Document:

ex10-1.htm

Exhibit 10.1

Platinum-Montaur Life Sciences, LLC

152 West 57th Street, 4th Floor

New York, NY 10019

August 8, 2012

Echo Therapeutics, Inc.

8 Penn Center

1628 JFK Blvd, Suite 300

Philadelphia, PA 19013

Attention: Dr. Patrick Mooney

Ladies and Gentlemen:

 

Platinum-Montaur Life Sciences, LLC (hereinafter called the “Lender”) is pleased to provide this commitment for a term loan facility (the “Term Loan Facility”) to Echo Therapeutics, Inc. (the “Borrower”) on the terms and conditions set forth herein.  This letter is a summary and is not intended to be all inclusive.  Additional provisions that are standard to transactions of this size and type can be expected to be included in the loan and financing documents prepared by the Lender and its counsel for this transaction.

 

	
BORROWER:  

	
Echo Therapeutics, Inc.

 

	
AMOUNT OF TERM LOAN FACILITY:

	
$5,000,000 initially, subject to increase in $3 million increments upon satisfaction of the Increase Conditions to an amount not to exceed to $20,000,000.

 

	
DRAWS:

	
Each Draw of the Term Loan Facility shall be in a minimum amount of $1,000,000, or in whole multiples of $100,000 in excess thereof.  Amounts repaid may not be reborrowed.

 

The Lender shall have no obligation to fund any Draw upon the issuance by the Borrower of shares of its common stock and/or securities convertible into, exchangeable for, or exercisable for common stock of the Borrower at a price of less than $4 per share (a “Dilutive Issuance”), other than issuances of common stock, options to acquire common stock or similar equity incentive grants and awards to the Borrower’s employees, directors and consultants pursuant to equity incentive plans approved by the shareholders of the Borrower.

 

	
INTEREST RATE:

	
Ten percent (10%) per annum, compounding monthly.

 

	
COMMITMENT FEE WARRANT:

	
On closing, the Borrower shall deliver to the Lender a warrant to purchase 4,000,000 shares of the Borrower’s common stock, such warrant to have an exercise price of $2.00 per share and a term of five years (the “Commitment Fee Warrant”).

 

	
DRAW WARRANT:

	
The delivery by the Borrower to the Lender of a warrant to purchase 1,000,000 shares of the Borrower’s common stock per $1,000,000 of the amount of each Draw (a “Draw Warrant” and together with the Commitment Fee Warrant, the “Warrants”) shall be a condition precedent to the funding of each Draw. Each Draw Warrant shall have a term of five years from the date of the Draw and an exercise price equal to the lesser of: (a) 150% of the market price of the Borrower’s common stock at the time of the applicable Draw (but in no event less than $2.00 per share), or (b) $4.00 per share.

 

	
WARRANT TERMS:

	
The Warrants shall provide for cashless exercise unless an effective registration statement providing for the registration of all warrant shares is available for resales. The exercise price of the Warrants shall be subject to a full ratchet adjustment in the event of a Dilutive Issuance.  The Borrower shall provide typical indemnification in connection with any sales made via a prospectus.

 

  

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INCREASE CONDITIONS:

	
The maximum principal amount of all Draws (the “Draw Credit Maximum Amount”) shall be increased by $3,000,000 upon the occurrence of each of the following conditions:

 

(1) The initiation of treatment of at least one subject at each institution included in the CE study;

 

 

(2) Upon the public announcement of a successful study (met the predefined success endpoints in the clinical protocol) suitable for filing for the CE Mark;

 

 

(3) Upon the completion of at least one test subject at each of the targeted clinical testing venues for the FDA pivotal study;

 

 

(4) Upon the public announcement of a successful study (meeting the predefined success endpoints in the clinical protocol) suitable for filing for FDA approval; and

 

 

(5) Upon the receipt of U.S. regulatory clearance to sell the CGM device in US institutions.

 

	
PURPOSE:

	
To provide working capital to the Borrower for its general corporate purposes.

 

	
MATURITY DATE OF TERM LOAN FACILITY:

 

	
Five years from the date of closing.

	
REPAYMENT:

	
(1) Interest.  Interest shall be due and payable monthly on the first business day of each month; provided, however, that no portion of an interest payment shall be due on any interest payment date if, giving effect to such portion of such interest payment, the Borrower would have cash and cash equivalents of less than $5,000,000 (after giving effect to such interest payment) in the aggregate on such interest payment date; and provided, further, that if not previously paid in full, all accrued interest shall be due and payable in full on the maturity date of the Term Loan Facility or upon earlier acceleration.

 

(2) Principal.  Principal shall be due and payable in full on the maturity date or upon earlier acceleration.

