Document:

Exhibit 10.2

FORM OF SUBSCRIPTION AGREEMENT

Delcath
Systems, Inc.

600 Fifth Avenue

23rd Floor

New York, New York 10017

Ladies and
Gentlemen:

The
undersigned (the “Investor”)
hereby confirms and agrees with you as follows: 

1. This
Subscription Agreement (this “Agreement”)
is made as of the date set forth below between Delcath Systems, Inc., a
Delaware corporation (the “Company”)
and the Investor.

2. The
Company has authorized the sale and issuance to certain investors of up to
3,833,108 shares (the “Shares”) of its common stock, par value
$0.01 per share (the “Common Stock”) and warrants (the
“Warrants” in the form attached hereto as Exhibit
B) to purchase up to 1,916,554 shares of Common Stock (the “Warrant
Shares”)(such number being 50% of
the number of Shares so purchased) for a purchase price of $3.70 per unit (the
“Purchase Price”). The Shares and
Warrants are referred to collectively herein as the “Securities.” The
Investor acknowledges that the Company intends
to enter into subscription agreements in substantially the same form as this
Agreement with certain other investors. The Investor acknowledges and agrees
that there is no minimum offering amount.

3. The
offering and sale of the Securities (the “Offering”) is being made
pursuant to (a)
an effective Registration Statement on Form S-3, initially filed on May 25,
2007 (No. 333-143280) by the Company with the Securities Exchange Commission
(the “Commission”)
and any registration statement relating to the Offering and filed pursuant to
Rule 462(b) under the Rules and Regulations (collectively, the “Registration
Statement”), which
contains the base prospectus dated May 25, 2007 (the “Base
Prospectus”), (b) if
applicable, certain “free writing prospectus” (as that term is defined in
Rule
405 under the Securities Act of 1933, as amended), that have or will be filed
with the Commission and delivered to the Investor on or prior to the date
hereof, (c) if applicable, a preliminary prospectus supplement to the Base
Prospectus (together with the Base Prospectus, the “Statutory
Prospectus”), and (d) a final prospectus
supplement (the “Prospectus Supplement” and together with the Base
Prospectus, the “Prospectus”) containing certain supplemental
information
regarding the Securities and terms of the Offering that will be filed with the
Commission and delivered to the Investor (or made available to the Investor by
the filing by the Company of an electronic version thereof with the Commission)
along with the Company’s counterpart to this Agreement. The Investor hereby
consents
to the receipt of the Company’s Prospectus in portable document format, or PDF,
via electronic e-mail. The Investor hereby confirms that it has had full access
to the Base Prospectus and the Company’s periodic reports and other information
incorporated by reference therein, and was able to read, review, download and
print such materials.

4. As
of the Closing (as defined below) and subject to the terms and conditions
hereof, the Company and the Investor agree that the Investor will purchase from
the Company and the Company will issue and sell to the Investor (i) such number
of shares of Common Stock, and (ii) such number of Warrants as is set forth on
the signature page hereto (the “Signature
Page”) for a purchase price of $3.70 per unit. The Investor acknowledges
that the Offering is not a firm commitment underwriting and that there is no
minimum offering amount. This offering will not clear directly through the

Placement
Agents (as defined below) acting in such capacity. Consequently, the Investor
must instruct their individual broker how to settle the transaction.

5. The
completion of the purchase and sale of the Securities (the
“Closing”)
shall occur at a place and time (the “Closing Date”) to be
specified by the
Company and the Lead Placement Agent (as defined below), and of which the
Investors will be notified in advance by the Placement Agents, in accordance
with Rule 15c6-1 promulgated under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). At the Closing, (a) the Company shall
cause
American Stock Transfer & Trust Company, the Company’s transfer agent, to
deliver to the Investor the number of Securities set forth on the Signature
Page registered in the name of the Investor, or if so indicated on the
Signature Page hereto, in the name of a nominee designated by the Investor and
(b) the aggregate purchase price for the Securities being purchased by the
Investor will be delivered by or on behalf of the Investor to the Company via
Delivery Versus Payment (“DVP”), the provisions set forth in Exhibit
A
hereto shall be incorporated herein by reference as if set forth fully
herein.

6. The
Company has entered into a Placement Agency Agreement (the “Placement
Agreement”), dated September 18, 2007 with Canaccord Adams Inc.
(“Canaccord”) and ThinkEquity Partners LLC
(“ThinkEquity” and together with
Canaccord, the “Placement Agents”), which will act as the
Company’s
placement agents with respect to the Offering and receive a fee in connection
with the sale of the Securities. Canaccord is acting as the lead placement
agent (the “Lead Placement Agent”).
The Placement Agreement contains certain representations and warranties of the
Company. The Company acknowledges and agrees that the Investor may rely on the
representations and warranties made by it to the Placement Agents in Section 2
of the Placement Agreement to the same extent as if such representations and
warranties had been incorporated in full herein and made directly to the
Investor, which shall be third party beneficiary thereof. 

