DELCATH SYSTEMS, INC.
 
 
WARRANT
 

   
Warrant No. _____
Original Issue Date: June 15, 2009
 
 
(“Issue Date”)

 
DELCATH SYSTEMS, INC., a Delaware corporation (the “Company”), hereby certifies
that, for value received, __________ or its permitted registered assigns (the
“Holder”), is entitled to purchase from the Company up to a total of ________
shares of common stock, $0.01 par value (the “Common Stock”), of the Company
(each such share, a “Warrant Share” and all such shares, the “Warrant Shares”)
at an exercise price equal to $3.99 per share (as adjusted from time to time as
provided herein, the “Exercise Price”), at any time and from time to time on or
after the Closing Date (the “Original Issue Date”) and through and including
5:00 P.M., New York City time, on June 15, 2014 (the “Expiration Date”), and
subject to the following terms and conditions:
 
This Warrant is being issued pursuant to that certain Subscription Agreement,
dated June 9, 2009, by and between the Company and the purchaser identified
therein (the “Subscription Agreement”). All such warrants are referred to
herein, collectively, as the “Warrants.”  The original issuance of the Warrants
and the Warrant Shares by the Company pursuant to the Subscription Agreement has
been registered pursuant to a Registration Statement on Form S-3 (File
No. 333-143280) (together with any registration statement filed by the Company
pursuant to Rule 462(b) under the Securities Act, the “Registration Statement”).
 
1.           Definitions. In addition to the terms defined elsewhere in this
Warrant, capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Subscription Agreement.
 
“Affiliate” of a person means a person that, directly or indirectly through one
or more intermediaries, controls, is controlled by, or is under common control
with, the person specified.
 
“Convertible Securities” means any stock or securities (other than Options)
directly or indirectly convertible into or exercisable or exchangeable for
shares of Common Stock.
 
“Options” means any rights, warrants or options to subscribe for or purchase
shares of Common Stock or Convertible Securities.
 
“Person” means an individual, a limited liability company, a partnership, a
joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
 
“Trading Day” means any day on which trading of the Common Stock occurs on the
applicable Trading Market.
 
“Trading Market” means the NASDAQ Capital Market or, if the Company’s Common
Stock is not then listed on the NASDAQ Capital Market, then such exchange or
quotation system on which the Common Stock then primarily trades.
 
“Weighted Average Price” means, for any security as of any date, the dollar
volume-weighted average price for such security on the applicable Trading Market
during the period beginning at 9:30:01 a.m., New York City time, and ending at
4:00:00 p.m., New York City time, as reported by Bloomberg through its “Volume
at Price”
 

 
 

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function or, if the foregoing does not apply, the dollar volume-weighted average
price of such security in the over-the-counter market on the electronic bulletin
board for such security during the period beginning at 9:30:01 a.m., New York
City time, and ending at 4:00:00 p.m., New York City time, as reported by
Bloomberg, or, if no dollar volume-weighted average price is reported for such
security by Bloomberg for such hours, the average of the highest closing bid
price and the lowest closing ask price of any of the market makers for such
security as reported in the “pink sheets” by Pink Sheets LLC (formerly the
National Quotation Bureau, Inc.). If the Weighted Average Price cannot be
calculated for such security on such date on any of the foregoing bases, the
Weighted Average Price of such security on such date shall be the fair market
value as mutually determined by the Company and the Holder. If the Company and
the Holder are unable to agree upon the fair market value of such security, then
such dispute shall be resolved pursuant to Section 15(b) hereof. All such
determinations shall be appropriately adjusted for any share dividend, share
split or other similar transaction during such period.
 
2.           List of Warrant Holders.  The Company shall register this Warrant,
upon records to be maintained by the Company for that purpose (the “Warrant
Register”), in the name of the record Holder (which shall include the initial
Holder or, as the case may be, any registered assignee to which this Warrant is
permissibly assigned hereunder from time to time). The Company may deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the
purpose of any exercise hereof or any distribution to the Holder, and for all
other purposes, absent actual notice to the contrary.
 
3.           List of Transfers; Restrictions on Transfer.
 
(a)           This Warrant and the Warrant Shares are subject to the
restrictions on transfer set forth in this Section 3.
 
(b)           The Company shall register any such transfer of all or any portion
of this Warrant in the Warrant Register, upon surrender of this Warrant, with
the Form of Assignment attached hereto duly completed and signed, to the Company
at its address specified herein. Upon any such registration or transfer, a new
Warrant to purchase Common Stock, in substantially the form of this Warrant (any
such new Warrant, a “New Warrant”), evidencing the portion of this Warrant so
transferred shall be issued to the transferee and a New Warrant evidencing the
remaining portion of this Warrant not so transferred, if any, shall be issued to
the transferring Holder. The acceptance of the New Warrant by the transferee
thereof shall be deemed the acceptance by such transferee of all of the rights
and obligations in respect of the New Warrant that the Holder has in respect of
this Warrant.
 
