Document:

ex103090914.htm

 

EMPLOYEE STOCK OPTION GRANT LETTER

 

DELCATH SYSTEMS, INC.

 

2009 STOCK INCENTIVE PLAN

 

September 14, 2009

 

David A. McDonald

c/o Delcath Systems, Inc.

Rockefeller Center

600 Fifth Avenue, 23rd Floor

New York, New York 10020

 

Dear Mr. McDonald:

 

This Grant Letter sets forth the terms and conditions of the stock option granted to you by Delcath Systems, Inc. (the “Company”) on September 14, 2009 (the “Grant Date”), in accordance with the provisions
of its 2009 Stock Incentive Plan (the “Plan”).  You have been granted an option (the “Option”) to purchase 250,000 shares of the Company’s Common Stock (“Common Stock”).  The Option is not intended to be an incentive stock
option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).  You are a party to an employment agreement entered into with the Company on September 13, 2009 (as the same may be amended or restated from time to time, the “Employment Agreement”).

 

The Option is subject to the terms and conditions set forth in the Plan, any rules and regulations adopted by the Committee (as defined in the Plan) from time to time, and this Grant Letter.  Any terms used in this Grant Letter and not defined herein have the meanings set forth in the Plan.

 

1. Option Price

 

The price at which you may purchase the shares of Common Stock covered by the Option is $3.92 per share, which is the Fair Market Value of a share on the date of grant of your Option.

 

2. Term of Option

 

Your Option expires on September 14, 2019.  However, your Option may terminate prior to such expiration date as provided in paragraph 6 of this Grant Letter or pursuant to the Plan.  Regardless of the provisions of paragraph 6 and the Plan, in no event can your Option be exercised after the expiration date set forth
in this paragraph 2.

 

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3. Exercisability of Option

 

(a) Unless it becomes exercisable on an earlier date as provided in paragraph 6 or pursuant to the Plan, your Option will become exercisable in installments as follows, provided that you remain in continuous service as an employee of
the Company or its Subsidiaries on such date:

 

	
Period
	
Number of shares Common Stock as to which the Option becomes exercisable

	
Each of the first 23 monthly anniversaries of the Grant Date, beginning October 14, 2009
	
10,417

	
September 14, 2011
	
10,409

(b) To the extent your Option has become exercisable, you may exercise the Option to purchase all or any part of such shares at any time on or before the date the Option expires or terminates.

 

4. Exercise of Option

 

You may exercise your Option by giving written notice to the Company of the number of shares of Common Stock you desire to purchase and paying the option price for such shares. The notice must be in the form provided by the Company from time to time (the “Option Exercise Form”),
which may be obtained from the Company’s Controller.  The notice must be hand delivered or mailed to the Company at the address of its executive offices, 600 Fifth Avenue, 23rd Floor, New York, NY 10020; Attention: Controller, or may be provided electronically to the extent and in the manner provided under procedures adopted by the Company.  Payment of the option price may be made in any manner permitted under
paragraph 5.  The cash, Common Stock or documentation described in the applicable provision of paragraph 5 must accompany the Option Exercise Form.  Subject to Section 5, your Option will be deemed exercised on the date the Option Exercise Form (and payment of the option price) is hand delivered, received by electronic transmission (if permitted) received by overnight courier, or, if mailed, postmarked.

 

5. Satisfaction of Option Price  Your Option may be exercised by payment of the option price in cash (including check, bank draft, money order, or wire
transfer to the order of the Company).  Unless prohibited by the Committee in its discretion (at any time prior to completion of the desire Option exercise), your Option may also be exercised using any of the following methods or a combination thereof:

 

(a) Payment of Common Stock.  You may satisfy the option price by tendering shares of Common Stock that you own.  For this purpose, the shares of Common Stock
so 

 

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tendered shall be valued at the closing sales price of the Common Stock on The Nasdaq Capital Market (or the exchange or market determined by the Committee to be the primary market for the Common Stock) for the day before the date of exercise or, if no such sale of Common Stock occurs on such date, the closing sales price on the nearest trading date before such date.  The certificate(s)
evidencing shares tendered in payment of the option price must be duly endorsed or accompanied by appropriate stock powers.  Only stock certificates issued solely in your name may be tendered to exercise your Option.  Fractional shares may not be tendered in satisfaction of the option price; any portion of the option price that is in excess of the aggregate value (as determined under this paragraph 5(a)) of the number of whole shares tendered must be paid in cash.  If a certificate
tendered in exercise of the Option evidences more shares than are required pursuant to the immediately preceding sentence for satisfaction of the portion of the option price being paid in Common Stock, an appropriate replacement certificate will be issued to you for the number of excess shares.

