SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15 (d) OF
THE
SECURITIES EXCHANGE ACT OF 1934
Date
of
Report (Date of earliest event reported): March 20, 2006
SIGA
TECHNOLOGIES, INC.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
0-23047
|
13-3864870
|
|
(State
or other jurisdiction of
incorporation
or organization)
|
(Commission
file number)
|
(I.R.S.
employer
identification
no.)
|
|
420
Lexington Avenue, Suite 408
New
York, New York
(Address
of principal executive offices)
|
10170
(Zip
code)
|
Registrant’s
telephone number, including area code: (212) 672-9100
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see
General
Instruction A.2. below):
r
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
r
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
r
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
r
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.01. Entry
Into a Material Definitive Agreement.
As
contemplated by a term sheet between SIGA Technologies, Inc., a Delaware
corporation (“SIGA”) and PharmAthene, Inc. (“PharmAthene”), disclosed in SIGA’s
8-K filed on March 14, 2006, SIGA entered into a Bridge Note Purchase Agreement
(the “Purchase Agreement”) on March 20, 2006 with PharmAthene for the sale of
three 8% Notes by SIGA in favor of PharmAthene (the “Notes”) for a purchase
price of $1,000,000 each. The first Note was issued on March 20, 2006 (the
“First Note”) and the subsequent remaining two Notes are contemplated to be
issued on April 19, 2006 and May 19, 2006, respectively. The proceeds of the
Notes will be used by SIGA for (i) expenses directly related to the development
of SIGA’s lead product, SIGA-246, an orally administered anti-viral drug that
targets the smallpox virus, (ii) expenses related to SIGA’s planned merger with
PharmAthene and (iii) corporate overhead. Pursuant to a Security Agreement
between SIGA and PharmAthene, also entered into on March 20, 2006 (the "Security
Agreement"), the Notes are secured by a first priority security interest in
SIGA
assets (other than those assets subject to the security interest granted in
that
certain Master Security Agreement between General Electric Capital Corporation
and SIGA, dated as of April 29, 2005 and attached as Exhibit 10.2 to the SIGA
8-K filed on May 3, 2005).
The
First
Note for a principal amount of $1,000,000 was issued on March 20, 2006. The
First Note will be payable on the earliest of (x) March 20, 2008 (the “Maturity
Date”), (y) the closing of a Qualified Financing (as defined in the Purchase
Agreement) or (z) a Sale Event (as defined in the Purchase Agreement). In the
case of a default under the First Note, payment of the First Note will be
accelerated such that the entire unpaid principal amount of the First Note,
and
all accrued and unpaid interest thereon, shall become immediately due and
payable in full. The remaining two Notes will be made under substantially
similar terms, except that their Maturity Dates are contemplated to be April
19,
2008 and May 19, 2008.
A
copy of
the Purchase Agreement is attached hereto as Exhibit 10.1, which is incorporated
into this Item 1.01 by reference.
A
copy of
the Security Agreement is attached hereto as Exhibit 10.2, which is incorporated
into this Item 1.01 by reference.
A
copy of
the First Note is attached hereto as Exhibit 10.3, which is incorporated into
this Item 1.01 by reference.
Item
2.03. Creation
of a Direct Financial Obligation or an Obligation under an Off- Balance Sheet
Arrangement.
See
Item
1.01 above, which is incorporated into this Item 2.03 by reference, for a
description of the First Note and the transaction giving rise thereto.
Item
9.01. Financial Statements and Exhibits.
(c)
Exhibits
|
Exhibit
No.
|
Description
|
|
10.1
|
Bridge
Note Purchase Agreement, dated as of March 20, 2006, by SIGA Technologies,
Inc. and PharmAthene, Inc.
|
|
10.2
|
Security
Agreement, dated as of March 20, 2006, by SIGA Technologies, Inc.
and
PharmAthene, Inc.
|
|
10.3
|
8%
Note by SIGA Technologies, Inc., in favor of PharmAthene,
Inc.
|
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
SIGA
TECHNOLOGIES,
INC.
By:
/s/
Thomas N.
Konatich
Name:
Thomas
N.
Konatich
Title:
Chief
Financial Officer
Date: March
22,
2006
Exhibit
10.1
By
and Between
PHARMATHENE,
INC.
and
SIGA
TECHNOLOGIES, INC.
Dated
as of March 20, 2006
TABLE
OF
CONTENTS
ARTICLE
I
CONSTRUCTION............................................................................................................................................................................................................................................
1
1.1 Defined
Terms.....................................................................................................................................................................................................................................................
1
1.2 Other
Definitional
Provisions...........................................................................................................................................................................................................................4
ARTICLE
II PURCHASE OF NOTES; TERMS; ADDITIONAL
TRANSACTIONS.................................................................................................................................................................................................................................................5
2.1 Sale
and Purchase of
Notes..............................................................................................................................................................................................................................
5
2.2 Closing.................................................................................................................................................................................................................................................................
5
2.3 Certain
Terms of
Notes.....................................................................................................................................................................................................................................
5
2.4 Obligations...........................................................................................................................................................................................................................................................6
2.5 Additional
Terms................................................................................................................................................................................................................................................
7
2.6 Use
of
Proceeds...................................................................................................................................................................................................................................................
7
ARTICLE
III REPRESENTATIONS AND
WARRANTIES...........................................................................................................................................................................................
7
3.1 Representations
and Warranties of the
Issuer...........................................................................................................................................................................................
7
3.2 Reliance;
Knowledge......................................................................................................................................................................................................................................
11
3.3 Representations
and Warranties of the
Holder........................................................................................................................................................................................
11
ARTICLE
IV
CONDITIONS...........................................................................................................................................................................................................................................
12
4.1 Conditions
to Holders’
Obligations...........................................................................................................................................................................................................
12
4.2 Conditions
to SIGA’S
Obligations.............................................................................................................................................................................................................
13
ARTICLE
V
COVENANTS............................................................................................................................................................................................................................................
13
5.1 Affirmative
Covenants.................................................................................................................................................................................................................................
13
5.2 Negative
Covenants......................................................................................................................................................................................................................................
15
ARTICLE
VI EVENTS OF
DEFAULT.........................................................................................................................................................................................................................
15
6.1 Bankruptcy,
etc............................................................................................................................................................................................................................................
15
6.2 Other
Events.................................................................................................................................................................................................................................................
16
ARTICLE
VII
MISCELLANEOUS..............................................................................................................................................................................................................................
17
7.1
Amendments
and
Waivers......................................................................................................................................................................................................................
17
7.2
Notices........................................................................................................................................................................................................................................................
17
7.3
No
Waiver; Cumulative
Remedies........................................................................................................................................................................................................
18
7.4
Survival
of Representations and
Warranties.....................................................................................................................................................................................
19
7.5
Payment
of Fees, Expenses;
Taxes........................................................................................................................................................................................................
19
7.6
Indemnification.........................................................................................................................................................................................................................................
19
7.7
Counterparts.............................................................................................................................................................................................................................................
19
7.8
Severability...............................................................................................................................................................................................................................................
19
7.9
Integration.................................................................................................................................................................................................................................................
20
7.10
Brokers
or
Finders.................................................................................................................................................................................................................................
20
7.11 GOVERNING
LAW.................................................................................................................................................................................................................................
20
7.12 Submission
to Jurisdiction;
Waivers..................................................................................................................................................................................................
20
7.13 Remedies...................................................................................................................................................................................................................................................
21
7.14 Successors
and
Assigns........................................................................................................................................................................................................................
21
7.15 Captions.....................................................................................................................................................................................................................................................21
7.16 Non-Disclosure.......................................................................................................................................................................................................................................
21
7.17 Acknowledgements................................................................................................................................................................................................................................
21
i
BRIDGE
NOTE PURCHASE AGREEMENT
BRIDGE
NOTE PURCHASE AGREEMENT,
dated
as of March 20, 2006, by SIGA TECHNOLOGIES, INC., a Delaware corporation (“SIGA”
or the “Issuer”), and PHARMATHENE, INC., a Delaware corporation (together with
its successors and assigns, the “Holder”).
RECITALS
SIGA
has
requested that the Holder purchase three notes of the Issuer for a purchase
price of $1,000,000 each and the Holders have agreed to purchase such notes,
in
each case subject to the terms and conditions set forth therein.
NOW
THEREFORE, in consideration of the premises and the mutual covenants contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as
follows:
ARTICLE
I
CONSTRUCTION
1.1 Defined
Terms.
As
used
in this Agreement, the following terms shall have the following
meanings:
“Affiliate”:
as to
SIGA, (i) any Person which, directly or indirectly, is in control of, is
controlled by, or is under common control with, the Issuer, including, without
limitation, any joint venture of the Issuer, or (ii) any Person who is a
director, officer, member or partner of (A) the Issuer, or (B) any Person
described in the preceding clause (i). For purposes of this definition,
“control” of a Person means the power, directly or indirectly, either to (i)
vote 25% or more of the voting securities having ordinary voting power for
the
election of directors or managers of such Person, or (ii) direct or cause the
direction of the management and policies of such Person, whether by contract
or
otherwise.
“Agreement”:
this
Bridge Note Purchase Agreement, as from time to time amended and in
effect.
“Business
Day”:
a day
other than a Saturday, Sunday or other day on which commercial banks in New
York
City are authorized or required by law to close.
“By-laws”:
the
By-laws of SIGA, as from time to time amended and in effect.
“Capital
Expenditure”:
any
expenditure by the Issuer in respect of the purchase or other acquisition of
fixed assets.
“Capital
Lease”:
any
lease of property, real or personal, by the Issuer, the obligations of which
are
required in accordance with GAAP to be capitalized on a balance sheet of the
Issuer.
“Change
of Control”:
is
deemed to occur if the current holders of greater than 50% of the currently
outstanding capital stock of SIGA cease to own 50% or more of the outstanding
capital stock of SIGA.
“Closing
Date”:
March
20, 2006, April 19, 2006 and June 18, 2006 and together, “Closing
Dates.”.
“Collateral”:
as
defined in Section 2.3(e).
“Contractual
Obligation”:
any
terms, conditions or provisions of (i) any material agreement, document,
instrument, contract, understanding, arrangement, note, indenture, mortgage
or
lease to which the Issuer is a party or under which the Issuer or any of its
material assets is bound or affected, (ii) the Restated Certificate of
Incorporation, or (iii) the By-laws.
“Event
of Default”:
any of
the events specified in Sections 6.1 or 6.2.
“Exchange
Act”:
Securities Exchange Act of 1934, as amended.
“GAAP”:
generally accepted accounting principles in the United States of America in
effect from time to time.
“GE
Capital Agreement”:
the
Master Security Agreement between General Electric Capital Corporation and
SIGA,
dated as of April 29, 2005.
“Governmental
Authority”:
any
nation or government, any state or other political subdivision thereof and
any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
“Holder”:
each
Holder and any of its successors or assigns.
“Indebtedness”:
(i)
all indebtedness for borrowed money or for the deferred purchase price of
property or services (other than current trade liabilities incurred in the
ordinary course of business) or which is evidenced by a note, bond, debenture
or
similar instrument, (ii) all obligations under Capital Leases, (iii) all
obligations in respect of letters of credit or acceptances, (iv) all obligations
under currency exchange contracts or interest rate swap agreements, and (v)
all
liabilities secured by any Lien on any property.
“Indemnified
Person”:
as
defined in Section 7.6.
“Interim
Balance Sheet”:
balance sheet as set forth in most recent filing by SIGA on Form 10-Q for the
period ended September 30, 2005 (“Form 10-Q”) with the Securities and Exchange
Commission.
“Interim
Financial Statements”:
financial statements as set forth in Form 10-Q.
“License
Agreement”:
the
proposed License Agreement between PharmAthene and SIGA relating to the current
compound under development by SIGA generally referred to as
2
SIGA
- 246 (“SIGA 246”) pursuant to the terms described in the Term Sheet attached
hereto as Exhibit C.
“Lien”:
any
mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or other), or preference, priority or other security agreement
or preferential
arrangement of any kind or nature whatsoever (including, without limitation,
any
conditional sale or other title retention agreement, any Capital Lease having
substantially the same economic effect as any of the foregoing.
“Material
Adverse Effect”:
a
material adverse effect on (i) the business, operations, property or, condition
(financial or otherwise) or prospects of the Issuer, (ii) the ability of the
Issuer to perform its obligations under the Purchase Documents, or (iii) the
validity or enforceability of the Purchase Documents or the rights or remedies
of the Holders hereunder or thereunder.
“Maturity
Date”:
with
respect to each Note the earlier to occur of (i) the date that is two years
from
the date of such Note, (ii) the closing of a Qualified Financing, or (iii)
a
Sale Event.
“Merger”:
the
proposed merger of PharmAthene with and into a wholly owned subsidiary of SIGA
in accordance with the terms described in the Merger Term Sheet attached to
this
Agreement as Exhibit B.
“Notes”:
the 8%
promissory notes issued pursuant to this Agreement, substantially in the form
attached hereto as Exhibit A and any replacement or substitute note issued
in
respect of such note.
