Document:

Exhibit 4.1

 

CELSION CORPORATION

 

WARRANT TO PURCHASE COMMON STOCK

 

Warrant No.:
           

Number of Shares of Common Stock:
                   

Date
of Issuance: September [   ], 2009 (“Issuance Date”)

 

Celsion Corporation, a Delaware corporation
(the “Company”), hereby certifies
that, for good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged,
[                      ],
the registered holder hereof or its permitted assigns (the “Holder”), is entitled, subject to the terms
set forth below, to purchase from the Company, at the Exercise Price (as
defined below) then in effect, upon surrender of this Warrant to Purchase
Common Stock (including any Warrants to Purchase Common Stock issued in
exchange, transfer or replacement hereof, the “Warrant”), at any time or times on or after the date six (6)
months after the date hereof (the “Exercisability
Date”), but not after 11:59 p.m., New York time, on the
Expiration Date (as defined below),
[                  ]
([              ])
fully paid nonassessable shares of Common Stock (as defined below)  (the “Warrant
Shares”).  Except as otherwise
defined herein, capitalized terms in this Warrant shall have the meanings set
forth in Section 15.  This
Warrant is the Warrant to purchase Common Stock (this “Warrant”) issued pursuant to (i) Section 2
of that certain Subscription Agreement (the “Subscription
Agreement”), dated as of September 25, 2009 (the “Subscription Date”), by and between the
Company and the Holder (the “Subscription Agreement”)
and (ii) the Company’s Registration Statement on Form S-3 (File
number 333-158402) (the “Registration
Statement”).

 

1.     EXERCISE OF WARRANT.

 

(a)      Mechanics of Exercise. 
Subject to the terms and conditions hereof, this Warrant may be
exercised by the Holder on any day on or after the Exercisability Date, in
whole or in part, by delivery of a written notice, in the form attached hereto
as Exhibit A (the “Exercise
Notice”), of the Holder’s election to exercise this Warrant.  The Holder shall not be required to deliver
the original Warrant in order to effect an exercise hereunder, but shall
deliver the original Warrant within five (5) days thereafter.  Execution and delivery of the Exercise Notice
with respect to less than all of the Warrant Shares shall have the same effect
as cancellation of the original Warrant and issuance of a new Warrant
evidencing the right to purchase the remaining number of Warrant Shares.  On or before the first (1st) Business Day
following the date on which the Company has received the Exercise Notice, the
Company shall transmit by facsimile an acknowledgment of confirmation of
receipt of the Exercise Notice to the Holder and American Stock Transfer &
Trust Company, the Company’s transfer Agent (“Transfer
Agent”).  On or before the
third (3rd) Business Day
following the date on which the Company has received the Exercise Notice (the “Share Delivery Date”), the Company shall (X) provided
that the Transfer Agent is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer
Program, upon the request of the Holder, credit such aggregate number of
Warrant Shares to which the Holder is entitled pursuant to such exercise to the
Holder’s or its designee’s balance account with DTC through its Deposit
Withdrawal Agent Commission system, or (Y) if the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer Program, issue and
dispatch by overnight courier to the address as specified in the Exercise
Notice, a 

 

 

certificate, registered in
the Company’s share register in the name of the Holder or its designee, for the
number of shares of Common Stock to which the Holder is entitled pursuant to
such exercise.  Upon delivery of the
Exercise Notice, the Holder shall be deemed for all corporate purposes to have
become the holder of record of the Warrant Shares with respect to which this
Warrant has been exercised, irrespective of the date such Warrant Shares are
credited to the Holder’s DTC account or the date of delivery of the
certificates evidencing such Warrant Shares, as the case may be.  If this Warrant is submitted in connection
with any exercise pursuant to this Section 1(a) and the number
of Warrant Shares represented by this Warrant submitted for exercise is greater
than the number of Warrant Shares being acquired upon an exercise, then the
Company shall as soon as practicable and in no event later than three (3) Business
Days after any exercise and at its own expense, issue a new Warrant (in
accordance with Section 7(d)) representing the right to purchase
the number of Warrant Shares purchasable immediately prior to such exercise
under this Warrant, less the number of Warrant Shares with respect to which
this Warrant is exercised.  No fractional
shares of Common Stock are to be issued upon the exercise of this Warrant, but
rather the number of shares of Common Stock to be issued shall be rounded down
to the nearest whole number.  The Company
shall pay any and all taxes which may be payable with respect to the issuance
and delivery of Warrant Shares upon exercise of this Warrant.

 

(b)      Exercise Price. 
For purposes of this Warrant, “Exercise
Price” means $[        ],
subject to adjustment as provided herein.

 

(c)      Company’s Failure to Timely Deliver Securities.  If the Company shall fail for any reason or
for no reason to issue to the Holder within three (3) Business Days of
receipt of the Exercise Notice in compliance with the terms of this Section 1,
a certificate for the number of shares of Common Stock to which the Holder is
entitled and register such shares of Common Stock on the Company’s share
register or to credit the Holder’s balance account with DTC for such number of
shares of Common Stock to which the Holder is entitled upon the Holder’s
exercise of this Warrant, and if on or after such Trading Day the Holder
purchases (in an open market transaction or otherwise) shares of Common Stock
to deliver in satisfaction of a sale by the Holder of shares of Common Stock
issuable upon such exercise that the Holder anticipated receiving from the
Company (a “Buy-In”), then the
Company shall, within three (3) Business Days after the Holder’s request
and in the Holder’s discretion, either (i) pay cash to the Holder in an
amount equal to the Holder’s total purchase price (including brokerage commissions,
if any) for the shares of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s
obligation to deliver such certificate (and to issue such Warrant Shares) shall
terminate, or (ii) promptly honor its obligation to deliver to the Holder
a certificate or certificates representing such Warrant Shares and pay cash to
the Holder in an amount equal to the excess (if any) of the Buy-In Price over
the product of (A) such number of shares of Common Stock, times (B) the
Closing Bid Price on the date of exercise.

 

(d)      Payment of Exercise Price.  The Company shall promptly, and in no case
later than the Business Day immediately following such receipt, confirm receipt
of an Exercise Notice via facsimile to the number specified in such Exercise
Notice.  The Holder shall pay the
Exercise Price to the Company in immediately available funds upon receipt of
such confirmation by the Company; provided,
however, that if at any time on or after the Exercisability Date the
Registration Statement covering the resale of the Warrant Shares is not
effective on such exercise date, the Holder may satisfy its obligation to pay
the Exercise Price 

 

2

 

through a “cashless
exercise,” in which event the Company shall issue to the Holder the number of
Warrant Shares determined as follows:

 

	
   

  	
   

  	
  X
  = Y [(A-B)/A]

  
	
  where:

  	
   

  	
   

  
	
   

  	
   

  	
  X
  = the number of Warrant Shares to be issued to the Holder.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Y
  = the number of Warrant Shares with respect to which this Warrant is being
  exercised.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  A
  = the average of the Closing Prices for the five Trading Days immediately
  prior to (but not including) the Exercise Date.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  B
  = the Exercise Price.

  

 

(e)   Rule 144.  For
purposes of Rule 144(d) promulgated under the Securities Act, as in
effect on the date hereof, it is intended that the Warrant Shares issued in a
Cashless Exercise shall be deemed to have been acquired by the Holder, and the
holding period for the Warrant Shares shall be deemed to have commenced, on the
date this Warrant was originally issued pursuant to the Subscription Agreement.

