Note

Note Payable

November 2013,

the Company entered into a loan agreement with Hercules Technology Growth Capital, Inc. (Hercules) which permits up to

$20

million in capital to be distributed in multiple tranches (the Hercules Credit Agreement). The Company drew the

first

tranche of

million upon closing of the Hercules Credit Agreement in

November 2013

and used approximately

million of the proceeds to repay the outstanding obligations under its loan agreement with Oxford Finance LLC and Horizon Technology Finance Corporation as discussed further below. On

June 10, 2014,

the Company closed the

second

million tranche under the Hercules Credit Agreement. The proceeds were used to fund the

$3.0

million upfront cash payment associated with Celsion's acquisition of EGEN, as well as the Company’s transaction costs associated with the EGEN acquisition. Upon the closing of this

second

tranche, the Company has drawn down a total of

$10

million under the Hercules Credit Agreement.

The obligations under the Hercules Credit Agreement were in the form of secured indebtedness bearing interest at a calculated prime-based variable rate (

11.25%

per annum since inception through

December 17, 2015

and

11.50%

since). Payments under the loan agreement were interest only for the

first

twelve

months after loan closing, followed by a

-month amortization period of principal and interest through the scheduled maturity date of

June 1, 2017.

In connection with the Hercules Credit Agreement, the Company incurred cash expenses of

$122,378.

Also in connection with the Hercules Credit Facility, the Company paid loan origination fees of

$230,000.

Collectively, these deferred fees have been classified as a direct deduction from the debt liability consistent with the presentation of a debt discount and are being amortized as interest expense using the effective interest method over the life of the loan.

As a fee in connection with the Hercules Credit Agreement, the Company issued Hercules a warrant for a total of

6,963

shares of the Company’s common stock (the Hercules Warrant) at a per share exercise price of

$50.26,

exercisable for cash or by net exercise from

November 25, 2013.

Upon the closing of the

second

tranche on

June 10, 2014,

this warrant became exercisable for an additional

6,963

shares of the Company’s common stock. The Hercules Warrant will expire

November 25, 2018.

Hercules has certain rights to register the common stock underlying the Hercules Warrant pursuant to a Registration Rights Agreement with the Company dated

November 25, 2013.

The registration rights expire on the date when such stock

may

be sold under Rule

144

without restriction or upon the

first

year anniversary of the registration statement for such stock, whichever is earlier. The common stock issuable pursuant to the Hercules Warrant was filed pursuant to Rule

415

under the Securities Act of

1933

on the Prospectus for Registration Statement

No.

333

193936

and was declared effective on

September 30, 2014.

The Company valued the Hercules Warrants issued using the Black-Scholes option pricing model and recorded a total of

$476,261

as a direct deductions from the debt liability consistent with the presentation of a debt discount and are being amortized as interest expense using the effective interest method over the life of the loan. Also in connection with each of the

$5.0

million tranches, the Company is required to pay an end of term charge equal to

3.5%

of each original loan amount at time of maturity. Therefore, these amounts totaling

$350,000

were amortized as interest expense using the effective interest method over the life of the loan.

The loan balance and end of term charges on the Hercules Credit Agreement was paid in full in

June 2017.

For the

three

month periods ended

June 30, 2017

and

2016,

the Company incurred

$11,731

and

$136,438

in interest expense, respectively, and amortized

$17,685

and

$66,915,

respectively as interest expense for deferred fees, debt discount and end of term charges in connection with the Hercules Credit Agreement. For the

six

month periods ended

June 30, 2017

and

2016,

the Company incurred

$56,386

and

$301,996

in interest expense, respectively, and amortized

$35,370

and

$145,586,

respectively as interest expense for deferred fees, debt discount and end of term charges in connection with the Hercules Credit Agreement.

The Hercules Credit Agreement contains customary covenants, including covenants that limit or restrict the Company’s ability to grant liens, incur indebtedness, make certain restricted payments, merge or consolidate and make dispositions of assets. Upon the occurrence of an event of default under the Hercules Credit Agreement, the lenders

may

cease making loans, terminate the Hercules Credit Agreement, declare all amounts outstanding to be immediately due and payable and foreclose on or liquidate the Company’s assets that comprise the lenders’ collateral. The Hercules Credit Agreement specifies a number of events of default (some of which are subject to applicable grace or cure periods), including, among other things, non-payment defaults, covenant defaults, a material adverse effect on the Company or its assets, cross-defaults to other material indebtedness, bankruptcy and insolvency defaults and material judgment defaults. The Company has maintained compliance with these covenants.