SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDED SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(A) AND
AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)
(Amendment No. 2)
Siga Technologies, Inc.
---------------------------
(Name of Issuer)
Common Stock, par value $.0001 per share
----------------------------------------
(Title of Class of Securities)
82 6917-10-6
-------------
(CUSIP Number)
Donald G. Drapkin
35 East 62nd Street
New York, NY 10021
(212) 872-0012
with a copy to:
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
Attn: Thomas E. Constance
(212) 715-9100
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
May 8, 2001
-----------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box [x]
Note: Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits. See Rule
13d-7 for other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 14 Pages)
- -------------------
1 The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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13D Page 2 of 14 pages
CUSIP No. 82 6917-10-6
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
Donald G. Drapkin
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF, OO (see Item 3)
- -------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 1,652,945 ** ***
BENEFICIALLY -------------------------------------------------
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 11,750 ***
PERSON WITH -------------------------------------------------
9 SOLE DISPOSITIVE POWER
747,313 ***
-------------------------------------------------
10 SHARED DISPOSITIVE POWER
11,750 ***
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,664,695 ** ***
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN
SHARES* **
[x]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
21.0%** ***
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
** Mr. Drapkin has entered into a Management Restructuring Agreement (see Item
4), pursuant to which, he will be granted proxies giving him voting power over
an aggregate of 905,632 shares of Common Stock.
*** Mr. Drapkin holds, inter alia, a warrant (an "Investor Warrant") to purchase
347,826 shares of Common Stock. However, the Investor Warrant provides that,
with certain limited exceptions, it is not exercisable if, as a result of such
exercise, the number of shares of Common Stock beneficially owned by Mr. Drapkin
and his affiliates (other than shares of Common Stock which may be deemed
beneficially owned through the ownership of the unexercised portion of such
Investor Warrant) would exceed 9.99% of the outstanding shares of Common Stock.
As a result of the restrictions described in the immediately preceding sentence
and the other securities which Mr. Drapkin may be deemed beneficially to own, as
of May 11, 2001, Mr. Drapkin's Investor Warrant is not presently exercisable.
- --------------------------------------------------------------------------------
13D Page 3 of 14 pages
CUSIP No. 82 6917-10-6
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
Drapkin Family Charity Foundation
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO (see Item 3)
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New Jersey
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY -------------------------------------------------
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 11,750
PERSON WITH -------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
-------------------------------------------------
10 SHARED DISPOSITIVE POWER
11,750
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,750
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.1%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
00 (see Item 2)
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
- --------------------------------------------------------------------------------
13D Page 4 of 14 pages
CUSIP No. 82 6917-10-6
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
Gabriel M. Cerrone
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF, OO (see Item 3)
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY -------------------------------------------------
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 754,700 **
PERSON WITH -------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
-------------------------------------------------
10 SHARED DISPOSITIVE POWER
754,700 **
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
754,700 **
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
** Mr. Cerrone, as the sole general partner of Panetta Partners Ltd., may
be deemed beneficially to own the securities held by Panetta.
- --------------------------------------------------------------------------------
13D Page 5 of 14 pages
CUSIP No. 82 6917-10-6
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
Panetta Partners Ltd.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO (see Item 3)
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Colorado
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY --------------------------------------------------
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 754,700
PERSON WITH --------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
--------------------------------------------------
10 SHARED DISPOSITIVE POWER
754,700
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
754,700
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
13D Page 6 of 14 pages
CUSIP No. 82 6917-10-6
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
Thomas E. Constance
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
N/A
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 0
BENEFICIALLY ------------------------------------------------
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 0
PERSON WITH ------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
- -------------------------------------------------------------------------------
13D Page 7 of 14 pages
CUSIP No. 82 6917-10-6
- --------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
Eric A. Rose, M.D.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEM 2(d) or 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES 100,000
BENEFICIALLY -------------------------------------------------
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING 0
PERSON WITH -------------------------------------------------
9 SOLE DISPOSITIVE POWER
100,000
-------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
100,000
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT
SCHEDULE 13D
This Amendment No. 1 amends and supplements the Reporting
Persons' Statement on Schedule 13D, dated March 30, 2001
(the "Schedule") in its entirety.
Item 1. Security and Issuer.
This Statement on Schedule 13D (the "Statement") relates to the
Common Stock, $.0001 par value per share, (the "Common Stock") of
Siga Technologies, Inc., a Delaware corporation (the "Issuer"). The
principal executive offices of the Issuer are located at 420
Lexington Avenue, Suite 620, New York, New York, 10170.
Item 2. Identity and Background.
(a) This statement is filed on behalf of Donald G. Drapkin, the
Drapkin Family Charity Foundation (the "Charity"), Gabriel M.
Cerrone, Panetta Partners Ltd. ("Panetta"), Thomas E.
Constance and Eric A. Rose, M.D. (collectively, the "Reporting
Persons"). See attached Exhibit A which is a copy of their
agreement in writing to file this statement jointly on behalf
of each of them. Each of the Reporting Persons has made, and
will continue to make, its own investment decisions with
respect to securities of the Issuer. Each Reporting Person
expressly disclaims membership in a "group" with any other
person within the meaning of Rule 13d-5(b)(1) of the
Securities Exchange Act of 1934, as amended.
(b) The business address of each of Mr. Drapkin and the Charity is
35 East 62nd Street, New York, New York, 10021. The business
address of each of Mr. Cerrone and Panetta is 265 East 66th
Street, Suite 16G, New York, New York, 10021. The business
address of Mr. Constance is 919 Third Avenue, 41st Floor, New
York, New York, 10022. The business address of Dr. Rose is 112
East 78th Street, New York, New York, 10021.
(c) Mr. Drapkin is a Director and Vice Chairman of MacAndrews &
Forbes Holdings Inc., a Delaware corporation having its
address at 35 East 62nd Street, New York, New York, 10021 and
is the sole Trustee of the Charity. The Charity is a
charitable trust, organized under the laws of New Jersey. Mr.
Cerrone is an investment banker, consultant and stock broker,
and the sole general partner of Panetta, a Colorado limited
partnership the principal business of which is delivering
consulting services. Mr. Constance is a Senior Partner of
Kramer Levin Naftalis & Frankel LLP, a law firm in New York
City. Dr. Rose is Chairman of the Department of Surgery and
Surgeon-in-Chief of the Columbia Presbyterian Center of New
York Presbyterian Hospital.
(d) The Reporting Persons and their respective managing members,
officers, directors, general partners, investment managers,
and trustees have not, during the five years prior to the date
hereof, been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors).
(e) The Reporting Persons and their respective managing members,
officers, directors, general partners, investment managers,
and trustees have not, during the five years prior to the date
hereof, been party to a civil proceeding of a judicial or
administrative body of competent jurisdiction, as a result of
which such person was or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or
mandating activities subject to, Federal or State securities
laws or finding any violation with respect to such laws.
(f) Mr. Drapkin, Mr. Cerrone, Mr. Constance and Dr. Rose are
citizens of the United States.
Item 3. Source and Amount of Funds or Other Consideration
Pursuant to a Securities Purchase Agreement between Mr. Drapkin and
the Issuer, dated as of January 31, 2000, (the "Purchase Agreement")
a copy of which is filed as Exhibit B hereto, Mr. Drapkin purchased
(i) $500,000 principal amount of 6% Convertible Debentures due
January 31, 2002 of the Issuer ("Debentures"), a copy of which is
filed as Exhibit C hereto, with $500,000 of his personal funds, and
(ii) a warrant (an "Investor Warrant"), a copy of which is filed as
Exhibit D hereto, to purchase up to 347,826 shares of Common Stock
at an exercise price of $3.4059 per share, with $17,391.30 of his
personal funds. The principal amount of, and accrued interest on,
the Debentures were convertible into Common Stock at
Page 8 of 14
the option of the holder at any time prior to the maturity date, at
a conversion price of $1.4375 per share. Pursuant to the Conversion
Agreement (as defined below), Mr. Drapkin converted his Debentures
into 373,913 shares of Preferred Stock (as defined below) of the
Issuer (see Item 4).
Pursuant to a Distributor's Agreement between Fahnestock & Co. Inc.
and the Issuer, dated as of January 27, 2000, and in connection with
the Issuer's private placement of Debentures, Fahnestock designated
Mr. Cerrone to receive, and he was issued, a warrant (the
"Distributor Warrant"), a copy of which is filed as Exhibit E
hereto, to purchase up to 210,000 shares of Common Stock at an
exercise price of $1.45 per share. Mr. Cerrone then assigned the
Distributor Warrant to Panetta. Pursuant to a Consulting Agreement
between Fahnestock & Co. Inc. and the Issuer, dated as of October
31, 2000, Fahnestock & Co. Inc. designated Panetta to receive, and
Panetta was issued a warrant (the "Consulting Warrant" and, together
with the Investor Warrant and the Distributor Warrant, the
"Warrants") to purchase up to 303,200 shares of Common Stock at an
exercise price of $2.00 per share, a copy of which is attached
hereto as Exhibit F. The Consulting Warrant was issued to Panetta
partially in consideration for the cancellation of a warrant to
purchase 303,200 shares of Common Stock at an exercise price of
$5.00 per share, a copy of which is filed as Exhibit G hereto, that
had been issued to Mr. Cerrone in connection with the Issuer's March
2000 equity financing. The Distributor Warrant and the Consulting
Warrant each contain provisions granting the holder certain
registration rights.
Each Warrant provides that, with certain limited exceptions, it is
not exercisable if, as a result of such exercise, the number of
shares of Common Stock beneficially owned by the holder thereof and
its affiliates (other than shares of Common Stock which may be
deemed beneficially owned through the ownership of the unexercised
portion of such Warrant) would exceed 9.99% of the outstanding
shares of Common Stock. As a result of the restrictions described in
the immediately preceding sentence (the "9.99% Limit") and the other
securities which Mr. Drapkin may be deemed beneficially to own, as
of May 11, 2001, Mr. Drapkin's Investor Warrant is not presently
exercisable. The Issuer may require the Investor Warrant to be
exercised (subject to the same 9.99% Limit) within five days if both
(i) the registration statement with respect to the shares of Common
Stock issuable thereupon is effective and (ii) the closing bid price
for the Common Stock for each of any 15 consecutive trading days is
at least 200% of the exercise price of the Investor Warrant at such
time. Exceptions to the 9.99% Limit include the existence of a
tender offer for the Issuer's common stock.
Between June 26, 2000 and December 22, 2000, Mr. Drapkin engaged in
open market transactions through which he acquired a net 373,400
shares of Common Stock. On November 9, 2000, the Charity purchased
11,750 shares of Common Stock on the open market. Between February
9, 2000 and March 13, 2000, Mr. Cerrone purchased 61,500 shares of
Common Stock on the open market. Mr. Cerrone then assigned such
shares to Panetta. Mr. Drapkin, the Charity and Mr. Cerrone used
their respective general funds for such purchases.
Mr. Drapkin made the following purchases:
Date No. of Shares Purchase Price
---- ------------- --------------
6/26/2000 31,500 $4.037
6/27/2000 2,000 $3.977
6/29/2000 5,000 $4.037
7/6/2000 2,500 $4.54
7/27/2000 4,000 $4.049
8/2/2000 20,500 $3.947
8/3/2000 1,600 $3.906
8/4/2000 4,000 $3.747
8/7/2000 500 $3.812
8/8/2000 2,500 $3.581
8/10/2000 5,000 $3.532
8/11/2000 6,000 $4.122
8/11/2000 50,000 $4.065
8/14/2000 50,000 $4.399
8/15/2000 1,100 $3.906
8/16/2000 2,000 $3.967
8/24/2000 12,500 $3.30
Page 9 of 14
8/25/2000 17,500 $3.406
8/28/2000 11,000 $3.457
8/29/2000 7,500 $3.195
8/31/2000 10,000 $3.084
9/14/2000 4,100 $3.004
9/25/2000 20,500 $3.498
9/27/2000 100 $2.906
9/29/2000 40,000 $4.039
11/3/2000 2,500 $4.175
11/30/2000 20,500 $4.047
12/1/2000 4,000 $3.852
12/5/2000 40,000 $4.508
12/22/2000 10,000 $3.026
Mr. Drapkin made the following sale:
Date No. of Shares Sales Price
---- ------------- -----------
9/19/2000 15,000 $3.386
The Charity made the following purchase:
Date No. of Shares Purchase Price
---- ------------- --------------
11/9/2000 11,750 $4.932
Mr. Cerrone made the following purchases:
Date No. of Shares Purchase Price
---- ------------- --------------
2/9/2000 16,100 $4.589
2/10/2000 3,900 $4.551
2/11/2000 10,500 $4.560
2/18/2000 12,100 $5.308
2/22/2000 2,400 $5.369
2/23/2000 12,500 $5.406
3/2/2000 2,500 $5.986
3/13/2000 1,500 $9.158
In connection with the Management Restructuring Agreement (as
defined in Item 4, below), each of Judson A. Cooper and Joshua D.
Schein, Ph.D. agreed to grant an irrevocable proxy (collectively,
the "Proxies") to Mr. Drapkin on the Effective Date (as defined in
the Management Restructuring Agreement) giving Mr. Drapkin voting
power over an aggregate of 905,632 shares of Common Stock owned by
such parties (the "Proxy Shares") together with any shares of
capital stock of the Issuer that such parties may acquire subsequent
to the date of the Proxies (including, without limitation, upon the
exercise of options held by Mr. Cooper and Mr. Schein, to purchase
up to an aggregate of 1,400,002 shares of Common Stock).
Pursuant to separate Common Stock and Warrant Purchase Agreements
between the Issuer and each of Panetta and Dr. Rose, dated as of May
8, 2001, (the "May 2001 Purchase Agreements") the form of which is
Exhibit K hereto: (i) Panetta purchased, with $180,000 of its
general funds, 90,000 shares of Common Stock and a warrant (a "May
2001 Investor Warrant"), the form of which is Exhibit L hereto, to
purchase up to 90,000 shares of Common Stock; and Dr. Rose
purchased, with $100,000 of his personal funds, 50,000 shares of
Common Stock and a May 2001 Investor Warrant to purchase up to
50,000 shares of Common Stock. The May 2001 Investor Warrants are
exercisable for a period of seven years at an exercise price of
$2.94 per share and contain provisions analogous to the 9.99% Limit
described above.
Page 10 of 14
Each Reporting Person disclaims beneficial ownership of all the
Common Stock except Common Stock held by such Reporting Person that
were purchased on the open market or pursuant to the May 2001
Purchase Agreement (collectively, the "Purchased Common"). Each
Reporting Person disclaims beneficial ownership of the securities
held by any other party.
Item 4. Purpose of Transaction.
Each Reporting Person which acquired securities of the Issuer did so
as an investment in the Issuer. Except as indicated in this Schedule
13D, no Reporting Person currently has any plans or proposals that
relate to, or would result in, any of the matters described in
subparagraphs (a) through (j) of Item 4 of Schedule 13D.
In connection with the Purchase Agreement, Mr. Drapkin entered into
a Registration Rights Agreement with the Issuer, dated as of January
31, 2000, ("Registration Rights Agreement"), a copy of which is
filed as Exhibit H hereto. Pursuant to the Registration Rights
Agreement, the Issuer agreed: (i) to file no later than 30 days
after the Closing Date (as used in the Purchase Agreement), a
Registration Statement under the Securities Act of 1933, as amended,
(the "Required Registration Statement") covering the resale of the
shares of Common Stock issuable upon conversion of principal and
interest of the Debentures and upon exercise of the Warrant; and
(ii) to use its reasonable best efforts to cause such Registration
Statement to be declared effective no later than the earlier of (x)
five days after notice by the Securities and Exchange Commission
that it may be declared effective and (y) 90 days after the Closing
Date. On May 10, 2000, the Issuer filed the Required Registration
Statement and, on May 24, 2000, it was declared effective. The
shares of Common Stock issuable upon exercise of the Distributor
Warrant were also included in the Required Registration Statement.
Pursuant to a letter agreement, dated as of March 30, 2001, among
Mr. Drapkin, the Issuer, Mr. Cerrone, Mr. Constance, Dr. Rose,
Judson A. Cooper and Joshua D. Schein, Ph.D. (the "Management
Restructuring Agreement"), a copy of which is filed as Exhibit I
hereto, Mr. Drapkin had the right to be and to have his designees
elected to the Board of Directors of the Issuer (the "Board") on the
Effective Date. The Management Restructuring Agreement also provides
that the members of the Board at such time would be caused to resign
from the Board and from any and all offices held with the Issuer.
Pursuant to the Management Restructuring Agreement, Judson A. Cooper
and Joshua D. Schein have agreed to resign from the Board of the
Issuer, and from all other offices held with the Issuer, effective
as of the Effective Date. Mr. Drapkin has designated Mr. Cerrone,
Mr. Constance and Dr. Rose for election to the Board in accordance
with the Management Restructuring Agreement. As of April 19, 2001,
Mr. Drapkin, Mr. Cerrone, Mr. Constance and Dr. Rose were appointed
to the Board and each of the Issuer's remaining other directors
resigned from the Board as contemplated by the Management
Restructuring Agreement. Thereafter, the Board filled the vacancies
on the Board that resulted from such resignations.
On May 3, 2001, the Issuer's Board of Directors made grants (the
"Conditional Grants") of options to certain officers, directors and
advisors of the Issuer, subject to approval of an Amendment and
Restatement of the Issuer's Amended and Restated 1996 Incentive and
Non-Qualified Stock Option Plan. Dr. Rose, Mr. Drapkin, Mr.
Constance and Mr. Cerrone received Conditional Grants of options to
purchase up to 1,125,000, 600,000, 200,000 and 875,000 shares of
Common Stock, respectively. The Conditional Grants were made subject
to stockholder approval, and at present no Reporting Person
beneficially owns any Common Stock issuable upon conversion of the
options constituting such Conditional Grants.
In connection with the May 2001 Purchase Agreement, Panetta and Dr.
Rose each entered into a Registration Rights Agreement with the
Issuer, dated as of May 8, 2001, (the "May 2001 Registration Rights
Agreements"), the form of which is Exhibit M hereto. Pursuant to the
May 2001 Registration Rights Agreement, the Issuer agreed: (i) to
file no later than 60 days after the Closing Date (as used in the
May 2001 Purchase Agreement), a Registration Statement under the
Securities Act of 1933, as amended, (the "2001 Required Registration
Statement") covering the resale of the shares of Common Stock issued
pursuant to the May 2001 Purchase Agreements and the shares of
Common Stock issuable upon exercise of the May 2001 Investor
Warrants; and (ii) to use its reasonable best efforts to cause such
Registration Statement to be declared effective no later than the
earlier of (x) five days after notice by the Securities and Exchange
Commission that it may be declared effective and (y) 180 days after
the Closing Date.
Pursuant to a Conversion Agreement among the Issuer and holders of
Debentures (the "Conversion Agreement"), the form of which is
attached hereto as Exhibit N, Mr. Drapkin agreed to convert the
Page 11 of 14
outstanding principal and accrued interest on his Debentures, into
373,913 shares of Series A Convertible Preferred Stock of the Issuer
(the "Preferred Stock"), the form of the Certificate of Designations
for which is attached hereto as Exhibit O, representing at a
conversion price of $1.4375 per share of Preferred Stock. The
Preferred Stock has a cumulative dividend of 6% per annum payable in
cash or additional shares of Preferred Stock at the Issuer's
discretion. The Preferred Stock is convertible into Common Stock an
initial conversion rate of one-to-one, and each holder of Preferred
Stock is entitled to the number of votes equal to the number of
whole shares of Common Stock into which the shares of Preferred
Stock held by such holder are then convertible. The Preferred Stock
is not subject to the 9.99% Limit.
Each Reporting Person may from time to time acquire, or dispose of,
Common Stock and/or other securities of the Issuer if and when it
deems it appropriate. Each Reporting Person may formulate other
purposes, plans or proposals relating to any securities of the
Issuer to the extent deemed advisable in light of market conditions,
investment policies and other factors.
Item 5. Interest in Securities of Issuer.
(a) As of May 11, 2001: Mr. Drapkin, as the holder of securities
of the Issuer, as proxyholder under the Proxies, and through
the holdings of the Charity, may be deemed beneficially to own
1,664,695 shares of Common Stock or 21.0% of the outstanding
shares, and, if not for the 9.99% Limit, Mr. Drapkin could be
deemed to beneficially own 2,012,521 shares of Common Stock or
23.3% of the outstanding shares (excluding, in each case, any
shares issuable upon conversion of amounts other than
principal of the Debentures); Mr. Cerrone, as the sole general
partner of Panetta, may be deemed beneficially to own 754,700
shares of Common Stock or 8.9% of the outstanding shares; and
each of the Charity, Panetta, Mr. Constance and Dr. Rose may
be deemed beneficially to own the respective numbers of shares
of Common Stock set forth below:
Charity 11,750
Panetta 754,700
Mr. Constance 0
Dr. Rose 100,000
Pursuant to Rule 13d-4 promulgated under the Securities
Exchange Act of 1934, as amended, each Reporting Person
disclaims beneficial ownership of all the Common Stock except
the Purchased Common Stock, if any, held by such Reporting
Person. Pursuant to Rule 13d-4 promulgated under the
Securities Exchange Act of 1934, as amended, each Reporting
Person disclaims beneficial ownership of the securities held
by any other person.
(b) Mr. Drapkin has the sole power to vote or to direct the vote
and to dispose or to direct the disposition of the shares that
he owns. Mr. Drapkin has the sole power to vote or to direct
the vote of the Proxy Shares. Mr. Drapkin and the Charity may
be deemed to share the power to vote or to direct the vote and
to dispose or to direct the disposition of the shares owned by
the Charity. Mr. Cerrone and Panetta share the power to vote
or to direct the vote and to dispose or to direct the
disposition of the shares owned by Panetta. Dr. Rose has the
sole power to vote or to direct the vote and to dispose or to
direct the disposition of the shares that he owns. Mr.
Constance does not beneficially own any shares of Common
Stock.
(c) Other than entering into the Management Restructuring
Agreement and receiving Conditional Grants (to the extent that
any of the above may be deemed a transaction in the Common
Stock), no Reporting Person has engaged in any transactions in
the Common Stock of the Issuer in the past 60 days.
(d)&(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
Pursuant to the Proxies, Mr. Drapkin was appointed proxyholder
with respect to certain securities held by Mr. Cooper and Mr.
Schein (see Item 3). A form of the Proxies is attached to the
Management Restructuring Agreement that is filed as Exhibit I
hereto. The Management
Page 12 of 14
Restructuring Agreement includes provisions restricting the
abilities of the parties thereto to transfer their respective
securities of the Issuer. Additionally, Mr. Drapkin has
entered into a Lock-Up Agreement with Vincent Fischetti, a
copy of which is filed as Exhibit J hereto, pursuant to which
Mr. Fischetti is restricted in transferring his securities of
the Issuer without Mr. Drapkin's prior written consent.
On May 3, 2001, the Issuer's Board of Directors made
Conditional Grants to certain of the Reporting Persons in
their respective capacities as officers and directors of the
Issuer (see Item 4).
Except as indicated in this Schedule 13D and the exhibits
hereto, there is no contract, arrangement, understanding or
relationship between the Reporting Person and any other
person, with respect to any securities of the Issuer.
Item 7. Material to be Filed as Exhibits.
Exhibit A: Agreement of Joint Filing of Schedule 13D, dated as
of April 6, 2001.
Exhibit B: Securities Purchase Agreement between Mr.
Drapkin and the Issuer, dated as of January 31,
2000.
Exhibit C: 6% Convertible Debenture due January 31, 2002 of the
Issuer in the principal amount of $500,000 issued to Mr.
Drapkin, dated as of January 31, 2000.
Exhibit D: Common Stock Purchase Warrant to purchase 347,826
shares of Common Stock issued to Mr. Drapkin, dated as
of January 31, 2000.
Exhibit E: Common Stock Purchase Warrant to purchase 210,000
shares of Common Stock issued to Mr. Cerrone, dated as
of January 31, 2000.
Exhibit F: Common Stock Purchase Warrant to purchase 303,200
shares of Common Stock, issued to Panetta, dated as of
November 10, 2000.
Exhibit G: Cancelled Common Stock Purchase Warrant to purchase
303,200 shares of Common Stock, issued to Mr. Cerrone,
dated as of May 1, 2000.
Exhibit H: Registration Rights Agreement between the
Issuer and Mr. Drapkin dated as of January 31,
2000.
Exhibit I: Letter Agreement, dated as of March 30, 2001,
among Mr. Drapkin, the Issuer, Mr. Cerrone, Mr.
Constance, Dr. Rose, Judson A. Cooper and
Joshua D. Schein, Ph.D.
Exhibit J: Lock-Up Agreement between Mr. Drapkin and
Vincent Fischetti.
Exhibit K: Form of Common Stock and Warrant Purchase Agreements
between the Issuer and each Buyer (as defined therein),
dated as of May 8, 2001. Exhibit K will be filed by
further amendment to this Schedule
Exhibit L: Form of Common Stock Purchase Warrants to purchase
shares of Common Stock issued to each Buyer, dated as of
May 8, 2001. Exhibit L will be filed by further
amendment to this Schedule
Exhibit M: Form of Registration Rights Agreements between the
Issuer and each Buyer, dated as of May 8, 2001.
Exhibit M will be filed by further amendment to this
Schedule
Exhibit N: Form of Conversion Agreement among the Issuer
and holders of Debentures
Exhibit O: Form of Certificate of Designation of Series A
Convertible Preferred Stock of the Issuer
Page 13 of 14
SIGNATURES
After reasonable inquiry and to the best knowledge and belief of each of
the undersigned, each of the undersigned certifies that the information set
forth in this statement with respect to such undersigned is true, complete and
correct.
Dated: May 11, 2001 /s/ Donald G. Drapkin
--------------------------------
Donald G. Drapkin
DRAPKIN FAMILY CHARITY FOUNDATION
Dated: May 11, 2001 By /s/ Donald G. Drapkin
--------------------------------
Name: Donald G. Drapkin
Title: Trustee
Dated: May 11, 2001 /s/ Gabriel M. Cerrone
----------------------------------
Gabriel M. Cerrone
PANETTA PARTNERS LTD.
Dated: May 11, 2001 By /s/ Gabriel M. Cerrone
----------------------------------
Name: Gabriel M. Cerrone
Title: General Partner
Dated: May 11, 2001 /s/ Thomas E. Constance
----------------------------------
Thomas E. Constance
Dated: May 11, 2001 /s/ Eric A. Rose, M.D.
----------------------------------
Eric A. Rose, M.D.
Page 14 of 14
EXHIBIT A
AGREEMENT OF
JOINT FILING OF SCHEDULE 13D
The undersigned hereby agree jointly to prepare and file with regulatory
authorities a Schedule 13D and any future amendments thereto reporting each of
the undersigned's ownership of securities of SIGA Technologies, Inc. and hereby
affirm that such Schedule 13D is being filed on behalf of each of the
undersigned.
Dated: April 6, 2001 /s/ Donald G. Drapkin
------------------------------
Donald G. Drapkin
DRAPKIN FAMILY CHARITY FOUNDATION
Dated: April 6, 2001 By: /s/ Donald G. Drapkin
----------------------------
Name: Donald G. Drapkin
Title: Trustee
Dated: April 6, 2001 /s/ Gabriel M. Cerrone
------------------------------
Gabriel M. Cerrone
PANETTA PARTNERS LTD.
Dated: April 6, 2001 By: /s/ Gabriel M. Cerrone
--------------------------
Name: Gabriel M. Cerrone
Title: General Partner
Dated: April 6, 2001 /s/ Thomas E. Constance
------------------------------
Thomas E. Constance
Dated: April 6, 2001 /s/ Eric A. Rose, M.D.
------------------------------
Eric A. Rose, M.D.
Exhibit B
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT, dated as of the date of
acceptance set forth below, is entered into by and between SIGA PHARMACEUTICALS,
INC., a Delaware corporation, with headquarters located at 420 Lexington Avenue,
Suite 620, New York, New York 10170 (the "Company"), and each entity named on a
signature page hereto (each, a "Buyer") (each agreement with a Buyer being
deemed a separate and independent agreement between the Company and such Buyer,
except that each Buyer acknowledges and consents to the rights granted to each
other Buyer under such agreement and the Transaction Agreements, as defined
below, referred to therein).
W I T N E S S E T H:
WHEREAS, the Company and the Buyer are executing and delivering this
Agreement in accordance with and in reliance upon the exemption from securities
registration afforded, inter alia, by Rule 506 under Regulation D ("Regulation
D") as promulgated by the United States Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the "1933 Act"), and/or
Section 4(2) of the 1933 Act; and
WHEREAS, the Buyer wishes to purchase, upon the terms and subject to
the conditions of this Agreement, 6% Convertible Debentures of the Company which
which will be convertible into shares of Common Stock, $.0001 par value per
share, of the Company (the "Common Stock"), upon the terms and subject to the
conditions of such Convertible Debentures, together with the Warrants (as
defined below) exercisable for the purchase of shares of Common Stock (the
"Warrant Shares"), and subject to acceptance of this Agreement by the Company;
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. AGREEMENT TO PURCHASE; CERTAIN DEFINITIONS.
a. Purchase. The undersigned hereby agrees to purchase from the
Company 6% Convertible Debentures in the principal amount set forth on the
signature page of this Agreement (the "Debentures"), out of a total offering of
$1,500,000 of such Debentures, and having the terms and conditions and being in
the form attached hereto as Annex I. The purchase price for the Debentures (the
"Debenture Purchase Price") shall be as set forth on the signature page hereto
and shall be payable in United States Dollars.
b. Certain Definitions. As used herein, each of the following terms
has the meaning set forth below, unless the context otherwise requires:
(i) "Closing Date" means the date of the closing of the purchase and
sale of the Debentures, as provided herein.
(ii) "Converted Shares" means the shares of Common Stock issuable
upon conversion of the Debentures or in lieu of interest payable thereon.
(iii) "Securities" means the Debentures, the Warrants and the Common
Stock issuable (x) upon the conversion of the Debentures or in lieu of interest
payable thereon or (y) upon the exercise of the Warrants.
(iv) "Shares" means the shares of Common Stock representing any or
all of the Converted Shares and other shares to be issued pursuant to the terms
of this Agreement and the Warrant Shares.
(v) "Warrant Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.
(vi) "Purchase Price" means the sum of the Debenture Purchase Price
and the Warrant Purchase Price (as defined below).
(vii) "Effective Date" means the effective date of the Registration
Statement covering the Registrable Securities (as those terms are defined in the
Registration Rights Agreement defined below).
c. Form of Payment; Delivery of Certificates.
(i) The Buyer shall pay the Purchase Price by delivering immediately
available good funds in United States Dollars to the escrow agent (the "Escrow
Agent") identified in the Joint Escrow Instructions attached hereto as Annex II
(the "Joint Escrow Instructions") on the date prior to the Closing Date.
(ii) No later than the Closing Date, but in any event promptly
following payment by the Buyer to the Escrow Agent of the Purchase Price, the
Company shall deliver the Debentures and the Warrants (collectively, the
"Certificates"), each duly executed on behalf of the Company and issued in the
name of the Buyer, to the Escrow Agent.