“Operating
Lease”:
any
lease of property, real or personal, which is not a Capital Lease.
“Option
Shares”:
as
defined in Section 3.1(b)(i).
“Permitted
Liens”:
(i)
Liens set forth on Schedule
1.1,
(ii)
Liens currently existing as of the date of this Agreement under the GE Capital
Agreement, (iii) Liens in favor of the Holder, (iii) Liens for taxes, fees,
assessments or other government charges or levies, either not delinquent or
being contested in good faith by appropriate proceedings; provided that adequate
reserves with respect to such taxes, fees, assessments or other government
charges or levies which are being contested are maintained on the books of
the
Issuer, in conformity with GAAP, (v) pledges or deposits in connection with
workers’ compensation, unemployment insurance and other social security
legislation, (vi) purchase money Liens not relating to any obligations in excess
of $20,000 (A) on assets acquired or held by Issuer incurred for financing
the
acquisition of such assets, or (B) existing on such asset when acquired;
provided
that
such Liens are in each case confined to the property and improvements and the
proceeds of such assets, and (vii) leases or subleases and non-exclusive
licenses or sublicenses, not representing obligations of the Issuer in excess
of
$20,000 per year, granted in the ordinary course of the Issuer’s
business.
“Person”:
an
individual, partnership, corporation, business trust, joint stock company,
limited liability company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
3
“Purchase
Documents”:
each
of the Notes and the Security Documents.
“Qualified
Financing”:
any
sale of any of the Issuer’s securities whether in a single transaction or a
series of transactions in excess of $1,000,000 excluding sales of securities
upon the
exercise of stock options to employees, consultants or Directors and the
conversion or exercise of any derivative security of the Issuer outstanding
as
of the date hereof.
“Restated
Certificate of Incorporation”:
the
Restated Certificate of Incorporation of SIGA as publicly filed.
“Sale
Event”:
(i)
the sale or other disposition by the Issuer of all or substantially all of
its
assets and business, whether by or through the sale of the Issuer’s securities
or assets, or any merger, consolidation or joint venture, or otherwise, and
whether in a single transaction or a series of related transactions, or (ii)
the
assignment, licensing or other disposition of any of the Issuer’s intellectual
property relating to SIGA 246.
“SEC”:
the
United States Securities and Exchange Commission.
“Securities
Act”:
the
Securities Act of 1933, as amended.
“Securities
Laws”:
as
defined in Section 3.1(f).
“Security
Agreement”:
the
Security Agreement, of even date herewith, between the Issuer and the Holder,
in
the form attached hereto as Exhibit D.
“Security
Documents”:
the
Security Agreement, and any and all documents, instruments and agreements
necessary to effectuate the transactions contemplated thereby, including any
UCC- 1 financing statements.
“Subsidiary”:
as to
any Person, any other Person of which more than 50% of the shares of stock,
or
other ownership interests having ordinary voting power (other than stock or
such
other ownership interests having such power only by reason of the happening
of a
contingency) to elect a majority of the board of directors or other managers
of
such Person, are at the time owned, directly or indirectly, through one or
more
intermediaries, or both, by such Person.
“UCC”:
the
Uniform Commercial Code, as from time to time in effect in the State of
Delaware.
1.2 Other
Definitional Provisions.
(a) Unless
otherwise specified therein, all capitalized terms used in the Notes or any
certificate or other document made or delivered hereunder shall have the
meanings given to such terms in this Agreement.
(b) As
used
herein and in the Notes, and any certificate or other document made or delivered
hereunder, accounting terms relating to the Issuer not defined in Section 1.1
and accounting terms partly defined in Section 1.1, to the extent not defined,
shall have the respective meanings given to them under GAAP.
4
(c)
The
words “hereof’, “herein” and “hereunder” and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision
of this Agreement. References to Sections, Subsections, Schedules and Exhibits
are to this Agreement unless otherwise specified.
(d) The
meanings given to terms defined herein shall be equally applicable to both
the
singular and plural forms of such terms, and masculine words shall include
the
feminine and the neuter genders, and vice versa.
(e) The
word
“including” when used in this Agreement shall be deemed to be followed by the
words “without limitation.”
ARTICLE
II
PURCHASE
OF NOTES; TERMS; ADDITIONAL TRANSACTIONS
2.1 Sale
and Purchase of Notes.
(a) Upon
the
terms and subject to the conditions set forth herein, the Holder agrees to
purchase, and the Issuer agrees to sell to Holder, on each of March 20, 2006,
April 19, 2006 and June 18, 2006 (each, a Closing Date”), Notes in the amount of
$1,000,000 on each Closing Date. At each Closing, the Issuer shall execute
and
deliver to the Holder a Note payable in the principal amount.
(b) The
Holder shall advance to the Issuer at each Closing, by wire transfer of
immediately available funds, 100% of the principal amount of the Note issued
to
the Holder at such Closing.
2.2 Closing.
Upon
the
terms and subject to the conditions set forth in this Agreement, each closing
of
the sale and purchase of the Notes (a “Closing”) shall take place at 10:00 a.m.
on each Closing Date provided that all of the conditions set forth in Article
4
shall be satisfied in accordance herewith, or at such other time as shall be
agreed upon by the parties.
2.3 Certain
Terms of Notes.
(a) Upon
any
termination of the Merger Term Sheet attached as Exhibit B, termination of
the
Definitive Agreement relating to the Merger, or if a Definitive Agreement is
not
executed by the Holder and the Issuer prior to April 24, 2006, SIGA and
PharmAthene will negotiate in good faith with the intention of executing a
definitive License Agreement in accordance with the terms set forth in the
License Agreement Term Sheet attached as Exhibit C and the Issuer agrees for
a
period of 90 days during which the definitive license agreement is under
negotiation, it shall not, directly or indirectly, initiate discussions or
engage in negotiations with any corporation, partnership, person or other entity
or group concerning any Competing Transaction without the prior written consent
of the other party or notice from the other party that it desires to terminate
discussions hereunder. For purposes of this letter, a “Competing Transaction”
shall mean lease, exchange, mortgage, pledge, license, transfer or other
disposition of any of the intellectual properties of the Issuer relating to
SIGA
246. The principal and interest
5
on
the
Notes will be repayable, at the option of the Holder, as a credit (in the
amount
of 110% of such principal and accrued interest) to the license fee payable
under
the definitive License Agreement. The obligation under this Section 2.3 are
independent of this Agreement and shall not
be
extinguished as a result of the satisfaction of any obligations hereunder
or any
termination of this Agreement.
(b) Each
payment of interest or principal on the Notes shall be allocated among all
of
the Notes in proportion, as nearly as practicable, to the respective unpaid
balances outstanding thereunder at the time such payment is made.
(c) The
Issuer shall keep at its principal executive office a register for the
registration of ownership and transfer of Notes. The Issuer covenants and agrees
to take and cause to be taken all action necessary to effect any transfers
and
exchanges requested by the Holder. Any such issuance of new Notes shall not
be
deemed to be the sale of new securities and shall in all respects be subject
to
compliance with applicable federal and state securities laws. Prior to due
presentment for registration of transfer, the Person in whose name any Notes
shall be registered shall be deemed and treated as the owner and holder thereof
for all purposes hereof, and the Issuer shall not be affected by any notice
or
knowledge to the contrary. The Issuer shall give to any Holder promptly upon
request therefor, a complete and correct copy of the names and addresses of
all
registered holders of Notes.
(d) Upon
surrender by a Holder to the Issuer of Notes purchased by the Holder, the
Issuer, at its expense but subject to the last sentence of this paragraph,
shall
issue in exchange therefore, and deliver to such Holder, a new Note or Notes
representing the obligations evidenced by the surrendered Notes, in such
denominations as may be requested by such Holder. Upon receipt by the Issuer
of
evidence satisfactory to it of the ownership of and the loss, theft, destruction
or mutilation of a Note (and the affidavit of a duly authorized representative
of a registered Holder shall be deemed satisfactory to the Issuer), the Issuer,
at its own expense shall execute and deliver, in lieu thereof, one or more
new
Notes, dated and bearing interest from the date to which interest shall have
been paid on such lost, stolen, destroyed or mutilated Note or dated the date
of
such lost, stolen, destroyed or mutilated Note if no interest shall have been
paid thereon. Holder or its assignee or transferee shall be responsible for
all
taxes associated with or related to such transfer.
(e) The
obligations of the Issuer under this Agreement and the Notes are secured by
a
perfected lien and security interest in all of the assets of the Issuer (the
“Collateral”), under the terms of the Security Agreement, which lien and
security interest are subordinated to the liens and security interests of
holders of Permitted Liens.
2.4 Obligations.
Without
impairing or releasing the obligations of the Issuer to the Holder, and without
reducing the amount due under the terms of this Agreement or the Notes (except
to the extent of amounts actually paid to and legally retained by the Holder),
the Holder may at any time and from time to time, without the consent to the
Issuer, upon any terms or conditions, and in whole or in part: (i) exercise
or
refrain from exercising any rights against the Issuer or others or against
any
security for the obligations under this Agreement or otherwise act or refrain
from
6
acting
(other than in breach of its obligations under this Agreement); (ii) settle
or
compromise any obligations of the Issuer under this Agreement, whether in a
proceeding or not, and whether voluntarily or involuntarily, and only upon
an
Event of Default, dispose of any security therefor (with or without
consideration) or settle or compromise any liability incurred directly or
indirectly in respect thereof or hereof, and subordinate the payment of all
or
any part thereof to the payment of any of the obligations under this Agreement,
whether or not due, to creditors of the Issuer other than the Holder; (iii)
apply any sums it receives, by whomever paid or however realized, to any of
the
obligations due under this Agreement; (iv) add, release, settle, modify or
discharge the obligation of any maker, endorser, guarantor, surety, obligor
or
any other party who is in any way obligated for any of the obligations under
this Agreement; (v) accept any additional security for the obligations under
this Agreement; and/or (vi) take any other action which might constitute a
defense available to, or a discharge of, the Issuer or any other obligated
party
in respect of the obligations under this Agreement. The invalidity, irregularity
or unenforceability of all or any part of any Purchase Document with respect
to
the Issuer, or the impairment, loss, failure to obtain or perform any security
or guaranty therefor, whether caused by any action or inaction of the Holder,
or
otherwise, shall not affect, impair or be a defense to the Issuer obligations
under this Agreement or the Notes.
2.5 Additional
Terms.
The
terms
of the Notes described in this Article II do not include all of the terms
applicable to the Notes, and the Notes are subject to such other terms and
conditions set forth herein and therein.
2.6 Use
of Proceeds.
The
proceeds from the sale of the Notes hereunder shall be used by the Issuer
exclusively for (i) expenses directly related to the development of SIGA 246,
(ii) expenses relating to the Merger and (iii) corporate overhead. The proceeds
shall not be used to repay indebtedness.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES
3.1 Representations
and Warranties of the Issuer.
To
induce
the Holder to enter into this Agreement and to purchase the Notes, the Issuer
hereby represents and warrants to each Holder as follows:
(a) Organization.
The
Issuer is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority to own and lease its property and to carry on its business as
presently conducted and as proposed to be conducted. The Issuer is duly
qualified to do business as a foreign corporation in the States of New York,
Florida and California. The Issuer does not own or lease property or engage
in
any activity in any other jurisdiction which would require its qualification
in
such jurisdiction and in which the failure to be so qualified would have a
Material Adverse Effect.
7
(b) Capitalization.
As more
fully described in the capitalization table set forth on Schedule 3.1, the
authorized capital stock of the Issuer immediately prior to and immediately
following each Closing shall consist of:
| (i) |
47,910,223
shares of Common Stock, of which: (i) 26,500,648 shall be validly
issued
and outstanding, fully paid and nonassessable, (ii) 63,038 shares
shall
have been duly reserved for issuance upon conversion of the issued
and
outstanding Preferred Stock, (iii) 11,467,743 shares (the “Option Shares”)
shall have been duly reserved for issuance upon exercise of options
and
(v) 9,878,794 shares shall have been duly reserved for issuance upon
exercise of outstanding Warrants;
and
|
| (ii) |
47,910,223
shares of Common Stock, of which: (i) 26,500,648 shall be validly
issued
and outstanding, fully paid and nonassessable, (ii) 63,038 shares
shall
have been duly reserved for issuance upon conversion of the issued
and
outstanding Preferred Stock, (iii) 11,467,743 shares (the “Option Shares”)
shall have been duly reserved for issuance upon exercise of options
and
(v) 9,878,794 shares shall have been duly reserved for issuance upon
exercise of outstanding Warrants;
and
|
(c) Authorization
of this Agreement and the Purchase Documents; Conflicts.