 

(b) Broker-Assisted Cashless Exercise.  You may satisfy the option price by delivering to the Company a copy of irrevocable instructions to a broker acceptable to the Company
to sell shares of Common Stock (or a sufficient portion of such shares) acquired upon exercise of the Option and remit to the Company a sufficient portion of the sale proceeds to pay the total option price and withholding tax obligation resulting from such exercise.  The broker must agree to deposit the entire sale proceeds into a Company-owned account pending delivery to the Company of the option price and tax withholding amount.  Shares issued under this method of exercise will be issued
to the designated brokerage firm for your account.  The ability to use this method of exercise is subject to the Company’s approval of the broker and of the specific mechanics of exercise.

 

(c) Net Share Exercise.  You may satisfy the option price by delivering to the Company an Option Exercise Form that directs the Company to withhold a sufficient number
of the shares acquired upon exercise to satisfy the aggregate option price and tax withholding obligation with respect to the shares as to which the Option is being exercised.  For purposes of this provision, the shares of Common Stock applied to satisfy the option price and withholding obligation shall be valued in the same manner as provided under paragraph 5(a).

 

6. Termination of Employment

 

(a) General.  The following special rules apply to your Option in the event of your death, disability, retirement, or other termination of employment.  Following
your employment termination, your Option will be exercisable only with respect to the number of shares you were entitled to purchase on the date of the termination of your employment and only for the period of time specified below.  The Option shall terminate upon the date of the termination of your employment with respect to any shares that were not exercisable as of your employment termination date.

 

(i) Termination of Employment for Cause.  If the Company or a Subsidiary terminates your employment for Cause, your Option will terminate on the date of such termination
of employment.  For this purpose, “Cause” shall have the meaning set forth in your Employment Agreement.

 

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(ii) Resignation.  If you resign from the Company or a Subsidiary other than upon Retirement (as defined below), your Option will terminate 90 days after such termination
of employment.

 

(iii) Termination Without Cause.  If the Company or a Subsidiary terminates your employment without Cause or if the Subsidiary or division in which you are employed is
sold by the Company, your Option will terminate 90 days after such termination of employment.

 

(iv) Death or Disability.  If your employment terminates by reason of death or Disability, your Option will terminate one year after such termination of employment.  For
purposes of this provision, “Disability” shall have the meaning set forth in the Employment Agreement.

 

(v) Retirement.  Upon your Retirement from the Company, except as provided in the next sentence, you may exercise your Option for a period of one year following your Retirement,
but not beyond the term of the Option.  If you serve as a director of the Company immediately following your Retirement, your Option will terminate one year after the termination of your service as a director, but not beyond the term of the Option.  For purposes of this provision, “Retirement” means termination of your employment with the Company and its Subsidiaries after you have attained age 60 and ten years of continuous
employment with the Company and/or its Subsidiaries.

 

(vi) Acceleration and Adjustments of Exercise Period.  The Committee may, in its discretion, declare all or any portion of your Option immediately exercisable and/or permit
all or any part of your Option to remain exercisable for such period designated by it after the time when the Option would have otherwise terminated as provided in the applicable portion of this paragraph 6(a), but not beyond the expiration date of your Option as set forth in paragraph 2 above.

 

(b) Committee Determinations.  The Committee shall have absolute discretion to make all determinations reserved to it under the Plan or this Grant Letter, including without
limitation the date and circumstances of termination of your employment, and its determinations shall be final, conclusive and binding upon you and your beneficiaries.