 

(3) Mandatory Prepayment.  The Borrower shall, on each interest payment date, pay to Lender an aggregate amount equal to 1/3rd of the total revenue reported by the Borrower during the then immediately prior fiscal quarter (excluding, for the avoidance of doubt, funds received by the Borrower from capital raising activities), such payments to be applied no later than 45 days following the end of such immediately prior fiscal quarter and to be applied to accrued and unpaid interest before being applied to principal (such principal payment to be applied to the Draw or Draws as designated by the Borrower in its discretion); provided, however, that no such portion of such payment shall be due on any payment date if, giving effect to such portion of such payment, the Borrower would have cash and cash equivalents of less than $5,000,000 in the aggregate on such payment date; and provided, further, that if not previously paid in full, all principal of and all accrued interest on all Draws shall be due and payable in full on the Maturity Date of the Term Loan Facility or upon earlier acceleration.

 

	
PREPAYMENT:

	
The Borrower shall have the option at all times to permanently prepay any Draw, in whole or in part, by providing to Lender two (2) business days’ prior written notice of the effective date and amount of such cancellation or prepayment.

  

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COLLATERAL:

	
The Term Loan Facility shall be initially be secured by a pledge of the Pledged Revenue of the Borrower and its subsidiaries.  Upon the earlier of an event of default under or the maturity date of the Term Loan Facility, the Term Loan Facility shall be secured by substantially all assets of the Borrower and its subsidiaries, it being understood that such lien shall not attach and be effective until such event of default or maturity.  Such grants of collateral shall be evidenced by one or more security agreements (“Security Agreements”).

 

As used herein, “Pledged Revenue” means (i) all rights of payment of monetary obligations, including rights to payment for goods and general intangibles sold, leased, licensed, assigned or otherwise disposed of; (ii) all rights to payment for services rendered or to be rendered; (iii) all rights under all documents and instruments and all sums of money or other proceeds due or becoming due thereon to the extent the same result from the sale, license or other disposition of the Borrower’s property, products or services, and all rights pertaining to and interest in such documents and instruments; (iv) all other rights and claims to the payment of money, under contracts or otherwise; all rights to payment evidenced by chattel paper or an instrument to the extent the same result from the sale, license or other disposition of the Borrower’s property, products or services; (v) all deposit accounts to the extent that such deposit accounts contain any of the foregoing items; and (vi) all other property constituting accounts (as defined in the UCC).  “Pledged Revenues” shall not include funds received by the Borrower from capital raising activities.

 

	
COVENANTS:

	
The Loan Documents shall contain customary and typical senior secured indebtedness covenants, including without limitation covenants regarding prohibitions on liens, indebtedness, organic changes, redemptions, affiliate transactions, dividends and investments, together with covenants regarding maintenance of assets, reporting requirements, and listing eligibility.  Further, the Borrower shall covenant to promptly provide, at the Borrower’s sole expense, any and all necessary legal opinions and other documentation as may be reasonably required by the Lender or the Borrower’s transfer agent to effect transactions under Rule 144, and otherwise by the Lender in the common stock to be received upon exercise of the Commitment Fee Warrant and the Draw Warrants.

 

	
GUARANTY:

	
All subsidiaries of the Borrower shall execute and deliver to the Lender a guaranty of the Borrower’s obligations under the Term Loan Facility (the “Guaranty”).

 

	
DOCUMENTATION:

	
The closing of the Term Loan Facility is subject to documentation acceptable to the Lender.

 

	
ASSIGNMENT:

	
Unless an Event of Default shall have occurred, the Lender may not assign all or any part of the Term Loan Facility without the Borrower’s consent; provided, that, the Lender shall have the right to assign all or part of the Term Loan Facility to any affiliate of the Lender without the prior consent of the Borrower; and provided, further, that the Lender shall be free to assign, sell, pledge, or otherwise dispose of the Warrants (and the stock underlying the Warrants) in its discretion.  The Borrower shall not have the right to assign the Term Loan Facility without the Lender’s prior written consent.

 

	
INDEMNITY:

	
The Borrower shall indemnify, defend and hold the Lender (and the Lender’s members, officers, managers, employees and agents) harmless against any and all losses, liabilities, claims, damages or expenses incurred in connection with  the Term Loan Facility except to the extent same are incurred solely by reason of the gross negligence or willful misconduct of the Lender (or the Lender’s members, officers, managers, employees or agents), including, without limitation, any brokerage commissions or finder’s fees claimed by any broker or other party in connection with the transactions contemplated hereby.

  

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EXPENSES:

	
Whether or not the transactions contemplated hereby are consummated, the Borrower shall pay all expenses incurred by the Lender in the preparation of this commitment letter, and the negotiation, execution, and delivery of the documents and instruments evidencing the Term Loan Facility (including without limitation a Loan Agreement, a promissory note, the Guaranty, the Security Agreements, an opinion of the Borrower’s counsel, and the Commitment Fee Warrant, collectively the “Loan Documents”), including attorneys’ fees reasonably incurred, subject to the limitation set forth below.