The
execution, delivery and performance by the Issuer of this Agreement, the Merger
Term Sheet and the Purchase Documents and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
action on the part of the Issuer. Each of this Agreement and the Purchase
Documents has been duly executed and delivered by the Issuer and constitutes
a
valid and binding obligation of the Issuer, enforceable in accordance with
its
terms, subject only to applicable bankruptcy, reorganization, insolvency or
similar laws affecting creditors’ rights generally and to equitable principals
of general application (regardless of whether enforcement is sought in equity
or
at law). The execution, delivery and performance of this Agreement and the
Purchase Documents and the compliance with the provisions hereof and thereof
by
the Issuer, will not:
|
(i)
|
violate
any provision of law, statute, ordinance, rule or regulation or any
ruling, writ, injunction, order, judgment or decree of any court,
administrative agency or other governmental
body;
|
|
(ii)
|
conflict
with or result in any breach of any of the terms, conditions or provisions
of, or constitute (with due notice or lapse of time, or both) a default
(or give rise to any right of termination, cancellation or acceleration)
under (i) any agreement, document, instrument, contract, understanding,
arrangement, note, indenture, mortgage or lease to which the Issuer
is a
party or under which the Issuer or any of its assets is bound or
affected,
(ii) the Restated Certificate of Incorporation, or (iii) the By-laws;
or
|
|
(iii)
|
result
in the creation of any lien, security interest, charge or encumbrance
upon
any of the properties or assets of the Issuer other than as contemplated
herein.
|
8
(d) Authorization
of Notes.
The
issuance by the Issuer of the Notes has been duly authorized by all requisite
action of the Issuer.
(e) Consents
and Approvals.
Except
as set forth in Schedule
3.1(e),
no
authorization, consent, approval or other order of, or declaration to or filing
with, any governmental agency or body (other than filings required to be made
under applicable federal and state securities laws) or any other Person is
or
will be required for: (i) the valid authorization, execution, delivery and
performance by the Issuer of this Agreement, the Merger Term Sheet and the
Purchase Documents; or (ii) the valid authorization, reservation, issuance,
sale
and delivery of the Notes. The Issuer has obtained all other consents that
are
necessary to permit the consummation of the transactions contemplated hereby
and
thereby.
(f) Securities
Laws.
Neither
the Issuer nor anyone acting on its behalf has offered securities of the Issuer
for sale to, or solicited any offers to buy the same from, or sold securities
of
the Issuer to, any Person, in violation of the Securities Act, the Exchange
Act,
or any state securities or “blue sky” laws (collectively, the “Securities
Laws”). The offer, grant, sale and/or issuance of the Notes were not, are not,
or, as the case may be, will not be, in violation of the Securities Laws when
offered, sold and issued in accordance with this Agreement. The Issuer is not
an
Investment Company, as such term is defined under the Investment Company Act
of
1940, as amended.
(g) No
Change.
Except
as set forth in Schedule
3.1(g),
since
the date of the SIGA SEC Reports, there has been no development or event which
has had or could reasonably be expected to have a Material Adverse Effect.
Since
the date of SIGA’s most recent report on Form 10-Q as amended by any SIGA SEC
Reports filed thereafter but prior to the date of this Agreement or as set
forth
on Schedule 3.1(g), there has not been any adverse change in the financial
condition or operations of the Issuer, and that except to the extent reflected
in SIGA’s most recent report on Form 10-Q as amended by any SIGA SEC Reports
filed thereafter but prior to the date of this Agreement or as set forth on
Schedule 3.1(g) and except for liabilities arising in the ordinary course of
business, the Issuer has no material accrued or contingent liabilities arising
out of any transaction or state of facts existing prior to the date
hereof.
(h) No
Material Litigation.
Except
as set forth in the SIGA SEC Reports, or as set forth in Schedule
3.1(h),
no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Issuer, threatened
by or against the Issuer or against any of its respective properties or revenues
(i) with respect to this Agreement or the Purchase Documents or any of the
transactions contemplated hereby or thereby, or (ii) which could reasonably
be
expected to have a Material Adverse Effect.
(i) Solvency.
The
Issuer, after giving effect to each purchase and sale of a Note pursuant to
this
Agreement and the use of the proceeds therefrom, will not be engaged in any
business or transaction for which the Issuer has unreasonably small capital
(within the meaning of Section 548 of the Federal Bankruptcy Code) and the
Issuer has no intent to (i) hinder, delay or defraud any Person to which the
Issuer is, or will become, on or after the date hereof, indebted, or (ii) incur
debts that would be beyond the Issuer’s ability to pay as they mature. After
giving effect to the Transactions, Borrower will be solvent, able to pay its
debts as they mature, will have capital sufficient to carry on its business
and
all businesses in which it is
9
about
to
engage, and (i) as of the Closing Date, the fair present saleable value of
its
assets, calculated on a going concern basis, is in excess of the amount of
its
liabilities and (ii) subsequent to the Closing Date, the fair saleable value
of
its assets (calculated on a going concern basis) will be in excess of the amount
of its liabilities.
(j) Collateral;
Perfection; Security Interest.
The
Security Documents create a valid first security interest, and a perfected
security interest to the extent that perfection may be accomplished by filing
a
financing statement pursuant under the UCC, in the Collateral, securing the
payment of the Notes, and all filings and other actions necessary or desirable
to perfect and protect such security interest have been duly taken. The Issuer
is the legal and beneficial owner of the Collateral free and clear of any Lien,
except for Permitted Liens.
(k) Accounting
Controls and Procedures. SIGA
maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations; (ii) transactions are recorded
timely as necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in accordance with
management’s general or specific authorization; and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
Since
December 31, 2004, there have been no changes in the internal accounting
controls or in other factors that could affect SIGA’s internal accounting
controls.
(l) SEC
Filings.
SIGA has
filed all forms, reports and documents required to be filed with the SEC since
January 1, 2000 to the extent that the failure to file such would have a
Material Adverse Effect on SIGA. All such required forms, reports and documents
(including those that SIGA may file subsequent to the date hereof) are referred
to herein as the “SIGA
SEC Reports.”
As
of
their respective dates, the SIGA SEC Reports (i) were prepared in accordance
with the requirements of the Securities Act or the Exchange Act, as the case
may
be, and the rules and regulations of the SEC thereunder applicable to such
SIGA
SEC Reports, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date
of
such filing) contain any untrue statement of a material fact or omit to state
a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(m) Compliance.
Other
than as set forth on Schedule 3.1(m), Issuer is in compliance with all material
obligations, agreements and conditions contained in any evidence of indebtedness
or any loan agreement or other material contract or agreement (whether or not
relating to indebtedness) to which the corporation is a party or is subject
(collectively, the “Obligations”), the lack of compliance with which would
result in a Material Adverse Effect.
(n) No
Defaults.
The
Issuer is not in violation of or default under any provision of (i) its By-Laws
or Restated Certificate of Incorporation, (ii) any material contract,
instrument, judgment, order, writ or decree to which it is a party or by which
it or any of its properties are bound, and (iii) the Issuer is not in violation
of any material provision of any
10
federal
or state statute, rule or regulation applicable to the Issuer the result of
which, in the case of (ii) or (iii) above, would have a Material Adverse
Effect.
(o) Payment
of Taxes.
The
Issuer has prepared and filed within the time prescribed by, and in material
compliance with, applicable law and regulations, all federal, state and local
income, excise or franchise tax returns, real estate and personal property
tax
returns, sales and use tax returns, payroll tax returns and other tax returns
required to be filed by it including
giving effect to any permitted extension, and has paid or made provision for
the
payment of all accrued and unpaid taxes and other charges to which the Issuer
is
subject and which are not currently due and payable. The federal income tax
returns of the Issuer have never been audited by the Internal Revenue Service.
Neither the Internal Revenue Service nor any other taxing authority is now
asserting nor is threatening to assert against the Issuer any deficiency or
claim for additional taxes or interest thereon or penalties in connection
therewith, and the Issuer does not know of any such deficiency or basis for
such
deficiency or claim.
3.2 Reliance;
Knowledge.
The
Issuer acknowledges and agrees that the foregoing representations and warranties
shall be deemed material and to have been relied upon by the
Holders.
3.3 Representations
and Warranties of the Holder.
To
induce
the Issuer to enter into this Agreement and to sell the Notes, the Holder hereby
represents and warrants to the Issuer as follows:
(a) Accredited
Investor.
The
Holder is an “accredited investor” within the meaning of Rule 501 promulgated
under the Securities Act.
(b) Authorization.
The
Holder has the capacity to enter into and perform this Agreement and to purchase
the Notes being purchased by the Holder. This Agreement has been duly
authorized, executed and delivered by the Holder, and constitutes the legal,
valid, and binding obligation of such Holder, enforceable in accordance with
its
terms, subject only to applicable bankruptcy, reorganization, insolvency or
similar laws affecting creditors’ rights generally and to equitable principals
of general application (regardless of whether enforcement is sought in equity
or
at law).
(c) Investment
Knowledge.
The
Holder has sufficient knowledge and experience in financial and business matters
so as to be capable of evaluating the risks and merits of its acquisition of
the
Notes contemplated hereby.
(d) Investment
Intent.
The
Notes purchased hereunder by the Holder are being acquired for the Holder’s own
account for the purpose of investment and not with a view to or for resale
in
connection with any distribution thereof or interest therein in violation of
the
Securities Act.
(e) Note
Not Registered Under the Securities Act.
The
Holder understands that (i) the offer and sale of the Notes has not been
registered under the Securities Act or any other Securities Laws, and is being
offered and sold pursuant to an exemption
11
under
the
Securities Act based in part upon the representations of the Holder contained
herein, (ii) the Notes must be held indefinitely unless a subsequent disposition
thereof is registered under the Securities Act or is exempt from such
registration (it being understood that the Issuer has no present intention
of
registering any disposition of the Notes), (iii) the Notes shall bear a legend
to such effect, and (iv) the Issuer will make a notation on its transfer books
to such effect.
ARTICLE
IV
CONDITIONS
4.1 Conditions
to Holders’ Obligations.
The
obligations of the Holder to purchase and pay for the Notes on each Closing
Date
shall be subject to satisfaction of the following conditions
precedent:
(a) Proceedings.
All
proceedings to have been taken and all waivers and consents to be obtained
in
connection with the transactions contemplated by this Agreement and the Purchase
Documents shall have been taken or obtained, and all documents incidental
thereto shall be reasonably satisfactory to the Holder and its counsel, and
the
Holder shall have received copies (executed or certified, as may be appropriate)
of all documents which the Holder or its counsel may reasonably have requested
in connection with such transactions.
(b) Legal
Matters. All
legal
matters incident to the purchase and acquisition of the Notes shall be
satisfactory to the Holders’ counsel, and the Holders shall have received from
Kramer Levin Naftalis & Frankel, LLC, counsel for the Issuer, such firm’s
opinion addressed to the Holder as of the Closing Date, substantially in the
form attached hereto as Exhibit E.
(c) Representations
and Warranties.
The
representations and warranties of the Issuer set forth herein shall be true
and
correct in all material respects on and as of each of the Closing Dates with
the
same force and effect as though such representations and warranties had been
made on and as of each such date.
(d) Secretary’s
Certificate. The
Issuer shall have delivered to the Holder a certificate or certificates, dated
as of each of the Closing Dates, of the Secretary of the Issuer certifying
as to
(i) the resolutions of the Issuer’s Board of Directors authorizing the execution
and delivery of this Agreement, the issuance to the Holder of the Notes, the
execution and delivery of the other Purchase Documents and the consummation
of
the transactions contemplated hereby and thereby, and certifying that such
resolutions were duly adopted and have not been rescinded or amended as of
said
date, and (ii) the name and signature of the officers of the Issuer authorized
to sign, as appropriate, this Agreement, the other Purchase Documents and the
other certificates to be delivered pursuant to this Agreement by either the
Issuer or any of its officers.
(e) Officer’s
Certificate. The
Issuer shall have delivered to the Holder a certificate or certificates, dated
as of each of the Closing Dates, of an executive officer of the Issuer
certifying as to the accuracy of the representations and warranties made by
the
Issuer hereunder.
12
(f) Security
Documents. The
Issuer shall have executed and delivered to the Holder the Security
Documents.
(g) Litigation.
There
shall exist no action, suit, investigation, litigation or proceeding affecting
either party pending or threatened before any court, governmental or regulators
agency or authority or arbitrator that purports to affect the legality, validity
or enforceability
of this Agreement or the Notes any other document related to the consummation
of
the transactions contemplated herein.
(h)
Legality. The execution, delivery and performance of this
Agreement and the Purchase Documents and the compliance with the provisions
hereof and thereof by the Holder, will not violate any provision of law,
statute, ordinance, rule or regulation or any ruling, writ, injunction, order,
judgment or decree of any court, administrative agency or other governmental
body the effect of which would have a Material Adverse Effect.
4.2 Conditions
to SIGA’S Obligations.
The
obligations of SIGA to sell and issue the Notes on each of the Closing Dates
shall be subject to the satisfaction of the following conditions
precedent:
(a) Representations
and Warranties. The
representations and warranties of the Holder contained herein shall be true
and
correct in all material respects on and as of the Closing Date.
(b) Payment
of Purchase Price. The
Holder shall have delivered to the Issuer, and the Issuer shall have received,
payment in full of the purchase price relating to the Notes being purchased
by
the Holder on each Closing Date.