7. The
obligations of the Company and the Investor to complete the transactions
contemplated by this Agreement shall be subject to the following:

          (a)
The Company’s obligation to issue and sell the
Securities to the Investor shall be subject to: (i) the receipt by the Company
of the purchase price for the Securities being purchased hereunder as set forth
on the Signature Page, and (ii) the accuracy of the representations and
warranties made by the Investor and the fulfillment of those undertakings of the
Investor to be fulfilled prior to the Closing Date.

          (b)
The Investor’s obligation to purchase the Securities
will be subject to the accuracy of the representations and warranties made by
the Company and the fulfillment of those undertakings of the Company to be
fulfilled prior to the Closing Date, including without limitation, those
contained in the Placement Agreement, and to the condition that the Lead
Placement Agent shall not have: (i) terminated the Placement Agreement pursuant
to the terms thereof or (ii) determined that the conditions to closing in the
Placement Agreement have not been satisfied. The Investor’s obligations are
expressly not conditioned on the purchase of the Securities by any or all of
the other Investors that they have agreed to purchase from the Company.

8. The
Company hereby makes the following representations, warranties and covenants to
the Investor:

          (a)
The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by this
Agreement and otherwise to carry out its

obligations
hereunder. The execution and delivery of this Agreement by the Company and the
consummation by it of the transactions contemplated hereunder have been duly
authorized by all necessary action on the part of the Company. This Agreement
has been duly executed by the Company and, when delivered in accordance with
the terms hereof, will constitute the valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
may be limited by any bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws affecting the enforcement of
creditors’ rights generally or by general principles of equity.

          (b)
The Company shall (i) before the opening of trading on
The NASDAQ Capital Market on the next trading day after the date hereof, issue
a press release, disclosing all material aspects of the transactions
contemplated hereby and (ii) make such other filings and notices in the manner
and time required by the Commission with respect to the transactions
contemplated hereby. Upon the issuance of the press release described in the
immediately preceding sentence, the Investor will not be in receipt of any
material, non-public information provided to it by the Company, its officers or
directors. The Company shall not identify the Investor by name in any press
release or public filing, or otherwise publicly disclose the Investor’s name,
without the Investor’s prior written consent, unless required by law or the
rules and regulations of any self-regulatory organization which the Company or
its securities are subject.

          (c)
If all or any portion of a Warrant is exercised at a
time when there is an effective registration statement to cover the issuance or
resale of the Warrant Shares or if the Warrant is exercised via cashless
exercise, the Warrant Shares issued pursuant to any such exercise shall be
issued free of all legends. If at any time following the date hereof the
Registration Statement (or any subsequent registration statement registering
the Warrant Shares) is not effective or is not otherwise available for the sale
or resale of the Warrant Shares, the Company shall immediately notify the
holders of the Warrants in writing that such registration statement is not then
effective and thereafter shall promptly notify such holders when the
registration statement is effective again and available for the sale or resale
of the Warrant Shares. The Company shall use best efforts to keep a
registration statement (including the Registration Statement) registering the
issuance or resale of the Warrant Shares effective during the term of the
Warrants.

          (d)
The Company will file with the Commission the annual
reports and the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may by rules and regulations
prescribe) that are specified under Sections 13 and 15(d) of the Exchange Act
within the time periods specified therein or in the relevant forms.

          (e)
The Company will not give the Investor any material
non-public information without the prior written consent of the Investor.

9. The
Investor hereby makes the following representations, warranties and covenants
to the Company:

          (a)
The Investor represents that (i) it has had full
access to the Base Prospectus and the Company’s periodic reports and other
information incorporated by reference therein, prior to or in connection with
its receipt of this Agreement, (ii) it is knowledgeable, sophisticated and
experienced in making, and is qualified to make, decisions with respect to
investments in securities representing an investment decision like that
involved in the purchase of the Securities, and (iii) it does not have any

agreement or
understanding, directly or indirectly, with any person or entity to distribute
any of the Securities.

          (b)
The Investor represents and warrants to, and covenants
with, the Company that (i) the Investor has answered all questions on the
Signature Page for use in preparation of the Prospectus Supplement and the
answers thereto are true and correct as of the date hereof and will be true and
correct as of the Closing Date and (ii) the Investor, in connection with its
decision to purchase the number of Securities set forth on the Signature Page,
is relying only upon the General Disclosure Package (as defined below) and the
representations and warranties of the Company contained herein.

