Exhibit 10.1

 
 
EMPLOYMENT AGREEMENT
 
This EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into effective
as of the 15th day of September 2011 (the “Effective Date”), by and between
Celsion Corporation, a Delaware corporation (the “Company”), and Michael H.
Tardugno., an individual (the “Executive”).
 
WITNESSETH
 
WHEREAS, the Company desires to retain the Executive to serve in the capacities
of President and Chief Executive Officer of the Company on the terms and
conditions set forth in this Agreement; and
 
WHEREAS, the Executive desires to accept employment in such capacities on such
terms and conditions.
 
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by the parties hereto,
such parties, intending to be legally bound, agree as follows:
 

 
1.
Employment Duties and Acceptance.

 
(a) In accordance with the terms of this Agreement, the Company hereby employs
the Executive, for the Term (as hereinafter defined), to render full-time
services to the Company as President and Chief Executive Officer and to perform
the customary duties and bear the customary responsibilities of such positions
and such other duties and responsibilities, commensurate with such positions, as
the Executive shall be directed from time to time by the Board (the “Board”) of
the Company to perform or bear, which duties and responsibilities shall be
consistent with the provisions of the Bylaws of the Company in effect on the
date hereof that relate to or bear upon the duties of the President and Chief
Executive Officer, all in accordance with the terms of this Agreement.
 
(b) The Executive hereby accepts such employment and agrees to render the
services described above, in accordance with the terms of this Agreement.
 
(c) The Executive further agrees to accept election and to serve during all or
any part of the Term as a director of the Company without any compensation
therefor other than that specified in this Agreement, if elected to such
position by the Board or the stockholders of the Company. At all times during
the Term, the Company shall include the Executive in the management slate for
election as a director at every stockholders’ meeting at which his term as a
director would otherwise expire. At the request of the Board, following
termination or expiration of this Agreement, the Executive promptly shall tender
his resignation as a director of the Company.
 
(d) The principal place of employment of the Executive hereunder shall at all
times during the Term be in the Columbia, Maryland area or such other
location(s) as may be mutually acceptable to the Executive and the Board.
 
(e) Notwithstanding anything to the contrary herein, although the Executive
shall provide services as a full-time employee, it is understood that the
Executive, with prior notification to the Board, may (1) participate in
professional activities; (2) publish academic articles; (3) support
non-competing external research programs; and (4) participate in community
and/or philanthropic activities (collectively, “Permitted Activities”),
provided, that such Permitted Activities do not interfere with the Executive’s
duties or services to the Company.
 

 
2.
Term of Employment.

 
The initial term of the Executive’s employment under this Agreement (the “Term”)
shall commence on the Effective Date and shall end on the January 31, 2016,
unless sooner terminated by the Company or the Executive pursuant to Section 6,
7 or 8 of this Agreement, as the case may be, or voluntarily by the Executive.
Notwithstanding the foregoing, unless notice is given by the Executive or the
Company to the other at least three (3) months prior to the expiration of the
Term of this Agreement (including at least three (3) months prior to the
expiration of any extension hereof, as provided below), the Term automatically
shall be extended by one (1) year from the date it would otherwise end (whether
upon expiration of the initial Term or any extension(s) thereof), unless sooner
terminated pursuant to Section 6, 7 or 8 hereof or voluntarily by the Executive.
In the event of such an automatic extension, the term “Term,” as used herein,
shall include each and any such extension.
 

 
3.
Compensation and Benefits.

 
(a) As compensation for the services to be rendered pursuant to this Agreement,
the Company agrees to pay the Executive, during the period from the Effective
Date through and including December 31, 2011, an annual base salary in the
amount of $412,307 (the “Base Salary”). The Executive’s Base Salary hereunder
shall be reviewed as of January 1, 2012 and at least annually thereafter during
the Term of the Agreement for adjustment upward (but not downward) in the
discretion of the Board or the Compensation Committee of the Board. The
Executive’s Base Salary, as so adjusted, shall be considered the new Base Salary
for all purposes of this Agreement. The Base Salary shall be paid in accordance
with the Company’s standard payroll practices applicable to its senior
executives.
 
(b) The Company agrees that the Executive shall be eligible for an annual
performance bonus from the Company with respect to each fiscal year of the
Company that ends during the Term, pursuant to the Company’s management
incentive bonus program, or policy or practice of the Board or Compensation
Committee, in effect from time to time. The amount of any such performance bonus
shall be determined by the Board or the Compensation Committee of the Board in
its sole and absolute discretion, consistent with the Company’s performance, the
Executive’s contribution to the Company’s performance and the provisions of any
such applicable incentive bonus program, policy or practice; provided, however,
that such annual performance bonus shall not exceed seventy percent (70%) of the
Base Salary for the fiscal year to which the bonus applies except pursuant to a
specific finding by the Board or the Compensation Committee of the Board that a
higher percentage is appropriate.  Any such annual performance bonus shall be
paid not later than two and one-half months after the end of the fiscal year to
which the bonus relates.
 