ARTICLE
V
COVENANTS
5.1 Affirmative
Covenants.
For
so
long any amounts are due or payable under the Notes, the Issuer agrees to the
following:
(a) The
Issuer will punctually pay or cause to be paid the principal of and interest
on
the Notes at the times and places and in the manner specified in the
Notes.
(b) The
Issuer shall pay, discharge or otherwise satisfy at or before maturity or before
they become delinquent, as the case may be, all of its material obligations
of
whatever nature, except where the amount or validity thereof is being contested
in good faith, by appropriate proceedings, and reserves, in conformity with
GAAP
with respect thereto, have been provided on its books and records.
(c) The
Issuer shall (i) continue to engage in business of the same general type as
now
conducted by it, (ii) and preserve, renew and keep in full force and effect
its
corporate existence, (iii) take all reasonable action to maintain all rights,
privileges and
13
franchises
necessary or desirable in the normal conduct of its business; and (iv) comply
with all Contractual Obligations and applicable laws except, in each case,
to
the extent that failure to comply therewith could not, individually or in the
aggregate, have a Material Adverse Effect.
(d) The
Issuer shall (i) keep all material property useful and necessary in its
businesses in good working order and condition; and (ii) maintain with
financially sound and reputable
insurance companies insurance policies on all its property in such amounts
and
against such risks (but including in any event environmental and product
liability) as are applicable to the policies currently maintained by the Issuer
and in place.
(e) The
Issuer shall keep proper books of records and accounts in which full, true
and
correct entries in conformity with GAAP and all applicable laws shall be made
in
all material respects of all dealings and transactions in relation to its
business and activities; permit representatives of any Holder to visit and
inspect any of its properties and examine and make abstracts from any of its
books and records at any reasonable time during business hours and as often
as
may reasonably be required but not so as to materially interfere with the
operation of the business, including, without limitation, any such visit,
inspection or examination by the Holder in connection with any audit conducted
by the Holder, and at which a representative of the Holder may be present from
time to time at the Holder’s discretion, and to discuss the business,
operations, properties and financial and other condition of the Issuer with
officers and employees of the Issuer and with their independent certified public
accountants.
(f) The
Issuer shall promptly give notice to the Holder of:
|
(i)
|
the
occurrence of any Event of Default;
|
|
(ii)
|
any
(A) default or event of default under any Contractual Obligation
of the
Issuer, or (B) litigation, investigation or proceeding which may
exist at
any time between the Issuer and any Governmental Authority;
and
|
|
(iii)
|
any
litigation or proceeding affecting the Issuer in which the amount
involved
is $100,000 or more (unless such litigation or proceeding affects,
involves or relates to any intellectual property of the Issuer, in
which
event there shall be no dollar threshold) and which is not covered
by
insurance or in which injunctive or similar relief is
sought.
|
Each
notice pursuant to this Section 5.1(e) shall be accompanied by a statement
of an
officer of the Issuer selling forth details of the occurrence referred to
therein and stating what action the Issuer proposes to take with respect
thereto.
(g) Each
of
the parties shall execute any and all further documents, and take all further
action which the other may reasonably request in order to effectuate the
transactions contemplated by this Agreement and the Purchase Documents. Without
limiting the generality of the foregoing, such further documents and actions
shall include the execution of agreements and instruments, and filing UCC
financing statements, in order to effectuate the transactions contemplated
by
this Agreement and the Purchase Documents and in order to grant,
preserve,
14
protect
and perfect the validity and priority of the security interests created or
intended to be created by this Agreement and the Purchase
Documents.
(h) The
proceeds from the sale of the Notes hereunder shall be used by the Issuer
exclusively for (i) expenses directly related to the development of SIGA 246,
(ii) expenses relating
to the Merger and (iii) corporate overhead. The proceeds shall not be used
to
repay indebtedness.
5.2 Negative
Covenants.
For
so
long as any amounts are due or payable under the Notes, the Issuer agrees to
the
following:
(a) The
Issuer shall not create, incur, assume or suffer to exist any Lien upon any
of
its property, assets or revenues, whether now owned or hereafter acquired,
except for Permitted Liens. Except with respect to Permitted Liens held by
GE
Capital, the consent of the Required Holders shall first be obtained before
the
terms of any indebtedness, obligations or commitments underlying any Permitted
Lien are amended, refinanced, increased or in any way changed or before any
additional indebtedness, borrowings, advances or loans are incurred
thereunder.
(b) The
Issuer shall not make any advance, loan, extension of credit or capital
contribution to, or purchase any stock, bonds, notes, debentures or other
securities of or any assets constituting a business unit of, or make any other
investment in, any Person, except for investments in cash and cash
equivalents.
(c) Unless
approved by the Holder, the Issuer shall not enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of property
or the rendering of any service, with any Affiliate, unless such transaction
is
in the ordinary course of, and pursuant to the reasonable requirements of the
Issuer’s business, is in good faith and is upon fair and reasonable terms no
less favorable to the Issuer than it would obtain in a comparable arm’s length
transaction with a Person not an Affiliate.
(d) The
Issuer shall not sell, abandon, transfer, lease or otherwise dispose of any
material assets except for (a) collection of Accounts in the ordinary course
of
business, (b) sales of Inventory in the ordinary course of business, or (c)
sales of Equipment which is obsolete and/or not of material value (each as
defined in the Security Agreement).
ARTICLE
VI
EVENTS
OF
DEFAULT
6.1 Bankruptcy,
etc.
If
the
Issuer shall commence any case, proceeding or other action (i) under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to have
an
order for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or
15
its
debts, or (ii) seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its assets, or
the
Issuer shall make a general assignment for the benefit of its creditors; or
(iii) there shall be commenced against the Issuer any case, proceeding or other
action of a nature referred to in clause (i) or (ii) above which (A) results
in
the entry of an order for relief or any such adjudication or appointment or
(B)
remains undismissed,
undischarged or unbonded for a period of 60 days; or (iv) there shall be
commenced against the Issuer any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which results in the entry
of
an order for any such relief which shall not have been vacated, discharged,
or
stayed or bonded pending appeal within 60 days from the entry thereof; or (v)
the Issuer shall take any action in furtherance of, or indicating its consent
to, approval of, or acquiescence in, any of the acts set forth in clause (i),
(ii), (iii), or (iv) above, then all outstanding principal and accrued and
unpaid interest under the Notes, and all other amounts owing under the Notes
and
this Agreement shall immediately become due and payable in full, without the
need for any notice or other action by the Holder.
6.2 Other
Events.
Unless
otherwise waived by the Holder, all outstanding principal and accrued and unpaid
interest under the Notes, and all other amounts payable under the Notes and
this
Agreement, shall become immediately due and payable in full, without the need
for any notice or other action by the Holder, if any of the following events
shall occur and be continuing:
(a) The
Issuer shall fail to pay (i) any principal of the Notes when due in accordance
with the terms thereof or (ii) interest on the Notes or any fees or other amount
payable hereunder or thereunder when due in accordance with the terms thereof
or
hereof, and such default continues for a period of five Business Days;
or
(b) Any
representation or warranty made by the Issuer herein or in any other Purchase
Document shall prove to have been incorrect in any material respect;
or
(c) The
Issuer shall default in the observance or performance of any agreement or
covenant contained in this Agreement any other Purchase Document; provided
that
a default in the observance or performance of any agreement contained in this
Agreement or the Notes which is by its nature curable shall not constitute
an
Event of Default hereunder if such default is fully cured within ten Business
Days of the occurrence thereof, it being agreed that Events of Default as a
result of a failure to satisfy any of Section 5.1(c)(ii) and 5.1(d)(ii), 5.1(e)
(with regard to conformance with GAAP), 5.1(h) and 5.2 are not subject to cure;
or
(d) The
Issuer shall default under any of the indebtedness relating to any of the
Permitted Liens and such default shall continue (in whole or in part) for a
period of ten Business Days; or
(e) The
Issuer shall (i) default in any payment of principal of or interest on any
Indebtedness, (provided that the principal amount of such Indebtedness exceeds,
individually, or in the aggregate, $50,000), payable in the instrument or
agreement under which such Indebtedness was created; or (ii) default in the
observance or performance of any other
16
agreement
or condition relating to any such Indebtedness (provided that the principal
amount of such Indebtedness exceeds, individually, or in the aggregate, $50,000)
or contained in any instrument or agreement evidencing, securing or relating
thereto, or any other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the Holders or
holders of such Indebtedness (or a trustee or agent on behalf of such holder
or
holders or beneficiary or beneficiaries) to cause, with the giving of notice
if
required, such Indebtedness to become due prior to its stated maturity;
or
(f) One
or
more judgments or decrees shall be entered against the Issuer involving in
the
aggregate a liability (not paid or fully covered by insurance) of $250,000
or
more and (i) all such judgments or decrees shall not have been vacated,
discharged, stayed or bonded pending appeal within 60 days from the entry
thereof or (ii) the judgment creditors with respect to such judgments or their
successors or assigns shall have commenced enforcement proceedings, which
enforcement proceedings shall have remained unstayed for 10 consecutive days;
or
(g) The
security interests created by any Purchase Document shall cease for any reason,
unless caused by the action or inaction of any Holder, to be enforceable and
of
the same effect and priority purported to be created thereby.
(h) There
occurs a Change of Control of the Issuer.
ARTICLE
VII
MISCELLANEOUS
7.1 Amendments
and Waivers.
No
provision of this Agreement, the Notes or any Purchase Documents may be waived,
modified or amended except by an instrument in writing executed by the Holder
and the Issuer.
7.2 Notices.
Any
and
all notices, requests, demands, consents and other communications required
or
permitted under this Agreement shall be in writing, signed by or on behalf
of
the party by which given, and shall be considered to have been duly given when
(i) delivered by hand, (ii) sent by telecopier (with receipt confirmed), or
(iii) received by the addressee, if sent by Express Mail, Federal Express or
other reputable express delivery service (receipt requested), or by first class
certified or registered mail, return receipt requested, postage prepaid, in
each
case to the party for which intended addressed as follows (or to such other
addresses and telecopier numbers as a party may from time to time designate
as
to itself by notice similarly given to the other parties in accordance with
this
Section 7.2):
17
|
Issuer:
|
SIGA
Technologies, Inc.
420
Lexington Avenue
Suite
408
New
York, New York 10170
Tel:
212-672-9107
Fax:
212-697-3130
Attn: Thomas
Konatich
|
|
With
a copy to:
|
Kramer
Levin Naftalis & Frankel, LLC
1177
Avenue of the Americas
New
York, New York 10036
Tel:
(212)
715-9100
Fax:
(212)
715-8000
Attn: James
Grayer, Esq.
|
|
Holder
|
PharmAthene,
Inc.
175
Admiral Cochrane Drive
Suite
101
Annapolis,
Maryland 21401
Tel:
(410)
571-8920
Fax:
(410)
571-8927
Attn:
David
P. Wright, President and
Chief
Executive Officer
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|
With
a copy to:
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McCarter
& English, LLP
Four
Gateway Center
100
Mulberry Street
Newark,
NJ 07102
Tel:
(973) 622-4444
Fax:
(973) 634-7070
Attn:
Jeffrey A. Baumel, Esq.
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A
notice
of change of address shall not be deemed given until received by the
addressee.
7.3 No
Waiver; Cumulative Remedies.
No
failure to exercise and no delay in exercising, on the part of the Holder,
any
right, remedy, power or privilege hereunder or under any Purchase Document
shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges herein provided are cumulative
and
not exclusive of any rights, remedies, powers and privileges provided by
law.
18
7.4
Survival of Representations and Warranties.
All
representations and warranties made hereunder or under any Purchase Document
and
in any document, certificate or statement delivered hereunder or thereunder
or
in connection herewith or therewith shall survive the Closing Date until the
repayment of the Notes and the extinguishment of all obligations
hereunder.
7.5 Payment
of Fees, Expenses; Taxes.
The
Issuer shall pay, and hold the Holder harmless against all liability for the
payment of, all costs and other expenses incurred by any such Holder in
connection with the Issuer’s performance of and compliance with all agreements
and conditions set forth herein or in any of the Purchase Documents or any
of
the transactions contemplated hereby or thereby on its part to be performed
or
complied with. The Issuer further agrees that it shall pay, and hold the Holder
harmless from, any and all liability with respect to any stamp or similar taxes
which may be determined to be payable in connection with the execution and
delivery of this Agreement or any Purchase Document or any modification,
amendment or alteration to the provisions hereof or thereof. This Section 7.5
shall survive repayment of the Notes and all other amounts payable hereunder.
Notwithstanding the above, Holder or its assignee or transferee shall be
responsible for all taxes associated with or related to such
transfer.
7.6 Indemnification.
The
Issuer will defend, indemnify, and hold harmless the Holder, its subsidiaries,
shareholders, partners, employees, agents, Affiliates, attorneys, officers,
and
directors (each an “Indemnified Person”), from and against any and all claims,
demands, penalties, causes of action, fines, liabilities, settlements, damages,
costs, or expenses of whatever kind or nature, known or unknown, foreseen or
unforeseen, contingent or otherwise (including, without limitation, counsel
and
consultant fees and expenses, investigation and laboratory fees and expenses,
court costs, and litigation expenses) arising out of this Agreement, the other
Purchase Documents or the transactions contemplated hereby and thereby; or
in
any way related to the inaccuracy, breach of or default under any
representations, warranties or covenants of the Issuer set forth herein or
in
any Purchase Document.
