe therefor; or

          (c) The Company shall take any action to effect any reclassification
or change of outstanding Shares or any consolidation, merger, sale, lease or
conveyance of property, described in Section 6; or

          (d) The Company shall take any action to effect any liquidation,
dissolution or winding-up of the Company or a sale of all or substantially all
of its property, assets and business;

then, and in any one or more of such cases, the Company shall give written
- ----                                                                      
notice thereof, by registered mail, postage prepaid, to the Holder at the
Holder's address as it shall appear in the Warrant Register, mailed at least
fifteen (15) days prior to (i) the date as of which the holders of record of
Shares to be entitled to receive any such dividend, distribution, rights,
warrants or other securities are to be determined, (ii) the date on which any
such offer to holders of Shares is made, or (iii) the date on which any such
reclassification, change of outstanding Shares, consolidation, merger, sale,
lease, conveyance of property, liquidation, dissolution or winding-up is
expected to become effective and the date as of which it is expected that
holders of record of Shares shall be entitled to exchange their shares for
securities or other property, if any, deliverable upon such reclassification,
change of outstanding shares, consolidation, merger, sale, lease, conveyance of
property, liquidation, dissolution or winding-up.  Nothing herein shall allow a
Holder to delay or prevent any of the foregoing actions.

  8.  Registration Rights.   (a) If, at any time during the seven-year period
      -------------------                                                    
commencing on the date hereof the Company shall file a registration statement
(other than on Form S-4, Form S-8, or any successor form) with the Securities
and Exchange Commission (the "Commission") while any Warrants or Warrant Shares
are outstanding, the Company shall give all of the then holders of any Warrants
(the "Eligible Holders") at least 45 days' prior written notice of the filing of
such registration statement.  If requested by any Eligible Holder in writing
within 30 days after receipt of any such notice, the Company shall, at the
Company's sole expense (other than the fees and disbursements of counsel for the
Eligible Holders and the underwriting discounts, if any, payable in respect of
the Warrant Shares sold by any Eligible Holder), register or qualify all or, at
each Eligible Holder's option, any portion of the Warrant Shares of any Eligible
Holders who shall have made such request, concurrently with the registration of
such other securities, all to the extent requisite to permit the public offering
and sale of the Warrant Shares through the facilities

                                      E-30

 
of all appropriate securities exchanges and the over-the-counter market, and
will use its best efforts through its officers, directors, auditors, and counsel
to cause such registration statement to become effective as promptly as
practicable.  Notwithstanding the foregoing, if the managing underwriter of any
such offering shall advise the Company in writing that, in its opinion, the
distribution of all or a portion of the Warrant Shares requested to be included
in the registration concurrently with the securities being registered by the
Company would materially adversely affect the distribution of such securities by
the Company for its own account, then any Eligible Holder who shall have
requested registration of his or its Warrant Shares shall delay the offering and
sale of such securities (or the portions thereof so designated by such managing
underwriter) for such period, not to exceed 90 days, as the managing underwriter
shall request (the "Delay Period"); provided that if any securities of the
Company are included in such registration statement and are eligible for sale
during the Delay Period for the account of any person other than the Company, a
pro rata portion of the securities which were requested to be included and
eligible for sale during the Delay Period shall also be included in such
registration statement and shall be eligible for sale during the Delay Period.

          (b) If, on any two occasions during the seven-year period commencing
on the date hereof, the Company shall receive a written request from Eligible
Holders who in the aggregate own (or upon exercise of all Warrants then
outstanding would own) a majority of the total number of shares of Common Stock
then included (or upon such exercises would be included) in the Warrant Shares
(the "Majority Holders"), to register the sale of all or part of the Warrant
Shares, the Company shall, as promptly as practicable, prepare and file with the
Commission a registration statement sufficient to permit the public offering and
sale of the Warrant Shares (whether covered by such request from the Majority
Holders or by any other written request from any Eligible Holder received within
30 days after such Eligible Holder's receipt of the Company's notice, as
described in the last sentence of this Section 8(b)) through the facilities of
all appropriate securities exchanges and the over-the-counter market, and will
use its best efforts through its officers, directors, auditors, and counsel to
cause such registration statement to become effective as promptly as
practicable; provided, that the Company shall only be obligated to file one such
registration statement for which all expenses incurred in connection with such
registration (other than the fees and disbursements of counsel for the Eligible
Holders and underwriting discounts, if any, payable in respect of the Warrant
Shares sold by the Eligible Holders) shall be borne by the Company.  Within
three business days after receiving any request contemplated by this Section
8(b), the Company shall give written notice to all the other Eligible Holders,
advising each of them that the Company is proceeding with such registration and
offering to include therein all or any portion of any such other Eligible
Holder's Warrant Shares, provided that the Company receives a written request to
do so from such Eligible Holder within 30 days after receipt by him or it of the
Company's notice.

          (c) Notwithstanding anything herein to the contrary, in addition to
the registration rights under Sections 8(a) and 8(b) above, the Eligible Holder
shall be entitled to the same registration rights and rights included therein as
the purchasers of securities of the Company are entitled to pursuant to the
Subscription Agreement, dated as of the date hereof, among the purchasers
described therein and the Company as to the Warrant Shares.

                                      E-31

 
          (d) In the event of a registration pursuant to the provisions of this
Section 8, the Company shall use its best efforts to cause the Warrant Shares so
registered to be registered or qualified for sale under the securities or blue
sky laws of such jurisdictions as the Holder or such holders may reasonably
request; provided, however, that the Company shall not be required to qualify to
do business in any state by reason of this Section 8(d) in which it is not
otherwise required to qualify to do business or otherwise subject itself to
general service of process in any such state.

          (e) The Company shall keep effective any registration or qualification
contemplated by this Section 8(a) or (b) and shall from time to time amend or
supplement each applicable registration statement, preliminary prospectus, final
prospectus, application, document and communication for such period of time as
shall be required to permit the Eligible Holders to complete the offer and sale
of the Warrant Shares covered thereby.  The Company shall in no event be
required to keep any such registration or qualification in effect for a period
in excess of six months from the date on which the Eligible Holders are first
free to sell such Warrant Shares; provided, however, that, if the Company is
required to keep any such registration or qualification in effect with respect
to securities other than the Warrant Shares beyond such period, the Company
shall keep such registration or qualification in effect as it relates to the
Warrant Shares for so long as such registration or qualification remains or is
required to remain in effect in respect of such other securities.

          (f) In the event of a registration pursuant to the provisions of this
Section 8, the Company shall furnish to each Eligible Holder such number of
copies of the registration statement and of each amendment and supplement
thereto (in each case, including all exhibits), such reasonable number of copies
of each prospectus contained in such registration statement and each supplement
or amendment thereto (including each preliminary prospectus), all of which shall
conform to the requirements of the Act and the rules and regulations thereunder,
and such other documents, as any Eligible Holder may reasonably request to
facilitate the disposition of the Warrant Shares included in such registration.

          (g) In the event of a registration pursuant to the provisions of this
Section 8, the Company shall furnish each Eligible Holder of any Warrant Shares
so registered with an opinion of its counsel (reasonably acceptable to the
Eligible Holders) to the effect that (I) the registration statement has become
effective under the Act and no order suspending the effectiveness of the
registration statement, preventing or suspending the use of the registration
statement, any preliminary prospectus, any final prospectus or any amendment or
supplement thereto has been issued, nor has the Commission or any securities or
blue sky authority of any jurisdiction instituted or threatened to institute any
proceedings with respect to such an order, (ii) the registration statement and
each prospectus forming a part thereof (including each preliminary prospectus),
and any amendment or supplement thereto, complies as to form with the Act and
the rules and regulations thereunder, and (iii) such counsel has no knowledge of
any material misstatement or omission in such registration statement or any
prospectus, as amended or supplemented.

          (h) In the event of a registration pursuant to the provision of this
Section 8, the Company shall enter into a cross-indemnity agreement and a
contribution agreement, each in customary form, with each underwriter, if any,
and, if requested, enter into an underwriting agreement containing conventional

                                      E-32

 
representations, warranties, allocation of expenses and customary closing
conditions, including, without limitation, opinions of counsel and accountants'
cold comfort letters, with any underwriter who acquires any Warrant Shares.

          (i) The Company agrees that until all the Warrant Shares have been
sold under a registration statement or pursuant to Rule 144 under the Act, it
shall, so long as it is so required by applicable law, timely file all reports,
statements and other materials required to be filed with the Commission to
permit holders of the Warrant Shares to sell such securities under Rule 144, for
a period of up to five years from the date hereof.

          (j) Until such time as the Warrant Shares shall become fully
transferable under Rule 144 under the Act, the Company will not, without the
written consent of the Majority Holders, grant to any persons the right to
request the Company to register any securities of the Company, provided that the
Company may grant such registration rights to other persons so long as such
rights do not conflict with the rights of the Eligible Holders; provided,
however, that pro rata rights resulting from "underwriter cutbacks" shall be
deemed not to conflict with the rights of Eligible Holders.

          (k) The Company may delay any requested registration hereunder if the
Company's Board of Directors determines in good faith that a registration at
such time would be materially detrimental to the Company provided that any such
delay shall not exceed 30 days and Company cannot provide this notice more than
twice in any 12 month period.

          (l) Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless each Eligible Holder, its officers, directors,
partners, employees, agents and counsel, and each person, if any, who controls
any such person within the meaning of Section 15 of the Act or Section 20(a) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), from and
against any and all loss, liability, charge, claim, damage and expense
whatsoever (which shall include, for all purposes of this Section 8, without
limitation, reasonable attorneys' fees and any and all expense whatsoever
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all amounts paid
in settlement of any claim or litigation), as and when incurred, arising out of,
based upon, or in connection with (i) any untrue statement or alleged untrue
statement of a material fact contained (A) in any registration statement,
preliminary prospectus or final prospectus (as from time to time amended and
supplemented), or any amendment or supplement thereto, relating to the sale of
any of the Warrant Shares, or (B) in any application or other document or
communication (in this Section 8 collectively called an "application") executed
by or on behalf of the Company or based upon written information furnished by or
on behalf of the Company filed in any jurisdiction in order to register or
qualify any of the Warrant Shares under the securities or blue sky laws thereof
or filed with the Commission or any securities exchange; or any omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, unless such statement
or omission was made in reliance upon and in conformity with written information
furnished to the Company with respect to such Eligible Holder by or on behalf of
such person expressly for inclusion in any registration statement, preliminary
prospectus, or final prospectus, or any amendment or supplement thereto, or in
any application, as the case may be, or (ii) any breach of any representation,

                                      E-33

 
warranty, covenant or agreement of the Company contained in this Warrant.  The
foregoing agreement to indemnify shall be in addition to any liability the
Company may otherwise have, including liabilities arising under this Warrant.

  If any action is brought against any Eligible Holder or any of its officers,
directors, partners, employees, agents or counsel, or any controlling persons of
such person (an "indemnified party") in respect of which indemnity may be sought
against the Company pursuant to the foregoing paragraph, such indemnified party
or parties shall promptly notify the Company in writing of the institution of
such action (but the failure so to notify shall not relieve the Company from any
liability other than pursuant to this Section 8(m) and shall not relieve the
Company from any liability pursuant to this Section 8(m) except to the extent
the Company has been prejudiced in any material respect by such failure) and the
Company shall promptly assume the defense of such action, including the
employment of counsel (reasonably satisfactory to such indemnified party or
parties) and payment of expenses.  Such indemnified party or parties shall have
the right to employ its or their own counsel in any such case, but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless the employment of such counsel shall have been authorized in
writing by the Company in connection with the defense of such action or the
Company shall not have promptly employed counsel reasonably satisfactory to such
indemnified party or parties to have charge of the defense of such action or
such indemnified party or parties shall have reasonably concluded that there may
be one or more legal defenses available to it or them or to other indemnified
parties which are different from or additional to those available to the
Company, in any of which events such fees and expenses of one counsel shall be
borne by the Company, and the Company shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties.  Anything
in this Section 8 to the contrary notwithstanding, the Company shall not be
liable for any settlement of any such claim or action effected without its
written consent, which shall not be unreasonably withheld.  The Company shall
not, without the prior written consent (which shall not be unreasonably
withheld) of each indemnified party that is not released as described in this
sentence, settle or compromise any action, or permit a default or consent to the
entry of judgment in or otherwise seek to terminate any pending or threatened
action, in respect of which indemnity may be sought hereunder (whether or not
any indemnified party is a party thereto), unless such settlement, compromise,
consent or termination includes an unconditional release of each indemnified
party from all liability in respect of such action.  The Company agrees promptly
to notify the Eligible Holders of the commencement of any litigation or
proceedings against the Company or any of its officers or directors in
connection with the sale of any Warrant Shares or any preliminary prospectus,
prospectus, registration statement or amendment or supplement thereto, or any
application relating to any sale of any Warrant Shares.

          (m) Each of the Holder and any Eligible Holder agrees to indemnify and
hold harmless the Company, each director of the Company, each officer of the
Company who shall have signed any registration statement covering Warrant Shares
held by the Holder and any Eligible Holder, each other person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, and its or their respective counsel, to the same
extent as the foregoing indemnity from the Company to the Holder in Section
8(m), but only with respect to statements or omissions, if any, made in any
registration statement or final prospectus, or any amendment or supplement

                                      E-34

 
thereto, or in any application, in reliance upon and in conformity with written
information furnished to the Company with respect to the Holder by or on behalf
of the Holder or with respect to any Eligible Holder or by or on behalf of such
Eligible Holder expressly for inclusion in any such registration statement or
final prospectus, or any amendment or supplement thereto, or in any application,
as the case may be; provided, however, that the Holder and each Eligible Holder
shall be liable only for written information furnished to the Company by it or
on its own behalf for inclusion in a registration statement; and provided,
further, that no Eligible Holder shall be liable in an amount greater than the
net proceeds received by such Eligible Holder in connection with the applicable
registration.  If any action shall be brought against the Company or any other
person so indemnified based on any such registration statement or final
prospectus, or any amendment or supplement thereto, or in any application, and
in respect of which indemnity may be sought against the Holder pursuant to this
Section 8(n), the Holder and each Eligible Holder, as the case may be, shall
have the rights and duties given to the Company, and the Company and each other
person so indemnified shall have the rights and duties given to the indemnified
parties, by the provisions of Section 8(m).

          (n) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 8(m) or
8(n) (subject to the limitations thereof) but it is found in a final judicial
determination, not subject to further appeal, that such indemnification may not
be enforced in such case, even though this Agreement expressly provides for
indemnification in such case, or (ii) any indemnified or indemnifying party
seeks contribution under the Act, the Exchange Act or otherwise, then the
Company (including for this purpose any contribution made by or on behalf of any
director of the Company, any officer of the Company who signed any such
registration statement, any controlling person of the Company, and its or their
respective counsel), as one entity, and the Eligible Holders of the Warrant
Shares included in such registration in the aggregate (including for this
purpose any contribution made by or on behalf of an indemnified party), as a
second entity, shall contribute to the losses, liabilities, claims, damages and
expenses whatsoever to which any of them may be subject, on the basis of
relevant equitable considerations such as the relative fault of the Company and
such Eligible Holders in connection with the facts which resulted in such
losses, liabilities, claims, damages and expenses.  The relative fault, in the
case of an untrue statement, alleged untrue statement, omission or alleged
omission, shall be determined by, among other things, whether such statement,
alleged statement, omission or alleged omission relates to information supplied
by the Company or by such Eligible Holders, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement, alleged statement, omission or alleged omission.  The Company and the
Holder agree that it would be unjust and inequitable if the respective
obligations of the Company and the Eligible Holders for contribution were
determined by pro rata or per capita allocation of the aggregate losses,
liabilities, claims, damages and expenses (even if the Holder and the other
indemnified parties were treated as one entity for such purpose) or by any other
method of allocation that does not reflect the equitable considerations referred
to in this Section 8(o).  In no case shall any Eligible Holder be responsible
for a portion of the contribution obligation imposed on all Eligible Holders in
excess of its pro rata share based on the number of shares of Common Stock owned
(or which would be owned upon exercise of all Warrants) by it and included in
such registration as compared to the number of shares of Common Stock owned (or
which would be owned

                                      E-35

 
upon exercise of all Warrants) by all Eligible Holders and included in such
registration nor shall any Eligible Holder be responsible for an amount greater
than the net proceeds received by such Eligible Holder in connection with the
applicable registration.  No person guilty of a fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who is not guilty of such fraudulent
misrepresentation.  For purposes of this Section 8(o), each person, if any, who
controls any Eligible Holder within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act and each officer, director, partner, employee,
agent and counsel of each such Eligible Holder or control person shall have the
same rights to contribution as such Eligible Holder or control person and each
person, if any, who controls the Company within the meaning of Section 15 of the
Act or Section 20(a) of the Exchange Act, each officer of the Company who shall
have signed any such registration statement, each director of the Company and
its or their respective counsel shall have the same rights to contribution as
the Company, subject in each case to the provisions of this Section 8(o).
Anything in this Section 8(o) to the contrary notwithstanding, no party shall be
liable for contribution with respect to the settlement of any claim or action
effected without its written consent.  This Section 8(o) is intended to
supersede any right to contribution under the Act, the Exchange Act or
otherwise.

  9.  Taxes.  The issuance of any shares or other securities upon the exercise
      -----                                                                   
of this Warrant and the delivery of certificates or other instruments
representing such shares or other securities shall be made without charge to the
Holder for any tax or other charge in respect of such issuance.  The Company
shall not, however, be required to pay any tax which may be payable in respect
of any transfer involved in the issue and delivery of any certificate in a name
other than that of the Holder (except for any tax that is payable in respect of
any such transfer and any related exercise of this Warrant and that would be
payable pursuant to the first sentence of this Section 9 were such certificate
to be issued in the name of the Holder) and the Company shall not be required to
issue or deliver any such certificate unless and until the person or persons
requesting the issue thereof shall have paid to the Company the amount of such
tax or shall have established to the satisfaction of the Company that such tax
has been paid.

  10.  Legend.  Unless registered pursuant to the provisions of Section 8
       ------                                                            
hereof, the certificate or certificates evidencing the Warrant Shares, shall
bear the following legend:

               "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
             REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
             "ACT"), OR STATE SECURITIES LAWS, BUT HAVE BEEN ISSUED OR
             TRANSFERRED PURSUANT TO AN EXEMPTION FROM THE REGISTRATION
             REQUIREMENTS OF THE ACT.  NO DISTRIBUTION, SALE, OFFER FOR SALE,
             TRANSFER, DELIVERY, PLEDGE, OR OTHER DISPOSITION OF THESE
             SECURITIES MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH THE ACT, ANY
             APPLICABLE STATE LAWS, AND THE RULES AND REGULATIONS OF THE
             SECURITIES AND EXCHANGE COMMISSION AND STATE AGENCIES PROMULGATED
             THEREUNDER."

                                      E-36

 
In addition, if, after the Warrant Shares are registered pursuant to Section
8(c) hereof, the Holder wishes to have the original legend removed, then, unless
the Warrant Shares are registered pursuant to the provisions of Section 8(a) and
(b) hereof, the certificate or certificates evidencing the Warrant Shares shall
bear the following legend:

                "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN REGISTERED
              UNDER THE SECURITIES ACT OF 1933, AS AMENDED, PURSUANT TO A
              REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE
              COMMISSION. HOWEVER, SUCH SHARES MAY NOT BE OFFERED OR SOLD EXCEPT
              PURSUANT TO (I) A POST-EFFECTIVE AMENDMENT TO SUCH REGISTRATION
              STATEMENT, UNLESS COUNSEL OF COMPANY ADVISES IN WRITING THAT SUCH
              POST-EFFECTIVE AMENDMENT IS NOT REQUIRED, IN WHICH EVENT SUCH
              SHARES MAY BE OFFERED PURSUANT TO THE ORIGINAL REGISTRATION
              STATEMENT PURSUANT TO WHICH THESE SHARES HAVE BEEN REGISTERED,
              (ii) A SEPARATE REGISTRATION STATEMENT UNDER SUCH ACT, OR (iii) AN
              EXEMPTION FROM REGISTRATION UNDER SUCH ACT."

  11.  Replacement of Warrants.  Upon receipt of evidence satisfactory to the
       -----------------------                                               
Company of the loss, theft, destruction or mutilation of any Warrant (and upon
surrender of any Warrant if mutilated), and upon reimbursement of the Company's
reasonable incidental expenses and execution of a reasonable lost security
indemnification agreement, the Company shall execute and deliver to the Holder
thereof a new Warrant of like date, tenor and denomination.

  12.  No Rights as Stockholder.  The Holder of any Warrant shall not have,
       ------------------------                                            
solely on account of such status, any rights of a stockholder of the Company,
either at law or in equity, or to any notice of meetings of stockholders or of
any other proceedings of the Company, except as provided in this Warrant.

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

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

          (b) If to the Company, to the address set forth on the first page of
this Warrant or to such other address as the Company may designate by notice to
the Holder.

  14.  Successors.  All the covenants, agreements, representations and
       ----------                                                     
warranties contained in this Warrant shall bind the parties hereto and their
respective heirs, executors, administrators, distributees, successors and
assigns.

  15.  Headings.  The Article and Section headings in this Warrant are inserted
       --------                                                                
for purposes of convenience only and shall have no substantive effect.

                                      E-37

 
  16.  Governing Law.  This Warrant shall be construed in accordance with the
       -------------                                                         
laws of the State of New York applicable to contracts made and performed within
such State, without regard to principles of conflicts of law.

  17.  Modification of Agreement.  This Warrant shall not otherwise be modified,
       -------------------------                                                
supplemented or amended in any respect unless such modification, supplement or
amendment is in writing and signed by the Company and the Holder of this Warrant
and Holders of any portion of the Warrant subsequently assigned or transferred
in accordance with the terms of this Warrant.

  18.  Consent to Jurisdiction.  The Company and the Holder irrevocably consent
       -----------------------                                                 
to the jurisdiction of the courts of the State of New York and of any federal
court located in such State in connection with any action or proceeding arising
out of or relating to this Warrant, any document or instrument delivered
pursuant to, in connection with or simultaneously with this Warrant, or a breach
of this Warrant or any such document or instrument.  In any such action or
proceeding, the Company waives personal service of any summons, complaint or
other process and agrees that service thereof may be made in accordance with
Section 13 hereof.

  IN WITNESS WHEREOF, the undersigned has executed this instrument as of the
date set forth below.



Dated:  [               ], 1997         SIGA PHARMACEUTICALS, INC.

                                        By:
                                            Name: ____________________
                                            Title: ___________________

                                      E-38

 
                               FORM OF ASSIGNMENT


  (To be executed by the registered holder if such holder desires to transfer
the attached Warrant.)

  FOR VALUE RECEIVED, _______________________ hereby sells, assigns, and
transfers unto _________________, having an address at
___________________________ _______________________, the attached Warrant to the
extent of the right to purchase ____________ Shares of $0.0001 par value per
share, of SIGA PHARMACEUTICALS, INC. (the "Company"), together with all right,
                                           -------                            
title, and interest therein, and does hereby irrevocably constitute and appoint
_________________ as attorney to transfer such Warrant on the books of the
Company, with full power of substitution.


Dated: _______________, _____
                              _____________________________
                              Print name of holder of Warrant


                              By:__________________________________
                              Name:
                              Title:



                                     NOTICE


  The signature on the foregoing Assignment must correspond to the name as
written upon the face of this Warrant in every particular, without alteration or
enlargement or any change whatsoever.

                                      E-39

 
To:

                               CASH EXERCISE FORM



  The undersigned hereby exercises its rights to purchase _________ Warrant
Shares covered by the within Warrant and tenders payment herewith in the amount
of $_____________ in accordance with the terms thereof, and requests that
certificates for such securities be issued in the name of, and delivered to:



                    (Print Name, Address and Social Security
                         or Tax Identification Number)

and, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant, that a new Warrant for the balance of the Warrant
Shares covered by the within Warrant be registered in the name of, and delivered
to, the undersigned at the address stated below.


Dated:__________________        Name:_________________________________
                                                 (Print)



                                     _________________________________
                                                 (Signature)
                                     (Signature must conform to the name of
                                     the Warrant Holder specified on the
                                     face of the Warrant)

Address:

                                      E-40

 
To:

                             CASHLESS EXERCISE FORM
            (To be executed upon conversion of the attached Warrant)



  The undersigned hereby irrevocably elects to surrender its Warrant for the
number of Warrant Shares as shall be issuable pursuant to the cashless exercise
provisions of Section 1 of the within Warrant, in respect of ________ Warrant
Shares underlying the within Warrant, and requests that certificates for such
Warrant Shares be issued in the name of and delivered to:



                    (Print Name, Address and Social Security
                         or Tax Identification Number)

and, if such number of Warrant Shares shall not be all the shares exchangeable
or purchasable under the within Warrant, that a new Warrant for the balance of
the Warrant Shares covered by the within Warrant be registered in the name of,
and delivered to, the undersigned at the address stated below.


Date:______________________________

Name:______________________________      (Print)

Address:_________________________________________________________________



__________________________________       (Signature)
Signature

                                      E-41


 
                                                                    EXHIBIT 1(c)

                                      E-42

 
      ESCROW AGREEMENT BY AND AMONG THE COMPANY, SUNRISE SECURITIES CORP.
  AND UNITED STATES TRUST COMPANY OF NEW YORK, DATED AS OF _____________, 1997

                           SIGA PHARMACEUTICALS, INC.

                            SUNRISE SECURITIES CORP.

                                ESCROW AGREEMENT

                                      With

                    UNITED STATES TRUST COMPANY OF NEW YORK


  ESCROW AGREEMENT, dated as of ____________, 1997 by and among SIGA
PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), SUNRISE
SECURITIES CORP., a Delaware corporation (the "Underwriter"), and UNITED STATES
TRUST COMPANY OF NEW YORK, a national banking institution incorporated under the
laws of the United States of America (the "Escrow Agent").

  WHEREAS, the Company proposes to sell 3,250,000 shares of its common stock
(the "Shares"), without par value of the Company (the "Common Stock"), in an
offering (the "Offering") registered pursuant to a Registration Statement (as
amended, the "Registration Statement") filed by the Company with the Securities
and Exchange Commission, with the offering price per share of Common Stock
assumed to be $5.00 per share;

  WHEREAS, the Underwriter has agreed to offer the Shares as the agent of the
Company on a "best efforts, all or none" basis;

  WHEREAS, the Company needs to provide for the safekeeping and investment of
the proceeds of the sale of the Shares until such time as the Company accepts
subscriptions for 3,100,000 Shares and the proceeds of the sale of such Shares
are deposited with the Escrow Agent or until such time as the Offering
terminates and the Escrow Agent is required to return such proceeds to the
subscribers as provided for herein; and

  WHEREAS, with respect to all subscription payments received by subscribers,
the Company proposes to establish an escrow account with the Escrow Agent at the
office of its Escrow Administration, 114 West 47th Street, 15th Floor, New York,
New York 10036.

  NOW, THEREFORE, it is agreed as follows:

  1.  Establishment of Escrow.  The Escrow Agent hereby agrees to receive and
      ------------------------                                               
disburse the proceeds from the Offering and any interest earned thereon in
accordance herewith.  Proceeds from the Offering shall be invested in accordance
with Rule 15c2-4 of the Rules and Regulations under the Securities Exchange Act
of 1934.

  2.  Deposit of Escrowed Property.  The Underwriter, on behalf of the
      -----------------------------                                   
subscribers of Shares, and/or such subscribers shall from time to time cause to
be wired to or deposited with the Escrow Agent funds or checks of the
subscribers delivered in payment for Shares (the "Escrowed Property").  Any
checks delivered

                                      E-43

 
to the Escrow Agent pursuant to the terms hereof shall be made payable to or
endorsed to the order of "U.S. Trust Company of New York as escrow agent for
SIGA Pharmaceuticals, Inc."  The Escrow Agent upon receipt of such checks shall
present such checks for payment to the drawee-bank under such checks.  Any
checks not honored by the drawee-bank thereunder after the first presentment for
payment shall be returned to the Company in the same manner as notices are
delivered pursuant to Section 4.  Upon receipt of such funds or checks, the
Escrow Agent shall credit such funds and the amount of such checks to an
interest-bearing account (the "Escrow Account") held by the Escrow Agent.  If,
following the credit of the amount of any check to the Escrow Account, such
check is dishonored, the Escrow Agent shall debit the Escrow Account for the
amount of such dishonored check.

  3.  List of Subscribers.  The Underwriter shall furnish or cause to be
      --------------------                                              
furnished to the Escrow Agent, at the time of each deposit by it of funds or
checks pursuant to Section 2, a list, substantially in the form of Exhibit A
hereto, containing the name of, the address of, number of Shares subscribed for
by, the subscription amount delivered to the Escrow Agent on behalf of, and the
social security number, if applicable, of, each subscriber whose funds are being
deposited, for each listed subscriber.  The Escrow Agent shall notify the
Underwriter and the Company of any discrepancy between the subscription amounts
set forth on any list delivered pursuant to this Section 3 and the subscription
amounts received by the Escrow Agent and shall notify the Underwriter upon its
receipt of funds or checks directly from any subscriber.  The Escrow Agent is
authorized to revise such list to reflect the actual subscription amounts
received and the release of any subscription amounts pursuant to Section 2.

  4.  Disbursement of Funds.  (a)  If the Escrow Agent shall receive a notice,
      ----------------------                                                  
substantially in the form of Exhibit B hereto (an "Offering Termination
Notice"), from the Company and the Underwriter, the Escrow Agent shall, promptly
after receipt of such Offering Termination Notice and the clearance of all
checks received by the Escrow Agent as Escrowed Property, (i) send to each
subscriber listed on the list held by the Escrow Agent pursuant to Section 3
whose total subscription amount shall not have been released pursuant to
paragraph (b) or (c) of this Section 4, in the manner set forth in paragraph (d)
of this Section 4, a check to the order of such subscriber in the amount of the
remaining subscription amount held by the Escrow Agent as set forth on such list
held by the Escrow Agent, and (ii) pay to the Company the amount of any interest
earned on the Escrowed Property.

  (b)  In the event that (i) 3,250,000 Shares have been subscribed for and funds
in respect thereof shall have been deposited with the Escrow Agent on or before
the Termination Date and (ii) no Offering Termination Notice shall have been
delivered to the Escrow Agent, the Company and the Underwriter from time to time
may deliver to the Escrow Agent a joint notice, substantially in the form of
Exhibit C hereto (a "Closing Notice"), designating the date on which Shares are
to be sold and delivered to the subscribers thereof (a "Closing Date"), which
date shall not be earlier than the clearance of any checks received by the
Escrow Agent as Escrowed Property, the proceeds of which are to be distributed
on such Closing Date, and identifying the subscribers and the number of the
Shares to be sold to each thereof on such Closing Date, not less than two (2)
nor more than seven (7) business days prior to such Closing Date.  The Escrow
Agent, after receipt of such Closing Notice and the clearance of such checks
shall, pay to the Company or its designees on such Closing Date, in federal or
other immediately

                                      E-44

 
available funds, in the manner specified by the Company and the Underwriter in
such Closing Notice, an amount equal to the aggregate of the subscription
amounts paid by the subscribers identified in such Closing Notice for the Shares
to be sold on such Closing Date as set forth on the list held by the Escrow
Agent pursuant to Section 3, together with any and all interest on the Escrowed
Property.

  (c)  If at any time and from time to time prior to the release of any
subscriber's total subscription amount pursuant to paragraph (a) or (b) of this
Section 4 from escrow, the Company or the Underwriter shall deliver to the
Escrow Agent a notice, substantially in the form of Exhibit D hereto (a
"Subscription Termination Notice"), to the effect that any or all of the
subscriptions of such subscriber have been rejected by the Company (a "Rejected
Subscription"), the Escrow Agent shall, promptly after receipt of such
Subscription Termination Notice and, if such subscriber delivered a check in
payment of its Rejected Subscription, after the clearance of such check, send to
such subscriber, in the manner set forth in paragraph (d) of this Section 4, a
check to the order of such subscriber in the amount of such Rejected
Subscription amount.  Any and all interest on the amount of any Rejected
Subscription shall be disbursed as provided in Section 3(b) or (c) above with
respect to interest on the Escrowed Property.

  (d)  For the purposes of this Section 4, any check that the Escrow Agent shall
be required to send to any subscriber shall be sent to such subscriber by first
class mail, postage prepaid, at such subscriber's address furnished to the
Escrow Agent pursuant to Section 3.

  5.  Notices.  Any notice or other communication required or permitted to be
      --------                                                               
given hereunder shall be in writing and shall be (a) delivered by hand or (b)
sent by mail, registered or certified, with proper postage prepaid, and
addressed as follows:

  If to the Company, to:

  SIGA Pharmaceuticals, Inc.
  666 Third Avenue
  New York, New York 10017
  Attention:  David H. De Weese
              President and Chief Executive Officer
  Phone:      212-681-4970
  Fax:        212-986-2399
 
  If to the Underwriter, to:
 
  Sunrise Securities Corp.
  135 E. 57th Street
  New York, New York  10022
  Attention:  Mr. Preston Tsao
  Phone:      212-421-1616
  Fax:        212-421-5942

  If to the Escrow Agent, to:

                                      E-45

 
  United States Trust Company of New York
  Corporate Trust
  Escrow Administration
  114 West 47th Street, 15th Floor
  New York, New York  10036
  Attention:

  Phone:  212-852-1613
  Fax:  212-852-1626

or to such other address as the person to whom notice is to be given may have
previously furnished to the others in the above-referenced manner.  All such
notices and communications, if mailed, shall be effective when deposited in the
mails, except that notices and communications to the Escrow Agent and notices of
changes of address shall not be effective until received.

  6.  Concerning the Escrow Agent.  To induce the Escrow Agent to act hereunder,
      ----------------------------                                              
it is further agreed by the Company and Underwriter that:

  (a) The Escrow Agent shall not be under any duty to give the Escrowed Property
held by it hereunder any greater degree of care than it gives its own similar
property and shall not be required to invest any funds held hereunder except as
directed in this Escrow Agreement.  Uninvested funds held hereunder shall not
earn or accrue interest.

  (b) This Escrow Agreement expressly sets forth all the duties of the Escrow
Agent with respect to any and all matters pertinent hereto.  No implied duties
or obligations shall be read into this Escrow Agreement against the Escrow
Agent.  The Escrow Agent shall not be bound by the provisions of any agreement
among the other parties hereto except this Escrow Agreement.

  (c)   The Escrow Agent shall not be liable, except for its own gross
negligence or willful misconduct, and, except with respect to claims based upon
such gross negligence or willful misconduct that are successfully asserted
against the Escrow Agent, the other parties hereto shall jointly and severally
indemnify and hold harmless the Escrow Agent (and any successor Escrow Agent)
from and against any and all losses, liabilities, claims, actions, damages and
expenses, including reasonable attorneys' fees and disbursements, arising out of
and in connection with this Escrow Agreement.  Without limiting the foregoing,
the Escrow Agent shall in no event be liable in connection with its investment
or reinvestment of any cash held by it hereunder in good faith, in accordance
with the terms hereof, including without limitation any liability for any delays
(not resulting from gross negligence or willful misconduct) in the investment or
reinvestment of the Escrowed Property, or any loss of interest incident to any
such delays.

  (d) The Escrow Agent shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument or other writing delivered to it
hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof.  The Escrow Agent may act in reliance upon any instrument or
signature believed by it in good faith to be genuine and may assume, if in good
faith, that any person purporting to give notice or receipt or advice or make
any statement or execute any document in connection with the provisions hereof
has been duly authorized to do so.

                                      E-46

 
     (e) The Escrow Agent may act pursuant to the advice of counsel with respect
to any matter relating to this Escrow Agreement and shall not be liable for any
action taken or omitted in good faith and in accordance with such advice.

  (f) The Escrow Agent does not have any interest in the Escrowed Property
deposited hereunder but is serving as escrow holder only.  Any payments of
income from the Escrow Account shall be subject to withholding regulations then
in force with respect to United States taxes.  The Company will provide the
Escrow Agent with appropriate forms for tax I.D., number certification, or non-
resident alien certifications.

  This paragraph (f) and paragraph (c) of this Section 6 shall survive
notwithstanding any termination of this Escrow Agreement or the resignation of
the Escrow Agent.

  (g) The Escrow Agent makes no representation as to the validity, value,
genuineness or the collectibility of any security or other documents or
instrument held by or delivered to it.

  (h) The Escrow Agent shall not be called upon to advise any party as to the
wisdom in selling or retaining or taking or refraining from any action with
respect to any securities or other property deposited hereunder.

  (i) The Escrow Agent (and any successor escrow agent) at any time may be
discharged from its duties and obligations hereunder by the delivery to it of
notice of termination signed by both the Company and the Underwriter or at any
time may resign by giving written notice to such effect to the Company and the
Underwriter.  Upon any such termination or resignation, the Escrow Agent shall
deliver the Escrowed Property to any successor escrow agent jointly designated
by the other parties hereto in writing, or to any court of competent
jurisdiction if no such successor escrow agent is agreed upon, whereupon the
Escrow Agent shall be discharged of and from any and all further obligations
arising in connection with this Escrow Agreement.  The termination or
resignation of the Escrow Agent shall take effect on the earlier of (i) the
appointment of a successor (including a court of competent jurisdiction) or (ii)
the day that is 30 days after the date of delivery:  (A) to the Escrow Agent of
the other parties' notice of termination or (B) to the other parties hereto of
the Escrow Agent's written notice of resignation.  If at that time the Escrow
Agent has not received a designation of a successor escrow agent, the Escrow
Agent's sole responsibility after that time shall be to keep the Escrowed
Property safe until receipt of a designation of successor escrow agent or a
joint written disposition instruction by the other parties hereto or an
enforceable order of a court of competent jurisdiction.

  (j) The Escrow Agent shall have no responsibility for the contents of any
writing of any third party contemplated herein as a means to resolve disputes
and may rely without any liability upon the contents thereof.

  (k) In the event of any disagreement among or between the other parties hereto
and/or the subscribers of the Shares resulting in adverse claims or demands
being made in connection with the Escrowed Property, or in the event that the
Escrow Agent in good faith is in doubt as to what action it should take
hereunder, the Escrow Agent shall be entitled to retain the Escrowed Property
until the Escrow Agent shall have received (i) a final and non-appealable order

                                      E-47

 
of a court of competent jurisdiction directing delivery of the Escrowed Property
or (ii) a written agreement executed by the other parties hereto and consented
to by the subscribers directing delivery of the Escrowed Property, in which
event the Escrow Agent shall disburse the Escrowed Property in accordance with
such order or agreement.  Any court order referred to in (i) above shall be
accompanied by a legal opinion by counsel for the presenting party satisfactory
to the Escrow Agent to the effect that said court order is final and non-
appealable.  The Escrow Agent shall act on such court order and legal opinions
without further question.

  (l) As consideration for its agreement to act as Escrow Agent as herein
described, the Company, agrees to pay the Escrow Agent fees determined in
accordance with the terms set forth on Exhibit E hereto (and made a part of this
Escrow Agreement as if herein set forth).  In addition, the Company agrees to
reimburse the Escrow Agent for all reasonable expenses, disbursements and
advances incurred or made by the Escrow Agent in performance of its duties
hereunder (including reasonable fees, expenses and disbursements of its
counsel).
  (m) The other parties hereto irrevocably (i) submit to the jurisdiction of any
New York State or federal court sitting in New York City in any action or
proceeding arising out of or relating to this Escrow Agreement, (ii) agree that
all claims with respect to such action or proceeding shall be heard and
determined in such New York State or federal court and (iii) waive, to the
fullest extent possible, the defense of an inconvenient forum.  The other
parties hereby consent to and grant any such court jurisdiction over the persons
of such parties and over the subject matter of any such dispute and agree that
delivery or mailing of process or other papers in connection with any such
action or proceeding in the manner provided hereinabove, or in such other manner
as may be permitted by law, shall be valid and sufficient service thereof.

  (n) No printed or other matter in any language (including, without limitation,
the Registration Statement, notices, reports and promotional material) which
mentions the Escrow Agent's name or the rights, powers, or duties of the Escrow
Agent shall be issued by the other parties hereto or on such parties' behalf
unless the Escrow Agent shall first have given its specific written consent
thereto.  The Escrow Agent hereby consents to the use of its name and the
reference to the escrow arrangement in the Registration Statement and to the
filing of this Agreement and the subscription agreements with respect to the
Shares as exhibits to the Registration Statement.

  8.  Miscellaneous.  (a)  This Escrow Agreement shall be binding upon and inure
      --------------                                                            
solely to the benefit of the parties hereto and their respective successors and
assigns, heirs, administrators and representatives, and the subscribers of the
Shares and shall not be enforceable by or inure to the benefit of any other
third party except as provided in paragraph (i) of Section 6 with respect to the
termination of, or resignation by, the Escrow Agent.  No party may assign any of
its rights or obligations under this Escrow Agreement without the written
consent of the other parties.

  (b) This Escrow Agreement shall be construed in accordance with and governed
by the internal law of the State of New York (without reference to its rules as
to conflicts of law).

                                      E-48

 
  (c) This Escrow Agreement may only be modified by a writing signed by all of
the parties hereto and consented to by the subscribers of the Shares adversely
affected by such modifications.  No waiver hereunder shall be effective unless
in a writing signed by the party to be charged.

  (d) This Escrow Agreement shall terminate upon the payment pursuant to Section
4 of all amounts held in the Escrow Account.

  (e) The section headings herein are for convenience only and shall not affect
the construction thereof.  Unless otherwise indicated, references to Sections
are to Sections contained herein.

  (f) This Escrow Agreement may be executed in one or more counterparts but all
such separate counterparts shall constitute but one and the same instrument;
provided that, although executed in counterparts, the executed signature pages
of each such counterpart may be affixed to a single copy of this Agreement which
shall constitute an original.

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

                              SIGA PHARMACEUTICALS, INC.


                              By: _______________________
                                    Name:
                                    Title:


                              SUNRISE SECURITIES CORP.


                              By: _______________________
                                    Name:
                                    Title:


                              UNITED STATES TRUST COMPANY
                              OF NEW YORK


                              By: ________________________
                                    Name:
                                    Title:

                                      E-49

 
                                   EXHIBIT A

                           SUMMARY OF CASH RECEIVED
                            NEW PARTICIPANT DEPOSIT
                                         Date_________________ ______
Deposit Date:                               List Number_____  ______
Investment Date:                            Page____ of ______ _____
Batch Number:                               Approved By_____ ______
 
 
         For Bank use only            JOB#:___________________ TITLE:_____________________________________

                NAME            DEPOSIT        SHARES           ADDRESS         TAX ID NUMBER
                                                                    
   |                       |                |          |                       |              |
   |                       |                |          |                       |              |
   |                       |                |          |                       |              |
   |                       |                |          |                       |              |
   |                       |                |          |                       |              |
   |...........................................................................................
   | Broker          Misc. I                             Misc. II               Misc. III
   |                       |                |          |                       |              |
   |                       |                |          |                       |              |
   |                       |                |          |                       |              |
   |                       |                |          |                       |              |
   |                       |                |          |                       |              |
   |...........................................................................................
   | Broker          Misc. I                             Misc. II               Misc. III
   |                       |                |          |                       |              |
   |                       |                |          |                       |              |
   |                       |                |          |                       |              |
   |                       |                |          |                       |              |
   |                       |                |          |                       |              |
   |...........................................................................................
   | Broker          Misc. I                             Misc. II               Misc. III
   |                       |                |          |                       |              |
   |                       |                |          |                       |              |
   |                       |                |          |                       |              |
   |                       |                |          |                       |              |
   |                       |                |          |                       |              |
 

                                      E-50

 
                                                                    
   |...........................................................................................
   | Broker          Misc. I                             Misc. II               Misc. III
 
 
                                   EXHIBIT B


                     [Form of Offering Termination Notice]


United States Trust Company of New York
Corporate Trust
Escrow Administration
114 West 47th Street, 15th Floor
New York, New York  10036
Attention:

Dear               :

     Pursuant to Section 4(a) of the Escrow Agreement dated as of ________ __,
1997 (the "Escrow Agreement") among SIGA Pharmaceuticals, Inc. (the "Company"),
Sunrise Securities Corp. and you, the Company and the Underwriter hereby notify
you of the termination of the offering of the Shares (as that term is defined in
the Escrow Agreement) and direct you to make payments to the subscribers and the
Company provided for in Section 4(a) of the Escrow Agreement.


                                    Very truly yours,

                                    SIGA PHARMACEUTICALS, INC.


                                    By:_________________________
                                         Name:
                                         Title:



                                    SUNRISE SECURITIES CORP.

                                      E-51

 
                                    By:_________________________
                                         Name:
                                         Title:

                                      E-52

 
                                   EXHIBIT C

                            [Form of Closing Notice]

United States Trust Company of New York
Corporate Trust
Escrow Administration
114 West 47th Street, 15th Floor
New York, New York  10036
Attention:

Dear            :

     Pursuant to Section 4(b) of the Escrow Agreement dated as of _______ __,
1997 (the "Escrow Agreement") among SIGA Pharmaceuticals, Inc. (the "Company"),
Sunrise Securities Corp. and you, the Company hereby certifies that
subscriptions for 3,250,000 Shares (as that term is defined in the Escrow
Agreement) have been received and the Company will sell and deliver [__________]
Shares to the subscribers thereof at a closing to be held on [____________,
1997] (the "Closing Date").  The names of the subscribers concerned, the number
of Shares subscribed for by each of such subscribers and the related
subscription amounts are set forth on the schedule annexed hereto.

     We hereby request that the aggregate subscription amount be paid to us as
follows:

            [To be inserted].

                                    Very truly yours,

                                    SIGA PHARMACEUTICALS, INC.

                                    By:_________________________
                                         Name:
                                         Title:

                                    SUNRISE SECURITIES CORP.

                                    By:_________________________
                                         Name
                                         Title:

                                      E-53

 
                                   EXHIBIT D


                   [Form of Subscription Termination Notice]



United States Trust Company of New York
Corporate Trust
Escrow Administration
114 West 47th Street, 15th Floor
New York, New York  10036
Attention:

Dear                   :

     Pursuant to Section 4(c) of the Escrow Agreement dated as of _______ __,
1997 (the "Escrow Agreement") among SIGA Pharmaceuticals, Inc. (the "Company"),
Sunrise Securities Corp. (the "Underwriter") and you, the undersigned hereby
notifies you that the following subscription(s) have been rejected:

                         Number of Subscribed      Amount of
Name of Subscriber(s)    Shares Rejected      Rejected Subscription

                                              $









                                                Very truly yours,

                                      E-54

 
                                   EXHIBIT E
                                        
     A.   [INTENTIONALLY OMITTED]

     B.   A fee equal to:

          10 Basis Points on the First $5,000,000 or any part thereof,
           6 Basis Points on the next $5,000,000,
           3 Basis Points on the next $90,000,000,
          1 1/2 Basis Points on amounts over $100,000,000 of Escrow Property
received by the Escrow Agent prior to the Closing Date pursuant to the terms of
the offering; provided that the aggregate amount of fees pursuant to this Item B
of Exhibit E shall not, in any event, exceed $7,500.  Fees will be calculated on
the aggregate amount of Escrow Property received by the Escrow Agent pursuant to
the Escrow Agreement to which this Exhibit is attached and Escrow Agreement I.

     C.   A fee for recordkeeping equal to the following:

          (1)  $   4.00  for each check issued by the Escrow Agent
          (2)  $   9.00  for each participant (hard copy input of subscriber
                    information) and
          (3)  $   2.00  for each 1099 form issued
          (4)  $   5.00 for each interest calculation
          (5)  $  20.00 for each cancellation, correction or withdrawal of
                    Escrowed Property made by the Escrow Agent pursuant to
                    Section 5(d) of the Escrow Agreement to which this Exhibit
                    is attached shall be paid when billed by the Escrow Agent.

          Capitalized terms not otherwise defined shall have the meanings
          ascribed thereto in the Escrow Agreement to which this Exhibit is
          attached.

                                      E-55


 
                                                                    EXHIBIT 1(d)

                                      E-56

 
                   FORM OF SUBSCRIPTION AGREEMENT TO PURCHASE
                     SHARES OF COMMON STOCK OF THE COMPANY

                             SUBSCRIPTION AGREEMENT


SIGA Pharmaceuticals, Inc.
666 Third Avenue
New York, New York 10017
Phone Number (212) 681-4970
ATTN: David H. De Weese
      President and Chief Executive Officer

Gentlemen:

     The undersigned (the "Subscriber") hereby subscribes for and agrees to
purchase shares of Common Stock, par value $.0001 per share (the "Securities"),
of SIGA Pharmaceuticals, Inc., a Delaware corporation (the "Company"), at a per
share purchase price of $5.00, in the amounts set forth on the Signature Page to
this Subscription Agreement (the "Signature Page") and on the terms set forth in
the Prospectus dated ___________, 1997 (the "Prospectus"), which is part of
Securities and Exchange Commission Registration Statement No. 333-______ (the
"Registration Statement"), and in this Subscription Agreement.

     The Subscriber represents and warrants to the Company and covenants and
agrees with it as follows:

     1.  Payment; Escrow.  (a)  The Company has entered into an Escrow Agreement
(the "Escrow Agreement") with United States Trust Company of New York (the
"Bank"), and the Bank has established an escrow account (the "Escrow Account").
The Subscriber shall forthwith cause the full amount of the subscription price
to be paid by check, payable to "U.S. Trust Company of New York, as escrow agent
for SIGA Pharmaceuticals, Inc.," or wire transferred to the Escrow Account as
follows:

                    Chase NYC, ABA # 021000021
                    Credit United States Trust Company of New York
                    Account #:
                    Further Credit: SIGA Pharmaceuticals, Inc.
                    Account #:
                    Attn:
                    Subscriber Name: ________________

If the subscription price is paid by wire transfer, the Subscriber shall (i)
include the Subscriber's name in the wire transfer instructions; and (ii)
request from the bank or other financial institution that is originating the
transfer, the federal wire number with respect to the subscription and retain
that number for future reference.  The Subscriber shall cause this Agreement,
appropriately executed and completed, to be mailed or otherwise delivered to the
Company at its address set forth above.  Upon payment of the Subscription Price,
the Subscriber shall also send a copy of the completed signature page of this
Agreement via facsimile to Sunrise Securities Corp., Attention: Mr. Preston
Tsao, Facsimile No. 212-421-5924.

