Employment Agreement-john Mon

EXECUTIVE EMPLOYMENT AGREEMENT


EMPLOYMENT AGREEMENT, made as of the 8th day of June, 2000, by and between John Mon (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 Treasurer, as Secretary, and as General Manager, 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 one of its senior executive officers. 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


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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 Vice President, New Business Development of the Company and as a member of its Board of Directors when elected as such, will have general supervision over investigation into new business opportunities for 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 Vice President, New Business Development, as may reasonably be assigned to him by the President. The Executive may be also be elected to another executive position such as Secretary of the Company. 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 President 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 place of employment shall be in and around the Columbia, Maryland area, but the duties of the Executive shall include such visits to the Company's


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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. TERM.


2.1. The Term of this Agreement will commence as of June 8th, 200 and will terminate at the close of business on June 7, 2003, 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 three 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 first twelve months of the Initial Term at the annual rate of $100,000. The Base Salary for subsequent 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


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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.


4. OPTION TO ACQUIRE BONUS SHARES.


4.1. The Company hereby agrees to grant to Executive as a bonus an option to acquire fifty (50,000) thousand (the "Bonus Shares") fully paid and non-assessable shares of common stock, par value $0.01 per share (the "Common Stock") of the Company. The purchase price for each Bonus Share shall be $2.75 per share. The option granted hereby shall expire on June 7, 2005, but may be exercised only while the Executive is employed by the Company, and, in the event of the termination of his service for any reason other than as provided either in Section 10 or in Section 12 of this Agreement, then this option may be exercised for a period of not more than nine months following the date of terminations of service with the Company. 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 Share. Bonus Shares will not be registered under federal or state securities laws, and will have the status of restricted securities. 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. The Company will not include any


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Bonus Shares in any registration statement. Bonus Shares may be sold by the Executive in transactions permitted by the provisions of Rule 144 of the Securities Act of 1933. In case the Company shall at any time subdivide or combine the outstanding shares of Common Stock, the number of Bonus Shares the Executive shall have the right to acquire shall be proportionately increased in the case of such subdivision or decreased in the case of such combination (on the date that such subdivision or combination shall become effective). Bonus Shares shall bear an appropriate restrictive legend, referring to the provisions hereof.


5.1 For purposes of this paragraph:


A. Corporate Milestones. The right to acquire Incentive Shares shall be available in tranches as indicated herein if, as and when 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: 50,000 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: 50,000 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


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to a tumor site and release their payload quickly when triggered by targeted hear. (Tranche: 50,000 shares).


Only 150,000 shares may be issued with respect to Class X Milestones. The right to acquire Incentive Shares shall be available in tranches as indicated herein if, as and when 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: 50,000 shares).


- Obtaining pre-marketing approval from the United States Food and Drug Administration for commercialization of the Company's breast cancer treatment system. (Tranche: 50,000 shares).


As a Class Z Milestone, the right to acquire Incentive Shares shall be available as to a tranche of 100,000 shares if, as and when the Company has achieved net income of $1,000,000 or more for any fiscal year prior to the Expiration Date.


Nothing in this paragraph shall be read to mean that the Executive shall have the right hereunder to acquire, in the aggregate, more than two hundred fifty (250,000) thousand Incentive Shares.


B. Purchase Price. The Purchase Price per Incentive Share shall be as follows:


On achieving the first Milestone, $2.75 per share;


On achieving the second Milestone, $2.95 per share;


On achieving the third Milestone, $3.15 per share;


On achieving the fourth Milestone, $3.35 per share, and


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On achieving the fifth Milestone, $3.55 per share.


C. Acquisition of Incentive Shares. Executive may acquire Incentive Shares in tranches as set forth as each Milestone is achieved at any time or from time to time on or after the date hereof and so long as he is employed by the Company, but not later than 5:00 p.m. New York time, on the Expiration Date. 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 Incentives 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 Purchase 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


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be required for issuance or delivery as Incentive Shares upon achievement of the Milestones set forth herein.


E. Vesting. Incentive Shares shall vest in the Executive upon issuance.


F. Anti-Dilution Provisions.


(1) Adjustment of Number of Incentive Shares. Anything in this paragraph (F) to the contrary notwithstanding, 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 Purchase 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 Paragraph (F) to the contrary notwithstanding, the Company shall not be required to give effect to any adjustment in the Purchase 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 Purchase Price by at least one cent, such change in the Purchase Price shall thereupon be given effect.


(3) Number of Incentive Shares Adjusted. Upon any adjustment of the Purchase Price other than pursuant to Paragraph (F)(1) hereof, the Executive shall thereafter (until another such adjustment) be entitled to purchase, at the new Purchase


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Price, the number of shares, calculat ...