Exhibit 10.40

LEAK-OUT AGREEMENT

December __, 2018

This agreement (the “Leak-Out Agreement”) is being delivered to you in
connection with an understanding by and among Delcath Systems, Inc., a Delaware
corporation (the “Company”), and the person or persons named on the signature
pages hereto (collectively, the “Holder”).

Reference is hereby made to (a) that certain Warrant Exchange Agreement, dated
December __, 2018 (the “Warrant Exchange Agreement”), by and between the Company
and the Holder, pursuant to which, among other things, the Holder (in its
capacity as a holder of certain Existing Warrants (as defined in the Warrant
Exchange Agreement”), acquired certain shares of Common Stock (“Shares”) in
exchange for such Existing Warrants (the “Warrant Exchange”). Capitalized terms
not defined herein shall have the meaning as set forth in the Warrant Exchange
Agreement.

The Holder agrees solely with the Company that from the date of issuance of the
Shares to the Holder (the “Effective Date”) and ending at 4:00 pm (New York City
time) on ________ __, 20__ (such period, the “Restricted Period”), neither the
Holder, nor any Affiliate of such Holder which (x) had or has knowledge of the
transactions contemplated by the Warrant Exchange Agreement, (y) has or shares
discretion relating to such Holder’s investments or trading or information
concerning such Holder’s investments, including in respect of the Securities, or
(z) is subject to such Holder’s review or input concerning such Affiliate’s
investments or trading (together, the “Holder’s Trading Affiliates”),
collectively, shall sell, dispose or otherwise transfer, directly or indirectly,
(including, without limitation, any sales, short sales, swaps or any derivative
transactions that would be equivalent to any sales or short positions) on any
Trading Day during the Restricted Period (any such date, a “Date of
Determination”), shares of Common Stock, or shares of Common Stock underlying
any Common Stock Equivalents, held by the Holder on the date hereof, including
the Shares (collectively, the “Restricted Securities”), in an amount more than
the Holder’s Leak-Out Percentage (as defined in that certain Leak-Out Agreement,
dated ________ __, 20__, by and between the Company and the Holder (such
percentage, the “February Leak-Out Percentage”), which for the Holder is ___% of
the trading volume of Common Stock as reported by Bloomberg, LP for the
applicable Date of Determination (“Leak-Out Percentage”).

Notwithstanding anything herein to the contrary, until the end of the Restricted
Period the Holder may, directly or indirectly, sell or transfer all, or any
part, of any Restricted Securities to any Person (an “Assignee”) in a
transaction which does not need to be reported on the consolidated tape on the
Trading Market, without complying with (or otherwise limited by) the
restrictions set forth in this Leak-Out Agreement; provided, that as a condition
to any such sale or transfer an authorized signatory of the Company and such
Assignee duly execute and deliver a leak-out agreement in the form of this
Leak-Out Agreement (an “Assignee Agreement”, and each such transfer a “Permitted
Transfer”) and, subsequent to a Permitted Transfer, sales of the Holder and the
Holder’s Trading Affiliates and all Assignees (other than any such sales that
constitute Permitted Transfers) shall be aggregated for all purposes of this
Leak-Out Agreement and all Assignee Agreements.

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Any notices, consents, waivers or other communications required or permitted to
be given under the terms of this Leak-Out Agreement must be in writing and shall
be given in accordance with the terms of the SPA.

This Leak-Out Agreement constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof and supersedes all prior
negotiations, letters and understandings relating to the subject matter hereof
and are fully binding on the parties hereto.

This Leak-Out Agreement may be executed simultaneously in any number of
counterparts. Each counterpart shall be deemed to be an original, and all such
counterparts shall constitute one and the same instrument. This Leak-Out
Agreement may be executed and accepted by facsimile or PDF signature and any
such signature shall be of the same force and effect as an original signature.

The terms of this Leak-Out Agreement shall be binding upon and shall inure to
the benefit of each of the parties hereto and their respective successors and
assigns.

This Leak-Out Agreement may not be amended or modified except in writing signed
by each of the parties hereto.

All questions concerning the construction, validity, enforcement and
interpretation of this Leak-Out Agreement shall be governed by the terms of the
Exchange Agreement.