(c) The Company agrees to grant to the Executive, during the Term, at the time
of its usual annual grant to employees for the applicable year, such options
and/or other equity awards with respect to shares of the Company’s common stock
as the Board or the Compensation Committee of the Board shall determine. In the
event of a Change in Control (as defined in Section 12) of the Company, all such
options and other equity awards granted by the Company to the Executive prior to
such event, shall immediately vest and, in the case of options and similar
awards, become and remain fully exercisable through their respective original
maximum terms (provided that, after giving effect to such accelerated vesting
and providing the Executive a reasonable opportunity to exercise such vested
options and similar awards, such options and awards shall be subject to earlier
termination in connection with a change in control of the Company and similar
events as provided in the applicable plan and/or award agreement) and otherwise
in accordance with their respective terms and conditions.
 
(d) The Company shall pay or reimburse the Executive for all reasonable expenses
actually incurred or paid by the Executive during the Term in the performance of
services under this Agreement, upon presentation of expense statements or
vouchers or such other supporting information as may reasonably be required
pursuant to the standard policies of the Company in effect from time to time.
The Executive agrees to promptly submit and document any reimbursable expenses
in accordance with the Company’s expense reimbursement policies to facilitate
the timely reimbursement of such expenses. Additionally, the Executive shall
receive a $12,000 annual allowance to be used at the Executive’s
discretion.  The allowance will be grossed up for tax purposes at the rate of
25%.  Such allowance and related tax gross-up shall be paid not later than two
and one-half months after the end of the year to which the allowance relates.
 
(e) During the Term, the Company shall, at its election, reimburse the Executive
for term life insurance at a level equal to one (1) times his Base Salary, or
provide coverage for the Executive at such level.
 
(f) During the Term, the Executive shall be eligible to participate in all
qualified and non-qualified savings and retirement plans, and all other
compensation and benefit plans and programs, including welfare and fringe
benefit programs that are generally made available by the Company to other
senior executives of the Company, in each case in accordance with the
eligibility and participation provisions of such plans and programs and as such
plans or programs may be in effect from time to time.
 
(g) During the Term, the Executive shall be eligible for paid vacation of four
(4) weeks per calendar year taken in accordance with the vacation policy of the
Company. In the event that Executive does not utilize all of his vacation in any
calendar year, he may carry forward up to four (4) weeks (twenty (20) days) for
up to one (1) calendar year. Unused vacation days shall not otherwise
accumulate.
 

 
4.
Confidentiality.

 
The Executive acknowledges and agrees that the “Employee Proprietary Information
and Ownership of Inventions Agreement” annexed hereto as Exhibit A shall be
deemed incorporated in and made a part of this Employment Agreement.
Notwithstanding any other provision of this Agreement, the Executive shall
continue to be bound by the terms of such Proprietary Information and Inventions
Agreement for a period of five (5) years after the expiration or termination of
this Agreement for any reason. The Executive and the Company agree that
following expiration or termination of this Agreement for any reason the
Proprietary Information and Inventions Agreement shall be applicable only to
material, non-public, proprietary information of the Company.
 

 
5.
Non-Competition, Non-Solicitation and Non-Disparagement.

 
(a) During the Term, the Executive shall not (1) provide any services, directly
or indirectly, to any other business or commercial entity without the consent of
the Board or (2) participate in the formation of any business or commercial
entity without the consent of the Board; provided, however, that nothing
contained in this Section 5(a) shall be deemed to prohibit the Executive from
acquiring, solely as an investment, shares of capital stock (or other interests)
of any corporation (or other entity) not exceeding two percent (2%) of such
corporation’s (or other entity’s) then-outstanding shares of capital stock (or
other interests) and, provided further, that nothing contained herein shall be
deemed to limit the Executive’s Permitted Activities pursuant to Section 1(e).
 
(b) If this Agreement is terminated by the Company for Cause (as defined in
Section 6(c)) or if the Executive terminates this Agreement other than in
accordance with Section 7 or 8 hereof, or if the Executive is entitled to
receive severance payments in connection with a termination of his employment in
accordance with Section 9(c)(i) or 9(d)(i), then for a period of two (2) years
following the date of termination the Executive shall not (1) provide any
services, directly or indirectly, to any other business or commercial entity in
the Company’s  Field of Interest (as defined in Section 12), (2) solicit any
customers or suppliers of the Company, (3) attempt to persuade or encourage
customers or suppliers of the Company not to do business with the Company and/or
to do business with a competitor of the Company, (4) participate in the
formation of any business or commercial entity engaged primarily in the
Company’s Field of Interest, or (5) directly or indirectly employ, or seek to
employ or secure the services in any capacity of, any person employed at that
time by the Company or any of its Affiliates, or otherwise encourage or entice
any such person to leave such employment; provided, however, that nothing
contained in this Section 5(b) shall be deemed to prohibit the Executive from
acquiring, solely as an investment, shares of capital stock (or other interests)
of any corporation (or other entity) in the Company’s Field of Interest not
exceeding two percent (2%) of such corporation’s (or other entity’s) then
outstanding shares of capital stock (or other interests) and, provided further,
that nothing contained herein shall be deemed to limit Executive’s Permitted
Activities pursuant to Section 1(e). This Section 5(b) shall be subject to
written waivers, which may be obtained by the Executive from the Company.
 
(c) At no time during the Term of this Agreement or thereafter will the
Executive knowingly make any written or oral untrue statement or any statement
that disparages the Company or its Affiliates or will the Company knowingly make
any written or oral untrue statement or any statement that disparages the
Executive.
 
(d) If the Executive commits a breach, or threatens to commit a breach, of any
of the provisions of this Section 5 or Exhibit A, the Company shall have the
right and remedy to have the provisions of this Agreement or Exhibit A, as the
case may be, specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any such breach or threatened breach will
cause irreparable injury to the Company and that money damages will not provide
an adequate remedy to the Company.
 
(e) If any of the covenants contained in this Section 5 or Exhibit A or any part
hereof or thereof, is hereafter construed to be invalid, illegal or
unenforceable by a court or regulatory agency or tribunal of competent
jurisdiction, such court, agency or tribunal shall have the power, and hereby is
directed, to substitute for or limit such provision(s) in order as closely as
possible to effectuate the original intent of the parties with respect to such
invalid, illegal or unenforceable covenant(s) generally and so to enforce such
substituted covenant(s). Subject to the foregoing, the invalidity, illegality or
unenforceability of any one or more of the covenants contained in this Section 5
shall not affect the validity of any other provision hereof, which shall be
given full effect without regard to the invalid portions.
 
(f) If any of the covenants contained in this Section 5 or Exhibit A, or any
part hereof or thereof, is held to be unenforceable because of the duration of
such provision, the area covered thereby or the extent thereof, the parties
agree that the tribunal making such determination shall have the power, and
hereby is directed, to reduce the duration, area and/or extent of such provision
and, in its reduced form, such provision shall then be enforceable.
 
(g) Anything else contained in this Agreement to the contrary notwithstanding,
the parties hereto intend to and hereby do confer jurisdiction to enforce the
covenants contained in this Section 5 and Exhibit A upon the courts of any state
within the geographical scope of such covenants. In the event that the courts of
any one or more of such states shall hold any such covenant wholly unenforceable
by reason of the breadth of such scope or otherwise, it is the intention of the
parties hereto that such determination not bar or in any way affect the
Company’s right to the relief provided above in the courts of any other state
within the geographical scope of such other covenants, as to breaches of such
covenants in such other jurisdictions, the above covenants as they relate to
each state being, for this purpose, severable into diverse and independent
covenants.
 

 
6.
Termination by the Company.

 
During the Term of this Agreement, the Company may terminate this Agreement if
any one or more of the following shall occur:  

(a) The Executive shall die during the Term; provided, however, that the
Executive’s legal representatives shall be entitled to receive (1) the
Executive’s Base Salary through the date which is ninety (90) days after the
Executive’s date of death and (2) a pro rata annual performance bonus (prorated
by multiplying the full year bonus that otherwise would be due by the percentage
derived from dividing the number of days in the then-current year prior to the
death of the Executive by three hundred sixty-five (365)) with respect to the
fiscal year of the Company during which death occurs. Upon the Executive’s
death, stock options previously granted to the Executive that are vested and
fully exercisable at the time of death shall remain fully exercisable, by the
Executive’s legal representatives, through their respective original maximum
terms (subject to earlier termination in connection with a change in control of
the Company and similar events as provided in the applicable plan and/or award
agreement) and otherwise in accordance with their respective terms and
conditions.  All stock options and stock awards (and similar equity rights) that
have not vested prior the date of death shall be forfeited.
 
(b) The Executive shall become physically or mentally disabled so that the
Executive is unable substantially to perform his services hereunder for (1) a
period of one hundred twenty (120) consecutive days, or (2) shorter periods
aggregating one hundred eighty (180) days during any twelve (12) month period;
provided, however, that the Company may terminate the Executive’s employment
under this Section 6(b) only upon thirty (30) days’ prior written notice given
by the Company to the Executive. Notwithstanding such disability the Company
shall continue to pay the Executive his Base Salary through the date of such
termination. In addition, the Executive shall be entitled to a pro rata annual
performance bonus (prorated by multiplying the full year bonus that otherwise
would be due by the percentage derived from dividing the number of days in the
then-current year prior to the termination on account of disability of the
Executive by three hundred sixty-five (365)) with respect to the fiscal year of
the Company during which such termination occurs. Upon such a disability, stock
options previously granted to the Executive that are vested and fully
exercisable at the time of disability shall remain fully exercisable, by the
Executive or his legal representatives, should he have such, through their
respective original maximum terms (subject to earlier termination in connection
with a change in control of the Company and similar events as provided in the
applicable plan and/or award agreement) and otherwise in accordance with their
respective terms and conditions.  All stock options and stock awards (and
similar equity rights) that have not vested prior to the date of disability
shall be forfeited by the Executive.
 
(c) The Executive acts, or fails to act, in a manner that provides Cause for
termination. For purposes of this Agreement, the term “Cause” means (1) the
Executive’s indictment for, or conviction of, any crime or serious offense
involving money or other property that constitutes a felony in the jurisdiction
involved; (2) the Executive’s willful and ongoing neglect of, or failure to
discharge, duties (including fiduciary duties), responsibilities and obligations
with respect to the Company hereunder, provided such neglect or failure remains
uncured for a period of thirty (30) days after written notice describing the
same is given to the Executive by the Company; (3) the Executive’s violation of
any of the non-competition provisions of Section 5 hereof or the Executive’s
material breach of any provisions of Section 13 hereof or Exhibit A hereto, or
(4) any act of fraud or embezzlement by the Executive involving the Company or
any of its Affiliates. All determinations of Cause for termination pursuant to
this Section 6 shall be made by the Board, and shall require at least a
two-thirds (2/3) vote of the entire Board excluding the Executive, should he
then be a member of the Board.
 

 
7.
Termination by the Executive.

 
The Executive may terminate this Agreement on written notice to the Company in
the event of a material breach of the terms of this Agreement by the Company if
such breach continues uncured for thirty (30) days after written notice
describing the breach is first given to the Company; provided, however, that the
Executive may terminate this Agreement if such breach is for the payment of
money and continues uncured for ten (10) days after written notice describing
such breach is first given. The Executive may also terminate this Agreement upon
written notice to the Company if any one or more of the following shall occur:
 
(a) loss of material duties or authority of the Executive as President and Chief
Executive Officer, and such loss continues for thirty (30) days after written
notice of such loss is given to the Company;
 
(b) a Prohibited Event occurs, provided that the Executive gives written notice
of termination within ninety (90) days after such occurrence and such Prohibited
Event is not remedied within thirty (30) days after such notice. For this
purpose a “Prohibited Event” exists if the Executive is not continuously at
least one (1) of President or Chief Executive Officer of the Company during the
Term;
 
(c) the Company shall make a general assignment for benefit of creditors, or any
proceeding shall be instituted by the Company seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking entry of an order for relief or the appointment of a
receiver, trustee, or other similar official for it or for any substantial part
of its property, or the Company shall take any corporate action to authorize any
of the actions set forth above in this Section 7(c);
 
(d) an involuntary petition shall be filed or an action or proceeding otherwise
commenced against the Company seeking reorganization, arrangement or
readjustment of the Company’s debts or for any other relief under the Federal
Bankruptcy Code, as amended, or under any other bankruptcy or insolvency act or
law, state or federal, now or hereafter existing and shall remain undismissed or
unstayed for a period of thirty (30) days;
 
(e) a receiver, assignee, liquidator, trustee or similar officer for the Company
or for all or any part of its property shall be appointed involuntarily; or
 
(f) a material breach by the Company of any other material agreement with the
Executive shall occur, if such breach continues uncured for thirty (30) days
after written notice describing such breach is first given to the Company;
provided, however, that the Executive shall be permitted to terminate this
Agreement if such breach is for the payment of money and continues uncured for
ten (10) days after written notice describing such breach is first given.
 

 
8.
Termination Following a Change in Control.

 
(a) In addition to the above, during the period commencing on the six (6) month
anniversary of a Change in Control (as defined in Section 12) of the Company and
ending on the two (2) year anniversary of such Change in Control, the Executive
may terminate this Agreement upon expiration of ninety (90) days’ prior written
notice if “Good Reason” exists for the Executive’s termination. For this
purpose, termination for “Good Reason” shall mean a termination by the Executive
of his employment hereunder following the occurrence, without his prior written
consent, of any of the following events, unless the Company fully cures all
grounds for such termination within thirty (30) days after the Executive’s
notice:
 
(i) any material adverse change in the Executive’s authority, duties, titles or
offices (including reporting responsibility), or any significant increase in the
Executive’s business travel obligations, from those existing immediately prior
to the Change in Control;
 
(ii) any failure by the Company to continue in effect any compensation plan in
which the Executive participated immediately prior to such Change in Control and
which is material to the Executive’s total compensation, including but not
limited to the Company’s stock option, bonus and other plans or any substitute
plans adopted prior to the Change in Control, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan) has been made with
respect to such plan, or any failure by the Company to continue the Executive’s
participation therein (or in such substitute or alternative plan) on a basis no
less favorable to the Executive, both in terms of the amount of benefits
provided and the level of the Executive’s participation relative to other
participants, as existed immediately prior to such Change in Control;
 
(iii) any failure by the Company to continue to provide the Executive with
benefits substantially similar to those enjoyed by the Executive under any of
the Company’s retirement, life insurance, medical, health and accident, or
disability plans, programs or arrangements in which the Executive was
participating immediately prior to such Change in Control, the taking of any
action by the Company that would directly or indirectly materially reduce any of
such benefits or deprive the Executive of any perquisite enjoyed by the
Executive at the time of such Change in Control, or the failure by the Company
to maintain a vacation policy with respect to the Executive that is at least as
favorable as the vacation policy (whether formal or informal) in place with
respect to the Executive immediately prior to such Change in Control; or
 
(iv) the failure of the Company to obtain the assumption in writing of its
obligation to perform this Agreement by any successor to all or substantially
all of the assets of the Company upon a merger, consolidation, sale or similar
transaction.
 