          (c)
(i) the Investor has full right, power, authority and
capacity to enter into this Agreement and to consummate the transactions
contemplated hereby and has taken all necessary action to authorize the
execution, delivery and performance of this Agreement, and (ii) this Agreement
constitutes a valid and binding obligation of the Investor enforceable against
the Investor in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors’ and contracting parties’ rights
generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) and except as the indemnification agreements of the Investors
herein may be legally unenforceable.

          (d)
The Investor understands that nothing in this
Agreement or any other materials presented to the Investor in connection with
the purchase and sale of the Securities constitutes legal, tax or investment
advice. The Investor has consulted such legal, tax and investment advisors as
it, in its sole discretion, has deemed necessary or appropriate in connection
with its purchase of Securities.

          (e)
The making, execution and performance of this
Agreement by the Investor and the consummation of the transactions contemplated
herein will not conflict with or result in a breach or violation of any of the
terms and provisions of, or constitute a default under, (i) the charter, bylaws
or other organizational documents of such Investor, as applicable, or (ii) any
law, order, rule, regulation, writ, injunction, judgment or decree of any
court, administrative agency, regulatory body, government or governmental
agency or body, domestic or foreign, having jurisdiction over such Investor or
its properties, except for any conflict, breach, violation or default which is
not reasonably likely to have a material adverse effect on such Investor’s
performance of its obligations hereunder or the consummation of the
transactions contemplated hereby. 

          (f)
The Investor will maintain the confidentiality of all
information acquired as a result of the transactions contemplated herein prior
to the public disclosure of that information by the Company. Notwithstanding
the foregoing, other than the existence and terms of this financing, the
Investor is not in possession of any material, non-public information
pertaining to the Company.

          (g)
Neither the Investor nor any person or entity acting
on behalf of, or pursuant to any understanding with or based upon any
information received from, the Investor has, directly or indirectly, engaged in
any transactions in the securities of the Company (including, without
limitation, any Short Sales involving the Company’s securities) since the
earlier to occur of (i) the time that the Investor was first contacted by a
Placement Agent or the Company with respect to the transactions contemplated
hereby and (ii) the date that is the fifth (5th) trading day prior
to the date of this Agreement. “Short Sales” include, without limitation,
all
“short sales” as defined in Rule 200 promulgated under Regulation SHO
under the
Exchange Act, whether or not against the box, and all types of direct and
indirect stock pledges, forward sale contracts, options, puts, calls, swaps,
“put

equivalent
positions” (as such term is defined in Rule 16a-1(h) under the Exchange Act)
and similar arrangements (including on a total return basis), and sales and
other transactions through non-U.S. broker dealers or foreign regulated brokers
(but shall not be deemed to include the location or reservation of borrowable
shares of the Company’s securities). The Investor covenants that neither it,
nor any person acting on behalf of, or pursuant to any understanding with or
based upon any information received from, the Investor will engage in any
transactions in the securities of the Company (including Short Sales) prior to
the time that the transactions contemplated by this Agreement are publicly
disclosed. 

          (h)
The Investor represents that, except as set forth
below, (i) it has had no position, office or other material relationship within
the past three years with the Company or persons known to it to be affiliates
of the Company, (ii) it is not a, and it has no direct or indirect affiliation
or association with any, Financial Industry Regulatory Authority
(“FINRA”) member or an Associated Person (as
such term is defined under the FINRA Membership and Registration Rules Section
1011) as of the date hereof, and (iii) neither it nor any group of investors
(as identified in a public filing made with the Commission) of which it is a
member, acquired, or obtained the right to acquire, 20% or more of the Common
Stock (or securities convertible or exercisable for Common Stock) or the voting
power of the Company on a post-transaction basis. Exceptions:

	
 

	

	
(If no exceptions, write “none.” If left
blank, response will be
 deemed to be “none.”)

          (i)
The Investor represents that it has received (or
otherwise had made available to it by the filing by the Company of an
electronic version thereof with the Commission) the Statutory Prospectus, the
documents incorporated by reference therein, and any free writing prospectus
(collectively, the “General Disclosure Package”), prior to or in connection
with the receipt of this Agreement. The Investor acknowledges that, prior to
delivery of this Agreement to the Company, the Investor will receive certain
additional information regarding the Offering, including pricing information
(the “Offering Information”). Such information may be provided to the
Investor
by any means permitted under the Act, including the Prospectus Supplement, a
free writing prospectus and oral communications. 

          (j)
The Investor acknowledges that no offer by the
Investor to buy Securities will be accepted and no part of the Purchase Price
will be delivered to the Company until the Investor has received the Offering
Information and the Company has accepted such offer by countersigning a copy of
the Agreement, and any such offer may be withdrawn or revoked, without
obligation or commitment of any kind, at any time prior to the Company (or a
Placement Agent on behalf of the Company) sending (orally, in writing or by
electronic mail) notice of its acceptance of such offer. Any indication of
interest will involve no obligation or commitment of any kind until the
Investor has been delivered the Offering Information and this Agreement is
accepted and countersigned by or on behalf of the Company.

