UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period ended June 30, 2001
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ___________to _________
Commission file number 000-14242
CELSION CORPORATION
(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-I Old Columbia Road, Columbia, Maryland 21046-1705
---------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (410) 290-5390
--------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____
As of August 14, 2001, the Registrant had outstanding 76,746,609 shares of
Common Stock, $.01 par value.
1
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
- --------------------------------------------------------------------------------
Index to Financial Statemen
- --------------------------------------------------------------------------------
Page
Balance Sheets as of June 30, 2001 and September 30, 2000 3
Statements of Operations for the Three and Nine Month Periods 5
Ended June 30, 2001 and June 30, 2000
Statements of Cash Flows for the Nine Month Periods Ended June 6
30, 2001 and 2000
Notes to Financial Statements 7
2
CELSION CORPORATION
BALANCE SHEETS
as of June 30, 2001 and September 30, 2000
ASSETS
June 30, 2001 September 30, 2000
------------- ------------------
(Unaudited)
Current assets:
Cash and cash equivalents $ 4,630,147 $ 8,820,196
Accounts receivable - trade 3,017 2,307
Accrued interest receivable -- 7,751
Inventories 26,194 13,538
Prepaid expenses 58,820 22,417
Other current assets
241,788 34,356
------------- ------------------
Total current assets 4,959,966 8,900,565
============= ==================
Property and equipment - at cost:
Furniture and office equipment 226,467 146,287
Laboratory and shop equipment 87,193 52,978
------------- ------------------
313,660 199,265
Less: accumulated depreciation 110,786 74,540
------------- ------------------
Net value of property and equipment 202,874 124,725
------------- ------------------
Other assets:
Patent licenses (net of amortization) 80,660 92,531
------------- ------------------
Total assets $ 5,243,500 $ 9,117,821
============= ==================
See accompanying notes.
3
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, 2001 September 30, 2000
------------- ------------------
(Unaudited)
Current liabilities:
Accounts payable - trade $ 124,805 $ 60,472
Notes payable 111,591 114,778
Accrued interest payable -- 155,373
Other accrued liabilities 50,000 60,769
------------- ------------------
Total current liabilities 286,396 391,392
------------- ------------------
Stockholders' equity:
Common stock $.01 par value - 150,000,000
shares authorized, 76,746,609 and
64,372,067 shares issued and outstanding
for June 30, 2001 and September 30,2000
respectively; 767,466 643,721
Series A 10% Convertible Preferred Stock -
$1,000 par value, 7,000 shares
authorized, 1,076 and 5,176 shares
issued and outstanding for June 30, 2001
and September 30,2000, respectively; 1,076,026 5,176,000
Additional paid-in capital 34,130,655 29,354,125
Accumulated deficit (31,017,043) (26,447,417)
------------- ------------------
Total stockholders' equity 4,957,104 8,726,429
------------- ------------------
Total liabilities and stockholders'equity $ 5,243,500 $ 9,117,821
============= ==================
See accompanying notes.
4
CELSION CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Nine Months
Ended June 30, Ended June 30,
------------------------------ ------------------------------
2001 2000 2001 2000
-------------- -------------- -------------- --------------
Revenue:
Hyperthermia sales
and parts $ 1,462 $ -- $ 3,320 $ 3,465
-------------- -------------- -------------- --------------
Total revenue 1,462 -- 3,320 3,465
-------------- -------------- -------------- --------------
Cost of sales -- -- --
--
Gross profit 1,462 -- 3,320 3,465
-------------- -------------- -------------- --------------
Operating expenses:
General and
administrative 1,127,585 460,233 3,041,535 1,216,002
Research and
development 552,934 644,106 1,801,255 1,876,943
-------------- -------------- -------------- --------------
Total operating
expenses 1,680,519 1,104,339 4,842,790 3,092,945
-------------- -------------- -------------- --------------
Loss from operations (1,679,057) (1,104,339) (4,839,470) (3,089,480)
Other income 62,438 142,040 269,897 209,982
Interest expense -- -- (53) --
-------------- -------------- -------------- --------------
Loss before income (1,616,619) (962,299) (4,569,626) (2,879,498)
taxes
Income taxes -- -- -- --
-------------- -------------- -------------- --------------
Net loss $ (1,616,619) $ (962,299) $ (4,569,626) $ (2,879,498)
============== ============== ============== ==============
Net loss per common
share (basic) $ (0.02) $ (0.02) $ (0.06) $ (0.05)
============== ============== ============== ==============
Weighted average
shares outstanding 76,515,562 63,050,849 70,447,996 57,790,252
============== ============== ============== ==============
See accompanying notes.
5
CELSION CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended June 30,
2001 2000
-------------- --------------
Cash flows from operating activities:
Net loss $ (4,569,626) $ (2,879,498)
Noncash items included in net loss:
Depreciation and amortization 48,117 28,558
Stock based compensation 372,634
--
Preferred shares converted into common stock 216,416
--
Net changes in:
Accounts receivable 7,041 --
Inventories (12,656) --
Prepaid expenses (36,403) (131,505)
Other current assets (207,432) (84,333)
Accounts payable-trade 64,333 (25,010)
Accrued interest-payable (155,373) (13,800)
Accrued compensation -- (91,009)
Other accrued liabilities and deferred revenue (10,768) 26,063
-------------- --------------
Net cash used by operating activities (4,283,717) (3,170,534)
-------------- --------------
Cash flows from investing activities:
Purchase of property and equipment (114,395) (54,742)
-------------- --------------
Net cash used by investing activities (114,395) (54,742)
-------------- --------------
Cash flows from financing activities:
Payment on notes payable (net) (3,187) (10,000)
Payment on capital leases (net) -- (5,719)
Proceeds of stock issuances 211,250 11,973,448
-------------- --------------
Net cash provided by financing activities 208,063 11,957,729
-------------- --------------
Net (decrease) increase in cash (4,190,049) 8,732,453
Cash at beginning of period 8,820,196 1,357,464
-------------- --------------
Cash at end of the period $ 4,630,147 $ 10,089,917
============== ==============
See accompanying notes.
6
CELSION CORPORATION
NOTES TO FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The accompanying unaudited condensed financial statements, which
include the accounts of Celsion Corporation (the "Company"), have been prepared
in accordance with accounting principles generally accepted in the United States
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 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 nine
months ended June 30, 2001 are not necessarily indicative of the results that
may be expected for the full year ending September 30, 2001. 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,
2000.