(b) In addition, the Executive may elect to terminate his employment, at his own
initiative, for any reason or for no reason, during the six- (6) month period
commencing on the six (6) -month anniversary of a Change in Control of the
Company and ending on the one (1)-year anniversary of such Change in Control, in
which case such termination of employment shall also be deemed to be for “Good
Reason.”
 

 
9.
Severance and Benefit Continuation.

 
(a) Termination for Cause or Voluntary Termination by the Executive. If the
Company terminates this Agreement for Cause pursuant to Section 6(c) hereof, or
if the Executive voluntarily terminates this Agreement other than pursuant to
Section 7 or 8 hereof (which termination alone shall not constitute a breach of
this Agreement), no severance or benefit continuation provisions shall apply;
provided, however, that the Executive shall have the same opportunity to
continue group health benefits at the Executive’s expense in accordance with the
Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) as is available
generally to other employees terminating employment with the Company. All stock
options and stock awards (and similar equity rights) held by the Executive that
have vested prior to such termination of this Agreement may be exercised by the
Executive for a period of one hundred eighty (180) days after the date of
termination (subject to earlier termination in connection with a change in
control of the Company and similar events as provided in the applicable plan
and/or award agreement), at which time they shall automatically be forfeited if
not exercised. All stock options and stock awards (and similar equity rights)
that have not vested prior to such termination shall be forfeited by the
Executive. For purposes of this Agreement, an election by the Company not to
renew this Agreement beyond the end of the then-current Term shall be considered
a termination of this Agreement Other Than for Cause.
 
(b) Termination for Death or Disability. In the event of termination of this
Agreement pursuant to Section 6(a) or 6(b) by reason of the death or disability
of the Executive, in addition to the Base Salary payments and pro rata annual
performance bonus provided for in paragraph (a) or (b) of Section 6, as
applicable, the Company shall continue to provide all benefits subject to COBRA,
at its sole cost and expense, with respect to the Executive and his dependents
for the maximum period provided by COBRA.
 
(c) Termination by the Company Other Than for Cause or Termination by the
Executive Based on a Material Breach by the Company. If (1) the Company
terminates this Agreement and the Executive’s employment other than pursuant to
Section 6 hereof or (2) the Executive terminates this Agreement and his
employment pursuant to Section 7, and in each case the termination of employment
does not occur on or within two (2) years following the consummation of a Change
in Control of the Company, then:
 
(i) the Company shall pay the Executive in accordance with its normal payroll
practice an amount equal to the Executive’s Base Salary at the annualized rate
in effect on the date of such termination, such payment to be made in equal
monthly installments (rounded down to the nearest whole cent) over a period of
twelve (12) consecutive months following the Executive’s Separation from Service
(as defined in Section 12) (the “Severance Period”), with the first installment
payable, subject to Section 14(b), in the month following the month in which the
Executive’s Separation from Service occurs;
 
(ii) all Company employee benefit plans and programs (including, but not limited
to, the plans and programs set forth in Section 3(f)), other than participation
in any Company tax-qualified retirement plan and any bonus, equity or other
incentive plans and programs, applicable to the Executive shall be continued for
the Severance Period (or, if such benefits are not available, or cannot be
provided due to applicable law, the Company shall pay the Executive a lump sum
cash amount equal to the after-tax economic equivalent thereof, provided that,
with respect to any benefit to be provided on an insured basis, such lump sum
cash value shall be the present value of the premiums expected to be paid for
such coverage, and with respect to other benefits, such value shall be the
present value of the expected cost to the Company of providing such benefits,
and that, in all events, such payment shall be made within ninety (90) days
following the Executive’s Separation from Service). In the case of all benefits
subject to COBRA, the Company shall continue to provide such benefits at its
expense with respect to the Executive and his dependents for the maximum period
provided by COBRA; and
 
(iii) all stock options and awards of restricted stock (and similar equity
rights), to the extent outstanding and vested on the date of such termination of
this Agreement, shall remain fully exercisable through their respective original
maximum terms (subject to earlier termination in connection with a change in
control of the Company and similar events as provided in the applicable plan
and/or award agreement) and otherwise in accordance with their respective terms
and conditions.
 