4.           Exercise and Duration of Warrants.
 
(a)           All or any part of this Warrant shall be exercisable by the
registered Holder in any manner permitted by Section 10 hereof at any time and
from time to time on or after the Original Issue Date and through and including
the Expiration Date. Subject to Section 11 hereof, at 5:00 p.m., New York City
time, on the Expiration Date, the portion of this Warrant not exercised prior
thereto shall be and become void and of no value and this Warrant shall be
terminated and no longer outstanding. In addition, if cashless exercise would be
permitted under Section 10(b) hereof, then all or part of this Warrant may be
exercised by the registered Holder utilizing such cashless exercise provisions
at any time, or from time to time, on or after the Original Issue Date and
through and including the Expiration Date.
 

 
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(b)           The Holder may exercise this Warrant by delivering to the Company
(i) an exercise notice, in the form attached hereto (the “Exercise Notice”),
completed and duly signed, and (ii) if such Holder is not utilizing the cashless
exercise provisions set forth in this Warrant, payment of the Exercise Price for
the number of Warrant Shares as to which this Warrant is being exercised. The
date such items are delivered to the Company (as determined in accordance with
the notice provisions hereof) is an “Exercise Date.” The Holder shall not be
required to deliver the original Warrant in order to effect an exercise
hereunder. Execution and delivery of the Exercise Notice shall have the same
effect as cancellation of the original Warrant and issuance of a New Warrant
evidencing the right to purchase the remaining number of Warrant Shares.  On or
before the first (1st) business day following the date on which the Company has
received the Exercise Notice, the Company shall transmit to a facsimile number
set forth in the Exercise Notice a confirmation of receipt of the Exercise
Notice to the Holder and also will notify the Company's transfer agent.
 
5.           Delivery of Warrant Shares.
 
(a)           Upon exercise of this Warrant, the Company shall promptly (but in
no event later than three Trading Days after the Exercise Date) issue or cause
to be issued and cause to be delivered to or upon the written order of the
Holder and in such name or names as the Holder may designate (provided that, if
the Registration Statement is not then effective and the Holder directs the
Company to deliver a certificate for the Warrant Shares in a name other than
that of the Holder or an Affiliate of the Holder, it shall deliver to the
Company on the Exercise Date an opinion of counsel reasonably satisfactory to
the Company to the effect that the issuance of such Warrant Shares in such other
name may be made pursuant to an available exemption from the registration
requirements of the Securities Act of 1933, as amended (the “Securities Act”)
and all applicable state securities or blue sky laws), a certificate for the
Warrant Shares issuable upon such exercise, free of restrictive legends unless
the Registration Statement is not then effective or the Warrant Shares are not
freely transferable without volume restrictions pursuant to Rule 144 under the
Securities Act. The Holder, or any Person permissibly so designated by the
Holder to receive Warrant Shares, shall be deemed to have become the holder of
record of such Warrant Shares as of the Exercise Date.  If the Warrant Shares
can be issued without restrictive legends, the Company shall, upon the written
request of the Holder, use its best efforts to deliver, or cause to be
delivered, Warrant Shares hereunder electronically through the Depository Trust
and Clearing Corporation (“DTC”) or another established clearing corporation
performing similar functions, if available; provided, that, the Company may, but
will not be required to, change its transfer agent if its current transfer agent
cannot deliver Warrant Shares electronically through DTC.
 
(b)           If by the close of the third Trading Day after delivery of an
Exercise Notice, duly completed and executed by the Holder, the Company fails to
deliver to the Holder a certificate representing the required number of Warrant
Shares in the manner required pursuant to Section 5(a) hereof, and if after such
third Trading Day and prior to the receipt of such Warrant Shares, the Holder
purchases (in an open market transaction or otherwise) shares of Common Stock to
deliver in satisfaction of a sale by the Holder of the Warrant Shares which the
Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company
shall, within three Trading Days after the Holder’s request, and in the Holder’s
sole discretion, either (i) pay in cash to the Holder an amount equal to the
Holder’s total purchase price (including brokerage commissions, if any) for the
shares of Common Stock so purchased (the “Buy-In Price”), at which point the
Company’s obligation to deliver such certificate (and to issue such Warrant
Shares) shall terminate or (ii) promptly honor its obligation to deliver to the
Holder a certificate or certificates representing such Warrant Shares and pay
cash to the Holder in an amount
 

 
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equal to the excess (if any) of the Buy-In Price over the product of (A) such
number of Warrant Shares, times (B) the closing bid price on the date of the
event giving rise to the Company’s obligation to deliver such certificate.
 
(c)           To the extent permitted by law, the Company’s obligations to issue
and deliver Warrant Shares in accordance with the terms hereof are absolute and
unconditional, irrespective of any action or inaction by the Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action to enforce the same,
or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of any obligation to
the Company or any violation or alleged violation of law by the Holder or any
other Person, and irrespective of any other circumstance that might otherwise
limit such obligation of the Company to the Holder in connection with the
issuance of Warrant Shares. Nothing herein shall limit a Holder’s right to
pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.
 