7.7 Counterparts.
This
Agreement may be executed in any number of counterparts and by facsimile, each
of which shall be deemed an original and all of which together shall constitute
one and the same instrument.
7.8 Severability.
Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in
any
other jurisdiction.
19
7.9
Integration.
This
Agreement and the other Purchase Documents represent the agreement of the Issuer
and the Holder with respect to the subject matter hereof; and there are no
promises, undertakings, representations or warranties by the Holder relative
to
subject matter hereof not expressly set forth or referred to herein or in the
other Purchase Documents.
7.10 Brokers
or Finders.
The
Issuer represents and warrants to the Holder that no Person has or will have,
as
a result of the transactions contemplated by this Agreement, any right, interest
or valid claim against or upon the Issuer or the Holder for any commission,
fee
or other compensation as a finder or broker because of any act or omission
by
the Issuer or any of its agents.
7.11 GOVERNING
LAW.
THIS
AGREEMENT AND THE PURCHASE DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES UNDER THIS AGREEMENT AND THE PURCHASE DOCUMENTS SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW
YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
7.12 Submission
to Jurisdiction; Waivers.
The
Issuer hereby irrevocably and unconditionally:
(a) submits
for itself and its property in any legal action or proceeding relating to the
Purchase Documents, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the State of
New
York or the Federal Courts for the Southern District of New York;
(b) consents
that any such action or proceeding may be brought in such courts and waives
any
objection that it may now or hereafter have to the venue of any such action
or
proceeding in any such court or that such action or proceeding was brought
in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees
that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially
similar form of mail), postage prepaid, to the Issuer at its address set forth
in this Agreement or at such other address of which the Holder shall have been
notified pursuant thereto;
(d) agrees
that nothing herein shall affect the right to effect service of process in
any
other manner permitted by law or shall limit the right to sue in any other
jurisdiction;
(e) waives,
to the maximum extent not prohibited by law, any right it may have to claim
or
recover in any legal action or proceeding referred to in this subsection any
punitive damages; and
20
(f) knowingly,
voluntarily and intentionally waives any rights it may have to a trial by
jury
in respect of any litigation, proceeding or other action arising under or
relating in any manner to this Agreement or any Purchase
Document.
7.13 Remedies.
In
furtherance, and not in limitation, of the rights of the Holder hereunder,
in
case any one or more of the representations, warranties, covenants an/or
agreements set forth in this Agreement shall have been breached by the Issuer,
the Holder may proceed to protect and enforce its rights, whether by suit in
equity and/or by action at law, including an action for damages as a result
of
any such breach and/or any action for specific performance of any such covenant
or agreement.
7.14 Successors
and Assigns.
Except
as
otherwise expressly provided herein, this Agreement shall be binding upon and
inure to the benefit of the Issuer and the Holder and their respective permitted
successors and assigns. This Agreement, and the rights and obligations of the
Holders set forth herein, may be assigned, in whole or in part, by the Holder
without the prior written approval of the Issuer. Neither this Agreement nor
any
of the rights or obligations of the Issuer set forth herein may be assigned
without the prior written approval of the Holder.
7.15 Captions.
Captions
contained herein are inserted as a matter of convenience and in no way define,
limit, extend or describe the scope of this Agreement or the intent of any
provision hereof.
7.16 Non-Disclosure.
The
Issuer shall not issue any press release or other public statement relating
to
the transactions set forth in this Agreement, or otherwise disclose to any
third-party (other than professional advisors) the terms of the transactions
set
forth in this Agreement or any Purchase Documents, without, in either case,
the
prior written consent of the Holder other than as required under the Federal
securities laws.
7.17 Acknowledgements.
The
Issuer hereby acknowledges that:
(a) it
has
been advised by counsel in the negotiation, execution and delivery of this
Agreement and the Purchase Documents;
(b) the
Holder does not have any fiduciary relationship to the Issuer, and the
relationship between the Holder, on one hand, and the Issuer, on the other
hand,
is solely that of debtor and creditor; and
(c) no
joint
venture exists between the Holder and the Issuer.
21
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.
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THE
ISSUER:
SIGA
TECHNOLOGIES, INC.
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By: /s/
Thomas
Konatich
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|
0;Thomas
Konatich
Chief
Financial Officer
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THE
HOLDER:
PHARMATHENE,
INC.
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By: /s/
David P.
Wright
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David
P. Wright,
President and
Chief Executive Officer
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22
Exhibit
10.2
SECURITY
AGREEMENT
This
Security Agreement (this “Agreement”), dated as of March 20, 2006, is by and
between SIGA Technologies, Inc., a Delaware corporation with an address at
420
Lexington Avenue, Suite 408, New York, New York 10170 (the “Debtor”), and
PharmAthene, Inc., a Delaware corporation with an address at 175 Admiral
Cochrane Drive, Suite 101, Annapolis, Maryland 21401 (the
“Holder”).
WITNESSETH
A. The
Holder has agreed to purchase certain notes (“Notes”) from the Debtor under the
terms and conditions set forth in that certain Note Purchase Agreement between
the Holder and the Debtor of even date herewith (the “Purchase
Agreement”).
B. It
is a
condition to the effectiveness of the Purchase Agreement that the Debtor provide
a security interest to the Holder in certain of its assets under the terms
and
conditions of this Agreement to secure its obligations thereunder.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
SECTION
I
DEFINITIONS
AND OTHER PROVISIONS
1.01 Certain
Defined Terms
The
following terms have the following meanings:
“Accounts”
means
all rights to the payment of money for goods sold or leased or for services
rendered by the Debtor whether in form of accounts receivable, contract rights,
chattel paper, instruments, notes, bills, acceptances, general intangibles
and
other forms of obligations relating to such rights, together with any property
evidencing or relating to such rights, including, without limitation, all books,
records, invoices, magnetic tapes, processing software, processing contracts
(such as contracts for computer time and services) and any other rights or
property of the Debtor that is an “account” within the meaning of the
UCC.
“Chattel
Paper”
means
all chattel paper, as that term is defined in the UCC, including without
limitation any writings which evidence both a monetary obligation and a security
interest in or a lease of specific goods.
“Collateral”
means
all tangible and intangible personal property of Debtor including without
limitation all Accounts, Chattel Paper, Commercial Tort Claims, Deposit
Accounts, Documents, Equipment, General Intangibles, Instruments, Inventory,
Investment Property, Intellectual Property and Letters of Credit whether
presently owned or hereafter acquired together with all supporting obligations
with respect thereto and all Proceeds thereof, provided, however, that the
Collateral shall not include the property that is subject to the security
interest granted in the GE Capital Loan Agreement, which property is listed
on
Schedule A hereto and provided further that the Collateral shall not include
those Material License
Agreement
rights that are listed on Schedule 1.01(b), in which the grant to the Holder
of
a security interest in those Material License Agreements would result in a
breach of the terms thereof.
“Commercial
Tort Claims”
means
tort claims of the Debtor arising from time to time including the commercial
tort claims listed on Schedule B.
“Deposit
Accounts”
means
all demand, time, savings, passbook or like accounts maintained with a bank,
savings and loan association, credit union or like organization including an
account evidenced by a certificate of deposit.
“Documents”
means
all documents, as that term is defined in the UCC, including but not limited
to
documents of title (as that term is defined in the UCC) and any and all receipts
of the kind described in Article 7 of the UCC.
“Equipment”
means
all machinery, apparatus, equipment, fittings and other tangible personal
property (other than Inventory) of every kind and description owned by the
Debtor, whether or not affixed to realty, including without limitation, all
motor vehicles, trucks, trailers, handling and delivery equipment, cranes,
hoisting equipment, fixtures, office machines and furniture, together with
all
accessions, replacements, rights under any manufacturer’s warranties relating to
the foregoing and any other rights or property of the Debtor that is equipment
within the meaning of the UCC.
“GAAP”
means
generally accepted accounting principles in the United States of America in
effect from time to time.
“GE
Capital Agreement”
means
the Master Security Agreement between General Electric Capital Corporation
and
Debtor, dated as of April 29, 2005.
“General
Intangibles”
means
all general intangibles, as that term is defined in the UCC, including, without
limitation, all choses in action, causes in action, designs, plans, goodwill,
all intellectual property and tax refunds.
“Governmental
Authority”
means
any nation or government, any state or other political subdivision thereof
and
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
“Instruments”
means
instruments, as that term is defined in the UCC, including without limitation
bills of exchange, notes and all negotiable instruments, all certificated
securities, all certificates of deposit and any other writing which evidences
a
right to payment of money and is a type which is in the ordinary course of
business transferred by delivery with any necessary endorsement or
assignment.
“Intellectual
Property”
means
each patent, patent application, copyright registration or application
therefore, mask work registration or application therefore, and trademark,
trademark application, trade name, service mark and domain name registration
or
application therefore owned by the Corporation, licensed by the Corporation
or
otherwise used by the Corporation, whether presently owned or hereafter
acquired, including, without limitation,
those
listed on Schedule 1.01(a) and Schedule 1.01(b) attached hereto, all proceeds
thereof, all rights corresponding thereto and all reissues, divisions,
continuations, renewals, extensions and continuations-in-part thereof, and
the
recordings and applications therefore.
“Inventory”
means
all goods intended for sale or lease by the Debtor, of every nature, kind and
description wherever located, including without limitation raw materials, goods,
work in process and finished goods and all goods returned or reclaimed from
customers, together with any other rights or property of the Debtor that is
inventory within the meaning of the UCC.
“Investment
Property”
means
(i) all securities, or securities certificates or uncertificated securities
representing the securities, (ii) security entitlements, (iii) securities
accounts, (iv) commodity contracts, or (v) commodity accounts.
“Letters
of Credit”
means
all letters of credit including, but not limited to, any written undertaking
to
pay money conditioned upon the presentation of specified documents and advances
of letters of credit, and including all letters of credit rights as defined
in
the UCC.
“Liens”
means
any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), or preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, the filing of any financing statement under
the
UCC or comparable law of any jurisdiction in respect of any of the
foregoing).
“Noteholders”
means
at any time and from time to time, the holders of the Notes issued under the
Purchase Agreement, their successor, transferees and assigns.
“Permitted
Liens”
means:
”: (i) Liens set forth on Schedule C, (ii) Liens currently existing as of the
date of this Agreement under the GE Capital Agreement, (iii) Liens in favor
of
the Holder, (iii) Liens for taxes, fees, assessments or other government charges
or levies, either not delinquent or being contested in good faith by appropriate
proceedings; provided that adequate reserves with respect to such taxes, fees,
assessments or other government charges or levies which are being contested
are
maintained on the books of the Debtor, in conformity with GAAP, (v) pledges
or
deposits in connection with workers’ compensation, unemployment insurance and
other social security legislation, (vi) purchase money Liens not relating to
any
obligations in excess of $20,000 (A) on assets acquired or held by Debtor
incurred for financing the acquisition of such assets, or (B) existing on such
asset when acquired; provided
that
such Liens are in each case confined to the property and improvements and the
proceeds of such assets, and (vii) leases or subleases and non-exclusive
licenses or sublicenses, not representing obligations of the Debtor in excess
of
$50,000 per year, granted in the ordinary course of the Debtor’s business.
“Proceeds”
means
all proceeds as that term is defined in the UCC including without limitation
whatever is received upon the use, lease, sale, exchange, collection, any other
utilization of any disposition of any property whether or not in cash, all
rental or lease payments, accounts, chattel paper, instruments, documents,
general intangibles, equipment, inventory,
substitutions,
additions, accessions, replacements, products and renewals of, for, or to such
property and all insurance therefore.
“Purchase
Agreement”
has
the
meaning assigned in the Recitals to this Agreement.
“Requirement
of Law”
as
to
any person, the Certificate of Incorporation and By-Laws or other organizational
or governing documents of such person, and any law, treaty, rule or regulation
or determination of an arbitrator or a court or other Governmental Authority,
in
each case applicable to or binding upon such person or any of its property
or to
which such person or any of its material property is subject.
“Secured
Obligations”
means
all present and future obligations of the Debtor arising under the Purchase
Agreement, the Notes issued thereunder, this Agreement and any present or future
obligations of the Debtor to the Holder or the Noteholders whether direct or
indirect, joint or several, secured or unsecured, primary or secondary, absolute
or contingent, which are due or that may become due whether contracted, acquired
or arising by operation of law including interest accruing during the pendency
of any bankruptcy, insolvency, receivership or other similar proceeding,
regardless of whether allowed or allowable in such proceeding.
“UCC”
means
the Uniform Commercial Code as effect in the State of Delaware from time to
time.
