UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period ended December 31, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________to _________
Commission file number 000-14242
CELSION CORPORATION
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(Exact name of registrant as specified in its charter)
Maryland 52-1256615
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State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
10220-I Old Columbia Road, Columbia, Maryland 21046-1705
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (410) 290-5390
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Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
As of December 31, 1999, the Registrant had outstanding 54,188,294 shares of
Common Stock, $.01 par value.
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Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Securities Holders
None.
Item 5. Other Information
On February 7, 2000, the Company issued a call for redemption of its
Series 700 and Series 800 Warrants, which enable the holders thereof to purchase
shares of Common Stock at prices of $1.00 and $0.90 per share, respectively. The
Series 700 Warrants relate to a total of 2,583,000, and the Series 800 Warrants
relate to a total of 2,610,000 shares of Common Stock. The Company anticipates
that a substantial number of Series 700 and Series 800 Warrants will be
exercised since the redemption price for such Warrants is equal to only $0.01
per share. Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3. Articles Supplementary amending the Articles of
Incorporation of the Company filed January 31, 2000
with the State of Maryland*
10.1 Employment Agreement between the Company and Spencer
J. Volk dated January 14, 2000*
10.2 Employment Agreement between the Company and
Augustine Y. Cheung dated January 14, 2000*
11. Computation of per share earnings
27. Financial Data Schedule
*Exhibits filed with this Amendment.
(b) Reports on Form 8-K.
Form 8-K was filed on February 3, 2000, reporting on the
completion of a recent private placement financing and a
related capitalization change, new executive employment
agreements and commencement of clinical trials. No financial
statements were filed with the Form 8-K.
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Exhibit 3
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CELSION CORPORATION
Articles Supplementary
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CELSION CORPORATION, a corporation (the "Corporation") organized and
existing under the laws of the State of Maryland, having its principal office in
Columbia, Maryland, hereby CERTIFIES to the State Department of Assessments and
Taxation of Maryland that:
FIRST: Pursuant to authority contained in the Corporation's Charter,
Seven Thousand (7,000) authorized but unissued shares of the Corporation's
capital stock, $.01 par value, have been duly reclassified by the Board of
Directors of the Corporation as authorized but unissued shares of Series A 10%
Convertible Preferred Stock.
SECOND: A description of the Series A 10% Convertible Preferred Stock
and of the powers, designation, preferences and rights of the shares of such
Series, and the qualifications, limitations, or restrictions thereof, is as
follows:
1. Designation and Par Value.
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The formal designation of the shares so reclassified by the
Board of Directors shall be Series A 10% Convertible Preferred Stock (referred
to herein for convenience as "Series A Preferred Stock" or as "Preferred
Shares"). The par value of Series A Preferred Stock is $.01 per share.
2. Liquidation Preference and Ranking.
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(a) Upon any voluntary or involuntary liquidation,
dissolution or winding up of the business and affairs of the Corporation, and
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before the holders of shares of Common Stock or any other class or series of
stock of the Corporation ranking junior on liquidation to the Series A Preferred
Stock shall be entitled to any payment on account of such shares, the holders of
Series A Preferred Stock then outstanding shall be entitled to receive, as a
liquidation preference, an amount equal to One Thousand ($1,000.00) Dollars per
share (the "Original Cost"), plus any accrued but unpaid dividends (the Original
Cost plus such dividends being referred to as the "Liquidation Preference") to
which such shareholders have become entitled and which have not theretofore been
paid. After the holders of Series A Preferred Stock shall have received such
payment of the Liquidation Preference plus all accrued and unpaid dividends in
the course of such liquidation, dissolution or winding up, they shall have no
right or claim to any of the remaining assets of the Corporation.
(b) If upon any liquidation, dissolution or winding up, the
Corporation shall have insufficient funds to permit payment to the holders of
Series A Preferred Stock then outstanding of the entire amount to which they are
entitled as a Liquidation Preference thereunder, then such funds as are
available for such purpose shall be distributed among such holders on the basis
of the number of shares of Series A Preferred Stock held by each such holder so
that, as nearly as may be practicable, the amount each such holder shall receive
shall represent the same proportion of such available funds as such holder's
total holding of shares of Series A Preferred Stock represents of the total
shares of Series A Preferred Stock at the time outstanding.
(c) For all purposes under these Articles Supplementary, all
shares of Series A Preferred Stock shall be of equal rank with each other.
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3. Dividends.
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(a) The holders of Series A Preferred Stock shall be entitled
to receive, when, as and if declared by the Board of Directors of the
Corporation, out of capital surplus or earnings at the time legally available
therefor, dividends at the annual rate of 10% per share, payable in fully- paid
and non-assessable shares of Series A Preferred Stock which shall be valued, for
this purpose, at an amount equal to the Original Cost. Dividends shall accrue,
whether or not declared, unless such dividends are then prohibited by the
provisions of the Maryland General Corporation Law or the Corporation's
Certificate of Incorporation.
(b) Dividends shall be cumulative and shall be payable
semi-annually on March 31 and on September 30 in each year commencing January 1,
2000, to stockholders of record on the immediately preceding March 15th and
September 15th, respectively, or such other record date fixed for the purpose by
the Board of Directors. Dividends payable with respect to any shares of Series A
Preferred Stock for the initial dividend period and for any period less than a
full six-month period shall accrue from the date of issuance of such shares of
Series A Preferred Stock on which such dividends are payable, and shall be
computed and apportioned on the basis of a 180-day period composed of six 30-day
months. Holders of Series A Preferred Stock shall not be entitled to any
dividends in excess of the full dividends provided for herein, and no interest
or sum of money in lieu of interest shall be payable in respect of any dividend
payment which may be in arrears. No dividends shall be payable on any fractional
or full shares of Series A Preferred Stock which shall have been declared, paid
or distributed as dividends on outstanding Preferred Shares.
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4. No Dividends or Distributions to Junior Securities.
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Except as may be otherwise provided in these Articles
Supplementary, so long as any shares of Series A Preferred Stock are
outstanding, no dividends shall be declared or paid or set aside for payment,
and no other distribution shall be declared or made, upon any Common Stock of
the Corporation or upon any other shares of a class or series of stock which is
junior in right and ranking to the Series A Preferred Stock, unless all amounts
then due to the holders of Series A Preferred Stock, including the dividends
provided for herein, have been paid.
5. Voting Rights.
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Except as otherwise expressly provided herein or as provided
by law, the Series A Preferred Stock shall have no voting rights. However,
notwithstanding the foregoing, the written consent or affirmative vote of the
holders of a majority of the outstanding Series A Preferred Stock is required to
approve (i) any proposed amendment to the Company's Certificate of Incorporation
that would materially alter or change the powers, preferences, or special rights
of the Series A Preferred Stock so as to affect the holders adversely, and (ii)
any plan of merger or consolidation that contains provisions which, if contained
in a proposed amendment to the Company's Certificate of Incorporation, would
have entitled the holders of the Series A Preferred Stock to vote, as a class,
on the issue.
6. Exchange and Conversion Rights.
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The Preferred Shares and any fractional Preferred Shares
(including, for such purposes, any shares and fractional shares issued or
issuable as dividends) will be entitled to the following rights of exchange and
conversion, subject to any limitations and conditions provided in these Articles
Supplementary:
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(a) (i) If the Corporation undertakes a public
securities offering ("Public Offering") registered with the Securities
and Exchange Commission ("SEC") consisting of either (i) equity
securities of the Corporation or (ii) units ("Units") comprised of
equity securities of the Corporation and of shares of any subsidiary of
the Corporation (the securities and/or Units to be sold in such public
offering being referred to as "Public Offering Securities"), and
provided that such Public Offering is consummated by the first
anniversary of the date of sale in a private placement (the "Private
Placement") offering of at least $2,500,000 in aggregate Original Cost
of Series A Preferred Stock (such date being referred to as the
"Minimum Closing Date"), the Corporation will promptly furnish each
holder with written notice of the Corporation's filing with the SEC of
a registration statement concerning the Public Offering. Within 30 days
after the giving of such notice (the "30-day Election Period"), each
such holder will be required to notify the Corporation, by returning a
form to be furnished to each holder of Preferred Shares by the
Corporation, that such holder elects, contingent on the consummation of
the Public Offering, either (1) to exchange 100% of the Preferred
Shares then held by such holder (including Preferred Shares and
fractional Preferred Shares issued as dividends) for such Public
Offering Securities at an exchange price which will be equal to 70% of
the public offering price of the Public Offering Securities, or (2) to
exchange 50% of the Preferred Shares then held by such holder
(including Preferred Shares and fractional Preferred Shares issued as
dividends) for Public Offering Securities at an exchange price which
will be equal to 70% of the public offering price of the Public
Offering Securities and to convert the remaining 50% of such Preferred
Shares into the Company's Common Stock ("Common Stock") at a conversion
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price of $0.41 per share of Common Stock, as such price may be adjusted
from time to time in accordance with the provisions of Section 7 below
(as so adjusted, the "Conversion Price"). Concurrently with the
consummation of the Public Offering, each holder who has made such an
election shall surrender and deliver to the Corporation or to the
exchange agent or transfer agent designated for such purpose by the
Corporation, certificates for the Preferred Shares being exchanged, or
exchanged and converted as the case may be, as set forth in such
holder's election as described in the immediately preceding sentence.
Within five (5) business days thereafter, the Corporation will cause to
be issued to each holder certificates representing the Public Offering
Securities being issued in exchange for such Preferred Shares, and, as
the case may be, certificates representing shares of Common Stock into
which 50% of such Preferred Shares are being converted if such holder
has so elected in accordance with this Paragraph (a).
(ii) In addition, if the Corporation shall, within 12
months after the Minimum Closing Date, consummate the sale of any
subsidiary of the Corporation (or all or substantially all of the
assets of such subsidiary) to a public company, or shall complete a
merger of such subsidiary into a public company (a "Disposition
Transaction"), for consideration consisting of securities of such
public company (the "Disposition Securities"), each holder of Preferred
Shares will be promptly notified of such Disposition Transaction in a
manner similar to that provided for in the immediately preceding
sub-paragraph, and will have a similar 30-day Election Period to elect
either (1) to exchange 100% of the holder's Preferred Shares for such
Disposition Securities at an exchange price equal to 70% of the price
of the Disposition Securities established in the Disposition
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Transaction, or (2) to exchange 50% of such holder's Preferred Shares
for Disposition Securities on the same terms and to convert the
remainder of such Preferred Shares into Common Stock at the Conversion
Price. Within 20 days after the expiration of the applicable 30-day
Election Period, each holder who has made such an election shall
surrender and deliver to the Corporation or to the exchange agent or
transfer agent designated for such purpose by the Corporation,
certificates for the Preferred Shares being exchanged, or exchanged and
converted as the case may be, as set forth in such holder's election as
described in the immediately preceding sentence. Within five (5)
business days thereafter, the Corporation will cause to be issued to
each holder certificates representing the Disposition Securities being
issued in exchange for such Preferred Shares, and, as the case may be,
certificates representing shares of Common Stock into which 50% of such
Preferred Shares are being converted if such holder has so elected.
(b) If any holder of Preferred Shares does not elect either
exchange alternative (1) or exchange alternative (2) described in sub-paragraph
(a) (i) or (a) (ii) above, as the case may be, within the applicable 30-day
Election Period, all rights of any such non-electing holder to exchange such
Preferred Shares for Public Offering Securities (or Disposition Securities, as
the case may be) or to convert such Preferred Shares into Common Stock at such
time or at any time thereafter shall, provided the Public Offering or the
Disposition Transaction, as the case may be, is consummated by the first
anniversary of the Minimum Closing Date, immediately lapse and completely
terminate. The Corporation will, within a reasonable time thereafter, redeem the
Preferred Shares held by such non-electing holder at a redemption price per
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share equal to 105% of the Liquidation Preference, in accordance with the
provisions of Section 8 below, except that such non-electing holder shall not be
permitted to exercise any right to convert the Preferred Shares into Common
Stock granted under the provisions of paragraph (c) of this Section 6.
(c) Other than as set forth in Paragraph (a) of this Section
6, the holders of Series A Preferred Stock will not have any right to convert
their Preferred Shares prior to the earlier of (i) the first anniversary of the
Minimum Closing Date or (ii) the Corporation's issuance of a Redemption Notice
as defined in paragraph (b) of Section 8. If the Public Offering is not
consummated by the first anniversary of the Minimum Closing Date, then, at the
election of any holder of Preferred Shares at any time thereafter, and subject
to the condition set forth in Paragraph (d) of this Section 6, such holder may
convert his Preferred Shares (including any whole or fractional Preferred Shares
received as dividends under the provisions of Section 3) in whole or in part
into shares of the Company's Common Stock at the Conversion Price, in accordance
with the conversion procedure set forth in Paragraph (e) of this Section 6.
