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CERTIFICATE OF THE DESIGNATIONS, POWERS,
PREFERENCES AND RIGHTS
OF THE
SERIES B 8% CONVERTIBLE PREFERRED STOCK
(PAR VALUE $0.01 PER SHARE)
OF
CELSION CORPORATION
------------------------
(A DELAWARE CORPORATION)
PURSUANT TO SECTION 151 OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
-----------------
CELSION CORPORATION, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), by its
President,
DOES HEREBY CERTIFY:
FIRST: That, pursuant to authority expressly vested in the Board of
Directors of the Corporation by the provisions of its Certificate of
Incorporation, the Board of Directors duly adopted the following resolution
providing for the designation and issuance of up to Five Thousand (5,000) shares
of Series B 8% Convertible Preferred Stock, $0.01 par value:
RESOLVED, that this Board of Directors, pursuant to
authority expressly vested in it by the provisions of the
Certificate of Incorporation of the Corporation, hereby
authorizes the issue from time to time of a series of
Preferred Stock of the Corporation and hereby fixes the
designation, preferences, and the relative, participating,
optional or other rights, and the qualifications, limitations
or restrictions thereof, in addition to those set forth in the
Corporation's Certificate of Incorporation, to be in their
entirety as follows:
1. Designation, Par Value and Number of Shares.
The formal designation of the shares shall be "Series B 8%
Convertible Preferred Stock" (referred to herein for convenience as "Series B
Preferred Stock" or as "Preferred B Shares"). The par value of Series B
Preferred Stock is $0.01 per share. The Series B Preferred Stock shall consist
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of Five Thousand (5,000) shares.
2. Liquidation Preference and Ranking.
(a) Upon any voluntary or involuntary liquidation, dissolution
or winding up of the business and affairs of the Corporation, and before the
holders of shares of the Corporation's common stock, par value $0.01 per share
(the "Common Stock") or any other class or series of stock of the Corporation
ranking junior in liquidation to the Series B Preferred Stock shall be entitled
to any payment on account of such shares, the holders of Series B Preferred
Stock then outstanding shall be entitled to receive, as a liquidation
preference, an amount equal to One Thousand Dollars ($1,000) per share (the
"Original Cost"), plus any accrued but unpaid dividends (the Original Cost plus
such dividends being referred to as the "Liquidation Preference") to which such
stockholders have become entitled and which have not theretofore been paid.
After the holders of Series B Preferred Stock shall have received such payment
of the Liquidation Preference plus all accrued and unpaid dividends in the
course of such liquidation, dissolution or winding up, they shall have no right
or claim to any of the remaining assets of the Corporation.
(b) If, upon any liquidation, dissolution or winding up, the
Corporation shall have insufficient funds to permit payment to the holders of
Series B Preferred Stock then outstanding of the entire amount to which they are
entitled as a Liquidation Preference, then such funds as are available for such
purpose shall be distributed among such holders on the basis of the number of
shares of Series B Preferred Stock held by each such holder so that, as nearly
as may be practicable, the amount each such holder shall receive shall represent
the same proportion of such available funds as such holder's total holding of
shares of Series B Preferred Stock represents of the total shares of Series B
Preferred Stock outstanding at the time.
(c) For all purposes under this Certificate of Designations,
all shares of Series B Preferred Stock shall be of equal rank with each other.
(d) For all purposes under this Certificate of Designations,
shares of Series B Preferred Stock shall rank in parity with shares of the
Corporation's Series A 10% Convertible Preferred Stock.
3. Dividends.
(a) The holders of Series B Preferred Stock shall be entitled
to receive, when, as and if declared by the Board of Directors of the
Corporation, out of capital surplus or earnings at the time legally available
therefor, dividends at the annual rate of eight percent (8%) per share, payable
in fully-paid and non-assessable shares of Series B Preferred Stock which shall
be valued, for this purpose, at an amount equal to the Original Cost (as
adjusted in a manner similar to that provided for the Conversion Price in
Section 9(a), as applicable). Dividends shall accrue, whether or not declared,
unless such dividends are then prohibited by the provisions of the Delaware
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General Corporation Law or the Corporation's Certificate of Incorporation.