 
(d) Involuntary Termination Other Than for Cause, Termination by the Executive
Based on a Material Breach by the Company or for Good Reason, or Nonrenewal by
the Company Upon or After a Change in Control. If (1) the Company terminates
this Agreement and the Executive’s employment other than pursuant to Section 6
hereof or (2) the Executive terminates this Agreement and his employment
pursuant to Section 7 or 8, and in each case the termination of employment
occurs on or within two (2) years of the consummation of a Change in Control of
the Company, then:
 
(i) the Company shall pay the Executive a cash lump sum equal to one (1) times
the Executive’s Base Salary at the annualized rate in effect on the date of such
termination, such payment to be made, subject to Section 14(b), in the month
following the month in which the Executive’s Separation from Service occurs;
 
(ii) all Company employee benefit plans and programs (including, but not limited
to, the plans and programs set forth in Section 3(f), other than participation
in any Company tax-qualified retirement plan, applicable to the Executive shall
be continued for one (1) year from the date of such termination of employment
(or, if such benefits are not available, or cannot be provided due to applicable
law, the Company shall pay the Executive a lump sum cash amount equal to the
after-tax economic equivalent thereof, provided that, with respect to any
benefit to be provided on an insured basis, such lump sum cash value shall be
the present value of the premiums expected to be paid for such coverage, and
with respect to other benefits, such value shall be the present value of the
expected cost to the Company of providing such benefits and that, in all events,
such payment shall be made within ninety (90) days following the Executive’s
Separation from Service). In the case of all benefits subject to COBRA, the
Company shall continue to provide such benefits at its sole cost and expense
with respect to the Executive and his dependents for the maximum period provided
by COBRA; and
 
(iii) all stock options and awards of restricted stock (and similar equity
rights), to the extent then vested and outstanding (after giving effect to any
accelerated vesting pursuant to Section 3 (c) hereof), shall remain fully
exercisable through their respective original maximum terms (provided that,
after giving effect to such accelerated vesting and providing the Executive a
reasonable opportunity to exercise such vested options and similar awards, such
options and awards shall be subject to earlier termination in connection with a
change in control of the Company and similar events as provided in the
applicable plan and/or award agreement) and otherwise in accordance with their
respective terms and conditions as if no Change in Control had occurred.
 
(e) The payments provided in Section 9(c) and 9(d) are intended as enhanced
severance for a termination by the Company without Cause, or a termination by
the Executive in the circumstances provided. As a condition of receiving such
payments, the Executive or his legal representatives, should he have such, shall
first execute and deliver to the Company within twenty-one (21) days following
such termination of employment a general release of all claims against the
Company, its Affiliates, agents and employees (other than any claims or rights
pursuant to the Agreement or pursuant to equity or employee benefit plans), in a
form and substance satisfactory to the Company, and shall not revoke such
release within any revocation period provided under applicable law. In
connection with such release by the Executive, the Company shall execute and
deliver a comparable release of claims against the Executive within twenty-one
(21) days following such termination of employment. Notwithstanding the
foregoing, the Executive may elect to forego the severance payments provided
herein, in which event neither party shall be required to execute a release of
the other. Notwithstanding the foregoing provisions of this section 9(e), no
release to be granted by the Executive shall be required to cause the Executive
to release the Company from, waive, or forego in any way any of the Executive’s
rights to indemnification under the applicable provisions of the Certificate of
Incorporation or By-laws of the Company or any then-existing agreement between
the Company and the Executive with respect thereto; and no release to be granted
by the Company hereunder shall apply to any obligation of the Executive pursuant
to this Agreement or any act of fraud or material dishonesty by the
Executive.  In addition, any release provided by one party to the other party
pursuant to this Section 9(e) shall be null and void if the other party does not
timely provide the release required hereunder (or, in the case of the release
provided by the Company, if the Executive revokes his release within any
revocation period provided by applicable law).
 

 
10.
Cooperation.

 
Following the termination of his employment, the Executive agrees to cooperate
with, and assist, the Company to ensure a smooth transition in management and,
if requested by the Company, to make himself available to consult during regular
business hours at mutually agreed upon times for up to a three- (3) month period
thereafter. At any time following the termination of his employment, the
Executive will provide such information as the Company may request with respect
to any Company- related transaction or other matter in which the Executive was
involved in any way while employed by the Company. The Executive further agrees,
during the Term of this Agreement and thereafter, to assist and cooperate with
the Company in connection with the defense or prosecution of any claim that may
be made against, or by, the Company or its Affiliates, in connection with any
dispute or claim of any kind involving the Company or its Affiliates, including
providing testimony in any proceeding before any arbitral, administrative,
judicial, legislative or other body or agency. The Executive shall be entitled
to reimbursement for all properly documented expenses reasonably incurred in
connection with rendering transition services under this Section, including, but
not limited to, reimbursement for all reasonable travel, lodging, meal expenses
and legal fees, and the Executive shall be entitled to a per diem amount for his
services equal to his then most recent annualized Base Salary under this
Agreement, divided by two hundred forty (240) (business days).
 

 
11.
No Mitigation.

 
The Executive shall not be required to mitigate the amount of any payment
provided for hereunder by seeking other employment or otherwise, nor shall the
amount of any payment provided for hereunder be reduced by any compensation
earned by the Executive as the result of employment by another employer after
the date of termination of employment by the Company.
 

 
12.
Definitions.

 
As used herein, the following terms have the following meaning:
 
(a) “Affiliate” means and includes any person, corporation or other entity
controlling, controlled by or under common control with the person, corporation
or other entity in question, determined in accordance with Rule 12b-2 under the
Securities Exchange Act of 1934, as amended).
 