 

(f)    Disputes.  In the
case of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall promptly issue
to the Holder the number of Warrant Shares that are not disputed.

 

(g)   Beneficial Ownership. 
The Holder shall not have the right to exercise this Warrant, to the
extent that after giving effect to such exercise, such Person (together with
such Person’s affiliates) would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the shares of
Common Stock outstanding immediately after giving effect to such exercise.  The Company shall be entitled to rely on
Holder’s exercise notice as an indication that Holder will not, pursuant to
such exercise, exceed the Maximum Percentage. 
For purposes of the foregoing sentence, the aggregate number of shares
of Common Stock beneficially owned by such Person and its affiliates shall
include the number of shares of Common Stock issuable upon exercise of this
Warrant with respect to which the determination of such sentence is being made,
but shall exclude shares of Common Stock which would be issuable upon (i) exercise
of the remaining, unexercised portion of this Warrant beneficially owned by
such Person and its affiliates and (ii) exercise or conversion of the
unexercised or unconverted portion of any other securities of the Company
beneficially owned by such Person and its affiliates (including, without
limitation, any convertible notes or convertible preferred stock or warrants)
subject to a limitation on conversion or exercise analogous to the limitation
contained herein..  Except as set forth
in the preceding sentence, for purposes of this paragraph, beneficial ownership
shall be calculated in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended. 
For purposes of this Warrant, in determining the number of outstanding
shares of Common Stock, the Holder may rely on the number of outstanding shares
of Common Stock as reflected in (1) the Company’s most recent Form 10-K,
Form 10-Q, Current Report on Form 8-K or other public filing with the

 

3

 

Securities and Exchange
Commission, as the case may be, (2) a more recent public announcement by
the Company or (3) any other notice by the Company or the Transfer Agent
setting forth the number of shares of Common Stock outstanding.  For any reason at any time, upon the written
or oral request of the Holder, the Company shall within two (2) Business
Days confirm orally and in writing to the Holder the number of shares of Common
Stock then outstanding.  In any case, the
number of outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company, including
this Warrant, by the Holder and its affiliates since the date as of which such
number of outstanding shares of Common Stock was reported.  By written notice to the Company, the Holder
may from time to time increase or decrease the Maximum Percentage to any other
percentage not in excess of 9.99% specified in such notice; provided that (i) any
such increase will not be effective until the sixty-first (61st) day after such notice is
delivered to the Company, and (ii) any such increase or decrease will
apply only to the Holder.  The provisions
of this paragraph shall be construed and implemented in a manner otherwise than
in strict conformity with the terms of this Section 1(g) to correct
this paragraph (or any portion hereof) which may be defective or inconsistent
with the intended beneficial ownership limitation herein contained or to make
changes or supplements necessary or desirable to properly give effect to such
limitation.

 

2.     ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES.  The Exercise Price and the number of Warrant
Shares shall be adjusted from time to time as follows:

 

(a)      Adjustment upon Subdivision or Combination of Common Stock.  If the Company at any time on or after the
Subscription Date subdivides (by any stock split, stock dividend,
recapitalization, reorganization, scheme, arrangement or otherwise) one or more
classes of its outstanding shares of Common Stock into a greater number of
shares, the Exercise Price in effect immediately prior to such subdivision will
be proportionately reduced and the number of Warrant Shares will be
proportionately increased.  If the
Company at any time on or after the Subscription Date combines (by any stock
split, stock dividend, recapitalization, reorganization, scheme, arrangement or
otherwise) one or more classes of its outstanding shares of Common Stock into a
smaller number of shares, the Exercise Price in effect immediately prior to
such combination will be proportionately increased and the number of Warrant
Shares will be proportionately decreased. 
Any adjustment under this Section 2(a) shall become effective
at the close of business on the date the subdivision or combination becomes
effective.

 

(b)      Other Events.  If
any event occurs of the type contemplated by the provisions of this Section 2
but not expressly provided for by such provisions, then the Company’s Board of
Directors will make an appropriate adjustment in the Exercise Price and the
number of Warrant Shares so as to protect the rights of the Holder; provided that no such adjustment pursuant
to this Section 2(b) will increase the Exercise Price or decrease the
number of Warrant Shares as otherwise determined pursuant to this Section 2.

 

3.     RIGHTS UPON DISTRIBUTION OF ASSETS.  If the Company shall declare or make any
dividend or other distribution of its assets (or rights to acquire its assets)
to holders of shares of Common Stock, by way of return of capital or otherwise
(including, without limitation, any distribution of cash, stock or other
securities, property or options by way of a dividend, stock split, spin off,
subdivision, reclassification, corporate rearrangement, scheme of 

 

4

 

arrangement or other similar
transaction) (a “Distribution”),
at any time after the issuance of this Warrant, then, in each such case:

 

(a)      any Exercise Price in effect immediately prior to the close of
business on the record date fixed for the determination of holders of shares of
Common Stock entitled to receive the Distribution shall be reduced, effective
as of the close of business on such record date, to a price determined by
multiplying such Exercise Price by a fraction of which (i) the numerator
shall be the Closing Bid Price of the shares of Common Stock on the Trading Day
immediately preceding such record date minus the value of the Distribution (as
determined in good faith by the Company’s Board of Directors) applicable to one
share of Common Stock, and (ii) the denominator shall be the Closing Bid
Price of the shares of Common Stock on the Trading Day immediately preceding
such record date; and

 

(b)   the number of Warrant Shares shall be
increased or decreased to a number of shares equal to the number of shares of
Common Stock obtainable immediately prior to the close of business on the
record date fixed for the determination of holders of shares of Common Stock
entitled to receive the Distribution multiplied by the reciprocal of the
fraction set forth in the immediately preceding paragraph (a); provided that in the event that the
Distribution is of shares of Common Stock (or common stock) (“Other Shares of Common Stock”) of a company
whose common shares are traded on a national securities exchange or a national
automated quotation system, then the Holder may elect to receive a warrant to
purchase Other Shares of Common Stock in lieu of an adjustment in the number of
Warrant Shares, the terms of which shall be identical to those of this Warrant,
except that such warrant shall be exercisable into the number of shares of
Other Shares of Common Stock that would have been payable to the Holder
pursuant to the Distribution had the Holder exercised this Warrant immediately
prior to such record date and with an aggregate exercise price equal to the
product of the amount by which the exercise price of this Warrant was decreased
with respect to the Distribution pursuant to the terms of the immediately
preceding paragraph (a) and the number of Warrant Shares calculated in
accordance with the first part of this paragraph (b).

 

4.     PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.

 

(a)      Purchase Rights. 
In addition to any adjustments pursuant to Section 2 above, if at
any time the Company grants, issues or sells any rights to purchase stock,
warrants, securities or other property pro rata to the record holders of any
class of shares of Common Stock (the “Purchase
Rights”), then the Holder will be entitled to acquire, upon the
terms applicable to such Purchase Rights, the aggregate Purchase Rights which
the Holder could have acquired if the Holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant (without regard
to any limitations on the exercise of this Warrant) immediately before the date
on which a record is taken for the grant, issuance or sale of such Purchase
Rights, or, if no such record is taken, the date as of which the record holders
of shares of Common Stock are to be determined for the grant, issue or sale of
such Purchase Rights.