(b) Dividends shall be cumulative and shall be payable
semi-annually on December 31 and on June 30 commencing with December 31, 2002,
to stockholders of record on the immediately preceding December 15th and June
15th, respectively, or such other record date as may be fixed for that purpose
by the Board of Directors; provided, however, that if December 15th or June 15th
shall not be a business day and the Board of Directors shall not fix another
record date, the record date shall be the next succeeding business day.
Dividends payable with respect to any shares of Series B Preferred Stock for the
initial dividend period and for any period less than a full six-month period
shall accrue from the date of issuance of such shares of Series B Preferred
Stock on which such dividends are payable, and shall be computed and apportioned
on the basis of a 180-day period composed of six 30-day months. Holders of
Series B Preferred Stock shall not be entitled to any dividends in excess of the
full dividends provided for herein, and no interest or sum of money in lieu of
interest shall be payable in respect of any dividend payment which may be in
arrears. No dividends shall be payable on any fractional or full shares of
Series B Preferred Stock which shall have been declared, paid or distributed as
dividends on outstanding Preferred B Shares.
4. No Dividends or Distributions to Junior Securities.
Except as may be otherwise provided in this Certificate of
Designations, so long as any shares of Series B Preferred Stock are outstanding,
no dividends shall be declared or paid or set aside for payment, and no other
distribution shall be declared or made, upon any Common Stock of the Corporation
or upon any other shares of a class or series of stock which is junior in right
and ranking to the Series B Preferred Stock, unless all amounts then due to the
holders of Series B Preferred Stock, including the dividends provided for
herein, have been paid.
5. Voting Rights.
Except as otherwise expressly provided herein or as required
by law, the Series B Preferred Stock shall have no voting rights. However,
notwithstanding the foregoing, the written consent or affirmative vote of the
holders of a majority of the outstanding shares of Series B Preferred Stock is
required to approve (i) any proposed amendment to the Certificate of
Incorporation of the Corporation that would materially alter or change the
powers, preferences, or special rights of the Series B Preferred Stock so as to
affect the holders adversely, and (ii) any plan of merger or consolidation that
contains provisions which, if contained in a proposed amendment to the
Certificate of Incorporation of the Corporation, would have entitled the holders
of the Series B Preferred Stock to vote, as a class, on the issue.
6. Elective Conversion.
The holders of shares of Series B Preferred Stock shall have the
following conversion rights:
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(a) Subject to the terms and conditions of this Section 6, the
holder of any share or shares of Series B Preferred Stock shall have the right,
at such holder's option at any time commencing with September 3, 2002, to
convert any such shares of Series B Preferred Stock (except that upon any
liquidation of the Corporation the right of conversion shall terminate at the
close of business on the business day fixed for payment of the amount
distributable on the Series B Preferred Stock) into such number of fully paid
and nonassessable shares of the Corporation's Common Stock as is obtained by (i)
multiplying the number of shares of Series B Preferred Stock so to be converted
by One Thousand Dollars ($1,000) and (ii) dividing the result by the conversion
price of Fifty Cents ($0.50) per share or, in case an adjustment of such price
has taken place pursuant to the further provisions hereof, then by the
conversion price as last adjusted and in effect at the date any such share or
shares of Series B Preferred Stock are surrendered for conversion; provided,
that, in no event shall such conversion price be less than $0.01 per share (such
price, or such price as last adjusted, being referred to as the "Conversion
Price").
(b) The conversion right provided under paragraph (a) of this
Section 6 shall be exercised by a holder of the Preferred B Shares subject to
conversion by delivering to the Corporation, during regular business hours, or
to such agent as may be designated by the Corporation, the original certificate
or certificates for the Preferred B Shares to be converted, duly endorsed or
assigned either in blank or to the Corporation, accompanied by written notice in
substantially the form attached hereto as Exhibit A, stating that the holder
elects to convert such Preferred B Shares (or the number of such Preferred B
Shares as to which the conversion right is to be exercise) and stating the name
or names (with address and Social Security or Federal Taxpayer Identification
Number) in which the certificate or certificates for the shares of Common Stock
are to be issued. Conversion shall be deemed to have been effected on the date
when the aforesaid delivery is made (the "Conversion Date").