                                      E-57

 
          (b) If by _________, 1997, or such later date, not later than
________, 1997, to which the offering contemplated by the Prospectus (the
"Offering") may be extended by Sunrise Securities Corp., the underwriter for the
Offering (the "Underwriter"), in its sole discretion, the proceeds of the sale
of 3,250,000 shares of Common Stock have been deposited in the Escrow Account
and the Escrow Agent has been notified by the Company and the Underwriter that
the Company has accepted subscription agreements for 3,250,000 shares of Common
Stock and that the other conditions for a closing of all or a portion of the
shares subject to the Offering have been met, and from time to time thereafter
after the Escrow Agent has been notified by the Company and the Underwriter that
the Company has accepted additional subscription agreements for shares of Common
Stock and that the other conditions for a closing of a portion of the shares
subject to the Offering have been met, the Escrow Agent will release the
purchase price of the Securities to the Company and the Company will, or will
cause its transfer agent to, mail promptly a certificate therefor to the
Subscriber at the address specified on the Signature Page or, if instructed to
do so on the Signature Page, deliver such Securities pursuant to alternate
delivery instructions.  In any case, delivery will be effected physically and
not via DTC.  Otherwise, the Escrow Agent will return such funds to the
Subscriber, without any deduction therefrom or interest thereon, by mailing a
check or by making a wire transfer.  Except as otherwise agreed between the
Subscriber and the Company, certificates representing the Securities shall not
bear any legends restricting transfer.

     2.  Irrevocable; Rejection or Acceptance of the Subscription by the
Company.  This Subscription Agreement is irrevocable by the Subscriber.  The
Company may, in its sole discretion, accept or reject this Subscription
Agreement in whole or in part at any time.  If the Company rejects the
Subscription Agreement in whole, the Company will promptly cause the Escrow
Agent to return the entire amount paid by the Subscriber in connection with this
Subscription Agreement, without interest thereon, by mailing a check or by
making a wire transfer.  If the Company rejects the Subscription Agreement in
part, the Company will promptly cause the Escrow Agent to return the amount paid
by the Subscriber in connection with the portion of this Subscription Agreement
that is rejected, without interest thereon, by mailing a check or by making a
wire transfer.  Unless and until the Company accepts this Subscription Agreement
and the Company receives payment in full for the Securities upon release of the
funds therefor from the Escrow Agent, the Subscriber will not become a holder of
the Securities subscribed for hereunder and such Securities will not be
considered issued or outstanding.

     3.  Prospectus.  The Subscriber has received and reviewed the Prospectus.

     4.  Subscriber's Representations.  The Subscriber (and with respect to
clause (a) below, each signatory executing this Subscription Agreement in a
representative or fiduciary capacity on behalf of any Subscriber) represents and
warrants that: (a) if such signatory is executing this Subscription Agreement in
a representative or fiduciary capacity, such signatory has full power and
authority to execute and deliver this Subscription Agreement in such capacity
and on behalf of his principal; and (b) this Subscription Agreement constitutes
a legal, valid and binding obligation of the Subscriber enforceable against the
Subscriber in accordance with its terms.

                                      E-58

 
     5.  Miscellaneous.  This Subscription Agreement sets forth the entire
agreement of the parties with respect to the subject matter hereof and it
supersedes and discharges all prior agreements (written or oral) and
negotiations and all contemporaneous oral agreements concerning such subject
matter.  This Subscription Agreement may not be amended or terminated except by
a writing signed by the party against whom any such amendment or terminations is
sought.  If the Subscriber is more than one person, the obligation of the
Subscriber shall be joint and several.  This Subscription Agreement is governed
by the laws of the State of New York.

                                      E-59

 
UPON PAYMENT OF THE SUBSCRIPTION PRICE, THIS PAGE SHOULD BE SENT VIA FACSIMILE
TO SUNRISE SECURITIES CORP., ATTENTION: MR. PRESTON TSAO, FACSIMILE NO. 212-421-
5924.  PLEASE FOLLOW CAREFULLY ALL OF THE OTHER SUBSCRIPTION INSTRUCTIONS
CONTAINED IN PARAGRAPH 1 OF THIS AGREEMENT.

Number of shares subscribed for:_____________ Total Amount of Payment: $________

                   Please note that delivery of certificates
                  will be effected physically and not via DTC.

                              SIGN AND DATE HERE:

ADDRESS OF SUBSCRIBER:
_____________________________________
                                         (Print Name of Subscriber)

_____________________________________   By:__________________________________
          (Street)                            (Signature)

_____________________________________ _____________________________________
           (City)                        (Print Name of Signatory)

_____________________________________ _____________________________________
     (State)        (Zip Code)           (Print Title of Signatory)

_____________________________________  _______________________________, 1997
 (Taxpayer Identification Number)                    (Date)

ALTERNATIVE DELIVERY INSTRUCTIONS:

================================================================================

ACCEPTED:  Date:___________________, 1997

SIGA PHARMACEUTICALS, INC.


By:__________________________________
       Authorized Officer

                                      E-60


 
                                                                    EXHIBIT 3(a)

                                      E-61

 
                   ARTICLES OF INCORPORATION OF THE COMPANY,
                        IN EFFECT AS OF THE DATE HEREOF


                          CERTIFICATE OF INCORPORATION

                                       OF

                           SIGA PHARMACEUTICALS, INC.


     THE UNDERSIGNED, in order to form a corporation for the purpose hereinafter
stated, under and pursuant to the provisions of the General Corporation Law of
the State of Delaware, as amended from time to time (the "Law"), hereby
certifies as follows:

     ARTICLE (i)  The name of the corporation is SIGA PHARMACEUTICALS, INC. (the
"Corporation").

     ARTICLE (ii)  The address of the Corporation's registered office in the
State of Delaware is 1013 Centre Road, Wilmington, County of New Castle 19805.
The name of the registered agent of the Corporation at such address is The
Prentice-Hall Corporation System, Inc.

     ARTICLE (iii)  The purpose of the Corporation is to engage in any lawful
act or activity for which a Corporation may be organized under the Law.

     ARTICLE (iv)  The total number of shares of stock which the Corporation
shall have authority to issue is twenty million (20,000,000), of which stock
fifteen million (15,000,000) shares of the par value of One Cent ($0.01) each,
amounting in the aggregate to One Hundred Fifty Thousand Dollars ($150,000),
shall be Common Stock, and of which five million (5,000,000) shares of the par
value of One Cent ($0.01) each, amounting in the aggregate to Fifty Thousand
Dollars ($50,000), shall be Preferred Stock.

     The Board of Directors shall have the authority to fix by Resolution the
voting powers (full, limited, multiple, fractional or none), designations,
preferences, qualifications, privileges, limitations, restrictions, options,
conversion rights and other special or relative rights of the Preferred Stock or
any class or series thereof prior to or concurrently with the issuance of such
shares.

     There shall be no cumulative voting rights for the Common Stock.

     The holders of the Common Stock and the Preferred Stock shall be entitled
to dividends, when, as and if declared by the Board of Directors of the
Corporation, payable at such time or times as the Board of Directors may
determine.

     Subject to the determination of the Board of Directors with regard to the
Preferred Stock, in the event of any liquidation, dissolution or winding up of
the affairs of the Corporation, whether voluntary or involuntary, all

                                      E-62

 
remaining assets and funds of the Corporation available for distribution to its
stockholders shall be distributed in equal amounts per share and without
preference or priority of one class of common stock over the other.

     Any action may be taken by the stockholders of the Corporation by their
written consent without a stockholders' meeting.

     No stockholder of this Corporation shall by reason of his holding shares of
any class have any preemptive or preferential right to purchase or subscribe to
any shares of any class of this Corporation, now or hereafter to be authorized,
or any notes, debentures, bonds, or other securities convertible into or
carrying options or warrants to purchase shares of any class, now or hereafter
to be authorized, whether or not the issuance of any such shares, or such notes,
debentures, bonds or other securities, would adversely affect the dividend or
voting rights of such stockholder, other than such rights, if any, as the board
of directors, in its discretion from time to time may grant, and at such price
as the Board of Directors in its discretion may fix; and the Board of Directors
may issue shares of any class of this Corporation, or any notes, debentures,
bonds, or other securities convertible into or carrying options or warrants to
purchase shares of any class, without offering any such shares of any class,
either in whole or in part, to the existing stockholders of any class.

     ARTICLE (v)  The name and mailing address of the Sole Incorporator is as
follows:

               William J. Ward
               20 North Wacker Drive
               Suite 2200
               Chicago, Illinois  60606

     ARTICLE (vi)  The number of directors of the Corporation shall be such as
from time to time shall be fixed by, or in the manner provided in, the by-laws
of the Corporation.  No election of directors need be by ballot unless the by-
laws so provide.

     ARTICLE (vii)  The Corporation hereby expressly elects not to be governed
by Section 203 of the Law.

     ARTICLE (viii)  No director of the Corporation shall be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, provided, however, that this provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the Corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the Law, or (iv) from any
transaction from which the director derived an improper personal benefit.

     ARTICLE (ix)  The Corporation shall indemnify, in accordance with and to
the full extent now or hereafter permitted by law, any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (including, without limitation, an action by

                                      E-63

 
or in the right of the Corporation), by reason of his acting as a director of
the Corporation (and the Corporation, in the discretion of the Board, may so
indemnify a person by reason of the fact that he is or was an officer or
employee of the Corporation or is or was serving at the request of the
Corporation in any other capacity for or on behalf of the Corporation) against
any liability or expense actually and reasonably incurred by such person in
respect thereof; provided, however, that, the Corporation shall not be obligated
to indemnify any such person (i) with respect to proceedings, claims or actions
initiated or brought voluntarily by such person and not by way of defense, or
(ii) for any amounts paid in settlement of an action effected without the prior
written consent of the Corporation to such settlement.  Such indemnification is
not exclusive of any other right to indemnification provided by law, agreement
or otherwise.

     ARTICLE (x)  No amendment to or repeal of Article 8 or Article 9 of this
Certificate of InCorporation shall apply to or have any effect on the rights of
any individual referred to in Article 8 or Article 9 for or with respect to acts
or omissions of such individual occurring prior to such amendment or repeal.

     ARTICLE (xi)  Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers appointed
for this Corporation under the provisions of Section 279 of Title 8 of the
Delaware Code, order a meeting of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this Corporation, as the case may
be, to be summoned in such manner as the said court directs.  If a majority in
number representing three-fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on this Corporation.

     ARTICLE (xii)  The Board of Directors shall have power without the assent
or vote of the stockholders to make, alter, amend, change, add to or repeal the
by-laws of the Corporation.

     ARTICLE (xiii)  The Corporation shall have perpetual existence.

     IN WITNESS WHEREOF, I have hereunto set my hand this 18th day of December,
1995.

                                      E-64

 
                                  /s/ William J. Ward
                                  -------------------
                                  WILLIAM J. WARD
                                  SOLE INCORPORATOR

                                      E-65

 
                            CERTIFICATE OF AMENDMENT

                                     TO THE

                          CERTIFICATE OF INCORPORATION

                                       OF

                           SIGA PHARMACEUTICALS, INC.
                           --------------------------

                                        
                     (Original Certificate of Incorporation
                            filed December 28, 1995)
                                  ----------------- 


          SIGA PHARMACEUTICALS, INC. (the "Corporation"), a corporation
          --------------------------                                   
organized and existing under the General Corporation Law of the State of
Delaware (as amended from time to time, the "Law"), does hereby certify:

     I.   That, by a written consent executed in accordance with Section 141(f)
of the Law and effective December 28, 1995, the Board of Directors of the
                         -----------------                               
Corporation adopted a resolution setting forth the Amendment to Certificate of
Incorporation set forth below (referred to therein as the "Amendment"),
declaring its advisability, and submitting it to the stockholders entitled to
vote in respect thereof.

     II.  That, by written consent executed in accordance with Section 228 of
the Law, the Stockholders of the Corporation have approved the adoption of the
Certificate of Amendment to the Certificate of Incorporation set forth below.

     RESOLVED, that Article 4 of the certificate of incorporation of the
Corporation is hereby amended in its entirety to read as follows:

     "ARTICLE 4.  The total number of shares of stock which the Corporation
shall have authority to issue is thirty-five million (35,000,000), of which
twenty-five million (25,000,000) shares of the par value of One Cent ($0.01)
each, amounting in the aggregate to Two Hundred Fifty Thousand Dollars
($250,000), shall be Common Stock, and of which ten million (10,000,000) shares
of the par value of One Cent ($0.01) each, amounting in the aggregate to One
Hundred Thousand Dollars ($100,000), shall be Preferred Stock.

     The Board of Directors shall have the authority to fix by Resolution the
voting powers (full, limited, multiple, fractional or none), designations,
preferences, qualifications, privileges, limitations, restrictions, options,
conversion rights and other special or relative rights of the Preferred Stock or
any class or series thereof prior to or concurrently with the issuance of such
shares.

     There shall be no cumulative voting rights for the Common Stock.


     The holders of the Common Stock and the Preferred Stock shall be entitled
to dividends, when, as and if declared by the Board of Directors of

                                      E-66

 
the Corporation, payable at such time or times as the Board of Directors may
determine.

     Subject to the determination of the Board of Directors with regard to the
Preferred Stock, in the event of any liquidation, dissolution or winding up of
the affairs of the Corporation, whether voluntary or involuntary, all remaining
assets and funds of the Corporation available for distribution to its
stockholders shall be distributed in equal amounts per share and without
preference or priority of one class of common stock over the other.

     Any action may be taken by the stockholders of the Corporation by their
written consent without a stockholders' meeting.

     No stockholder of this Corporation shall by reason of his holding shares of
any class have any preemptive or preferential right to purchase or subscribe to
any shares of any class of this Corporation, now or hereafter to be authorized,
or any notes, debentures, bonds, or other securities convertible into or
carrying options or warrants to purchase shares of any class, now or hereafter
to be authorized, whether or not the issuance of any such shares, or such notes,
debentures, bonds or other securities, would adversely affect the dividend or
voting rights of such stockholder, other than such rights, if any, as the board
of directors, in its discretion from time to time may grant, and at such price
as the Board of Directors in its discretion may fix; and the Board of Directors
may issue shares of any class of this Corporation, or any notes, debentures,
bonds, or other securities convertible into or carrying options or warrants to
purchase shares of any class, without offering any such shares of any class,
either in whole or in part, to the existing stockholders of any class."

     IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to Certificate of Incorporation to be signed by its Vice-President and
Secretary on December 28, 1995.
                      --       


                        SIGA PHARMACEUTICALS, INC.
                        --------------------------



                        By: /s/ Joshua Schein
                            -------------------------------------------
                            Joshua Schein, Vice-President and Secretary

                                      E-67

 
                          CERTIFICATE OF CORRECTION OF

                   AMENDMENT TO CERTIFICATE OF INCORPORATION

                                       OF

                           SIGA PHARMACEUTICALS, INC.



     It is hereby certified that:

     1.   The name of the corporation is Siga Pharmaceuticals, Inc.

     2.   The Amendment to Certificate of Incorporation, which was filed by the
Secretary of State of Delaware on December 28, 1995, is hereby corrected.
 
     3.   The defect to be corrected in said instrument is found in Article 4.
With the defect underlined, Article 4 as previously filed reads as follows:

          "Article 4.  The total number of shares of stock which the Corporation
          shall have the authority to issue is thirty-five million (35,000,000),
          of which twenty-five million (25,000,000) of the par value of One Cent
                                                                        --------
          ($0.01) each, amounting in the aggregate to Two Hundred Fifty Thousand
          -------                                     --------------------------
          Dollars ($250,000.00), shall be Common Stock, and of which ten million
          ---------------------                                                 
          (10,000,000) shares of the par value of One Cent ($0.01) each,
                                                  ----------------      
          amounting in the aggregate to One Hundred Thousand Dollars
                                        ----------------------------
          ($100,000.00), shall be Preferred Stock.
          -------------                           

     4.   Article 4 in corrected form is as follows:

          "Article 4.  The total number of shares of stock which the Corporation
          shall have the authority to issue is thirty-five million (35,000,000),
          of which twenty-five million (25,000,000) of the par value of One
          Hundredth of One Cent ($.0001) each, amounting in the aggregate to Two
          Thousand Five Hundred Dollars ($2500.00), shall be Common Stock, and
          of which ten million (10,000,000) shares of the par value of One
          Hundredth of One Cent ($.0001) each, amounting in the aggregate to One
          Thousand Dollars ($1000.00), shall be Preferred Stock.

     Signed on February 6, 1996


                                         SIGA PHARMACEUTICALS, INC.

                                    By:  /s/ Joshua Schein
                                         ----------------------------
                                         Joshua Schein
                                         Vice President and Secretary

                                      E-68

 
                            CERTIFICATE OF AMENDMENT

                                     TO THE

                          CERTIFICATE OF INCORPORATION

                                       OF

                           SIGA PHARMACEUTICALS, INC.
                           --------------------------


                                        
                     (Original Certificate of Incorporation
                            filed December 28, 1995)
                                  ----------------- 


          SIGA PHARMACEUTICALS, INC. (the "Corporation"), a corporation
          --------------------------                                   
organized and existing under the General Corporation Law of the State of
Delaware (as amended from time to time, the "Law"), does hereby certify:

     I.  That, by a written consent executed in accordance with Section 141(f)
of the Law and effective December 6, 1996 the Board of Directors of the
Corporation adopted a resolution setting forth the Amendment to Certificate of
Incorporation set forth below (referred to therein as the "Amendment"),
declaring its advisability, and submitting it to the stockholders entitled to
vote in respect thereof.

     II.  That, by written consent executed in accordance with Section 228 of
the Law, the Stockholders of the Corporation have approved the adoption of the
Certificate of Amendment to the Certificate of Incorporation set forth below.

     The following paragraph shall be added to the end of Article 4 of the
     Certificate of Incorporation of the Corporation:

     "As of December 6, 1996, each 6 shares of the Corporation's Common Stock
     outstanding on the record date set by the Board, shall be split and changed
     (without changing the par value thereof), into one share of the
     Corporation's Common Stock.  Any fractional shares resulting from this
     reverse stock split will be rounded up to the next highest whole share."

     IN WITNESS WHEREOF, the Corporation has caused this Amendment to the
Certificate of Incorporation to be signed by its Vice President on December 6,
1996.


                        SIGA PHARMACEUTICALS, INC.


                        By: /s/ Joshua D. Schein
                            ---------------------------------------
                             Joshua D. Schein, Vice President

                                      E-69


 
                                                                    EXHIBIT 3(b)

                                      E-70

 
             BYLAWS OF THE COMPANY, IN EFFECT AS OF THE DATE HEREOF



                                    BY-LAWS

                                       OF

                           SIGA PHARMACEUTICALS, INC.

                             A DELAWARE CORPORATION


                                   ARTICLE I

                                    OFFICES

     The registered office shall be in the City of Dover, County of Kent, State
of Delaware.

     The corporation may also have offices at such other places both within and
without the State of Delaware as the board of directors may from time to time
determine or the business of the corporation may require.


                                   ARTICLE II

                            MEETINGS OF STOCKHOLDERS

     2.1  All meetings of the stockholders for the election of directors shall
be held in New York, NY, at such place as may be fixed from time to time by the
board of directors, or at such other place either within or without the State of
Delaware as shall be designated from time to time by the board of directors and
stated in the notice of the meeting.  Meetings of stockholders for any other
purpose may be held at such time and place, within or without the State of
Delaware, as shall be stated in the notice of the meeting or in a duly executed
waiver of notice thereof.

     2.2  ANNUAL MEETINGS.  Annual meetings of stockholders, commencing with the
year 1996, shall be held on the First Tuesday in November if not a legal
holiday, and if a legal holiday, then on the next business day following, at
10:00 a.m., or at such other date and time as shall be designated from time to
time by the board of directors and stated in the notice of the meeting, at which
they shall elect by a plurality vote a board of directors, and transact such
other business as may properly be brought before the meeting.

     2.3  ANNUAL MEETING NOTICES.  Written notice of the annual meeting stating
the place, date and hour of the meeting shall be given to each stockholder
entitled to vote at such meeting not less than ten or more than sixty days
before the date of meeting.

                                      E-71

 
     2.4  VOTING LISTS.  The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of meeting during
the whole time thereof, and may be inspected by any stockholder who is present.

     2.5  SPECIAL MEETINGS.  Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by the
certificate of incorporation, may be called by the president and shall be called
by the president or the secretary at the request in writing of a majority of the
board of directors, or at the request in writing of stockholders owning capital
stock of the corporation representing at least ten percent (10%) of the total
votes entitled to be cast by stockholders of the corporation.  Such request
shall state the purpose or purposes of the proposed meeting.

     2.6  SPECIAL MEETING NOTICES.  Written notice of a special meeting stating
the place, date and hour of the meeting and the purpose or purposes for which
the meeting is called, shall be given not less than ten nor more than sixty days
before the date of the meeting, to each stockholder entitled to vote at such
meeting.

     2.7  QUORUM.  The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation.  If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented.  At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified.  If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.

     When a quorum is present at any meeting, the vote of the holders of a
majority of the stock having voting power present in person or represented by
proxy shall decide any questions brought before such meeting, unless the
question is one upon which by express provision of the statutes or of the
certificate of incorporation, a different vote is required in which case such
express provision shall govern and control the decision of such questions.

                                      E-72

 
     2.8  VOTING OF SHARES.  Unless otherwise specifically provided by statute
or the certificate of incorporation, each stockholder shall at every meeting of
the stockholders be entitled to one vote for each share of the capital stock
having voting power held by such stockholder.

     2.9  PROXIES.  Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him or her
by proxy, but no proxy shall be voted or acted upon after three years from its
date, unless the proxy provides for a longer period.

     2.10 INFORMAL ACTION BY STOCKHOLDERS.  Except as otherwise provided in the
certificate of incorporation and subject to the requirements of statute, any
action required or permitted to be taken at any annual or special meeting of
stockholders may be taken without a meeting, without prior notice and without a
vote, if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted.  Prompt notice of the taking of any corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing.


                                  ARTICLE III

                                   DIRECTORS

     3.1  NUMBER, TENURE AND QUALIFICATIONS.  The number of directors which
shall constitute the whole board shall be such number of members, not less than
One (1) nor more than Seven (7), as the board of directors may from time to time
determine by resolution.  The directors shall be elected at the annual meeting
of the stockholders, except as provided in section 3.2 of this Article, and each
director elected shall hold office until his or her successor is elected and
qualified, or until his or her earlier resignation or removal.  Directors need
not be stockholders.

     3.2  VACANCIES.  Vacancies and newly created directorships resulting from
any increase in the authorized number of directors may be filled by a majority
of the directors then in office, though less than a quorum, or by a sole
remaining director, and any director so chosen shall hold office until the next
annual election and until his or her successor is duly elected and shall
qualify, or until his or her earlier resignation or removal.  If there are no
directors in office, then an election of directors may be held in the manner
provided by statute.  If, at the time of filling any vacancy or newly created
directorship, the directors then in office shall constitute less than a majority
of the whole board (as constituted immediately prior to any such increase), the
Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten per cent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office.

                                      E-73

 
     3.3  GENERAL POWERS.  The business of the corporation shall be managed by
its board of directors which may exercise all such powers of the corporation and
do all such lawful acts and things as are not by statute or by certificate of
incorporation or by these by-laws directed or required to be exercised or done
by the stockholders.

     3.4  MEETINGS.  The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.

     3.5  FIRST MEETING.  The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote of
the stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present.  In the event of the failure of the
stockholders to fix that time or place of such first meeting of the newly
elected board of directors, or in event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.

     3.6  REGULAR MEETINGS.  Regular meetings of the board of directors may be
held without notice at such time and at such place as shall from time to time be
determined by the board.

     3.7  SPECIAL MEETINGS.  Special meetings of the board of directors may be
called by the president on two days' notice to each director, either personally
or by mail or by telegram; special meetings shall be called by the president or
the secretary in a like manner and on like notice on the written request of two
directors.

     3.8  QUORUM.  At all meetings of the board a majority of the directors
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the board of directors, except as may be otherwise
specifically provided by statute or by the certificate of incorporation.  If a
quorum shall not be present at any meeting of the board of directors the
directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum shall be present.

     3.9  INFORMAL ACTION BY DIRECTORS.  Unless otherwise restricted by the
certificate of incorporation or these by-laws, any action required or permitted
to be taken at any meeting of the board of directors or of any committee thereof
may be taken without a meeting, if all members of the board or committee, as the
case may be, consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the board or committee.

     3.10 PARTICIPATION BY CONFERENCE TELEPHONE.  Unless otherwise restricted by
the certificate of incorporation or these by-laws, members of the board of
directors, or any committee designated by the board, may participate in a
meeting of the board or such committee by means of

                                      E-74

 
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other, and participation in a
meeting pursuant to this section shall constitute presence in person at such
meeting.

     3.11 COMMITTEES.  The board of directors may, by resolution passed by a
majority of the whole board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation.  The board may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee;
provided, however, that, if the resolution of the board of directors so
provides, in the absence or disqualification of any such member or alternate
member of such committee or committees, the member or members thereof present at
any meeting and not disqualified from voting, whether or not he, she or they
constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or disqualified
member or alternate member.  Any such committee, to the extent provided in the
resolution of the board of directors, shall have and may exercise all the powers
and authority of the board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all the papers which may require it, but no such committee shall have
the power or authority in reference to amending the certificate of
incorporation, adopting an agreement of merger or consolidation, recommending to
the stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution or amending the
by-laws of the corporation; and, unless the resolution expressly so provides, no
such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock.  Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the board of directors.

     3.12 MEETING MINUTES.  Each committee shall keep regular minutes of its
meetings and report the same to the board of directors when required.

     3.13 COMPENSATION OF DIRECTORS.  The directors may be paid their expenses,
if any, of attendance at each meeting of the board of directors and may be paid
a fixed sum for attendance at each meeting of the board of directors or a stated
salary as director.  No such payment shall preclude any director from serving
the corporation in any other capacity and receiving compensation therefor.
Members of special or standing committees may be allow like compensation for
attending committee meetings.


                                   ARTICLE IV

                                    NOTICES

     4.1  WRITTEN NOTICE.  Whenever, under the provisions of the statutes or of
the certificate of incorporation or of these by-laws, notice is required to be
given to any director or stockholder, such notice shall be in writing and shall
be given in person or by mail to such director or stockholder.  If mailed, such
notice shall be addressed to such director or

                                      E-75

 
stockholder at his or her address as it appears on the records of the
corporation, with postage thereon prepaid, and shall be deemed to be given at
the time when the same shall be deposited in the United States mail.  Notice to
directors may also be given by telegram.  If notice be given by telegram, such
notice shall be deemed to be delivered when the telegram is delivered to the
telegraph company.

     4.2  WAIVER OF NOTICE.  Whenever any notice is required to be given under
the provisions of the statutes or of the certificate of incorporation or of
these by-laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.


                                   ARTICLE V

                                    OFFICERS

     5.1  NUMBER.  The officers of the corporation shall be chosen by the board
of directors and shall be a president, a treasurer and a secretary. The board of
directors may also choose vice-presidents, and one or more assistant treasurers
and assistant secretaries.  The board of directors may appoint such other
officers and agents as it shall deem desirable who shall hold their offices for
such terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the board.  Any number of offices may be held by
the same person, unless the certificate of incorporation or these by-laws
otherwise provide.

     5.2  ELECTION AND TERM OF OFFICE.  The board of directors at its first
meeting after each annual meeting of stockholders shall choose a president, a
treasurer and a secretary.  The officers of the corporation shall hold office
until their successors are chosen and qualify.

     5.3  REMOVAL.  Any officer elected or appointed by the board of directors
may be removed at any time by the affirmative vote of a majority of the board of
directors.

     5.4  VACANCIES.  Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.

     5.5  SALARIES.  The salaries of all officers of the corporation shall be
fixed by the board of directors.

     5.6  THE PRESIDENT.  The president shall be the chief executive officer of
the corporation, shall preside at all meetings of the stockholders and the board
of directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.  The President shall execute bonds,
mortgages, and other contracts requiring a seal, under the seal of the
corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the board of directors to some other officer or agent of
the corporation; the president shall vote all shares of stock of any other
corporation standing in the name of this

                                      E-76

 
corporation except where the voting thereof shall be expressly delegated by the
board of directors to some other officer or agent of the corporation; and in
general shall perform all duties incident to the office of the president and
such other duties as may be prescribed by the board of directors from time to
time.

     5.6  THE VICE-PRESIDENTS.  In the absence of the president or in the event
of his or her inability or refusal to act, the vice-president, if one shall be
elected (or in the event there be more than one vice-president, the vice-
presidents in the order designated, or in the absence of any designation, then
in the order of their election) shall perform the duties of the president, and
when so acting, shall have all the powers of and be subject to all the
restrictions upon the president.  The vice-presidents shall perform such other
duties and have such other powers as the board of directors may from time to
time prescribe.

     5.7  THE TREASURER.  If required by the board of directors, the treasurer
shall give a bond for the faithful discharge of his or her duties in such sum
and with such surety or sureties as the board of directors shall determine.  The
treasurer shall:  (a) have charge and custody of and be responsible for all
funds and securities of the corporation; receive and give receipts for moneys
due and payable to the corporation from any source whatsoever, and deposit all
such moneys in the name of the corporation in such banks, trust companies or
other depositaries as shall be selected in accordance with the provisions of
Article VII of these by-laws; (b) in general perform all the duties incident to
the office of treasurer and such other duties as from time to time may be
assigned to him or her by the president or by the board of directors.

     5.8  THE SECRETARY.  The secretary shall:  (a) keep the minutes of the
stockholders' and of the board of directors' meetings in one or more books
provided for that purpose; (b) see that all notices are duly given in accordance
with the provisions of these by-laws or as required by law; (c) be custodian of
the corporate records and of the seal of the corporation and see that the seal
of the corporation is affixed to all certificates for shares prior to the issue
thereof and to all documents, the execution of which on behalf of the
corporation under its seal is duly authorized in accordance with the provisions
of these by-laws; (d) keep a register of the post office address of each
stockholder which shall be furnished to the secretary by such stockholder; (e)
have general charge of the stock transfer books of the corporation; (f) in
general perform all duties incident to the office of secretary and such other
duties as from time to time may be assigned to him or her by the president or by
the board of directors.

     5.9  THE ASSISTANT TREASURERS AND ASSISTANT SECRETARIES.  The assistant
treasurers shall respectively, if required by the board of directors, give bonds
for the faithful discharge of their duties in such sums and with such surety or
sureties as the board of directors shall determine.  The assistant treasurers
and assistant secretaries, in general, shall perform such duties as shall be
assigned to them by the treasurer or the secretary, respectively, or by the
president or the board of directors, and in the event of the absence, inability
or refusal to act of the treasurer or the secretary, the assistant treasurers
and assistant secretaries (in the order designated, or in the absence of any
designation,

                                      E-77

 
then in the order of their election) shall perform the duties of the treasurer
or the secretary, respectively.


                                   ARTICLE VI

                       INTERESTED DIRECTORS AND OFFICERS

     No contract or transaction between the corporation and one or more of its
directors or officers, or between the corporation and any other corporation,
partnership, association, or other organization in which one or more of its
directors or officers are directors or officers, or have a financial interest,
shall be void or voidable solely for this reason, or solely because the director
or officer is present at or participates in the meeting of the board of
directors or a committee thereof which authorizes the contract or transaction,
or solely because his, her or their votes are counted for such purpose, if:

          (a)  The material facts as to his or her relationship or interest and
     as to the contract or transaction are disclosed or are known to the board
     of directors or the committee, and the board or committee in good faith
     authorizes the contract or transaction by the affirmative votes of a
     majority of the disinterested directors, even though the disinterested
     directors be less than a quorum; or

          (b)  The material facts as to his or her relationship or interest and
     as to the contract or transaction are disclosed or are known to the
     stockholders entitled to vote thereon, and the contract or transaction is
     specifically approved in good faith by vote of the stockholders without
     counting the vote of any stockholder who is an interested director; or

          (c)  The contract or transaction is fair as to the corporation as of
     the time it is authorized, approved or ratified, by the board of directors,
     a committee thereof, or the stockholders.

     The common or interested directors may be counted in determining the
presence of a quorum at a meeting of the board of directors or of a committee
which authorizes the contract or transaction.


                                  ARTICLE VII

                   INDEMNIFICATION OF DIRECTORS AND OFFICERS

     7.1  RIGHT TO INDEMNIFICATION.  Each person who was or is made a party or
is threatened to be made a party to or is involved in or called as a witness in
any Proceeding because he or she is an Indemnified Person, shall be indemnified
and held harmless by the corporation to the fullest extent permitted under the
Delaware General Corporation Law (the "DGCL"), as the same now exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the corporation to

                                      E-78

 
provide broader indemnification rights than the DGCL permitted the corporation
to provide prior to such amendment).  Such indemnification shall cover all
expenses incurred by an Indemnified Person (including, but not limited to,
attorneys' fees and other expenses of litigation) and all liabilities and losses
(including, but not limited to, judgments, fines, ERISA or other excise taxes or
penalties and amounts paid or to be paid in settlement) incurred by such person
in connection therewith.

     Notwithstanding the foregoing, except with respect to indemnification
specified in section 7.3 of this Article, the corporation shall indemnify an
Indemnified Person in connection with a Proceeding (or part thereof) initiated
by such person only if such Proceeding (or part thereof) was authorized by the
board of directors of the corporation.

     For purposes of this Article:

          (a) a "Proceeding" is an action, suit or proceeding, whether civil,
     criminal, administrative or investigative, and any appeal therefrom;

          (b) an "Indemnified Person" is a person who is, was, or had agreed to
     become a director or an officer or a Delegate, as defined herein, of the
     corporation or the legal representative of any of the foregoing; and

          (c) a "Delegate" is a person serving at the request of the corporation
     or a subsidiary of the corporation as a director, trustee, fiduciary, or
     officer of such subsidiary or of another corporation, partnership, joint
     venture, trust or other enterprise.

     7.2  EXPENSES.  Expenses, including attorneys' fees, incurred by a person
indemnified pursuant to section 7.1 of this Article in defending or otherwise
being involved in a Proceeding shall be paid by the corporation in advance of
the final disposition of such Proceeding, including any appeal therefrom, upon
receipt of an undertaking (the "Undertaking") by or on behalf of such person to
repay such amount if it shall ultimately be determined that he or she is not
entitled to be indemnified by the corporation; provided, that in connection with
a Proceeding (or part thereof) initiated by such person, except a Proceeding
authorized by section 7.3 of this Article, the corporation shall pay said
expenses in advance of final disposition only if such Proceeding (or part
thereof) was authorized by the board of directors.  A person to whom expenses
are advanced pursuant hereto shall not be obligated to repay pursuant to the
Undertaking until the final determination of any pending Proceeding in a court
of competent jurisdiction concerning the right of such person to be indemnified
or the obligation of such person to repay pursuant to the Undertaking.

     7.3  PROTECTION OF RIGHTS.  If a claim under section 7.1 of this Article is
not promptly paid in full by the corporation after a written claim has been
received by the corporation or if expenses pursuant to section 7.2 of this
Article have not been promptly advanced after a written request for such
advancement accompanied by the Undertaking has been received by the corporation,
the claimant may at any time thereafter bring

                                      E-79

 
suit against the corporation to recover the unpaid amount of the claim or the
advancement of expenses.  If successful, in whole or in part, in such suit, such
claimant shall also be entitled to be paid the reasonable expense thereof.  It
shall be a defense to any such action (other than an action brought to enforce a
claim for expenses incurred in defending any Proceeding in advance of its final
disposition where the required Undertaking has been tendered to the corporation)
that indemnification of the claimant is prohibited by law, but the burden of
proving such defense shall be on the corporation.  Neither the failure of the
corporation (including its board of directors, independent legal counsel, or its
stockholders) to have made a determination, if required, prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances, nor an actual determination by the corporation (including its
board of directors, independent legal counsel, or its stockholders) that
indemnification of the claimant is prohibited, shall be a defense to the action
or create a presumption that indemnification of the claimant is prohibited.

     7.4  MISCELLANEOUS.

     (a)  Non-Exclusivity of Rights.  The rights conferred on any person by this
Article shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the certificate of
incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise.  The board of directors shall have the authority, by
resolution, to provide for such indemnification of employees or agents of the
corporation or others and for such other indemnification of directors, officers
or Delegates as it shall deem appropriate.

     (b)  Insurance, Contracts and Funding.  The corporation may maintain
insurance, at its expense, to protect itself and any director, officer,
employee, or agent of, or person serving in any other capacity with, the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any expenses, liabilities or losses, whether or not the
corporation would have the power to indemnify such person against such expenses,
liabilities or losses under the DGCL.  The corporation may enter into contracts
with any director, officer or Delegate of the corporation in furtherance of the
provisions of this Article and may create a trust fund, grant a security
interest or use other means (including, without limitation, a letter of credit)
to ensure the payment of such amounts as may be necessary to effect the
advancing of expenses and indemnification as provided in this Article.

     (c)  Contractual Nature.  The provisions of this Article shall be
applicable to all Proceedings commenced or continuing after its adoption,
whether such arise out of events, acts or omissions which occurred prior or
subsequent to such adoption, and shall continue as to a person who has ceased to
be a director, officer or Delegate and shall inure to the benefit of the heirs,
executors and administrators of such person.  This Article shall be deemed to be
a contract between the corporation and each person who, at any time that this
Article is in effect, serves or agrees to serve in any capacity which entitles
him or her to indemnification hereunder and any repeal or other modification of
this Article or any repeal or modification of the DGCL or any other applicable
law shall not limit any Indemnified Person's entitlement to the advancement of
expenses or

                                      E-80

 
indemnification under this Article for Proceedings then existing or later
arising out of events, acts or omissions occurring prior to such repeal or
modification, including, without limitation, the right to indemnification for
Proceedings commenced after such repeal or modification to enforce this Article
with regard to Proceedings arising out of acts, omissions or events occurring
prior to such repeal or modification.

     (d)  Severability.  If this Article or any portion hereof shall be
invalidated or held to be unenforceable on any ground by any court of competent
jurisdiction, the decision of which shall not have been reversed on appeal, such
invalidity or unenforceability shall not affect the other provisions hereof, and
this Article shall be construed in all respects as if such invalid or
unenforceable provisions had been omitted therefrom.

                                      E-81

 
                                  ARTICLE VIII

                             CERTIFICATES OF STOCK

     8.1  CERTIFICATES OF STOCK.  Every holder of stock in the corporation shall
be entitled to have a certificate, signed by, or in the name of the corporation
by the president or a vice-president and by the treasurer or an assistant
treasurer or the secretary or an assistant secretary of the corporation,
certifying the number of shares owned by him or her in the corporation.  Any of
or all of the signatures on the certificate may be a facsimile.  In case any
officer, transfer agent or register who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the corporation with the same effect as if he or she were such officer,
transfer agent or registrar at the date of issue.

     8.2  LOST CERTIFICATES.  The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed.  When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his or her legal representative, to advertise the same in such
manner it shall require and/or to give the corporation a bond in such sum as it
may direct as indemnity against any claim that may be made against the
corporation with respect to the certificates alleged to have been lost, stolen
or destroyed.

     8.3  TRANSFERS OF STOCK.  Upon surrender to the corporation or the transfer
agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its book.

     8.4  FIXING RECORD DATE.  In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action.  A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.

     8.5  REGISTERED STOCKHOLDERS.  The corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the

                                      E-82

 
owner of shares to receive dividends, and to vote as such owner, and to hold
liable for calls and assessments a person registered on its books as the owner
of shares, and shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other person, whether or
not it shall have express or other notice thereof, except as otherwise provided
by the laws of Delaware.


                                   ARTICLE IX

                               GENERAL PROVISIONS

     9.1  DIVIDENDS.  Dividends upon the capital stock of the corporation,
subject to the provisions of the certificate of incorporation, if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law.  Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of incorporation.  Before
payment of any dividend, there may be set aside out of any funds of the
corporation available for dividends such sum or sums as the directors from time
to time, in their absolute discretion, think proper as a reserve or reserves to
meet contingencies, or for equalizing dividends, or for repairing or maintaining
any property of the corporation, or for such other purpose as the directors
shall think conducive to the interest of the corporation, and the directors may
modify or abolish any such reserve in the manner in which it was created.

     9.2  CHECKS.  All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.

     9.3  FISCAL YEAR.  The fiscal year of the corporation shall end on the last
day of December in each year.

     9.4  SEAL.  The corporate seal shall have inscribed thereon the name of the
corporation and the words "Corporate Seal, Delaware".  The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.


                                   ARTICLE X

                                   AMENDMENTS

     These by-laws may be altered, amended or repealed and new by-laws may be
adopted by the board of directors at any meeting of the board.

                                      E-83


 
                                                                    EXHIBIT 4(a)

                                      E-84

 
                        FORM OF COMMON STOCK CERTIFICATE

                                    [Front]

Number                                                                  Shares
***                                                                        ***

INCORPORATED UNDER THE LAWS                           OF THE STATE OF DELAWARE

                           SIGA PHARMACEUTICALS, INC.

PREFERRED STOCK 10,0000 SHARES PAR VALUE $.01 (ONCE CENT EACH  
                          COMMON STOCK 25,000,000  SHARES PAR VALUE $.0001 EACH)

This Certifies that ********** is the owner of ********** full paid and non-
assessable
           SHARES OF THE COMMON STOCK OF SIGA PHARMACEUTICALS, INC.,
transferable only on the books of the Corporation by the holder hereof in person
or by duly authorized Attorney upon the surrender of this Certificate properly
endorsed.

     The corporation will furnish without charge to each shareholder who so
requests, the powers, designations, preferences and relative, participating
optional or other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such preferences and/or
rights.

IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and to be sealed with the Seal of the
Corporation, this *** day of ***** A.D. 19**.

/s/ Joshua D. Schein     [Corporate Seal]      /s/ David H. de Weese
- --------------------                           ---------------------
Secretary                                                  President

                                      E-85

 
                                     [Back]

For Value Received, ___ hereby sell, assign and transfer unto _________
__________ Shares represented by the written Certificate, and do hereby
irrevocably constitute and appoint __________ Attorney to transfer the said
Shares on the books of the within named Corporation with full power of
substitution in the premises.

     Dated ______________ 19__
     In presence of
     ______________________________________________

                   THIS SPACE IS NOT TO BE COVERED IN ANY WAY

                                      E-86


 
                                                                    EXHIBIT 4(b)

                                      E-87

 
               1996 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN



                                        

                           SIGA PHARMACEUTICALS, INC.
                             a Delaware corporation

               1996 Incentive and Non-Qualified Stock Option Plan
               --------------------------------------------------

     19.  Purpose.  The purposes of this 1996 Incentive and Non-Qualified Stock
          -------                                                              
Option Plan are to attract and retain the best available personnel, to provide
additional incentive to the Employees, Consultants and Outside Directors of Siga
Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and to promote
the success of the Company's business.

     Options granted hereunder may, consistent with the terms of this Plan, be
either Incentive Stock Options or Nonstatutory Stock Options, at the discretion
of the Committee and as reflected in the terms of the written option agreement.

     20.  Definitions.  As used in this Plan, the following definitions shall
          -----------                                                        
apply:

     (a) "Board" means the Board of Directors of the Company.
          -----                                              

     (b) "Code" means the Internal Revenue Code of 1986, as amended from time to
          ----                                                                  
time, and the rules and regulations promulgated thereunder.

     (c) "Commission" means the United States Securities and Exchange
          ----------                                                 
Commission.

     (d) "Committee" means the Committee appointed by the Board or otherwise
          ---------                                                         
determined in accordance with Section 4(a) of this Plan.

     (e) "Common Stock" means the common stock of the Company, par value $0.0001
          ------------                                                          
per share.

     (f) "Consultant" means any person who is engaged by the Company or any
          ----------                                                       
Parent or Subsidiary to render consulting services and is compensated for such
consulting services; provided that the term Consultant shall not include
                     --------                                           
directors who are not compensated for their services or are paid only a
director's fee by the Company.

     (g) "Continuous Status as an Employee, Consultant or Outside Director"
          ---------------------------------------------------------------- 
means the absence of any interruption or termination of service as an Employee,
Consultant or Outside Director, as applicable.  Continuous Status as an
Employee, Consultant or Outside Director shall not be considered interrupted in
the case of sick leave or military leave, any other leave provided pursuant to a
written policy of the Company in effect at the time of determination, or any
other leave of absence approved by the Board or the Committee; provided that
                                                               --------     
such leave is for a period of not more than the greatest of (i) 90 days, (ii)
the date of the resumption of such

                                      E-88

 
service upon the expiration of such leave which is guaranteed by contract or
statute or is provided in a written policy of the Company which was in effect
upon the commencement of such leave, or (iii) such period of leave as may be
determined by the Board or the Committee in its sole discretion.

     (h) "Disinterested Person" shall have the meaning set forth in Rule 16b-
          --------------------                                              
3(d)(3), or any successor definition adopted by the Commission, provided the
person is also an "outside director" under Section 162(m) of the Code.

     (i) "Employee" means any person employed by the Company or any Parent or
          --------                                                           
Subsidiary of the Company, including employees who are also officers or
directors or both of the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.

     (j) "Exchange Act" means the Securities Exchange Act of 1934, as amended
          ------------                                                       
from time to time, and the rules and regulations promulgated thereunder.

     (k) "Incentive Stock Option" means an Option intended to qualify as an
          ----------------------                                           
incentive stock option within the meaning of Section 422 of the Code, and the
rules and regulations promulgated thereunder.

     (l) "Nonstatutory Stock Option" means an Option not intended to qualify as
          -------------------------                                            
an Incentive Stock Option.

     (m) "Option" means a stock option granted pursuant to this Plan.
          ------                                                     

     (n) "Optioned Stock" means the Common Stock subject to an Option.
          --------------                                              

     (o) "Optionee" means an Employee, Consultant or Outside Director who
          --------                                                       
receives an Option.

     (p) "Outside Director" means any member of the Board of Directors of the
          ----------------                                                   
Company who is not an Employee or Consultant.

     (q) "Parent" means a "parent corporation," whether now or hereafter
          ------                                                        
existing, as defined in Section 424(e) of the Code.

     (r) "Plan" means this SIGA Corporation 1996 Stock Option Plan, as amended
          ----                                                                
from time to time.

     (s) "Rule 16b-3" means Rule 16b-3, as promulgated by the Commission under
          ----------                                                          
Section 16(b) of the Exchange Act, as such rule is amended from time to time and
as interpreted by the Commission.

     (t) "Securities Act" means the Securities Act of 1933, as amended from time
          --------------                                                        
to time, and the rules and regulations promulgated thereunder.

     (u) "Share" means a share of the Common Stock, as adjusted in accordance
          -----                                                              
with Section 10 of this Plan.

     (v) "Subsidiary" means a "subsidiary corporation," whether now or hereafter
          ----------                                                            
existing, as defined in Section 424(f) of the Code.

                                      E-89

 
     21.  Scope of Plan.  Subject to the provisions of Section 10 of this Plan,
          -------------                                                        
and unless otherwise amended by the Board and approved by the stockholders of
the Company as required by law, the maximum aggregate number of Shares issuable
under this Plan is 2,000,000, and such Shares are hereby made available and
shall be reserved for issuance under this Plan.  The Shares may be authorized
but unissued, or reacquired, Common Stock.

     If an Option shall expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares subject thereto shall
(unless this Plan shall have terminated) become available for grants of other
Options under this Plan.

     22.  Administration of Plan.
          ---------------------- 

     (a) Procedure.  This Plan shall be administered by the Committee appointed
         ---------                                                             
pursuant to this Section 4(a).  The Committee shall consist of two or more
Outside Directors appointed by the Board, but all Committee members must be
Disinterested Persons.  If the Board fails to appoint such persons, the
Committee shall consist of all Outside Directors who are Disinterested Persons.

     (b) Powers of Committee.  Subject to Section 5(b) below and otherwise
         -------------------                                              
subject to the provisions of this Plan, the Committee shall have full and final
authority in its discretion to:  (i)  grant Incentive Stock Options and
Nonstatutory Stock Options, (ii) determine, upon review of relevant information
and in accordance with Section 7 below, the Fair Market Value of the Common
Stock; (iii) determine the exercise price per share of Options to be granted, in
accordance with this Plan, (iv) determine the Employees and Consultants to whom,
and the time or times at which, Options shall be granted, and the number of
shares to be represented by each Option; (v) cancel, with the consent of the
Optionee, outstanding Options and grant new Options in substitution therefor;
(vi) interpret this Plan; (vii) accelerate or defer (with the consent of
Optionee) the exercise date of any Option; (viii) prescribe, amend and rescind
rules and regulations relating to this Plan; (ix) determine the terms and
provisions of each Option granted (which need not be identical) by which Options
shall be evidenced and, with the consent of the holder thereof, modify or amend
any provisions (including without limitation provisions relating to the exercise
price and the obligation of any Optionee to sell purchased Shares to the Company
upon specified terms and conditions) of any Option; (x) require withholding from
or payment by an Optionee of any federal, state or local taxes; (xi) appoint and
compensate agents, counsel, auditors or other specialists as the Committee deems
necessary or advisable; (xii) correct any defect or supply any omission or
reconcile any inconsistency in this Plan and any agreement relating to any
Option, in such manner and to such extent the Committee determines to carry out
the purposes of this Plan, and; (xiii) construe and interpret this Plan, any
agreement relating to any Option, and make all other determinations deemed by
the Committee to be necessary or advisable for the administration of this Plan.