          (k)
The Investor, if outside the United States, will
comply with all applicable laws and regulations in each foreign jurisdiction in
which it purchases, offers, sells or delivers Securities or has in its
possession or distributes any offering material, in all cases at its own
expense.

10. Notwithstanding
anything to the contrary contained herein, the number of Warrant Shares that
may be acquired by the Investor upon exercise of the Warrant shall be limited
to the extent necessary to insure that, following such exercise (or other
issuance), the total number of shares of Common Stock

then
beneficially owned by such Investor and its Affiliates (as such term is defined
in the Warrant) and any other Persons (as such term is defined in the Warrant)
whose beneficial ownership of Common Stock would be aggregated with the
Investor’s for purposes of Section 13(d) of the Exchange Act, does not exceed
9.999% 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.

11. Notwithstanding
any investigation made by any party to this Agreement, all covenants,
agreements, representations and warranties made by the Company and the Investor
herein will survive the execution of this Agreement, the delivery to the
Investor of the Securities being purchased and the payment therefor. The
Placement Agents shall be third party beneficiaries with respect to
representations, warranties and agreements of the Investor in Section 9
hereof.

12. This
Agreement may not be modified or amended except pursuant to an instrument in
writing signed by the Company and the Investor.

13. In
case any provision contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein will not in any way be affected or
impaired thereby.

14. This
Agreement will be governed by, and construed in accordance with, the internal
laws of the State of New York, without giving effect to the principles of
conflicts of law that would require the application of the laws of any other
jurisdiction.

15. This
Agreement may be executed in two or more counterparts, each of which will
constitute an original, but all of which, when taken together, will constitute
but one instrument, and will become effective when one or more counterparts
have been signed by each party hereto and delivered to the other parties. The
Company and the Investor acknowledge and agree that the Company shall deliver
its counterpart to the Investor along with the Prospectus Supplement (or the
filing by the Company of an electronic version thereof with the Commission).

16. The
Investor acknowledges and agrees that such Investor’s receipt of the
Company’s
counterpart to this Agreement, together with the Prospectus Supplement (or the
filing by the Company of an electronic version thereof with the Commission),
shall constitute written confirmation of the Company’s sale of Securities to
such Investor.

17. In
the event that the Placement Agreement is terminated by the Lead Placement
Agent pursuant to the terms thereof, this Agreement shall terminate without any
further action on the part of the parties hereto. 

18. This
Agreement constitutes the entire agreement among the parties hereof with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter hereof and thereof.

INVESTOR SIGNATURE PAGE

	
 

	
 

	
Number of
 Shares:

	
 

	
 

	

	
 

	
 

	
 

	
 

	
Number of
 Warrants:

	
 

	
 

	

	
 

	
 

	
(such number
 to be equal to 50% of the number of Shares being purchased by the
Investor)

	
 

	
 

	
Purchase
 Price Per Unit: $3.70

	
 

	
 

	
 

	
 

	
Aggregate
 Purchase Price: $

	
 

	
 

	

Please confirm
that the foregoing correctly sets forth the agreement between us by signing in
the space provided below for that purpose.

Dated as of: September 18, 2007

	
 

	
 

	

	
INVESTOR

	
 

	
 

	
 

	
 

	
By:

	
 

	

	
 

	
 

	
Print Name:

	
 

	

	
 

	
 

	
Title:

	
 

	

	
 

	
 

	
Name that
 Securities are to be registered: 

	
 

	

	
 

	
 

	
Mailing
 Address: 

	
 

	

	
 

	
 

	

	
 

	
 

	

	
 

	
 

	
Taxpayer
 Identification Number: 

	
 

	
 

	

	
Manner of
 Settlement: DVP (see Exhibit A for explanation and instructions)

Agreed and
Accepted this 18th day of September 2007:

DELCATH SYSTEMS, INC.

	
 

	
 

	
By:

	
 

	
 

	

	
Name: 

	
Title:

Sales of the Securities purchased hereunder
were made pursuant to a registration statement or in a transaction in which a
final prospectus would have been required to have been delivered in the absence
of Rule 172 promulgated under the Securities Act.