(b) “Change in Control” means the occurrence of any of the following events:
 
(i) Any Person, other than the Company, its Affiliates or any Company employee
benefit plan (including any trustee of such plan acting as trustee), is or
becomes the Beneficial Owner, directly or indirectly, of securities of the
Company representing more than fifty percent (50%) of the combined voting power
of the then outstanding securities entitled to vote generally in the election of
directors (“Voting Securities”) of the Company; or
 
(ii) Individuals who constitute the Board of the Company (the “Incumbent
Directors”), as of the beginning of any twenty-four (24) month period commencing
with the Effective Date of this Agreement, cease for any reason to constitute at
least a majority of the directors. Notwithstanding the foregoing, any individual
becoming a director subsequent to the beginning of such period, whose election
or nomination for election by the Company’s stockholders, was approved by a vote
of at least two-thirds (2/3) of the directors then comprising the Incumbent
Directors, shall be, considered an Incumbent Director; or
 
(iii) Consummation by the Company of a recapitalization, reorganization, merger,
consolidation or other similar transaction (a “Business Combination”), with
respect to which all or substantially all of the individuals and entities who
were the beneficial owners of the Voting Securities immediately prior such
Business Combination (the “Incumbent Shareholders”) do not, following
consummation of all transactions intended to constitute part of such Business
Combination, beneficially own, directly or indirectly, fifty percent (50%) or
more of the Voting Securities of the corporation, business trust or other entity
resulting from or being the surviving entity in such Business Combination (the
“Surviving Entity”), in substantially the same proportion as their ownership of
such Voting Securities immediately prior to such Business Combination; or
 
       (iv) Consummation of a complete liquidation or dissolution of the
Company, or the sale or other disposition of all or substantially all of the
assets of the Company, other than to a corporation, business trust or other
entity with respect to which, following consummation of all transactions
intended to constitute part of such sale or disposition, more than fifty percent
(50%) of the combined Voting Securities is then owned beneficially, directly or
indirectly, by the Incumbent Shareholders in substantially the same proportion
as their ownership of the Voting Securities immediately prior to such sale or
disposition.
 
For purposes of this definition, the following terms shall have the meanings set
forth below:
 
(A) “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the
Exchange Act;
 
(B) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended;
and
 
(C) “Person” shall have the meaning as used in Sections 13(d) and 14(d) of the
Exchange Act.
 
Notwithstanding the foregoing, a transaction shall not constitute a Change in
Control unless it is a “change in the ownership or effective control” of the
Company, or a change “in the ownership of a substantial portion of the assets”
of the Company within the meaning of Section 409A of the U.S. Internal Revenue
Code of 1986, as amended (“Code Section 409A”).
 
(c) “Company’s Field of Interest” means the primary businesses of the Company as
described in the Company’s then two most recent Annual Reports on Form 10-K
filed by the Company with the Securities and Exchange Commission (subject to any
further description of such businesses that may be included in any Quarterly
Reports on Form 10-Q or Current Reports on Form 8-K thereafter filed by the
Company with the Securities and Exchange Commission) or as determined from time
to time by the Board during the Term hereof.
 
(d) As used herein, a “Separation from Service” occurs when the Executive dies,
retires, or otherwise has a termination of employment with the Company that
constitutes a “separation from service” within the meaning of Treasury
Regulation Section 1.409A-1(h)(1), without regard to the optional alternative
definitions available thereunder.
 

 
13.
Representations by Executive.

 
The Executive represents and warrants that he has full right, power and
authority to execute this Agreement and perform his obligations hereunder and
that this Agreement has been duly executed by the Executive and such execution
and the performance of this Agreement by the Executive do not and will not
result in any conflict, breach or violation of or default under any other
agreement or any judgment, order or decree to which the Executive is a party or
by which he is bound. The Executive acknowledges and agrees that any material
breach of the representations set forth in this Section 13 will constitute Cause
under Section 6.
 

 
14.
Section 409A Compliance

 
(a)         It is intended that any amounts payable under this Agreement shall
either be exempt from or comply with Code Section 409A (including the Treasury
regulations and other published guidance relating thereto) so as not to subject
the Executive to payment of any additional tax, penalty or interest imposed
under Code Section 409A.  The provisions of this Agreement shall be construed
and interpreted to avoid the imputation of any such additional tax, penalty or
interest under Code Section 409A yet preserve (to the nearest extent reasonably
possible) the intended benefit payable to the Executive.
 
(b)          If the Executive is a “specified employee” within the meaning of
Treasury Regulation Section 1.409A-1(i) as of the date of the Executive’s
Separation from Service, the Executive shall not be entitled to any payment or
benefit pursuant to Section 9(c) or 9(d) until the earlier of (i) the date which
is six (6) months after his Separation from Service for any reason other than
death, or (ii) the date of the Executive’s death.  The provisions of this
Section 14(b) shall only apply if, and to the extent, required to avoid the
imputation of any tax, penalty or interest pursuant to Code Section 409A.  Any
amounts otherwise payable to the Executive upon or in the six (6) month period
following the Executive’s Separation from Service that are not so paid by reason
of this Section 14(b) shall be paid (without interest) as soon as practicable
(and in all events within thirty (30) days) after the date that is six (6)
months after the Executive’s Separation from Service (or, if earlier, as soon as
practicable, and in all events within thirty (30) days, after the date of the
Executive’s death).
 
