Exhibit 99.1
STOCK OPTION
AGREEMENT
(Non-Qualified Stock
Option)
THIS STOCK OPTION AGREEMENT (this
“Agreement”) is made effective as of July 29, 2005
(the “Effective Date”), by and between Celsion
Corporation, a Delaware corporation (the “Company”) and
Lawrence Olanoff, M.D., Ph.D. (the
“Optionee”).
WITNESSETH:
WHEREAS, the Company and the Optionee are
parties to that certain Employment Agreement, effective as of
July 29, 2005 (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 Six Million, Four
Hundred Forty Thousand (6,440,000) 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 Six Million Four Hundred Forty Thousand
(6,440,000) 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 .
(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 the Inducement Option to purchase
1,610,000 Shares on the first, second,
2
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 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 to
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 eighty (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 Opt