(d) In addition, if at any time subsequent to the first
anniversary of the Minimum Closing Date (no sale of Public Offering Securities
having been consummated by such first anniversary), the Corporation undertakes a
public offering consisting of the sale of Common Stock for its own account,
then, at the specific election of the Corporation and upon notice to the holders
of the Preferred Stock, such holders may be required to convert their shares of
Preferred Stock (including any whole or fractional Preferred Shares received as
dividends under the provisions of Section 3) into shares of Common Stock at the
Conversion Price. Such election by the Corporation may be exercised by the
giving of notice to holders of Preferred Shares, establishing a period of least
30 days from the date of such notice, during which holders shall convert their
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Preferred Shares into shares of Common Stock at the Conversion Price, and after
which all conversion rights of such holders shall lapse and completely
terminate.
(e) A right to convert Preferred Shares into shares of Common
Stock under paragraph (c) or (d) of this Section 6 shall be exercised by a
holder by delivering to the Corporation during regular business hours, or to
such agent as may be designated by the Corporation, the original certificate or
certificates for the shares to be converted, duly endorsed or assigned either in
blank or to the Corporation, accompanied by written notice in substantially the
form annexed hereto as Exhibit A, stating that the holder elects to convert such
shares (or the amount thereof as to which the conversion right is to be
exercised, which amount shall be not less than that represented by shares having
an aggregate Original Cost of $5,000) and stating the name or names (with
address and Social Security or Federal Taxpayer Identification Number) in which
the certificate or certificates for the shares of Common Stock are to be issued.
Conversion shall be deemed to have been effected on the date when the aforesaid
delivery is made (the "Conversion Date"). As promptly as practicable thereafter,
the Corporation shall issue and deliver to such holder (or upon the written
order of such holder) to the place designated by such holder, a certificate or
certificates for the number of shares of Common Stock to which such holder is
entitled. The person in whose name the certificate or certificates for Common
Stock are to be issued shall be deemed to have become a stockholder of record on
the applicable Conversion Date unless the transfer books of the Corporation are
closed on that date, in which event such person shall be deemed to have become a
stockholder of record on the next succeeding date on which the transfer books
are open. Upon conversion of only a portion of the number of shares covered by a
certificate representing shares of Series A Preferred Stock surrendered for
conversion, the Corporation shall issue and deliver to such holder, or upon the
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written order of the holder of the certificate so surrendered for conversion, at
the expense of the Corporation, a new certificate covering the number of shares
of Series A Preferred Stock representing the unconverted portion of the
certificate so surrendered.
(f) The Corporation shall, at all times when Series A
Preferred Stock shall be outstanding, reserve and keep available out of its
authorized but unissued stock, for the purpose of effecting the conversion of
Series A Preferred Stock, such number of its duly authorized shares of Common
Stock as shall from time to time be sufficient to effect the conversion of all
outstanding shares of Series A Preferred Stock.
(g) All shares of Common Stock which may be issued in
connection with the conversion provisions set forth herein will, upon issuance
by the Corporation, be validly issued, fully paid and non-assessable. No
adjustment shall be made for dividends on any share of Series A Preferred Stock
which is being converted (unless such dividends have been accrued and are unpaid
as of the Conversion Date) or on any share of Common Stock issued on exercise of
a holder's Conversion Right.
(h) No fractional shares of Common Stock shall be issued upon
conversion of the Series A referred Stock and, in lieu of any fractional shares
to which the holder would otherwise be entitled, the number of shares of Common
Stock issuable upon conversion shall be rounded to the nearest whole number.
(i) All shares of Series A Preferred Stock which shall have
been surrendered for conversion or exchange as herein provided shall no longer
be deemed to be outstanding, and all rights with respect to such shares,
including the rights, if any, to receive notices and to vote, shall immediately
cease and terminate on the Conversion Date, with respect Preferred Shares which
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have been converted, and on the specified effective date of exchange for
Preferred Shares which have been exchanged, except only the right of the holders
thereof to receive shares of Common Stock, or Public Offering Securities, in
conversion or exchange therefor. Any shares of Series A Preferred Stock so
converted or exchanged shall be retired and canceled and shall not be reissued,
and the Corporation (without the need for stockholder action) may from time to
time take such appropriate action as may be necessary to reduce the authorized
number of shares of Series A Preferred Stock accordingly.
(j) The Corporation shall pay any and all issue and other
taxes that may be payable in respect of any issuance or delivery of shares of
Common Stock upon conversion of shares of Series A Preferred Stock pursuant to
this Section 6. The Corporation shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the issuance and
delivery of shares of Common Stock in a name other than that in which the shares
of Series A Preferred Stock so converted were registered, and no such issuance
or delivery shall be made unless and until the person or entity requesting such
issuance has paid to the Corporation the amount of any such tax or has
established, to the satisfaction of the Corporation, that such tax has been
paid.
7. Adjustments to Conversion Price.
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The Conversion Price (which is initially established at $.41
per share of Common Stock) in effect from time to time shall be subject to
adjustment (to the nearest cent) from time to time as follows:
(a) If the Corporation, at any time after the Minimum Closing
Date and at any time prior to the conversion of a Preferred Share shall have
subdivided its outstanding shares of Common Stock by recapitalization,
reclassification or split-up thereof, or if the Corporation shall have declared
a stock dividend or distributed shares of Common Stock to its stockholders, the
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Conversion Price immediately prior to such conversion shall be proportionately
increased; and if the Corporation, prior to such conversion, shall have at any
time combined the outstanding shares of Common Stock by recapitalization,
reclassification or comparable combination thereof, the Conversion Price
immediately prior to such conversion shall be proportionately increased.
(b) In case the Corporation, after the Minimum Closing Date,
shall consolidate with or merge into another corporation or convey all or
substantially all of its assets to another corporation, then, and in each such
case, the Conversion Price shall be adjusted in such manner that the holder of
Preferred Shares, upon the conversion thereof as provided in Section 6 above, at
any time after the consummation of such consolidation, merger or conveyance,
shall be entitled to receive the securities or property to which such holder
would have been entitled upon such consummation if such holder had exercised his
right to convert such Preferred Shares immediately prior thereto.
(c) For purposes hereof, the term "Additional Shares of Common
Stock" shall mean all shares of Common Stock issued by the Corporation after the
Minimum Closing Date, or shares of Common Stock issuable upon conversion or
exchange of any securities (including, for this purpose, preferred stock other
than the Preferred Shares, and notes and debentures) convertible into Common
Stock ("Convertible Securities"), but not warrants or options issued after the
Minimum Closing Date, except to the extent such warrants or options are actually
exercised. If the Corporation at any time or from time to time after the Minimum
Closing Date shall agree to issue any Convertible Securities or shall fix a
record date for the determination of holders of any class of securities entitled
to receive any such Convertible Securities, then the maximum number of shares of
Common Stock (as set forth in the instrument relating thereto without regard to
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any provision contained therein for a subsequent adjustment of such number)
issuable upon the conversion such Convertible Securities shall be deemed to be
Additional Shares of Common Stock, but only as of the time of such issuance of
Convertible Securities or, in case such a record date shall have been fixed,
only as of the close of business on such record date, provided that Additional
Shares of Common Stock shall not be deemed to have been issued unless the
consideration per share (determined pursuant to paragraph (e) of this Section 7)
of such Additional Shares of Common Stock would be less than the Adjustment Base
Price as defined below in effect on the date of and immediately prior to such
issue, or such record date, as the case may be, and provided further that in any
such case in which Additional Shares of Common Stock are deemed to be issued
pursuant to this paragraph (c), no further adjustment in the Conversion Price
shall be made upon the subsequent issuance of Common Stock at the time of the
actual conversion of such Convertible Securities.
(d) In the event the Corporation shall at any time after the
Minimum Closing Date issue Additional Shares of Common Stock, including
Additional Shares of Common Stock deemed to be issued pursuant to paragraph (c)
of this Section 7 (except for issuances of Common Stock described in paragraph
(f) below) without consideration or for a consideration per share less than the
greater of (A) the applicable Conversion Price in effect immediately prior to
such issuance, and (B) 50% of the Current Market Value per share of Common Stock
(as defined below) as of the date of such issuance (such greater amount being
defined as the "Adjustment Base Price"), then and in such event, such Conversion
Price shall be reduced, concurrently with such issuance, to a price (calculated
to the nearest cent) determined by multiplying such Conversion Price by a
fraction: (A) the numerator of which shall be (1) the number of shares of Common
Stock outstanding immediately prior to such issuance plus (2) the quotient
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derived by dividing the aggregate consideration received from such issuance of
Additional Shares of Common Stock by the Adjustment Base Price; and (B) the
denominator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issue plus the number of such Additional Shares of
Common Stock so issued. For purposes hereof, Current Market Value shall mean the
Common Stock average closing price over a period of 60 trading days ending on
the day immediately preceding the date of issuance of the shares which are the
subject of the above calculations.
(e) For purposes of Paragraph (d) of this Section 7, the
consideration received by the Corporation for the issue of any Additional Shares
of Common Stock referred to therein shall be computed as follows:
Cash and Property: Such consideration shall:
(I) insofar as it consists of cash, be computed at
the gross amount of aggregate cash received by the
Corporation, excluding amounts paid or payable for
accrued interest and the costs of the issuance;
(II) insofar as it consists of property other than
cash, be computed at the fair market value thereof at
the time of such issue, as determined in good faith
by the Board of Directors; and
(III) in the event Additional Shares of Common Stock
are issued together with other shares or securities
or other assets of the Corporation for consideration
which covers both, be the proportion of such
consideration so received, computed as provided in
clauses (I) and (II) above, as determined in good
faith by the Board of Directors.
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(f) Notwithstanding anything to the contrary contained in this
Section 7 or elsewhere in these Articles Supplementary, the following issuances,
transactions or occurrences shall be excluded from those events requiring any
adjustment in accordance with Paragraph (d):
(i) The accrual or payment in kind of dividends
on the Series A Preferred Stock;
(ii) The issuance or re-issuance of the Preferred
Shares to any investors in the Private
Placement (or any subsequent issuance or
reissuance to their transferees) and any
exchange, conversion or redemption of any
Preferred Shares (and of any shares of
Series A Preferred Stock representing
dividends paid in kind) in accordance with
provisions governing such exchange,
conversion or redemption as set forth in the
Corporation's Articles of Incorporation,
Articles Supplementary and By-Laws;
(iii) The issuance to any of the Corporation's
executives, directors, employees and
consultants of options, warrants or shares
granted under any incentive, stock option,
bonus or other benefit plan, program or
policy of the Corporation, provided that
such issuances in the aggregate do not
exceed 15% in the aggregate of the
Corporation's then outstanding shares of
Common Stock;
(iv) The issuance of shares of Common Stock upon
the exercise of any option or warrant of the
Corporation outstanding on the Minimum
Closing Date (including all warrants to be
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issued to the placementagent in the Private
Placement, whether issued on or after the
Minimum Closing Date);
(v) The issuance of shares of Common Stock, or
warrants or options for the purchase of
shares of Common Stock, to pay, settle or
compromise Corporation obligations to
suppliers, vendors, contractors, licensors
and joint venture partners, including,
without limiting the generality of the
foregoing, Duke University and assignees or
designees of Warren C. Stearns and Stearns
Management Company; and
(vi) The future issuance of shares, or options or
warrants for the purchase of shares, at a
discount from the current market value, to
the placement agent in the Private Placement
or to another placement agent, or to an
underwriter, bank, commercial lender or
other institution, or to a broker-dealer or
investor which is furnishing or arranging
financing for the Company, provided that any
such issuance is not at a price which is
less than the Adjustment Base Price, it
being understood that, if such price is less
than the Adjustment Base Price, the
provisions of Paragraph (d) of this Section
7 shall govern the adjustment to be made to
the Conversion Price.
(g) The Corporation will not, by amendment of its Certificate
of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
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of the terms to be observed or performed hereunder by the Corporation, but will
at all times in good faith assist in the carrying out of all the provisions of
this Section 7 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the holders of the
Series A Preferred Stock against impairment.
(h) Upon the occurrence of each adjustment or readjustment of
the Conversion Price pursuant to this Section 7, the Corporation at its expense
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and furnish to each holder of Series A Preferred Stock, upon the
request of such holder, a certificate setting forth such adjustment or
readjustment and showing the facts upon which such adjustment or readjustment is
based and the then Conversion Price.
8. Redemption.
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(a) Beginning six (6) months after the Minimum Closing Date
the Corporation, at its sole option, expressed by resolution of its Board of
Directors, may call for redemption and may redeem shares of Series A Preferred
Stock in whole, or from time to time in part, upon notice as set forth below.