Exhibit A

TO BE COMPLETED BY INVESTOR

SETTLING VIA DVP

Delivery
versus payment (“DVP”) through DTC (i.e., the Company shall deliver
Shares
registered in the Investor’s name and address as set forth on the Signature
Page of the Agreement to which this Exhibit A is attached and released
by American Stock Transfer & Trust Company, the Company’s transfer agent,
to the Investor at the Closing directly to the account(s) at the Placement
Agents identified by the Investor and simultaneously therewith payment shall be
made from such account(s) to the Company through DTC). NO LATER THAN ONE (1)
BUSINESS DAY AFTER
THE EXECUTION OF THE AGREEMENT TO WHICH THIS EXHIBIT A IS ATTACHED BY
THE INVESTOR AND THE COMPANY, THE INVESTOR SHALL:

	
 

	
 

	
(I)

	
NOTIFY THE PLACEMENT AGENT OF THE ACCOUNT OR ACCOUNTS AT THE
 PLACEMENT AGENT TO BE CREDITED WITH THE SHARES BEING PURCHASED BY SUCH
 INVESTOR, AND 

	
 

	
 

	
(II)

	
CONFIRM THAT THE ACCOUNT OR ACCOUNTS AT THE PLACEMENT AGENT TO BE
 CREDITED WITH THE SHARES BEING PURCHASED BY THE INVESTOR HAVE A MINIMUM
 BALANCE EQUAL TO THE AGGREGATE PURCHASE PRICE FOR THE SHARES BEING PURCHASED
 BY THE INVESTOR. 

If the Shares
are to be further credited to an account held elsewhere than at the Placement
Agents, please complete the information requested below in order to facilitate
such further credit:

	
 

	
 

	
 

	
 

	
 

	
Name of DTC
 Participant (broker-dealer at which the account or accounts to be credited
 with the Shares are maintained)

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
DTC
 Participant Number

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
Name of
 Account at DTC Participant being credited with the Shares

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
Account
 Number at DTC Participant being credited with the Shares

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
Address for
 Notice and Delivery of Warrants

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
Facsimile:

	
 

	
 

	
 

	
 

	
 

	

	
 

	
 

	
 

	
 

	
 

	
Attention:

	
 

	
 

	
 

	
 

	
 

	

Exhibit B

FORM OF WARRANTExhibit 10.3

Form of Warrant

          THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFER AS SET FORTH IN SECTION 3
HEREOF.

DELCATH SYSTEMS, INC.

WARRANT

	
 

	
 

	
Warrant No.
 _____

	
Original Issue Date: September __, 2007 

	
 

	
(“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 $4.53 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 date occurring six months after the Closing
Date (the “Trigger Date”) and
through and including September __, 2012 (the “Expiration
Date”), and subject to the following terms and conditions:

          This
Warrant is one of a series of warrants issued pursuant to those certain
Subscription Agreements, each dated September 18, 2007, by and between the
Company and each of the purchasers identified therein (the “Subscription Agreements”). All such
warrants are referred to herein, collectively, as the “Warrants.” The original issuance of the
Warrants by the Company pursuant to the Subscription Agreements 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 Agreements.

          “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” 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

2

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.

                    (c)
If, at the time of the surrender of this Warrant in connection with any
transfer of this Warrant, the transfer of this Warrant shall not be registered
pursuant to an effective registration statement under the Securities Act of
1933, as amended (the “Securities Act”)
and under applicable state securities or blue sky laws, the Company may
require, as a condition of allowing such transfer (i) that the Holder or
transferee of this Warrant, as the case may be, furnish to the Company a
written opinion of counsel (which opinion shall be in form, substance and scope
customary for opinions of counsel in comparable transactions) to the effect
that such transfer may be made without registration under the Securities Act
and under applicable state securities or blue sky laws, (ii) that the
Holder or transferee execute and deliver to the Company an investment letter in
form and substance acceptable to the Company and (iii) that the transferee
be an “accredited investor” as defined in Rule 501(a) promulgated under the
Securities Act.

          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 Trigger 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 Trigger Date and through and
including the Expiration Date.

                    (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.

          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

3

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
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(k) 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 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 the Depository Trust and Clearing
Corporation.

                    (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 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.

4

          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. 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.

          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.

                    (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

5

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 (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 Common
Stock are permitted to tender or exchange their shares for other securities,
cash or property, or (iv) the Company effects any reclassification of the
Common Stock or any compulsory share exchange pursuant to which the 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 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 that is (1) an all cash transaction, (2)
a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”), or (3) a Fundamental Transaction involving a person or
entity not traded on a national securities exchange, the Nasdaq Global Select
Market, the Nasdaq Global Market, or the Nasdaq Capital Market, the Company or
any successor entity shall pay 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 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

6

as of the date
of consummation of the applicable Fundamental Transaction and (iii) an expected
volatility equal to the 100 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 transactions
analogous to a Fundamental Transaction.

                    (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)
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.

                    (f)
Adjustment upon issuance of shares of Common Stock. The Exercise Price and the number of Warrant
Shares shall be adjusted from time to time if and whenever on or after
the Issue Date, the Company issues or sells, or is deemed to have issued or
sold, any shares of Common Stock (including the issuance or sale of shares of
Common Stock owned or held by or for the account of the Company for a
consideration per share (the “New Issuance
Price”) less than a price (the “Applicable Price”) equal to the Exercise Price in effect
immediately prior to such issue or sale or deemed issuance or sale (the
foregoing a “Dilutive Issuance”),
then immediately after such Dilutive Issuance, the Exercise Price then in
effect shall be reduced to an amount equal to the New Issuance Price. Upon each
such adjustment of the Exercise Price hereunder, the number of Warrant Shares
shall be adjusted to the number of shares of Common Stock determined by
multiplying the Exercise Price in effect immediately prior to such adjustment
by the number of Warrant Shares acquirable upon exercise of this Warrant
immediately prior to such adjustment and dividing the product thereof by the
Exercise Price resulting from such adjustment. For purposes of determining the adjusted
Exercise Price under this Section 9(f), the following shall be applicable: 

	
 

	
 

	
 

	
(i) Issuance
 of Options. If the Company in any manner grants any Options and the
 lowest price per share for which one share of Common Stock is issuable upon
 the exercise of any such Option or upon conversion, exercise or exchange of
 any Convertible Securities issuable upon exercise of any such Option is less
 than the Applicable Price, then such share of Common Stock shall be deemed to
 be outstanding and to have been issued and sold by the Company at the time of
 the granting or sale of such Option for such price per share. For purposes of
 this Section 9(f)(i), the “lowest price per share for which one share of
 Common Stock is issuable upon exercise of such Options or upon conversion,
 exercise or exchange of such Convertible Securities issuable upon exercise of
 any such Option” shall be equal to the sum of the lowest amounts of
 consideration (if any) received or receivable by the Company with respect to
 any one share of Common

7

	
 

	
 

	
 

	
Stock upon
 the granting or sale of the Option, upon exercise of the Option and upon
 conversion, exercise or exchange of any Convertible Security issuable upon
 exercise of such Option. No further adjustment of the Exercise Price or
 number of Warrant Shares shall be made upon the actual issuance of such
 shares of Common Stock or of such Convertible Securities upon the exercise of
 such Options or upon the actual issuance of such shares of Common Stock upon
 conversion, exercise or exchange of such Convertible Securities. 

	
 

	
 

	
 

	
(ii) Issuance
 of Convertible Securities. If the Company in any manner issues or sells
 any Convertible Securities and the lowest price per share for which one share
 of Common Stock is issuable upon the conversion, exercise or exchange thereof
 is less than the Applicable Price, then such share of Common Stock shall be
 deemed to be outstanding and to have been issued and sold by the Company at
 the time of the issuance or sale of such Convertible Securities for such
 price per share. For the purposes of this Section 9(f)(ii), the “lowest price
 per share for which one share of Common Stock is issuable upon the
 conversion, exercise or exchange thereof” shall be equal to the sum of the
 lowest amounts of consideration (if any) received or receivable by the
 Company with respect to one share of Common Stock upon the issuance or sale
 of the Convertible Security and upon conversion, exercise or exchange of such
 Convertible Security. No further adjustment of the Exercise Price or number
 of Warrant Shares shall be made upon the actual issuance of such shares of
 Common Stock upon conversion, exercise or exchange of such Convertible
 Securities, and if any such issue or sale of such Convertible Securities is
 made upon exercise of any Options for which adjustment of this Warrant has
 been or is to be made pursuant to other provisions of this Section 9(f), no
 further adjustment of the Exercise Price or number of Warrant Shares shall be
 made by reason of such issue or sale. 

	
 

	
 

	
 

	
(iii) Change
 in Option Price or Rate of Conversion. If the purchase price provided for
 in any Options, the additional consideration, if any, payable upon the issue,
 conversion, exercise or exchange of any Convertible Securities, or the rate
 at which any Convertible Securities are convertible into or exercisable or
 exchangeable for shares of Common Stock increases or decreases at any time,
 then the Exercise Price and the number of Warrant Shares in effect at the
 time of such increase or decrease shall be adjusted to the Exercise Price and
 the number of Warrant Shares which would have been in effect at such time had
 such Options or Convertible Securities provided for such increased or
 decreased purchase price, additional consideration or increased or decreased
 conversion rate, as the case may be, at the time initially granted, issued or
 sold. For purposes of this Section 9(f)(iii), if the terms of any Option or
 Convertible Security that was outstanding as of the date of issuance of this
 Warrant are increased or decreased in the manner described in the immediately
 preceding sentence, then such Option or Convertible Security and the shares
 of Common Stock deemed issuable upon exercise, conversion or exchange thereof
 shall be deemed to have been issued as of the date of such increase or decrease.
 No adjustment pursuant to this Section 9(f) shall be made if such adjustment
 would result in an increase of the Exercise Price then in effect or a
 decrease in the number of Warrant Shares. 

