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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q (Mark One)
[ ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended ___________________________
or
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from October 1, 2003 to December 31, 2003
Commission file number 000-14242
CELSION CORPORATION
-------------------
(Exact name of registrant as specified in its charter)
DELAWARE 52-1256615
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10220-L OLD COLUMBIA ROAD, COLUMBIA, MARYLAND 21046-1705
---------------------------------------------------------
(Address of principal executive offices) (Zip code)
(410) 290-5390
(Registrant's telephone number, including area code)
FORMER ADDRESS: 10220-I OLD COLUMBIA ROAD, COLUMBIA, MARYLAND 21046-1705 AND
FORMER FISCAL YEAR COMMENCED OCTOBER 1 AND ENDED SEPTEMBER 30
-------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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
--- ---
Indicate by check mark whether the Registrant is an accelerated filer
(as defined in Rule 12b-2 of the Exchange Act). Yes No X
--- ---
AS OF FEBRUARY 12, 2004, THE REGISTRANT HAD OUTSTANDING 150,650,287 SHARES OF
COMMON STOCK, $.01 PAR VALUE.
SEC 1296 (1-04) POTENTIAL PERSONS WHO ARE TO RESPOND TO THE COLLECTION OF
INFORMATION CONTAINED IN THIS FORM ARE NOT REQUIRED TO RESPOND
UNLESS THE FORM DISPLAYS A CURRENTLY VALID OMB CONTROL NUMBER.
TABLE OF CONTENTS
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS AND NOTES.
BALANCE SHEETS
STATEMENTS OF OPERATIONS
STATEMENTS OF CASH FLOWS
NOTES TO FINANCIAL STATEMENTS
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
ITEM 4. CONTROLS AND PROCEDURES.
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
EXHIBITS
3.1 CERTIFICATE OF INCORPORATION OF THE CORPORATION, AS AMENDED
(COMPILED)
3.2 BYLAWS OF THE CORPORATION, AS AMENDED (COMPILED)
11 STATEMENT RE. COMPUTATION OF EARNINGS PER SHARE.
31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO RULE
13A-14(A)/15D-14(A), AS ADOPTED PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002.
31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO RULE
13A-14(A)/15D-14(A), AS ADOPTED PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002.
32.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18
U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002.
32.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18
U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002.
2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
-----------------------------------------------------------------------
Index to Financial Statements
-----------------------------------------------------------------------
Page
-----------------------------------------------------------------------
Balance Sheets 4
December 31, 2003 and September 30, 2003
-----------------------------------------------------------------------
Statements of Operations for the 6
Three Months Ended December 31, 2003 and 2002
-----------------------------------------------------------------------
Statements of Cash Flows for the 7
Three Months Ended December 31, 2003 and 2002
-----------------------------------------------------------------------
Notes to Financial Statements 8
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3
CELSION CORPORATION
BALANCE SHEETS
December 31, 2003 and September 30, 2003
ASSETS
December 31, September 30,
2003 2003
---- ----
(Unaudited)
Current assets:
Cash .......................................... $12,272,407 $11,410,533
Other receivables ............................. 16,753 90,927
Materials ..................................... 838,992 732,225
Work-in-process ............................... 37,308 51,156
Finished goods ................................ 41,410 41,410
Prepaid expenses .............................. 361,967 78,842
----------- -----------
Total current assets .................... 13,568,837 12,405,093
----------- -----------
Property and equipment - at cost:
Furniture and office equipment ................ 146,508 138,592
Computer hardware and software ................ 218,758 189,812
Laboratory and shop equipment ................. 212,379 172,006
Leasehold improvements ........................ 107,258 12,275
----------- -----------
684,903 512,685
Less accumulated depreciation .............. 296,068 275,361
----------- -----------
Net value of property and equipment ..... 388,835 237,324
----------- -----------
Other assets:
Deposits ..................................... 23,622 23,622
Prepaid inventory development costs ......... 417,453 417,218
Patent licenses (net of amortization) ....... 41,087 45,044
----------- -----------
Total other assets .......................... 482,162 485,884
----------- -----------
Total assets ......................... $14,439,834 $13,128,301
=========== ===========
4
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, September 30,
2003 2003
---- ----
(Unaudited)
Current liabilities:
Accounts payable - trade ......................................... $ 631,097 $ 883,218
Accrued noncash compensation ..................................... 153,316 125,395
Other accrued liabilities ........................................ 202,426 384,886
------------ ------------
Total current liabilities .................................. 986,839 1,393,499
------------ ------------
Stockholders' equity:
Common Stock $0.01 par value: 200,000,000 shares authorized,
148,034,473 and 143,101,134 shares issued and outstanding at
December 31, 2003 and September 30, 2003, respectively .............. 1,480,345 1,431,011
Additional paid-in capital ....................................... 72,204,867 67,582,174
Accumulated deficit .............................................. (60,232,217) (57,278,383)
------------ ------------
Total stockholders' equity ................................ 13,452,995 11,734,802
------------ ------------
Total liabilities and stockholders' equity .......... $ 14,439,834 $ 13,128,301
============ ============
See accompanying notes.
5
CELSION CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended December 31,
------------------------------------
2003 2002
---- ----
Operating expenses:
General and administrative .......... $ 856,968 $ 840,044
Research and development ............ 2,109,795 1,097,428
------------- -------------
Total operating expenses ......... 2,966,763 1,937,472
------------- -------------
Loss from operations ................. (2,966,763) (1,937,472)
Loss from disposal of property and
equipment ............................ (5,791) --
Interest income ...................... 18,720 2,651
------------- -------------
Loss before income taxes ............. (2,953,834) (1,934,821)
Income taxes ......................... -- --
------------- -------------
Net loss ............................. $ (2,953,834) $ (1,934,821)
Dividends on preferred stock ......... -- (53,313)
------------- -------------
Net loss attributable to common
stockholders ......................... $ (2,953,834) $ (1,988,134)
============= =============
Net loss per common share (basic) .... $ (0.02) $ (0.02)
============= =============
Weighted average shares outstanding .. 144,152,732 95,128,667
============= =============
See accompanying notes.
6
CELSION CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended December 31,
-------------------------------
2003 2002
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .............................................. $ (2,953,834) $ (1,934,821)
Non-cash items included in net loss:
Depreciation and amortization ...................... 31,149 24,875
Common Stock and stock options
issued for compensation and other operating expenses 219,115 132,957
Stock based compensation ........................... 647,656 --
Loss on disposal of property and equipment ......... 5,791 --
Net changes in:
Other receivables .................................. 74,174 84,493
Inventories ........................................ (92,919) (171,748)
Prepaid expenses ................................... (283,125) (196,541)
Prepaid inventory development costs ................ (235) 32,380
Accounts payable-trade ............................. (252,121) 299,054
Other accrued liabilities .......................... (154,539) (151,568)
------------ ------------
Net cash used by operating activities ........... (2,758,888) (1,880,919)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment .................. (184,493) (294)
------------ ------------
Net cash used by investing activities ............ (184,493) (294)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds of stock issuances ............................ 3,805,255 1,503,000
Note payable ........................................... -- 500,000
Net cash provided by financing activities ........ 3,805,255 2,003,000
------------ ------------
NET INCREASE IN CASH .................................... 861,874 121,787
Cash at beginning of period ............................. 11,410,533 928,819
------------ ------------
Cash at end of the period ............................... $ 12,272,407 $ 1,050,606
============ ============
See accompanying notes.
7
CELSION CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The accompanying unaudited condensed financial statements of Celsion
Corporation (the "Company") have been prepared in accordance with accounting
principles generally accepted in the United States of America for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements. In the opinion of
management, all adjustments, consisting only of normal recurring accruals
considered necessary for a fair presentation, have been included in the
accompanying unaudited financial statements. Operating results for the
three-month period ended December 31, 2003 are not necessarily indicative of the
results that may be expected for any other interim period or for any full year.
For further information, refer to the financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 2003.
Note 2. Common Stock Outstanding and Per Share Information
For the three-month periods ended December 31, 2003 and 2002, per share
data is based on the weighted average number of shares of common stock, par
value $0.01 per share ("Common Stock"), outstanding. Outstanding warrants and
options which can be converted into Common Stock are not included, as their
effect is anti-dilutive.
Note 3. New Accounting Pronouncements
In December 2002, the Financial Accounting Standards Boards ("FASB")
issued Statement of Financial Accounting Standards (SFAS) No. 148, Accounting
for Stock-Based Compensation - Transition and Disclosure, an amendment of SFAS
No. 123, Accounting for Stock-Based Compensation. This statement was issued to
provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based compensation. In addition, this
statement amends the disclosure requirements of SFAS No. 123 to require
prominent disclosures in both annual and interim financial statements about the
method of accounting for stock-based employee compensation and the effect of the
method used on reported results. The Company adopted the disclosure requirements
of SFAS No. 148 in 2003, and such adoption did not have a material effect on the
Company's reported results of operation, financial positions and cash flows.
In April 2003, FASB issued SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities, to provide clarification on the
meaning of an underlying derivative, the characteristics of a derivative that
contains financing components and the meaning of an initial investment that is
smaller than would be required for other types of contracts that would be
expected to have a similar response to changes in market factors. This statement
is effective for contracts entered into or modified after June 30, 2003 and for
hedging relationships designated after June 30, 2003. In addition, all
provisions of this statement should be applied prospectively. The adoption of
SFAS No. 149 did not have a material impact on the Company's reported results of
operations or financial condition.
