Executive Employment Agreement - Celsion Corp. and Augustine Y. Cheung
AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT
------------------------------
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT, effective as of the 1st
day of January, 2000, by and between Augustine Y. Cheung (the "Executive"), an
individual residing at c/o Celsion Corporation, 10220-1 Old Columbia Road,
Columbia, Maryland 21046-1705, and Celsion Corporation (the "Company"), a
Maryland corporation with offices at 10220-1 Old Columbia Road, Columbia,
Maryland 21046-1705.
WITNESSETH:
-----------
WHEREAS, the Executive is currently employed by the Company as its
Chairman and Chief Science Officer, and the Company desires that the Executive
shall continue to be employed by it and render services to it, and the Executive
is willing to continue to be so employed and to render services, all upon the
terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Employment, Duties and Acceptance.
1.1 The Company hereby employs Executive, and the Executive hereby
accepts employment, for the term ("Term") set forth in Section 2 hereof, to
render services to Company as its Chairman and Chief Science Officer. The
Executive represents and warrants to the Company that he has full power and
authority to enter into this Agreement and that he is not under any obligation
of a contractual or other nature to any person, firm or corporation which is
inconsistent or in conflict with this Agreement, or which would prevent, limit
or impair in any way the performance by Executive of his obligations hereunder.
1.2 The Executive will serve as Chairman and Chief Science Officer of
the Company and as a member of its Board of Directors when elected as such, will
have general supervision over the research and development operations of the
Company and its subsidiaries or affiliates (referred to collectively as
"Affiliates") and will have such other duties and responsibilities, consistent
with his position as Chairman and Chief Science Officer, as may reasonably be
assigned to him by the Board of Directors. In addition, the Executive will serve
as a senior officer and a director (when elected as such) of each of the
Company's Affiliates. The Executive will report to the Board of Directors of the
Company.
1.3 The Executive shall devote all of his business time and effort to
the business and affairs of the Company, and shall use his best efforts, skills,
and abilities to promote the interests of the Company, except for reasonable
vacations and during periods of illness or incapacity, but nothing contained in
this Agreement shall prevent the Executive from engaging in charitable,
community or other business activities provided they do not interfere with the
regular performance of the Executive's duties and responsibilities under this
Agreement.
1.4 Unless the Executive and the Company shall otherwise agree, the
Executive's principal places of employment shall be in and around the Columbia,
Maryland area and the Chicago, Illinois area, but the duties of the Executive
shall include such visits to the Company's Affiliates, research and development
partners, product and clinical trial test sites, customers, investment and other
bankers, in each case at the expense of the Company, as the Executive determines
is reasonably required in the performance of the Executive's responsibilities.
2
<PAGE>
2. Term.
2.1 The Term of this Agreement will commence as of January 1, 2000 and
will terminate at the close of business on December 31, 2002, unless sooner
terminated in accordance with the provisions of this Agreement ("Initial Term").
Thereafter, the employment of the Executive shall continue for successive
one-year periods (each such one year period being hereinafter referred to as a
"Renewal Term") unless the Corporation or Executive shall give notice to the
other at least six months prior to the end of the Term or any Renewal Term of
the election of the Corporation or the Executive to terminate the employment of
the Executive at the end of the Term or the then current Renewal Term.
3. Base Salary.
3.1 For all services performed by the Executive under this Agreement,
the Executive shall be paid a base salary ("Base Salary") for the Company's
fiscal year 2000 at the annual rate of $240,000. The Base Salary for subsequent
fiscal years shall be the greatest of (i) one hundred five percent (105%) of the
Base Salary for the prior calendar year; (ii) the product of the multiplication
of the Base Salary during the calendar year immediately preceding by the sum of
(y) one hundred percent plus (z) the amount (expressed as a percent) by which
the most recently reported Consumer Price Index ("CPI") applicable to the
Washington-Baltimore Metropolitan region is greater than the CPI for that same
region for the prior twelve months; or (iii) the sum offered by the Board of
Directors after a review taking into account corporate and individual
performance, the Company's prospects and general business conditions.
3.2 Base Salary shall be paid in equal monthly or semi-monthly
installments in keeping with the Company's standard payroll policies applicable
to its senior executives.