     A majority of the Committee shall constitute a quorum at any meeting, and
the acts of a majority of the members present, or acts unanimously approved in
writing by the entire Committee without a meeting, shall be the

                                      E-90

 
acts of the Committee.  A member of the Committee shall not participate in any
decisions with respect to himself under this Plan.

     (c) Effect of Committee's Decision.  All decisions, determinations and
         ------------------------------                                    
interpretations of the Committee shall be final and binding on all Optionees and
any other holders of any Options granted under this Plan.

     23.  Eligibility.
          ----------- 

     (a)  Options may be granted to any Employee, Consultant or Outside Director
as the Committee may from time to time designate, provided that (i) Incentive
                                                  --------                   
Stock Options may be granted only to Employees, and (ii) Options may be granted
to Outside Directors only in accordance with the provisions of Section 5(b)
below.  In selecting the individuals to whom Options shall be granted, as well
as in determining the number of Options granted, the Committee shall take into
consideration such factors as it deems relevant in connection with accomplishing
the purpose of this Plan.  Subject to the provisions of Section 3 above, an
Optionee may, if he or she is otherwise eligible, be granted an additional
Option or Options if the Committee shall so determine.

     (b)  All grants of Options to Outside Directors under this Plan shall be
automatic and non-discretionary and shall be made strictly in accordance with
the following provisions:

     (i)  No person shall have any discretion to select which Outside Directors
shall be granted options or to determine the number of Shares to be covered by
options granted to Outside Directors; provided, that nothing in this Plan shall
                                      --------                                 
be construed to prevent an Outside Director from declining to receive an Option
under this Plan.

     (ii)  The terms of each Option granted pursuant to this Section 5(b) shall
be as follows:

               (A)  the term of the option shall be ten (10) years;

               (B)  the Option shall become exercisable cumulatively with
               respect to one-third of the Shares on each of the first, second
               and third anniversaries of the date of grant; provided, however,
               that in no event shall any option be exercisable prior to
               obtaining stockholder approval of this Plan; and

               (C)  the exercise price per share of Common Stock shall be 100%
               of the "Fair Market Value" (as defined in Section 7(b) below) on
               the date of grant of the Option.

     (c)  Each Option granted pursuant to Section 5(b) above shall be a
Nonstatutory Stock Option.  Each other Option shall be designated in the written
option agreement as either an Incentive Stock Option or a Nonstatutory Stock
Option.  Notwithstanding such designations, if and to the extent that the
aggregate Fair Market Value of the Shares with respect to which Options
designated as Incentive Stock Options are exercisable for the first time by any
Optionee during any calendar year (under all plans of the

                                      E-91

 
Company) exceeds $100,000, such options shall be treated as Nonstatutory Stock
Options.  For purposes of this Section 5(c), Options shall be taken into account
in the order in which they are granted, and the Fair Market Value of the Shares
shall be determined as of the time the Option with respect to such Shares is
granted.

     (d)  This Plan shall not confer upon any Optionee any right with respect to
continuation of employment by or the rendition of services to the Company or any
Parent or Subsidiary, nor shall it interfere in any way with his or her right or
the right of the Company or any Parent or Subsidiary to terminate his or her
employment or services at any time, with or without cause.  The terms of this
Plan or any Options granted hereunder shall not be construed to give any
Optionee the right to any benefits not specifically provided by this Plan or in
any manner modify the Company's right to modify, amend or terminate any of its
pension or retirement plans.

     24.  Term of Plan.  This Plan shall become effective upon its adoption by
          ------------                                                        
the Board of Directors of the Company subject to the approval thereof by vote of
the holders of a majority of the outstanding shares of the Company present, or
represented, and entitled to vote at a meeting to be duly held in accordance
with the applicable laws of the State of Delaware.  Such meeting shall be held
within twelve months of the adoption of the Plan by the Board of Directors.  The
Plan shall terminate no later than January 1, 2006.  No grants shall be made
under this Plan after the date of termination of this Plan.  Any termination,
either partially or wholly, shall not affect any Options then outstanding under
this Plan.

     25.  Exercise Price and Consideration.
          -------------------------------- 

     (a) Exercise Price.  The per Share exercise price for the Shares to be
         --------------                                                    
issued pursuant to exercise of an Option shall be determined by the Committee as
follows:

     (i) In the case of an Incentive Stock Option granted to any Employee, the
per Share exercise price shall be no less than 100% of the Fair Market Value per
Share on the date of grant, but if granted to an Employee who, at the time of
the grant of such Incentive Stock Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the per Share exercise price shall be no less than 110% of
the Fair Market Value per Share on the date of grant.

     (ii)   With respect to (i) above, the per Share exercise price is subject
to adjustment as provided in Section 10 below.  For purposes of this Section
7(a), if an Option is amended to reduce the exercise price, the date of grant of
such option shall thereafter be considered to be the date of such amendment.

     (b) Fair Market Value.  The "Fair Market Value" of the Common Stock shall
         -----------------                                                    
be determined by the Committee in its discretion; provided, that if the Common
                                                  --------                    
Stock is listed on a stock exchange, the Fair Market Value per Share shall be
the closing price on such exchange on the date of grant of the Option as
reported in the Wall Street Journal (or, (i) if not so reported, as otherwise
reported by the exchange, and (ii) if not reported on

                                      E-92

 
the date of grant, then on the last prior date on which a sale of the Common
Stock was reported); or if not listed on an exchange but traded on the National
Association of Securities Dealers Automated Quotation National Market System
("NASDAQ"), the Fair Market Value per Share shall be the closing price per share
of the Common Stock for the date of grant, as reported in the Wall Street
Journal (or, (i) if not so reported, as otherwise reported by NASDAQ, and (ii)
if not reported on the date of grant, then on the last prior date on which a
sale of the Common Stock was reported); or, if the Common Stock is otherwise
publicly traded, the mean of the closing bid price and asked price for the last
known sale.

     (c) Consideration.  The consideration to be paid for the Shares to be
         -------------                                                    
issued upon exercise of an Option, including the method of payment, shall be
determined by the Committee (and in the case of an Incentive Stock Option, shall
be determined at the time of grant) and may consist entirely of (i) cash; (ii)
check; (iii) the Optionee's personal interest bearing full recourse promissory
note with such terms and provisions as the Committee may authorize (provided
                                                                    --------
that no person who is not an Employee of the Company may purchase Shares with a
promissory note); (iv) other Shares of Common Stock which (X) either have been
owned by the Optionee for more than six (6) months on the date of surrender or
were not acquired directly or indirectly from the Company, and (Y) have a Fair
Market Value on the date of surrender (determined without regard to any
limitations on transferability imposed by securities laws) equal to the
aggregate exercise price of the Shares as to which said Option shall be
exercised; (v) any combination of such methods of payment; or (vi) such other
consideration and method of payment for the issuance of Shares to the extent
permitted under applicable laws.

     (d) Withholding.  No later than the date as of which an amount first
         -----------                                                     
becomes includable in the gross income of the Optionee for federal income tax
purposes with respect to an option, the Optionee shall pay to the Company (or
other entity identified by the Committee), or make arrangements satisfactory to
the Company or other entity identified by the Committee regarding the payment
of, any federal, state, local or foreign taxes of any kind required by law to be
withheld with respect to such amount required in order for the Company to obtain
a current deduction.  Unless otherwise determined by the Committee, withholding
obligations may be settled with Common Stock, including Common Stock underlying
the subject option, provided that any applicable requirements under Section 16
of the Exchange Act are satisfied so as to avoid liability thereunder.  The
obligations of the Company under this Plan shall be conditional upon such
payment or arrangements, and the Company shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment otherwise due to the
Optionee.

     26.  Options.
          ------- 

     (a) Term of Option.  The term of each Option granted (other than an Option
         --------------                                                        
granted under Section 5(b) above) shall be for a period of no more than ten (10)
years from the date of grant thereof or such shorter term as may be provided in
the Option agreement.  However, in the case of an Option granted to an Optionee
who, at the time the Option is granted, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Parent or Subsidiary, the term of the Option

                                      E-93

 
shall be five (5) years from the date of grant thereof or such shorter time as
may be provided in the Option Agreement.

     (b)  Exercise of Options.
          ------------------- 

     (i) Procedure for Exercise; Rights as a Stockholder. Any Option granted
         -----------------------------------------------                    
under this Plan (other than an Option granted pursuant to Section 5(b) above)
shall be exercisable at such times and under such conditions as determined by
the Committee, including performance criteria with respect to the Company and/or
the Optionee, and as shall otherwise be permissible under the terms of this
Plan.

                                      E-94

 
     An Option may not be exercised for a fraction of a Share.

     An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company.  Full payment may, as authorized by the Committee, consist of any
consideration and method of payment allowable under Section 7 of this Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option.  The Company shall issue (or cause
to be issued) such stock certificate promptly upon exercise of the Option.  If
the exercise of an Option is treated in part as the exercise of an Incentive
Stock Option and in part as the exercise of a Nonstatutory Stock Option pursuant
to Section 5(b) above, the Company shall issue a separate stock certificate
evidencing the Shares treated as acquired upon exercise of an Incentive Stock
Option and a separate stock certificate evidencing the Shares treated as
acquired upon exercise of a Nonstatutory Stock Option and shall identify each
such certificate accordingly in its stock transfer records.  No adjustment will
be made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 10 of this
Plan.

     Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of this
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.

     (ii)   Method of Exercise.  An Optionee may exercise an Option, in whole or
            ------------------                                                  
in part, at any time during the option period by the Optionee's giving written
notice of exercise on a form provided by the Committee (if available) to the
Company specifying the number of shares of Common Stock subject to the Option to
be purchased.  Such notice shall be accompanied by payment in full of the
purchase price by cash or check or such other form of payment as the Company may
accept.  If approved by the Committee, payment in full or in part may also be
made (A) by delivering Common Stock already owned by the Optionee having a total
Fair Market Value on the date of such delivery equal to the exercise price of
the subject Option; (B) by the execution and delivery of a note or other
evidence of indebtedness (and any security agreement thereunder) satisfactory to
the Committee; (C)  by authorizing the Company to retain shares of Common Stock
which would otherwise be issuable upon exercise of the Option having a total
Fair Market Value on the date of delivery equal to the exercise price of the
subject Option; (D) by the delivery of cash by a broker-dealer to whom the
Optionee has submitted an irrevocable notice of exercise (in accordance with
Part 220, Chapter II, Title 12 of the Code of Federal Regulations, so-called
"cashless" exercise); or (E) by any combination of the foregoing.  In the case
of an Incentive Stock Option, the right to make a payment in the form of already
owned shares of Common Stock of the same class as the Common Stock subject to
the Option may be authorized only at the time the Option is granted.  No shares
of Common Stock shall be issued until full payment therefor has been made.  An
Optionee shall have all of the rights of a

                                      E-95

 
stockholder of the Company holding the class of Common Stock that is subject to
such Option (including, if applicable, the right to vote the shares and the
right to receive dividends), when the Optionee has given written notice of
exercise, has paid in full for such shares and such shares have been recorded on
the Company's official stockholder records as having been issued or transferred.

     (iii)  Termination of Status as an Employee, Consultant or Outside
            -----------------------------------------------------------
Director.  If an Optionee's Continuous Status as an Employee, Consultant or
Outside Director (as the case may be) is terminated for any reason whatever,
such Optionee may, but only within such period of time as provided in the Option
agreement, after the date of such termination (but in no event later than the
date of expiration of the term of such Option as set forth in the Option
agreement and determined by the Committee), exercise the Option to the extent
that such Employee, Consultant or Outside Director was entitled to exercise it
at the date of such termination pursuant to the terms of the Option agreement.
To the extent that such Employee, Consultant or Outside Director was not
entitled to exercise the Option at the date of such termination, or if such
Employee, Consultant or Outside Director does not exercise such Option (which
such Employee, Consultant or Outside Director was entitled to exercise) within
the time specified in the Option agreement, the Option shall terminate.

     (iv)  Company Loan or Guarantee.  Upon the exercise of any Option and
           -------------------------                                      
subject to the pertinent Option agreement and the discretion of the Committee,
the Company may at the request of the Optionee; (A) lend to the Optionee, with
recourse, an amount equal to such portion of the option exercise price as the
Committee may determine; or (B) guarantee a loan obtained by the Optionee from a
third-party for the purpose of tendering the option exercise price.

     27.  Non-transferability of Options.  An Option granted hereunder shall by
          ------------------------------                                       
its terms not be sold, pledged, assigned, hypothecated, transferred, or disposed
of in any manner other than by will or the laws of descent and distribution.  An
Option may be exercised during the Optionee's lifetime only by the Optionee.

     28.  Adjustments Upon Changes in Capitalization or Merger.
          ---------------------------------------------------- 

     (a) Capitalization.  Subject to any required action by the stockholders of
         --------------                                                        
the Company, the number of shares of Common Stock which have been authorized for
issuance under this Plan but as to which no Options have yet been granted or
which have been returned to this Plan upon cancellation or expiration of an
Option, and the number of shares of Common Stock subject to each outstanding
Option, as well as the price per share of Common Stock covered by each such
outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock of the Company or the payment of a stock dividend with respect
to the Common Stock.  Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an Option.

                                      E-96

 
     (b) Dissolution or Liquidation.  In the event of the proposed dissolution
         --------------------------                                           
or liquidation of the Company, each Option will terminate immediately prior to
the consummation of such proposed action, unless otherwise provided by the
Committee.  The Committee may, in the exercise of its sole discretion in such
instances, declare that any Option shall terminate as of a date fixed by the
Committee and give each Optionee the right to exercise his or her Option as to
all or any part of the Optioned Stock, including Shares as to which the Option
would not otherwise be exercisable.

     (c) Sale or Merger.  "Sale" means: (i) sale (other than a sale by the
         --------------                                                   
Company) of securities entitled to more than 75% of the voting power of the
Company in a single transaction or a related series of transactions; or (ii)
sale of substantially all of the assets of the Company; or (iii) approval by the
stockholders of the Company of a reorganization, merger or consolidation of the
Company, as a result of which the persons who were the stockholders of the
Company immediately prior to such reorganization, merger or consolidation do not
own securities immediately after the reorganization, merger or consolidation
entitled to more than 50% of the voting power of the reorganized, merged or
consolidated company.  Immediately prior to a Sale, each Optionee may exercise
his or her Option as to all Shares then subject to the Option, regardless of any
vesting conditions otherwise expressed in the Option.  Voting power, as used in
this Section 10(c), shall refer to those securities entitled to vote generally
in the election of directors, and securities of the Company not entitled to vote
but which are convertible into, or exercisable for, securities of the Company
entitled to vote generally in the election of directors shall be counted as if
converted or exercised, and each unit of voting securities shall be counted in
proportion to the number of votes such unit is entitled to cast.

     (d) Purchased Shares.  No adjustment under this Section 10 shall apply to
         ----------------                                                     
any purchased Shares already deemed issued at the time any adjustment would
occur.

     (e) Notice of Adjustments.  Whenever the purchase price or the number or
         ---------------------                                               
kind of securities issuable upon the exercise of the Option shall be adjusted
pursuant to Section 10, the Company shall give each Optionee written notice
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, and the method by which such adjustment was
calculated.

     (f) Certain Cash Payments.  If an Optionee would not be permitted to
         ---------------------                                           
exercise an Option or any portion thereof (for purposes of this subsection (f)
only, each such Option being referred to as a "Subject Option") or dispose of
the Shares received upon the exercise thereof without loss or liability (other
than a loss or liability for the exercise price, applicable withholding or any
associated transactional cost), or if the Board determines that the Optionee may
not be permitted to exercise the same rights or receive the same consideration
with respect to the Sale of the Company as a stockholder of the Company with
respect to any Subject Options or portion thereof or the Shares received upon
the exercise thereof, then notwithstanding any other provision of this Plan and
unless the Committee shall provide otherwise in an agreement with such Optionee
with respect to

                                      E-97

 
any Subject Options, such Optionee shall have the right, whether or not the
Subject Option is fully exercisable or may be otherwise realized by the
Optionee, by giving notice during the 60-day period from and after a Sale to the
Company, to elect to surrender all or part of any Subject Options to the Company
and to receive cash, within 30 days of such notice, in an amount equal to the
amount by which the "Sale Price" (as defined herein) per share of Common Stock
on the date of such election shall exceed the amount which the Optionee must pay
to exercise the Subject Options per share of Common Stock under such Subject
Options (the "Spread") multiplied by the number of shares of Common Stock
granted under the Subject Options as to which the right granted hereunder shall
be applicable and shall have been exercised; provided, however, that if the end
of such 60-day period from and after a Sale is within six months of the date of
grant of a Subject Option held by an Optionee (except an Optionee who has
deceased during such six month period) who is an officer or director of the
Company (within the meaning of Section 16(b) of the Exchange Act), such Subject
Option shall be canceled in exchange for a payment to the Optionee, effective on
the day which is six months and one day after the date of grant of such Subject
Option, equal to the Spread multiplied by the number of shares of Common Stock
granted under the Subject Option.  With respect to any Optionee who is an
officer or director of the Company (within the meaning of Section 16(b) of the
Exchange Act), the 60-day period shall be extended, if necessary, to include the
"window period" of Rule 16(b)-3 which first commences on or after the date of
the Sale, and the Committee shall have sole discretion, if necessary, to approve
the Optionee's exercise hereunder and the date on which the Spread is calculated
may be adjusted, if necessary, to a later date if necessary to avoid liability
to such Optionee under Section 16(b).  For purposes of the Plan, "Sale Price"
means the higher of (a) the highest reported sales price of a share of Common
Stock in any transaction reported on the principal exchange on which such shares
are listed or on NASDAQ during the 60-day period prior to and including the date
of a Sale or (b) if the Sale is the result of a tender or exchange offer or a
corporate transaction, the highest price per share of Common Stock paid in such
tender or exchange offer or a corporate transaction, except that, in the case of
Incentive Stock Options, such price shall be based only on the Fair Market Value
of the Common Stock on the date such Incentive Stock Option is exercised.  To
the extent that the consideration paid in any such transaction described above
consists all or in part of securities or other non-cash consideration, the value
of such securities or other non-cash consideration shall be determined in the
sole discretion of the Committee.

     (g) Mitigation of Excise Tax.  If any payment or right accruing to an
         ------------------------                                         
Optionee under this Plan (without the application of this Section), either alone
or together with other payments or rights accruing to the Optionee from the
Company or an affiliate ("Total Payments") would constitute a "parachute
payment" (as defined in Section 280G of the Code and regulations thereunder),
the Committee may in each particular instance determine to (i) reduce such
payment or right to the largest amount or greatest right that will result in no
portion of the amount payable or right accruing under the Plan being subject to
an excise tax under Section 4999 of the Code or being disallowed as a deduction
under Section 280G of the Code, or (ii) take such other actions, or make such
other arrangements or payments with respect to any such payment or right as the
Committee may determine in the circumstances.  Any such determination shall be
made by the Committee in

                                      E-98

 
the exercise of its sole discretion, and such determination shall be conclusive
and binding on the Optionee.  The Optionee shall cooperate as may be requested
by the Committee in connection with the Committee's determination, including
providing the Committee with such information concerning such Optionee as the
Committee may deem relevant to its determination.

     29.  Time of Granting Options.  The date of grant of an Option shall, for
          ------------------------                                            
all purposes, be the date on which the Committee makes the determination
granting such Option.  Notice of the determination shall be given to each
Employee, Consultant or Outside Director to whom an Option is so granted within
a reasonable time after the date of such grant.  If the Committee cancels, with
the consent of Optionee, any Option granted under this Plan, and a new Option is
substituted therefor, the date that the canceled Option was originally granted
shall be the date used to determine the earliest date for exercising the new
substituted Option under Section 7 so that the Optionee may exercise the
substituted Option at the same time as if the Optionee had held the substituted
Option since the date the canceled Option was granted.

     30.  Amendment and Termination of Plan.
          --------------------------------- 

     (a) Amendment and Termination.  The Board or the Committee may amend, waive
         -------------------------                                              
or terminate this Plan from time to time in such respects as it shall deem
advisable; provided that, to the extent necessary to comply with Rule 16b-3 or
           --------                                                           
with Section 422 of the Code (or any other successor or applicable law or
regulation), the Company shall obtain stockholder approval of any Plan amendment
in such a manner and to such a degree as is required by the applicable law, rule
or regulation.  Notwithstanding the foregoing, neither the provisions of Section
5(b) of this Plan, nor any other provisions pertaining to the automatic option
grants to Outside Directors, shall be amended more than once every six months,
other than to comport with changes in the Code or other applicable laws or any
rules or regulations promulgated thereunder.

     (b) Effect of Amendment or Termination.  Any such amendment or termination
         ----------------------------------                                    
of this Plan shall not affect Options already granted and such Options shall
remain in full force and effect as if this Plan had not been amended or
terminated, unless mutually agreed otherwise between the Optionee and the
Committee, which agreement must be in writing and signed by the Optionee and the
Company.

     31.  Conditions Upon Issuance of Shares.  Shares shall not be issued
          ----------------------------------                             
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act,
the Exchange Act, and the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.

     As a condition to the exercise of an Option, the Company may require the
person exercising such Option to represent and warrant at the time of any such
exercise that the Shares are being purchased only for investment

                                      E-99

 
and without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.

     32.  Restrictions on Shares.  Shares of Common Stock issued upon exercise
          ----------------------                                              
of an Option shall be subject to the terms and conditions specified herein and
to such other terms, conditions and restrictions as the Committee in its
discretion may determine or provide in the grant.  The Company shall not be
required to issue or deliver any certificates for shares of Common Stock, cash
or other property prior to (a) the listing of such shares on any stock exchange
(or other public market) on which the Common Stock may then be listed (or
regularly traded), (b) the completion of any registration or qualification of
such shares under federal or state law, or any ruling or regulation of any
government body which the Committee determines to be necessary or advisable, and
(c) the satisfaction of any applicable withholding obligation in order for the
Company or an affiliate to obtain a deduction with respect to the exercise of an
Option.  The Company may cause any certificate for any share of Common Stock to
be delivered to be properly marked with a legend or other notation reflecting
the limitations on transfer of such Common Stock as provided in this Plan or as
the Committee may otherwise require.  The Committee may require any person
exercising an Option to make such representations and furnish such information
as it may consider appropriate in connection with the issuance or delivery of
the shares of Common Stock in compliance with applicable law or otherwise.
Fractional shares shall not be delivered, but shall be rounded to the next lower
whole number of shares.

     33.  Stockholder Rights.  No person shall have any rights of a stockholder
          ------------------                                                   
as to shares of Common Stock subject to an Option until, after proper exercise
of the Option or other action required, such shares shall have been recorded on
the Company's official stockholder records as having been issued or transferred.
Subject to the preceding Section and upon exercise of the Option or any portion
thereof, the Company will have thirty (30) days in which to issue the shares,
and the Optionee will not be treated as a stockholder for any purpose whatsoever
prior to such issuance.  No adjustment shall be made for cash dividends or other
rights for which the record date is prior to the date such shares are recorded
as issued or transferred in the Company's official stockholder records, except
as provided herein or in an agreement.

     34.  Best Efforts To Register.  If there has been a public offering, the
          ------------------------                                           
Company may register under the Securities Act the Common Stock delivered or
deliverable pursuant to Options on Commission Form S-8 if available to the
Company for this purpose (or any successor or alternate form that is
substantially similar to that form to the extent available to effect such
registration), in accordance with the rules and regulations governing such
forms, as soon as such forms are available for registration to the Company for
this purpose.  The Company will, if it so determines, use its good faith efforts
to cause the registration statement to become effective as soon as possible and
will file such supplements and amendments to the registration statement as may
be necessary to keep the registration statement in effect until the earliest of
(a) one year following the expiration of the option period of the last Option
outstanding, (b) the date the Company is no longer a reporting company under the
Exchange Act and (c) the date all Optionees

                                     E-100

 
have disposed of all shares delivered pursuant to any Option.  The Company may
delay the foregoing actions at any time and from time to time if the Committee
determines in its discretion that any such registration would materially and
adversely affect the Company's interests or if there is no material benefit to
Optionees.

     35.  Reservation of Shares.  The Company, during the term of this Plan,
          ---------------------                                             
will at all times reserve and keep available such number of Shares as shall be
sufficient to permit the exercise of all Options outstanding under this Plan.
The inability of the Company to obtain authority from any regulatory body having
jurisdiction, which authority is deemed by the Company's counsel to be necessary
to the lawful issuance and sale of any Shares hereunder, shall relieve the
Company of any liability in respect of the failure to issue or sell such Shares
as to which such requisite authority shall not have been obtained for any
reason.

     36.  Option Agreements.  Options shall be evidenced by written Option
          -----------------                                               
agreements in such form as the Committee shall approve.

     37.  Information to Optionees.  To the extent required by applicable law,
          ------------------------                                            
the Company shall provide to each Optionee, during the period for which such
Optionee has one or more Options outstanding, copies of all annual reports and
other information which are provided to all stockholders of the Company.  Except
as otherwise noted in the foregoing sentence, the Company shall have no
obligation or duty to affirmatively disclose to any Optionee, and no Optionee
shall have any right to be advised of, any material information regarding the
Company or any Parent or Subsidiary at any time prior to, upon or otherwise in
connection with, the exercise of an Option.

     38.  Funding.  Benefits payable under this Plan to any person shall be paid
          -------                                                               
directly by the Company.  The Company shall not be required to fund or otherwise
segregate assets to be used for payment of benefits under this Plan.

     39.  Indemnification.  In addition to such other rights of indemnification
          ---------------                                                      
as they may have as directors or as members of the Committee, the members of the
Committee shall be indemnified by the Company against the reasonable expenses,
including attorneys' fees, actually and necessarily incurred in connection with
the defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with this Plan or any option
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding; provided that within 60 days after institution of any such
action, suit or proceeding a Committee member shall in writing offer the Company
the opportunity, at its own expense, to handle and defend the same.  The
foregoing right of indemnification shall not be exclusive and shall be
independent of any other rights of indemnification to which such persons may be
entitled under the Company's Certificate of Incorporation or by-laws, by
contract, as a matter of law, or otherwise.

                                     E-101

 
     40.  Controlling Law.  This Plan shall be governed by the laws of the State
          ---------------                                                       
of Delaware applicable to contracts made and performed wholly in Delaware
between Delaware residents.

                                     E-102


 
                                                                    EXHIBIT 4(c)

                                     E-103

 
                WARRANT AGREEMENT DATED AS OF SEPTEMBER 15, 1996
                  BETWEEN THE COMPANY AND VINCENT A. FISCHETTI


     WARRANT AGREEMENT, dated as of September 15, 1996, between SIGA
PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), and DR. VINCENT
A. FISCHETTI ("Holder").

                              W I T N E S S E T H:
                              - - - - - - - - - - 

     WHEREAS, Holder, in consideration for his work as on behalf of the Company
in identifying potential joint venture partners shall be issued an aggregate of
900,000 twenty-year warrants to purchase shares of Common Stock of the Company
("Common Stock") at an exercise price of $0.25 per share.

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

     1.  Issue.  The Company hereby issues to Holder a certificate (the "Warrant
         -----                                                                  
Certificate") dated as of the date hereof providing Holder with the right to
purchase, at any time from the date hereof until 5:30 p.m., New York time, on
the twentieth anniversary of the date hereof, 900,000 shares of Common Stock
(the "Warrant Shares") (subject to adjustment as provided in Section 8 hereof)
                                                             ---------        
at an initial exercise price (subject to adjustment as provided in Section 8
                                                                   ---------
hereof) equal to $0.25 per share.

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

     3.  Exercise of Warrant.  The Warrants, when initially exercisable, are
         -------------------                                                
exercisable at an aggregate initial exercise price per share set forth in
Section 6 hereof payable by certified check or official bank check in New York
- ---------                                                                     
Clearing House funds.  Upon surrender of a Warrant Certificate with the annexed
Form of Election to Purchase duly executed, together with payment of the
Exercise Price (as hereinafter defined) for the Warrant Shares purchased, at the
Company's principal offices in New York (presently located at 666 Third Avenue,
30th Floor, New York, NY 10017) Holder shall be entitled to receive a
certificate for the Warrant Shares so purchased.  The purchase rights
represented by the Warrant Certificate are exercisable at the option of the
Holder thereof, in whole or in part (but not as to fractional shares of the
Common Stock underlying the Warrants).  In the case of the purchase of less than
all the Warrant Shares purchasable under the Warrant Certificate, the Company
shall cancel said Warrant Certificate upon the surrender thereof and shall
execute and deliver a new Warrant Certificate of like tenor for the balance of
the Warrant Shares purchasable thereunder.

     4.   Issuance of Certificate.  Upon the exercise of the Warrants, the
          -----------------------                                         
issuance of a certificate for Warrant Shares or other securities, properties or
rights underlying such Warrants shall be made forthwith (and in any event

                                     E-104

 
within five (5) business days thereafter) without charge to the Holder thereof
including, without limitation, any tax which may be payable in respect of the
issuance thereof, and such certificate shall (subject to the provisions of
Sections 5 and 7 hereof) be issued in the name of, or in such names as may be
- ----------     -                                                             
directed by, the Holder thereof; provided, however, that the Company shall not
                                 --------  -------                            
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate in a name other
than that of the Holder and the Company shall not be required to issue or
deliver such certificate unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.

     The Warrant Certificate and the certificate representing the Warrant Shares
(and/or other securities, property or rights issuable upon exercise of the
Warrants) shall be executed on behalf of the Company by the manual or facsimile
signature of the then present Chairman or Vice Chairman of the Board of
Directors or President or any Vice President of the Company under its corporate
seal reproduced thereon, attested to by the manual or facsimile signature of the
then present Secretary or any Assistant Secretary of the Company.  The Warrant
Certificate shall be dated the date of execution by the Company upon initial
issuance, division, exchange, substitution or transfer.

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

     6.   Exercise Price.
          -------------- 

     (S)6.1  Initial and Adjusted Exercise Price.  Except as otherwise provided
             -----------------------------------                               
in Section 8 hereof, the initial exercise price of each Warrant shall be the
   ---------                                                                
price set forth in Section 1 hereof per Warrant Share issued thereunder.  The
                   ---------                                                 
adjusted exercise price shall be the price which shall result from time to time
from any and all adjustments of the initial exercise price in accordance with
the provisions of Section 8 hereof.
                  ---------        

     (S)6.2  Exercise Price.  The term "Exercise Price" herein shall mean the
             --------------                                                  
initial exercise price or the adjusted exercise price, depending upon the
context.

     7.   Registration Under the Securities Act of 1933.  The Warrants, the
          ---------------------------------------------                    
Warrant Shares and any of the other securities issuable upon exercise of the
Warrants have not been registered under the Securities Act of 1933, as amended
(the "Act").  Upon exercise, in whole or in part, of the Warrants, a certificate
representing the Warrant Shares underlying the Warrants, and any of the other
securities issuable upon exercise of the Warrants (collectively, the "Warrant
Securities") shall bear the following legend unless such Warrant Shares
previously have been registered under the Act in accordance with the terms
hereof:

                                     E-105

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

 
     8.  Adjustments to Exercise Price and Number of Securities.
         ------------------------------------------------------ 

     (S)8.1 Subdivision and Combination.  In case the Company shall at any time
            ---------------------------                                        
subdivide or combine the outstanding shares of Common Stock, the Exercise Price
shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.

     (S)8.2  Adjustment in Number of Securities.  Upon each adjustment of the
             ----------------------------------                              
Exercise Price pursuant to the provisions of this Section 8, the number of
                                                  ---------               
Warrant Shares issuable upon the exercise of each Warrant shall be adjusted to
the nearest full amount by multiplying a number equal to the Exercise Price in
effect immediately prior to such adjustment by the number of Warrant Shares
issuable upon exercise of the Warrants immediately prior to such adjustment and
dividing the product so obtained by the adjusted Exercise Price.


     (S)8.3  Merger or Consolidation.  In case of any consolidation of the
             -----------------------                                      
Company with, or merger of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger which does not result
in any reclassification or change of the outstanding Common Stock), the
corporation formed by such consolidation or merger shall execute and deliver to
the Holder a supplemental warrant agreement providing that the holder of each
Warrant then outstanding or to be outstanding shall have the right thereafter
(until the expiration of such Warrant) to receive, upon exercise of such
Warrant, the kind and amount of shares of stock and other securities and
property receivable upon such consolidation or merger, by a holder of the number
of shares of Common Stock of the Company for which such Warrant might have been
exercised immediately prior to such consolidation, merger, sale or transfer.
Such supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in this Section 8.  The above provision of
                                              ---------                         
this subsection shall similarly apply to successive consolidations or mergers.

     (S)8.4  No Adjustment of Exercise Price in Certain Cases.  No adjustment of
             ------------------------------------------------                   
the Exercise Price shall be made:

          (a)  Upon the issuance or sale of the Warrants or the shares of Common
     Stock issuable upon the exercise of the Warrants.

          (b)  If the amount of said adjustment shall be less than two cents
     (2c) per Warrant Share, provided, however, that in such case any adjustment
                             --------  -------                                  
     that would otherwise be required then to be made shall be

                                     E-106

 
     carried forward and shall be made at the time of and together with the next
     subsequent adjustment which, together with any adjustment so carried
     forward, shall amount to at least two cents (2c) per Warrant Share.

          (c)  Upon the issuance or sale of Common Stock or warrants, options or
     convertible securities, to be issued and/or sold to employees, advisors,
     directors or officers of, or consultants to, the Company or any of its
     subsidiaries pursuant to a stock grant, stock option plan, stock purchase
     plan, pension or profit sharing plan or other stock agreement or
     arrangement currently existing or approved by the Company's Board of
     Directors.

          (d)  Upon the issuance of shares of Common Stock, warrants, options
     and convertible securities pursuant to warrants, options and convertible
     securities outstanding as of the date hereof.

          (e)  Upon the issuance of shares of Common Stock, warrants, options
     and convertible securities in connection with strategic partnerships or
     other business and/or product consolidations or joint ventures.

     9.  Exchange and Replacement of Warrant Certificate.  The Warrant
         -----------------------------------------------              
Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Shares in such denominations as shall be
designated by the Holder thereof at the time of such surrender.

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

     10.  Elimination of Fractional Interests.  The Company shall not be
          -----------------------------------                           
required to issue certificates representing fractions of shares of Common Stock
upon the exercise of the Warrants, nor shall it be required to issue scrip or
pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock or other securities,
properties or rights.

     11.  Reservation and Listing of Securities.  The Company shall at all times
          -------------------------------------                                 
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issuance upon the exercise of the Warrants, such number of
shares of Common Stock or other securities, properties or rights as shall be
issuable upon the exercise thereof.  The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of Common Stock and other securities issuable upon such exercise shall be duly
and validly issued, fully paid,

                                     E-107

 
non-assessable and not subject to the preemptive rights of any stockholder.  As
long as the Warrants shall be outstanding, the Company shall use its best
efforts to cause all shares of Common Stock issuable upon the exercise of the
Warrants to be listed (subject to official notice of issuance) on all securities
exchanges on which the Common Stock may then be listed and/or quoted on NASDAQ.

     12.  Notices to Warrant Holder.  Nothing contained in this Agreement shall
          -------------------------                                            
be construed as conferring upon the Holder by virtue of his holding the Warrant
the right to vote or to consent or to receive notice as a stockholder in respect
of any meetings of stockholders for the election of directors or any other
matter, or as having any rights whatsoever as a stockholder of the Company.  If,
however, at any time prior to the expiration of the Warrants and their exercise,
any of the following events shall occur:

          (a) the Company shall take a record of the holders of its shares of
     Common Stock for the purpose of entitling them to receive a dividend or
     distribution payable otherwise than in cash, or a cash dividend or
     distribution payable otherwise than out of current or retained earnings, as
     indicated by the accounting treatment of such dividend or distribution on
     the books of the Company; or

          (b) the Company shall offer to all the holders of its Common Stock any
     additional shares of capital stock of the Company or securities convertible
     into or exchangeable for shares of capital stock of the Company, or any
     option, right or warrant to subscribe therefor; or

          (c) a dissolution, liquidation or winding up of the Company (other
     than in connection with a consolidation or merger) or a sale of all or
     substantially all of its property, assets and business as an entirety shall
     be proposed;

then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale or any such earlier date
that notice of such event is given to stockholders of the Company.  Such notice
shall specify such record date or the date of closing the transfer books, as the
case may be.  Failure to give such notice or any defect therein shall not affect
the validity of any action taken in connection with the declaration or payment
of any such dividend, or the issuance of any convertible or exchangeable
securities, or subscription rights, options or warrants, or any proposed
dissolution, liquidation, winding up or sale.

                                     E-108

 
     13.  Notices.
          ------- 

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

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

          (b) If to the Company, to the address set forth in Section 3 hereof or
                                                             ---------          
     to such other address as the Company may designate by notice to the Holder.

     14.  Supplements and Amendments.  The Company and Holder may from time to
          --------------------------                                          
time supplement or amend this Agreement in order to cure any ambiguity, to
correct or supplement any provision contained herein which may be defective or
inconsistent with any provisions herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and Holder
may deem necessary or desirable.

     15.  Successors.  All the covenants and provisions of this Agreement shall
          ----------                                                           
be binding upon and inure to the benefit of the Company, the Holder and their
respective successors and assigns hereunder.

     16.  Termination.  This Agreement shall terminate at the close of business
          -----------                                                          
on the twentieth anniversary of the issuance of the Warrants.

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

     18.  Entire Agreement; Modification.  This Agreement contains the entire
          ------------------------------                                     
understanding between the parties hereto with respect to the subject matter
hereof and may not be modified or amended except by a writing duly signed by the
party against whom enforcement of the modification or amendment is sought.

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

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

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

                                     E-109

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

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


               SIGA PHARMACEUTICALS, INC.



               By:/s/ Joshua D. Schein
                  ------------------------------------------------
                  Name:  Joshua D. Schein
                  Title: Secretary and Chief Financial Officer

 

               /s/ Vincent A. Fischetti____________________________
               ------------------------                            
                  Dr. Vincent A. Fischetti

                                     E-110

 
                                                                       EXHIBIT X
                                                                              TO
                                                               WARRANT AGREEMENT

                         [FORM OF WARRANT CERTIFICATE]

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

                   EXERCISABLE FROM SEPTEMBER 15, 1996 UNTIL
                  5:30 P.M., NEW YORK TIME, SEPTEMBER 15, 2016

No. W-96A-1                                                    900,000 Warrants



                              WARRANT CERTIFICATE

     This Warrant Certificate certifies that Dr. Vincent A. Fischetti or his
registered assigns, is the registered holder of 900,000 Warrants to purchase
initially, at any time from September 15, 1996 until 5:30 p.m. New York time on
September 15, 2016 ("Expiration Date"), up to 900,000 fully-paid and non-
assessable shares of common stock, par value $.0001 per share ("Common Stock")
of SIGA PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), at the
initial exercise price, subject to adjustment in certain events (the "Exercise
Price"), equal to $0.25 per share upon surrender of this Warrant Certificate and
payment of the Exercise Price at an office or agency of the Company, but subject
to the conditions set forth herein and in the Warrant Agreement dated as of
September 15, 1996 between the Company and Dr. Vincent A. Fischetti (the
"Warrant Agreement").  Payment of the Exercise Price shall be made by certified
check or official bank check in New York Clearing House funds payable to the
order of the Company.

     No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.

     The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holder (the word "holder" meaning the registered holder) of the Warrants.

     The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be

                                     E-111

 
adjusted.  In such event, the Company will, at the request of the holder, issue
a new Warrant Certificate evidencing the adjustment in the Exercise Price and
the number and/or type of securities issuable upon the exercise of the Warrants;
provided, however, that the failure of the Company to issue such new Warrant
Certificate shall not in any way change, alter, or otherwise impair, the rights
of the holder as set forth in the Warrant Agreement.

     Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax or other governmental charge
imposed in connection with such transfer.

     Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.

     The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.

     All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.

     IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed.

Dated as of September 15, 1996.


               SIGA PHARMACEUTICALS, INC.



               By:_________________________________________________
                  Name:  Joshua D. Schein
                  Title: Secretary and Chief Financial Officer

                                     E-112

 
                         [FORM OF ELECTION TO PURCHASE]

     The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ________________ shares of
Common Stock and herewith tenders in payment for such securities a certified
check or official bank check payable in New York Clearing House Funds to the
order of SIGA PHARMACEUTICALS, INC. in the amount of $______, all in accordance
with the terms of Section 3 of the Warrant Agreement dated as of September 15,
1996 between Siga Pharmaceuticals, Inc. and Dr. Vincent A. Fischetti.  The
undersigned requests that a certificate for such securities be registered in the
name of_____________ whose address is ______________________ and that such
Certificate be delivered to ______________________ whose address is
______________.

Dated:
               Signature 
                         --------------------------------------------------
               (Signature must conform in all respects to name of holder as
               specified on the face of the Warrant Certificate.)


               ------------------------------------------------------------
               (Insert Social Security or Other Identifying
               Number of Holder)

                                     E-113

 
                              [FORM OF ASSIGNMENT]



            (To be executed by the registered holder if such holder
                 desires to transfer the Warrant Certificate.)


     FOR VALUE RECEIVED ___________________ hereby sells, assigns and transfers
unto


- --------------------------------------------------------------------------------

                 (Please print name and address of transferee)

this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________ Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.


Dated:                    Signature:
      ------------------            --------------------------------------------
                              (Signature  must conform in all respects to name
                              of holder as specified on the face of the Warrant
                              Certificate.)



                              --------------------------------------------------
                              (Insert Social Security or Other Identifying
                              Number of Assignee)

                                     E-114


 
                                                                    EXHIBIT 4(d)

                                     E-115

 
                WARRANT AGREEMENT DATED AS OF NOVEMBER 18, 1996
                     BETWEEN THE COMPANY AND DAVID DE WEESE



     WARRANT AGREEMENT, dated as of November 18, 1996, between SIGA
PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), and DAVID DE
WEESE ("Holder").

                              W I T N E S S E T H:
                              - - - - - - - - - - 

     WHEREAS, Holder, in consideration for his agreeing to join the Company as
President, Chairman and Chief Executive Officer shall be issued an aggregate of
2,766,095 ten-year warrants (the "Warrants") to purchase shares of Common Stock
of the Company ("Common Stock") at an exercise price of $0.50 per share.

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

     1.  Issue.  The Company hereby issues to Holder certificates (the "Warrant
         -----                                                                 
Certificates"), dated as of the date hereof, providing Holder with the right to
purchase an aggregate of 2,766,095 shares of Common Stock (the "Warrant Shares")
(subject to adjustment as provided in Section 8 hereof) at an initial exercise
                                      ---------                               
price (subject to adjustment as provided in Section 8 hereof) equal to $0.50 per
                                            ---------                           
share.  Warrants to purchase 691,529 Warrant Shares shall be exercisable from
the date hereof until 5:30 p.m., New York time, on the tenth anniversary of this
Agreement.  The remaining Warrants shall become exercisable on a pro rata basis
on the first, second and third anniversaries of this Agreement, and shall be
exercisable until 5:30 p.m., New York time, on the eleventh, twelfth and
thirteenth anniversaries of this Agreement, respectively.

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

     3.  Exercise of Warrant.  The Warrants, when initially exercisable, are
         -------------------                                                
exercisable at an aggregate initial exercise price per share set forth in
                                                                         
Section 6 hereof payable by certified check or official bank check in New York
- ---------                                                                     
Clearing House funds.  Upon surrender of a Warrant Certificate with the annexed
Form of Election to Purchase duly executed, together with payment of the
Exercise Price (as hereinafter defined) for the Warrant Shares purchased, at the
Company's principal offices in New York (presently located at 666 Third Avenue,
30th Floor, New York, NY 10017) Holder shall be entitled to receive a
certificate for the Warrant Shares so purchased.  The purchase rights
represented by the Warrant Certificates are exercisable at the option of the
Holder thereof, in whole or in part (but not as to fractional shares of the
Common Stock underlying the Warrants).  In the case of the purchase of less than
all the Warrant Shares purchasable under the

                                     E-116

 
Warrant Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the Warrant Shares purchasable thereunder.

     4.   Issuance of Certificate.  Upon the exercise of the Warrants, the
          -----------------------                                         
issuance of a certificate for Warrant Shares or other securities, properties or
rights underlying such Warrants shall be made forthwith (and in any event within
five (5) business days thereafter) without charge to the Holder thereof
including, without limitation, any tax which may be payable in respect of the
issuance thereof, and such certificate shall (subject to the provisions of
Sections 5 and 7 hereof) be issued in the name of, or in such names as may be
- ----------     -                                                             
directed by, the Holder thereof; provided, however, that the Company shall not
                                 --------  -------                            
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate in a name other
than that of the Holder and the Company shall not be required to issue or
deliver such certificate unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.

     The Warrant Certificates and the certificate representing the Warrant
Shares (and/or other securities, property or rights issuable upon exercise of
the Warrants) shall be executed on behalf of the Company by the manual or
facsimile signature of the then present Chairman or Vice Chairman of the Board
of Directors or President or any Vice President of the Company under its
corporate seal reproduced thereon, attested to by the manual or facsimile
signature of the then present Secretary or any Assistant Secretary of the
Company.  The Warrant Certificates shall be dated the date of execution by the
Company upon initial issuance, division, exchange, substitution or transfer.

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

     6.   Exercise Price.
          -------------- 

     (S)6.1  Initial and Adjusted Exercise Price.  Except as otherwise provided
             -----------------------------------                               
in Section 8 hereof, the initial exercise price of each Warrant shall be the
   ---------                                                                
price set forth in Section 1 hereof per Warrant Share issued thereunder.  The
                   ---------                                                 
adjusted exercise price shall be the price which shall result from time to time
from any and all adjustments of the initial exercise price in accordance with
the provisions of Section 8 hereof.
                  ---------        

     (S)6.2  Exercise Price.  The term "Exercise Price" herein shall mean the
             --------------                                                  
initial exercise price or the adjusted exercise price, depending upon the
context.

     7.   Registration Under the Securities Act of 1933.  The Warrants, the
          ---------------------------------------------                    
Warrant Shares and any of the other securities issuable upon exercise of

                                     E-117

 
the Warrants have not been registered under the Securities Act of 1933, as
amended (the "Act").  Upon exercise, in whole or in part, of the Warrants, a
certificate representing the Warrant Shares underlying the Warrants, and any of
the other securities issuable upon exercise of the Warrants (collectively, the
"Warrant Securities") shall bear the following legend unless such Warrant Shares
previously have been registered under the Act in accordance with the terms
hereof:

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

 
     8.  Adjustments to Exercise Price and Number of Securities.
         ------------------------------------------------------ 

     (S)8.1 Subdivision and Combination.  In case the Company shall at any time
            ---------------------------                                        
subdivide or combine the outstanding shares of Common Stock, the Exercise Price
shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.

     (S)8.2  Adjustment in Number of Securities.  Upon each adjustment of the
             ----------------------------------                              
Exercise Price pursuant to the provisions of this Section 8, the number of
                                                  ---------               
Warrant Shares issuable upon the exercise of each Warrant shall be adjusted to
the nearest full amount by multiplying a number equal to the Exercise Price in
effect immediately prior to such adjustment by the number of Warrant Shares
issuable upon exercise of the Warrants immediately prior to such adjustment and
dividing the product so obtained by the adjusted Exercise Price.


     (S)8.3  Merger or Consolidation.  In case of any consolidation of the
             -----------------------                                      
Company with, or merger of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger which does not result
in any reclassification or change of the outstanding Common Stock), the
corporation formed by such consolidation or merger shall execute and deliver to
the Holder a supplemental warrant agreement providing that the holder of each
Warrant then outstanding or to be outstanding shall have the right thereafter
(until the expiration of such Warrant) to receive, upon exercise of such
Warrant, the kind and amount of shares of stock and other securities and
property receivable upon such consolidation or merger, by a holder of the number
of shares of Common Stock of the Company for which such Warrant might have been
exercised immediately prior to such consolidation, merger, sale or transfer.
Such supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in this Section 8.  The above provision of
                                              ---------                         
this subsection shall similarly apply to successive consolidations or mergers.

                                     E-118

 
     (S)8.4  No Adjustment of Exercise Price in Certain Cases.  No adjustment of
             ------------------------------------------------                   
the Exercise Price shall be made:

          (a)  Upon the issuance or sale of the Warrants or the shares of Common
     Stock issuable upon the exercise of the Warrants.

          (b)  If the amount of said adjustment shall be less than two cents
     (2c) per Warrant Share, provided, however, that in such case any adjustment
                             --------  -------                                  
     that would otherwise be required then to be made shall be carried forward
     and shall be made at the time of and together with the next subsequent
     adjustment which, together with any adjustment so carried forward, shall
     amount to at least two cents (2c) per Warrant Share.

          (c)  Upon the issuance or sale of Common Stock or warrants, options or
     convertible securities, to be issued and/or sold to employees, advisors,
     directors or officers of, or consultants to, the Company or any of its
     subsidiaries pursuant to a stock grant, stock option plan, stock purchase
     plan, pension or profit sharing plan or other stock agreement or
     arrangement currently existing or approved by the Company's Board of
     Directors.

          (d)  Upon the issuance of shares of Common Stock, warrants, options
     and convertible securities pursuant to warrants, options and convertible
     securities outstanding as of the date hereof.

          (e)  Upon the issuance of shares of Common Stock, warrants, options
     and convertible securities in connection with strategic partnerships or
     other business and/or product consolidations or joint ventures.

     9.  Exchange and Replacement of Warrant Certificate.  A Warrant Certificate
         -----------------------------------------------                        
is exchangeable without expense, upon the surrender thereof by the registered
Holder at the principal executive office of the Company, for a new Warrant
Certificate of like tenor and date representing in the aggregate the right to
purchase the same number of Shares in such denominations as shall be designated
by the Holder thereof at the time of such surrender.

