Document:

dcth-ex1040_226.htm

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.

[The remainder of the page is intentionally left blank]

 

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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:
	
 
	
 

 

4dcth-ex1042_229.htm

Exhibit 10.42

global settlement AGREEMENT

THIS GLOBAL SETTLEMENT AGREEMENT (the “Agreement”) is made as of April 18, 2019 (the “Effective Date”) by and among Delcath Systems, Inc. (“Plaintiff” or the “Company”), Iroquois Capital Investment Group, LLC (“Iroquois Capital”), Iroquois Master Fund Ltd. (“Iroquois Master”), and FirstFire Global Opportunities Fund LLC (“FirstFire” and with Iroquois Capital and Iroquois Master, “Defendants” each of which is a “Defendant” and with Plaintiff, the “Parties” each of which is a “Party”).

RECITALS

A.On or about February 9, 2018, Defendants and twelve other parties (the “Consenting Warrant Holders” and with Defendants, the “Warrant Holders”) purchased Series D Warrants to Purchase Two Shares of Common Stock (the “Warrants”) which Plaintiff issued pursuant to a prospectus and related documents filed with the United States Securities and Exchange Commission.

B.Plaintiff later identified what it has alleged is an erroneous cross-reference in the Warrants.

C.In late 2018, Plaintiff offered the Warrant Holders an opportunity to exchange their Warrants for shares of common stock in the Company pursuant to an exchange agreement (the “Exchange Agreement”).

D.As of March 26, 2019, eleven of the Consenting Warrant Holders had executed the Exchange Agreement.

E.On March 26, 2019, Plaintiff commenced an action against Defendants and the twelfth Consenting Warrant Holder in Supreme Court of the State of New York, New York County, captioned Delcath Systems, Inc. v. Iroquois Capital Investment Group LLC, et al., Index No. 651749/2019 (the “Reformation Action”).  The Reformation Action sought to reform the Warrants in the manner that Plaintiff contends is their intended meaning. The twelfth Consenting Warrant Holder subsequently executed the Exchange Agreement.

F.As of the date of this Agreement, Defendants are the only Warrant Holders who have not executed the Exchange Agreement and they are the only Defendants in the Reformation Action.

G.The Parties desire to resolve the Reformation Action without further litigation and, after arm’s length negotiations, have agreed to the settlement set forth in this Agreement.

 

 

SETTLEMENT TERMS

For good and valuable consideration, the receipt and sufficiency of which the Parties hereby acknowledge, the Parties agree to the following terms:

	
 
	
1.
	
Representations and Warranties of the Parties

Each of the Parties represents and warrants as follows:

(a)such Party is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has all necessary power and authority to enter into this Agreement, to carry out the obligations it imposes and to consummate the transactions it requires to be consummated (the “Transactions”);

(b)the execution, delivery and performance by such Party of its obligations hereunder and consummation by such Party of the Transactions have been duly authorized by all necessary actions on the part of such Party;

(c)this Agreement constitutes a legal, valid and binding obligation of such Party enforceable against such Party in accordance with its terms; and

(d)the execution, delivery and performance by such Party of its obligations hereunder will not be ultra vires or violate, conflict with or result in the breach of any provision of the organizational documents of such Party.

	
 
	
2.
	
Settlement Terms

In consideration of this Agreement:

(a)On the Effective Date, Defendants shall surrender the Warrants to the Company and shall thereupon waive all of the rights granted by or in connection with the Warrants;

(b)On the Effective Date, Defendants shall waive any and all rights under the Defendants’ respective Stock Purchase Agreements dated as of February 9, 2018 with respect to participation in the Company’s future common stock offerings;

(c)Within three business days of the Effective Date, Plaintiff shall pay Defendants’ counsel one-fifth of the reasonable, documented, out-of-pocket fees, costs, and expenses Defendants’ counsel incurred in connection with the Reformation Action and this Agreement, the total of which shall not exceed $50,000.00 (“Defendants’ Legal Fees”);

(d)Plaintiff shall pay Defendants $400,000.00 (the “Settlement Payment”); provided, however, that this payment will be made only if Plaintiff secures and closes financing in the form of a Private Investment in Public Equity or similar-type transaction (“PIPE Financing”) such that Plaintiff can continue its operations without filing for bankruptcy protection; and provided further, that Plaintiff’s failure to secure and close such PIPE Financing 

 

 

and make the Settlement Payment within five business days of securing and closing such PIPE Financing, shall void this Agreement in its entirety;1

(e)Contemporaneously with Plaintiff’s payment of the Settlement Payment, Plaintiff shall pay Defendants’ counsel the remaining eighty percent (80%) of Defendants’ Legal Fees; and

(f)Plaintiff shall either withdraw the Reformation Action or file a notice of discontinuance of the Reformation Action, either as applicable, within five business days of making the Settlement Payment.