1.02 Other
Definitional Provisions
a. As
used
herein and in any certificate or other document made or delivered pursuant
hereto or thereto, accounting terms not defined in Subsection 1.01 shall have
the respective meanings given to them under GAAP.
b. The
words
“hereof”, “herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement, and section, subsection schedule and exhibit
references are to this agreement unless otherwise specified. The meaning of
defined terms shall be equally applicable to the singular and plural forms
of
the defined terms.
SECTION
II
SECURITY
INTERESTS
2.01 Grant
of Security Interest
The
Debtor hereby grants to the Holder, a first lien on and a security interest
in
the Collateral to secure the prompt and complete payment and performance when
due (whether at the stated maturity, by acceleration or otherwise) of the
Secured Obligations.
2.02 Failure
to Perform Agreements
If
the
Debtor fails to perform or comply with any of its agreements contained herein
or
in the Purchase Agreement then the Holder may, on behalf of the Debtor and
on
five (5)
days
advance written notice to the Debtor, perform or comply, or otherwise cause
performance or compliance with such agreement in order to provide for protection
of the value of the Collateral. Debtor shall reimburse the Holder for all
amounts expended in connection with such payment, performance or compliance,
together with interest thereon at a rate equal to a rate per annum equal to
3%
per annum, such interest to be calculated from the date of such advance to
the
date of repayment thereof, shall be payable by the Debtor to the Holder ten
(10)
business days following demand for payment by the Holder.
2.03 Holder’s
Appointment as Attorney-in-Fact
Subject
to the agreement of the Holder in the last sentence of this Section 2.03 and
only to exercise the following rights during the existence of an Event of
Default the Debtor, hereby irrevocably constitutes and appoints the Holder
and
any officer or agent thereof, with full power of substitution, as its true
and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of the Debtor and in the name of the Debtor or in its own name, from
time to time in the Holder’s discretion, for the purpose of carrying out the
terms of this Agreement, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or desirable to
accomplish the purposes of this Agreement, and, without limiting the generality
of the foregoing, the Debtor hereby gives the Holder the power and right, on
behalf of the Debtor without notice to or assent by the Debtor, to do the
following:
a. to
take
possession of and endorse and collect any checks, drafts, notes, acceptances
or
other instruments for the payment of moneys due under any Collateral and to
file
any claim or to take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by the Holder for the purpose of
collecting any and all such moneys due under any Collateral whenever
payable;
b. to
pay or
discharge taxes and Liens levied or placed on or threatened against the
Collateral, to effect any repairs or any insurance called for by the terms
of
this Agreement and to pay all or any part of the premiums therefore and the
costs thereof;
c. to
direct
any party liable for any payment under any of the Collateral to make payment
of
any and all moneys due or to become due thereunder directly to the
Holder;
d. to
ask or
demand for, or collect, receive payment of and receipt for, any and all moneys,
claims and other amounts due or to become due at any time in respect of or
arising out of any Collateral;
e. to
sign
and endorse any invoices, freight or express bills, bills of lading, storage
or
warehouse receipts, drafts against debtors, assignments, verifications, notices
and other documents in connection with any of the Collateral;
f. to
commence and prosecute any suits, actions or proceedings at law or in equity
in
any court of competent jurisdiction to collect the Collateral or any portion
thereof and to enforce any other right in respect of any
Collateral;
g.
to
defend any suit, action or proceeding brought against the Debtor with respect
to
any Collateral;
h. to
settle, compromise or adjust any suit, action or proceeding described above
and,
in connection therewith, to give such discharges or releases as the Holder
may
deem appropriate;
i. generally,
to sell, transfer, pledge and make any agreement with respect to or otherwise
deal with any of the Collateral as fully and completely as though the Holder
were the absolute owner thereof for all purposes, and to do, at the Holder’s
option and the Debtor’s expense, at any time, or from time to time, all acts and
things which the Holder deems necessary to protect, preserve or realize upon
the
Collateral and the Security Interests thereon in order to effect the intent
of
this Agreement, all as fully and effectively as the Debtor might do;
and
j. in
connection with the sale of Collateral provided for herein, execute any
endorsements, assignments or other instruments of conveyance or transfer with
respect to the Collateral.
This
power of attorney is a power coupled with an interest and shall be irrevocable
during the existence of an Event of Default and shall be automatically revoked
without any action on the part of the Debtor once the Event of Default giving
rise to such power of attorney has been cured. The powers conferred on the
Holder hereunder are solely to protect the Holder’s interest in the Collateral
and shall not impose any duty upon the Holder to exercise any such powers.
The
Holder shall be accountable only for amounts that it actually receives as a
result of the exercise of such powers, and neither it nor any of its officers,
directors, employees or agents shall be responsible to the Debtor for any act
or
failure to act hereunder, except for its own gross negligence or willful
misconduct. The Holder shall only exercise the foregoing power of attorney
during the existence of an Event of Default; provided that any person relying
on
the authority of the Holder under this power of attorney may rely exclusively
upon the representation of the Holder as to its authority hereunder and with
respect to the Holder’s right to exercise the powers granted above, shall not be
under any obligation to determine whether an Event of Default exists at the
time
the Holder attempts to exercise the powers granted above, and may disregard
any
claim by the Debtor to the contrary. If the Holder transfers the Notes or any
portion thereof to any other parties, the Holder will provide for appropriate
considerations such that any action of the Holder may be taken either by a
majority in interest of the Holders or by a collateral agent to be appointed
by
the Holder or Holders.
SECTION
III
REPRESENTATIONS
AND WARRANTIES
3.01 Power
and Authority
The
Debtor has the power and authority to execute and deliver, to perform its
obligations under, this Agreement, and to grant the security interest in and
lien on the Collateral pursuant to, this Agreement. The Debtor has taken all
necessary action to authorize the execution,
delivery and performance of this Agreement, and the grant of the security
interest in the Collateral pursuant to this Agreement.
3.02
Title; No Other Liens
Except
for Permitted Liens and as otherwise listed on Schedule D, the Debtor owns
each
item of Collateral free and clear of any and all Liens or claims of others.
No
security agreement, financing statement or other public notice with respect
to
all or any part of the Collateral is on file or of record in any public office
except as may have been filed in favor of the Holder, the holders of Permitted
Liens or as reflected on such schedule.
3.03 Perfected
First Security Interest
To
the
extent that perfection may be accomplished by filing a UCC financing statement
the security interests granted herein will, upon such filing, constitute a
first
priority perfected security interest in the Collateral in favor of the Holder
enforceable against all creditors of the Debtor except the holders of Permitted
Liens.
3.04 Intellectual
Property.
All
the
Intellectual Property, if any, owned or licensed by the Debtor, used by the
Debtor or in which the Debtor may have an interest and is material to the
business of the Debtor is listed on Schedule 1.01(a)
and
Schedule 1.01(b).
Each
item of Intellectual Property owned by or licensed to the Debtor or in which
the
Debtor has a right is (i) valid, subsisting, existing, unexpired, enforceable
and has not been abandoned, (ii) not the subject of any holding, decision or
judgment by any Governmental Authority which would limit, cancel or question
its
validity, (iii) not the subject of any action or proceeding (A) seeking to
limit, cancel or question its validity, or (B) which, if adversely determined,
would have a material adverse effect on its value, and (iv) to the knowledge
of
the Debtor, the use of the Intellectual Property does not infringe upon the
rights of any Person. The Debtor owns all rights to all patents relating to
SIGA
246, as defined in the Purchase Agreement. None
of
the aspects of the use by the Debtor of SIGA 246 are subject to any license
or
license agreement from any third party, or, to the extent that it would
adversely affect the rights of Holder hereunder, to any third party.
SECTION
IV
COVENANTS
4.01 Further
Documentation; Financing Statements
At
any
time and from time to time, upon the written request of the Holder, and at
the
sole expense of the Debtor, the Debtor will promptly and duly execute and
deliver such further instruments and documents and take such further action
as
the Holder may reasonably request for the purpose of obtaining or preserving
the
full benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, any financing or continuation statements under
the law of any jurisdiction with respect to the Liens created hereby or any
Patent Assignment of Security Interest or Trademark Collateral Assignment with
the United States Patent and Trademark Office with respect tot the Intellectual
Property. The Debtor hereby authorizes the Holder to file any such financing
or
continuation statement without the signature of the Debtor to the extent
permitted by applicable law. The Debtor authorizes the Holder to execute and
file, in the name of the Debtor or otherwise, UCC-1 financing statements which
the Holder in its sole discretion may deem necessary or appropriate to further
perfect its security interest in the Collateral. The Debtor agrees and
authorizes that a carbon, photographic or other reproduction of this Agreement
may be used as a financing statement for filing in any
jurisdiction.
4.02 Intellectual
Property.
a. Upon
request of the Holder, the Debtor shall execute and deliver any and all
agreements, instruments, documents, and papers as the Holder may request to
evidence the Holder’s security interests in any patent, trademark or copyright
and any goodwill, know-how, trade secrets
and
general intangibles of the Debtor relating thereto or represented thereby.
The
agreements evidencing the Holder's security interest in such patents, trademark
or copyrights will contain terms reasonably satisfactory to the
Holder.
b. The
Debtor shall, consistent with its past practices, take whatever action is
necessary to protect its rights in any patents, trademarks or copyrights. The
Debtor (either itself or through licensees) will take all commercially
reasonable steps to not allow any third party to infringe on any of its patents,
trademarks or copyrights.
4.03 Maintenance
Subject
to Section 4.07 herein, the Debtor will keep and maintain at its own cost and
expense reasonably satisfactory and complete records of the Collateral,
including, without limitation, a record of all payments received and all credits
granted with respect to the Accounts. The Debtor will maintain each item of
Equipment in good operating condition, ordinary wear and tear excepted, and
will
provide all maintenance, service and repairs necessary for such
purpose.
4.04 Compliance
with Laws, etc.
The
Debtor will comply in all material respects with all Requirements of Law
applicable to the Collateral or any part thereof or to the operation of the
Debtor’s business.
4.05 Payment
of Obligations
The
Debtor will pay promptly when due all taxes, assessments and governmental
charges or levies imposed upon the Collateral or in respect of its income or
profits therefrom, as well as all claims of any kind (including, without
limitation, claims for labor, materials and supplies) against or with respect
to
the Collateral, except that no such charge need be paid if (a) the validity
thereof is being contested in good faith by appropriate proceedings, (b) such
proceedings do not involve any material danger of the sale, forfeiture or loss
of any of the Collateral or any interest therein, and (c) such charge is
adequately reserved against on the Debtor’s books in accordance with
GAAP.
4.06 Limitation
on Liens
The
Debtor will not create, incur or permit to exist, will defend the Collateral
against, and will take such other action as is reasonably necessary to remove,
any Lien or claim on or to the Collateral other than Permitted Liens, and will
defend the right, title and interest of the Holder in and to any of the
Collateral against the claims and demands of all persons other than the holders
of Permitted Liens.
4.07 Limitations
on Disposition of Collateral
The
Debtor will not sell, transfer, lease or otherwise dispose of any of the
Collateral, except for (a) collection of Accounts in the ordinary course of
business, (b) sales of Inventory in the ordinary course of business, or (c)
sales of Equipment which is obsolete and/or not of material value.
4.08 Limitations
on Modifications to Accounts
The
Debtor will not (a) amend, modify, terminate or waive any provision of any
agreement giving rise to an Account in any manner which could reasonably be
expected to materially adversely affect the value of the Collateral as a whole,
(b) fail to exercise promptly and diligently material rights giving rise to
Accounts (other than any right of termination), or (c) fail to deliver to the
Holder a copy of each material demand, notice or document received by it
relating in any way to any agreement giving rise to an Account that could
reasonably be expected to materially adversely affect the value of the
Collateral as a whole.
4.09 Limitations
on Discounts, Compromises, Extensions of Accounts
Other
than in the ordinary course of business, the Debtor will not grant any extension
of time of payment of any of the Accounts, compromise, compound or settle the
same for less than the full amount thereof, release, wholly or partially, any
person liable for the payment thereof, or allow any credit or discount
whatsoever thereon.
4.10 Insurance
a. The
Debtor will maintain, with financially sound and reputable companies insurance
policies (i) insuring any tangible Collateral against loss by fire, explosion,
theft and such other casualties as are usually insured against in the same
general area by companies engaged in the same or similar business, and (ii)
insuring the Debtor and the Holder against liability for personal injury and
property damage relating to the Collateral.
b. Subject
to the prior rights of any other holders of Permitted Liens and the other
holders of any capital leases or purchase money liens and only during the
existence of an Event of Default, in the event the Collateral is impaired:
(i)
the Debtor hereby authorizes and directs payment directly and solely to the
Holder of any proceeds of any such policy of insurance; (ii) the Holder is
hereby authorized to adjust and compromise any loss under any such policies
and
to collect and receive all such proceeds; (iii) the Holder is hereby authorized
to execute and endorse in the Debtor’s name all proofs of loss, drafts, checks
and other documents necessary to accomplish such collection and any person
making payment to the Holder is hereby relieved from obligation to see to the
application of the sums so paid.
c. After
deduction from any proceeds of any such insurance of all costs and expenses
incurred by the Holder in collection and handling of such proceeds, the net
proceeds may be applied, at the Holder's option, either toward replacing or
restoring the Collateral or as a credit against the Secured Obligations, whether
matured or unmatured.