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

     10.  Elimination of Fractional Interests.  The Company shall not be
          -----------------------------------                           
required to issue certificates representing fractions of shares of Common Stock
upon the exercise of the Warrants, nor shall it be required to issue scrip or
pay cash in lieu of fractional interests, it being the intent of the parties
that all fractional interests shall be eliminated by rounding any fraction up to
the nearest whole number of shares of Common Stock or other securities,
properties or rights.

                                     E-119

 
     11.  Reservation and Listing of Securities.  The Company shall at all times
          -------------------------------------                                 
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issuance upon the exercise of the Warrants, such number of
shares of Common Stock or other securities, properties or rights as shall be
issuable upon the exercise thereof.  The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of Common Stock and other securities issuable upon such exercise shall be duly
and validly issued, fully paid, non-assessable and not subject to the preemptive
rights of any stockholder.  As long as the Warrants shall be outstanding, the
Company shall use its best efforts to cause all shares of Common Stock issuable
upon the exercise of the Warrants to be listed (subject to official notice of
issuance) on all securities exchanges on which the Common Stock may then be
listed and/or quoted on NASDAQ.

     12.  Notices to Warrant Holder.  Nothing contained in this Agreement shall
          -------------------------                                            
be construed as conferring upon the Holder by virtue of his holding the Warrant
the right to vote or to consent or to receive notice as a stockholder in respect
of any meetings of stockholders for the election of directors or any other
matter, or as having any rights whatsoever as a stockholder of the Company.  If,
however, at any time prior to the expiration of the Warrants and their exercise,
any of the following events shall occur:

          (a) the Company shall take a record of the holders of its shares of
     Common Stock for the purpose of entitling them to receive a dividend or
     distribution payable otherwise than in cash, or a cash dividend or
     distribution payable otherwise than out of current or retained earnings, as
     indicated by the accounting treatment of such dividend or distribution on
     the books of the Company; or

          (b) the Company shall offer to all the holders of its Common Stock any
     additional shares of capital stock of the Company or securities convertible
     into or exchangeable for shares of capital stock of the Company, or any
     option, right or warrant to subscribe therefor; or

          (c) a dissolution, liquidation or winding up of the Company (other
     than in connection with a consolidation or merger) or a sale of all or
     substantially all of its property, assets and business as an entirety shall
     be proposed;

then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale or any such earlier date
that notice of such event is given to stockholders of the Company.  Such notice
shall specify such record date or the date of closing the transfer books, as the
case may be.  Failure to give such notice or any defect therein shall not affect
the validity of any action taken in connection with the declaration or payment
of any such dividend, or the issuance of any convertible or exchangeable
securities, or subscription

                                     E-120

 
rights, options or warrants, or any proposed dissolution, liquidation, winding
up or sale.

     13.  Notices.
          ------- 

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

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

          (b) If to the Company, to the address set forth in Section 3 hereof or
                                                             ---------          
     to such other address as the Company may designate by notice to the Holder.

     14.  Supplements and Amendments.  The Company and Holder may from time to
          --------------------------                                          
time supplement or amend this Agreement in order to cure any ambiguity, to
correct or supplement any provision contained herein which may be defective or
inconsistent with any provisions herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and Holder
may deem necessary or desirable.

     15.  Successors.  All the covenants and provisions of this Agreement shall
          ----------                                                           
be binding upon and inure to the benefit of the Company, the Holder and their
respective successors and assigns hereunder.

     16.  Termination.  This Agreement shall terminate at the close of business
          -----------                                                          
on the thirteenth anniversary of the date of this Agreement.

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

     18.  Entire Agreement; Modification.  This Agreement contains the entire
          ------------------------------                                     
understanding between the parties hereto with respect to the subject matter
hereof and may not be modified or amended except by a writing duly signed by the
party against whom enforcement of the modification or amendment is sought.

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

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

     21.  Benefits of this Agreement.  Nothing in this Agreement shall be
          --------------------------                                     
construed to give to any person or corporation other than the Company and

                                     E-121

 
Holder any legal or equitable right, remedy or claim under this Agreement; and
this Agreement shall be for the sole and exclusive benefit of the Company and
Holder.

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

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


               SIGA PHARMACEUTICALS, INC.



               By:/s/ Joshua D. Schein
                  -----------------------------------------------------
                  Name:  Joshua D. Schein
                  Title: Secretary and Chief Financial Officer

 

               /s/ David de Weese
               ---------------------------------------------------------
                  David de Weese

                                     E-122

 
                                                                       EXHIBIT W
                                                                              TO
                                                               WARRANT AGREEMENT

                         [FORM OF WARRANT CERTIFICATE]

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

                    EXERCISABLE FROM NOVEMBER 18, 1996 UNTIL
                  5:30 P.M., NEW YORK TIME, NOVEMBER 18, 2006

No. W-96B-1                                                     691,529 Warrants



                              WARRANT CERTIFICATE

     This Warrant Certificate certifies that David de Weese or his registered
assigns, is the registered holder of 691,529 Warrants to purchase initially, at
any time from November 18, 1996 until 5:30 p.m. New York time on November 18,
2006 ("Expiration Date"), up to 691,529 fully-paid and non-assessable shares of
common stock, par value $.0001 per share ("Common Stock") of SIGA
PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), at the initial
exercise price, subject to adjustment in certain events (the "Exercise Price"),
equal to $0.50 per share upon surrender of this Warrant Certificate and payment
of the Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the Warrant Agreement dated as of November
18, 1996 between the Company and David de Weese (the "Warrant Agreement").
Payment of the Exercise Price shall be made by certified check or official bank
check in New York Clearing House funds payable to the order of the Company.

     No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.

     The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holder (the word "holder" meaning the registered holder) of the Warrants.

     The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be

                                     E-123

 
adjusted.  In such event, the Company will, at the request of the holder, issue
a new Warrant Certificate evidencing the adjustment in the Exercise Price and
the number and/or type of securities issuable upon the exercise of the Warrants;
provided, however, that the failure of the Company to issue such new Warrant
Certificate shall not in any way change, alter, or otherwise impair, the rights
of the holder as set forth in the Warrant Agreement.

     Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax or other governmental charge
imposed in connection with such transfer.

     Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.

     The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.

     All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.

     IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed.

Dated as of November 18, 1996.


               SIGA PHARMACEUTICALS, INC.



               By:_______________________________________________________
                  Name:  Joshua D. Schein
                  Title: Secretary and CFO

                                     E-124

 
                         [FORM OF ELECTION TO PURCHASE]

     The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ________________ shares of
Common Stock and herewith tenders in payment for such securities a certified
check or official bank check payable in New York Clearing House Funds to the
order of SIGA PHARMACEUTICALS, INC. in the amount of $______, all in accordance
with the terms of Section 3 of the Warrant Agreement dated as of November 18,
1996 between Siga Pharmaceuticals, Inc. and David de Weese.  The undersigned
requests that a certificate for such securities be registered in the name
of_____________ whose address is _____________________ and that such
Certificate be delivered to ______________________ whose address is
______________.


Dated:

                              Signature
                                       -----------------------------------------
                              (Signature must conform in all respects to name of
                              holder as specified on the face of the Warrant
                              Certificate.)


                              --------------------------------------------------
                              (Insert Social Security or Other Identifying
                              Number of Holder)

                                     E-125

 
                              [FORM OF ASSIGNMENT]



            (To be executed by the registered holder if such holder
                 desires to transfer the Warrant Certificate.)


     FOR VALUE RECEIVED ___________________ hereby sells, assigns and transfers
unto


- --------------------------------------------------------------------------------

                 (Please print name and address of transferee)

this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________ Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.


Dated:                        Signature:
      ----------------------            ---------------------------------------
                                        (Signature must conform in all respects
                                        to name of holder as specified on the
                                        face of the Warrant Certificate.)



                                        --------------------------------------- 
                                        (Insert Social Security or Other
                                        Identifying Number of Assignee)

                                     E-126

 
                                                                       EXHIBIT X
                                                                              TO
                                                               WARRANT AGREEMENT

                         [FORM OF WARRANT CERTIFICATE]

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

                    EXERCISABLE FROM NOVEMBER 18, 1997 UNTIL
                  5:30 P.M., NEW YORK TIME, NOVEMBER 18, 2007

No. W-97A-1                                                     691,522 Warrants



                              WARRANT CERTIFICATE

     This Warrant Certificate certifies that David de Weese or his registered
assigns, is the registered holder of 691,522 Warrants to purchase initially, at
any time from November 18, 1997 until 5:30 p.m. New York time on November 18,
2007 ("Expiration Date"), up to 691,522 fully-paid and non-assessable shares of
common stock, par value $.0001 per share ("Common Stock") of SIGA
PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), at the initial
exercise price, subject to adjustment in certain events (the "Exercise Price"),
equal to $0.50 per share upon surrender of this Warrant Certificate and payment
of the Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the Warrant Agreement dated as of November
18, 1996 between the Company and David de Weese (the "Warrant Agreement").
Payment of the Exercise Price shall be made by certified check or official bank
check in New York Clearing House funds payable to the order of the Company.

     No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.

     The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holder (the word "holder" meaning the registered holder) of the Warrants.

     The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be

                                     E-127

 
adjusted.  In such event, the Company will, at the request of the holder, issue
a new Warrant Certificate evidencing the adjustment in the Exercise Price and
the number and/or type of securities issuable upon the exercise of the Warrants;
provided, however, that the failure of the Company to issue such new Warrant
Certificate shall not in any way change, alter, or otherwise impair, the rights
of the holder as set forth in the Warrant Agreement.

     Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax or other governmental charge
imposed in connection with such transfer.

     Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.

     The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.

     All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.

     IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed.

Dated as of November 18, 1996.


               SIGA PHARMACEUTICALS, INC.



               By:_________________________________________________
                  Name:  Joshua D. Schein
                  Title: Secretary and CFO

                                     E-128

 
                         [FORM OF ELECTION TO PURCHASE]

     The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ________________ shares of
Common Stock and herewith tenders in payment for such securities a certified
check or official bank check payable in New York Clearing House Funds to the
order of SIGA PHARMACEUTICALS, INC. in the amount of $______, all in accordance
with the terms of Section 3 of the Warrant Agreement dated as of November 18,
1996 between Siga Pharmaceuticals, Inc. and David de Weese.  The undersigned
requests that a certificate for such securities be registered in the name
of_____________ whose address is _____________________ and that such
Certificate be delivered to ______________________ whose address is
______________.

Dated:
                          Signature
                                    --------------------------------------------
                                    (Signature must conform in all respects to
                                    name of holder as specified on the face of
                                    the Warrant Certificate.)


                                    --------------------------------------------
                                    (Insert Social Security or Other Identifying
                                    Number of Holder)

                                     E-129

 
                              [FORM OF ASSIGNMENT]



            (To be executed by the registered holder if such holder
                 desires to transfer the Warrant Certificate.)


     FOR VALUE RECEIVED ___________________ hereby sells, assigns and transfers
unto


- -------------------------------------------------------------------------------

                 (Please print name and address of transferee)

this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________ Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.


Dated:                         Signature:
      -----------------------            ---------------------------------------
                                         (Signature must conform in all respects
                                         to name of holder as specified on the
                                         face of the Warrant Certificate.)



                                         ---------------------------------------
                                         (Insert Social Security or Other
                                         Identifying Number of Assignee)

                                     E-130

 
                                                                       EXHIBIT Y
                                                                              TO
                                                               WARRANT AGREEMENT

                         [FORM OF WARRANT CERTIFICATE]

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

                    EXERCISABLE FROM NOVEMBER 18, 1998 UNTIL
                  5:30 P.M., NEW YORK TIME, NOVEMBER 18, 2008

No. W-98A-1                                                     691,522 Warrants



                              WARRANT CERTIFICATE

     This Warrant Certificate certifies that David de Weese or his registered
assigns, is the registered holder of 691,522 Warrants to purchase initially, at
any time from November 18, 1998 until 5:30 p.m. New York time on November 18,
2008 ("Expiration Date"), up to 691,522 fully-paid and non-assessable shares of
common stock, par value $.0001 per share ("Common Stock") of SIGA
PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), at the initial
exercise price, subject to adjustment in certain events (the "Exercise Price"),
equal to $0.50 per share upon surrender of this Warrant Certificate and payment
of the Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the Warrant Agreement dated as of November
18, 1996 between the Company and David de Weese (the "Warrant Agreement").
Payment of the Exercise Price shall be made by certified check or official bank
check in New York Clearing House funds payable to the order of the Company.

     No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.

     The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holder (the word "holder" meaning the registered holder) of the Warrants.

     The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be

                                     E-131

 
adjusted.  In such event, the Company will, at the request of the holder, issue
a new Warrant Certificate evidencing the adjustment in the Exercise Price and
the number and/or type of securities issuable upon the exercise of the Warrants;
provided, however, that the failure of the Company to issue such new Warrant
Certificate shall not in any way change, alter, or otherwise impair, the rights
of the holder as set forth in the Warrant Agreement.

     Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax or other governmental charge
imposed in connection with such transfer.

     Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.

     The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.

     All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.

     IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed.

Dated as of November 18, 1996.


               SIGA PHARMACEUTICALS, INC.


               By:_____________________________________________________
                  Name:  Joshua D. Schein
                  Title: Secretary and CFO

                                     E-132

 
                         [FORM OF ELECTION TO PURCHASE]

     The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ________________ shares of
Common Stock and herewith tenders in payment for such securities a certified
check or official bank check payable in New York Clearing House Funds to the
order of SIGA PHARMACEUTICALS, INC. in the amount of $______, all in accordance
with the terms of Section 3 of the Warrant Agreement dated as of November 18,
1996 between Siga Pharmaceuticals, Inc. and David de Weese.  The undersigned
requests that a certificate for such securities be registered in the name
of_____________ whose address is _____________________ and that such
Certificate be delivered to ______________________ whose address is
______________.

Dated:
                    Signature
                              --------------------------------------------------
                              (Signature must conform in all respects to name of
                              holder as specified on the face of the Warrant
                              Certificate.)


                              --------------------------------------------------
                              (Insert Social Security or Other Identifying
                              Number of Holder)

                                     E-133

 
                              [FORM OF ASSIGNMENT]



            (To be executed by the registered holder if such holder
                 desires to transfer the Warrant Certificate.)


     FOR VALUE RECEIVED ___________________ hereby sells, assigns and transfers
unto


- --------------------------------------------------------------------------------

                 (Please print name and address of transferee)

this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________ Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.


Dated:                        Signature:
      ---------------------             ----------------------------------------
                              (Signature must conform in all respects to name of
                              holder as specified on the face of the Warrant
                              Certificate.)



                              --------------------------------------------------
                              (Insert Social Security or Other Identifying
                              Number of Assignee)

                                     E-134

 
                                                                       EXHIBIT Z
                                                                              TO
                                                               WARRANT AGREEMENT

                         [FORM OF WARRANT CERTIFICATE]

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

                    EXERCISABLE FROM NOVEMBER 18, 1999 UNTIL
                  5:30 P.M., NEW YORK TIME, NOVEMBER 18, 2009

No. W-99A-1                                                     691,522 Warrants



                              WARRANT CERTIFICATE

     This Warrant Certificate certifies that David de Weese or his registered
assigns, is the registered holder of 691,522 Warrants to purchase initially, at
any time from November 18, 1999 until 5:30 p.m. New York time on November 18,
2009 ("Expiration Date"), up to 691,522 fully-paid and non-assessable shares of
common stock, par value $.0001 per share ("Common Stock") of SIGA
PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), at the initial
exercise price, subject to adjustment in certain events (the "Exercise Price"),
equal to $0.50 per share upon surrender of this Warrant Certificate and payment
of the Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the Warrant Agreement dated as of November
18, 1996 between the Company and David de Weese (the "Warrant Agreement").
Payment of the Exercise Price shall be made by certified check or official bank
check in New York Clearing House funds payable to the order of the Company.

     No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.

     The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holder (the word "holder" meaning the registered holder) of the Warrants.

     The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be

                                     E-135

 
adjusted.  In such event, the Company will, at the request of the holder, issue
a new Warrant Certificate evidencing the adjustment in the Exercise Price and
the number and/or type of securities issuable upon the exercise of the Warrants;
provided, however, that the failure of the Company to issue such new Warrant
Certificate shall not in any way change, alter, or otherwise impair, the rights
of the holder as set forth in the Warrant Agreement.

     Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax or other governmental charge
imposed in connection with such transfer.

     Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.

     The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.

     All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.

     IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed.

Dated as of November 18, 1996.


               SIGA PHARMACEUTICALS, INC.



               By:___________________________________________________
                  Name:  Joshua D. Schein
                  Title: Secretary and CFO

                                     E-136

 
                         [FORM OF ELECTION TO PURCHASE]

     The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ________________ shares of
Common Stock and herewith tenders in payment for such securities a certified
check or official bank check payable in New York Clearing House Funds to the
order of SIGA PHARMACEUTICALS, INC. in the amount of $______, all in accordance
with the terms of Section 3 of the Warrant Agreement dated as of November 18,
1996 between Siga Pharmaceuticals, Inc. and David de Weese.  The undersigned
requests that a certificate for such securities be registered in the name
of_____________ whose address is _____________________ and that such
Certificate be delivered to ______________________ whose address is
______________.

Dated:
                          Signature   
                                    -------------------------------------------
                                    (Signature must conform in all respects to
                                    name of holder as specified on the face of
                                    the Warrant Certificate.)


                         -------------------------------------------------------
                         (Insert Social Security or Other Identifying  Number of
                         Holder)

                                     E-137

 
                              [FORM OF ASSIGNMENT]



            (To be executed by the registered holder if such holder
                 desires to transfer the Warrant Certificate.)


     FOR VALUE RECEIVED ___________________ hereby sells, assigns and transfers
unto


- --------------------------------------------------------------------------------

                 (Please print name and address of transferee)

this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________ Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.


Dated:                          Signature:                       
       -----------------------             -------------------------------------
     (Signature must conform in all respects to name of holder as specified on
     the face of the Warrant Certificate.)



                              --------------------------------------------------
                              (Insert Social Security or Other Identifying
                              Number of Assignee)

                                     E-138


 
                                                                    EXHIBIT 4(e)

                                     E-139

 
           FORM OF BRIDGE LOAN LETTER AGREEMENT FOR BRIDGE INVESTORS


                                    As of [                   ], 1997

To:  Bridge Loan Investors Listed on Schedule I



Ladies and Gentlemen:

     This letter confirms our agreement that you will make an investment for the
amount listed next to your name on Schedule I to purchase up to 40 units
("Units") of securities of SIGA Pharmaceuticals, Inc., a Delaware corporation
(the "Issuer").  Each Unit consists of (i) a senior sub-ordinated non-negotiable
promissory note in the principal amount of $25,000 (individually, a "Bridge
Note" and collectively, the "Bridge Notes") bearing interest at the rate of 10%
per annum due and payable on the earlier of (a) the closing of an initial public
offering of the Issuer's common stock, par value $.0001 per share (the "Common
Stock"), pursuant to the Securities Act of 1933, as amended (the "Act"), or (b)
[6 MONTHS AFTER DATE OF EXECUTION], 1997, and (ii) warrants to purchase the
number of shares of Common Stock which equals $12,500 divided by the initial
public offering price of the Common Stock (the "IPO Price"), at an exercise
price equal to the IPO Price (the "Warrants").  Partial Units may be offered and
sold at the discretion of the Issuer.  Your investment is part of an offering
(the "Offering") of the Issuer with one or more closings to occur on or before
February 28, 1997 (the "Closing").  You, together with the other purchasers of
the Units in the Offering, shall be collectively referred to herein as the
"Investors."

     The Bridge Notes included in the Units will constitute a general obligation
of the Issuer, senior to all indebtedness.  The Bridge Notes will provide, among
other things, for interest payable monthly in arrears at the rate of 10% per
annum and for prepayment, without penalty, on any interest date at the sole
option of the Issuer.  The Bridge Notes will also provide that the entire
principal amount, and any accrued and unpaid interest thereon, will be payable
on the earlier of (a) the closing of an initial public offering of the Common
Stock, pursuant to the Act, or (b) [6 MONTHS AFTER DATE OF EXECUTION], 1997 (the
"Maturity Date").

     The Warrants will contain, among other things, provisions permitting
cashless exercise and "piggyback" registration rights provisions pursuant to the
Registration Rights Agreement of even date for the shares of Common Stock
issuable upon the exercise thereof.

     The Issuer represents and warrants to you that (i) it has the requisite
organizational authority to enter into this transaction and has taken all
required actions necessary to effectuate the transactions contemplated herein,
and (ii) as of the date hereof, and as of the date of the Closing of the
Offering, it has, and will have, no other existing debt obligations, other than
trade payables arising in the ordinary course of business.

     The undersigned Investor understands and acknowledges that:

                                     E-140

 
     (i) The offering of Units to the Investor has not been registered under the
Act, or any state securities laws or regulations, and the Units will be
restricted securities which must be held for an indefinite period of time unless
they are subsequently so registered or an exemption from such registration is
available.

     (ii) The Units are being offered and sold without registration under the
Act in reliance upon applicable exemptions under the Act and similar exemptions
under state securities laws for private offerings.  The availability of the
aforesaid exemptions depends in part upon the accuracy of certain of the
representations, declarations and warranties which are made by the Investor
herein and in any other information furnished by the Investor to the Issuer, and
the same may be relied upon in determining the suitability of the Investor to
invest in the securities of the Issuer.

     (iii)   There is no established market for the Units and it is not likely
that any public market for the Units will develop.

       The undersigned Investor represents and warrants to the Issuer that:

     (i) The Investor is an "accredited investor", as such term is defined in
the Act, Rule 501(a), and has sufficient available financial resources to
provide adequately for the Investor's current needs, including possible personal
contingencies, and can bear the economic risk of a complete loss of the
Investor's investment hereunder without materially affecting the Investor's
financial condition.

     (ii) The Investor has been furnished with all materials relating to the
Issuer and its activities which the Investor has requested and has been afforded
the opportunity to obtain any additional information necessary to verify the
accuracy of any representations or information relating to the Investor and its
activities.

     (iii)  The Issuer has answered all inquiries made by the Investor
concerning the Issuer and its activities, or any other matters relating to the
Offering and sale of Units and the operations of the Issuer.

     (iv) The Investor has not been furnished any offering literature other than
any materials and/or information made available to the Investor by the Issuer as
described in subparagraphs (ii) and (iii) above, and the Investor has relied
only on such materials and/or information. Furthermore, as set forth above, no
representations or warranties have been made to the Investor by the Issuer, or
by its members or officers or employees with respect to the intended business of
the Issuer, the financial condition, prospects, profitability, operations and/or
potential of the Issuer, and/or the economic or any other aspects of the
consequences of an investment in Units, and the Investor has not relied upon any
information concerning the offering, written or oral, other than information
contained in this Agreement or provided by the Issuer at the Investor's request.

     (v) The Investor is acquiring the Units for which the Investor hereby
subscribes for the Investor's own account, as principal, for investment and not
with a view to the resale or distribution of all or any part of such Units.

                                     E-141

 
     (vi) The Investor, if a corporation, partnership, or other form of business
entity, is authorized and otherwise duly qualified to purchase and hold Units,
and such entity has not been formed for the specific purpose of acquiring Units.
 
     (vii)  If the Investor is more than one person, the obligations of the
Investor shall be joint and several and the representations and warranties
herein contained shall be deemed to be made by and be binding upon each such
person and his heirs, executors, administrators, successors and assigns.

     This letter represents the entire agreement between the Issuer and you with
respect to the purchase of the Units and supersedes all prior agreements,
whether written or oral.  This agreement may only be modified by a letter duly
signed by each of the parties hereto and shall be governed by the laws of the
State of New York.

     This agreement may be executed in two or more counterparts which together
shall form a single agreement.

     If the foregoing accurately reflects our agreement, kindly sign this letter
where indicated and return the same to us at your earliest convenience.


                                         Very truly yours,

                                         SIGA PHARMACEUTICALS, INC.



                                         By:_____________________________
                                              Authorized Officer
 

ACCEPTED AND AGREED TO:

INVESTOR:

_______________________________________
     Name:
     Address:

NO. OF UNITS OF SUBSCRIPTION: _________

                                     E-142

 
                                                      SIGA PHARMACEUTICALS, INC.
                                                                      SCHEDULE I

Name of Investor        Address                        Aggregate Amount Invested
- ----------------        -------                        -------------------------

                                     E-143


 
                                                                    EXHIBIT 4(f)

                                     E-144

 
                  FORM OF PROMISSORY NOTE FOR BRIDGE INVESTORS


     THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
     AMENDED (THE "1933 ACT"), OR UNDER THE PROVISIONS OF ANY APPLICABLE STATE
     SECURITIES LAWS, BUT HAS BEEN ACQUIRED BY THE REGISTERED HOLDER HEREOF FOR
     PURPOSES OF INVESTMENT AND IN RELIANCE OF STATUTORY EXEMPTIONS UNDER THE
     1933 ACT, AND UNDER ANY APPLICABLE STATE SECURITIES LAWS.  THIS NOTE MAY
     NOT BE SOLD, PLEDGED, TRANSFERRED OR ASSIGNED EXCEPT IN A TRANSACTION WHICH
     IS EXEMPT UNDER PROVISIONS OF THE 1933 ACT AND ANY APPLICABLE STATE
     SECURITIES LAWS OR PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT; AND IN
     THE CASE OF AN EXEMPTION, ONLY IF THE MAKER HAS RECEIVED AN OPINION OF
     COUNSEL SATISFACTORY TO THE MAKER THAT SUCH TRANSACTION DOES NOT REQUIRE
     REGISTRATION OF THIS NOTE UNDER THE 1933 ACT OR APPLICABLE STATE SECURITIES
     LAWS.

                           SIGA PHARMACEUTICALS, INC.

[              ], 1997  NEW YORK, NEW YORK
NO. PN-SIGA-97-[  ]  $[            ]

                    10% SENIOR SUBORDINATED PROMISSORY NOTE

          SIGA PHARMACEUTICALS, INC., a Delaware corporation with an address at
666 Third Avenue, 30th Floor, New York, NY 10017 (the "Maker"), for value
received, hereby promises to pay to [NAME OF HOLDER] or [HIS/HER] registered
assigns (the "Holder") on the earlier of (i) the closing of an initial public
offering of the Issuer's common stock, par value $.0001 per share (the "Common
Stock"), pursuant to the Securities Act of 1933, as amended (the "Act"), or (b)
[6 MONTHS AFTER DATE OF PROMISSORY NOTE], 1997, the principal sum of [$        ]
in such coin or currency of the United States of America as at the time of
payment shall be legal tender for the payment of public and private debts, and
to pay interest (computed on the basis of a 360 day year of twelve months) on
the outstanding principal sum hereof at the rate of 10% per annum from the date
hereof until the Maker's obligation with respect to the payment of such
principal sum shall be discharged as herein provided.  The earliest date is
hereinafter referred to as the "Maturity Date."  Principal and interest shall be
payable on the Maturity Date in like coin or currency to the Holder hereof at
the office of the Maker as hereinafter set forth.  The Holder is also
simultaneously herewith receiving warrants to purchase the number of shares of
Common Stock which equals [50% OF PRINCIPAL SUM] divided by the initial public
offering price of the Common Stock (the "IPO Price"), at an exercise price equal
to the IPO Price.  This Note is one of a series of senior promissory notes of
the Maker in the aggregate principal amount of $1,000,000 issued or to be issued
in connection with a private placement (the "Private Placement") of the Maker of
up to 40 units of its securities ("Units"), each Unit consisting of Notes in
denominations of $25,000 per Note (the "Notes") and warrants to purchase the
number of shares of Common Stock which equals $25,000 divided by the initial
public offering price of the Common Stock, at an exercise price equal to the IPO
Price (the "Warrants").  This Note shall rank pari passu with all of the other
                                              ---- -----                      
Notes.

                                     E-145

 
     1.   TRANSFERS OF NOTE TO COMPLY WITH THE 1933 ACT
          ---------------------------------------------

          The Holder agrees that this Note may not be sold, transferred,
pledged, hypothecated or otherwise disposed of except as follows: (1) to a
person whom the Note may legally be transferred without registration and without
delivery of a current prospectus under the 1933 Act with respect thereto and
then only against receipt of an agreement of such person to comply with the
provisions of this Section 1 with respect to any resale or other disposition of
the Note; or (2) to any person upon delivery of a prospectus then meeting the
requirements of the 1933 Act relating to such securities and the offering
thereof for such sale or disposition, and thereafter to all successive
assignees.

     2.   PAYMENT AND PREPAYMENT
          ----------------------

          All payments on this Note shall be applied first to the payment of
accrued interest, and, after all such interest has been paid, any remainder
shall be applied to reduction of the principal balance.

          Maker may prepay all or any part of the principal sum from time to
time without penalty at its sole discretion on a date that interest payments
hereunder become due and payable, provided that any such principal prepayment
shall be accompanied by all interest then accrued and shall be made on a pro
rata basis with all of the other Notes then outstanding.

     3.   SUBORDINATION
          -------------

          The indebtedness evidenced by this Note is hereby expressly
subordinated, to the extent and in the manner hereinafter set forth, in right of
payment to the prior payment in full of all the Maker's "Senior Indebtedness"
(as hereafter defined).

     (a) SENIOR INDEBTEDNESS.  As used in this Note, the term "Senior
Indebtedness" shall mean the principal of and unpaid accrued interest on all
indebtedness of the Maker to banks or other institutional lenders and any
indebtedness to refinance the outstanding balance thereof.

     (b)  DEFAULT ON NOTE OR SENIOR INDEBTEDNESS.   If this Note shall be
declared due and payable upon the occurrence of an "Event of Default" as defined
hereinafter, then: (i) no amount shall be paid by the Maker in respect of the
principal of or interest on this Note at the time outstanding, unless and until
any payment defaults, if any, under any of the Senior Indebtedness then
outstanding shall be fully cured, and (ii) no claim or proof of claim shall be
filed with the Maker by or on behalf of the Holder of this Note that shall
assert any right to receive any payments in respect of the principal of and
interest on this Note, except subject to the curing of any and all payment
defaults in regard to any of the Senior Indebtedness then outstanding.  If there
occurs an event of default relating to the payment of principal and interest
that has been declared in writing with respect to any Senior Indebtedness, or in
the instrument under which any Senior Indebtedness is outstanding, permitting
the holder of such Senior Indebtedness to accelerate the maturity thereof, then,
unless and until such event of default relating to the payment of principal and
interest shall have been cured or waived or shall have ceased to exist, or all
Senior

                                     E-146

 
Indebtedness shall have been paid in full, no payment shall be made in respect
of the principal of this Note, unless within six (6) months after the happening
of such event of default, the maturity of such Senior Indebtedness shall not
have been accelerated by the holder of such Senior Indebtedness.  In the event
of any such default on the Senior Indebtedness, Maker hereby undertake to notify
the Holder within ten days of such default.

     (c) EFFECT OF SUBORDINATION.  Nothing contained in this Section 3 shall
impair, as between the Maker, on the one hand, and the Holder, on the other
hand, the obligation of the Maker, subject to the terms and conditions hereof,
to pay to the Holder the principal hereof and interest hereon as and when the
same become due and payable or shall prevent the Holder of this Note, upon
default hereunder, from exercising all rights, powers and remedies otherwise
provided herein or by applicable law.  In the event the principal of this Note
is not paid as a result of the provisions of this Section 3, interest on this
Note will accrue at the rate of 12% per annum until the principal of an accrued
interest on this Note shall be paid in full.

     (d) UNDERTAKING.  By its acceptance of this Note, the Holder agrees at the
expense of the Maker to execute and deliver such documents as may be reasonably
requested from time to time by the Maker or the lender of any Senior
Indebtedness in order to implement the foregoing provisions of this Section 3.

     4.   EVENTS OF DEFAULT AND REMEDIES
          ------------------------------

          At the option of Holder, but subject to Section 3, the entire unpaid
principal sum and all accrued interest shall become immediately due and payable,
without notice or demand, upon the occurrence of any one or more of the
following events of default ("Events of Default"):

     (a) Maker shall fail to make payment of principal or interest hereunder,
     under any of the other Notes of Maker in aggregate principal amount of
     $750,000 outstanding as of the date hereof for a period of five days from
     the date due;

     (b) Maker shall be unable, or admit in writing its inability, to pay its
     debts, or shall not pay its debts generally as they come due, or shall make
     any assignment for the benefit of creditors;

     (c) Maker shall take action to liquidate or dissolve or shall sell all or
     substantially all of its assets, by means of an asset sale, merger or
     issuance of capital stock resulting in a change of control (except that any
     liquidation, dissolution or sale of assets that occurs solely in connection
     with Maker's currently anticipated change in organizational structure from
     a limited liability company to a corporation, shall not constitute a
     default hereunder);

     (d) Maker shall commence, or there shall be commenced against Maker, any
     case, proceeding, or other action seeking to have an order for relief
     entered with respect to Maker, or to adjudicate Maker as a bankrupt or
     insolvent; or

                                     E-147

 
     (e) Maker shall breach any of its covenants or agreements hereunder and
     such breach shall not be cured within 15 days after the occurrence thereof.

     5.   MISCELLANEOUS
          -------------

          No delay on the part of Holder in exercising any option, power or
right shall constitute a waiver thereof.

          In the event this Note is turned over to an attorney for collection,
Maker agrees to pay all costs of collection, including reasonable attorneys'
fees, which amounts may, at Holder's option, be added to the principal hereof.

          No recourse under or upon any obligation, covenant or agreement of
this Note, or for any claim based thereon or otherwise in respect thereof, shall
be had against any principal, or against any past, present, or future member,
manager, or economic interest holder as such, of Maker or of any incorporator,
stockholder, officer or director of any successor corporation, either directly
or through Maker; it being expressly agreed that this Note

and the obligations hereunder are solely organizational obligations of Maker and
any successor corporation.

          This Note shall be governed as to validity, interpretation,
construction, effect and in all other respects by the laws and decisions of the
State of New York.  Maker, and any endorsers, sureties and guarantors, agree
that the state courts located in the State of New York shall have subject matter
jurisdiction to entertain any action brought to enforce or collect upon this
Note and, by execution hereof, voluntarily submit to personal jurisdiction of
such courts; provided, however such jurisdiction shall not be exclusive and, at
its option, Holder may commence such action in any other court which otherwise
has jurisdiction.

          Maker waives demand for payment, presentment for payment, notice of
nonpayment or dishonor, protest and notice of protest, and agrees to any
extension of time of payment and partial payments before, at, or after maturity.
No renewal or extension of this Note, no release or surrender of any security
for this Note, no release of any person liable hereon, no delay in the
enforcement hereof, and no delay or omission in exercising any right or power
hereunder, shall affect the liability of Maker.  No delay or omission by Holder
in exercising any power or right hereunder shall impair such right or power or
be construed to be a waiver of any default, nor shall any single or partial
exercise of any power or right hereunder preclude any or full exercise thereof
or the exercise of any other right or power.  Each legal holder hereof shall
have and may exercise all the rights and powers given to Holder herein.


                   [Balance of Page Intentionally Left Blank]

                                     E-148

 
     This Note may not be changed or terminated orally.

     IN WITNESS WHEREOF, Maker has duly executed this Note on the date first
above written.

                                    SIGA PHARMACEUTICALS, INC.


                                    By:______________________________
                                       Authorized Officer
 

                                     E-149


 
                                                                    EXHIBIT 4(g)

                                     E-150

 
                 FORM OF WARRANT AGREEMENT FOR BRIDGE INVESTORS

                                                           SIGA BRIDGE INVESTORS

                               WARRANT AGREEMENT


     WARRANT AGREEMENT, dated as of [             ], 1997, between SIGA
PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), and the persons
whose names and addresses are set forth on Schedule I annexed hereto (the
"Holders").

                              W I T N E S S E T H:
                              ------------------- 

     WHEREAS, pursuant to a letter agreement of even date hereof between the
Company and the Holders, Holders shall be issued an aggregate of up to 40 units
of the Company's securities ("Units"), each Unit consisting of (i) a senior sub-
ordinated non-negotiable promissory note in the principal amount of $25,000
(individually, a "Bridge Note" and collectively, the "Bridge Notes"), and (ii)
warrants to purchase the number of shares of the Company's common stock, par
value $.0001 per share ("Common Stock"; shares of Common Stock shall be referred
as "Common Shares"), which equals $12,500 divided by the initial public offering
price of the Common Stock (the "IPO Price"), at an exercise price equal to the
IPO Price (the "Warrants").

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

     1.  Issue.  Subject to Section 4 hereof, the Company shall issue to each
         -----              ---------                                        
Holder a certificate (the "Warrant Certificate") dated as of the date hereof
providing each such Holder with the right to purchase, at any time, from [
], 1998, until 5:30 p.m., New York time, on [            ], 2002, the number of
Common Shares listed next to the name of each such Holder on Exhibit I (the
"Warrant Shares") (subject to adjustment as provided in Section 8 hereof), at an
                                                        ---------               
exercise price (subject to adjustment as provided in Section 8 hereof) equal to
                                                     ---------                 
the IPO Price per Common Share.

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

     3.  Exercisability of Warrants.  The Warrants shall be exercisable at any
         --------------------------                                           
time from [         ], 1998, until 5:30 p.m., New York time, on [             ],
2002.

     4.  Number of Warrants and Exercise Price if No Initial Public Offering or
         ----------------------------------------------------------------------
in Event of Acquistion.  In the event that (i) there is no initial public
- ----------------------                                                   
offering of the Common Stock prior to [             ], 1997, the maturity date
of the Bridge Notes (the "Maturity Date"), or (ii) the Company is acquired by

                                     E-151

 
another corporation prior to the Maturity Date, whether by merger,
consolidation, sale of the Company's assets or otherwise, then the number of
Warrants issued with each Unit shall be 2,500 Warrants to purchase 2,500 shares
of Common Stock, and the exercise price shall be $5.00 per share.

     5.  Procedure for Exercise of Warrants.
         ---------------------------------- 

     5.1  Cash Exercise.  The Warrants are exercisable at an aggregate initial
          -------------                                                       
exercise price per Common Share set forth in Section 8 hereof payable by
                                             ---------                  
certified check or official bank check in New York Clearing House funds.  Upon
surrender of a Warrant Certificate with the annexed Form of Election to Purchase
duly executed, together with payment of the Exercise Price (as hereinafter
defined) for the Warrant Shares purchased, at the Company's principal offices in
New York (presently located at 666 Third Avenue, 30th Floor, New York, NY 10017)
the registered holder of a Warrant Certificate (individually a "Holder" and
sometimes collectively the "Holders") shall be entitled to receive a certificate
for the Warrant Shares so purchased.  The purchase rights represented by the
Warrant Certificate are exercisable at the option of the Holder  thereof, in
whole or in part (but not as to fractional Common Shares underlying the
Warrants).  In the case of the purchase of less than all the Warrant Shares
purchasable under the Warrant Certificate, the Company shall cancel said Warrant
Certificate upon the surrender thereof and shall execute and deliver a new
Warrant Certificate of like tenor for the balance of the Warrant Shares
purchasable thereunder.

     5.2  Cashless Exercise.  In addition to the exercise of all or a portion of
          -----------------                                                     
the Warrants by the payment of the Exercise Price in cash or check as set forth
in Section 5.1 above, and in lieu of any such payment, the Holder has the right
   -----------                                                                 
to exercise the Warrants, in full or in part, by surrendering the Warrant
Certificate with the annexed Form of Election to Purchase duly executed, in
exchange for the number of Common Shares equal to the product of (x) the number
of Common Shares as to which the Warrants are being exercised multiplied by (y)
a fraction, the numerator of which is the Current Market Price of the Common
Shares (as defined below) less the Exercise Price then in effect and the
denominator of which is the Current Market Price.

     6.   Issuance of Certificate.  Upon the exercise of the Warrants, the
          -----------------------                                         
issuance of a certificate for Warrant Shares (or Other Securities) shall be made
forthwith (and in any event within five (5) business days thereafter) without
charge to the Holder thereof including, without limitation, any tax which may be
payable in respect of the issuance thereof, and such certificate shall (subject
to the provisions of Sections 7 and 9 hereof) be issued in the name of, or in
                     ----------     -                                        
such names as may be directed by, the Holder thereof; provided, however, that
                                                      --------  -------      
the Company shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any such certificate in
a name other than that of the Holder and the Company shall not be required to
issue or deliver such certificate unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.

                                     E-152

 
     The Warrant Certificate and the certificate representing the Warrant Shares
(or Other Securities) shall be executed on behalf of the Company by the manual
or facsimile signature of the then present Chairman or Vice Chairman of the
Board of Directors or President or any Vice President of the Company under its
corporate seal reproduced thereon, attested to by the manual or facsimile
signature of the then present Secretary or any Assistant Secretary of the
Company.  The Warrant Certificate shall be dated the date of execution by the
Company upon initial issuance, division, exchange, substitution or transfer.

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

     8.   Exercise Price.
          -------------- 

     8.1  Initial and Adjusted Exercise Price.  Except as otherwise provided in
          -----------------------------------                                  
Section 8 hereof, the initial exercise price of each Warrant shall be the price
- ---------                                                                      
set forth in Section 1 hereof per Warrant Shares issued thereunder.  The
             ---------                                                  
adjusted exercise price shall be the price which shall result from time to time
from any and all adjustments of the initial exercise price in accordance with
the provisions of Section 10 hereof.
                  ----------        

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

     9.   Registration Under the Securities Act of 1933.  The Warrants, the
          ---------------------------------------------                    
Warrant Shares and any of the Other Securities issuable upon exercise of the
Warrants have not been registered under the Securities Act of 1933, as amended
(the "Act").  Upon exercise, in whole or in part, of the Warrants, a certificate
representing the Warrant Shares underlying the Warrants, and any of the Other
Securities issuable upon exercise of the Warrants (collectively, the "Warrant
Securities") shall bear the following legend unless such Warrant Shares
previously have been registered under the Act in accordance with the terms
hereof:

     THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
     UNDER THE SECURITIES ACT OF 1933, AS AMENDED ("ACT"), AND MAY NOT BE
     OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT
     UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR
     ANY SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES),
     OR (iii) AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY
     SATISFACTORY TO COUNSEL TO THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION
     UNDER THE ACT IS AVAILABLE.
 
     10.  Adjustments to Exercise Price and Number of Securities.  The Exercise
          ------------------------------------------------------               
Price and, in some cases, the number of Warrant Shares purchasable

                                     E-153

 
upon the exercise of the Warrants, shall be subject to adjustment from time to
time upon the occurrence of certain events described in this Section 10.
                                                             ---------- 

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

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

     10.3  Other Notices.  If at any time:
           -------------                  

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

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

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

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

then, in any one or more of said cases, the Company shall give, by certified or
registered mail, postage prepaid, addressed to the registered holder of this
Warrant at the address of such holder as shown on the books of the Company, (i)
at least 15 days' prior written notice of the date on which the books of the
Company shall close or a record shall be taken for such dividend, distribution
or subscription rights or for determining rights to vote in respect of any such
dissolution, liquidation or winding-up; (ii) at least 10

                                     E-154

 
days' prior written notice of the date on which the books of the Company shall
close or a record shall be taken for determining rights to vote in respect of
any such reorganization, reclassification, consolidation, merger or sale, and
(iii) in the case of any such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding-up, at least 15 days' written
notice of the date when the same shall take place.  Any notice given in
accordance with clause (i) above shall also specify, in the case of any such
dividend, distribution or option rights, the date on which the holders of Common
Shares shall be entitled thereto.  Any notice given in accordance with clause
(iii) above shall also specify the date on which the holders of Common Shares
shall be entitled to exchange their Common Shares for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding-up, as the case may be.  If
the Holder of the Warrant does not exercise this Warrant prior to the occurrence
of an event described above, except as provided in Sections 10.1 and 10.4, the
                                                   ----------------------     
Holder shall not be entitled to receive the benefits accruing to existing
holders of the Common Shares in such event.

     10.4  Changes in Common Shares.  In case at any time the Company shall be a
           ------------------------                                             
party to any transaction (including, without limitation, a merger,
consolidation, sale of all or substantially all of the Company's assets or
recapitalization of the Common Shares) in which the previously outstanding
Common Shares shall be changed into or exchanged for different securities of the
Company or common stock or other securities of another corporation or interests
in a non-corporate entity or other property (including cash) or any combination
of any of the foregoing (each such transaction being herein called the
"Transaction" and the date of consummation of the Transaction being herein
called the "Consummation Date"), then, as a condition of the consummation of the
Transaction, lawful and adequate provisions shall be made so that each Holder,
upon the exercise hereof at any time on or after the Consummation Date, shall be
entitled to receive, and this Warrant shall thereafter represent the right to
receive, in lieu of the Common Shares issuable upon such exercise prior to the
Consummation Date, the highest amount of securities or other property to which
such Holder would actually have been entitled as a holder of an Common Share
upon the consummation of the Transaction if such Holder had exercised such
Warrant immediately prior thereto.  The provisions of this Section 10.4 shall
                                                           ------------      
similarly apply to successive Transactions.

     11.  Exchange and Replacement of Warrant Certificate.  The Warrant
          -----------------------------------------------              
Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Warrant Shares in such denominations as
shall be designated by the Holder thereof at the time of such surrender.

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

                                     E-155

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

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

     14.  Notices to Warrant Holder.  Except as otherwise provided in Section
          -------------------------                                   -------
10.4, nothing contained in this Agreement shall be construed as conferring upon
- ----                                                                           
the Holder by virtue of his holding the Warrant the right to vote or to consent
or to receive notice as a holder of an Common Share in respect of any meetings
of such holders for the election of directors or any other matter, or as having
any rights whatsoever as such a holder of the Company.

     15.  Notices.
          ------- 

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

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

          (b) If to the Company, to the address set forth in Section 5 hereof or
                                                             ---------          
     to such other address as the Company may designate by notice to the Holder.

     16.  Supplements and Amendments.  The Company and Holder may from time to
          --------------------------                                          
time supplement or amend this Agreement in order to cure any ambiguity, to
correct or supplement any provision contained herein which may be defective or
inconsistent with any provisions herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and Holder
may deem necessary or desirable.

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

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

                                     E-156

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

     20.  Entire Agreement; Modification.  This Agreement contains the entire
          ------------------------------                                     
understanding between the parties hereto with respect to the subject matter
hereof and may not be modified or amended except by a writing duly signed by the
party against whom enforcement of the modification or amendment is sought.

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

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

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

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

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


                                         Very truly yours,

                                         SIGA PHARMACEUTICALS, INC.



                                         By:__________________________
                                              Authorized Officer
ACCEPTED AND AGREED TO:

INVESTOR:

____________________________________
     Name:
     Address:
NO. OF UNITS OF SUBSCRIPTION:________

                                     E-157

 
                                                                       EXHIBIT X
                                                                              TO
                                                               WARRANT AGREEMENT

                         [FORM OF WARRANT CERTIFICATE]

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

                    EXERCISABLE FROM [               ], 1998
                                     UNTIL
                5:30 P.M., NEW YORK TIME, [              ], 2002

No. W-SIGA-97-[   ]                                         [         ] Warrants


                              WARRANT CERTIFICATE

     This Warrant Certificate certifies that [NAME OF INVESTOR] or his/her
registered assigns ("Holder"), is the registered holder of [          ] Warrants
to purchase initially at any time from [                  ], 1998, until 5:30
p.m. New York time on [                ], 2002 ("Expiration Date"), up to [
    ] fully-paid and non-assessable shares of common stock, par value $.0001 per
share ("Common Shares") of SIGA PHARMACEUTICALS INC., a Delaware corporation
(the "Company"), at the initial exercise price, subject to adjustment in certain
events (the "Exercise Price"), equal to [$     ] per Common Share upon surrender
of this Warrant Certificate and payment of the Exercise Price at an office or
agency of the Company, but subject to the conditions set forth herein and in the
Warrant Agreement dated as of the date hereof between the Company and Holder
(the "Warrant Agreement").  Payment of the Exercise Price shall be made by
certified check or official bank check in New York Clearing House funds payable
to the order of the Company, unless exercise is made pursuant to Section 5.2  of
                                                                 -----------    
the Warrant Agreement.

     No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.

     The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
Holder (the word "Holder" meaning the registered holder) of the Warrants.

                                     E-158

 
     The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted.  In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant Certificate
shall not in any way change, alter, or otherwise impair, the rights of the
holder as set forth in the Warrant Agreement.

     Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax or other governmental charge
imposed in connection with such transfer.

     Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.

     The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.

     All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.

     IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed.

Dated as of [              ], 1997


               SIGA PHARMACEUTICALS, INC.



               By:________________________________________________________
                     Authorized Officer

                                     E-159

 
                         [FORM OF ELECTION TO PURCHASE]

     The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase ________________ Common
Shares and herewith tenders in payment for such securities a certified check or
official bank check payable in New York Clearing House Funds to the order of
SIGA PHARMACEUTICALS, INC. in the amount of $______, all in accordance with the
terms of Section 5 of the Warrant Agreement dated as of [          ], 1997
between SIGA PHARMACEUTICALS, INC. and the undersigned (or its assignor).  The
undersigned requests that a certificate for such securities be registered in the
name of

_____________ whose address is ______________________ and that such Certificate 
be delivered to ______________________ whose address is ______________.

Dated:
                    Signature
                              --------------------------------------------------
                              (Signature must conform in all respects to name of
                              holder as specified on the face of the Warrant
                              Certificate.)


                    ----------------------------------------------------------- 
                    (Insert Social Security or Other Identifying Number of
                    Holder)

                                     E-160

 
                              [FORM OF ASSIGNMENT]



            (To be executed by the registered holder if such holder
                 desires to transfer the Warrant Certificate.)


     FOR VALUE RECEIVED ___________________ hereby sells, assigns and transfers
unto


- --------------------------------------------------------------------------------
                 (Please print name and address of transferee)

this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________ Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.


Dated:                    Signature:
      ------------------            -------------------------------------------
                                    (Signature must conform in all respects to
                                    name of holder as specified on the face of
                                    the Warrant Certificate.)



