EXHIBIT 10.35

RESTRICTED STOCK AGREEMENT

This Restricted Stock Agreement (“Agreement”) is made as of October 20, 2009
(the “Grant Date”) between Delcath Systems, Inc. (the “Company”) and Krishna
Kandarpa, MD, Ph.D. (the “Executive”).

WHEREAS, the Company maintains the Delcath Systems, Inc. 2009 Stock Incentive
Plan, as amended (the “Plan”), which is administered by a committee designated
by the Company’s Board of Directors (the “Committee”), and

WHEREAS, in consideration of the Executive’s continued employment with the
Company, the Committee has determined that the Executive shall be granted an
award of Restricted Stock under the Plan, and

WHEREAS, to comply with the terms of the Plan and to further the interests of
the Company and the Executive, the parties hereto have set forth the terms of
such award in writing in this Agreement;

NOW, THEREFORE, the Company and the Executive agree as follows:

1.           Award.

 
(a)
Grant. The Executive is hereby granted 200,000 shares (the “Restricted Stock”)
of the Company’s common stock, par value $.01 per share (“Stock”), which shall
be issued in the Executive’s name subject to the restrictions contained in this
Agreement.  The Restricted Stock award pursuant to this Agreement is separate
from and not in tandem with any other award(s) granted to the Executive under
the Plan or otherwise.

 
(b)
Plan Incorporated. The Executive acknowledges receipt of a copy of the Plan and
agrees that this award of Restricted Stock shall be subject to all of the terms
and conditions set forth in the Plan, including future amendments thereto, if
any, pursuant to the terms thereof, which Plan is incorporated herein by
reference as a part of this Agreement. Any terms used in this Agreement and not
defined herein have the meanings set forth in the Plan.

2.
Restrictions.  The shares of Restricted Stock are subject to the following
restrictions (collectively, the “Restrictions”):

 
(a)
Forfeiture Restrictions.  If the Executive’s employment with the Company shall
terminate for any reason other than those provided in Section 3 below, the
Executive shall forfeit the right to receive any shares of Restricted Stock with
respect to which the Restrictions have not lapsed as provided in Section 3 below
as of the effective date of termination of Executive’s employment.

 
 
(b)
Restrictions on Transfer. The Executive may not sell, assign, pledge, exchange,
hypothecate or otherwise transfer, encumber or dispose of any shares of
Restricted Stock with respect to which the Restrictions have not lapsed as
provided in Section 3 below. Upon any violation of this restriction, the shares
of Restricted Stock with respect to which the Restrictions have not lapsed as
provided in Section 3 below shall be forfeited.

3.           Lapse of Restrictions.

 
(a)
Unless otherwise accelerated pursuant to this Section 3 or otherwise by the
Committee pursuant to its authority under the Plan, the Restrictions will lapse
with respect to the shares of Restricted Stock in accordance with the following
schedule:

 
Number
Date
100,000 shares
October 20, 2010
100,000 shares
October 20, 2011

 
 

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(b)
Notwithstanding the foregoing, if earlier than provided in the immediately
preceding section (and, without duplication, reduced by any shares that
previously vested pursuant to the immediately preceding sentence), the
restrictions with respect to (i) 50,000 shares of Restricted Stock shall lapse
upon receipt by the Company of financing from third party investors of $15
million or more (gross proceeds), (ii) 50,000 shares of Restricted Stock shall
lapse on submission to the U.S. Food and Drug Administration (the “FDA”), with
the consent of the Board, of a Premarket Approval or New Drug Approval (as such
terms are used by the FDA) for the Company’s percutaneous hepatic perfusion
treatment system, and (iii) 100,000 shares of Restricted Stock shall lapset upon
the FDA’s formal written notice of such approval including FDA-approved labeling
language for the percutaneous hepatic perfusion treatment.

 
(c)
Notwithstanding the foregoing, all shares subject to the Option and Restricted
Stock shall immediately vest upon (i) the Executive’s Involuntary Termination
(as defined in Section 5.5) after the first anniversary of the Effective Date or
(ii) a Change of Control (as such term is defined in subsections (a)-(d) of the
definition of “Change of Control” contained in the Company’s 2009 Stock
Incentive Plan).  Upon the Executive’s Involuntary Termination between the
Effective Date and its first anniversary, an additional number of shares such
that a total of 50% of all shares under the Minimum Annual Stock Option Bonus,
50% of all shares subject to the Option and 50% of the Restricted Stock shall be
vested as of the Severance Date (as defined in Section 5.3).

 
(d)
Notwithstanding the foregoing, in the event the Executive’s employment is
terminated by reason of the Executive’s death or Disability, the Restrictions
with respect to all shares of Restricted Stock will lapse immediately and
automatically as of the date of the Executive’s death or as of the effective
date of the Executive’s termination of employment by reason of his
Disability.  For purposes of this Agreement, the term “Disability” shall have
the meaning set forth in the Employment Agreement dated September 30, 2009
between the Company and the Executive.

The shares of Restricted Stock with respect to which the Restrictions have
lapsed shall cease to be subject to any Restrictions except as otherwise
provided in the Plan.