In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity. SFAS
No. 150 establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its scope
as a liability (or an asset in some circumstances). Many of those instruments
were previously classified as equity. Some of the provisions of this statement
are consistent with the current definition of liabilities in FASB Concepts
Statement No. 6, Elements of Financial Statements. This
8
statement is effective for financial instruments entered into or modified after
May 31, 2003, and otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003. Thus, the Company adopted the provisions
of SFAS No. 150 for its fourth fiscal quarter beginning July 1, 2003. The
adoption of SFAS No. 150 did not have a material impact on the Company's
reported results of operations or financial condition.
In January 2003, the FASB issued FASB Interpretation ("FIN") 46,
Consolidation of Variable Interest Entities - an Interpretation of ARAB No. 51.
This interpretation provides guidance related to identifying variable interest
entities (previously known as special purpose entities or SPEs) and determining
whether such entities should be consolidated. Certain disclosures are required
if it is reasonably possible that a company will consolidate or disclose
information about a variable interest entity when it initially applies FIN 46.
This interpretation will be effective for the Company's quarter beginning
October 1, 2003. The Company has no investment in or contractual relationship or
other business relationship with a variable interest entity and therefore the
adoption of FIN 46 will not have any impact on our results of operations and
financial condition. However, if the Company enters into any such arrangement
with a variable interest entity in the future (or any entity with which we
currently have a relationship is reconsidered based on guidance in FIN 46 to be
a variable interest entity), the Company's reported results of operations and
financial condition will be affected.
Note 4. Fair Value Accounting for Stock Plans
The Company has long-term compensation plans that permit the granting
of incentive awards in the form of stock options. The Company had adopted the
disclosure-only provisions of Statement of Financial Accounting Standard
("SFAS") No. 148, which allows companies to continue to measure compensation
costs for stock options granted to employees using the value-based method of
accounting prescribed by APB Opinion No. 25 Accounting for Stock Issued to
Employees (APB 25). Celsion has elected to follow APB 25 and the related
interpretations in accounting for its employee stock options.
The following table illustrates the effect on net income and earnings
per share if the Company had applied the fair value recognition provisions of
Statement 123, to its stock-based employee plans:
Three Months Ended December 31,
-------------------------------
2003 2002
---- ----
Net loss attributable to common
stockholders, as reported ............... $ (2,953,834) $(1,988,134)
Add: Stock-based employee compensation
expense included in reported net
loss .................................... 647,656 --
Deduct: Total stock-based employee
compensation expense determined using the
fair value based method for all awards .. 711,910 199,617
------------- -----------
Pro forma net loss ...................... $ (3,018,088) $(2,187,751)
============= ===========
Loss per share:
Basic - as reported ..................... $ (0.02) $ (0.02)
============= ===========
Basic - pro forma ....................... $ (0.02) $ (0.02)
============= ===========
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
FORWARD-LOOKING STATEMENTS
Statements and terms such as "expect", "anticipate", "estimate",
"plan", "believe", and words of similar import, regarding the Company's
expectations as to the development and effectiveness of its technologies, the
potential demand for its products, and other aspects of its present and future
business operations, constitute forward- looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Although the Company
believes that its expectations are based on reasonable assumptions within the
bounds of its knowledge of its business and operations, the Company cannot
guarantee that actual results will not differ materially from its expectations.
In evaluating such statements, readers should specifically consider the various
factors contained in the Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 2003, including, without limitation, unforeseen changes
in the course of research and development activities and in clinical trials;
possible changes in cost and timing of development and testing, capital
structure, and other financial items; changes in approaches to medical
treatment; introduction of new products by others; possible acquisitions of
other technologies, assets or businesses; and possible actions by customers,
suppliers, competitors and regulatory authorities. These and other risks and
uncertainties could cause actual results to differ materially from those
indicated by such forward-looking statements, including those set forth in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Risk Factors" contained in the Company's Annual Report on Form 10-K
for the fiscal year ended September 30, 2003, as well as those set forth below
and elsewhere in this Report.
GENERAL
Since inception, the Company has incurred substantial operating losses.
The Company expects operating losses to continue and possibly increase in the
near term and for the foreseeable future, as it continues its product
development efforts, conducts clinical trials and undertakes marketing and sales
activities for new products. The Company's ability to achieve profitability is
dependent upon its ability successfully to integrate new technology into its
thermotherapy systems, conduct clinical trials, obtain governmental approvals,
and manufacture, market and sell its new products. Major obstacles facing the
Company over the last several years have included inadequate funding, a negative
net worth, and the slow development of the thermotherapy market due to technical
shortcomings of the thermotherapy equipment available commercially. The Company
has not continued to market its older thermotherapy system, principally because
of the system's inability to provide heat treatment for other than surface and
sub-surface tumors, and has concentrated its efforts on a new generation of
thermotherapy products.
RESULTS OF OPERATIONS
Comparison of Three Months Ended December 31, 2003
and Three Months Ended December 31, 2002
There were no product sales for the three months ended December 31,
2003 or 2002. No product revenues are expected until the Company's equipment
incorporating new technologies receives the necessary approvals from
governmental regulatory agencies and the Company begins to market such
equipment.
General and administrative expense did not change materially for the
three months ended December 31, 2003, compared to the comparable period in 2002.
Research and development expense increased by 92% to $2,109,795 for the
current quarter from $1,097,428 for the three months ended December 31, 2002.
The increase of $1,012,367 in the current quarter was the result of recognition
of compensation expense related to employee stock options, salary, recruiting
and relocation expenses associated with new employees and increased business
development expenses for Benign Prostatic Hyperplasia (BPH),, liposome and gene
therapy.
The net increase in expenditures discussed above resulted in an
increase in the loss from operations for the three-month period ended December
31, 2003 of $1,029,291, or 53%, to $2,966,763 from $1,937,472 in the comparable
period during the prior fiscal year.
Interest income net of interest expense increased by 606% to $18,720
for the quarter ended December 31,
10
2003 from $2,651 during the comparable quarter in 2002. The increase of $16,069
was due to higher average cash balances, as a result of capital raising
activities during the intervening period.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, our expenses have significantly exceeded our revenues,
resulting in an accumulated deficit of $60,232,217 at December 31, 2003. We have
incurred negative cash flows from operations since our inception and have funded
our operations primarily through the sale of equity securities. As of December
31, 2003, we had cash of $12,272,407 and total current assets of $13,568,837,
compared with current liabilities of $986,839, resulting in a working capital
surplus of $12,581,998. As of September 30, 2003, we had $11,410,533 in cash and
total current assets of $12,405,093, compared with current liabilities of
$1,393,499, which resulted in a working capital surplus of $11,011,594 at the
fiscal year end. Net cash used in the Company's operating activities was
$2,758,888 for the three months ending December 31, 2003.
On December 12, 2003, the Company issued 4,550,000 shares of its Common
Stock and associated warrants to purchase 1,365,000 shares of its Common Stock
in connection with a private placement offering. The warrants issued to each
investor entitle such investor to purchase that number of shares of Common Stock
equal to 30% of the number of shares of Common Stock initially issued to the
investor in the offering. The warrants are exercisable at $1.25 per share of
Common Stock, subject to call under certain circumstances. In connection with
the private placement offering, the Company issued warrants to a finder to
purchase 473,200 shares of its Common Stock at an exercise price of $0.88 per
share. The Company realized gross proceeds in the amount of $4,004,000 and paid
a cash finders' fee in the amount of $320,320 in connection with the sale of
these securities. In addition, during the quarter, the Company issued a total of
196,500 shares of its Common Stock for cash consideration of $119,575 upon
exercise of outstanding stock purchase warrants. The warrants were exercised in
accordance with their respective terms at prices ranging from $0.54 to $0.65 per
share. The Company also issued 5,000 shares of its Common Stock for a cash
consideration of $2,000 upon exercise of a stock option.
During the three months ended December 31, 2003, we expended
approximately $2,109,795 (including research and development outlays,
compensation expenses, including recruitment and relocation expenses for new
employees, expenses relating to previously repriced stock options and increased
business development costs for BPH, liposome and gene therapy products) for
clinical testing of our breast cancer, BPH and prostate cancer treatment
systems, as well as corporate overhead. For fiscal year ending December 31,
2004, we expect to expend approximately $10 million for clinical testing of our
breast cancer, prostate cancer and liver cancer treatment systems, as well as
corporate overhead, all of which we have funded, or expect to fund, from our
current resources. If, as currently anticipated, our BPH system is approved for
marketing during the course of fiscal 2004, funding could be generated from
product sales. The foregoing amounts are estimates based upon assumptions as to
the scheduling of institutional clinical research and testing personnel, the
timing of clinical trials and other factors which are not fully predictable or
within our control.
We anticipate that our available cash on hand will be sufficient to
fund our activities through December 31, 2004. However, our dependence on
raising additional capital beyond fiscal 2004 will continue at least until we
are able to begin marketing our new technologies. Our future capital
requirements and the adequacy of our financing depend upon numerous factors,
including the successful commercialization of our BPH 800 system and breast
cancer treatment systems, progress in product development efforts, progress with
pre-clinical studies and clinical trials, the cost and timing of production
arrangements, the development of effective sales and marketing activities, the
cost of filing, prosecuting, defending and enforcing intellectual property
rights, competing technological and market developments and the development of
strategic alliances for the marketing of our products. We will be required to
obtain additional funding through equity or debt financing, strategic alliances
with corporate partners and others, or through other sources not yet identified.
We do not have any committed sources of additional financing, and cannot
guarantee that additional funding will be available in a timely manner, on
acceptable terms, or at all. If adequate funds are not available, we may be
required to delay, scale back or eliminate certain aspects of our operations or
attempt to obtain funds through unfavorable arrangements with partners or others
that may require us to relinquish rights to certain of our technologies, product
candidates, products or potential markets or which otherwise may be materially
unfavorable to us. Furthermore, if we cannot fund our ongoing development and
other operating requirements, particularly those associated with our obligation
to conduct clinical trials under our licensing agreements, we will be in breach
of our commitments under those licensing agreements and could therefore lose our
license rights, which could have material adverse effects on our business.
