SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): January 25, 2002
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Celsion Corporation
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(Exact Name of Registrant as Specified in Charter)
Delaware 000-14242 52-1256615
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
10220-I Old Columbia Road, Columbia, Maryland 21046-1705
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (410) 290-5390
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(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events
Settlement of Stearns Litigation
As previously reported, on April 27, 2000, the Company commenced an
action (the "Original Suit") in the United States District Court for the
District of Maryland (the "Maryland Court") against Warren C. Stearns, a former
director of the Company ("W.C. Stearns"), Mr. Stearn's management company and a
number of his affiliates, family members and colleagues (collectively, the
"Original Defendants"), who held warrants (the "Original Warrants") for the
purchase of approximately 4.1 million shares of the Company's Common Stock at
$0.41 per share. On January 18, 2001, the Maryland Court transferred the case to
the United States District Court for the Northern District of Illinois, in
Chicago (the "Chicago Court"). On July 17, 2001, the Company filed a motion to
amend its complaint to add a second count, alleging that Mr. Stearns, on behalf
of himself and the other Original Defendants, had executed a Mutual Release
which released any right the Original Defendants had to exercise the warrants
("Count II"). The motion was granted on July 19, 2001.
On August 9, 2001, the Original Defendants filed a counterclaim (the
"Counterclaim") against the Company, certain of its officers and directors, and
an attorney and law firm that previously had represented the Company. On
September 10, 2001, the Chicago Court dismissed, with prejudice, Count I of the
Complaint. On November 23, 2001, the Company and certain of its officers and
directors filed a motion to dismiss the Counterclaim.
On January 25, 2002, the Company and Augustine Y. Cheung, Spencer J.
Volk, Walter B. Herbst, LaSalle D. Leffall, Claude Tihon, John Mon, Max E. Link
(all of whom are present or former officers and/or directors of the Company),
George Bresler, Bresler, Goodman & Unterman LLP and The George Bresler Trust on
the one hand (collectively, the "Company Parties"), and Stearns Management
Company, Anthony Riker, Ltd., John T. Horton, The George T. Horton Trust, Warren
R. Stearns, Charles A. Stearns, and W.C. Stearns (collectively, the "Stearns
Parties"), on the other hand, entered into a settlement agreement (the
"Settlement Agreement"). Pursuant to the Settlement Agreement, the Company,
among other things, has agreed (a) to pay to W.C. Stearns the lesser of (i) the
Stearns Parties' actual legal fees, costs and expenses incurred in connection
with the Original Suit, the Counterclaim and the Settlement Agreement or (ii)
$265,000; (b) to issue to the Stearns Parties warrants (the "Settlement
Warrants") to purchase a total of 6,325,821 shares of the Company's Common
Stock, at an exercise price of $0.01 per share; and (c) to register for resale
the shares underlying the Settlement Warrants. The Settlement Warrants are in
replacement of the Original Warrants, the validity of which was at issue in the
Original Suit. However, while the Original Warrants, among other things,
contained antidilution provisions ensuring the Stearns Parties the right to
purchase 4.6875% of the Company's Common Stock, on a fully diluted basis, until
completion of the Company's next public offering (as defined) and a renewal
right at the election of the holder, the Settlement Warrants contain no such
provisions. In addition, pursuant to the Settlement Agreement, the Company
Parties, on the one hand, and the Stearns Parties, on the other, unconditionally
released one another from any and all claims arising prior to the effective date
of the Settlement Agreement and agreed to dismiss, with prejudice, the Original
Suit, including the Counterclaim.
The Settlement Agreement has the effect of fully and finally resolving
the matters in dispute in the Original Suit and the Counterclaim between the
Company Parties, on the one hand, and the Stearns Parties, on the other hand.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CELSION CORPORATION
Date: JANUARY 28, 2002 By: /s/ Anthony P. Deasey
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Anthony P. Deasey
Senior Vice President - Finance and
Chief Financial Officer
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