3
<PAGE>
3.3 The Company reserves the right to pay the Executive on a current
basis at an annual salary rate of no more than $240,000. Any unpaid sum will
accrue as an unpaid obligation owed to the Executive, and that obligation of the
Company will be evidenced not more often than once each calendar quarter by a
junior convertible note issued by the Company bearing interest at 8.75%, payable
interest only at the end of each calendar quarter until September 30, 2001. From
and after October 1, 2001, the Company will pay the outstanding principal amount
owed to the Executive in four quarterly installments of principal and related
interest; provided, however, that if, at any time, the Company achieves annual
revenues of $2,500,000 or more, then the unpaid salary obligations to the
Executive (and related interest) shall be paid in full, and from and after
achieving that annual revenue, the Company's right to pay the Executive at any
rate other than the then applicable salary rate shall expire. At the option of
the Executive, however, he may convert the outstanding principal amount and
related interest owing to him (whether or not evidenced by a note) into Common
Stock at a price equal to eighty (80%) percent of the average closing price of
the Common Stock during any ten consecutive trading days (selected by the
Executive) within the forty trading days prior to the date of conversion.
4. Option to Acquire Bonus Shares.
4.1 The Company hereby agrees to grant to Executive as a bonus a
non-qualified stock option to acquire three hundred thousand (300,000) fully
paid and non-assessable shares of common stock (the "Bonus Shares"), par value
$0.01 per share (the "Common Stock") of the Company. The exercise price for each
Bonus Share shall be the average of the closing price of the Company's Common
Stock during the fiscal quarter ended December 31, 1999. The options to acquire
the 300,000 shares of Common Stock shall vest in accordance with the following
4
<PAGE>
vesting schedule: one hundred thousand (100,000) of the Bonus Shares may be
acquired by Executive on or after March 15, 2000, and one hundred thousand
(100,000) of the Bonus Shares may be acquired by Executive on or after each of
October 1, 2001, and October 1, 2002. If Executive is not employed by the
Company on any of the three vesting dates, he shall no longer be entitled to
exercise his option to acquire the Bonus Shares vesting on or after such date.
Subject to the limitations set forth in this Agreement, the Executive may
exercise the stock options constituting the Bonus Shares, at any time prior to
5:00 PM (New York time) on November 27, 2010 (the "Expiration Date"), upon
notice to the Company at its principal office at 10220-1 Old Columbia Road,
Columbia, MD 21046-1705, Attention: Spencer J. Volk, President (or at such other
location as the Company may advise the Executive in writing) which time all
unexercised options shall expire and be of no further force or effect.
4.2 The Company shall at all times reserve for issuance and/or delivery
such number of shares of its Common Stock as shall be required for issuance or
delivery as Bonus Shares. No fractional shares or scrip representing fractional
shares shall be issued as Bonus Shares. Bonus Shares may not be sold or offered
for sale in the absence of effective registration under such securities laws, or
an opinion of counsel satisfactory to the Company that such registration is not
required. Bonus Shares may be sold by the Executive in transactions permitted by
the provisions of Rule 144 of the Securities Act of 1933. Bonus Shares shall
bear an appropriate restrictive legend, referring to the provisions hereof.
5. Incentive Compensation.
5.1 As incentive compensation to Executive, the Company hereby grants
to Executive non-qualified stock options to acquire from the Company, on an
original issue basis, an aggregate of seven hundred thousand (700,000) fully
5
<PAGE>
paid and non-assessable shares of Common Stock (the "Incentive Shares") at the
exercise prices designated below upon the achievement by the Company of the
several corporate accomplishments (the "Milestones") listed below.
5.2 For purposes of this paragraph:
A. Corporate Milestones. The right to acquire Incentive Shares shall
vest and thereafter be available for exercise in tranches as indicated herein
if, and at any time after, the Company has achieved the first two of the
following Class X Milestones:
> Execution and delivery of an agreement with one or more
strategic partners to the Company providing for the marketing and distribution
of any one of the Company's products related to its breast cancer treatment
system. (Tranche: 150,000 shares).
> Execution and delivery of an agreement with one or more
strategic partners to the Company providing for the marketing and distribution
of any one of the Company's products related to treating chronic prostate
enlargement condition, common in older males, known as benign prostatic
hyperplasia ("BPH") (Tranche: 150,000 shares).
> Execution and delivery of an agreement with one or more
strategic partners to the Company providing for the marketing and distribution
of any one of the Company's products related to liposome compounds that can
carry chemotherapy drugs to a tumor site and release their payload quickly when
triggered by targeted heat. (Tranche: 150,000 shares).