 

	
CLOSING:

	
Definitive documentation to be executed and delivered by the Borrower and its subsidiaries no later than August 24, 2012, with closing to occur no later than September 24, 2012.

 

	
CONDITIONS PRECEDENT TO CLOSING:

	
The following are conditions precedent to the closing of the Term Loan Facility:

 

(1) The Borrower shall have provided to the Lender all information reasonably requested by the Lender.

 

(2) The negotiation, execution and delivery of the Loan Documents shall be satisfactory to the Lender, the Borrower and their respective counsel.  All documents required to be delivered in connection with the Term Loan Facility, including customary legal opinions, corporate records and documents from public officials and officers’ certificates, shall have been delivered and shall be in form and substance satisfactory to the Lender and the Lender’s counsel.

 

(3) All representations and warranties of the Borrower and its subsidiaries shall be true, complete and correct.

 

(4) There shall not have occurred any event or conditions that, in the opinion of the Lender , has had or could reasonably be expected to have a material adverse effect on the Borrower and/or any subsidiary of the Borrower (financial or otherwise) or any collateral, since the date of the most recent consolidated financial statements of the Borrower and its subsidiaries last submitted and reviewed by the Lender.

 

(5) All necessary governmental, third party and other approvals required for the transaction contemplated hereby shall have been obtained and be in full force and effect on the closing date and any applicable waiting periods shall have expired without any action being taken or threatened by any applicable authority, which, without limitation, would restrain, prevent or otherwise impose materially adverse conditions on the Borrower or create any material risk to the Lender.

 

(6) There shall not exist any action, suit, investigation or proceeding pending or threatened in any court of before any arbitrator or governmental authority that purports to affect any transaction contemplated hereby or the ability of the Borrower or any other obligor under the loan documentation to perform their respective obligations under such loan documentation.

 

(7) $15,000 in fees, costs and expenses incurred by the Lender in connection with the negotiation, drafting and execution of Term Loan Facility and the Loan Documents (including this letter) shall have been paid by the Borrower.

 

(8) The Borrower shall have provided opinions of counsel, in form and substance satisfactory to the Lender, addressing such matters as the Lender may reasonably request.

 

(9) NASDAQ shall have approved the listing of the common stock underlying the Warrants.

  

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If the terms and conditions of this commitment letter are acceptable to you, please sign and deliver the enclosed copy to the undersigned.  This commitment letter is made to the Borrower and is not assignable or transferable.  Unless the Borrower executes and delivers a copy of this this letter to the Lender on or before August 9, 2012, this letter (other than provisions regarding reimbursement of expenses) shall expire and be of no further force or effect.

 

We look forward to continuing to work with you.  If you have any questions, please call me.

[signature page follows]

 

  

-5-

  

 

Very truly yours,

PLATINUM-MONTAUR LIFE SCIENCES, LLC

By: /s/ Michael Goldberg, M.D.

Its Duly Authorized Agent

 

	
The Borrower hereby accepts and agrees to the terms and conditions set forth above:

 

ECHO THERAPEUTICS, INC.

 

By: /s/ Patrick Mooney

Its Duly Authorized Agent

By: /s/ Christopher Schnittker

Its Duly Authorized Agent

Date:  August 8, 2012ex4-1.htm

EXHIBIT 4.1

 

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN SECTIONS 5.3 AND 5.4 BELOW, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

 

WARRANT TO PURCHASE STOCK

 

	
Company:

	
CELSION CORPORATION, a Delaware corporation

	
Number of Shares:

	
25,685

	
Type/Series of Stock:

	
Common Stock

	
Warrant Price:

	
$2.92 per share

	
Issue Date:

	
June 27, 2012

	
Expiration Date:

	
June 27, 2019  See also Section 5.1(b).

	
Credit Facility:

	
This Warrant to Purchase Stock (“Warrant”) is issued in connection with that certain Loan and Security Agreement of even date herewith among Oxford Finance LLC, as Lender and Collateral Agent, the Lenders from time to time party thereto, including Horizon Technology Finance Corporation and the Company (as modified, amended and/or restated from time to time, the “Loan Agreement”).

 

THIS WARRANT CERTIFIES THAT, for good and valuable consideration, OXFORD FINANCE LLC (“Oxford” and, together with any successor or permitted assignee or transferee of this Warrant or of any shares issued upon exercise hereof, “Holder”) is entitled to purchase the number of fully paid and non-assessable shares (the “Shares”) of the above-stated Type/Series of Stock (the “Class”) of the above-named company (the “Company”) at the above-stated Warrant Price, all as set forth above and as adjusted pursuant to Section 2 of this Warrant, subject to the provisions and upon the terms and conditions set forth in this Warrant.

