Document:

Exhibit 10.1

 

EMPLOYMENT AGREEMENT

 

This
EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into effective as of
the 1st day of March, 2009 (the “Effective Date”), by and between Celsion
Corporation, a Delaware corporation (the “Company”), and Michael 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 therefore
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 January 1 2013,
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, 2009, an annual base salary in the
amount of $360,500 (the “Base Salary”). The Executive’s Base Salary hereunder
shall be reviewed as of January 1, 2010 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.

 

 

(e) 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 to
purchase Shares of 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 stock options and stock awards (and similar equity rights)
granted to the Executive prior to such event, including without limitation the
Inducement Options and the Restricted Stock to be granted hereunder, shall
immediately vest and become and remain fully exercisable through their
respective original terms and otherwise in accordance with their respective
original terms.

 

f)
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

 

(g) 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.

 

(h) 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.

 

(i) 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 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 receiving Severance Payments in accordance
with Section 9(c) or payments under Section 9(d), 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 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, upon
expiration of thirty (30) days’ prior written notice given by the Company to
the Executive (except in the case of the Executive’s death), 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, for a
period of one hundred eighty (180) days from the date of death, 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 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.
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, for a period of one hundred eight (180)
days from the date of disability, 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 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/or 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 ninety (90) days after the date of termination, 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.

 

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 other than pursuant to Section 6
hereof or (2) the Executive terminates this Agreement pursuant to Section 7,
and in each case the termination of employment does not occur 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 time of his termination
of employment for one (1) year from the date of termination (the
“Severance Period”);

 

(ii) all
Company employee benefit plans and programs (including, but not limited to, the
plans and programs set forth in Section 3(i)), other than participation in
any Company tax-qualified retirement plan, 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). 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 stock awards (and similar equity rights) that are vested at
the time of termination shall remain fully exercisable for a period of one year
after the date of termination, 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.

 

(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 a Change in Control.
If (1) the Company terminates this Agreement other than pursuant to Section 6
hereof or (2) the Executive terminates this Agreement pursuant to Section 7
or 8, and in each case the termination of employment occurs 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 immediately upon such termination
of employment equal to one (1) times the Executive’s Base Salary at the
time of his termination of employment;

 

(ii) all
Company employee benefit plans and programs (including, but not limited to, the
plans and programs set forth in Section 3(i), 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).
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

 

(e) hereof,
shall remain fully exercisable through their respective original terms and
otherwise in accordance with their respective original terms 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 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. In
connection with such release by the Executive, the Company shall execute and
deliver a comparable release of claims against the Executive. 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

 

(iii) all stock options and awards of restricted
stock (and similar equity rights), all of which shall have become fully vested
pursuant to Section 3

 

(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.

 

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, the term “Change in Control” shall also have such additional
meanings as are permitted or required in guidance issued by the Internal
Revenue Service under 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, Quarterly Reports
on Form 10-Q or Current Reports on Form 8-K filed with the Securities
and Exchange Commission or as determined from time to time by the Board during
the Term hereof.

 

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.

 

Certain
provisions of this employment agreement may be required to comply with Code
section 409A. Notwithstanding anything in the Employment Agreement to the
contrary, if this Employment Agreement is deemed to be subject to Code section
409A, the parties agree to make any changes necessary to ensure that the
Employment Agreement complies with Code section 409A.

 

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 14.

 

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

10220
L Old Columbia Road

Columbia,
Maryland 21046

Attention:
Chairman of the Compensation Committee

Telephone:
(410) 290-5390

Fax:
(410) 290-5394

 

If
to the Executive:

Michael
Tardugno

Address:
1400 Lancaster St.  #900, Baltimore, MD
21231

Telephone:
917-623-9054

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.

 

 

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

 

	
   

  	
  Celsion Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gary W. Pace

  
	
   

  	
   

  	
   

  
	
   

  	
  Print
  Name: Gary W Pace

  
	
   

  	
   

  
	
   

  	
  Title:
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sean Moran

  
	
   

  	
   

  	
   

  
	
   

  	
  Print
  Name: Sean Moran

  
	
   

  	
  Title
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael Tardugno

  
	
   

  	
  Michael TardugnoExhibit 10.1

 

A.                                    Performance
Criteria for Incentive Plan Awards for Year 2009 Pursuant to the 2003 Executive
Incentive Plan

 

	
   

  	
  1.

  	
  Awardees:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a.

  	
   

  	
  Henry J. Herrmann

  
	
   

  	
   

  	
  b.

  	
   

  	
  Michael L. Avery

  
	
   

  	
   

  	
  c.

  	
   

  	
  Thomas W. Butch

  
	
   

  	
   

  	
  d.

  	
   

  	
  Daniel P. Connealy

  
	
   

  	
   

  	
  e.

  	
   

  	
  Daniel C. Schulte

  
	
   

  	
   

  	
  f.

  	
   

  	
  Michael D. Strohm

  
	
   

  	
   

  	
  g.

  	
   

  	
  John E. Sundeen, Jr.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.

  	
  Performance Goal:

  

 

a.                                       The aggregate
Incentive Plan Award to the Awardees shall equal four percent of the Adjusted
2009 Operating Income (defined below). 
The aggregate Incentive Plan Award shall be allocated among the Awardees
as follows:

 

	
  Awardee

  	
   

  	
  Portion of Aggregate

  Incentive Plan Award

  
	
  Henry J. Herrmann

  	
   

  	
  32%

  
	
  Michael L. Avery

  	
   

  	
  17%

  
	
  Thomas W. Butch

  	
   

  	
  15%

  
	
  Daniel P. Connealy

  	
   

  	
  9%

  
	
  Daniel C. Schulte

  	
   

  	
  9%

  
	
  Michael D. Strohm

  	
   

  	
  9%

  
	
  John E. Sundeen, Jr.