Only 300,000 shares in the aggregate may be issued to the Executive
with respect to Class X Milestones.
6
<PAGE>
The right to acquire Incentive Shares shall be available in tranches as
indicated herein if, and at any time after, the Company has achieved any of the
following Class Y Milestones:
> Obtaining pre-marketing approval from the United States Food and
Drug Administration for commercialization of the Company's BPH treatment system.
(Tranche: 150,000 shares).
> Obtaining pre-marketing approval from the United States Food and
Drug Administration for commercialization of the Company's breast cancer
treatment system. (Tranche: 150,000 shares).
As a Class Z Milestone, the right to acquire Incentive Shares shall be
available as to a tranche of 100,000 shares if, and at any time after, the
Company has achieved net income of $1,000,000 or more for any fiscal year prior
to the Expiration Date.
B. Exercise Price. The exercise price payable per share for each stock
option exercised upon or after the occurrence of a Milestone shall be as
follows:
Upon achieving the first Milestone, $0.80 per share;
Upon achieving the second Milestone, $1.00 per share;
Upon achieving the third Milestone, $1.20 per share;
Upon achieving the fourth Milestone, $1.40 per share;
and Upon achieving the fifth Milestone, $1.60 per share.
C. Acquisition of Incentive Shares. Subject to the limitations set
forth in this Agreement, the Executive may exercise the option to acquire the
Incentive Shares in tranches as set forth as each Milestone is achieved at any
time on or after the date on which the applicable Milestone is achieved and so
long as he is employed by the Company, but not later than the Expiration Date,
7
<PAGE>
upon notice to the Company at its principal office at 10220-1 Old Columbia Road,
Columbia, MD 21046-1705, Attention: Spencer J. Volk, President and Chief
Executive Officer (or at such other location as the Company may advise the
Executive in writing). The notice shall be executed and delivered with the
Purchase Form attached hereto duly filled in and signed and upon payment in cash
or cashier's check of the aggregate Purchase Price for the number of shares
which Executive is acquiring determined in accordance with the provisions
hereof. If such date is a day on which banking institutions are authorized by
law to close, then the Expiration Date shall be on the next succeeding day which
shall not be such a day. Incentive Shares may be acquired without regard to the
sequence in which the Milestones have been achieved. A Notice of Intention to
acquire Incentive Shares shall be submitted by the Executive to the Company's
Board of Directors, identifying the Milestone achieved and the number of shares
covered by the relevant tranche. The Board of Directors shall be deemed to have
approved the relevant acquisition of Incentive Shares unless, within seventy two
(72) hours of the submission of the Notice of Intention, the Board adopts a
resolution determining that Incentive Shares may not be issued as to the
Milestone identified in the Notice of Intention. In the absence of such a
disaffirming resolution, Executive may acquire Incentive Shares thereafter by
presentation of the Notice of Intention either to the Company or at the office
of its stock transfer agent, if any, and accompanied by payment in cash or cash
equivalent of the exercise price for the number of Incentive Shares specified in
such Notice of Intention, together with all federal and state taxes applicable
upon such exercise.
D. Reservation of Shares. The Company hereby agrees that at all times
there shall be reserved for issuance such number of shares of its Common Stock
as shall be required for issuance or delivery as Incentive Shares to the
Executive upon achievement of the Milestones set forth herein.
8
<PAGE>
E. Anti-Dilution Provisions.
(1) Adjustment of Number of Incentive Shares. Notwithstanding anything
in this Section 5.2E to the contrary, in case the Company shall at any time
issue Common Stock by way of dividend or other distribution on any stock of the
Company or subdivide or combine the outstanding shares of Common Stock, the
exercise price shall be proportionately decreased in the case of such issuance
(on the day following the date fixed for determining shareholders entitled to
receive such dividend or other distribution) or decreased in the case of such
subdivision or increased in the case of such combination (on the date that such
subdivision or combination shall become effective).
(2) No Adjustment for Small Amounts. Anything in this Section 5.2E to
the contrary notwithstanding, the Company shall not be required to give effect
to any adjustment in the exercise price unless and until the net effect of one
or more adjustments, determined as above provided, shall have required a change
of the exercise price by at least one cent, but when the cumulative net effect
of more than one adjustment so determined shall be to change the actual exercise
price by at least one cent, such change in the exercise price shall thereupon be
given effect.