(c)         To the extent that any benefits pursuant to Section 9(c)(ii) or
9(d)(ii) or reimbursements pursuant to Section 3(d) or 3(e) are taxable to the
Executive, any reimbursement payment due to the Executive pursuant to any such
provision shall be paid to the Executive on or before the last day of the
Executive’s taxable year following the taxable year in which the related expense
was incurred.  The benefits and reimbursements pursuant to such provisions are
not subject to liquidation or exchange for another benefit and the amount of
such benefits and reimbursements that the Executive receives in one taxable year
shall not affect the amount of such benefits or reimbursements that the
Executive receives in any other taxable year.
 

 
15.
Arbitration.

 
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 or his own experts, evidence and legal counsel, unless the
arbitrator rules otherwise in the arbitration. Each party agrees to use its or
his 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.
Notwithstanding the foregoing, the Company shall be free to pursue its rights
and remedies under Section 5 hereof and pursuant to Exhibit A hereto in any
court of competent jurisdiction, without regard to the arbitral proceedings
contemplated by this Section 15.
 

 
16.
Notices.

 
All notices, requests, consents and other communications required or permitted
to be given hereunder or contemplated or in connection herewith shall be in
writing and shall be deemed to have been duly given if sent by private overnight
mail service (delivery confirmed by such service), registered or certified mail
(return receipt requested and received), telecopy (confirmed receipt by return
fax from the receiving party) or if delivered personally, as follows (or to such
other address as either party shall designate by notice in writing to the other
in accordance herewith):
 
If to the Company:
 
Celsion Corporation
997 Lenox Drive, Suite 100
Lawrenceville, NJ 08648
Attention: Chairman of the Compensation Committee
Telephone: 609-896-9100  
Fax:  609-896-2200
 
If to the Executive:
 
Michael Tardugno
Address: _______
Telephone: __________
Fax: —
 

 
17.
Indemnification and Limitation of Liability.

 
The Corporation acknowledges and agrees that the protections afforded by Article
Ninth of the Amended and Restated Certificate of Incorporation, as amended, of
the Corporation, and Article VI of the Bylaws, as amended, of the Corporation
are available to the Executive throughout the Term and thereafter, in accordance
with their respective terms.
 

 
18.
General.

 
(a) This Agreement shall be governed by and construed and enforced in accordance
with the laws of the State of Maryland applicable to agreements made and to be
performed entirely in Maryland by Maryland residents.
 
(b) This Agreement, together with the agreement set forth in Annex A hereto,
sets forth the entire agreement and understanding of the parties relating to the
subject matter hereof, and supersedes all prior agreements, arrangements and
understandings, written or oral, relating to the subject matter hereof. No
representation, promise or inducement has been made by either party that is not
embodied in this Agreement, and neither party shall be bound by or liable for
any alleged representation, promise or inducement not so set forth.
Notwithstanding the foregoing, in the event that the provisions hereof shall
conflict with the terms of any stock option grant agreement, stock award
agreement or similar document granting stock options, warrants or similar
rights, then the terms hereof shall control.
 
(c) This Agreement may be amended, modified, superseded, canceled, renewed or
extended, and the terms or covenants hereof may be waived, only by a written
instrument executed by the parties hereto, or in the case of a waiver, by the
party waiving compliance. The failure of a party at any time or times to require
performance of any provision hereof shall in no manner affect the right at a
later time to enforce the same. No waiver by a party of the breach of any term
or covenant contained in this Agreement, whether by conduct or otherwise, or any
one or more or continuing waivers of any such breach, shall constitute a waiver
of the breach of any other term or covenant contained in this Agreement.
 
(d) This Agreement shall be binding upon and inure to the benefit of the legal
representatives, heirs, distributees, successors and permitted assigns of the
parties hereto. The Company may not assign its rights and obligation under this
Agreement without the prior written consent of the Executive, except to a
successor to substantially all the Company’s business that expressly assumes the
Company’s obligations hereunder in writing. For purposes of this Agreement,
“successors” shall mean any successor by way of share exchange, merger,
consolidation, reorganization or similar transaction, or the sale of all or
substantially all of the assets of the Company. The Executive may not assign,
transfer, alienate or encumber any rights or obligations under this Agreement,
except by will or operation of law, provided that the Executive may designate
beneficiaries to receive any payments permitted under the terms of the Company’s
benefit plans.
 
[Signature Page follows.]

 
 
 

--------------------------------------------------------------------------------

 

 

 
IN WITNESS WHEREOF , each of the parties has executed this Agreement under its
or his seal effective as of the date first above written.
 
 

         
[SEAL]
 
Celsion Corporation
         
By:
       
Print Name:
 
Robert W. Hooper
   
Title:
 
Director
   
[SEAL]
       
Michael H. Tardugno

 
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