                        ------------------------------------------------------- 
                        (Insert Social Security or Other Identifying Number of
                        Assignee)

                                     E-161

 
                                                      SIGA PHARMACEUTICALS, INC.
                                                                      SCHEDULE I

Name of Investor            Address                    Aggregate Amount Invested
- ----------------            -------                    -------------------------

                                     E-162


 
                                                                    EXHIBIT 4(h)

                                     E-163

 
           FORM OF REGISTRATION RIGHTS AGREEMENT FOR BRIDGE INVESTORS


     THIS REGISTRATION AGREEMENT (the "Agreement") dated as of [            ],
1997 is made by and among SIGA PHARMACEUTICALS, INC., a Delaware corporation
(the "Company"), and the persons listed on Schedule I hereto (collectively, the
"Holders", each a "Holder").

                                    RECITALS

          A.   In connection with the purchase by the Holders of certain units
("Units") of the Company's securities, each Unit consists of (i) a senior sub-
ordinated non-negotiable promissory note in the principal amount of $25,000
(individually, a "Bridge Note" and collectively, the "Bridge Notes"), and (ii)
warrants to purchase the number of shares of the Company's common stock, par
value $.0001 per share ("Common Stock;" shares of Common Stock shall be referred
as "Common Shares"), which equals $12,500 divided by the initial public offering
price of the Common Stock (the "IPO Price"), at an exercise price equal to the
IPO Price (the "Warrants").

          B.   The Company has agreed to grant to the Holders certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder (collectively, the "Securities Act") with respect to
the Common Shares issuable upon exercise of the Warrants (the "Warrant Shares").
This Agreement sets forth the terms and conditions of such undertaking.

                                   AGREEMENTS

          The Company and the Holders covenant and agree as follows:

          1.   DEFINITIONS.  For purposes of this Agreement:

          (a) The terms "register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement or
statements or similar documents in compliance with the Securities Act and
pursuant to Rule 415 under the Securities Act or any successor rule providing
for offering securities on a continuous basis ("Rule 415"), and the declaration
or ordering of the effectiveness of such registration statement or document by
the Securities and Exchange Commission (the "SEC");

          (b) The term "Registrable Securities" means (i) the Warrant Shares and
(ii) any Common Shares issued as (or issuable upon the conversion or exercise of
any convertible security, warrant, right or other security which is issued as) a
dividend or other distribution with respect to, or in exchange for or in
replacement of such Warrant Shares, excluding in all cases, however, any
Registrable Securities sold by a Holder in a transaction in which its
registration rights under this Agreement are not assigned.

                                     E-164

 
          2.   REGISTRATION.

          (a)  Demand Registration.  Subject to the limitations set forth in
               -------------------                                          
Section 2(c) below, the Company shall, upon the written request of Holders
holding a majority of the sum of (x) the outstanding Registrable Securities and
(y) the then outstanding and unexercised Warrants, use its best efforts to cause
the Registrable Securities specified in such request to be registered under the
Securities Act (a "Demand Registration").  In the event that the Company shall
receive a written request under this Section 2(a), the Company shall give prompt
written notice thereof to any Holder which did not join in such written request.
If requested in writing by any of such other Holders within fifteen days after
the Company gives the notice described in the preceding sentence, the Company
shall include among the Registrable Securities that it endeavors to register
under this Section 2(a) such Registrable Securities as shall be specified in the
request of such other Holders.

          (b)  Notice of Demand Registration.  Each request delivered pursuant
               -----------------------------                                  
to Section 2(a) shall:  (i) specify the amount of Registrable Securities
intended to be offered and sold by each of the Holders joining in the request;
(ii) express the present intent to offer such Registrable Securities for
distribution; (iii) describe the nature or method of the proposed offer and sale
of the Registrable Securities; and (iv) contain the undertaking of the Holders
to provide all such information and materials and take all such action as may be
required in order to permit the Company to comply with all applicable
requirements of the Securities Act, the Registrable Securities and state
securities and "blue sky" laws, and to obtain acceleration of the effective date
of the Registration Statement (as defined below).

          (c)  Limitations on Demand Registrations.  Notwithstanding anything
               -----------------------------------                           
herein to the contrary, the obligations of the Company to cause any Registrable
Securities to be registered pursuant to Section 2(a) are subject to each of the
following limitations, conditions and qualifications:

          (i)  The Holders may only request that the Company make any Demand
Registration subsequent to the earlier of 180 days following (i) the effective
date of the registration statement for the initial public offering of the
Company's securities or (ii) any class of securities otherwise becoming subject
to the registration requirements of Section 12 of the Securities Exchange Act of
1934, as amended.

          (ii)  Any request for Demand Registration made by the Sellers pursuant
to Section 2(a), to be effective, shall request the registration of the offering
and sale or other distribution by the Holders of not less than one-half of the
Registrable Securities.

          (iii) In the event the Holders request Demand Registration pursuant to
Section 2(a) and the related offering is to be underwritten, the managing
underwriter shall be a nationally recognized investment banking firm approved by
the Company in the reasonable exercise of its discretion.

                                     E-165

 
                    (iv)  The Company shall be required to effect only one
Demand Registration pursuant to Section 2(a).

          (d)  Incidental Registration.  Subject to the limitations set forth in
               -----------------------                                          
Section 2(f), at any time that the Company shall propose the registration under
the Securities Act of an offering of any of its securities on a registration
form which can be used for registration of the Registrable Securities, the
Company shall give written notice as promptly as possible of such proposed
registration to the Holders, and shall include in the offering such amount of
Registrable Securities as the Holders shall request to be included by written
notice to the Company received within fifteen days after receipt of the
Company's notice, upon the same terms (including the method of distribution) as
the securities being sold by the Company pursuant to any such offering (an
"Incidental Registration").

          (e)  Notice of Incidental Registration.  Each request delivered
               ---------------------------------                         
pursuant to Section 2(d) shall: (i) specify the amount of Registrable Securities
intended to be offered and sold by each of the Holders; and (ii) contain the
undertaking of the Holders to provide all such information and materials and
take all such action as may be required in order to permit the Company to comply
with all applicable requirements of the Securities Act, the SEC and state
securities and "blue sky" laws and to obtain acceleration of the effective date
of the Registration Statement.

          (f)  Limitations on Incidental Registrations.  Notwithstanding
               ---------------------------------------                  
anything contained herein to the contrary, the obligations of the Company to
cause Registrable Securities to be registered pursuant to Section 2(d) are
subject to each of the following limitations, conditions and qualifications:

          (i)  The Company shall not be required to give notice or include
Registrable Securities in any registration pursuant to Section 2(d) if the
proposed registration is primarily:  (A) a registration of a stock option,
thrift, employee benefit or compensation plan or of securities issued or
issuable pursuant to any such plan; (B) a registration of securities proposed to
be issued in connection with a dividend reinvestment and stock purchase plan or
customer stock purchase plan; (C) a registration of securities proposed to be
issued in exchange for securities or assets of, or in connection with a merger
or consolidation with, another corporation or other entity; or (D) a
registration of securities which is solely a combination of any of the above.

          (ii)  If the Company is advised in writing by the managing underwriter
(or its investment banking firm if the offering is not underwritten) that the
inclusion of Registrable Securities may, in the opinion of such underwriter or
investment banking firm, as the case may be, interfere with the orderly sale and
distribution of the securities proposed to be offered by the Company or
adversely affect the price at which such securities may be sold, the number of
shares of Registrable Securities to be included in the offering shall be reduced
or eliminated to the extent necessary as shall be reasonably determined by such
underwriter or investment banker, as the case may be, in good faith.

                                     E-166

 
          (iii)  In the event the Holders request registration pursuant to
Section 2(d) and the related offering is to be underwritten, the Holders will
enter into an underwriting agreement containing representations, warranties and
agreements not substantially different from those customarily made by an issuer
and a selling shareholder in underwriting agreements with respect to secondary
distributions.

          (iv)  The Company may, in its sole discretion, without the consent of
the Holders and without liability to any Holder for such action, withdraw such
registration statement and abandon the proposed offering in which the Holder had
requested to participate at any time.

                    (v)  The Company shall only be required to effect one
Incidental Registration pursuant to Section 2(d).

          3.   OBLIGATIONS OF THE COMPANY.  When required under the Agreement to
effect the registration of the Registrable Securities, the Company shall, as
expeditiously as reasonably possible:

          (a) Registration Statements.  Prepare and file with the SEC a
              -----------------------                                  
registration statement or statements or similar documents (the "Registration
Statement") with respect to all Registrable Securities, other than any
Registrable Securities excluded by Holders pursuant to Sections 2(a) and 2(d),
and use its best efforts to cause the Registration Statement to become effective
and maintain the effectiveness of the Registration Statement until the earlier
of (i) the date all such registered Registrable Securities are sold and any
prospectus delivery requirements under the Securities Act shall have lapsed, and
(ii) (A) six months (in the case of a registration statement on Form S-1 or
comparable long-form registration statement) or (B) six months following the
latest expiration date of the Warrants (in the case of a registration statement
on Form S-3 or comparable short-form registration statement).

          (b) Amendments.  Prepare and file with the SEC such amendments
              ----------                                                
(including post-effective amendments) and supplements to the Registration
Statement and the prospectus used in connection with the Registration Statement
as may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by the Registration
Statement.

          (c) Prospectuses.  Furnish promptly to each Holders such numbers of
              ------------                                                   
copies of a prospectus, including a preliminary prospectus, and all amendments
and supplements thereto, in conformity with the requirements of the Securities
Act, and such other documents as the Holders may reasonably request in order to
facilitate the disposition of Registrable Securities.

          (d) Blue Sky.  Use its best efforts to register and qualify the
              --------                                                   
securities covered by the Registration Statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, and to prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements and to take such other
actions necessary or advisable to maintain such registration and

                                     E-167

 
qualifications in effect, and to take all other actions necessary or advisable
to enable the disposition of such securities in such jurisdictions, provided
that the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions or to provide any undertaking or
make any change in its charter or bylaws which the Board of Directors determines
to be contrary to the best interest of the Company and its stockholders.

          (e)  Underwriting Arrangements.  Enter into and perform its
               -------------------------                             
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering.  The Holders shall
also enter into and perform their customary obligations under any such agreement
including, without limitation, customary indemnification and contribution
obligations.

          (f) Notification of Changes.  Notify the Holders, at any time when a
              -----------------------                                         
prospectus relating to Registrable Securities covered by the Registration
Statement is required to be delivered under the Securities Act, of the happening
of any event as a result of which the prospectus including in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing.  The Company shall promptly amend or supplement the Registration
Statement to correct any such untrue statement or omission.

          (g) Notification of Stop Orders.  Notify the Holders of the issuance
              ---------------------------                                     
by the SEC of any stop order suspending the effectiveness of the Registration
Statement or the initiation of any proceedings for that purpose.  The Company
will make every reasonable effort to prevent the issuance of any stop order and,
if any stop order is issued, to obtain the lifting thereof at the earliest
possible time.

          (h) Review by Counsel.  Permit a single firm of counsel designated as
              -----------------                                                
selling stockholders' counsel by the holders of a majority in interest of the
Registrable Securities to review  (at the expense of such selling stockholders)
the Registration Statement and all amendments and supplements thereto a
reasonable period of time prior to their filing, and shall not file any document
in a form to which counsel reasonably objects.

          (i) Opinions.  At the request of the Holders, use its best efforts to
              --------                                                         
furnish on the date that Registrable Securities are delivered to the
underwriters for sale in connection with a registration pursuant to this
Agreement (i) an opinion, dated such date, of the counsel representing the
Company for the purposes of such registration, in form and substance as is
customarily given to underwriters in an underwritten public offering, addressed
to the underwriters and (ii) a letter dated such date, from the independent
certified public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to

                                     E-168

 
underwriters in an underwritten public offering, addressed to the underwriters.

          (j) Due Diligence.  Make available for inspection by the Holders, any
              -------------                                                    
underwriters participating in the offering pursuant to the registration and the
counsel, accountants or other agents retained by the Holders or any such
underwriter, all pertinent financial and other records, corporate documents and
properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by the Holders or any
such underwriters in connection with the registration.

          (k) Listing.  If the class of the Company's securities is then listed
              -------                                                          
on a national securities exchange, use its best efforts to cause the Registrable
Securities to be listed on such exchange.  If the Company's securities are not
then listed on a national securities exchange, use its best efforts to
facilitate the reporting of the Registrable Securities on NASDAQ.

          (l) Further Actions.  Take all other reasonable actions necessary to
              ---------------                                                 
expedite and facilitate disposition by the Holders of the Registrable Securities
pursuant to the Registration Statement.

          4.   FURNISH INFORMATION.  It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Agreement with
respect to each Holder that such Holder shall furnish to the Company such
information regarding itself, the Registrable Securities held by it, and the
intended method of disposition of such securities as shall be reasonably
required to effect the registration of the Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request.

          5.   EXPENSES OF REGISTRATION.  All expenses other than the
underwriting discounts and commissions incurred in connection with registration,
filings or qualifications pursuant to Sections 2 and 3, including, without
limitation, all registration, listing, filing and qualification fees, printing
and accounting fees, the fees and disbursements of counsel for the Company (but
excluding the fees and disbursements of any counsel for the Holders) shall be
borne by the Company.

          6.   INDEMNIFICATION.  In the event any Registrable Securities are
included in a Registration Statement under this Agreement:

          (a) By Company.  To the extent permitted by law, the Company will
              ----------                                                   
indemnify and hold harmless each Holder, the directors, if any, of such Holder,
the officers, if any, of such Holder who sign the Registration Statement, each
person, if any, who controls such Holder, any underwriter (as defined in the
Securities Act) for the Holders and each person, if any, who controls any such
underwriter within the meaning of the Securities Act or the Securities Act of
1934, as amended (the "1934 Act"), against any losses, claims, damages, expenses
or liabilities (joint or several) to which any of them may become subject under
the Securities Act, the 1934 Act or otherwise, insofar as such losses, claims,
damages, expenses or liabilities (or actions

                                     E-169

 
or proceedings, whether commenced or threatened, in respect thereof) arise out
of or are based upon any of the following statements, omissions or violations
(collectively, a "Violation"):  (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein, in light of the circumstance in which they are
made, not misleading or (iii) any violation or alleged violation by the Company
of the Securities Act, the 1934 Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the 1934 Act, any state
securities law; and the Company will reimburse the Holders and each such
underwriter or controlling person, promptly as such expenses are incurred, for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability action or
proceeding; provided, however, that the indemnity agreement contained in this
            --------  -------                                                
Section 6(a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Company, which consent shall not be unreasonably withheld, nor
shall the Company be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it aries out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
the Holders or any such underwriter or controlling person, as the case may be.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Holders or any such underwriter or
controlling person and shall survive the transfer of the Registrable Securities
by Holders.

          (b) By Holders.  To the extent permitted by law, each Holder,
              ----------                                               
severally and not jointly, will indemnify and hold harmless the Company, each of
its directors, each of its officers who have signed the Registration Statement,
each person, if any, who controls the Company within the meaning of the
Registration Statement, each person, if any, who controls the Company within the
meaning of the Securities Act or the 1934 Act, any underwriter and any other
stockholder selling securities pursuant to the Registration Statement or any of
its directors or officers or any person who controls such holder or underwriter,
against any losses, claims, damages or liabilities (joint or several) to which
any of them may become subject, under the Securities Act, the 1934 Act or other
federal state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration, and such Holder
will reimburse any legal or other expenses reasonably incurred by any of them in
connection with investigating or defending any such loss, claim, damage
liability or action; provided, however, that the indemnity agreement contained
in this subsection 6(b) shall not apply to amounts paid in settlement of such
loss, claim, damage, liability or action if such settlement is effected without
the consent of such Holder, which consent shall not be unreasonably withheld;
and provided further, that the Holder shall be liable under this paragraph for
only that

                                     E-170

 
amount of losses, claims, damages and liabilities as does not exceed the
proceeds to such Holder as a result of the sale of Registrable Securities
pursuant to such registration.

          (c) Procedure for Indemnification.  Promptly after receipt by an
              -----------------------------                               
indemnified party under this Section 6 of notice of the commencement of any
action (including any governmental action), such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this
Section 6, deliver to the indemnifying party a written notice of commencement
thereof and the indemnifying party shall have the right to participate in, and,
to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the defense thereof
with counsel mutually satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel, with the fees
and expenses to be paid by the indemnifying party, if, in the reasonable opinion
of counsel for the indemnifying party, representation of such indemnified party
by the counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party and any
other party represented by such counsel in such proceeding.  The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall relieve such indemnifying party of any
liability to the indemnified party under this Section 6 only to the extent
prejudicial to its ability to defend such action, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party other than under this Section 6.  The
indemnification required by this Section 6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, promptly
as such expense, loss, damage or liability is incurred.

          (d) Contribution.  To the extent any indemnification by an
              ------------                                          
indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for which it
otherwise would be liable under this Section 6 to the extent permitted by law,
provided that (i) no contribution shall be made under the circumstances where
the maker would not have been liable for indemnification under the fault
standards set forth in this Section 6, (ii) no seller of Registrable Securities
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any seller of
Registrable Securities who was not guilty of such fraudulent misrepresentation
and (iii) contribution by any seller of Registrable Securities shall be limited
in amount to the net amount of proceeds received by such seller from the sale of
such Registrable Securities.

          7.   REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934.  With a view to
making available to the Holders the benefits of SEC Rule 144 promulgated under
the Securities Act and any other rule or regulation of the SEC that may at any
time permit the Holders to sell securities of the Company to the public without
registration, the Company agrees, following the initial public offer of the
Company's securities, to:

                                     E-171

 
          (i) make and keep public information available, as those terms
are understood and defined in SEC Rule 144;

          (ii) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the 1934 Act; and

          (iii) furnish to each Holder, so long as such Holder owns any
Registrable Securities, forthwith upon request (A) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144,
the Securities Act and the 1934 Act, (B) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company and (C) such other information as may be reasonably requested in
availing the Holders of any rule or regulation of the SEC which permits the
selling of any securities without registration.

          8.   ASSIGNMENT OF REGISTRATION RIGHTS.  The rights to have the
Company register Registrable Securities pursuant to this Agreement may be
assigned by the Holders to transferees or assignees of such securities provided
the Company is, within a reasonable time after such transfer, furnished with
written notice of the name and address of such transferee or assignee and the
securities with respect to which such registration rights are being assigned;
provided, further, that such assignment shall be effective only if immediately
following such transfer the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act.  The term
"Holders" as used in this Agreement shall include permitted assignees.

          9.   MISCELLANEOUS.

          (a) Notices.  Notices required or permitted to be given hereunder
              -------                                                      
shall be in writing and shall be deemed to be sufficiently given when personally
delivered or sent by registered mail, return receipt requested, addressed (i) if
to the Company, at 666 Third Avenue, 30th Floor, New York, NY 10017 (with a copy
to: Eilenberg & Zivian, 666 Third Avenue, 30th Floor, New York, NY 10017;
Attention: Adam D. Eilenberg, Esq.) and (ii) if to a Holder at the address set
forth in Schedule I, or at such other address as each such party furnishes by
notice given in accordance with this Section 9(a).

          (b) Waiver.  Failure of any party to exercise any right or remedy
              ------                                                       
under this Agreement or otherwise, or delay by a party in exercising such right
or remedy, will not operate as a waiver thereof.  No waiver will be effective
unless and until it is in writing and signed by the party giving the waiver.

          (c) Governing Law.  This Agreement shall be enforced, governed and
              -------------                                                 
construed in all respects in accordance with the laws of the State of New York,
as such laws are applied by New York courts to agreements entered into and to be
performed in New York by and between residents of New York.  In the event that
any provision of this Agreement is invalid or unenforceable under any applicable
statute or rule of law, then such provision

                                     E-172

 
shall be deemed inoperative to the extent that it may conflict therewith and
shall be deemed modified to conform with such statute of rule of law.  Any
provision hereof which may prove invalid or unenforceable under any law shall
not affect the validity or enforceability of any other provision hereof.

          (d) Entire Agreement.  This Agreement constitutes the entire agreement
              ----------------                                                  
between the parties hereto with respect to the subject matter hereof and may be
amended only be a writing executed by the Company and the holders of a majority
in interest of the sum of (x) the Registrable Securities and (y) the then
outstanding and unexercised Warrants.

                        SIGA PHARMACEUTICALS, INC.


                        By:   
                             ----------------------------------------
                              Authorized Officer

                        HOLDER:

                        ---------------------------------------------
                        Name:
                        Title:

                        NO. OF UNITS OF SUBSCRIPTION:
                                                     ----------------

                                     E-173

 
                                                      SIGA PHARMACEUTICALS, INC.
                                                                      SCHEDULE I

Name of Investor          Address                      Aggregate Amount Invested
- ----------------          -------                      -------------------------

                                     E-174


 
                                                                    EXHIBIT 5(a)

                                     E-175

 
                         OPINION OF EILENBERG & ZIVIAN



                                March __, 1997



SIGA Pharmaceuticals, Inc.
666 Third Avenue, 30th Floor
New York, NY 10017

Ladies and Gentlemen:

We have examined the Registration Statement on Form SB-2 (the "Registration
Statement") to be filed by you with the Securities and Exchange Commission in
connection with an offering (the "Public Offering") of 3,100,000 shares of
common stock, par value $.0001 per share (the "Common Stock"), of SIGA
Pharmaceuticals, Inc. (the "Company"), and up to 310,000 shares of the Company's
Common Stock issuable upon exercise of a certain Underwriter's Warrant (the
"Warrant Shares"; the Offering shares and the Warrant Shares collectively
referred to as the "Shares").  As your counsel in connection with the Public
Offering and the offer and sale of the Common Stock, we have examined the
originals, or photostatic or certified copies, of such records of the Company,
certificates of the Company and of public officials and such other matters and
documents as we have deemed necessary or relevant as a basis for this opinion.

Based on these examinations, it is our opinion that the Shares, when issued upon
payment therefor, will be validly issued, fully paid and non-assessable shares
of Common Stock of the Company.

We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the reference to this firm under the caption
"Legal Matters" in the Prospectus forming a part of the Registration Statement.

     Very truly yours,


     /s/ Eilenberg & Zivian
     ----------------------
     EILENBERG & ZIVIAN

                                     E-176


 
                                                                   EXHIBIT 10(a)

                                     E-177

 
                     LICENSE AND RESEARCH SUPPORT AGREEMENT
               BETWEEN THE COMPANY AND THE ROCKEFELLER UNIVERSITY

                     LICENSE AND RESEARCH SUPPORT AGREEMENT


     AGREEMENT made as of the 31st day of January, 1996 by and between SIGA
PHARMACEUTICALS, INC. ("LICENSEE"), a corporation organized and existing under
the laws of the State of Delaware, having an office at 666 Third Avenue, 30th
Floor, New York, New York, 10017 and THE ROCKEFELLER UNIVERSITY ("UNIVERSITY"),
a nonprofit education corporation organized and existing under the laws of the
State of New York, having an office at 1230 York Avenue, New York, New York
10021.

                               W I T N E S E T H:

     WHEREAS, DR. VINCENT A. FISCHETTI and his colleagues at the UNIVERSITY
together with colleagues at Emory University and Oregon State University, have
developed certain technology relating to vaccines and the development of
antibiotics, which technology is more fully described in the patents, and patent
applications listed in Exhibits "A-1" and "A-2" of this Agreement ("Core
Technology");

     WHEREAS, LICENSEE wishes to obtain the exclusive license rights from the
UNIVERSITY to exploit the patents and patent applications covering the Core
Technology of which the UNIVERSITY is the sole owner (said patents and
applications being listed on Exhibit "A-1") and the exclusive grant from the
UNIVERSITY of its licensing rights to the patents and patent applications
covering the Core Technology of which the University is the co-owner (said co-
owned patents and applications being listed on Exhibit "A-2" attached);

     WHEREAS, LICENSEE further wishes to sponsor continuing research by DR.
FISCHETTI and his colleagues at the UNIVERSITY in the area of the Core
Technology;

     WHEREAS, the UNIVERSITY is willing to grant such license rights as provided
for herein in return for the research support, patent reimbursements and
LICENSEE'S other undertakings herein provided, all in the manner described
herein; and

     WHEREAS, the research support herein described is of the essence of this
Agreement and any default in the prompt and full payment thereof in accordance
with the payment schedule herein provided shall be deemed a material breach of
this Agreement;

     NOW, THEREFORE, in consideration of the mutual benefits to be derived
hereunder, the parties hereto agree as follows:

     1.   DEFINITIONS
          -----------

        The following terms will have the meanings assigned to them below when
used in this Agreement:

     1.1  "Affiliate" means, as to any person or entity, any other person or
entity which directly or indirectly controls, is controlled by, or is under
common control with such person or entity.  For purposes of the preceding
definition, "control" means the right to control, or actual control of, the
management of such other entity, whether by ownership of voting securities, by
agreement, or otherwise.

     1.2  "Combination Product" means any product that is comprised in part of a
Product and in part of one or more other biologically active diagnostic,
preventive or therapeutic agents which are not themselves Products (the "Other
Agents").  "Other Agents" excludes diluents and vehicles of Products.

                                     E-178

 
     1.3  "Commercial Sale" means any transfer to another person or entity
(including a distributor, wholesaler or sales agent), for value, after which
transfer the seller has no right, power or authority to determine the
transferee's resale price, if any.  A transfer by LICENSEE to an Affiliate or
Sublicensee, or a transfer among or between Affiliates and/or Sublicensees,
shall not constitute a Commercial Sale.  "Commercial Sale" does not include
distribution of free promotional samples of any Product or Combination Product
by LICENSEE or any of its Affiliates or Sublicensees in amounts determined to be
commercially reasonable by LICENSEE in the exercise of its reasonable
discretion.

     1.4  "Party" shall mean either LICENSEE or UNIVERSITY and "Parties" shall
mean both LICENSEE and UNIVERSITY.

     1.5  "Licensed Patent Rights" shall mean

     (a)  the patent(s), patent application(s) and invention disclosures set
forth in Exhibits "A-1" and "A-2" attached hereto and all patents which may
issue thereon,  Exhibit "A-1" being those exclusively owned by the UNIVERSITY
and Exhibit "A-2" being those co-owned by the UNIVERSITY and Oregon State
University, in one instance, and by the UNIVERSITY and Emory University, in
another instance;

     (b)  any patent(s) and/or patent application(s) covering any Invention or
Improvement (as defined below) made in the course of research sponsored by
LICENSEE pursuant to Paragraph 5 hereof; and

     (c)  all patent applications and/or patents (including patents which may be
issued) which are divisionals, continuations, continuations-in-part, reissues,
renewals, reexaminations, substitutions, foreign counterparts, extensions or
additions of or to the patents and/or applications or are based upon the
invention disclosures described in (a) and (b) of this Paragraph 1.5.

     1.6  "Core Technology" shall mean the technology described in the patents,
patent application(s) and invention disclosures set forth in Exhibits "A-1" and
"A-2", as the same may be expanded by Invention(s) or Improvement(s) added
thereto by operation of this Agreement.

     1.7  "Invention(s)" or "Improvement(s)" shall mean any and all discoveries,
methods, processes, compositions of matter and uses, whether or not patentable,
made by DR. VINCENT FISCHETTI and/or his laboratory colleagues, conceived and
reduced to practice during the two-year term of research which is sponsored by
LICENSEE pursuant to the provisions of Paragraph 5 of this Agreement, or any
extension of such term of research sponsored by LICENSEE, which is agreed to by
the Parties.

     1.8  "Technical Information" shall mean any and all technical data,
information, materials, trade secrets, methods, protocols, procedures,
formulations, arts and know-how, whether or not patentable, owned by or subject
to the rights of the University relating to the Core Technology during the term
of this Agreement which are determined by LICENSEE to be useful in the practice
of Licensed Patent Rights.

     1.9  "Product(s)" means any product that is covered by a Valid Claim of the
Licensed Patent Rights.  "Valid Claim", with respect to each country, means an
issued claim of any unexpired patent, or a claim of any pending patent
application that has not been held unenforceable, unpatentable or invalid by a
decision of a court or governmental body of competent jurisdiction, unappealable
or unappealed within the time allowed for appeal, which has not been rendered
unenforceable through disclaimer or otherwise, and which has not been lost
through an interference proceeding, in such country.

                                     E-179

 
     1.10  "Net Sales" means:

     (a)  with respect to Products, the gross sales price actually charged by
LICENSEE or an Affiliate or Sublicensee in the Commercial Sale of such Licensed
Product, less:

     (i)  trade, prompt payment, quantity or cash discounts, rebates, and non-
affiliated brokers' or agents' commissions, each as actually and customarily
allowed and taken;

     (ii)  amounts actually repaid or credited to customers on account of
rejections or returns of specified products on which Royalties have been paid
hereunder or on account of retroactive price reductions affecting such products;

     (iii)  customary freight and other transportation costs, including
insurance charges, and duties, tariffs, sales, use and excise taxes and other
governmental charges based directly on sales, turnover or delivery of the
specified products and actually paid or allowed by LICENSEE, an Affiliate of
LICENSEE or a Sublicensee; and

     (iv)  commercially reasonable allowances for bad debts incurred with
respect to the Products during the first full year of Commercial Sales of any
such Product, provided that such bad debt reserve shall be deemed extinguished
              --------                                                        
within 180 days of the end of such first full year, and any amount of such
reserve not actually debited in accordance with commercially reasonable
practices during that period shall be deemed to be receipts of Net Sales for all
purposes of this Agreement; and

     (b)  with respect to Combination Products, the gross sales price actually
charged by LICENSEE or an Affiliate or Sublicensee in the Commercial Sale of
such Combination Product, less the deductions set forth in subsections (a)(i) -
(iv) above, multiplied by a fraction having (i) a numerator of the gross sales
price of the Product(s) included in such Combination Product as if sold
separately or, if such sales price is not available, the fair market value of
such Product(s), and (ii) a denominator of the gross sales price of such
Combination Product, or if such sales price is not available, the sum of the
fair market values of the Other Agents and the Product(s) contained in such
Combination Product.  The "fair market value" for any Product or Other Agent
shall be determined for a quantity comparable to that included in the
Combination Product and of substantially comparable class, purity and potency,
and shall be mutually agreed to by UNIVERSITY and LICENSEE.  When no fair market
value is available, the fraction set forth above shall be changed to a fraction
having (x) a numerator of the cost to LICENSEE, its Affiliates or Sublicensees,
of the Product(s) included in such Combination Product, and (y) a denominator of
the sum of such cost plus the cost to LICENSEE, its Affiliates or Sublicensees
of the Other Agents contained in such Combination Product, provided that in no
                                                           --------           
event shall the fraction be less than (A) one-half (1/2), if only one Other
Agent is included with a Product(s) in such Combination Product, (B) one-third
(1/3), if two Other Agents are included with a Product(s) in such Combination
Product, and (C) one-quarter (1/4), if three or more Other Agents are included
with a Product(s) in such Combination Product.  "Cost" as used above means the
actual cost paid by LICENSEE, and/or it Affiliates or Sublicensees in an arm's
length transaction, if purchased, or if not purchased but actually manufactured
by any such entity, the sum of the direct manufacturing cost as determined by
such entity's internal cost accounting system consistently applied.

     1.11  "Royalty" means for any given fiscal year of LICENSEE any sum payable
to the UNIVERSITY with respect to Net Sales in such fiscal year of Products or
Combination Products by LICENSEE, its Affiliates or Sublicensees, and shall
exclude without limitation any research or development support payments,
marketing or licensing fees received by LICENSEE or any Affiliate from any third
party, any equity investments received from any person or entity whatsoever, and
all other reimbursements, advances, prepayments or

                                     E-180

 
other payments received from third parties not specifically made with respect to
sales of Products or Combination Products.

     1.12  "Sublicense"  means any agreement pursuant to which LICENSEE or an
Affiliate of LICENSEE expressly grants to any third party the right to practise
the Inventions or Improvements included within the Licensed Patent Rights for
the purpose of manufacturing a Product which has not been produced by LICENSEE
or any of its Affiliates or provided to such third party by LICENSEE or any of
its Affiliates, and specifically excludes any marketing, sales, distribution or
similar arrangement with a third party; "SUBLICENSEE" means any person or entity
which is not an Affiliate of LICENSEE and to whom a Sublicense has been granted.

     1.13  "Streptococcal A/Commensal Vaccine" means any product combining both
(a) the technology set forth in the UNIVERSITY'S patent application titled "THE
DELIVERY AND EXPRESSION OF A HYBRID SURFACE PROTEIN ON THE SURFACE OF GRAM
POSITIVE BACTERIA" and (b) the technology described in any one or more of the
following: (i) the UNIVERSITY'S patent titled "PRODUCTION OF STREPTOCOCCAL M
PROTEIN IMMUNOGENS"; (ii) the UNIVERSITY'S patent application titled
"RECOMBINANT POXVIRUS AND STREPTOCOCCAL M. PROTEIN VACCINE"; or (iii) the
UNIVERSITY'S patent application titled "SYNTHETIC PEPTIDES FROM STREPTOCOCCAL M
PROTEIN AND VACCINES PREPARED THEREFROM".

     1.14  "Territory" shall mean the entire world.

     2.   LICENSED RIGHTS GRANTED
          -----------------------

     2.1  The UNIVERSITY hereby grants to LICENSEE and its Affiliates a sole and
exclusive license, including the right to grant Royalty bearing Sublicenses
under terms consistent with this Agreement, subject only to the UNIVERSITY's
prior approval of Sublicensee selected by LICENSEE which approval shall not be
unreasonably withheld or delayed, under Licensed Patent Rights and Technical
Information, to make, have made, use, have used, sell, have sold and import
Products and Combination Products in the Territory, and to enter into marketing,
sales, distribution and similar agreements with third parties, except to the
extent that the UNIVERSITY'S right to do so may be limited

               (a)  under the provisions of 35 United States Code, Section 201,
                                                                               
                    et seq., and regulations and rules promulgated thereunder
                    -- ---                                                   
                    and implementing agreements thereof, or

               (b)  because the UNIVERSITY is only a co-owner of the the patents
                    and applications listed on Exhibit "A-2."

          2.2  The UNIVERSITY agrees that any Invention(s) or Improvement(s)
made in the course of the research sponsored by LICENSEE, pursuant to Paragraph
5 hereof, shall be disclosed promptly to LICENSEE.   The UNIVERSITY agrees that
Dr. Fischetti shall provide LICENSEE with a quarterly research progress report
within thirty (30) days of the end of each calendar quarter after the date
hereof, which reports shall disclose any such Invention(s) or Improvement(s) to
LICENSEE, and a final research report containing customary detail and summaries
within sixty (60) days following the end of the research.   Any such
Invention(s) or Improvement(s) shall automatically be added to LICENSEE'S
existing license grant under Section 2.1 hereof without the payment of any
additional consideration.  The existing license shall automatically be expanded
to cover the new Invention(s) or Improvement(s) without any further action by
either of the Parties hereto, and said Invention(s) or Improvement(s) shall
thereupon be deemed an addition to the Core Technology under this Agreement.

          2.3  If LICENSEE

               (a)  chooses not to practice any Licensed Patent Rights licensed
to it hereunder, or

                                     E-181

 
          (b)  notifies the UNIVERSITY of its intent not to add a particular new
Invention or Improvement to the existing license, the UNIVERSITY shall be free
to license the same to a third party or parties of its choosing.

          LICENSEE agrees to give the UNIVERSITY prompt Notice of any decision
not to practice Licensed Patent Rights or not to add a new Invention or
Improvement to the existing license.

          2.4  The UNIVERSITY agrees to provide LICENSEE with Technical
Information developed in DR. FISCHETTI'S laboratory at the UNIVERSITY from time
to time during the term of this Agreement.  LICENSEE shall be entitled to use
(and shall be entitled to allow its Affiliates and Sublicensees to use) such
Technical Information internally in support of development, discovery,
manufacturing and marketing efforts for sales of Licensed Products.  The
UNIVERSITY further agrees to use its good faith efforts to cause Dr. Fischetti
to promptly deliver clones or copies of the molecules, compounds, reagents or
other materials in his possession included in the Core Technology to LICENSEE
promptly from time to time upon LICENSEE'S request.

          3.   ROYALTIES AND OTHER LICENSE CONSIDERATION
               -----------------------------------------

          3.1  As further consideration for the license grant provided in
Paragraph 2.1, Licensee agrees to pay the UNIVERSITY the following amounts in
the nature of Royalties:

               (a)  Royalties on Net Sales of Products, as follows:

                    (I)  For Products or Combination Products sold, leased or
                         otherwise disposed of by LICENSEE or any of its
                         Affiliates, Royalties equal to the following:

                         (A)  For Streptococcal A/Commensal Vaccine:
                              (i)   *****/1/ of Net Sales up to *****/1/;
                              (ii)  *****/1/ of Net Sales above *****/1/ but
                                    less than *****/1/; and
                              (iii) *****/1/ of Net Sales above *****/1/.

                         (B)  For all other Products:
                              (i)   *****/1/ of Net Sales up to *****/1/;
                              (ii)  *****/1/ of Net Sales above *****/1/, but
                                    less than *****/1/;
                              (iii) *****/1/ of Net Sales above *****/1/, but
                                    less than *****/1/; and
                              (iv)  *****/1/ of Net Sales above *****/1/.

                    (II) For Products or Combination Products sold, leased or
                         otherwise disposed of pursuant to a Sublicense by the
                         Sublicensee, the Royalty received by the UNIVERSITY
                         shall be equal to *****/1/ of the Royalty received by
                         LICENSEE from such Sublicensee, but in no event shall
                         the amount of such Royalty be greater than the amount
                         the UNIVERSITY would otherwise be entitled to receive
                         if such transaction were not a Sublicense, in which
                         case the University's



_____________
1    Confidential information is omitted and identified by a * and filed
     separately with the SEC pursuant to a request for Confidential Treatment.

                                     E-182

 
                         Royalty would be a calculated as a percentage of Net
                         Sales of the Sublicensee as determined in Section
                         3.1(a)(I) above.  In addition, UNIVERSITY shall receive
                         *****/1/ of any non-royalty consideration received by
                         LICENSEE for sublicensing of technology licensed
                         hereunder.

          The obligation to pay Royalties hereunder is imposed only once with
respect to the sale, lease or disposition of any Product or Combination Product
regardless of the number of Valid Claims which cover such Product or Combination
Product.  Additionally, there shall be no obligation to pay Royalties on the
sale, lease or disposition of Products by LICENSEE or its Affiliates to any
Sublicensees for resale, but in such instances, the obligation to pay Royalties
shall arise upon the sale by any such Sublicensee to unrelated third parties.

               (b)  Milestone payments (which shall be paid only once per
               Product) as follows:

                    (i)  *****/1/ Dollars within sixty (60) days of the first
                         approved submission of an IND in any country of the
                         Territory on a Product,

                    (ii) *****/1/ Dollars within sixty (60) days of the start of
                         a Phase II clinical trial in any country of the
                         Territory,

                    (iii)  *****/1/ within sixty (60) days of the first FDA
                         approval or its equivalent in any country of the
                         Territory on a Product.

          3.2  Upon commencement of Net Sales of Products or Combination
Products which generate a Royalty to the UNIVERSITY pursuant to this Agreement,
LICENSEE shall, within sixty (60) days of the close of the calendar quarter in
which such Net Sales begin, make quarterly reports to the UNIVERSITY indicating
the total Net Sales of Products and Combination Products in the quarter and the
calculation of Royalties due thereon.  Any Royalty then due and payable shall be
included with such report.

          LICENSEE'S records shall be open to inspection by the UNIVERSITY or a
certified public accountant designated by the UNIVERSITY, at reasonable times,
and from time to time, for the sole purpose of verifying the accuracy of the
reports and the Royalty payments.  The UNIVERSITY shall bear the reasonable
costs of such inspection unless the inspection establishes an error in the
UNIVERSITY'S favor of *****/1/ or more of the amount payable for the period of
inspection.  The UNIVERSITY shall keep all reports, information, documents and
other materials received from LICENSEE under this Agreement, including the
reports made pursuant to the preceeding paragraph, confidential and the use of
such reports and information by the UNIVERSITY is strictly limited to the
enforcement of the UNIVERSITY'S rights under this Agreement.

          4.   PATENTS
               -------

          4.1  Prior Patent Expenses:  Within five (5) business days following
the execution of this Agreement, LICENSEE shall reimburse the UNIVERSITY for all
unreimbursed out-of-pocket amounts expended by the UNIVERSITY, Emory University
and Oregon State University prior to the date hereof for the preparation,
filing, prosecution and maintenance of Licensed Patent Rights being licensed to
LICENSEE pursuant to Paragraph 2.1 of this


_____________
1    Confidential information is omitted and identified by a * and filed
     separately with the SEC pursuant to a request for Confidential Treatment.

                                     E-183

 
Agreement, said amount being $*****/1/.  The UNIVERSITY will promptly reimburse
Emory University and Oregon State University for such amount that was expended
by Emory University and Oregon State University, and LICENSEE shall have no
responsibility for any amounts owed to such institutes for prior patent
expenses.

          4.2  Future Patent Expenses:  LICENSEE shall select qualified
independent patent counsel reasonably satisfactory to the UNIVERSITY to file,
prosecute and maintain all patent applications included in Licensed Patent

Rights, at the expense of LICENSEE, including divisionals, continuations,
continuations-in-part, reissues, renewals, foreign counterparts or extensions.
LICENSEE shall be entitled to determine the countries in which it wishes to
obtain and maintain patent protection under this Agreement and shall be free, at
any time and at its sole option and upon Notice to the UNIVERSITY, to abandon
patent prosecution or maintenance in any country of the Territory.

          4.3  Should Licensee decide not to finance the preparation, filing,
prosecution, or maintenance of any patent application or patent licensed
hereunder, LICENSEE will give Notice to the UNIVERSITY of such decision in
writing in adequate time to allow the UNIVERSITY, at its own cost, to effectuate
such preparation, filing, prosecution, or maintenance if it desires to do so.

          Nothing herein is intended or shall be construed as obligating the
UNIVERSITY to file or maintain any U.S. or foreign patents at its own expense,
or to defend, enforce, or support any patent or patent applications which may be
included in Licensed Patents Rights to which it has granted license rights to
LICENSEE; provided, however, that the UNIVERSITY will cooperate with LICENSEE in
its activity in applying for U.S. or foreign patents or in the defense or
enforcement of Licensed Patent Rights.

          Nothing herein is intended or shall be construed as obligating
LICENSEE to maintain its license with respect to any patent or application
licensed hereunder and to finance the preparation, filing, prosecution or
maintenance of any patent application in any country or jurisdiction in which it
believes it is not in the best business interest of LICENSEE to do so.

          4.4  LICENSEE, or any Affiliate or Sublicensee of LICENSEE, shall have
the right but not the obligation to institute patent infringement proceedings
against third parties based on any Licensed Patent Rights licensed hereunder.
The UNIVERSITY agrees to give Notice to LICENSEE promptly, in writing, of each
infringement of Licensed Patent Rights of which the UNIVERSITY is or becomes
aware during the term of this Agreement.  If LICENSEE does not institute
infringement proceedings against such third parties, the UNIVERSITY shall have
the right, but not the obligation, to institute such proceedings within thirty
(30) days after Notice of its intention to commence such proceedings shall have
been given to LICENSEE, in writing, and provided that Licensee does not, within
such thirty (30) day period, institute its own proceedings.  The expenses of
such proceedings, including lawyers' fees, shall be borne by the Party
instituting suit.  The Party instituting suit shall have the right to select
counsel to conduct the suit.  Each Party shall execute all necessary and proper
documents and take all other appropriate action, including but not limited to
being named as a participating party, to allow the other Party to institute and
prosecute such proceedings.  Any award paid by third parties as a result of such
proceedings (whether by way of settlement or otherwise) shall first be applied
toward reimbursement for the legal fees and expenses incurred, and the excess,
if any, shall be shared on a pro rata basis based on the expenses incurred by
                             --- ----                                        
each Party.


_____________
1    Confidential information is omitted and identified by a * and filed
     separately with the SEC pursuant to a request for Confidential Treatment.

                                     E-184

 
          5.  SPONSORED RESEARCH
              ------------------

          LICENSEE agrees to sponsor further research on the Core Technology by
DR. VINCENT A. FISCHETTI and his colleagues at the UNIVERSITY for a minimum
period of two (2) years at the budget level provided for in

Exhibit "B", attached hereto.  Sponsorship at this level shall continue for a
third and subsequent years thereafter unless LICENSEE gives the University a
minimum of six (6) months' notice that it does not wish to fund research for
such third or subsequent years.

          LICENSEE shall pay the budgeted amounts to the UNIVERSITY in advance
for a two (2) year period of guaranteed support, the total payment therefor, in
the amount of $*****/1/, being payable upon within five (5) business days
following the execution of this Agreement.

          6.   ACADEMIC FREEDOM
               ----------------

          The Parties recognize the traditional freedom of all scientists to
publish and present promptly the results of their research.  The Parties also
recognize that patent rights can be jeopardized by public disclosure prior to
the filing of suitable patent applications.  Therefore, the UNIVERSITY will
assure that each proposed publication concerning any technology described in
Licensed Patent Rights or Technical Information or which may constitute an
Invention or Improvement hereunder, before submission to a publisher, will be
submitted to LICENSEE for review in connection with preservation of patent
rights.  LICENSEE shall have thirty (30) days in which to review the
publication, which may be extended for an additional thirty (30) days when
LICENSEE provides substantial and reasonable need for such extension.  By mutual
agreement, this period may be further extended for not more than an additional
three (3) months.  LICENSEE will allow for simultaneous submission of the
publication to the publisher and LICENSEE, where appropriate.  Scientists acting
on behalf of both the UNIVERSITY and LICENSEE will be expected to treat matters
of authorship in a proper collaborative spirit, giving credit where it is due
and proceeding in a manner which fosters cooperation and communication.

          7.   Publicity
               ---------

          LICENSEE will not use the UNIVERSITY'S name or the name of any member
of its faculty or its staff for any public, commercial or advertising purposes
without the prior written approval of the  UNIVERSITY and faculty or staff
member involved; provided, however, that it is expressly agreed that LICENSEE
may reveal or identify the UNIVERSITY or any member of its faculty or staff as
the inventor, source or origin of any Core Technology, Technical Information or
any Product or Process for the purpose of soliciting third parties to invest or
enter into other commercial arrangements with LICENSEE, or to acquire a
Sublicense, assignment or other transfer of rights in such Core Technology from
LICENSEE and provided further that LICENSEE may use and disclose the
UNIVERSITY'S name and the name of any member of its faculty or its staff in its
internal communications or, upon prior disclosure and consultation with the
UNIVERSITY, in making any required governmental reports and filings.

          It is recognized by the Parties that at some future date, a public
offering of securities may be contemplated by LICENSEE.  The UNIVERSITY intends
to cooperate with LICENSEE in expeditiously reviewing any LICENSEE registration
statements and/or prospectuses, but wishes to reserve its rights with respect to
how its name will be used.

_____________
1    Confidential information is omitted and identified by a * and filed
     separately with the SEC pursuant to a request for Confidential Treatment.

                                     E-185

 
          8.   PRODUCT LIABILITY
               -----------------

          LICENSEE agrees to indemnify and hold harmless the UNIVERSITY (and the
UNIVERSITY'S co-owners of the Licensed Patent Rights described on Exhibit "A-2"
if Licensee obtains license right from such co-owners) and its trustees,
officers, agents, faculty, employees, and students from any and all liability
arising from injury or damage to person or property resulting directly or
indirectly from LICENSEE'S use, manufacture, or sale of any product covered by
any Licensed Patent Rights or Technical Information.  This obligation may be
delegated by the LICENSEE to assignees and/or Sublicensees of the LICENSEE'S
rights under this Agreement and may be satisfied by THE LICENSEE'S and/or its
Sublicensees or assignees obtaining and maintaining until the expiration of all
licenses granted hereunder, appropriate and available product liability
insurance for a conventional amount of coverage generally deemed appropriate in
the biotechnology or pharmaceutical industry, under which insurance the
UNIVERSITY is named as an additional insured.

          The UNIVERSITY shall promptly give the LICENSEE Notice of any claim
asserted or threatened on the basis of which the Party giving such Notice
intends to seek indemnification from LICENSEE as herein provided.

          9.   TERMINATION
               -----------

          9.1  The licenses herein granted shall continue for the full term of
any patents licensed hereunder as the same or the effectiveness thereof may be
extended by any governmental authority, rule or regulation applicable thereto;
it being understood, however, that the LICENSEE'S right to continue the practice
of then existing Technical Information shall continue as a fully paid, perpetual
license.

          9.2  The LICENSEE shall have the right to terminate any license
granted herein at any time upon ninety (90) days' prior written notice to the
UNIVERSITY.

          9.3  Either Party may terminate this Agreement in the event of a
material breach by the other Party, provided only that the breaching Party is
given Notice of the breach and a reasonable time, not to exceed thirty (30)
days, in which to cure such breach.

          9.4  The UNIVERSITY agrees that in the event of the termination of
this Agreement and of any option and/or license granted hereunder it will
continue any applicable Sublicense on the terms and conditions of such
Sublicense in effect at the time of any such termination.

          10.  DISCLAIMER
               ----------

         EXCEPT AS EXPRESSLY SET FORTH HEREIN AND WITH RESPECT TO THE OWNERSHIP
OF THE LICENSED PATENT RIGHTS, INVENTIONS, IMPROVEMENTS, AND TECHNICAL
INFORMATION, THE UNIVERSITY MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN RESPECT
OF THE CORE TECHNOLOGY, TECHNICAL INFORMATION, LICENSED PATENT RIGHT, PRODUCT OR
PROCESSES AND SPECIFICALLY DISCLAIMS ANY WARRANTY OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.

          11.   NOTICES
                -------

          Any Notice required to be given pursuant to this Agreement shall be
made by personal delivery or, if by mail, then by registered or certified mail,
return receipt requested, with postage and fees prepaid, by one Party to the
other Party at the addresses noted below, or to such other address as such Party
may designate in writing from time to time to the other Party.