(3) Number of Incentive Shares Adjusted. Upon any adjustment of the
exercise price other than pursuant to Section 5.2E(1) hereof, the Executive
shall thereafter (until another such adjustment) be entitled to purchase, at the
new exercise price, the number of shares, calculated to the nearest full share,
obtained by multiplying the number of shares of Common Stock initially issuable
upon achieving any Milestone by the exercise price in effect on the date hereof
and dividing the product so obtained by the new exercise price.
9
<PAGE>
F. Adjustments in the Event of a Recapitalization or Similar
Transaction. In the event of a reclassification, recapitalization, stock split,
reverse stock split, stock dividend or combination of shares, or other similar
events, the number and class of shares issuable to the Executive upon exercise
of the option to acquire either Bonus Shares or Incentive Shares shall be
adjusted to reflect such event.
G. Acceleration Upon Change of Control. Notwithstanding any language to
the contrary contained herein, if this Agreement is in effect at the time of the
occurrence of a "Change of Control" event, the options to acquire Bonus Shares
and Incentive Shares shall automatically vest 100% and immediately become
exercisable upon the occurrence of the Change of Control event. For purposes of
this Agreement, Change of Control event has the meaning set forth in Section
11.1 hereof.
6. Reimbursement for Expenses.
6.1 Company shall reimburse Executive for all reasonable out-of-pocket
expenses paid or incurred by him in the course of his employment, upon
presentation by Executive of valid receipts or invoices therefor, utilizing
procedures and forms for that purpose as established by Company from time to
time.
7. Vacations.
7.1 Executive shall be entitled to reasonable vacations (which shall
aggregate no less than four (4) weeks vacation with pay) during each consecutive
twelve (12) month period commencing on the date hereof. Executive may not
accumulate any vacation days which remain unused at the end of any year during
the term hereof without the prior consent of Company.
10
<PAGE>
8. Employee Benefit Programs, etc.
8.1 The Company shall provide the Executive with an automobile (or at
Employee's option, a cash allowance in the amount of $450.00 per month in lieu
thereof) for use in the performance of Executive's duties, along with fuel,
fluids and maintenance, upon such terms and conditions as are approved by
Company. The Company will also either provide or pay or reimburse the Executive
for the costs of a cellular telephone.
8.2 The Company shall provide the Executive at the Company's expense
disability insurance providing for disability payments to the Executive, in a
sum at least equal to 70% of his Base Salary then in effect, following a
termination of Executive's employment hereunder as a result of Disability (as
defined in Section 9.2 below). In the event such policy is not obtained,
Executive shall be entitled to participate in such disability plan(s) as are
available to Company executives generally.
8.3 The Company shall obtain at its expense, and shall be the owner of,
a policy on the life of the Executive in the amount of Three Million
($3,000,000) Dollars, naming the Company as the beneficiary.
8.4 In addition to the life insurance to be provided in accordance with
paragraph 8.3, subject to the Executive's meeting the eligibility requirements
of each respective plan, Executive shall participate in and be covered by each
pension, life insurance, accident insurance, health insurance, hospitalization
and any other employee benefit plan of Company, as the case may be, made
available generally from and after the date hereof to its respective senior
executives, on the same basis as shall be available to such other executives
without restriction or limitation by reason of this Agreement.
11
<PAGE>
8.5 Nothing contained herein shall prevent the Company from at any time
increasing the compensation provided herein to be paid to Executive, either
permanently or for a limited period, or from paying bonuses and other additional
compensation to Executive, whether or not based upon the earnings of the
business of Company, or from increasing or expanding any employee benefit
program applicable to the Executive, in the event the Company, in its sole
discretion, shall deem it advisable so to do in order to recognize and
compensate fairly Executive for the value of his services.
9. Death or Disability.
9.1 If Executive shall die during the term hereof, this Agreement shall
immediately terminate, except that Executive's legal representatives or
designated beneficiaries shall be entitled to receive (i) the Base Salary due to
Executive hereunder to the last day of the month following the month in which
his death occurs, payable in accordance with the Company's regular payroll
practices, (ii) all other benefits payable upon death under any employee benefit
program or other insurance covering the Executive as of the date of death, and
(iii) any stock option issued to acquire the Bonus Shares or Incentive Shares
that was exercisable at the date of death may be exercised by the legal
representative of the Executive's estate at any time or times during the period
beginning on the date of death and ending one year after the date of death, or
until the expiration of the stated term of such stock option, whichever period
is shorter, and any stock option not exercisable at the date of death shall be
forfeited.
