Exhibit 10.1
STOCK OPTION
AGREEMENT
(Non-Qualified Stock
Option)
THIS STOCK OPTION AGREEMENT (this
“Agreement”) is made effective as of January 3,
2007 (the “Effective Date”), by and between Celsion
Corporation, a Delaware corporation (the “Company”) and
Michael H. Tardugno (the “Optionee”).
WITNESSETH:
WHEREAS, the Company and the
Optionee are parties to that certain Employment Agreement,
effective as of January 3, 2007 (the “Employment
Agreement”);
WHEREAS, pursuant to
Section 3(c) of the Employment Agreement, the Company has
agreed to issue an option (the “Inducement Option”) to
purchase Four Hundred and Thirty Thousand (430,000) shares
(the “Shares”) of the common stock, par value $0.01 per
share, of the Company (the “Common Stock”), subject to
the terms and conditions of the Employment Agreement;
and
WHEREAS, as contemplated by such
Section 3(c), the Company and the Employee desire to evidence
the terms and conditions relating to the grant of the Inducement
Option;
NOW, THEREFORE, in consideration of
the foregoing and other good and valuable consideration the receipt
and sufficiency of which is acknowledged by each of the parties
hereto, such parties, intending legally to be bound, hereby agree
as follows:
1. Defined Terms . When used
in this Agreement, the following capitalized terms have the
respective meanings set forth in this Section 1:
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(a)
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“Administrator” means the
Company’s Board of Directors or the Compensation Committee of
the Company’s Board of Directors if the Board of Directors
has delegated to the Compensation Committee as such, or a
subcommittee of the Compensation Committee if so
designated.
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(b)
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“Agreement” has the meaning ascribed
thereto in the Introductory Paragraph of this Agreement.
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(c)
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“Applicable Laws” means the
statutes, laws, ordinances, including the rules and regulations
promulgated thereunder, governing the administration of stock
options under U.S. state corporate laws, U.S. federal and state
securities laws, the Code and any U.S. stock exchange, market or
quotation system on which the Common Stock is listed or
quoted.
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(d)
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“Cause” has the meaning ascribed
thereto in the Employment Agreement.
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(e)
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“Change
in Control” has the meaning ascribed thereto in the
Employment Agreement.
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(f)
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“Code” means the Internal Revenue
Code of 1986, as amended, or any successor thereto, including the
rules and regulations promulgated thereunder as in effect from time
to time.
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(g)
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“Common
Stock” has the meaning ascribed thereto in the Recitals to
this Agreement
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(h)
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“Company” has the meaning ascribed
thereto in the Introductory Paragraph of this Agreement.
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(f)
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“Disability” has the meaning
ascribed thereto in the Employment Agreement.
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(g)
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“Effective Date” has the meaning
ascribed thereto in the Introductory Paragraph to this
Agreement.
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(h)
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“Employment Agreement” has the
meaning ascribed thereto in the Recitals to this
Agreement.
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(i)
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“Fair
Market Value” means, on a given day, the closing sale price
for the Common Stock as reported on the principal securities
exchange, market or quotation system on which the Common Stock may
be listed or quoted on such date or, if no such sale occurred on
that date, then for the next preceding date on which a sale was
made. If the Common Stock should not be listed or quoted on a
securities exchange, market or quotation system, Fair Market Value
shall be determined in good faith by the Board of Directors of the
Company.
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(j)
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“Inducement Option” has the meaning
ascribed thereto in the Recitals to this Agreement.
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(k)
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“Installment” has the meaning
ascribed thereto in Section 3(b) of this Agreement.
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(l)
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“Optionee” has the meaning ascribed
thereto in the Introductory Paragraph of this Agreement.
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(m)
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“Option
Price” has the meaning ascribed thereto in Section 3(a)
of this Agreement.
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(n)
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“Option
Term” has the meaning ascribed thereto in Section 3(b)
of this Agreement.
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(o)
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“Shares” has the meaning ascribed
thereto in the Recitals to this Agreement.