6.           Charges, Taxes and Expenses. Issuance and delivery of certificates
for shares of Common Stock upon exercise of this Warrant shall be made without
charge to the Holder for any issue or transfer tax, withholding tax, transfer
agent fee or other incidental tax or expense in respect of the issuance of such
certificates, all of which taxes and expenses shall be paid by the Company;
provided, however, that the Company shall not be required to pay any tax that
may be payable in respect of any transfer involved in the registration of any
certificates for Warrant Shares or Warrants in a name other than that of the
Holder. The Holder shall be responsible for all other tax liability that may
arise as a result of holding or transferring this Warrant or receiving Warrant
Shares upon exercise hereof.
 
7.           Replacement of Warrant. If this Warrant is mutilated, lost, stolen
or destroyed, the Company shall issue or cause to be issued in exchange and
substitution for and upon cancellation hereof, or in lieu of and substitution
for this Warrant, a New Warrant, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and customary and
reasonable indemnity (which shall not include a surety bond), if requested.
Applicants for a New Warrant under such circumstances shall also comply with
such other reasonable regulations and procedures and pay such other reasonable
third-party costs as the Company may prescribe. If a New Warrant is requested as
a result of a mutilation of this Warrant, then the Holder shall deliver such
mutilated Warrant to the Company as a condition precedent to the Company’s
obligation to issue the New Warrant.
 
8.           Reservation of Warrant Shares; Listing. The Company covenants that
it will at all times reserve and keep available out of the aggregate of its
authorized but unissued and otherwise unreserved Common Stock, solely for the
purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as
herein provided, the number of Warrant Shares that are then issuable and
deliverable upon the exercise of this entire Warrant, free from preemptive
rights or any other contingent purchase rights of persons other than the Holder
(taking into account the adjustments and restrictions of Section 9 hereof). The
Company covenants that all Warrant Shares so issuable and deliverable shall,
upon issuance and the payment of the applicable Exercise Price in accordance
with the terms hereof, be duly and validly authorized, issued and fully paid and
nonassessable.  The Company shall use its best efforts to cause the Warrant
Shares to be listed for quotation on the NASDAQ Capital Market and to maintain
such listing.
 
9.           Certain Adjustments. The Exercise Price and number of Warrant
Shares issuable upon exercise of this Warrant are subject to adjustment from
time to time as set forth in this Section 9.
 

 
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(a)           Stock Dividends and Splits. If the Company, at any time while this
Warrant is outstanding, (i) pays a stock dividend on its Common Stock or
otherwise makes a distribution on any class of capital stock that is payable in
shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into
a larger number of shares, or (iii) combines outstanding shares of Common Stock
into a smaller number of shares, then in each such case the Exercise Price shall
be multiplied by a fraction of which the numerator shall be the number of shares
of Common Stock outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to clause (i) of this
paragraph shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution,
and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall
become effective immediately after the effective date of such subdivision or
combination.
 
(b)           Pro Rata Distributions. If the Company, at any time while this
Warrant is outstanding, distributes to all holders of Common Stock for no
consideration (i) evidences of its indebtedness, (ii) any security (other than a
distribution of Common Stock covered by the preceding paragraph), (iii) rights
or warrants to subscribe for or purchase any security, or (iv) any other asset
(including cash) (in each case, “Distributed Property”), then, upon any exercise
of this Warrant that occurs after the record date fixed for determination of
stockholders entitled to receive such distribution, the Holder shall be entitled
to receive, in addition to the Warrant Shares otherwise issuable upon such
exercise (if applicable), the Distributed Property that such Holder would have
been entitled to receive in respect of such number of Warrant Shares had the
Holder been the record holder of such Warrant Shares immediately prior to such
record date.
 
(c)           Fundamental Transactions. If, at any time while this Warrant is
outstanding (i) the Company effects any merger or consolidation of the Company
with or into another Person, in which the shareholders of the Company as of
immediately prior to the transaction own less than a majority of the outstanding
stock of the surviving entity, (ii) the Company effects any sale of all or
substantially all of its assets in one or a series of related transactions,
(iii) any tender offer or exchange offer (whether by the Company or another
Person) is completed pursuant to which holders of a majority of the outstanding
shares of Common Stock tender or exchange their shares for other securities,
cash or property, or (iv) the Company effects any reclassification of all
outstanding Common Stock or any compulsory share exchange pursuant to which all
outstanding Common Stock is effectively converted into or exchanged for other
securities, cash or property (each, a “Fundamental Transaction”), then the
Holder shall have the right thereafter to receive, upon any subsequent exercise
of this Warrant, the same amount and kind of securities, cash or property as it
would have been entitled to receive upon the occurrence of such Fundamental
Transaction if it had been, immediately prior to such Fundamental Transaction,
the holder of the number of Warrant Shares then issuable upon exercise in full
of this Warrant (the “Alternate Consideration”). The Company shall not effect
any such Fundamental Transaction unless prior to or simultaneously with the
consummation thereof, any successor to the Company, surviving entity or the
corporation purchasing or otherwise acquiring such assets or other appropriate
corporation or entity shall assume the obligation to deliver to the Holder, such
Alternate Consideration as, in accordance with the foregoing provisions, the
Holder may be entitled to purchase, and the other obligations under this
Warrant. Notwithstanding anything to the contrary, in the event of a Fundamental
Transaction, the Company or any successor entity shall pay in exchange for this
Warrant at the Holder’s option, exercisable at any time concurrently with or
within 30 days after the consummation of the Fundamental Transaction, an amount
of cash equal to the value of this Warrant as determined in accordance with the
Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg
L.P. using (i) a price per share of Common Stock equal to the VWAP of the Common
Stock for the Trading Day immediately preceding the date
 