                                     E-186

 
     In the case of the LICENSEE, Notice should be sent to:

                    SIGA Pharmaceuticals, Inc.
                    666 Third Avenue, 30th Floor
                    New York, NY 10017

     In the case of THE ROCKEFELLER UNIVERSITY, Notice should be sent to:
 
                    The Rockefeller University
                    1230 York Avenue
                    New York, New York  10021
                    Attention:  Office of the General Counsel

          12.  REPRESENTATION AND WARRANTIES
               -----------------------------

          The UNIVERSITY hereby represents and warrants to the LICENSEE that

               (i)  the UNIVERSITY has the right to grant the license herein
                    provided under the terms and conditions set forth herein;

               (ii) there are no encumbrances or restrictions not set forth
                    herein on its right to grant the licenses herein provided;
                    and

               (iii)  this Agreement does not conflict with or breach any other
                    agreement or understanding to which the UNIVERSITY is a
                    party.


          LICENSEE hereby represents and warrants to the UNIVERSITY that

               (i)  LICENSEE is a corporation duly organized and validly
                    existing under the laws of the State of Delaware, and

               (ii) LICENSEE will deliver to the UNIVERSITY, on an on-going
                    confidential basis, any reports or other materials provided
                    to its shareholders.

          13.  ASSIGNMENT
               ----------

          No Party hereto may assign any of its rights or obligations under this
Agreement to any third party, without the express prior written consent of the
other Party to this Agreement, which consent will not be unreasonably withheld
or delayed; provided, however, that no consent shall be necessary in the event
of (i) the sale, merger, acquisition or other business combination, or sale of
substantially all the assets, of LICENSEE or (ii) the sale of all of LICENSEE'S
rights with respect to any Product line or lines.

          14.  GOVERNING LAW
               -------------

              This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
 
          15.  FURTHER ACTION
               --------------

          At any time and from time to time, each Party agrees, without further
consideration, to take such actions and to execute and deliver such documents as
may be reasonable necessary to effectuate the purposes of this Agreement.

          16.  WAIVER
               ------

          Any Waiver by any Party of a breach of any provision of this Agreement
shall not operate as or be construed to be a waiver of any other

                                     E-187

 
breach of this provision or of any breach of any other provision of this
Agreement.  The failure of a Party to insist upon strict adherence to any term
of this Agreement on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict adherence to
that term or any other term of this Agreement.

          17.  SEVERABILITY
               ------------

          If any provision of this Agreement is invalid, illegal, or
unenforceable, the balance of this Agreement shall remain in effect, and if any
provision is inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.

          18.  COUNTERPARTS
               ------------

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

          19.  FORCE MAJEURE
               -------------

          The Parties shall not be liable in any manner for failure or delay in
fulfillment of all or part of this Agreement, directly or indirectly caused by
acts of God, governmental order or restrictions, war, war-like condition,
revolution, riot, looting, strike, lockout, fire, flood or other similar or
dissimilar causes or circumstances beyond the non-performing Party's control.
The non-performing Party shall promptly notify the other Party of the cause or
circumstance and shall recommence its performance of its obligations as soon as
practicable after the cause or circumstance ceases.

          20.  ARBITRATION.
               ----------- 

          In the event of any dispute under this Agreement, such dispute shall
be submitted to arbitration in accordance with the terms of this Section.  The
party who is alleging that a dispute exists shall send a notice of such dispute
to all other parties, which notice shall set forth in detail the dispute, the
parties involved and the position of such party with respect thereto.  Within
ten (10) business days after the delivery of such a notice, counsel for the
parties shall mutually select as an arbitrator an attorney practicing in New
York, New York, who is experienced in commercial arbitration.  If counsel for
the parties are unable to agree upon the selection of the arbitrator, an
arbitrator residing in or about New York, New York shall be selected by the New
York office of the American Arbitration Association.  The arbitrator so selected
shall schedule a hearing in New York, New York on the disputed issues within
forty-five (45) days after his/her appointment and the arbitrator shall render a
decision after the hearing, in writing, as expeditiously as is possible, which
shall be delivered to the parties.  The arbitrator shall render a decision based
on written materials supplied by the parties to the arbitration in support of
their respective oral presentations at the hearing, and no party shall be
entitled to discovery in such matter.  The parties shall supply a copy of any
written materials to be submitted to the arbitrator at least fifteen (15) days
prior to the scheduled hearing.  A default judgment may be entered against a
party who fails to appear at the arbitration hearing.  Such decision and
determination shall be final and unappealable and shall be filed as a judgment
of record in any jurisdiction designated by the successful party.  The parties
to this Agreement agree that this paragraph has been included to rapidly and
inexpensively resolve any disputes between them with respect to the matters
described above, and that this paragraph shall be grounds for dismissal of any
court action commenced by any party with respect to a dispute arising out of
such matters.  For purposes of this Section, Licensors may participate in any
arbitration either jointly or severally, in their sole discretion.

                                     E-188

 
          21.  ENTIRE UNDERSTANDING
               --------------------

          This Agreement, together with the Exhibits hereto and the concurrently
executed Agreement constitute the entire agreement between the Parties with
respect to the subject matter hereof, supersedes all prior understanding and
agreement by the Parties with respect to the subject matter hereof and may be
modified only by written instrument duly executed by each Party.

          22.  HEADING
               -------

          The headings contained herein are for the purpose of convenience only
and are not intended to define or limit the contents of such sections.

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

                                    SIGA PHARMACEUTICALS, INC.

                                    By: /s/ Judson Cooper
                                        -----------------
                                       Its: President



                                    THE ROCKEFELLER UNIVERSITY



                                    By: /s/ Frederick M. Bohm
                                     -----------------------------
                                    Its: Executive Vice President

                                     E-189

 
     The undersigned, STATE OF OREGON, acting by and through the State Board of
Higher Education on behalf of OREGON STATE UNIVERSITY, to the extent that it may
have rights in Licensed Patent Rights as defined in the attached Agreement
between THE ROCKEFELLER UNIVERSITY and the LICENSEE therein named, hereby
consents and joins in the license grant to the LICENSEE and agrees to be bound
by the term of such license grant with respect to its interest in the Licensed
Patent Rights described in Exhibit "A-2" attached to said Agreement, subject
only to the agreement of THE ROCKEFELLER UNIVERSITY to pay to the undersigned
*****/1/ of the net monies received by THE ROCKEFELLER UNIVERSITY pursuant to
Paragraph 3 thereof.

January 8, 1996                          /s/ George H. Keller
- ---------------                          --------------------------
Date                          Vice Provost for Research
                              & Int'l Programs

     THE ROCKEFELLER UNIVERSITY will promptly reimburse OREGON STATE UNIVERSITY
its share of the patent expenses paid to THE ROCKEFELLER UNIVERSITY pursuant to
paragraph 4.1 hereof.  Additionally, and in consideration of OREGON STATE
UNIVERSITY'S joining in the license grant as above provided, THE ROCKEFELLER
UNIVERSITY agrees to pay to OREGON STATE UNIVERSITY *****/1/ of the net monies
received by THE ROCKEFELLER UNIVERSITY pursuant to Paragraph 3 thereof.

                                      THE ROCKEFELLER UNIVERSITY

                                      By /s/ Frederick M. Bohm
                                      ---------------------------
                                      Executive Vice President



_____________
1    Confidential information is omitted and identified by a * and filed
     separately with the SEC pursuant to a request for Confidential Treatment.

                                     E-190

 
     The undersigned, EMORY UNIVERSITY, to the extent that it may have rights in
the attached Agreement between THE ROCKEFELLER UNIVERSITY and the LICENSEE
therein named, hereby consents and joins in the license grant to the LICENSEE
and agrees to be bound by the terms of the license grant with respect to its
interest in the Licensed Patent Rights described in Exhibit "A-2" attached to
said Agreement subject only to the agreement of THE ROCKEFELLER UNIVERSITY to
pay to the undersigned *****/1/ of the net monies received by THE ROCKEFELLER
UNIVERSITY pursuant to Paragraph 3 thereof.

                                              EMORY UNIVERSITY

                                              By /s/ John L. Singer
                                                 ------------------

                                         January 31, 1996
                                         ----------------
                                         Date


     THE ROCKEFELLER UNIVERSITY will promptly reimburse EMORY UNIVERSITY its
share of the patent expenses paid to THE ROCKEFELLER UNIVERSITY pursuant to
Paragraph 4.1 hereof.  Additionally, and in consideration of EMORY UNIVERSITY'S
joining in the license grant as above provided, THE ROCKEFELLER UNIVERSITY
agrees to pay to EMORY UNIVERSITY *****/1/ of the net monies received by THE
ROCKEFELLER UNIVERSITY pursuant to Paragraph 3 thereof.

                              THE ROCKEFELLER UNIVERSITY

                              By /s/ Frederick M. Bohm
                                 ------------------------
                                 Executive Vice President



_____________
1    Confidential information is omitted and identified by a * and filed
     separately with the SEC pursuant to a request for Confidential Treatment.

                                     E-191

 
                                  EXHIBIT A-1

The Rockefeller University's Docket:  102
Title:    "SYNTHETIC PEPTIDES FROM STREPTOCOCCAL M PROTEIN AND VACCINES PREPARED
- ------    ----------------------------------------------------------------------
          THEREFROM"
          ----------
U.S. Patent No.:
Issue Date:
Serial No.:    08/369,295
Filing Date:   January 6, 1995
Corresponding patent applications and patents in:
                              Australia
                              Canada
                              Japan
                              Europe:    Austria
                                         Belgium
                                         Switzerland/Liechtenstein
                                         Germany
                                         France
                                         Great Britain
                                         Luxembourg
                                         Netherlands
                                         Sweden

                                     E-192

 
The Rockefeller University's Docket:  129
Title:    "RECOMBINANT POXVIRUS AND STREPTOCOCCAL M. PROTEIN VACCINE"
U.S. Patent No.:
Issue Date:
Serial No.:    08/205,348
Filing Date:   March 3, 1994
Corresponding patent applications and patents in:
                              Australia
                              Canada
                              Japan
                              Europe:    Austria
                                         Belgium
                                         Switzerland/Liechtenstein
                                         Denmark
                                         Germany
                                         France
                                         Great Britain
                                         Italy
                                         Luxembourg
                                         Netherlands
                                         Spain
                                         Sweden

                                     E-193

 
The Rockefeller University's Docket:  180 CIP
Title: "THE DELIVERY AND EXPRESSION OF A HYBRID SURFACE PROTEIN ON THE
       SURFACE OF GRAM POSITIVE BACTERIA"
U.S. Patent No.:
Issue Date:
Serial No.:                           08/302,756
Filing Date:                          March 7, 1995
Foreign Filing:                       PCT Application No. PCT/US93/02355
 
The Rockefeller University's Docket:  180
U.S. Patent No.:  "A POLYPEPTIDE OF A HYBRID SURFACE PROTEIN"
Issue Date:
Serial No.:    08/280,390
Filing Date:   July 26, 1994
No Foreign Filing

                                     E-194

 
The Rockefeller University's Docket:  234
Title: "MULTIFUNCTIONAL SURFACE PROTEIN OF STREPTOCOCCI
Serial No.:          08/217,008
Filing Date:         March 23, 1994
Foreign Filing:      PCT Application No. PCT/US93/00082
 
The Rockefeller University's Docket:  266
Title:               "SURFACE PROTEIN OF STAPHYLOCOCCUS AUREUS"
Serial No.           08/254,968
Filing Date:         June 7, 1994
Foreign Filing:      PCT Application No. PCT/US95/07100
 
The Rockefeller University's Docket:  267
Title:               "REGULATION OF EXOPROTEIN IN STAPHYLOCOCCUS AUREUS"
Serial No.:          08/248,505
Filing Date:         May 24, 1994
No Foreign Filing
 
The Rockefeller University's Docket:  299
Title:               "ENZYME FOR CLEAVAGE OF THE ANCHOR REGION OF SURFACE
 PROTEINS FROM THE SURFACE OF GRAM-POSITIVE BACTERIA"
Serial No.:          08/319,540
Filing Date:         October 7, 1994
Foreign Filing:      PCT Application pending

                                     E-195

 
The Rockefeller University's Docket 264
Title:               "GENE SERUM OPACITY FACTOR"
U.S. Patent No:
Serial No:           08/115,227
Filing Date:         September 1, 1993
Foreign Filing:      PCT/ US94/09926
 
The Rockefeller University's Docket:  RU 326
Title:          "A BACTERIAL PLASMIN BINDING PROTEIN AND METHODS OF USE THEREOF"
Serial Number:  Not Assigned
Filing Date:    September 17, 1996

                                     E-196

 
                                  EXHIBIT A-2
The Rockefeller University's Docket:  29
Title:            "PRODUCTION OF STREPTOCOCCAL M PROTEIN IMMUNOGENS"
U.S. Patent No.:  4,784, 948
Issue Date:       November 15, 1994
Serial No.:       821,716
Filing Date:      June 18, 1984
Corresponding patent applications and patents in:
                              Australia
                              Canada
                              Japan
                              Europe:    Austria
                                         Belgium
                                         Switzerland/Liechtenstein
                                         Denmark
                                         Germany
                                         France
                                         Great Britain
                                         Luxembourg
                                         Netherlands
                                         Sweden

Divisional applications Nos. 08/200,914 filed February 22, 1994

                                     E-197

 
                                   EXHIBIT B

VINCENT A. FISCHETTI LABORATORY:

The following is a brief outline of some of the research that is in progress in
my lab and their future directions based on these outgoing studies.

CURRENT AND FUTURE PROJECTS:

1.  STREPTOCOCCAL VACCINE:  Having made a construction in which the
Streptococcus gordonii expresses the conserved region of the M protein on its
surface, we are performing safety studies to determine if cross-reactive
antibodies are generated to this region.  So far we found that there are no
cross-reactive antibodies produced in serum and saliva of rabbits or mice
colonized with these recombinant organisms, while antigen-specific antibodies
are present in both compartments.  We are now preparing purified protein of the
conserved region from our clone to immunize rabbits with adjuvant to determine
if cross-reactive antibodies are produced by this route.

FUTURE:  Using our mouse challenge model, we will test our current construct for
protection against streptococcal colonization.  In preliminary experiments with
a small number of animals we observed protection to the same levels as were seen
with the vaccinia virus vector system.  We are planning similar experiments
using a larger number of animals.

2.  COMMENSAL VECTOR:  We are in the process of preparing a new construct for
the streptococcal vaccine (second generation).  This construct consists of
multiple repeats of the C-repeat region to see if it increases immunogenicity.
We have completed part of the construct in collaboration with Dr. Hruby at OSU
and it will take a few more months to complete.

FUTURE:  Once the construct is complete in Dr. Hruby's laboratory, we will test
it in our lab using our streptococcal challenge assay in mice.  We also plan to
prepare other constructs in S. Gordonii to validate our patent claims.  These
will include enzymes as well as molecules that have had their anchors modified
for secretion.  The former will be tested for enzyme activity and the later in
an animal model for tolerance.  We have also (in collaboration with group in
France)  created vectors for vaginal delivery of antigens.  Lactobacillus and
lactococci have now been engineered to deliver foreign antigens to this site.
We will now expand this to develop the system for the delivery of vaginal-
specific antigens (GP120/160 and gonococcal antigens).  In addition, we will
determine if more that one antigen may be delivered and expressed on the
gordonii surface.  We will engineer regions on the chromosome of the gordonii to
express both the M protein and the SDH molecule.

3.  STAPHYLOCOCCAL FIBRINOGEN BINDING PROTEIN:  We are currently in the process
of purifying the fibrinogen binding protein from our E. coli clone.

FUTURE:  Once purified and sufficient quantities have been obtained, we will
prepare monoclonal and polyclonal antibodies and perform blocking experiments
both in vitro and in vivo.  Since this protein is important in staphylococcal
colonization of implanted medical devices and catheters, this information will
allow us to evaluate its potential as a staphylococcal vaccine.

4.  NEW ANTIBIOTIC TARGET FOR GRAM-POSITIVE BACTERIA:  Studies to find a new
antibiotic against a Gram-positive bacteria, based on our identification of a
new target, is poised and ready to begin.  We have isolated the enzyme
responsible for this attachment and have developed a rapid assay to test for
inhibitors.  The chance of success will depend on the number of compounds that
can be screened.  Contractual arrangements will need to be made with
pharmaceutical or independent companies to supply the compounds to be screened.

                                     E-198

 
FUTURE:  We will purify the enzyme to determine its sequence in  order to clone
its gene.  This will enable us to perform computer docking experiments to
identify compounds by rational drug design.  Our long-term goal is to further
identify the complete attachment mechanism for surface proteins in hopes to
uncover other targets.

5.  SERUM OPACITY FACTOR:  The serum opacity factor (SOF) is a group A
                               -     -       -                        
streptococcal protein that induces opacity of mammalian serum.  Our studies have
shown that the molecule is a surface enzyme that has the specificity to cleave
apolipoprotein A1 (ApoA1) of HDL.  We have cloned and sequenced the molecule and
have prepared ApoA1 knockout mice for our future studies.

FUTURE:  Because SOF may be used as an diagnostic assay for HDL, studies to
localize its activity will help in the development of the assay.  Purified SOF
will be used to cleave ApoA1 and the cleavage products examined by physical and
chemical techniques to determine the site of cleavage.  We will try to establish
the biological importance of SOF in mice by injecting them with purified SOF and
examining its effects.  Since serum from ApoA1 knockout mice does not become
opaque after treatment with SOF, these animals will serve as controls.

                                     E-199

 
                                   AMENDMENT
                   TO LICENSE AND RESEARCH SUPPORT AGREEMENT
                 BETWEEN THE COMPANY AND ROCKEFELLER UNIVERSITY


                                   AMENDMENT
                                   ---------

          THIS AMENDMENT is effective as of October 1, 1996 by and between SIGA
PHARMACEUTICALS, INC. ("SIGA") and THE ROCKEFELLER UNIVERSITY ("ROCKEFELLER").

          WHEREAS, SIGA and ROCKEFELLER have entered into a License Agreement
(the "Agreement") dated February 1, 1996; and

          WHEREAS, the Parties desire to further amend the Agreement to add a
technology relating to Bacterial Plasmin Binding Protein.

          NOW THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the Parties hereby agree as follows:

          1.   Exhibit A-1 to the Agreement shall be amended to add the
               following patent application:

                    The Rockefeller University's Docket:     RU-326
                    Title:          "A Bacterial Plasmin Binding Protein and
                                    Methods of Use Thereof"
                    Serial No.:     Not Assigned
                    Filing Date:         September 17, 1996

          2.   In all other aspects, the Agreement shall remain unchanged and in
               full force and effect.

          IN WITNESS WHEREOF, the Parties have executed this amendment to the
Agreement.


THE ROCKEFELLER UNIVERSITY          SIGA PHARMACEUTICALS, INC.


By:/s/ William H. Griesar           By:/s/ Joshua D. Schein
   ----------------------              --------------------

Name:  William H. Griesar,          Name:  Joshua D. Schein,
       Vice President & General            Vice President & Chief 
       Counsel                             Financial Officer

Date:  September 27, 1996           Date:  October 15, 1996

                                     E-200


 
                                                                   EXHIBIT 10(b)

                                     E-201

 
          RESEARCH AGREEMENT BETWEEN THE COMPANY AND EMORY UNIVERSITY


                               RESEARCH AGREEMENT
                               ------------------

     RESEARCH GRANT made as of the 31st day of January, 1996 by and between SIGA
                                   ----                                         
Pharmaceuticals, Inc., a corporation organized and existing under the laws of
the State of Delaware, having an office at 666 Third Avenue, 30th Floor, New
York, New York 10017 ("Grantor") and Emory University, a nonprofit corporation
organized and existing under the laws of the State of Georgia with principal
offices located at 1380 South Oxford Road, Atlanta, Georgia 30322 ("Emory").

                                   WITNESSETH
                                   ----------

     WHEREAS, Dr. June R. Scott, a member of the faculty of Emory, and her
laboratory colleagues are engaged in microbiology research particularly as it
relates to the control of infectious diseases; and

     WHEREAS, Grantor wishes to provide funding for this research in return for
a right of first refusal to acquire commercial rights to any technology arising
from such research sponsored hereunder.

     NOW, THEREFORE, in consideration of the mutual benefits to be derived, the
parties agree as follows:

1.   DEFINITIONS.   The following terms shall have the meaning assigned to them
     -----------                                                               
below when used in this Agreement:

     1.1  "Party" shall mean either Emory or Grantor and "Parties" shall mean
both Emory and Grantor.

     1.2  "Sponsored Research Invention" shall mean any and all discoveries,
whether patentable or not made by Dr. June R. Scott and/or her laboratory
colleagues who are employees or otherwise under the control of Emory pursuant to
research funded by Grantor.

     1.3  "Field" shall mean any aspect of microbiological research particularly
as it relates to the control of infectious diseases which Dr. Scott selects as
research to be sponsored by Grantor including, but not limited to recombinant
DNA Technology, immunological techniques and vaccines.

2.   SPONSORED RESEARCH GRANT.
     ------------------------ 

     2.1  Grantor agrees to provide Emory with funding to sponsor research in
the Field in the total amount of *****/1/ dollars.

     2.2  Payment shall be made in semi-annual installments of *****/1/ dollars
with the initial payment made upon execution of this Agreement.

     2.3  Payments shall be sent to:

               Susan Eckert
               Department Administrator
               Emory University
               Microbiology/Immunology Department
               1510 Clifton Road, Ste. 3001
               Atlanta, Georgia 30322

     2.4  Emory shall retain title to any equipment purchased with funds
provided by Grantor under this Agreement.

_____________
1    Confidential information is omitted and identified by a ***** and filed
     separately with the SEC pursuant to a request for Confidential Treatment.

                                     E-202

 
3.   RIGHTS TO SPONSORED RESEARCH INVENTIONS.  Subject to Grantor's compliance
     ---------------------------------------                                  
with all the terms of this Agreement, Emory hereby grants Grantor a right of
first refusal to acquire an exclusive license for the manufacture, sale and use
of any invention disclosed to Grantor hereunder.  The license shall include
terms which require Grantor to reimburse Emory for all expenses incurred in
obtaining patent prosecution for any licensed technology and shall further
require Grantor to defend, hold harmless, and indemnify Emory against all claims
or damages arising from the commercial exploitation of any licensed technology,
provided that such requirement may be satisfied by obtaining appropriate
liability insurance for a conventional amount of coverage under which insurance
Emory is made an insured or co-insured.  The license agreement shall include
reasonable fees and royalty payments in accordance with industry standards.  The
license shall further include terms and conditions typically found in license
agreements entered into between universities and biotechnology or pharmaceutical
companies involving similar technology.  All such remaining terms and conditions
shall be negotiated in good faith by Emory and Grantor.  The term of Grantor's
right of first refusal respecting any disclosed invention shall commence upon
the date of this Agreement and terminate six (6) months after such invention is
disclosed to Grantor.

4.   PUBLICITY.  Neither party shall use the name of the other in any form of
     ---------                                                               
advertising or promotion without the prior written approval of the other;
provided, however, that it is expressly agreed that Grantor may reveal or
identify the Emory or any member of its faculty or staff as the inventor, source
or origin of any technology, technical information or any product or process
arising from the Research for the purpose of soliciting third parties to invest
or enter into other commercial arrangements with Grantor, or to acquire a
sublicense, assignment or other transfer of rights in such technology from
Grantor and provided that Grantor may use and disclose Emory's name and the name
of any member of its faculty or its staff in its internal communications or,
upon prior disclosure and consultation with Emory, in making any required
governmental reports and filings.  In addition, the parties may acknowledge
Grantor's support for, and the nature of, the investigations being pursued under
this Agreement.  In any such statement, the relationship of the parties shall be
accurately and appropriately described.

5.   ACADEMIC FREEDOM. Emory and Grantor recognize the traditional freedom of
     ----------------                                                        
all scientists to publish and present promptly the results of their research.
Emory and Grantor also recognize that patent rights can be jeopardized by public
disclosure prior to the filing of suitable patent applications.  Therefore,
Emory will assure that each proposed publication, before submission to a
publisher, will be submitted to Grantor for review in connection with
preservation of patent rights.  Grantor shall have thirty (30) days in which to
review the publication, which may be extended for an additional thirty (30) days
when Grantor provides substantial and reasonable need for such extension.  This
period may be further extended by mutual agreement for not more than an
additional three (3) months.  Grantor will allow for simultaneous submission of
the publication to the publisher and Grantor where appropriate.

6.   TECHNICAL REPRESENTATIVES.  Grantor's Technical Representatives shall be
     -------------------------                                               
Joshua D. Schein, Ph.D., or other such representative as Grantor my subsequently
designate in writing.

7.   CONSULTATION WITH GRANTOR'S REPRESENTATIVES.  During the period of this
     -------------------------------------------                            
Agreement, Grantor's Technical Representative and other representatives will
have reasonable access to visit and consult informally with Dr. Scott regarding
the sponsored research both personally and by telephone.  Access to work carried
on in Emory laboratories in the course of the sponsored research shall be
entirely under the control of Emory personnel; Grantor's representatives shall
be permitted to visit such laboratories only during usual hours of operation as
is mutually agreeable.

                                     E-203

 
8.   CONFIDENTIALITY.
     --------------- 

     8.1  During the term of this Agreement, Grantor my provide Emory with
information and materials to be used in the performance of sponsored research
hereunder; including but not limited to, data, drawings, models, processes,
trade secrets and devices which Grantor requires its employees to hole in
confidence (hereinafter referred to as "Proprietary Information").

     8.2  Emory shall use reasonable care to hold in confidence, Grantor
Proprietary Information, if such information is provided to Emory in writing and
marked as proprietary or confidential.  If it is not feasible for Grantor to
initially disclose such information in writing, Grantor shall reduce such
information to writing and provide Emory with a copy of it, marked as
proprietary and confidential, within thirty (30) days of the initial disclosure.
Emory shall not disclose any Proprietary Information to any third party, nor use
the same for its own benefit, nor permit its use for the benefit of others
without the prior written consent of Grantor.

     8.3  The obligations of confidentiality assumed by Emory hereunder shall
not apply to any information: (i) that was known by Emory before disclosure to
Emory by Grantor as evidenced by prior written records,  (ii) which becomes part
of the public domain through no fault of Emory,  (iii) which was obtained by
Emory from a third party under no obligation to Grantor not to disclose the
information, (iv) which is developed by Emory independently of disclosures made
hereunder, and (v) which is required to be disclosed by law;

     8.4  Emory's obligations of confidentiality with respect to Proprietary
Information shall continue for a period of three (3) years from the date of this
Agreement.

9.   SPONSORED RESEARCH INVENTIONS.
     ----------------------------- 

     9.1  All right and title to Sponsored Research Inventions shall belong to
Emory and shall be subject of the terms and conditions of this Agreement.

     9.2  Emory shall promptly and fully disclose to Grantor any Sponsored
Research Inventions conceived or made during the sponsored research.  Within
sixty (60) days of such disclosure, Grantor shall notify Emory in writing if it
wants Emory to pursue patent protection for such Sponsored Research Inventions.
Emory shall promptly prepare, file, and prosecute any U.S. or foreign
applications requested by Grantor to protect such Sponsor's Research Inventions.
Grantor shall bear all costs incurred in connection with such preparation,
filing, prosecution, and maintenance of U.S. foreign application(s).  Grantor
shall cooperate with Emory to assure that such application(s) will cover, to the
best of Grantor's knowledge, all items of commercial interest and importance.
Emory shall be primarily responsible for making decisions regarding the scope
and content of such patent application(s) and the prosecution thereof.  Grantor
shall be given an opportunity to review and comment upon such patent
application(s).  Emory shall keep Grantor advised as to all developments with
respect to such application(s) and shall promptly supply Grantor with copies of
all papers received and filed in connection with the prosecution thereof in
sufficient time for Grantor to comment thereon.

     9.3  If Grantor elects not to request that Emory prepare and file a patent
application covering any Sponsored Research Inventions disclosed to Grantor or
if Grantor decides to discontinue the financial support of the prosecution or
maintenance of any patent applications on patents covering such disclosed
Sponsored Research Inventions, Emory shall be free to file, prosecute or
maintain any patents covering such Sponsored Research Inventions and such
Sponsored Research Inventions shall not be subject to Section 3 hereof.

                                     E-204

 
10.  DATA AND RESULTS OF RESEARCH.  Emory shall retain ownership of any data
     ----------------------------                                           
which results from this study.  Emory shall, within the bounds of legal
requirements, make such data available for review and copying by Grantor.

11.  TERM AND TERMINATION.
     -------------------- 

     11.1 This Agreement shall become effective upon the date first hereinabove
written and, except for the provisions of Section 3,4,8,9 and 13, shall continue
in effect for two calendar years unless sooner terminated in accordance with the
provisions of this Section 9.

     11.2 If either Party commits any breach or defaults upon any of the terms
or conditions of this Agreement, and fails to remedy such default or breach
within ninety (90) days after receipt of Notice thereof from the other Party,
the Party giving Notice may, at its option and in addition to any other remedies
which it may have at law or in equity, terminate this Agreement by sending such
effect, and such termination shall be effective as of the date of the receipt of
such Notice.

12.  INDEPENDENT CONTRACTOR.  In the performance of all services hereunder:
     ----------------------                                                

     12.1 Emory shall be deemed to be and shall be an independent contractor,
and as such, Emory shall not be entitled to any benefits applicable to employees
of Grantor;

     12.2 Neither Party is authorized or empowered to act as agent for the other
for any purpose and shall not on behalf of the other into any contract,
warranty, or representation as to any matter.

     12.3 Neither Party shall be bound by the acts or conduct of the other
party.

13.  GOVERNING LAW.  This Agreement shall be governed and construed in
     -------------                                                    
accordance with the laws of the State of Georgia.

14.  REPORTS.  Dr. Scott shall provide Grantor with semi-annual oral reports and
     -------                                                                    
a written annual report summarizing the research conducted pursuant to this
Grant.

15.  NOTICES.  Any Notice required under this Agreement shall be given by
     -------                                                             
certified mail, return receipt requested, to the Parties at the addresses shown
below, or to such other addresses as to which the Parties shall, hereinafter,
give Notice as provided herein.

               Grantor:  SIGA Pharmaceuticals, Inc.
               -------                             
                         c/o CSO Ventures LLC
                         666 Third Avenue
                         30th Floor
                         New York, NY 10017

               Emory:    Susan Eckert
               -----                 
                         Department Administrator
                         3001 Rollins Research Building
                         1510 Clifton Road, N.E.
                         Atlanta, GA 30322

                         with copy to:
                         ------------ 
                         Vincent La Terza
                         Director of Licensing and Patent Counsel
                         2009 Ridgewood Drive
                         Atlanta, GA 30322

16.  AGREEMENT MODIFICATION.  Any agreement to change the terms of this
     ----------------------                                            
agreement in any way, shall be valid only if the change is made in a written
document, signed by authorized representatives of the parties.

                                     E-205

 
17.  ASSIGNMENT:  This Agreement may not be assigned by either Party without the
     ----------                                                                 
prior written approval of the other Party.

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


EMORY UNIVERSITY                    SIGA PHARMACEUTICALS, INC.
By:  /s/ Joseuif U. Choeks          By:  /s/ Joshua D. Schein
     ---------------------               --------------------
Name:  Joseuif U. Choeks            Name:  Joshua D. Schein
Title:  V.P. & General Counsel      Title: Chief Financial Officer
Date:  2/13/96                      Date:  1/31/96

                                     E-206


 
                                                                   EXHIBIT 10(c)

                                     E-207

 
   RESEARCH SUPPORT AGREEMENT BETWEEN THE COMPANY AND OREGON STATE UNIVERSITY


                                 RESEARCH SUPPORT AGREEMENT

          This AGREEMENT (this "Agreement") is made as of the 31st day of
January, 1996 by and between SIGA PHARMACEUTICALS, INC. ("Sponsor"), a
corporation organized and existing under the laws of the State of Delaware,
having an office at 666 Third Avenue, 30th Floor, New York, New York, 10017 and
the STATE OF OREGON, Acting by and through the STATE BOARD OF HIGHER EDUCATION
on behalf of OREGON STATE UNIVERSITY, an institution of higher education in the
State of Oregon located at Corvallis, Oregon ("University").

I.  Scope of Work
    -------------

     Sponsor grants to University and University accepts support for basic
     research investigations under the direction of Dennis Hruby, Ph.D. as
     described in the attached Statement of Work (Attachment A) and Budget
     (Attachment B).

II.  Compensation
     ------------

     In consideration of University's exerting its good faith efforts to carry
     out the research described in Attachment A ("Research"), pursuant to the
     budget described in Attachment B, Sponsor will pay University *****/1/
     dollars.  Sponsor will pay University one-quarter of the amount for the
     first year upon the execution of this Agreement, and the remaining payments
     will be made at three-month intervals in advance.  Checks should be made
     payable to "Oregon State University" and should identify the Sponsor and
     the Principal Investigator and be sent to the address set forth for
     University in Paragraph 16.  University shall not be obligated to expend
     funds (except with respect to general overhead and administration, which
     expenses University shall bear), and Sponsor shall not be obligated to
     reimburse University for funds in excess of those provided under this
     Agreement to conduct the Research.

III. Period of Performance
     ---------------------

     Unless sooner terminated under Paragraph 21, research under this Agreement
     will be performed during the two-year period beginning on the date of this
     Agreement.  Sponsorship shall continue at the same level as set forth in
     Paragraph 2 for a third and subsequent years thereafter unless Sponsor
     gives the University a minimum of six (6) months notice that it does not
     wish to fund research for such third and subsequent years.

IV.  Technical Representatives
     -------------------------

     Sponsor's Technical Representative shall be Joshua D. Schein, Ph.D., or
     other such representative as Sponsor may subsequently designate in writing.
     University's Principal Investigator shall be Dennis Hruby, Ph.D., who shall
     be responsible for the direction and conduct of the Research.

V.   Consultation with Sponsor's Representatives
     -------------------------------------------

     During the period of this Agreement, Sponsor's Technical Representative and
     other representatives will have reasonable access to visit and consult
     informally with University's Principal Investigator regarding the Research
     both personally and by telephone.  Access to work carried on in University
     laboratories in the course of the Research shall be entirely under the
     control of University personnel; Sponsor's representatives shall be
     permitted to visit such laboratories only during usual hours of operation
     as is mutually agreeable.



_____________
1    Confidential information is omitted and identified by a ***** and filed
          separately with the SEC pursuant to a request for Confidential
          Treatment.

                                     E-208

 
VI.  Technical Reports
     -----------------

     The Principal Investigator shall make quarterly oral reports and a
     detailed, written annual report regarding the Research to Sponsor's
     Technical Representative.  Within sixty (60) days after the expiration of
     this Agreement, the Principal Investigator shall submit a comprehensive
     written final report to Sponsor.

VII. Publicity
     ---------

     Neither party shall use the name of the other in any form of advertising or
     promotion without the prior written approval of the other; provided,
     however, that it is expressly agreed that Sponsor may reveal or identify
     the University or any member of its faculty or staff as the inventor,
     source or origin of any technology, technical information or any product or
     process arising from the Research for the purpose of soliciting third
     parties to invest or enter into other commercial arrangements with Sponsor,
     or to acquire a sublicense, assignment or other transfer of rights in such
     technology from Sponsor and provided further that Sponsor may use and
     disclose the University's name and the name of any member of its faculty or
     its staff in its internal communications or, upon prior disclosure and
     consultation with the University, in making any required governmental
     reports and filings.  In addition, the parties may acknowledge Sponsor's
     support for, and the nature of, the investigations being pursued under this
     Agreement.  In any such statement, the relationship of the parties shall be
     accurately and appropriately described.

VIII.  Publication
       -----------

     The Parties recognize the traditional freedom of all scientists to publish
     and present promptly the results of their research.  The Parties also
     recognize that patent rights can be jeopardized by public disclosure prior
     to the filing of suitable patent applications.  Therefore, the University
     will assure that each proposed publication concerning the Research, whether
     oral or written, before submission to a publisher (or other entity), will
     be submitted to Sponsor for review in connection with preservation of
     patent rights.   Sponsor shall have thirty (30) days in which to review the
     publication, which may be extended for an additional thirty (30) days when
     Sponsor provides University with a reasonable need for such extension.  By
     mutual agreement, this period may be further extended for not more than an
     additional three (3) months.   Sponsor will allow for simultaneous
     submission of the publication to the publisher (or other entity) and
     Sponsor, where appropriate.  All employees of the University and persons
     otherwise acting on behalf of both the University and Sponsor will be
     expected to treat matters of authorship in a proper collaborative spirit,
     giving credit where it is due and proceeding in a manner which fosters
     cooperation and communication.

                                     E-209

 
IX.  Intellectual Property and Patent Rights
     ---------------------------------------

     All rights in inventions, discoveries, biological material or software
     created in the course of the Research (collectively, the "Inventions")
     shall be assigned to and the property of the University.  University agrees
     to license any such Inventions to Sponsor according to the terms set forth
     in Paragraph 10.  University shall promptly report in writing to Sponsor
     the existence and nature of any Inventions.  Sponsor shall select qualified
     independent patent counsel, subject to the approval of the University, to
     file, prosecute and maintain all patent applications arising from the
     Research, at the expense of Sponsor, including divisionals, continuations.
     continuations-in-part, reissues, renewals, foreign counterparts or
     extensions.  Sponsor shall be entitled to determine the countries in which
     it wishes to obtain and maintain patent protection under this Agreement, if
     any, and shall be free, at any time and at its sole option and upon notice
     to the University, to abandon patent prosecution or maintenance in any
     country.  Should Sponsor decide not to finance the preparation, filing,
     prosecution, or maintenance of any patent application Sponsor will give
     notice to the University of such decision in writing in adequate time to
     allow the University, at its own cost, to effectuate such preparation,
     filing, prosecution, or maintenance if it desires to do so.  University
     agrees to cooperate with Sponsor in its activity in applying for U.S. or
     foreign patents or in the defense or enforcement of any patent rights, and
     will cause University's employees to execute and deliver to Sponsor such
     documents and instruments as Sponsor may request in order to assist Sponsor
     in the preparation, filing, prosecution or maintenance of any patent
     application.  Nothing herein is intended or shall be construed as
     obligating Sponsor to finance the preparation, filing, prosecution or
     maintenance of any patent application in any country or jurisdiction in
     which it believes it is not in the best business interest of Sponsor to do
     so.

X.   Royalties
     ---------

     As consideration for the license of rights to Inventions provided in
     Paragraph 9, for any Invention which is not related to the "Core
     Technology," as defined in the License and Research Support Agreement
     between Sponsor and The Rockefeller University (the "Rockefeller
     Agreement"), Sponsor agrees to pay the University royalties on the same
     basis and at the same rates as royalties are paid under Paragraph 3 of the
     Rockefeller Agreement; provided, however, that the aggregate amount of
                            --------  -------                              
     royalties paid by Sponsor shall not be greater than the amount of royalties
     Sponsor is obligated to pay under Paragraph 3 of the Rockefeller Agreement.
     For any Invention related to the Core Technology, Sponsor shall pay
     royalties as set forth in Paragraph 3 of the Rockefeller Agreement.

XI.  Confidentiality
     ---------------

     Subject only to publication rights set forth in Paragraph 8 and to the
     limitations and conditions of the Oregon Public Records Law, University
     represents that University and its employees, faculty and students are
     obligated to keep all information concerning the Research confidential and
     agrees that University and its employees, faculty and students will not
     disclose any information related to the Research to any third party without
     the express written consent of Sponsor.

XII. Product Liability
     -----------------

     Sponsor agrees to indemnify and hold harmless the University and its
     trustees, officers, agents, faculty, employees, and students from any and
     all liability arising from injury or damage to person or property resulting
     directly or indirectly from any product liability claims relating to
     products based on the Research unless such claim is due solely to the
     negligence of University.  This obligation may be delegated by the Sponsor
     to assignees of the Sponsor's rights under this Agreement and may be
     satisfied by the Sponsor's or its assignees

                                     E-210

 
     obtaining and maintaining appropriate and available product liability
     insurance for a conventional amount of coverage generally deemed
     appropriate in the biotechnology or pharmaceutical industry, under which
     insurance the University is named as an additional insured.  The University
     shall promptly give the Sponsor notice of any claim asserted or threatened
     on the basis of which the party giving such notice intends to seek
     indemnification from Sponsor as herein provided.

XIII.  Warranties
       ----------

     UNIVERSITY MAKES NO WARRANTIES, EXPRESS OR IMPLIED, AS TO ANY MATTER
     WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE CONDITION, ORIGINALITY OR
     ACCURACY OF THE RESEARCH OR ANY INVENTION(S) OR PRODUCT(S), WHETHER
     TANGIBLE OR INTANGIBLE, CONCEIVED, DISCOVERED, OR DEVELOPED UNDER THIS
     AGREEMENT; OR THE OWNERSHIP, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR
     PURPOSE OF THE RESEARCH OR ANY SUCH INVENTION OR PRODUCT.  UNIVERSITY SHALL
     NOT BE LIABLE FOR ANY DIRECT, CONSEQUENTIAL, OR OTHER DAMAGES SUFFERED BY
     SPONSOR, ANY LICENSEE, OR ANY OTHERS RESULTING FROM THE USE OF THE RESEARCH
     OR ANY SUCH INVENTION OR PRODUCT.

XIV. Independent Contractor
     ----------------------

     For the purposes of this Agreement and all services to be provided
     hereunder, each party shall be, and shall be deemed to be, an independent
     contractor and not an agent or employee of the other party.  Neither party
     shall have authority to make any statements, representations or commitments
     or any kind, or to take any action, which shall be binding on the other
     party, except as may be explicitly provided for herein or authorized by the
     other party in writing.

XV.  Assignment
     ----------
     Neither party may assign this Agreement without the prior written consent
     of the other party.  Any and all assignments not made in accordance with
     this section shall be void.

XVI. Notices
     -------

     Any notice required to be given pursuant to this Agreement shall be made by
     personal delivery or, if by mail, then by registered or certified mail,
     return receipt requested, with postage and fees prepaid, by one party to
     the other party at the addresses noted below, or to such other address as
     such party may designate in writing from time to time to the other party.

               In the case of Sponsor, notice should be sent to:
                    SIGA Pharmaceuticals, Inc.
                    666 Third Avenue, 30th Floor
                    New York, NY 10017
                    Attention: Joshua D. Schein

               In the case of University, notice should be sent to:
 
                    Oregon State University
                    Contract Administration
                    306 Administrative Services Bldg.
                    Corvallis, OR  97331-2147
                    Attn: 97331-2147


XVII.  No Oral Modification
       --------------------

     No change, modification, extension, termination or waiver of this
     Agreement, or any of the provisions herein contained, shall be valid unless
     made in writing and signed by duly authorized representatives of the
     parties hereto.

XVIII.    Paragraph Headings
          ------------------
     The section headings are provided for convenience and are not to be used in
     construing this Agreement.

                                     E-211

 
XIX. Survivorship
     ------------
     The provisions of Paragraphs 7, 9, 11, 12, 14, 19, 20 and 21 shall survive
     any expiration or termination of this Agreement.

XX.  Term and Termination
     --------------------

     This Agreement shall expire the date which is two years from the date of
     this Agreement, unless extended by the mutual agreement of the parties or
     sooner terminated in accordance with the provisions of this Paragraph.  In
     the event University's Principal Investigator is unavailable or unable to
     continue direction of the Research for a period of thirty (30) days,
     Sponsor may immediately terminate this Agreement.  Either party may
     terminate this Agreement in the event of a material breach by the other
     party, provided only that the breaching party is given notice of the breach
     and a reasonable time, not to exceed thirty (30) days, in which to cure
     such breach.  Termination or expiration of this Agreement for reasons other
     than an unremedied failure to meet the material obligations under this
     Agreement shall not affect the rights and obligations of the parties
     accrued prior to termination.

XXI. Entire Agreement
     ----------------

     This instrument contains the entire Agreement between parties hereto.  No
     verbal agreement, conversation or representation between any officers,
     agents, or employees of the parties hereto either before or after the
     execution of this Agreement, shall affect or modify any of the terms or
     obligations herein contained.

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

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the date first set forth above.

                                    SIGA PHARMACEUTICALS, INC.

                                    By:  Joshua D. Schein
                                         ----------------
                                    Its: Chief Financial Officer



                                    STATE OF OREGON, Acting by and through the
                                    STATE BOARD OF HIGHER EDUCATION on behalf of
                                    OREGON STATE UNIVERSITY



                                    By: /s/
                                        ------------------------
                                         Contract Officer, Oregon State
                                         University

                                     E-212

 
                                   EXHIBIT A
                                   ---------

The funds received from SIGA PHARMACEUTICALS, INC. will be used to support basic
research activities in the laboratory of Dennis E. Hruby at Oregon State
University.  Specifically, Dr. Hruby will conduct experiments designed to
continue the development of gram positive commensal bacteria for use as
expression vetors.  This will involve testing new methods and sites for
inserting immunogenicity of foreign proteins, and constructing prototype vaccine
formulation for use in animal efficacy studies.

                                     E-213

 
                               Exhibit B - Budget
                               ------------------

                                     YEAR 1
                                     ------
 
Personnel                        Salary   Benefits   Total
- ---------                        ------   --------   -----
Christine A. Franke              *****/1/  *****/1/  *****/1/
Senior Research Assistant
 
Lab helper (half-time)           *****/1/  *****/1/  *****/1/
 
Supplies & Services
- -------------------
Consumable supplies (media, plates, enzymes, etc.)                  *****/1/
Contract Services (oligonucleotide synthesis, DNA sequencing, etc.) *****/1/
 
Travel
- ------
P.J. to/from New York on a quarterly basis                          *****/1/
                                                                    -------
                                                Total direct costs  *****/1/
 
                                  OSU indirect costs, 96-97 (41.5%) *****/1/
                                                                    -------
                                                        Total costs *****/1/

                                     YEAR 2
                                     ------

Same as Year 1 with a 4% increase in direct costs to cover inflation, and an
increase in indirect cost rate to 42.5% in accordance with agreement currently
in place with DHHS.

                                 Total direct costs  *****/1/

                                 OSU indirect costs, 97-98 (42.5%) *****/1/

                                 Total costs      *****/1/


                                 TOTAL REQUESTED TWO YEAR BUDGET  *****/1/

_____________
1    Confidential information is omitted and identified by a ***** and filed
     separately with the SEC pursuant to a request for Confidential Treatment.

                                     E-214


 
                                                                   EXHIBIT 10(d)

                                     E-215

 
       EMPLOYMENT AGREEMENT BETWEEN THE COMPANY AND DR. JOSHUA D. SCHEIN


                                        
                              EMPLOYMENT AGREEMENT

     Employment Agreement effective as of January 1, 1996 between SIGA
PHARMACEUTICALS, INC., a Delaware corporation (with its successors and assigns,
referred to as the "Corporation"), and Dr. Joshua D. Schein (referred to as
"Schein").


                             PRELIMINARY STATEMENT

     Schein is now employed as the Vice President and Chief Financial Officer of
the Corporation.

     The Corporation desires to continue to employ Schein, and Schein wishes to
continue to be employed by the Corporation, upon the terms and subject to the
conditions set forth in this Agreement.  The Corporation and Schein also wish to
enter into the other agreements set forth in this Agreement, all of which are
related to Schein's employment under this Agreement.


                                 AGREEMENT

     Schein and the Corporation therefore agree as follows:

          1.  EMPLOYMENT FOR TERM.  The Corporation hereby employs Schein and
Schein hereby accepts employment with the Corporation for the period (the
"Term") beginning on the date of this Agreement and ending on December 31, 1997,
or upon the earlier termination of the Term pursuant to Section 6.  The Term
will automatically be extended for an additional year upon the completion of
additional private financing(s) of at least an aggregate of $500,000 following
the completion of the Corporation's initial private financing.  The termination
of the Term for any reason shall end Schein's employment under this Agreement,
but shall not terminate Schein's or the Corporation's other agreements in this
Agreement.

          2.  POSITION AND DUTIES.  During the Term, Schein shall serve as the
Vice President and Chief Financial Officer of the Corporation.  During the Term,
Schein shall also hold such additional positions and titles as the Board of
Directors of the Corporation (the "Board") may determine from time to time.
During the Term, Schein shall devote as much time as necessary to satisfactorily
perform his duties as an employee of the Corporation.

          3.  COMPENSATION.

          (A)  BASE SALARY AND STOCK.  The Corporation shall pay Schein a base
salary, beginning on the first day of the Term and ending on the last day of the
Term, of not less than $150,000 per annum, payable at least monthly on the
Corporation's regular pay cycle for professional employees.  Additionally, the
Corporation shall pay Schein $6,000 as a one time payment in consideration for
certain work on behalf of the Corporation. The Corporation shall grant to Schein
100,000 options to purchase Common Stock of the Corporation at an exercise price
of $0.25.  The Corporation shall thereafter grant 100,000 stock options per
annum to Schein exercisable at the then current market price.  The Corporation
shall pay Schein a monthly car allowance of $500.

          (B)  OTHER AND ADDITIONAL COMPENSATION.   Section 3 establishes the
minimum compensation during the Term and shall not preclude the Board from
awarding Schein a higher salary or any bonuses or stock options in the
discretion of the Board during the Term at any time.

                                     E-216

 
          4.  EMPLOYEE BENEFITS.  During the Term, Schein shall be entitled to
the employee benefits, including vacation, health and other insurance benefits
made available by the Corporation to any other officers or key employees of the
Corporation.

          5.  EXPENSES.  The Corporation shall reimburse Schein for actual out-
of-pocket expenses incurred by him in the performance of his services for the
Corporation upon the receipt of appropriate documentation of such expenses.