Note 2. Common Stock Outstanding and Per Share Information
For the quarter and nine-month periods ended June 30, 2001 and 2000,
per share data is based on the weighted average number of shares of Common Stock
outstanding. Outstanding warrants and options that can be converted into Common
Stock are not included as their effect is anti-dilutive.
Note 3. Inventories
Inventories are carried at the lower of actual cost or market, and cost
is determined using the average cost method. Parts held in inventory as of June
30, 2001 are held as replacements and spares for occasional repair of older
systems sold in previous years.
The components of inventories as of June 30, 2001 and September 30,
2000 are as follows:
June 30, 2001 September 30, 2000
------------- ------------------
Materials $ 9,788 $ 5,059
Work - in - process 16,406 8,479
------ -----
Finished products $26,194 $13,538
======= =======
7
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 technology, 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, 2000, which 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", as well as those set forth below and
elsewhere in this Report. These factors include, but are not limited to
unforeseen changes in the course of research and development activities and
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, regulatory authorities.
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 to successfully 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.
The operating results of the Company have fluctuated significantly in
the past on an annual and a quarterly basis. The Company expects that its
operating results will fluctuate significantly from quarter to quarter in the
future and will depend on a number of factors, many of which are outside the
Company's control.
8
Results of Operations
Comparison of Three Months Ended June 30, 2001
and Three Months Ended June 30, 2000
Revenue increased to $1,462 for the three months ended June 30, 2001
compared to no revenue for the three months ended June 30, 2000. No significant
new product revenues are expected until such time, if any, as the Company's
equipment incorporating new technologies receives the necessary approvals from
governmental regulatory agencies. The new equipment is currently in pivotal
Phase II clinical testing.
General and administrative expense increased by 145% to $1,127,585 for
the three months ended June 30, 2001, from $460,233 for the comparable period in
2000. The increase of $667,352 was due primarily to increased staff, consulting,
travel, and legal expenses. The Company also expanded and upgraded its office
space, to accommodate increased staff, resulting in an increase in rent.
Research and development expense decreased by 14% to $552,934 for the
current period from $644,106 for the three months ended June 30, 2000 due
primarily to the fact that expenditures in the third quarter of fiscal 2000
included a significant initial payment related to the licensing of gene therapy
technology from the Memorial Sloan Kettering Cancer Center. The Company expects
expenditures on research and development to increase for the remainder of the
current fiscal year as it continues pivotal Phase II clinical trials for its
breast cancer and BPH treatment systems.
The increased general and administrative expense, discussed above,
resulted in an increase in the loss from operations for the three month period
ended June 30, 2001 of $574,718, to $1,679,057 from $1,104,339 in the comparable
period during the prior year.
Comparison of Nine Months Ended June 30, 2001
and Nine Months Ended June 30, 2000
Revenue decreased to $3,320 for the nine months ended June 30, 2001
compared to $3,465 for the nine months ended June 30, 2000. No significant new
product revenues are expected until such time, if any, as the Company's
equipment incorporating new technologies receives the necessary approvals from
governmental regulatory agencies. The new equipment is currently in pivotal
Phase II clinical testing.
General and administrative expense increased by 150% to $3,041,535 for
the nine months ended June 30, 2001, from $1,216,002 for the comparable period
in 2000. The increase of $1,825,533 was due primarily to increased staff,
consulting, travel, legal expenses and costs associated with a registration
statement filed by the Company and subsequently withdrawn in December 2000. The
Company also expanded and upgraded its office space, to accommodate increased
staff, resulting in an increase in rent.
Research and development expense decreased by 4% to $1,801,255 for the
current period from $1,876,943 for the nine months ended June 30, 2000 due
primarily to the fact that expenditures in the third quarter of fiscal 2000
included a significant initial payment related to the licensing of gene therapy
technology from the Memorial Sloan Kettering Cancer Center. The Company expects
expenditures on research and development to increase for the remainder of the
current fiscal year as it continues pivotal Phase II clinical trials for its
breast cancer and BPH treatment systems.
9
The overall increased expenditures discussed above resulted in an
increase in the loss from operations for the nine month period ended June 30,
2001 of $1,749,990, to $4,839,470 from $3,089,480 in the comparable period
during the prior year.
Liquidity and Capital Resources
Since inception, the Company's expenses have significantly exceeded its
revenues, resulting in an accumulated deficit of $31,017,043 at June 30, 2001.
The Company has incurred negative cash flows from operations since its
inception, and has funded its operations primarily through the sale of equity
securities. As of June 30, 2001, the Company had total current assets of
$4,959,966, including cash and cash equivalents of $4,630,147, current
liabilities of $286,396 and a working capital surplus of $4,673,570. As of
September 30, 2000, the Company had total current assets of $8,900,565,
including cash and cash equivalents of $8,820,196, current liabilities of
$391,392, and a working capital surplus of $8,509,173. Net cash used in the
Company's operating activities was $4,283,717 for the nine months ending June
30, 2001.
The Company does not have any bank financing arrangements and has
funded its operations in recent years primarily through private placement
offerings. For all of fiscal year 2001, the Company expects to expend a total of
about $7 million for research, development and administration, of which
approximately $4.3 million had been expended during the nine months ended June
30, 2001. This aggregate expenditure amount is an estimate based upon
assumptions such as, the scheduling and cost of institutional clinical research
and testing personnel, the timing of clinical trials and other factors, not all
of which are fully predictable or within the control of the Company.
Accordingly, estimates and timing concerning projected expenditures and programs
are subject to change.
The Company expects to meet its funding needs for the remainder of
fiscal year 2001 from its current resources.
The Company's dependence on raising additional capital will continue at
least until such time, if any, as the Company is able to begin marketing its new
technologies. The Company's future capital requirements and the adequacy of its
financing depend upon numerous factors, including the successful
commercialization of its thermotherapy systems, progress in its 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
its products. The Company will be required to obtain such funding through equity
or debt financing, strategic alliances with corporate partners and others, or
through other sources not yet identified. The Company does not have any
committed sources of additional financing and cannot guarantee that additional
funding will be available in a timely manner, or on acceptable terms, if at all.
If adequate funds are not available in a timely manner and on acceptable terms,
the Company may be required to delay, scale back or eliminate certain aspects of
its operations or attempt to obtain funds through arrangements with
collaborative partners or others that may require the Company to relinquish
rights to certain of its technologies, product candidates, products or potential
markets.
10
Item 3. Quantitative and Qualitative Disclosure About Market Risk.