8

	
 

	
 

	
 

	
(iv) Calculation
 of Consideration Received. In case any Option is issued in connection
 with the issue or sale of other securities of the Company, together
 comprising one integrated transaction in which no specific consideration is
 allocated to such Options by the parties thereto, the Options will be deemed
 to have been issued for a consideration of $0.01. If any shares of Common
 Stock, Options or Convertible Securities are issued or sold or deemed to have
 been issued or sold for cash, the consideration received therefor will be
 deemed to be the net amount received by the Company therefor. If any shares
 of Common Stock, Options or Convertible Securities are issued or sold for a
 consideration other than cash, the amount of such consideration received by the
 Company will be the fair value of such consideration, except where such
 consideration consists of securities, in which case the amount of
 consideration received by the Company will be the Weighted Average Price of
 such security on the date of receipt. If any shares of Common Stock, Options
 or Convertible Securities are issued to the owners of the non-surviving
 entity in connection with any merger in which the Company is the surviving
 entity, the amount of consideration therefor will be deemed to be the fair
 value of such portion of the net assets and business of the non-surviving
 entity as is attributable to such shares of Common Stock, Options or
 Convertible Securities, as the case may be. The fair value of any
 consideration other than cash or securities will be determined jointly by the
 Company and the Required Holders. If such parties are unable to reach
 agreement within ten (10) days after the occurrence of an event requiring
 valuation (the “Valuation Event”),
 the fair value of such consideration will be determined within five (5)
 Business Days after the tenth (10th) day following the Valuation Event by an
 independent, reputable appraiser jointly selected by the Company and the
 Required Holders. The determination of such appraiser shall be final and binding
 upon all parties absent manifest error and the fees and expenses of such
 appraiser shall be borne by the Company. 

	
 

	
 

	
 

	
(v) Record
 Date. If the Company takes a record of the holders of shares of Common
 Stock for the purpose of entitling them (A) to receive a dividend or other
 distribution payable in shares of Common Stock, Options or in Convertible
 Securities or (B) to subscribe for or purchase shares of Common Stock,
 Options or Convertible Securities, then such record date will 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. 

	
 

	
 

	
 

	
(vi) If the
 Company has not obtained shareholder approval that may be required under
 applicable law, rules or regulations, then the Company may not issue upon
 exercise of this Warrant a number of shares of Common Stock, which, when
 aggregated with any shares of Common Stock issued upon prior exercise of this
 or any other Warrant issued pursuant to the Subscription Agreements, would
 exceed 3,719,814, subject to adjustment for reverse and forward stock splits,
 stock dividends, stock combinations and other similar transactions of the
 Common Stock that occur after the date of the Issue Date (such number of
 shares, 

9

	
 

	
 

	
 

	
the “Issuable Maximum”). The holder hereof
 and the holders of the other Warrants issued pursuant to the Subscription
 Agreements shall be entitled to a portion of the Issuable Maximum equal to
 the quotient obtained by dividing (x) the Holder’s original aggregate
 Purchase Price by (y) the aggregate original aggregate Purchase Price of all
 holders pursuant to the Subscription Agreements. In addition, the Holder may
 allocate its pro-rata portion of the Issuable Maximum among Warrants held by
 it in its sole discretion. Such portion shall be adjusted upward ratably in
 the event a purchaser no longer holds any Warrants and the amount of shares issued
 to such purchaser pursuant to its Warrants was less than such purchaser’s
 pro-rata share of the Issuable Maximum. This provision shall only limit the
 number of Warrant Shares issuable hereunder, not the Exercise Price which
 shall have no limit or floor on adjustments.

	
 

	
 

	
 

	
(vii) For
 purposes of this Section 9(f), the following shall not be deemed issuances of
 Common Stock or securities convertible into or exercisable or exchangeable
 for shares of Common Stock or any options, warrants or other rights to
 acquire shares of Common Stock: options exercisable for shares of Common
 Stock issued pursuant to any duly adopted stock option plan of the Company
 including the Company’s 2000 Stock Option Plan, 2001 Stock Option Plan and
 2004 Stock Incentive Plan.

	
 

	
 

	
                    (g)
 Adjustment upon Subdivision or Combination of Common Stock. If the
 Company at any time on or after the Issue Date subdivides (by any stock
 split, stock dividend, recapitalization or otherwise) one or more classes of
 its outstanding shares of Common Stock into a greater number of shares, the
 Exercise Price in effect immediately prior to such subdivision will be
 proportionately reduced and the number of Warrant Shares will be
 proportionately increased. If the Company at any time on or after the Issue
 Date combines (by combination, reverse stock split or otherwise) one or more
 classes of its outstanding shares of Common Stock into a smaller number of
 shares, the Exercise Price in effect immediately prior to such combination
 will be proportionately increased and the number of Warrant Shares will be
 proportionately decreased. Any adjustment under this Section 9(g) shall
 become effective at the close of business on the date the subdivision or
 combination becomes effective. 

	
 

	
                    (h)
 Other Events. If any event occurs of the type contemplated by the
 provisions of this Section 9 but not expressly provided for by such
 provisions (including, without limitation, the granting of stock appreciation
 rights, phantom stock rights or other rights with equity features), then the
 Company’s Board of Directors will make an appropriate adjustment in the
 Exercise Price and the number of Warrant Shares so as to protect the rights
 of the Holder; provided that no such adjustment pursuant to this Section 9(h)
 will increase the Exercise Price then in effect or decrease the number of
 Warrant Shares as otherwise determined pursuant to this Section 9. 

	
 

	
                    (i)
 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(i) 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 

10

	
 

	
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.

	
 

	
                    (j)
 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.

	
 

	
                    (k)
 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 agreement contemplating 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:

                    (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 (or, in lieu thereof, a resale registration statement on
Form S-3 covering the resale of the Warrant Shares) 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

11

	
 

	
 

	
 

	
 

	
 

	
A

	
=

	
the average
 of the Closing Prices 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 Trigger 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.

          11.
Limitations on Exercise. 

                    (a)
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 insure that, following such exercise (or other issuance), the total number
of shares of Common Stock then beneficially owned by such 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
Exchange Act, does not exceed 4.999% 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 hereunder will constitute a representation by the Holder that it
has evaluated the limitation set forth in this Section 11(a) and determined
that issuance of the full number of Warrant Shares requested in such Exercise
Notice is permitted under this Section 11(a). The Company’s obligation to issue
shares of Common Stock in excess of the limitation referred to in this Section
11(a) 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 5:00 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 that 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 hereof. By written notice to the
Company, the Holder may waive the provisions of this Section 11(a) but any such
waiver will not be effective until the 61st day after such notice is delivered
to the Company, nor will any such waiver effect any other Holder. This
provision shall not apply to Holders who, together with Affiliates, as of the
Closing Date beneficially own (as determined in accordance with Section 13(d) of
the Exchange Act and the rules and regulations promulgated 

12

thereunder) in
excess of 5% of the total number of issued and outstanding shares of Common
Stock.

                    (b)
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 insure that, following such exercise (or other issuance), the
total number of shares of Common Stock then beneficially owned by such 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 Exchange Act, does not exceed 9.999% 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 hereunder will constitute a representation by the Holder that
it has evaluated the limitation set forth in this Section 11(b) and determined
that issuance of the full number of Warrant Shares requested in such Exercise
Notice is permitted under this Section 11(b). The Company’s obligation to issue
shares of Common Stock in excess of the limitation referred to in this Section
11(b) 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 5:00 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 that 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 hereof. By written notice to the
Company, the Holder may waive the provisions of this Section 11(b) but any such
waiver will not be effective until the 61st day after such notice is delivered
to the Company, nor will any such waiver effect any other Holder. This provision
shall not apply to Holders who, together with Affiliates, as of the Closing
Date beneficially own (as determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder) in excess of
10% of the total number of issued and outstanding shares of Common Stock.

          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.

13

(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).

          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

14

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.

                    (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

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK,

SIGNATURE PAGE FOLLOWS]

15

          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:
 Richard L. Taney

	
 

	
Title:
   Chief Executive Officer

16

EXERCISE NOTICE

DELCATH SYSTEMS, INC.

WARRANT NO. ___DATED SEPTEMBER __, 2007

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):

	
 

	
 

	
 

	
 

	
o

	
Cash
 Exercise under Section 10(a)

	
 

	
 

	
 

	
 

	
o

	
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:

	
 

	
 

	

	
 

	
 

	
 

	
 

	
Title:

	
 

	
 

	

WARRANT ORIGINALLY ISSUED SEPTEMBER __, 2007

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:

	
 

	
 

	

	
 

	
 

	
 

	
 

	
Title:

	
 

	
 

	

	
 

	
 

	
 

	
 

	
TRANSFEREE:

	
 

	
 

	
 

	
 

	
 

	

	
 

	
(Print Name)

	
 

	
 

	
 

	
(Address of
 Transferee)

	
 

	
 

	
 

	

	
 

	
 

	
 

	

	
 

	
 

	
In the
 presence of:

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