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(p)
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“Vested
Portion” has the meaning ascribed thereto in
Section 3(b) of this Agreement.
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2. Grant and Nature . Subject
to the terms and conditions hereof and of the Employment Agreement
including, without limitation, adjustment pursuant to
Section 4 of this Agreement, the Company hereby grants to the
Optionee the Inducement Option to purchase the Shares, consisting
of Four Hundred-Thirty Thousand (430,000) shares of Common
Stock. The Inducement Option is intended to be a nonqualified stock
option, and is not intended to qualify as an incentive stock option
under Section 422 of the Code.
3. Terms and Conditions
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(a) Option Price . The
purchase price (the “Option Price”) to be paid by the
Optionee to the Company upon the exercise of the Inducement Option
shall be the closing price of the Common Stock on the American
Stock Exchange on the Effective Date, subject to adjustment as
provided in Section 4 of this Agreement.
(b) Vesting .
(i) The Inducement Option shall vest
and become exercisable in four (4) equal installments of
Inducement Option to purchase 107,500 Shares on the first, second,
third and fourth anniversaries of the Effective Date (each, an
“Installment”) subject to accelerated vesting and
forfeiture as otherwise provided herein, provided that, if
the Optionee’s employment
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is terminated by the Company prior to the first
anniversary of the Effective Date other than pursuant to
Section 6 of the Employment Agreement (death, Disability or
termination for “Cause”), the first installment of
Inducement Option shall vest on the date of such termination and
the remainder of the Inducement Option shall not vest and shall be
forfeited and further provided that, if the Optionee is not
employed by the Company on the second, third or fourth anniversary
of the Effective Date, the installments vesting on and after any
such anniversary shall not vest and the Inducement Option included
therein shall be forfeited. The portion of the Inducement Option
which has become vested and exercisable pursuant to this
Section 3 is hereinafter referred to as the “Vested
Portion.” The Inducement Option shall be exercisable, once
vested, for a period ending on the tenth anniversary of the
Effective Date (the “Option Term”), subject to earlier
termination as provided herein.
(ii) In the event of the death of
the Optionee, any portion of the Inducement Option that is vested
and fully exercisable at the time of death shall remain fully
exercisable, by the Optionee’s legal representatives, for a
period of one hundred eighty (180) days from the date of
death, at which time any Vested Portion of the Inducement Option
not exercised automatically shall be forfeited. Any portion of the
Inducement Option that has not vested prior the date of death shall
be forfeited.
(iii) In the event of the physical
or mental Disability of the Optionee, as defined in the Employment
Agreement, any portion of the Inducement Option that is vested and
fully exercisable at the time of Disability shall remain fully
exercisable, by the Optionee 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 any Vested Portion of
the Inducement Option not exercised automatically shall be
forfeited. Any portion of the Inducement Option that has not vested
prior to the date of Disability shall be forfeited.
(iv) In the event that the
Optionee’s employment with the Company is terminated for
“Cause” as defined in the Employment Agreement, or that
the Optionee voluntarily terminates his employment other than
pursuant to Section 7 or Section 8 of the Employment
Agreement, except as otherwise provided in subsection (i) of
this Section 3(b), any portion of the Inducement Option that
is vested and fully exercisable at the time of such termination may
be exercised by the Optionee for a period of ninety (90) days
after the date of termination, at which time any Vested Portion of
the Inducement Option not exercised automatically shall be
forfeited. Any portion of the Inducement Option that has not vested
prior to the date of termination shall be forfeited.
(v) In the event that the
Optionee’s employment with the Company is terminated by the
Company other than pursuant to Section 6 of the Employment
Agreement (death, Disability, or “Cause”) or is
terminated by the Optionee pursuant to Section 7 of the
Employment Agreement (for a material breach by the Company), and
such termination does not occur within two (2) years following
a Change in Control, any portion of the Inducement Option that is
vested and fully exercisable at the time of terminatio
