Item
1.01. Entry into Material Definitive Agreement
On
September 8, 2020, Celsion Corporation (the “Company” or “we”, “our” or “us”)
entered into a Purchase Agreement (the “Purchase Agreement”) and a Registration Rights Agreement (the “Registration
Rights Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which, upon the terms and
subject to the conditions and limitations set forth therein, the Company has the right to sell to Lincoln Park up to $26.0 million
of shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), at the Company’s
discretion as described below (the “Offering”).
Over
the 36-month term of the Purchase Agreement, we have the right, but not the obligation, from time to time, in our sole discretion
and subject to certain conditions, including that the closing price of our Common Stock is not below $0.25 per share, to direct
Lincoln Park to purchase up to an aggregate amount of $26.0 million (subject to certain limitations) of shares of Common Stock.
Under the Purchase Agreement, on any business day selected by us, we may direct Lincoln Park to purchase up to 400,000 shares
(the “Regular Purchase Share Limit”) of our Common Stock (each such purchase, a “Regular Purchase”). Lincoln
Park’s maximum obligation under any single Regular Purchase will not exceed $1,500,000, unless we mutually agree to increase
the maximum amount of such Regular Purchase. The purchase price for shares of Common Stock to be purchased by Lincoln Park under
a Regular Purchase will be the equal to the lower of (in each case, subject to the adjustments described in the Purchase Agreement):
(i) the lowest sale price for our Common Stock on The Nasdaq Capital Market on the applicable purchase date, and (ii) the arithmetic
average of the three lowest sale prices for our Common Stock on The Nasdaq Capital Market during the ten trading days prior to
the purchase date.
If
we direct Lincoln Park to purchase the maximum number of shares of Common Stock we then may sell in a Regular Purchase, then in
addition to such Regular Purchase, and subject to certain conditions and limitations in the Purchase Agreement, we may direct
Lincoln Park to make an “accelerated purchase” of an additional amount of Common Stock that may not exceed the lesser
of (i) 300% of the number of shares purchased pursuant to the corresponding Regular Purchase and (ii) 30% of the total number
of shares of our Common Stock traded on The Nasdaq Capital Market during a specified period on the applicable purchase date as
set forth in the Purchase Agreement. Under certain circumstances and in accordance with the Purchase Agreement, the Company may
direct Lincoln Park to purchase shares in multiple accelerated purchases on the same trading day.
The
Purchase Agreement prohibits us from issuing or selling to Lincoln Park under the Purchase Agreement: (i) in excess of 6,688,588
shares of our Common Stock (the “Exchange Cap”), unless we obtain stockholder approval to issue shares in excess of
the Exchange Cap or the average price of all applicable sales of our Common Stock to Lincoln Park under the Purchase Agreement
equal or exceed the lower of (a) the Nasdaq Official Closing Price (as defined in the Purchase Agreement) immediately preceding
the execution of the Purchase Agreement or (b) the average of the five Nasdaq Official Closing Prices for the Common Stock immediately
preceding the execution of the Purchase Agreement, as adjusted in accordance with the rules of The Nasdaq Capital Market, and
(ii) any shares of our Common Stock if those shares, when aggregated with all other shares of our Common Stock then beneficially
owned by Lincoln Park and its affiliates would result in Lincoln Park and its affiliates having beneficial ownership of more than
9.99% of the then total outstanding shares of our Common Stock.
The
Purchase Agreement does not limit our ability to raise capital from other sources at our sole discretion, except that we may not
enter into any equity line or similar transaction for 36 months, other than an “at-the-market” offering. The Purchase
Agreement and the Registration Rights Agreement contain customary representations, warranties and agreements of us and Lincoln
Park, indemnification rights and other obligations of the parties. We have the right to terminate the Purchase Agreement at any
time on one business day’s notice to Lincoln Park, at no cost to us.
As
consideration for entering into the Purchase Agreement, we are issuing 437,828 shares of our Common Stock to Lincoln Park (the
“Commitment Shares”). We will not receive any cash proceeds from the issuance of the Commitment Shares. Also pursuant
to the Purchase Agreement, Lincoln Park has agreed to an initial purchase of 1,000,000 shares of our Common Stock for an aggregate
purchase price of $1,000,000 or $1.00 per share. Lincoln Park has covenanted not to cause or engage in any manner whatsoever,
any direct or indirect short selling or hedging of our shares of Common Stock.
The
Offering is being made pursuant to our effective Registration Statement on Form S-3 (File No. 333-227236) (the “Registration
Statement”), which was previously filed with the SEC on September 7, 2018, and declared effective by the SEC on October
12, 2018, and the prospectus supplement related to the Offering filed with the SEC on September 8, 2020. Pursuant to the Registration
Rights Agreement, under certain circumstances, if the Registration Statement is no longer available for use with respect to the
Offering, we will be required to file additional registration statement(s).
We
expect to use the proceeds from the Offering for continued research and development initiatives in connection with our product
pipeline and for general corporate purposes.
The
foregoing description of the Purchase Agreement and the Registration Rights Agreement does not purport to be complete and is qualified
in its entirety by reference to the full text of the Purchase Agreement and the Registration Rights Agreement, which are attached
hereto as Exhibit 10.1 and 4.1, respectively, and incorporated by reference herein.
This
Current Report on Form 8-K shall not constitute an offer to sell or the solicitation of an offer to buy the shares, nor shall
there be any offer, solicitation or sale of the shares in any state or country in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws of any such state or country.