9.2 In the event of the Disability of the Executive, as hereinafter
defined, the Executive shall be entitled to continue to receive payment of his
Base Salary (prorated as may be necessary) in accordance with the terms of
12
<PAGE>
Section 3 hereof through the last day of the third month following the month in
which Executive's employment hereunder is terminated as a result of such
Disability. At any time after the date of the Notice (as hereinafter defined)
and during the continuance of the Executive's Disability, the Company may at any
time thereafter terminate Executive's employment hereunder by written notice to
the Executive. The term "Disability" shall mean physical or mental illness or
injury which prevents the Executive from performing his customary duties for the
Company for a period of sixty (60) consecutive days or an aggregate period of
one hundred twenty (120) days out of any consecutive twelve (12) months. The
date of commencement of Disability shall be the date set forth in the notice
(the "Notice") given by Company to the Executive at any time following a
determination of Disability, which date shall not be earlier than the date the
Notice is given by Company. A determination of Disability by Company shall be
solely for the purposes of this Section 9.2 and shall in no way affect the
Executive's status under any other benefit plan applicable to the Executive.
9.3 Upon the occurrence of a Disability, and unless the Executive's
employment shall have been terminated as provided in Section 9.2, the Executive
shall, during such time as he is continuing to receive Base Salary payments as
set forth in Section 9.2, perform such services for Company, consistent with his
duties under Section 1 hereof, as he is reasonably capable of performing in
light of the condition giving rise to a Disability. All payments due under
Section 9.2 shall be payable in accordance with Company's regular payroll
practices. Any amount paid to Executive pursuant to this Agreement by reason of
his Disability, shall be reduced by the aggregate amount of all monthly
disability payments which the Executive is entitled to receive under all workers
compensation plans, disability plans and accident, health or other insurance
plans or programs maintained for the Executive by Company, by any company
controlling, controlled by or under common control with, Company.
13
<PAGE>
9.4 In the event the Executive's employment is terminated due to
Disability, in addition to receipt of the Base Salary payments described in
Section 9.2, any stock option issued to acquire the Bonus Shares or Incentive
Shares that was exercisable at the date of Disability may be exercised by the
Executive or his legal representative at any time or times during the period
beginning on the date of Disability and ending one year after the date of
Disability, or until the expiration of the stated term of such stock option,
whichever period is shorter, and any stock option not exercisable at the date of
Disability shall be forfeited.
10. Termination for Cause.
10.1 The employment of the Executive may be terminated by the Company
for Cause. For this purpose, "Cause" shall mean:
(i) an act constituting a felony and resulting or intended to
result, directly or indirectly, in his gain or personal enrichment at the
expense of the Company and its shareholders;
(ii) dishonest acts against the Company;
(iii) illegal drug use;
(iv) grossly or willfully neglecting to carry out his duties under
this Agreement resulting in material harm to the Company.
The Executive's employment shall not be terminated for Cause under clauses (ii)
or (iv) unless
(a) the Executive has received at least 15 days notice of a meeting of
the Board of Directors at which meeting the Board shall consider the
existence of Cause, shall provide the Executive with an opportunity to
be heard before the Board, and, following such consideration and
hearing, the Board has determined, based upon credible evidence, that
grounds for Cause exist; and
14
<PAGE>
(b) the misconduct or breaches on which an assertion of Cause is based
are not cured within 30 days thereafter if such misconduct or breaches
are capable of being cured.
10.2 In the event of a termination for Cause, the Executive shall (a)
be entitled to any unpaid Base Salary pro rated up to the date of termination,
and (b) any stock options not exercised prior to the date of termination shall
automatically be forfeited by the Executive, and the Executive shall have no
further rights under this Agreement. Furthermore, the Executive shall be and
remain subject to all provisions of Section 13 below for the period indicated
therein.