 

SECTION 1.                      EXERCISE.

 

1.1   Method of Exercise.  Holder may at any time and from time to time exercise this Warrant, in whole or in part, by delivering to the Company the original of this Warrant together with a duly executed Notice of Exercise in substantially the form attached hereto as Appendix 1 and, unless Holder is exercising this Warrant pursuant to a cashless exercise set forth in Section 1.2, a check, wire transfer of same-day funds (to an account designated by the Company), or other form of payment acceptable to the Company for the aggregate Warrant Price for the Shares (or other security issuable upon the exercise hereof) being purchased.

 

1.2   Cashless Exercise.  On any exercise of this Warrant (or upon a deemed exercise pursuant to this Section in accordance with the terms of Section 1.6 or 5.1(b)), in lieu of payment of the aggregate Warrant Price in the manner as specified in Section 1.1 above, but otherwise in accordance with the requirements of Section 1.1, Holder may elect to receive Shares (or such other securities) equal to the value of this Warrant, or portion hereof as to which this Warrant is being exercised.  Thereupon, the Company shall issue to the Holder such number of fully paid and non-assessable Shares (or other securities) as are computed using the following formula:

 

X = Y(A-B)/A 

 

where:

 

	
  

	
X =

	
the number of Shares (or other securities) to be issued to the Holder;

 

	
  

	
Y =

	
the number of Shares (or other securities) with respect to which this Warrant is being exercised (inclusive of the Shares (or other securities) surrendered to the Company in payment of the aggregate Warrant Price);

 

  

1

  

 

	
  

	
A =

	
the Fair Market Value (as determined pursuant to Section 1.3 below) of one Share (or other security); and

 

	
  

	
B =

	
the Warrant Price.

 

1.3   Fair Market Value.  If the Company’s common stock (or other securities issuable upon the exercise hereof) is then traded or quoted on a nationally recognized securities exchange, inter-dealer quotation system or over-the-counter market (a “Trading Market”) and the Class is common stock (or such other securities issuable upon the exercise hereof), the fair market value of a Share (or such other securities) shall be the average of the closing price or sale price of a share of common stock (or such other securities) reported for the three (3) Business Days immediately before the date on which Holder delivers this Warrant together with its Notice of Exercise to the Company.  If the Company’s common stock (or other securities issuable upon the exercise hereof) is then traded in a Trading Market and the Class is a series of the Company’s convertible preferred stock (or other securities convertible into the Company’s common stock or such other securities issuable upon the exercise hereof), the fair market value of a Share (or such other security) shall be the average of the closing price or last sale price of a share of the Company’s common stock (or such other security) reported for the three (3) Business Days immediately before the date on which Holder delivers this Warrant together with its Notice of Exercise to the Company multiplied by the number of shares of the Company’s common stock (or such other security) into which a Share (or such other security) is then convertible.  If the Company’s common stock (or other securities issuable upon the exercise hereof) is not traded in a Trading Market, the Board of Directors of the Company shall determine the fair market value of a Share (or such other security) in its reasonable good faith judgment.

 

1.4   Delivery of Certificate and New Warrant.  Within a reasonable time after Holder exercises this Warrant in the manner set forth in Section 1.1 or 1.2 above, the Company shall deliver to Holder a certificate representing the Shares (or other security issuable upon the exercise hereof) issued to Holder upon such exercise and, if this Warrant has not been fully exercised and has not expired, a new warrant of like tenor representing the Shares (or other securities) not so acquired.

 

1.5   Replacement of Warrant.  On receipt 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, on delivery of an indemnity agreement reasonably satisfactory in form, substance and amount to the Company or, in the case of mutilation, on surrender of this Warrant to the Company for cancellation, the Company shall, within a reasonable time, execute and deliver to Holder, in lieu of this Warrant, a new warrant of like tenor and amount.

 

1.6   Treatment of Warrant Upon Acquisition of Company.

 

(a)   Acquisition.  For the purpose of this Warrant, “Acquisition” means any transaction or series of related transactions involving: (i) the sale, lease, exclusive license, or other disposition of all or substantially all of the assets of the Company (ii) any merger or consolidation of the Company into or with another person or entity (other than a merger or consolidation effected exclusively to change the Company’s domicile), or any other corporate reorganization, in which the stockholders of the Company in their capacity as such immediately prior to such merger, consolidation or reorganization, own less than a majority of the Company’s (or the surviving or successor entity’s) outstanding voting power immediately after such merger, consolidation or reorganization (or, if such Company stockholders beneficially own a majority of the outstanding voting power of the surviving or successor entity as of immediately after such merger, consolidation or reorganization, such surviving or successor entity is not the Company); or (iii) any sale or other transfer by the stockholders of the Company of shares representing at least a majority of the Company’s then-total outstanding combined voting power.