11
On January 21, 2003, Celsion entered into an agreement with Boston
Scientific under which Boston Scientific will market and distribute the
Company's BPH 800 treatment system. In connection with this agreement, Boston
Scientific purchased 9,375,354 shares of Celsion Common Stock for an initial
investment of $5,000,000 and agreed to invest an additional $10 million in a
combination of equity and licensing fees upon Celsion meeting certain
milestones. Further investments by Boston Scientific would contribute to
Celsion's funding requirements for the future.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
We have conducted an evaluation of the effectiveness of the design and
operation of our disclosure controls and procedures (as such term is defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) under
the supervision of our Chief Executive Officer and Chief Financial Officer as of
the end of the fiscal quarter covered by this Quarterly Report on Form 10-Q.
Based on this evaluation, our Chief Executive Officer and Chief Financial
Officer have concluded that, as of December 31, 2003, our disclosure controls
and procedures were effective to ensure that information required to be
disclosed in reports that Celsion files or submits under the Exchange Act is
recorded, processed, summarized and reported in a timely manner. In designing,
implementing and evaluating our disclosure controls and procedures, our
management recognizes that any controls and procedures, no matter how well
designed and implemented, may not be effective in all circumstances. However, we
believe that our disclosure controls and procedures provide reasonable assurance
of achieving the desired disclosure control objectives.
There have not been any significant changes in our internal controls or
in other factors subsequent to the date the evaluation was completed that could
significantly affect such controls and no corrective actions have been required
with regard to significant deficiencies and material weaknesses.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
During the fiscal quarter ended December 31, 2003, the Company issued
5,000 shares of its Common Stock for a cash consideration of $2,000 upon
exercise of a stock option. Additionally, the Company issued the following
securities without registration under the Securities Act of 1933, as amended
(the "Securities Act"):
- On December 12, 2003, the Company issued 4,550,000 shares of its Common
Stock and associated warrants to purchase 1,365,000 shares of its
Common Stock in connection with a private placement offering. The
private placement offering was made exclusively to "accredited
investors" as that term is defined in Rule 501 under the Securities
Act. These securities were issued at a price of $0.88 per share and
associated fractional warrant. The warrants issued to each investor
entitle such investor to purchase that number of shares of Common Stock
equal to 30% of the number of shares of Common Stock initially issued
to the investor in the offering. The warrants are exercisable at $1.25
per share of Common Stock, subject to call under certain circumstances.
In connection with the private placement offering, the Company issued
warrants to a finder to purchase 473,200 shares of its Common Stock at
an exercise price of $0.88 per share. The Company realized gross
proceeds in the amount of $4,004,000 and paid a cash finders' fee in
the amount of $320,320 in connection with the sale of these securities.
The shares issued are restricted stock, endorsed with the Company's
standard restricted stock legend, with a stop transfer instruction
recorded by the transfer agent. The certificates representing the
warrants have a similar restrictive legend. Accordingly, the Company
views the shares issued as exempt from registration under Sections 4(2)
and/or 4(6) of the Securities Act.
- During the quarter, the Company issued a total of 196,500 shares of its
Common Stock for cash
12
consideration of $119,575 upon exercise of outstanding stock purchase
warrants. The warrants were exercised in accordance with their
respective terms at prices ranging from $0.54 to $0.65 per share. These
shares are restricted stock, and the certificates representing such
shares are endorsed with Celsion's standard restrictive legend, with a
stop transfer instruction recorded by the transfer agent. Accordingly,
Celsion views the shares issued as exempt from registration under
Sections 4(2) and/or 4(6) of the Securities Act
- During the quarter, from time to time the Company also issued a total
of 62,567 shares of its Common Stock to four outside consultants for
services valued at $67,697. These shares are restricted stock, endorsed
with the Company's standard restricted stock legend, with stop transfer
instructions recorded by the transfer agent. Accordingly, the Company
views the shares issued as exempt from registration under Sections 4(2)
and/or 4(6) of the Securities Act.
- During the quarter, the Company issued a total of 96,334 shares of its
Common Stock to its non-employee directors for service as members of
the Board of Directors for fiscal year ended September 30, 2003. The
Company also issued 22,938 shares of its Common Stock to one of its
non-employee directors as expense reimbursement in lieu of cash. These
shares are restricted stock, endorsed with the Company's standard
restricted stock legend, with a stop transfer instruction recorded by
the transfer agent. Accordingly, the Company views the shares issued as
exempt from registration under Sections 4(2) and/or 4(6) of the
Securities Act.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
3.1 Certificate of Incorporation of the Corporation, as amended
(compiled)
3.2 Bylaws of the Corporation, as amended (compiled)
11 Statement Re. Computation of Earnings Per Share.
31.1 Certification of Chief Executive Officer pursuant to Rule
13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer pursuant to Rule
13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K.
On December 3, 2003, the Company filed with the SEC a Current
Report on Form 8-K reporting, under Item 5, that, effective
December 31, 2003, it is changing its fiscal year end from
September 30 to December 31.
13
On December 19, 2003, the Company filed with the SEC a Current
Report on Form 8-K reporting, under Item 5, that on December
12, 2003, it completed a private placement of 4,550,000 shares
of its Common Stock, par value $0.01 per share and warrants to
purchase 1,365,000 shares of Common Stock (representing 30%
warrant coverage) exercisable at $1.25 per share. The
placement was priced at $0.88 per share and associated warrant
and yielded gross proceeds of approximately $4 million. The
proceeds from the private placement will, after the payment of
transaction costs, be used to continue the development of the
Company's heat-activated liposomes and Cancer Repair Inhibitor
(CRI) technologies and for working capital and general
corporate purposes through the end of 2004. The Company also
issued warrants to purchase approximately 437,200 shares of
Common Stock, exercisable at $0.88 per share, as compensation
to its finder.
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATE: February 17, 2004
CELSION CORPORATION
-------------------
Registrant
By: /s/ Augustine Y. Cheung
-----------------------
Augustine Y. Cheung
President and Chief Executive Officer
By: /s/Anthony P. Deasey
-----------------------
Anthony P. Deasey
Executive Vice President-Finance and
Administration
15
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
CELSION (DELAWARE) CORPORATION
(Compiled and reflecting all amendments through February 17, 2004*)
The undersigned, a natural person of legal age, for the purpose of
organizing a corporation pursuant to the General Corporation Law of the State of
Delaware, hereby certifies that:
FIRST: The name of the Corporation is
CELSION (DELAWARE) CORPORATION
SECOND: The address, including street, number, city, and county, of the
registered office of the Corporation in the State of Delaware is c/o United
Corporate Services, Inc., 15 East North Street, in the City of Dover, County of
Kent, State of Delaware 19901, and the name of the registered agent at said
address is United Corporate Services, Inc.
THIRD: The nature of the business and the purposes to be conducted and
promoted by the Corporation are to conduct any lawful business, to promote any
lawful purpose, and to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have authority to issue is two hundred million one hundred
thousand (200,100,000) shares, consisting of (i) two hundred million
(200,000,000) shares of Common Stock, par value $0.01 per share ("Common
Stock"), and (ii) one hundred thousand (100,000) shares of Preferred Stock, par
value $0.01 per share ("Preferred Stock"). The Preferred Stock may be issued
from time to time in one or more series.
The Corporation shall from time to time in accordance with the laws of
the State of Delaware increase the authorized amount of its Common Stock if at
any time the number of shares of Common Stock remaining unissued and available
for issuance shall not be sufficient to permit the conversion of the Preferred
Stock into Common Stock in accordance with any terms governing such conversion
established by the Board of Directors under applicable law.
The Board of Directors is hereby authorized, subject to limitations
prescribed by law and the provisions of this Article FOURTH, by resolution to
provide for the issuance of Preferred Stock in one or more series, and to
establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, privileges, preferences and
- ------------------
* Last Amendment made effective November 11, 2002. Filed with the Securities and
Exchange Commission on February 17, 2004.
relative participating, optional or other rights, if any, of the shares of each
such series and the qualifications, limitations or restrictions thereof.
The authority of the Board of Directors with respect to each series of
Preferred Stock shall include, but shall not be limited to, determination of the
following:
(a) The number of shares constituting that series (including an
increase or decrease in the number of shares of any such series (but not below
the number of shares in any series then outstanding) and the distinctive
designation of that series;
(b) Whether a dividend shall be payable on any series, and, if so, the
dividend rate on the shares in that series, whether dividends shall be in cash
or in kind, whether dividends shall be cumulative, and, if so, from which date
or dates, and the relative rights of priority, if any, of payment of dividends
on shares of that series;
(c) Whether that series shall have voting rights (including multiple or
fractional votes per share) in addition to the voting rights provided by law,
and, if so, the terms of such voting rights;
(d) Whether that series shall have conversion privileges, and, if so,
the terms and conditions of such privileges, including provision for adjustment
of the conversion rate in such events as the Board of Directors shall determine;
(e) Whether or not the shares of that series shall be redeemable, and,
if so, the terms and conditions of such redemption, including the date or dates
upon or after which they shall be redeemable, and the amount per share payable
in case of redemption, which amount may vary under different conditions and at
different redemption rates;
(f) Whether that series shall have a sinking fund or sinking funds for
the redemption or purchase of shares of that series, and, if so, the terms and
amount of such sinking fund or funds;
(g) The rights of the shares of that series in the event of voluntary
or involuntary liquidation, dissolution or winding up of the Corporation, and
the relative rights of priority, if any, of payment with respect to shares of
that series; and
(h) Any other relative rights, preferences and limitations of that
series.
No holder of shares of the Corporation of any class, now or hereafter
authorized, shall have any preferential or preemptive rights to subscribe for,
purchase or receive any shares of the Corporation of any class, now or hereafter
authorized, or any options or warrants for such shares, or any rights to
subscribe for, purchase or receive any securities convertible to or exchangeable
for such shares, which may at any time be issued, sold or offered for sale by
the Corporation, except in the case of any shares of Preferred Stock to which
such rights are specifically granted by any resolution or resolutions of the
Board of Directors adopted pursuant to this Article FOURTH.
2
FIFTH: The name and address of the incorporator are as follows:
NAME ADDRESS
---- -------
Michael Barr 10 Bank Street
White Plains, NY 10606
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution of any receiver or receivers appointed for this Corporation under
Section 279 of Title 8 of the Delaware Code order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
indebtedness held by such creditors or class of creditors, and/or three-fourths
of the shares held by the stockholders or class of stockholders of this
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this Corporation, as the case may be,
and also on the Corporation.
EIGHTH:
(a) The management of the business and conduct of the affairs of the
Corporation shall be vested in its Board of Directors. The number of directors
which shall constitute the whole Board of Directors shall be fixed by, or in the
manner provided in, the By-Laws. The Board of Directors shall be classified and
divided into three classes, designated as Class I, Class II and Class III. The
terms of office of the initial Class I directors shall expire at the first
annual meeting of the stockholders of the Corporation after the election of such
initial Class I directors, the terms of office of the initial Class II directors
shall expire at the second annual meeting of the stockholders of the Corporation
after the election of such initial Class II directors and the terms of office of
the initial Class III directors shall expire at the third annual meeting after
the election of such initial Class III directors. At each annual meeting
following such classification and division of the members of the Board of
Directors, a number of directors equal to the number of directorships in the
class the term of which expires at the time of such meeting shall be elected to
hold office until the third succeeding annual meeting of the stockholders of the
Corporation. Each director shall hold office for the class term for which he is
elected and until his or her successor shall be elected and qualified, or until
his or her earlier resignation, removal or death. Any director may be removed
for cause (but not without cause) from office at any time by the
3
vote or written consent of the stockholders. In case of any increase or
decrease, from time to time, in the number of directors constituting the whole
Board of Directors, the number of directors in each class shall be determined by
action of the Board of Directors. A director elected by the remainder of the
Board of Directors to fill a vacancy shall hold office for the remaining term of
the predecessor director and until his or her successor is elected and has
qualified, or until his or her earlier resignation, removal or death.
(b) The Board of Directors shall have the power without the assent or
vote of the stockholders:
(1) To make, alter, amend, change, add to or repeal the
By-Laws of the Corporation; to fix and vary the amount to be reserved for any
proper purpose; to authorize and cause to be executed mortgages and liens upon
all or any part of the property of the Corporation; to determine the use and
disposition of any surplus or net profits; and to fix the times for the
declaration and payment of dividends.
(2) To determine from time to time whether, and at what times
and places, and under what conditions the accounts and books of the Corporation
(other than the stock ledger) or any of them, shall be open to the inspection of
the stockholders.
(c) In addition to the powers and authorities hereinbefore or by
statute expressly conferred upon them, the directors are hereby empowered to
exercise all such powers and do all such acts and things as may be exercised or
done by the Corporation; subject, nevertheless, to the provisions of the General
Corporation Law of the State of Delaware, of this Certificate, and to any
By-Laws from time to time made by the stockholders; provided, however, that no
By-Laws so made shall invalidate any prior act of the directors which would have
been valid if such By-Laws had not been made.
NINTH:
(a) The personal liability of the directors of the Corporation is
hereby eliminated to the fullest extent permitted by the provisions of the
General Corporation Law of the State of Delaware, as the same may be amended and
supplemented from time to time, and, in accordance therewith, no director of the
Corporation shall be personally liable to the Corporation or its stockholders
for monetary damages for breach of fiduciary duty as a director.
(b) The Corporation may indemnify to the fullest extent permitted by
law any person made or threatened to be made a party to an action or proceeding,
whether criminal, civil, administrative or investigative, by reason of the fact
that he, his testator or intestate is or was a director, officer or employee of
the Corporation or any predecessor or subsidiary of the Corporation or serves or
served at any other enterprise as a director, officer or employee at the request
of the Corporation or any predecessor or subsidiary of the Corporation.
(c) Neither any amendment nor repeal of this Article NINTH, nor the
adoption of any provision of the Corporation's Certificate of Incorporation
inconsistent with this Article NINTH, shall eliminate or reduce the effect of
this Article NINTH with respect to any matter occurring,
4
or any action or proceeding accruing or arising or that, but for this Article
NINTH, would accrue or arise, prior to such amendment, repeal, or adoption of an
inconsistent provision.
TENTH: From time to time any of the provisions of the Corporation's
Certificate of Incorporation may be amended, altered, or repealed, and other
provisions authorized by the laws of the State of Delaware at the time in force
may be added or inserted as prescribed by said laws, and all rights at any time
conferred upon the stockholders of the Corporation by this Certificate of
Incorporation are granted subject to the provisions of this Article TENTH.
IN WITNESS WHEREOF, the undersigned hereby executes this document and
affirms that the facts set forth herein are true under the penalties of perjury
this 17th day of May, 2000.
/s/ Michael Barr
Incorporator
5
EXHIBIT 3.2
BYLAWS
OF
CELSION (DELAWARE) CORPORATION
(Compiled and reflecting all amendments through February 17, 2004*)
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE. The registered office of the corporation shall
be fixed in the Certificate of Incorporation of the corporation.
1.2 OTHER OFFICES. The board of directors may at any time establish the
principal office and any branch or subordinate offices of the corporation at any
place or places deemed advisable.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS. Meetings of stockholders shall be held at any
place within or outside the State of Delaware designated by the board of
directors.
2.2 ANNUAL MEETING.
(a) The annual meeting of stockholders shall be held each year on a
date and at a time designated by the board of directors. At the meeting,
directors shall be elected, and any other proper business may be transacted.
(b) At an annual meeting of the stockholders, only such business shall
be conducted as shall have been properly brought before the meeting. To be
properly brought before an annual meeting, business must be: (A) specified in
the notice of meeting (or any supplement thereto) given by or at the direction
of the board of directors, (B) otherwise properly brought before the meeting by
or at the direction of the board of directors, or (C) otherwise properly brought
before the meeting by a stockholder. For business to be properly brought before
an annual meeting by a stockholder, the stockholder must have given timely
notice thereof in writing to the secretary of the corporation. To be timely, a
stockholder's notice must be delivered to or mailed and received at the
principal executive offices of the corporation not less than one hundred twenty
(120) calendar days in advance of the date specified in the corporation's proxy
statement released to stockholders in connection with the previous year's annual
meeting of stockholders; provided,
- --------
* Last Amendment made effective February 13, 2004. Filed with the Securities and
Exchange Commission on February 17, 2004.
however, that in the event that no annual meeting was held in the previous year
or the date of the annual meeting has been changed by more than thirty (30) days
from the date contemplated at the time of the previous year's proxy statement,
notice by the stockholder to be timely must be so received not later than the
close of business on the later of one hundred twenty (120) calendar days in
advance of such annual meeting or ten (10) calendar days following the date on
which public announcement of the date of the meeting is first made. A
stockholder's notice to the secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting: (i) a brief description
of the business desired to be brought before the annual meeting and the reasons
for conducting such business at the annual meeting, (ii) the name and address,
as they appear on the corporation's books, of the stockholder proposing such
business, (iii) the class and number of shares of the corporation which are
beneficially owned by the stockholder, (iv) any material interest of the
stockholder in such business, and (v) any other information that is required to
be provided by the stockholder pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (the "1934 Act"), in his capacity as a
proponent to a stockholder proposal. Notwithstanding the foregoing, in order to
include information with respect to a stockholder proposal in the proxy
statement and form of proxy for a stockholder's meeting, stockholders must
provide notice as required by the regulations promulgated under the 1934 Act.
Notwithstanding anything in these Bylaws to the contrary, no business shall be
conducted at any annual meeting except in accordance with the procedures set
forth in this paragraph (b), the chairman of the annual meeting shall, if the
facts warrant, determine and declare at the meeting that business was not
properly brought before the meeting in accordance with the provisions of this
paragraph (b), and, if he should so determine, he shall declare at the meeting
that any such business not properly brought before the meeting shall not be
transacted.
(c) Only persons who are nominated in accordance with the procedures
set forth in this paragraph (c) shall be eligible for election as directors.
Nominations of persons for election to the board of directors of the corporation
may be made at a meeting of stockholders by or at the direction of the board of
directors or by any stockholder of the corporation entitled to vote in the
election of directors at the meeting who complies with the notice procedures set
forth in this paragraph (c). Such nominations, other than those made by or at
the direction of the board of directors, shall be made pursuant to timely notice
in writing to the secretary of the corporation in accordance with the provisions
of paragraph (b) of this Section 2.2. Such stockholder's notice shall set forth
(i) as to each person, if any, whom the stockholder proposes to nominate for
election or re-election as a director: (A) the name, age, business address and
residence address of such person, (B) the principal occupation or employment of
such person, (C) the class and number of shares of the corporation which are
beneficially owned by such person, (D) a description of all arrangements or
understandings between the stockholder and each nominee and any other person or
persons (naming such person or persons) pursuant to which the nominations are to
be made by the stockholder, and (E) any other information relating to such
person that is required to be disclosed in solicitations of proxies for
elections of directors, or is otherwise required, in each case pursuant to
Regulation 14A under the 1934 Act (including, without limitation, such person's
written consent to being named in the proxy statement, if any, as a nominee and
to serving as a director if elected); and (ii) as to such stockholder giving
notice, the information required to be provided pursuant to paragraph (b) of
this Section 2.2. At the request of the board of directors, any person nominated
by a stockholder for election as a director shall furnish to the secretary of
the corporation that information required to be set forth in the
2
stockholder's notice of nomination which pertains to the nominee. No person
shall be eligible for election as a director of the corporation unless nominated
in accordance with the procedures set forth in this paragraph (c). The chairman
of the meeting shall, if the facts warrants, determine and declare at the
meeting that a nomination was not made in accordance with the procedures
prescribed by these Bylaws, and if he should so determine, he shall so declare
at the meeting, and the defective nomination shall be disregarded.
2.3 SPECIAL MEETING. A special meeting of the stockholders may be
called at any time by the board of directors, the president or the chairman, but
such special meeting may not be called by any other person or persons. Only such
business shall be considered at a special meeting of stockholders as shall have
been stated in the notice for such meeting.
2.4 ORGANIZATION. Meetings of stockholders shall be presided over by
the president, the chairman or, in his or her absence, by a chairman designated
by the board of directors, or in the absence of such designation, by a chairman
chosen at the meeting by the vote of a majority in interest of the stockholders
present in person or represented by proxy and entitled to vote thereat. The
secretary, or in his or her absence an assistant secretary, or in the absence of
the secretary and any assistant secretary, a person whom the chairman of the
meeting shall appoint, shall act as secretary of the meeting and keep a record
of the proceedings thereof.
The board of directors of the corporation shall be entitled to make
such rules or regulations for the conduct of meetings of stockholders as it
shall deem necessary, appropriate or convenient. Subject to such rules and
regulations of the board of directors, if any, the chairman of the meeting shall
have the right and authority to prescribe such rules, regulations and procedures
and to do all such acts as, in the judgment of such chairman, are necessary,
appropriate or convenient for the proper conduct of the meeting, including,
without limitation, establishing an agenda or order of business, limitations on
the time allotted to questions or comments by participants and regulation of the
opening and closing of the polls for balloting. Unless determined by the board
of directors or the chairman of the meeting, meetings of stockholders shall not
be required to be held in accordance with rules of parliamentary procedure.
2.5 NOTICE OF STOCKHOLDERS' MEETINGS. All notices of meetings of
stockholders shall be sent or otherwise given in accordance with Section 2.6 of
these Bylaws not less than ten (10) nor more than sixty (60) days before the
date of the meeting. The notice shall specify the place, date, and hour of the
meeting and (i) in the case of a special meeting, the general nature of the
business to be transacted or (ii) in the case of the annual meeting, those
matters which the board of directors, at the time of giving the notice, intends
to present for action by the stockholders (but any proper matter may be
presented at the meeting for such action). The notice of any meeting at which
directors are to be elected shall include the name of any nominee or nominees
who, at the time of the notice, the board intends to present for election.
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE. Notice of any meeting
of stockholders shall be given either personally or by mail, telecopy, telegram
or other electronic or wireless means. Notices not personally delivered shall be
sent charges prepaid and shall be addressed to the stockholder at the address of
that stockholder appearing on the books of the
3
corporation or given by the stockholder to the corporation for the purpose of
notice. Notice shall be deemed to have been given at the time when delivered
personally or deposited in the mail or sent by telecopy, telegram or other
electronic or wireless means.
An affidavit of the mailing or other means of giving any notice of any
stockholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice or report.
2.7 QUORUM. The holders of a majority in voting power of the stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business except as otherwise provided by
statute or by the Certificate of Incorporation. If, however, such quorum is not
present or represented at any meeting of the stockholders, then either (i) the
chairman of the meeting or (ii) the stockholders by the vote of the holders of a
majority of the stock, present in person or represented by proxy shall have
power to adjourn the meeting.
When a quorum is present at any meeting, the vote of the holders of a
majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one upon which, by express provision of the laws of the State of Delaware or
of the Certificate of Incorporation or these Bylaws, a vote of a greater number
or voting by classes is required, in which case such express provision shall
govern and control the decision of the question.
If a quorum be initially present, the stockholders may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum, if any action taken is approved by a
majority of the stockholders initially constituting the quorum.
2.8 ADJOURNED MEETING; NOTICE. Any stockholders' meeting, annual or
special, whether or not a quorum is present, may be adjourned from time to time
by the vote of the majority of the voting power of the shares represented at
that meeting, either in person or by proxy. In the absence of a quorum, no other
business may be transacted at that meeting except as provided in Section 2.7 of
these Bylaws.
When any meeting of stockholders, either annual or special, is
adjourned to another time or place, notice need not be given of the adjourned
meeting if the time and place are announced at the meeting at which the
adjournment is taken. However, if a new record date for the adjourned meeting is
fixed or if the adjournment is for more than thirty (30) days from the date set
for the original meeting, then notice of the adjourned meeting shall be given.
Notice of any such adjourned meeting shall be given to each stockholder of
record entitled to vote at the adjourned meeting in accordance with the
provisions of Sections 2.5 and 2.6 of these Bylaws. At any adjourned meeting the
corporation may transact any business which might have been transacted at the
original meeting.
4
2.9 VOTING. The stockholders entitled to vote at any meeting of
stockholders shall be determined in accordance with the provisions of Section
2.12 of these Bylaws, subject to applicable provisions of the General
Corporation Law of Delaware.
Except as may be otherwise provided in the Certificate of
Incorporation, by instruments setting forth the voting rights of specific
classes or series of stocks, by these Bylaws or by applicable law, each
stockholder shall be entitled to one vote for each share of capital stock held
by such stockholder.
Any stockholder entitled to vote on any matter may vote part of the
shares in favor of the proposal and refrain from voting the remaining shares or,
except when the matter is the election of directors, may vote them against the
proposal; but if the stockholder fails to specify the number of shares which the
stockholder is voting affirmatively, it will be conclusively presumed that the
stockholder's approving vote is with respect to all shares which the stockholder
is entitled to vote.
2.10 VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT. The
transactions of any meeting of stockholders, either annual or special, however
called and noticed, and wherever held, shall be as valid as though they had been
taken at a meeting duly held after regular call and notice, if a quorum be
present either in person or by proxy.
Attendance by a person at a meeting shall constitute a waiver of notice
of and presence at that meeting, except when the person objects at the beginning
of the meeting to the transaction of any business because the meeting is not
lawfully called or convened.
2.11 ACTION BY WRITTEN CONSENT. Subject to the rights of the holders of
the shares of any series of Preferred Stock or any other class of stock or
series thereof having a preference over the Common Stock as dividend or upon
liquidation, any action required or permitted to be taken by the stockholders of
the corporation must be effected at a duly called annual or special meeting of
stockholders of the corporation and may not be effected by any consent in
writing by such stockholders.
2.12 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS. For
purposes of determining the stockholders entitled to notice of any meeting or to
vote thereat, the board of directors may fix, in advance, a record date, which
shall not be more than sixty (60) days nor less than ten (10) days before the
date of any such meeting, and in such event only stockholders of record on the
date so fixed are entitled to notice and to vote, notwithstanding any transfer
of any shares on the books of the corporation after the record date, except as
otherwise provided in the Certificate of Incorporation, by these Bylaws, by
agreement or by applicable law.
If the board of directors does not so fix a record date, the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the business day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the business day next preceding the day on which the
meeting is held.
5
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting
unless the board of directors fixes a new record date for the adjourned meeting,
but the board of directors shall fix a new record date if the meeting is
adjourned for more than thirty (30) days from the date set for the original
meeting.
The record date for any other purpose shall be as provided in Section
8.1 of these Bylaws.
2.13 PROXIES. Every person entitled to vote for directors, or on any
other matter, shall have the right to do so either in person or by one or more
agents authorized by a written proxy, which may be in the form of a telegram,
cablegram, or other means of electronic transmission, signed by the person and
filed with the secretary of the corporation, but no such proxy shall be voted or
acted upon after three (3) years from its date, unless the proxy provides for a
longer period. A proxy shall be deemed signed if the stockholder's name is
placed on the proxy (whether by manual signature, typewriting, telegraphic
transmission or otherwise) by the stockholder or the stockholder's
attorney-in-fact. A duly executed proxy shall be irrevocable if it states that
it is irrevocable and if, and only as long as, it is coupled with an interest
sufficient in law to support an irrevocable power. A stockholder may revoke any
proxy which is not irrevocable by attending the meeting and voting in person or
by filing an instrument in writing revoking the proxy or by filing another duly
executed proxy bearing a later date with the secretary of the corporation.
A proxy is not revoked by the death or incapacity of the maker unless,
before the vote is counted, written notice of such death or incapacity is
received by the corporation.
2.14 INSPECTORS OF ELECTION. In conjunction with any meeting of
stockholders, either the corporation's chief executive officer or chief
financial officer, or either of their equivalents, or any person or persons
designated by either of them, shall appoint an inspector or inspectors of
election to act at the meeting or its adjournment and to determine such matters
as quorum, validity of proxies and ballots, voting eligibility, and the
tabulation of votes. The number of inspectors shall be either one (1) or three
(3). If any person appointed as inspector fails to appear or fails or refuses to
act, then the chairman of the meeting may, and upon the request of any
stockholder or a stockholder's proxy shall, appoint a person to fill that
vacancy.
The inspectors of election shall perform their duties impartially, in
good faith, to the best of their ability and as expeditiously as is practical.
If there are three (3) inspectors of election, the decision, act or certificate
of a majority is effective in all respects as the decision, act or certificate
of all. Any report or certificate made by the inspectors of election is prima
facie evidence of the facts stated therein.
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ARTICLE III
DIRECTORS
3.1 POWERS. Subject to the provisions of the General Corporation Law of
Delaware and to any limitations in the Certificate of Incorporation or these
Bylaws relating to action required to be approved by the stockholders or by the
outstanding shares, the business and affairs of the corporation shall be managed
and all corporate powers shall be exercised by or under the direction of the
board of directors.
3.2 NUMBER AND CLASSIFICATION. The authorized number of directors shall
be not less than three (3) nor more than nine (9). Within such limits, the
number of directors shall be initially fixed at seven (7), which number may be
changed by resolution of the board of directors. An indefinite number of
directors may be fixed, or the definite number may be changed, by a duly adopted
amendment to the Certificate of Incorporation or by an amendment to this by-law
duly adopted by the stockholders or the board of directors.
No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office expires.
If, for any reason, the directors shall not have been elected at an annual
meeting, they may be elected as soon thereafter as convenient at a special
meeting of the stockholders called for that purpose in the manner provided in
these By-Laws.
The board of directors shall be divided into three classes, designated
as Class I, Class II and Class III, with each class to be elected for three-year
terms on a staggered basis, except with respect to the initial terms of the
classes, all as further set forth in Section 3.3 below.
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS. The terms of office of
the initial Class I directors shall expire at the first annual meeting of the
stockholders of the Corporation after the election of such initial Class I
directors, the terms of officer of the initial Class II directors shall expire
at the second annual meeting of the stockholders of the Corporation after the
election of such initial Class II directors and the terms of office of the
initial Class III directors shall expire at the third annual meeting after the
election of such initial Class III directors. At each annual meeting following
such classification and division of the members of the Board of Directors, a
number of directors equal to the number of directorships in the class the term
of which expires at the time of such meeting shall be elected to hold office
until the third succeeding annual meeting of the stockholders of the
Corporation. Each director shall hold office for the class term for which he is
elected and until his or her successor shall be elected and qualified, or until
his or her earlier resignation, removal or death. Directors need not be
stockholders unless so required by the Certificate of Incorporation or by these
By-Laws.
3.4 RESIGNATIONS AND VACANCIES. Any director may resign on giving
written notice to the president, the chairman, the secretary or the board of
directors, unless the notice specifies a later time for that resignation to
become effective.
Unless otherwise provided in the Certificate of Incorporation or these
By-Laws:
(a) Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, although less than a quorum, or by a sole
remaining director. A director elected by the
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remainder of the Board of Directors to fill a vacancy shall hold office for the
remaining term of the predecessor director and until his or her successor is
elected and has qualified, or until his or her earlier resignation, removal or
death.
(b) Whenever the holders of any class or classes of stock or series
thereof are entitled to elect one or more directors by the provisions of the
Certificate of Incorporation, vacancies and newly created directorships of such
class or classes or series may be filled by a majority of the directors elected
by such class or classes or series thereof then in office, or by a sole
remaining director so elected.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the Certificate of Incorporation or these Bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the General Corporation Law of Delaware.
3.5 REMOVAL. Any director may be removed for cause (but not without
cause) from office at any time by the vote or written consent of the
stockholders
3.6 PLACE OF MEETINGS; MEETINGS BY TELEPHONE. Regular meetings of the
board of directors may be held at any place within or outside the State of
Delaware that has been designated from time to time by resolution of the board
of directors. In the absence of such a designation, regular meetings shall be
held at the principal executive office of the corporation. Special meetings of
the board of directors may be held at any place within or outside the State of
Delaware that has been designated in the notice of the meeting or, if not stated
in the notice or if there is no notice, at the principal executive office of the
corporation.
Any meeting, regular or special, may be held by conference telephone or
similar communication equipment, so long as all directors participating in the
meeting can hear one another; and all such directors shall be deemed to be
present in person at the meeting.
3.7 REGULAR MEETINGS. Regular meetings of the board of directors may be
held without notice if the times of such meetings are fixed by the board of
directors.
3.8 SPECIAL MEETINGS; NOTICE. Special meetings of the board of
directors for any purpose or purposes may be called at any time by the
president, the chairman, the secretary or by any two (2) or more of the
directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by mail, telecopy, telegram
or other electronic or wireless means, charges prepaid, addressed to each
director at that director's address as it is shown on the records of the
corporation or if the address is not readily ascertainable, notice shall be
addressed to the director at the city or place in which the meetings of
directors are regularly held. If the notice is mailed, it shall be deposited in
the United States mail at least three (3) days before the
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time of the holding of the meeting. If the notice is delivered personally or by
telephone, telecopy, telegram or other electronic or wireless means, it shall be
delivered personally or by telephone or other electronic or wireless means at
least twenty-four (24) hours before the time of the holding of the meeting. Any
oral notice given personally or by telephone may be communicated either to the
director or to a person at the office of the director who the person giving the
notice has reason to believe will promptly communicate it to the director. A
notice of special meeting need not state the purpose of such meeting, and,
unless indicated in the notice thereof, any and all business may be transacted
at a special meeting.
3.9 QUORUM. A majority of the authorized number of directors shall
constitute a quorum for the transaction of business, except to fill vacancies in
the board of directors as provided in Section 3.4 and to adjourn as provided in
Section 3.11 of these Bylaws. Every act or decision done or made by a majority
of the directors present at a duly held meeting at which a quorum is present
shall be regarded as the act of the board of directors, subject to the
provisions of the Certificate of Incorporation and applicable law.
A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.
3.10 WAIVER OF NOTICE. Notice of a meeting need not be given to any
director (i) who signs a waiver of notice or a consent to holding the meeting or
an approval of the minutes thereof, whether before or after the meeting, or (ii)
who attends the meeting without protesting, prior thereto or at its
commencement, the lack of notice to such directors. The transactions of any
meeting of the board, however called and noticed or wherever held, are as valid
as though had at a meeting duly held after regular call and notice if a quorum
is present and if, either before or after the meeting, each of the directors not
present signs a written waiver of notice. All such waivers shall be filed with
the corporate records or made part of the minutes of the meeting. A waiver of
notice need not specify the purpose of any regular or special meeting of the
board of directors.
3.11 ADJOURNMENT. A majority of the directors present, whether or not
constituting a quorum, may adjourn any meeting to another time and place.
3.12 NOTICE OF ADJOURNMENT. Notice of the time and place of holding an
adjourned meeting need not be given if announced unless the meeting is adjourned
for more than twenty-four (24) hours. If the meeting is adjourned for more than
twenty-four (24) hours, then notice of the time and place of the adjourned
meeting shall be given.
3.13 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING. Any action
required or permitted to be taken by the board of directors may be taken without
a meeting, provided that all members of the board of directors individually or
collectively consent in writing to that action. Such action by written consent
shall have the same force and effect as a unanimous vote of the board of
directors. Such written consent and any counterparts thereof shall be filed with
the minutes of the proceedings of the board.
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3.14 ORGANIZATION. Meetings of the board of directors shall be presided
over by the president, the chairman, or, in his or her absence, by a president
pro tem chosen by a majority of the directors present. The secretary shall act
as secretary of the meeting, but in his or her absence the chairman of the
meeting may appoint any person to act as secretary of the meeting.
3.15 FEES AND COMPENSATION OF DIRECTORS. Directors and members of
committees may receive such compensation, if any, for their services and such
reimbursement of expenses as may be fixed or determined by resolution of the
board of directors. This Section 3.15 shall not be construed to preclude any
director from serving the corporation in any other capacity as an officer,
agent, employee or otherwise and receiving compensation for those services.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS. The board of directors may designate one
(1) or more committees, each consisting of two or more directors, to serve at
the pleasure of the board of directors. The board of directors may designate one
(1) or more directors as alternate members of any committee, who may replace any
absent member at any meeting of the committee. The purposes and authority of any
committee shall be as provided in the resolution of the board, but no such
committee shall have power or authority by itself to (i) approve or adopt or
recommend to the stockholders any action or matter that requires the approval of
the stockholders or (ii) adopt, amend or repeal any Bylaw of the corporation.
4.2 MEETINGS AND ACTION OF COMMITTEES. To the extent feasible, meetings
and actions of committees shall be governed by, and held and taken in accordance
with, the provisions of Article III of these Bylaws, Section 3.6 (place of
meetings), Section 3.7 (regular meetings), Section 3.8 (special meetings and
notice), Section 3.9 (quorum), Section 3.10 (waiver of notice), Section 3.11
(adjournment), Section 3.12 (notice of adjournment), and Section 3.13 (action
without meeting), with such changes in the context of those Bylaws as are
necessary to substitute the committee and its members for the board of directors
and its members, provided, however, that the board of directors may adopt rules
for the government of any committee not inconsistent with the provisions of
these Bylaws.
ARTICLE V
OFFICERS
5.1 OFFICERS. The officers of this corporation shall consist of a
president, a chairman, a chief scientific officer, one or more vice presidents,
a secretary, a treasurer, and such other officers as may be determined from time
to time by the board of directors, all of whom shall be chosen in such manner
and hold their offices for such terms as the board of directors may prescribe.
Any two or more of such offices may be held by the same person. The board of
directors may designate one or more vice presidents as executive vice presidents
or senior vice presidents. The board of directors may from time to time
designate the president or any other officer as the chief operating officer of
the corporation.
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5.2 TERMS OF OFFICE AND COMPENSATION. The term of office and salary of
each of said officers and the manner and time of the payment of such salaries
shall be fixed and determined by the board of directors and may be altered by
said board from time to time at its pleasure, subject to the rights, if any, of
said officers under any contract of employment.
5.3 REMOVAL; RESIGNATION OF OFFICERS AND VACANCIES. Any officer of the
corporation may be removed at the pleasure of the board of directors at any
meeting or by vote of stockholders entitled to exercise the majority of voting
power of the corporation at any meeting or at the pleasure of any officer who
may be granted such power by a resolution of the board of directors. Any officer
may resign at any time upon written notice to the corporation without prejudice
to the rights, if any, of the corporation under any contract to which the
officer is a party. If any vacancy occurs in any office of the corporation, the
board of directors may elect a successor to fill such vacancy for the remainder
of the unexpired term and until a successor is duly chosen and qualified.
5.4 PRESIDENT. The president shall be the chief executive officer of
the corporation and shall have general direction of the affairs of the
corporation and general supervision over its several officers, subject, however,
to the control of the board of the board of directors. The president shall at
each annual meeting and from time to time report to the stockholders and the
board of directors all matters within his knowledge which the interest of the
corporation may require to be brought to their notice, may sign with the
treasurer or an assistant treasurer, if any, or the secretary or an assistant
secretary, if any, any or all certificates of stock of the corporation. The
president shall preside at all meetings of the stockholders and at all meetings
of the board of directors, may sign and execute in the name of the corporation
all contracts or other instruments authorized by the board of directors, except
in cases where the signing and execution thereof shall be expressly delegated or
permitted by the board of directors or by these Bylaws to some other officer or
agent of the corporation, and in general shall perform such duties and, subject
to the other provisions of these Bylaws and to the control of the board of
directors, have such powers incident to the office of president and perform such
other duties and have such other powers as from time to time may be assigned to
him by the board of directors.
5.5 CHAIRMAN OF THE BOARD. The chairman shall be a senior executive
officer of the corporation and shall exercise and perform such powers and duties
as may from time to time be assigned to him by the board of directors or as may
be prescribed by these Bylaws. The chairman shall report to the board of
directors.
5.6 UNAVAILABILITY OF PRESIDENT. In case of the absence, disability or
death of the president, the chairman or, if he is not available, a vice
president, shall exercise all the powers and perform all the duties of the
president. If there is more than one elected vice president, the order in which
the elected vice presidents shall succeed to the powers and duties of the
president shall be as fixed by the board of directors.
5.7 SECRETARY. The powers and duties of the secretary are:
(i) To keep a book of minutes at the principal office of the
corporation, or such other place as the board of directors may order, of all
meetings of its directors and stockholders with
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the time and place of holding, whether regular or special, and, if special, how
authorized, the notice thereof given, the names of those present at directors'
meetings, the number of shares present or represented at stockholders' meetings
and the proceedings thereof.
(ii) To keep the seal of the corporation and affix the same to all
instruments which may require it.
(iii) To keep or cause to be kept at the principal office of the
corporation, or at the office of the transfer agent or agents, a share register,
or duplicate share registers, showing the names of the stockholders and their
addresses, the number of and classes of shares, and the number and date of
cancellation of every certificate surrendered for cancellation.
(iv) To keep a supply of certificates for shares of the corporation, to
fill in all certificates issued, and to make a proper record of each such
issuance; provided, that so long as the corporation shall have one or more duly
appointed and acting transfer agents of the shares, or any class or series of
shares, of the corporation, such duties with respect to such shares shall be
performed by such transfer agent or transfer agents.
(v) To transfer upon the share books of the corporation any and all
shares of the corporation; provided, that so long as the corporation shall have
one or more duly appointed and acting transfer agents of the shares, or any
class or series of shares, of the corporation, such duties with respect to such
shares shall be performed by such transfer agent or transfer agents, and the
method of transfer of each certificate shall be subject to the reasonable
regulations of the transfer agent to which the certificate is presented for
transfer, and also, if the corporation then has one or more duly appointed and
acting registrars, to the reasonable regulations of the registrar to which the
new certificate is presented for registration; and provided, further that no
certificate for shares of stock shall be issued or delivered or, if issued or
delivered, shall have any validity whatsoever until and unless it has been
signed or authenticated in the manner provided in Section 8.5 hereof.
(vi) To make service and publication of all notices that may be
necessary or proper, and without command or direction from anyone. In case of
the absence, disability, refusal, or neglect of the secretary to make service or
publication of any notices, then such notices may be served and/or published by
the president or a vice president, or by any person thereunto authorized by
either of them or by the board of directors or by the holders of a majority of
the outstanding shares of the corporation.
(vii) Generally to do and perform all such duties as pertain to the
office of secretary and as may be required by the board of directors.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES AND OTHER AGENTS
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS. The corporation shall,
to the maximum extent and in the manner permitted by the General Corporation Law
of Delaware,
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indemnify each of its directors and officers against expenses (including
attorneys' fees), judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with any proceeding, arising by reason of the
fact that such person is or was an agent of the corporation; provided, however,
that the corporation may modify the extent of such indemnification by individual
contracts with its directors and executive officers and, provided, further, that
the corporation shall not be required to indemnify any director or officer in
connection with any proceeding (or part thereof) initiated by such person unless
(i) such indemnification is expressly required to be made by law, (ii) the
proceeding was authorized in advance by the board of directors of the
corporation, (iii) such indemnification is provided by the corporation, in its
sole discretion, pursuant to the powers vested in the corporation under the
General Corporation Law of Delaware or (iv) such indemnification is required to
be made pursuant to an individual contract. For purposes of this Section 6.1, a
"director" or "officer" of the corporation includes any person (i) who is or was
a director or officer of the corporation, (ii) who is or was serving at the
request of the corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or (iii) who was a
director or officer of a corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation.
6.2 INDEMNIFICATION OF OTHERS. The corporation shall have the power, to
the maximum extent and in the manner permitted by the General Corporation Law of
Delaware, to indemnify each of its employees and agents (other than directors
and officers) against expenses (including attorneys' fees), judgments, fines,
settlements and other amounts actually and reasonably incurred in connection
with any proceeding, arising by reason of the fact that such person is or was an
agent of the corporation. For purposes of this Section 6.2, an "employee" or
"agent" of the corporation (other than a director or officer) includes any
person (i) who is or was an employee or agent of the corporation, (ii) who is or
was serving at the request of the corporation as an employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, or (iii) who
was an employee or agent of a corporation which was a predecessor corporation of
the corporation or of another enterprise at the request of such predecessor
corporation.
6.3 INSURANCE. The corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him or
her and incurred by him or her in any such capacity, or arising out of his or
her status as such, whether or not the corporation would have the power to
indemnify him or her against such liability under the provisions of the General
Corporation Law of Delaware.
6.4 EXPENSES. The corporation shall advance to any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he or she is or was a director or
officer of the corporation, or is or was serving at the request of the
corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, prior to the final disposition of the
proceeding, promptly following request therefor, all expenses incurred by any
director or officer in connection with such proceeding, upon receipt of an
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undertaking by or on behalf of such person to repay said amounts if it should be
determined ultimately that such person is not entitled to be indemnified under
this Bylaw or otherwise; provided, however, that the corporation shall not be
required to advance expenses to any director or officer in connection with any
proceeding (or part thereof) initiated by such person unless the proceeding was
authorized in advance by the board of directors of the corporation.
Notwithstanding the foregoing, unless otherwise determined pursuant to
Section 6.5, no advance shall be made by the corporation to an officer of the
corporation (except by reason of the fact that such officer is or was a director
of the corporation in which event this paragraph shall not apply) in any action,
suit or proceeding, whether civil, criminal, administrative or investigative, if
a determination is reasonably and promptly made (i) by the board of directors by
a majority vote of a quorum consisting of directors who were not parties to the
proceeding, or (ii) if such quorum is not obtainable, or, even if obtainable, a
quorum of disinterested directors so directs, by independent legal counsel in a
written opinion, that the facts known to the decision-making party at the time
such determination is made demonstrate clearly and convincingly that such person
acted in bad faith or in a manner that such person did not believe to be in or
not opposed to the best interests of the corporation.
6.5 NON-EXCLUSIVITY OF RIGHTS. The rights conferred on any person by
this Bylaw shall not be exclusive of any other right which such person may have
or hereafter acquire under any statute, provision of the Certificate of
Incorporation, Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding office. The corporation is specifically
authorized to enter into individual contracts with any or all of its directors,
officers, employees or agents respecting indemnification and advances, to the
fullest extent not prohibited by the General Corporation Law of Delaware.
6.6 SURVIVAL OF RIGHTS. The rights conferred on any person by this
Bylaw shall continue as to a person who has ceased to be a director, officer,
employee or other agent and shall inure to the benefit of the heirs, executors
and administrators of such a person.
6.7 AMENDMENTS. Any repeal or modification of this Bylaw shall only be
prospective and shall not affect the rights under this Bylaw in effect at the
time of the alleged occurrence of any action or omission to act that is the
cause of any proceeding against any agent of the corporation.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS. The corporation shall,
either at its principal executive office or at such place or places as
designated by the board of directors, keep a record of its stockholders listing
their names and addresses and the number and class of shares held by each
stockholder, a copy of these Bylaws as amended to date, accounting books and
other records.
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Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
7.2 INSPECTION BY DIRECTOR. Any director shall have the right to
examine the corporation's stock ledger, a list of its stockholders and its other
books and records for a purpose reasonably related to his or her position as a
director. The Court of Chancery is hereby vested with the exclusive jurisdiction
to determine whether a director is entitled to the inspection sought. The Court
may summarily order the corporation to permit the director to inspect any and
all books and records, the stock ledger, and the stock list and to make copies
or extracts therefrom. The Court may, in its discretion, prescribe any
limitations or conditions with reference to the inspection, or award such other
and further relief as the Court may deem just and proper.
ARTICLE VIII
GENERAL MATTERS
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING. For purposes
of determining the stockholders entitled to receive payment of any dividend or
other distribution or allotment of any rights or the stockholders entitled to
exercise any rights in respect of any other lawful action, the board of
directors may fix, in advance, a record date, which shall not be more than sixty
(60) days before any such action. In that case, only stockholders of record at
the close of business on the date so fixed are entitled to receive the dividend,
distribution or allotment of rights, or to exercise such rights, as the case may
be, notwithstanding any transfer of any shares on the books of the corporation
after the record date so fixed, except as otherwise provided in the Certificate
of Incorporation, by these Bylaws, by agreement or by law.
If the board of directors does not so fix a record date, then the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the board adopts the applicable resolution
or the sixtieth (60th) day before the date of that action, whichever is later.
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS. From time to time, the
board of directors shall determine by resolution which person or persons may
sign or endorse all checks, drafts, other orders for payment of money, notes or
other evidences of indebtedness that are issued in the name of or payable to the
corporation, and only the persons so authorized shall sign or endorse those
instruments.
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8.3 CORPORATE CONTRACTS AND INSTRUMENTS; HOW EXECUTED. The board of
directors, except as otherwise provided in these Bylaws, may authorize any
officer or officers, or agent or agents, to enter into any contract or execute
any instrument in the name of and on behalf of the corporation; such authority
may be general or confined to specific instances. Unless so authorized or
ratified by the board of directors or within the agency power of an officer, no
officer, agent or employee shall have any power or authority to bind the
corporation by any contract or engagement or to pledge its credit or to render
it liable for any purpose or for any amount.
8.4 FISCAL YEAR. Commencing in 2004, the fiscal year of this
corporation shall begin on the first day of January of each year and end on the
last day of December of such year.
8.5 STOCK CERTIFICATES. There shall be issued to each holder of fully
paid shares of the capital stock of the corporation a certificate or
certificates for such shares. Every holder of shares of the corporation shall be
entitled to have a certificate signed by, or in the name of the corporation by
the president or the chairman or the president or a vice president, and by the
treasurer or an assistant treasurer, or the secretary or an assistant secretary
of such corporation representing the number of shares registered in certificate
form. Any or all of the signatures on the certificate may be a facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate has ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the corporation with the same effect as if he or she were such officer,
transfer agent or registrar at the date of issue.
8.6 SPECIAL DESIGNATION ON CERTIFICATES. If the corporation is
authorized to issue more than one class of stock or more than one series of any
class, then the powers, the designations, the preferences, and the relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights shall be set forth in full or summarized on the face or back of
the certificate that the corporation shall issue to represent such class or
series of stock; provided, however, that, except as otherwise provided in
Section 202 of the General Corporation Law of Delaware, in lieu of the foregoing
requirements there may be set forth on the face or back of the certificate that
the corporation shall issue to represent such class or series of stock a
statement that the corporation will furnish without charge to each stockholder
who so requests the powers, the designations, the preferences, and the relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.
8.7 LOST CERTIFICATES. The corporation may issue a new share
certificate or new certificate for any other security in the place of any
certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate or the owner's legal representative to give the
corporation a bond (or other adequate security) sufficient to indemnify it
against any claim that may be made against it (including any expense or
liability) on account of the alleged loss, theft or destruction of any such
certificate or the issuance of such new certificate. The board of directors may
adopt such
16
other provisions and restrictions with reference to lost certificates, not
inconsistent with applicable law, as it shall in its discretion deem
appropriate.
8.8 CONSTRUCTION; DEFINITIONS. Unless the context requires otherwise,
the general provisions, rules of construction, and definitions in the General
Corporation Law of Delaware shall govern the construction of these Bylaws.
Without limiting the generality of this provision, the singular number includes
the plural, the plural number includes the singular, and the term "person"
includes both a corporation and a natural person.
8.9 PROVISIONS ADDITIONAL TO PROVISIONS OF LAW. All restrictions,
limitations, requirements and other provisions of these Bylaws shall be
construed, insofar as possible, as supplemental and additional to all provisions
of law applicable to the subject matter thereof and shall be fully complied with
in addition to the said provisions of law unless such compliance shall be
illegal.
8.10 PROVISIONS CONTRARY TO PROVISIONS OF LAW. Any article, section,
subsection, subdivision, sentence, clause or phrase of these Bylaws which upon
being construed in the manner provided in Section 8.9 hereof, shall be contrary
to or inconsistent with any applicable provisions of law, shall not apply so
long as said provisions of law shall remain in effect, but such result shall not
affect the validity or applicability of any other portions of these Bylaws, it
being hereby declared that these Bylaws would have been adopted and each
article, section, subsection, subdivision, sentence, clause or phrase thereof,
irrespective of the fact that any one or more articles, sections, subsections,
subdivisions, sentences, clauses or phrases is or are illegal.
8.11 NOTICES. Any reference in these Bylaws to the time a notice is
given or sent means, unless otherwise expressly provided, the time a written
notice by mail is deposited in the United States mails, postage prepaid; or the
time any other written notice is personally delivered to the recipient or is
delivered to a common carrier for transmission, or actually transmitted by the
person giving the notice by electronic means, to the recipient; or the time any
oral notice is communicated, in person or by telephone or wireless, to the
recipient or to a person at the office of the recipient who the person giving
the notice has reason to believe will promptly communicate it to the recipient.
ARTICLE IX
AMENDMENTS
Subject to Section 6.7 hereof, the original or other bylaws of the
corporation may be adopted, amended or repealed by the stockholders entitled to
vote; provided, however, that the corporation may, in its certificate of
incorporation, confer the power to adopt, amend or repeal bylaws upon the
directors. The fact that such power has been so conferred upon the directors
shall not divest the stockholders of the power, nor limit their power to adopt,
amend or repeal bylaws.
Whenever an amendment or new bylaw is adopted, it shall be copied in
the book of bylaws with the original bylaws, in the appropriate place. If any
bylaw is repealed, the fact of repeal with the date of the meeting at which the
17
repeal was enacted or the filing of the operative written consent(s) shall be
stated in said book.
18
EXHIBIT 11
CELSION CORPORATION
COMPUTATION OF EARNINGS PER SHARE
- --------------------------------------------------------------------------
Three Months Ended December 31,
- --------------------------------------------------------------------------
2003 2002
- --------------------------------------------------------------------------
Net loss attributable to common $(2,953,834) $(1,988,134)
stockholders
- --------------------------------------------------------------------------
Net (loss) income per common $(0.02) $(0.02)
share*
- --------------------------------------------------------------------------
Weighted average shares 144,152,732 95,128,667
outstanding
- --------------------------------------------------------------------------
* Common stock equivalents have been excluded from the calculation of net loss
per share as their inclusion would be anti-dilutive.
EXHIBIT 31.1
CELSION CORPORATION
CERTIFICATION
I, Augustine Y. Cheung, certify that:
1. I have reviewed this report on Form 10-Q of Celsion Corporation;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in
all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant's other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material
information relating to the registrant, including its
consolidated subsidiaries, is made known to us by
others within those entities, particularly during the
period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end
of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred
during the registrant's most recent fiscal quarter that
has materially affected, or is reasonably likely to
materially affect, the registrant's internal control
over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in
the design or operation of internal control over
financial reporting which are reasonably likely to
adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
(b) Any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal control over
financial reporting.
Date: February 17, 2004 /s/ Augustine Y. Cheung
-----------------------
Augustine Y. Cheung
Chief Executive Officer
Celsion Corporation
EXHIBIT 31.2
CELSION COROPRATION
CERTIFICATION
I, Anthony P. Deasey, certify that
1. I have reviewed this report on Form 10-Q of Celsion Corporation;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the
circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other
financial information included in this report, fairly present in
all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the
periods presented in this report;
4. The registrant's other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material
information relating to the registrant, including its
consolidated subsidiaries, is made known to us by
others within those entities, particularly during the
period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's
disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of
the disclosure controls and procedures, as of the end
of the period covered by this report based on such
evaluation; and
(c) Disclosed in this report any change in the registrant's
internal control over financial reporting that occurred
during the registrant's most recent fiscal quarter that
has materially affected, or is reasonably likely to
materially affect, the registrant's internal control
over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons
performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in
the design or operation of internal control over
financial reporting which are reasonably likely to
adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
(b) Any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrant's internal control over
financial reporting.
Date: February 17, 2004 /s/ Anthony P. Deasey
---------------------
Anthony P. Deasey
Chief Financial Officer
Celsion Corporation
EXHIBIT 32.1
CELSION CORPORATION
CERTIFICATION
PURSUANT TO 18 UNITED STATES CODE ss. 1350
The undersigned hereby certifies that the Quarterly Report on Form 10-Q
for the period ended December 31, 2003 of Celsion Corporation (the "Company")
filed with the Securities and Exchange Commission on the date hereof fully
complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended, and that the information contained in such
report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
/s/ Augustine Y. Cheung
-----------------------
Augustine Y. Cheung
Chief Executive Officer
February 17, 2004
EXHIBIT 32.2
CELSION CORPORATION
CERTIFICATION
PURSUANT TO 18 UNITED STATES CODE ss. 1350
The undersigned hereby certifies that the Quarterly Report on Form
10-Q for the period ended December 31, 2003 of Celsion Corporation (the
"Company") filed with the Securities and Exchange Commission on the date hereof
fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended, and that the information contained in such
report fairly presents, in all material respects, the financial condition and
results of operations of the Company.
/s/ Anthony P. Deasey
--------------------------
Anthony P. Deasey
Chief Financial Officer
February 17, 2004