Not applicable.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
On April 27, 2000, we commenced an action in the United States District
Court for the District of Maryland against Warren C. Stearns, a former director,
Mr. Stearn's management company, SMC, and a number of Mr. Stearns' family
members and colleagues who hold certain warrants for the purchase of
approximately 4.1 million shares of our Common Stock. These warrants were
intended as compensation for certain investment banking, brokerage and financing
services rendered and to be rendered by Mr. Stearns and SMC. We have reviewed
with our attorneys the circumstances surrounding the issuance of these warrants
and the services that were performed or purported to be performed by Mr. Stearns
and SMC, and have concluded that these warrants should be rescinded. We believe
that the issuance of these warrants was in violation of Section 15 of the
Securities and Exchange Act of 1934 and constitutes a voidable transaction under
the provisions of Section 29 of that Act and that the right of Mr. Stearns and
his affiliates, if any, to exercise these warrants was released.
The defendants in the litigation have moved to dismiss the complaint on
various technical grounds, including statute of limitations. On January 18,
2001, the Maryland District Court denied the defendants' motion to dismiss for
lack of personal jurisdiction but granted the defendants' motion that venue was
improper. The Maryland District Court transferred the matter to the United
States District Court for the Northern District of Illinois, in Chicago, and
referred the remaining grounds for dismissal raised in the defendants' motion to
dismiss to the Illinois District Court. The Illinois District Court has
scheduled a hearing to rule on the Defendants' motion to dismiss for August 15,
2001. On July 17, 2001, we filed a motion to amend the complaint to add a second
count alleging that Mr. Stearns and his affiliates released any right they had
to exercise the warrants through a document entitled Mutual Release by and among
Celsion Corporation, Warren Stearns and Stearns Management Company. The Motion
to amend was granted on July 19, 2001. No answer or motion has been filed by the
defendants with respect to the second count of the complaint.
Item 2. Change in Securities.
During the fiscal quarter ended June 30, 2001, we issued the following
securities without registration under the Securities Act of 1933, as amended
(the "Securities Act"):
1. At various times during the quarter, we issued a
total of 225,000 shares of its Common Stock for
aggregate consideration of $56,250 upon exercise of
stock options. 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, we view the shares
issued as exempt from registration under Sections
4(2) and/or 4(6) of the Securities Act. The cash
consideration received by the Company was added to
working capital to be used for general corporate
purposes.
11
2. At various times during the quarter, we issued a
total of 234,042 shares of its Common Stock upon
conversion of 96 shares of its Series A 10%
Convertible Preferred Stock. 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, we view the shares issued as exempt from
registration under Sections 3(a)(9), 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 Securities Holders.
On May 18, 2001, we held our Annual Meeting of Stockholders (the
"Annual Meeting"). At the Annual Meeting, the stockholders voted to elect the
following directors to the Board of Directors (Proposal No. 1), in light of the
approval of Proposal No. 2, described below, to serve in the Classes and until
the annual meetings in the years indicated and until their respective successors
are elected and shall have qualified:
Name Class Term Expires Results of Stockholder Vote
Augustine Y. Cheung III 2004 Votes For: 68,141,817
Votes Withheld: 142,625
LaSalle D. Leffall, Jr. II 2003 Votes For: 68,148,087
Votes Withheld: 136,355
Max E. Link III 2004 Votes For: 68,151,437
Votes Withheld: 133,005
John Mon I 2002 Votes For: 68,135,137
Votes Withheld: 149,305
Claude Tihon I 2002 Votes For: 68,151,942
Votes Withheld: 132,500
Kris Venkat III 2004 Votes For: 68,153,002
Votes Withheld: 131,440
Spencer J. Volk II 2003 Votes For: 67,398,148
Votes Withheld: 886,294
12
At the Annual Meeting, the Stockholders also acted on the following Proposals:
Proposal Number
Subject Matter Results of Stockholder Vote
2 Establishment of a Classified Board of For: 39,517,679
Directors Against: 1,898,333
Abstain and
Broker Non-Votes: 27,036,149
3 Approval of the Celsion Corporation 2001 For: 37,542,815
Stock Option Plan Against: 3,885,871
Abstain and
Broker Non-Votes: 27,043,475
4 Ratification of Stegman & Company as the For: 68,019,659
Company's Independent Public Accountants Against: 109,448
for the Fiscal Year Ended September 30, 2001 Abstain and
Broker Non-Votes: 155,335
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
3.1. Certificate of Incorporation of Celsion Corporation (the
"Company"), as amended through June 5, 2001, and as in effect on August
14, 2001.
3.2. Bylaws of the Company, as amended through June 5, 2001, and as in
effect on August 14, 2001.
10.1. Employment Agreement between the Company and Anthony P. Deasey
dated November 27, 2000.
11. Computation of Per Share Earnings.
(b) Reports on Form 8-K.
None.
13
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: August 14, 2001
CELSION CORPORATION
-------------------
(Registrant)
By: /s/ Spencer J. Volk
-----------------------
Spencer J. Volk
President and Chief Executive Officer
By: /s/ Anthony P. Deasey
-------------------------
Anthony P. Deasey
Chief Financial Officer
14
Exhibit 3.1
Certificate of Incorporation (as amended on June 5, 2001)
CERTIFICATE OF INCORPORATION
OF
CELSION (DELAWARE) CORPORATION
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 one hundred fifty million one
hundred thousand (150,100,000) shares, consisting of (i) one hundred fifty
million (150,000,000) 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 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:
15
(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.
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.
16
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: 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 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. 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. 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.
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.
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(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, 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 ____(th) day of March, 2000.
By: /s/ Michael Barr
- --------------------
Michael Barr
Incorporator
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Exhibit 3.2
Bylaws (as amended on June 5, 2001)
BYLAWS
OF
CELSION (DELAWARE) CORPORATION
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, 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
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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 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.
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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 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.
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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.
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.
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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.
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. Before any meeting of stockholders, the board
of directors 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.
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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.
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.
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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 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.
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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 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.
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
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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 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.
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(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, 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.
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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
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.
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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.
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
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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.
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. The fiscal year of this corporation shall begin on the
first day of October of each year and end on the last day of September of the
following 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.
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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 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.
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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
repeal was enacted or the filing of the operative written consent(s) shall be
stated in said book.
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Exhibit 10.1
Employment Agreement with Anthony P. Deasey
EXECUTIVE EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, made as of the 27th day of November 2000 between
ANTHONY DEASEY (the "Executive"), an individual residing at 11 Woods Lane,
Elmira, NY 14905, and CELSION CORPORATION (the "Company"), a Maryland
corporation with offices at 10220-1 Old Columbia Road, Columbia, Maryland
21046-1705.
WITNESSETH:
WHEREAS, the Executive desires to be employed by the Company, and the
Company desires that the Executive shall be employed by it and render services
to it, and the Executive is willing to be so employed and to render services,
all upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Employment, Duties and Acceptance.
---------------------------------
1.1 The Company hereby employs Executive, and the Executive hereby
accepts employment for the term ("Term") set forth in Section 2 hereof, to
render services to Company as the Chief Financial Officer. The Executive
represents and warrants to the Company that he has full power and authority to
enter into this Agreement and that he is not under any obligation of a
contractual or other nature to any person, firm or corporation which is
inconsistent or in conflict with this Agreement, or which would prevent, limit
or impair in any way the performance by Executive of his obligations hereunder.
1.2 The Executive will have general supervision over the financial
affairs of the Company and its subsidiaries or affiliates (referred to
collectively as "Affiliates") and will have such other duties and
responsibilities consistent with his position, as may reasonably be assigned to
him by the Board of Directors. In addition, the Executive will serve as a senior
officer of each of the Company's Affiliates. The Executive will report to the
President and CEO of the Company.
1.3 The Executive shall devote all of his business time and effort to
the business and affairs of the Company, and shall use his best efforts, skills,
and abilities to promote the interests of the Company, except for reasonable
vacations and during periods of illness or incapacity, but nothing contained in
this Agreement shall prevent the Executive from engaging in charitable,
community or other business activities provided they do not interfere with the
regular performance of the Executive's duties and responsibilities under this
Agreement.
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1.4 Unless the Executive and the Company shall otherwise agree, the
Executive's principal place of employment shall be in and around the Columbia,
Maryland area, but the duties of the Executive shall include such visits to the
Company's Affiliates, research and development partners, product and clinical
trial test sites, customers, investment and other bankers, in each case at the
expense of the Company, as the Executive determines is reasonably required in
the performance of the Executive's responsibilities.
2. Term.
----
2.1 The term of this Agreement will commence as of November 27, 2000
and will terminate at the close of business on November 30, 2003, unless sooner
terminated in accordance with the provisions of this Agreement ("Initial Term").
Thereafter, the employment of the Executive shall continue for successive
one-year periods (each such one year period being hereinafter referred to as a
"Renewal Term") unless the Corporation or Executive shall give notice to the
other at least three months prior to the end of the Initial Term or any Renewal
Term of the election of the Corporation or Executive to terminate the employment
of the Executive at the end of the Initial Term or the then current Renewal
Term.
3. Base Salary.
-----------
3.1 For all services performed by the Executive under this Agreement,
the Executive shall be paid a base salary ("Base Salary") for the first twelve
months of the Initial Term at the annual rate of $200,000. The Base Salary for
subsequent years shall be the greatest of (i) one hundred five percent (105%) of
the Base Salary for the prior calendar year; (ii) the product of the
multiplication of the Base Salary during the calendar year immediately preceding
by the sum of (y) one hundred percent plus (z) the amount (expressed as a
percent) by which the most recently reported Consumer Price Index ("CPI")
applicable to the Washington-Baltimore Metropolitan region is greater than the
CPI for that same region for the prior twelve months; or (iii) the sum offered
by the Board of Directors after a review taking into account corporate and
individual performance, the Company's prospects and general business conditions.
3.2 Base Salary shall be paid in equal monthly or semi-monthly
installments in keeping with the Company's standard payroll policies applicable
to its senior executives.
4. Option to Acquire Common Stock.
------------------------------
4.1 The Company hereby grants to Executive as a bonus (the "Bonus
Option"), a non-qualified stock option to acquire five hundred thousand
(500,000) (fully paid and non-assessable shares of common stock, par value $0.01
per share (the "Common Stock") of the Company. The purchase price for each share
of Common Stock acquired upon exercise of the stock options constituting the
Bonus shall be $1.4375/share. The options to acquire the 500,000 shares of
Common Stock shall vest in accordance with the following vesting schedule:
Executive may exercise his option to acquire one hundred sixty seven thousand
(167,000) shares on or after November 27, 2000, his option to acquire one
hundred sixty-seven thousand (167,000) shares on or after November 27, 2001, and
his option to acquire one hundred sixty-six thousand (166,000) shares after
36
November 27, 2002. If the Executive is not employed by the Company on any of the
three vesting dates, he shall no longer be entitled to exercise his option(s) to
acquire Common Stock vesting on or after such date. Subject to the limitations
set forth in this Agreement, the Executive may exercise the stock options
constituting the Bonus, at any time prior to 5:00 PM (New York time) on November
27, 2010 (the "Expiration Date"), upon notice to the Company at its principal
office at 10220-1 Old Columbia Road, Columbia, MD 21046-1705, Attention: Spencer
J. Volk, President and Chief Executive Officer (or at such other location as the
Company may advise the Executive in writing) which time all unexercised options
shall expire and be of no further legal force or effect.
4.2 The Company shall at all times reserve for issuance and/or delivery
such number of shares of its Common Stock as shall be required for issuance or
delivery upon exercise of the Bonus Option. No fractional shares or scrip
representing fractional shares shall be issued when the option is exercised.
Common Stock issued on exercise of the Bonus Option may not be sold or offered
for sale in the absence of effective registration under such securities laws, or
an opinion of counsel satisfactory to the Company that such registration is not
required. Common Stock issued on exercise of the Bonus Option may be sold by the
Executive in transactions permitted by the provisions of Rule 144 of the
Securities Act of 1933. Common Stock issued upon exercise of the Bonus Option
shall bear an appropriate restrictive legend referring to the provisions hereof.
5. Additional Performance Based Options.
------------------------------------
5.1 As a form of incentive compensation to Executive, the Executive,
the Company hereby grants to Executive a non-qualified stock option to acquire
from the Company, on an original issue basis, an aggregate of four hundred
thousand (400,000) fully paid and non-assessable shares of Common Stock at the
several purchase prices designated below, upon the achievement by the Company of
the several corporate accomplishments (the "Milestones") listed below (the
"Performance Option").
5.2 For purpose of this Section 5:
A. Corporate Milestones. The Performance Option to acquire
Common Stock shall vest and thereafter be available for
exercise in tranches as indicated herein if, and at any
time after, the Company has achieved the following
Milestones:
o Completion of a secondary offering of Celsion shares
(Tranche: 80,000 shares).
o Obtaining pre-marketing approval from the United States
Food and Drug Administration for commercialization of the
Company's BPH treatment system (Tranche: 80,000 shares).
o Obtaining pre-marketing approval from the United States
Food and Drug Administration for commercialization of the
Company's Breast Cancer treatment system (Tranche: 80,000
shares).
o Creation and financing of Liposome Division/ Subsidiary
(Tranche: 80,000 shares). o Achievement of annual revenues
for any calendar year of $5.0 million (Tranche: 80,000
shares).
37
B. Exercise Price. The exercise price payable per share for
each stock option exercised after the occurrence of a
Milestone shall be as follows:
Upon achieving the first Milestone, $1.4375 per share;
Upon achieving the second Milestone,$1.58125 per share;
Upon achieving the third Milestone, $1.725 per share;
Upon achieving the fourth Milestone, $1.86875 per share;
Upon achieving the fifth Milestone, $2.0125 per share.
C. Exercise of Performance Option. Subject to the limitations
set forth in this Agreement, the Executive may exercise
the Performance Option at any time on or after the date on
which the applicable Milestone is achieved and so long as
he is employed by the Company, but not later than the
Expiration Date, upon notice to the Company at its
principal office at 10220-1 Old Columbia Road, Columbia,
MD 21046-1705, Attention: Spencer J. Volk, President and
Chief Executive Officer (or at such other location as the
Company may advise the Executive in writing). The notice
shall be executed and delivered with the Purchase Form
attached hereto duly filled in and signed and upon payment
in cash or cashier's check of the aggregate Purchase Price
for the number of shares which Executive is acquiring
determined in accordance with the provisions hereof. If
such date is a day on which banking institutions are
authorized by law to close, then the Expiration Date shall
be on the next succeeding day which shall not be such a
day. The Performance Option may be exercised without
regard to the sequence in which the Milestones have been
achieved. A Notice of Exercise of the Performance Option
shall be submitted by the Executive to the Company's Board
of Directors, identifying the Milestone achieved and the
number of shares covered by the relevant tranche. The
Board of Directors shall be deemed to have approved the
exercise of the Performance Option unless, within
seventy-two (72) hours of the submission of the Notice of
Exercise, the Board adopts a resolution determining that
exercise of the Performance Option is not agreed as to the
Milestone identified in the Notice of Exercise. In the
absence of such a disaffirming resolution, Executive may
acquire Common Stock thereafter by presentation of the
Notice of Exercise either to the Company or at the office
of its stock transfer agent, if any, and accompanied by
payment in cash or cash equivalent of the exercise price
for the number of shares of Common Stock specified in such
Notice of Exercise, together with all federal and state
taxes applicable upon such exercise.
D. Reservation of Shares. The Company hereby agrees that at
all times there shall be reserved for issuance such number
of shares of its Common Stock as shall be required for
issuance or delivery to the Executive upon achievement of
the Milestones set forth herein.
38
E. Anti-Dilution Provisions.
(1) Adjustment of Number of Shares of Common Stock.
Notwithstanding anything in this Section 5.2E to the
contrary, in case the Company shall at any time issue
Common Stock by way of dividend or other distribution on
any stock of the Company or subdivide or combine the
outstanding shares of Common Stock, the exercise price
shall be proportionately decreased in the case of such
issuance (on the day following the date fixed for
determining shareholders entitled to receive such dividend
or other distribution) or either decreased in the case of
such subdivision or increased in the case of such
combination (on the date that such subdivision or
combination shall become effective).
(2) No Adjustment for Small Amounts. Anything in this
Section 5.2E to the contrary, the Company shall not be
required to give effect to any adjustment in the exercise
price unless and until the net effect of one or more
adjustments, determined as above provided, shall have
require a change of the exercise price by at least one
cent, but when the cumulative net effect of more than one
adjustment so determined shall be to change the actual
exercise price by at least one cent, such change in the
exercise price shall thereupon be given effect.
(3) Number of Shares of Common Stock Adjusted. Upon any
adjustment of the exercise price other than pursuant to
Section 5.2E(1) hereof, the Executive shall thereafter
(until another such adjustment) be entitled to purchase,
at the new exercise price, the number of shares,
calculated to the nearest full share, obtained by
multiplying the number of shares of Common Stock initially
issuable upon achieving any Milestone by the exercise
price in effect on the date hereof and dividing the
product so obtained by the new exercise price.
G. Adjustments in the Event of a Recapitalization or Similar
Transaction. In the event of a reclassification,
recapitalization, stock split, reverse stock split, stock
dividend or combination of shares, or other similar event,
the number and class of shares issuable to the Executive
upon exercise of either the Bonus Option or Performance
Option shall be adjusted to reflect such event.
H. Acceleration Upon Change of Control. Notwith- standing any
language to the contrary contained herein, if this
Agreement is in effect at the time of the occurrence of a
"Change of Control" event, the Bonus Option and
Performance Option shall automatically vest 100% and
immediately become exercisable upon the occurrence of the
Change of Control event. For purposes of this Agreement,
"Change of Control" event has the meaning set forth in
Section 11.1 hereof.
39
6. Reimbursement for Expenses.
6.1 Company shall reimburse Executive for all reasonable
out-of-pocket expenses paid or incurred by him in the course of his employment,
upon presentation by Executive of valid receipts or invoices therefore,
utilizing procedures and forms for that purpose as established by Company from
time to time. In addition, the Company shall pay to the Executive a relocation
allowance in the amount of Twenty Thousand Dollars ($20,000) plus reimbursement
in full of the actual amount of all relocation expenses incurred by the
Executive in moving from his present residence to the area in and around the
headquarters of the Company. Both the relocation allowance and the reimbursement
of relocation expenses will be "grossed up" by such amount as is necessary to
cover the Executive's federal, state and local income tax liability arising from
such payments.
7. Vacations.
7.1 Executive shall be entitled to reasonable vacations
(which shall aggregate no less than four (4) weeks vacation with pay) during
each consecutive twelve (12) month period commencing on the date hereof
Executive may not accumulate any vacation days which remain unused at the end of
any year during the term hereof without the prior consent of the Company.
8. Employee Benefit Programs, etc.
8.1 The Company shall provide the Executive with an
automobile (or at Employee's option, a cash allowance in the amount of $450.00
per month in lieu thereof) for use in the performance of Executive's duties,
along with fuel, fluids and maintenance, upon such terms and conditions as are
approved by the Company. The Company will also either provide or pay or
reimburse the Executive for the costs of a cellular telephone.
8.2 Subject to the Executive's meeting the eligibility
requirements of each respective plan, Executive shall participate in and be
covered by each pension, life insurance, accident insurance, health insurance,
hospitalization, disability insurance and any other employee benefit plan of
Company, as the case may be, made available generally from and after the date
hereof to its respective senior executives, on the same basis as shall be
available to such other executives without restriction or limitation by reason
of this Agreement.
8.3 Nothing contained herein shall prevent the Company
from at any time increasing the compensation provided to be paid to Executive
herein, either permanently or for a limited period, or from paying bonuses and
other additional compensation to Executive, whether or not based upon the
earnings of the business of Company, or from increasing or expanding any
employee benefit program applicable to the Executive, in the event the Company,
in its sole discretion, shall deem it advisable so to do in order to recognize
and compensate fairly Executive for the value of his services.
9. Death or Disability.
9.1 If Executive shall die during the term hereof, this
Agreement shall immediately terminate, except that Executive's legal
representatives or designated beneficiaries shall be entitled to receive (i) the
Base Salary due to Executive hereunder to the last day of the month following
the month in which his death occurs, payable in accordance with the Company's
regular payroll practices, (ii) all other benefits payable upon death under any
40
employee benefit program or other insurance covering the Executive as of the
date of death, and (iii) any stock option issued as part of the Bonus Option or
Performance Option that was exercisable at the date of death may be exercised by
the legal representative of the Executive's estate at any time or times during
the period beginning on the date of death and ending one year after the date of
death, or until the expiration of the stated term of such stock option,
whichever period is shorter, and any stock option not exercisable at the date of
death shall be forfeited.
9.2 In the event of the Disability of the Executive, as
hereinafter defined, the Executive shall be entitled to continue to receive
payment of his Base Salary (prorated as may be necessary) in accordance with the
terms of Section 3 hereof through the last day of the sixth month following the
month in which Executive's employment hereunder is terminated as a result of
such Disability. At any time after the date of the Notice (as hereinafter
defined) and during the continuance of the Executive's Disability, the Company
may at any time thereafter terminate Executive's employment hereunder by written
notice to the Executive. The term "Disability" shall mean physical or mental
illness or injury which prevents the Executive from performing his customary
duties for the Company for a period of thirty (30) consecutive days or an
aggregate period of ninety (90) days out of any consecutive twelve (12) months.
The date of commencement of Disability shall be the date set forth in the notice
(the "Notice") given by Company to the Executive at any time following a
determination of Disability, which date shall not be earlier than the date the
Notice is given by Company. A determination of Disability by Company shall be
solely for the purposes of this Section 9 and shall in no way affect the
Executive's status under any other benefit plan applicable to the Executive.
9.3 Upon the occurrence of a Disability, and unless the
Executive's employment shall have been terminated as provided in Section 9.2,
the Executive shall, during such time as he is continuing to receive Base Salary
payment as set forth in Section 9.2, perform such services for Company,
consistent with his duties under Section 1 hereof, as he is reasonably capable
of performing in light of the condition giving rise to a Disability. All
payments due under Section 9.2 shall be payable in accordance with Company's
regular payroll practices. Any amount paid to Executive pursuant to this
Agreement by reason of his Disability, shall be reduced by the aggregate amount
of all monthly disability payments which the Executive is entitled to receive
under all workers compensation plans, disability plans and accident, health or
other insurance plans or programs maintained for the Executive by Company, by
any company controlling, controlled by, or under common control with, Company.
9.4 In the event the Executive's employment is terminated
due to Disability, in addition to receipt of the Base Salary payments described
in Section 9.2, any stock option issued as part of the Bonus or Performance
Option that was exercisable at the date of Disability may be exercised by the
Executive or his legal representative at any time or times during the period
beginning on the date of Disability and ending one year after the date of
Disability, or until the expiration of the stated term of such stock option,
whichever period is shorter, and any stock option not exercisable at the date of
Disability shall be forfeited.
10. Termination for Cause.
10.1 The employment of the Executive may be terminated by
the Company for Cause. For this purpose, "Cause" shall mean:
41
(i) an act constituting a felony and resulting
or intended to result, directly or indirectly,
in his gain or personal enrichment at the
expense of the Company and its shareholders;
(ii) dishonest acts against the Company;
(iii) illegal drug use; or
(iv) grossly or willfully neglecting to carry out
his duties under this Agreement resulting in
material harm to the Company.
The Executive's employment shall not be terminated for Cause under clauses (ii)
or (iv) unless:
(a) the Executive has received at least fifteen (15) days notice
of a meeting of the Board of Directors at which meeting the
Board shall consider the existence of Cause, shall provide the
Executive with an opportunity to be heard before the Board,
and, following such consideration and hearing, the Board has
determined, based upon credible evidence, that grounds for
Cause exist; and
(b) the misconduct or breaches on which an assertion of Cause is
based are not cured within thirty (30) days thereafter if such
misconduct or breaches are capable of being cured.
10.2 In the event of a termination for Cause, the
Executive shall (a) be entitled to any unpaid Base Salary pro rated up to the
date of termination, and (b) any stock options not exercised prior to the date
of termination shall automatically be forfeited by the Executive, and the
Executive shall have no further rights under this Agreement. Furthermore, the
Executive shall be and remain subject to all provisions of Section 13 below for
the period indicated therein.
11. Termination Upon Change of Control or by Company Without
Cause.
11.1 A "Change in Control" shall occur: (A) if any Person,
or combination of Persons (as hereinafter defined), or any affiliate of any of
the above, is or becomes the "beneficial owner" (as defined in Rule l3d-3
promulgated under the Securities Exchange Act of 1934) directly or indirectly,
of securities of the Company representing twenty-five percent (25%) or more of
the total number of outstanding shares of common stock of the Company; (B) if
individuals who, at the date of this Agreement, constitute the Board (the
"Incumbent Directors") cease, for any reason, to constitute at least a majority
thereof, provided that any new director whose election was approved by a vote of
at least 75% of the Incumbent Directors shall be treated as an Incumbent
Director; or (C) the Company sells substantially all of its assets to a
purchaser other than a subsidiary. For purposes hereof, "person" shall mean any
individual, partnership, joint venture, association, trust, or other entity,
including a "group" as referred to in section 13(d)(3) of the Securities
Exchange Act of 1934.
11.2 If there occurs a Change in Control, and if there
subsequently occurs a material adverse change, without the Executive's written
consent, in the Executive's working conditions or status, including but not
limited to a significant change in the nature or scope of the Executive's
authority, powers, duties or responsibilities, or a reduction in the level of
support services or staff, then, whether or not such change would otherwise
constitute a breach of this Agreement by the Company, this Agreement may be
terminated by notice given by the Executive, specifying the Change of Control
and significant adverse change or changes.