 

7. Tax Withholding

 

You must make arrangements satisfactory to the Company to satisfy any applicable federal, state, local or other withholding tax liability.  If you exercise your Option by payment of cash or Common Stock, you can satisfy your withholding obligation by making a cash payment to the Company of the required amount.  In addition,
unless the Committee in its discretion prohibits such method, you may satisfy your withholding obligation by having the Company retain from the Common Stock otherwise deliverable to you upon exercise of your Option shares of Common Stock having a value equal to the minimum amount of any required tax withholding with respect to the exercise.  If you exercise your Option using the broker-assisted cashless option exercise method, the Committee may require that any required tax withholding be retained by
the Company from the proceeds of the sale of your shares.  If you exercise your 

 

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Option using the net share exercise method, any required tax withholding will be retained by the Company from the shares acquired upon exercise.  If you fail to satisfy your withholding obligation in a time and manner satisfactory to the Company, the Company or a Subsidiary shall have the right to withhold the required amount
from your salary or other amounts payable to you.

 

Any election to have shares withheld must be made on or before the date you exercise your Option.  A copy of the withholding election form may be obtained from the Company’s Controller.  The election form does not apply to exercises under the cashless option exercise method or the net share exercise method.  Share
withholding is mandatory if you are using the net share method of exercise.

 

The amount of withholding tax retained by the Company or paid by you to the Company will be paid to the appropriate tax authorities in satisfaction of the withholding obligations under the tax laws.  The total amount of income you recognize by reason of exercise of the Option will be reported to the tax authorities in the year
in which you recognize income with respect to the exercise.  Whether you owe additional tax will depend on your overall taxable income for the applicable year and the total tax remitted for that year through withholding or by estimated payments.

 

8. Administration of the Plan

 

The Plan is administered by the Committee.  The Committee has authority to interpret the Plan, to adopt rules for administering the Plan, to decide all questions of fact arising under the Plan, and generally to make all other determinations necessary or advisable for administration of the Plan.  All decisions and acts
of the Committee are final and binding on all affected Plan participants.

 

9. Non-transferability of Option

 

The Option granted to you by this Grant Letter may be exercised only by you, and may not be assigned, pledged, or otherwise transferred by you, with the exception that in the event of your  death the Option may be exercised (at any time prior to its expiration or termination as provided in paragraphs 2 and 6) by the executor
or administrator of your estate or by a person who acquired the right to exercise your Option by bequest or inheritance or  by reason of your death.

 

10. Amendment and Adjustments to your Option

 

The Plan authorizes the Board or the Committee to make amendments and adjustments to outstanding awards, including the Option granted by this Grant Letter, in specified circumstances, as provided in the Plan.

 

11. Effect on Other Benefits

 

Income recognized by you as a result of exercise of the Option will not be included in the formula for calculating benefits under the Company’s other benefit plans.

 

 

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12. Regulatory Compliance

 

Under the Plan, the Company is not required to deliver Common Stock upon exercise of your Option if such delivery would violate any applicable law or regulation or stock exchange requirement.  If required by law or regulation, the Company may impose restrictions on your ability to transfer shares received under the Plan.

 

13. Data Privacy

 

By accepting this Option you expressly consent to the collection, use and transfer, in electronic or other form, of your personal data by and among the Company, its Subsidiaries and any broker or third party assisting the Company in administering the Plan or providing recordkeeping services for the Plan, for the purpose of implementing,
administering and managing your participation in the Plan.  By accepting this Option you waive any data privacy rights you may have with respect to such information.  You may revoke the consent and waiver described in this paragraph by written notice to the Company’s Controller; however any such revocation may adversely affect your ability to participate in the Plan and to exercise any stock options previously granted under the Plan.

 

14. Consent to Jurisdiction

 

Your Option and the Plan are governed by the laws of the State of Delaware without regard to any conflict of law rules.  Any dispute arising out of this Option or the Plan may be resolved only in a state or federal court located within New York County, New York State, U.S.A.  This Option is issued on the condition that
you accept such venue and submit to the personal jurisdiction of any such court.