  	
   

  	
  9%

  

 

Notwithstanding the foregoing, the Compensation Committee may, in its
sole discretion, elect to award each Awardee less of the Incentive Plan Award
for the 2009 Year than is set forth above, provided that any such decrease in
the Incentive Plan Award for any one Awardee shall not increase the award for
any other Awardee.

 

b.                                      The term “Adjusted
2009 Operating Income” means the operating income of the Company for its
fiscal year ending December 31, 2009 (the “2009 Year”), determined
pursuant to generally accepted accounting principles, adjusted as follows:  (i) such amount shall be increased by
the Company’s interest expense for the 2009 Year; (ii) such amount shall
be increased by the Company’s federal, state and local income taxes for the 2009
Year; (iii) such amount shall be increased by bonuses paid under Company
executive compensation and deferred compensation plans for the 2009 Year; (iv) such
amount shall be increased by losses from publicly-disclosed transactions
entered into during the 2009 Year that the 

 

 

Compensation Committee considers to be extraordinary or non-recurring; (v) such
amount shall be decreased by gains from publicly-disclosed transactions entered
into during the 2009 Year that the Compensation Committee considers to be
extraordinary or non-recurring; (vi) such amount shall be increased by any
net losses during the 2009 Year from entities, trades or businesses and lines
of businesses acquired from unrelated parties (“2009 Acquisitions”); and
(vii) such amount shall be decreased by any net profits during the 2009
Year from entities, trades or businesses and lines of businesses acquired
pursuant to 2009 Acquisitions.

 

B.                                    Performance
Criteria for Restricted Stock Awards for Year 2009 Pursuant to the 1998 Stock
Incentive Plan

 

	
   

  	
  1.

  	
  Awardees:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  a.

  	
   

  	
  Henry J. Herrmann

  
	
   

  	
   

  	
  b.

  	
   

  	
  Michael L. Avery

  
	
   

  	
   

  	
  c.

  	
   

  	
  Thomas W. Butch

  
	
   

  	
   

  	
  d.

  	
   

  	
  Daniel P. Connealy

  
	
   

  	
   

  	
  e.

  	
   

  	
  Daniel C. Schulte

  
	
   

  	
   

  	
  f.

  	
   

  	
  Michael D. Strohm

  
	
   

  	
   

  	
  g.

  	
   

  	
  John E. Sundeen, Jr.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  2.

  	
  Performance Goal:

  

 

a.                                       The aggregate
Restricted Stock Award to the Awardees shall equal 420,000 shares of Company
common stock, provided that no such award shall be made unless the Threshold
Condition (defined below) is met.  The
aggregate Restricted Stock Plan Award shall be allocated among the Awardees as
follows:

 

	
  Awardee

  	
   

  	
  Portion of Aggregate

  Incentive Plan Award

  
	
  Henry J. Herrmann

  	
   

  	
  20%

  
	
  Michael L. Avery

  	
   

  	
  19%

  
	
  Thomas W. Butch

  	
   

  	
  17%

  
	
  Daniel P. Connealy

  	
   

  	
  11%

  
	
  Daniel C. Schulte

  	
   

  	
  11%

  
	
  Michael D. Strohm

  	
   

  	
  11%

  
	
  John E. Sundeen, Jr.

  	
   

  	
  11%

  

 

Notwithstanding the foregoing, the Compensation Committee may, in its
sole discretion, elect to award each Awardee less of a Restricted Stock Plan
Award for the 2009 Year than is set forth above, provided that any such
decrease in the Restricted Stock Plan Award for any one Awardee 

 

 

shall not
increase the award for any other Awardee. 
These awards, if any, are to be granted in December 2009.

 

b.                                      The term “Threshold
Condition” means that the quotient of (i) Adjusted 2009 Operating Income
(defined in Section A), divided by (ii) Adjusted 2009 Equity (defined
below), equals or exceeds 0.40.

 

c.                                       The term “Adjusted
2009 Equity” means the quotient of (i) the sum of Beginning 2009
Equity (defined below) plus Adjusted Ending 2009 Equity (defined below),
divided by (ii) 2.0.

 

d.                                      The term “Beginning
2009 Equity” means the shareholders equity of the Company as of January 1,
2009, determined pursuant to generally accepted accounting principles.

 

e.                                       The term “Adjusted
Ending 2009 Equity” means the shareholders equity of the Company as of December 31,
2009, determined pursuant to generally accepted accounting principles, adjusted
as follows:  (i) such amount shall
be increased by bonuses paid under Company executive compensation and deferred
compensation plans for the 2009 Year; (ii) such amount shall be increased
by losses from publicly-disclosed transactions entered into during the 2009
Year that the Compensation Committee considers extraordinary or non-recurring; (iii) such
amount shall be decreased by gains from publicly-disclosed transactions entered
into during the 2009 Year that the Compensation Committee considers to be
extraordinary or non-recurring; (iv) such amount shall be increased by any
net losses during the 2009 Year from entities, trades or businesses and lines
of businesses acquired pursuant to 2009 Acquisitions; and (v) such amount
shall be decreased by any net profits during the 2009 Year from entities,
trades or businesses and lines of businesses acquired pursuant to 2009 Acquisitions.

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