11. Termination Upon Change of Control or by Company Without Cause.
11.1 A "Change in Control" shall occur: (A) if any Person, or
combination of Persons (as hereinafter defined), or any affiliate of any of the
above, is or becomes the "beneficial owner" (as defined in Rule l3d-3
promulgated under the Securities Exchange Act of 1934) directly or indirectly,
of securities of the Company representing twenty-five percent (25%) or more of
the total number of outstanding shares of common stock of the Company; (B) if
individuals who, at the date of this Agreement, constitute the Board (the
"Incumbent Directors") cease, for any reason, to constitute at least a majority
thereof, provided that any new director whose election was approved by a vote of
at least 75% of the Incumbent Directors shall be treated as an Incumbent
Director; or (C) the Company sells substantially all of its assets to a
purchaser other than a subsidiary. For purposes hereof, "person" shall mean any
15
<PAGE>
individual, partnership, joint venture, association, trust, or other entity,
including a "group" as referred to in section 13(d)(3) of the Securities
Exchange Act of 1934.
11.2 If there occurs a Change in Control, and if there subsequently
occurs a material adverse change, without the Executive's written consent, in
the Executive's working conditions or status, including but not limited to a
significant change in the nature or scope of the Executive's authority, powers,
duties or responsibilities, or a reduction in the level of support services or
staff, then, whether or not such change would otherwise constitute a breach of
this Agreement by the Company, this Agreement may be terminated by notice given
by the Executive, specifying the Change of Control and significant adverse
change or changes.
11.3 Upon the termination of this Agreement in accordance with Section
11.2 above, the Executive will be entitled, without any duty to mitigate
damages, to:
(a) All unpaid Base Salary pro-rated up to the date of termination; and
(b) The opportunity to exercise any stock option issued to acquire the
Bonus Shares or Incentive Shares that was exercisable at the date of
termination may be exercised by the Executive at any time or times
during the period beginning on the effective date of termination and
ending one year after the date of termination, or until the expiration
of the stated term of such stock option, whichever period is shorter,
and any stock option not exercisable upon the effective date of
termination shall be forfeited;
(c) A severance payment equal to 2.99 times the Base Salary in effect
on the date of termination; and
16
<PAGE>
(d) All benefits available under the Company's employee benefit
programs, to the extent applicable to senior executives voluntarily and
amicably retiring from employment with the Company.
11.4 In the event that the Company shall actually or constructively
terminate this Agreement during the Initial Term or any Renewal Term without
cause (and with or without a Change of Control), the Executive shall be entitled
to the same payments, compensation and rights as provided in the case of a
termination by the Executive under Section 11.3.
11.5 The payments and any other compensation and benefits to which the
Executive is entitled under this Section 11 shall be made available to the
Executive no later than thirty (30) days after the date of any termination
referred to in Section 11.2, 11.3 or 11.4.
11.6 In the event that Executive receives the payments and any other
compensation and benefits referred to in this Section 11, he will be bound by
the restrictive provisions of Section 13 for the period therein provided.
12. Termination by Executive.
12.1 If the Executive shall terminate his employment under this
Agreement during the Initial Term without either (i) a Change of Control or (ii)
the express written consent of the Company, then, for purposes of establishing
the rights of the Executive upon such termination, such termination shall be
deemed the equivalent of a termination for Cause under Section 10.1, and the
Executive shall have only those rights with regard to compensation as are set
forth in Section 10.2, and the restrictive provisions of Section 13 below shall
fully apply.
17
<PAGE>
12.2 If the Executive shall terminate his employment under this
Agreement during any Renewal Term without either (i) a Change of Control or (ii)
the express written consent of the Company, then, for purposes of establishing
the rights of the Executive upon such termination, the Executive shall be
entitled to receive:
(a) All unpaid Base Salary pro-rated up to the date of termination; and
(b) for a period of thirty (30) days following the date of termination,
to exercise any unexercised options to acquire Common Stock under
Section 4 that was exercisable by the Executive on the date preceding
the date of termination, but all unexercised options to acquire Common
Stock under Section 5 shall be automatically forfeited on the effective
date of termination of this Agreement. 12.3 In the case of a
termination pursuant to Section 12.2, the restrictions set forth in
Section 13 shall apply to Executive for the period therein stated.