 
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of consummation of the applicable Fundamental Transaction, (ii) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period equal to the
remaining term of this Warrant as of the date of consummation of the applicable
Fundamental Transaction and (iii) an expected volatility equal to the 60 day
volatility obtained from the “HVT” function on Bloomberg L.P. determined as of
the Trading Day immediately following the public announcement of the applicable
Fundamental Transaction. The provisions of this paragraph (c) shall similarly
apply to subsequent Fundamental Transactions.
 
(d)           Number of Warrant Shares. Simultaneously with any adjustment to
the Exercise Price pursuant to paragraph (a) of this Section 9, the number of
Warrant Shares that may be purchased upon exercise of this Warrant shall be
increased or decreased proportionately, so that after such adjustment the
aggregate Exercise Price payable hereunder for the adjusted number of Warrant
Shares shall be the same as the aggregate Exercise Price in effect immediately
prior to such adjustment.
 
(e)              Subsequent Equity Sales.
 
          (i)              If the Company shall at any time issue shares of
Common Stock or Convertible Securities entitling any Person to acquire shares of
Common Stock, at a price per share less than the Exercise Price in effect
immediately prior to the time of such issuance (if the holder of the Common
Stock or Convertible Securities so issued shall at any time, whether by
operation of purchase price adjustments, reset provisions, floating conversion,
exercise or exchange prices or otherwise, or due to warrants, options or rights
issued in connection with such issuance, be entitled to receive shares of Common
Stock at a price less than the Exercise Price, such issuance shall be deemed to
have occurred for less than the Exercise Price), then, the Exercise Price shall
be reduced to equal such lower price, but the number of Warrant Shares which the
Holder may acquire under this Warrant will not be affected thereby. Such
adjustment shall be made whenever such Common Stock or Convertible Securities
are issued. The Company shall notify the Holder in writing, no later than the
Trading Day following the issuance of any Common Stock or Convertible Securities
subject to this Section, indicating therein the applicable issuance price, or
the applicable reset price, exchange price, conversion price and other pricing
terms.
 
          (ii)              For purposes of this subsection 9(e), the following
subsections (e)(ii)(l) to (e)(ii)(7) shall also be applicable:
 
                                                    (1)    Issuance of Rights or
Options. In case at any time the Company shall in any manner grant (directly and
not by assumption in a merger or otherwise) any warrants or other rights to
subscribe for or to purchase, or any options for the purchase of, Common Stock
or any stock or security convertible into or exchangeable for Common Stock (such
warrants, rights or options being called “Options” and such convertible or
exchangeable stock or securities being called “Convertible Securities”), whether
or not such Options or the right to convert or exchange any such Convertible
Securities are immediately exercisable, and the price per share for which Common
Stock is issuable upon the exercise of such Options or upon the conversion or
exchange of such Convertible Securities (determined by dividing (i) the sum
(which sum shall constitute the applicable consideration) of (x) the total
amount, if any, received or receivable by the Company as consideration for the
granting of such Options, plus (y) the aggregate amount of additional
consideration payable to the Company upon the exercise of all such Options, plus
(z), in the case of such Options that relate to Convertible Securities, the
aggregate amount of additional consideration, if any, payable upon the issue or
sale of such Convertible Securities and upon the conversion or exchange thereof,
by (ii) the total maximum number of shares of Common Stock issuable upon the
exercise of such Options or upon the conversion or exchange of all such
 

 
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Convertible Securities issuable upon the exercise of such Options) shall be less
than the Exercise Price in effect immediately prior to the time of the granting
of such Options, then the total number of shares of Common Stock issuable upon
the exercise of such Options or upon conversion or exchange of the total amount
of such Convertible Securities issuable upon the exercise of such Options shall
be deemed to have been issued for such price per share as of the date of
granting of such Options or the issuance of such Convertible Securities and
thereafter shall be deemed to be outstanding for purposes of adjusting the
Exercise Price. Except as otherwise provided in subsection 9(e)(ii)(3), no
adjustment of the Exercise Price shall be made upon the actual issue of such
Common Stock or of such Convertible Securities upon exercise of such Options or
upon the actual issue of such Common Stock upon conversion or exchange of such
Convertible Securities.
 
