Exhibit 10.2
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 Option that is vested and
fully exercisable at the time of termination shall remain fully
exercisable for a period of one hundred eig