13. Restrictive Covenants; Compensation.
13.1 During such time as this Agreement shall be in effect and, except
as otherwise explicitly stated herein, for a period of three (3) years following
the termination of Executive's employment with Cause, or one (1) year after
voluntary termination of this Agreement by the Executive, and without the
Company's prior written consent (which may be withheld for any reason or for no
reason in Company's sole discretion), Executive shall not do anything in any way
inconsistent with his duties to, or adverse to the interests of, the Company,
nor shall Executive, directly or indirectly, himself or by or through a family
member or otherwise, alone or as a member of a partnership or joint venture, or
as a principal, officer, director, consultant, employee or stockholder of any
18
<PAGE>
other entity, compete with Company or be engaged in or connected with any other
business competitive with that of Company any of its affiliates, except that
Executive may own as a passive investment not more than five percent (5%) of the
securities of any publicly held corporation that may engage in such a business
competitive with that of Company or any of its Affiliates.
13.2 In view of the fact that Executive will be brought into close
contact with many confidential affairs of Company and its Affiliates not readily
available to the public, Executive agrees during the Term of this Agreement and
thereafter:
(a) to keep secret and retain in the strictest confidence all
non-public information about (i) research and development, test
results, suppliers, venture or strategic partners, licenses and patents
or patent applications, planned or existing products, know-how,
financial condition and other financial affairs (such as costs,
pricing, profits and plans for future development, methods of operation
and marketing concepts) of Company and its Affiliates; (ii) the
employment policies and plans of the Company and its Affiliates; and
(iii) any other proprietary information relating to the Company and its
Affiliates, their operations, businesses, financial condition and
financial affairs (collectively, the "Confidential Information") and,
for such time as Company or any of its Affiliates is operating,
Executive shall not disclose the Confidential Information to anyone not
then an officer, director or authorized employee of Company or its
Affiliates, either during or after the term of this Agreement, except
in the course of performing his duties hereunder or with Company's
express written consent or except to the extent that such confidential
information can be shown to have been in the public domain through no
fault of Executive; and
19
<PAGE>
(b) to deliver to Company within ten days after termination of his
services, or at any time Company may so request, all memoranda, notes,
records, reports and other documents relating to Company or its
Affiliates, businesses, financial affairs or operations and all
property associated therewith, which he may then possess or have under
his control.
13.3 Executive shall not at any time during the three-year period
following the termination of his employment for any reason whatsoever, including
termination resulting from the natural expiration of the term of this Agreement,
(i) employ any individual who was employed by Company or any of its Affiliates
at any time during the such period or during the 12 calendar months immediately
preceding such termination, or (ii) in any way cause, influence or participate
in the employment of any such individual by anyone else in any business that is
competitive with any of the businesses engaged in by Company or any of its
Affiliates.
13.4 Executive shall not at any time during the three-year period
following the termination of his employment, for any reason whatsoever,
including termination resulting from the natural expiration of the term of this
Agreement, directly or indirectly, either (i) persuade or attempt to persuade
any customer or client of the Company or of any of its Affiliates to cease doing
business with Company or with any Affiliate, or to reduce the amount of business
it does with Company or with any of its Affiliates, or (ii) solicit for himself
or any person other than Company or any of its Affiliates, the business of any
individual or business which was a customer or client of Company or any of its
Affiliates at any time during the eighteen month period immediately preceding
such termination.
13.5 Executive acknowledges that the execution and delivery by him of
the promises set forth in this Section 13 is an essential inducement to Company
to enter into this Agreement, and that Company would not have entered into this
20
<PAGE>
Agreement but for such promises. Executive further acknowledges that his
services are unique and that any breach or threatened breach by Executive of any
of the foregoing provisions of this Section 13 cannot be remedied solely by
damages. In the event of a breach or a threatened breach by Executive of any of
the provisions of this Section 13, Company shall be entitled to injunctive
relief restraining Executive and any business, firm, partnership, individual,
corporation or other entity participating in such breach or attempted breach.
Nothing herein, however, shall be construed as prohibiting Company from pursuing
any other remedies available at law or in equity for such breach or threatened
breach, including the recovery of damages and the immediate termination of the
employment of Executive hereunder.
13.6 If any of the provisions of, or promises contained in, this
Section 13 are hereafter construed to be invalid or unenforceable in any
jurisdiction, the same shall not affect the remainder of the provisions or the
enforceability thereof in any other jurisdiction, which shall be given full
effect, without regard to the invalid portions or the unenforceability in such
other jurisdiction. If any provisions contained in this Section 13 are held to
be unenforceable in any jurisdiction because of the duration or scope thereof,
the parties hereto agree that the court making such determination shall have the
power to reduce the duration and/or scope (if such provision, in its reduced
form, shall be enforceable); provided, however, that the determination of such
court shall not affect the enforceability, duration or scope of this Section 13
in any other jurisdiction.