(c) As promptly as practicable after the receipt of the
written notice referred to in Section 6(b) and surrender of the certificate or
certificates for the share or shares of Series B Preferred Stock to be
converted, the Corporation shall issue and deliver to such holder (or upon the
written order of such holder) to the place designated by such holder, a
certificate or certificates for the number of shares of Common Stock to which
such holder is entitled as a consequence of such conversion. To the extent
permitted by law, the person in whose name the certificate or certificates for
Common Stock are to be issued shall be deemed to have become a stockholder of
record on the applicable Conversion Date unless the transfer books of the
Corporation are closed on that date, in which event such person shall be deemed
to have become a stockholder of record on the next succeeding business day on
which the transfer books are open and, at such time, the rights of the holder of
such Preferred B Share or Shares shall cease.
(d) All shares of Series B Preferred Stock which shall have
been surrendered for conversion shall no longer be deemed to be outstanding, and
all rights with respect to such shares, including the rights, if any, to receive
notices and to vote, shall immediately cease and terminate on the Conversion
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Date, with respect to Preferred B Shares which have been converted, except only
the right of the holders thereof to receive shares of Common Stock in conversion
therefor. Any shares of Series B Preferred Stock so converted shall be retired
and canceled and shall not be reissued, and the Corporation (without the need
for stockholder action) may from time to time take such appropriate action as
may be necessary to reduce the authorized number of shares of Series B Preferred
Stock accordingly.
7. Mandatory Redemption. The Corporation shall have the follow-
ing rights to redeem shares of Series B Preferred Stock:
(a) Subject to the terms and conditions of this Section 7, the
Corporation shall have the right (the "Redemption Right"), at its option at any
time (except that, upon any liquidation of the Corporation, the Redemption Right
shall terminate at the close of business on the business day fixed for payment
of the amount distributable on the Series B Preferred Stock), to redeem and
require the conversion of all or a portion of the Preferred B Shares then
outstanding for and into such number of fully paid and nonassessable shares of
Common Stock (the "Redemption Stock") as is obtained by (i) multiplying the
number of shares of Series B Preferred Stock so to be converted and redeemed by
One Thousand Dollars ($1,000) and (ii) dividing the result by the Conversion
Price. In the event that the Corporation elects to exercise its Redemption Right
as to fewer than all of the Preferred B Shares then outstanding, Preferred B
Shares shall be redeemed ratably (based on the number of shares held thereby and
the total number of Preferred B Shares then outstanding) from each holder
thereof.
(b) At least twenty (20) calendar days prior to the date
selected by the Board of Directors as the effective date for the exercise of its
Redemption Right pursuant to this Section 7 (a "Redemption Date") the
Corporation shall give notice (a "Redemption Notice") to each holder of record
(at the close of business on the business day next preceding the day on which
the Redemption Notice is given) of shares of Series B Preferred Stock notifying
such holder of the redemption and specifying the Redemption Date, the number of
shares of Series B Preferred Stock to be redeemed from such holder, the number
of shares of Redemption Stock issuable thereto in respect thereof and the place
where said Redemption Price shall be payable. The Redemption Notice shall be
addressed to each holder at such holder's address as shown by the records of the
Corporation.
(c) For a period of ten (10) calendar days following the
delivery of the Redemption Notice, each holder of Series B Preferred Stock shall
have the right to designate, by means of a notice substantially in the form of
Exhibit B hereto, the name or names (with address and Social Security or Federal
Taxpayer Identification Number) in which the certificate or certificates for the
shares of Redemption Stock are to be issued. In the event that any holder shall,
for any reason, fail to make such designation as to some or all of the shares of
Redemption Stock issuable thereto, all shares of Redemption Stock not subject to
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valid and timely designation shall be issued in the name of the holder of the
Series B Preferred Stock subject to the Redemption Right.
(d) From and after the close of business on a Redemption Date,
unless there shall have been a default in issuance of the Redemption Stock as
required hereby, all rights of holders of shares of Series B Preferred Stock
(except the right to receive the Redemption Stock) shall cease with respect to
the shares to be redeemed on such Redemption Date, and such shares shall be
retired and canceled and shall not be reissued, and the Corporation (without the
need for stockholder action) may from time to time take such appropriate action
as may be necessary to reduce the authorized number of shares of Series B
Preferred Stock accordingly.
8. Provisions Applicable to Conversions and Redemptions.
(a) No fractional shares of Common Stock shall be issued upon
conversion or redemption of shares of Series B Preferred Stock into or for
shares of Common Stock or Redemption Stock, and the number of shares of Common
Stock or Redemption Stock to be delivered upon such conversion or redemption, in
lieu of delivering any fractional share, shall be rounded to the nearest whole
share (with .5 shares rounded up or down to the even number of shares). Upon
conversion of only a portion of the number of shares covered by a certificate
representing shares of Series B Preferred Stock surrendered for conversion or
upon the written order of the holder of the certificate surrendered for
conversion, the Corporation shall issue and deliver to such holder, at the
expense of the Corporation, a new certificate covering the number of shares of
Series B Preferred Stock representing the unconverted portion of the certificate
so surrendered. Upon redemption of only a portion of the number of shares
covered by a certificate representing shares of Series B Preferred Stock, the
certificate or certificates representing the Preferred B Shares so redeemed
shall, from and after the Redemption Date, be deemed for all purposes to
represent that number of shares of Series B Preferred Stock not subject to
redemption and such certificate or certificates shall be deemed canceled, and of
no further effect with respect to shares redeemed; provided, however, that the
Corporation shall, upon surrender to it or to such agent as may be designated by
the Corporation of the original certificate or certificates for the Preferred B
Shares to be redeemed or upon the written order of the holder of the certificate
so surrendered, issue and deliver to the holder of any shares of Series B
Preferred Stock, at the expense of the Corporation, a new certificate covering
the number of shares of Series B Preferred Stock representing the unredeemed
portion of the certificate so surrendered.
(b) The Corporation shall, at all times when Series B
Preferred Stock shall be outstanding, reserve and keep available out of its
authorized but unissued Common Stock, for the purpose of effecting the
conversion or redemption of Series B Preferred Stock, such number of its duly
authorized shares as shall from time to time be sufficient to effect the
conversion or redemption of all outstanding shares of Series B Preferred Stock.
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(c) All shares of Common Stock (including Redemption Stock)
which may be issued in connection with the conversion or redemption provisions
set forth herein will, upon issuance by the Corporation, be validly issued,
fully paid and non-assessable. No adjustment shall be made for dividends on any
share of Series B Preferred Stock which is being converted or redeemed (unless
such dividends have been accrued and are unpaid as of the Conversion or
Redemption Date) or on any share of Common Stock (including Redemption Stock)
issued on exercise of a holder's conversion right or the Corporation's
Redemption Right as provided herein.
(d) The Corporation shall pay any and all issue and other
taxes that may be payable in respect of any issuance or delivery of shares of
Common Stock (including Redemption Stock) upon conversion or redemption of
shares of Series B Preferred Stock pursuant hereto. The Corporation shall not,
however, be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of shares of Common Stock
(including Redemption Stock) in a name other than that in which the shares of
Series B Preferred Stock so converted or redeemed were registered, and no such
issuance or delivery shall be made unless and until the person or entity
requesting such issuance has paid to the Corporation the amount of any such tax
or has established, to the satisfaction of the Corporation, that such tax has
been paid.
9. Adjustments to Conversion Price.
(a) The Conversion Price (which is initially established at
Fifty Cents ($0.50) per share of Common Stock (including Redemption Stock)) in
effect from time to time shall be subject to adjustment (to the nearest cent)
from time to time as follows:
(i) If the Corporation, at any time after June 1,
2002 and at any time prior to the conversion of a Preferred Share shall have
subdivided its outstanding shares of Common Stock by recapitalization, reclassi
fication or split-up thereof, or if the Corporation shall have declared a stock
dividend or distributed shares of Common Stock to its stockholders, the
Conversion Price immediately prior to such conversion shall be proportionately
increased; and, if the Corporation, prior to such conversion, shall have at any
time combined the outstanding shares of Common Stock by recapitalization, re
classification or comparable combination thereof, the Conversion Price
immediately prior to such conversion shall be proportionately increased.
(ii) In case the Corporation, after June 1, 2002,
shall consolidate with or merge into another corporation or convey all or
substantially all of its assets to another corporation, then, and in each such
case, the Conversion Price shall be adjusted in such manner that the holder of
Preferred B Shares, upon the conversion or redemption thereof as provided
herein, at any time after the consummation of such consolidation, merger or
conveyance, shall be entitled to receive the securities or property to which
such holder would have been entitled upon such consummation if such holder had
exercised his right to convert such Preferred B Shares immediately prior
thereto.
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(b) Any provision of this Section 9 to the contrary
notwithstanding, no adjustment of the Conversion Price shall be made if the
amount of such adjustment would be less than One Cent ($0.01) per share;
provided, however, that any such adjustment shall be carried forward and an
adjustment with respect thereto shall be made at such time, if any, as any
subsequent adjustment(s) together with such carried-forward adjustment(s) result
in an aggregate adjustment of One Cent ($0.01) or more.
(c) Upon any adjustment of the Conversion Price, then and in
each such case, other than as provided in paragraph (b) above, the Corporation's
chief financial officer shall give written notice thereof to each holder of
shares of Series B Preferred Stock at the address of such holder as shown on the
books of the Corporation, which notice shall state the Conversion Price
resulting from such adjustment, setting forth in reasonable detail the method
upon which such calculation is based.
10. General.
(a) The Corporation shall not amend, alter or repeal the
preferences, special rights or other powers of the Series B Preferred Stock so
as to affect adversely the Series B Preferred Stock, without the written consent
or affirmative vote of the holders of a majority of the then outstanding shares
of Series B Preferred Stock, given in writing or by vote at a meeting,
consenting or voting (as the case may be) separately as a class, in accordance
with applicable law. Without limiting the generality of the foregoing, the
authorization of any shares of capital stock with preference or priority over
the Series B Preferred Stock as to the right to receive either dividends or
amounts distributable upon liquidation, dissolution or winding up of the
Corporation shall be deemed to affect adversely the Series B Preferred Stock,
and the authorization of any shares of capital stock on a parity with Series B
Preferred Stock as to the right to receive either dividends or amounts
disbributable upon liquidation, dissolution or winding up of the Corporation
shall not be deemed to affect adversely the Series B Preferred Stock.
(b) The number of authorized shares of Series B Preferred
Stock may be increased (but only for the purpose of providing a sufficient
number of authorized Preferred B Shares for the payment of dividends on
outstanding Preferred B Shares) or decreased (but not below the number of shares
then outstanding) by the directors of the Corporation.
(c) Any of the rights of the holders of Series B Preferred
Stock set forth herein may be waived by the affirmative vote of the holders of a
majority of the shares of Series B Preferred Stock then outstanding, which vote
may be taken by written consent or at a meeting of the holders of Preferred B
Shares.
11. Notices.
(a) Any notices required to be given to any holder of Series B
Preferred Stock shall be deemed properly given if deposited in the United States
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mail, postage prepaid, or sent by facsimile or by overnight or express delivery
service, or by electronic mail or similar electronic transmission, followed by
duplicate notice via United States first class mail, postage prepaid, and
addressed to the holder of record at such holder's address appearing at the
books of the Corporation.
(b) In case of any (i) capital reorganization of the
Corporation, reclassification, of the capital stock of the Corporation,
consolidation or merger of the Corporation with or into another corporation, or
conveyance of all or substantially all of the assets of the Corporation to
another corporation; (ii) voluntary or involuntary dissolution, liquidation or
winding up of the Corporation; or (iii) other event specified in this
Certificate of Designations or pursuant to applicable law requiring the taking
of such a record, then, and in each such case, the Corporation shall mail or
cause to be mailed to each holder of shares of Series B Preferred Stock a notice
specifying, as the case may be, the date on which a record is to be taken for
the foregoing purposes and providing the information reasonably required in
order enable to holders of record of Preferred B Shares to exercise the rights
conferred by this Certificate of Designations.