 

15.           Entire Agreement.

 

This Grant Letter embodies the entire agreement of the parties hereto respecting the matters within its scope.  This Grant Letter supersedes all prior and contemporaneous agreements of the parties hereto that directly or indirectly bear upon the subject matter hereof, including,
without limitation, the Employment Agreement.  Any prior negotiations, correspondence, agreements, proposals or understandings relating to the subject matter hereof shall be deemed to have been merger into this Grant Letter, and to the extent inconsistent herewith, such negotiations, correspondence, agreements, proposals, or understandings shall be deemed to be of no force or effect.  There are no representations, warranties, or agreements, whether express or implied, or oral or written, with
respect to the subject matter hereof, except as expressly set forth herein.

 

 

*     *     *     *     *

 

If you have any questions regarding your Option or would like to obtain additional information about the Plan or its administration, please contact the Company’s Controller, Delcath Systems, Inc., 600 Fifth Avenue, 23rd Floor, New York, NY 10020 (telephone
(212) 489-2100).

 

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This Grant Letter contains the formal terms and conditions of your award and accordingly should be retained in your files for future reference.

 

                                                

	 	
  Very truly yours,

 

	  	
 
	  /s/ Eamonn P. Hobbs
	  	  	
Eamonn P. Hobbs, President and Chief Executive Officer
	
 

	  	  	  	  
	  	  Acknowledged and Agreed:	  
	  	  	  
	  	  	  
	  	  	  /s/ David A. McDonald
	  	  	
David A. McDonald

  

7ex104090914.htm

RESTRICTED STOCK AGREEMENT 

This Restricted Stock Agreement (“Agreement”) is made as of  September 14, 2009 (the “Grant Date”) between Delcath Systems, Inc.
(the “Company”) and David A. McDonald (the “Executive”). 

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

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

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

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

1.           Award.

(a)           Grant. The Executive is hereby granted 50,000 shares (the “Restricted Stock”) of the Company’s common stock, par value $.01
per share (“Stock”), which shall be issued in the Executive’s name subject to the restrictions contained in this Agreement. The Restricted Stock award pursuant to this Agreement is separate from and not in tandem with any other award(s) granted to the Executive under the Plan or otherwise.

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

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

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

 

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

 

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violation of this restriction, the shares of Restricted Stock with respect to which the Restrictions have not lapsed as provided in Section 3 below shall be forfeited.

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

Number                                                                           Date

25,000 shares                                                                  March
14, 2010

25,000 shares                                                                  September
14, 2010

Notwithstanding the above, in the event the Executive’s employment is terminated by reason of the Executive’s death or Disability, the Restrictions with respect to all shares of Restricted Stock will lapse immediately and automatically as of the date of the Executive’s death or as of the effective date of the Executive’s
termination of employment by reason of his Disability.  For purposes of this Agreement, the term “Disability” shall have the meaning set forth in the Employment Agreement dated September 13, 2009 between the Company and the Executive.

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

4.           Custody of Restricted Stock.

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

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

(c)           Delivery to the Executive.  With respect to shares of Restricted Stock for which the Restrictions have lapsed (without forfeiture), the stock certificate(s) representing such unrestricted shares of
Stock shall be released to the Executive. Notwithstanding any other provisions of this Agreement, the issuance or delivery of any shares of Stock (whether subject to restrictions or unrestricted) may be postponed for such period as may be required to comply with applicable requirements of any national securities exchange or any requirements of any regulation applicable to the issuance or delivery of such Stock. The Company shall not be obligated to issue or deliver any shares of Stock if the issuance or delivery
thereof shall 

 

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constitute a violation of any provision of any law or of any regulation of any governmental authority or any securities exchange. The Company shall not be required to transfer on its books any shares of Stock (whether subject to restrictions or unrestricted) which shall have been sold or transferred in violation of any of the provisions set
forth in this Agreement.

 

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

 

6.           Relationship to Company.

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

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

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

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

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

 

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

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

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

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

Awarded subject to the terms and conditions stated above:

 

	
DELCATH SYSTEMS, INC.

 

By: /s/ Eamonn P. Hobbs

Eamonn P. Hobbs, President and Chief Executive Officer
	
Accepted under the terms and conditions stated above:

 

/s/ David A. McDonald

David A. McDonald

 

 

 

  

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