(iii) By signing this Agreement, each of the Buyer and the Company,
subject to acceptance by the Escrow Agent, agrees to all of the terms and
conditions of, and becomes a party to, the Joint Escrow Instructions, all of the
provisions of which are incorporated herein by this reference as if set forth in
full.
d. Method of Payment. Payment into escrow of the Purchase Price
shall be made by wire transfer of funds to:
Bank of New York
350 Fifth Avenue
New York, New York 10001
ABA# 021000018
For credit to the account of Krieger & Prager LLP, Esqs.
Account No.: [To be provided to the Buyer by Krieger &
Prager LLP]
Re: Siga Transaction
2
Not later than 5:00 p.m., New York time, on the date which is two (2) New York
Stock Exchange ("NYSE") trading days after the Company shall have accepted this
Agreement and returned a signed counterpart of this Agreement to the Escrow
Agent by facsimile, the Buyer shall deposit with the Escrow Agent the Purchase
Price in currently available funds. Time is of the essence with respect to such
payment, and failure by the Buyer to make such payment, shall allow the Company
to cancel this Agreement.
e. Escrow Property. The Purchase Price and the Certificates
delivered to the Escrow Agent as contemplated by Sections 1(c) and (d) hereof
are referred to as the "Escrow Property."
2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION.
The Buyer represents and warrants to, and covenants and agrees with,
the Company as follows:
a. Without limiting Buyer's right to sell the Common Stock pursuant
to the Registration Statement, the Buyer is purchasing the Debentures and the
Warrants and will be acquiring the Shares for its own account for investment
only and not with a view towards the public sale or distribution thereof and not
with a view to or for sale in connection with any distribution thereof.
b. The Buyer is (i) an "accredited investor" as that term is defined
in Rule 501 of the General Rules and Regulations under the 1933 Act by reason of
Rule 501(a)(3), (ii) experienced in making investments of the kind described in
this Agreement and the related documents, (iii) able, by reason of the business
and financial experience of its officers (if an entity) and professional
advisors (who are not affiliated with or compensated in any way by the Company
or any of its affiliates or selling agents), to protect its own interests in
connection with the transactions described in this Agreement, and the related
documents, and (iv) able to afford the entire loss of its investment in the
Securities.
c. All subsequent offers and sales of the Debentures and the Shares
by the Buyer shall be made pursuant to registration of the Shares under the 1933
Act or pursuant to an exemption from registration.
d. The Buyer understands that the Securities are being offered and
sold to it in reliance on specific exemptions from the registration requirements
of United States federal and state securities laws and that the Company is
relying upon the truth and accuracy of, and the Buyer's compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Buyer set forth herein in order to determine the availability of such
exemptions and the eligibility of the Buyer to acquire the Securities.
e. The Buyer and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Debentures and the offer of the
Shares which have been requested by the Buyer, including Annex V hereto. The
Buyer and its advisors, if any, have been afforded the opportunity to ask
questions of the Company and have received complete and satisfactory
3
answers to any such inquiries. Without limiting the generality of the foregoing,
the Buyer has also had the opportunity to obtain and to review the Company's (1)
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1998, (2)
Quarterly Reports on Form 10-Q for the fiscal quarters ending on March 31, 1999
and June 30, 1999 and on Form 10-QSB for the fiscal quarter ended on September
30, 1999, and (3) the Notice and Proxy Statement for the Annual Meeting of
Shareholders of the Company filed on January 14, 2000 (collectively, the
"Company's SEC Documents"). .
f. The Buyer understands that its investment in the Securities
involves a high degree of risk.
g. The Buyer understands that no United States federal or state
agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities.
h. This Agreement has been duly and validly authorized, executed and
delivered on behalf of the Buyer and is a valid and binding agreement of the
Buyer enforceable in accordance with its terms, subject as to enforceability to
general principles of equity and to bankruptcy, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights generally.
3. COMPANY REPRESENTATIONS, ETC. The Company represents and warrants
to the Buyer as of the date hereof and as of the Closing Date that, except as
otherwise provided in Annex V hereto:
a. Concerning the Debentures. There are no preemptive rights of any
stockholder of the Company, as such, to acquire the Debentures, the Warrants or
the Shares.
b. Reporting Company Status. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power to own its properties and to
carry on its business as now being conducted. The Company is duly qualified as a
foreign corporation to do business and is in good standing in each jurisdiction
where the nature of the business conducted or property owned by it makes such
qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have a material adverse effect on the business, operations
or financial condition or results of operation of the Company and its
subsidiaries taken as a whole. The Company has registered its Common Stock and
is obligated to file reports pursuant to Section 12 of the 1934 Act, and the
Common Stock is listed and traded on The NASDAQ/SmallCap Market. The Company has
received no notice, either oral or written, with respect to the continued
eligibility of the Common Stock for such listing, and the Company has maintained
all requirements for the continuation of such listing.
c. Authorized Shares. The authorized capital stock of the Company
consists of (i) 25,000,000 shares of Common Stock, $.0001 par value per share,
of which, as of January 27, 2000, 6,602,712 shares are outstanding, and (ii)
10,000,000 shares of Preferred Stock, $.0001 par share, none of which, as of
January 27, 2000, none was outstanding. All issued and outstanding shares of
Common Stock have been duly authorized and validly issued and are
4
fully paid and nonassessable. The Company has sufficient authorized and unissued
shares of Common Stock as may be necessary to effect the issuance of the Shares.
The Shares have been duly authorized and, when issued upon conversion of, or as
interest on, the Debentures or upon exercise of the Warrants, each in accordance
with its respective terms, will be duly and validly issued, fully paid and
nonassessable and will not subject the holder thereof to personal liability by
reason of being such holder.
d. Securities Purchase Agreement; Registration Rights Agreement and
Stock. This Agreement and the Registration Rights Agreement, the form of which
is attached hereto as Annex IV (the "Registration Rights Agreement"), and the
transactions contemplated thereby, have been duly and validly authorized by the
Company. This Agreement has been duly executed and delivered by the Company and
this Agreement is, and each of the other Transaction Agreements, which, when
executed and delivered by the Company, will be, valid and binding agreements of
the Company enforceable in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium, and other similar laws affecting the enforcement of creditors'
rights generally.
e. Non-contravention. The execution and delivery of this Agreement
and the Registration Rights Agreement by the Company, the issuance of the
Securities, and the consummation by the Company of the other transactions
contemplated by this Agreement and each of the Transaction Agreements do not and
will not conflict with or result in a breach by the Company of any of the terms
or provisions of, or constitute a default under (i) the articles of
incorporation or by-laws of the Company, each as currently in effect, (ii) any
indenture, mortgage, deed of trust, or other material agreement or instrument to
which the Company is a party or by which it or any of its properties or assets
are bound, including any listing agreement for the Common Stock except as herein
set forth, (iii) to its knowledge, any existing applicable law, rule, or
regulation or any applicable decree, judgment, or order of any court, United
States federal or state regulatory body, administrative agency, or other
governmental body having jurisdiction over the Company or any of its properties
or assets, or (iv) the Company's listing agreement with The Nasdaq Stock Market,
Inc. relating to its Common Stock, except such conflict, breach or default which
would not have a material adverse effect on the business, operations, condition
(financial or otherwise) or results of operations of the Company and its
subsidiaries, taken as a whole, or on the transactions contemplated by this
Agreement or any of the other Transaction Agreements.
f. Approvals. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the stockholders of the Company is required to be obtained
by the Company for the issuance and sale of the Securities to the Buyer as
contemplated by this Agreement and the other Transaction Agreements, except such
authorizations, approvals and consents that have been obtained.
g. SEC Filings. None of the Company's SEC Documents contained, at
the time they were filed, any untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statements made therein in light of the circumstances under which they were
made, not misleading. The Company has, since December 1, 1998, timely filed with
the SEC all forms, reports and exhibits thereto required to be filed by
5
the Company under the Securities Exchange Act of 1934, as amended (the "1934
Act") and the regulations promulgated thereunder,
h. Absence of Certain Changes. Since December 31, 1998, there has
been no material adverse change and no material adverse development in the
business, properties, operations, condition (financial or otherwise) or results
of operation of the Company and its subsidiaries taken as a whole, except as
disclosed in the Company's SEC Documents. Since December 31, 1998, except as
provided in the Company's SEC Documents, the Company has not (i) incurred or
become subject to any material liabilities (absolute or contingent) except
liabilities incurred in the ordinary course of business consistent with past
practices; (ii) discharged or satisfied any material lien or encumbrance or paid
any material obligation or liability (absolute or contingent), other than
current liabilities paid in the ordinary course of business consistent with past
practices; (iii) declared or made any payment or distribution of cash or other
property to stockholders with respect to its capital stock, or purchased or
redeemed, or made any material agreements to purchase or redeem, any shares of
its capital stock; (iv) sold, assigned or transferred any other tangible assets,
or canceled any debts or claims, except in the ordinary course of business
consistent with past practices; (v) suffered any substantial losses or waived
any rights of material value, whether or not in the ordinary course of business,
or suffered the loss of any material amount of existing business; (vi) made any
changes in employee compensation, except in the ordinary course of business
consistent with past practices; or (vii) experienced any material problems with
labor or management in connection with the terms and conditions of their
employment.
i. Full Disclosure. There is no fact known to the Company (other
than general economic conditions known to the public generally or as disclosed
in the Company's SEC Documents) that has not been disclosed in writing to the
Buyer that (i) would reasonably be expected to have a material adverse effect on
the business, operations, condition (financial or otherwise) or results of
operations of the Company and its subsidiaries, taken as a whole, (ii) would
reasonably be expected to materially and adversely affect the ability of the
Company to perform its obligations pursuant to this Agreement or any of the
other agreements contemplated hereby (collectively, including this Agreement,
the "Transaction Agreements"), or (iii) would reasonably be expected to
materially and adversely affect the value of the rights granted to the Buyer in
the Transaction Agreements.
j. Absence of Litigation. Except as set forth in the Company's SEC
Documents, there is no action, suit, proceeding, inquiry or investigation before
or by any court, public board or body pending or, to the knowledge of the
Company, threatened against or affecting the Company, wherein an unfavorable
decision, ruling or finding would reasonably be expected to have a material
adverse effect on the business, operations, condition (financial or otherwise)
or results of operations of the Company and its subsidiaries, taken as a whole,
or on the transactions contemplated by any of the Transaction Agreements or
which would reasonably be expected to adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, any of the Transaction Agreements.
k. Absence of Events of Default. The Company is not in default in
the performance or observance of any material obligation, agreement, covenant or
condition contained in any material indenture, mortgage, deed of trust or other
material instrument or
6
agreement to which it is a party or by which it or its property is bound. Except
as set forth in Section 3(e) hereof, no Event of Default (or its equivalent
term), as defined in the respective agreement to which the Company is a party,
and no event which, with the giving of notice or the passage of time or both,
would become an Event of Default (or its equivalent term) (as so defined in such
agreement), has occurred and is continuing, which would have a material adverse
effect on the business, operations, condition (financial or otherwise) or
results of operations of the Company and its subsidiaries, taken as a whole.
l. Prior Issues. During the twelve (12) months preceding the date
hereof, the Company has not issued any convertible securities.
m. No Undisclosed Liabilities or Events. The Company has no
liabilities or obligations other than those disclosed in the Company's SEC
Documents or those incurred in the ordinary course of the Company's business
since December 31, 1998, and which individually or in the aggregate, do not or
would reasonably be expected not to have a material adverse effect on the
properties, business, operations (financial or otherwise) or results of
operations of the Company and its subsidiaries, taken as a whole. No event or
circumstances has occurred or exists with respect to the Company or its
properties, business, operations, financial condition, or results of operations,
which, under applicable law, rule or regulation, requires public disclosure or
announcement prior to the date hereof by the Company but which has not been so
publicly announced or disclosed. There are no proposals currently under
consideration or currently anticipated to be under consideration by the Board of
Directors or the executive officers of the Company which proposal would (x)
change the certificate of incorporation or other charter document or by-laws of
the Company, each as currently in effect, with or without shareholder approval,
which change would reduce or otherwise adversely affect the rights and powers of
the shareholders of the Common Stock or (y) materially or substantially change
the business, assets or capital of the Company, including its interests in
subsidiaries.
n. No Integrated Offering. Neither the Company nor any of its
affiliates nor any person acting on its or their behalf has, directly or
indirectly, at any time since January 1, 1999, made any offer or sales of any
security or solicited any offers to buy any security under circumstances that
would eliminate the availability of the exemption from registration under Rule
506 of Regulation D in connection with the offer and sale of the Securities as
contemplated hereby.
o. Dilution. The number of Shares issuable upon conversion of the
Debentures and the exercise of the Warrants may increase substantially in
certain circumstances. The Company's executive officers and directors have
studied and fully understand the nature of the Securities being sold hereby and
recognize that they have a potential dilutive effect. The board of directors of
the Company has concluded, in its good faith business judgment, that such
issuance is in the best interests of the Company and its shareholders. The
Company specifically acknowledges that its obligation to issue the Shares upon
conversion of the Debentures and upon exercise of the Warrants is binding upon
the Company and enforceable regardless of the dilution such issuance may have on
the ownership interests of other shareholders of the Company, and the Company
will honor every Notice of Conversion (as contemplated by the Debentures) and
every Notice of Exercise Form (as contemplated by the Warrants) relating to the
exercise of the
7
Warrants unless the Company is subject to an injunction (which injunction was
not sought by the Company) prohibiting the Company from doing so.
p. Brokers, Finders. Except for payment of fees to Fahnestock & Co.
Inc. (the "Placement Agent"), payment of which is the sole responsibility of the
Company, the Company has taken no action which would give rise to any claim by
any person for brokerage commission, finder's fees or similar payments by Buyer
relating to this Agreement or the transactions contemplated hereby. Buyer shall
have no obligation with respect to such fees or with respect to any claims made
by or on behalf of other Persons for fees of a type contemplated in this Section
3(p) that may be due in connection with the transactions contemplated hereby.
The Company shall indemnify and hold harmless each of Buyer, its employees,
officers, directors, agents, and partners, and their respective affiliates, from
and against all claims, losses, damages, costs (including the costs of
preparation and attorney's fees) and expenses suffered in respect of any such
claimed or existing fees, as and when incurred.
4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.
a. Transfer Restrictions. The Buyer acknowledges that (1) the
Debentures have not been and are not being registered under the provisions of
the 1933 Act and, except as provided in the Registration Rights Agreement, the
Shares have not been and are not being registered under the 1933 Act, and may
not be transferred unless (A) subsequently registered thereunder or (B) the
Buyer shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company, to the effect that the
Securities to be sold or transferred may be sold or transferred pursuant to an
exemption from such registration; (2) any sale of the Securities made in
reliance on Rule 144 promulgated under the 1933 Act may be made only in
accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such Securities under circumstances in which the
seller, or the person through whom the sale is made, may be deemed to be an
underwriter, as that term is used in the 1933 Act, may require compliance with
some other exemption under the 1933 Act or the rules and regulations of the SEC
thereunder; and (3) neither the Company nor any other person is under any
obligation to register the Securities (other than pursuant to the Registration
Rights Agreement) under the 1933 Act or to comply with the terms and conditions
of any exemption thereunder.
b. Restrictive Legend. The Buyer acknowledges and agrees that the
Debentures and the Warrants, and, until such time as the Common Stock has been
registered under the 1933 Act as contemplated by the Registration Rights
Agreement and sold in accordance with an effective Registration Statement,
certificates and other instruments representing any of the Securities shall bear
a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of any such Securities):
THESE SECURITIES (THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF
8
COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.
c. Filings. The Company undertakes and agrees to make all necessary
filings in connection with the sale of the Securities to the Buyer under
applicable provisions of the 1933 Act, the 1934 Act and the regulations
promulgated thereunder, or required by any domestic securities exchange or
trading market, and to provide a copy thereof to the Buyer promptly after such
filing.
d. Reporting Status. So long as the Buyer beneficially owns any
Securities, (i) the Company shall file all reports required to be filed with the
SEC pursuant to Section 13 or 15(d) of the 1934 Act and shall not terminate its
status as an issuer required to file reports under the 1934 Act even if the 1934
Act or the rules and regulations thereunder would permit such termination and
(ii) the Company will take all reasonable action under its control to obtain and
to continue the listing and trading of its Common Stock (including, without
limitation, all Registrable Securities) on The Nasdaq SmallCap Market and will
comply in all material respects with the Company's reporting, filing and other
obligations under the by-laws or rules of the National Association of Securities
Dealers, Inc. ("NASD") or The Nasdaq Stock Market, Inc. So long as the Buyer
beneficially owns any of the Securities, if the Common Stock ceases to be listed
and traded on an exchange, or if the Company terminates it status as an issuer
required to file reports pursuant to Section 13 or 15(d) of the 1934 Act, it
will take all reasonable action under its control to ensure that adequate
current public information with respect to the Company, as required in
accordance with Rule 144(c)(2) of the 1933 Act, is publicly available.
e. Use of Proceeds. The Company currently intends to use the
proceeds from the sale of the Debentures (excluding amounts paid by the Company
for legal fees, finder's fees, escrow fees and other transaction expenses
relating to the sale of the Debentures), for internal working capital purposes,
and, unless specifically consented to in advance in each instance by the Buyer,
the Company shall not, directly or indirectly, use such proceeds for any loan to
or investment in any other corporation, partnership enterprise or other person
or for the repayment of any outstanding loan by the Company to any other party.
f. Certain Agreements.
(i) Except to the extent specifically provided below, but in each
such event subject to compliance with all of the other provisions of this
Agreement, the Company covenants and agrees that it will not, without the prior
written consent of the Buyer, enter into any subsequent or further offer or sale
of Common Stock or securities convertible into Common Stock (collectively, "New
Common Stock") with any third party pursuant to a transaction which in any
manner permits the registration of the Common Stock, included in or underlying
the new Common Stock to become effective on any date which is earlier than
ninety (90) days after the Effective Date.
(ii) The foregoing provisions shall not restrict the Company from
(A) issuing shares of Common Stock upon the exercise of certain warrants and
options for the purchase of shares outstanding as of the date hereof or pursuant
to the Company's existing stock option
9
plans, all as scheduled on Annex V hereto, or (B) issuing or registering (or
both) up to 125,000 shares of Common Stock which may have been issued or may be
issuable to Open-i Media, Inc. ("Open-i") pursuant to an existing contractual
obligation of the Company to Open-i. The transactions referred to in clauses (A)
and (B) of this subparagraph (ii) are referred to as "Allowable Transactions."
(iii) The provisions of the subparagraph (i) of this Section4(f)
will no longer apply once one or more of the Buyers have, in the aggregate,
disposed of seventy-five percent (75%) or more of the Registrable Securities.
(iv) By the Closing Date, the Company shall obtain the agreement
(each, a "Principal's Agreement") of each of its Principals (as defined below)
that, without the prior written consent of the Buyer in each instance, such
Principal will not sell or otherwise transfer or offer to sell or otherwise
transfer any shares of Common Stock (other than shares originally acquired by
such Principal in open market transactions) directly or indirectly held by such
Principal during the period commencing on the date of this Agreement and
continuing through and including the date which is ninety (90) days after the
Effective Date. Each such Principal's Agreement shall (w) specify that it is
entered into as an inducement to the Buyer's execution, delivery and performance
of this Agreement, (x) name the Buyer as a third party beneficiary thereof, (y)
acknowledge that the Company's transfer agent will be provided with instructions
that transfers by a Principal require the consent of the Company and the Buyer,
and (z) contemplate that, in addition to any other damages or remedies that may
be appropriate, the Principal's Agreement shall be enforceable by injunction
sought by the Company and the Buyer or any one or more of them. A "Principal" is
a person who meets any one or more of the following criteria: (A) each of Joshua
Schein, Judson Cooper, Richard Stone and Vincent Fischetti, respectively (each,
a "Company Principal"), (B) a spouse of a Company Principal (a "Principal's
Spouse") who, directly or indirectly, holds any shares of Common Stock of the
Company, (C) a parent, sibling or child of a Company Principal who resides in
the household of a Company Principal or of a Principal's Spouse (each, a
"Principal's Relative") and who, directly or indirectly, holds any shares of
Common Stock, or (D) any other person or entity, including, without limitation,
for profit or non-profit corporations, partnerships and trusts, whose voting
rights regarding Common Stock of the Company is subject to the direction,
control or other influence of any Company Principal, Principal's Spouse, or
Principal's Relative.
(v) In the event the Company breaches the provisions of this Section
4(f), the Conversion Price (as defined in the Debenture) shall be amended to be
equal to (x) 90% of (y) the amount determined in accordance with the provisions
of the Debentures without regard to this provision, and the Purchaser may
require the Company to immediately redeem all outstanding Debentures in
accordance with Section 4(i)(y) hereof.
g. Available Shares. The Company shall have at all times authorized
and reserved for issuance, free from preemptive rights, shares of Common Stock
sufficient to yield the number of shares of Common Stock as may be required to
satisfy (i) the conversion rights of all Buyers pursuant to the terms and
conditions of any outstanding Debentures or represent payment of any accrued but
unpaid or future interest on the Debentures, assuming in each instance that the
Conversion Price was the Minimum Conversion Price (as defined in the Debentures)
and (ii) the exercise rights of all unexercised portions of the Warrants.
10
h. Warrants. The Company agrees to issue to the Buyer on the Closing
Date transferable, divisible warrants (the "Warrants") for the purchase of
69,565 shares of Common Stock for each $100,000 of the Debenture Purchase Price
paid by the Buyer. In consideration of the issuance of the Warrants, Buyer
agrees to pay the Company, at the same time and in same manner as the Debenture
Purchase Price is paid, an amount (the "Warrant Purchase Price") equal to $.05
per share covered by such Warrant. The Warrant Purchase Price will be applied
against the amount payable by the Buyer on exercise of the Warrant. The Warrants
shall bear an exercise price equal to one-hundred five percent (105%) of the
average closing bid price of the Common Stock, as reported by Bloomberg, LP or,
if not so reported, as reported on the over-the-counter market, for a period of
five consecutive trading days ending on the trading day immediately before the
Closing Date. The Warrants will expire on the last day of the calendar month in
which the fifth anniversary of the Closing Date occurs. The Warrants shall be in
the form annexed hereto as Annex VI, together with (x) registration rights as
provided in the Registration Rights Agreement and (y) piggy-back registration
rights after the effectiveness of the Registration Statement expires, as
contemplated by the Registration Rights Agreement.
i. Limitation on Issuance of Shares. If applicable to the Company,
the Company may be limited in the number of shares of Common Stock it may issue
by virtue of (i) the number of authorized shares or (ii) the applicable rules
and regulations of the markets on which the Common Stock is listed or traded,
including, but not necessarily limited to, NASDAQ Rule 4310(c)(25)(H)(i) or Rule
4460(i)(1), as may be applicable (collectively, the "Cap Regulations"). Without
limiting the other provisions thereof, the Debentures shall provide that (i) the
Company will take all steps reasonably necessary, including calling a special or
annual shareholders' meeting, to be in a position to issue shares of Common
Stock on conversion of the Debentures without violating the Cap Regulations and
(ii) if, despite taking such steps, the Company still can not issue such shares
of Common Stock without violating the Cap Regulations, the holder of a Debenture
which cannot be converted as result of the Cap Regulations (each such Debenture,
an "Unconverted Debenture") shall have the option, exercisable in such holder's
sole and absolute discretion, to elect either of the following remedies:
(x) if permitted by the Cap Regulations, require the Company
to issue shares of Common Stock in accordance with such holder's
notice of conversion at a conversion purchase price equal to the
average of the closing price per share of Common Stock for any five
(5) consecutive trading days (subject to certain equitable
adjustments for certain events occurring during such period) during
the sixty (60) trading days immediately preceding the date of notice
of conversion; or
(y) require the Company to redeem each Unconverted Debenture
for an amount (the "Redemption Amount"), payable in cash, equal to:
V x M
-----------
CP
11
where:
"V" means the principal of an Unconverted Debenture plus any
accrued but unpaid interest thereon;
"CP" means the conversion price in effect on the date of
redemption (the "Redemption Date") specified in the notice from the
holder of the Unconverted Debentures electing this remedy; and
"M" means the highest closing ask price per share of the
Common Stock during the period beginning on the Redemption Date and
ending on the date of payment of the Redemption Amount.
A holder of an Unconverted Debenture may elect one of the above remedies with
respect to some of such holder's Unconverted Debenture and the other remedy with
respect to other portions of the Unconverted Debenture. The Debentures shall not
contain any provisions inconsistent with the above terms. The provisions of this
paragraph are not intended to limit the scope of the provisions otherwise
included in the Debentures.
j. Reset Shares.
(i) If at any time after the Closing Date and prior to or on the
ninetieth (90th day) after the Effective Date, except with respect to an
Allowable Transaction, the Company shall sell or enter into an agreement to sell
Common Stock or securities convertible into Common Stock (a "Reset Transaction")
where the New Yield (as defined below) is greater than the then applicable
Current Yield (as defined below), the Company shall issue (x) shares of Common
Stock (the "Reset Debenture Shares") to each Buyer (I) on the closing date of
the Reset Transaction (the "Reset Transaction Date") in connection with each
conversion of Debentures effected prior to the Reset Transaction Date as to
which the Buyer has not yet disposed of the Converted Shares issued to the Buyer
thereby (each, a "Prior Conversion") and (II) at the same time as the issuance
of any shares of Common Stock with respect to each subsequent conversion (each,
a "Subsequent Conversion") and (y) warrants to purchase shares of Common Stock
("Reset Warrants") to each Buyer on the Reset Transaction Date (I) in connection
with each exercise of Warrants effected prior to the Reset Transaction Date as
to which the Buyer has not yet disposed of the Warrant Shares issued to the
Buyer thereby (each, a "Prior Exercise") and (II) in connection with the
unexercised portion of the Warrants held by such Buyer on the Reset Transaction
Date. The Reset Debenture Shares and the Reset Warrants shall be issued in
addition to, and not in lieu of, shares of Common Stock issuable upon conversion
of the Debentures by the Buyer and the Warrants being issued to the Buyer on the
Closing Date.
(ii) For purposes of this Section 4(j), the following terms shall
have the meanings indicated:
(A) "Principal Converted" means (x) with respect to Prior
Conversions, the aggregate principal amount of the Debentures previously
converted by the Buyer into Common Stock and (y) with respect to each Subsequent
Conversion, the principal amount of the Debentures then being converted by the
Buyer into Common Stock.
12
(B) "Current Discount" means the percentage determined by
dividing the Conversion Price by the Current Market Price (as defined below), in
all events expressed as a decimal, or, if there has been a previous Reset
Transaction for which Reset Shares were issued to the Buyer, the New Discount
applicable to that Reset Transaction, in all events expressed as a decimal.
(C) "Current Yield" means the result of one (1) divided by the
Current Discount.
(D) "New Discount" means (x) the lowest stated percentage of
the relevant market price at which a buyer in the New Transaction may convert
the securities purchased in the Reset Transaction into Common Stock (e.g., 75%)
or if the conversion price or rate is stated as a percentage discount from the
relevant market price, the result of 1 minus such stated percentage discount
(e.g., a "25% discount" is equal to 75%), or, (y) if the Reset Transaction is
for the sale of Common Stock at a fixed purchase price per share of the Common
Stock which is less than the New Market Price (as defined below), the percentage
determined by dividing such fixed price by the New Market Price (e.g., if the
fixed price per share of Common Stock is $4 and the New Market Price is $5,
80%), in all events expressed as a decimal.
(E) "New Yield" means the result of one (1) divided by the New
Discount.
(F) "Current Market Price" means the average closing bid price
of the Common Stock as reported by Bloomberg, LP for the five (5) trading days
ending on the trading day immediately preceding the Closing Date.
(G) "New Market Price" means the average closing bid price of
the Common Stock as reported by Bloomberg, LP or the average closing bid price
on the over-the-counter market, for the five (5) trading days ending on the
trading day immediately preceding (i) the date on which the binding agreement
for the Reset Transaction was entered into, provided such date is not more than
forty-five (45) calendar days prior to the Reset Transaction Date, or (ii) if
clause (i) does not apply, the Reset Transaction Date.
(H) "Relevant Market Price" means (x) with respect to the
computation of Reset Debenture Shares for Prior Conversions, the New Market
Price and (y) with respect to the computation of Reset Debenture Shares for each
Subsequent Conversion, the average closing bid price of the Common Stock as
reported by Bloomberg, LP or the average closing bid price on the
over-the-counter market for the five (5) trading days ending on the trading day
immediately preceding the relevant effective conversion date.
(I) "Exercisable Warrants" means (x) with respect to Prior
Exercises, the aggregate number of shares as to which the Buyer exercised the
Buyer's Warrants, plus (y) the aggregate number of shares then remaining subject
to exercise of the Buyer's Warrant.
(J) "Debenture Percentage" means the fraction, of which (i) the
numerator is the Principal Converted and (ii) the denominator is the Principal
Amount of the Debentures specified on the Buyer's signature page to this
Agreement.
13
(K) "Disposed Shares Percentage" means the fraction, of which
(i) the numerator is the Converted Shares and Warrant Shares previously sold or
otherwise disposed of by the Buyer and (ii) the denominator is the 139,130
shares for each $100,000 of Debenture Purchase Price specified on the Buyer's
signature page to this Agreement. At the written request of the Company (which
shall be made to the Placement Agent, but not more frequently than once in any
calendar week with respect to each Buyer), the Buyer or the Placement Agent will
confirm in writing that the Buyer has not sold or otherwise disposed of
Converted Shares and Warrant Shares previously issued to the Buyer. If the
Company does receive such confirmation within three (3) business days of the
Placement Agent's receipt of such request, the Company shall be entitled to deem
that the Buyer has previously sold or otherwise disposed of such Converted
Shares or Warrant Shares. For purposes of this paragraph (K), Converted Shares
shall not include shares issued in payment of interest on the Debentures.
(L) "Reset Shares" means the Reset Debenture Shares and the
shares of Common Stock issuable on exercise of Reset Warrants.
(iii) The number of Reset Debenture Shares shall be equal to the
result of multiplying the Debenture Percentage by the following fraction:
(Principal Converted) x (New Yield - Current Yield)
---------------------------------------------------
Relevant Market Price
(iv) The number of Reset Warrants shall be equal to the result of
the following calculation:
(Exercisable Warrants) x ([New Yield - Current Yield]-1)
The Reset Warrants shall have the same terms as the Warrants, including but not
limited to, exercise price for the shares covered by such Reset Warrants.
(v) With respect to each Buyer individually, the obligations of the
Company under this Section 4(j) will cease to apply if such Buyer's Disposed
Shares Percentage is seventy-five percent (75%) or more.
(vi) The provisions of Section 5(c), (d) and (e) of this Agreement
shall apply to the Reset Shares.