 

(b)   Treatment of Warrant at Acquisition.  In the event of an Acquisition in which the consideration to be received by the Company’s stockholders consists solely of cash, solely of Marketable Securities or a combination of cash and Marketable Securities (a “Cash/Public Acquisition”), either (i) Holder shall exercise this Warrant pursuant to Section 1.1 and/or 1.2 and such exercise will be deemed effective immediately prior to and contingent upon the consummation of such Acquisition or (ii) if Holder elects not to exercise the Warrant, this Warrant will expire immediately prior to the consummation of such Acquisition.

 

  

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(c)   The Company shall provide Holder with written notice of a pending Cash/Public Acquisition (together with such reasonable information as Holder may reasonably require regarding the treatment of this Warrant in connection with such contemplated Cash/Public Acquisition giving rise to such notice), which is to be delivered to Holder not less than seven (7) Business Days prior to the closing of the proposed Cash/Public Acquisition.  In the event the Company does not provide such notice, then if, immediately prior to the Cash/Public Acquisition, the fair market value of one Share (or other security issuable upon the exercise hereof) as determined in accordance with Section 1.3 above would be greater than the Warrant Price in effect on such date, then this Warrant shall automatically be deemed on and as of such date to be exercised pursuant to Section 1.2 above as to all Shares (or such other securities) for which it shall not previously have been exercised, and the Company shall promptly notify the Holder of the number of Shares (or such other securities) issued upon such exercise to the Holder and Holder shall be deemed to have restated each of the representations and warranties in Section 4 of the Warrant as the date thereof.  In the event the Company does not provide such notice, then if, immediately prior to the Cash/Public Acquisition, the fair market value of one Share (or other security issuable upon the exercise hereof) as determined in accordance with Section 1.3 above would be less than or equal to the Warrant Price in effect on such date, then the acquiring, surviving or successor entity shall assume the obligations of this Warrant, and this Warrant shall thereafter be exercisable for the same securities and/or other property as would have been paid for the Shares (or other security issuable upon the exercise hereof) issuable upon exercise of the unexercised portion of this Warrant as if such Shares (or other securities) were outstanding on and as of the closing of such Acquisition, subject to further adjustment from time to time in accordance with the provisions of this Warrant.

 

(d)   The Company shall provide Holder with written notice of a pending Acquisition other than a Cash/Public Acquisition (together with such reasonable information as Holder may reasonably require regarding the treatment of this Warrant in connection with such contemplated Acquisition giving rise to such notice), which is to be delivered to Holder not less than seven (7) Business Days prior to the closing of such proposed Acquisition.  Upon the closing of any Acquisition other than a Cash/Public Acquisition defined above, the acquiring, surviving or successor entity shall assume the obligations of this Warrant, and this Warrant shall thereafter be exercisable for the same securities and/or other property as would have been paid for the Shares (or other security issuable upon the exercise hereof) issuable upon exercise of the unexercised portion of this Warrant as if such Shares (or other securities) were outstanding on and as of the closing of such Acquisition, subject to further adjustment from time to time in accordance with the provisions of this Warrant.

 

(e)   As used in this Warrant, “Marketable Securities” means securities meeting all of the following requirements: (i) the issuer thereof is then subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is then current in its filing of all required reports and other information under the Act and the Exchange Act; (ii) the class and series of shares or other security of the issuer that would be received by Holder in connection with the Acquisition were Holder to exercise this Warrant on or prior to the closing thereof is then traded in Trading Market, and (iii) Holder would be able to publicly re-sell, within six (6) months following the closing of such Acquisition, all of the issuer’s shares and/or other securities that would be received by Holder in such Acquisition were Holder to exercise this Warrant in full on or prior to the closing of such Acquisition.

 

SECTION 2.                      ADJUSTMENTS TO THE SHARES AND WARRANT PRICE.

 

2.1   Stock Dividends, Splits, Etc.  If the Company declares or pays a dividend or distribution on the outstanding shares of the Class payable in common stock or other securities or property (other than cash), then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without additional cost to Holder, the total number and kind of securities and property (other than cash) which Holder would have received had Holder owned the Shares of record as of the date the dividend or distribution occurred.  If the Company subdivides the outstanding shares of the Class by reclassification or otherwise into a greater number of shares, the number of Shares purchasable hereunder shall be proportionately increased and the Warrant Price shall be proportionately decreased.  If the outstanding shares of the Class are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased and the number of Shares shall be proportionately decreased.