                                          (2)              Issuance of
Convertible Securities. In case the Company shall in any manner issue (directly
and not by assumption in a merger or otherwise) or sell any Convertible
Securities, whether or not the rights to exchange or convert any such
Convertible Securities are immediately exercisable, and the price per share for
which Common Stock is issuable upon such conversion or exchange (determined by
dividing (i) the sum (which sum shall constitute the applicable consideration)
of (x) the total amount received or receivable by the Company as consideration
for the issue or sale of such Convertible Securities, plus (y) the aggregate
amount of additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (ii) the total number of shares of Common
Stock issuable upon the conversion or exchange of all such Convertible
Securities) shall be less than the Exercise Price in effect immediately prior to
the time of such issue or sale, then the total maximum number of shares of
Common Stock issuable upon conversion or exchange of all such Convertible
Securities shall be deemed to have been issued for such price per share as of
the date of the issue or sale of such Convertible Securities and thereafter
shall be deemed to be outstanding for purposes of adjusting the Exercise Price,
provided that (a) except as otherwise provided in subsection 9(e)(ii)(3), no
adjustment of the Exercise Price shall be made upon the actual issuance of such
Common Stock upon conversion or exchange of such Convertible Securities and (b)
no further adjustment of the Exercise Price shall be made by reason of the issue
or sale of Convertible Securities upon exercise of any Options to purchase any
such Convertible Securities for which adjustments of the Exercise Price have
been made pursuant to the other provisions of subsection 9(e). No adjustment
pursuant to this Section 9 shall be made if such adjustment would result in an
increase of the Exercise Price then in effect.
 
                                          (3)              Change in Option
Price or Conversion Rate. Upon the happening of any of the following events,
namely, if the purchase price provided for in any Option referred to in
subsection 9(e)(ii)(l) hereof, the additional consideration, if any, payable
upon the conversion or exchange of any Convertible Securities referred to in
subsections 9(e)(ii)(l) or 9(e)(ii)(2), or the rate at which Convertible
Securities referred to in subsections 9(e)(ii)(l) or 9(e)(ii)(2) are convertible
into or exchangeable for Common Stock shall change at any time (including, but
not limited to, changes under or by reason of provisions designed to protect
against dilution), the Exercise Price in effect at the time of such event shall
forthwith be readjusted to the Exercise Price that would have been in effect at
such time had such Options or Convertible Securities still outstanding provided
for such changed purchase price, additional consideration or conversion rate, as
the case may be, at the time initially granted, issued or sold.
 
                                          (4)           Stock
Dividends.  Subject to the provisions of this Section 9(e), in case the Company
shall declare a dividend or make any other distribution upon any stock of the
Company (other than the Common Stock) payable in Common Stock, Options or
Convertible Securities, then any Common Stock, Options or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without consideration.

 
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(5)          Consideration for Stock.  In case any shares of Common Stock,
Options or Convertible Securities shall be issued or sold for cash, the
consideration received therefor shall be deemed to be the gross amount received
by the Company therefor. In case any shares of Common Stock, Options or
Convertible Securities shall be issued or sold for a consideration other than
cash, the amount of the consideration other than cash received by the Company
shall be deemed to be the fair value of such consideration as determined in good
faith by the Board of Directors of the Company. In case any Options shall be
issued in connection with the issue and sale of other securities of the Company,
together comprising one integral transaction in which no specific consideration
is allocated to such Options by the parties thereto, such Options shall be
deemed to have been issued for such consideration as determined in good faith by
the Board of Directors of the Company. If Common Stock, Options or Convertible
Securities shall be issued or sold by the Company and, in connection therewith,
other Options or Convertible Securities (the “Additional Rights”) are issued,
then the consideration received or deemed to be received by the Company shall be
reduced by the fair market value of the Additional Rights (as determined using
the Black-Scholes option pricing model or another method mutually agreed to by
the Company and the Holder). The Board of Directors of the Company shall respond
promptly, in writing, to an inquiry by the Holder as to the fair market value of
the Additional Rights. In the event that the Board of Directors of the Company
and the Holder are unable to agree upon the fair market value of the Additional
Rights, the Company and the Holder shall jointly select an appraiser who is
experienced in such matters. The decision of such appraiser shall be final and
conclusive, and the cost of such appraiser shall be borne evenly by the Company
and the Holder.
 
(6)           Record Date.  In case the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them (i) to receive a
dividend or other distribution payable in Common Stock, Options or Convertible
Securities or (ii) to subscribe for or purchase Common Stock, Options or
Convertible Securities, then such record date shall be deemed to be the date of
the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase, as the case may be.

(7)           Treasury Shares.  The number of shares of Common Stock outstanding
at any given time shall not include shares owned or held by or for the account
of the Company or any of its wholly-owned subsidiaries, and the disposition of
any such shares (other than the cancellation or retirement thereof) shall be
considered an issue or sale of Common Stock for the purpose of this subsection
(e).
 