The redemption price per share of Series A Preferred Stock shall be equal to
105% of the Liquidation Preference plus accrued and unpaid dividends.
(b) Notice of any redemption of the Series A Preferred Stock
(the "Redemption Notice") shall be given at least 30 days prior to the date
fixed in such notice for such redemption (the "Redemption Date") to each holder
of record of shares of Series A Preferred Stock, at such holder's address as the
same shall appear on the books of the Corporation. Such notice shall specify the
time and place of redemption, the redemption price, and, if less than all the
outstanding Preferred Shares are to be redeemed, shall also specify the
proportion of shares which are to be redeemed.
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(c) If any such notice of redemption shall have been duly
given and if, on or before the Redemption Date specified therein, all funds
necessary for such redemption shall have been set aside by the Corporation,
separate and apart from its other funds, in trust for the pro rata benefit of
the holders of the shares so called for redemption, so as to be and continue to
be available therefor, then, notwithstanding that any certificate for shares so
called for redemption shall not have been surrendered for cancellation, all
shares so called for redemption shall no longer be deemed outstanding on and
after the Redemption Date, and the right to receive dividends thereon and all
other rights with respect to such shares shall forthwith on such Redemption Date
cease and terminate, except only the right of the holders thereof to receive the
amount payable on redemption, without interest.
(d) From and after the giving of the notice of redemption,
holders of Series A Preferred Stock shall continue to have the conversion rights
provided in Section 6, which rights shall continue in effect until the
Redemption Date.
(e) Shares of Series A Preferred Stock which have been
redeemed, purchased or otherwise acquired by the Corporation shall be canceled
and shall not be subject to re-issuance by the Corporation for any purpose.
9. General.
--------
(a) The Corporation shall not amend, alter or repeal the
preferences, special rights or other powers of the Series A Preferred Stock so
as to affect adversely the Series A Preferred Stock, without the written consent
or affirmative vote of the holders of a majority of the then outstanding shares
of Series A Preferred Stock, given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a class, in accordance
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with applicable law. For this purpose, without limiting the generality of the
foregoing, the authorization of any shares of capital stock with preference or
priority over the Series A Preferred Stock as to the right to receive either
dividends or amounts distributable upon liquidation, dissolution or winding up
of the Corporation shall be deemed to affect adversely the Series A Preferred
Stock, and the authorization of any shares of capital stock on a parity with
Series A Preferred Stock as to the right to receive either dividends or amounts
distributable upon liquidation, dissolution or winding up of the Corporation
shall not be deemed to affect adversely the Series A Preferred Stock.
(b) The number of authorized shares of Series A Preferred
Stock may be increased (but only for the purpose of providing a sufficient
number of authorized Preferred Shares for the payment of dividends on
outstanding Preferred Shares) or decreased (but not below the number of shares
then outstanding) by the directors of the Corporation.
(c) Any of the rights of the holders of Series A Preferred
Stock set forth herein may be waived by the affirmative vote of the holders of a
majority of the shares of Series A Preferred Stock then outstanding.
(d) Fractional shares of Series A Preferred Stock may be
issued as required in connection with the payment of dividends or transfers of
Preferred Shares among holders.
10. Notices.
--------
(a) Any notices required to be given to any holder of Series A
Preferred Stock shall be deemed properly given if deposited in the United States
mail, postage prepaid, or sent by facsimile or by overnight or express delivery
service, followed by duplicate notice via United States first class mail,
postage prepaid, and addressed to the holder of record at such holder's address
appearing at the books of the Corporation.
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<PAGE>
(b) In case:
i. of any capital reorganization of the
Corporation , any reclassification of the
capital stock of the Corporation , any
consolidation or merger of the Corporation
with or into another corporation, or any
conveyance of all or substantially all of
the assets of the Corporation to another
corporation; or
ii. of any voluntary or involuntary dissolution,
liquidation or winding up of the
Corporation; or
iii. any other event specified in these Articles
requiring the taking of such a record,
Then, and in each such case, the Corporation shall mail or
cause to be mailed to each holder a notice specifying, as the case may be, the
date on which a record is to be taken for the foregoing purposes and providing
the information reasonably required in order enable the holders of record of
Preferred Shares to exercise the rights conferred by these Articles
Supplementary.
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<PAGE>
THIRD: The reclassification of authorized but unissued shares as set
forth in these Articles Supplementary does not increase the authorized capital
of the Corporation or the aggregate par value thereof.
IN WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary for its Series A 10% Convertible Preferred Stock to be duly
executed by its President and by its Secretary, respectively, this 31st day of
January, 2000.
CELSION CORPORATION
By: /s/ Spencer J. Volk
--------------------
Spencer J. Volk
President and Chief Executive Officer
By: /s/ John Mon
------------
John Mon
Secretary
[Corporate Seal]
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EXHIBIT A
---------
CELSION CORPORATION
NOTICE OF CONVERSION OF
Series A 10% Convertible Preferred Stock
(To be Executed by the Registered Holder in order to Convert the Series A
Preferred Stock)
The undersigned Holder hereby irrevocably elects to convert ____ shares
of Series A Preferred Stock, represented by stock certificate No(s). ___________
(the "Preferred Stock Certificates") into shares of common stock ("Common
Stock") of Celsion Corporation according to the conditions set forth in the
Articles Supplementary for Series A Preferred Stock, as of the date written
below. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates. No fee will be charged to
the Holder for any conversion, except for transfer taxes, if any. A copy of each
of the Preferred Stock Certificates being converted is attached hereto.
Date of Submission:
----------------------------------
Number of Shares of Series A 10% Convertible
Preferred Stock to be Converted:
--------------------
Name of Holder:
--------------------------------------
By:
--------------------------------------------------
(Signature)
Title:
-----------------------------------------------
Address:
---------------------------------------------
Social Security or
Federal Taxpayer ID No:
------------------------------
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IMPORTANT
---------
No shares of Common Stock will be issued until the original
Series A Preferred Stock Certificate(s) to be converted and the Notice
of Conversion are received by the Company. The Holder shall fax, or
otherwise deliver, a copy of this completed and fully executed Notice
of Conversion to the Corporation at the office of the Corporation or
such other location designated by the Corporation and shall deliver, at
the same time, the original Series A Preferred Stock Certificate(s)
representing the Series A Preferred Stock being converted, duly
endorsed for transfer.
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Exhibit 10.1
------------
EXECUTIVE EMPLOYMENT AGREEMENT
------------------------------
EMPLOYMENT AGREEMENT, made as of the 14th day of January, 2000, by and
between Spencer J. Volk (the "Executive"), an individual residing at c/o Celsion
Corporation, 10220-1 Old Columbia Road, Columbia, Maryland 21046-1705, and
Celsion Corporation (the "Company"), a Maryland corporation with offices at
10220-1 Old Columbia Road, Columbia, Maryland 21046- 1705.
W I T N E S S E T H:
- - - - - - - - - --
WHEREAS, the Executive is currently employed by the Company as its
President and Chief Executive Officer, and the Company desires that the
Executive shall continue to be employed by it and render services to it, and the
Executive is willing to continue to be so employed and to render services, all
upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Employment, Duties and Acceptance.
----------------------------------
1.1 The Company hereby employs Executive, and the Executive
hereby accepts employment, for the term ("Term) set forth in Section 2 hereof,
to render services to Company as its President and Chief Executive Officer. The
Executive represents and warrants to the Company that, subject to the provisions
of Section 17.8 hereof, he has full power and authority to enter into this
Agreement and that he is not under any obligation of a contractual or other
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nature to any person, firm or corporation which is inconsistent or in conflict
with this Agreement, or which would prevent, limit or impair in any way the
performance by Executive of his obligations hereunder.
1.2 The Executive will serve as President and Chief Executive
Officer of the Company and as a member of its Board of Directors when elected as
such, will have general executive supervision over the property, business and
affairs of the Company and its subsidiaries or affiliates (referred to
collectively as "Affiliates") and will have such other duties and
responsibilities, consistent with his position as President and Chief Executive
Officer, as may reasonably be assigned to him by the Board of Directors. In
addition, the Executive will serve as a senior officer and a director (when
elected as such) of each of the Company's Affiliates. The Executive will report
to the Board of Directors of the Company.
1.3 The Executive shall devote all of his business time and
effort to the business and affairs of the Company, and shall use his best
efforts, skills, and abilities to promote the interests of the Company, except
for reasonable vacations and during periods of illness or incapacity, but
nothing contained in this Agreement shall prevent the Executive from engaging in
charitable, community or other business activities provided they do not
interfere with the regular performance of the Executive's duties and
responsibilities under this Agreement.
1.4 Unless the Executive and the Company shall otherwise
agree, the Executive's principal places of employment shall be in and around the
Columbia, Maryland area and the Chicago, Illinois area, but the duties of the
Executive shall include such visits to the Company's Affiliates, research and
development partners, product and clinical trial test sites, customers,
investment and other bankers, in each case at the expense of the Company, as the
Executive determines is reasonably required in the performance of the
Executive's responsibilities.
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2. Term.
-----
2.1 The Term of this Agreement will commence as of January 1,
2000 and will terminate at the close of business on December 31, 2002, unless
sooner terminated in accordance with the provisions of this Agreement ("Initial
Term"). Thereafter, the employment of the Executive shall continue for
successive one-year periods (each such one year period being hereinafter
referred to as a "Renewal Term") unless the Corporation or Executive shall give
notice to the other at least six months prior to the end of the Term or any
Renewal Term of the election of the Corporation or the Executive to terminate
the employment of the Executive at the end of the Term or the then current
Renewal Term.
3. Base Salary.
------------
3.1 For all services performed by the Executive under this
Agreement, the Executive shall be paid a base salary ("Base Salary") for the
Company's fiscal year 2000 at the annual rate of $240,000. The Base Salary for
fiscal year 2001 and all subsequent fiscal years shall be the greatest of (i)
one hundred five percent (105%) of the Base Salary for the prior fisscal year;
(ii) the product of the multiplication of the Base Salary during the fiscal year
immediately preceding by the sum of (y) one hundred percent plus (z) the amount
(expressed as a percent) by which the most recently reported Consumer Price
Index ("CPI") applicable to the Washington -Baltimore Metropolitan region is
greater than the CPI for that same region for the prior twelve months; (iii) the
sum offered by the Board of Directors after a review taking into account
corporate and individual performance, the Company's prospects and general
business conditions; or (iv) $360,000.
3.2 Base Salary shall be paid in equal monthly or semi-monthly
installments in keeping with the Company's standard payroll policies applicable
to its senior executives.
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3.3 The Company reserves the right to pay the Executive on a
current basis at an annual salary rate of no more than $240,000. Any unpaid sum
will accrue as an unpaid obligation owed to the Executive, and that obligation
of the Company will be evidenced not more often than once each calendar quarter
by a junior convertible note issued by the Company bearing interest at 8.75%,
payable interest only at the end of each calendar quarter until September 30,
2001. From and after October 1, 2001, the Company will pay the outstanding
principal amount owed to the Executive in four quarterly installments of
principal and related interest; provided, however, that if, at any time, the
Company achieves annual revenues of $2,500,000 or more, then the unpaid salary
obligations to the Executive (and related interest) shall be paid in full, and
from and after achieving that annual revenue, the Company's right to pay the
Executive at any rate other than the then applicable salary rate shall expire.
At the option of the Executive, however, he may convert the outstanding
principal amount and related interest owing to him (whether or not evidenced by
a note) into Common Stock at a price equal to eighty (80%) percent of the
average closing price of the Common Stock during any ten consecutive trading
days (selected by the Executive) within the forty trading days prior to the date
of conversion.
4. Option to Acquire Bonus Shares.
-------------------------------
4.1 The Company hereby agrees to grant to Executive as a bonus
an option to acquire four hundred fifty (450,000) thousand (the "Bonus Shares")
fully paid and non-assessable shares of common stock, par value $0.01 per share
(the "Common Stock") of the Company. The exercise price for each Bonus Share
shall be the average of the closing price of the Company's Common Stock during
the fiscal quarter ended December 31, 1999. Two hundred fifty (250,000) thousand
of the Bonus Shares may be acquired by Executive on or after March 15, 2000, and
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<PAGE>
one hundred (100,000) thousand of the Bonus Shares may be acquired by Executive
on or after each of October 1, 2001, and October 1, 2002. If Executive is not
employed by the Company at any of the three vesting dates, he shall not be
entitled to acquire the Bonus Shares attributable to that date. The Company
shall at all times reserve for issuance and/or delivery such number of shares of
its Common Stock as shall be required for issuance or delivery as Bonus Shares.