4.           Custody of Restricted Stock.

 
(a)
Custody.  One or more stock certificates evidencing the shares of Restricted
Stock granted hereunder shall be registered in the Executive’s name, however,
such stock certificate(s) shall be delivered to and held by the Secretary of the
Company until forfeiture occurs or the Restrictions lapse with respect to such
shares of Restricted Stock pursuant to the terms of the Plan and this Agreement.

 
(b)
Additional Securities as Restricted Stock. Any securities received as the result
of ownership of shares of Restricted Stock, including without limitation,
securities received as a stock dividend or stock split, or as a result of a
recapitalization or reorganization (all such securities to be considered
“Restricted Stock” for all purposes under this Agreement), shall be held in
custody in the same manner and subject to the same conditions as the shares of
Restricted Stock with respect to which they were issued.

 
(c)
Delivery to the Executive.  With respect to shares of Restricted Stock for which
the Restrictions have lapsed (without forfeiture), the stock certificate(s)
representing such unrestricted shares of Stock shall be released to the
Executive.  Notwithstanding any other provisions of this Agreement, the issuance
or delivery of any shares of Stock (whether subject to restrictions or
unrestricted) may be postponed for such period as may be required to comply with
applicable requirements of any national securities exchange or any requirements
of any regulation applicable to the issuance or delivery of such Stock.  The
Company shall not be obligated to issue or deliver any shares of Stock if the
issuance or delivery thereof shall constitute a violation of any provision of
any law or of any regulation of any governmental authority or any securities
exchange.  The Company shall not be required to transfer on its books any shares
of Stock (whether subject to restrictions or unrestricted) which shall have been
sold or transferred in violation of any of the provisions set forth in this
Agreement.

 
 
 

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5.
Status of Stock.  Notwithstanding the Restrictions contained herein, and unless
and until the shares of Restricted Stock are forfeited pursuant to the
provisions of this Agreement, the Executive shall have all rights of a
stockholder with respect to the shares of Restricted Stock, including the right
to vote such shares and to receive dividends thereon.

 
6.           Relationship to Company.

 
(a)
No Effect on Company’s Rights or Powers. The existence of this Restricted Stock
Agreement shall not affect in any way the right or power of the Company or its
stockholders to make or authorize any or all adjustments, recapitalizations,
reorganization, or other changes in the Company’s capital structure or its
business, or any merger or consolidation of Company or any issue of bonds,
debentures, preferred or prior preference stock ahead of or affecting the shares
of Restricted Stock or the rights thereof, or the dissolution or liquidation of
the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise.

 
(b)
No Guarantee of Service. Neither this Restricted Stock Agreement nor the shares
of Restricted Stock awarded hereby shall confer upon the Executive any right
with respect to continuance of employment by the Company or any of the Company’s
affiliates, nor shall this Restricted Stock Agreement or the shares of
Restricted Stock awarded hereby interfere in any way with any right the Company,
or its directors or stockholders, would otherwise have to terminate the
Executive’s employment at any time.

7.
Agreement with Respect to Taxes.  The Executive shall be liable for any and all
taxes, including withholding taxes, arising out of this Restricted Stock award
or the lapse of the Restrictions hereunder.  The Executive agrees that if he
does not pay, or make arrangements for the payment of, such amounts, the
Company, to the fullest extent permitted by law, rule or regulation shall have
the right to deduct such amounts from any payments of any kind otherwise due to
the Executive (including from the Executive’s compensation) and that the Company
shall have the right to withhold shares of Restricted Stock for which the
Restrictions have lapsed such number of unrestricted shares of Stock having an
aggregate market value at the time equal to the amount the Executive owes.

8.
Committee’s Powers.  No provision contained in this Agreement shall in any way
terminate, modify or alter, or be construed or interpreted as terminating,
modifying or altering any of the powers, rights or authority vested in the
Committee pursuant to the terms of the Plan, including, without limitation, the
Committee’s rights to make certain determinations and elections with respect to
the shares of Restricted Stock granted hereby.

9.
Binding Effect.  This Agreement shall be binding upon and inure to the benefit
of any successors and assigns of the Company and all persons lawfully claiming
under the Executive.

10.
Counterparts.  This Agreement may be executed in two or more counterparts each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument. Delivery of a party’s signature hereto by facsimile
or PDF shall bind the parties hereto.

11.
Governing Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of Delaware or
any other jurisdiction) that would cause the laws of any jurisdiction other than
the State of Delaware to be applied.

12.
Severability.  The provisions of this Agreement are severable and if any one or
more provisions are determined to be illegal or otherwise unenforceable, in
whole or in part, the remaining provisions shall nevertheless be binding and
enforceable.

 
 

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13.
Acceptance of Terms and Conditions.  This Restricted Stock award will not be
effective until the Executive has acknowledged and agreed to the terms and
conditions set forth herein by executing this Agreement in the space provided
below and returning the same to the Company.

Awarded subject to the terms and conditions stated above:

DELCATH SYSTEMS, INC.
 
Accepted under the terms and conditions stated above:
By:/s/Eamonn P. Hobbs
 
By:/s/Krishna Kandarpa
Eamonn P. Hobbs, President
 
Krishna Kandarpa, MD, Ph.D.
And Chief Executive Officer