 

(b)      In connection with any Fundamental Transaction, the Company shall make
appropriate provision so that this Warrant shall thereafter be exercisable for
shares of the Successor Entity based upon the conversion ratio or other
consideration payable in the 

 

5

 

Fundamental Transaction. The provisions of this Section shall
apply similarly and equally to successive Fundamental Transactions and shall be
applied without regard to any limitations on the exercise of this Warrant.  Without limiting the foregoing, in connection
with a Fundamental Transaction that constitutes a Change of Control, at the
request of the Holder delivered before the 90th day after such Fundamental
Transaction, the Company (or the Successor Entity) shall purchase this Warrant
from the Holder by paying to the Holder, within five (5) Business Days
after such request (or, if later, on the effective date of the Fundamental
Transaction), cash in an amount equal to the Black Scholes Value of the
remaining unexercised portion of this Warrant on the date of such Fundamental
Transaction.

 

In
the event that any person becomes a Parent Entity of the Company, such person
shall assume all of the obligations of the Company under this Warrant with the
same effect as if such person had been named as the Company herein.

 

5.     NONCIRCUMVENTION.  The Company hereby covenants and agrees that
the Company will not, by amendment of its Certificate of Incorporation, Bylaws
or through any reorganization, transfer of assets, consolidation, merger,
scheme of arrangement, dissolution, issue or sale of securities, or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, and will at all times in good faith carry out all
the provisions of this Warrant and take all action as may be required to
protect the rights of the Holder. 
Without limiting the generality of the foregoing, the Company (i) shall
not increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the Exercise Price then in effect, (ii) shall
take all such actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares of
Common Stock upon the exercise of this Warrant, and (iii) shall, so long
as this Warrant is outstanding, take all action necessary to reserve and keep
available out of its authorized and unissued shares of Common Stock, solely for
the purpose of effecting the exercise of this Warrant, 100% of the number of
shares of Common Stock issuable upon exercise of this Warrant then outstanding
(without regard to any limitations on exercise).

 

6.     WARRANT HOLDER NOT DEEMED A STOCKHOLDER.  Except as otherwise specifically provided
herein, the Holder, solely in such Person’s capacity as a holder of this
Warrant, shall not be entitled to vote or receive dividends or be deemed the
holder of share capital of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the Holder, solely in
such Person’s capacity as the Holder of this Warrant, any of the rights of a
stockholder of the Company or any right to vote, give or withhold consent to
any corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or otherwise),
receive notice of meetings, receive dividends or subscription rights, or
otherwise, prior to the issuance to the Holder of the Warrant Shares which such
Person is then entitled to receive upon the due exercise of this Warrant.  In addition, nothing contained in this
Warrant shall be construed as imposing any liabilities on the Holder to
purchase any securities (upon exercise of this Warrant or otherwise) or as a
stockholder of the Company, whether such liabilities are asserted by the
Company or by creditors of the Company.

 

6

 

7.     REISSUANCE OF WARRANTS.

 

(a)   Transfer of Warrant.  If this Warrant is to be transferred, the
Holder shall surrender this Warrant to the Company, whereupon the Company will
forthwith issue and deliver upon the order of the Holder a new Warrant (in
accordance with Section 7(d)), registered as the Holder may request,
representing the right to purchase the number of Warrant Shares being
transferred by the Holder and, if less then the total number of Warrant Shares
then underlying this Warrant is being transferred, a new Warrant (in accordance
with Section 7(d)) to the Holder representing the right to purchase the
number of Warrant Shares not being transferred.

 

(b)   Lost, Stolen or Mutilated Warrant.  Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of loss, theft or destruction, of
any indemnification undertaking by the Holder to the Company in customary form
and, in the case of mutilation, upon surrender and cancellation of this
Warrant, the Company shall execute and deliver to the Holder a new Warrant (in
accordance with Section 7(d)) representing the right to purchase the
Warrant Shares then underlying this Warrant.

 

(c)   Exchangeable for Multiple Warrants.  This Warrant is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a
new Warrant or Warrants (in accordance with Section 7(d)) representing in
the aggregate the right to purchase the number of Warrant Shares then
underlying this Warrant, and each such new Warrant will represent the right to
purchase such portion of such Warrant Shares as is designated by the Holder at
the time of such surrender; provided, however, that no Warrants for fractional
shares of Common Stock shall be given.

 

(d)   Issuance of New Warrants.  Whenever the Company is required to issue a
new Warrant pursuant to the terms of this Warrant, such new Warrant (i) shall
be of like tenor with this Warrant, (ii) shall represent, as indicated on
the face of such new Warrant, the right to purchase the Warrant Shares then
underlying this Warrant (or in the case of a new Warrant being issued pursuant
to Section 7(a) or Section 7(c), the Warrant Shares designated
by the Holder which, when added to the number of shares of Common Stock
underlying the other new Warrants issued in connection with such issuance, does
not exceed the number of Warrant Shares then underlying this Warrant), (iii) shall
have an issuance date, as indicated on the face of such new Warrant which is
the same as the Issuance Date, and (iv) shall have the same rights and
conditions as this Warrant.

 

8.     NOTICES.  Whenever notice is required to be given under
this Warrant, unless otherwise provided herein, such notice shall be given in
accordance with Section 6 of Annex I to the Subscription Agreement.  The Company shall provide the Holder with
prompt written notice of all actions taken pursuant to this Warrant, including
in reasonable detail a description of such action and the reason therefore.

 

9.     AMENDMENT AND WAIVER.  Except as otherwise provided herein, the
provisions of this Warrant may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed
by it, only if the Company has obtained the written consent of the Holder.

 

7

 

10.   GOVERNING LAW.  This Warrant shall be governed by and
construed and enforced in accordance with, and all questions concerning the
construction, validity, interpretation and performance of this Warrant shall be
governed by, the internal laws of the State of New York, without giving effect
to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdictions) that would cause the application
of the laws of any jurisdictions other than the State of New York.

 

11.   CONSTRUCTION; HEADINGS.  This Warrant shall be deemed to be jointly
drafted by the Company and the Holder and shall not be construed against any
person as the drafter hereof.  The
headings of this Warrant are for convenience of reference and shall not form part
of, or affect the interpretation of, this Warrant.

 

12.   DISPUTE RESOLUTION.  In the case of a dispute as to the
determination of the Exercise Price or the arithmetic calculation of the
Warrant Shares, the Company shall submit the disputed determinations or
arithmetic calculations via facsimile within two (2) Business Days of
receipt of the Exercise Notice giving rise to such dispute, as the case may be,
to the Holder.  If the Holder and the
Company are unable to agree upon such determination or calculation of the
Exercise Price or the Warrant Shares within three Business Days of such
disputed determination or arithmetic calculation being submitted to the Holder,
then the Company shall, within two (2) Business Days submit via facsimile (a) the
disputed determination of the Exercise Price to an independent, reputable
investment bank selected by the Company and approved by the Holder  or (b) the disputed arithmetic
calculation of the Warrant Shares to the Company’s independent, outside
accountant.  The Company shall cause at
its expense the investment bank or the accountant, as the case may be, to
perform the determinations or calculations and notify the Company and the
Holder of the results no later than ten Business Days from the time it receives
the disputed determinations or calculations. 
Such investment bank’s or accountant’s determination or calculation, as
the case may be, shall be binding upon all parties absent demonstrable error.