No fractional shares or scrip representing fractional shares shall be issued as
Bonus Shares. Bonus Shares will not be registered under federal or state
securities laws, and will have the status of restricted securities. Bonus Shares
may not be sold or offered for sale in the absence of effective registration
under such securities laws, or an opinion of counsel satisfactory to the Company
that such registration is not required. The Company will not include any Bonus
Shares in any registration statement unless there shall be a specific
affirmative agreement to do so by an investment banking firm which has agreed to
serve as underwriter of a public cash offering of the Company's securities.
Bonus Shares may be sold by the Executive in transactions permitted by the
provisions of Rule 144 of the Securities Act of 1933, but notwithstanding the
provisions of Rule 144, Executive agrees that he will not undertake any
disposition of the Bonus Shares in the twelve month period beginning when sales
under Rule 144 are permissible without the approval of a majority of the
disinterested members of the Board of Directors of the Company. In case the
Company shall at any time subdivide or combine the outstanding shares of Common
Stock, the number of Bonus Shares the Executive shall have the right to acquire
shall be proportionately increased in the case of such subdivision or decreased
in the case of such combination (on the date that such subdivision or
combination shall become effective). Bonus Shares shall bear an appropriate
restrictive legend, referring to the provisions hereof.
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<PAGE>
5. Incentive Compensation. As incentive compensation to Executive, the
Company hereby grants to Executive the right to acquire from the Company, on an
original issue basis, an aggregate of seven hundred (700,000) thousand fully
paid and non-assessable shares of Common Stock (the "Incentive Shares") at the
several purchase prices designated below upon the achievement by the Company of
the several corporate accomplishments (the "Milestones") listed below.
Executive's right as set forth herein shall be available at any time on and
after the date on which the first Milestone is achieved and so long as he is
employed by the Company, but not later than 5:00 P.M. (New York time) December
31, 2004 (the "Expiration Date"), upon notice to the Company at its principal
office at 10220-I Old Columbia Road, Columbia, MD 21046-1705, Attention:
Treasurer (or at such other location as the Company may advise the Executive in
writing). The notice shall be executed and delivered with the Purchase Form
attached hereto duly filled in and signed and upon payment in cash or cashier's
check of the aggregate exercise price for the number of shares which Executive
is acquiring determined in accordance with the provisions hereof.
5.1 For purposes of this paragraph:
A. Corporate Milestones. The right to acquire
Incentive Shares shall be available in tranches as indicated herein if, as and
when the Company has achieved the first two of the following Class X Milestones:
> Execution and delivery of an agreement
with one or more strategic partners to the Company providing for the marketing
and distribution of any one of the Company's products related to its breast
cancer treatment system. (Tranche: 150,000 shares)
> Execution and delivery of an agreement
with one or more strategic partners to the Company providing for the marketing
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<PAGE>
and distribution of any one of the Company's products related to treating
chronic prostate enlargement condition, common in older males, known as benign
prostatic hyperplasia ("BPH") (Tranche: 150,000 shares).
> Execution and delivery of an agreement
with one or more strategic partners to the Company providing for the marketing
and distribution of any one of the Company's products related to liposome
compounds that can carry chemotherapy drugs to a tumor site and release their
payload quickly when triggered by targeted heat. (Tranche: 150,000 shares). Only
300,000 shares may be issued with respect to Class X Milestones. The right to
acquire Incentive Shares shall be available in tranches as indicated herein if,
as and when the Company has achieved any of the following Class Y Milestones:
>Obtaining pre-marketing approval from the
United States Food and Drug Administration for commercialization of the
Company's BPH treatment system. (Tranche: 150,000 shares)
> Obtaining pre-marketing approval from the
United States Food and Drug Administration for commercialization of the
Company's breast cancer treatment system. (Tranche: 150,000 shares).
As a Class Z Milestone, the right to acquire Incentive Shares shall be
available as to a tranche of 100,000 shares if, as and when the Company has
achieved net income of $1,000,000 or more for any fiscal year prior to the
Expiration Date.
A. Purchase Price.The purchase price per share shall be as
follows:
On achieving the first Milestone, $0.80 per share;
On achieving the second Milestone, $1.00 per share;
On achieving the third Milestone, $1.20 per share;
On achieving the fourth Milestone, $1.40 per share, and
On achieving the fifth Milestone, $1.60 per share.
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<PAGE>
B. Acquisition of Incentive Shares. Executive may acquire
Incentive Shares in tranches as set forth as each Milestone is
achieved at any time or from time to time on or after the date
hereof and so long as he is employed by the Company, but not
later than 5:00 p.m. New York time, on the Expiration Date. If
such date is a day on which banking institutions are
authorized by law to close, then the Expiration Date shall be
on the next succeeding day which shall not be such a day.
Incentive Shares may be acquired without regard to the
sequence in which the Milestones have been achieved. A Notice
of Intention to acquire Incentive Shares shall be submitted by
the Executive to the Company's Board of Directors, identifying
the Milestone achieved and the number of shares covered by the
relevant tranche. The Board of Directors shall be deemed to
have approved the relevant acquisition of Incentive Shares
unless, within seventy two (72) hours of the submission of the
Notice of Intention, the Board adopts a resolution determining
that Incentive Shares may not be issued as to the Milestone
identified in the Notice of Intention. In the absence of such
a disaffirming resolution, Executive may acquire Incentive
Shares thereafter by presentation of the Notice of Intention
either to the Company or at the office of its stock transfer
agent, if any, and accompanied by payment in cash or cash
equivalent of the purchase price for the number of Incentive
Shares specified in such Notice of Intention, together with
all federal and state taxes applicable upon such exercise.
-8-
<PAGE>
C. Reservation of Shares. The Company hereby agrees that at all
times there shall be reserved for issuance such number of
shares of its Common Stock as shall be required for issuance
or delivery as Incentive Shares upon achievement of the
Milestones set forth herein.
D. Vesting. Incentive Shares shall vest in the Executive upon
issuance.
E. Anti-Dilution Provisions.
(1) Adjustment of Number of Incentive Shares. Anything in this
Paragraph (F) to the contrary notwithstanding, in case the Company
shall at any time issue Common Stock by way of dividend or other
distribution on any stock of the Company or subdivide or combine the
outstanding shares of Common Stock, the Purchase Price shall be
proportionately decreased in the case of such issuance (on the day
following the date fixed for determining shareholders entitled to
receive such dividend or other distribution) or decreased in the case
of such subdivision or increased in the case of such combination (on
the date that such subdivision or combination shall become effective).
(2) No Adjustment for Small Amounts. Anything in this
Paragraph (F) to the contrary notwithstanding, the Company shall not be
required to give effect to any adjustment in the Purchase Price unless
and until the net effect of one or more adjustments, determined as
above provided, shall have required a change of the Purchase Price by
at least one cent, but when the cumulative net effect of more than one
adjustment so determined shall be to change the actual Purchase Price
by at least one cent, such change in the Purchase Price shall thereupon
be given effect.
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<PAGE>
(3) Number of Incentive Shares Adjusted. Upon any adjustment
of the Purchase Price other than pursuant to Paragraph (F)(1) hereof,
the Executive shall thereafter (until another such adjustment) be
entitled to purchase, at the new Purchase Price, the number of shares,
calculated to the nearest full share, obtained by multiplying the
number of shares of Common Stock initially issuable upon achieving any
Milestone by the Purchase Price in effect on the date hereof and
dividing the product so obtained by the new Purchase Price.
F. Reclassification, Reorganization or Merger. In case of any
reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the Company (other than
a change in par value, or from par value to no par value or
from no par value to par value, or as a result of an issuance
of Common Stock by way of dividend or other distribution or of
a subdivision or combination), or in case of any consolidation
or merger of the Company with or into another corporation
(other than a merger in which the Company is the continuing
corporation and which does not result in any reclassification,
capital reorganization or other change of outstanding shares
of Common Stock) or in case of any sale or conveyance to
another corporation of the property of the Company as an
entirety or substantially as an entirety, the Company shall
cause effective provision to be made so that the Executive
shall have the right thereafter as he has hereunder to
purchase the kind and amount of shares of stock and other
securities and property receivable upon such reclassification,
capital reorganization or other change, consolidation, merger,
sale or conveyance. The foregoing provisions of this Paragraph
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(G) shall similarly apply to successive reclassifications,
capital reorganizations and changes of shares of Common Stock
and to successive consolidations, mergers, sale or
conveyances. In the event that in any such capital
reorganization or reclassification, consolidation, merger,
sale or conveyance, additional shares of Common Stock shall be
issued in exchange, conversion, substitution or payment, in
whole or in part, for or of a security of the Company other
than Common Stock, any such issue shall be treated as an issue
of Common Stock covered by the provisions hereof with the
amount of the consideration received upon the issue thereof
being determined by the Board of Directors of the Company,
such determination to be final and binding on the Executive.
6. Reimbursement for Expenses.
---------------------------
6.1 Company shall reimburse Executive for all reasonable
out-of-pocket expenses paid or incurred by him in the course of his employment,
upon presentation by Executive of valid receipts or invoices therefor, utilizing
procedures and forms for that purpose as established by Company from time to
time.
7. Vacations.
----------
7.1 Executive shall be entitled to reasonable vacations (which
shall aggregate no less than four (4 ) weeks vacation with pay) during each
consecutive 12 month period commencing on the date hereof. Executive may not
accumulate any vacation days which remain unused at the end of any year during
the term hereof without the prior consent of Company.
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8. Employee Benefit Programs, etc.
-------------------------------
8.1 The Company shall provide the Executive with an automobile
(or at Employee's option, a cash allowance in the amount of $450.00 per month in
lieu thereof) for use in the performance of Executive's duties, along with fuel,
fluids and maintenance, upon such terms and conditions as are approved by
Company. The Company will also either provide or pay or reimburse the Executive
for the costs of a cellular telephone.
8.2 The Company shall provide the Executive at the Company's
expense disability insurance providing for disability payments to the Executive,
in a sum at least equal to 70 % of his Base Salary then in effect, following a
termination of Executive's employment hereunder as a result of Disability (as
defined in Section 9.2 below). In the event such policy is not obtained,
Executive shall be entitled to participate in such disability plan(s) as are
available to Company executives generally.
8.3 The Company shall obtain at its expense, and shall be the
owner of, a policy on the life of the Executive in the amount of Three Million
($3,000,000) Dollars, naming the Company as the beneficiary.
8.4 In addition to the life insurance to be provided in
accordance with paragraph 8.3, subject to the Executive's meeting the
eligibility requirements of each respective plan, Executive shall participate in
and be covered by each pension, life insurance, accident insurance, health
insurance, hospitalization and any other employee benefit plan of Company, as
the case may be, made available generally from and after the date hereof to its
respective senior executives, on the same basis as shall be available to such
other executives without restriction or limitation by reason of this Agreement.
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8.5 Nothing herein contained shall prevent the Company from at
any time increasing the compensation herein provided to be paid to Executive,
either permanently or for a limited period, or from paying bonuses and other
additional compensation to Executive, whether or not based upon the earnings of
the business of Company, or from increasing or expanding any employee benefit
program applicable to the Executive, in the event the Company, in its sole
discretion, shall deem it advisable so to do in order to recognize and
compensate fairly Executive for the value of his services.
9. Death or Disability.
--------------------
9.1 If Executive shall die during the term hereof, this
Agreement shall immediately terminate, except that Executive's legal
representatives or designated beneficiaries shall be entitled to receive (i) the
Base Salary due to Executive hereunder to the last day of the month following
the month in which his death occurs, payable in accordance with the Company's
regular payroll practices, (ii) all other benefits payable upon death under any
employee benefit program or other insurance covering the Executive as of the
date of death; and (iii) a pro-rated portion of the Bonus Shares payable under
Section 4.
9.2 In the event of the Disability of the Executive, as
hereinafter defined, the Executive shall be entitled to continue to receive
payment of his Base Salary (prorated as may be necessary) in accordance with the
terms of Section 3 hereof through the last day of the third month following the
month in which Executive's employment hereunder is terminated as a result of
such Disability. At any time after the date of the Notice (as hereinafter
defined) and during the continuance of the Executive's Disability, the Company
may at any time thereafter terminate Executive's employment hereunder by written
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notice to the Executive. The term "Disability" shall mean physical or mental
illness or injury which prevents the Executive from performing his customary
duties for the Company for a period of sixty (60) consecutive days or an
aggregate period of one hundred twenty (120) days out of any consecutive twelve
(12) months. The date of commencement of Disability shall be the date set forth
in the notice (the "Notice") given by Company to the Executive at any time
following a determination of Disability, which date shall not be earlier than
the date the Notice is given by Company. A determination of Disability by
Company shall be solely for the purposes of this Section 9.2 and shall in no way
affect the Executive's status under any other benefit plan applicable to the
Executive.