4.11 Further
Identification of Collateral
The
Debtor will furnish to the Holder from time to time statements and schedules
but
no more than twice annually further identifying and describing the Collateral
and such other reports in connection with the Collateral as the Holder may
reasonably request, all in reasonable detail.
4.12 Notices
The
Debtor will advise the Holder promptly, in reasonable detail (a) of any Lien
(other than Liens created hereby, Permitted Liens, and any other Liens permitted
to exist on the Collateral under the Purchase Agreement) on, or claim asserted
against, any of the Collateral in excess of $25,000; and (b) of the occurrence
of any other event which could reasonably be expected to have a material adverse
effect on the aggregate value of the Collateral or on the Liens created
hereunder.
4.13 Changes
in Locations, Name, etc.
The
Debtor will not (a) change the location of its chief executive office/chief
place of business from that specified in this Agreement or remove its books
and
records from the location specified in this Agreement, (b) permit any of the
Inventory to be kept at a location other than those listed in this Agreement,
or
(c) change its name, identity or structure to such an extent that any financing
statement filed by the Holder in connection with this Agreement would become
seriously misleading, unless it shall have given the Holder at least 5 days
prior written notice thereof.
4.14 Commercial
Tort Claims
The
Debtor shall notify the Holder of any Commercial Tort Claim that may arise
from
time to time and execute documents, including a supplementary security agreement
and additional financing statements as the Holder may reasonably request so
that
the Holder is at all times the holder of a perfected security interest (to
the
extent that such security interest can be perfected by filing a UCC Statement)
in such claims.
SECTION
V
EVENT
OF DEFAULT AND REMEDIES
5.01 Events
of Default
An
“Event
of Default” under the terms of the Purchase Agreement shall constitute an “Event
of Default” under this Agreement.
5.02
General
During
the existence of an Event of Default, the Holder may exercise, in addition
to
all other rights and remedies granted in this Agreement and in any other
instrument or agreement securing, evidencing or relating to the obligations
of
the Debtor, all rights and remedies of a secured party upon default under the
UCC.
5.03 With
respect to Accounts and General Intangibles
During
the existence of an Event of Default:
a. if
the
Holder shall so request, the Debtor shall forthwith do one or more of the
following: (i) legend, in form and manner acceptable to the Holder, its books,
records and documents evidencing or pertaining to its Accounts and General
Intangibles with an appropriate reference to the fact that such Collateral
has
been assigned to the Holder and that the Holder has a security interest therein
and notify any person with an obligation with respect to such Collateral of
the
Holder’s security interest therein, (ii) account for and transmit to the Holder,
in the same form as received, all proceeds of collection of such Collateral
received by the Debtor and, until so transmitted, hold the same in trust for
the
Holder and not commingle such proceeds with any other of its funds, (iii)
deliver, at its own expense, any or all books, record or other documents
relating to such Collateral to the Holder at a place designated by the Holder,
and (iv) notify the obligors on such Collateral that the Accounts and General
Intangibles of the Debtor have been assigned to the Holder and that payments
in
respect thereof shall be made directly to the Holder.
b. the
Holder, without notice to, or assent by, the Debtor and in the name of the
Debtor or its own name, or otherwise, may (but need not) (i) notify the obligors
of any of the Debtor’s Accounts or General Intangibles to make payments thereon
directly to the Holder; (ii) ask for, demand, collect, receive, compound and
give acquittance for such Collateral or any part thereof; (iii) extend the
time
of payment for such Collateral or compromise or settle any such Collateral
for
cash, credit or otherwise, and upon any terms and conditions; (iv) endorse
the
name of the Debtor on any check, draft or other order or instrument for the
payment of moneys payable to the Debtor which has been issued in respect of
such
Collateral; (v) file any claims and commence, maintain or discontinue any
action, suits or other proceedings deemed by the Holder necessary or advisable
for the purpose of collecting or enforcing payment of any such Collateral;
(vi)
at the Holder’s sole discretion make test verifications of such Collateral or
any portion thereof; (vii) execute any instrument and do any and all other
things necessary and proper to protect and preserve and realize upon such
Collateral and other rights contemplated hereby; and (viii) without obligation
to resort to other security, at any time and from time to time, sell, re-sell,
assign and deliver all or any of such Collateral, in one or more parcels at
the
same or different times, and all right, title and interest, claim and demand
therein and any right of redemption thereof, at public or private sale, for
cash, upon credit or for future delivery and at such price or prices and on
such
terms as the Holder may determine, with the proceeds thereof to be applied
in
the manner provided herein.
The
Debtor hereby agrees that the Holder may exercise the rights and remedies
provided herein and that the exercise of such rights and remedies by the Holder,
including, without limitation, the sale of Accounts or General Intangibles,
may
be accomplished without demand, advertisement or notice (except as required
by
law) all of which (to the extent permitted by law) are hereby expressly waived.
If any notice of a proposed sale or other disposition of such Collateral shall
be required by law, such notice shall be deemed reasonable and proper if given
at least 10 days before such sale or other disposition. The Holder shall not
be
obligated to make any sale regardless of notice of sale having been given.
The
Holder may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefore, and such sale may, without further
notice, be made at the time and place to which it was so adjourned. The Holder
shall not be obligated to take any action authorized by this section, but in
the
event that the Holder elects to take any such action, it shall not be
responsible to the Debtor except for its willful misconduct.
5.04 As
to Inventory and Equipment
During
the existence of an Event of Default:
a. upon
notice to such effect, the Debtor shall deliver, at Debtor’s own expense, any or
all Inventory and Equipment to the Holder at a place designated by the
Holder;
b. take
possession of any or all Inventory and Equipment and, for that purpose, enter,
with the aid and assistance of any person or persons, any premises where the
Collateral, or any part thereof, is, or may be, placed or assembled, and remove
any of the same;
c. execute
any instrument and do all other things necessary and proper to protect and
preserve and realize upon such Collateral and other rights contemplated hereby;
and
d. without
obligation to resort to other security, at any time and from time to time,
sell,
assign and deliver at the same or different times, all right, title, interest
or
claim of the Debtor in such Collateral, and any right of redemption thereof,
at
public or private sale, in one or more parcels, for cash, upon credit or for
future delivery, and at such price or prices and on such terms as the Holder
may
determine.
The
Debtor hereby agrees that the exercise by the Holder of the rights and remedies
under this section, including, without limitation, sale of Inventory or
Equipment may be accomplished without demand, advertisement or notice (except
as
required by law), all of which (to the extent permitted by law) are hereby
expressly waived. If any notice of a proposed sale or other disposition shall
be
required by law, such notice shall be deemed reasonable and proper if given
at
least 10 days before such sale or other disposition. The Holder shall not be
obligated to make any sale regardless of notice of sale having been given.
The
Holder may adjourn any public or private sale from time to time by announcement
at the time and place fixed therefore, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
The
Holder may offer any Inventory or Equipment for sale in its then present
condition and has no duty to repair or clean the Collateral prior to sale and
the failure to make such repairs or clean the Collateral shall not effect the
commercial reasonableness of the sale. The Holder may disclaim all warranties
including warranties of title, possession, quiet enjoyment, merchantability,
fitness for a particular and any such disclaimer shall not effect the commercial
reasonableness of the sale. The Holder shall not be obligated to take any of
the
action authorized by this section, but in the event that the Holder elects
to
take any such action, it shall not be responsible to the Debtor except for
its
willful misconduct.
5.05 As
to Instruments, Chattel Paper and Investment Property
During
the existence of an Event of Default, subject to the prior rights of any other
holders of Permitted Liens:
a. if
the
Holder shall so request, the Debtor shall forthwith do one or more of the
following: (i) legend, in form and manner acceptable to the Holder, the Debtor’s
books, records and documents evidencing or pertaining to any Instruments,
Chattel Paper or Investment Property with an appropriate reference to the fact
that such assets have been assigned to the Holder and that the Holder has a
security interest therein and notify any person with an obligation with respect
to such Collateral of the Holder’s security interest therein, (ii) account for
and transmit to the Holder, in the same form as received, all proceeds of
collection of such Collateral received by it and, until so transmitted, to
hold
the same in trust for the Holder and not commingle such proceeds with any other
of its funds, (iii) deliver, at its own expense, any or all books, records
or
other documents relating to such Collateral to the Holder at a place designated
by the Holder, and (iv) notify the obligors on such Collateral that such assets
have been assigned to the Holder and that payments in respect thereof shall
be
made directly to the Holder.
b. the
Holder, without notice to, or assent by, the Debtor and in the name of the
Debtor or its own name, or otherwise, may (but need not) (i) notify the obligors
of any of the Debtor’s Instruments, Chattel Paper or Investment Property to make
payments thereon directly to the Holder; (ii) ask for, demand, collect, receive,
compound and give acceptance for the such Collateral or any part thereof; (iii)
extend the time of payment for such Collateral or compromise or settle any
such
Collateral for cash, credit or otherwise, and upon any terms and conditions;
(iv) endorse the name of the Debtor on any check, draft or other order or
instrument for the payment of moneys payable to the Debtor which has been issued
in respect of such Collateral; (v) file any claims and commence, maintain or
discontinue any action, suits or other proceedings deemed by the Holder
necessary or advisable for the purpose of collecting or enforcing payment of
any
such Collateral; (vi) at the Holder’s sole discretion make test verifications of
such Collateral or any portion thereof; (vii) execute any instrument and do
any
and all other things necessary and proper to protect and preserve and realize
upon such Collateral and other rights contemplated hereby; and (viii) without
obligation to resort to other security, at any time and from time to time,
sell,
re-sell, assign and deliver all or any such Collateral, in one or more parcels
at the same or different times, and all right, title and interest, claim and
demand therein and any right of redemption thereof, at public or private sale,
for cash, upon credit or for future delivery and at such price or prices and
on
such terms as the Holder may determine, with the proceeds thereof to be applied
in the manner provided herein.
The
Debtor hereby agrees that the Holder may sell such Collateral or any part
thereof at public or private sale or at any broker's board or on any securities
exchange, for cash, upon credit or for future delivery, and at such price or
prices as the Holder may deem satisfactory. The Holder may be the purchaser
of
any or all of the Collateral so sold at any public sale. The Debtor covenants
and agrees that it will execute and deliver such documents and take such other
action as the Holder deems necessary or advisable in order that any such sale
may be made in compliance with law. Upon any such sale the Holder shall have
the
right to deliver, assign and transfer to the purchaser thereof the Collateral
so
sold. Each purchaser at any such sale shall hold the Collateral so sold
absolutely and free from any claim or right of whatsoever kind, including any
equity or right of redemption of the Debtor which may be waived, and the Debtor,
to the extent permitted by law, hereby specifically waives all rights of
redemption, stay or appraisal which it has or may have under any law now
existing or hereafter adopted. The Debtor further acknowledges that the Holder
may deem it impracticable to effect a public sale of any part of the securities
included in the Collateral, and therefore authorizes the Holder in connection
with any such private sale, if the Holder deems it advisable to do so, (i)
to
restrict the prospective bidders on or purchasers of any of the Collateral
to a
limited number of sophisticated investors who will represent and agree that
they
are purchasing for their own account for investment and not with a view to
the
distribution or sale of any of such securities, (ii) to cause to be placed
on
certificates for any or all of the Collateral or on any other securities pledged
hereunder a legend to the effect that such security has not been registered
under the Securities Act of 1933 and may not be disposed of in violation of
the
provision of said Act, and (iii) to impose such other limitations or conditions
in connection with any such sale as the Holder deems necessary or advisable
in
order to comply with said Act or any other law. The notice (if any) of such
sale
shall (1) in case of a public sale, state the time and place fixed for such
sale, (2) in case of sale at a broker's board or on a securities exchange,
state
the board or exchange at which such sale is to be made and the day on which
the
Collateral, or the portion thereof so being sold, will first be offered for
sale
at such board or exchange, and (3) in the case of a private sale, state the
day
after which such sale may be consummated. Any such public sale shall be held
at
such time or times within ordinary business hours and at such place or places
as
the Holder may fix in the notice of such sale. At any such sale, the Collateral
may be sold in one lot as an entirety or in separate parcels, as the Holder
may
determine. The Holder shall not be obligated to make any such sale pursuant
to
any such notice. The Holder may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time
by
announcement at the time and place fixed for the sale, and such sale may be
made
at any time or place to which the same may be so adjourned. In case of any
sale
of all or any part of the Collateral on credit or for future delivery, the
Collateral so sold may be retained by the Holder until the selling price is
paid
by the purchaser thereof, but the Holder shall not incur any liability in case
of the failure of such purchaser to take up and pay for the Collateral so sold
and, in case of any such failure, such Collateral may again be sold upon like
notice.
