Item 1.01 Entry into a Material Definitive Agreement.
On
January 10, 2022, Celsion Corporation, a Delaware Corporation (the “Company”), entered into a Securities Purchase Agreement
(the “Purchase Agreement”) with several institutional investors, pursuant to which the Company agreed to issue and sell,
in concurrent registered direct offerings (the “Offerings”), (i) 50,000 shares of the Company’s Series A Convertible
Redeemable Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”), and (ii) 50,000 shares of the Company’s
Series B Convertible Redeemable Preferred Stock, par value $0.01 per share (the “Series B Preferred Stock” and together with
the Series A Preferred Stock, the “Preferred Stock”), in each case at an offering price of $285 per share, representing a
5% original issue discount to the stated value of $300 per share, for gross proceeds of each Offering of $14.25 million, or approximately
$28.50 million in the aggregate for the Offerings, before the deduction of the Placement Agent’s (as defined below) fee and offering
expenses. The shares of Series A Preferred Stock will have a stated value of $300 per share and will be convertible, at a conversion
price of $0.91 per share, into 16,483,516 shares of common stock (subject in certain circumstances to adjustments). The shares of Series
B Preferred Stock will have a stated value of $300 per share and will be convertible, at a conversion price of $1.00 per share, into
15,000,000 shares of common stock (subject in certain circumstances to adjustments). The Series A Preferred Stock and the Series B Preferred
Stock are being offered by the Company pursuant to a registration statement on Form S-3 (File No. 333-254515)
(the “Registration Statement”) filed under the Securities Act of 1933, as amended (the “Securities Act”). The
Purchase Agreement contains customary representations, warranties and agreements by the Company and customary conditions to closing.
The closing of the Offerings is expected to occur on January 13, 2022.
The
Company intends to call a special meeting of stockholders to consider an amendment (the “Amendment”) to the Company’s
Certificate of Incorporation, as amended (the “Charter”), to effect a reverse stock split of the outstanding shares of common
stock (“Common Stock”) by a ratio
to be determined by the Board of Directors of the Company (the “Reverse Stock Split”), ranging from 7-to-1
to, 10-to-1, 12-to-1 or 15-to-1. The Investors
have agreed in the Purchase Agreement to not transfer, offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of the
shares of the Preferred Stock until the Reverse Stock Split, to vote the shares of the Series A Preferred Stock purchased in the Offerings
in favor of such Amendment and to vote the shares of the Series B Preferred Stock purchased in the Offerings in a manner that “mirrors”
the proportions on which the shares of Common Stock (excluding any shares of Common Stock that are not voted) and Series A Preferred
Stock are voted on the Reverse Stock Split and the Amendment. The Amendment requires the approval of the majority of the votes associated
with our outstanding stock entitled to vote on the proposal. Since the Series B Preferred Stock will mirror only votes cast, abstentions
or broker non-votes by common stockholders, which would ordinarily have the effect of a no vote, will not have any effect on the outcome
of the vote.
Pursuant
to the Purchase Agreement, the Company will file two certificates of designation (the “Certificates of Designation”) with
the Secretary of the State of Delaware designating the rights, preferences and limitations of the shares of Preferred Stock. The Certificates
of Designation will provide, in particular, that the Preferred Stock will have no voting rights, other than the right to vote as a class
on certain specified matters, except that (i) each share of Series A Preferred Stock will have the right to vote, on an as converted
basis, on the Reverse Stock Split (together with the Company’s Common Stock and the Series B Preferred Stock as a single class),
and (ii) each share of Series B Preferred Stock will have the right to cast 45,000 votes per share of Series B Preferred Stock on the
Reverse Stock Split.
The
holder of Preferred Stock will be entitled to dividends, on an as-if converted basis, equal to dividends actually paid, if any, on shares
of Common Stock. The Preferred Stock is convertible into shares of Common Stock at a rate of $0.91 per share for the Series A Preferred
Stock and $1.00 per share for the Series B Preferred Stock. The conversion price can be adjusted pursuant to the Certificate of Designation
for stock dividends and stock splits, subsequent rights offerings, pro rata distributions of dividends or the occurrence of a fundamental
transaction (as defined in the applicable Certificate of Designation). The Preferred Stock can be converted at the option of the holder
at any time after the Company has received stockholder approval for the Reverse Stock Split and filed the requisite Amendment with the
Delaware Secretary of State’s office to effectuate the Reverse Stock Split (the “Reverse Stock Split Date”), subject
to beneficial ownership limitations set forth in the applicable Certificate of Designation. In addition, on or after the Reverse Stock
Split Date, and subject to the satisfaction of certain conditions, the Company can cause the holder of the Preferred Stock to convert
their shares of Preferred Stock, subject to such beneficial ownership limitations.