5. TRANSFER AGENT INSTRUCTIONS.
a. Promptly following the delivery by the Buyer of the Purchase
Price in accordance with Section 1(c) hereof, the Company will irrevocably
instruct its transfer agent to issue Common Stock from time to time upon
conversion of the Debentures in such amounts as specified from time to time by
the Company to the transfer agent, bearing the restrictive legend specified in
Section 4(b) of this Agreement prior to registration of the Shares under the
1933 Act, registered in the name of the Buyer or its nominee and in such
denominations to be specified by the Buyer in connection with each conversion of
the Debentures. The Company warrants that no instruction inconsistent with the
instructions referred to in this Section 5 and the stop transfer instructions to
give effect to Section 4(a) hereof prior to registration and sale of the Shares
under
14
the 1933 Act will be given by the Company to the transfer agent with respect to
the Shares and that the Shares shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided in this
Agreement, the Registration Rights Agreement, and applicable law. Nothing in
this Section shall affect in any way the Buyer's obligations and agreement to
comply with all applicable securities laws upon resale of the Securities. If the
Buyer provides the Company with an opinion of counsel reasonably satisfactory to
the Company that registration of a resale by the Buyer of any of the Securities
in accordance with clause (1)(B) of Section 4(a) of this Agreement is not
required under the 1933 Act, the Company shall (except as provided in clause (2)
of Section 4(a) of this Agreement) permit the transfer of the Securities and, in
the case of the Converted Shares or the Warrant Shares, as the case may be,
promptly instruct the Company's transfer agent to issue one or more certificates
for Common Stock without legend in such name and in such denominations as
specified by the Buyer.
b. (i) The Company will permit the Buyer to exercise its right to
convert the Debentures by telecopying or delivering an executed and completed
Notice of Conversion to the Company and, upon full conversion of the Debenture,
delivering, within five (5) business days after the relevant Conversion Date,
the original Debentures are being converted to the Company by express courier,
with a copy to the transfer agent.
(ii) The term "Conversion Date" means, with respect to any
conversion elected by the holder of the Debentures, the date specified in the
Notice of Conversion, provided the copy of the Notice of Conversion is
telecopied to or otherwise delivered to the Company in accordance with the
provisions hereof so that it is received by the Company on or before such
specified date.
(iii) The Company will instruct its transfer agent to transmit the
certificates representing the Converted Shares issuable upon conversion of any
Debentures to the Buyer at the address specified in the Notice of Conversion
(which may be the Buyer's address for notices as contemplated by Section 11
hereof or a different address) via recognized express or overnight courier, by
electronic transfer or otherwise, within three (3) business days (such third
business day, the "Instruction Date") after (A) the business day on which the
Company has received the Notice of Conversion (by facsimile or other delivery)
and the original Debentures being converted (and if the same are not delivered
to the Company on the same date, the date of delivery of the last of such items
to be delivered) or (B) the date an interest payment on the Debentures which the
Company has elected to pay by the issuance of Common Stock, as contemplated by
the Debentures, was due. In any event, the Company will cause to be delivered to
the Buyer the certificates representing Converted Shares (together, unless
otherwise instructed by the Buyer, with one or more instruments representing the
Debentures not being so converted if the instruments submitted in connection
with such conversion represent more principal than then being converted) within
ten (10) calendar days (such tenth day, the "Delivery Date") after (A) the
business day on which the Company has received the Notice of Conversion (by
facsimile or other delivery) and the original Debentures being converted (and if
the same are not delivered to the Company on the same date, the date of delivery
of the last of such items to be delivered) or (B) the date an interest payment
on the Debentures which the Company has elected to pay by the issuance of Common
Stock, as contemplated by the Debentures, was due.
15
c. The Company understands that a delay in instructing its transfer
agent to issue the Shares of Common Stock beyond the Instruction Date or
issuance of the shares after the Delivery Date could result in economic loss to
the Buyer. As compensation to the Buyer for such loss, the Company agrees to pay
payments to the Buyer for late delivery of instructions to the Company's
transfer agent or late issuance of the shares in accordance with the following
schedule (where "No. Business Days Late" is defined as the number of business
days beyond two (2) business days from the I nstruction Date or Delivery Date,
as the case may be.):
Late Payment For Each $10,000
of Debenture Principal or Interest
No. Business Days Late Amount Being Converted
- ---------------------- ----------------------
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
>10 $1,000 +$200 for each Business
Day Late in excess of 10 days
The Company shall pay any payments incurred under this Section in immediately
available funds upon demand. Nothing herein shall limit the Buyer's right to
pursue actual damages for the Company's failure to properly instruct its
transfer agent to issue and deliver the Common Stock to the Buyer or to timely
issue the Common Stock to the Buyer. Furthermore, in addition to any other
remedies which may be available to the Buyer, in the event that the Company
fails for any reason to instruct its transfer agent to effect delivery of such
shares of Common Stock within two (2) business days after the Instruction Date
or by the Delivery Date, the Buyer will be entitled to revoke the relevant
Notice of Conversion by delivering a notice to such effect to the Company
whereupon the Company and the Buyer shall each be restored to their respective
positions immediately prior to delivery of such Notice of Conversion.
d. If, by the Delivery Date, the Company fails for any reason to
deliver the Shares to be issued upon conversion of a Debenture and thereafter
the holder of the Debentures being converted (a "Converting Holder") purchases,
in an arm's-length open market transaction or otherwise, shares of Common Stock
(the "Covering Shares") in order to make delivery in satisfaction of a sale of
Common Stock by the Converting Holder (the "Sold Shares"), which delivery such
Converting Holder anticipated to make using the Shares to be issued upon such
conversion (a "Buy-In"), the Converting Holder shall have the right to require
the Company pay to the Converting Holder the Buy-In Adjustment Amount (as
defined below) in addition to all other amounts contemplated in other provisions
of the Transaction Agreements, and not in lieu of any such amounts. The "Buy-In
Adjustment Amount" is the amount equal to the excess, if any, of (x) the
Converting Holder's total purchase price (including brokerage commissions, if
16
any) for the Covering Shares over (y) the net proceeds (after brokerage
commissions, if any) received by the Converting Holder from the sale of the Sold
Shares. The Company shall pay the Buy-In Adjustment Amount to the Company in
immediately available funds immediately upon demand by the Converting Holder. By
way of illustration and not in limitation of the foregoing, if the Converting
Holder purchases shares of Common Stock having a total purchase price (including
brokerage commissions) of $11,000 to cover a Buy-In with respect to shares of
Common Stock it sold for net proceeds of $10,000, the Buy-In Adjustment Amount
which Company will be required to pay to the Converting Holder will be $1,000.
e. In lieu of delivering physical certificates representing the
Common Stock issuable upon conversion, provided the Company's transfer agent is
participating in the Depository Trust Company ("DTC") Fast Automated Securities
Transfer program, upon request of the Buyer and its compliance with the
provisions contained in this paragraph, so long as the certificates therefor do
not bear a legend and the Buyer thereof is not obligated to return such
certificate for the placement of a legend thereon, the Company shall use its
best efforts to cause its transfer agent to electronically transmit the Common
Stock issuable upon conversion to the Buyer by crediting the account of Buyer's
Prime Broker with DTC through its Deposit Withdrawal Agent Commission system.
f. If, at any time (i) the Company challenges, disputes or denies
the right of a holder of a Debenture to effect a conversion of the Debenture
into Common Stock or otherwise dishonors or rejects any Conversion Notice
delivered in accordance with the terms of this Agreement or the Certificate of
Designations or any exercise of any Warrant in accordance with its terms
("Warrant Exercise"), or (ii) any third party who is not and has never been an
Affiliate of such holder commences any lawsuit or proceeding or otherwise
asserts any claim before any court or public or governmental authority, which
lawsuit, proceeding or claim seeks to challenge, deny, enjoin, limit, modify,
delay or dispute the right of such holder to effect the conversion of the
Debenture, into Common Stock, which lawsuit, proceeding or assertion is not
withdrawn or dismissed within three (3) business days after it was instituted or
made, and the Company refuses to honor any such Conversion Notice or Warrant
Exercise, then such holder shall have the right, by written notice to the
Company, to require the Company to promptly redeem the Debentures for cash at a
redemption price (the "Mandatory Purchase Amount") equal to (x) one hundred
thirty percent (130%) of the unliquidated principal of the unconverted
Debentures held by such holder plus (y) all accrued but unpaid dividends on the
Debentures through the date of payment of the Mandatory Purchase Amount. Nothing
contained in this Section 5 shall be construed to require the Company to pay to
the Buyer any of the amounts contemplated by this Section 5 for late delivery of
any certificates or refusal to honor a Notice of Conversion or Warrant Exercise
to the extent that such delay or refusal is caused by the Buyer (but exclusion
of the delay or refusal of the Company shall be limited only to the period of
such delay or refusal which was directly caused by an uncured action or omission
of the Buyer and not to periods beyond the cure of such action or omission by or
on behalf of the Buyer). Under any of the circumstances set forth above, the
Company shall be responsible for the payment of all costs and expenses of such
holder, including, but not necessarily limited to, reasonable legal fees and
expenses, as and when incurred in connection with such holder's disputing any
such action or pursuing such holder's rights hereunder (in addition to any other
rights such holder may have hereunder or otherwise).
17
g. The holder of any Debentures shall be entitled to exercise its
conversion privilege with respect to the Debentures notwithstanding the
commencement of any case under 11 U.S.C.ss. 101 et seq. (the "Bankruptcy Code").
In the event the Company is a debtor under the Bankruptcy Code, the Company
hereby waives, to the fullest extent permitted, any rights to relief it may have
under 11 U.S.C.ss.362 in respect of such holder's conversion privilege. The
Company hereby waives, to the fullest extent permitted, any rights to relief it
may have under 11 U.S.C.ss.362 in respect of the conversion of the Debentures.
The Company agrees, without cost or expense to such holder, to take or to
consent to any and all action necessary to effectuate relief under 11
U.S.C.ss.362.
h. The Company will authorize its transfer agent to give information
relating to the Company directly to the Buyer or the Buyer's representatives
upon the request of the Buyer or any such representative , to the extent such
information relates to (i) the status of shares of Common Stock issued or
claimed to be issued to the Buyer in connection with a Notice of Conversion, or
(ii) the number of outstanding shares of Common Stock of all stockholders as of
a current or other specified date. The Company will provide the Buyer with a
copy of the authorization so given to the transfer agent.
6. CLOSING DATE.
a. The Closing Date shall occur on the date which is the first
trading day on The Nasdaq SmallCap Market after each of the conditions
contemplated by Sections 7 and 8 hereof shall have either been satisfied or been
waived by the party in whose favor such conditions run.
b. The closing shall occur on the Closing Date at the offices of the
Escrow Agent and shall take place no later than 3:00 P.M., New York time, on
such day or such other time as is mutually agreed upon by the Company and the
Buyer.
c. Notwithstanding anything to the contrary contained herein, the
Escrow Agent will be authorized to release the Escrow Funds to the Company and
to others and to release the other Escrow Property on the Closing Date upon
satisfaction of the conditions set forth in Sections 7 and 8 hereof and as
provided in the Joint Escrow Instructions.
7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.
The Buyer understands that the Company's obligation to sell the Debentures and
the Warrants to the Buyer pursuant to this Agreement on the Closing Date is
conditioned upon:
a. The execution and delivery of this Agreement and the Registration
Rights Agreement by the Buyer;
b. Delivery by the Buyer to the Escrow Agent of good funds as
payment in full of an amount equal to the Purchase Price in accordance with this
Agreement;
c. The accuracy on the Closing Date of the representations and
warranties of the Buyer contained in this Agreement, each as if made on such
date, and the performance by the
18
Buyer on or before such date of all covenants and agreements of the Buyer
required to be performed on or before such date; and
d. There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained.
8. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.
The Company understands that the Buyer's obligation to purchase the
Debentures and the Warrants pursuant to this Agreement on the Closing Date is
conditioned upon:
a. The execution and delivery of this Agreement and the Registration
Rights Agreement by the Company;
b. Delivery by the Company to the Escrow Agent of the Certificates
in accordance with this Agreement;
c. The accuracy in all material respects on the Closing Date of the
representations and warranties of the Company contained in this Agreement. each
as if made on such date, and the performance by the Company on or before such
date of all covenants and agreements of the Company required to be performed on
or before such date;
d. On the Closing Date, the Buyer shall have received an opinion of
counsel for the Company, dated such Closing Date, in form, scope and substance
reasonably satisfactory to the Buyer, substantially to the effect set forth in
Annex III attached hereto;
e. There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained;
f. From and after the date hereof to and including the Closing Date,
the trading of the Common Stock shall not have been suspended by the SEC or the
NASD and trading in securities generally on the NYSE or The NASDAQ/SmallCap
Market shall not have been suspended or limited, nor shall minimum prices been
established for securities traded on The NASDAQ/SmallCap Market, nor shall there
be any outbreak or escalation of hostilities involving the United States or any
material adverse change in any financial market that in either case in the
reasonable judgment of the Buyer makes it impracticable or inadvisable to
purchase the Debentures.
9. GOVERNING LAW: MISCELLANEOUS.
a. This Agreement shall be governed by and interpreted in accordance
with the laws of the State of New York for contracts to be wholly performed in
such state and without giving effect to the principles thereof regarding the
conflict of laws. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the City of New York or the
state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Agreement and hereby waives, to
the maximum extent
19
permitted by law, any objection, including any objection based on forum non
conveniens, to the bringing of any such proceeding in such jurisdictions. To the
extent determined by such court, the Company shall reimburse the Buyer for any
reasonable legal fees and disbursements incurred by the Buyer in enforcement of
or protection of any of its rights under any of the Transaction Agreements.
b. 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,
shall not operate as a waiver thereof.
c. This Agreement shall inure to the benefit of and be binding upon
the successors and assigns of each of the parties hereto.
d. All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
e. A facsimile transmission of this signed Agreement shall be legal
and binding on all parties hereto.
f. This Agreement may be signed in one or more counterparts, each of
which shall be deemed an original.
g. The headings of this Agreement are for convenience of reference
and shall not form part of, or affect the interpretation of, this Agreement.
h. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
i. This Agreement may be amended only by an instrument in writing
signed by the party to be charged with enforcement thereof.
j. This Agreement supersedes all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof.
10. NOTICES. Any notice required or permitted hereunder shall be
given in writing (unless otherwise specified herein) and shall be deemed
effectively given on the earliest of
(a) the date delivered, if delivered by personal delivery
as against written receipt therefor or by confirmed
facsimile transmission,
(b) the seventh business day after deposit, postage
prepaid, in the United States Postal Service by
registered or certified mail, or
(c) the third business day after mailing by express
courier, with delivery costs and fees prepaid,
20
in each case, addressed to each of the other parties thereunto entitled at the
following addresses (or at such other addresses as such party may designate by
ten (10) days' advance written notice similarly given to each of the other
parties hereto):
COMPANY: Siga Pharmaceuticals, Inc.
At its address at the head of this Agreement
Attn: Judson Cooper
Telephone No.: (212) 672-9150
Telecopier No.: (212) 697-3130
and with a copy to:
Orrick Herrington & Sutcliffe, LLP
666 Fifth Avenue
New York, NY 10103
Attn: Jeffrey Fessler, Esq.
Telephone No.: (212) 506-5000
Telecopier No.: (212) 506-5151
BUYER: At the address set forth on the signature page of this
Agreement.
with a copy to:
Krieger & Prager, Esqs.
319 Fifth Avenue
Attn: Samuel Krieger, Esq.
New York, New York 10016
Telephone No.: (212) 689-3322
Telecopier No. (212) 213-2077
ESCROW AGENT: Krieger & Prager, Esqs.
319 Fifth Avenue
Attn: Samuel Krieger, Esq.
New York, New York 10016
Telephone No.: (212) 689-3322
Telecopier No.: (212) 213-2077
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's and
the Buyer's representations and warranties herein shall survive the execution
and delivery of this Agreement and the delivery of the Certificates and the
Warrants and the payment of the Purchase Price, and shall inure to the benefit
of the Buyer and the Company and their respective successors and assigns.
21
IN WITNESS WHEREOF, this Agreement has been duly executed by the
Buyer by one of its officers thereunto duly authorized as of the date set forth
below.
PRINCIPAL AMOUNT OF DEBENTURES: $500,000
-------
DEBENTURE PURCHASE PRICE: $500,000
-------
NUMBER OF WARRANTS(1): 347,826
-------
WARRANT PURCHASE PRICE(2): $ 17,391.30
----------
TOTAL PURCHASE PRICE: $517,391.30
----------
SIGNATURES FOR INDIVIDUAL
IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this 26 day of January, 2000.
c/o 35 East 62 Street Donald G. Drapkin
- ------------------------------------ -------------------------------------
Address Printed Name of Subscriber
New York, NY 10021
By: /s/ Donald G. Drapkin
--------------------------------
(Signature of Authorized Person)
Telecopier No. 212/572-5184
---------------------
Resident: P.O. Box 1040 _____________________________________
Rio Vista Drive Printed Name and Title
____________Alpine NJ 07620____
Jurisdiction of Incorporation
or organization
As of the date set forth below, the undersigned hereby accepts this Agreement
and represents that the foregoing statements are true and correct and that it
has caused this Securities Purchase Agreement to be duly executed on its behalf.
SIGA PHARMACEUTICALS, INC
By: /s/ Judson Cooper
------------------------------
Title: Chairman
------------------------------
Date: January 31, 2000
-------------------------------
- -----------------
(1) 69,565 per $100,000 Debenture Purchase Price.
(2) $0.05 per share covered by the Warrant.
22
Exhibit C
NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON CONVERSION
HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR UNDER THE
SECURITIES ACT OF 1933 (THE "1933 ACT"), AS AMENDED. THE SECURITIES ARE
RESTRICTED AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT
AS PERMITTED UNDER THE 1933 ACT PURSUANT TO REGISTRATION OR EXEMPTION OR
SAFE HARBOR THEREFROM.
No. 00A-1 US $500,000.00
SIGA PHARMACEUTICALS, INC.
6% CONVERTIBLE DEBENTURE DUE JANUARY 31, 2002
THIS DEBENTURE is one of a duly authorized issue of up to $1,500,000 in
Debentures of SIGA PHARMACEUTICALS, INC., a corporation organized and existing
under the laws of the State of Delaware (the "Company") designated as its 6%
Convertible Debentures. Such Debentures may be issued in series, each of which
may have a different maturity date, but which otherwise have substantially
similar terms. Capitalized terms not defined herein shall have the meanings
ascribed to them in the Securities Purchase Agreement, dated January 31, 2000,
by and among the Company and the Buyers (as that term is defined therein) (the
"Securities Purchase Agreement").
FOR VALUE RECEIVED, the Company promises to pay to DONALD G. DRAPKIN, the
registered holder hereof (the "Holder"), the principal sum of Five Hundred
Thousand and 00/100 Dollars (US $500,000.00) on January 31, 2002 (the "Maturity
Date") and to pay interest on the principal sum outstanding from time to time in
arrears (i) upon conversion as provided herein, (ii) upon redemption as provided
herein or (iii) on the Maturity Date, at the rate of 6% per annum accruing from
January 31, 2000, the date of initial issuance of this Debenture. Accrual of
interest shall commence on the first such business day to occur after the date
hereof and shall continue to accrue on a daily basis until payment in full of
the principal sum has been made or duly provided for.
This Debenture is subject to the following additional provisions:
1. The Debentures are issuable in denominations of Ten Thousand and 00/100
Dollars (US $10,000.00) and integral multiples thereof. The Debentures are
exchangeable for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holder surrendering the same. No
service charge will be made for such registration or transfer or exchange.
2. The Company shall be entitled to withhold from all payments of
principal of, and interest on, this Debenture any amounts required to be
withheld under the applicable provisions of the United States income tax laws or
other applicable laws at the time of such payments, and Holder shall execute and
deliver all required documentation in connection therewith.
3. This Debenture has been issued subject to investment representations of
the original purchaser hereof and may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended (the "1933 Act"), and
other applicable state and foreign securities laws and the terms of the
Transaction Agreements. In the event of any proposed transfer of this Debenture,
the Company may require, prior to issuance of a new Debenture in the name of
such other person, that it receive reasonable transfer documentation including
legal opinions that the issuance of the Debenture in such other name does not
and will not cause a violation of the 1933 Act or any applicable state or
foreign securities laws. Prior to due presentment for transfer of this
Debenture, the Company and any agent of the Company may treat the person in
whose name this Debenture is duly registered on the Company's Debenture Register
as the owner hereof for the purpose of receiving payment as herein provided and
for all other purposes, whether or not this Debenture is overdue, and neither
the Company nor any such agent shall be affected by notice to the contrary.
4. (A) The Holder of this Debenture is entitled, at its option, subject to
the following provisions of this Section 4, to convert all or a portion of this
Debenture into shares of Common Stock of the Company, $.0001 par value per share
("Common Stock") of the Company at any time (except as set forth in this Section
4(A) or in Section 4(C) hereunder) prior to the Maturity Date, at a conversion
price (the "Conversion Price") for each share of Common Stock equal to $1.4375,
as such amount may be equitably adjusted in accordance with Sections 8, 9 and 10
hereof, if applicable. The minimum principal amount a Buyer may convert is the
lower of (x) at least US $10,000 (unless if at the time of such election to
convert the aggregate principal amount of all Debentures registered to the
Holder is less than US $10,000, then the whole amount thereof) or (y) the
maximum amount which the Holder can then convert pursuant to the terms of
Section 4(C) hereof.
(B) Conversion shall be effectuated by delivery by facsimile or other
delivery to the Company of the form of conversion notice attached hereto as
Exhibit A executed by the Holder of the Debenture evidencing such Holder's
intention to convert this Debenture or a specified portion hereof ("Notice of
Conversion"), and accompanied, if required by the Company, by proper assignment
hereof in blank. Subject to the provisions of Section 4(C) hereof, interest
accrued or accruing from the date of issuance to the date of conversion shall,
at the option of the Company, be paid in cash or Common Stock upon conversion at
the Conversion Price applicable to such conversion. No fractional shares of
Common Stock or scrip representing fractions of shares will be issued on
conversion, but the number of shares issuable shall be rounded to the nearest
whole share. The date on which notice of conversion is given shall be deemed to
be the date on which the Holder faxes or otherwise delivers the Notice of
Conversion, duly executed, to the Company (the "Conversion Date"), provided that
the Holder shall deliver to the Company the original Debentures being converted
within five (5) business days thereafter. Facsimile delivery of the Notice of
Conversion shall be accepted by the Company at facsimile number (212) 697-3130;
ATTN: President. Certificates representing Common Stock upon
-2-
conversion will be delivered within three (3) business days following the
Conversion Date, except as otherwise provided in the Securities Purchase
Agreement.
(C) Notwithstanding any other provision hereof, of the Warrants or of
any of the other Transaction Agreements, in no event (except (i) with respect to
an automatic or mandatory conversion, if any, of a Debenture as provided in the
Debentures, (ii) as specifically provided in this Debenture as an exception to
this provision, or (iii) while there is outstanding a tender offer for any or
all of the shares of the Company's Common Stock) shall the Holder be entitled to
convert any Debenture or shall the Company have the obligation, to convert all
or any portion of this Debenture (and the Company shall not have the right to
pay interest on this Debenture in the form of Common Stock) to the extent that,
after such conversion, the sum of (1) the number of shares of Common Stock
beneficially owned by the Holder and its affiliates (other than shares of Common
Stock which may be deemed beneficially owned through the ownership of the
unconverted portion of the Debentures or unexercised portion of the Warrants),
and (2) the number of shares of Common Stock issuable upon the conversion of the
Debentures or exercise of the Warrants with respect to which the determination
of this proviso is being made, would result in beneficial ownership by the
Holder and its affiliates of more than 9.99% of the outstanding shares of Common
Stock (after taking into account the shares to be issued to the Holder upon such
conversion or exercise). For purposes of the proviso to the immediately
preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), except as otherwise provided in clause (1) of such sentence. The Holder,
by its acceptance of this Debenture, further agrees that if the Holder transfers
or assigns any of the Debentures to a party who or which would not be considered
such an affiliate, such assignment shall be made subject to the transferee's or
assignee's specific agreement to be bound by the provisions of this Section 4(C)
as if such transferee or assignee were the original Holder hereof.
(D) The Holder recognizes that the Company may be limited in the number
of shares of Common Stock it may issue by (i) reason of its authorized shares,
or (ii) the applicable rules and regulations of the principal securities market
on which the Common Stock is listed or traded (collectively, the "Cap
Regulations"). Without limiting the other provisions hereof, (i) the Company
will take all steps reasonably necessary to be in a position to issue shares of
Common Stock on conversion of the Debentures without violating the Cap
Regulations and (ii) if, despite taking such steps, the Company still cannot
issue such shares of Common Stock without violating the Cap Regulations, the
Holder of this Debenture (to the extent the same can not be converted in
compliance with the Cap Regulations (an "Unconverted Debenture")), shall have
the option, exercisable in the Holder's sole and absolute discretion, to elect
any one of the following remedies:
(x) if permitted by the Cap Regulations, require the Company
to issue shares of Common Stock in accordance with such Holder's
Notice of Conversion relating to the Unconverted Debenture at a
conversion purchase price equal to the average of the closing bid
price per share of Common Stock for any five (5) consecutive trading
days (subject to the equitable adjustments for certain events
-3-
occurring during such period as provided in this Debenture) during
the sixty (60) trading days immediately preceding the date of the
Notice of Conversion; or
(y) require the Company to redeem each Unconverted Debenture
for an amount (the "Cap Redemption Amount"), payable in cash, equal
to:
V x M
-----------
CP
where:
"V" means the outstanding principal plus accrued interest
through the Cap Redemption Date (as defined below) of an Unconverted
Debenture;
"CP" means the Conversion Price in effect on the date of
redemption (the "Cap Redemption Date") specified in the notice from
the Holder electing this remedy; and
"M" means the highest closing ask price per share during the
period beginning on the Cap Redemption Date and ending on the date
of payment of the Cap Redemption Amount.
The holder of an Unconverted Debenture may elect one of the above remedies with
respect to a portion of such Unconverted Debenture and the other remedy with
respect to other portions of the Unconverted Debenture.
(E) Anything herein to the contrary notwithstanding, in the event the
Company breaches the provisions of Section 4(f) of the Securities Purchase
Agreement, the Conversion Price shall be amended to be equal to 90% of the
Conversion Price determined in accordance with Section 4(A) of this Debenture,
and the Holder may require the Company to immediately redeem the outstanding
portion of this Debenture in accordance with clause (y) of Section 4(D).
5. [Intentionally omitted]
6. Subject to the terms of the Securities Purchase Agreement, no provision
of this Debenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of, and interest on, this
Debenture at the time, place, and rate, and in the coin or currency, herein
prescribed in accordance with its terms. This Debenture and all other Debentures
now or hereafter issued of similar terms are direct obligations of the Company.
7. No recourse shall be had for the payment of the principal of, or the
interest on, this Debenture, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, shareholder, officer or director, as
such, past, present or future, of the Company or
-4-
any successor corporation, whether by virtue of any constitution, statute or
rule of law, or by the enforcement of any assessment or penalty or otherwise,
all such liability being, by the acceptance hereof and as part of the
consideration for the issue hereof, expressly waived and released.
8. If the Company merges or consolidates with another corporation or sells
or transfers all or substantially all of its assets to another person and the
holders of the Common Stock are entitled to receive stock, securities or
property in respect of or in exchange for Common Stock, then as a condition of
such merger, consolidation, sale or transfer, the Company and any such
successor, purchaser or transferee agree that the Debenture may thereafter be
converted on the terms and subject to the conditions set forth above into the
kind and amount of stock, securities or property receivable upon such merger,
consolidation, sale or transfer by a holder of the number of shares of Common
Stock into which this Debenture might have been converted immediately before
such merger, consolidation, sale or transfer, subject to adjustments which shall
be as nearly equivalent as may be practicable. In the event of any proposed
merger, consolidation or sale or transfer of all or substantially all of the
assets of the Company (a "Sale"), the Holder hereof shall have the right to
convert this Debenture by delivering a Notice of Conversion to the Company
within fifteen (15) days of receipt of notice of such Sale from the Company.
9. If, for any reason, prior to the conversion or redemption, the Company
spins off or otherwise divests itself of a part of its business or operations or
disposes all of or a substantial part of its assets in a transaction (the "Spin
Off") in which the Company does not receive compensation for such business,
operations or assets, but causes securities of another entity (the "Spin Off
Securities") to be issued to security holders of the Company, then the Company
shall cause (i) to be reserved Spin Off Securities equal to the number thereof
which would have been issued to the Holder had all of the Holder's Debentures
outstanding on the record date (the "Record Date") for determining the amount
and number of Spin Off Securities to be issued to security holders of the
Company (the "Outstanding Debentures") been converted as of the close of
business on the trading day immediately before the Record Date (the "Reserved
Spin Off Shares"), and (ii) to be issued to the Holder on the conversion of all
or any of the Outstanding Debentures, such amount of the Reserved Spin Off
Shares equal to (x) the Reserved Spin Off Shares multiplied by (y) a fraction,
of which (I) the numerator is the principal amount of the Outstanding Debentures
then being converted, and (II) the denominator is the principal amount of the
Outstanding Debentures.
10. If, at any time while any portion of this Debenture remains
outstanding, the Company effectuates a stock split or reverse stock split of its
Common Stock or issues a dividend on its Common Stock consisting of shares of
Common Stock, the Conversion Price shall be equitably adjusted to reflect such
action. By way of illustration, and not in limitation, of the foregoing: (i) if
the Company effectuates a 2:1 split of its Common Stock, thereafter, with
respect to any conversion for which the Company issues the shares after the
record date of such split, the Conversion Price shall be deemed to be one-half
of the Conversion Price in effect immediately prior to such split; (ii) if the
Company effectuates a 1:10 reverse split of its Common Stock, thereafter, with
respect to any conversion for which the Company issues the shares after the
record date of such reverse split, the Conversion Price shall be deemed to be
ten times the Conversion Price in effect immediately prior to such split; and
(iii) if the Company declares a stock dividend of one share of Common Stock for
every 10 shares outstanding, thereafter, with respect to any conversion for
which the Company issues the
-5-
shares after the record date of such dividend, the Conversion Price shall be
deemed to be the amount of the Conversion Price in effect immediately prior to
such record date multiplied by a fraction, of which the numerator is the number
of shares (10) for which a dividend share will be issued and the denominator is
such number of shares plus the dividend share(s) issuable or issued thereon
(11).
11. All payments contemplated hereby to be made "in cash" shall be made in
immediately available good funds in such coin or currency of the United States
of America as at the time of payment is legal tender for payment of public and
private debts. All payments of cash and each delivery of shares of Common Stock
issuable to the Holder as contemplated hereby shall be made to the Holder at the
address last appearing on the Debenture Register of the Company as designated in
writing by the Holder from time to time; except that the Holder can designate,
by notice to the Company, a different delivery address for any one or more
specific payments or deliveries.
12. The Holder of the Debenture, by acceptance hereof, agrees that this
Debenture is being acquired for investment purposes and that such Holder will
not offer, sell or otherwise dispose of this Debenture or the Shares of Common
Stock issuable upon conversion thereof except under circumstances which will not
result in a violation of the Act or any applicable state Blue Sky or foreign
laws or similar laws relating to the sale of securities.