	
 
	
3.
	
General Releases

(a)As of the Effective Date, Plaintiff hereby forever releases (i) each of Defendants and (ii) each of their respective past and present parent companies, divisions, subsidiaries, affiliates, joint ventures, predecessors, successors, transferees, assigns, subrogees, insurers, co-insurers, reinsurers, representatives, agents, stockholders or owners of Defendants (collectively, the “Defendant Releasees”), from any and all claims, including, without limitation, defaults, obligations, rights, damages, causes of action, demands, suits, judgments, remedies, setoffs, recoupments, defenses, debts, and liabilities of any kind or nature whatsoever, under any legal theory, including under contract, tort, or otherwise, whether at law, in equity, or otherwise, whether known or unknown, matured or unmatured, fixed or contingent, liquidated or unliquidated, disputed or undisputed, asserted or unasserted, suspected or unsuspected, foreseen or unforeseen, direct or indirect, choate or inchoate, now existing or hereafter arising) (each a “Claim”) that Plaintiff may now have, has ever had or may in the future have, against a Defendant Releasee arising prior to the Effective Date hereof. 

(b)As of the Effective Date, each Defendant hereby forever releases (i) Plaintiff and (ii) its past and present parent companies, divisions, affiliates, joint ventures, predecessors, successors, transferees, assigns, subrogees, insurers, co-insurers, reinsurers, representatives, agents, stockholders or owners (collectively, the “Plaintiff Releasees”), from any Claim that any Defendant or any affiliate of any Defendant may now have, has ever had or may in the future have, against a Plaintiff Releasee arising prior to the Effective Date hereof.

(c)Notwithstanding the foregoing, no Party hereby releases claims arising out of, related to or in connection with (i) its rights or obligations under, or actions required by, this Agreement, or (ii) rights under or in connection with the Company’s securities other than the Warrants.

	
 
	
4.
	
Counterparts

This Agreement may be executed in counterparts, each of which shall be an original and all which together shall constitute a single agreement.

	
	 

	
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For the avoidance of doubt, the Settlement Payment shall not be due and payable upon any bridge financings of up to and cumulatively including $5.0 million.

 

 

	
 
	
5.
	
Amendments

No amendment, modification or waiver in respect of this Agreement will be effective unless in writing (including writing evidenced by facsimile transmission or electronic transmission of a Portable Document Format file) and executed by each of the parties hereto.

	
 
	
6.
	
Severability

If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced under any Law or public policy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect.  Upon a determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good faith to modify this Agreement so as to effectuate the original intent of the parties as closely as possible so that the Transactions are consummated as originally contemplated to the greatest extent possible.

	
 
	
7.
	
Entire Agreement

This Agreement sets forth the entire understanding and agreement between the parties as to the matters addressed herein and supersedes and replaces any prior understanding, agreement or statement of intent, written or oral.

	
 
	
8.
	
Binding Nature

The terms and provisions of this Agreement shall be binding in all respects on, and shall inure to the benefit of, the Parties, their successors and assigns.  No other person or entity shall have rights under this Agreement.

	
 
	
9.
	
Joint Drafting

This Agreement is the product of arm’s length negotiations between the Parties and any rule of construction that ambiguities are to be resolved against the drafting Party shall not apply in the interpretation of this Agreement.

	
 
	
10.
	
No Admissions 

This Agreement reflects a compromise of disputed claims and shall not be construed as an admission against any Party’s interest and shall not be used as or deemed to be evidence of any liability by any Party in any proceeding before any court, except in a proceeding to enforce the terms of this Agreement.

	
 
	
11.
	
Governing Law

Except as provided for herein, this Agreement shall be interpreted under and governed by the laws of the State of New York without giving effect to any conflicts of law provisions thereof that would make the law of any other jurisdiction applicable to this Agreement.

 

 

IN WITNESS WHEREOF, Plaintiff and the Defendants each caused this instrument to be signed by their duly authorized representatives, as of the date first above written.

 

		
	
DELCATH SYSTEMS, INC.

	
 

	
By:
	
 

	
 
	
Name: 

	
 
	
Title:

	
 

	
IROQUOIS CAPITAL INVESTMENT GROUP, LLC

	
 

	
By:
	
 

	
 
	
Name:

	
 
	
Title:

	
 

	
IROQUOIS MASTER FUND LTD.

	
 

	
By:
	
 

	
 
	
Name:

	
 
	
Title:

	
 
	
 

	
FIRSTFIRE GLOBAL OPPORTUNITIES FUND LLC

	
 

	
By:
	
 

	
 
	
Name:

	
 
	
Title:

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