9.3 Upon the occurrence of a Disability, and unless the
Executive's employment shall have been terminated as provided in Section 9.2,
the Executive shall, during such time as he is continuing to receive Base Salary
payments as set forth in Section 9.2, perform such services for Company,
consistent with his duties under Section 1 hereof, as he is reasonably capable
of performing in light of the condition giving rise to a Disability. All
payments due under Section 9.2 shall be payable in accordance with Company's
regular payroll practices. Any amount paid to Executive pursuant to this
Agreement by reason of his Disability, shall be reduced by the aggregate amount
of all monthly disability payments which the Executive is entitled to receive
under all workers compensation plans, disability plans and accident, health or
other insurance plans or programs maintained for the Executive by Company, by
any company controlling, controlled by or under common control with, Company.
9.4 In the event the Executive's employment is terminated due
to Disability, the Executive shall be entitled, in addition to the Base Salary
payments described in Section 9.2, to the Bonus Shares payable in accordance
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with Section 4 for the fiscal year in which such Disability occurs, pro-rated by
multiplying the Bonus Shares otherwise issuable by a fraction, the numerator of
which is the number of days the Executive was employed during such fiscal year
and the denominator of which is 365.
10. Termination for Cause.
----------------------
10.1 The employment of the Executive may be terminated by
the Company for Cause. For this purpose, "Cause" shall mean:
(i) an act constituting a felony and resulting or
intended to result, directly or indirectly, in
his gain or personal enrichment at the expense
of the Company and its shareholders;
(ii) dishonest acts against the Company;
(iii) illegal drug use;
(iv) grossly or willfully neglecting to carry out his
duties under this Agreement resulting in
material harm to the Company.
The Executive's employment shall not be terminated for Cause under
clauses (ii) or (iv) unless
(a) the Executive has received at least 15 days notice of a meeting of
the Board of Directors at which meeting the Board shall consider the
existence of Cause, shall provide the Executive with an opportunity to
be heard before the Board, and, following such consideration and
hearing, the Board has determined, based upon credible evidence, that
grounds for Cause exist; and
(b) the misconduct or breaches on which an assertion of Cause is based
are not cured within 30 days thereafter if such misconduct or breaches
are capable of being cured.
10.2 In the event of a termination for Cause, the Executive
shall (a) be entitled to any unpaid Base Salary pro rated up to the date of
termination, and (b) shall have no further rights
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under this Agreement. Furthermore, the Executive shall be and remain subject to
all provisions of Section 13 below for the period indicated therein, but shall
not receive any of the compensation set forth therein.
11. Termination Upon Change of Control or by Company Without Cause.
---------------------------------------------------------------
11.1 A "Change in Control" shall occur: (A) if any Person, or
combination of Persons (as hereinafter defined), or any affiliate of any of the
above, is or becomes the "beneficial owner" (as defined in Rule 13d-3
promulgated under the Securities Exchange Act of 1934) directly or indirectly,
of securities of the Company representing twenty- five percent (25%) or more of
the total number of outstanding shares of common stock of the Company; or (B) if
individuals who, at the date of this Agreement, constitute the Board (the
"Incumbent Directors") cease, for any reason, to constitute at least a majority
thereof, provided that any new director whose election was approved by a vote of
at least 75% of the Incumbent Directors shall be treated as an Incumbent
Director. For purposes hereof, "person" shall mean any individual, partnership,
joint venture, association, trust, or other entity, including a "group" as
referred to in section 13(d)(3) of the Securities Exchange Act of 1934.
11.2 If there occurs a Change in Control, and if there
subsequently occurs a material adverse change, without the Executive's written
consent, in the Executive's working conditions or status, including but not
limited to a significant change in the nature or scope of the Executive's
authority, powers, duties or responsibilities, or a reduction in the level of
support services or staff, then, whether or not such change would otherwise
constitute a breach of this Agreement by the Company, this Agreement may be
terminated by notice given by the Executive, specifying the Change of Control
and significant adverse change or changes.
11.3 Upon the termination of this Agreement in accordance with
Section 11.2 above, the Executive will be entitled, without any duty to mitigate
damages, to:
(a) All unpaid Base Salary pro-rated up to the date of
termination; and
(b) The full number of unissued Bonus Shares pursuant to
Section 4;
(c) A severance payment equal to 2.99 times the Base
Salary in effect for the prior fiscal year; and
(d) All benefits available under the Company's employee
benefit programs, to the extent applicable to senior
executives voluntarily and amicably retiring from
employment with the Company.
11.4 In the event that the Company shall actually or
constructively terminate this Agreement during the Initial Term or any Renewal
Term without cause (and with or without a Change of Control), the Executive
shall be entitled to the same payments, compensation and rights as provided in
the case of a termination by the Executive under Section 11.3.
11.5 The payments and any other compensation and benefits to
which the Executive is entitled under this Section 11 shall be made available to
the Executive no later than thirty (30) days after the date of any termination
referred to in Section 11.2, 11.3 or 11.4.
11.6 In the event that Executive receives the payments and any
other compensation and benefits referred to in this Section 11, he will be bound
by the restrictive provisions of Section 13 for the period therein provided,
subject to the right to receive the compensation therein set forth.
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12. Termination by Executive.
-------------------------
12.1 If the Executive shall terminate his employment under
this Agreement during the Initial Term without either (i) a Change of Control or
(ii) the express written consent of the Company, then, for purposes of
establishing the rights of the Executive upon such termination, such termination
shall be deemed the equivalent of a termination for Cause under Section 12.1,
and the Executive shall have only those rights with regard to compensation as
are set forth in Section 12.2, and the restrictive provisions of Section 13
below shall fully apply (but the Executive shall not have any right to the
compensation set forth therein).
12.2 If the Executive shall terminate his employment under
this Agreement during any Renewal Term without either (i) a Change of Control or
(ii) the express written consent of the Company, then, for purposes of
establishing the rights of the Executive upon such termination, the Executive
shall be entitled to receive:
(a) All unpaid Base Salary pro-rated up to the date of
termination; and
(b) the full and absolute ownership of all Bonus Shares
previously delivered to him, subject to the provisions of the
securities laws of the United States, but without the specific
limitations set forth in Section 4 hereof.
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12.3 In the case of a termination pursuant to Section
12.2, the restrictions set forth in Section 13 shall apply to Executive for the
period therein stated, and the Executive shall receive the compensation set
forth therein.
13. Restrictive Covenants; Compensation.
------------------------------------
13.1 During such time as this Agreement shall be in
effect and, except as otherwise explicitly stated herein, for a period of three
(3) years following the termination of Executive's employment, and without the
Company's prior written consent (which may be withheld for any reason or for no
reason in Company's sole discretion), Executive shall not do anything in any way
inconsistent with his duties to, or adverse to the interests of, the Company,
nor shall Executive, directly or indirectly, himself or by or through a family
member or otherwise, alone or as a member of a partnership or joint venture, or
as a principal, officer, director, consultant, employee or stockholder of any
other entity, compete with Company or be engaged in or connected with any other
business competitive with that of Company or any of its affiliates, except that
Executive may own as a passive investment not more than five percent (5%) of the
securities of any publicly held corporation that may engage in such a business
competitive with that of Company or any of its Affiliates.
13.2 In view of the fact that Executive will be brought
into close contact with many confidential affairs of Company and its Affiliates
not readily available to the public, Executive agrees during the Term of this
Agreement and thereafter:
(a) to keep secret and retain in the strictest
confidence all non-public information about (i) research and
development, test results, suppliers, venture or strategic
partners, licenses and patents or patent applications, planned
or existing products, knowhow, financial condition and other
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financial affairs (such as costs, pricing, profits and plans
for future development, methods of operation and marketing
concepts) of Company and its Affiliates; (ii) the employment
policies and plans of the Company and its Affiliates; and
(iii) any other proprietary information relating to the
Company and its Affiliates, their operations, businesses,
financial condition and financial affairs (collectively, the
"Confidential Information") and, for such time as Company or
any of its Affiliates is operating, Executive shall not
disclose the Confidential Information to anyone not then an
officer, director or authorized employee of Company or its
Affiliates, either during or after the term of this Agreement,
except in the course of performing his duties hereunder or
with Company's express written consent or except to the extent
that such confidential information can be shown to have been
in the public domain through no fault of Executive; and
(b) to deliver to Company within ten days after
termination of his services, or at any time Company may so
request, all memoranda, notes, records, reports and other
documents relating to Company or its Affiliates, businesses,
financial affairs or operations and all property associated
therewith, which he may then possess or have under his
control.
13.3 Executive shall not at any time during the three-year
period following the termination of his employment for any reason whatsoever,
including termination resulting from the natural expiration of the term of this
Agreement, (i) employ any individual who was employed by Company or any of its
Affiliates at any time during the such period or during the 12 calendar months
immediately preceding such termination, or (ii) in any way cause, influence or
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participate in the employment of any such individual by anyone else in any
business that is competitive with any of the businesses engaged in by Company or
any of its Affiliates.
13.4 Executive shall not at any time during the three -year
period following the termination of his employment, for any reason whatsoever,
including termination resulting from the natural expiration of the term of this
Agreement, directly or indirectly, either (i) persuade or attempt
to persuade any customer or client of the Company or of any of its Affiliates to
cease doing business with Company or with any Affiliate, or to reduce the amount
of business it does with Company or with any of its Affiliates, or (ii) solicit
for himself or any person other than Company or any of its Affiliates, the
business of any individual or business which was a customer or client of Company
or any of its Affiliates at any time during the eighteen month period
immediately preceding such termination.
13.5 Executive acknowledges that the execution and delivery by
him of the promises set forth in this Section 13 is an essential inducement to
Company to enter into this Agreement, and that Company would not have entered
into this Agreement but for such promises. Executive further acknowledges that
his services are unique and that any breach or threatened breach by Executive of
any of the foregoing provisions of this Section 13 cannot be remedied solely by
damages. In the event of a breach or a threatened breach by Executive of any of
the provisions of this Section 13, Company shall be entitled to injunctive
relief restraining Executive and any business, firm, partnership, individual,
corporation or other entity participating in such breach or attempted breach.
Nothing herein, however, shall be construed as prohibiting Company from pursuing
any other remedies available at law or in equity for such breach or threatened
breach, including the recovery of damages and the immediate termination of the
employment of Executive hereunder.
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13.6 If any of the provisions of, or promises contained in,
this Section 13 are hereafter construed to be invalid or unenforceable in any
jurisdiction, the same shall not affect the remainder of the provisions or the
enforceability thereof in any other jurisdiction, which shall be given full
effect, without regard to the invalid portions or the unenforceability in such
other jurisdiction. If any provisions contained in this Section 13 are held to
be unenforceable in any jurisdiction because of the duration or scope thereof,
the parties hereto agree that the court making such determination shall have the
power to reduce the duration and/or scope (if such provision, in its reduced
form, shall be enforceable); provided, however, that the determination of such
court shall not affect the enforceability, duration or scope of this Section 13
in any other jurisdiction.
13.7 As separate and additional compensation to be paid to the
Executive in consideration of the observance and performance of the promises
contained in this Section 13, the Company agrees that, during the period of
restrictions set forth in this Section 13, the Executive will be entitled to be
paid an amount equal to 100% of the Base Salary computed at the annual rate
prevailing immediately prior to the termination of his employment (such amount
to be paid in the same manner as the Company's regular payroll practices),
except that, (i) in the case of termination of the Executive's employment for
Cause, or in case the Executive shall terminate this Agreement under Section
12.1 during the Initial Term, the Executive will receive no such compensation
14. Relationship of Parties.
------------------------
Nothing herein contained shall be deemed to constitute a
partnership between or a joint venture by the parties, nor shall anything herein
contained be deemed to constitute either the Executive, the Company or any
Affiliates the agent of the other except as is expressly provided herein.
Neither Executive nor Company shall be or become liable or bound by any
representation, act or omission whatsoever of the other party made contrary to
the provisions of this Agreement.
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15. Notices.
--------
All notices and communications hereunder shall be in writing
and delivered by hand or sent by registered or certified mail, postage and
registration or certification fees prepaid, return receipt requested, or by
overnight delivery such as Federal Express, and shall be deemed given when hand
delivered or upon three (3) business days after the date when mailed, or upon
one (1) business day after delivery to an agent for overnight delivery, if sent
in such manner, as follows:
If to Company: Celsion Corporation
10220-1 Old Columbia Road,
Columbia, Maryland 21046-1705.
Attention: Board of Directors
With a copy to: Bresler Goodman & Unterman LLP
521 Fifth Avenue
New York, NY 10175
Attn: Kevin J. Lake
If to Executive: Spencer J. Volk
C/o Celsion Corporation
10220-1 Old Columbia Road,
Columbia, Maryland 21046-1705.
The foregoing addresses may be changed by notice given in the manner set forth
in this Section 15.