Each
holder of the Preferred Stock shall have the right to cause the Company to redeem all or part of their shares of the Preferred Stock
from the earlier of receipt of stockholder approval of the reverse stock split or of 90 days following the original issue date until
120 days following the original issue date, the “Redemption Date,” in cash at a redemption price equal to 105% of the stated
value plus an amount equal to accumulated but unpaid dividends, if any, on such shares (whether or not earned or declared, but excluding
interest on such dividends) up to, but excluding, the Redemption Date. The proceeds of the Offerings will be held in an escrow account
until the expiration of the redemption period for the Series A Preferred Stock or the Series B Preferred Stock, as applicable, subject
to the earlier payment to redeeming holders. Upon expiration of the redemption period, any proceeds remaining in escrow will be disbursed
to the Company.
In
connection with the Offerings, the Company entered into a placement agent agreement (the “Placement Agent Agreement”) with
A.G.P./Alliance Global Partners, as placement agent (“AGP,” or the “Placement Agent”) pursuant to which the Company
agreed to pay the Placement Agents an aggregate cash fee equal to $1,000,000 and reimburse the Placement Agent for certain of their expenses
in an amount not to exceed $110,000.
The
Placement Agent Agreement contains customary representations, warranties and agreements by the Company, customary conditions to closing,
indemnification obligations of the Company and the Placement Agent, including for liabilities under the Securities Act, other obligations
of the parties and termination provisions.
Under
the Placement Agent Agreement, the Company and its subsidiaries are prohibited, for a period of 90 days after the closing from issuing,
entering into any agreement to issue or announcing any issuance or proposed issuance of common stock, preferred stock or common stock
equivalents, subject to limited exceptions for exempted issuances as defined in the Purchase Agreement.
In
addition, under the Purchase Agreement, to the extent shares of Preferred Stock are outstanding, for a period of 30 days from the date
of the Purchase Agreement, the Company and its subsidiaries are prohibited from (i) issuing entering into any agreement to issue or announce
the issuance or proposed issuance of any shares of common stock or common stock equivalents or (ii) filing any registration statement
or amendment or supplement thereto, other than the Prospectus Supplements for the Offerings (other than a registration statement or amendment
or supplement thereto relating to the issuance or resale of the common stock issuable or issued on conversion of shares of Preferred
Stock). Additionally, to the extent shares of Preferred Stock are outstanding, from the closing date of the Purchase Agreement until
the date that is 120 days thereafter, neither the Company nor any of its subsidiaries may issue any shares of Preferred Stock or other
securities having rights senior to or pari passu with the Preferred Stock.
Further,
from the date of the Purchase Agreement until one year following the Reverse Stock Split Date, the Company is be prohibited from effecting
or entering into an agreement to effect any issuance by the Company or any of its subsidiaries of common stock or common stock equivalents
(or a combination of units thereof) involving a Variable Rate Transaction, as defined in the Purchase Agreement. Also, until the Reverse
Stock Split Date, neither the Company nor any subsidiary may make any issuance whatsoever of common stock or common stock equivalents.
The
above limitations on issuances of stock under the Purchase Agreement do not apply to exempt issuances as defined in the Purchase Agreement.
The
foregoing summaries of the Purchase Agreement and the Placement Agent Agreement do not purport to be complete and are subject to, and
qualified in their entirety by, such documents attached as Exhibits 10.1 and 1.1, respectively, to this Current Report on Form 8-K, which
are incorporated herein by reference.
The
representations, warranties and covenants contained in the Purchase Agreement and the Placement Agent Agreement were made only for purposes
of such agreement and as of specific dates, were solely for the benefit of the parties to the such agreements and are subject to limitations
agreed upon by the contracting parties. Accordingly, the Purchase Agreement and the Placement Agent Agreement are incorporated herein
by reference only to provide investors with information regarding the terms of the Purchase Agreement and the Placement Agent Agreement
and not to provide investors with any other factual information regarding the Company or its business, and should be read in conjunction
with the disclosures in the Company’s periodic reports and other filings with the Securities and Exchange Commission.
The
legal opinions, including the related consent, of Baker & McKenzie LLP relating to the issuance and sale of Series A Preferred Stock
(and the shares of Common Stock issuable upon conversion
of the Series A Preferred Stock) and the Series B Preferred Stock (and the shares of Common
Stock issuable upon conversion of the Series B Preferred Stock) are filed as Exhibit 5.1 and Exhibit
5.2, respectively, hereto.