                       (iii)    Notwithstanding the foregoing, no adjustment
will be made under this paragraph (e) in respect of: (i) the issuance of
securities upon the exercise or conversion of any Common Stock or Convertible
Securities issued by the Company prior to the date hereof; provided that neither
the conversion price, exercise price nor number of shares issuable under such
Convertible Securities (excluding any Convertible Securities covered by clause
(ii) below) is amended, modified or changed after the issuance date thereof
other than pursuant to the provisions of such Convertible Securities as they
exist as of such issuance date, (ii) the grant of options, warrants, Common
Stock or other Convertible Securities (but not including any amendments to such
instruments) under any duly authorized Company stock option, restricted stock
plan or stock purchase plan whether now existing or hereafter approved by the
Company and its stockholders in the future (including without limitation the
Company’s 2004 and 2009 Stock Incentive Plan and the employment agreement of
Richard L. Taney as currently filed with the Commission), and the issuance of
Common Stock in respect thereof, (iii) the
 

 
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issuance of securities in connection with a Strategic Transaction, (iv) in the
event the Company’s securities are included in a nationally recognized stock
index, the issuance in any manner whatsoever by the Company of Common Stock to
certain index funds that track such stock index, or (v) the issuance of
securities in a transaction described in Section 9(a) or 9(b) (collectively,
“Excluded Issuances”). For purposes of this paragraph, a “Strategic Transaction”
means a transaction or relationship in which (1) the Company issues shares of
Common Stock to a Person that the Board of Directors of the Company determined
in good faith is, itself or through its Subsidiaries, an operating company in a
business synergistic with the business of the Company (or a shareholder thereof)
and (2) the Company expects to receive benefits in addition to the investment of
funds.
 
(f)           Calculations. All calculations under this Section 9 shall be made
to the nearest cent or the nearest 1/100th of a share, as applicable. The number
of shares of Common Stock outstanding at any given time shall not include shares
owned or held by or for the account of the Company, and the disposition of any
such shares shall be considered an issue or sale of Common Stock.
 
(g)           De Minimis Adjustments. No adjustment in the Exercise Price shall
be required unless such adjustment would require an increase or decrease of at
least $0.01 in such price; provided, however, that any adjustment which by
reason of this Section 9(g) is not required to be made shall be carried forward
and taken into account in any subsequent adjustments under this Section 9. All
calculations under this Section 9 shall be made by the Company in good faith and
shall be made to the nearest cent or to the nearest one hundredth of a share, as
applicable. No adjustment need be made for a change in the par value or no par
value of the Company’s Common Stock.
 
(h)           Notice of Adjustments. Upon the occurrence of each adjustment
pursuant to this Section 9, the Company at its expense will, at the written
request of the Holder, promptly compute such adjustment in accordance with the
terms of this Warrant and prepare a certificate setting forth such adjustment,
including a statement of the adjusted Exercise Price and adjusted number or type
of Warrant Shares or other securities issuable upon exercise of this Warrant (as
applicable), describing the transactions giving rise to such adjustments and
showing in detail the facts upon which such adjustment is based. Upon written
request, the Company will promptly deliver a copy of each such certificate to
the Holder and to the American Stock Transfer & Trust Company, the transfer
agent of the Company.
 
(i)           Notice of Corporate Events. If, while this Warrant is outstanding,
the Company (i) declares a dividend or any other distribution of cash,
securities or other property in respect of its Common Stock, including without
limitation any granting of rights or warrants to subscribe for or purchase any
capital stock of the Company or any Subsidiary, (ii) authorizes or approves,
enters into any definitive agreement for or solicits stockholder approval for
any Fundamental Transaction or (iii) authorizes the voluntary dissolution,
liquidation or winding up of the affairs of the Company, then, except if such
notice and the contents thereof shall be deemed to constitute material
non-public information, the Company shall deliver to the Holder a notice
describing the material terms and conditions of such transaction at least 10
Trading Days prior to the applicable record or effective date on which a Person
would need to hold Common Stock in order to participate in or vote with respect
to such transaction, and the Company will take all reasonable steps to give
Holder the practical opportunity to exercise this Warrant prior to such time;
provided, however, that the failure to deliver such notice or any defect therein
shall not affect the validity of the corporate action required to be described
in such notice.
 
10.           Payment of Exercise Price. The Holder may pay the Exercise Price
in one of the following manners:
 

 
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(a)           Cash Exercise. The Holder may deliver immediately available funds;
or
 
(b)           Cashless Exercise. If an Exercise Notice is delivered at a time
when the Registration Statement is not then effective, then the Holder may
notify the Company in an Exercise Notice of its election to utilize cashless
exercise, in which event the Company shall issue to the Holder the number of
Warrant Shares determined as follows:
 
X   =   Y [(A-B)/A]
 
Where
 
X   =   the number of Warrant Shares to be issued to the Holder
 
Y   =   the number of Warrant Shares with respect to which this Warrant is being
exercised
 
A   =   the Weighted Average Price for the five Trading Days immediately prior
to (but not including) the Exercise Date
 
B   =   the Exercise Price
 
For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced, on
the date this Warrant was originally issued.
 
If, but only if, at any time after the Original Issue Date there is no effective
Registration Statement registering the Warrant Shares, the Company shall use its
best efforts to file a new Registration Statement on Form S-3 pursuant to
General Instruction I.B.4(a)(3) (including compliance with General Instruction
I.B.4(b) and I.B.4(c) as required thereby) registering the Warrant Shares
issuable upon exercise of the Warrant.
 