16. Disputes.
--------
Any dispute arising under this Agreement shall be settled in
accordance with the following provisions. If the parties are deadlocked on any
issue arising under the terms of this Agreement, a tiebreaker shall be chosen by
the Dean of the School of Business Administration at the University or Maryland.
Each party may present its proposal to the designated tiebreaker in written form
and may, on a date established by the tiebreaker within fifteen calendar days of
the day the tiebreaker is chosen, make an oral presentation not to exceed two
hours in length, accompanied by exhibits and written arguments not to exceed 50
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pages in length. The designated tiebreaker shall then select one of the
submitted proposals, without any change or adjustment, and shall announce to the
parties his or her selection within five calendar days of the day of submission.
The party offering the proposal that is not selected by the tiebreaker shall
bear all costs and expenses (including legal, expert and other fees and
expenses), and the expenses and fees charged by the tiebreaker. Any award by the
tiebreaker may be enforced on application of either party by the order or
judgment of any Federal or state court in the State of Maryland as the party
making such application shall elect, having jurisdiction over the subject matter
thereof. Each of the parties hereto hereby submits itself to the jurisdiction of
any such court and agree that service of process on it in any action, suit or
proceeding to enforce any such award may be effected by the means by which
notices are to be given to it under this Agreement.
17. Miscellaneous.
--------------
17.1 This Agreement contains the entire understanding of the
parties hereto with respect to the employment of Executive by Company during the
term hereof, and the provisions hereof may not be altered, amended, waived,
terminated or discharged in any way whatsoever except by subsequent written
agreement executed by the party charged therewith. This Agreement supersedes all
prior employment agreements, understandings and arrangements between Executive
and Company pertaining to the terms of the employment of Executive. A waiver by
either of the parties of any of the terms or conditions of this Agreement, or of
any breach hereof, shall not be deemed a waiver of such terms or conditions for
the future or of any other term or condition hereof, or of any subsequent breach
hereof.
17.2 The provisions of this Agreement are severable, and if
any provision of this Agreement is invalid, void, inoperative or unenforceable,
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the balance of the Agreement shall remain in effect, and if any provision is
inapplicable to any circumstance, it shall nevertheless remain applicable to all
other circumstances.
17.3 Company shall have the right to deduct and withhold from
Executive's compensation the amounts required to be deducted and withheld
pursuant to any present or future law concerning the withholding of income
taxes. In the event that Company makes any payments or incurs any charges for
Executive's account or Executive incurs any personal charges with Company,
Company shall have the right and Executive hereby authorizes Company to recoup
such payments or charges by deducting and withholding the aggregate amount
thereof from any compensation otherwise payable to Executive hereunder.
17.4 This Agreement shall be construed and interpreted under
the laws of the State of Maryland applicable to contracts executed and to be
performed entirely therein.
17.5 The captions and section headings in this Agreement are
not part of the provisions hereof, are merely for the purpose of reference and
shall have no force or effect for any purpose whatsoever, including the
construction of the provisions of this Agreement.
17.6 To the extent any provision of this Agreement
contemplates action after termination hereof or creates a cause of action or
claim on which action may be brought by either party, such provision, cause of
action or claim shall survive termination of Executive's employment or
termination of this Agreement.
17.7 Executive may not assign his rights nor delegate his
duties under this Agreement; provided, however, that notwithstanding the
foregoing this Agreement shall inure to the benefit of Executive's legal
representatives, executors, administrators or successors and to the successors
or assigns of Company.
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17.8 Effective on the execution and delivery of this Agreement, each of
the Company and the Executive agrees that the prior agreement between the
parties dated the 11th day of May, 1997, as in effect prior to the date hereof
shall cease to be of further force and effect, except to the extent that
separate written arrangements between the Executive and the Company have been
agreed to reflect modifications in certain of the terms of that prior agreement
requested by the Company and agreed by the Executive.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
CELSION CORPORATION
By: /s/ Augustine Y. Cheung
-------------------------
Augustine Y. Cheung, Chairman
/s/ Spencer J. Volk
--------------------
Spencer J. Volk
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Exhibit 10.2
------------
EXECUTIVE EMPLOYMENT AGREEMENT
------------------------------
EMPLOYMENT AGREEMENT, made as of the 1st day of January, 2000, by and
between Augustine Y. Cheung (the "Executive"), an individual residing at c/o
Celsion Corporation, 10220-1 Old Columbia Road, Columbia, Maryland 21046-1705,
and Celsion Corporation (the "Company"), a Maryland corporation with offices at
10220-1 Old Columbia Road, Columbia, Maryland 21046- 1705.
W I T N E S S E T H:
- - - - - - - - - --
WHEREAS, the Executive is currently employed by the Company as its
Chairman and Chief Science Officer, and the Company desires that the Executive
shall continue to be employed by it and render services to it, and the Executive
is willing to continue to be so employed and to render services, all upon the
terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Employment, Duties and Acceptance.
----------------------------------
1.1 The Company hereby employs Executive, and the Executive
hereby accepts employment, for the term ("Term) set forth in Section 2 hereof,
to render services to Company as its Chairman and Chief Science Officer. The
Executive represents and warrants to the Company that he has full power and
authority to enter into this Agreement and that he is not under any obligation
of a contractual or other nature to any person, firm or corporation which is
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inconsistent or in conflict with this Agreement, or which would prevent, limit
or impair in any way the performance by Executive of his obligations hereunder.
1.2 The Executive will serve as Chairman and Chief Science
Officer of the Company and as a member of its Board of Directors when elected as
such, will have general supervision over the research and development operations
of the Company and its subsidiaries or affiliates (referred to collectively as
"Affiliates") and will have such other duties and responsibilities, consistent
with his position as Chairman and Chief Science Officer, as may reasonably be
assigned to him by the Board of Directors. In addition, the Executive will serve
as a senior officer and a director (when elected as such) of each of the
Company's Affiliates. The Executive will report to the Board of Directors of the
Company.
1.3 The Executive shall devote all of his business time and
effort to the business and affairs of the Company, and shall use his best
efforts, skills, and abilities to promote the interests of the Company, except
for reasonable vacations and during periods of illness or incapacity, but
nothing contained in this Agreement shall prevent the Executive from engaging in
charitable, community or other business activities provided they do not
interfere with the regular performance of the Executive's duties and
responsibilities under this Agreement.
1.4 Unless the Executive and the Company shall otherwise
agree, the Executive's principal place of employment shall be in and around the
Columbia, Maryland area, but the duties of the Executive shall include such
visits to the Company's Affiliates, research and development partners, product
and clinical trial test sites, customers, investment and other bankers, in each
case at the expense of the Company, as the Executive determines is reasonably
required in the performance of the Executive's responsibilities.
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2. Term.
-----
2.1 The Term of this Agreement will commence as of January 1,
2000 and will terminate at the close of business on December 31, 2002, unless
sooner terminated in accordance with the provisions of this Agreement ("Initial
Term"). Thereafter, the employment of the Executive shall continue for
successive one-year periods (each such one year period being hereinafter
referred to as a "Renewal Term") unless the Corporation or Executive shall give
notice to the other at least six months prior to the end of the Term or any
Renewal Term of the election of the Corporation or the Executive to terminate
the employment of the Executive at the end of the Term or the then current
Renewal Term.
3. Base Salary.
------------
3.1 For all services performed by the Executive under this
Agreement, the Executive shall be paid a base salary ("Base Salary") for the
calendar year 2000 at the annual rate of $240,000. The Base Salary for
subsequent years shall be the greatest of (i) one hundred five percent (105%) of
the Base Salary for the prior calendar year; (ii) the product of the
multiplication of the Base Salary during the calendar year immediately preceding
by the sum of (y) one hundred percent plus (z) the amount (expressed as a
percent) by which the most recently reported Consumer Price Index ("CPI")
applicable to the Washington -Baltimore Metropolitan region is greater than the
CPI for that same region for the prior twelve months; or (iii) the sum offered
by the Board of Directors after a review taking into account corporate and
individual performance, the Company's prospects and general business conditions.
3.2 Base Salary shall be paid in equal monthly or semi-monthly
installments in keeping with the Company's standard payroll policies applicable
to its senior executives.
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4. Option to Acquire Bonus Shares.
-------------------------------
4.1 The Company hereby agrees to grant to Executive as a bonus
an option to acquire three hundred (300,000) thousand (the "Bonus Shares") fully
paid and non-assessable shares of common stock, par value $0.01 per share (the
"Common Stock") of the Company. The purchase price for each Bonus Share shall be
the average of the closing price of the Company's Common Stock during the fiscal
quarter ended December 31, 1999. One hundred (100,000) thousand of the Bonus
Shares may be acquired by Executive on or after March 15, 2000, and one hundred
(100,000) thousand of the Bonus Shares may be acquired by Executive on or after
each of October 1, 2001, and October 1, 2002. If Executive is not employed by
the Company at any of the three vesting dates, he shall not be entitled to
acquire the Bonus Shares attributable to that date. The Company shall at all
times reserve for issuance and/or delivery such number of shares of its Common
Stock as shall be required for issuance or delivery as Bonus Shares. No
fractional shares or scrip representing fractional shares shall be issued as
Bonus Shares. Bonus Shares will not be registered under federal or state
securities laws, and will have the status of restricted securities. Bonus Shares
may not be sold or offered for sale in the absence of effective registration
under such securities laws, or an opinion of counsel satisfactory to the Company
that such registration is not required. The Company will not include any Bonus
Shares in any registration statement unless there shall be a specific
affirmative agreement to do so by an investment banking firm which has agreed to
serve as underwriter of a public cash offering of the Company's securities.
Bonus Shares may be sold by the Executive in transactions permitted by the
provisions of Rule 144 of the Securities Act of 1933, but notwithstanding the
provisions of Rule 144, Executive agrees that he will not undertake any
disposition of the Bonus Shares in the twelve month period beginning when sales
under Rule 144 are permissible without the approval of a majority of the
disinterested members of the Board of Directors of the Company. In case the
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Company shall at any time subdivide or combine the outstanding shares of Common
Stock, the number of Bonus Shares the Executive shall have the right to acquire
shall be proportionately increased in the case of such subdivision or decreased
in the case of such combination (on the date that such subdivision or
combination shall become effective). Bonus Shares shall bear an appropriate
restrictive legend, referring to the provisions hereof.
5. Incentive Compensation. As incentive compensation to Executive, the
Company hereby grants to Executive the right to acquire from the Company, on an
original issue basis, an aggregate of seven hundred (700,000) thousand fully
paid and non-assessable shares of Common Stock (the "Incentive Shares") at the
several purchase prices designated below upon the achievement by the Company of
the several corporate accomplishments (the "Milestones") listed below.
Executive's right as set forth herein shall be available at any time on and
after the date on which the first Milestone is achieved and so long as he is
employed by the Company, but not later than 5:00 P.M. (New York time) December
31, 2004 (the "Expiration Date"), upon notice to the Company at its principal
office at 10220-I Old Columbia Road, Columbia, MD 21046-1705, Attention: Spencer
J. Volk, President and Chief Executive Officer (or at such other location as the
Company may advise the Executive in writing). The notice shall be executed and
delivered with the Purchase Form attached hereto duly filled in and signed and
upon payment in cash or cashier's check of the aggregate Purchase Price for the
number of shares which Executive is acquiring determined in accordance with the
provisions hereof.
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5.1 For purposes of this paragraph:
A. Corporate Milestones. The right to acquire
Incentive Shares shall be available in tranches as indicated herein if, as and
when the Company has achieved the first two of the following Class X Milestones:
> Execution and delivery of an agreement
with one or more strategic partners to the Company providing for the marketing
and distribution of any one of the Company's products related to its breast
cancer treatment system. (Tranche: 150,000 shares)
> Execution and delivery of an agreement
with one or more strategic partners to the Company providing for the marketing
and distribution of any one of the Company's products related to treating
chronic prostate enlargement condition, common in older males, known as benign
prostatic hyperplasia ("BPH") (Tranche: 150,000 shares).
> Execution and delivery of an agreement
with one or more strategic partners to the Company providing for the marketing
and distribution of any one of the Company's products related to liposome
compounds that can carry chemotherapy drugs to a tumor site and release their
payload quickly when triggered by targeted heat. (Tranche: 150,000 shares).
Only 300,000 shares may be issued with respect to Class X
Milestones.
The right to acquire Incentive Shares shall
be available in tranches as indicated herein if, as and when the Company has
achieved any of the following Class Y Milestones:
>Obtaining pre-marketing approval from the
United States Food and Drug Administration for commercialization of the
Company's BPH treatment system. (Tranche: 150,000 shares)
> Obtaining pre-marketing approval from the
United States Food and Drug Administration for commercialization of the
Company's breast cancer treatment system. (Tranche: 150,000 shares).