Each party hereto acknowledges that, in view of the uniqueness of the
transactions contemplated by this Leak-Out Agreement, the other party or parties
hereto may not have an adequate remedy at law for money damages in the event
that this Leak-Out Agreement has not been performed in accordance with its
terms, and therefore agrees that such other party or parties shall be entitled
to seek specific enforcement of the terms hereof in addition to any other remedy
it may seek, at law or in equity.

The obligations of the Holder under this Leak-Out Agreement are several and not
joint with the obligations of any other holder of securities issued upon
exercise (other than pursuant to the terms of such securities in effect as of
the date hereof and assuming, for such purpose, no amendment or waiver thereof
except such amendments and waiver in effect prior to the date hereof) or
exchange, as applicable, of any outstanding warrants to purchase Common Stock of
the Company (each, an “Other Holder”), and the Holder shall not be responsible
in any way for the performance of the obligations of any Other Holder under any
other agreement (including, without limitation, any other leak-out agreement
(each, an “Other Leak-Out Agreement”). Nothing contained herein or in this
Leak-Out Agreement, and no action taken by the Holder pursuant hereto, shall be
deemed to constitute the Holder and Other Holders as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Holder and the Other Holders are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by this Leak-Out Agreement and the Company acknowledges that the
Holder and the Other Holders are not acting in concert or as a group with
respect to such obligations or the transactions contemplated by this Leak-Out
Agreement or any other agreement. The Company and the Holder confirm that the
Holder has independently participated in the negotiation of the transactions
contemplated hereby with the advice of its own counsel and advisors. The Holder
shall be entitled to independently protect and enforce its rights, including,
without limitation, the rights arising out of this Leak-Out Agreement, and it
shall not be necessary for any Other Holder or any Prospectus Purchaser Other
Holder to be joined as an additional party in any proceeding for such purpose.

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The Company hereby represents and warrants as of the date hereof and covenants
and agrees from and after the date hereof that it will enforce the provisions of
each Other Leak-Out Agreement, if any, in accordance with its terms.  If any
party to any Other Leak-Out Agreement breaches any provision of such Other
Leak-Out Agreement, the Company shall promptly use its best efforts to seek
specific performance of the terms of such Other Leak-Out Agreement.

The Company hereby represents and warrants as of the date hereof and covenants
and agrees from and after the date hereof that none of the terms offered to any
Other Holder with respect to (x) any exchange of any of the ________ and
________ Warrants (as defined in the Warrant Exchange Agreement) into any other
securities of the Company or (y) any restrictions on (or failure to restrict)
the sale of any such securities (including, without limitation, any Other
Leak-Out Agreement or the failure by the Company to obtain any Other Leak-Out
Agreement with respect thereto) (each a “Settlement Document”), is or will be
more favorable to such Other Holder or any Prospectus Purchaser Other Holder
than those of the Holder and this Leak-Out Agreement (for the avoidance of
doubt, a Leak Out Percentage (as defined in each Other Leak-Out Agreement) of an
Other Holder that is the same as the February Leak-Out Percentage (as defined in
each Other Leak-Out Agreement) of such Other Holder shall not be a more
favorable term of such Other Leak-Out Agreement). If, and whenever on or after
the date hereof, the Company enters into a Settlement Document with terms that
are materially different from this Leak-Out Agreement, then (i) the Company
shall provide notice thereof to the Holder promptly following the occurrence
thereof and (ii) the terms and conditions of this Leak-Out Agreement shall be,
without any further action by the Holder or the Company, automatically amended
and modified in an economically and legally equivalent manner such that the
Holder shall receive the benefit of the more favorable terms and/or conditions
(as the case may be) set forth in such Settlement Document, provided that upon
written notice to the Company at any time the Holder may elect not to accept the
benefit of any such amended or modified term or condition, in which event the
term or condition contained in this Leak-Out Agreement shall apply to the Holder
as it was in effect immediately prior to such amendment or modification as if
such amendment or modification never occurred with respect to the Holder. The
provisions of this paragraph shall apply similarly and equally to each
Settlement Document.

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Exhibit 10.40

The parties hereto have executed this Leak-Out Agreement as of the date first
set forth above.

 

Sincerely,

 

DELCATH SYSTEMS, INC.

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

Agreed to and Acknowledged:

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

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