 

13.   REMEDIES, OTHER OBLIGATIONS, BREACHES AND
INJUNCTIVE RELIEF.  The remedies
provided in this Warrant shall be cumulative and in addition to all other
remedies available under this Warrant, at law or in equity (including a decree
of specific performance and/or other injunctive relief), and nothing herein
shall limit the right of the Holder to pursue actual damages for any failure by
the Company to comply with the terms of this Warrant.

 

14.   TRANSFER.  This
Warrant may be offered for sale, sold, transferred or assigned without the
consent of the Company.

 

15.   CERTAIN DEFINITIONS. 
For purposes of this Warrant, the following terms shall have the
following meanings:

 

(a)   “Black
Scholes Value” means the value of this Warrant based on the Black
and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg
using (i) a price per share of Common Stock equal to the Weighted Average
Price of the Common Stock for the Trading Day immediately preceding the date of
consummation of the applicable Fundamental Transaction, (ii) a risk-free
interest rate corresponding to the U.S. Treasury rate for a 

 

8

 

period equal to the
remaining term of this Warrant as of the date of consummation of the applicable
Fundamental Transaction and (iii) an expected volatility equal to the 30
day volatility obtained from the HVT function on Bloomberg determined as of the
Trading Day immediately following the public announcement of the applicable
Fundamental Transaction.

 

(b)   “Bloomberg”
means Bloomberg Financial Markets.

 

(c)   “Business
Day” means any day other than Saturday, Sunday or other day on which
commercial banks in The City of New York are authorized or required by law to
remain closed.

 

(d)   “Change of
Control” means any Fundamental Transaction other than (A) any
reorganization, recapitalization or reclassification of the Common Stock, in
which holders of the Company’s voting power immediately prior to such
reorganization, recapitalization or reclassification continue after such
reorganization, recapitalization or reclassification to hold publicly traded
securities and, directly or indirectly, the voting power of the surviving
entity or entities necessary to elect a majority of the members of the board of
directors (or their equivalent if other than a corporation) of such entity or
entities, or (B) pursuant to a migratory merger effected solely for the
purpose of changing the jurisdiction of incorporation of the Company.

 

(e)   “Closing
Bid Price” and “Closing Sale Price”
means, for any security as of any date, the last closing bid price and last
closing trade price, respectively, for such security on the Principal Market,
as reported by Bloomberg, or, if the Principal Market begins to operate on an
extended hours basis and does not designate the closing bid price or the
closing trade price, as the case may be, then the last bid price or the last
trade price, respectively, of such security prior to 4:00:00 p.m., New
York time, as reported by Bloomberg, or, if the Principal Market is not the
principal securities exchange or trading market for such security, the last
closing bid price or last trade price, respectively, of such security on the
principal securities exchange or trading market where such security is listed
or traded as reported by Bloomberg, or if the foregoing do not apply, the last
closing bid price or last trade price, respectively, of such security in the
over-the-counter market on the electronic bulletin board for such security as
reported by Bloomberg, or, if no closing bid price or last trade price,
respectively, is reported for such security by Bloomberg, the average of the
bid prices, or the ask prices, respectively, of any market makers for such
security as reported in the “pink sheets” by Pink Sheets LLC (formerly the
National Quotation Bureau, Inc.). 
If the Closing Bid Price or the Closing Sale Price cannot be calculated
for a security on a particular date on any of the foregoing bases, the Closing
Bid Price or the Closing Sale Price, as the case may be, of such security on
such date shall be the fair market value as mutually determined by the Company
and the Holder.  All such determinations
to be appropriately adjusted for any stock dividend, stock split, stock
combination or other similar transaction during the applicable calculation
period.

 

(f)    “Common
Stock” means (i) the Company’s shares of Common Stock, par
value $0.01 per share, and (ii) any share capital into which such Common
Stock shall have been changed or any share capital resulting from a
reclassification of such Common Stock.

 

(g)   “Eligible
Market” means the Principal Market, The New York Stock Exchange, Inc.,
The American Stock Exchange or The NASDAQ Capital Market.

 

9

 

(h)   “Expiration
Date” means the date sixty-six (66) months after the Issuance
Date or, if such date falls on a day other than a Business Day or on which
trading does not take place on the Principal Market (a “Holiday”), the next date that is not a
Holiday.

 

(i)    “Fundamental
Transaction” means that the Company shall,
directly or indirectly, in one or more related transactions, (i) consolidate
or merge with or into (whether or not the Company is the surviving corporation)
another Person, or (ii) sell, assign, transfer, convey or otherwise
dispose of all or substantially all of the properties or assets of the Company
to another Person, or (iii) allow another Person to make a
purchase, tender or exchange offer that is accepted by the holders of more than
the 50% of the outstanding shares of Common Stock (not
including any shares of Common Stock held by the Person or Persons making or
party to, or associated or affiliated with the Persons making or party to, such
purchase, tender or exchange offer), or (iv) consummate a stock purchase
agreement or other business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than the
50% of the outstanding shares of Common Stock
(not including any shares of Common Stock held by the other Person or other
Persons making or party to, or associated or affiliated with the other Persons
making or party to, such stock purchase agreement or other business combination), (v) reorganize, recapitalize or reclassify its Common
Stock, or (vi) any “person” or “group” (as these terms are used for
purposes of Sections 13(d) and 14(d) of the Exchange Act) is or shall
become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of 50% of the aggregate ordinary voting power
represented by issued and outstanding Common Stock.

 

(j)    “Parent
Entity” of a Person means an
entity that, directly or indirectly, controls the applicable Person and whose common stock or
equivalent equity security is quoted or listed on an Eligible Market, or, if there is more than one such Person or Parent Entity, the
Person or Parent Entity with the largest public market capitalization as of the
date of consummation of the Fundamental Transaction.

 

(k)   “Person”
means an individual, a limited liability company, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization, any other
entity and a government or any department or agency thereof.

 

(l)    “Principal
Market” means The NASDAQ Global Market.

 

(m)  “Successor
Entity” means the
Person (or, if so elected by the Holder, the Parent Entity) formed by,
resulting from or surviving any Fundamental Transaction or the Person (or, if
so elected by the Holder, the Parent Entity) with which such Fundamental
Transaction shall have been entered into.

 

(n)   “Trading
Day” means any day on which the Common Stock are traded on the
Principal Market, or, if the Principal Market is not the principal trading market
for the Common Stock, then on the principal securities exchange or securities
market on which the Common Stock are then traded; provided that “Trading Day”
shall not include any day on which the Common Stock are scheduled to trade on
such exchange or market for less than 4.5 hours or any day that the Common
Stock are suspended from trading during the final hour of trading on such
exchange or market (or if such exchange or market does not designate in advance
the closing 

 

10

 

time of trading on such
exchange or market, then during the hour ending at 4:00:00 p.m., New York
time).

