DELCATH SYSTEMS, INC.

                            2004 STOCK INCENTIVE PLAN

                       Nonqualified Stock Option Agreement



To:  [NAME]

     We are pleased to notify you that, by action of the Compensation and Stock
Option Committee (hereinafter called the "Committee") on [DATE] a nonqualified
stock option to purchase [NUMBER] shares of the Common Stock, $0.01 par value,
of Delcath Systems, Inc. (herein called the "Company"), at the price of
$[EXERCISE PRICE] per share (herein called the "Exercise Price") was approved
pursuant to the Company's 2004 Stock Incentive Plan (the "2004 Plan"). In
accordance with the provisions of Section 6.2 of the 2004 Plan, this Agreement
shall become effective upon your execution hereof. This option may be exercised
only upon the terms and conditions set forth below.

     Exercising options may not be a prudent business decision for some persons.
Therefore, we urge you to review this opportunity carefully and consult with
your own tax advisor prior to exercising this option as the decision as to
whether to exercise this option and the manner in which you exercise the option
should be guided by your personal financial and tax considerations.

     1. Purpose of Option.

     The purpose of the 2004 Plan under which this nonqualified stock option has
been granted is to further the growth and development of the Company and its
direct and indirect subsidiaries by encouraging selected employees, directors,
consultants, agents, independent contractors and other persons who contribute
and are expected to contribute materially to the Company's success to obtain a
proprietary interest in the Company through the ownership of stock, thereby
providing such persons with an added incentive to promote the best interests of
the Company, and affording the Company a means of attracting to its service
persons of outstanding ability.

     2. Acceptance of Option Agreement.

     Your execution of this nonqualified stock option agreement will indicate
your acceptance of and your willingness to be bound by its terms; it imposes no
obligation upon you to purchase any of the shares subject to the option. Your
obligation to purchase shares can arise only upon your exercise of the option in
the manner set forth in paragraph 4 hereof.


                                       2


<PAGE>



     3. When Option May Be Exercised.

     This option shall be exercisable as follows:

          (a) this option shall become exercisable on [DATE] as to [NUMBER]
of the shares covered hereby; and

          (b) this option shall become exercisable on [DATE] as to the
remaining [NUMBER] shares covered hereby.

     This option may not be exercised for fewer than ten shares at any one time
(or the remaining shares then purchasable if less than ten), may not be
exercised for fractional shares of the Company's Common Stock, and expires on
July 7, 2010 unless sooner terminated as provided in paragraph 5 hereof.

     4. How Option May Be Exercised.

     This option is exercisable by a written notice signed by you and delivered
to the Company at its executive offices, signifying your election to exercise
the option ("Notice of Exercise"). The Notice of Exercise, substantially in the
form attached hereto as Exhibit A, must state the number of shares of Common
Stock as to which your option is being exercised and must contain a statement by
you that such shares are being acquired by you for investment and not with a
view to their distribution or resale (unless a registration statement covering
the shares purchasable has been declared effective by the Securities and
Exchange Commission, with it being acknowledged by you that the Company shall
not be under any obligation to file any such registration statement). The
payment of the Exercise Price of an option shall be subject to the following:

          (a) Payment of Exercise Price. The Exercise Price shall be payable in
cash, check to the order of the Company or by tendering shares of Common Stock
that (i) you have held for at least six (6) months and (ii) are valued at Fair
Market Value, as defined in the Plan, as of the day of exercise, or in any
combination thereof, as determined by the Committee, for the full purchase price
of the shares being purchased, plus such amount, if any, as is required for
withholding taxes.

          (b) Net Issuance Exercise Right. You may elect to pay the Exercise
Price upon the exercise of this option by surrendering this option (or a portion
hereof) on a cash-free basis in exchange for shares of Common Stock acquired
upon exercise of this option. If you surrender this option (or a portion hereof)
as payment for the exercised shares, the number of exercised shares to be issued
to you will be equal to the product of (i) a fraction, the numerator of which
will be (a) the Fair Market Value of one share of Common Stock on the date of
exercise, less (b) the Exercise Price, and the denominator of which will be the
Fair Market Value of a share of Common Stock on the date of exercise, multiplied
by (ii) the number of options to be exercised (the "Formula"). The Formula may
also be represented as:



<PAGE>


                                                                               2


                                  X = (A - B) Y
                                      -------
                                        A

          Where:    X = the number of shares of Common Stock to be issued to the
                    Optionholder;

                    Y = the number of options to be exercised;

                    A = the Fair Market Value of one share of Common Stock on
                        the date of exercise; and

                    B = Exercise Price.