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As a Class Z Milestone, the right to acquire
Incentive Shares shall be available as to a tranche of 100,000 shares if, as and
when the Company has achieved net income of $1,000,000 or more for any fiscal
year prior to the Expiration Date.
A. Purchase Price. The Purchase Price per share shall be as
follows:
On achieving the first Milestone, $0.80 per share;
On achieving the second Milestone, $1.00 per share;
On achieving the third Milestone, $1.20 per share;
On achieving the fourth Milestone, $1.40 per share, and
On achieving the fifth Milestone, $1.60 per share.
B. Acquisition of Incentive Shares. Executive may acquire Incentive
Shares in tranches as set forth as each Milestone is achieved at
any time or from time to time on or after the date hereof and so
long as he is employed by the Company, but not later than 5:00 p.m.
New York time, on the Expiration Date. If such date is a day on
which banking institutions are authorized by law to close, then the
Expiration Date shall be on the next succeeding day which shall not
be such a day. Incentive Shares may be acquired without regard to
the sequence in which the Milestones have been achieved. A Notice
of Intention to acquire Incentive Shares shall be submitted by the
Executive to the Company's Board of Directors, identifying the
Milestone achieved and the number of shares covered by the relevant
tranche. The Board of Directors shall be deemed to have approved
the relevant acquisition of Incentive Shares unless, within seventy
two (72) hours of the submission of the Notice of Intention, the
Board adopts a resolution determining that Incentive Shares may not
be issued as to the Milestone identified in the Notice of
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Intention. In the absence of such a disaffirming resolution,
Executive may acquire Incentive Shares thereafter by presentation
of the Notice of Intention either to the Company or at the office
of its stock transfer agent, if any, and accompanied by payment in
cash or cash equivalent of the Purchase Price for the number of
Incentive Shares specified in such Notice of Intention, together
with all federal and state taxes applicable upon such exercise.
C. Reservation of Shares. The Company hereby agrees that at all times
there shall be reserved for issuance such number of shares of its
Common Stock as shall be required for issuance or delivery as
Incentive Shares upon achievement of the Milestones set forth
herein.
D. Vesting. Incentive Shares shall vest in the Executive upon
issuance.
E. Anti-Dilution Provisions.
(1) Adjustment of Number of Incentive Shares. Anything in this
Paragraph (F) to the contrary notwithstanding, in case the Company
shall at any time issue Common Stock by way of dividend or other
distribution on any stock of the Company or subdivide or combine the
outstanding shares of Common Stock, the Purchase Price shall be
proportionately decreased in the case of such issuance (on the day
following the date fixed for determining shareholders entitled to
receive such dividend or other distribution) or decreased in the case
of such subdivision or increased in the case of such combination (on
the date that such subdivision or combination shall become effective).
(2) No Adjustment for Small Amounts. Anything in this
Paragraph (F) to the contrary notwithstanding, the Company shall not be
required to give effect to any adjustment in the Purchase Price unless
and until the net effect of one or more adjustments, determined as
above provided, shall have required a change of the Exercise Price by
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at least one cent, but when the cumulative net effect of more than one
adjustment so determined shall be to change the actual Purchase Price
by at least one cent, such change in the Purchase Price shall thereupon
be given effect.
(3) Number of Incentive Shares Adjusted. Upon any adjustment
of the Purchase Price other than pursuant to Paragraph (F)(1) hereof,
the Executive shall thereafter (until another such adjustment) be
entitled to purchase, at the new Purchase Price, the number of shares,
calculated to the nearest full share, obtained by multiplying the
number of shares of Common Stock initially issuable upon achieving any
Milestone by the Purchase Price in effect on the date hereof and
dividing the product so obtained by the new Purchase Price.
F. Reclassification, Reorganization or Merger. In case of any
reclassification, capital reorganization or other change of
outstanding shares of Common Stock of the Company (other than
a change in par value, or from par value to no par value or
from no par value to par value, or as a result of an issuance
of Common Stock by way of dividend or other distribution or of
a subdivision or combination), or in case of any consolidation
or merger of the Company with or into another corporation
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(other than a merger in which the Company is the continuing
corporation and which does not result in any reclassification,
capital reorganization or other change of outstanding shares
of Common Stock) or in case of any sale or conveyance to
another corporation of the property of the Company as an
entirety or substantially as an entirety, the Company shall
cause effective provision to be made so that the Executive
shall have the right thereafter as he has hereunder to
purchase the kind and amount of shares of stock and other
securities and property receivable upon such reclassification,
capital reorganization or other change, consolidation, merger,
sale or conveyance. The foregoing provisions of this Paragraph
(G) shall similarly apply to successive reclassifications,
capital reorganizations and changes of shares of Common Stock
and to successive consolidations, mergers, sale or
conveyances. In the event that in any such capital
reorganization or reclassification, consolidation, merger,
sale or conveyance, additional shares of Common Stock shall be
issued in exchange, conversion, substitution or payment, in
whole or in part, for or of a security of the Company other
than Common Stock, any such issue shall be treated as an issue
of Common Stock covered by the provisions hereof with the
amount of the consideration received upon the issue thereof
being determined by the Board of Directors of the Company,
such determination to be final and binding on the Executive.
6. Reimbursement for Expenses.
---------------------------
6.1 Company shall reimburse Executive for all reasonable
out-of-pocket expenses paid or incurred by him in the course of his employment,
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upon presentation by Executive of valid receipts or invoices therefor, utilizing
procedures and forms for that purpose as established by Company from time to
time.
7. Vacations.
----------
7.1 Executive shall be entitled to reasonable vacations (which
shall aggregate no less than four (4 ) weeks vacation with pay) during each
consecutive 12 month period commencing on the date hereof. Executive may not
accumulate any vacation days which remain unused at the end of any year during
the term hereof without the prior consent of Company.
8. Employee Benefit Programs, etc.
------------------------------
8.1 The Company shall provide the Executive with an automobile
(or at Employee's option, a cash allowance in the amount of $450.00 per month in
lieu thereof) for use in the performance of Executive's duties, along with fuel,
fluids and maintenance, upon such terms and conditions as are approved by
Company. The Company will also either provide or pay or reimburse the Executive
for the costs of a cellular telephone.
8.2 The Company shall provide the Executive at the Company's
expense disability insurance providing for disability payments to the Executive,
in a sum at least equal to 70 % of his Base Salary then in effect, following a
termination of Executive's employment hereunder as a result of Disability (as
defined in Section 9.2 below). In the event such policy is not obtained,
Executive shall be entitled to participate in such disability plan(s) as are
available to Company executives generally.
8.3 The Company shall obtain at its expense, and shall be the
owner of, a policy on the life of the Executive in the amount of Three Million
($3,000,000) Dollars, naming the Company as the beneficiary.
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8.4 In addition to the life insurance to be provided in
accordance with paragraph 8.3, subject to the Executive's meeting the
eligibility requirements of each respective plan, Executive shall participate in
and be covered by each pension, life insurance, accident insurance, health
insurance, hospitalization and any other employee benefit plan of Company, as
the case may be, made available generally from and after the date hereof to its
respective senior executives, on the same basis as shall be available to such
other executives without restriction or limitation by reason of this Agreement.
8.5 Nothing herein contained shall prevent the Company from at
any time increasing the compensation herein provided to be paid to Executive,
either permanently or for a limited period, or from paying bonuses and other
additional compensation to Executive, whether or not based upon the earnings of
the business of Company, or from increasing or expanding any employee benefit
program applicable to the Executive, in the event the Company, in its sole
discretion, shall deem it advisable so to do in order to recognize and
compensate fairly Executive for the value of his services.
9. Death or Disability.
--------------------
9.1 If Executive shall die during the term hereof, this
Agreement shall immediately terminate, except that Executive's legal
representatives or designated beneficiaries shall be entitled to receive (i) the
Base Salary due to Executive hereunder to the last day of the month following
the month in which his death occurs, payable in accordance with the Company's
regular payroll practices, (ii) all other benefits payable upon death under any
employee benefit program or other insurance covering the Executive as of the
date of death; and (iii) a pro-rated portion of the Bonus Shares payable under
Section 4.
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9.2 In the event of the Disability of the Executive, as
hereinafter defined, the Executive shall be entitled to continue to receive
payment of his Base Salary (prorated as may be necessary) in accordance with the
terms of Section 3 hereof through the last day of the third month following the
month in which Executive's employment hereunder is terminated as a result of
such Disability. At any time after the date of the Notice (as hereinafter
defined) and during the continuance of the Executive's Disability, the Company
may at any time thereafter terminate Executive's employment hereunder by written
notice to the Executive. The term "Disability" shall mean physical or mental
illness or injury which prevents the Executive from performing his customary
duties for the Company for a period of sixty (60) consecutive days or an
aggregate period of one hundred twenty (120) days out of any consecutive twelve
(12) months. The date of commencement of Disability shall be the date set forth
in the notice (the "Notice") given by Company to the Executive at any time
following a determination of Disability, which date shall not be earlier than
the date the Notice is given by Company. A determination of Disability by
Company shall be solely for the purposes of this Section 9.2 and shall in no way
affect the Executive's status under any other benefit plan applicable to the
Executive.
9.3 Upon the occurrence of a Disability, and unless the
Executive's employment shall have been terminated as provided in Section 9.2,
the Executive shall, during such time as he is continuing to receive Base Salary
payments as set forth in Section 9.2, perform such services for Company,
consistent with his duties under Section 1 hereof, as he is reasonably capable
of performing in light of the condition giving rise to a Disability. All
payments due under Section 9.2 shall be payable in accordance with Company's
regular payroll practices. Any amount paid to Executive pursuant to this
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Agreement by reason of his Disability, shall be reduced by the aggregate amount
of all monthly disability payments which the Executive is entitled to receive
under all workers compensation plans, disability plans and accident, health or
other insurance plans or programs maintained for the Executive by Company, by
any company controlling, controlled by or under common control with, Company.
9.4 In the event the Executive's employment is terminated due
to Disability, the Executive shall be entitled, in addition to the Base Salary
payments described in Section 9.2, to the Bonus Shares payable in accordance
with Section 4 for the fiscal year in which such Disability occurs, pro-rated by
multiplying the Bonus Shares otherwise issuable by a fraction, the numerator of
which is the number of days the Executive was employed during such fiscal year
and the denominator of which is 365.
10. Termination for Cause.
----------------------
10.1 The employment of the Executive may be terminated by
the Company for Cause. For this purpose, "Cause" shall mean:
(i) an act constituting a felony and resulting or
intended to result, directly or indirectly, in his
gain or personal enrichment at the expense of the
Company and its shareholders;
(ii) dishonest acts against the Company;
(iii) illegal drug use;
(iv) grossly or willfully neglecting to carry out his
duties under this
Agreement resulting in material harm to the Company.
The Executive's employment shall not be terminated for Cause under
clauses (ii) or (iv) unless
(a) the Executive has received at least 15 days notice of a meeting of
the Board of Directors at which meeting the Board shall consider the
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existence of Cause, shall provide the Executive with an opportunity to
be heard before the Board, and, following such consideration and
hearing, the Board has determined, based upon credible evidence, that
grounds for Cause exist; and (b) the misconduct or breaches on which an
assertion of Cause is based are not cured within 30 days thereafter if
such misconduct or breaches are capable of being cured.
10.2 In the event of a termination for Cause, the Executive
shall (a) be entitled to any unpaid Base Salary pro rated up to the date of
termination, and (b) shall have no further rights under this Agreement.
Furthermore, the Executive shall be and remain subject to all provisions of
Section 13 below for the period indicated therein, but shall not receive any of
the compensation set forth therein.
11. Termination Upon Change of Control or by Company Without Cause.
---------------------------------------------------------------
11.1 A "Change in Control" shall occur: (A) if any Person, or
combination of Persons (as hereinafter defined), or any affiliate of any of the
above, is or becomes the "beneficial owner" (as defined in Rule 13d-3
promulgated under the Securities Exchange Act of 1934) directly or indirectly,
of securities of the Company representing twenty- five percent (25%) or more of
the total number of outstanding shares of common stock of the Company; or (B) if
individuals who, at the date of this Agreement, constitute the Board (the
"Incumbent Directors") cease, for any reason, to constitute at least a majority
thereof, provided that any new director whose election was approved by a vote of
at least 75% of the Incumbent Directors shall be treated as an Incumbent
Director. For purposes hereof, "person" shall mean any individual, partnership,
joint venture, association, trust, or other entity, including a "group" as
referred to in section 13(d)(3) of the Securities Exchange Act of 1934.
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11.2 If there occurs a Change in Control, and if there
subsequently occurs a material adverse change, without the Executive's written
consent, in the Executive's working conditions or status, including but not
limited to a significant change in the nature or scope of the Executive's
authority, powers, duties or responsibilities, or a reduction in the level of
support services or staff, then, whether or not such change would otherwise
constitute a breach of this Agreement by the Company, this Agreement may be
terminated by notice given by the Executive, specifying the Change of Control
and significant adverse change or changes.