 

2.2   Reclassification, Exchange, Combinations or Substitution.  Upon any event whereby all of the outstanding shares of the Class are reclassified, exchanged, combined, substituted, or replaced for, into, with or by Company securities of a different class and/or series, then from and after the consummation of such event, this Warrant will be exercisable for the number, class and series of Company securities that Holder would have received had the Shares been outstanding on and as of the consummation of such event, and subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant.  The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, combinations substitutions, replacements or other similar events.

 

  

3

  

 

2.3   No Fractional Share.  No fractional Share (or other security issuable upon the exercise hereof) shall be issuable upon exercise of this Warrant and the number of Shares (or other securities) to be issued shall be rounded down to the nearest whole Share (or other security).  If a fractional Share (or other security) interest arises upon any exercise of the Warrant, the Company shall eliminate such fractional Share (or other security) interest by paying Holder in cash the amount computed by multiplying the fractional interest by (i) the fair market value (as determined in accordance with Section 1.3 above) of a full Share (or other security), less (ii) the then-effective Warrant Price.

 

2.4   Notice/Certificate as to Adjustments.  Upon each adjustment of the Warrant Price, Class and/or number of Shares (or other security issuable upon the exercise hereof), the Company, at the Company’s expense, shall notify Holder in writing within a reasonable time setting forth the adjustments to the Warrant Price, Class and/or number of Shares (or other securities), the computation thereof and facts upon which such adjustment is based.  The Company shall, upon written request from Holder, furnish Holder with a certificate of its Chief Financial Officer, including computations of such adjustment and the Warrant Price, Class and number of Shares in effect upon the date of such adjustment.

 

SECTION 3.                      REPRESENTATIONS AND COVENANTS OF THE COMPANY.

 

3.1   Representations and Warranties.  The Company represents and warrants to, and agrees with, the Holder as follows: all Shares (or other security issuable upon the exercise hereof) which may be issued upon the exercise of this Warrant, shall, upon issuance, be duly authorized, validly issued, fully paid and non-assessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws.  The Company covenants that it shall at all times cause to be reserved and kept available out of its authorized and unissued capital stock such number of shares of the Class (or other security issuable upon the exercise hereof) as will be sufficient to permit the exercise in full of this Warrant.

 

3.2   Notice of Certain Events.  If the Company proposes at any time to:

 

(a)   declare any dividend or distribution upon the outstanding shares of the Class or common stock, whether in cash, property, stock, or other securities and whether or not a regular cash dividend;

 

(b)   offer for subscription or sale pro rata to the holders of the outstanding shares of the Class any additional shares of any class or series of the Company’s stock (other than pursuant to contractual pre-emptive rights);

 

(c)   effect any reclassification, exchange, combination, substitution, reorganization or recapitalization of the outstanding shares of the Class; or

 

(d)   effect an Acquisition or to liquidate, dissolve or wind up;

 

then, in connection with each such event, the Company shall give Holder:

 

(1)   at least seven (7) Business Days prior written notice of the date on which a record will be taken for such dividend, distribution, or subscription rights (and specifying the date on which the holders of outstanding shares of the Class will be entitled thereto) or for determining rights to vote, if any, in respect of the matters referred to in (a) and (b) above; and

 

(2)   in the case of the matters referred to in (c) and (d) above at least seven (7) Business Days prior written notice of the date when the same will take place (and specifying the date on which the holders of outstanding shares of the Class will be entitled to exchange their shares for the securities or other property deliverable upon the occurrence of such event).

 

Reference is made to Section 1.6(c) whereby this Warrant will be deemed to be exercised pursuant to Section 1.2 hereof if the Company does not give written notice to Holder of a Cash/Public Acquisition as required by the terms hereof.  Company will also provide information requested by Holder that is reasonably necessary to enable Holder to comply with Holder’s accounting or reporting requirements.

 

  

4

  

 

SECTION 4.                      REPRESENTATIONS, WARRANTIES OF THE HOLDER.

 

The Holder represents and warrants to the Company as follows:

 

4.1   Purchase for Own Account.  This Warrant and the securities to be acquired upon exercise of this Warrant by Holder are being acquired for investment for Holder’s account, not as a nominee or agent, and not with a view to the public resale or distribution within the meaning of the Act.  Holder also represents that it has not been formed for the specific purpose of acquiring this Warrant or the Shares (or other security issuable upon the exercise hereof).

 

4.2   Disclosure of Information.  Holder is aware of the Company’s business affairs and financial condition and has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the acquisition of this Warrant and its underlying securities.  Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of this Warrant and its underlying securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to Holder or to which Holder has access.