 

(o)   “Weighted
Average Price” means, for any security as of any date, the dollar
volume-weighted average price for such security on the Principal Market during
the period beginning at 9:30:01 a.m., New York City time, and ending at
4:00:00 p.m., New York City time, as reported by Bloomberg through its “Volume
at Price” function or, if the foregoing does not apply, the dollar volume-weighted
average price of such security in the over-the-counter market on the electronic
bulletin board for such security during the period beginning at 9:30:01 a.m.,
New York City time, and ending at 4:00:00 p.m., New York City time, as
reported by Bloomberg, or, if no dollar volume-weighted average price is
reported for such security by Bloomberg for such hours, the average of the
highest closing bid price and the lowest closing ask price of any of the market
makers for such security as reported in the “pink sheets” by Pink Sheets LLC
(formerly the National Quotation Bureau, Inc.).  If the Weighted Average Price cannot be
calculated for such security on such date on any of the foregoing bases, the
Weighted Average Price of such security on such date shall be the fair market
value as mutually determined by the Company and the Holder.  If the Company and the Holder are unable to
agree upon the fair market value of such security, then such dispute shall be
resolved pursuant to Section 12 with the term “Weighted Average Price”
being substituted for the term “Exercise Price.”  All such determinations shall be
appropriately adjusted for any share dividend, share split or other similar
transaction during such period.

 

[Signature Page Follows]

 

11

 

IN WITNESS WHEREOF, the Company has caused this
Warrant to Purchase Common Stock to be duly executed as of the Issuance Date
set out above.

 

 

	
   

  	
  CELSION CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

EXHIBIT A

 

EXERCISE NOTICE

 

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE
THIS

WARRANT TO PURCHASE COMMON STOCK

 

CELSION CORPORATION

 

The
undersigned holder hereby exercises the right to purchase
                                  
of the shares of Common Stock (“Warrant Shares”)
of Celsion Corporation, a Delaware corporation (the “Company”), evidenced by the attached Warrant to Purchase
Common Stock (the “Warrant”).  Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.

 

1.  Form of Exercise Price.  The Holder’s payment of the Exercise Price
shall be made as:

 

                               
a “Cash Exercise” with respect to
                                  
Warrant Shares; and/or

 

                               
a “Cashless Exercise” with respect to
                              
Warrant Shares.

 

2.  Payment of Exercise Price.  In the event that the Holder conducted a Cash
Exercise with respect to some or all of the Warrant Shares to be issued
pursuant hereto, the holder shall pay the Aggregate Exercise Price in the sum
of
$                                      
to the Company in accordance with the terms of the Warrant.

 

3.  Delivery of Warrant Shares.  The Company shall deliver to the Holder
                    
Warrant Shares in accordance with the terms of the Warrant.

 

4.  Confirmation.  Please send confirmation of receipt of this
Exercise Notice to the following facsimile number:
                                            .

 

 

	
  Date:
                                
      ,

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Name of Registered Holder

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

ACKNOWLEDGMENT

 

The
Company hereby acknowledges this Exercise Notice and hereby directs American
Stock Transfer & Trust Company to issue the above indicated number of
shares of Common Stock in accordance with the Transfer Agent Instructions dated
            , 200 
from the Company and acknowledged and agreed to by American Stock Transfer &
Trust Company.

 

	
   

  	
  CELSION CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:Exhibit 10.1

 

SUBSCRIPTION AGREEMENT

 

Celsion Corporation

10220-L Old Columbia Road

Columbia, Maryland 21046

 

Gentlemen:

 

The
undersigned (the “Investor”)
hereby confirms its agreement with Celsion Corporation, a Delaware corporation (the “Company”),
as follows:

 

1.             This
Subscription Agreement, including the Terms and Conditions for Purchase of
Shares attached hereto as Annex I (collectively, this “Agreement”) is made as of the date set
forth below between the Company and the Investor.

 

2.             The Company has
authorized the sale and issuance to certain investors of up to an aggregate of 2,018,153
units (the “Units”), with each
Unit consisting of (i) one share (each, a “Share” and, collectively, the “Shares”) of the common stock, par value $0.01 per share (the “Common Stock”) of the Company and (ii) one
warrant to purchase 0.5 shares of Common Stock (the “Warrant” and, collectively, the “Warrants”), for a purchase price of $3.50 per Unit (the “Purchase Price”).  The Shares issuable upon the exercise of the
Warrants are referred to herein as the “Warrant
Shares” and, together with the Units, the Shares and the Warrants,
are referred to herein as the “Securities.”

 

3.             The offering
and sale of the Units (the “Offering”)
is being made pursuant to (a) an effective Registration Statement on Form S-3
(the “Registration Statement”)
filed by the Company with the Securities and Exchange Commission (the “Commission”), including the Prospectus
contained therein (the “Base Prospectus”),
(b) if applicable, certain “free writing prospectuses” (as that term is
defined in Rule 405 under the Securities Act of 1933, as amended (the “Act”)), that have been or will be filed
with the Commission and delivered to the Investor (or made available to the
Investor by the filing by the Company of an electronic version thereof with the
Commission) on or prior to the date hereof 
(the “Issuer Free Writing Prospectus”),
containing certain supplemental information regarding the Shares, the terms of
the Offering and the Company  and (c) a Prospectus Supplement (the “Prospectus Supplement” and, together with
the Base Prospectus, the “Prospectus”)
containing certain supplemental information regarding the Securities and terms
of the Offering that has been or will be filed with the Commission and
delivered or made available to the Investor.

 

4.             The Company and
the Investor agree that the Investor will purchase from the Company and the
Company will issue and sell to the Investor the Units set forth below for the
aggregate purchase price set forth below. 
The Units shall be purchased pursuant to the Terms and Conditions for
Purchase of Units attached hereto as Annex I and incorporated herein by
this reference as if fully set forth herein. 
The Investor acknowledges that the Offering is not being underwritten by
the placement agent (the “Placement Agent”)
named in the Prospectus Supplement and that there is no minimum offering
amount.

 

 

5.             The manner of
settlement of the Shares included in the Units purchased by the Investor shall
be determined by such Investor as follows (check one):

 

o                                    A.           Delivery by
crediting the account of the Investor’s prime broker (as specified by such
Investor on Exhibit A annexed hereto) with the Depository Trust
Company (“DTC”) through its
Deposit/Withdrawal At Custodian (“DWAC”)
system, whereby Investor’s prime broker shall initiate a DWAC transaction on
the Closing Date using its DTC participant identification number, and released
by American Stock Transfer & Trust Company, the Company’s transfer
agent (the “Transfer Agent”), at
the Company’s direction.  NO LATER THAN ONE (1) BUSINESS DAY AFTER THE
EXECUTION OF THIS AGREEMENT BY THE INVESTOR AND THE COMPANY, THE INVESTOR
SHALL:

 

(I)           DIRECT THE BROKER-DEALER AT
WHICH THE ACCOUNT OR ACCOUNTS TO BE CREDITED WITH THE SHARES ARE MAINTAINED TO
SET UP A DWAC INSTRUCTING THE TRANSFER AGENT TO CREDIT SUCH ACCOUNT OR ACCOUNTS
WITH THE SHARES, AND

 

(II)       REMIT BY
WIRE TRANSFER THE AMOUNT OF FUNDS EQUAL TO THE AGGREGATE PURCHASE PRICE FOR THE
UNITS BEING PURCHASED BY THE INVESTOR TO THE FOLLOWING ACCOUNT:

 

JPMorgan
Chase Bank, N.A.