5.06 Application
of Proceeds; Deficiency
a. The
Holder shall apply the net proceeds of any such collection, realization or
sale,
after deducting all reasonable costs and expenses of every kind incurred
thereinor
incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Holder hereunder, including,
without limitation, reasonable attorneys’ fees and disbursements, to the payment
in whole or in part of the Secured Obligations pro rata in proportion to the
amounts owed to each of the holders, and only after such application and after
the payment by the Holder of any other amount required by any provision of
law,
need the Holder account for the surplus, if any, to the
Debtor.
b. The
Debtor shall remain liable for any deficiency if the proceeds of any sale or
other disposition of the Collateral are insufficient to pay the Secured
Obligations and the reasonable fees and disbursements of any attorneys employed
by the Holder to collect such deficiency.
SECTION
VI
MISCELLANEOUS
6.01 Limitations
on Rights and Obligations
Notwithstanding
any of the terms of this Agreement to the contrary, each of the rights of the
Holder and the obligations of the Debtor are subject to the rights of the
holders of Permitted Liens described herein.
6.02 Amendments
and Waivers
The
Debtor and the Holder may, from time to time, enter into written waivers,
amendments, supplements or modifications hereto for the purpose of adding any
provision to this Agreement or enter into written instruments waiving any of
the
requirements of this Agreement or any Event of Default and its consequences.
In
the case of any waiver, the Debtor shall be restored to its former positions
and
rights hereunder and any Event of Default waived shall be deemed to be cured
and
not existing; but no such waiver shall extend to any subsequent or other Event
of Default, or impair any right consequent thereon.
6.03 Notices
Unless
this Agreement specifically provides otherwise, all notices and communications
under this Agreement shall be provided in accordance with the provisions of
the
Purchase Agreement.
6.04 No
Waiver; Cumulative Remedies
No
failure to exercise or delay in exercising, on the part of the Holder, any
right, remedy, power or privilege hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided to the Holder are cumulative and not
exclusive of any rights, remedies, powers and privileges provided to the Holder
by law. In accordance with this section, the Holder may exercise its rights,
remedies, powers or privileges hereunder in any order it deems
appropriate.
6.05
Termination; Filing of Termination Statement;
Indemnification
This
Agreement, any and all security interests and any and all rights and powers
granted to the Holder under this Agreement shall automatically terminate and
be
of no further force and effect upon the earlier of the Maturity Date (as defined
in the Purchase Agreement), unless an Event of Default is in existence on that
date and then only until such Event of Default has been cured (the “Termination
Date”). The Holder hereby irrevocably constitutes and appoints Debtor and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in place
and
stead of the Holder and in the name of the Holder or in its own name,
immediately upon the Termination Date, for the exclusive purpose of filing
(a) a
Termination Statement on Form UCC 3 (or any successor form) and (b) any other
documents necessary or desirable to evidence the termination of any and all
security interests held by the Holder. The Debtor agrees to pay, and to hold
the
Holder harmless from, any and all liabilities, costs and expenses (including,
without limitation, reasonable legal fees and expenses) (a) with respect to,
or
resulting from, any delay in paying, any and all excise, sales or other taxes
which may be payable or determined to be payable with respect to any of the
Collateral, except in connection with any costs resulting from the gross
negligence or willful misconduct of the Holder, or (b) with respect to, or
resulting from, any delay in complying with any Requirement of Law applicable
to
any of the Collateral, except in connection with any costs resulting from the
gross negligence or willful misconduct of the Holder. In any suit, proceeding
or
action brought by the Holder under any Account for any sum owing thereunder,
or
to enforce any provisions of any Account, the Debtor will save, indemnify and
keep the Holder harmless from and against all expense, loss or damage suffered
by reason of any defense, set-off, counterclaim, recoupment or reduction or
liability whatsoever of the account debtor or obligor thereunder, arising out
of
a breach by the Debtor of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to or in favor or such
account debtor or obligor or its successors.
6.06 Governing
Law
This
Agreement shall be governed by, and construed and interpreted in accordance
with
the law of the State of New York.
6.07 Section
Headings
The
section headings herein are intended for convenience only and shall be ignored
in construing this Agreement.
6.08 Entire
Agreement
All
understandings and agreements heretofore made or exchanged between the Debtor
and the Holder with respect to the subject matter hereof are merged into this
Agreement, which fully, completely, and integrally expresses the understanding
of the Debtor and the Holder concerning the subject matter hereof.
6.09
Severability
If
any
provision hereof is invalid or unenforceable in any jurisdiction, then, to
the
fullest extent permitted by law, (a) the other provisions hereof shall remain
in
full force and effect in such jurisdiction and shall be liberally construed
in
order to carry out the intentions of the parties hereto as nearly as may be
possible; and (b) the invalidity or enforceability of any provision hereof
in
any jurisdiction shall not affect the validity or enforceability of such
provision in any other jurisdiction.
6.10 WAIVER
OF TRIAL BY JURY
THE
DEBTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATED TO THIS AGREEMENT.
6.11 NOTWITHSTANDING
ANY PROVISION HEREOF TO THE CONTRARY, THE HOLDER ACKNOWLEDGES THAT ALL RIGHTS,
INTERESTS AND REMEDIES ARE SUBORDINATE TO GE CAPITAL AS FURTHER PROVIDED IN
THE
SUBORDINATION AGREEMENT.
[signature
page follows]
IN
WITNESS WHEREOF, the parties hereto have caused this agreement to be executed
by
their respective officers thereunto duly authorized, as of the date first above
written.
|
THE
DEBTOR
SIGA
TECHNOLOGIES, INC.
|
|
By: /s/
Thomas
Konatich
|
|
0;Thomas
Konatich
0;Chief
Financial Officer
|
|
THE
HOLDER:
PHARMATHENE,
INC.
|
|
By: /s/
David P.
Wright
|
|
David
P. Wright, President and
Chief
Executive Officer
|
Exhibit
10.3
8%
NOTE
No.
PN-1
$1,000,000 March
20,
2006
FOR
VALUE
RECEIVED, the undersigned, SIGA TECHNOLOGIES, INC., a corporation duly formed
under the laws of the State of Delaware (the “Issuer”), hereby unconditionally
promises to pay to the order of PHARMATHENE, INC., a Delaware corporation,
or
its registered assigns (the “Holder”), in lawful money of the United States of
America and in immediately available funds, the principal sum of ONE MILLION
AND
00/100 ($1,000,000) DOLLARS on the Maturity Date (as hereinafter defined),
together with interest thereon calculated and payable as provided below. This
8%
Note (this “Note”) is issued pursuant to that certain Bridge Note Purchase
Agreement, dated March 20, 2006, between the Issuer and the Holder (the
“Purchase Agreement”), and is entitled to the benefits of the Purchase
Agreement. Capitalized terms used in this Note and not otherwise defined in
this
Note shall have the meanings given to such terms in the Purchase
Agreement.
1. Interest
on the outstanding principal amount of this Note shall be computed on the basis
of a 365-day year and actual days elapsed. The principal of this Note shall
bear
interest at the rate of eight percent (8%) per annum. Interest on the principal
amount of this Note shall be payable upon the Maturity Date.
2. The
outstanding principal amount of this Note and all accrued and unpaid interest
thereon shall be due and payable on the date (the “Maturity Date”) which is the
earliest to occur of (x) March 20, 2008, (y) the closing of a Qualified
Financing and (z) a Sale Event; provided, however, that the principal and
interest hereunder may be credited towards payments due under the License
Agreement in accordance with the terms of the Purchase Agreement.
3. Notwithstanding
anything in this Note to the contrary, should an Event of Default occur and
be
continuing, interest on the outstanding principal amount of this Note shall
be
increased by three percent (3%) per annum, and the outstanding balance of the
principal amount, including unpaid interest, shall continue to accrue interest
from the date of such Event of Default at such interest rate until such Event
of
Default is cured or waived.
4. Notwithstanding
anything in this Note to the contrary, in case an Event of Default shall occur,
payment of this Note shall be accelerated and the entire unpaid principal amount
of this Note, and all accrued and unpaid interest thereon, shall become
immediately due and payable in full.
5. Payment
of the principal and interest on this Note shall be made in money of the United
States of America which at the time of payment is legal tender for the payment
of public and private debts, by wire transfer in immediately available funds
to
such account as the Holder shall from time to time have designated to the Issuer
in writing, or, if requested by the Holder, by certified or back cashier’s check
payable to the Holder, mailed to the Holder at 175 Admiral Cochrane Drive,
Suite
101, Annapolis, Maryland 21401, Attn: David P. Wright, President and
Chief
Executive Officer, or such other address as shall be designated in writing
by
the Holder to the Issuer.
6. Any
and
all payments made by the Issuer in respect of this Note shall be applied first
to payment of the fees and charges due under this Note, second to payment of
accrued and unpaid interest, and then to payment of the outstanding principal
amount of this Note.
7. All
calculations and applications of amounts due on any date, whether by
acceleration or otherwise, shall be made by the Holder, and the Issuer agrees
that all such calculations and applications shall be conclusive and binding
absent manifest error.
8. The
Issuer may, at its option, at any time and from time to time, prepay all or
any
part of the principal balance of this Note, without penalty or premium, in
whole
or in part, together with accrued and unpaid interest through the date of
prepayment.
9. This
Note is secured by the Collateral and other assets, property rights and
interests as described in the Security Documents.
10. The
Issuer hereby waives presentment, notice of dishonor, protest and notice of
protest, and any or all other notices or demands in connection with the
delivery, acceptance, performance, default, endorsement or guarantee of this
Note.
11. In
case any principal of or interest on this Note is not paid when due, or any
other Event of Default shall occur, the Issuer shall be liable for, and agrees
to pay, in addition to principal and interest hereunder, all costs of
enforcement and collection of this Note incurred by the Holder, including,
without limitation, reasonable attorney’s fees, disbursements and court costs.
In addition, if an Event of Default shall occur, the Issuer shall pay all
reasonable attorney’s fees and disbursements incurred by the Holder in obtaining
advice as to its rights and remedies in connection with such
default.
12. The
liability of the Issuer hereunder shall be unconditional and shall not be in
any
manner affected by any indulgence whatsoever granted or consented to by the
Holder, including, but not limited to any extension of time, renewal, waiver
or
other modification. Any failure of the Holder to exercise any right hereunder
shall not be construed as a waiver of the right to exercise the same or any
other right at any time and from time to time thereafter. The Holder may accept
late payments, or partial payments, even though marked “payment in full” or
containing words of similar import or other conditions, without waiving any
of
its rights. No amendment, modification or waiver of any provision of this Note
or consent to any departure by the Issuer therefrom shall be effective,
irrespective of any course of dealing, unless the same shall be in writing
and
signed by the Holder, and then such waiver or consent shall be effective only
in
the specific instance and for the specific purpose for which given. This Note
cannot be changed or terminated orally or by estoppel or waiver or by any
alleged oral modification regardless of any claimed partial performance
referable thereto.
13. Any
notice from the Holder to the Issuer shall be deemed given when delivered in
accordance with the Purchase Agreement.
14.
This
Note shall be governed by and construed in accordance with the laws of the
State
of New York applicable to instruments made and to be performed wholly within
that state. If any provision of this Note is held to be illegal or unenforceable
for any reason whatsoever, such illegality or unenforceability shall not affect
the validity of any other provision of this Note.
15. EACH
OF THE ISSUER AND THE HOLDER AGREES THAT ANY ACTION, SUIT OR PROCEEDING IN
RESPECT OF OR ARISING OUT OF THIS NOTE MAY BE INITIATED AND PROSECUTED IN THE
COURTS OF THE STATE OF NEW YORK OR THE FEDERAL COURTS FOR THE SOUTHERN DISTRIT
OF NEW YORK. EACH OF THE ISSUER AND THE HOLDER CONSENTS TO AND SUBMITS TO THE
EXERCISE OF JURISDICTION OVER ITS PERSON BY ANY SUCH COURT HAVING JURISDICTION
OVER THE SUBJECT MATTER, WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON
IT
AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY REGISTERED MAIL
DIRECTED TO THE HOLDER AT ITS ADDRESS SET FORTH ABOVE, ANT) TO THE ISSUER AT
ITS
ADDRESS SET FORTH BELOW OR TO ANY OTHER ADDRESS AS MAY APPEAR IN THE HOLDER’S
RECORDS AS THE ADDRESS OF THE ISSUER.
16. IN
ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS NOTE, EACH
OF THE HOLDER AND THE ISSUER WAIVES TRIAL BY JURY, AND THE ISSUER ALSO WAIVES
(I) ANY OBJECTION BASED ON FORUM NON CONVENIENS OR VENUE AND (II) ANY CLAIM
FOR
CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES.
IN
WITNESS WHEREOF, the Issuer has caused this Note to be duly executed and
delivered.
|
SIGA
TECHNOLOGIES,
INC.
|
|
By: /s/
Thomas
Konatich
|
|
Thomas
Konatich
Chief
Financial
Officer
|
Address
for Notices:
SIGA
Technologies, Inc.
420
Lexington Avenue
Suite
408
New
York,
New York 10170
Tel: 212-672-9107
Fax: 212-697-3130
Attn: Thomas
Konatich