13. This Debenture shall be governed by and construed in accordance with
the laws of the State of Delaware. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
City of Wilmington or the state courts of the State of Delaware sitting in the
City of Wilmington in connection with any dispute arising under this Agreement
and hereby waives, to the maximum extent permitted by law, any objection,
including any objection based on forum non coveniens, to the bringing of any
such proceeding in such jurisdictions. To the extent determined by such court,
the Company shall reimburse the Holder for any reasonable legal fees and
disbursements incurred by the Holder in enforcement of or protection of any of
its rights under any of this Debenture.
14. The following shall constitute an "Event of Default":
a. The Company shall default in the payment of principal
or interest on this Debenture and same shall continue
for a period of ten (10) days; or
b. Any of the representations or warranties made by the
Company herein, in the Securities Purchase Agreement,
the Registration
-6-
Rights Agreement or in any certificate or financial
or other written statements heretofore or hereafter
furnished by the Company in connection with the
execution and delivery of this Debenture or the
Securities Purchase Agreement shall be false or
misleading in any material respect at the time made;
or
c. The Company fails to issue shares of Common Stock to
the Holder or to cause its Transfer Agent to issue
shares of Common Stock upon exercise by the Holder of
the conversion rights of the Holder in accordance
with the terms of this Debenture, fails to transfer
or to cause its Transfer Agent to transfer any
certificate for shares of Common Stock issued to the
Holder upon conversion of this Debenture and when
required by this Debenture or the Registration Rights
Agreement, and such transfer is otherwise lawful, or
fails to remove any restrictive legend or to cause
its Transfer Agent to transfer on any certificate or
any shares of Common Stock issued to the Holder upon
conversion of this Debenture as and when required by
this Debenture, the Agreement or the Registration
Rights Agreement and such legend removal is otherwise
lawful, and any such failure shall continue uncured
for five (5) business days after written notice from
the Holder of such failure; or
d. The Company shall fail to perform or observe, in any
material respect, any other covenant, term,
provision, condition, agreement or obligation of any
Debenture in this series and such failure shall
continue uncured for a period of thirty (30) days
after written notice from the Holder of such failure;
or
e. The Company shall fail to perform or observe, in any
material respect, any covenant, term, provision,
condition, agreement or obligation of the Company
under the Securities Purchase Agreement or the
Registration Rights Agreement and such failure shall
continue uncured for a period of thirty (30) days
after written notice from the Holder of such failure
(other than a failure to cause the Registration
Statement to become effective no later than the
Required Effective Date, as defined and provided in
the Registration Rights Agreement, as to which no
such cure period shall apply); or
f. The Company shall (1) admit in writing its inability
to pay its debts generally as they mature; (2) make
an assignment for the benefit of creditors or
commence proceedings for its dissolution; or (3)
apply for or consent to the appointment of a trustee,
liquidator or receiver for its or for a substantial
part of its property or business; or
g. A trustee, liquidator or receiver shall be appointed
for the Company or for a substantial part of its
property or business
-7-
without its consent and shall not be discharged
within sixty (60) days after such appointment; or
h. Any governmental agency or any court of competent
jurisdiction at the instance of any governmental
agency shall assume custody or control of the whole
or any substantial portion of the properties or
assets of the Company and shall not be dismissed
within sixty (60) days thereafter; or
i. Any money judgment, writ or warrant of attachment, or
similar process in excess of Two Hundred Thousand
($200,000) Dollars in the aggregate shall be entered
or filed against the Company or any of its properties
or other assets and shall remain unpaid, unvacated,
unbonded or unstayed for a period of sixty (60) days
or in any event later than five (5) days prior to the
date of any proposed sale thereunder; or
j. Bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors
shall be instituted by or against the Company and, if
instituted against the Company, shall not be
dismissed or stayed within sixty (60) days after such
institution or the Company shall by any action or
answer approve of, consent to, or acquiesce in any
such proceedings or admit the material allegations
of, or default in answering a petition filed in any
such proceeding; or
k. The Company shall have its Common Stock suspended or
delisted from an exchange or over-the-counter market
from trading for in excess of five (5) trading days;
or
l. The Company fails to file the Registration Statement
within sixty (60) days following the Closing Date or
the Registration Statement is not declared effective
within one hundred fifty (150) days following the
Closing Date.
Then, or at any time thereafter, and in each and every such case, unless such
Event of Default shall have been waived in writing by the Holder (which waiver
shall not be deemed to be a waiver of any subsequent default) at the option of
the Holder and in the Holder's sole discretion, the Holder may consider this
Debenture immediately due and payable, without presentment, demand, protest or
notice of any kinds, all of which are hereby expressly waived, anything herein
or in any note or other instruments contained to the contrary notwithstanding,
and the Holder may immediately enforce any and all of the Holder's rights and
remedies provided herein or any other rights or remedies afforded by law.
-8-
15. Nothing contained in this Debenture shall be construed as conferring
upon the Holder the right to vote or to receive dividends or to consent or
receive notice as a shareholder in respect of any meeting of shareholders or any
rights whatsoever as a shareholder of the Company, unless and to the extent
converted in accordance with the terms hereof.
16. In the event for any reason, any payment by or act of the Company or
the Holder shall result in payment of interest which would exceed the limit
authorized by or be in violation of the law of the jurisdiction applicable to
this Debenture, the obligation of the Company to pay interest or perform such
act or requirement shall be reduced to the limit authorized under such law, so
that in no event shall the Company be obligated to pay any such interest,
perform any such act or be bound by any requirement which would result in the
payment of interest in excess of the limit so authorized. In the event any
payment by or act of the Company shall result in the extraction of a rate of
interest in excess of a sum which is lawfully collectible as interest, then such
amount (to the extent of such excess not returned to the Company) shall, without
further agreement or notice between or by the Company or the Holder, be deemed
applied to the payment of principal, if any, hereunder immediately upon receipt
of such excess funds by the Holder, with the same force and effect as though the
Company had specifically designated such sums to be so applied to principal and
the Holder had agreed to accept such sums as an interest-free prepayment of this
Debenture. If any part of such excess remains after the principal has been paid
in full, whether by the provisions of the preceding sentences of this Section 16
or otherwise, such excess shall be deemed to be an interest-free loan from the
Company to the Holder, which loan shall be payable immediately upon demand by
the Company. The provisions of this Section 16 shall control every other
provision of this Debenture.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.
Dated: _________________, 2000
SIGA PHARMACEUTICALS, INC.
By: /s/ Judson Cooper
-------------------------
Judson Cooper
------------------------------
(Print Name)
Chairman
------------------------------
(Title)
-9-
EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Debenture)
The undersigned hereby irrevocably elects to convert $________________ of the
principal amount of the above Debenture No. __ into Shares of Common Stock of
Siga Pharmaceuticals, Inc. (the "Company") according to the conditions
hereof, as of the date written below.
Conversion Date*
__________________________________________
Applicable Conversion Price
__________________________________________
Signature
__________________________________________
[Name]
Address:
__________________________________________
__________________________________________
- -------------------
* This original Debenture must be received by the Company by the fifth business
date following the Conversion Date.
-10-
Exhibit D
THESE SECURITIES INCLUDING ANY UNDERLYING SECURITIES (THE "SECURITIES")
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED.
SIGA PHARMACEUTICALS, INC.
COMMON STOCK PURCHASE WARRANT
1. Issuance; Certain Definitions. In consideration of good and valuable
consideration, the receipt of which is hereby acknowledged by SIGA
PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), DONALD G. DRAPKIN
or registered assigns (the "Holder") is hereby granted the right to purchase at
any time until 5:00 P.M., New York City time, on January 31, 2005 (the
"Expiration Date"), Three Hundred Forty-seven Thousand Eight Hundred Twenty-six
(347,826) fully paid and nonassessable shares of the Company's Common Stock, par
value $.0001 per share (the "Common Stock") at an initial exercise price per
share (the "Exercise Price'") of $3.4059 per share, subject to further
adjustment asset forth herein. This Warrant is being issued pursuant to the
terms of that certain Securities Purchase Agreement, dated as of January 31,
2000 (the "Securities Purchase Agreement"), to which the Company and Holder (or
Holder's predecessor in interest) are parties. Capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Securities
Purchase Agreement.
2. Exercise of Warrants.
2.1. General. This Warrant is exercisable in whole or in part at
any time and from time to time. Such exercise shall be effectuated by submitting
to the Company (either by delivery to the Company or by facsimile transmission
as provided in Section 8 hereof) a completed and duly executed Notice of
Exercise (substantially in the form attached to this Warrant Certificate) as
provided in this paragraph. The date such Notice of Exercise is faxed to the
Company shall be the "Exercise Date," provided that the Holder of this Warrant
tenders this Warrant Certificate to the Company within five (5) business days
thereafter. The Notice of Exercise shall be executed by the Holder of this
Warrant and shall indicate the number of shares then being purchased pursuant to
such exercise. Upon surrender of this Warrant Certificate with, together with
appropriate payment of the Exercise Price for the shares of Common Stock
purchased, the Holder shall be entitled to receive a certificate or certificates
for the shares of Common Stock so purchased. The Exercise Price per share of
Common Stock for the shares then being exercised shall be payable in cash or by
certified or official bank check, except that the Holder may apply all or a
portion of the previously unapplied aggregate Warrant Purchase Price specified
on the signature page of the Securities Purchase Agreement against the amount so
payable pursuant to such exercise. The Holder shall be deemed to be the holder
of the shares issuable to it in accordance with the provisions of this Section
2.1 on the Exercise Date.
2.2. Limitation on Exercise. Notwithstanding the provisions of
this Warrant, the Securities Purchase Agreement or of the other Transaction
Agreements, in no event (except (i) after the Maturity Date of the Debentures,
(ii) as specifically provided in this Warrant as an exception to this provision,
or (iii) while there is outstanding a tender offer for any or all of the shares
of the Company's Common Stock) shall the Holder be entitled to exercise this
Warrant, or shall the Company have either the obligation to issue shares upon
such exercise of all or any portion of this Warrant or the right to require the
Holder to exercise this Warrant as contemplated by Section 2.3 hereof, to the
extent that, after such exercise the sum of (1) the number of shares of Common
Stock beneficially owned by the Holder and its affiliates (other than shares of
Common Stock which may be deemed beneficially owned through the ownership of the
unconverted portion of the Debentures or unexercised portion of the Warrants),
and (2) the number of shares of Common Stock issuable upon the exercise of the
Warrants with respect to which the determination of this proviso is being made,
would result in beneficial ownership by the Holder and its affiliates of more
than 9.99% of the outstanding shares of Common Stock (after taking into account
the shares to be issued to the Holder upon such exercise). For purposes of the
proviso to the immediately preceding sentence, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended (the "1934 Act"), except as otherwise provided in clause (1) of
such sentence. The Holder, by its acceptance of this Warrant, further agrees
that if the Holder transfers or assigns any of the Warrants to a party who or
which would not be considered such an affiliate, such assignment shall be made
subject to the transferee's or assignee's specific agreement to be bound by the
provisions of this Section 2.2 as if such transferee or assignee were the
original Holder hereof.
2.3. Company Option to Require Exercise. If, but only if, both
(i) the Registration Statement is currently effective, and
(ii) the closing bid price for the Common Stock, as reported by
Bloomberg, LP or, if not so reported, as reported by the
securities exchange or automated quotation system on which
the Common Stock is listed or on the over-the-counter market,
for each of any fifteen (15) consecutive trading days is at
least two hundred percent (200%) of the Exercise Price (as
the same may be adjusted as contemplated by the terms of this
Warrant),
the Company will have the right by written notice (the "Required Exercise
Notice") to the Holder to require the Holder to exercise all or a portion of the
unexercised portion of this Warrant in accordance with its terms (except that
such requirement shall not be deemed to require the Holder to exercise the
Warrant in a manner inconsistent with the provisions of Section 2.2 hereof). The
Company's right to issue a Required Exercise Notice shall expire at the close of
the fifth trading day after the last day in such consecutive trading day period
in which the closing bid price was at or above the standard referred to in
clause (ii) of this Section 2.3. The shares which are the subject of the
Required Exercise Notice are referred to as the "Required Shares." To the extent
the Holder does not exercise this Warrant for the Required Shares within five
(5) business days after the Holder's receipt of the Required Exercise Notice,
the Holder's rights under this Warrant with respect to the unexercised portion
of the Required Shares shall expire.
-2-
3. Reservation of Shares. The Company hereby agrees that at all times
during the term of this Warrant there shall be reserved for issuance upon
exercise of this Warrant such number of shares of its Common Stock as shall be
required for issuance upon exercise of this Warrant (the "Warrant Shares").
4. Mutilation or Loss of Warrant. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.
5. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in this Warrant and
are not enforceable against the Company except to the extent set forth herein.
6. Protection Against Dilution.
6.1. Adjustment Mechanism. If an adjustment of the Exercise Price
is required pursuant to this Section 6, the Holder shall be entitled to purchase
such number of additional shares of Common Stock as will cause (i) the total
number of shares of Common Stock Holder is entitled to purchase pursuant to this
Warrant, multiplied by (ii) the adjusted Exercise Price per share, to equal
(iii) the dollar amount of the total number of shares of Common Stock Holder is
entitled to purchase before adjustment multiplied by the total Exercise Price
before adjustment.
6.2. Capital Adjustments. In case of any stock split or reverse
stock split, stock dividend, reclassification of the Common Stock,
recapitalization, merger or consolidation, or like capital adjustment affecting
the Common Stock of the Company, the provisions of this Section 6 shall be
applied as if such capital adjustment event had occurred immediately prior to
the date of this Warrant and the original Exercise Price had been fairly
allocated to the stock resulting from such capital adjustment; and in other
respects the provisions of this Section shall be applied in a fair, equitable
and reasonable manner so as to give effect, as nearly as may be, to the purposes
hereof. A rights offering to stockholders shall be deemed a stock dividend to
the extent of the bargain purchase element of the rights.
6.3. Adjustment for Spin Off. If, for any reason, prior to the
exercise of this Warrant in full, the Company spins off or otherwise divests
itself of a part of its business or operations or disposes all or of a part of
its assets in a transaction (the "Spin Off') in which the Company does not
receive compensation for such business, operations or assets, but causes
securities of another entity (the "Spin Off Securities") to be issued to
security holders of the Company, then
(a) the Company shall cause (i) to be reserved Spin Off
Securities equal to the number thereof which would have been issued to
the Holder had all of the Holder's unexercised Warrants outstanding on
the record date (the "Record Date") for determining
-3-
the amount and number of Spin Off Securities to be issued to security
holders of the Company (the "Outstanding Warrants") been exercised as
of the close of business on the trading day immediately before the
Record Date (the "Reserved Spin Off Shares"), and (ii) to be issued to
the Holder on the exercise of all or any of the Outstanding Warrants,
such amount of the Reserved Spin Off Shares equal to (x) the Reserved
Spin Off Shares multiplied by (y) a fraction, of which (I) the
numerator is the amount of the Outstanding Warrants then being
exercised, and (I) the denominator is the amount of the Outstanding
Warrants; and
(b) the Exercise Price on the Outstanding Warrants shall be
adjusted immediately after consummation of the Spin Off by multiplying
the Exercise Price by a fraction (if, but only if, such fraction is
less than 1.0), the numerator of which is the Average Market Price of
the Common Stock (as defined below) for the five (5) trading days
immediately following the fifth trading day after the Record Date, and
the denominator of which is the Average Market Price of the Common
Stock on the five (5) trading days immediately preceding the Record
Date; and such adjusted Exercise Price shall be deemed to be the
Exercise Price: with respect to the Outstanding Warrants after the
Record Date. As used herein, the term "Average Market Price of the
Common Stock" means the average closing bid price of a share of Common
Stock, as reported by Bloomberg, LP or, if not so reported, as
reported on the over-the-counter market for the relevant period.
7. Transfer to Comply with the Securities Act; Registration Rights.
7.1. Transfer. This Warrant has not been registered under the
Securities Act of 1933, as amended, (the "Act") and has been issued to the
Holder for investment and not with a view to the distribution of either the
Warrant or the Warrant Shares. Neither this Warrant nor any of the Warrant
Shares or any other security issued or issuable upon exercise of this Warrant
may be sold, transferred, pledged or hypothecated in the absence of an effective
registration statement under the Act relating to such security or an opinion of
counsel satisfactory to the Company that registration is not required under the
Act. Each certificate for the Warrant, the Warrant Shares and any other security
issued or issuable upon exercise of this Warrant shall contain a legend on the
face thereof, in form and substance satisfactory to counsel for the Company,
setting forth the restrictions on transfer contained in this Section.
7.2. Registration Rights. (a) Reference is made to the
Registration Rights Agreement. The Company's obligations under the Registration
Rights Agreement and the other terms and conditions thereof with respect to the
Warrant Shares, including, but not necessarily limited to, the Company's
commitment to file a registration statement including the Warrant Shares, to
have the registration of the Warrant Shares completed and effective, and to
maintain such registration, are incorporated herein by reference.
(b) In addition to the registration rights referred to in the preceding
provisions of Section 7.2(a), effective after the expiration of the
effectiveness of the Registration Statement as contemplated by the Registration
Rights Agreement, the Holder shall have piggy-back registration rights with
respect to the Warrant Shares then held by the Holder or then subject to
issuance upon exercise of this Warrant (collectively, the "Remaining Warrant
Shares"), subject
-4-
to the conditions set forth below. If, at any time after the Registration
Statement has ceased to be effective, the Company participates (whether
voluntarily or by reason of an obligation to a third party) in the registration
of any shares of the Company's stock (other than a registration on Form S-4 or
Form S-8), the Company shall give written notice thereof to the Holder and the
Holder shall have the right, exercisable within ten (10) business days after
receipt of such notice, to demand inclusion of all or a portion of the Holder's
Remaining Warrant Shares in such registration statement. If the Holder exercises
such election, the Remaining Warrant Shares so designated shall be included in
the registration statement at no cost or expense to the Holder (other than any
costs or commissions which would be borne by the Holder under the terms of the
Registration Rights Agreement). The Holder's rights under this Section 7 shall
expire at such time as the Holder can sell all of the Remaining Warrant Shares
under Rule 144 without volume or other restrictions or limit.
8. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage pre-paid. Any such notice shall be deemed given when so
delivered personally, telegraphed, telexed or sent by facsimile transmission,
or, if mailed, two days after the date of deposit in the United States mails, as
follows:
(i) if to the Company, to:
Siga Pharmaceuticals, Inc.
420 Lexington Avenue, Suite 620
New York, New York 10170
Attn: Judson Cooper
Telephone No.: (212) 672-9150
Telecopier No.: (212) 697-3130
and with a copy to:
Orrick Herrington & Sutcliffe, LLP
666 Fifth Avenue
New York, NY 10103
Attn: Jeffrey Fessler, Esq.
Telephone No.: (212) 506-5000
Telecopier No.: (212) 506-5151
(ii) if to the Holder, to:
Donald G. Drapkin
c/o 35 East 62nd Street
New York, NY 10021-8016
Telephone No.: ( ) ___-____
Telecopier No.: (212) 572-5184
-5-
with a copy to:
Krieger & Prager LLP, Esqs.
39 Broadway
Suite 1440
New York, NY 10006
Attn: Samuel Krieger, Esq.
Telephone No.: (212) 363-2900
Telecopier No. (212) 363-2999
Any party may be notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
9. Supplements and Amendments; Whole Agreement. This Warrant may be
amended or supplemented only by an instrument in writing signed by the parties
hereto. This Warrant of even date herewith contain the full understanding of the
parties hereto with respect to the subject matter hereof and thereof and there
are no representations, warranties, agreements or understandings other than
expressly contained herein and therein.
10. Governing Law. This Warrant shall be deemed to be a contract made
under the laws of the State of New York for contracts to be wholly performed in
such state and without giving effect to the principles thereof regarding the
conflict of laws. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the City of New York or the
state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Warrant and hereby waives, to the
maximum extent permitted by law, any objection, including any objection based on
forum non conveniens, to the bringing of any such proceeding in such
jurisdictions. To the extent determined by such court, the Company shall
reimburse the Holder for any reasonable legal fees and disbursements incurred by
the Buyer in enforcement of or protection of any of its rights under any of the
Transaction Agreements.
11. Counterparts. This Warrant may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
-6-
12. Descriptive Headings. Descriptive headings of the several Sections
of this Warrant are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
the 31th day of January, 2000.
SIGA PHARMACEUTICALS, INC.
By: /s/ Judson Cooper
---------------------------
Name: Judson Cooper
Its: Chairman
Attest:
/s/ Joshua D. Schein
- ------------------------------
Name: Joshua D. Schein
Title: CEO
-7-
NOTICE OF EXERCISE OF WARRANT
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of _________________, ___, to
purchase shares of the Common Stock, par value $.0001 per share, of SIGA
PHARMACEUTICALS, INC. and tenders herewith payment in accordance with Section 1
of said Common Stock Purchase Warrant.
Please deliver the stock certificate to:
Dated:
__________________________
________________________________
[Name of Holder]
By:_____________________________
|_| CASH: $__________________
Less: CREDIT FOR PREVIOUSLY
UNAPPLIED WARRANT PURCHASE PRICE:
$-------------------
CURRENT PAYMENT: $___________________
-8-
Exhibit E
THESE SECURITIES INCLUDING ANY UNDERLYING SECURITIES (THE "SECURITIES")
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED.
SIGA PHARMACEUTICALS, INC.
COMMON STOCK PURCHASE WARRANT
1. Issuance; Certain Definitions. In consideration of good and valuable
consideration, the receipt of which is hereby acknowledged by SIGA
PHARMACEUTICALS, INC., a Delaware corporation (the "Company"), GABRIEL M.
CERRONE or registered assigns (the "Holder") is hereby granted the right to
purchase at any time until 5:00 P.M., New York City time, on January 31, 2005
(the "Expiration Date"), Two Hundred Ten Thousand (210,000) fully paid and
nonassessable shares of the Company's Common Stock, par value $.0001 per share
(the "Common Stock") at an initial exercise price per share (the "Exercise
Price") of $1.45 per share, subject to further adjustment as set forth herein.
Reference is made to that certain Securities Purchase Agreement, dated as of
January 31, 2000 (the "Securities Purchase Agreement"), to which the Company and
certain named Buyers are parties. Capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Securities Purchase Agreement.
2. Exercise of Warrants.
2.1 General. This Warrant is exercisable in whole or in part at any
time and from time to time. Such exercise shall be effectuated by submitting to
the Company (either by delivery to the Company or by facsimile transmission as
provided in Section 8 hereof) a completed and duly executed Notice of Exercise
(substantially in the form attached to this Warrant Certificate) as provided in
this paragraph. The date such Notice of Exercise is faxed to the Company shall
be the "Exercise Date," provided that the Holder of this Warrant tenders this
Warrant Certificate to the Company within five (5) business days thereafter. The
Notice of Exercise shall be executed by the Holder of this Warrant and shall
indicate the number of shares then being purchased pursuant to such exercise.
Upon surrender of this Warrant Certificate with, together with appropriate
payment of the Exercise Price for the shares of Common Stock purchased, the
Holder shall be entitled to receive a certificate or certificates for the shares
of Common Stock so purchased. The Exercise Price per share of Common Stock for
the shares then being exercised shall be payable in cash or by certified or
official bank check. The Holder shall be deemed to be the holder of the shares
issuable to it in accordance with the provisions of this Section 2.1 on the
Exercise Date.
2.2 Limitation on Exercise. Notwithstanding the provisions of this
Warrant, in no event (except (i) as specifically provided in this Warrant as an
exception to this provision, or (ii) while there is outstanding a tender offer
for any or all of the shares of the
Company's Common Stock) shall the Holder be entitled to exercise this Warrant,
or shall the Company have either the obligation to issue shares upon such
exercise of all or any portion of this Warrant, to the extent that, after such
exercise the sum of (1) the number of shares of Common Stock beneficially owned
by the Holder and its affiliates (other than shares of Common Stock which may be
deemed beneficially owned through the ownership of the unexercised portion of
the Warrants), and (2) the number of shares of Common Stock issuable upon the
exercise of the Warrants with respect to which the determination of this proviso
is being made, would result in beneficial ownership by the Holder and its
affiliates of more than 9.99% of the outstanding shares of Common Stock (after
taking into account the shares to be issued to the Holder upon such exercise).
For purposes of the proviso to the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), except as otherwise provided
in clause (1) of such sentence. The Holder, by its acceptance of this Warrant,
further agrees that if the Holder transfers or assigns any of the Warrants to a
party who or which would not be considered such an affiliate, such assignment
shall be made subject to the transferee's or assignee's specific agreement to be
bound by the provisions of this Section 2.2 as if such transferee or assignee
were the original Holder hereof.
3. Reservation of Shares. The Company hereby agrees that at all times
during the term of this Warrant there shall be reserved for issuance upon
exercise of this Warrant such number of shares of its Common Stock as shall be
required for issuance upon exercise of this Warrant (the "Warrant Shares").
4. Mutilation or Loss of Warrant. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.
5. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder and limited to those expressed in this Warrant and
are not enforceable against the Company except to the extent set forth herein.
6. Protection Against Dilution.
6.1 Adjustment Mechanism. If an adjustment of the Exercise Price is
required pursuant to this Section 6, the Holder shall be entitled to purchase
such number of additional shares of Common Stock as will cause (i) the total
number of shares of Common Stock Holder is entitled to purchase pursuant to this
Warrant, multiplied by (ii) the adjusted Exercise Price per share, to equal
(iii) the dollar amount of the total number of shares of Common Stock Holder is
entitled to purchase before adjustment multiplied by the total Exercise Price
before adjustment.
6.2 Capital Adjustments. In case of any stock split or reverse stock
split, stock dividend, reclassification of the Common Stock, recapitalization,
merger or
-2-
consolidation, or like capital adjustment affecting the Common Stock of the
Company, the provisions of this Section 6 shall be applied as if such capital
adjustment event had occurred immediately prior to the date of this Warrant and
the original Exercise Price had been fairly allocated to the stock resulting
from such capital adjustment; and in other respects the provisions of this
Section shall be applied in a fair, equitable and reasonable manner so as to
give effect, as nearly as may be, to the purposes hereof. A rights offering to
stockholders shall be deemed a stock dividend to the extent of the bargain
purchase element of the rights.
6.3 Adjustment for Spin Off. If, for any reason, prior to the
exercise of this Warrant in full, the Company spins off or otherwise divests
itself of a part of its business or operations or disposes all or of a part of
its assets in a transaction (the "Spin Off") in which the Company does not
receive compensation for such business, operations or assets, but causes
securities of another entity (the "Spin Off Securities") to be issued to
security holders of the Company, then
(a) the Company shall cause (i) to be reserved Spin Off Securities
equal to the number thereof which would have been issued to the Holder had
all of the Holder's unexercised Warrants outstanding on the record date
(the "Record Date") for determining the amount and number of Spin Off
Securities to be issued to security holders of the Company (the
"Outstanding Warrants") been exercised as of the close of business on the
trading day immediately before the Record Date (the "Reserved Spin Off
Shares"), and (ii) to be issued to the Holder on the exercise of all or
any of the Outstanding Warrants, such amount of the Reserved Spin Off
Shares equal to (x) the Reserved Spin Off Shares multiplied by (y) a
fraction, of which (I) the numerator is the amount of the Outstanding
Warrants then being exercised, and (II) the denominator is the amount of
the Outstanding Warrants; and
(b) the Exercise Price on the Outstanding Warrants shall be
adjusted immediately after consummation of the Spin Off by multiplying the
Exercise Price by a fraction (if, but only if, such fraction is less than
1.0), the numerator of which is the Average Market Price of the Common
Stock (as defined below) for the five (5) trading days immediately
following the fifth trading day after the Record Date, and the denominator
of which is the Average Market Price of the Common Stock on the five (5)
trading days immediately preceding the Record Date; and such adjusted
Exercise Price shall be deemed to be the Exercise Price with respect to
the Outstanding Warrants after the Record Date. As used herein, the term
"Average Market Price of the Common Stock" means the average closing bid
price of a share of Common Stock, as reported by Bloomberg, LP or, if not
so reported, as reported on the over-the-counter market for the relevant
period.
7. Transfer to Comply with the Securities Act; Registration Rights.
7.1 Transfer. This Warrant has not been registered under the
Securities Act of 1933, as amended (the "Act") and has been issued to the Holder
for investment and not with a view to the distribution of either the Warrant or
the Warrant Shares. Neither this Warrant nor any of the Warrant Shares or any
other security issued or issuable upon exercise of this Warrant may be sold,
transferred, pledged or hypothecated in the absence of an effective
-3-
registration statement under the Act relating to such security or an opinion of
counsel satisfactory to the Company that registration is not required under the
Act. Each certificate for the Warrant, the Warrant Shares and any other security
issued or issuable upon exercise of this Warrant shall contain a legend on the
face thereof, in form and substance satisfactory to counsel for the Company,
setting forth the restrictions on transfer contained in this Section.
7.2 Registration Rights. (a) Reference is made to the Registration
Rights Agreement, dated January 31, 2000, to which the Company and certain
Initial Investors named therein are parties (the "Registration Rights
Agreement"). The shares issuable upon exercise of this Warrant ("Warrant
Shares") are Registrable Securities, as that term is used in the Registration
Rights Agreement. Subject to and in accordance with the provisions of the
Registration Rights Agreement (the terms of which are incorporated herein by
reference), the Company agrees to file a registration statement or an amendment
to its registration statement on Form S-3 which shall include the Warrant Shares
(as so filed or amended, the "Registration Statement"), pursuant to the Act, by
the Required Filing Date and to have the registration of the Warrant Shares
completed and effective by the Required Effective Date (as those terms are
defined in the Registration Rights Agreement) and to maintain such registration.
(b) In addition to the registration rights referred to in the preceding
provisions of Section 7.2(a), effective after the expiration of the
effectiveness of the Registration Statement as contemplated by the Registration
Rights Agreement, the Holder shall have piggy-back registration rights with
respect to the Warrant Shares then held by the Holder or then subject to
issuance upon exercise of this Warrant (collectively, the "Remaining Warrant
Shares), subject to the conditions set forth below. If, at any time after the
New Registration Statement has ceased to be effective, the Company participates
(whether voluntarily or by reason of an obligation to a third party) in the
registration of any shares of the Company's stock (other than a registration on
Form S-4 or Form S-8), the Company shall give written notice thereof to the
Holder and the Holder shall have the right, exercisable within ten (10) business
days after receipt of such notice, to demand inclusion of all or a portion of
the Holder's Remaining Warrant Shares in such registration statement. If the
Holder exercises such election, the Remaining Warrant Shares so designated shall
be included in the registration statement at no cost or expense to the Holder
(other than any costs or commissions which would be borne by the Holder under
the terms of the Registration Rights Agreement).
8. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage pre-paid. Any such notice shall be deemed given when so
delivered personally, telegraphed, telexed or sent by facsimile transmission,
or, if mailed, two days after the date of deposit in the United States mails, as
follows:
(i) if to the Company, to;
Siga Pharmaceuticals, Inc.
420 Lexington Avenue, Suite 620
New York, New York 10170
Attn: Judson Cooper
Telephone No.: (212) 672-9150
Telecopier No.: (212) 697-3130
-4-
and with a copy to:
Orrick Herrington & Sutcliffe, LLP
666 Fifth Avenue
New York, NY 10103
Attn: Jeffrey Fessler, Esq.