SECOND: That such determination of the designation,
preferences and the relative, participating, optional or other rights, and the
qualifications, limitations or restrictions thereof, relating to said Series B
Preferred Stock, was duly made by the Board of Directors pursuant to the
provisions of the Certificate of Incorporation of the Corporation, and in
accordance with the provisions of Section 151 of the General Corporation Law of
the State of Delaware, as amended.
[SIGNATURE PAGE FOLLOWS.]
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IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designations for its Series B 8% Convertible Preferred Stock to be duly executed
by its President and by its Secretary, respectively, this 28th day of May, 2002.
CELSION CORPORATION
By: /s/ Augustine Y. Cheung
-----------------------------------------
Augustine Y. Cheung
President and Chief Executive Officer
ATTEST
/s/ John Mon
-------------------
John Mon, Secretary
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Exhibit A
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CELSION (DELAWARE) CORPORATION
NOTICE OF CONVERSION OF
SERIES B 8% CONVERTIBLE PREFERRED STOCK
(To be Executed by the Registered Holder in order to convert the Series B
Preferred Stock)
The undersigned Holder hereby irrevocably elects to convert
___________shares of the Series B 8% Convertible Preferred Stock (the "Series B
Preferred Stock") of Celsion Corporation, a Delaware corporation (the
"Corporation") represented by stock certificate No(s). ________________
_______________________________ (the "Preferred Stock Certificates") into shares
of common stock ("Common Stock") of the Corporation according to the conditions
set forth in the Certificate of Designations for Series B Preferred Stock, as of
the date written below. If shares are to be issued in the name of a person other
than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto and is delivering herewith such certificates. No fee will be
charged to the Holder for any conversion, except for transfer taxes, if any. A
copy of each of the Preferred Stock Certificates being converted is attached
hereto.
Date of Submission: ___________________________________________________________
Number of Share of Series B 8% Convertible Preferred Stock to be Converted: ____
Name of Holder:_________________________________________________________________
By:_____________________________________________________________________________
Title:__________________________________________________________________________
Address:________________________________________________________________________
Social Security or Federal Taxpayer ID No: _____________________________________
IMPORTANT
No shares of Common Stock will be issued until the original Series B Preferred
Stock Certificates(s) to be converted and the Notice of Conversion are received
by the Corporation. The Holder shall fax, or otherwise deliver, a copy of this
completed and fully executed Notice of Conversion to the Corporation at the
office of the Corporation or such other location designated by the Corporation
and shall deliver, at the same time, the original Preferred Stock Certificate(s)
representing the Series B Preferred Stock being converted, duly endorsed for
transfer.
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Exhibit B
---------
CELSION (DELAWARE) CORPORATION
NOTICE OF NAME AND ADDRESS OF
TRANSFEREE OF SHARES OF REDEMPTION STOCK
In accordance with Section 7 of the Certificate of Designations, the
Corporation has exercised its redemption right and the undersigned holder of
shares of the Corporation's Series B 8% Convertible Preferred Stock (the "Series
B Preferred Stock") subject to such redemption right desires to have the shares
of Common Stock of the Corporation, par value $0.01 per share, issued pursuant
to such redemption (the "Redemption Shares") issued in the name of a person
other than the undersigned. The undersigned desires to have the Redemption
Shares issued to the individual or entity identified below. The undersigned will
pay all transfer taxes payable with respect thereto and is delivering herewith
such certificates (the "Preferred Stock Certificates") representing the shares
of Series B Preferred Stock subject to redemption. No fee will be charged to the
undersigned holder for redemption, except for transfer taxes, if any. A copy of
each of the Preferred Stock Certificates being redeemed is attached hereto.
Date of Submission: ___________________________________________________________
Name of Holder:_________________________________________________________________
By:_____________________________________________________________________________
Title:__________________________________________________________________________
Address:________________________________________________________________________
Social Security or Federal Taxpayer ID No: _____________________________________
IMPORTANT
No shares of Common Stock will be issued until the original Series B
Preferred Stock Certificates(s) representing the Series B Preferred Stock being
redeemed, duly endorsed for transfer, are received by the Corporation.
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