          6.  TERMINATION.

          (a)  GENERAL.  The Term shall end immediately upon Schein's death, and
upon a change of ownership of at least fifty percent (50%) of the outstanding
Common Stock of the Corporation (on a fully converted basis) by sale, merger,
consolidation or other means (a "Change in Ownership").  The Term may also end
for Cause or Disability, as defined in Section 7.

          (b)  NOTICE OF TERMINATION.  Promptly after it ends the Term, the
Corporation shall give Schein notice of the termination, including a statement
of whether the termination was for Cause or Disability (as defined in Section 7
and 7(b) below).  The Corporation's failure to give notice under this Section 6
shall not, however, affect the validity of the Corporation's termination of the
Term.

          (c)  TERMINATION UPON CHANGE IN OWNERSHIP.  Upon a Change in Ownership
of the Corporation, the Term shall end and all compensation due Schein under
this Agreement will become immediately due and payable.

          7.  SEVERANCE BENEFITS.

          (a)  "CAUSE" DEFINED.  "Cause" means (i) willful malfeasance or
willful misconduct by Schein in connection with his employment; (ii) Schein's
gross negligence in performing any of his duties under this Agreement; (iii)
Schein's conviction of, or entry of a plea of guilty to, or entry of a plea of
nolo contendere with respect to, any crime other than a traffic violation or
infraction which is a misdemeanor; (iv) Schein's material breach of any written
policy applicable to all employees adopted by the Corporation; or (v) material
breach by Schein of any of his agreements in this Agreement.

          (b) DISABILITY DEFINED. "Disability" shall mean Schein's incapacity
due to physical or mental illness that results in his being unable to
substantially perform his duties hereunder for six consecutive months (or for
six months out of any nine month period).  During a period of Disability, Schein
shall continue to receive his base salary hereunder, provided that if the
Corporation provides Schein with disability insurance coverage, payments of
Schein's base salary shall be reduced by the amount of any disability insurance
payments received by Schein due to such coverage.  The Corporation shall give
Schein written notice of termination which shall take effect thirty (30) days
after the date it is sent to Schein unless Schein shall have returned to the
performance of his duties hereunder during such thirty (30) day period
(whereupon such notice shall become void).

          8.  CONFIDENTIALITY.

          (a)  "CORPORATION INFORMATION" DEFINED.  "CORPORATION INFORMATION"
means all information, knowledge or data of or pertaining to (i) the
Corporation, its employees and all work undertaken on behalf of the Corporation,
and (ii) any other person, firm, corporation or business organization with which
the Corporation may do business during the Term, that is not in the public
domain (and whether relating to methods, processes, techniques, discoveries,
pricing, marketing or any other matters).

          (b) CONFIDENTIALITY.  Schein hereby recognizes that the value of all
trade secrets and other proprietary data and all other information of the
Corporation not in the public domain disclosed by the Corporation in the

                                     E-217

 
course of his employment with the Corporation is attributable substantially to
the fact that such confidential information is maintained by the Corporation in
strict confidentiality and secrecy and would be unavailable to others without
the expenditure of substantial time, effort or money.  Schein therefore, except
as provided in the next two sentences, covenants and agrees that all Corporation
Information shall be kept secret and confidential at all times during and after
the end of the Term and shall not be used or divulged by him outside the scope
of his employment as contemplated by this Agreement, except as the Corporation
may otherwise expressly authorize by action of the Board.  In the event that
Schein is requested in a judicial, administrative or governmental proceeding to
disclose any of the Corporation Information, Schein will promptly so notify the
Corporation so that the Corporation may seek a protective order or other
appropriate remedy and/or waive compliance with this Agreement.  If disclosure
of any of the Corporation Information is required, Schein may furnish the
material so required to be furnished, but Schein will furnish only that portion
of the Corporation Information that legally is required.

          9.  SUCCESSORS AND ASSIGNS.

          (a) SCHEIN.  This Agreement is a personal contract, and the rights and
interests that the Agreement accords to Schein may not be sold, transferred,
assigned, pledged, encumbered, or hypothecated by him.  All rights and benefits
of Schein shall be for the sole personal benefit of Schein, and no other person
shall acquire any right, title or interest under this Agreement by reason of any
sale, assignment, transfer, claim or judgment or bankruptcy proceedings against
Schein.  Except as so provided, this Agreement shall inure to the benefit of and
be binding upon Schein and his personal representatives, distributees and
legatees.

          (b) THE CORPORATION.  Subject to Section 6(c), this Agreement shall be
binding upon the Corporation and inure to the benefit of the Corporation and of
its successors and assigns.

          10.  SUCCESS FEE.  Upon the successful completion of a transaction
resulting in a Change in Ownership of the Corporation, the Corporation shall pay
to Schein, in consideration of his work on behalf of the Corporation, a one time
cash payment equal to one and one-half percent (1.5%) of the total consideration
received by the Corporation.

          11.  ENTIRE AGREEMENT.  This Agreement represents the entire agreement
between the parties concerning Schein's employment with the Corporation and
supersedes all prior negotiations, discussions, understandings and agreements,
whether written or oral, between Schein and the Corporation relating to the
subject matter of this Agreement.

          12.  AMENDMENT OR MODIFICATION, WAIVER.  No provision of this
Agreement may be amended or waived unless such amendment or waiver is agreed to
in writing signed by Schein and by a duly authorized officer of the Corporation.
No waiver by any party to this Agreement of any breach by another party of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar or dissimilar condition or provision at
the same time, any prior time or any subsequent time.

          13.  NOTICES.  Any notice to be given under this Agreement shall be in
writing and delivered personally or sent by overnight courier or registered or
certified mail, postage prepaid, return receipt requested, addressed to the
party concerned at the address indicated below, or to such other address of
which such party subsequently may give notice in writing:

If to Schein:                    Dr. Joshua D. Schein
                                 666 Third Avenue
                                 30th Floor
                                 New York, NY 10017

                                     E-218

 
If to the Corporation:           SIGA PHARMACEUTICALS, INC.
                                 666 Third Avenue
                                 30th Floor
                                 New York, NY 10017
                                 Attention:  Dr. Joshua D. Schein

with a copy to:                  Fitzpatrick Eilenberg & Zivian
                                 666 Third Avenue
                                 30th Floor
                                 New York, NY 10017
                                 Attention:  Jeffrey D. Abbey, Esq.
 
 

Any notice delivered personally or by overnight courier shall be deemed given on
the date delivered and any notice sent by registered or certified mail, postage
prepaid, return receipt requested, shall be deemed given on the date mailed.

          14.  SEVERABILITY.  If any provision of this Agreement or the
application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid and
unenforceable to any extent, the remainder of this Agreement or the application
of such provision to such person or circumstances other than those to which it
is so determined to be invalid and unenforceable shall not be affected, and each
provision of this Agreement shall be validated and shall be enforced to the
fullest extent permitted by law.  If for any reason any provision of this
Agreement containing restrictions is held to cover an area or to be for a length
of time that is unreasonable or in any other way is construed to be too broad or
to any extent invalid, such provision shall not be determined to be entirely
null, void and of no effect; instead, it is the intention and desire of both the
Corporation and Schein that, to the extent that the provision is or would be
valid or enforceable under applicable law, any court of competent jurisdiction
shall construe and interpret or reform this Agreement to provide for a
restriction having the maximum enforceable area, time period and such other
constraints or conditions (although not greater than those contained currently
contained in this Agreement) as shall be valid and enforceable under the
applicable law.

          15.  SURVIVORSHIP.  The respective rights and obligations of the
parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.

          16.  HEADINGS.  All descriptive headings of sections and paragraphs in
this Agreement are intended solely for convenience of reference, and no
provision of this Agreement is to be construed by reference to the heading of
any section or paragraph.

          17.  WITHHOLDING TAXES.  All salary, benefits, reimbursements and any
other payments to Schein under this Agreement shall be subject to all applicable
payroll and withholding taxes and deductions required by any law, rule or
regulation of and federal, state or local authority.
 
          18.  COUNTERPARTS.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together constitute one and same instrument.

          19.  APPLICABLE LAW:  JURISDICTION.  The laws of the State of New York
shall govern the interpretation, validity and performance of the terms of this
Agreement, without reference to rules relating to conflicts of law.  Any suit,
action or proceeding against Schein with respect to this Agreement, or any
judgment entered by any court in respect thereof, may be brought in any court of
competent jurisdiction in the State of New York, as the Corporation may elect in
its sole discretion, and Schein hereby submits to the nonexclusive

                                     E-219

 
jurisdiction of such courts for the purpose of any such suit, action, proceeding
or judgment.

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



                                 /s/ Joshua D. Schein
                                 --------------------
                                 Dr. Joshua D. Schein



                                 SIGA PHARMACEUTICALS, INC.


                                 By: /s/ Joshua A. Cooper
                                     --------------------
                                 Judson A. Cooper, President


 

                                     E-220


 
                                                                   EXHIBIT 10(e)

                                     E-221

 
  EMPLOYMENT AGREEMETN AND AMENDMENT BETWEEN THE COMPANY AND JUDSON A. COOPER


                                        
                              EMPLOYMENT AGREEMENT

          Employment Agreement effective as of January 1, 1996 between SIGA
PHARMACEUTICALS, INC., a Delaware corporation (with its successors and assigns,
referred to as the "Corporation"), and Judson A. Cooper (referred to as
"Cooper").


                             PRELIMINARY STATEMENT

          Cooper is now employed as the President of the Corporation.

          The Corporation desires to continue to employ Cooper, and Cooper
wishes to continue to be employed by the Corporation, upon the terms and subject
to the conditions set forth in this Agreement.  The Corporation and Cooper also
wish to enter into the other agreements set forth in this Agreement, all of
which are related to Cooper's employment under this Agreement.


                                 AGREEMENT

          Cooper and the Corporation therefore agree as follows:

          1.  EMPLOYMENT FOR TERM.  The Corporation hereby employs Cooper and
Cooper hereby accepts employment with the Corporation for the period (the
"Term") beginning on the date of this Agreement and ending on December 31, 1997,
or upon the earlier termination of the Term pursuant to Section 6.  The Term
will automatically be extended for an additional year upon the completion of
additional private financing(s) of at least an aggregate of $500,000 following
the completion of the Corporation's initial private financing.  The termination
of the Term for any reason shall end Cooper's employment under this Agreement,
but shall not terminate Cooper's or the Corporation's other agreements in this
Agreement.

          2.  POSITION AND DUTIES.  During the Term, Cooper shall serve as the
President of the Corporation.  During the Term, Cooper shall also hold such
additional positions and titles as the Board of Directors of the Corporation
(the "Board") may determine from time to time.  During the Term, Cooper shall
devote as much time as necessary to satisfactorily perform his duties as an
employee of the Corporation.

          3.  COMPENSATION.

          (a)  BASE SALARY AND STOCK.  The Corporation shall pay Cooper a base
salary, beginning on the first day of the Term and ending on the last day of the
Term, of not less than $150,000 per annum, payable at least monthly on the
Corporation's regular pay cycle for professional employees.  Additionally, the
Corporation shall pay Cooper $6,000 as a one time payment in consideration for
certain work on behalf of the Corporation. The Corporation shall grant to Cooper
100,000 options to purchase Common Stock of the Corporation at an exercise price
of $0.25.  The Corporation shall thereafter grant 100,000 stock options per
annum to Cooper exercisable at the then current market price.  The Corporation
shall pay Cooper a monthly car allowance of $500.

          (b)  OTHER AND ADDITIONAL COMPENSATION.   Section 3 establishes the
minimum compensation during the Term and shall not preclude the Board from
awarding Cooper a higher salary or any bonuses or stock options in the
discretion of the Board during the Term at any time.

          4.  EMPLOYEE BENEFITS.  During the Term, Cooper shall be entitled to
the employee benefits, including vacation, health and other insurance benefits

                                     E-222

 
made available by the Corporation to any other officers or key employees of the
Corporation.

          5.  EXPENSES.  The Corporation shall reimburse Cooper for actual out-
of-pocket expenses incurred by him in the performance of his services for the
Corporation upon the receipt of appropriate documentation of such expenses.

          6.  TERMINATION.

          (a)  GENERAL.  The Term shall end immediately upon Cooper's death, and
upon a change of ownership of at least fifty percent (50%) of the outstanding
Common Stock of the Corporation (on a fully converted basis) by sale, merger,
consolidation or other means (a "Change in Ownership").  The Term may also end
for Cause or Disability, as defined in Section 7.

          (b)  NOTICE OF TERMINATION.  Promptly after it ends the Term, the
Corporation shall give Cooper notice of the termination, including a statement
of whether the termination was for Cause or Disability (as defined in Section 7
and 7(b) below).  The Corporation's failure to give notice under this Section 6
shall not, however, affect the validity of the Corporation's termination of the
Term.

          (c)  TERMINATION UPON CHANGE IN OWNERSHIP.  Upon a Change in Ownership
of the Corporation, the Term shall end and all compensation due Cooper under
this Agreement will become immediately due and payable.

          7.  SEVERANCE BENEFITS.

          (a)  "CAUSE" DEFINED.  "Cause" means (i) willful malfeasance or
willful misconduct by Cooper in connection with his employment; (ii) Cooper's
gross negligence in performing any of his duties under this Agreement; (iii)
Cooper's conviction of, or entry of a plea of guilty to, or entry of a plea of
nolo contendere with respect to, any crime other than a traffic violation or
infraction which is a misdemeanor; (iv) Cooper's material breach of any written
policy applicable to all employees adopted by the Corporation; or (v) material
breach by Cooper of any of his agreements in this Agreement.

          (b) DISABILITY DEFINED. "Disability" shall mean Cooper's incapacity
due to physical or mental illness that results in his being unable to
substantially perform his duties hereunder for six consecutive months (or for
six months out of any nine month period).  During a period of Disability, Cooper
shall continue to receive his base salary hereunder, provided that if the
Corporation provides Cooper with disability insurance coverage, payments of
Cooper's base salary shall be reduced by the amount of any disability insurance
payments received by Cooper due to such coverage.  The Corporation shall give
Cooper written notice of termination which shall take effect thirty (30) days
after the date it is sent to Cooper unless Cooper shall have returned to the
performance of his duties hereunder during such thirty (30) day period
(whereupon such notice shall become void).

          8.  CONFIDENTIALITY.

          (a)  "CORPORATION INFORMATION" DEFINED.  "CORPORATION INFORMATION"
means all information, knowledge or data of or pertaining to (i) the
Corporation, its employees and all work undertaken on behalf of the Corporation,
and (ii) any other person, firm, corporation or business organization with which
the Corporation may do business during the Term, that is not in the public
domain (and whether relating to methods, processes, techniques, discoveries,
pricing, marketing or any other matters).

          (b) CONFIDENTIALITY.  Cooper hereby recognizes that the value of all
trade secrets and other proprietary data and all other information of the
Corporation not in the public domain disclosed by the Corporation in the course
of his employment with the Corporation is attributable substantially to the fact
that such confidential information is maintained by the Corporation

                                     E-223

 
in strict confidentiality and secrecy and would be unavailable to others without
the expenditure of substantial time, effort or money.  Cooper therefore, except
as provided in the next two sentences, covenants and agrees that all Corporation
Information shall be kept secret and confidential at all times during and after
the end of the Term and shall not be used or divulged by him outside the scope
of his employment as contemplated by this Agreement, except as the Corporation
may otherwise expressly authorize by action of the Board.  In the event that
Cooper is requested in a judicial, administrative or governmental proceeding to
disclose any of the Corporation Information, Cooper will promptly so notify the
Corporation so that the Corporation may seek a protective order or other
appropriate remedy and/or waive compliance with this Agreement.  If disclosure
of any of the Corporation Information is required, Cooper may furnish the
material so required to be furnished, but Cooper will furnish only that portion
of the Corporation Information that legally is required.

          9.  SUCCESSORS AND ASSIGNS.

          (a) COOPER.  This Agreement is a personal contract, and the rights and
interests that the Agreement accords to Cooper may not be sold, transferred,
assigned, pledged, encumbered, or hypothecated by him.  All rights and benefits
of Cooper shall be for the sole personal benefit of Cooper, and no other person
shall acquire any right, title or interest under this Agreement by reason of any
sale, assignment, transfer, claim or judgment or bankruptcy proceedings against
Cooper.  Except as so provided, this Agreement shall inure to the benefit of and
be binding upon Cooper and his personal representatives, distributees and
legatees.

          (b) THE CORPORATION.  Subject to Section 6(c), this Agreement shall be
binding upon the Corporation and inure to the benefit of the Corporation and of
its successors and assigns.

          10.  SUCCESS FEE.  Upon the successful completion of a transaction
resulting in a Change in Ownership of the Corporation, the Corporation shall pay
to Cooper, in consideration of his work on behalf of the Corporation, a one time
cash payment equal to one and one-half percent (1.5%) of the total consideration
received by the Corporation.

          11.  ENTIRE AGREEMENT.  This Agreement represents the entire agreement
between the parties concerning Cooper's employment with the Corporation and
supersedes all prior negotiations, discussions, understandings and agreements,
whether written or oral, between Cooper and the Corporation relating to the
subject matter of this Agreement.

          12.  AMENDMENT OR MODIFICATION, WAIVER.  No provision of this
Agreement may be amended or waived unless such amendment or waiver is agreed to
in writing signed by Cooper and by a duly authorized officer of the Corporation.
No waiver by any party to this Agreement of any breach by another party of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar or dissimilar condition or provision at
the same time, any prior time or any subsequent time.

          13.  NOTICES.  Any notice to be given under this Agreement shall be in
writing and delivered personally or sent by overnight courier or registered or
certified mail, postage prepaid, return receipt requested, addressed to the
party concerned at the address indicated below, or to such other address of
which such party subsequently may give notice in writing:

If to Cooper:      Judson A. Cooper
                   666 Third Avenue
                   30th Floor
                   New York, NY 10017

                                     E-224

 
If to the Corporation:           SIGA PHARMACEUTICALS, INC.
                                 666 Third Avenue
                                 30th Floor
                                 New York, NY 10017
                                 Attention:  Joshua D. Schein

with a copy to:                  Fitzpatrick Eilenberg & Zivian
                                 666 Third Avenue
                                 30th Floor
                                 New York, NY 10017
                                 Attention:  Jeffrey D. Abbey, Esq.
 
 

Any notice delivered personally or by overnight courier shall be deemed given on
the date delivered and any notice sent by registered or certified mail, postage
prepaid, return receipt requested, shall be deemed given on the date mailed.

          14.  SEVERABILITY.  If any provision of this Agreement or the
application of any such provision to any party or circumstances shall be
determined by any court of competent jurisdiction to be invalid and
unenforceable to any extent, the remainder of this Agreement or the application
of such provision to such person or circumstances other than those to which it
is so determined to be invalid and unenforceable shall not be affected, and each
provision of this Agreement shall be validated and shall be enforced to the
fullest extent permitted by law.  If for any reason any provision of this
Agreement containing restrictions is held to cover an area or to be for a length
of time that is unreasonable or in any other way is construed to be too broad or
to any extent invalid, such provision shall not be determined to be entirely
null, void and of no effect; instead, it is the intention and desire of both the
Corporation and Cooper that, to the extent that the provision is or would be
valid or enforceable under applicable law, any court of competent jurisdiction
shall construe and interpret or reform this Agreement to provide for a
restriction having the maximum enforceable area, time period and such other
constraints or conditions (although not greater than those contained currently
contained in this Agreement) as shall be valid and enforceable under the
applicable law.

          15.  SURVIVORSHIP.  The respective rights and obligations of the
parties hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.

          16.  HEADINGS.  All descriptive headings of sections and paragraphs in
this Agreement are intended solely for convenience of reference, and no
provision of this Agreement is to be construed by reference to the heading of
any section or paragraph.

          17.  WITHHOLDING TAXES.  All salary, benefits, reimbursements and any
other payments to Cooper under this Agreement shall be subject to all applicable
payroll and withholding taxes and deductions required by any law, rule or
regulation of and federal, state or local authority.
 
          18.  COUNTERPARTS.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together constitute one and same instrument.

          19.  APPLICABLE LAW:  JURISDICTION.  The laws of the State of New York
shall govern the interpretation, validity and performance of the terms of this
Agreement, without reference to rules relating to conflicts of law.  Any suit,
action or proceeding against Cooper with respect to this Agreement, or any
judgment entered by any court in respect thereof, may be brought in any court of
competent jurisdiction in the State of New York, as the Corporation may elect in
its sole discretion, and Cooper hereby submits to the nonexclusive

                                     E-225

 
jurisdiction of such courts for the purpose of any such suit, action, proceeding
or judgment.


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



                                 /s/ Judson A. Cooper
                                 --------------------
                                 Judson A. Cooper



                                 SIGA PHARMACEUTICALS


                                 By:  /s/ Joshua D. Schein
                                 --------------------
                                 Joshua D. Schein, Vice President


 

                                     E-226

 
                                AMENDMENT NO. 1
                                      TO
                             EMPLOYMENT AGREEMENT

          This AMENDMENT, dated as of November 18, 1996, is between SIGA
PHARMACEUTICALS, INC., a Delaware corporation (with its successors and assigns,
referred to as the "Corporation"), and Judson A. Cooper (referred to as
"Cooper").

          The Employment Agreement between the Corporation and Cooper, dated as
of January 1, 1996 (the "Agreement"), is hereby amended as follows:

          1.  The first sentence of the Preliminary Statement shall be replaced
with the following sentence:

               "Cooper is now employed as an Executive Vice President of the
               Corporation."

          2.  The first sentence of SECTION 2 of the Agreement shall be replaced
with the following sentence:

               "During the Term, Cooper shall serve as an Executive President of
               the Corporation."


     The Agreement shall remain the same in all other respects.
 
     IN WITNESS WHEREOF, the parties hereto have executed this AMENDMENT as of
the date first written above.



                         /s/ Judson A. Cooper
                         --------------------
                         Judson A. Cooper



                         SIGA PHARMACEUTICALS


                         By:  /s/ Joshua D. Schein
                              --------------------
                              Joshua D. Schein, Vice President

                                     E-227


 
                                                                   EXHIBIT 10(f)

                                     E-228

 
        EMPLOYMENT AGREEMENT BETWEEN THE COMPANY AND DR. KEVIN F. JONES

                                        
                              EMPLOYMENT AGREEMENT

     Employment Agreement effective as of January 1, 1996 between SIGA
PHARMACEUTICALS, INC., a Delaware corporation (with its successors and assigns,
referred to as the "Corporation"), and Dr. Kevin F. Jones (referred to as
"Jones").


                             PRELIMINARY STATEMENT

     Jones is now employed as the Director of Bacterial Research of the
Corporation.

     The Corporation desires to continue to employ Jones, and Jones wishes to
continue to be employed by the Corporation, upon the terms and subject to the
conditions set forth in this Agreement.  The Corporation and Jones also wish to
enter into the other agreements set forth in this Agreement, all of which are
related to Jones's employment under this Agreement.


                                 AGREEMENT

          Jones and the Corporation therefore agree as follows:

          1.  EMPLOYMENT FOR TERM.  The Corporation hereby employs Jones and
Jones hereby accepts employment with the Corporation for the period (the "Term")
beginning on the date of this Agreement and ending on December 31, 1997, or upon
the earlier termination of the Term pursuant to Section 6.  The end of the Term
for any reason shall end Jones's employment under this Agreement, but shall not
terminate Jones's or the Corporation's other agreements in this Agreement.

          2.  POSITION AND DUTIES.  During the Term, Jones shall serve as the
Director of Bacterial Research of the Corporation.  During the Term, Jones shall
also hold such additional positions and titles as the Board of Directors of the
Corporation (the "Board") may determine from time to time.  During the Term,
Jones shall devote all of his business time and best efforts to his duties as an
employee of the Corporation.

          3.  COMPENSATION.

          (a)  BASE SALARY AND STOCK.  The Corporation shall pay Jones a base
salary, beginning on the first day of the Term and ending on the last day of the
Term, of not less than $90,000 per annum, payable at least monthly on the
Corporation's regular pay cycle for professional employees.


          (b)  OTHER AND ADDITIONAL COMPENSATION.   Section 3 establishes the
minimum compensation during the Term and shall not preclude the Board from
awarding Jones a higher salary or any bonuses or stock options in the discretion
of the Board during the Term at any time.

          4.  EMPLOYEE BENEFITS.  During the Term, Jones shall be entitled to
the employee benefits, including vacation, health and other insurance benefits
made available by the Corporation to any other employee of the Corporation.

          5.  EXPENSES.  The Corporation shall reimburse Jones for actual out-
of-pocket expenses incurred by him in the performance of his services for the
Corporation upon the receipt of appropriate documentation of such expenses.

                                     E-229

 
          6.  TERMINATION.

          (a)  GENERAL.  The Term shall end immediately upon Jones's death.  The
Term may also end for Cause or Disability, as defined in Section 7.

          (b)  NOTICE OF TERMINATION.  Promptly after it ends the Term, the
Corporation shall give Jones notice of the termination, including a statement of
whether the termination was for Cause or Disability (as defined in Section 7
and 7(b) below).  The Corporation's failure to give notice under this Section 6
shall not, however, affect the validity of the Corporation's termination of the
Term.

          7.  SEVERANCE BENEFITS.

          (a)  "CAUSE" DEFINED.  "Cause" means (i) willful malfeasance or
willful misconduct by Jones in connection with his employment; (ii) Jones's
gross negligence in performing any of his duties under this Agreement; (iii)
Jones's conviction of, or entry of a plea of guilty to, or entry of a plea of
nolo contendere with respect to, any crime other than a traffic violation or
infraction which is a misdemeanor; (iv) Jones's material breach of any written
policy applicable to all employees adopted by the Corporation; or (v) material
breach by Jones of any of his agreements in this Agreement.

          (b) DISABILITY DEFINED. "Disability" shall mean Jones's incapacity due
to physical or mental illness that results in his being unable to substantially
perform his duties hereunder for six consecutive months (or for six months out
of any nine month period).  During a period of Disability, Jones shall continue
to receive his base salary hereunder, provided that if the Corporation provides
Jones with disability insurance coverage, payments of Jones's base salary shall
be reduced by the amount of any disability insurance payments received by Jones
due to such coverage.  The Corporation shall give Jones written notice of
termination which shall take effect thirty (30) days after the date it is sent
to Jones unless Jones shall have returned to the performance of his duties
hereunder during such thirty (30) day period (whereupon such notice shall become
void).

          (c)  TERMINATION.  If the Corporation ends the Term for Cause or
Disability, or if Jones resigns as an employee of the Corporation, or if Jones
dies, then the Corporation shall have no obligation to pay Jones any amount,
whether for salary, benefits, bonuses, or other compensation or expense
reimbursements of any kind, accruing after the end of the Term, and such rights
shall, except as otherwise required by law, be forfeited immediately upon the
end of the Term.

          8.  CONFIDENTIALITY, OWNERSHIP, AND COVENANTS.

          (a)  "CORPORATION INFORMATION" AND "INVENTIONS" DEFINED.  "CORPORATION
INFORMATION" means all information, knowledge or data of or pertaining to (i)
the Corporation, its employees and all work undertaken on behalf of the
Corporation, and (ii) any other person, firm, corporation or business
organization with which the Corporation may do business during the Term, that is
not in the public domain (and whether relating to methods, processes,
techniques, discoveries, pricing, marketing or any other matters).  "INVENTIONS"
collectively refers to any and all inventions, trade secrets, ideas, processes,
formulas, source and object codes, data, programs, other works of authorship,
know-how, improvements, research, discoveries, developments, designs, and
techniques regarding any of the foregoing.

          (b) CONFIDENTIALITY.  (i)  Jones hereby recognizes that the value of
all trade secrets and other proprietary data and all other information of the
Corporation not in the public domain disclosed by the Corporation in the course
of his employment with the Corporation is attributable substantially to the fact
that such confidential information is maintained by the Corporation in strict
confidentiality and secrecy and would be unavailable to others without the
expenditure of substantial time, effort

                                     E-230

 
or money.  Jones therefore, except as provided in the next two sentences,
covenants and agrees that all Corporation Information shall be kept secret and
confidential at all times during and after the end of the Term and shall not be
used or divulged by him outside the scope of his employment as contemplated by
this Agreement, except as the Corporation may otherwise expressly authorize by
action of the Board.  In the event that Jones is requested in a judicial,
administrative or governmental proceeding to disclose any of the Corporation
Information, Jones will promptly so notify the Corporation so that the
Corporation may seek a protective order or other appropriate remedy and/or waive
compliance with this Agreement.  If disclosure of any of the Corporation
Information is required, Jones may furnish the material so required to be
furnished, but Jones will furnish only that portion of the Corporation
Information that legally is required.

          (ii) Jones also hereby agrees to keep the terms of this Agreement
confidential.

          (c)  OWNERSHIP.  Jones hereby assigns to the Corporation all of
Jones's  right (including patent rights, copyrights, trade secret rights, and
all other rights throughout the world), title and interest in and to Inventions,
whether or not patentable or registrable under copyright or similar statutes,
made or conceived or reduced to practice or learned by Jones, either alone or
jointly with others, during the course of the performance of services for the
Corporation.  Jones shall also assign to, or as directed by, the Corporation,
all of Jones's right, title and interest in and to any and all Inventions, the
full title to which is required to be in the United States government by a
contract between the Corporation and the United States government or any of its
agencies.  The Corporation shall have all right, title and interest in all
research and work product produced by Jones as an employee of the Corporation,
including, but not limited to, all research materials and lab books.  The
provisions of Sections 8(a), 8(b) and this Section 8(c) are not intended to
supersede or limit the effect of any prior confidentiality or proprietary rights
agreements previously executed by Jones.

          (d)  NON-COMPETITION PERIOD DEFINED.  "Non-Competition Period" means
the period beginning at the end of the Term and ending one (1) year after the
end of the Term.

          (e)  COVENANTS REGARDING THE TERM AND NON-COMPETITION PERIOD.  Jones
acknowledges and agrees that his services pursuant to this Agreement are unique
and  extraordinary; that the Corporation will be dependent upon Jones for the
research and development of antibiotics, vaccines and anti-infectives;  and that
he will have access to and control of confidential information of the
Corporation.  Jones further acknowledges that the business of the Corporation is
national in scope and cannot be confined to any particular geographic area of
the United States.  For the foregoing reasons and to induce the Corporation to
enter this Agreement, Jones covenants and agrees that during the Term and the
Non-Competition Period Jones shall not unless with written consent of the
Corporation:

       (i) engage in the business of research and development of the Core
     Technology, as defined in the License and Research Support Agreement
     between the Corporation and The Rockefeller University, or any other
     products or processes in which the Corporation is engaged in during the
     Term or in any other business conducted by the Corporation during the Term
     (collectively the "Prohibited Activity") in the United States or elsewhere
     for his own account;

     (ii)  become interested in any individual, corporation, partnership or
     other business entity (a "Person") engaged in any Prohibited Activity in
     the United States, directly or indirectly, as an individual, partner,
     shareholder, officer, director, principal, agent, employee, trustee,
     consultant or in any other relationship or capacity; provided, however,
     that Jones may own directly or indirectly, solely as an investment,

                                     E-231

 
     securities of any Person which are traded on any national securities
     exchange if Jones (x) is not a controlling person of, or a member of a
     group which controls, such person or (y) does not, directly or indirectly,
     own 5% or more of any class of securities of such person;

     (iii)  directly or indirectly hire, engage or retain any person which at
     any time during the Term or Non-Competition Period was a supplier, client
     or customer of the Corporation, or directly or indirectly solicit, entice
     or induce any such person to become, a supplier, client or customer of any
     other person engaged in any Prohibited Activity; or

     (iv)  directly or indirectly hire, employ or retain any person who at any
     time was an employee of the Corporation or directly or indirectly solicit,
     entice, induce or encourage any such person to become employed by any other
     person.

          (f)  REMEDIES.  Jones hereby acknowledges that the covenants and
agreements contained in Section 8  are reasonable and valid in all respects and
that the Corporation is entering into this Agreement, inter alia, on such
                                                      ----------         
acknowledgment.  If Jones breaches, or threatens to commit a breach, of any of
the Restrictive Covenants, the Corporation shall have the following rights and
remedies, each of which rights and remedies shall be independent of the other
and severally enforceable, and all of which rights and remedies shall be in
addition to, and not in lieu of, any other rights and remedies available to the
Corporation under law or in equity: (i) the right and remedy to have the
Restrictive Covenants specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to the Corporation and that
money damages will not provide an adequate remedy to the Corporation; (ii) the
right and remedy to require Jones to account for and pay over to the Corporation
all compensation, profits, monies, accruals, increments or other benefits
(collectively, "Benefits") derived or received by Jones as the result of any
transactions constituting a breach of any of the Restrictive Covenants, and
Jones shall account for and pay over such Benefits to the Corporation; (iii) if
any court determines that any of the Restrictive Covenants, or any part thereof,
is invalid or unenforceable, the remainder of the Restrictive Covenants shall
not thereby be affected and shall be given full effect, without regard to the
invalid portions; and (iv) if any court construes any of the Restrictive
Covenants, or any part thereof, to be unenforceable because of the duration of
such provision or the area covered thereby, such court shall have the power to
reduce the duration or area of such provision and, in its reduced form, such
provision shall then be enforceable and shall be enforced.

          (g)  JURISDICTION.  The parties intend to and hereby confer
jurisdiction to enforce the Restrictive Covenants upon the courts of any
jurisdiction within the geographical scope of such Covenants.  If the courts of
any one or more such jurisdictions hold the Restrictive Covenants wholly
unenforceable by reason of the breadth of such scope or otherwise, it is the
intention of the parties that such determination not bar or in any way affect
the Corporation's right to the relief provided above in the courts of any other
jurisdiction, within the geographical scope of such Covenants, as to breaches of
such Covenants in such other respective jurisdictions such Covenants as they
relate to each jurisdiction being, for this purpose, severable into diverse and
independent covenants.


     9.   SUCCESSORS AND ASSIGNS.

          (a) JONES.  This Agreement is a personal contract, and the rights and
interests that the Agreement accords to Jones may not be sold, transferred,
assigned, pledged, encumbered, or hypothecated by him.  All rights and benefits
of Jones shall be for the sole personal benefit of Jones, and no other person
shall acquire any right, title or interest under this Agreement by reason of any
sale, assignment, transfer, claim or judgment or

                                     E-232

 
bankruptcy proceedings against Jones.  Except as so provided, this Agreement
shall inure to the benefit of and be binding upon Jones and his personal
representatives, distributees and legatees.

          (b) THE CORPORATION.  This Agreement shall be binding upon the
Corporation and inure to the benefit of the Corporation and of its successors
and assigns, including (but not limited to) any corporation that may acquire all
or substantially all of the Corporation's assets or business or into or with
which the Corporation may be consolidated or merged.  This Agreement shall
continue in full force and effect in the event that the Corporation sells all or
substantially all of its assets, merges or consolidates, otherwise combines or
affiliates with another business, dissolves and liquidates, or otherwise sells
or disposes of substantially all of its assets.  The Corporation's obligations
under this Agreement shall cease, however, if the successor to, the purchaser or
acquiror either of the Corporation or of all or substantially all of its assets,
or the entity with which the Corporation has affiliated, shall assume in writing
the Corporation's obligations under this Agreement (and deliver an executed copy
of such assumption to Jones), in which case such successor or purchaser, but not
the Corporation, shall thereafter be the only party obligated to perform the
obligations that remain to be performed on the part of the Corporation under
this Agreement.

     10.  ENTIRE AGREEMENT.  This Agreement represents the entire agreement
between the parties concerning Jones's employment with the Corporation and
supersedes all prior negotiations, discussions, understandings and agreements,
whether written or oral, between Jones and the Corporation relating to the
subject matter of this Agreement.

     11.  AMENDMENT OR MODIFICATION, WAIVER.  No provision of this Agreement may
be amended or waived unless such amendment or waiver is agreed to in writing
signed by Jones and by a duly authorized officer of the Corporation.  No waiver
by any party to this Agreement of any breach by another party of any condition
or provision of this Agreement to be performed by such other party shall be
deemed a waiver of a similar or dissimilar condition or provision at the same
time, any prior time or any subsequent time.

     12.  NOTICES.  Any notice to be given under this Agreement shall be in
writing and delivered personally or sent by overnight courier or registered or
certified mail, postage prepaid, return receipt requested, addressed to the
party concerned at the address indicated below, or to such other address of
which such party subsequently may give notice in writing:

If to Jones:             Dr. Kevin F. Jones
                         610 West 110th Street
                         Apt. 12C
                         New York, NY 10025

If to the Corporation:   SIGA PHARMACEUTICALS, INC.
                         666 Third Avenue
                         30th Floor
                         New York, NY 10017
                         Attention:  Dr. Joshua D. Schein

with a copy to:          Fitzpatrick Eilenberg & Zivian
                         666 Third Avenue
                         30th Floor
                         New York, NY 10017
                         Attention:  Jeffrey D, Abbey, Esq.
 
 

Any notice delivered personally or by overnight courier shall be deemed given on
the date delivered and any notice sent by registered or certified mail,

                                     E-233

 
postage prepaid, return receipt requested, shall be deemed given on the date
mailed.

     13.  SEVERABILITY.  If any provision of this Agreement or the application
of any such provision to any party or circumstances shall be determined by any
court of competent jurisdiction to be invalid and unenforceable to any extent,
the remainder of this Agreement or the application of such provision to such
person or circumstances other than those to which it is so determined to be
invalid and unenforceable shall not be affected, and each provision of this
Agreement shall be validated and shall be enforced to the fullest extent
permitted by law.  If for any reason any provision of this Agreement containing
restrictions is held to cover an area or to be for a length of time that is
unreasonable or in any other way is construed to be too broad or to any extent
invalid, such provision shall not be determined to be entirely null, void and of
no effect; instead, it is the intention and desire of both the Corporation and
Jones that, to the extent that the provision is or would be valid or enforceable
under applicable law, any court of competent jurisdiction shall construe and
interpret or reform this Agreement to provide for a restriction having the
maximum enforceable area, time period and such other constraints or conditions
(although not greater than those contained currently contained in this
Agreement) as shall be valid and enforceable under the applicable law.

     14.  SURVIVORSHIP.  The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.

     15.  HEADINGS.  All descriptive headings of sections and paragraphs in this
Agreement are intended solely for convenience of reference, and no provision of
this Agreement is to be construed by reference to the heading of any section or
paragraph.

     16.  WITHHOLDING TAXES.  All salary, benefits, reimbursements and any other
payments to Jones under this Agreement shall be subject to all applicable
payroll and withholding taxes and deductions required by any law, rule or
regulation of and federal, state or local authority.
 
     17.  COUNTERPARTS.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together constitute one and same instrument.

     18.  APPLICABLE LAW:  JURISDICTION.  The laws of the State of New York
shall govern the interpretation, validity and performance of the terms of this
Agreement, without reference to rules relating to conflicts of law.  Any suit,
action or proceeding against Jones with respect to this Agreement, or any
judgment entered by any court in respect thereof, may be brought in any court of
competent jurisdiction in the State of New York, as the Corporation may elect in
its sole discretion, and Jones hereby submits to the nonexclusive jurisdiction
of such courts for the purpose of any such suit, action, proceeding or judgment.

                                     E-234

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

                         SIGA PHARMACEUTICALS, INC.


                         By:  /s/ Joshua Schein
                              -----------------
                              Joshua Schein, Chief Financial Officer


                              /s/ Kevin F. Jones
                              ------------------
                              Dr. Kevin F. Jones

                                     E-235


 
                                                                   EXHIBIT 10(g)

                                     E-236

 
          EMPLOYMENT AGREEMENT BETWEEN THE COMPANY AND DAVID DE WEESE


                                        
                              EMPLOYMENT AGREEMENT

     Employment Agreement effective as of November 18, 1996 between SIGA
PHARMACEUTICALS, INC., a Delaware corporation (with its successors and assigns,
referred to as the "Corporation"), and David de Weese ("Employee").


                             PRELIMINARY STATEMENT

                                        
     The Corporation desires to employ Employee, and Employee wishes to continue
to be employed by the Corporation, upon the terms and subject to the conditions
set forth in this Agreement.  The Corporation and Employee also wish to enter
into the other agreements set forth in this Agreement, all of which are related
to Employee's employment under this Agreement.


                                 AGREEMENT

     Employee and the Corporation therefore agree as follows:

          1.  EMPLOYMENT FOR TERM.  The Corporation hereby employs Employee and
Employee hereby accepts employment with the Corporation for the three-year
period beginning on the date of this Agreement (the "Term"), or upon the earlier
termination of the Term pursuant to Section 6.  The termination of the Term for
any reason shall end Employee's employment under this Agreement, but shall not
terminate Employee's or the Corporation's other agreements in this Agreement.

          2.  POSITION AND DUTIES.  During the Term, Employee shall serve as
President, Chairman and Chief Executive Officer of the Corporation and shall be
responsible for developing and presenting the Corporation's strategies and
potential products or technologies, negotiating licensing and sublicensing
agreements, and directing product research and overall corporate direction.
During the Term, Employee shall also perform such other duties as the Board of
Directors of the Corporation (the "Board") may reasonably determine from time to
time.  During the Term, Employee shall devote as much time as necessary to
satisfactorily perform his duties as an employee of the Corporation.

          3.  COMPENSATION.

          (a)  BASE SALARY AND STOCK OPTIONS.  The Corporation shall pay
Employee a base salary of $225,000 per annum, as increased pursuant to Sections
3(b) and 3(c) ("Base Salary"), payable at least monthly on the Corporation's
regular pay cycle for professional employees.  The Corporation shall also pay
Employee a monthly car allowance of $500. In additon, the Corporation shall
grant to Employee 100,000 currently exerciseable options to purchase Common
Stock of the Corporation at an exercise price of $0.50 per share.  The
Corporation shall thereafter grant 100,000 stock options per annum to Employee
exercisable when granted at the then current market price.  The options may be
exercised at any time up to 10 years after their issuance.

          (b)  ANNUAL INCREASES.  The Base Salary shall be increased at the end
of each year of service by the greater of (i) 5% or (ii) a percentage equal to
the increase, if any, in the United States Department of Labor Consumer Price
Index (or comparable index, if unavailable) for the New York metropolitan area
over the previous 12 months.

          (c)  OTHER AND ADDITIONAL COMPENSATION.   Sections 3 and 3(b)
establishe the minimum compensation during the Term and shall not preclude the

                                     E-237

 
Board from awarding Employee a higher salary or any bonuses or additional stock
options in the discretion of the Board during the Term at any time.

          (d)  WARRANTS.  Upon the execution of this Agreement, Corporation
shall issue to Employee ten-year warrants to purchase 2,766,095 shares of the
Corporation's Common Stock at an exercise price of $.50 per share.  Warrants to
purchase 25% of such shares shall be immediately exerciseable and the remaining
warrants shall become exerciseable on a pro rata basis on the first, second and
third anniversaries of this Agreement.

          4.  EMPLOYEE BENEFITS.  During the Term, Employee shall be entitled to
the employee benefits, including vacation, health and other insurance benefits
made available by the Corporation to any other officers or key employees of the
Corporation.

          5.  EXPENSES.  The Corporation shall reimburse Employee for actual
out-of-pocket expenses incurred by him in the performance of his services for
the Corporation upon the receipt of appropriate documentation of such expenses.

          6.  TERMINATION.

          (a)  GENERAL.  The Term shall end immediately upon Employee's death,
and upon a change of ownership of at least fifty percent (50%) of the
outstanding Common Stock of the Corporation (on a fully converted basis) by
sale, merger, consolidation or other means (a "Change in Ownership").  The Term
may also end for Cause or Disability, as defined in Section 7.

          (b)  NOTICE OF TERMINATION.  Promptly after it ends the Term, the
Corporation shall give Employee notice of the termination, including a statement
of whether the termination was for Cause or Disability (as defined in Section 7
and 7(b) below).  The Corporation's failure to give notice under this Section 6
shall not, however, affect the validity of the Corporation's termination of the
Term.

          (c)  TERMINATION UPON CHANGE IN OWNERSHIP.  Upon a Change in Ownership
of the Corporation, the Term shall end and all compensation due Employee under
this Agreement will become immediately due and payable and all stock, warrants
and options of Employee in the Corporation shall immediately become vested.

          (d)  In the event this Agreement is terminated by the Corporation
without Cause, all compensation due Employee under this Agreement will become
immediately due and payable and all stock, warrants and options of Employee in
the Corporation shall immediately become vested.

          7.  SEVERANCE BENEFITS.

          (a)  "CAUSE" DEFINED.  "Cause" means (i) willful malfeasance or
willful misconduct by Employee in connection with his employment; (ii)
Employee's gross negligence in performing any of his duties under this
Agreement; (iii) Employee's conviction of, or entry of a plea of guilty to, or
entry of a plea of nolo contendere with respect to, any crime other than a
traffic violation or infraction which is a misdemeanor; (iv) Employee's material
breach of any written policy applicable to all employees adopted by the
Corporation; or (v) material breach by Employee of any of his agreements in this
Agreement.

          (b) DISABILITY DEFINED. "Disability" shall mean Employee's incapacity
due to physical or mental illness that results in his being unable to
substantially perform his duties hereunder for six consecutive months (or for
six months out of any nine month period).  During a period of Disability,
Employee shall continue to receive his base salary hereunder, provided that if
the Corporation provides Employee with disability insurance coverage, payments
of Employee's base salary shall be reduced by the amount of any disability
insurance payments received by Employee due to such coverage.  The Corporation

                                     E-238

 
shall give Employee written notice of termination which shall take effect thirty
(30) days after the date it is sent to Employee unless Employee shall have
returned to the performance of his duties hereunder during such thirty (30) day
period (whereupon such notice shall become void).

          8.  CONFIDENTIALITY.

          (a)  "CORPORATION INFORMATION" DEFINED.  "CORPORATION INFORMATION"
means all information, knowledge or data of or pertaining to (i) the
Corporation, its employees and all work undertaken on behalf of the Corporation,
and (ii) any other person, firm, corporation or business organization with which
the Corporation may do business during the Term, that is not in the public
domain (and whether relating to methods, processes, techniques, discoveries,
pricing, marketing or any other matters).

          (b) CONFIDENTIALITY.  Employee hereby recognizes that the value of all
trade secrets and other proprietary data and all other information of the
Corporation not in the public domain disclosed by the Corporation in the course
of his employment with the Corporation is attributable substantially to the fact
that such confidential information is maintained by the Corporation in strict
confidentiality and secrecy and would be unavailable to others without the
expenditure of substantial time, effort or money.  Employee therefore, except as
provided in the next two sentences, covenants and agrees that all Corporation
Information shall be kept secret and confidential at all times during and after
the end of the Term and shall not be used or divulged by him outside the scope
of his employment as contemplated by this Agreement, except as the Corporation
may otherwise expressly authorize by action of the Board.  In the event that
Employee is requested in a judicial, administrative or governmental proceeding
to disclose any of the Corporation Information, Employee will promptly so notify
the Corporation so that the Corporation may seek a protective order or other
appropriate remedy and/or waive compliance with this Agreement.  If disclosure
of any of the Corporation Information is required, Employee may furnish the
material so required to be furnished, but Employee will furnish only that
portion of the Corporation Information that legally is required.

          9.  COVENANT.

          (a)  NON-COMPETITION PERIOD DEFINED.  "Non-Competition Period" means
the period beginning at the end of the Term and ending one year following the
date of termination of Employee's employment.

          (b)  COVENANTS REGARDING THE TERM AND NON-COMPETITION PERIOD.
Employee acknowledges and agrees that his services pursuant to this Agreement
are unique and extraordinary; that the Corporation will be dependent upon
Employee for developing and presenting the Corporation's strategies and
potential products or technologies and directing product research and overall
corporate direction; and that he will have access to and control of confidential
information of the Corporation.  Employee further acknowledges that the business
of the Corporation is national in scope and cannot be confined to any particular
geographic area of the United States.  For the foregoing reasons and to induce
the Corporation to enter this Agreement, Employee covenants and agrees that
during the Term and the Non-Competition Period Employee shall not unless with
written consent of the Corporation:

       (i) engage in any business in which the Corporation had been engaged in
     during the Term ("Prohibited Activity") in the United States or elsewhere
     for his own account;

     (ii)  directly or indirectly, enter the employ of, or render any services,
     including but not limited to consultations, to any individual, corporation,
     partnership or other business entity (a "Person") engaged in any Prohibited
     Activity in the United States or elsewhere; or

                                     E-239

 
     (iii)  become interested in any Person engaged in any Prohibited Activity
     in the United States, directly or indirectly, as an individual, partner,
     shareholder, officer, director, principal, agent, employee, trustee,
     consultant or in any other relationship or capacity; provided, however,
     that Employee may own directly or indirectly, solely as an investment,
     securities of any Person which are traded on any national securities
     exchange if Employee (x) is not a controlling person of, or a member of a
     group which controls, such person or (y) does not, directly or indirectly,
     own 5% or more of any class of securities of such person;

     (iv)  directly or indirectly hire, engage or retain any person which at any
     time during the Term or Non-Competition Period was a supplier, client or
     customer of the Corporation, or directly or indirectly solicit, entice or
     induce any such person to become, a supplier, client or customer of any
     other person engaged in any Prohibited Activity; or

     (v)  directly or indirectly hire, employ or retain any person who at any
     time was an employee of the Corporation or directly or indirectly solicit,
     entice, induce or encourage any such person to become employed by any other
     person.

          (c)  EXCEPTION.  Sections 9(a) and (b) above shall not apply to (i)
any consulting arrangement which Employee may have or (ii) any stock, other
securities, Board of directors seat, or other interest which Employee may hold
as of November 17, 1996.