 

4.3   Investment Experience.  Holder understands that the purchase of this Warrant and its underlying securities involves substantial risk.  Holder has experience as an investor in securities of companies in the development stage and acknowledges that Holder can bear the economic risk of such Holder’s investment in this Warrant and its underlying securities and has such knowledge and experience in financial or business matters that Holder is capable of evaluating the merits and risks of its investment in this Warrant and its underlying securities and/or has a preexisting personal or business relationship with the Company and certain of its officers, directors or controlling persons of a nature and duration that enables Holder to be aware of the character, business acumen and financial circumstances of such persons.

 

4.4   Accredited Investor Status.  Holder is an “accredited investor” within the meaning of Regulation D promulgated under the Act.

 

4.5   The Act.  Holder understands that this Warrant and the Shares (or other securities) issuable upon exercise hereof have not been registered under the Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the Holder’s investment intent as expressed herein.  Holder understands that this Warrant and the Shares (or other securities) issued upon any exercise hereof must be held indefinitely unless subsequently registered under the Act and qualified under applicable state securities laws, or unless exemption from such registration and qualification are otherwise available.  Holder is aware of the provisions of Rule 144 promulgated under the Act.

 

4.6   No Stockholder Rights.  Except as otherwise expressly set forth herein (including with respect to stock dividends in Section 2.1), Holder, in its capacity as the holder of this Warrant, shall not be entitled to vote or receive dividends, nor shall anything contained herein be construed to confer upon the Holder, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to receive notice of meetings, or to receive subscription rights, until this Warrant shall have been exercised.

 

SECTION 5.                      MISCELLANEOUS.

 

5.1   Term; Automatic Cashless Exercise Upon Expiration.

 

(a)   Term.  Subject to the provisions of Section 1.6 above, this Warrant is exercisable in whole or in part at any time and from time to time on or before 6:00 PM, Eastern time, on the Expiration Date and shall be void thereafter.

 

  

5

  

 

(b)   Automatic Cashless Exercise upon Expiration.  In the event that, upon the Expiration Date, the fair market value of one Share (or other security issuable upon the exercise hereof) as determined in accordance with Section 1.3 above is greater than the Warrant Price in effect on such date, then this Warrant shall automatically be deemed on and as of such date to be exercised pursuant to Section 1.2 above as to all Shares (or such other securities) for which it shall not previously have been exercised, and the Company shall, within a reasonable time, deliver a certificate representing the Shares (or such other securities) issued upon such exercise to Holder.

 

5.2   Legends.  Each certificate evidencing Shares (or other securities issuable upon the exercise hereof) shall be imprinted with a legend in substantially the following form:

 

THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN THAT CERTAIN WARRANT TO PURCHASE STOCK ISSUED BY THE ISSUER TO OXFORD FINANCE LLC DATED JUNE 27, 2012, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

 

5.3   Compliance with Securities Laws on Transfer.  This Warrant and the Shares (or other securities) issued upon exercise of this Warrant may not be transferred or assigned in whole or in part except in compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company).  The Company shall not require Holder to provide an opinion of counsel if the transfer is to an Affiliate (as defined under the Act) of Holder, provided that any such transferee is an “accredited investor” as defined in Regulation D promulgated under the Act.  Additionally, the Company shall also not require an opinion of counsel if there is no material question as to the availability of Rule 144 promulgated under the Act.

 

5.4   Transfer Procedure.  After receipt by Holder of the executed Warrant, Oxford may transfer all or part of this Warrant to one or more of Oxford’s Affiliates (as defined under the Act; each, an “Oxford Affiliate”), by execution of an Assignment substantially in the form of Appendix 2.  Subject to the provisions of Article 5.3 and upon providing the Company with written notice, Oxford, any such Oxford Affiliate and any subsequent Holder, may transfer all or part of this Warrant or the Shares issuable upon exercise of this Warrant to any transferee, provided, however, in connection with any such transfer, the Oxford Affiliate(s) or any subsequent Holder will give the Company notice of the portion of the Warrant being transferred with the name, address and taxpayer identification number of the transferee and Holder will surrender this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable).

 

5.5   Notices.  All notices and other communications hereunder from the Company to the Holder, or vice versa, shall be deemed delivered and effective (i) when given personally, (ii) on the third (3rd) Business Day after being mailed by first-class registered or certified mail, postage prepaid, (iii) upon actual receipt if given by facsimile or electronic mail and such receipt is confirmed in writing by the recipient, or (iv) on the first Business Day following delivery to a reliable overnight courier service, courier fee prepaid, in any case at such address as may have been furnished to the Company or Holder, as the case may be, in writing by the Company or such Holder from time to time in accordance with the provisions of this Section 5.5.  All notices to Holder shall be addressed as follows until the Company receives notice of a change of address in connection with a transfer or otherwise:

 

Oxford Finance LLC

133 N. Fairfax Street

Alexandria, VA 22314

Attn: Legal Department

Telephone: (703) 519-4900

Facsimile: (703) 519-5225

 

Email: LegalDepartment@oxfordfinance.com

 

  

6

  

 

Notice to the Company shall be addressed as follows until Holder receives notice of a change in address:

 

CELSION CORPORATION

997 Lenox Drive, Suite 100

Lawrenceville, New Jersey  08648

Attn: Chief Financial Officer

Telephone: (609) 896-9100

Facsimile:  (609) 896-2200

Email: gweaver@celsion.com

5.6   Waiver.  This Warrant and any term hereof may be changed, waived, discharged or terminated (either generally or in a particular instance and either retroactively or prospectively) only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.