ABA
# 021000021

Account
Name: Celsion Corporation

Account Number:
                     

Attention:
Audrey Cohen

Tel:
(212) 623-5078

 

— OR —

 

o                                    B.             Delivery versus
payment (“DVP”) through DTC (i.e.,
on the Closing Date, the Company shall deliver Shares registered in the
Investor’s name and address as set forth below and released by the Transfer
Agent to the Investor through DTC at the Closing directly to the account(s) at
Needham & Company LLC (“Needham”)
identified by the Investor; upon receipt of such Shares, Needham shall promptly
electronically deliver such Shares to the Investor, and simultaneously
therewith payment shall be made by Needham by wire transfer to the
Company).  NO LATER THAN ONE (1) BUSINESS DAY AFTER THE EXECUTION OF THIS
AGREEMENT BY THE INVESTOR AND THE COMPANY, THE INVESTOR SHALL:

 

(I)           NOTIFY NEEDHAM OF THE
ACCOUNT OR ACCOUNTS AT NEEDHAM TO BE CREDITED WITH THE SHARES BEING PURCHASED
BY SUCH INVESTOR, AND

 

2

 

(II)       CONFIRM THAT THE ACCOUNT OR
ACCOUNTS AT NEEDHAM TO BE CREDITED WITH THE SHARES BEING PURCHASED BY THE
INVESTOR HAVE A MINIMUM BALANCE EQUAL TO THE AGGREGATE PURCHASE PRICE FOR THE
UNITS BEING PURCHASED BY THE INVESTOR.

 

IT IS THE
INVESTOR’S RESPONSIBILITY TO (A) MAKE THE NECESSARY WIRE TRANSFER OR
CONFIRM THE PROPER ACCOUNT BALANCE IN A TIMELY MANNER AND (B) ARRANGE FOR
SETTLEMENT BY WAY OF DWAC OR DVP IN A TIMELY MANNER.  IF THE INVESTOR DOES NOT DELIVER THE
AGGREGATE PURCHASE PRICE FOR THE UNITS OR DOES NOT MAKE PROPER ARRANGEMENTS FOR
SETTLEMENT IN A TIMELY MANNER, THE SHARES MAY NOT BE DELIVERED AT CLOSING
TO THE INVESTOR OR THE INVESTOR MAY BE EXCLUDED FROM THE CLOSING
ALTOGETHER.

 

6.             The executed
Warrant shall be delivered in accordance with the terms thereof.  The Investor represents that, except as set
forth below, (a) it has had no position, office or other material
relationship within the past three years with the Company or persons known to
it to be affiliates of the Company, (b) it is not a member of the
Financial Industry Regulatory Authority, Inc. (“FINRA”) or an Associated Person (as such term is defined under
the FINRA Membership and Registration Rules Section 1011) as of the
Closing, and (c) neither the Investor nor any group of Investors (as
identified in a public filing made with the Commission) of which the Investor
is a part in connection with the Offering of the Units, acquired, or obtained
the right to acquire, 20% or more of the Common Stock (or securities
convertible into or exercisable for Common Stock) or the voting power of the
Company on a post-transaction basis. 
Exceptions:

 

	
   

  
	
  (If no exceptions, write “none.” If left blank, response will be
  deemed to be “none.”)

  

 

7.             The Investor
represents that it has received (or otherwise had made available to it by the
filing by the Company of an electronic version thereof with the Commission) the
Base Prospectus which is a part of the Company’s Registration Statement, the
documents incorporated by reference therein and any Issuer Free Writing
Prospectus (collectively, the “Disclosure
Package”), prior to or in connection with the receipt of this
Agreement.  The Investor acknowledges
that, prior to the delivery of this Agreement to the Company, certain
additional information regarding the Offering, including pricing information
(the “Offering Information”) will
be delivered or made available to the Investor. 
Such information may be provided to the Investor by any means permitted
under the Act, including the Prospectus Supplement, an Issuer Free Writing
Prospectus (if any) and oral communications.

 

8.             No offer by the
Investor to buy Units will be accepted and no part of the Purchase Price will
be delivered to the Company until the Disclosure Package and Offering
Information have been delivered or made available to the Investor and the
Company has accepted such offer by countersigning a copy of this Agreement, and
any such offer may be withdrawn or revoked, without obligation or commitment of
any kind, at any time prior to the Company (or Placement Agent on behalf of the
Company) sending (orally, in writing or by electronic mail) notice of its
acceptance of such offer.  An indication
of interest will involve no obligation or commitment of 

 

3

 

any
kind until the Disclosure Package and Offering Information are delivered or
made available to the Investor and this Agreement is accepted and countersigned
by or on behalf of the Company.

 

9.             The Company
acknowledges that the only material, non-public information relating to the
Company it has provided to the Investor in connection with the Offering prior
to the date hereof is the existence of the Offering.

 

4

 

Number
of Units:
                                                                 

 

Purchase Price Per Unit: $                                                    

 

Aggregate Purchase Price: $                                                 

 

Please
confirm that the foregoing correctly sets forth the agreement between us by
signing in the space provided below for that purpose.

 

 

	
   

  	
   

  	
  Dated
  as of: 
              
      , 2009

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  INVESTOR

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Print
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
  Address:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Agreed
  and Accepted

  	
   

  	
   

  
	
  this
         day of
                ,
  2009:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  CELSION CORPORATION

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
							

 

5

 

ANNEX I

 

TERMS AND CONDITIONS FOR PURCHASE OF UNITS

 

1.                                     Authorization and Sale of the Units. 
Subject to the terms and conditions of this Agreement, the Company has
authorized the sale of the Units, which consist of the Shares and the Warrants.

 

2.                                     Agreement to Sell and Purchase the Units; Placement Agent.

 

2.1          At the Closing (as defined in Section 3.1),
the Company will sell to the Investor, and the Investor will purchase from the
Company, upon the terms and conditions set forth herein, the number of Units
set forth on the last page of the Agreement to which these Terms and
Conditions for Purchase of Units are attached as Annex I (the “Signature Page”) for the aggregate purchase
price therefor set forth on the Signature Page.

 

2.2          The Company proposes to enter into substantially this same
form of Subscription Agreement with certain other investors (the “Other Investors”) and expects to complete
sales of Units to them.  The Investor and
the Other Investors are hereinafter sometimes collectively referred to as the “Investors,” and this Agreement and the
Subscription Agreements executed by the Other Investors are hereinafter
sometimes collectively referred to as the “Agreements.”

 

2.3          Investor acknowledges that the Company has agreed to pay
Needham & Company LLC (the “Placement
Agent”) a fee (the “Placement Fee”)
in respect of the sale of Units to the Investor.

 

2.4          The Company has entered into a Placement Agent Agreement,
dated September 25, 2009 (the “Placement
Agreement”), with the Placement Agent that contains certain
representations, warranties, covenants and agreements of the Company that may
be relied upon by the Investor, which shall be a third party beneficiary
thereof.

 

2.5          The Company covenants and agrees to use its best efforts to
keep the Registration Statement effective until the earlier of (x) such
time as all of the Shares and Warrant Shares issued or issuable can be sold by
the Investor or its affiliates immediately without compliance with the
registration requirements of the Act pursuant to Rule 144 under the Act
and (y) the date all of the Shares and Warrant Shares issued or issuable
shall have been sold by the Investor and its affiliates.