          (d)  REMEDIES.  Employee hereby acknowledges that the covenants and
agreements contained in Section 8  are reasonable and valid in all respects and
that the Corporation is entering into this Agreement, inter alia, on such
                                                      ----------         
acknowledgment.  If Employee breaches, or threatens to commit a breach, of this
Section 9, the Corporation shall have the following rights and remedies, each of
which rights and remedies shall be independent of the other and severally
enforceable, and all of which rights and remedies shall be in addition to, and
not in lieu of, any other rights and remedies available to the Corporation under
law or in equity: (i) the right and remedy to have this Section 9 specifically
enforced by any court having equity jurisdiction, it being acknowledged and
agreed that any such breach or threatened breach will cause irreparable injury
to the Corporation and that money damages will not provide an adequate remedy to
the Corporation; (ii) the right and remedy to require Employee to account for
and pay over to the Corporation all compensation, profits, monies, accruals,
increments or other benefits (collectively, "Benefits") derived or received by
Employee as the result of any transactions constituting a breach of this Section
9, and Employee shall account for and pay over such Benefits to the Corporation;
(iii) if any court determines that any of the Restrictive Covenants, or any part
thereof, is invalid or unenforceable, the remainder of this Section 9 shall not
thereby be affected and shall be given full effect, without regard to the
invalid portions; and (iv) if any court construes any of this Section 9, or any
part thereof, to be unenforceable because of the duration of such provision or
the area covered thereby, such court shall have the power to reduce the duration
or area of such provision and, in its reduced form, such provision shall then be
enforceable and shall be enforced.

          (e)  JURISDICTION.  The parties intend to and hereby confer
jurisdiction to enforce this Section 9 upon the courts of any jurisdiction
within the geographical scope of such Covenants.  If the courts of any one or
more such jurisdictions hold this Section 9 wholly unenforceable by reason of
the breadth of such scope or otherwise, it is the intention of the parties that
such determination not bar or in any way affect the Corporation's right to the
relief provided above in the courts of any other jurisdiction, within the
geographical scope of such Covenants, as to breaches of such Covenants in such
other respective jurisdictions such Covenants as they relate to each
jurisdiction being, for this purpose, severable into diverse and independent
covenants.

                                     E-240

 
     10.  SUCCESSORS AND ASSIGNS.

          (a) EMPLOYEE.  This Agreement is a personal contract, and the rights
and interests that the Agreement accords to Employee may not be sold,
transferred, assigned, pledged, encumbered, or hypothecated by him.  All rights
and benefits of Employee shall be for the sole personal benefit of Employee, and
no other person shall acquire any right, title or interest under this Agreement
by reason of any sale, assignment, transfer, claim or judgment or bankruptcy
proceedings against Employee.  Except as so provided, this Agreement shall inure
to the benefit of and be binding upon Employee and his personal representatives,
distributees and legatees.

          (b) THE CORPORATION.  Subject to Section 6(c), this Agreement shall be
binding upon the Corporation and inure to the benefit of the Corporation and of
its successors and assigns.

     10.  SUCCESS FEE.  Upon the successful completion of a transaction
resulting in a Change in Ownership of the Corporation, the Corporation shall pay
to Employee, in consideration of his work on behalf of the Corporation, a one
time cash payment equal to one and one-half percent (1.5%) of the total
consideration received by the Corporation.

     11.  ENTIRE AGREEMENT.  This Agreement represents the entire agreement
between the parties concerning Employee's employment with the Corporation and
supersedes all prior negotiations, discussions, understandings and agreements,
whether written or oral, between Employee and the Corporation relating to the
subject matter of this Agreement.

     12.  AMENDMENT OR MODIFICATION, WAIVER.  No provision of this Agreement may
be amended or waived unless such amendment or waiver is agreed to in writing
signed by Employee and by a duly authorized officer of the Corporation.  No
waiver by any party to this Agreement of any breach by another party of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar or dissimilar condition or provision at
the same time, any prior time or any subsequent time.

     13.  NOTICES.  Any notice to be given under this Agreement shall be in
writing and delivered personally or sent by overnight courier or registered or
certified mail, postage prepaid, return receipt requested, addressed to the
party concerned at the address indicated below, or to such other address of
which such party subsequently may give notice in writing:

If to Employee:          David de Weese
                         666 Third Avenue
                         30th Floor
                         New York, NY 10017

If to the Corporation:   SIGA PHARMACEUTICALS, INC.
                         666 Third Avenue
                         30th Floor
                         New York, NY 10017
                         Attention:  Dr. Joshua D. Schein

with a copy to:          Fitzpatrick Eilenberg & Zivian
                         666 Third Avenue
                         30th Floor
                         New York, NY 10017
                         Attention:  Jeffrey D. Abbey, Esq.
 
 

Any notice delivered personally or by overnight courier shall be deemed given on
the date delivered and any notice sent by registered or certified mail,

                                     E-241

 
postage prepaid, return receipt requested, shall be deemed given on the date
mailed.

     14.  SEVERABILITY.  If any provision of this Agreement or the application
of any such provision to any party or circumstances shall be determined by any
court of competent jurisdiction to be invalid and unenforceable to any extent,
the remainder of this Agreement or the application of such provision to such
person or circumstances other than those to which it is so determined to be
invalid and unenforceable shall not be affected, and each provision of this
Agreement shall be validated and shall be enforced to the fullest extent
permitted by law.  If for any reason any provision of this Agreement containing
restrictions is held to cover an area or to be for a length of time that is
unreasonable or in any other way is construed to be too broad or to any extent
invalid, such provision shall not be determined to be entirely null, void and of
no effect; instead, it is the intention and desire of both the Corporation and
Employee that, to the extent that the provision is or would be valid or
enforceable under applicable law, any court of competent jurisdiction shall
construe and interpret or reform this Agreement to provide for a restriction
having the maximum enforceable area, time period and such other constraints or
conditions (although not greater than those contained currently contained in
this Agreement) as shall be valid and enforceable under the applicable law.

     15.  SURVIVORSHIP.  The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.

     16.  HEADINGS.  All descriptive headings of sections and paragraphs in this
Agreement are intended solely for convenience of reference, and no provision of
this Agreement is to be construed by reference to the heading of any section or
paragraph.

     17.  WITHHOLDING TAXES.  All salary, benefits, reimbursements and any other
payments to Employee under this Agreement shall be subject to all applicable
payroll and withholding taxes and deductions required by any law, rule or
regulation of and federal, state or local authority.
 
     18.  COUNTERPARTS.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together constitute one and same instrument.

     19.  APPLICABLE LAW:  JURISDICTION.  The laws of the State of New York
shall govern the interpretation, validity and performance of the terms of this
Agreement, without reference to rules relating to conflicts of law.  Any suit,
action or proceeding against Employee with respect to this Agreement, or any
judgment entered by any court in respect thereof, may be brought in any court of
competent jurisdiction in the State of New York, as the Corporation may elect in
its sole discretion, and Employee hereby submits to the nonexclusive
jurisdiction of such courts for the purpose of any such suit, action, proceeding
or judgment.

                                     E-242

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



                         /s/ David de Weese
                         ------------------
                         David de Weese



                         SIGA PHARMACEUTICALS, INC.


                         By:  /s/ Joshua D. Schein             
                              --------------------                             
                              Joshua D. Schein

 

                                     E-243


 
                                                                   EXHIBIT 10(h)

                                     E-244

 
         CONSULTING AGREEMENT BETWEEN THE COMPANY AND CSO VENTURES, LLC


                              CONSULTING AGREEMENT


     CONSULTING AGREEMENT ("Agreement"), dated as of January 1, 1996, between
SIGA Pharmaceuticals, Inc., a Delaware corporation (the "Company"), and CSO
Ventures LLC (the "Consultant").

     WHEREAS, the Company desires to retain Consultant, and Consultant desires
to be retained pursuant to the terms and conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants herein contained, it is agreed as follows:

          1.   DUTIES.  The Company hereby retains the Consultant to provide
business development, operations and other advisory services, and the Consultant
hereby accepts such retention and shall perform for the Company the duties
described herein, faithfully and to the best of its ability.

          2.   TERM.  The Consultant's retention hereunder shall commence upon
the initial funding of the company and shall terminate on January 15, 1998,
unless within 90 days of that date, the parties elect by signed agreement to
renew or extend the term.

          3.   COMPENSATION AND EXPENSES.

          (a) In consideration for Consultant's performing the Consulting
Services for the Company, the Company shall pay to Consultant a consulting fee
of $120,000 per year, payable monthly.

          (b) In addition to its consulting fees, Consultant may also be paid
annual bonuses, and other compensation, including stock options, as may be
determined by the Board of Directors of the Company.
 
          (c) The Company will reimburse Consultant for actual out-of-pocket
expenses incurred in connection with the performance of the Consulting Services,
provided that Consultant submits receipts or other expense records to the
Company in accordance with the Company's general reimbursement policy then in
effect.
 
          4.   SUCCESSORS AND ASSIGNS.  This Agreement is binding upon and
inures to the benefit of the Company and its affiliates, successors and assigns
and is binding upon and inures to the benefit of Consultant and its successors
and assigns; provided that in no event shall Consultant's obligations to perform
the Consulting Services be delegated or transferred by Consultant without the
prior written consent of the Company.

          5.   TERMINATION.

          (a) This Agreement may only be terminated by the Company for Cause.

          (b) The Company shall have "Cause" to terminate this Agreement upon
any material breach by Consultant of any provision of this Agreement.

          (c) In the event of a termination of this Agreement for Cause,
Consultant shall receive consulting fees only to the Date of Termination.  If
the Company shall terminate Consultant other than for Cause, the Company shall
be obligated to pay Consultant the full amount of compensation due Consultant
hereunder through the completion of the term.

                                     E-245

 
          6.   CONFIDENTIALITY.

          Consultant hereby recognizes that the value of all trade secrets and
other proprietary data and all other information of the Company not in the
public domain ("Confidential Information") disclosed by the Company in the
course of performing Consulting Services with the Company is attributable
substantially to the fact that such Confidential Information is maintained by
the Company in the strict confidentiality and secrecy and would be unavailable
to others without the expenditure of substantial time, effort or money.
Consultant, therefore, covenants and agrees to keep strictly secret and
confidential the Confidential Information of the Company in accordance with the
following provisions of this Section 6.  Consultant covenants and agrees to
safeguard the Confidential Information of the Company disclosed to or otherwise
acquired by Consultant in the course of performing Consulting Services and to
prevent the disclosure or other dissemination thereof to any third party, or the
use thereof by any competitor.  In implementation of the foregoing, Consultant
shall not disclose any of the Confidential Information of the Company to any
employee or consultant except those for whom disclosure is necessary for the
effective performance of their responsibilities as employees or consultants and,
in each case, only to the extent required for such effective performance of
responsibilities by employees or consultants to whom such disclosure is made
pursuant to this Section 6.  The obligations undertaken by Consultant pursuant
to this Section 6 shall not apply to any Confidential Information which
hereafter shall become published or otherwise generally available to the public,
except in consequence of a willful or negligent act or admission by Consultant,
or its employees or consultants, in contravention of the obligations hereinabove
set forth in this Section 6, and such obligations shall, as so limited, survive
expiration or termination of this Agreement.

          7.   REPRESENTATIONS AND WARRANTIES. Consultant represents and
warrants that it is not under any obligation, contractual or otherwise to any
person or entity which would prevent it from entering into this Agreement or
prevent, impede or hinder it from fully faithfully performing any of its duties
and services hereunder.

          8.   COUNTERPARTS.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

          9.   SEVERABILITY.  If in any jurisdiction, any provision of this
Agreement or its application to any party or circumstance is restricted,
prohibited or unenforceable, such provision shall, as to such jurisdiction, be
ineffective only to the extent of such restriction, prohibition or
unenforceability, without invalidating the remaining provisions hereof and
without affecting the validity or enforceability of such provision in any other
jurisdiction or its application to other parties or circumstances.  In addition,
if any one or more of the provisions contained in this Agreement shall for any
reason in any jurisdiction be held to be excessively broad as to time, duration,
geographical scope, activity or subject, it shall be construed, by limiting and
reduction it, so as to be enforceable to the extent compatible with the
applicable law of such jurisdiction as it shall then appear.

                                     E-246

 
     IN WITNESS WHEREOF, this Consulting Agreement has been executed by the
Company and Consultant as of the date first written above.



                         SIGA PHARMACEUTICALS, INC.


                         By:  /s/ Judson A. Cooper
                              --------------------
                              Authorized Officer
 


 
                         CSO VENTURES LLC
 
                         By:  /s/ Joshua D. Schein
                              --------------------
                              Authorized Officer

                                     E-247


 
                                                                   EXHIBIT 10(i)

                                     E-248

 
     CONSULTING AGREEMENT BETWEEN THE COMPANY AND DR. VINCENT A. FISCHETTI



                              CONSULTING AGREEMENT


     CONSULTING AGREEMENT ("Agreement"), dated as of January 1, 1996, between
SIGA Pharmaceuticals, Inc., a Delaware corporation having offices at 666 Third
Avenue, 30th Floor, New York, NY 10017 and Dr. Vincent A. Fischetti, c/o The
Rockefeller University, 1230 York Avenue, New York, NY 10021 ("Consultant").

     WHEREAS, the Company has entered into a License and Research Support
Agreement, dated as of the date hereof ("the "License Agreement") with
Consultant's current employer The Rockefeller University ("Rockefeller")
covering certain technology relating to vaccines and the development of
antibiotics.

     WHEREAS, in connection with the License Agreement and the Company's support
of scientific research to be engaged in by Rockefeller thereunder, the Company
desires to retain Consultant, and Consultant desires to be retained, as a part-
time Chief Scientific Advisor, all pursuant to the terms and conditions
hereinafter set forth.

     NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants herein contained, it is agreed as follows:

          1.   DUTIES.  The Company hereby retains the Consultant as its part-
time Chief Scientific Advisor, to assist in the administration of the License
Agreement and in the performance of scientific research thereunder in research
laboratories at Rockefeller (the "Consulting Services"), and the Consultant
hereby accepts such retention and shall perform for the Company the duties
described herein, faithfully and to the best of his ability.  In this regard,
Consultant shall devote an average of 19% of his business time and attention to
matters on which the Company shall request his services, subject to the
direction of senior management of the Company.

          2.   TERM.  The Consultant's retention hereunder shall be for a term
of two (2) years (the "Initial Term") commencing as of the date hereof, and
shall be automatically renewed for up to three additional one (1) year periods
(each period a "Renewal Term"; together with the Initial Term, the "Consultancy
Period") unless either party notifies the other in writing of its intention not
to so renew this Agreement no less than 90 days prior to the expiration of the
Initial Term or any Renewal Term.

          3.   PLACE OF PERFORMANCE.  In connection with rendering Consulting
Services to the Company, Consultant shall be based in New York, NY, where the
Company currently has its executive offices and where Rockefeller's research
laboratories currently are located.  Consultant acknowleges that the Company may
require that from time to time Consultant travel on behalf of the Company in
connection with scientific conferences or meetings with potential strategic or
financial partners or advisors, or in connection with potential financing
transactions, and the Company shall give Consultant reasonable prior notice of
such requirements and an approximation of the number of days that Consultant's
services will be required.

          4.   COMPENSATION AND EXPENSES.

          (a) In consideration for Consultant's performing the Consulting
Services for the Company, the Company shall pay to Consultant a consulting fee
of $75,000 per year, payable quarterly in advance.

          (b) In addition to its consulting fees, Consultant may also be paid
annual bonuses and other compensation, including stock options, as may be
determined by the Board of Directors of the Company.

                                     E-249

 
          (c) The Company will reimburse Consultant for actual out-of-pocket
expenses incurred in connection with the performance of the Consulting Services,
provided that Consultant submits receipts or other expense records to the
Company in accordance with the Company's general reimbursement policy then in
effect.

          5.   EMPLOYEE BENEFIT PLANS.  Because Consultant is a consultant to
and not an employee of the Company, Consultant shall not be entitled to
participate in any employee benefit plans in effect for employees of the
Company.

          6.   SUCCESSORS AND ASSIGNS.  This Agreement is binding upon and
inures to the benefit of the Company and its affiliates, successors and assigns
and is binding upon and inures to the benefit of Consultant and his successors
and assigns; provided that in no event shall Consultant's obligations to perform
the Consulting Services be delegated or transferred by Consultant without the
prior written consent of the Company.

          7.   TERMINATION.

          (a) This Agreement may only be terminated by the Company for Cause, or
upon Consultant's death or Disability.

          (b) The Company shall have "Cause" to terminate this Agreement upon
(i) Consultant's conviction of, or plea of "no contest" to, any felony; or (ii)
any material breach by Consultant of any provision of this Agreement.

          (c) "Disability" shall mean Consultant's incapacity due to physical or
mental illness that results in his being unable to substantially perform his
duties hereunder for six consecutive months (or for six months out of any nine
month period).  The Company shall give Consultant written notice of termination
which shall take effect thirty (30) days after the date it is sent to Consultant
unless Consultant shall have returned to the performance of his duties hereunder
during such thirty (30) day period (whereupon such notice shall become void).

          (d) In the event of a termination of this Agreement for Cause, or
Consultant's death or Disability, Consultant shall receive consulting fees only
to the Date of Termination.  If the Company shall terminate Consultant other
than for Cause or his death or Disability, the Company shall be obligated to pay
Consultant the full amount of compensation due Consultant hereunder through the
completion of the Initial Term, or the Renewal Term, as the case may be, then in
effect at the time of termination.

          8.   INVENTIONS, PATENTS AND TECHNOLOGY.  Consultant shall promptly
and fully disclose to the Company any and all inventions, methods, improvements,
discoveries, original works of authorship, trade secrets, or other intellectual
property conceived, developed or reduced to practice by Consultant or any of his
employees, consultants or research assistants, during the performance of the
Consulting Services hereunder or derived from Confidential Information, as
hereinafter defined, including without limitation, as relates to the Core
Technology, as defined in the License Agreement (collectively, "Work Product").
Consultant shall treat all Work Product as the Confidential Information of the
Company.  Consultant agrees and does hereby assign to the Company and its
successors and assigns, without further consideration, his entire right, title
and interest in and to all Work Product developed during the performance of
Consulting Services hereunder or derived from any Confidential Information,
whether or not patentable or copyrightable, subject only to the provisions of
the License Agreement and Rockefeller's rights thereunder and any other existing
written agreement Consultant may have with Rockefeller.  Consultant further
agrees to execute all applications for patents and/or copyrights, domestic or
foreign, assignments and other papers necessary to secure and enforce rights
relating to the Work Product.  The parties acknowledge that all original works
of authorship that are made by Consultant within the scope of the Consulting

                                     E-250

 
Services and that may be protected by copyrighted are "works made for hire," as
that time is defined in the United States Copyright Act (17 USC Section 101).

          9.   COVENANTS.

          (a) Consultant hereby recognizes that the value of all trade secrets
and other proprietary data and all other information of the Company not in the
public domain ("Confidential Information") disclosed by the Company in the
course of performing Consulting Services with the Company is attributable
substantially to the fact that such Confidential Information is maintained by
the Company in the strict confidentiality and secrecy and would be unavailable
to others without the expenditure of substantial time, effort or money.
Consultant, therefore, covenants and agrees to keep strictly secret and
confidential the Confidential Information of the Company in accordance with the
following provisions of this Section 9(a), subject only to the provisions of the
License Agreement and Rockefeller's rights thereunder.  Consultant covenants and
agrees to safeguard the Confidential Information of the Company disclosed to or
otherwise acquired by Consultant in the course of performing Consulting Services
and to prevent the disclosure or other dissemination thereof to any third party,
or the use thereof by any competitor.  In implementation of the foregoing,
Consultant shall not disclose any of the Confidential Information of the Company
to any employee, consultant or research assistant except those for whom
disclosure is necessary for the effective performance of their responsibilities
as employees, consultants or research assistants and, in each case, only to the
extent required for such effective performance of responsibilities by employees,
consultants or research assistants to whom such disclosure is made pursuant to
this Section 9(a).  The obligations undertaken by Consultant pursuant to this
Section 9(a) shall not apply to any Confidential Information which hereafter
shall become published or otherwise generally available to the public, except in
consequence of a willful or negligent act or admission by Consultant, or his
employees, consultants or research assistants, in contravention of the
obligations hereinabove set forth in this Section 9(a), and such obligations
shall, as so limited, survive expiration or termination of this Agreement.

          (b) Consultant shall not, during or after the term of this Agreement,
make any statement or do any act which will disparage or injure the goodwill or
reputation of the Company.

          (c) Consultant acknowledges and agrees that (i) the principal business
of the Company is development of the Core Technology, as defined in the License
Agreement; (ii) he is one of the limited number of persons who has developed
such business; (iii) the business of the Company is conducted primarily
throughout the United States but also internationally; (iv) his work for the
Company has included the identification and solicitation of present and
prospective strategic partners; (v) his work for the Company has provided him,
and his consulting services for the Company will continue to provide him, with
confidential information.  To induce the Company to enter into this Agreement,
Consultant covenants and agrees that:

          (i) From the date hereof and until the date that is two (2) years from
the expiration of the Consultancy Period (the "Restricted Period"), Consultant
shall not unless with written consent of the Company:

     (A) engage in the business of research and development of the Core
     Technology, or, (I) during the Consultancy Period, engage in the business
     of research and development of any other products or processes in which the
     Company is engaged during the term of this Agreement or in any other
     business presently being conducted or which may from time to time be
     conducted by the Company, or, (II) during the two year period after the end
     of the Consultancy Period, engage in the business of research and
     development of any other products or processes in which the Company had
     been engaged at the end of the Consultancy Period or for the six (6) months
     prior thereto or in any other business conducted by the

                                     E-251

 
     Company at the end of the Consultancy Period or for the six (6) months
     prior thereto (collectively the "Prohibited Activity") in the United States
     or elsewhere for his own account;

     (B) directly or indirectly, enter the employ of, or render any services to,
     any individual, corporation, partnership or other business entity (a
     "Person") engaged in any Prohibited Activity in the United States or
     elsewhere; or

     (C) become interested in any Person engaged in any Prohibited Activity in
     the United States, directly or indirectly, as an individual, partner,
     shareholder, officer, director, principal, agent, employee, trustee,
     consultant or in any other relationship or capacity; provided, however,
     that Consultant may own directly or indirectly, solely as an investment,
     securities of any Person which are traded on any national securities
     exchange if Consultant (x) is not a controlling person of, or a member of a
     group which controls, such person or (y) does not, directly or indirectly,
     own 5% or more of any class of securities of such person;

          (ii) directly or indirectly hire, engage or retain any person which at
any time during the Restricted Period or for the two year period prior thereto
was a supplier, client or customer of the Company, or directly or indirectly
solicit, entice or induce any such person to become, a supplier, client or
customer of any other person engaged in any Prohibited Activity; or

          (iii)  directly or indirectly hire, employ or retain any person who at
any time was an employee of the Company or directly or indirectly solicit,
entice, induce or encourage any such person to become employed by any other
person.

          (d)  The restrictions of Section 9(c) shall continue to apply in the
event that the Consultant elects not to renew this Agreement in accordance with
the provisions of Section 2.

          (e)  Notwithstanding the foregoing, the restrictions of Section 9(c)
shall not apply in the event Consultant is terminated without Cause by the
Company or if the rights to the Core Technology revert back to The Rockefeller
University.

          (f)  Consultant hereby acknowledges that the covenants and agreements
contained in Sections 8 and 9 (the "Restrictive Covenants") are reasonable and
valid in all respects and that the Company is entering into this Agreement,
inter alia, on such acknowledgment.  If Consultant breaches, or threatens to
- ----------                                                                  
commit a breach, of any of the Restrictive Covenants, the Company shall have the
following rights and remedies, each of which rights and remedies shall be
independent of the other and severally enforceable, and all of which rights and
remedies shall be in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or in equity: (i) the right and
remedy to have the Restrictive Covenants specifically enforced by any court
having equity jurisdiction, it being acknowledged and agreed that any such
breach or threatened breach will cause irreparable injury to the Company and
that money damages will not provide an adequate remedy to the Company; (ii) the
right and remedy to require Consultant to account for and pay over to the
Company all compensation, profits, monies, accruals, increments or other
benefits (collectively, "Benefits") derived or received by Consultant as the
result of any transactions constituting a breach of any of the Restrictive
Covenants, and Consultant shall account for and pay over such Benefits to the
Company; (iii) if any court determines that any of the Restrictive Covenants, or
any part thereof, is invalid or unenforceable, the remainder of the Restrictive
Covenants shall not thereby be affected and shall be given full effect, without
regard to the invalid portions; and (iv) if any court construes any of the
Restrictive Covenants, or any part thereof, to be unenforceable because of the
duration of such provision or the area covered thereby, such court shall have
the power to reduce the duration or area of

                                     E-252

 
such provision and, in its reduced form, such provision shall then be
enforceable and shall be enforced.

          (g)  The parties intend to and hereby confer jurisdiction to enforce
the Restrictive Covenants upon the courts of any jurisdiction within the
geographical scope of such Covenants.  If the courts of any one or more such
jurisdictions hold the Restrictive Covenants wholly unenforceable by reason of
the breadth of such scope or otherwise, it is the intention of the parties that
such determination not bar or in any way affect the Company's right to the
relief provided above in the courts of any other jurisdiction, within the
geographical scope of such Covenants, as to breaches of such Covenants in such
other respective jurisdictions such Covenants as they relate to each
jurisdiction being, for this purpose, severable into diverse and independent
covenants.

          10.  REPRESENTATIONS AND WARRANTIES.  Consultant represents and
warrants that he is not under any obligation, contractual or otherwise, to
Rockefeller or to any other person, which would prevent his entering into this
Agreement or prevent, impede or hinder his fully faithfully performing any of
his duties and services hereunder.

          11.  NOTICE.  For the purpose of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given (i) when delivered, if personally delivered, (ii) when sent
by facsimile transmission, when receipt therefor has been duly received, or
(iii) when mailed by United States registered mail, return receipt requested,
postage prepaid, or by recognized overnight courier, addressed as follows:

          If, to Consultant:

               Dr. Vincent A. Fischetti
               c/o Rockefeller University
               1230 York Avenue
               New York, NY 10021
               Fax: 212-327-7584

          If, to the Company:

               SIGA Pharmaceuticals, Inc.
               666 Third Avenue, 30th Floor
               New York, NY 10017
               Attention: President
               Fax: 212-986-2399

or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.

          12.  MISCELLANEOUS.  No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by authorized officers of each party.  No waiver by either
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.  No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.  The validity,
interpretation, construction and performance of this Agreement shall be governed
by the internal laws of the State of New York.  Any controversy arising under or
in relation to this Agreement shall be settled by binding arbitration in New
York, New York in accordance with the laws of the State of New York and the
rules of the American Arbitration Association.

                                     E-253

 
          13.  COUNTERPARTS.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

          14.  SEVERABILITY.  If in any jurisdiction, any provision of this
Agreement or its application to any party or circumstance is restricted,
prohibited or unenforceable, such provision shall, as to such jurisdiction, be
ineffective only to the extent of such restriction, prohibition or
unenforceability, without invalidating the remaining provisions hereof and
without affecting the validity or enforceability of such provision in any other
jurisdiction or its application to other parties or circumstances.  In addition,
if any one or more of the provisions contained in this Agreement shall for any
reason in any jurisdiction be held to be excessively broad as to time, duration,
geographical scope, activity or subject, it shall be construed, by limiting and
reduction it, so as to be enforceable to the extent compatible with the
applicable law of such jurisdiction as it shall then appear.

     IN WITNESS WHEREOF, this Consulting Agreement has been executed by the
Company and Consultant as of the date first written above.

                    SIGA PHARMACEUTICALS, INC.


                    By: /s/ Joshua D. Schein
                        --------------------
                         Authorized Officer
 

 
                                     Vincent A. Fischetti
                            ---------------------------------
                          Dr. Vincent A. Fischetti

                                     E-254


 
                                                                   EXHIBIT 10(j)

                                     E-255

 
         CONSULTING AGREEMENT BETWEEN THE COMPANY AND DR. DENNIS HRUBY

                                                                         [HRUBY]

                              CONSULTING AGREEMENT


     CONSULTING AGREEMENT ("Agreement"), dated as of January 1, 1996, between
SIGA Pharmaceuticals, Inc., a Delaware corporation having offices at 666 Third
Avenue, 30th Floor, New York, NY 10017 and Dr. Dennis Hruby, 4017 NW Christine,
Corvallis, OR 97330-3263 ("Consultant").

     WHEREAS, the Company has entered into a Research Support Agreement, dated
as of the date hereof (the "Research Agreement") with Consultant's current
employer The State Board of Higher Education on behalf of Oregon State
University ("Oregon") covering certain technology relating to vaccines and the
development of antibiotics.

     WHEREAS, in connection with the Research Agreement and the Company's
support of scientific research to be engaged in by Oregon thereunder, the
Company desires to retain Consultant, and Consultant desires to be retained, as
a part-time Senior Scientific Advisor, all pursuant to the terms and conditions
hereinafter set forth.

     NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and covenants herein contained, it is agreed as follows:

          1.   DUTIES.  The Company hereby retains the Consultant as its part-
time Senior Scientific Advisor, to assist in the administration of the Research
Agreement and in the performance of scientific research thereunder in research
laboratories at Oregon (the "Consulting Services"), and the Consultant hereby
accepts such retention and shall perform for the Company the duties described
herein, faithfully and to the best of his ability.  In this regard, Consultant
shall devote an average of 20% of his business time and attention to matters on
which the Company shall request his services, subject to the direction of senior
management of the Company.

          2.   TERM.  The Consultant's retention hereunder shall be for a term
of two (2) years (the "Initial Term") commencing as of the date hereof, and
shall be automatically renewed for up to three additional one (1) year periods
(each period a "Renewal Term"; together with the Initial Term, the "Consultancy
Period") unless either party notifies the other in writing of its intention not
to so renew this Agreement no less than 90 days prior to the expiration of the
Initial Term or any Renewal Term.

          3.   PLACE OF PERFORMANCE.  In connection with rendering Consulting
Services to the Company, Consultant shall be based in Corvallis, Oregon, where
Oregon's research laboratories currently are located.  Consultant acknowleges
that the Company may require that from time to time Consultant travel on behalf
of the Company in connection with scientific conferences or meetings with
potential strategic or financial partners or advisors, or in connection with
potential financing transactions, and the Company shall give Consultant
reasonable prior notice of such requirements and an approximation of the number
of days that Consultant's services will be required.

          4.   COMPENSATION AND EXPENSES.

          (a) In consideration for Consultant's performing the Consulting
Services for the Company, the Company shall pay to Consultant a consulting fee
of $50,000 per year, payable quarterly in advance.

          (b) In addition to its consulting fees, Consultant may also be paid
such bonuses and other compensation, including stock options, if any, as may
from time to time be determined by the Board of Directors of the Company.

                                     E-256

 
          (c) The Company will reimburse Consultant for actual out-of-pocket
expenses incurred in connection with the performance of the Consulting Services,
provided that Consultant submits receipts or other expense records to the
Company in accordance with the Company's general reimbursement policy then in
effect.


          5.   EMPLOYEE BENEFIT PLANS.  Because Consultant is a consultant to
and not an employee of the Company, Consultant shall not be entitled to
participate in any employee benefit plans in effect for employees of the
Company.


          6.   SUCCESSORS AND ASSIGNS.  This Agreement is binding upon and
inures to the benefit of the Company and its affiliates, successors and assigns
and is binding upon and inures to the benefit of Consultant and his successors
and assigns; provided that in no event shall Consultant's obligations to perform
the Consulting Services be delegated or transferred by Consultant without the
prior written consent of the Company.


          7.   TERMINATION.


          (a) This Agreement may be terminated by the Company for Cause, or upon
Consultant's death or Disability.

          (b) The Company shall have "Cause" to terminate this Agreement upon
(i) Consultant's conviction of, or plea of "no contest" to, any felony; or (ii)
any material breach by Consultant of any provision of this Agreement.

          (c) "Disability" shall mean Consultant's incapacity due to physical or
mental illness that results in his being unable to substantially perform his
duties hereunder for six consecutive months (or for six months out of any nine
month period).  The Company shall give Consultant written notice of termination
which shall take effect thirty (30) days after the date it is sent to Consultant
unless Consultant shall have returned to the performance of his duties hereunder
during such thirty (30) day period (whereupon such notice shall become void).

          (d) In the event of a termination of this Agreement for Cause, or
Consultant's death or Disability, Consultant shall receive consulting fees only
to the Date of Termination.  If the Company shall terminate Consultant other
than for Cause or his death or Disability, the Company shall be obligated to pay
Consultant the full amount of compensation due Consultant hereunder through the
completion of the Initial Term, or the Renewal Term, as the case may be, then in
effect at the time of termination.

          8.   INVENTIONS, PATENTS AND TECHNOLOGY.  Consultant shall promptly
and fully disclose to the Company any and all inventions, methods, improvements,
discoveries, original works of authorship, trade secrets, or other intellectual
property conceived, developed or reduced to practice by Consultant or any of his
employees, consultants or research assistants, during the performance of the
Consulting Services hereunder or derived from Confidential Information, as
hereinafter defined, including without limitation, as relates to the Core
Technology, as defined in the Research Agreement (collectively, "Work Product").
Consultant shall treat all Work Product as the Confidential Information of the
Company.  Consultant agrees and does hereby assign to the Company and its
successors and assigns, without further consideration, his entire right, title
and interest in and to all Work Product developed during the performance of
Consulting Services hereunder or derived from any Confidential Information,
whether or not patentable or copyrightable, subject only to the provisions of
the Research Agreement and Oregon's rights thereunder and any other existing
written agreement Consultant may have with Oregon.  Consultant further agrees to
execute all applications

                                     E-257

 
for patents and/or copyrights, domestic or foreign, assignments and other papers
necessary to secure and enforce rights relating to the Work Product.  The
parties acknowledge that all original works of authorship that are made by
Consultant within the scope of the Consulting Services and that may be protected
by copyrighted are "works made for hire," as that time is defined in the United
States Copyright Act (17 USC Section 101).

          9.   COVENANTS.

          (a) Consultant hereby recognizes that the value of all trade secrets
and other proprietary data and all other information of the Company not in the
public domain ("Confidential Information") disclosed by the Company in the
course of performing Consulting Services with the Company is attributable
substantially to the fact that such Confidential Information is maintained by
the Company in the strict confidentiality and secrecy and would be unavailable
to others without the expenditure of substantial time, effort or money.
Consultant, therefore, covenants and agrees to keep strictly secret and
confidential the Confidential Information of the Company in accordance with the
following provisions of this Section 9(a), subject only to the provisions of the
Research Agreement and Oregon's rights thereunder.  Consultant covenants and
agrees to safeguard the Confidential Information of the Company disclosed to or
otherwise acquired by Consultant in the course of performing Consulting Services
and to prevent the disclosure or other dissemination thereof to any third party,
or the use thereof by any competitor.  In implementation of the foregoing,
Consultant shall not disclose any of the Confidential Information of the Company
to any employee, consultant or research assistant except those for whom
disclosure is necessary for the effective performance of their responsibilities
as employees, consultants or research assistants and, in each case, only to the
extent required for such effective performance of responsibilities by employees,
consultants or research assistants to whom such disclosure is made pursuant to
this Section 9(a).  The obligations undertaken by Consultant pursuant to this
Section 9(a) shall not apply to any Confidential Information which hereafter
shall become published or otherwise generally available to the public, except in
consequence of a willful or negligent act or admission by Consultant, or his
employees, consultants or research assistants, in contravention of the
obligations hereinabove set forth in this Section 9(a), and such obligations
shall, as so limited, survive expiration or termination of this Agreement.

          (b) Neither party shall, during or after the term of this Agreement,
make any statement or do any act which will disparage or injure the goodwill or
reputation of the other party.

          (c) Consultant acknowledges and agrees that (i) the principal business
of the Company is development of the Core Technology, as defined in the Research
Agreement; (ii) he is one of the limited number of persons who has developed
such business; (iii) the business of the Company is conducted primarily
throughout the United States but also internationally; (iv) his work for the
Company has included the identification and solicitation of present and
prospective strategic partners; (v) his work for the Company has provided him,
and his consulting services for the Company will continue to provide him, with
confidential information.  To induce the Company to enter into this Agreement,
Consultant covenants and agrees that:

          (i) From the date hereof and until the date that is two (2) years from
the expiration of the Consultancy Period (the "Restricted Period"), Consultant
shall not unless with written consent of the Company:

     (A) engage in the business of research and development of the Core
     Technology, or, (I) during the Consultancy Period, engage in the business
     of research and development of any other products or processes in which the
     Company is engaged during the term of this Agreement or in any other
     business presently being conducted or which may from time to time be
     conducted by the Company, or, (II) during the two year period after the end
     of the Consultancy Period, engage in the business of

                                     E-258

 
     research and development of any other products or processes in which the
     Company had been engaged at the end of the Consultancy Period or for the
     six (6) months prior thereto or in any other business conducted by the
     Company at the end of the Consultancy Period or for the six (6) months
     prior thereto (collectively the "Prohibited Activity") in the United States
     or elsewhere for his own account;

     (B) directly or indirectly, enter the employ of, or render any services to,
     any individual, corporation, partnership or other business entity (a
     "Person") engaged in any Prohibited Activity in the United States or
     elsewhere; or

     (C) become interested in any Person engaged in any Prohibited Activity in
     the United States, directly or indirectly, as an individual, partner,
     shareholder, officer, director, principal, agent, employee, trustee,
     consultant or in any other relationship or capacity; provided, however,
     that Consultant may own directly or indirectly, solely as an investment,
     securities of any Person which are traded on any national securities
     exchange if Consultant (x) is not a controlling person of, or a member of a
     group which controls, such person or (y) does not, directly or indirectly,
     own 5% or more of any class of securities of such person;

          (ii) directly or indirectly hire, engage or retain any person which at
any time during the Restricted Period or for the two year period prior thereto
was a supplier, client or customer of the Company, or directly or indirectly
solicit, entice or induce any such person to become, a supplier, client or
customer of any other person engaged in any Prohibited Activity; or

          (iii)  directly or indirectly hire, employ or retain any person who at
any time was an employee of the Company or directly or indirectly solicit,
entice, induce or encourage any such person to become employed by any other
person.

          (d)  Notwithstanding the foregoing, the restrictions of Section 9(c)
shall not apply in the event Consultant is terminated without Cause by the
Company, but shall continue to apply in the event either the Company or
Consultant elects not to renew this Agreement in accordance with the provisions
of Section 2.

          (e)  Consultant hereby acknowledges that the covenants and agreements
contained in Sections 8 and 9 (the "Restrictive Covenants") are reasonable and
valid in all respects and that the Company is entering into this Agreement,
inter alia, on such acknowledgment.  If Consultant breaches, or threatens to
- ----------                                                                  
commit a breach, of any of the Restrictive Covenants, the Company shall have the
following rights and remedies, each of which rights and remedies shall be
independent of the other and severally enforceable, and all of which rights and
remedies shall be in addition to, and not in lieu of, any other rights and
remedies available to the Company under law or in equity: (i) the right and
remedy to have the Restrictive Covenants specifically enforced by any court
having equity jurisdiction, it being acknowledged and agreed that any such
breach or threatened breach will cause irreparable injury to the Company and
that money damages will not provide an adequate remedy to the Company; (ii) the
right and remedy to require Consultant to account for and pay over to the
Company all compensation, profits, monies, accruals, increments or other
benefits (collectively, "Benefits") derived or received by Consultant as the
result of any transactions constituting a breach of any of the Restrictive
Covenants, and Consultant shall account for and pay over such Benefits to the
Company; (iii) if any court determines that any of the Restrictive Covenants, or
any part thereof, is invalid or unenforceable, the remainder of the Restrictive
Covenants shall not thereby be affected and shall be given full effect, without
regard to the invalid portions; and (iv) if any court construes any of the
Restrictive Covenants, or any part thereof, to be unenforceable because of the
duration of such provision or the area covered thereby, such court shall have
the power to reduce the duration or area of

                                     E-259

 
such provision and, in its reduced form, such provision shall then be
enforceable and shall be enforced.

          (f)  The parties intend to and hereby confer jurisdiction to enforce
the Restrictive Covenants upon the courts of any jurisdiction within the
geographical scope of such Covenants.  If the courts of any one or more such
jurisdictions hold the Restrictive Covenants wholly unenforceable by reason of
the breadth of such scope or otherwise, it is the intention of the parties that
such determination not bar or in any way affect the Company's right to the
relief provided above in the courts of any other jurisdiction, within the
geographical scope of such Covenants, as to breaches of such Covenants in such
other respective jurisdictions such Covenants as they relate to each
jurisdiction being, for this purpose, severable into diverse and independent
covenants.

          10.  REPRESENTATIONS AND WARRANTIES.  Consultant represents and
warrants that he is not under any obligation, contractual or otherwise, to
Oregon or to any other person, which would prevent his entering into this
Agreement or prevent, impede or hinder his fully faithfully performing any of
his duties and services hereunder.

          11.  NOTICE.  For the purpose of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given (i) when delivered, if personally delivered, (ii) when sent
by facsimile transmission, when receipt therefor has been duly received, or
(iii) when mailed by United States registered mail, return receipt requested,
postage prepaid, or by recognized overnight courier, addressed as follows:

          If, to Consultant:

               Dr. Dennis Hruby
               4017 NW Christine
               Corvallis, OR 97330-3263
               Fax: 541-737-2440

          If, to the Company:

               SIGA Pharmaceuticals, Inc.
               666 Third Avenue, 30th Floor
               New York, NY 10017
               Attention: President
               Fax: 212-986-2399

or to such other address as any party may have furnished to the other in writing
in accordance herewith, except that notices of change of address shall be
effective only upon receipt.

          12.  MISCELLANEOUS.  No provisions of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing signed by authorized officers of each party.  No waiver by either
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.  No agreements or representations, oral or otherwise, express
or implied, with respect to the subject matter hereof have been made by either
party which are not set forth expressly in this Agreement.  The validity,
interpretation, construction and performance of this Agreement shall be governed
by the internal laws of the State of Oregon.  Any controversy arising under or
in relation to this Agreement shall be settled by binding arbitration in
Corvallis, Oregon in accordance with the laws of the State of Oregon and the
rules of the American Arbitration Association.

                                     E-260

 
          13.  COUNTERPARTS.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.

          14.  SEVERABILITY.  If in any jurisdiction, any provision of this
Agreement or its application to any party or circumstance is restricted,
prohibited or unenforceable, such provision shall, as to such jurisdiction, be
ineffective only to the extent of such restriction, prohibition or
unenforceability, without invalidating the remaining provisions hereof and
without affecting the validity or enforceability of such provision in any other
jurisdiction or its application to other parties or circumstances.  In addition,
if any one or more of the provisions contained in this Agreement shall for any
reason in any jurisdiction be held to be excessively broad as to time, duration,
geographical scope, activity or subject, it shall be construed, by limiting and
reduction it, so as to be enforceable to the extent compatible with the
applicable law of such jurisdiction as it shall then appear.

     IN WITNESS WHEREOF, this Consulting Agreement has been executed by the
Company and Consultant as of the date first written above.


                    SIGA PHARMACEUTICALS, INC.


                    By: /s/ Joshua D. Schein
                        --------------------
                         Authorized Officer
 

 
                                 /s/ Dennis Hruby
                          -------------------------------
                          Dr. Dennis Hruby

                                     E-261


 
                                                                   EXHIBIT 10(k)

                                     E-262

 
       LETTER AGREEMENT BETWEEN THE COMPANY AND DR. VINCENT A. FISCHETTI

                           SIGA PHARMACEUTICALS, INC.
                          666 THIRD AVENUE, 30TH FLOOR
                              NEW YORK, NY  10017



                                 March 1, 1996


Dr. Vincent A. Fischetti
c/o The Rockefeller University
1230 York Avenue
New York, NY 10021

Dear Vince:

     This letter agreement is written to confirm that Dr. Vincent A. Fischetti
("Fischetti") has identified and introduced SIGA Pharmaceuticals, Inc. ("SIGA")
to certain pharmaceutical companies, including SmithKline Beecham
Pharmaceuticals and American Home Products, with whom SIGA may collaborate in a
joint venture or research and development activities (a "Transaction").

     1.   Fees.  The Company will grant to Fischetti options to purchase shares
          ----                                                                 
          of the Company's Common Stock as follows:

          a.   Fischetti will receive 450,000 options to purchase 450,000 shares
               of the Company's Common Stock at a price of $0.25 per share if
               and when SIGA enters into a Transaction with a company introduced
               by Dr. Fischetti.

          b.   Fischetti will receive an additional 450,000 options to purchase
               450,000 shares of the Company's Common Stock at a price of $0.25
               per share if and when SIGA enters into a Transaction with a
               second company introduced by Dr. Fischetti.

     2.   Fischetti agrees to participate in meetings (such participation to be
          in person or by telephone, as appropriate) at which a potential
          Transaction is to be considered.  Fischetti agrees that information
          regarding any potential Transaction will be treated confidentially by
          Fischetti and Fischetti's representatives or affiliates.
 
     3.   Notices.   The Company will keep Fischetti informed as to the progress
          --------                                                              
          and status of negotiations with parties introduced by Fischetti as
          well as to the ultimate result(s) of such negotiations. Any notices,
          statements, or payments required by this agreement shall be in writing
          and shall be delivered in person, mailed postage prepaid, or
          transmitted by telex or facsimile to the parties at the addresses set
          forth below (unless delivery is in person), or to such substituted
          address as either party may hereafter state in a notice to the other.

          If to Fischetti:

               Dr. Vincent A. Fischetti
               c/o The Rockefeller University
               1230 York Avenue
               New York, NY 10021
               Fax: 212-327-7584

                                     E-263

 
          If to the Company:

               SIGA Pharmaceuticals, Inc.
               666 Third Avenue, 30th Floor
               New York, NY 10017
               Fax: 212-986-2399
 
     4.   Binding.   This agreement shall inure to the benefit of and be binding
          ---------                                                             
          on the respective parties hereto and the respective executors,
          administrators, successors, and assigns.

     5.   Other.  The validity and interpretation of this agreement shall be
          -----                                                             
          governed by, and construed and enforced in accordance with, the laws
          of the State of New York applicable to agreements made and to be fully
          performed therein.  This agreement may not be modified or amended
          except in writing executed by the parties hereto.  This agreement, and
          any modification or amendment thereto, may be executed in
          counterparts, each of which shall be deemed an original and all of
          which shall constitute one and the same instrument.

If the foregoing correctly sets forth our agreement, please so indicate by
signing below and returning an executed copy to me.

                              Very truly yours,

                              SIGA Pharmaceuticals, Inc.


                              By: /s/ Joshua D. Schein
                                  --------------------
                                    Joshua D. Schein

 
 

ACCEPTED AND AGREED AS OF
THE DATE FIRST ABOVE WRITTEN

/s/ Vincent A. Fischetti
- ------------------------
Dr. Vincent A. Fischetti
 

                                     E-264


 
                                                                   EXHIBIT 11(a)

                                     E-265

 
                STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS

                              SIGA PHARMACEUTICALS
                       Computation of Per Share Earnings





 
                                            DECEMBER 31, 1996          DECEMBER 31, 1995
                                        -------------------------  --------------------------
                                                       WEIGHTED                   WEIGHTED
                                                       AVERAGE                     AVERAGE
                                           DAYS         SHARES        DAYS         SHARES
                              SHARES    OUTSTANDING  OUTSTANDING   OUTSTANDING  OUTSTANDING
                             ---------  -----------  ------------  -----------  -------------
                                                                 
Shares to founders           2,079,170          365    2,079,170             4     2,079,170


Shares issued in
 March 1996 private
 placement                   1,038,008          308      875,908             -             -
 
 
Shares issued in
 September 1996 private
 placement                     250,004           95       65,070             -             -
 
 
Cheap Stock
 consideration for shares
 issued in September 1996
 private placement             100,004          365      100,004             4       100,004
 
 
 
Cheap stock
 consideration for stock
 options and warrants
 issued during 1996            319,407          365      319,407             4       319,407
                                                                                  ----------
 
 
 
     Weighted average                                                                        
     shares outstanding                                3,439,559                   2,498,581 

     Net loss for period                             $(2,268,176)                 $   (1,000)
                                                     -----------                  ----------
     Net loss per common share                       $     (0.66)                          -
                                                     ===========                  ==========


                                     E-266


 
                                                                   EXHIBIT 24(a)

                                     E-267

 
                         CONSENT OF EILENBERG & ZIVIAN



                                 March 10, 1997



SIGA Pharmaceuticals, Inc.
666 Third Avenue, 30th Floor
New York, NY 10017

Ladies and Gentlemen:

We have examined the Registration Statement on Form SB-2 (the "Registration
Statement") to be filed by you with the Securities and Exchange Commission in
connection with an offering (the "Public Offering") of 3,250,000 shares of
common stock, par value $.0001 per share (the "Common Stock"), of SIGA
Pharmaceuticals, Inc. (the "Company"), and up to 325,000 shares of the Company's
Common Stock issuable upon exercise of a certain Underwriter's Warrant (the
"Warrant Shares"; the Offering shares and the Warrant Shares collectively
referred to as the "Shares").  As your counsel in connection with the Public
Offering and the offer and sale of the Common Stock, we have examined the
originals, or photostatic or certified copies, of such records of the Company,
certificates of the Company and of public officials and such other matters and
documents as we have deemed necessary or relevant as a basis for this opinion.

Based on these examinations, it is our opinion that the Shares, when issued upon
payment therefor, will be validly issued, fully paid and non-assessable shares
of Common Stock of the Company.

We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the reference to this firm under the caption
"Legal Matters" in the Prospectus forming a part of the Registration Statement.


     Very truly yours,


     /s/ Eilenberg & Zivian
     ----------------------
     EILENBERG & ZIVIAN

                                     E-268


 
                                                                   EXHIBIT 24(b)

                                     E-269

 
                       CONSENT OF INDEPENDENT ACCOUNTANTS


We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form SB-2 of our report dated March 3, 1997
relating to the financial statements of SIGA Pharmaceuticals, Inc., which
appears in such Prospectus.  We also consent to the reference to us under the
heading "Experts" in such Prospectus.



/s/PRICE WATERHOUSE LLP
- -----------------------

PRICE WATERHOUSE LLP
New York, New York
March 10, 1997

                                     E-270