11.3 Upon the termination of this Agreement in accordance with
Section 11.2 above, the Executive will be entitled, without any duty to mitigate
damages, to:
(a) All unpaid Base Salary pro-rated up to the date of
termination; and
(b) The full number of unissued Bonus Shares pursuant to
Section 4;
(c) A severance payment equal to 2.99 times the Base
Salary in effect for the prior fiscal year; and
(d) All benefits available under the Company's employee
benefit programs, to the extent applicable to senior
executives voluntarily and amicably retiring from
employment with the Company.
11.4 In the event that the Company shall actually or
constructively terminate this Agreement during the Initial Term or any Renewal
Term without cause (and with or without a Change of Control), the Executive
shall be entitled to the same payments, compensation and rights as provided in
the case of a termination by the Executive under Section 11.3.
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11.5 The payments and any other compensation and benefits to
which the Executive is entitled under this Section 11 shall be made available to
the Executive no later than thirty (30) days after the date of any termination
referred to in Section 11.2, 11.3 or 11.4.
11.6 In the event that Executive receives the payments and any
other compensation and benefits referred to in this Section 11, he will be bound
by the restrictive provisions of Section 13 for the period therein provided,
subject to the right to receive the compensation therein set forth.
12. Termination by Executive.
-------------------------
12.1 If the Executive shall terminate his employment under
this Agreement during the Initial Term without either (i) a Change of Control or
(ii) the express written consent of the Company, then, for purposes of
establishing the rights of the Executive upon such termination, such termination
shall be deemed the equivalent of a termination for Cause under Section 12.1,
and the Executive shall have only those rights with regard to compensation as
are set forth in Section 12.2, and the restrictive provisions of Section 13
below shall fully apply (but the Executive shall not have any right to the
compensation set forth therein).
12.2 If the Executive shall terminate his employment under
this Agreement during any Renewal Term without either (i) a Change of Control or
(ii) the express written consent of the Company, then, for purposes of
establishing the rights of the Executive upon such termination, the Executive
shall be entitled to receive:
(a) All unpaid Base Salary pro-rated up to the date of
termination; and
(b) the full and absolute ownership of all Bonus Shares
previously delivered to him, subject to the
provisions of the securities laws of the United
States, but without the specific limitations set
forth in Section 4 hereof.
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12.3 In the case of a termination pursuant to Section 12.2,
the restrictions set forth in Section 13 shall apply to Executive for the period
therein stated, and the Executive shall receive the compensation set forth
therein.
13. Restrictive Covenants; Compensation.
------------------------------------
13.1 During such time as this Agreement shall be in effect
and, except as otherwise explicitly stated herein, for a period of three (3)
years following the termination of Executive's employment, and without the
Company's prior written consent (which may be withheld for any reason or for no
reason in Company's sole discretion), Executive shall not do anything in any way
inconsistent with his duties to, or adverse to the interests of, the Company,
nor shall Executive, directly or indirectly, himself or by or through a family
member or otherwise, alone or as a member of a partnership or joint venture, or
as a principal, officer, director, consultant, employee or stockholder of any
other entity, compete with Company or be engaged in or connected with any other
business competitive with that of Company or any of its affiliates, except that
Executive may own as a passive investment not more than five percent (5%) of the
securities of any publicly held corporation that may engage in such a business
competitive with that of Company or any of its Affiliates.
13.2 In view of the fact that Executive will be brought into
close contact with many confidential affairs of Company and its Affiliates not
readily available to the public, Executive agrees during the Term of this
Agreement and thereafter:
(a) to keep secret and retain in the strictest
confidence all non-public information about (i) research and
development, test results, suppliers, venture or strategic
partners, licenses and patents or patent applications, planned
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or existing products, knowhow, financial condition and other
financial affairs (such as costs, pricing, profits and plans
for future development, methods of operation and marketing
concepts) of Company and its Affiliates; (ii) the employment
policies and plans of the Company and its Affiliates; and
(iii) any other proprietary information relating to the
Company and its Affiliates, their operations, businesses,
financial condition and financial affairs (collectively, the
"Confidential Information") and, for such time as Company or
any of its Affiliates is operating, Executive shall not
disclose the Confidential Information to anyone not then an
officer, director or authorized employee of Company or its
Affiliates, either during or after the term of this Agreement,
except in the course of performing his duties hereunder or
with Company's express written consent or except to the extent
that such confidential information can be shown to have been
in the public domain through no fault of Executive; and
(b) to deliver to Company within ten days after
termination of his services, or at any time Company may so
request, all memoranda, notes, records, reports and other
documents relating to Company or its Affiliates, businesses,
financial affairs or operations and all property associated
therewith, which he may then possess or have under his
control.
13.3 Executive shall not at any time during the three-year
period following the termination of his employment for any reason whatsoever,
including termination resulting from the natural expiration of the term of this
Agreement, (i) employ any individual who was employed by Company or any of its
Affiliates at any time during the such period or during the 12 calendar months
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immediately preceding such termination, or (ii) in any way cause, influence or
participate in the employment of any such individual by anyone else in any
business that is competitive with any of the businesses engaged in by Company or
any of its Affiliates.
13.4 Executive shall not at any time during the three -year
period following the termination of his employment, for any reason whatsoever,
including termination resulting from the natural expiration of the term of this
Agreement, directly or indirectly, either (i) persuade or attempt to persuade
any customer or client of the Company or of any of its Affiliates to cease doing
business with Company or with any Affiliate, or to reduce the amount of business
it does with Company or with any of its Affiliates, or (ii) solicit for himself
or any person other than Company or any of its Affiliates, the business of any
individual or business which was a customer or client of Company or any of its
Affiliates at any time during the eighteen month period immediately preceding
such termination.
13.5 Executive acknowledges that the execution and delivery by
him of the promises set forth in this Section 13 is an essential inducement to
Company to enter into this Agreement, and that Company would not have entered
into this Agreement but for such promises. Executive further acknowledges that
his services are unique and that any breach or threatened breach by Executive of
any of the foregoing provisions of this Section 13 cannot be remedied solely by
damages. In the event of a breach or a threatened breach by Executive of any of
the provisions of this Section 13, Company shall be entitled to injunctive
relief restraining Executive and any business, firm, partnership, individual,
corporation or other entity participating in such breach or attempted breach.
Nothing herein, however, shall be construed as prohibiting Company from pursuing
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any other remedies available at law or in equity for such breach or threatened
breach, including the recovery of damages and the immediate termination of the
employment of Executive hereunder.
13.6 If any of the provisions of, or promises contained in,
this Section 13 are hereafter construed to be invalid or unenforceable in any
jurisdiction, the same shall not affect the remainder of the provisions or the
enforceability thereof in any other jurisdiction, which shall be given full
effect, without regard to the invalid portions or the unenforceability in such
other jurisdiction. If any provisions contained in this Section 13 are held to
be unenforceable in any jurisdiction because of the duration or scope thereof,
the parties hereto agree that the court making such determination shall have the
power to reduce the duration and/or scope (if such provision, in its reduced
form, shall be enforceable); provided, however, that the determination of such
court shall not affect the enforceability, duration or scope of this Section 13
in any other jurisdiction.
13.7 As separate and additional compensation to be paid to the
Executive in consideration of the observance and performance of the promises
contained in this Section 13, the Company agrees that, during the period of
restrictions set forth in this Section 13, the Executive will be entitled to be
paid an amount equal to 100% of the Base Salary computed at the annual rate
prevailing immediately prior to the termination of his employment (such amount
to be paid in the same manner as the Company's regular payroll practices),
except that, (i) in the case of termination of the Executive's employment for
Cause, or in case the Executive shall terminate this Agreement under Section
12.1 during the Initial Term, the Executive will receive no such compensation
14. Relationship of Parties.
------------------------
Nothing herein contained shall be deemed to constitute a
partnership between or a joint venture by the parties, nor shall anything herein
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contained be deemed to constitute either the Executive, the Company or any
Affiliates the agent of the other except as is expressly provided herein.
Neither Executive nor Company shall be or become liable or bound by any
representation, act or omission whatsoever of the other party made contrary to
the provisions of this Agreement.
15. Notices.
--------
All notices and communications hereunder shall be in writing
and delivered by hand or sent by registered or certified mail, postage and
registration or certification fees prepaid, return receipt requested, or by
overnight delivery such as Federal Express, and shall be deemed given when hand
delivered or upon three (3) business days after the date when mailed, or upon
one (1) business day after delivery to an agent for overnight delivery, if sent
in such manner, as follows:
If to Company: Celsion Corporation
10220-1 Old Columbia Road,
Columbia, Maryland 21046-1705.
Attention: Board of Directors
With a copy to: Bresler Goodman & Unterman LLP
521 Fifth Avenue
New York, NY 10175
Attn: Kevin J. Lake
If to Executive: Augustine Y. Cheung
C/o Celsion Corporation
10220-1 Old Columbia Road,
Columbia, Maryland 21046-1705.
The foregoing addresses may be changed by notice given in the manner set forth
in this Section 15.
16. Disputes.
---------
Any dispute arising under this Agreement shall be settled in
accordance with the following provisions. If the parties are deadlocked on any
issue arising under the terms of this Agreement, a tiebreaker shall be chosen by
the Dean of the School of Business Administration at the University or Maryland.
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Each party may present its proposal to the designated tiebreaker in written form
and may, on a date established by the tiebreaker within fifteen calendar days of
the day the tiebreaker is chosen, make an oral presentation not to exceed two
hours in length, accompanied by exhibits and written arguments not to exceed 50
pages in length. The designated tiebreaker shall then select one of the
submitted proposals, without any change or adjustment, and shall announce to the
parties his or her selection within five calendar days of the day of submission.
The party offering the proposal that is not selected by the tiebreaker shall
bear all costs and expenses (including legal, expert and other fees and
expenses), and the expenses and fees charged by the tiebreaker. Any award by the
tiebreaker may be enforced on application of either party by the order or
judgment of any Federal or state court in the State of Maryland as the party
making such application shall elect, having jurisdiction over the subject matter
thereof. Each of the parties hereto hereby submits itself to the jurisdiction of
any such court and agree that service of process on it in any action, suit or
proceeding to enforce any such award may be effected by the means by which
notices are to be given to it under this Agreement.
17. Miscellaneous.
--------------
17.1 This Agreement contains the entire understanding of the
parties hereto with respect to the employment of Executive by Company during the
term hereof, and the provisions hereof may not be altered, amended, waived,
terminated or discharged in any way whatsoever except by subsequent written
agreement executed by the party charged therewith. This Agreement supersedes all
prior employment agreements, understandings and arrangements between Executive
and Company pertaining to the terms of the employment of Executive. A waiver by
either of the parties of any of the terms or conditions of this Agreement, or of
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any breach hereof, shall not be deemed a waiver of such terms or conditions for
the future or of any other term or condition hereof, or of any subsequent breach
hereof.
17.2 The provisions of this Agreement are severable, and if
any provision of this Agreement is invalid, void, inoperative or unenforceable,
the balance of the Agreement shall remain in effect, and if any provision is
inapplicable to any circumstance, it shall nevertheless remain applicable to all
other circumstances.
17.3 Company shall have the right to deduct and withhold from
Executive's compensation the amounts required to be deducted and withheld
pursuant to any present or future law concerning the withholding of income
taxes. In the event that Company makes any payments or incurs any charges for
Executive's account or Executive incurs any personal charges with Company,
Company shall have the right and Executive hereby authorizes Company to recoup
such payments or charges by deducting and withholding the aggregate amount
thereof from any compensation otherwise payable to Executive hereunder.
17.4 This Agreement shall be construed and interpreted under
the laws of the State of Maryland applicable to contracts executed and to be
performed entirely therein.
17.5 The captions and section headings in this Agreement are
not part of the provisions hereof, are merely for the purpose of reference and
shall have no force or effect for any purpose whatsoever, including the
construction of the provisions of this Agreement.
17.6 To the extent any provision of this Agreement
contemplates action after termination hereof or creates a cause of action or
claim on which action may be brought by either party, such provision, cause of
action or claim shall survive termination of Executive's employment or
termination of this Agreement.
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17.7 Executive may not assign his rights nor delegate his
duties under this Agreement; provided, however, that notwithstanding the
foregoing this Agreement shall inure to the benefit of Executive's legal
representatives, executors, administrators or successors and to the successors
or assigns of Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
CELSION CORPORATION
By: /s/ Spencer J. Volk
--------------------
Spencer J. Volk, President
/s/ Augustine Y. Cheung
------------------------
Augustine Y. Cheung
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