          (c) Unless the Company determines that it would not be permitted under
applicable law, you may elect to have the Company lend you sufficient funds to
pay the Exercise Price and any tax withholding resulting from such exercise upon
the exercise of an option.

          (d) If requested by the Company, a written acknowledgement by you, in
the form contained in the Notice of Exercise that an investment in the Common
Stock of the Company involves a high degree of risk, that you have received a
copy of the Company's financial statements for the most recently ended fiscal
year for which such statement is available (which shall be provided annually to
you by the Company), and that you have had the opportunity to ask questions of
management concerning the Company prior to the exercise of this option (the
Company to provide such information as you may reasonably request).

     The full Exercise Price for share of Common Stock purchased upon the
exercise of this option shall be paid at the time of such exercise.

     The Committee may cause each certificate evidencing the purchased Common
Stock to be endorsed with one or more legends setting forth the restrictions on
transfer or otherwise of such Common Stock.

     Certificates for shares of the Common Stock so purchased will be issued as
soon as practicable. The Company, however, shall not be required to issue or
deliver a certificate for any shares until it has complied with all requirements
of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934,
as amended, any stock exchange on which the Common Stock may then be listed and
all applicable state laws in connection with the issuance or sale of such shares
or the listing of such shares on said exchange. Until the issuance of the
certificate for such shares, you or such other person as may be entitled to
exercise this option, shall have none of the rights of a stockholder with
respect to shares subject to this option.

     You shall promptly advise the Company of any sale of shares of Common Stock
issued upon exercise of this option which occurs within one year from the date
of the exercise of this option.



<PAGE>


                                                                               3


     By your acceptance hereof, you agree that you will not sell, transfer,
pledge or otherwise dispose of any shares of Common Stock you acquire upon an
exercise of this option prior to the first anniversary of the date of such
exercise.

     5. Subject to Terms of the 2004 Plan.

     This Nonqualified Stock Option Agreement shall be subject in all respects
to the terms and conditions of the 2004 Plan and, in the event of any question
or controversy relating to the terms of the 2004 Plan, the decision of the
Committee shall be conclusive. THIS AGREEMENT SHALL BE NULL AND VOID AB INITIO,
AND THE OPTION GRANT REFLECTED HEREIN SHALL BE DEEMED FORFEITED, UNLESS THE
COMPANY RECEIVES, WITHIN TWO WEEKS OF ITS TENDER OF THIS AGREEMENT TO YOU, ONE
COPY HEREOF BEARING YOUR ORIGINAL COUNTERSIGNATURE BELOW.

     6. Tax Status.

     This option does not qualify as an "incentive stock option" under the
provisions of Section 422 of the Code, and the income tax implications of your
receipt of a nonqualified stock option and your exercise of such an option
should be discussed with your tax advisor.


                                         Sincerely yours,

                                         DELCATH SYSTEMS, INC.


                                         By:_______________________________
                                              Name:
                                              Title:



Agreed to and Accepted

this ___ day of [DATE].


----------------------------------
[NAME]


<PAGE>



                                                                       EXHIBIT A


                               NOTICE OF EXERCISE

            (To be Executed by an Optionholder to Purchase Shares of
   Common Stock of Delcath Systems, Inc. under its 2004 Stock Incentive Plan)



     The undersigned hereby irrevocably elects to exercise his or her right to
purchase ___________________ (__________) shares of Common Stock, $0.01 par
value per share (the "Shares"), of Delcath Systems, Inc. ("Delcath") as provided
by the Nonqualified Stock Option Agreement between the undersigned and Delcath,
dated ________________, and according to the conditions thereof, and hereby
makes payment of the Exercise Price for such Shares in the full amount of
$______________, by wire transfer or by check delivered herewith.

     By executing this Notice of Exercise, the undersigned represents and
warrants to Delcath that the following statements are true and correct:

     1. I am acquiring the shares of the Company's Common Stock for investment
purposes only and not with a view to their distribution or resale.

     2. I understand that an investment in the Common Stock of the Company
involves a high degree of risk and is suitable only for persons of adequate
financial means and should not be made by anyone who cannot afford the loss of
his or her entire investment.

     3. I have received and carefully read and am familiar with the Company's
financial statements for the most recently ended fiscal year for which such
statements are available.

     4. I acknowledge that I have had an opportunity to consult with counsel and
other advisers about acquiring the shares of the Company's Common Stock for
investment purposes.

     5. I have had the opportunity to ask questions of management concerning the
Company prior to the exercise of the option and the Company has made available
such information pertaining to my acquiring the Shares as I have reasonably
requested.


                              Signature:        ______________________________

                              Print Name:

                              Address:          ______________________________

                                                ______________________________

                                                ______________________________


Dated: ______________________