42
11.3 Upon the termination of this Agreement in accordance
with Section 11.2 above, the Executive shall be entitled, without any duty to
mitigate damages, to:
(a) All unpaid Base Salary pro-rated up to the date of
termination; and
(b) The opportunity to exercise any stock option issued as
part of the Bonus Option or Performance Option that was
exercisable at the date of termination may be exercised by
the Executive at any time or times during the period
beginning on the effective date of termination and ending
one year after the date of termination, or until the
expiration of the stated term of such stock option,
whichever period is shorter, and any stock option not
exercisable upon the effective date of termination shall
be forfeited;
(c) A severance payment equal to 2.99 times the Base
Salary in effect on the date of termination, payable at
the election of the Executive, in either a lump sum
payment payable immediately upon termination or over the
course of the year immediately following the termination
date; and
(d) All benefits available under the Company's employee
benefit programs, to the extent applicable to senior
executives voluntarily and amicably retiring from
employment with the Company.
11.4 The payments and any other compensation and benefits
to which the Executive is entitled under this Section 11 shall be made available
to the Executive no later than thirty (30) days after the date of any
termination referred to herein.
11.5 In the event that the Company shall actually or
constructively terminate this Agreement during the Initial Term or any Renewal
Term without cause (and with or without a Change of Control), the Executive
shall be entitled to the same payments, compensation and rights as provided in
the case of a termination by the Executive under Section 11.3.
11.6 In the event that Executive receives the payments and
any other compensation and benefits referred to in this Section 11, he will be
bound by the restrictive provisions of Section 13 for the period therein
provided.
12. Termination by Executive.
12.1 If the Executive shall terminate his employment under
this Agreement during the Initial Term without the express written consent of
the Company, then, for purposes of establishing the rights of the Executive upon
such termination, such termination shall be deemed the equivalent of a
termination for Cause under Section 10.1, and the Executive shall have only
those rights with regard to compensation as are set forth in Section 12.2, and
the restrictive provisions of Section 13 below shall fully apply.
12.2 If the Executive shall terminate his employment under
this Agreement during any Renewal Term without the express written consent of
the Company, then, for purposes of establishing the rights of the Executive upon
such termination, the Executive shall be entitled (i) to receive all unpaid Base
Salary pro-rated up to the date of termination, and (ii) for a period of thirty
(30) days following the date of termination, to exercise any unexercised option
to acquire Common Stock under either Section 4 or Section 5 hereof that was
exercisable by the Executive on the date preceding the date of termination.
43
12.3 In the case of a termination pursuant to Section
12.2, the restrictions set forth in Section 13 shall apply to Executive for the
period therein stated.
13. Restrictive Covenants; Compensation.
13.1 During such time as this Agreement shall be in
effect, and as otherwise explicitly stated herein, for a period of three (3)
years following the termination of Executive's employment with Cause, or one (1)
year after voluntary termination of this Agreement by the Executive, and without
the Company's prior written consent (which may be withheld for any reason or for
no reason in Company's sole discretion), Executive shall not do anything in any
way inconsistent with his duties to, or adverse to the interests of, the
Company, nor shall Executive, directly or indirectly, himself or by or through a
family member or otherwise, alone or as a member of a partnership or joint
venture, or as a principal, officer, director, consultant, employee or
stockholder of any other entity, compete with Company or be engaged in or
connected with any other business competitive with that of Company or any of its
affiliates, except that Executive may own as a passive investment not more than
five percent (5%) of the securities of any publicly held corporation that may
engage in such a business competitive with that of Company or any of its
Affiliates.
13.2 In view of the fact that Executive will be brought
into close contact with many confidential affairs of Company and its Affiliates
not readily available to the public, Executive agrees during the Term of this
Agreement and thereafter:
(a) to keep secret and retain in the strictest confidence
all non-public information about (i) research and development, test results,
suppliers, venture or strategic partners, licenses and patents or patent
applications, planned or existing products, know-how, financial condition and
other financial affairs (such as costs, pricing, profits and plans for future
development, methods of operation and marketing concepts) of Company and its
Affiliates; (ii) the employment policies and plans of the Company and its
Affiliates; and (iii) any other proprietary information relating to the Company
and its Affiliates, their operations, businesses, financial condition and
financial affairs (collectively, the "Confidential Information") and, for such
time as Company or any of its Affiliates is operating, Executive shall not
disclose the Confidential Information to anyone not then an officer, director or
authorized employee of Company or its Affiliates, either during or after the
term of this Agreement, except in the course of performing his duties hereunder
or with Company' express written consent or except to the extent that such
confidential information can be shown to have been in the public domain through
no fault of Executive; and
(b) to deliver to Company within ten days after
termination of his services, or at any time Company may so request, all
memoranda, notes, records, reports and other documents relating to Company or
its Affiliates, businesses, financial affairs or operations and all property
associated therewith, which he may then possess or have under his control.
13.3 Executive shall not at any time during the three-year
period following the termination of his employment for any reason whatsoever,
including termination resulting from the natural expiration of the term of this
Agreement, (i) employ any individual who was employed by Company or any of its
44
Affiliates at any time during the such period or during the twelve (12) calendar
months immediately preceding such termination, or (ii) in any way cause,
influence or participate in the employment of any such individual by anyone else
in any business that is competitive with any of the businesses engaged in by
Company or any of its Affiliates.
13.4 Executive shall not at any time during the three-year
period following the termination of his employment for any reason whatsoever,
including termination resulting from the natural expiration of the term of this
Agreement, directly or indirectly, either (i) persuade or attempt to persuade
any customer or client of the Company or of any of its Affiliates to cease doing
business with Company or with any Affiliate, or to reduce the amount of business
it does with Company or with any of its Affiliates, (ii) solicit for himself or
any person other than Company or any of its Affiliates, the business of any
individual or business which was a customer or client of Company or any of its
Affiliates at any time during the eighteen month period immediately preceding
such termination.
13.5 Executive acknowledges that the execution and
delivery by him of the promises set forth in this Section 13 is an essential
inducement to Company to enter into this Agreement, and that Company would not
have entered into this Agreement but for such promises. Executive further
acknowledges that his services are unique and that any breach or threatened
breach by Executive of any of the foregoing provisions of this Section 13 cannot
be remedied solely by damages. In the event of a breach or a threatened breach
by Executive of any of the provisions of this Section 13, Company shall be
entitled to injunctive relief restraining Executive and any business, firm,
partnership, individual, corporation or other entity participating in such
breach or attempted breach. Nothing herein, however, shall be construed as
prohibiting Company from pursuing any other remedies available at law or in
equity for such breach or threatened breach, including the recover of damages
and the immediate termination of the employment of Executive hereunder.
13.6 If any of the provisions of, or promises contained
in, this Section 13 are hereafter construed to be invalid or unenforceable in
any jurisdiction, the same shall not affect the remainder of the provisions or
the enforceability thereof in any other jurisdiction, which shall be given full
effect, without regard to the invalid portions or the unenforceability in such
other jurisdiction. If any provisions contained in this Section 13 are held to
be unenforceable in any jurisdiction because of the duration or scope thereof,
the parties hereto agree that the court making such determination shall have the
power to reduce the duration and/or scope (if such provision, in its reduced
form, shall be enforceable); provided, however, that the determination of such
court shall not affect the enforceability, duration or scope of this Section 13
in any other jurisdiction.
14. Relationship of Parties.
Nothing herein contained shall be deemed to constitute a
partnership between or a joint venture by the parties, nor shall anything herein
contained be deemed to constitute the Executive, the Company or any Affiliates
the agent of the other except as is expressly provided herein. Neither Executive
nor Company shall be or become liable or bound by any representation, act or
omission whatsoever of the other party made contrary to the provisions of this
Agreement.
15. Notices.
All notices and communications hereunder shall be in
writing and delivered by hand or sent by registered or certified mail, postage
and registration or certification fees prepaid, return receipt requested, or by
45
overnight delivery such as Federal Express, and shall be deemed given when hand
delivered or upon three (3) business days after the date when mailed, or upon
one (1) business day after delivery to an agent for overnight delivery, if sent
in such manner, as follows:
If to Company Celsion Corporation
10220-1 Old Columbia Road
Columbia, Maryland 21046-1705
Attention: Board of Directors
With a copy to: Venable, Baetjer and Howard, LLP
Mercantile Bank and Trust Building
Two Hopkins Plaza Suite 1800
Baltimore, Maryland 21201
Attention: Greg Cross
If to Executive: Mr. Tony Deasey
-------------------------
With a copy to: -------------------------
-------------------------
-------------------------
The foregoing address may be changed by notice given in the manner set forth in
this Section 15.
16. Disputes. The parties shall attempt in good faith to
resolve all claims, disputes and other disagreements arising hereunder by
negotiation. In the event that a dispute between the parties cannot be resolved
within thirty (30) days of written notice from one party to the other party,
such dispute shall, at the request of either party, after providing written
notice to the other party, be submitted to arbitration in Columbia, Maryland in
accordance with the arbitration rules of the American Arbitration Association
then in effect. The notice of arbitration shall specifically describe the
claims, disputes or other matters in issue to be submitted to arbitration. The
parties shall jointly select a single arbitrator who shall have the authority to
hold hearings and to render a decision in accordance with the arbitration rules
of the American Arbitration Association. If the parties are unable to agree
within ten (10) days, the arbitrator shall be selected by the Chief Judge of the
Circuit Court for Howard County. The discovery rights and procedures provided by
the Federal Rules of Civil Procedure shall be available and enforceable in the
arbitration proceeding. The written decision of the arbitrator so appointed
shall be conclusive and binding on the parties and enforceable by a court of
competent jurisdiction. The expenses of the arbitration shall be borne equally
by the parties to the arbitration, and each party shall pay for and bear the
cost of its own experts, evidence and legal counsel, unless the arbitrator rules
otherwise in the arbitration. Both parties agree to use their best efforts to
cause a final decision to be rendered with respect to the matter submitted to
arbitration within sixty (60) days after its submission.
46
17. Miscellaneous.
17.1 This Agreement contains the entire understanding of
the parties hereto with respect to the employment of Executive by Company during
the term hereof, and the provisions hereof may not be altered, amended, waived,
terminated or discharged in any way whatsoever except by subsequent written
agreement executed by the party charged therewith. This Agreement supersedes all
prior employment agreements, understandings and arrangements between Executive
and Company pertaining to the terms of the employment of Executive. A waiver by
either of the parties of any of the terms or conditions of this Agreement, or of
any breach hereof, shall not be deemed a waiver of such terms or conditions for
the future or of any other term or condition hereof, or of any subsequent breach
hereof.
17.2 The provisions of this Agreement are severable, and
if any provision of this Agreement is invalid, void, inoperative or
unenforceable, the balance of the Agreement shall remain in effect, and if any
provision is inapplicable to any circumstances, it shall nevertheless remain
applicable to all other circumstances.
17.3 Company shall have the right to deduct and withhold
from Executive's compensation the amounts required to be deducted and withheld
pursuant to any present or future law concerning the withholding of income
taxes. In the event that Company makes any payments or incurs any charges for
Executive's account or Executive incurs any personal charges with Company,
Company shall have the right and Executive hereby authorizes Company to recoup
such payments or charges by deducting and withholding the aggregate amount
thereof from any compensation otherwise payable to Executive hereunder.
17.4 This Agreement shall be construed and interpreted
under the laws of the State of Maryland applicable to contracts executed and to
be performed entirely therein.
17.5 The captions and section headings in this Agreement
are not part of the provisions hereof, are merely for the purpose of reference
and shall have no force or effect for any purpose whatsoever, including the
construction of the provisions of this Agreement.
17.6 To the extent any provision of this Agreement
contemplates action after termination hereof or creates a cause of action or
claim on which action may be brought by either party, such provision, cause of
action or claims shall survive termination of Executive's employment or
termination of this Agreement.
17.7 Executive may not assign nor delegate his duties
under this Agreement; provided, however, that notwithstanding the foregoing this
Agreement shall inure to the benefit of Executive's legal representatives,
executors, administrators or successors and to the successors or assigns of
Company.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
CELSION CORPORATION
By: /s/ Spencer J. Volk
---------------------
Spencer J. Volk, President
By: /s/ Anthony Deasey
----------------------
Anthony Deasey
47
Exhibit 11
Computation of Earnings Per Share
----------------------------------------------------------------------------
Three Months Ended June 30,
----------------------------------------------------------------------------
2001 2000
Net (loss) income $ (1,616,619) $ (962,299)
Net (loss) income per common share* $ (0.02) $ (0.02)
Weighted average shares outstanding 76,515,562 63,050,849
----------------------------------------------------------------------------
* Common stock equivalents have been excluded from the calculation of net loss
per share, as their inclusion would be anti-dilutive.
48