 

3.                                     Closings and Delivery of the Units and Funds.

 

3.1          Closing.  The completion of the
purchase and sale of the Units (the “Closing”)
shall occur at a place and time (the “Closing
Date”) to be specified by the Company and the Placement Agent, and
of which the Investors will be notified in advance by the Placement Agent, in
accordance with Rule 15c6-1 promulgated under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”).  At the Closing, (a) the Company shall
cause the Transfer Agent to deliver to the Investor the number of Shares set
forth on the Signature Page 

 

6

 

registered in the name of
the Investor or, if so indicated on the Investor Questionnaire attached hereto
as Exhibit A, in the name of a nominee designated by the Investor, (b) the
Company shall cause to be delivered to the Investor a Warrant to purchase a
number of whole Warrant Shares determined by multiplying the number of Shares
(and Units) set forth on the Signature Page by the Warrant Ratio, and
rounding down to the nearest whole number and (c) the aggregate purchase
price for the Units being purchased by the Investor will be delivered by or on
behalf of the Investor to the Company.

 

3.2          Conditions to the
Obligations of the Parties.

 

(a)           Conditions to the Company’s Obligations.  The Company’s obligation to issue and
sell the Units to the Investor shall be subject to: (i) the receipt by the
Company of the purchase price for the Units being purchased hereunder as set
forth on the Signature Page and (ii) the accuracy of the
representations and warranties made by the Investor and the fulfillment of
those undertakings of the Investor to be fulfilled prior to the Closing Date.

 

(b)           Conditions to the Investor’s Obligations.  The Investor’s obligation to purchase the
Units will be subject to the accuracy of the representations and warranties
made by the Company and the fulfillment of those undertakings of the Company to
be fulfilled prior to the Closing Date, including without limitation, those
contained in the Placement Agreement, and to the condition that the Placement
Agent shall not have: (i) terminated the Placement Agreement pursuant to
the terms thereof or (ii) determined that the conditions to the closing in
the Placement Agreement have not been satisfied.  The Investor’s obligations are expressly not
conditioned on the purchase by any or all of the Other Investors of the Units
that they have agreed to purchase from the Company.  The Investor understands and agrees that, in
the event that the Placement Agent in its sole discretion determines that the
conditions to closing in the Placement Agreement have not been satisfied or if the
Placement Agent Agreement may be terminated for any other reason permitted by
such Agreement, then the Placement Agent may, but shall not be obligated to,
terminate such Agreement, which shall have the effect of terminating this
Subscription Agreement pursuant to Section 14 below.

 

3.3          Delivery
of Funds.

 

(a)           DWAC Delivery.  If the Investor elects to settle the Units
purchased by such Investor through DTC’s Deposit/Withdrawal at Custodian (“DWAC”) delivery system, no later than one (1) business day after the
execution of this Agreement by the Investor and the Company, the
Investor shall remit by wire transfer the amount of funds equal to the
aggregate purchase price for the Units being purchased by the Investor to the
following account designated by the Company and the Placement Agent pursuant to
the terms of that certain Escrow Agreement (the “Escrow Agreement”) dated as of the date hereof, by and among
the Company, the Placement Agent and JPMorgan Chase Bank, N.A. (the “Escrow Agent”):

 

JPMorgan
Chase Bank, N.A.

ABA
# 021000021

Account
Name:                                                 

Account Number:
                                           

 

7

 

Attention: Audrey Cohen

Tel:
(212) 623-5078

 

Such
funds shall be held in escrow until the Closing and delivered by the Escrow
Agent on behalf of the Investors to the Company upon the satisfaction, in the
sole judgment of the Placement Agent, of the conditions set forth in Section 3.2(b) hereof.  The Placement Agent shall have no rights in
or to any of the escrowed funds, unless the Placement Agent and the Escrow
Agent are notified in writing by the Company in connection with the Closing
that a portion of the escrowed funds shall be applied to the Placement
Fee.  The Company agrees to indemnify and
hold the Escrow Agent harmless from and against any and all losses, costs,
damages, expenses and claims (including, without limitation, court costs and
reasonable attorneys fees) (“Losses”)
arising under this Section 3.3 or otherwise with respect to the
funds held in escrow pursuant hereto or arising under the Escrow Agreement,
unless it is finally, judicially determined that such Losses resulted directly
from the willful misconduct or gross negligence of the Escrow Agent.  Anything in this Agreement to the contrary
notwithstanding, in no event shall the Escrow Agent be liable for any special,
indirect or consequential loss or damage of any kind whatsoever (including but
not limited to lost profits), even if the Escrow Agent has been advised of the
likelihood of such loss or damage and regardless of the form of action.

 

(b)           Delivery Versus
Payment through The Depository Trust Company.  If the Investor elects to settle the Shares
purchased by such Investor by delivery versus payment through DTC, no later than one (1) business day after the
execution of this Agreement by the Investor and the Company, the
Investor shall confirm that the account or accounts at Needham to be credited
with the Shares being purchased by the Investor have a minimum balance equal to
the aggregate purchase price for the Units being purchased by the Investor.

 

3.4          Delivery
of Shares.

 

(a)           DWAC Delivery.  If the Investor elects to settle the Shares
purchased by such Investor through DTC’s DWAC delivery system, no later than one (1) business day after the
execution of this Agreement by the Investor and the Company, the
Investor shall direct the broker-dealer at which the account or accounts to be
credited with the Shares being purchased by such Investor are maintained, which
broker/dealer shall be a DTC participant, to set up a DWAC instructing American
Stock Transfer & Trust Company, the Company’s Transfer Agent, to
credit such account or accounts with the Shares.  Such DWAC instruction shall indicate the
settlement date for the deposit of the Shares, which date shall be provided to
the Investor by the Placement Agent. 
Simultaneously with the delivery to the Company by the Escrow Agent of
the funds held in escrow pursuant to Section 3.3 above, the Company
shall direct the Transfer Agent to credit the Investor’s account or accounts
with the Shares pursuant to the information contained in the DWAC.

 

(b)           Delivery Versus
Payment through The Depository Trust Company.  If the Investor elects to settle the Shares
purchased by such Investor by delivery versus payment through DTC, no later than one (1) business day after the
execution of this Agreement by the Investor and the Company, the
Investor shall notify the Placement Agent of the account or accounts at the
Placement Agent to be credited with the Shares being purchased by such 

 

8

 

Investor.  On the Closing Date, the Company shall
deliver the Shares to the Investor through DTC directly to the account(s) at
the Placement Agent identified by Investor and simultaneously therewith payment
shall be made by the Placement Agent by wire transfer to the Company.

 

4.                                     Representations, Warranties and Covenants of the Investor.

 

The
Investor acknowledges, represents and warrants to, and agrees with, the Company
and the Placement Agent that:

 

4.1          The Investor (a) is
knowledgeable, sophisticated and experienced in making, and is qualified to
make decisions with respect to, investments in Units presenting an investment
decision like that involved in the purchase of the Units, including investments
in securities issued by the Company and investments in comparable companies, (b) has
answered all questions on the Signature Page and the Investor
Questionnaire and the answers thereto are true and correct as of the date
hereof and will be true and correct as of the Closing Date and (c) in
connection with its decision to purchase the number of Units set forth on the
Signature Page, has received and is relying only upon the Disclosure Package
and the documents incorporated by reference therein and the Offering
Information.