14. Relationship of Parties.
Nothing herein contained shall be deemed to constitute a partnership
between or a joint venture by the parties, nor shall anything herein contained
be deemed to constitute either the Executive, the Company or any Affiliates the
21
<PAGE>
agent of the other except as is expressly provided herein. Neither Executive nor
Company shall be or become liable or bound by any representation, act or
omission whatsoever of the other party made contrary to the provisions of this
Agreement.
15. Notices.
All notices and communications hereunder shall be in writing and
delivered by hand or sent by registered or certified mail, postage and
registration or certification fees prepaid, return receipt requested, or by
overnight delivery such as Federal Express, and shall be deemed given when hand
delivered or upon three (3) business days after the date when mailed, or upon
one (1) business day after delivery to an agent for overnight delivery, if sent
in such manner, as follows:
If to Company: Celsion Corporation
10220-1 Old Columbia Road,
Columbia, Maryland 21046-1705
Attention: Board of Directors
With a copy to: Venable, Baetjer and Howard, LLP
Mercantile Bank and Trust Building
2 Hopkins Plaza, Suite 1800
Attn: Greg Cross
If to Executive: Augustine Y. Cheung
c/o
____________________
_________, Maryland
The foregoing addresses may be changed by notice given in the manner set forth
in this Section 15.
16. Disputes. 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
22
<PAGE>
(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 own experts, evidence and legal counsel, unless the arbitrator rules
otherwise in the arbitration. Both parties agree to use their 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.
17. Miscellaneous.
17.1 This Agreement contains the entire understanding of the parties
hereto with respect to the employment of Executive by Company during the term
hereof, and the provisions hereof may not be altered, amended, waived,
terminated or discharged in any way whatsoever except by subsequent written
agreement executed by the party charged therewith. This Agreement supersedes all
prior employment agreements, understandings and arrangements between Executive
23
<PAGE>
and Company pertaining to the terms of the employment of Executive. A waiver by
either of the parties of any of the terms or conditions of this Agreement, or of
any breach hereof, shall not be deemed a waiver of such terms or conditions for
the future or of any other term or condition hereof, or of any subsequent breach
hereof.
17.2 The provisions of this Agreement are severable, and if any
provision of this Agreement is invalid, void, inoperative or unenforceable, the
balance of the Agreement shall remain in effect, and if any provision is
inapplicable to any circumstance, it shall nevertheless remain applicable to all
other circumstances.
17.3 Company shall have the right to deduct and withhold from
Executive's compensation the amounts required to be deducted and withheld
pursuant to any present or future law concerning the withholding of income
taxes. In the event that Company makes any payments or incurs any charges for
Executive's account or Executive incurs any personal charges with Company,
Company shall have the right and Executive hereby authorizes Company to recoup
such payments or charges by deducting and withholding the aggregate amount
thereof from any compensation otherwise payable to Executive hereunder.
17.4 This Agreement shall be construed and interpreted under the laws
of the State of Maryland applicable to contracts executed and to be performed
entirely therein.
17.5 The captions and section headings in this Agreement are not part
of the provisions hereof, are merely for the purpose of reference and shall have
no force or effect for any purpose whatsoever, including the construction of the
provisions of this Agreement.
17.6 To the extent any provision of this Agreement contemplates action
after termination hereof or creates a cause of action or claim on which action
may be brought by either party, such provision, cause of action or claim shall
survive termination of Executive's employment or termination of this Agreement.
24
<PAGE>
17.7 Executive may not assign his rights nor delegate his duties under
this Agreement; provided, however, that notwithstanding the foregoing this
Agreement shall inure to the benefit of Executive's legal representatives,
executors, administrators or successors and to the successors or assigns of
Company.
17.8 Effective on the execution and
delivery of this Agreement, each of the Company and the Executive agrees that
all prior agreements between the parties, including without limitation, the
Executive Employment Agreement dated as of January 14, 2000, as in effect prior
to the date hereof, shall cease to be of any further legal force or effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated
Executive Employment Agreement effective as of the date first above written.
CELSION CORPORATION
By: /s/Spencer J. Volk
-----------------------------
Spencer J. Volk, President
/s/Augustine y. Cheung
------------------------------
Augustine Y. Cheung
25