(c)           Company-Elected Conversion. (i) The Company shall provide to the
Holder prompt written notice of any time that the Company is unable to issue the
Warrant Shares via DTC transfer (or otherwise without restrictive legend),
because (A) the Securities and Exchange Commission (the “Commission”) has issued
a stop order with respect to the Registration Statement, (B) the Commission
otherwise has suspended or withdrawn the effectiveness of the Registration
Statement, either temporarily or permanently, (C) the Company has suspended or
withdrawn the effectiveness of the Registration Statement, either temporarily or
permanently, or (D) otherwise (each a “Restrictive Legend Event”). To the extent
that a Restrictive Legend Event occurs after the Holder has exercised this
Warrant in accordance with Section 4(b) but prior to the delivery of the Warrant
Shares, the Company shall (i) if the Weighted Average Price (as calculated
above) of the Warrant Shares is greater than the Exercise Price, provide written
notice to the Holder that the Company will deliver that number of Warrant Shares
to the Holder as should be delivered in a Cashless Exercise in accordance with
Section 10(b), and return to the Holder all consideration paid to the Company in
connection with the Holder’s attempted exercise of this Warrant pursuant to
Section 4(b) (a “Company-Elected Conversion”), or (ii) at the election of the
Holder to be given within five (5) days of receipt of notice of a
Company-Elected Conversion, the Holder shall be entitled to rescind the
previously submitted Notice of Exercise and the Company shall return all
consideration paid by Holder for such shares upon such rescission.  The Company
shall

 
10

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provide to the Holder prompt written notice of the termination of the
Restrictive Legend Event.   If a Restricted Legend Event is occurring as of the
Expiration Date, the term of this Warrant shall be extended until the fifth
(5th) business day after the termination of such Restricted Legend Event.
 
11.           Limitations on Exercise.  Notwithstanding anything to the contrary
contained herein, the number of Warrant Shares that may be acquired by the
Holder upon any exercise of this Warrant (or otherwise in respect hereof) shall
be limited to the extent necessary to ensure that, following such exercise (or
other issuance), the total number of shares of Common Stock then beneficially
owned by the Holder and its affiliates and any other Persons whose beneficial
ownership of Common Stock would be aggregated with the Holder’s for purposes of
Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), does not exceed 4.99% of the total number of issued and outstanding
shares of Common Stock (including for such purpose the shares of Common Stock
issuable upon such exercise). For such purposes, beneficial ownership shall be
determined in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder. Each delivery of an Exercise Notice by
the Holder will constitute a representation by the Holder that it has evaluated
the limitation set forth in this Section and determined that issuance of the
full number of Warrant Shares requested in such Exercise Notice is permitted
under this Section.  The Company’s obligation to issue shares of Common Stock in
excess of the limitation referred to in this Section shall be suspended (and,
except as provided below, shall not terminate or expire notwithstanding any
contrary provisions hereof) until such time, if any, as such shares of Common
Stock may be issued in compliance with such limitation; provided, that, if, as
of 5:30 p.m., New York City time, on the Expiration Date, the Company has not
received written notice that the shares of Common Stock may be issued in
compliance with such limitation, the Company’s obligation to issue such shares
shall terminate.  This provision shall not restrict the number of shares of
Common Stock which a Holder may receive or beneficially own in order to
determine the amount of securities or other consideration that such Holder may
receive in the event of a Fundamental Transaction as contemplated in Section 9
of this Warrant.  By written notice to the Company, which will not be effective
until the 61st day after such notice is delivered to the Company, the Holder may
waive the provisions of this Section to change the beneficial ownership
limitation to 9.9% of the number of shares of the Common Stock outstanding
immediately after giving effect to the issuance of shares of Common Stock upon
exercise of this Warrant, and the provisions of this Section 11 shall continue
to apply. Upon such a change by a Holder of the beneficial ownership limitation
from such 4.99% limitation to such 9.9% limitation, the beneficial ownership
limitation may not be further waived by such Holder.
 
12.           No Fractional Shares. No fractional Warrant Shares will be issued
in connection with any exercise of this Warrant. In lieu of any fractional
shares that would otherwise be issuable, the Company shall pay cash equal to the
product of such fraction multiplied by the closing price of one Warrant Share as
reported by the applicable Trading Market on the Exercise Date.
 
13.           Notices. Any and all notices or other communications or deliveries
hereunder (including, without limitation, any Exercise Notice) shall be in
writing and shall be deemed given and effective on the earliest of (i) the date
of transmission, if such notice or communication is delivered via facsimile at
the facsimile number specified in this Section 13 at or prior to 5:00 p.m. (New
York City time) on a Trading Day, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section 13 on a day that is not a Trading Day
or later than 5:00 p.m. (New York City time) on any Trading Day, (iii) the
Trading Day following the date of mailing, if sent by nationally recognized
overnight courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given. The addresses for such notices or communications
shall be: (a) if to the Company, to Delcath Systems, Inc., 600 Fifth Avenue,
23rd Floor, New York, New York 10017, Attention: Chief Executive Officer,
Facsimile No.: (212) 489-2102 (or such other address as the Company shall
indicate in writing in accordance with this Section 13) or (b) if to the Holder,
to the address or facsimile number appearing on the Warrant Register (or such
other address as the Company shall indicate in writing in accordance with this
Section 13).
 