 

4.2          (a) No action has been or will be
taken in any jurisdiction outside the United States by the Company or the
Placement Agent that would permit an offering of the Securities, or possession
or distribution of offering materials in connection with the issue of the
Securities in any jurisdiction outside the United States where action for that
purpose is required, (b) if the Investor is outside the United States, it
will comply with all applicable laws and regulations in each foreign
jurisdiction in which it purchases, offers, sells or delivers Securities or has
in its possession or distributes any offering material, in all cases at its own
expense and (c) the Placement Agent is not authorized to make and has not
made any representation, disclosure or use of any information in connection
with the issue, placement, purchase and sale of the Units, except as set forth
or incorporated by reference in the Issuer Free Writing Prospectus (if any),
the Base Prospectus or the Prospectus Supplement.

 

4.3          (a) The Investor has
full right, power, authority and capacity to enter into this Agreement and to
consummate the transactions contemplated hereby and has taken all necessary
action to authorize the execution, delivery and performance of this Agreement,
and (b) this Agreement constitutes a valid and binding obligation of the
Investor enforceable against the Investor in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors’ and contracting parties’ rights
generally and except as enforceability may be subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law) and except as to the enforceability of any rights to
indemnification or contribution that may be violative of the public policy
underlying any law, rule or regulation (including any federal or state
securities law, rule or regulation).

 

4.5          The Investor understands
that nothing in this Agreement, the Prospectus the Disclosure Package, the
Offering Information or any other materials presented to the Investor in
connection with the purchase and sale of the Units constitutes legal, tax or
investment advice.  The Investor has
consulted such legal, tax and investment advisors and made such investigation 

 

9

 

as
it, in its sole discretion, has deemed necessary or appropriate in connection
with its purchase of the Units.

 

4.6          Since the date on which the Placement
Agent first contacted the Investor about the Offering, it has not disclosed any
information regarding the Offering to any third parties (other than its legal,
accounting and other advisors that are subject to a legal obligation of
confidentiality) and has not engaged in any transactions involving the
securities of the Company (including, without limitation, any Short Sales
involving the Company’s securities).  The
Investor covenants that it will not engage in any transactions in the
securities of the Company (including Short Sales) or disclose any information
about the Offering (other than to its legal, accounting and other advisors that
are subject to a legal obligation of confidentiality) prior to the time that
the transactions contemplated by this Agreement are publicly disclosed.  The Investor agrees that it will not use any
of the Units acquired pursuant to this Agreement to cover any short position in
the Common Stock if doing so would be in violation of applicable securities
laws, including without limitation rules and regulations of the Commission
and compliance and disclosure interpretations published by the Commission staff
from time to time.  For purposes hereof, “Short Sales” include, without limitation,
all “short sales” as defined in Rule 200 promulgated under Regulation SHO
under the Exchange Act, whether or not against the box, and all types of direct
and indirect stock pledges, forward sales contracts, options, puts, calls,
short sales, swaps, “put equivalent positions” (as defined in Rule 16a-1(h) under
the Exchange Act) and similar arrangements (including on a total return basis),
and sales and other transactions through non-US broker dealers or foreign
regulated brokers.

 

5.                                     Survival of Representations, Warranties and Agreements; Third Party
Beneficiary.  Notwithstanding
any investigation made by any party to this Agreement or by the Placement
Agent, all covenants, agreements, representations and warranties made by the
Company and the Investor herein will survive the execution of this Agreement,
the delivery to the Investor of the Units being purchased and the payment
therefor.  The Placement Agent shall be a
third party beneficiary with respect to the representations, warranties and
agreements of the Investor in Section 4 hereof.

 

6.                                     Notices.  All notices,
requests, consents and other communications hereunder will be in writing, will
be mailed (a) if within the domestic United States by first-class
registered or certified airmail, or nationally recognized overnight express
courier, postage prepaid, or by facsimile or (b) if delivered from outside
the United States, by International Federal Express or facsimile, and (c) will
be deemed given (i) if delivered by first-class registered or certified
mail domestic, three business days after so mailed, (ii) if delivered by
nationally recognized overnight carrier, one business day after so mailed, (iii) if
delivered by International Federal Express, two business days after so mailed
and (iv) if delivered by facsimile, upon electric confirmation of receipt
and will be delivered and addressed as follows:

 

(a)                                                                                 if to the
Company, to:

 

Celsion
Corporation

10220-L Old Columbia Road

Columbia, Maryland 21046

Attention:  Michael H. Tardugno

 

10

 

Facsimile:  (410) 290-5319

 

with copies (which shall not
constitute notice) to:

 

Seyfarth
Shaw LLP

620
Eighth Avenue

New
York, New York 10018

Attention:  Blake Hornick, Esq.

Facsimile:  (212) 218-5526

 

(b)                                             if
to the Investor, at its address on the Signature Page hereto, or at such
other address or addresses as may have been furnished to the Company in
writing.

 

7.                                     Changes.  This Agreement
may not be modified or amended except pursuant to an instrument in writing
signed by the Company and the Investor.

 

8.                                     Headings.  The headings of
the various sections of this Agreement have been inserted for convenience of
reference only and will not be deemed to be part of this Agreement.

 

9.                                     Severability.  In case any provision
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein will not in any way be affected or impaired thereby.

 

10.                              Governing Law.  This Agreement
will be governed by, and construed in accordance with, the internal laws of the
State of New York, without giving effect to the principles of conflicts of law
that would require the application of the laws of any other jurisdiction.

 

11.                              Counterparts.  This Agreement
may be executed in two or more counterparts, each of which will constitute an
original, but all of which, when taken together, will constitute but one
instrument, and will become effective when one or more counterparts have been
signed by each party hereto and delivered to the other parties.  The Company and the Investor acknowledge and
agree that the Company shall deliver its counterpart to the Investor along with
the Prospectus Supplement (or the filing by the Company of an electronic
version thereof with the Commission).

 

12.                              Confirmation of Sale.  The Investor acknowledges and agrees that
such Investor’s receipt of the Company’s signed counterpart to this Agreement,
together with the Prospectus Supplement (or the filing by the Company of an
electronic version thereof with the Commission), shall constitute written
confirmation of the Company’s sale of Units to such Investor.

 

13.                              Press Release.  The Company
and the Investor agree that the Company shall prior to the opening of the
financial markets in New York City on the business day immediately after the
date hereof (a) issue a press release announcing the Offering and
disclosing all material information regarding the Offering and (b) file a
current report on Form 8-K with the Securities 

 

11

 

and Exchange Commission
including, but not limited to, a form of this Agreement as an exhibit thereto.

 

14.                              Termination.  In the
event that the Placement Agreement is terminated by the Placement Agent
pursuant to the terms thereof, this Agreement shall terminate without any
further action on the part of the parties hereto.

 

12

 

EXHIBIT A

 

CELSION CORPORATION

 

INVESTOR QUESTIONNAIRE

 

Pursuant
to Section 3 of Annex I to the Agreement, please provide us
with the following information:

 

	
  1.

  	
   

  	
  The
  exact name that your Shares and Warrants are to be registered in. You may use
  a nominee name if appropriate:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  The
  relationship between the Investor and the registered holder listed in
  response to item 1 above:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  The
  mailing address of the registered holder listed in response to item 1 above:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  The
  Social Security Number or Tax Identification Number of the registered holder
  listed in the response to item 1 above:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Name
  of DTC Participant (broker-dealer at which the account or accounts to be
  credited with the Shares are maintained):

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  DTC
  Participant Number:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Name
  of Account at DTC Participant being credited with the Shares:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Account
  Number at DTC Participant being credited with the Shares:

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