Telephone No.: (212) 506-5000
Telecopier No.: (212) 506-5151
(ii) if to the Holder, to:
Gabriel M. Cerrone
265 E. 66th St.
Apt. 16G
New York, NY 10021
Telephone No.: (212) 755-6003
Telecopier No.: (212) 755-6574
with a copy to:
Krieger & Prager LLP, Esqs.
39 Broadway
Suite 1440
New York, NY 10006
Attn: Samuel Krieger, Esq.
Telephone No.: (212) 363-2900
Telecopier No.: (212) 363-2999
Any party may be notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
9. Supplements and Amendments; Whole Agreement. This Warrant may be
amended or supplemented only by an instrument in writing signed by the parties
hereto. This Warrant of even date herewith contain the full understanding of the
parties hereto with respect to the subject matter hereof and thereof and there
are no representations, warranties, agreements or understandings other than
expressly contained herein and therein.
10. Governing Law. This Warrant shall be deemed to be a contract made
under the laws of the State of New York for contracts to be wholly performed in
such state and without giving effect to the principles thereof regarding the
conflict of laws. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the City of New York or the
state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Warrant and hereby waives, to the
maximum
-5-
extent permitted by law, any objection, including any objection based on forum
non conveniens, to the bringing of any such proceeding in such jurisdictions. To
the extent determined by such court, the Company shall reimburse the Holder for
any reasonable legal fees and disbursements incurred by the Buyer in enforcement
of or protection of any of its rights under any of the Transaction Agreements.
11. Counterparts. This Warrant may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
12. Descriptive Headings. Descriptive headings of the several Sections
of this Warrant are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
the __th day of ___________, 2000.
SIGA PHARMACEUTICALS, INC.
By:
--------------------------------------
Name:
-------------------------------
Its:
--------------------------------
Attest:
Name:
-----------------------------
Title:
----------------------------
-6-
NOTICE OF EXERCISE OF WARRANT
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of______________, _____, to
purchase shares of the Common Stock, par value $.0001 per share, of SIGA
TECHNOLOGIES, INC. and tenders herewith payment in accordance with Section 1 of
said Common Stock Purchase Warrant.
Please deliver the stock certificate to:
Dated:___________________________
[Name of Holder]
By:
[ ] CASH: $____________________
Exhibit F
THESE SECURITIES INCLUDING ANY UNDERLYING SECURITIES (THE "SECURITIES")
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED.
SIGA TECHNOLOGIES, INC.
COMMON STOCK PURCHASE WARRANT
1. Issuance; Certain Definitions. In consideration of good and valuable
consideration, the receipt of which is hereby acknowledged by SIGA TECHNOLOGIES,
INC., a Delaware corporation (the "Company"), PANETTA PARTNERS LTD., 265 E. 66th
Street, Suite 16G, New York, New York 10021 or registered assigns (the "Holder")
is hereby granted the right to purchase at any time hereafter until 5:00 P.M.,
New York City time, on November 10, 2005 (the "Expiration Date"), Three Hundred
Three Thousand Two Hundred (303,200) fully paid and nonassessable shares of the
Company's Stock, par value $.0001 per share (the "Common Stock") at an initial
exercise price per share (the "Exercise Price") of $2.00 per share, subject to
further adjustment as set forth herein. Reference is made to that certain
Securities Purchase Agreement, dated as of January 31, 2000 (the "Securities
Purchase Agreement"), to which the Company and certain named Buyers are parties.
Capitalized terms not otherwise defined herein shall have the meanings ascribed
to them in the Securities Purchase Agreement.
2. Exercise of Warrants.
2.1 General. This Warrant is exercisable in whole or in part
at any time and from time to time. Such exercise shall be effectuated by
submitting to the Company (either by delivery to the Company or by facsimile
transmission as provided in Section 8 hereof) a completed and duly executed
Notice of Exercise (substantially in the form attached to this Warrant
Certificate) as provided in this paragraph. The date such Notice of Exercise is
faxed to the Company shall be the "Exercise Date," provided that the Holder of
this Warrant tenders this Warrant Certificate to the Company within five (5)
business days thereafter. The Notice of Exercise shall be executed by the Holder
of this Warrant and shall indicate the number of shares then being purchased
pursuant to such exercise. Upon surrender of this Warrant Certificate with,
together with appropriate payment of the Exercise Price for the shares of Common
Stock purchased, the Holder shall be entitled to receive a certificate or
certificates for the shares of Common Stock so purchased. The Exercise Price per
share of Common Stock for the shares then being exercised shall be payable in
cash or by certified or official bank check. The Holder shall be deemed to be
the holder of the shares issuable to it in accordance with the provisions of
this Section 2.1 on the Exercise Date.
2.2 Limitation on Exercise. Notwithstanding the provisions of
this Warrant, in no event (except (i) as specifically provided in this Warrant
as an exception to this provision, or (ii) while there is outstanding a tender
offer for any or all of the shares of the
Company's Common Stock) shall the Holder be entitled to exercise this Warrant,
or shall the Company have either the obligation to issue shares upon such
exercise of all or any portion of this Warrant, to the extent that, after such
exercise the sum of (1) the number of shares of Common Stock beneficially owned
by the Holder and its affiliates (other than shares of Common Stock which may be
deemed beneficially owned through the ownership of the unexercised portion of
the Warrants), and (2) the number of shares of Common Stock issuable upon the
exercise of the Warrants with respect to which the determination of this proviso
is being made, would result in beneficial ownership by the Holder and its
affiliates of more than 9.99% of the outstanding shares of Common Stock (after
taking into account the shares to be issued to the Holder upon such exercise).
For purposes of the proviso to the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), except as otherwise provided
in clause (1) of such sentence. The Holder, by its acceptance of this Warrant,
further agrees that if the Holder transfers or assigns any of the Warrants to a
party who or which would not be considered such an affiliate, such assignment
shall be made subject to the transferee's or assignee's specific agreement to be
bound by the provisions of this Section 2.2 as if such transferee or assignee
were the original Holder hereof.
3. Reservation of Shares. The Company hereby agrees that at all times
during the term of this Warrant there shall be reserved for issuance upon
exercise of this Warrant such number of shares of its Common Stock as shall be
required for issuance upon exercise of this Warrant (the "Warrant Shares").
4. Mutilation or Loss of Warrant. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.
5. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder are limited to those expressed in this Warrant and
are not enforceable against the Company except to the extent set forth herein.
6. Protection Against Dilution.
6.1 Adjustment Mechanism. If an adjustment of the Exercise
Price is required pursuant to this Section 6, the Holder shall be entitled to
purchase such number of additional shares of Common Stock as will cause (i) the
total number of shares of Common Stock Holder is entitled to purchase pursuant
to this Warrant, multiplied by (ii) the adjusted Exercise Price per share, to
equal (iii) the dollar amount of the total number of shares of Common Stock
Holder is entitled to purchase before adjustment multiplied by the total
Exercise Price before adjustment.
6.2 Capital Adjustments. In case of any stock split or reverse
stock split, stock dividend, reclassification of the Common Stock,
recapitalization, merger or
-2-
consolidation, or like capital adjustment affecting the Common Stock of the
Company, the provisions of this Section 6 shall be applied as if such capital
adjustment event had occurred immediately prior to the date of this Warrant and
the original Exercise Price had been fairly allocated to the stock resulting
from such capital adjustment; and in other respects the provisions of this
Section shall be applied in a fair, equitable and reasonable manner so as to
give effect, as nearly as may be, to the purposes hereof. A rights offering to
stockholders shall be deemed a stock dividend to the extent of the bargain
purchase element of the rights.
6.3 Adjustment for Spin Off. If, for any reason, prior to the
exercise of this Warrant in full, the Company spins off or otherwise divests
itself of a part of its business or operations or disposes all or of a part of
its assets in a transaction (the "Spin Off") in which the Company does not
receive compensation for such business, operations or assets, but causes
securities of another entity (the "Spin Off Securities") to be issued to
security holders of the Company, then
(a) the Company shall cause (i) to be reserved Spin Off Securities
equal to the number thereof which would have been issued to the Holder had
all of the Holder's unexercised Warrants outstanding on the record date
(the "Record Date") for determining the amount and number of Spin Off
Securities to be issued to security holders of the Company (the
"Outstanding Warrants") been exercised as of the close of business on the
trading day immediately before the Record Date (the "Reserved Spin Off
Shares"), and (ii) to be issued to the Holder on the exercise of all or
any of the Outstanding Warrants, such amount of the Reserved Spin Off
Shares equal to (x) the Reserved Spin Off Shares multiplied by (y) a
fraction, of which (I) the numerator is the amount of the Outstanding
Warrants then being exercised, and (II) the denominator is the amount of
the Outstanding Warrants; and
(b) the Exercise Price on the Outstanding Warrants shall be adjusted
immediately after consummation of the Spin Off by multiplying the Exercise
Price by a fraction (if, but only if, such fraction is less than 1.0), the
numerator of which is the Average Market Price of the Common Stock (as
defined below) for the five (5) trading days immediately following the
fifth trading day after the Record Date, and the denominator of which is
the Average Market Price of the Common Stock on the five (5) trading days
immediately preceding the Record Date; and such adjusted Exercise Price
shall be deemed to be the Exercise Price with respect to the Outstanding
Warrants after the Record Date. As used herein, the term "Average Market
Price of the Common Stock" means the average closing bid price of a share
of Common Stock, as reported by Bloomberg, LP or, if not so reported, as
reported on the over-the-counter market for the relevant period.
7. Transfer to Comply with the Securities Act; Registration Rights.
7.1 Transfer. This Warrant has not been registered under the
Securities Act of 1933, as amended, (the "Act") and has been issued to the
Holder for investment and not with a view to the distribution of either the
Warrant or the Warrant Shares. Neither this Warrant nor any of the Warrant
Shares or any other security issued or issuable upon exercise of this Warrant
may be sold, transferred, pledged or hypothecated in the absence of an effective
-3-
registration statement under the Act relating to such security or an opinion of
counsel satisfactory to the Company that registration is not required under the
Act. Each certificate for the Warrant, the Warrant Shares and any other security
issued or issuable upon exercise of this Warrant shall contain a legend on the
face thereof, in form and substance satisfactory to counsel for the Company,
setting forth the restrictions on transfer contained in this Section.
7.2 Registration Rights. (a) The Company agrees to file a
registration statement or an amendment to its registration statement on Form S-3
to register all of the Warrant Shares (as so filed or amended, the "New
Registration Statement"), pursuant to the Securities Act of 1933, as amended,
within twenty (20) business days after the original issue of this Warrant, all
at no cost or expense to the Holder (other than any costs or commissions which
would be borne by the Holder under the terms of the Registration Rights
Agreement were the Warrant Shares deemed to be Registrable Securities under that
agreement). The Company further agrees that, after the New Registration
Statement is declared effective, it will thereafter maintain the effectiveness
of such registration until (i) two (2) years from the effective date of the New
Registration Statement, (ii) the earlier date on which the Holder has sold or
otherwise transferred all of the Warrant Shares which have been or could be
acquired upon exercise of this Warrant or (iii) the earlier date on which the
Warrant Shares have been or could be sold pursuant to Rule 144(k).
(b) In addition to the registration rights referred to in the preceding
provisions of Section 7.2(a), effective after the expiration of the
effectiveness of the New Registration Statement as contemplated by the
provisions of Section 7.2(a), the Holder shall have piggy-back registration
rights with respect to the Warrant Shares then held by the Holder or then
subject to issuance upon exercise of this Warrant (collectively, the "Remaining
Warrant Shares), subject to the conditions set forth below. If, at any time
after the New Registration Statement has ceased to be effective, the Company
participates (whether voluntarily or by reason of an obligation to a third
party) in the registration of any shares of the Company's stock (other than a
registration on Form S-4 or Form S-8), the Company shall give written notice
thereof to the Holder and the Holder shall have the right, exercisable within
ten (10) business days after receipt of such notice, to demand inclusion of all
or a portion of the Holder's Remaining Warrant Shares in such registration
statement. If the Holder exercises such election, the Remaining Warrant Shares
so designated shall be included in the registration statement at no cost or
expense to the Holder (other than any costs or commissions which would be borne
by the Holder under the terms of the Registration Rights Agreement were the
Warrant Shares deemed to be Registrable Securities under that agreement).
Notwithstanding the foregoing, the piggy-back rights granted to Holder pursuant
to this Section 7.2(b) are subject to the right of any future holder of
registration rights to specifically exclude any other securities of the Company
from being included on a registration statement filed for the benefit of such
holder, provided that such exclusion shall exclude any other securities of the
Company that are not subject to registration rights which specifically provide
for such securities to be in the subject registration statement.
(c) The Holder's rights under this Section 7 shall expire at such time as
the Holder can sell all of the Warrant Shares then held by the Holder and all
shares then subject to issuance upon exercise of this Warrant under Rule 144(k).
-4-
8. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage pre-paid. Any such notice shall be deemed given when so
delivered personally, telegraphed, telexed or sent by facsimile transmission,
or, if mailed, two days after the date of deposit in the United States mails, as
follows:
(i) if to the Company, to;
Siga Technologies, Inc.
420 Lexington Avenue, Suite 620
New York, New York 10170
Attn: Judson Cooper
Telephone No.: (212) 672-9150
Telecopier No.: (212) 697-3130
and with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, NY 100222
Attn: Jeffrey Fessler, Esq.
Telephone No.: (212) 872-1000
Telecopier No.: (212) 872-1002
(ii) if to the Holder, to:
Fahnestock & Co. Inc.
125 Broad Street
New York, NY 10004
Attn: Kee Colen
Telephone No.: (212) 668-8000
Telecopier No.: (212) 425-2028
with a copy to:
Krieger & Prager LLP, Esqs.
39 Broadway
Suite 1440
New York, NY 10006
Attn: Samuel Krieger, Esq.
Telephone No.: (212) 363-2900
Telecopier No.: (212) 363-2999
Any party may be notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
-5-
9. Supplements and Amendments; Whole Agreement. This Warrant may be
amended or supplemented only by an instrument in writing signed by the parties
hereto. This Warrant of even date herewith contain the full understanding of the
parties hereto with respect to the subject matter hereof and thereof and there
are no representations, warranties, agreements or understandings other than
expressly contained herein and therein.
10. Governing Law. This Warrant shall be deemed to be a contract
made under the laws of the State of New York for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Each of the parties consents to the jurisdiction
of the federal courts whose districts encompass any part of the City of New York
or the state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Warrant and hereby waives, to the
maximum extent permitted by law, any objection, including any objection based on
forum non conveniens, to the bringing of any such proceeding in such
jurisdictions. To the extent determined by such court, the Company shall
reimburse the Holder for any reasonable legal fees and disbursements incurred by
the Buyer in enforcement of or protection of any of its rights under any of the
Transaction Agreements.
11. Counterparts. This Warrant may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
12. Descriptive Headings. Descriptive headings of the several
Sections of this Warrant are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions hereof.
-6-
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as
of the 10th day of November, 2000.
SIGA TECHNOLOGIES, INC.
By:
--------------------------------------
Name:
-------------------------------
Its:
--------------------------------
Attest:
- ------------------------------------
Name:
-----------------------------
Title:
----------------------------
-7-
NOTICE OF EXERCISE OF WARRANT
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of ____________________,
_________, to purchase _____________________ shares of the Common Stock, par
value $.0001 per share, of SIGA TECHNOLOGIES, INC. and tenders herewith payment
in accordance with Section 1 of said Common Stock Purchase Warrant.
Please deliver the stock certificate to:
Dated:
------------------------------
[Name of Holder]
By:
|_| CASH: $
-----------------------------
Exhibit G
THESE SECURITIES INCLUDING ANY UNDERLYING SECURITIES (THE "SECURITIES")
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE
IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED.
SIGA, TECHNOLOGIES, INC.
COMMON STOCK PURCHASE WARRANT
1. Issuance; Certain Definitions. In consideration of good and valuable
consideration, the receipt of which is hereby acknowledged by SIGA TECHNOLOGIES
INC., a Delaware corporation (the "Company"), GABRIEL M. CERRONE or registered
assigns (the "Holder") is hereby granted the right to purchase at any time from
the Commencement Date (defined below) until 5:00 P.M., New York City time, on
March 28, 2005 (the "Expiration Date"), Three Hundred Three Thousand Two Hundred
(303,200) fully paid and nonassessable shares of the Company's Stock, par value
$.0001 per share (the "Common Stock") at an initial exercise price per share
(the "Exercise Price") of $5.00 per share, subject to further adjustment as set
forth herein. Reference is made to that certain Securities Purchase Agreement,
dated as of January 31, 2000 (the "Securities Purchase Agreement"), to which the
Company and certain named Buyers are parties. Capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Securities
Purchase Agreement.
2. Exercise of Warrants.
2.1 General. This Warrant is exercisable in whole or in part at any
time and from time to time. Such exercise shall be effectuated by submitting to
the Company (either by delivery to the Company or by facsimile transmission as
provided in Section 8 hereof) a completed and duly executed Notice of Exercise
(substantially in the form attached to this Warrant Certificate) as provided in
this paragraph. The date such Notice of Exercise is faxed to the Company shall
be the "Exercise Date," provided that the Holder of this Warrant tenders this
Warrant Certificate to the Company within five (5) business days thereafter. The
Notice of Exercise shall be executed by the Holder of this Warrant and shall
indicate the number of shares then being purchased pursuant to such exercise.
Upon surrender of this Warrant Certificate with, together with appropriate
payment of the Exercise Price for the shares of Common Stock purchased, the
Holder shall be entitled to receive a certificate or certificates for the shares
of Common Stock so purchased. The Exercise Price per share of Common Stock for
the shares then being exercised shall be payable in cash or by certified or
official bank check. The Holder shall be deemed to be the holder of the shares
issuable to it in accordance with the provisions of this Section 2.1 on the
Exercise Date.
2.2 Limitation on Exercise. Notwithstanding the provisions of this
Warrant, in no event (except (i) as specifically provided in this Warrant as an
exception to this provision, or (ii) while there is outstanding a tender offer
for any or all of the shares of the
Company's Common Stock) shall the Holder be entitled to exercise this Warrant,
or shall the Company have either the obligation to issue shares upon such
exercise of all or any portion of this Warrant, to the extent that, after such
exercise the sum of (1) the number of shares of Common Stock beneficially owned
by the Holder and its affiliates (other than shares of Common Stock which may be
deemed beneficially owned through the ownership of the unexercised portion of
the Warrants), and (2) the number of shares of Common Stock issuable upon the
exercise of the Warrants with respect to which the determination of this proviso
is being made, would result in beneficial ownership by the Holder and its
affiliates of more than 9.99% of the outstanding shares of Common Stock (after
taking into account the shares to be issued to the Holder upon such exercise).
For purposes of the proviso to the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 1.3(d) of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), except as
otherwise provided in clause (1) of such sentence. The Holder, by its acceptance
of this Warrant, further agrees that if the Holder transfers or assigns any of
the Warrants to a party who or which would not be considered such an affiliate,
such assignment shall be made subject to the transferee's or assignee's specific
agreement to be bound by the provisions of this Section 2.2 as if such
transferee or assignee were the original Holder hereof.
2.3 Commencement Date. The term "Commencement Date" means March 28,
2000.
3. Reservation of Shares. The Company hereby agrees that at all times
during the term of this Warrant there shall be reserved for issuance upon
exercise of this Warrant such number of shares of its Common Stock as shall be
required for issuance upon exercise of this Warrant (the "Warrant Shares").
4. Mutilation or Loss of Warrant. Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.
5. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a stockholder in the Company, either at law or equity,
and the rights of the Holder and limited to those expressed in this Warrant and
are not enforceable against the Company except to the extent set forth herein.
6. Protection Against Dilution.
6.1 Adjustment Mechanism. If an adjustment of the Exercise Price is
required pursuant to this Section 6, the Holder shall be entitled to purchase
such number of additional shares of Common Stock as will cause (i) the total
number of shares of Common Stock Holder is entitled to purchase pursuant to this
Warrant, multiplied by (ii) the adjusted Exercise Price per share, to equal
(iii) the dollar amount of the total number of shares of Common Stock Holder is
entitled to purchase before adjustment multiplied by the total Exercise Price
before adjustment.
-2-
6.2 Capital Adjustments. In case of any stock split or reverse stock
split, stock dividend, reclassification of the Common Stock, recapitalization,
merger or consolidation, or like capital adjustment affecting the Common Stock
of the Company, the provisions of this Section 6 shall be applied as if such
capital adjustment event had occurred immediately prior to the date of this
Warrant and the original Exercise Price had been fairly allocated to the stock
resulting from such capital adjustment; and in other respects the provisions of
this Section shall be applied in a fair, equitable and reasonable manner so as
to give effect, as nearly as may be, to the purposes hereof. A rights offering
to stockholders shall be deemed a stock dividend to the extent of the bargain
purchase element of the rights.
6.3 Adjustment for Spin Off. If, for any reason, prior to the
exercise of this Warrant in full, the Company spins off or otherwise divests
itself of a part of its business or operations or disposes all or of a part of
its assets in a transaction (the "Spin Off") in which the Company does not
receive compensation for such business, operations or assets, but causes
securities of another entity (the "Spin Off Securities") to be issued to
security holders of the Company, then
(a) the Company shall cause (i) to be reserved Spin Off Securities
equal to the number thereof which would have been issued to the Holder had
all of the Holder's unexercised Warrants outstanding on the record date
(the "Record Date") for determining the amount and number of Spin Off
Securities to be issued to security holders of the Company (the
"Outstanding Warrants") been exercised as of the close of business on the
trading day immediately before the Record Date (the "Reserved Spin Off
Shares"), and (ii) to be issued to the Holder on the exercise of all or
any of the Outstanding Warrants, such amount of the Reserved Spin Off
Shares equal to (x) the Reserved Spin Off Shares multiplied by (y) a
fraction, of which (I) the numerator is the amount of the Outstanding
Warrants then being exercised, and (II) the denominator is the amount of
the Outstanding Warrants; and
(b) the Exercise Price on the Outstanding Warrants shall be adjusted
immediately after consummation of the Spin Off by multiplying the Exercise
Price by a fraction (if, but only if, such fraction is less than 1.0), the
numerator of which is the Average Market Price of the Common Stock (as
defined below) for the five (5) trading days immediately following the
fifth trading day after the Record Date, and the denominator of which is
the Average Market Price of the Common Stock on the five (5) trading days
immediately preceding the Record Date; and such adjusted Exercise Price
shall be deemed to be the Exercise Price with respect to the Outstanding
Warrants after the Record Date. As used herein, the term "Average Market
Price of the Common Stock" means the average closing bid price of a share
of Common Stock, as reported by Bloomberg, LP or, if not so reported, as
reported on the over-the-counter market for the relevant period.
7. Transfer to Comply with the Securities Act; Registration Rights.
7.1 Transfer. This Warrant has not been registered under the
Securities Act of 1933, as amended, (the "Act") and has been issued to the
Holder for investment and not with a view to the distribution of either the
Warrant or the Warrant Shares. Neither this
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Warrant nor any of the Warrant Shares or any other security issued or issuable
upon exercise of this Warrant may be sold, transferred, pledged or hypothecated
in the absence of an effective registration statement under the Act relating to
such security or an opinion of counsel satisfactory to the Company that
registration is not required under the Act. Each certificate for the Warrant,
the Warrant Shares and any other security issued or issuable upon exercise of
this Warrant shall contain a legend on the face thereof, in form and substance
satisfactory to counsel for the Company, setting forth the restrictions on
transfer contained in this Section.
7.2 Registration Rights. (a) The Company agrees to file a
registration statement or an amendment to its registration statement on Form S-3
to register all of the Warrant Shares (as so filed or amended, the "New
Registration Statement"), pursuant to the Securities Act of 1933, as amended,
and to have such New Registration Statement at no cost or expense to the Holder
(other than any costs or commissions which would be borne by the Holder under
the terms of the Registration Rights Agreement were the Warrant Shares deemed to
be Registrable Securities under that agreement). The Company further agrees
that, after the New Registration Statement is declared effective, it will
thereafter maintain the effectiveness of such registration until the earlier of
the date on which both (i) the Holder has exercised all of the Holder's rights
to acquire Warrant Shares or the Warrant has expired, whichever is earlier, and
(ii) the Holder has sold or otherwise transferred all of the Warrant Shares
acquired upon exercise of this warrant.
(b) In addition to the registration rights referred to in the
preceding provisions of Section 7.2(a), effective after the expiration of
the effectiveness of the New Registration Statement as contemplated by the
Registration Rights Agreement, the Holder shall have piggy-back
registration rights with respect to the Warrant Shares then held by the
Holder or then subject to issuance upon exercise of this Warrant
(collectively, the "Remaining Warrant Shares), subject to the conditions
set forth below. If, at any time after the New Registration Statement has
ceased to be effective, the Company participates (whether voluntarily or
by reason of an obligation to a third party) in the registration of any
shares of the Company's stock (other than a registration on Form S-4 on
form S-8), the Company shall give written notice thereof to the Holder and
the Holder shall have the right, exercisable within ten (10) business days
after receipt of such notice, to demand inclusion of all or a portion of
the Holder's Remaining Warrant Shares in such registration statement. If
the Holder exercises such election, the Remaining Warrant Shares so
designated shall be included in the registration statement at no cost or
expense to the Holder (other than any costs or commissions which would be
borne by the Holder under the terms of the Registration Rights Agreement
were the Warrant Shares deemed to be Registrable Securities under that
agreement).
(c) The Holder's rights under this Section 7 shall expire at such
time as the Holder can sell all of the Warrant Shares then held by the
Holder and all shares then subject to issuance upon exercise of this
Warrant under Rule 144 without volume or other restrictions or limit.
8. Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage pre-paid. Any
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such notice shall be deemed given when so delivered personally, telegraphed,
telexed or sent by facsimile transmission, or, if mailed, two days after the
date of deposit in the United States mails, as follows:
(i) if to the Company, to;
Siga Technologies, Inc.
420 Lexington Avenue, Suite 620
New York, New York 10170
Attn: Judson Cooper
Telephone No.: (212) 672-9150
Telecopier No.: (212) 697-3130
and with a copy to:
Orrick Herrington & Sutcliffe, LLP
666 Fifth Avenue
New York, NY 10103
Attn: Jeffrey Fessler, Esq.
Telephone No.: (212) 506-5000
Telecopier No.: (212) 506-5151
(ii) if to the Holder, to:
Gabriel M. Cerrone
265 E. 66th St.
Apt. 16G
New York, NY 10021
Telephone No.: (212) 755-6003
Telecopier No.: (212) 755-6574
with a copy to:
Krieger & Prager LLP, Esqs.
39 Broadway
Suite 1440
New York, NY 10006
Attn: Samuel Krieger, Esq.
Telephone No.: (212) 363-2900
Telecopier No.: (212) 363-2999
Any party may be notice given in accordance with this Section to the
other parties designate another address or person for receipt of notices
hereunder.
9. Supplements and Amendments; Whole Agreement. This Warrant may be
amended or supplemented only by an instrument in writing signed by the parties
hereto. This
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Warrant of even date herewith contain the full understanding of the parties
hereto with respect to the subject matter hereof and thereof and there are no
representations, warranties, agreements or understandings other than expressly
contained herein and therein.
10. Governing Law. This Warrant shall be deemed to be a contract made
under the laws of the State of New York for contracts to be wholly performed in
such state and without giving effect to the principles thereof regarding the
conflict of laws. Each of the parties consents to the jurisdiction of the
federal courts whose districts encompass any part of the City of New York or the
state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Warrant and hereby waives, to the
maximum extent permitted by law, any objection, including any objection based on
forum non conveniens, to the bringing of any such proceeding in such
jurisdictions. To the extent determined by such court, the Company shall
reimburse the Holder for any reasonable legal fees and disbursements incurred by
the Buyer in enforcement of or protection of any of its rights under any of the
Transaction Agreements.
11. Counterparts. This Warrant may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.
12. Descriptive Headings. Descriptive headings of the several Sections
of this Warrant are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of
the 1st day of May, 2000.
SIGA TECHNOLOGIES, INC.
By:
--------------------------------------
Name: Joshua D. Schein
Title: Chief Executive Officer
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NOTICE OF EXERCISE OF WARRANT
The undersigned hereby irrevocably elects to exercise the right,
represented by the Warrant Certificate dated as of , , to purchase shares of the
Common Stock, par value $0001 per share, of SIGA TECHNOLOGIES, INC. and tenders
herewith payment in accordance with Section 1 of said Common Stock Purchase
Warrant.
Please deliver the stock certificate to:
Dated: ___________________________
[Name of Holder]
By:
[ ] CASH: $_____________________
Exhibit H
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT, dated as of January __, 2000, is made
by and between SIGA PHARMACEUTICALS, INC., a Delaware corporation, with
headquarters located at 420 Lexington Avenue, Suite 620, New York , New York
10170 (the "Company") and each entity named on a signature page hereto (each, an
"Initial Investor") (each agreement with an Initial Investor being deemed a
separate and independent agreement between the Company and such Initial
Investor, except that each Initial Investor acknowledges and consents to the
rights granted to each other Initial Investor under such agreement).
Terms not otherwise defined herein shall have the meanings ascribed to
them in the Securities Purchase Agreement, dated as of January __, 2000 (the
"Securities Purchase Agreement"), between the Initial Investor and the Company.
W I T N E S S E T H:
WHEREAS, upon the terms and subject to the conditions of the
Securities Purchase Agreement, the Company has agreed to issue and sell to the
Initial Investor the Company's 6% Convertible Debentures having an aggregate
principal balance of up to $1,500,000 (the "Debentures"); and
WHEREAS, the Company has agreed to issue Warrants to the Initial
Investor as contemplated by the Securities Purchase Agreement (the "Warrants");
and
WHEREAS, the Debentures are convertible into shares of Common Stock
(the "Conversion Shares"; which term, for purposes of this Agreement, shall
include shares of Common Stock of the Company issuable in lieu of accrued
interest on conversion as contemplated by the Debentures and as Reset Shares as
contemplated by the Securities Purchase Agreement) upon the terms and subject to
the conditions contained in the Debentures and the Securities Purchase
Agreement, and the Warrants may be exercised for the purchase of shares of
Common Stock (the "Warrant Shares") upon the terms and conditions of the
Warrants; and
WHEREAS, to induce the Initial Investor to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"Securities Act"), with respect to the Conversion Shares and the Warrant Shares;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Initial Investor hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms shall
have the following meanings:
(a) "Investor" means the Initial Investor and any permitted
transferee or assignee who agrees to become bound by the provisions of this
Agreement in accordance with Section 9 hereof and who holds Debentures, Warrants
or Registrable Securities.
(b) "Potential Material Event" means any of the following: (i) the
possession by the Company of material information not ripe for disclosure in a
registration statement, which shall be evidenced by determinations in good faith
by the Board of Directors of the Company that disclosure of such information in
the registration statement would be detrimental to the business and affairs of
the Company; or (ii) any material engagement or activity by the Company which
would, in the good faith determination of the Board of Directors of the Company,
be adversely affected by disclosure in a registration statement at such time,
which determination shall be accompanied by a good faith determination by the
Board of Directors of the Company that the registration statement would be
materially misleading absent the inclusion of such information.
(c) "Register," "Registered," and "Registration" refer to a
registration effected by preparing and filing a Registration Statement or
Statements 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 effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").
(d) "Registrable Securities" means the Conversion Shares and the
Warrant Shares. Notwithstanding the above: (1) Common Stock which would
otherwise be deemed to be Registrable Securities shall not constitute
Registrable Securities if those shares of Common Stock may be resold in a public
transaction without volume or other limitations and without registration under
the Act, including, without limitation, pursuant to Rule 144 under the Act; and
(2) any Registrable Securities resold in a public transaction shall cease to
constitute Registrable Securities.
(e) "Registration Statement" means a registration statement of the
Company under the Securities Act.
(f) "Required Effective Date" means the relevant Initial Required
Effective Date or Increased Required Effective Date (as those terms are defined
below).
2. Registration.
(a) Mandatory Registration.
(i) The Company shall prepare and file with the SEC, as soon
as possible after the Closing Date but no later than
thirty (30) days after the Closing Date (the "Required
Filing Date"), either a Registration Statement on Form
S-3 or an amendment to an existing Registration
Statement, in either event registering for resale by the
Investor the number of shares equal to one hundred ten
percent (110%) of the sum of (A) the Purchase Price plus
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accrued interest on the Debentures through the Maturity
Date of the Debentures, divided by the Conversion Price,
plus (B) the number of Warrant Shares, or such lesser
number as may be required by the SEC. The Registration
Statement (X) shall include only the Registrable
Securities and the shares referred to in Exhibit 1
annexed hereto; and (Y) shall also state that, in
accordance with Rule 416 and 457 under the Securities
Act, it also covers such indeterminate number of
additional shares of Common Stock as may become issuable
upon conversion of the Debentures and the exercise of
the Warrants to prevent dilution resulting from stock
splits, or stock dividends. The Company will use its
reasonable best efforts to cause such Registration
Statement to be declared effective on a date (the
"Initial Required Effective Date") which no later than
is the earlier of (Y) five (5) days after notice by the
SEC that it may be declared effective or (Z) ninety (90)
days after the Closing Date.
(ii) If at any time, the number of shares of Common Stock
represented by the Registrable Shares, issued or to be
issued as contemplated by the Transaction Agreements,
exceeds the aggregate number of shares of Common Stock
then registered (an "Increased Registered Shares Date"),
the Company shall, within ten (10) business days after
receipt of a written notice from any Investor, either
(V) amend the Registration Statement filed by the
Company pursuant to the preceding provisions of this
Section 2, if such Registration Statement has not been
declared effective by the SEC at that time, to register
such Registrable Shares, computed, (1)with respect to
Shares previously issued, as the number of shares
actually issued, and (W) with respect to Shares not yet
issued, utilizing the Conversion Price, or (X) if such
Registration Statement has been declared effective by
the SEC at that time, file with the SEC an additional
Registration Statement on Form S-3 or other appropriate
registration statement form (an "Additional Registration
Statement") to register the shares of Common Stock
represented by the Registrable Shares, computed as
contemplated by the immediately preceding subparagraph
(i), that exceed the aggregate number of shares of
Common Stock already registered. The Company will use
its reasonable best efforts to cause such Registration
Statement to be declared effective on a date (each, an
"Increased Required Effective Date") which is no later
than (Q) with respect to a Registration Statement under
clause (V) of this subparagraph (ii), the Initial
Required Effective Date and (R) with respect to an
Additional Registration Statement, the earlier of (I)
five (5) days after notice by the SEC that it may be
declared effective or (II) thirty (30) days after the
Increased Registered Shares Date.
(b) Payments by the Company.
(i) If the Registration Statement covering the Registrable
Securities is not filed with the SEC by the Required Filing Date in the proper
form required by this Agreement, the Company will make payment to the Initial
Investor in such amounts and at such times as shall be determined pursuant to
this Section 2(b).
(ii) If the Registration Statement covering the Registrable
Securities is not effective by the relevant Required Effective Date or if the
Investor is restricted from making sales of Registrable Securities covered by a
previously effective Registration Statement at any time (the date such
restriction commences, a "Restricted Sale Date") after the Effective Date other
than during a Permitted Suspension Period (as defined below), then the Company
will make payments to the Initial Investor in such amounts and at such times as
shall be determined pursuant to this Section 2(b).
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(iii) The amount (the "Periodic Amount") to be paid by the
Company to the Initial Investor shall be determined as of each Computation Date
(as defined below) and such amount shall be equal to the Periodic Amount
Percentage (as defined below) of the principal for all the Debentures (the
"Debenture Principal") for the period from the date following the relevant
Required Filing Date, Required Effective Date or Restricted Sale Date, as the
case may be, to the first relevant Computation Date, and thereafter to each
subsequent Computation Date. The "Periodic Amount Percentage" means (A) two
percent (2%) of the Debenture Principal for all Debentures for the period from
the date following the relevant Required Filing Date, Required Effective Date or
Restricted Sale Date, as the case may be, to the first relevant Computation
Date, and (B) three percent (3%) of such Debenture Principal of all Debentures
to each Computation Date thereafter. Anything in the preceding provisions of
this paragraph (iii) to the contrary notwithstanding, after the Effective Date
the Debenture Principal shall be deemed to refer to the sum of (X) the principal
of all Debentures not yet converted and (Y) the Held Debentures Value (as
defined below). The "Held Debentures Value" means, for shares acquired by the
Investor upon a conversion within the thirty (30) days preceding the Restricted
Sale Date, but not yet sold by the Investor, the principal of the Debentures
converted into such Conversion Shares; provided, however, that if the Investor
effected more than one conversion during such thirty (30) day period and sold
less than all of such shares, the sold shares shall be deemed to be derived
first from the conversions in the sequence of such conversions (that is, for
example, until the number of shares from the first of such conversions have been
sold, all shares shall be deemed to be from the first conversion; thereafter,
from the second conversion until all such shares are sold). By way of
illustration and not in limitation of the foregoing, if the Registration
Statement is timely filed but is not declared effective until one hundred
sixty-five (165) days after the Initial Closing Date, the Periodic Amount will
aggregate eight percent (8%) of the Debenture Principal (2% for days 91-120,
plus 3% for days 121-150, plus 3% for days 151-165).
(iv) Each Periodic Amount will be payable by the Company in
cash or other immediately available funds to the Investor monthly, without
requiring demand therefor by the Investor.
(v) The parties acknowledge that the damages which may be
incurred by the Investor if the Registration Statement is not filed by the
Required Filing Date or if the Registration Statement has not been declared
effective by a Required Effective Date, including if the right to sell
Registrable Securities under a previously effective Registration Statement is
suspended, may be difficult to ascertain. The parties agree that the Periodic
Amounts represent a reasonable estimate on the part of the parties, as of the
date of this Agreement, of the amount of such damages.
(vi) Notwithstanding the foregoing, the amounts payable by
the Company pursuant to this provision shall not be payable to the extent any
delay in the effectiveness of the Registration Statement occurs because of an
act of, or a failure to act or to act timely by the Initial Investor or its
counsel, or in the event all of the Registrable Securities may be sold pursuant
to Rule 144 or another available exemption under the Act.
(vii) "Computation Date" means (A) the date which is the
earlier of (1) thirty (30) days after the Required Filing Date, any relevant
Required Effective Date or a
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Restricted Sale Date, as the case may be, or (2) the date after the Required
Filing Date, such Required Effective Date or Restricted Sale Date on which the
Registration Statement is filed (with respect to payments due as contemplated by
Section 2(b)(i) hereof) or is declared effective or has its restrictions removed
(with respect to payments due as contemplated by Section 2(b)(ii) hereof), as
the case may be, and (B) each date which is the earlier of (1) thirty (30) days
after the previous Computation Date or (2) the date after the previous
Computation Date on which the Registration Statement is filed (with respect to
payments due as contemplated by Section 2(b)(i) hereof) or is declared effective
or has its restrictions removed (with respect to payments due as contemplated by
Section 2(b)(ii) hereof), as the case may be.
(viii) Anything in the preceding provisions of this Section
2(b) to the contrary notwithstanding, if, but only if, the Registration
Statement is declared effective within one hundred twenty (120) days following
the Initial Closing Date, the provisions of Section 2(b)(ii) shall not apply to
the fact that the Registration Statement was initially declared effective after
the Initial Required Effective Date, and the Company will not have any
obligation to pay any Periodic Amount to the Initial Investor with respect
thereto; provided, however, that the provisions of Section 2(b)(ii) shall
continue to apply to all other events described therein.
3. Obligations of the Company. In connection with the registration
of the Registrable Securities, the Company shall do each of the following.
(a) Prepare promptly, and file with the SEC by the Required Filing
Date a Registration Statement with respect to not less than the number of
Registrable Securities provided in Section 2(a) above, and thereafter use its
reasonable best efforts to cause such Registration Statement relating to
Registrable Securities to become effective by the Required Effective Date and
keep the Registration Statement effective at all times during the period (the
"Registration Period") continuing until the earliest of (i) the date that is two
(2) years after the last day of the calendar month following the month in which
the Effective Date occurs, (ii) the date when the Investors may sell all
Registrable Securities under Rule 144 without volume or other restrictions or
limits or (iii) the date the Investors no longer own any of the Registrable
Securities, which Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading;
(b) 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 keep the Registration Statement effective at all times during the
Registration Period, and, during the Registration Period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement;
(c) Permit a single firm of counsel designated by the Initial
Investors to review the Registration Statement and all amendments and
supplements thereto a reasonable
-5-
period of time (but not less than three (3) business days) prior to their filing
with the SEC, and not file any document in a form to which such counsel
reasonably objects.
(d) Notify each Investor, such Investor's legal counsel identified
to the Company (which, until further notice, shall be deemed to be Krieger &
Prager LLP, ATTN: Samuel Krieger, Esq.; each, an "Investor's Counsel"), and any
managing underwriters immediately (and, in the case of (i)(A) below, not less
than five (5) days prior to such filing) and (if requested by any such Person)
confirm such notice in writing no later than one (1) business day following the
day (i)(A) when a Prospectus or any Prospectus supplement or post-effective
amendment to the Registration Statement is proposed to be filed; (B) whenever
the SEC notifies the Company whether there will be a "review" of such
Registration Statement; (C) whenever the Company receives (or a representative
of the Company receives on its behalf) any oral or written comments from the SEC
in respect of a Registration Statement (copies or, in the case of oral comments,
summaries of such comments shall be promptly furnished by the Company to the
Investors); and (D) with respect to the Registration Statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the SEC or any other Federal or state governmental authority for
amendments or supplements to the Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement covering any or all
of the Registrable Securities or the initiation of any proceedings for that
purpose; (iv) if at any time any of the representations or warranties of the
Company contained in any agreement (including any underwriting agreement)
contemplated hereby ceases to be true and correct in all material respects; (v)
of the receipt by the Company of any notification with respect to the suspension
of the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
proceeding for such purpose; and (vi) of the occurrence of any event that to the
best knowledge of the Company makes any statement made in the Registration
Statement or Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it 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, in light of the circumstances under which they were
made, not misleading, unless such material change, untrue statement or omission
is not properly and timely disclosed in a document incorporated into the
Registration Statement or Prospectus.
(e) Furnish to each Investor and such Investor's Counsel (i)
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one (1) copy of the Registration Statement,
each preliminary prospectus and prospectus, and each amendment or supplement
thereto, and (ii) such number of copies of a prospectus, and all amendments and
supplements thereto and such other documents, as such Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Investor;
(f) As promptly as practicable after becoming aware thereof, notify
each Investor of the happening of any event of which the Company has knowledge,
as a result of which the prospectus included 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
-6-
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and use its best efforts promptly to
prepare a supplement or amendment to the Registration Statement or other
appropriate filing with the SEC to correct such untrue statement or omission,
and deliver a number of copies of such supplement or amendment to each Investor
as such Investor may reasonably request;
(g) As promptly as practicable after becoming aware thereof, notify
each Investor who holds Registrable Securities being sold (or, in the event of
an underwritten offering, the managing underwriters) of the issuance by the SEC
of a Notice of Effectiveness or any notice of effectiveness or any stop order or
other suspension of the effectiveness of the Registration Statement at the
earliest possible time;
(h) Notwithstanding the foregoing, if at any time or from time to
time after the date of effectiveness of the Registration Statement, the Company
notifies the Investors in writing of the existence of a Potential Material
Event, the Investors shall not offer or sell any Registrable Securities, or
engage in any other transaction involving or relating to the Registrable
Securities, from the time of the giving of notice with respect to a Potential
Material Event until such Investor receives written notice from the Company that
such Potential Material Event either has been disclosed to the public or no
longer constitutes a Potential Material Event; provided, however, that the
Company may not so suspend the right to such holders of Registrable Securities
during the periods the Registration Statement is required to be in effect other
than during a Permitted Suspension Period. The term "Permitted Suspension
Period" means one or more suspension periods during any consecutive 12-month
period which suspension periods, in the aggregate, do not exceed fifty (50)
days, provided, however, that no one such suspension period shall either (i) be
for more than twenty (20) days or (ii) begin less than ten (10) business days
after the last day of the preceding suspension (whether or not such last day was
during or after a Permitted Suspension Period).
(i) Use its reasonable efforts to secure and maintain the
designation of all the Registrable Securities covered by the Registration
Statement on the "OTC SmallCap Market" of the National Association of Securities
Dealers Automated Quotations System ("NASDAQ") within the meaning of Rule I 1
Aa2-1 of the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the quotation of the Registrable Securities on The NASDAQ
Bulletin Board Market; and, without limiting the generality of the foregoing, to
arrange for at least two market makers to register with the National Association
of Securities Dealers, Inc. ("NASD") as such with respect to such Registrable
Securities;
(j) Provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities not later than the effective date of the
Registration Statement;
(k) Cooperate with the Investors to facilitate the timely
preparation and delivery of certificates for the Registrable Securities to be
offered pursuant to the Registration Statement and enable such certificates for
the Registrable Securities to be in such denominations or amounts as the case
may be, as the Investors may reasonably request, and, within three (3) business
days after a Registration Statement which includes Registrable Securities is
ordered effective by the SEC, the Company shall deliver, and shall cause legal
counsel selected by the Company to deliver, to the transfer agent for the
Registrable Securities (with copies to the
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Investors whose Registrable Securities are included in such Registration
Statement) an appropriate instruction and opinion of such counsel; and
(l) Take all other reasonable actions necessary to expedite and
facilitate disposition by the Investor of the Registrable Securities pursuant to
the Registration Statement.
4. Obligations of the Investors. In connection with the registration
of the Registrable Securities, the Investors shall have the following
obligations:
(a) It shall be a condition precedent to the obligations of the
Company to complete the registration pursuant to this Agreement with respect to
the Registrable Securities of a particular Investor that such Investor shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of the Registrable
Securities held by it, as shall be reasonably required to effect the
registration of such Registrable Securities and shall execute such documents in
connection with such registration as the Company may reasonably request. At
least ten (10) days prior to the first anticipated filing date of the
Registration Statement, the Company shall notify each Investor of the
information the Company requires from each such Investor (the "Requested
Information") if such Investor elects to have any of such Investor's Registrable
Securities included in the Registration Statement. If at least two (2) business
days prior to the filing date the Company has not received the Requested
Information from an Investor (a "Non-Responsive Investor"), then the Company may
file the Registration Statement without including Registrable Securities of such
Non-Responsive Investor;
(b) Each Investor, by such Investor's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement hereunder, unless such Investor has notified the Company in writing of
such Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement; and
(c) Each Investor agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3(e) or
3(f), above, such Investor will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities and will not engage in any other transactions in the
Company's securities until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(e) or 3(f) and, if
so directed by the Company, such Investor shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in such Investor's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice. Each Investor also agrees to maintain the confidentiality of the
information in such notice referred to in the first sentence of this
subparagraph (c).
5. Expenses of Registration. (a) All reasonable expenses (other than
underwriting discounts and commissions of the Investor) incurred in connection
with registrations, filings or qualifications pursuant to Section 3, but
including, without limitation, all registration, listing, and qualifications
fees, printers and accounting fees, the fees and disbursements of counsel for
the Company shall be borne by the Company. In addition, a fee for
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a single counsel to review the Registration Statement on behalf of the Investors
equal to, in the aggregate for all Investors, $3,500, shall be borne by the
Company.
(b) Neither the Company nor any of its subsidiaries has, as of the
date hereof, nor shall the Company nor any of its subsidiaries, on or after the
date of this Agreement, enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Investors in this Agreement
or otherwise conflicts with the provisions hereof. Neither the Company nor any
of its subsidiaries has previously entered into any agreement granting any
registration rights with respect to any of its securities to any Person other
than Open-i. Without limiting the generality of the foregoing, without the
written consent of the Investors holding a majority of the Registrable
Securities, the Company shall not grant to any person the right to request the
Company to register any securities of the Company under the Securities Act
unless the rights so granted are subject in all respects to the prior rights in
full of the Investors set forth herein, and are not otherwise in conflict or
inconsistent with the provisions of this Agreement and the other Transaction
Agreements.
6. Indemnification. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Investor who holds such Registrable Securities, the
directors, if any, of such Investor, the officers, if any, of such Investor,
each person, if any, who controls any Investor within the meaning of the
Securities Act or the Exchange Act (each, an "Indemnified Person" or
"Indemnified Party"), against any losses, claims, damages, liabilities or
expenses (joint or several) incurred (collectively, "Claims") to which any of
them may become subject under the Securities Act, the Exchange Act or otherwise,
insofar as such Claims (or actions or proceedings, whether commenced or
threatened, in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations in the Registration Statement, or
any post-effective amendment thereof, or any prospectus included therein: (i)
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or any post-effective amendment thereof or the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, (ii)
any untrue statement or alleged untrue statement of a material fact contained in
the final prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission or alleged
omission to state therein any material fact necessary to make the statements
made therein, in light of the circumstances under which the statements therein
were made, not misleading or (iii) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act, any state securities law or any
rule or regulation under the Securities Act, the Exchange Act or any state
securities law (the matters in the foregoing clauses (i) through (iii) being,
collectively, "Violations"). Subject to clause (b) of this Section 6, the
Company shall reimburse the Investors, promptly as such expenses are incurred
and are due and payable, for any legal fees or other reasonable expenses
incurred by them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6(a) shall not (I) apply to a Claim arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by or on behalf of any
Indemnified Person expressly for use in connection with the preparation of the
Registration Statement or any such
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amendment thereof or supplement thereto, if such prospectus was timely made
available by the Company pursuant to Section 3(c) hereof; (II) be available to
the extent such Claim is based on a failure of the Investor to deliver or cause
to be delivered the prospectus (or the amendment or supplement thereto) made
available by the Company; (III) be available to the extent such Claim is based
on a breach of the Investor's breach of Section 4(c) hereof; or (IV) apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of the Company, which consent shall not be
unreasonably withheld. Each Investor will indemnify the Company and its
officers, directors and agents (each, an "Indemnified Person" or "Indemnified
Party") against any claims arising out of or based upon a Violation which occurs
in reliance upon and in conformity with information furnished in writing to the
Company, by or on behalf of such Investor, expressly for use in connection with
the preparation of the Registration Statement or the amendment or supplement
thereto, subject to such limitations and conditions as are applicable to the
Indemnification provided by the Company to this Section 6. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Section 9.
(b) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, 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 the 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
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case maybe. In case any such action is brought against any Indemnified Person or
Indemnified Party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party similarly
notified, assume the defense thereof, subject to the provisions herein stated
and after notice from the indemnifying party to such Indemnified Person or
Indemnified Party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such Indemnified Person or Indemnified
Party under this Section 6 for any legal or other reasonable out-of-pocket
expenses subsequently incurred by such Indemnified Person or Indemnified Party
in connection with the defense thereof other than reasonable costs of
investigation, unless the indemnifying party shall not pursue the action of its
final conclusion. The Indemnified Person or Indemnified Party shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and reasonable out-of-pocket expenses of such
counsel shall not be at the expense of the indemnifying party if the
indemnifying party has assumed the defense of the action with counsel reasonably
satisfactory to the Indemnified Person or Indemnified Party. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action. 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, as such expense, loss, damage or liability is incurred
and is due and payable.
-10-
7. 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
would otherwise be liable under Section 6 to the fullest extent permitted by
law; provided, however, that (a) no contribution shall be made under
circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Section 6; (b) 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 (c) 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.
8. Reports under Exchange Act. With a view to making available to
the Investors the benefits of Rule 144 promulgated under the Securities Act or
any other similar rule or regulation of the SEC that may at any time permit the
Investors to sell securities of the Company to the public without registration
("Rule 144"), the Company agrees to:
(a) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act,
or, if the provisions of Rule 144(c)(2) are applicable, ensure that the
standards contemplated by Rule 144(c) to permit sales by the Investors under
said Rule 144 are satisfied at all times; and
(b) furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act, (ii) 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 (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without
registration.
9. Assignment of the Registration Rights. The rights to have the
Company register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investors to any transferee of the Registrable
Securities (or all or any portion of any unconverted Debentures or unexercised
Warrant) only if: (a) the Investor agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to the
Company within a reasonable time after such assignment, (b) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (i) the name and address of such transferee or assignee and
(ii) the securities with respect to which such registration rights are being
transferred or assigned, (c) immediately following such transfer or assignment
the further disposition of such securities by the transferee or assignee is
restricted under the Securities Act and applicable state securities laws, and
(d) at or before the time the Company received the written notice contemplated
by clause (b) of this sentence the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions contained herein. In the event
of any delay in filing or effectiveness of the Registration Statement as a
result of such assignment, the Company shall not be liable for any damages
arising from such delay, or the payments set forth in Section 2(b) hereof
arising from such delay.
-11-
10. Amendment of Registration Rights. Any provision of this
Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investors who
hold a sixty-seven (67%) percent interest of the Registrable Securities. Any
amendment or waiver effected in accordance with this Section 10 shall be binding
upon each Investor and the Company.
11. Termination. This Agreement shall terminate on the date all
Registrable Securities cease to exist; but without prejudice to (i) the parties'
rights and obligations arising from breaches of this Agreement occurring prior
to such termination and (ii) other indemnification obligations under this
Agreement.
12. Miscellaneous.
(a) Notices required or permitted to be given hereunder shall be
given in the manner contemplated by the Securities Purchase Agreement, (i) if to
the Company or to the Initial Investor, to their respective address contemplated
by the Securities Purchase Agreement, and (iii) if to any other Investor, at
such address as such Investor shall have provided in writing to the Company, or
at such other address as each such party furnishes by notice given in accordance
with this Section 12(a).
(b) 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,
shall not operate as a waiver thereof.
(c) This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Each of the parties consents to the jurisdiction
of the federal courts whose districts encompass any part of the City of
Wilmington or the state courts of the State of Delaware sitting in the City of
Wilmington in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based on forum non coveniens, to the bringing of any such
proceeding in such jurisdictions. To the extent determined by such court, the
Company shall reimburse the Investor for any reasonable legal fees and
disbursements incurred by the Investor in enforcement of or protection of any of
its rights under this Agreement.
(d) If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement or the
validity or enforceability of this Agreement in any other jurisdiction.
(e) Subject to the requirements of Section 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto.
(f) All pronouns and any variations thereof refer to the masculine,
feminine or neuter, singular or plural, as the context may require.
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(g) The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning thereof.
(h) This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by telephone line facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this Agreement.
(i) This Agreement constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof. This Agreement may be amended only by an instrument in writing signed by
the party to be charged with enforcement thereof.
(j) Fahnestock & Co., Inc. and Krieger & Prager LLP and their
respective designees with respect to the securities referred to in Exhibit I
shall be deemed third-party beneficiaries of Section 2(a).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
COMPANY:
SIGA PHARMACEUTICALS, INC.
By: /s/ Judson Cooper
--------------------------------
Name: Judson Cooper
Title: Chairman
INITIAL INVESTOR:
Donald G. Drapkin
------------------------------------
By: /s/ Donald G.Drapkin
-------------------------------
Name: Donald G. Drapkin
Title:________________________________
-14-
Exhibit I
Donald G. Drapkin
35 East 62nd Street
New York, New York 10021
March 30, 2001
SIGA Technologies, Inc.
420 Lexington Avenue, Suite 620
New York, New York 10170
Gabriel M. Cerrone
265 East 66th Street, Suite 16G
New York, New York 10021
Thomas E. Constance
c/o Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Eric A. Rose, M.D.
112 East 78th Street
New York, New York 10021
Judson A. Cooper
c/o SIGA Technologies, Inc.
420 Lexington Avenue, Suite 620
New York, New York 10170
Joshua D. Schein, Ph.D.
c/o SIGA Technologies, Inc.
420 Lexington Avenue, Suite 620
New York, New York 10170
Re: SIGA Technologies, Inc. ("SIGA").
--------------------------------
Gentlemen:
This letter is to confirm the understanding (the "Agreement")
among Donald G. Drapkin ("Drapkin"), SIGA, Gabriel M. Cerrone ("Cerrone"),
Thomas E. Constance ("Constance"), Eric A. Rose, M.D. ("Rose"), Judson A.
Cooper ("Cooper") and Joshua D. Schein, Ph.D. ("Schein" and, together with
Drapkin, SIGA, Cerrone, Constance, Rose and Cooper, the "Parties"), with
respect to certain matters relating to SIGA.
1. Resignations. On or before April 16, 2001 or such other date as is
consented to by Drapkin (the "Effective Date"), each of Cooper and Schein shall
(i) resign from the Board of Directors of SIGA (the "Board") and from any and
all offices held with SIGA and (ii) use his best
1
efforts to cause each of the Resigning Directors (as defined below) to resign
from the Board and from any and all offices held with SIGA by each such
Resigning Director, in each case, at no cost to SIGA. "Resigning Director" shall
mean each member of the Board other than Schein and Cooper; provided, however,
that the "Resigning Directors" shall not be construed to include Drapkin or any
of his designees.
2. Appointments. Cooper and Schein shall use their best efforts to cause
Drapkin and his designees to be elected to the Board.
3. Termination of Employment Agreements. (a) On the Effective Date, each
of Cooper and Schein shall cause any agreement or other arrangement relating to
their respective employment by SIGA, including, without limitation, the
respective Amended and Restated Employment Agreements between SIGA and each of
Cooper and Schein, dated as of October 6, 2000, to be immediately terminated
voluntarily and at no cost to SIGA, pursuant to the respective Separation
Agreement between each such Party and SIGA of even date herewith (the
"Separation Agreements"), other than costs expressly provided for in this
Agreement.
(b) At Drapkin's request, on or after the Effective Date, each of
Cooper and Schein shall cause any consulting agreements or other arrangements
between SIGA and any entity controlled by Cooper or Schein, including, without
limitation, Prism Ventures LLC, to be immediately terminated at no cost to SIGA.
(c) On the Effective Date, SIGA shall enter into Mutual Releases
with each of Cooper and Schein and with each Resigning Director, in the form
attached hereto as Exhibit A.
4. Cooperation. (a) From the period commencing on the Effective Date and
terminating on the first anniversary thereof, each of Cooper and Schein shall
cooperate with SIGA, if and as reasonably requested by SIGA, to effect a
transition of their respective responsibilities and to ensure that their
respective successors and SIGA are aware of all matters that had been handled by
such Party. Such cooperation by each of Cooper and Schein shall include, without
limitation, performing up to ten hours per month of consulting services to SIGA
if and as reasonably requested by SIGA. After receiving an invoice therefor,
SIGA shall pay such Party $175 per hour consulting work actually performed
pursuant to, and within the scope of, a request for such services made by the
Chief Executive Officer of SIGA.
(b) Following the Effective Date, each of Cooper and Schein shall,
upon reasonable notice, furnish such information and assistance to SIGA as may
reasonably be required by SIGA in connection with any legal action, suit,
proceeding, claim, complaint, dispute or investigation, whether at law, in
equity, in arbitration or before the government of any nation, state, city,
locality or other political subdivision thereof or any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, and including any external or internal investigation,
involving SIGA or any of its affiliates or in which any of them is, or may
become, a party.
5. Books and Records. On the Effective Date, each of Cooper and Schein
shall turn over, and shall cause SIGA to turn over, to Drapkin or Drapkin's
designee, all books and records of SIGA.
2
6. Lock-Up. (a) Each of Cooper and Schein shall not, and shall cause its
respective affiliates to not, directly or indirectly, offer, sell, pledge,
hypothecate, contract to sell, acquire any option to sell, grant any option to
purchase, short or otherwise dispose of (or announce any offer, sale, contract
of sale or other disposition of) (collectively, "Transfer") any shares acquired
either prior to April 16, 2001 or pursuant to grants or vesting of either stock
options or restricted stock thereafter, or any interest acquired either prior to
April 16, 2001 or pursuant to grants or vesting of either stock options or
restricted stock thereafter in any shares, of common stock, par value $.0001 per
share ("Common Stock"), other capital stock of SIGA or any Convertibles (as
defined below), during the period commencing on the date hereof and ending on
April 16, 2003 (the "Lock-Up Period"), except that each of Cooper and Schein
shall, notwithstanding the above restrictions, be entitled to Transfer (i) any
such securities pursuant to a pledge or hypothecation to the extent necessary to
margin them in a brokerage account (a "Permitted Pledge"), (ii) 250,000 in the
case of Schein, or 220,500 in the case of Cooper, shares of Common Stock on or
after October 16, 2001 and (iii) an additional 125,000 shares of Common Stock on
or after each of April 16, 2002, July 16, 2002, October 16, 2002 and January 16,
2003; provided that, in any event, such Party shall not Transfer in any one day
more than the greater of (x) 10,000 shares of Common Stock and (y) a number of
shares of Common Stock equal to 5% of the total volume of shares of Common Stock
traded on the open market on such day. Notwithstanding Cooper's relationship
with his children, they shall not be deemed an "affiliate" of Cooper for
purposes of this Agreement.
(b) Subject to the conditions contained in Section 13 hereof, Each
of Drapkin, Cerrone, Constance and Rose shall not, and shall cause its
respective affiliates to not Transfer any shares acquired either prior to April
16, 2001 or pursuant to grants or vesting of either stock options or restricted
stock thereafter, or any interest acquired either prior to April 16, 2001 or
pursuant to grants or vesting of either stock options or restricted stock
thereafter in any shares, of Common Stock, other capital stock of SIGA or any
Convertibles, during the Lock-Up Period, except that each of Drapkin, Cerrone,
Constance and Rose shall, notwithstanding the above restrictions, be entitled to
Transfer (i) any such securities pursuant to a Permitted Pledge, (ii) on or
after October 16, 2001, 24.2% of the securities "beneficially owned" (as defined
below) by such person as of October 16, 2001 which remain subject to such
restrictions, (iii) on or after April 16, 2002, 16.0% of the securities
beneficially owned by such person as of April 16, 2002 which remain subject to
such restrictions, (iv) on or after July 16, 2002, 19.0% of the securities
beneficially owned by such person as of July 16, 2002 which remain subject to
such restrictions, (v) on or after October 16, 2002, 23.5% of the securities
beneficially owned by such person as of October 16, 2002 which remain subject to
such restrictions and (vi) on or after January 16, 2003, 30.7% of the securities
beneficially owned by such person as of January 16, 2003 which remain subject to
such restrictions; provided that, in any event, such Party shall not Transfer in
any one day more than the greater of (x) 10,000 shares of Common Stock and (y) a
number of shares of Common Stock equal to 5% of the total volume of shares of
Common Stock traded on the open market on such day. As used in this Agreement,
the term beneficially ownership shall have the meaning ascribed to it in Rule
13d-3 promulgated under the Securities Exchange Act of 1934, as amended, except
that, for purposes hereof: (A) all Common Stock issuable upon conversion or
exercise of Convertibles shall be deemed "beneficially owned," notwithstanding
any limitation on the conversion or exercise thereof based on the amount of
securities beneficially owned by the holder thereof; and (B) the 11,750 shares
of Common Stock owned by the Drapkin Family Charity Foundation (the "Charity")
shall not be deemed beneficially owned by Drapkin. Furthermore,
3
notwithstanding Drapkin's relationship with the Charity, the Charity shall not
be deemed an "affiliate" of Drapkin for purposes of this Agreement.
(c) At any time or times, at Drapkin's option, the provisions of
Subsections 6(a) and 6(b) (the "Lock-Up") may be (i) terminated as a whole and
rendered null and void; or (ii) modified so that the number of shares of Common
Stock that each Party is allowed to Transfer shall be increased, pro rata in
accordance with their respective beneficial ownership of Common Stock, by such
amount as Drapkin shall decide in his sole discretion. Any such termination or
modification of the Lock-Up shall be effective on and after the date specified
in a notice from Drapkin to each other Party, which notice is sent no fewer than
five days prior to such termination or modification of the Lock-Up. In the case
of any modification of the Lock-Up in accordance with clause (ii) of the first
sentence of this Subsection 6(c), Drapkin shall state the amount of such
modification in the notice thereof required by the immediately preceding
sentence.
(d) If a Party or an affiliate of such Party consummates any
Transfer in violation of Subsection 6(a) or 6(b), such Party shall immediately
pay to SIGA an amount of liquidated damages equal to the gross sales price of
such securities or interest.
(e) No Party shall hold any shares of Common Stock, Convertibles or
other capital stock of SIGA through any broker that has not agreed to send
copies of all confirmations with respect to such securities to SIGA. SIGA shall
keep records of all such confirmations received, and each Party shall have the
right, upon at least five days prior written notice to SIGA, to inspect such
records during SIGA's regular business hours, at SIGA's offices, at such
inspecting Party's expense; provided, however, that no Party may exercise such
inspection right more than once in any period of 90 consecutive calendar days.
Upon at least ten days prior written notice from any Party (in such capacity the
"Inspector") to any Party other than SIGA (in such capacity the "Inspected"),
the Inspected shall provide the Inspector with copies of the Inspected's two
most recent monthly statements for each of such Inspected's securities accounts
that contains Common Stock, Convertibles or other capital stock of SIGA, which
copies may be redacted so long as the information relating to holdings of, and
transactions in, any such SIGA securities subject to the Lock-Up are visible;
provided, however, that no Inspector may exercise such inspection right more
than once in any period of 180 consecutive calendar days with respect to the
same Inspected. No Party shall give SIGA's transfer agent stop transfer
instructions solely on account of the Lock-Up; provided that such stop transfer
instructions may be given with respect to any shares held by a Party that has
breached this Section 6, including without limitation, any shares held in
violation of the first sentence of this Subsection 6(e). The provisions of this
Subsection 6(e) shall terminate 90 days after the end of the Lock-Up Period.
(f) On the Effective Date, Cooper and Schein shall grant to Drapkin
an irrevocable proxy for the duration of the Lock-Up Period, in substantially
the form attached hereto as Exhibit B, with respect to all shares of capital
stock of SIGA held by such Party.
7. Representations and Warranties. Each of Cooper and Schein hereby
represents and warrants, as of the date hereof and as of the Effective Date,
each of the following:
(a) Since December 15, 2000, SIGA has taken no action for which
approval of the Board was required nor has the Board approved any action, except
for (i) the execution and
4
delivery of and performance under this Agreement and (ii) filing a Registration
Statement on Form S-8 registering Common Stock issued in connection with the
Plan (as defined below), which actions have been duly authorized by the Board.
(b) Since December 15, 2000, no options or other rights to purchase
securities of SIGA have vested or otherwise become exercisable nor have the
provisions of any such options or other rights been amended or modified, except
(i) the vesting pursuant to the original terms thereof of options to purchase
Common Stock held by each of Thomas Konatich and David Kaufman, to the extent of
12,500 shares each, (ii) the vesting pursuant to the original terms thereof of
options to purchase 25,000 shares of Common Stock held by Dennis Hruby and (iii)
as expressly provided in this Agreement.
(c) SIGA has no contingent liabilities (whether known or
unknown).
(d) Except as set forth on Schedule 7(d) hereto, SIGA is neither
contemplating, nor is obligated to engage in, any transaction or transactions
whereby SIGA would pay or receive compensation (in any form) that could
reasonably be valued at $5,000 or more individually or $20,000 or more in the
aggregate. Except for transactions pursuant to Sections 8 and 9 of this
Agreement, as of the date hereof and as of the Effective Date, SIGA has not and
will not have consummated, nor does or will SIGA have any binding obligation
with respect to, is SIGA or will SIGA be obligated to incur any cost for failing
to consummate, any transaction described on Schedule 7(d).
(e) Except as set forth on Schedule 7(e) hereto, there are no: (i)
outstanding options, warrants or other rights to acquire Common Stock; (ii)
securities convertible into or exchangeable for Common Stock; nor (iii) any
rights (contingent or otherwise) to acquire, directly or indirectly, any of (i)
or (ii), above ((i), (ii) and (iii), above, are referred to collectively as
"Convertibles"). Schedule 7(e) sets forth, for each Convertible, all vesting and
expiration dates and the number of shares of Common Stock subject thereto.
(f) Except as set forth on Schedule 7(f), no spouse or child of
either Cooper or Schein owns any Common Stock, Convertibles or other securities
of SIGA.
(g) Neither Cooper nor Schein beneficially owns any Common Stock,
Convertibles or other securities of SIGA except as set forth on Schedule 7(g).
(h) Except as set forth on Schedule 7(h), SIGA is not party to any
agreements or other arrangements or any amendments, renewals or other
modifications thereof relating to the employment by SIGA of any person other
than Cooper and Schein.
(i) The exercise price applicable to the Unvested Options (as
defined below) is $1.125 per share of Common Stock. The Expiring Options (as
defined below) were issued in three equal tranches, and the respective exercise
prices applicable to each tranche of the Expiring Options are $1.50, $5.00 and
$4.00 per share of Common Stock.
(j) Other than the Common Stock, SIGA does not have any other
classes of voting securities outstanding.
5
(k) Except as expressly provided in this Agreement or disclosed in
SIGA's public filings under the Securities Exchange Act of 1934, as amended, up
to and including SIGA's proxy statement filed September 28, 2000, as of the date
hereof and as of the Effective Date, none of the terms of any of the Resigning
Directors' stock options, restricted stock or other awards, whether granted
under the Plan or otherwise, have been modified, nor have any agreements or
arrangements been entered into to so modify them.
(l) The modifications to the terms of the Unvested Options and the
Expiring Options pursuant to Section 8 hereof is permissible under the Plan.
The representations and warranties contained in this Section 7 shall survive
until April 16, 2003.
8. Adjustments to Certain Options. Subject to the conditions of Section 13
hereof: (i) SIGA shall cause any employee stock options held by Cooper and
Schein that are scheduled to vest on November 1, 2001, to the extent of options
to purchase up to 37,500 shares of Common Stock each (the "Unvested Options"),
to instead vest on the Effective Date; and (ii) SIGA shall cause any employee
stock options held by Cooper and Schein, that would expire within 90 days of
such Party's termination, to the extent of options to purchase up to 50,001
shares of Common Stock each (the "Expiring Options"), to remain exercisable
until such options would otherwise expire in accordance with their terms.
9. Fees of Counsel. SIGA shall pay for Cooper and Schein's reasonable
attorneys' fees and disbursements, of no more than $20,000 in the aggregate, in
connection with this Agreement upon an accounting therefor. SIGA shall pay for
Drapkin's reasonable attorneys' fees and disbursements in connection with this
Agreement upon an accounting therefor.
10. Mutual Release. (a) Drapkin, on behalf of himself and each of his
predecessors, successors, heirs, executors, administrators, assigns ("Drapkin
Releasor") hereby releases, remises and forever discharges each of Cooper,
Schein and the members of the current Board of Directors of SIGA, together with
each and all of their respective predecessors, successors, heirs, executors,
administrators, assigns ("Drapkin Releasees") from the Released Claims (as
defined below). "Released Claims" means all actions, causes of action, suits,
debts, dues, sums of money, accounts, controversies, agreements, promises,
variances, trespasses, damages, judgments, abstracts of judgments, liens,
extents, executions, claims and demands whatsoever, in law, admiralty or equity
(collectively, "Claims"), which the Releasor ever had, now has or hereafter can,
shall or may have against any or all of the Releasees, for, upon or by reason of
any matter, cause or thing whatsoever regarding SIGA or Drapkin's investment in
SIGA from the beginning of the world to the day of the date of this Agreement,
except for (i) Claims arising out of or related to this Agreement and (ii)
Claims arising out of or resulting from any Drapkin Releasee's fraud or
intentional misconduct. Drapkin Releasor further covenants and agrees not to
bring suit against the Drapkin Releasees for any Released Claims.
(b) Each of Cooper and Schein, on behalf of themselves, each other
and the members of the current Board of Directors of SIGA, in each case together
with each and all of their respective predecessors, successors, heirs,
executors, administrators, assigns (collectively, the "Insider Releasors")
hereby releases, remises and forever discharges Drapkin, together with each and
all of his predecessors, successors, heirs, executors, administrators and
assigns ("Insider
6
Releasees") from all Claims which any Insider Releasor ever had, now has or
hereafter can, shall or may have against any or all of the Insider Releasees,
for, upon or by reason of any matter, cause or thing whatsoever regarding SIGA
or Drapkin's investment in SIGA from the beginning of the world to the day of
the date of this Agreement, except for (i) Claims arising out of or related to
this Agreement and (ii) Claims arising out of or resulting from any Insider
Releasee's fraud or intentional misconduct. Each Insider Releasor further
covenants and agrees not to bring suit against any Insider Releasees for any
Released Claims.
11. Registration. Subject to any suspension or black-out periods that are
applicable generally to SIGA's securities that are registered under the
Securities Act of 1933, as amended (the "Securities Act"), SIGA shall use its
best efforts to have its Registration Statement on Form S-8 registering Common
Stock issued in connection with SIGA's employee stock incentive plan (the
"Plan") remain effective with respect to each option issued to Cooper and Schein
under the Plan until the earlier of (i) the later of (A) the date of expiration
of such option and (B) the one year anniversary of the last date on which any
portion of such option is actually exercised and (ii) the one year anniversary
of the date on which such option or any remaining portion of such option has
been exercised in full. If SIGA fails to comply with the provisions of this
Section 11, lost profits sustained by Cooper or Schein shall be deemed ordinary
damages, to the extent proven to be caused by SIGA's breach of this Section 11.
12. Insurance and Indemnification. Except as otherwise provided herein:
(a) SIGA shall use its best efforts to provide each of Cooper and
Schein with the same health insurance benefits that SIGA currently provides such
Party until the earlier of (i) such Party's obtaining employment by an entity
other than SIGA and (ii) April 16, 2003.
(b) SIGA shall use its best efforts to maintain Directors and
Officers insurance at least as protective as its current policy.
(c) SIGA shall indemnify, in accordance with and to the full extent
permitted by law, Cooper, Schein and any Resigning Director (each an
"Indemnified Party") that is a party or is threatened to be made a party to any
pending or threatened action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of Indemnified Party's acting as a
director of SIGA, against any liability or expense actually and reasonably
incurred by such Indemnified Party in respect thereof; provided, however, that,
SIGA shall not be obligated to indemnify any such Indemnified Party (i) with
respect to proceedings, claims or actions initiated or brought voluntarily by
such Indemnified Party and not by way of defense, (ii) for any amounts paid in
settlement of an action effected without the prior written consent of SIGA to
such settlement or (iii) with respect to proceedings, claims or actions based
upon or attributable to such Indemnified Party gaining in fact a personal profit
or advantage to which such Indemnified Party is not entitled, (iv) with respect
to proceedings, claims or actions resulting from such Indemnified Party's gross
negligence or willful misconduct or (v) with respect to proceedings, claims or
actions, the indemnification in respect of which by SIGA is not permitted by
applicable law ((i) through (v) are collectively referred to herein as the
"Indemnification Exclusions").
(d) If any Indemnified Party receives notice with respect to any
matter that may give rise to a claim for indemnification under Subsection 12(c),
then such Indemnified Party shall
7
promptly thereafter (and in any event within ten days of receipt of notice of
such matter) notify SIGA, describing the nature of the claim and stating that
indemnification may be sought with respect to such matter. The Indemnified Party
shall cooperate with SIGA to familiarize SIGA with the nature of the claim,
including providing copies of all information and materials relating to the
claim. SIGA shall be entitled to assume the defense of any matter for which
indemnification is sought in accordance with Subsection 12(c); provided,
however, that SIGA shall pay the reasonable fees and expenses of separate
counsel retained by the Indemnified Party if SIGA's counsel determines, in its
sole discretion, that there is a conflict of interest. In the event that SIGA
does not assume the defense of the matter, then the Indemnified Party shall be
entitled to defend against the matter; provided that the assumption of the
defense of the matter by the Indemnified Party shall not prejudice the right of
SIGA to later assume the defense of the matter (and as long as such assumption
would not reasonably be expected to have a material adverse impact on the
conduct of the defense of the matter). In the event that SIGA incurs expenses of
any kind (including, without limitation, legal fees and disbursements) in
defending, or in reimbursing the defense of, any Indemnified Party from, or in
satisfaction or settlement of, any proceeding, claim or action, and it is ever
determined that any of the Indemnification Exclusions apply, then such
Indemnified Party shall immediately reimburse SIGA for all such expenses,
together with interest thereon at prevailing rates.
13. Certain Conditions. The rights of Cooper and Schein under this
Agreement, including, without limitation, (i) the release of Cooper and Schein
by Drapkin contained in Section 10 hereof, (ii) SIGA's obligation to pay the
fees for counsel to Cooper and Schein contained in Section 9 hereof, (iii) the
adjustments to certain options held by Cooper and Schein, pursuant to Section 8
hereof, (iv) the right of Cooper and Schein to Transfer certain securities
during the Lock-Up Period, as provided in Subsection 6(a) hereof, and (v)
Drapkin's, Cerrone's, Constance's and Rose's respective obligations regarding
restrictions on Transfer of certain securities during the Lock-Up Period, as
provided in Subsection 6(b), are all subject to the following conditions:
(a) Drapkin and his designees shall be elected to the Board;
(b) Cooper, Schein and each Resigning Director shall resign from the
Board and from any and all offices held by such Resigning Director with SIGA, in
each case, at no cost to SIGA except to the extent expressly provided herein;
and
(c) Any consulting agreements or other arrangements between SIGA and
any entity controlled by Cooper or Schein, including, without limitation, Prism
Ventures LLC, that Drapkin requests to be terminated shall be terminated at no
cost to SIGA.
14. Securityholdings of Drapkin, Cerrone, Constance and Rose. Each of
Drapkin, Cerrone, Constance nor Rose represents and warrants that, except as set
forth on Schedule 14, such Party does not beneficially own any Common Stock,
Convertibles or other securities of SIGA, excluding any such securities with
respect to which such Party may be deemed the beneficial owner solely as the
holder of a proxy with respect thereto.
15. Schedule 14f-1. Cooper, Schein and SIGA shall cause a Schedule 14f-1
Information Statement regarding the transactions contemplated by this Agreement,
in form and substance reasonably satisfactory to Drapkin, to be filed with the
Securities and Exchange
8
Commission and transmitted to the stockholders of SIGA at least 10 days prior to
the Effective Date.
16. Successors and Assigns. All authority herein conferred or agreed to be
conferred shall survive the death or incapacity of any Party hereto and any
obligations of any Party shall be binding upon the heirs, personal
representatives, successors, and assigns of such Party.
9
If this reflects your understanding of the Agreement, please sign
below and return a copy of this letter to the undersigned.
---------------------------------
Donald G. Drapkin
Accepted and Agreed to:
SIGA TECHNOLOGIES, INC.
By: ______________________
Name:
Title:
- ----------------------
Gabriel M. Cerrone
- ----------------------
Thomas E. Constance
- ----------------------
Eric A. Rose, M.D.
- ----------------------
Judson A. Cooper
- ----------------------
Joshua D. Schein, Ph.D.
10
EXHIBIT A
FORM OF
MUTUAL RELEASE
THIS MUTUAL RELEASE (this "Mutual Agreement"), made and entered into as of
this __ day of April, 2001, by and between SIGA Technologies, Inc., 420
Lexington Avenue, Suite 620, New York, New York 10170, and [Joshua Schein,
[INSERT ADDRESS]] [Judson Cooper, [INSERT ADDRESS]] {Jeffrey Rubin {INSERT
ADDRESS}}{Eric I. Richman {INSERT ADDRESS}} {Thomas N. Lanier {INSERT ADDRESS}}.
As used throughout this Agreement: "Company" refers to SIGA Technologies, Inc.,
together with its their past and present parents, subsidiaries, and affiliates,
and each of their respective past and present officers, directors, agents,
employees, successors and assigns, in both their individual and corporate
capacities; and "Executive" refers to [Joshua Schein] [Judson Cooper] {Jeffrey
Rubin} {Eric I. Richman} {Thomas N. Lanier}, his heirs, executors,
administrators, agents, successors, assigns and dependents.
WHEREAS, Executive is serving [as the [Chief Executive Officer]
[Chairman and Executive Vice President] of SIGA Technologies, Inc.] {[[and]
as a member of the Board of Directors of SIGA Technologies, Inc.]}; and
WHEREAS, by mutual agreement between Executive and the Company, Executive
has agreed to resign as an employee, officer and director of the Company
effective as of the date hereof; and
WHEREAS, SIGA Technologies, Inc., [Executive,] [{the other(s) of Cooper
and/or Schein}] Gabriel M. Cerrone, Thomas E. Constance, Donald G. Drapkin
and Eric A. Rose, M.D. have entered into a letter agreement of dated as of
March 30, 2001 (the "Restructuring Agreement") that contemplates the
execution and delivery of this Agreement.
NOW, THEREFORE, for and in consideration of the mutual promises, covenants
and obligations contained herein, the parties hereto agree as follows:
Section 1 Release of Claims by Executive.
(a) Except as necessary to enforce the terms of this Mutual
Release, [the Separation Agreement dated as of March 30, 2001 among the parties
hereto (the "Separation Agreement"), and the Restructuring Agreement,] and in
exchange for and in consideration of the promises, covenants and agreements set
forth herein [and therein], Executive hereby releases the Company to the maximum
extent permitted by law from any and all manner of claims, demands, causes of
action, obligations, damages, or liabilities whatsoever of every kind and
nature, at law or in equity, known or unknown, and whether or not discoverable,
which Executive has or may have for any period prior to and including the date
of his execution of this Mutual Release, including, but not limited to, any
claim of defamation, wrongful discharge, breach of contract, claims for unpaid
wages, claims arising under or related to [the Employment Agreement (as defined
in the Separation Agreement)] {such Executive's service ("Board Service") as a
member of the Board of Directors of the Company} and claims of discrimination
under the Age Discrimination in
11
Employment Act of 1967 and all other federal, state and local laws, and any
claim for attorneys' fees or costs.
(b) Executive represents that he does not have any claim,
action or proceeding pending against the Company or which arises out of his
[employment by the Company] {Board Service}. Executive represents and warrants
that he has not assigned or subrogated any of his rights, claims and causes of
action, including any claims referenced in this Agreement, or authorized any
other person or entity to assert such claim or claims on his behalf, and he
agrees to indemnify and hold harmless the Company against any assignment of said
rights, claims and/or causes of action.
(c) Executive represents and warrants that[, other than (i)
the Employment Agreement, as modified by the Separation Agreement, and (ii) as
provided for under the Restructuring Agreement,] Executive is not party to any
agreement or arrangement respecting employment by the Company.
Section 2 Release of Claims by the Company. Except as necessary to enforce
the terms of this Mutual Release, [the Separation Agreement and the
Restructuring Agreement,] and in exchange for and in consideration of the
promises, covenants and agreements set forth herein [and therein], the Company
hereby releases Executive to the maximum extent permitted by law from any and
all manner of claims, demands, causes of action, obligations, damages, or
liabilities whatsoever of every kind and nature, at law or in equity, known or
unknown, and whether or not discoverable, arising out of Executive's [employment
by the Company] {Board Service} which the Company has or may have for any period
prior to and including the date of the execution of this Mutual Release;
provided, however, that the Company does not release herein any claims the
Company may now or in the future have against Executive for acts of intentional
misconduct committed by Executive during Executive's [employment with the
Company] {Board Service}.
Section 3 Acknowledgements.
(a) Executive acknowledges that he has read and understands
the terms of this Mutual Release and has voluntarily agreed to these terms
without coercion or undue persuasion by the Company.
(b) Executive acknowledges that he has been advised to consult
with an attorney prior to executing this Mutual Release. Executive also
acknowledges that he has had an adequate opportunity to review this Mutual
Release before its execution.
(c) Executive acknowledges that he has been afforded an
opportunity to take at least twenty-one (21) days to consider this Mutual
Release and has been advised to consult with the attorneys of his choice prior
to executing this Mutual Release. Executive further acknowledges that he will
have a period of seven (7) calendar days following his execution of this Mutual
Release in which to revoke his consent, and that such revocation will be
effective only if received in writing by Kramer Levin Naftalis & Frankel LLP,
919 Third Avenue, New York, New York, 10022, Attention: David M. Zlotchew, Esq.,
on or before the expiration of this seven (7) day period. This Mutual Release
will not become effective or enforceable until the revocation period has
expired.
12
IN WITNESS WHEREOF, the parties hereto have executed this
Mutual Release as of the date first written above.
SIGA TECHNOLOGIES, INC.
By:
------------------------------------
_______________________________________
[Joshua Schein]
[Judson Cooper]
{Jeffrey Rubin}
{Eric I. Richman}
{Thomas N. Lanier}
13
EXHIBIT B
FORM OF
IRREVOCABLE PROXY
The undersigned ("Stockholder"), being the holder of _____ shares of
common stock, $.0001 par value per share, of SIGA Technologies, Inc., a Delaware
corporation (the "Company") (together with any shares of capital stock of the
Company which the undersigned may acquire subsequent to the date hereof, the
"Shares"), does hereby irrevocably constitute and appoint Donald G. Drapkin
("Proxyholder") Stockholder's true and lawful attorney, agent and proxy, to vote
and otherwise act, or give written consent in lieu thereof, any or all of the
Shares on Stockholder's behalf and in Stockholder's name, place and stead, as
Stockholder's proxy and representative, and otherwise to exercise all voting
rights and to enter into agreements, on Stockholder's behalf, with respect to
the Shares in the same manner and to the same extent as if Proxyholder were the
sole and absolute owner thereof in Proxyholder's own right; and full power and
authority are hereby conferred upon Proxyholder to do all such things within the
power of a shareholder as may be incident to the foregoing, including without
limitation to attend meetings of the shareholders of the Company or any
continuations or adjournments thereof on Stockholder's behalf, with full power
of substitution and revocation and with all the powers Stockholder would possess
if personally present thereat, or to consent in writing on Stockholder's behalf
to any action of the shareholders of the Company.
Any proxy or proxies heretofore given by the undersigned to any
person or persons with respect to the foregoing matters are hereby revoked. This
Irrevocable Proxy shall be effective from the date hereof until April 16, 2003
(the "Term"), except as expressly provided below.
THIS IRREVOCABLE PROXY SHALL BE DEEMED COUPLED WITH AN INTEREST AND
IS IRREVOCABLE, AND STOCKHOLDER RETAINS NO RIGHT TO CANCEL, RESCIND, QUALIFY OR
MODIFY THIS PROXY IN ANY RESPECT DURING THE TERM.
This proxy shall remain in full force and effect and be binding upon
any donee, transferee or assignee of Stockholder, except to the extent that
Stockholder's entire interest in any Shares are transferred in accordance with
the terms of the letter agreement dated as of March 30, 2001 among Proxyholder,
the Company, Stockholder, Gabriel M. Cerrone, Thomas E. Constance, Eric A. Rose,
M.D. and [the other of Cooper or Schein].
Dated as of April 16, 2001
-----------------------------
[Stockholder's name]
14
Exhibit J
LOCK-UP AGREEMENT
This LOCK-UP AGREEMENT (this "Agreement") is entered into as of
January __, 2001, by and between Donald G. Drapkin ("Drapkin") and Vincent
Fischetti ("Fischetti").
WHEREAS, Drapkin and Fischetti desire to enter into the "lock-up"
arrangements contained in this Agreement relating to securities of Siga
Technologies, Inc., a Delaware corporation, ("SIGA").
NOW, THEREFORE, in consideration of the premises and the obligations
herein contained and for other consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto, intending to be legally bound,
agree as follows:
1. Without the prior written consent of Drapkin, Fischetti shall
not, and shall cause his respective relatives and affiliates to not, directly or
indirectly, offer, sell, pledge, hypothecate, contract to sell, grant any option
to purchase, short or otherwise dispose (or announce any offer, sale, contract
of sale or other disposition) of (collectively, "Transfer") any shares, or any
interest in any shares, of common stock, par value $.0001 per share ("Common
Stock") or other shares of capital stock of SIGA or any Convertibles (as defined
below) during the period commencing on the date of this Agreement and ending on
July 31, 2003 (the "Lock-Up Period").
2. Notwithstanding anything to the contrary in Paragraph 1, if
Drapkin Transfers any Common Stock or Convertibles during the Lock-Up Period,
Fischetti shall not be prohibited from Transferring the same proportion of
Fischetti's Common Stock or Convertibles, as the case may be, as Drapkin
Transfers; provided, that Fischetti so Transfers in the same manner as Drapkin.
3. In addition, the Parties shall, (i) with respect to any shares of
Common Stock for which Fischetti is the record holder, cause the transfer agent
for SIGA to note stop transfer instructions with respect to such shares of
Common Stock on the transfer books of SIGA and, (ii) with respect to any shares
of Common Stock for which Fischetti is the "beneficial owner" (within the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended) but not the record holder, cause the record holder of such shares of
Common Stock to cause the transfer agent for SIGA to note stop transfer
instructions with respect to such shares of Common Stock on the transfer books
of SIGA.
4. During the Lock-Up Period, Fischetti shall be the holder of
record of every share of Common Stock that may be deemed beneficially owned by
him.
5. The provisions of this Agreement may be waived or modified by a
writing signed by Drapkin; provided, however, that no modification of this
Agreement may place further restrictions on Fischetti's ability to Transfer
securities of SIGA without Fischetti's written consent thereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
/s/ Vincent Fischetti
------------------------------------
Vincent Fischetti
Accepted and Agreed to:
_______________________
Donald G. Drapkin
Exhibit N
FORM OF
CONVERSION AGREEMENT
THIS CONVERSION AGREEMENT (this "Agreement") is made this __ day of
May, 2001 among Siga Technologies, Inc., a Delaware corporation (the "Company")
and each of the signatories identified on the signature page hereto
(collectively, the "Holders" and, individually, a "Holder").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, each Holder owns the 6% Convertible Debentures due January
31, 2002 (the "Debentures") in the aggregate principal amount set forth opposite
such Holder's name on Schedule 1 hereto; and
WHEREAS, pursuant to Section 4(A) of the Debentures, the Holders
thereof have the right to convert all or a portion of the Debentures into shares
of Common Stock of the Company, $.0001 par value per share (the "Common Stock")
at any time; and
WHEREAS, each of the Holders, by executing this Agreement, consents
to converting all or a portion of their Debentures into shares of a new series
of Preferred Stock of the Company, the Series A Convertible Preferred Stock,
$.0001 par value per share (the "Series A Preferred Stock"), upon the terms and
subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereto hereby agree as
follows:
Conversion of Debentures
1.1 Conversion by the Holders. Upon the closing of the transactions
contemplated hereby (the "Closing"), each Holder shall convert the aggregate
principal amount of Debentures plus accrued interest attributed to him on
Schedule 1 hereto into such number of shares of Series A Preferred Stock set
forth opposite such Holder's name on Schedule 1 at the Conversion Price set
forth in Section 4(A) of the Debentures.
1.2 Delivery of Debentures.
Upon the Closing (a) the Holders shall deliver the certificates representing
their Debentures to the Company, and (b) the Company shall deliver to each
Holder, certificates representing the number of shares of Series A Preferred
Stock to be issued to such Holder pursuant to Section 1.1 hereof.
1.3 Section 4(C) of the Debentures. Except for the Debentures owned
by Howard Gittis, upon the Closing Section 4(C) of the Debentures shall not be
applicable to the conversion of the Debentures into the Series A Preferred
Stock.
Section 2. Representations and Warranties of the Holders.
Each Holder hereby severally represents and warrants to the Company with respect
to all representations and warranties contained in this Section 2. 2.1 Ownership
of Shares or Warrants. Each Holder is the owner of and has good and valid title
to the Debentures set forth opposite his name on Schedule 1 hereto, has full
legal right, power and authority to deliver such Debentures to the Company and,
such Debentures are free and clear of all claims, security interests, mortgages,
pledges, liens and other encumbrances of every nature whatsoever (collectively,
"Liens").
2.2 Execution and Delivery.
This Agreement has been duly and validly executed and delivered by each Holder
and constitutes his valid and binding obligation, enforceable against him in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
2.3 Acquisition for Investment.
Such Holder is acquiring the shares of Series A Preferred Stock for investment
purposes and not with a view to or for sale in connection with any distribution
of such Series A Preferred Stock to the public.
2.4 Accredited Investor Status.
Such Holder is an "accredited investor" within the meaning of Regulation D
promulgated by the United States Securities and Exchange Commission.
Section 3. Representations and Warranties of the Company.
The Company represents and warrants to the Holders as follows:
3.1 Execution and Delivery.
This Agreement has been duly and validly executed and delivered by the Company
and constitutes its valid and binding obligation, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether enforcement
is sought in a proceeding at law or in equity).
3.2 Due Incorporation and Qualification.
The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has the corporate power and
authority to own and lease its assets and properties and to carry on its
business as now conducted.
3.3 Authority to Execute and Perform Agreement.
The Company has the full legal right and corporate power and authority required
to enter into, execute and deliver this Agreement and to perform fully its
obligations hereunder. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the performance by the
Company of this Agreement in accordance with its terms and conditions will not
(a) result in a material breach of any of the terms or conditions of, or
termination of, or constitute (or with notice or lapse of time or both would
constitute) a default under, its Certificate of Incorporation or By-laws or any
material lease, contract, agreement, mortgage, bond, indenture, franchise,
license, permit or other similar instrument to which it is a party or by or to
which it or any of its assets or properties are bound or subject, or (b) violate
any order, writ, injunction, judgment, decree, rule or regulation of any court,
administrative agency or governmental body applicable to the Company.
Section 4. Mutual Covenants.
The Company and the Holders covenant and agree as follows:
4.1 Expenses of Conversion.
The Holders, on the one hand, and the Company, on the other hand, shall each
bear their own direct and indirect expenses incurred in connection with the
negotiation and preparation of this Agreement and the consummation and
performance of the transactions contemplated hereby.
4.2 Further Assurances.
The Holders and the Company each will, execute and deliver such documents and
other papers and take such further action as may be reasonably required or
desirable to carry out the provisions hereof and the transactions contemplated
hereby.
Section 5. Conditions Precedent to Obligations of the Company.
The obligation of the Company to proceed with the Closing shall be subject to
the fulfillment of the following conditions:
5.1 Injunction.
No temporary restraining order or preliminary or permanent injunction or other
order of a court or governmental or regulatory agency of competent jurisdiction
directing that the transactions contemplated herein not be consummated shall be
in effect, and there shall be no outstanding threat by any governmental or
regulatory agency of competent jurisdiction to obtain a temporary restraining
order or preliminary or permanent injunction with respect to the transactions
contemplated hereby.
5.2 Performance.
The Holders shall have performed in all material respects all of the covenants
and agreements set forth in this Agreement to be performed by them at or prior
to the Closing.
5.3 Representations and Warranties.
The representations and warranties of the Holders shall be true and correct in
all material respects on and as of the Closing Date as though such
representations and warranties were made
on and as of such time, and there shall be no material breach of any
representations or warranties of the Holders herein contained.
5.4 Deliveries.
The Holders shall have delivered the items required to be delivered by them in
Section 8.1.
Section 6. Conditions Precedent to the Obligations of the Holders.
The obligations of the Holders to proceed with the Closing shall be subject to
the fulfillment of the following conditions:
6.1 Injunction.
No temporary restraining order or preliminary or permanent injunction or other
order of a court or governmental or regulatory agency of competent jurisdiction
directing that the transactions contemplated herein not be consummated shall be
in effect, and there shall be no outstanding threat by any governmental or
regulatory agency of competent jurisdiction to obtain a temporary restraining
order or preliminary or permanent injunction with respect to the transactions
contemplated hereby.
6.2 Performance.
The Company shall have performed in all material respects all of the covenants
and agreements set forth in this Agreement to be performed by it at or prior to
the Closing.
6.3 Representations and Warranties.
The representations and warranties of the Company shall be true and correct in
all material respects on and as of the Closing Date as though such
representations and warranties were made on and as of such time, and there shall
be no material breach of any representations or warranties of the Company herein
contained.
6.4 Deliveries.
The Company shall have delivered the items required to be delivered by it in
Section 8.2.
Section 7. Closing.
7.1 The Closing.
The Closing shall be held at the offices of Akin, Gump, Strauss, Hauer & Feld,
L.L.P., 590 Madison Avenue, New York, New York, 10022.
7.2 Termination.
This Agreement may be terminated and the transactions contemplated hereunder may
be abandoned by the mutual written consent of the Holders and the Company at any
time prior to the Closing.
Section 8. Deliveries at the Closing.
8.1 Deliveries by the Holders.
At the Closing, the Holders shall deliver or cause to be delivered to the
Company the following:
8.1.1 Certificates representing the Debentures, in the form
specified in Section 1.2; and
8.1.2 Such other documents and materials as may be reasonably
required by the Company.
8.2 Deliveries by the Company.
At the Closing, the Company shall deliver or cause to be delivered to the
Holders the following:
8.2.1 Certificates representing shares of Series A Preferred Stock
referred to in Section 1.2; and
8.2.2 Such other documents and materials as may be reasonably
required by the Holders.
Section 9. Miscellaneous.
9.1 Notices.
Any notice or other communication required or which may be given hereunder shall
be in writing and either delivered personally to the addressee, telecopied or
telexed to the addressee or mailed, certified or registered mail, postage
prepaid, and shall be deemed given when so delivered personally, telecopied or
telexed or, if mailed, five days after the date of mailing, as follows:
(a) if to the Holders, to:
With a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
Attention: Jeffrey Fessler, Esq.
(b) if to the Company, to:
420 Lexington Avenue, Suite 620
New York, New York 10170
Attention: Eric A. Rose, M.D.
9.2 Assignment.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors, heirs and permitted assigns, and neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto without the prior written consent of
the other parties.
9.3 Entire Agreement.
This Agreement (including the Schedules hereto) contains the entire agreement
between the parties with respect to the transactions contemplated hereby and
supersedes all prior agreements and representations, written or oral, with
respect thereto.
9.4 Waivers and Amendments.
This Agreement may be amended, modified, superseded, cancelled,
renewed or extended, and the terms and conditions hereof may be waived, only by
a written instrument signed by the parties or, in the case of a waiver, by the
party waiving compliance. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any party of any right, power or privilege hereunder,
nor shall any single or partial exercise of any right, power or privilege
hereunder, preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder. The rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies which
any party may otherwise have at law or in equity.
9.5 Governing Law.
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York, without regard to the conflict of laws principles
thereof.
9.6 Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original but all of which together shall constitute one and the
same instrument.
9.7 Headings.
The headings in this Agreement are for reference purposes only and shall not in
any way affect the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first above written.
SIGA TECHNOLOGIES, INC., a Delaware
corporation
By:
---------------------------
Name:
Title:
---------------------------
---------------------------
---------------------------
---------------------------
---------------------------
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Exhibit O
FORM OF
CERTIFICATE OF DESIGNATION OF SERIES
AND DETERMINATION OF RIGHTS AND
PREFERENCES OF SERIES A CONVERTIBLE
PREFERRED STOCK OF SIGA TECHNOLOGIES, INC.
SIGA Technologies, Inc., a Delaware corporation (the "Company"), acting
pursuant to ss.151 of the General Corporation Law of Delaware, does hereby
submit the following Certificate of Designation of Series and Determination of
Rights and Preferences of its Series A Convertible Preferred Stock.
FIRST: The name of the Company is SIGA Technologies, Inc.
SECOND: By unanimous consent of the Board of Directors of the Company
dated April __, 2001, the following resolutions were duly adopted:
WHEREAS the Certificate of Incorporation ("Certificate of Incorporation")
of the Company authorizes Preferred Stock consisting of 10,000,000 shares, par
value $0.001 per share, issuable from time to time in one or more series; and
WHEREAS the Board of Directors of the Company is authorized, subject to
limitations prescribed by law and by the provisions of Article Fourth of the
Company's Restated Certificate of Incorporation, as amended, to establish and
fix the number of shares to be included in any series of Preferred Stock and the
designation, rights, preferences, powers, restrictions and limitations of the
shares of such series; and
WHEREAS it is the desire of the Board of Directors to establish and fix
the number of shares to be included in a new series of Preferred Stock and the
designation, rights, preferences and limitations of the shares of such new
series;
NOW, THEREFORE, BE IT RESOLVED that pursuant to Article Fourth of the
Certificate of Incorporation there is hereby established a new series of
________________ thousand (________) shares of Series A Convertible Preferred
Stock of the Company (the "Series A Preferred Stock") to have the designation,
rights, preferences, powers, restrictions and limitations set forth in a
supplement of Article IV as follows:
1. Dividends.
(a) The holders of the outstanding shares of Series A Preferred
Stock shall be entitled to receive, out of any funds legally available
therefor, dividends at the annual rate of 6% of the Original Series A
Issue Price (as defined below) per share (subject to appropriate
adjustment in the event of any stock dividend, stock split, combination or
other similar recapitalization of such shares), payable in cash or, at the
option of the Company, in shares of Series A Preferred Stock valued at the
Liquidation Amount of such shares. Such dividends shall be payable if, as
and when declared by the Company's
Board of Directors or upon a liquidation, dissolution or winding up as
provided in Section 2, and not otherwise. Such dividends shall accrue on
each share of Series A Preferred Stock from the date of original issuance
of such share, whether or not earned or declared, but shall not compound.
Such dividends shall be cumulative so that if such dividends in respect of
any previous or current annual dividend period, at the annual rate
specified above, shall not have been paid or declared and a sum sufficient
for the payment thereof set apart, the deficiency shall first be paid
before any dividend or other distribution shall be paid or declared and
set apart for the Common Stock.
(b) Each dividend paid in cash shall be mailed to the holders of
record of the Series A Preferred Stock as their names and addresses appear
on the share register of the Company or at the office of the transfer
agent on the corresponding dividend payment date. Holders of Series A
Preferred Stock will receive written notification from the Company or the
transfer agent if a dividend is paid in kind, which notification will
specify the number of shares of Series A Preferred Stock paid as a
dividend and the recipient's aggregate holdings of Series A Preferred
Stock as of that dividend payment date and after giving effect to the
dividend.
2. Liquidation, Dissolution or Winding Up: Certain Mergers,
Consolidations and Asset Sales.
(a) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company, the holders of shares of Series
A Preferred Stock then outstanding shall be entitled to be paid out of the
assets of the Company available for distribution to its stockholders, by
reason of their ownership thereof, but prior and in preference to any
payments made to any holders of Common Stock and any other class or series
of capital stock of the Company which is junior to the Series A Preferred
Stock with respect to rights to receive distributions upon liquidation an
amount equal to $_____ per share (hereafter, the "Original Series A Issue
Price") (subject to appropriate adjustment in the event of any stock
dividend, stock split, combination or other similar recapitalization of
such shares), plus any accrued but unpaid dividends thereon (the
"Liquidation Amount"). If upon any such liquidation, dissolution or
winding up of the Company the remaining assets of the Company available
for distribution to its stockholders shall be insufficient to pay the
holders of shares of Series A Preferred Stock the full amount to which
they shall be entitled, the holders of shares of Series A Stock shall
share ratably in any distribution of the remaining assets and funds of the
Company in proportion to the respective amounts which would otherwise be
payable in respect of the shares held by them upon such distribution if
all amounts payable on or with respect to such shares were paid in full.
(b) After the payment of all preferential amounts required to be
paid to the holders of Series A Preferred Stock and any other class or
series of capital stock ranking on parity with the Series A Preferred
Stock upon the dissolution, liquidation or winding up of the Company, the
holders of shares of Common Stock then outstanding shall share ratably in
the distribution of the remaining assets and funds of the Company.
2
(c) Any merger or consolidation of the Company into or with another
Company (except one in which the holders of capital stock of the Company
immediately prior to such merger or consolidation continue to hold at
least fifty percent by voting power of the capital stock of the surviving
Company after such merger or consolidation) or the sale of all or
substantially all of the assets of the Company, shall be deemed to be a
liquidation of the Company, and all consideration payable to the
stockholders of the Company (in the case of a merger or consolidation), or
all consideration payable to the Company, together with all other
available assets of the Company (in the case of an asset sale), shall be
distributed to the holders of capital stock of the Company in accordance
with Subsections 2(a) and 2(b) above. The Company shall promptly provide
to the holders of shares of Series A Preferred Stock such information
concerning the terms of such merger, consolidation or asset sale and the
value of the assets of the Company as may reasonably be requested by the
holders of Series A Preferred Stock. If applicable, the Company shall
cause the agreement or plan of merger or consolidation to provide for a
rate at which the shares of capital stock of the Company are converted
into or exchanged for cash, new securities or other property which gives
effect to this provision. The amount deemed distributed to the holders of
Series A Preferred Stock upon any such merger or consolidation shall be
the cash or the value of the property, rights or securities distributed to
such holders by the acquiring person, firm or other entity. The value of
such property, rights or other securities shall be determined in good
faith by the Board of Directors of the Company. Notwithstanding anything
to the contrary contained in this paragraph, a holder of Series A
Preferred Stock may elect to give effect to the conversion rights
contained in Section 4 (or the rights contained in Sections 4(i), if
applicable) instead of giving effect to the provisions contained in this
subparagraph (c) with respect to the shares of Series A Preferred Stock
owned by such holder.
3. Voting.
Each holder of outstanding shares of Series A Preferred Stock shall
be entitled to the number of votes equal to the number of whole shares of
Common Stock into which the shares of Series A Preferred Stock held by
such holder are then convertible (as adjusted from time to time pursuant
to Section 4 hereof), at each meeting of stockholders of the Company (and
written actions of stockholders in lieu of meetings) with respect to any
and all matters presented to the stockholders of the Company for their
action or consideration (including, without limitation, any matter voted
on together with the holders of Common Stock). Except as provided by law,
by any of the provisions contained herein or by the provisions
establishing any other series of stock, holders of Series A Preferred
Stock and of any other outstanding series of stock shall vote together
with the holders of Common Stock as a single class.
4. Optional Conversion. The holders of the Series A Preferred Stock
shall have conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Series A Preferred Stock shall
be convertible, at the option of the holder thereof, at any time and from
time to time, and without the payment of additional consideration by the
holder thereof, into such number
3
of fully paid and nonassessable shares of Common Stock as is determined by
dividing $_____ by the Series A Conversion Price (as defined below) in
effect at the time of conversion. The "Series A Conversion Price" shall
initially be $____. Such Series A Conversion Price and the rate at which
shares of Series A Preferred Stock may be converted into shares of Common
Stock shall be subject to adjustment as provided below.
In the event of a liquidation of the Company, the Conversion Right shall
terminate at the close of business on the first full day preceding the date
fixed for the payment of any amounts distributable on liquidation to the holders
of Series A Preferred Stock. In the event of liquidation, the Company shall
provide to each holder of shares of Series A Preferred Stock at least 20 days
prior to the termination of the Conversion Right, notice of such event of
liquidation which notice shall include the full amounts that will be
distributable on such liquidation, as the case may be.
(b) Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of the Series A Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Company shall pay cash equal to such fraction multiplied by the then
effective Series A Conversion Price.
(c) Mechanics of Conversion.
(i) In order for a holder of Series A Preferred Stock to
convert such shares into shares of Common Stock, such holder shall
surrender the certificate or certificates for such shares of Series
A Preferred Stock at the office of the transfer agent for the Series
A Preferred Stock (or at the principal office of the Company if the
Company serves as its own transfer agent), together with written
notice that such holder elects to convert all or any number of the
shares of the Series A Preferred Stock represented by such
certificate or certificates. Such notice shall state such holder's
name or the names of the nominees in which such holder wishes the
certificate or certificates for shares of Common Stock to be issued.
If required by the Company, certificates surrendered for conversion
shall be endorsed or accompanied by a written instrument or
instruments of transfer, in form satisfactory to the Company, duly
executed by the registered holder or his or its attorney duly
authorized in writing. The date of receipt of such certificates and
notice by the transfer agent (or by the Company if the Company
serves as its own transfer agent) shall be the conversion date (the
"Conversion Date"). The Company shall, as soon as practicable after
the Conversion Date, issue and deliver at such office to such holder
of Series A Preferred Stock, or to his or its nominees, a
certificate or certificates for the number of shares of Common Stock
to which such holder shall be entitled, together with cash in lieu
of any fraction of a share.
(ii) The Company shall at all times when the Series A
Preferred Stock shall be outstanding, reserve and keep available out
of its authorized but unissued stock, for the purpose of effecting
the conversion of the Series A Preferred Stock, such number of its
duly authorized shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding Series A
Preferred Stock. Before taking any action which would cause an
adjustment reducing the
4
Series A Conversion Price below the then par value of the shares of
Common Stock issuable upon conversion of the Series A Preferred
Stock, the Company will take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may
validly and legally issue fully paid and nonassessable shares of
Common Stock at such adjusted Series A Conversion Price.
(iii) Upon any such conversion, no adjustment to the Series A
Conversion Price shall be made for accrued or declared but unpaid
dividends on the Series A Preferred Stock surrendered for conversion
or on the Common Stock delivered upon conversion.
(iv) All shares of Series A Preferred Stock which shall have
been surrendered for conversion as herein provided shall no longer
be deemed to be outstanding and all rights with respect to such
shares, including the rights, if any, to receive notices and to
vote, shall immediately cease and terminate on the Conversion Date,
except only the right of the holders thereof to receive shares of
Common Stock in exchange therefor and payment of any dividends
declared or accrued but unpaid thereon. Any shares of Series A
Preferred Stock so converted shall be retired and canceled and shall
not be reissued, and the Company (without the need for stockholder
action) may from time to time take such appropriate action as may be
necessary to reduce the authorized Series A Preferred Stock
accordingly.
(v) The Company shall pay any and all issue and other taxes
that may be payable in respect of any issuance or delivery of shares
of Common Stock upon conversion of shares of Series A Preferred
Stock pursuant to this Section 4. The Company shall not, however, be
required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of shares of Common
Stock in a name other than that in which the shares of Series A
Preferred Stock so converted were registered, and no such issuance
or delivery shall be made unless and until the person or entity
requesting such issuance has paid to the Company the amount of any
such tax or has established, to the satisfaction of the Company,
that such tax has been paid.
(d) Adjustments to Conversion Price for Diluting Issues:
(i) Special Definitions. For purposes of this Subsection
4(d), the following definitions shall apply:
(A) "Option" shall mean rights, options or warrants to
subscribe for, purchase or otherwise acquire Common Stock or Convertible
Securities.
(B) "Series A Original Issue Date" shall mean the date
on which a share of Series A Preferred Stock was first issued.
5
(C) "Convertible Securities" shall mean any evidences of
indebtedness, shares or other securities directly or indirectly
convertible into or exchangeable for Common Stock.
(D) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued by the Company after the Series A Original
Issue Date other than:
(I) Upon conversion of any Convertible
Securities, or upon exercise of any
Options and shares of Common Stock issued
or issuable upon conversion of shares of
Series A Preferred Stock.
(II) shares issued as a dividend or
distribution on the Series A Preferred
Stock;
(III) shares issued by reason of a dividend,
stock split, split-up or other
distribution on shares of Common Stock
that is covered by Subsection 4(e) or
4(f) of Sections B or C hereof; or
(IV) in consideration for the acquisition
(whether by merger or otherwise) by the
Company of all or substantially all of
the capital stock or assets of any other
entity, or securities issued in
consideration of any licensing, corporate
partnering or strategic alliance
transaction.
(ii) No Adjustment of Conversion Price. No adjustment in the
number of shares of Common Stock into which the Series A Preferred
Stock is convertible shall be made, by adjustment in the Series A
Conversion Price thereof: (a) unless the consideration per share
(determined pursuant to Subsection 4(d)(iv)) for an Additional Share
of Common Stock issued or deemed to be issued by the Company is less
than the Series A Conversion Price in effect on the date of, and
immediately prior to, the issue of such Additional Shares, or (b) if
prior to such issuance, the Company receives written notice from the
holders of at least fifty percent of the then outstanding shares of
Series A Preferred Stock, agreeing that no such adjustment shall be
made as the result of the issuance of Additional Shares of Common
Stock.
(iii) Adjustment of Conversion Price Upon Issuance of
Additional Shares of Common Stock. In the event the Company shall at
any time after the Series A Original Issue Date issue Additional
Shares of Common Stock (but excluding shares issued as a stock split
or combination as provided in Subsection 4(e) or upon a dividend or
distribution as provided in Subsection 4(f)), without
6
consideration or for a consideration per share less than the Series
A Conversion Price in effect on the date of and immediately prior to
such issue, then and in such event, the Series A Conversion Price
shall be reduced, concurrently with such issue, to a price
(calculated to the nearest cent) determined by multiplying the
Series A Conversion Price by a fraction, (A) the numerator of which
shall be (1) the number of shares of Common Stock outstanding
immediately prior to such issue plus (2) the number of shares of
Common Stock which the aggregate consideration received or to be
received by the Company for the total number of Additional Shares of
Common Stock so issued would purchase at the Series A Conversion
Price; and (B) the denominator of which shall be the number of
shares of Common Stock outstanding immediately prior to such issue
plus the number of such Additional Shares of Common Stock so issued;
provided that, for the purpose of this Subsection 4(d)(iii), all
shares of Common Stock issuable upon conversion of Convertible
Securities outstanding immediately prior to such issue shall be
deemed to be outstanding.
(iv) Determination of Consideration. For purposes of this
Subsection 4(d), the consideration received by the Company for the
issue of any Additional Shares of Common Stock shall be computed as
follows:
Cash and Property: Such consideration shall:
(I) insofar as it consists of cash, be computed at the
aggregate of cash received by the Company, excluding amounts
paid or payable for accrued interest;
(II) insofar as it consists of property other than cash,
be computed at the fair market value thereof at the time of
such issue, as determined in good faith by the Board of
Directors; and
(III) in the event Additional Shares of Common Stock are
issued together with other shares or securities or other
assets of the Company for consideration which covers both, be
the proportion of such consideration so received, computed as
provided in clauses (I) and (II) above, as determined in good
faith by the Board of Directors.
(v) Multiple Closing Dates. In the event the Company shall
issue on more than one date Additional Shares of Common Stock which
are comprised of shares of the same series or class of Preferred
Stock, and such issuance dates occur within a period of no more than
120 days, then the Series A Conversion Price shall be adjusted only
once on account of such issuances, with such adjustment to occur
upon the final such issuance and to give effect to all such
issuances as if they occurred on the date of the final such
issuance.
7
(e) Adjustment for Stock Splits and Combinations. If the Company shall at
any time or from time to time after the Series A Original Issue Date
effect a subdivision of the outstanding Common Stock, the Series A
Conversion Price in effect immediately before that subdivision shall be
proportionately decreased. If the Company shall at any time or from time
to time after the Series A Original Issue Date combine the outstanding
shares of Common Stock, the Series A Conversion Price then in effect
immediately before the combination shall be proportionately increased. Any
adjustment under this paragraph shall become effective at the close of
business on the date the subdivision or combination becomes effective.
(f) Adjustment for Certain Dividends and Distributions. In the event that
the Company at any time, or from time to time after the Series A Original
Issue Date, shall make or issue, or fix a record date for the
determination of holders of Common Stock entitled to receive, a dividend
or other distribution payable in additional shares of Common Stock, then
and in each such event the Series A Conversion Price then in effect shall
be decreased as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of business on such
record date, by multiplying the Series A Conversion Price then in effect
by a fraction:
(i) the numerator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date, and
(ii) the denominator of which shall be the total number of shares of
Common Stock issued and outstanding immediately prior to the time of
such issuance or the close of business on such record date plus the
number of shares of Common Stock issuable in payment of such
dividend or distribution; provided, however, that if such record
date shall have been fixed and such dividend is not fully paid or if
such distribution is not fully made on the date fixed therefor, the
Series A Conversion Price shall be recomputed accordingly as of the
close of business on such record date and thereafter such Series A
Conversion Price shall be adjusted pursuant to this paragraph as of
the time of actual payment of such dividends or distributions; and
provided further, however, that no such adjustment shall be made if
the holders of Series A Preferred Stock simultaneously receive a
dividend or other distribution of shares of Common Stock in a number
equal to the number of shares of Common Stock as they would have
received if all outstanding shares of Series A Preferred Stock had
been converted into Common Stock on the date of such event.
(g) Adjustments for Other Dividends and Distributions. In the event that
the Company at any time or from time to time after the Series A Original
Issue Date, shall make or issue, or fix a record date for the
determination of holders of Common Stock entitled to receive, a dividend
or other distribution payable in securities of the Company other than
shares of Common Stock, then and in each such event provision shall be
made so that the holders of the Series A Preferred Stock shall receive
upon conversion thereof in addition to the number of shares of Common
Stock receivable thereupon, the amount
8
of securities of the Company that they would have received had the Series
A Preferred Stock been converted into Common Stock on the date of such
event and had they thereafter, during the period from the date of such
event to and including the conversion date, retained such securities
receivable by them as aforesaid during such period giving application to
all adjustments called for during such period under this paragraph with
respect to the rights of the holders of the Series A Preferred Stock; and
provided further, however, that no such adjustment shall be made if the
holders of Series A Preferred Stock simultaneously receive a dividend or
other distribution of such securities in an amount equal to the amount of
such securities as they would have received if all outstanding shares of
Series A Preferred Stock had been converted into Common Stock on the date
of such event.
(h) Adjustment for Reclassification, Exchange, or Substitution. If the
Common Stock issuable upon the conversion of the Series A Preferred Stock
shall be changed into the same or a different number of shares of any
class or classes of stock, whether by capital reorganization,
reclassification or otherwise (other than a subdivision or combination of
shares or stock dividend provided for above, or a reorganization, merger,
consolidation, or sale of assets provided for below), then and in each
such event the holder of each such share of Series A Preferred Stock shall
have the right thereafter to convert such share into the kind and amount
of shares of stock and other securities and property receivable upon such
reorganization, reclassification, or other change, by holders of the
number of shares of Common Stock into which such shares of Series A
Preferred Stock might have been converted immediately prior to such
reorganization, reclassification, or change, all subject to further
adjustment as provided herein.
(i) Adjustment for Merger or Reorganization, etc. In case of any
consolidation or merger of the Company with or into another Company, or
the sale of all or a significant amount of the assets of the Company to
another Company (other than a consolidation, merger or sale which is
covered by Subsection 2(b)), each share of Series A Preferred Stock shall
thereafter be convertible (or shall be converted into a security which
shall be convertible) into the kind and amount of shares of stock or other
securities or property to which a holder of the number of shares of Common
Stock deliverable upon conversion of such Series A Preferred Stock would
have been entitled upon such consolidation, merger or sale; and, in such
case, appropriate adjustment (as determined in good faith by the Board of
Directors) shall be made in the application of the provisions in this
Section 4 set forth with respect to the rights and interest thereafter of
the holders of the Series A Preferred Stock, to the end that the
provisions set forth in this Section 4 (including provisions with respect
to changes in and other adjustments of the Series A Conversion Price)
shall thereafter be applicable, as nearly as reasonably may be, in
relation to any shares of stock or other property thereafter deliverable
upon the conversion of the Series A Preferred Stock. Notwithstanding
anything to the contrary contained herein, each holder of shares of Series
A Preferred Stock shall have the right to elect to give effect to the
conversion rights contained in Section 4 (or the rights contained in
Sections 2(c), if
9
applicable) instead of giving effect to the provisions contained in this
paragraph (i) with respect to the shares of Series A Preferred Stock owned
by such holder.
(j) No Impairment. The Company will not, by amendment of its Certificate
of of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by
the Company, but will at all times in good faith assist in the carrying
out of all the provisions of this Section 4, and in the taking of all such
action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of the Series A Preferred Stock against
impairment.
(k) Certificate as to Adjustments. Upon the occurrence of each adjustment
or readjustment of the Series A Conversion Price pursuant to this Section
4, the Company shall, at its expense, promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each
holder of Series A Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon the written
request at any time of any holder of Series A Preferred Stock, furnish or
cause to be furnished to such holder a similar certificate setting forth
(i) such adjustments and readjustments, (ii) the Series A Conversion Price
then in effect, and (iii) the number of shares of Common Stock and the
amount, if any, of other property which then would be received upon the
conversion of Series A Preferred Stock.
(l) Notice of Record Date. In the event:
(i) that the Company declares a dividend (or any other
distribution) on its Common Stock payable in Common Stock or other
securities of the Company;
(ii) that the Company subdivides or combines its outstanding
shares of Common Stock;
(iii) of any reclassification of the Common Stock (other than
a subdivision or combination of its outstanding shares of Common
Stock or a stock dividend or stock distribution thereon), or of any
consolidation or merger of the Company into or with another Company,
or of the sale of all or a significant amount of the assets of the
Company; or
(iv) of the involuntary or voluntary dissolution, liquidation
or winding up of the Company then the Company shall cause to be
filed at its principal office or at the office of the transfer agent
of the Series A Preferred Stock, and shall cause to be mailed to the
holders of the Series A Preferred Stock at their last addresses as
shown on the records of the Company or such transfer agent, at least
ten days prior to the date specified in (A) below or twenty days
before the date specified in (B) below, a notice stating
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(A) the record date of such dividend, distribution,
subdivision or combination, or, if a record is not to be taken,
the date as of which the holders of Common Stock of record to be
entitled to such dividend, distribution, subdivision or
combination are to be determined, or
(B) the date on which such reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up is expected
to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property
deliverable upon such reclassification, consolidation, merger,
sale, dissolution or winding up.
5. Mandatory Conversion.
(a) Each share of Series A Preferred Stock shall automatically be
converted into shares of Common Stock at its then effective Conversion
Price at any time upon the written consent of the holders of a majority of
the shares of Series A Preferred Stock then outstanding (the date of such
closing or consent, the "Mandatory Conversion Date").
(b) All holders of record of shares of Series A Preferred Stock
shall be given written notice of the Mandatory Conversion Date and the
place designated for mandatory conversion of all such shares of Series A
Preferred Stock pursuant to this Section 5. Such notice need not be given
in advance of the occurrence of the Mandatory Conversion Date. Such notice
shall be sent by first class or registered mail, postage prepaid, to each
record holder of Series A Preferred Stock, at such holder's address last
shown on the records of the transfer agent for such Series A Preferred
Stock (or the records of the Company, if it serves as its own transfer
agent). Upon receipt of such notice, each holder of shares of Series A
Preferred Stock shall surrender his or its certificate or certificates for
all such shares to the Company at the place designated in such notice, and
shall thereafter receive certificates for the number of shares of Common
Stock to which such holder is entitled pursuant to this Section 5. On the
Mandatory Conversion Date, all rights with respect to the Series A
Preferred Stock so converted, including the rights, if any, to receive
notices and vote (other than as a holder of Common Stock) will terminate,
except only the rights of the holders thereof, upon surrender of their
certificate or certificates therefor, to receive certificates for the
number of shares of Common Stock into which such Series A Preferred Stock
have been converted, and, in each case, payment of any declared or accrued
but unpaid dividends thereon. If required by the Company, certificates
surrendered for conversion shall be endorsed or accompanied by written
instrument or instruments of transfer in form satisfactory to the Company,
duly executed by the registered holder or by his or its attorney duly
authorized in writing. As soon as practicable after the Mandatory
Conversion Date and the surrender of the certificate or certificates for
Series A Preferred Stock, the Company shall issue and deliver to such
holder, or on their written order, a certificate or certificates for the
number of full shares of Common Stock issuable upon such conversion in
accordance with the provisions
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hereof, and cash as provided in Subsection 4(b) in respect of any fraction
of a share of Common Stock otherwise issuable upon such conversion.
(c) All certificates evidencing shares of Series A Preferred Stock
which are required to be surrendered for conversion in accordance with the
provisions hereof shall, from and after the Mandatory Conversion Date, be
deemed to have been retired and canceled, and the shares of Series A
Preferred Stock represented thereby converted into Common Stock for all
purposes, notwithstanding the failure of the holder or holders thereof to
surrender such certificates on or prior to such date. The Company may
thereafter take such appropriate action (without the need for stockholder
action) as may be necessary to reduce the authorized Series A Preferred
Stock accordingly.
IN WITNESS WHEREOF, the Company has caused this Certificate to be executed
by its President and attested to by its Secretary this ____ of April, 2001.
SIGA TECHNOLOGIES, INC.
By:
-------------------------
Name:
Title:
ATTEST:
- -------------------------
Name:
Title: Secretary
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