 

5.7   Attorneys’ Fees.  In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys’ fees.

 

5.8   Counterparts; Facsimile/Electronic Signatures.  This Warrant may be executed in counterparts, all of which together shall constitute one and the same agreement.  Any signature page delivered electronically or by facsimile shall be binding to the same extent as an original signature page with regards to any agreement subject to the terms hereof or any amendment thereto.

 

5.9   Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to its principles regarding conflicts of law.

 

5.10         Headings.  The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant.

 

5.11         Business Days.  “Business Day” is any day that is not a Saturday, Sunday or a day on which banks in the United States are required or authorized to be closed.

 

 

 

 

 

[Balance of Page Intentionally Left Blank]

 

  

7

  

 

IN WITNESS WHEREOF, the parties have caused this Warrant to Purchase Stock to be executed by their duly authorized representatives effective as of the Issue Date written above.

 

	“COMPANY”
	 	 	 
	CELSION CORPORATION
	 	 	 
	 	 	 
	By:	 	 
	 	 	 
	Name:	 	 
	 	(Print)	 
	Title:	 	 
	 	 	 
	 	 	 
	“HOLDER”
	 
	OXFORD FINANCE LLC
	 	 	 
	 	 	 
	By:	 	 
	 	 	 
	Name:	 	 
	 	(Print)	 
	Title:	 	 

 

 

 

 

 

[Signature Page to Warrant to Purchase Stock]

 

  

  

  

 

APPENDIX 1

 

NOTICE OF EXERCISE

 

1.   The undersigned Holder hereby exercises its right purchase ___________ shares of the Common Stock of CELSION CORPORATION (the “Company”) in accordance with the attached Warrant To Purchase Stock (the “Warrant”), and tenders payment of the aggregate Warrant Price for such shares as follows:

 

[    ]        check in the amount of $________ payable to order of the Company enclosed herewith

 

[    ]        Wire transfer in the amount of $________ in immediately available funds to the Company’s account

 

[    ]        Cashless Exercise pursuant to Section 1.2 of the Warrant

 

[    ]        Other (pursuant to the terms of Section 1.1 of the Warrant) [Describe] _______________________

 

2.   Please issue a certificate or certificates representing the Shares (or other security issuable upon the exercise of the Warrant) in the name specified below:

 

                                                                                                  

Holder’s Name

 

                                                                                                    

 

                                                                                                      

(Address)

 

3.   By its execution below and for the benefit of the Company, Holder hereby restates each of the representations and warranties in Section 4 of the Warrant as of the date hereof.

 

	  	  	
HOLDER:

	  	  	  
	  	  	
                                                                                                                                                                          

	  	  	  
	  	  	
By:                                                                                                                                                                            

	  	  	
Name:                                                                                                                                                                  

	  	  	  
	  	  	
Title:                                                                                                                                                                        

	  	  	  
	  	  	
Date:                                                                                                                                                                         

 

  

Appendix 1

  

 

APPENDIX 2

 

ASSIGNMENT

 

For value received, Oxford Finance LLC hereby sells, assigns and transfers unto

	 	  

Name:

	  

[OXFORD TRANSFEREE]

	 
	 	 	 	 
	 	Address:	                                                                                      	 
	 	 	 	 
	 	Tax ID:	                                                                    	 

 

that certain Warrant to Purchase Stock issued by CELSION CORPORATION (the “Company”), on June 27, 2012 (the “Warrant”) together with all rights, title and interest therein.

 

	  	
OXFORD FINANCE LLC

	  	  
	  	  
	  	
By:                                                                                                                                                              

	  	  
	  	
Name:                                                                                                                                                     

	  	  
	  	
Title:                                                                                                                                                          

	  	  
	
Date:                                                                                                                                     

	  

 

By its execution below, and for the benefit of the Company, [OXFORD TRANSFEREE] makes each of the representations and warranties set forth in Article 4 of the Warrant and agrees to all other provisions of the Warrant as of the date hereof.

 

	  	

[OXFORD TRANSFEREE]

	  	  
	  	  
	  	
By:                                                                                                                                                              

	  	  
	  	
Name:                                                                                                                                                     

	  	  
	  	
Title:                                                                                                                                                          

 

 

Appendix 2

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