 
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14.           Warrant Agent. The Company shall serve as warrant agent under this
Warrant. Upon 30 days’ notice to the Holder, the Company may appoint a new
warrant agent. Any corporation into which the Company or any new warrant agent
may be merged or any corporation resulting from any consolidation to which the
Company or any new warrant agent shall be a party or any corporation to which
the Company or any new warrant agent transfers substantially all of its
corporate trust or shareholders services business shall be a successor warrant
agent under this Warrant without any further act. Any such successor warrant
agent shall promptly cause notice of its succession as warrant agent to be
mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last
address as shown on the Warrant Register.
 
15.           Miscellaneous.
 
(a)           This Warrant shall be binding on and inure to the benefit of the
parties hereto and their respective successors and assigns. Subject to the
preceding sentence, nothing in this Warrant shall be construed to give to any
Person other than the Company and the Holder any legal or equitable right,
remedy or cause of action under this Warrant. This Warrant may be amended only
in writing signed by the Company and the Holder, or their successors and
assigns.
 
(b)           All questions concerning the construction, validity, enforcement
and interpretation of this Warrant shall be governed by and construed and
enforced in accordance with the internal laws of the State of New York, without
regard to the principles of conflicts of law thereof. Each party agrees that all
legal proceedings concerning the interpretations, enforcement and defense of
this Warrant and the transactions herein contemplated (“Proceedings”) (whether
brought against a party hereto or its respective Affiliates, employees or
agents) shall be commenced exclusively in the courts of the State of New York
located in the City and County of New York or in the United States District
Court for the Southern District of New York (the “New York Courts”). Each party
hereto hereby irrevocably submits to the exclusive jurisdiction of the New York
Courts for the adjudication of any dispute hereunder or in connection herewith
or with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any Proceeding, any claim that
it is not personally subject to the jurisdiction of any New York Court, or that
such Proceeding has been commenced in an improper or inconvenient forum. Each
party hereto hereby irrevocably waives personal service of process and consents
to process being served in any such Proceeding by mailing a copy thereof via
registered or certified mail or overnight delivery (with evidence of delivery)
to such party at the address in effect for notices to it under this Warrant and
agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law. Each party hereto
hereby irrevocably waives, to the fullest extent permitted by applicable law,
any and all right to trial by jury in any legal proceeding arising out of or
relating to this Warrant or the transactions contemplated hereby. If either
party shall commence a Proceeding to enforce any provisions of this Warrant,
then the prevailing party in such Proceeding shall be reimbursed by the other
party for its attorney’s fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such Proceeding.
 
(c)           The headings herein are for convenience only, do not constitute a
part of this Warrant and shall not be deemed to limit or affect any of the
provisions hereof.
 
(d)           In case any one or more of the provisions of this Warrant shall be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Warrant shall not in any way be affected
or impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefore, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
 

 
12

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(e)           Prior to exercise of this Warrant, the Holder hereof shall not, by
reason of by being a Holder, be entitled to any rights of a stockholder with
respect to the Warrant Shares
 
 

 

 
13

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by
its authorized officer as of the date first indicated above.
 

 
DELCATH SYSTEMS, INC.
               
By:
     
Name:
     
Title:
   

 
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EXERCISE NOTICE
 
DELCATH SYSTEMS, INC.
 
WARRANT NO. ___DATED JUNE 15, 2009
 
 
Ladies and Gentlemen:
 
 
(1)            The undersigned hereby elects to exercise the above-referenced
Warrant with respect to ____________ shares of Common Stock. Capitalized terms
used herein and not otherwise defined herein have the respective meanings set
forth in the Warrant.
 
(2)            The Holder intends that payment of the Exercise Price shall be
made as (check one):
 
           Cash Exercise under Section 10(a)
 
           Cashless Exercise under Section 10(b)
 
(3)            If the Holder has elected a Cash Exercise, the holder shall pay
the sum of $___to the Company in accordance with the terms of the Warrant.
 
(4)            Pursuant to this Exercise Notice, the Company shall deliver to
the Holder the number of Warrant Shares determined in accordance with the terms
of the Warrant.
 
(5)            By its delivery of this Exercise Notice, the undersigned
represents and warrants to the Company that in giving effect to the exercise
evidenced hereby the Holder will not beneficially own in excess of the number of
shares of Common Stock (as determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934) permitted to be owned under Section 11 of this
Warrant to which this notice relates.
 

 
HOLDER:
               
(Print Name)
         
By:
     
Name:
     
Title:
   

 
 

--------------------------------------------------------------------------------

 

 
WARRANT ORIGINALLY ISSUED JUNE 15, 2009
 
WARRANT NO. ____
 
FORM OF ASSIGNMENT
 
To be completed and signed only upon transfer of Warrant
 
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
__________ the right represented by the within Warrant to purchase __________
shares of Common Stock to which the within Warrant relates and appoints
__________ attorney to transfer said right on the books of the Company with full
power of substitution in the premises.
 
 
Dated:
 

 
TRANSFEROR:
               
(Print Name)
         
By:
     
Name:
     
Title:
   

 
TRANSFEREE:
               
(Print Name)
                     
(Address of Transferee)
 

In the presence of: