UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[x] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the quarterly period ended June 30, 2005
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the transition period from ____________ to ____________
Commission file number: 001-16133
DELCATH SYSTEMS, INC.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 06-1245881
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State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1100 Summer Street, 3rd Floor, Stamford, CT 06905
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(Address of Principal Executive Offices)
(203) 323-8668
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(Issuer's Telephone Number, Including Area Code)
N/A
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(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
As of August 8, 2005, 16,573,965 shares of the Issuer's common stock, $0.01 par
value, were issued and outstanding.
Transitional Small Business Disclosure Format (check one): Yes _____ No __X__
DELCATH SYSTEMS, INC.
Index
Page No.
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Part I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements (Unaudited)
Balance Sheet - June 30, 2005 3
Statements of Operations for the Three and Six Months Ended 4
June 30, 2005 and 2004 and Cumulative from Inception
(August 5, 1988) to June 30, 2005
Statements of Cash Flows for the Six Months Ended 5
June 30, 2005 and 2004 and Cumulative from Inception
(August 5, 1988) to June 30, 2005
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis or
Plan of Operation 9
Item 3. Controls and Procedures 11
Part II. OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits 12
Signatures 13
2
Delcath Systems, Inc.
(A Development Stage Company)
Balance Sheet
(Unaudited)
June 30, 2005
June 30,
Assets 2005
-----------------
Current assets:
Cash and cash equivalents $ 830,597
Certificate of deposit 5,047,077
Interest receivable 82,934
Prepaid insurance 19,278
-----------------
Total current assets 5,979,884
Furniture and fixtures, net 10,576
-----------------
Total assets $ 5,990,462
=================
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 430,328
-----------------
Total current liabilities 430,328
-----------------
Stockholders' equity
Common stock, $0.01 par value, 70,000,000
shares authorized 155,044
Additional paid-in capital 29,916,049
Deficit accumulated during development stage (24,510,959)
-----------------
Total stockholders' equity 5,560,134
-----------------
Total liabilities and stockholders'
equity $ 5,990,462
=================
See accompanying notes to condensed financial statements
3
Delcath Systems, Inc.
(A Development Stage Company)
Statements of Operations
(Unaudited)
Cumulative
From Inception
Three Months Ended Six Months Ended (August 5, 1988)
June 30, June 30, to
2005 2004 2005 2004 June 30, 2005
------------------------- ---------------------------- -------------------
Costs and expenses:
General and administrative expenses $ 292,145 $ 278,644 $ 707,403 $ 507,288 $ 7,778,264
Research and development costs 382,806 584,334 934,167 1,072,174 16,250,396
----------- ---------- ------------ ----------- --------------
Total costs and expenses 674,951 862,978 1,641,570 1,579,462 24,028,660
----------- ---------- ------------ ----------- --------------
Operating loss (674,951) (862,978) (1,641,570) (1,579,462) (24,028,660)
Other income (expense):
Interest income 49,867 36,353 101,159 43,303 1,187,779
Interest expense - - - - (171,473)
----------- ---------- ------------ ------------ --------------
Net loss $ (625,084) $ (826,625) $ (1,540,411) $ (1,536,159) $ (23,012,354)
=========== ========== ============ =========== =============
Common share data:
Basic and diluted loss
per share $ (0.04) $ (0.07) $ (0.10) $ (0.14)
============ ========== =========== =========
Weighted average number
of shares of common
stock outstanding 15,491,060 11,520,573 15,424,912 10,663,100
========== ========== ============ ==========
See accompanying notes to condensed financial statements
4
DELCATH SYSTEMS, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
Cumulative
Six Months Ended from inception
June 30, (August 5, 1988)
2005 2004 to June 30, 2005
--------------------------------- ------------------
Cash flows from operating activities:
Net loss $ (1,540,411) $ (1,536,159) $ (23,012,354)
Adjustments to reconcile net
loss to net cash used in operating activities
Stock option compensation expense - - 2,525,392
Stock and warrant compensation expense
issued for consulting services - - 236,286
Depreciation expense 3,030 2,496 34,722
Amortization of organization costs - - 42,165
Changes in assets and liabilities:
Decrease (increase) in prepaid expenses 28,538 6,434 (19,278)
(Increase) in interest receivable (50,048) (11,380) (82,931)
(Decrease) increase in accounts
payable and accrued expenses (134,298) 264,200 430,327
--------------------------------- ------------------
Net cash used in operating activities (1,693,188) (1,274,409) (19,845,671)
--------------------------------- ------------------
Cash flows from investing activities:
Purchase of furniture and fixtures - - (45,300)
Purchase of short-term investments (1,047,077) (2,000,000) (12,016,781)
Proceeds from maturities of short-term investments 3,055,129 1,014,575 6,969,704
Organization costs - - (42,165)
--------------------------------- ------------------
Net cash provided by (used in)
investing activities 2,008,052 (985,425) (5,134,542)
--------------------------------- ------------------
Cash flows from financing activities:
Net proceeds from sale of stock and
exercise of stock options and warrants 313,398 3,617,852 24,656,484
Repurchases of outstanding common stock - - (51,103)
Dividends paid - - (499,535)
Proceeds from short-term borrowings - - 1,704,964
--------------------------------- ------------------
Net cash provided by
financing activities 313,398 3,617,852 25,810,810
--------------------------------- ------------------
Increase in cash and cash equivalents 628,262 1,358,018 830,597
Cash and cash equivalents at beginning of period 202,335 313,615 -
--------------------------------- ------------------
Cash and cash equivalents at end of period $ 830,597 $ 1,671,633 $ 830,597
================================= ==================
Cash paid for interest $ - $ - $ 171,473
================================= ==================
Supplemental disclosure of non-cash activities:
Conversion of debt to common stock $ - $ - $ 1,704,964
================================= ==================
Common stock issued for preferred stock dividends $ - $ - $ 999,070
================================= ==================
Conversion of preferred stock to common stock $ - $ - 24,167
================================= ==================
Common stock issued as compensation
for stock sale $ - $ - $ 510,000
================================= ==================
See accompanying notes to condensed financial statements
5
Delcath Systems, Inc.
(A Development Stage Company)
Notes to Condensed Financial Statements
Note 1: Description of Business
Delcath Systems, Inc. (the "Company") is a development stage company which was
founded in 1988 for the purpose of developing and marketing a proprietary drug
delivery system capable of introducing, and removing, high dose chemotherapy
agents to a diseased organ while greatly inhibiting their entry into the general
circulation system. It is hoped that the procedure will result in a meaningful
treatment for cancer. In November 1989, the Company was granted an IDE
(Investigational Device Exemption) and an IND (Investigational New Drug) for its
product by the FDA (Food and Drug Administration). The Company is seeking to
complete clinical trials in order to obtain separate FDA pre-market approvals
for the use of its delivery system using doxorubicin and melphalan,
chemotherapeutic agents, to treat malignant melanoma that has spread to the
liver.
Note 2: Basis of Presentation
The accompanying financial statements are unaudited and have been prepared by
the Company in accordance with accounting principles generally accepted in the
United States of America. Certain information and footnote disclosures normally
included in the Company's annual financial statements have been condensed or
omitted. The interim financial statements, in the opinion of management, reflect
all adjustments (consisting of normal recurring accruals) necessary for a fair
statement of the results for the interim periods ended June 30, 2005 and 2004
and cumulative from inception (August 5, 1988) to June 30, 2005.
The results of operations for the interim periods are not necessarily indicative
of the results of operations to be expected for the fiscal year. These interim
financial statements should be read in conjunction with the audited financial
statements and notes thereto for the year ended December 31, 2004, which are
contained in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 2004 as filed with the Securities and Exchange Commission.
Note 3: Research and Development Costs
Research and development costs include the costs of materials, personnel,
outside services and applicable indirect costs incurred in development of the
Company's proprietary drug delivery system. All such costs are charged to
expense when incurred.
Note 4: Stockholders' Equity
During the six months ended June 30, 2005, the Company received net proceeds of
$43,108 ($1.022 per share) upon the exercise of 8,436 of the Representative Unit
Purchase Warrants that were issued to underwriters as part of the 2003 public
offering. This resulted in the issuance of 42,180 shares of common stock
together with a similar amount of Representative's Common Stock Warrants. In
addition, 157,180 Representative's Common Stock Warrants were exercised ($1.28
per share) with a similar amount of common stock being issued and receipt of net
proceeds of $202,191.
The Company received a net amount of $68,100 upon the exercise of 90,000 in
stock options during the six months ended June 30, 2005. 60,000 options were
exercised at a price of $0.71 per share and 30,000 were exercised at a price of
$0.85 per share.
6.
The following table sets forth changes in stockholders' equity during the six
months ended June 30, 2005:
Common Stock, $0.01 Par Value Deficit Accumulated
Issued and Outstanding Additional During
-----------------------------
No. of shares Amount Paid in Capital Development Stage Total
------------- ------ --------------- ----------------- -----
Balance at December 31, 2004 15,215,085 $152,151 $29,605,543 $(22,970,548) $ 6,787,146
Issuance of common stock in
connection with the exercise of
2003 Representative's Unit
Warrants 42,180 422 42,686 - 43,108
Issuance of common stock in
connection with the exercise of
Representative's Common Stock
Warrants 157,180 1,571 200,620 - 202,191
Issuance of common stock in
connection with the exercise of
stock options 90,000 900 67,200 - 68,100
Net loss for six months ended
June 30, 2005 - - - (1,540,411) (1,540,411)
------------- ---------- ----------- ----------- ----------
Balance at June 30, 2005 15,504,445 $155,044 $29,916,049 $(24,510,959) $ 5,560,134
============= ========== =========== =========== ==========
Note 5: Stock Option Plan
The Company has historically accounted for its employee stock option plans in
accordance with the provisions of Accounting Principles Board ("APB") Opinion
No. 25, "Accounting for Stock Issued to Employees," and related interpretations.
As such, compensation expense is recorded on the date of grant only if the
current fair market value of the underlying stock exceeds the exercise price.
Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation" permits entities to recognize as expense over the
vesting period the fair value of all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 also allows entities to continue to apply the
provisions of APB Opinion No. 25 and provide pro forma net income (loss) and pro
forma earnings (loss) per share disclosures for employee stock option grants as
if the fair-value-based method defined in SFAS No. 123 had been applied. The
Company has elected to continue to apply the provisions of APB Opinion No. 25
and provide the pro forma disclosure required by SFAS No. 123.
7.
Following the methodology of SFAS No. 123 regarding compensation costs based on
the fair value for all employee stock option grants, the net loss and net loss
per share for the three and six months ended June 30, 2005 and 2004 would have
been increased to the pro forma amounts indicated as follows:
Three Months Ended June 30, Six Months Ended June 30,
------------------------- ----------------- -- ------------
2005 2004 2005 2004
----------- ----------- -------------- ---------------
Net loss, as reported $ (625,084) $ (826,625) $(1,540,411) $ (1,536,159)
Stock-based employee
compensation expense included
in net loss, net of related
tax effects 0 0 0 0
Stock-based employee
compensation determined under
the fair value based method,
net of related tax effects (17,618) (25,392) (35,235) (50,783)
----------- ----------- -------------- ---------------
Pro forma net loss (642,702) (852,017) (1,575,646) (1,586,942)
======== ======= ========= =========
Loss per share (basic and
diluted):
As reported $ (0.04) $ (0.07) $ (0.10) $ (0.14)
Pro forma (0.04) (0.07) (0.10) (0.15)
In December 2004, the FASB issued SFAS No. 123 (Revised 2004)("SFAS No. 123(R)")
"Share-based Payment," that will require the Company to expense costs related to
share-based payment transaction with employees. With limited exceptions, SFAS
No. 123(R) requires that the fair value of share-based payments to employees be
expensed over the period service is received and eliminates the ability to
account for these instruments under the intrinsic value method prescribed by APB
No. 25 and allowed under the original provisions of SFAS No. 123. SFAS No.
123(R) becomes mandatorily effective for the Company on January 1, 2006. SFAS
No. 123(R) allows for either prospective recognition of compensation expense or
retrospective recognition, which may be back to the original issuance of SFAS
No. 123 or only to interim periods in the year of adoption. The Company is
currently evaluating these transition methods.
SFAS No. 123(R) allows the use of both closed form models (e.g., Black-Scholes
Model) and open form models (e.g., lattice models) to measure the fair value of
the share-based payment as long as that model is capable of incorporating all of
the substantive characteristics unique to share-based awards. In accordance with
the transition provisions of SFAS No. 123(R), the expense attributable to an
award will be measured in accordance with the Company's measurement model at
that award's date of grant.
8.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
(a) Plan of Operation
FORWARD LOOKING STATEMENTS
This report contains forward-looking statements which are subject to certain
risks and uncertainties that can cause actual results to differ materially from
those described. Factors that may cause such differences include, but are not
limited to, uncertainties relating to our ability to successfully complete Phase
III clinical trials and secure regulatory approval of our current or future
drug-delivery system and uncertainties regarding our ability to obtain financial
and other resources for any research, development and commercialization
activities. These factors, and others, are discussed from time to time in our
filings with the Securities and Exchange Commission. You should not place undue
reliance on these forward-looking statements, which speak only as of the date
they are made. We undertake no obligation to publicly update or revise these
forward-looking statements to reflect events or circumstances after the date
they are made.
OVERVIEW
Since our founding in 1988 by a team of physicians, we have been a development
stage company engaged primarily in developing and testing the Delcath system for
the treatment of liver cancer. A substantial portion of our historical expenses
have been for the development of our medical device and the clinical trials of
our product, and the pursuit of patents worldwide. We expect to continue to
incur significant losses from costs for product development, clinical studies,
securing patents, regulatory activities, manufacturing and establishment of a
sales and marketing organization without any significant revenues. A detailed
description of the cash used to fund historical operations is in the financial
statements and the notes thereto. Without an FDA-approved product and commercial
sales, we will continue to be dependent upon existing cash and the sale of
equity or debt to fund future activities. While the amount of future net losses
and time required to reach profitability are uncertain, our ability to generate
significant revenue and become profitable will depend on our success in
commercializing our device.
During 2001, Delcath initiated the clinical trial of the system for isolated
liver perfusion using the chemotherapeutic agent melphalan. A Phase I trial at
the National Cancer Institute marked an expansion in the potential labeled usage
beyond doxorubicin, the chemotherapeutic agent used in our initial clinical
trials. Enrollment of new patients in the Phase I trial was completed in 2003
and following the 2004 presentation and adoption of a Phase II clinical trial
protocol for three types of cancer in the liver, patients are being enrolled and
treated. This study involves patients with primary liver cancer, neuroendocrine
tumors and metastatic adenocarcinomas in the liver, including liver metastasis
from colorectal cancer.
In May 2005, Delcath announced that it received "fast-track" status from the FDA
for treating metastatic melanoma in the liver with melphalan. The FDA's
fast-track program is designed to facilitate development and expedite the review
of new drugs or, in the case of Delcath, a new drug-device combination, having
the potential to treat illnesses which currently lack adequate therapy.
During 2004, we commenced a Phase III clinical trial in Australia to proceed
with study of the Delcath drug delivery system for inoperable cancer in the
liver using doxorubicin. We are currently in discussions with additional sites
worldwide to expand this trial.
Over the next 12 months, we expect to continue to incur substantial expenses
related to the research and development of our technology, including Phase III
clinical trials using doxorubicin with the Delcath system and Phase II clinical
trials using melphalan with the Delcath system. Additional funds, when
available, will be
9.
committed to pre-clinical and clinical trials for the use of other chemotherapy
agents with the Delcath system for the treatment of liver cancer, and for the
development of additional products and components. We will also continue efforts
to qualify additional sources of the key components of our device, in an effort
to further reduce manufacturing costs and minimize dependency on a single source
of supply.
Liquidity and Capital Resources
Our available funds will be sufficient to meet our anticipated needs for working
capital and capital expenditures at least through the end of 2006. The Company
is not projecting any capital expenditures that will significantly affect the
Company's liquidity during the next 12 months. The Company is projecting the
hiring of two additional employees.
Our future liquidity and capital requirements will depend on numerous factors,
including the progress of our research and product development programs,
including clinical studies; the timing and costs of making various United States
and foreign regulatory filings, obtaining approvals and complying with
regulations; the timing and effectiveness of product commercialization
activities, including marketing arrangements overseas; the timing and costs
involved in preparing, filing, prosecuting, defending and enforcing intellectual
property rights; and the effect of competing technological and market
developments.
The Company's future results are subject to substantial risks and uncertainties.
The Company has operated at a loss for its entire history and there can be no
assurance of its ever achieving consistent profitability. The Company believes
its capital resources are adequate to fund operations for at least the next
twelve months but anticipates that it will require additional working capital
after 2006. There can be no assurance that such working capital will be
available on acceptable terms, if at all.
During the six months ended June 30, 2005, the Company had exercises of
previously issued warrants together with exercises of stock options. Please see
Note 4 to the June 30, 2005 Condensed Financial Statements included in Part I of
this filing and incorporated herein by reference for a complete description of
share issuances together with receipt of proceeds. We plan to use the net
proceeds to fund, in part, the Phase III clinical trial using doxorubicin and
the Phase II clinical trial at NCI using melphalan.
10.
Application of Critical Accounting Policies
The Company's financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America.
Certain accounting policies have a significant impact on amounts reported in the
financial statements. A summary of those significant accounting policies can be
found in Note 1 to the Company's financial statements contained in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 2004 as filed with
the Securities and Exchange Commission. The Company has not adopted any
significant new accounting policies or modified the application of existing
policies during the six months ended June 30, 2005.
(b) Management's Discussion and Analysis of Financial Condition and
Results of Operations
Not Applicable.
(c) Off-balance sheet arrangements
The Company does not have any off-balance sheet arrangements.
Item 3. CONTROLS AND PROCEDURES
Based on an evaluation of the Company's disclosure controls and procedures
performed by the Company's Chief Executive Officer and its Chief Financial
Officer as of the end of the period covered by this report, the Company's Chief
Executive Officer and its Chief Financial Officer concluded that the Company's
disclosure controls and procedures have been effective.
As used herein, "disclosure controls and procedures" means controls and other
procedures of the Company that are designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the
Securities Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the rules and forms issued by the Securities and
Exchange Commission. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the
Securities Exchange Act is accumulated and communicated to the Company's
management, including its principal executive officer or officers and its
principal financial officer or officers, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure.
Since the date of the evaluation described above, there were no significant
changes in the Company's internal controls or in other factors that could
significantly affect these controls, and there were no corrective actions with
regard to significant deficiencies and material weaknesses.
PART II
OTHER INFORMATION
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES
On August 4 and August 5, 2005, the Company sold an aggregate of
1,069,520 shares of its Common Stock upon exercise of all of its then
outstanding Series B Warrants to Purchase Shares of Common Stock dated November
24, 2004 (the "Series B Warrants"). Based on the exercise price of $2.60 for
each of the Series B Warrants, the Company received an aggregate of $2,780,752
upon such exercises. The Company claims an exemption from registration of the
offer and sale of the shares of Common Stock issued upon exercise of the Series
B Warrants under Rule 506 under the Securities Act of 1933 on the basis that
each of the purchasers is an accredited investor. The resale of these shares is
covered by an effective Registration Statement under the Securities Act of 1933.
11.
No underwriter was involved in the exercise of the Series B Warrants, and
the Company paid no underwriting discount or commission in connection therewith.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 14, 2005, the Company held its 2005 Annual Meeting of Stockholders.
At the meeting, the stockholders voted on the election of two Class II directors
of the Company to hold office until the Annual Meeting of Stockholders in 2008
and until their successors are duly elected and qualified.
The stockholders voted 12,652,834 shares in favor of electing M. S. Koly to
serve as a Class II director and withheld authority to vote 21,303 shares. The
stockholders voted 12,652,998 shares in favor of electing Samuel Herschkowitz,
M.D. to serve as a Class II director and withheld authority to vote 21,139
shares. The term of office of each of Mark A. Corigliano and Victor Nevins as
Class III directors will continue until the Annual Meeting of Stockholders in
2006. The term of office of Daniel Isdaner as a Class I director will continue
until the Annual Meeting of Stockholders in 2007.
Item 6. EXHIBITS
3(i). Certificate of Incorporation, as amended to June 30, 2005.
4. Warrant Agreement dated as of July 22, 2005 between the Company and
American Stock Transfer & Trust Company, as warrant agent, together
with the form of 2005 Redeemable Common Stock Purchase Warrants -
Series A.
10.1 Employment Agreement between the Company and M. S. Koly, as amended by
Amendment No. 1 thereto.
10.2 Form of Incentive Stock Option Agreement under the Company's 2004
Stock Incentive Plan.
10.3 Form of Nonqualified Stock Option Agreement under the Company's 2004
Stock Incentive Plan.
10.4 Form of Stock Grant Agreement under the Company's 2004 Stock Incentive
Plan.
31.1 Certification by Chief Executive Officer Pursuant to Rule 13a-14.
31.2 Certification by Chief Financial Officer Pursuant to Rule 13a-14.
32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section
1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section
1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
12.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
DELCATH SYSTEMS, INC.
(Registrant)
August 11, 2005 /s/ PAUL M. FEINSTEIN
----------------------------------------
Paul M. Feinstein
Chief Financial Officer (on behalf of
the registrant and as the principal
financial and accounting officer of the
registrant)
13.
EXHIBIT INDEX
3(i). Certificate of Incorporation, as amended to June 30, 2005.
4. Warrant Agreement dated as of July 22, 2005 between the Company and
American Stock Transfer & Trust Company, as warrant agent, together
with the form of 2005 Redeemable Common Stock Purchase Warrants -
Series A.
10.1 Employment Agreement between the Company and M. S. Koly, as amended by
Amendment No. 1 thereto.
10.2 Form of Incentive Stock Option Agreement under the Company's 2004
Stock Incentive Plan.
10.3 Form of Nonqualified Stock Option Agreement under the Company's 2004
Stock Incentive Plan.
10.4 Form of Stock Grant Agreement under the Company's 2004 Stock Incentive
Plan.
31.1 Certification by Chief Executive Officer Pursuant to Rule 13a-14.
31.2 Certification by Chief Financial Officer Pursuant to Rule 13a-14.
32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section
1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
Exhibit 3(i)
STATE OF DELAWARE
CERTIFICATE OF CORRECTION
The corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware:
DOES HEREBY CERTIFY:
1. The name of the corporation is: Delcath Systems, Inc.
2. That a Certificate of Amendment of Amended and Restated Certificate of
Incorporation (the "Certificate of Amendment") was filed by the Secretary of
State Delaware on June 16, 2004 and that said Certificate of Amendment requires
correction as permitted by Section 103 of the General Corporation Law of the
State of Delaware.
3. The inaccuracy or defect of said Certificate of Amendment to be
corrected is a follows: Paragraph SECOND indicated that the first paragraph of
Article FOURTH of the Amended and Restated Certificate of Incorporation of the
Corporation was to be deleted and a new first paragraph of Article FOURTH
increasing the total number of authorized shares from forty-five million to
eighty million was to be substituted in lieu thereof. The number of authorized
shares was incorrectly spelled out as forty-five million but was correctly set
forth in numerals as (80,000,000).
4. Article SECOND of the Certificate is corrected to read as follows:
SECOND. The Amended and Restated Certificate of
Incorporation of the Corporation is hereby amended by deleting
the first paragraph of Article FOURTH in its entirety and
replacing it with the following:
"FOURTH. The total number of all classes of
shares of stock which the Corporation shall have
authority to issue is eighty million (80,000,000)
shares, consisting of ten million (10,000,000)
shares of Preferred Stock with a par value of $.01
per share, and seventy million (70,000,000) shares
of Common Stock with a par value of $0.01 per
share."
IN WITNESS WHEREOF, said Corporation has caused this certificate to be
signed by M. S. Koly, an Authorized Officer, this 25 day of May, A.D. 2005.
By: /s/ M. S. KOLY
-------------------------------------------
Authorized Officer
Name: M. S. KOLY
-----------------------------------------
Print or Type
Title: President and Chief Executive Officer
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
DELCATH SYSTEMS, INC.
DELCATH SYSTEMS, INC. (the "Corporation"), a corporation organized and
existing under the laws of the State of Delaware, does hereby certify as
follows:
FIRST: The name of the Corporation is "Delcath Systems, Inc." and the
Corporation was incorporated upon the filing of its original certificate of
incorporation on August 5, 1988.
SECOND: The Amended and Restated Certificate of Incorporation of the
Corporation is hereby amended by deleting the first paragraph of Article FOURTH
in its entirety and replacing it with the following:
"FOURTH: The total number of all classes of shares of stock
which the Corporation shall have authority to issue is
forty-five million (80,000,000) shares, consisting of ten
million (10,000,000) shares of Preferred Stock with a par
value of $.01 per share, and seventy million (70,000,000)
shares of Common Stock with a par value of $0.01 per share."
THIRD: This Amendment to the Amended and Restated Certificate of
Incorporation of the Corporation has been duly adopted in accordance with the
provisions of Sections 141 and 242 of the General Corporation Law of the State
of Delaware by the unanimous vote of the Board of Directors of the Corporation
and by a majority of the outstanding stock entitled to vote, and a majority of
the outstanding stock of each class entitled to vote as a class, voted in favor
of the amendment at the annual meeting of stockholders of the Corporation held
on June 15, 2004.
[Signature Page Follows]
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by M. S. Koly, its President and Chief Executive Officer, as of June 15,
2004. The undersigned acknowledges pursuant to Section 103 of the General
Corporation Law of the State of Delaware that he executed this Certificate as
the free act and deed of the Corporation and that all facts stated herein are
true.
DELCATH SYSTEMS, INC.
By: /s/ M. S. KOLY
--------------------------------------
M. S. Koly
President and Chief Executive Officer
2
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
DELCATH SYSTEMS, INC.
DELCATH SYSTEMS, INC. (the "Corporation"), a corporation organized and
existing under the laws of the State of Delaware, does hereby certify as
follows:
FIRST: The name of the Corporation is "Delcath Systems, Inc." and the
Corporation was incorporated upon the filing of its original certificate of
incorporation on August 5, 1988.
SECOND: The Amended and Restated Certificate of Incorporation of the
Corporation is hereby amended by deleting the first paragraph of Article FOURTH
in its entirety and replacing it with the following:
"FOURTH: The total number of all classes of shares of stock which the
Corporation shall have authority to issue is forty-five million
(45,000,000) shares, consisting of ten million (10,000,000) shares of
Preferred Stock with a par value of $.01 per share, and thirty-five million
(35,000,000) shares of Common Stock with a par value of $.01 per share."
THIRD: This Amendment to the Amended and Restated Certificate of
Incorporation of the Corporation has been duly adopted in accordance with the
provisions of Sections 141 and 242 of the General Corporation Law of the State
of Delaware by the unanimous vote of the Board of Directors of the Corporation
and by a majority of the outstanding stock entitled to vote, and a majority of
the outstanding stock of each class entitled to vote as a class, voted in favor
of the amendment at a special meeting held on January 31, 2003 for that purpose.
[Signature Page Follows]
2
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by M. S. Koly, its President and Chief Executive Officer, as of January
31, 2003. The undersigned acknowledges pursuant to Section 103 of the General
Corporation Law of the State of Delaware that he executes this Certificate as
the free act and deed of the Corporation and that all facts stated herein are
true.
DELCATH SYSTEMS, INC.
By: /s/ M. S. Koly
----------------
M. S. Koly
President and Chief Executive
Officer
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
DELCATH SYSTEMS, INC.
FIRST: The name of the corporation is Delcath Systems, Inc.
SECOND: The address, including street, number, city and county of the
registered office of the Corporation in the State of Delaware is 229 South State
Street, City of Dover, County of Kent; and the name of the registered agent of
the Corporation in the State of Delaware at such address is the Corporation
Service Company.
THIRD: The nature of the business and the purposes to be conducted and
promoted by the Corporation shall be to conduct any lawful business, to promote
any lawful purpose, and to engage in any lawful act or activity for which
corporations may be organized under the General Corporation Law of the State of
Delaware.
FOURTH: The total number of all classes of shares of stock which the
corporation shall have authority to issue is twenty-five million (25,000,000)
shares, consisting of ten million (10,000,000) shares of Preferred Stock with a
par value of $.01 per share, and fifteen million (15,000,000) shares of Common
Stock with a par value of $.01 per share, amounting in the aggregate to two
hundred and fifty thousand dollars ($250,000).
The designation and powers, rights and preferences, and the
qualifications, limitation, or restrictions with respect to each class or series
of such class of the stock of the Corporation shall be as determined by
resolution of the Board of Directors from time to time.
FIFTH: The corporation is to have perpetual existence.
SIXTH: For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation, and
regulation of the powers of the Corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the affairs of the
Corporation shall be vested in its Board of Directors. The number of directors
shall be determined by affirmative vote of a majority of the Board of Directors,
but shall be not less than three (3).
2. The directors shall be divided into three classes, designated Class
I, Class II and Class III. Each class shall consist, as nearly as may be
possible, of one-third of the total number of directors constituting the entire
Board of Directors. The term of the initial Class I directors shall terminate on
the date of the 2001 annual meeting of stockholders; the term of the initial
Class II directors shall terminate on the date of the 2002 annual meeting of
stockholders and the term of the Class III directors shall terminate on the date
of the 2003 annual meeting of stockholders. At each annual meeting of
stockholders beginning in 2001, successors to the class of directors whose term
expires at that annual meeting shall be elected for a three-year term. If the
number of directors is changed, any increase or decrease in directorships shall
be apportioned among the classes so as to maintain the number of directors in
each class as nearly equal as possible, and any additional directors of any
class elected to fill a vacancy resulting from an increase in such class shall
hold office for a term that shall coincide with the remaining term of that
class, but in no case will a decrease in the number of directors shorten the
term of any incumbent director. Directors shall hold office until the annual
meeting for the year in which their terms expire and until their successors
shall be elected and shall qualify, subject, however, to prior death,
resignation, retirement, disqualification or removal from office. A majority of
total directors shall constitute a quorum for the transaction of business.
Except as otherwise required by law, any vacancy on the Board of Directors,
however resulting, may be filled only by the affirmative vote of a majority of
the remaining directors then in office even if less than a quorum. Any director
elected to fill a vacancy shall hold office for a term that shall coincide with
the remaining term of that class.
3. Notwithstanding the foregoing, whenever the holders of any one or
more classes or series of Preferred Stock issued by the Corporation shall have
the right, voting separately by class or series, to elect directors at an annual
or special meeting of stockholders, the election, term of office, filling of
vacancies and features of such directorships shall be governed by the terms of
this Certificate of Incorporation or the resolution or resolutions adopted by
the Board of Directors applicable thereto, and such directors so elected shall
not be divided into classes pursuant to this Article unless expressly provided
by such terms.
4. Subject to the rights, if any, of the holders of shares of Preferred
Stock then outstanding, any or all of the directors of the Corporation may be
removed from office at any time, with or without cause, by affirmative vote of
two-thirds of the directors then in office or for cause only by the affirmative
vote of the holders of at least eighty percent (80%) of the outstanding stock of
the Corporation then entitled to vote generally for the election of directors,
considered for purposes of this Article as one class.
5. The power to adopt, amend, or repeal the By-Laws of the Corporation
may be exercised by the affirmative vote of a majority of the Board of Directors
of the Corporation. In addition, the By-Laws may be amended by the stockholders,
except that Articles II, III, IV, V, VI and IX of the By-Laws shall not be
altered, amended or repealed by the stockholders, and no provision inconsistent
therewith shall be adopted by the stockholders, without the affirmative vote of
at least eighty percent (80%) of the outstanding stock of the Corporation
entitled to vote thereon.
6. The Board of Directors shall have the power, when considering a
tender offer or merger or acquisition proposal, to take into account any and all
factors that the Board of Directors determines to be relevant, including, but
not limited to the following:
(a) the interests of the Corporation's stockholders, including the
possibility that these interests might be best served by the continued
independence of the Corporation;
-2-
(b) whether the proposed transaction might violate federal or state
laws;
(c) not only the consideration being offered in the proposed
transaction, in relation to the then current market price for the outstanding
capital stock of the Corporation, but also to the market price for the capital
stock of the Corporation over a period of years, the estimated price that might
be achieved in a negotiated sale of the Corporation as a whole or in part or
through orderly liquidation, the premiums over market price for the securities
of other corporations in similar transactions, current political, economic and
other factors bearing on securities prices and the Corporation's financial
condition and future prospects; and
(d) the social, legal and economic effects upon employees,
suppliers, customers, creditors and others having similar relationships with the
Corporation, upon the communities in which the Corporation conducts its business
and upon the economy of the state, region and nation.
7. The holders of shares of any class having the right to cast 10% or
more of the votes which may be cast on any matter at a meeting of stockholders
shall have the right to call a special meeting of stockholders by delivering to
the President or Secretary of the Corporation a notice demanding that a special
meeting be called as soon as practicable after the delivery of such notice.
SEVENTH: No person serving as a director of the Corporation shall be
personally liable to the Corporation or its stockholders for breach of his or
her fiduciary duty as a director; provided, however, that the foregoing shall
not eliminate or limit the liability of a director of the Corporation (i) for
any breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware General Corporation Law, or (iv) for any transaction from which the
director derived an improper personal benefit.
EIGHTH: The Corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as the same
may be amended and supplemented, indemnify (and advance expenses to) any and all
persons who it shall have power to indemnify (and advance expenses to) under
said section from and against any and all of the expenses, liabilities, or other
matters referred to in or covered by said section, and the indemnification and
advancement provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any By-law, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee, or agent and shall inure to the benefit of the heirs,
executors, and administrators of such a person.
-3-
NINTH: Annual meetings of the stockholders shall be held on the date
set in the Corporation's By-Laws. Any stockholder who desires to present a
proposal or other matter or to nominate any person for election to the Board of
Directors at an annual meeting of stockholders shall be entitled to present such
proposal, matter or nomination at the annual meeting only if such stockholder
notifies the Corporation, in writing, signed by the stockholder or stockholders
submitting the notice, addressed to the Secretary of the Corporation, describing
in detail the proposal or other matter to be presented and, in the case of
nomination of a director, specifically identifying the person or persons such
stockholder is nominating, sent by and delivery, overnight delivery or certified
mail, return receipt requested, and such notice is received by the Secretary or
President of the Corporation not less than one hundred and twenty (120) calendar
days before the date of the Corporation's proxy statement released to the
stockholders in connection with the previous year's annual meeting. In the event
the Corporation did not hold an annual meeting the previous year, or if the date
of the current year's annual meeting has been changed by more than thirty (30)
calendar days from the date of the previous year's meeting, such notice must be
received by the Secretary or President not less than sixty (60) days before the
date set for the current year's meeting.
TENTH: From time to time any of the provisions of this certificate of
incorporation may be amended, altered, or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the Corporation by this
certificate of incorporation are granted subject to the provision of this
Article TENTH, except that Articles SIXTH, SEVENTH, EIGHTH, NINTH and this
Article TENTH shall not be altered, amended or repealed and no provision
inconsistent therewith shall be adopted without the affirmative vote of the
holders of at least eighty percent (80%) of the voting power of all the stock of
the Corporation entitled to vote generally in the election of directors, voting
together as a single class.
IN WITNESS WHEREOF, DELCATH SYSTEMS, INC. has caused this Amended and
Restated Certificate of Incorporation to be executed and acknowledged by M. S.
Koly, its President and CEO this 28th day of September, 2000.
DELCATH SYSTEMS, INC.
By: /s/ M. S. KOLY
------------------------------
M. S. Koly, President and CEO
-4-
DELCATH SYSTEMS, INC.
a Delaware corporation
and
AMERICAN STOCK TRANSFER & TRUST COMPANY
Warrant Agent
WARRANT AGREEMENT
WARRANT AGENT AGREEMENT dated as of July 22, 2005, by and between Delcath
Systems, Inc., a Delaware corporation (the "Company") and American Stock
Transfer & Trust Company, as warrant agent (the "Warrant Agent").
WHEREAS, the Company proposes to make an offer to the holders of the
1,200,000 outstanding Redeemable Common Stock Purchase Warrants issued by the
Company in connection with its initial public offering in 2000 (the "2000
Warrants") to exchange any or all of the 2000 Warrants for an equal number of
new warrants to be designated "2005 Redeemable Common Stock Purchase Warrants -
Series A" (the "Warrants"), each warrant giving the holder thereof the right to
purchase one share of the Company's Common Stock, par value $0.01 per share (the
"Common Stock");
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer, exchange and exercise of the Warrants;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, the parties hereto agree as follows:
Section 1. Appointment of Warrant Agent. The Company hereby appoints the
Warrant Agent to act as Warrant Agent for the Company in accordance with the
instructions hereinafter set forth in this Agreement, and the Warrant Agent
hereby accepts such appointment.
Section 2. Form of Warrant. The text of the Warrants and of the form of
election to purchase Common Stock to be printed on the reverse thereof shall be
substantially as set forth in Exhibit A attached hereto. Each Warrant shall
entitle the registered holder thereof to purchase one share of Common Stock at a
purchase price of Two Dollars and Seventy-Five Cents ($2.75), at any time
commencing on the date of
2
issuance thereof until 5:00 p.m. Eastern time, on December 31, 2005 (the
"Warrant Exercise Period"). The warrant price and the number of shares of Common
Stock issuable upon exercise of the Warrants are subject to adjustment upon the
occurrence of certain events, all as hereinafter provided. The Warrants shall be
executed on behalf of the Company by the manual or facsimile signature of the
present or any future Chief Executive Officer, President or Vice President of
the Company, attested to by the manual or facsimile signature of the present or
any future Secretary, Assistant Secretary or Chief Financial Officer of the
Company.
Warrants shall be dated as of the issuance by the Warrant Agent either upon
initial issuance or upon transfer or exchange.
In the event the aforesaid expiration date of the Warrants falls on a
Saturday or Sunday, or on a legal holiday on which the New York Stock Exchange
is closed, then the Warrants shall expire at 5:00 p.m. Eastern time on the next
succeeding business day.
Section 3. Countersignature and Registration. The Warrant Agent shall
maintain books for the transfer and registration of the Warrants. Upon the
initial issuance of the Warrants, the Warrant Agent shall issue and register the
Warrants in the names of the respective holders thereof. The Warrants shall be
countersigned manually or by facsimile by the Warrant Agent (or by any successor
to the Warrant Agent then acting as warrant agent under this Agreement) and
shall not be valid for any purpose unless so countersigned. Warrants may,
however, be so countersigned by the Warrant Agent (or by its successor as
Warrant Agent) and be delivered by the Warrant Agent, notwithstanding that the
persons whose manual or facsimile signatures appear thereon as proper officers
of the Company shall have ceased to be such officers at the time of such
countersignature or delivery.
Section 4. Transfers and Exchanges. The Warrant Agent shall transfer, from
time to time, any outstanding Warrants upon the books to be maintained by the
Warrant Agent for that purpose, upon surrender thereof for transfer properly
endorsed or accompanied by appropriate instructions for transfer. Upon any such
transfer, a new Warrant shall be issued to the transferee and the surrendered
Warrant shall be cancelled by the Warrant Agent. Warrants so cancelled shall be
delivered by the Warrant Agent to the Company from time to time upon request.
Warrants may be exchanged at the option of the holder thereof, when surrendered
at the office of the Warrant Agent, for another Warrant, or other Warrants of
different denominations of like tenor and representing in the aggregate the
right to purchase a like number of shares of Common Stock.
Section 5. Exercise of Warrants. Subject to the provisions of this
Agreement, each registered holder of Warrants shall have the right to purchase
from the Company (and the Company shall issue and sell to such registered holder
of Warrants) the number of fully paid and non-assessable shares of Common Stock
specified in such Warrants upon surrender of such Warrants to the Company at the
office of the Warrant Agent, with the
3
form of election to purchase on the reverse thereof duly filled in and signed,
and upon payment to the Company of the Warrant Price, as defined and determined
in accordance with the provisions of Section 9 of this Agreement, for the number
of shares of Common Stock in respect of which such Warrants are then exercised.
Payment of such Warrant Price shall be made by certified check or bank draft to
the order of the Company. Subject to Section 6, upon such surrender of Warrants
and payment of the Warrant Price, the Company shall issue and cause to be
delivered with all reasonable dispatch to or upon the written order of the
registered holder of such Warrants and in such name or names as such registered
holder may designate, a certificate or certificates for the number of full
shares of Common Stock so purchased upon the exercise of such Warrants. Such
certificate or certificates shall be deemed to have been issued, and any person
so designated to be named therein shall be deemed to have become a holder of
record of such shares of Common Stock, as of the date of the surrender of such
Warrants and payment of the Warrant Price as aforesaid. The rights of purchase
represented by the Warrants shall be exercisable, at the election of the
registered holders thereof, either as an entirety or from time to time for a
portion of the shares specified therein and, in the event that any Warrant is
exercised in respect of less than all of the shares of Common Stock specified
therein at any time prior to the date of expiration of the Warrants, a new
Warrant or Warrants will be issued to the registered holder for the remaining
number of shares of Common Stock specified in the Warrant so surrendered, and
the Warrant Agent is hereby irrevocably authorized to countersign and to deliver
the required new Warrants pursuant to the provisions of this Section and of
Section 3 of this Agreement and the Company, whenever requested by the Warrant
Agent, will supply the Warrant Agent with Warrants duly executed on behalf of
the Company for such purpose. Anything in the foregoing to the contrary
notwithstanding, no Warrant will be exercisable unless at the time of exercise
the Company has filed with the Securities and Exchange Commission a registration
statement under the Securities Act of 1933, as amended (the "Act"), and such
registration statement is then effective covering the shares of Common Stock
issuable upon exercise of such Warrant and such shares have been so registered
or qualified or deemed to be exempt under the securities laws of the state of
residence of the holder of such Warrant, unless the Company in its sole
discretion may otherwise permit such exercise. The Company shall use its
reasonable efforts to have all shares so registered or qualified.
Section 6. Payment of Taxes. The Company will pay any documentary stamp
taxes attributable to the initial issuance of Common Stock issuable upon the
exercise of Warrants; provided, however, that the Company shall not be required
to pay any tax which may be payable in respect of any transfer involved in the
issue or delivery of any certificates for shares of Common Stock in a name other
than that of the registered holder of Warrants in respect of which such shares
are issued, and in such case neither the Company nor the Warrant Agent shall be
required to issue or deliver any certificate for shares of Common Stock or any
Warrant until the person requesting the same has paid to the Company the amount
of such tax or has established to the Company's satisfaction that such tax has
been paid.
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Section 7. Mutilated or Missing Warrants. In case any of the Warrants shall
be mutilated, lost, stolen or destroyed, the Company may, in its discretion,
issue and the Warrant Agent shall countersign and deliver in exchange and
substitution for and upon cancellation of the mutilated Warrant, or in lieu of
and in substitution for the Warrant lost, stolen or destroyed, a new Warrant of
like tenor and representing an equivalent right or interest, but only upon
receipt of evidence satisfactory to the Company and the Warrant Agent of such
loss, theft or destruction and, in case of a lost, stolen or destroyed Warrant,
indemnity, if requested, also satisfactory to them. Applicants for such
substitute Warrants shall also comply with such other reasonable regulations and
pay such reasonable charges as the Company or the Warrant Agent may prescribe.
Section 8. Reservation of Common Stock. The Company shall at all times keep
reserved, out of the authorized and unissued shares of Common Stock, a number of
shares of Common Stock sufficient to provide for the exercise of the rights of
purchase represented by the Warrants, and the transfer agent for the shares of
Common Stock and every subsequent transfer agent for any shares of the Company's
Common Stock issuable upon the exercise of any of the rights of purchase
aforesaid are irrevocably authorized and directed at all times to reserve such
number of authorized and unissued shares of Common Stock as shall be required
for such purpose. The Company agrees that all shares of Common Stock issued upon
exercise of the Warrants shall be, at the time of delivery of the certificates
for such shares, validly issued and outstanding, fully paid and nonassessable
and listed on any national securities exchange upon which the other shares of
Common Stock are then listed. So long as any unexpired Warrants remain
outstanding, the Company will file such appropriate registration statements (or
post-effective amendment or supplements) as may be necessary to permit it to
deliver to each person exercising a Warrant, a prospectus meeting the
requirements of Section 10(a)(3) of the Act and otherwise complying therewith,
and will deliver such prospectus to each such person. To the extent that during
any period it is not reasonably likely that the Warrants will be exercised, due
to market price or otherwise, the Company need not file such registration
statement or post-effective amendment during such period. The Company will keep
a copy of this Agreement on file with the transfer agent for the shares of
Common Stock and with every subsequent transfer agent for any shares of the
Common Stock issuable upon the exercise of the rights of purchase represented by
the Warrants. The Warrant Agent is irrevocably authorized to requisition from
time to time from such transfer agent stock certificates required to honor
outstanding Warrants. The Company will supply such transfer agent with duly
executed stock certificates for that purpose. All Warrants surrendered in the
exercise of the rights thereby evidenced shall be cancelled by the Warrant Agent
and shall thereafter be delivered to the Company, and such cancelled Warrants
shall constitute sufficient evidence of the number of shares of Common Stock
which have been issued upon the exercise of such Warrants. Promptly after the
date of expiration of the Warrants, the Warrant Agent shall certify to the
Company the total aggregate number of Warrants then outstanding, and thereafter
no shares of Common Stock shall be subject to reservation in respect of such
Warrants which shall have expired.
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Section 9. Warrant Price; Adjustments.
(a) The warrant price at which Common Stock shall be purchasable upon
the exercise of the Warrants shall be $2.75 per share or after adjustment, as
provided in this Section, shall be such price as so adjusted (the "Warrant
Price").
(b) The Warrant Price shall be subject to adjustment from time to time
as follows:
(i) In case the Company shall at any time after the date hereof
pay a dividend in shares of Common Stock or make a distribution in shares of
Common Stock, then upon such dividend or distribution the Warrant Price in
effect immediately prior to such dividend or distribution shall forthwith be
reduced to a price determined by dividing:
(A) an amount equal to the total number of shares of Common
Stock outstanding immediately prior to such dividend or distribution multiplied
by the Warrant Price in effect immediately prior to such dividend or
distribution, by
(B) the total number of shares of Common Stock outstanding
immediately after such issuance or sale.
For the purposes of any computation to be made in accordance with the
provisions of this Section 9(b)(i), the following provisions shall be
applicable: Common Stock issuable by way of dividend or other distribution on
any stock of the Company shall be deemed to have been issued immediately after
the opening of business on the date following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution.
(ii) In case the Company shall at any time subdivide or combine
the outstanding Common Stock, the Warrant Price shall forthwith be
proportionately decreased in the case of subdivision or increased in the case of
combination to the nearest one cent. Any such adjustment shall become effective
at the time such subdivision or combination shall become effective.
(iii) Within a reasonable time after the close of each quarterly
fiscal period of the Company during which the Warrant Price has been adjusted as
herein provided, the Company shall:
(A) file with the Warrant Agent a certificate signed by the
Chief Executive Officer, President or Vice President of the Company and by the
Chief Financial Officer, the Treasurer or Assistant Treasurer or the Secretary
or an Assistant Secretary of the Company, showing in detail the facts requiring
all such adjustments occurring during such period and the Warrant Price after
each such adjustment; and
6
(B) the Warrant Agent shall have no duty with respect to any
such certificate filed with it except to keep the same on file and available for
inspection by holders of Warrants during reasonable business hours, and the
Warrant Agent may conclusively rely upon the latest certificate furnished to it
hereunder. The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of a Warrant to determine whether any facts exist
which may require any adjustment of the Warrant Price, or with respect to the
nature or extent of any adjustment of the Warrant Price when made, or with
respect to the method employed in making any such adjustment, or with respect to
the nature or extent of the property or securities deliverable hereunder. In the
absence of a certificate's having been furnished, the Warrant Agent may
conclusively rely upon the provisions of the Warrants with respect to the Common
Stock deliverable upon the exercise of the Warrants and the applicable Warrant
Price thereof.
(iv) Notwithstanding anything contained herein to the contrary,
no adjustment of the Warrant Price shall be made if the amount of such
adjustment shall be less than $0.05, but in such case any adjustment that would
otherwise be required then to be made shall be carried forward and shall be made
at the time and together with the next subsequent adjustment which, together
with any adjustment so carried forward, shall amount to not less than $0.05.
(v) In the event that the number of outstanding shares of Common
Stock is increased by a stock dividend payable in Common Stock or by a
subdivision of the outstanding Common Stock, then, from and after the time at
which the adjusted Warrant Price becomes effective pursuant to this Section 9(b)
by reason of such dividend or subdivision, the number of shares of Common Stock
issuable upon the exercise of each Warrant shall be increased in proportion to
such increase in outstanding shares. In the event that the number of shares of
Common Stock outstanding is decreased by a combination of the outstanding Common
Stock, then, from and after the time at which the adjusted Warrant Price becomes
effective pursuant to this Section 9(b) by reason of such combination, the
number of shares of Common Stock issuable upon the exercise of each Warrant
shall be decreased in proportion to such decrease in the outstanding shares of
Common Stock.
(vi) In case of any reorganization or reclassification of the
outstanding Common Stock (other than a change in par value, or from par value to
no par value, or as a result of a subdivision or combination), or in case of any
consolidation of the Company with, or merger of the Company into, another
corporation (other than a consolidation or merger in which the Company is the
continuing corporation and which does not result in any reclassification of the
outstanding Common Stock), or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety, the holder of each Warrant then outstanding shall thereafter have the
right to purchase the kind and amount of shares of Common Stock and other
securities and property receivable upon such reorganization, reclassification,
consolidation, merger, sale or conveyance by a holder of the number of shares of
Common Stock which
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the holder of such Warrant shall then be entitled to purchase; such adjustments
shall apply with respect to all such changes occurring between the date of this
Warrant Agreement and the date of exercise of such Warrant.
(vii) Subject to the provisions of this Section 9, in case the
Company shall, at any time prior to the exercise of the Warrants, make any
distribution of its assets to holders of its Common Stock as a liquidating or a
partial liquidating dividend, then the holder of Warrants who exercises its
Warrants after the record date for the determination of those holders of Common
Stock entitled to such distribution of assets as a liquidating or partial
liquidating dividend shall be entitled to receive for the Warrant Price per
Warrant, in addition to each share of Common Stock, the amount of such
distribution (or, at the option of the Company, a sum equal to the value of any
such assets at the time of such distribution as determined by the Board of
Directors of the Company in good faith), which would have been payable to such
holder had he been the holder of record of the Common Stock receivable upon
exercise of its Warrant on the record date for the determination of those
entitled to such distribution.
(viii) In case of the dissolution, liquidation or winding up of
the Company, all rights under the Warrants shall terminate on a date fixed by
the Company, such date to be no earlier than ten (10) days prior to the
effectiveness of such dissolution, liquidation or winding up and not later than
five (5) days prior to such effectiveness. Notice of such termination of
purchase rights shall be given to the last registered holder of the Warrants, as
the same shall appear on the books of the Company maintained by the Warrant
Agent, by registered mail at least thirty (30) days prior to such termination
date.
(ix) In case the Company shall, at any time prior to the
expiration of the Warrants and prior to the exercise thereof, offer to the
holders of its Common Stock any rights to subscribe for additional shares of any
class of the Company, then the Company shall give written notice thereof to the
last registered holder thereof not less than thirty (30) days prior to the date
on which the books of the Company are closed or a record date is fixed for the
determination of the stockholders entitled to such subscription rights. Such
notice shall specify the date on which the books shall be closed or record date
fixed with respect to such offer of subscription and the right of the holder
thereof to participate in such offer of subscription shall terminate if the
Warrant shall not be exercised on or before the date of such closing of the
books or such record date.
(x) Any adjustment pursuant to the aforesaid provisions of this
Section 9 shall be made on the basis of the number of shares of Common Stock
which the holder thereof would have been entitled to acquire by the exercise of
the Warrant immediately prior to the event giving rise to such adjustment.
(xi) Irrespective of any adjustments in the Warrant Price or the
number or kind of shares purchasable upon exercise of the Warrants, Warrants
previously
8
or thereafter issued may continue to express the same price and number and kind
of shares as are stated in the similar Warrants initially issuable pursuant to
this Warrant Agreement.
(xii) The Company may retain a firm of independent public
accountants (who may be any such firm regularly employed by the Company) to make
any computation required under this Section 9, and any certificate setting forth
such computation signed by such firm shall be conclusive evidence of the
correctness of any computation made under this Section 9.
(xiii) If at any time, as a result of an adjustment made pursuant
to Section 9(b)(vi) above, the holders of a Warrant or Warrants shall become
entitled to purchase any securities other than shares of Common Stock,
thereafter the number of such securities so purchasable upon exercise of each
Warrant and the Warrant Price for such shares shall be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable
to the provisions with respect to the Common Stock contained in Sections
9(b)(ii) through (v).
Section 10. Fractional Interest. The Warrants may only be exercised to
purchase full shares of Common Stock and the Company shall not be required to
issue fractions of shares of Common Stock on the exercise of Warrants. However,
if a Warrant holder exercises all Warrants then owned of record by it and such
exercise would result in the issuance of a fractional share, the Company will
pay to such Warrant holder, in lieu of the issuance of any fractional share
otherwise issuable, an amount of cash based on the market value of the Common
Stock of the Company on the last trading day prior to the exercise date.
Section 11. Notices to Warrant Holders.
(a) Upon any adjustment of the Warrant Price and the number of shares
of Common Stock issuable upon exercise of a Warrant, then and in each such case
the Company shall give written notice thereof to the Warrant Agent, which notice
shall state the Warrant Price resulting from such adjustment and the increase or
decrease, if any, in the number of shares purchasable at such price upon the
exercise of a Warrant, setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based. The Company
shall also mail such notice to the holders of the Warrants at their addresses
appearing in the Warrant register. Failure to give or mail such notice, or any
defect therein, shall not affect the validity of the adjustments.
(b) In case at any time:
(i) the Company shall pay dividends payable in stock upon its
Common Stock or make any distribution (other than regular cash dividends) to the
holders of its Common Stock; or
9
(ii) the Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights; or
(iii) there shall be any capital reorganization or
reclassification of the capital stock of the Company, or consolidation or merger
of the Company with, or sale or substantially all of its assets to, another
corporation; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then in any one or more of such cases, the Company shall give written notice in
the manner set forth in Section 11(a) of the date on which (A) a record shall be
taken for such dividend, distribution or subscription rights, or (B) such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding up shall take place, as the case may be. Such notice
shall also specify the date as of which the holders of Common Stock of record
shall participate in such dividend, distribution or subscription rights, or
shall be entitled to exchange their Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding up, as the case may be. Such
notice shall be given at least thirty (30) days prior to the action in question
and not less than thirty (30) days prior to the record date in respect thereof.
Failure to give such notice, or any defect therein, shall not affect the
legality or validity of any of the matters set forth in this Section 11(b).
(c) The Company shall cause copies of all financial statements and
reports, proxy statements and other documents that are sent to its stockholders
to be sent postage prepaid, on the date of mailing and in the same manner as
sent to such stockholders, to each registered holder of Warrants at his address
appearing in the warrant register as of the record date for the determination of
the stockholders entitled to such documents.
Section 12. Disposition of Proceeds on Exercise of Warrants.
(a) The Warrant Agent shall promptly forward to the Company all monies
received by the Warrant Agent for the purchase of shares of Common Stock through
the exercise of Warrants.
(b) The Warrant Agent shall keep copies of this Agreement available
for inspection by holders of Warrants during normal business hours.
Section 13. Redemption of Warrants. The Warrants are redeemable by the
Company, in whole or in part, on not less than thirty (30) days' prior written
notice at a redemption price of $0.10 per Warrant at any time. The redemption
notice shall be mailed to the holders of the Warrants at their addresses
appearing in the Warrant register. Holders
10
of the Warrants will have exercise rights until the close of business on the
date fixed for redemption.
Section 14. Merger or Consolidation or Change of Name of Warrant Agent. Any
corporation or company which may succeed to the corporate trust business of the
Warrant Agent by any merger or consolidation or otherwise shall be the successor
to the Warrant Agent hereunder without the execution or filing of any paper or
any further act on the part of any of the parties hereto, provided that such
corporation would be eligible to serve as a successor Warrant Agent under the
provisions of Section 16 of this Agreement. In case at the time such successor
to the Warrant Agent shall succeed to the agency created by this Agreement, any
of the Warrants shall have been countersigned but not delivered, any such
successor to the Warrant Agent may adopt the countersignature of the original
Warrant Agent and deliver such Warrants so countersigned.
In case at any time the name of the Warrant Agent shall be changed and at
such time any of the Warrants shall have been countersigned but not delivered,
the Warrant Agent may adopt the countersignature under its prior name and
deliver Warrants so countersigned. In all such cases such Warrants shall have
the full force provided in the Warrants and in this Agreement.
Section 15. Duties of Warrant Agent. The Warrant Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Warrants, by their
acceptance thereof, shall be bound:
(a) The statements of fact and recitals contained herein and in the
Warrants shall be taken as statements of the Company, and the Warrant Agent
assumes no responsibility for the correctness of any of the same except such as
describe the Warrant Agent or action taken or to be taken by it. The Warrant
Agent assumes no responsibility with respect to the distribution of the Warrants
except as herein expressly provided.
(b) The Warrant Agent shall not be responsible for any failure of the
Company to comply with any of the covenants in this Agreement or in the Warrants
to be complied with by the Company.
(c) The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company) and the Warrant Agent
shall incur no liability or responsibility to the Company or to any holder of
any Warrant in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the opinion or the advice of such counsel.
(d) The Warrant Agent shall incur no liability or responsibility to
the Company or to any holder of any Warrant for any action taken in reliance on
any notice,
11
resolution, waiver, consent, order, certificate or other instrument believed by
it to be genuine and to have been signed, sent or presented by the proper party
or parties.
(e) The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the execution of
this Agreement, to reimburse the Warrant Agent for all expenses, taxes and
governmental charges and other charges incurred by the Warrant Agent in the
execution of this Agreement and to indemnify the Warrant Agent and save it
harmless against any and all liabilities, including judgments, costs and
reasonable counsel fees, for anything done or omitted by the Warrant Agent in
the execution of this Agreement except as a result of the Warrant Agent's
negligence, willful misconduct or bad faith.
(f) The Warrant Agent shall be under no obligation to institute any
action, suit or legal proceeding or to take any other action likely to involve
expenses unless the Company or one or more registered holders of Warrants shall
furnish the Warrant Agent with reasonable security and indemnity for any costs
and expenses which may be incurred, but this provision shall not affect the
power of the Warrant Agent to take such action as the Warrant Agent may consider
proper, whether with or without any such security or indemnity. All rights of
action under this Agreement or under any of the Warrants may be enforced by the
Warrant Agent without the possession of any of the Warrants or the production
thereof at any trial or other proceeding, and any such action, suit or
proceeding instituted by the Warrant Agent shall be brought in its name as
Warrant Agent, and any recovery of judgment shall be for the ratable benefit of
the registered holders of the Warrants, as their respective rights and interests
may appear.
(g) The Warrant Agent and any stockholder, director, officer, partner
or employee of the Warrant Agent may buy, sell or deal in any of the Warrants or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to or otherwise act as fully and freely as though it were not the Warrant
Agent under this Agreement. Nothing herein shall preclude the Warrant Agent from
acting in any other capacity for the Company or for any other legal entity.
(h) The Warrant Agent shall act hereunder solely as agent and its
duties shall be determined solely by the provisions hereof.
(i) The Warrant Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys, agents or employees, and the Warrant Agent shall not be
answerable or accountable for any such attorneys, agents or employees or for any
loss to the Company resulting from such neglect or misconduct, provided
reasonable care had been exercised in the selection and continued employment
thereof.
12
(j) Any request, direction, election, order or demand of the Company
shall be sufficiently evidenced by an instrument signed in the name of the
Company by its Chief Executive Officer, President or a Vice President or its
Secretary or an Assistant Secretary or its Chief Financial Officer, Treasurer or
an Assistant Treasurer (unless other evidence in respect thereof be herein
specifically prescribed); and any resolution of the Board of Directors may be
evidenced to the Warrant Agent by a copy thereof certified by the Chief
Financial Officer or the Secretary or an Assistant Secretary of the Company.
Section 16. Change of Warrant Agent. The Warrant Agent may resign and be
discharged from its duties under this Agreement by giving to the Company notice
in writing, and to the holders of the Warrants notice by mailing such notice to
the holders at their addresses appearing on the Warrant register, of such
resignation, specifying a date when such resignation shall take effect. The
Warrant Agent may be removed by like notice to the Warrant Agent from the
Company and the like mailing of notice to the holders of the Warrants. If the
Warrant Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Warrant Agent. If the
Company shall fail to make such appointment within a period of thirty (30) days
after such removal or after it has been notified in writing of such resignation
or incapacity by the resigning or incapacitated Warrant Agent or after the
Company has received such notice from a registered holder of a Warrant (who
shall, with such notice, submit his Warrant for inspection by the Company), then
the registered holder of any Warrant may apply to any court of competent
jurisdiction for the appointment of a successor to the Warrant Agent. Any
successor Warrant Agent, whether appointed by the Company or by such a court,
shall be a bank or trust company, in good standing, incorporated under New York
or federal law. After appointment, the successor Warrant Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Warrant Agent without further act or deed and the former
Warrant Agent shall deliver and transfer to the successor Warrant Agent all
cancelled Warrants, records and property at the time held by it hereunder, and
execute and deliver any further assurance or conveyance necessary for the
purpose. Failure to file or mail any notice provided for in this Section,
however, or any defect therein, shall not affect the validity of the resignation
or removal of the Warrant Agent or the appointment of the successor Warrant
Agent, as the case may be.
Section 17. Identity of Transfer Agent. Forthwith upon the appointment of
any transfer agent for the shares of Common Stock or of any subsequent transfer
agent for the shares of Common Stock or other shares of the Company's Common
Stock issuable upon the exercise of the rights of purchase represented by the
Warrants, the Company will file with the Warrant Agent a statement setting forth
the name and address of such transfer agent.
Section 18. Notices. Any notice pursuant to this Agreement to be given by
the Warrant Agent or by the registered holder of any Warrant to the Company,
shall be
13
sufficiently given if sent by first-class mail, postage prepaid, addressed
(until another is filed in writing by the Company with the Warrant Agent) as
follows:
Delcath Systems, Inc.
1100 Summer Street
Stamford, Connecticut 06905
Attention: M. S. Koly
Chief Executive Officer
and a copy thereof to:
Murtha Cullina LLP
Two Whitney Avenue
P.O. Box 704
New Haven, Connecticut 06503-0704
Attention: Paul G. Hughes, Esq.
Any notice pursuant to this Agreement to be given by the Company or by the
registered holder of any Warrant to the Warrant Agent shall be sufficiently
given if sent by first-class mail, postage prepaid, addressed (until another
address is filed in writing by the Warrant Agent with the Company) as follows:
American Stock Transfer & Trust Company
6201 5th Avenue
Brooklyn, New York 11219
Attention: Office of the General Counsel
Section 19. Supplements and Amendments. The Company and the Warrant Agent
may from time to time supplement or amend this Agreement in order to cure any
ambiguity or to correct or supplement any provision contained herein which may
be defective or inconsistent with any other provision herein, or to make any
other provisions in regard to matters or questions arising hereunder which the
Company and the Warrant Agent may deem necessary or desirable and which shall
not be inconsistent with the provisions of the Warrants and which shall not
adversely affect the interest of the holders of Warrants.
Section 20. New York Contract. This Agreement and each Warrant issued
hereunder shall be deemed to be a contract made under the laws of the State of
New York and shall be construed in accordance with the laws of New York
applicable to agreements to be performed wholly within New York.
Section 21. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company, the
Warrant Agent and the registered holders of the Warrants any legal or equitable
right, remedy or claim
14
under this Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Warrant Agent and the registered holders of the
Warrants.
Section 22. Successors. All the covenants and provisions of this Agreement
by or for the benefit of the Company or the Warrant Agent shall bind and inure
to the benefit of their respective successors and assigns hereunder.
IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
DELCATH SYSTEMS, INC.
By: /s/ M. S. KOLY
----------------------------------
Name: M. S. Koly
Title: President and Chief Executive
Officer
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: /s/ HERBERT J. LEMMER
----------------------------------
Name: Herbert J. Lemmer
Title: Vice President
NUMBER: WARRANTS:
___________________________ _________________________
DELCATH SYSTEMS, INC.
2005 REDEEMABLE COMMON STOCK
PURCHASE WARRANTS - SERIES A
CUSIP
24661P 14 6
REGISTERED OWNER:
THIS IS TO CERTIFY THAT the person named above or registered assigns, is the
owner of the number of warrants set forth above. Each warrant (subject to
adjustments as hereinafter referred to) entitles the holder hereof to purchase
at any time until 5:00 p.m. Eastern time on December 31, 2005 one fully paid and
non-assessable share of common stock (the "Common Stock") of Delcath Systems,
Inc., a Delaware corporation (the "Company"), (such shares of Common Stock being
hereinafter referred to as the "Shares" or a "Share") upon payment of the
warrant price (as hereinafter described), provided, however, that under certain
conditions set forth in the Warrant Agreement hereinafter mentioned the number
of Shares purchased upon the exercise of a warrant may be increased or reduced
and the warrant price may be adjusted. Subject to adjustment as aforesaid, the
warrant price per Share (hereinafter called the "Warrant Price") shall be $2.75
per Share. As provided in said Warrant Agreement the Warrant Price is payable
upon the exercise of the Warrant, either in cash or by certified check or bank
draft to the order of the Company.
Under certain conditions set forth in the Warrant Agreement, this Warrant may be
called for redemption at a redemption price of $0.10 per Warrant upon written
notice of not less than 30 days.
Upon the exercise of this Warrant, the form of election to purchase on the
reverse hereof must be properly completed and executed. In the event that this
Warrant is exercised in respect of less than all of such Shares, a new Warrant
for the remaining number of Shares will be issued on such surrender.
This Warrant is issued under and the rights represented hereby are subject to
the terms and provisions contained in a Warrant Agreement dated as of July [__],
2005 by and between the Company and American Stock Transfer & Trust Company, as
Warrant Agent (the "Warrant Agent"), to all terms and provisions of which the
registered holder of this Warrant, by acceptance hereof, assents. Reference is
hereby made to said Warrant Agreement for a more complete statement of the
rights and limitations of rights of the registered holder hereof, the rights and
duties of the Warrant Agent and the rights and obligations of the Company
hereunder. Copies of said Warrant Agreement are on file at the office of the
Warrant Agent.
The Company shall not be required upon the exercise of this Warrant to issue
fractions of Shares, but shall make adjustments therefor in cash on the basis of
the then current market value of any fractional interest as provided in the
Warrant Agreement.
This Warrant may be transferred, when surrendered at the office of the Warrant
Agent or its successor as warrant agent by the registered holder hereof in
person or by attorney duly authorized in writing, but only in the manner and
subject to the limitations provided in the Warrant Agreement or in this Warrant
and upon surrender of this Warrant Certificate and the payment of any transfer
taxes. Upon any such transfer, a new Warrant or Warrants of different
denominations of this tenor and representing in the aggregate the right to
purchase a like number of Shares equal to the number of such Warrants.
If this Warrant Certificate shall be surrendered for exercise within any period
during which the transfer books for the Company's Common Stock or other
securities purchasable upon exercise of the Warrants are closed for any purpose,
the Company shall not be required to make delivery of certificates for the
securities purchased upon such exercise until the date of the reopening of said
transfer books.
The holder of this Warrant shall not be entitled to any of the rights of a
shareholder of the Company prior to the exercise hereof.
This Warrant shall not be valid unless countersigned by the Warrant Agent.
Witness the facsimile seal of the Company and the facsimile signatures of its
duly authorized officers.
Dated:
/s/ PAUL M. FEINSTEIN /s/ M. S. KOLY
____________________________ _____________________________________
Chief Financial Officer President and Chief Executive Officer
COUNTERSIGNED AND REGISTERED: AMERICAN STOCK TRANSFER & TRUST
COMPANY
(New York, N.Y.) WARRANT
AGENT
AND REGISTRAR
BY:
AUTHORIZED SIGNATURE
DELCATH SYSTEMS, INC
ELECTION TO PURCHASE
To Be Executed by the Registered Holder In Order to Exercise Warrants
To: DELCATH SYSTEMS, INC.
c/o: American Stock Transfer & Trust Company
59 Maiden Lane
New York, New York 10038
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by the within Warrant(s) for and to purchase thereunder,
________________ shares of Common Stock provided for therein and tenders
herewith payment of the purchase price in full to the order of the Company and
requests that certificates for such shares shall be issued in the name of
PLEASE INSERT SOCIAL
SECURITY OR OTHER
IDENTIFYING NUMBER
_______________________ _______________________________________________________
(Please Print or Typewrite)
and be delivered to ____________________________________________________________
(Name)
at _____________________________________________________________________________
(Street Address) (City) (State) (Zip Code)
and, if said number of shares shall not be all the shares purchasable
thereunder, that a new Warrant for the balance remaining of the shares
purchasable under the within Warrant be registered in the name of, and delivered
to, the undersigned at the address stated below.
Dated: _______________ Signature: ___________________________________
Note: The above signature must correspond
Name: ____________________________ with the name as written upon the face of
this Warrant or with the name of the
assignee appearing in the assignment form
below in every particular without
alteration or enlargement or any other
change whatever.
Addrress: __________________________
(Please Print or Typewrite)
*Signature Guaranteed: _________________
____________________________________
(City) (State) (Zip Code)
_________________________________________
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER
ASSIGNMENT
For value received, _____________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL
SECURITY OR OTHER
IDENTIFYING NUMBER
______________________ _________________________________________________________
Please Print or typewrite name and address including
postal zip code of assignee)
( )
________________________________________________________________________________
Warrants represented by the within Warrant Certificate, together with all right,
title and interest therein, and do hereby irrevocably constitute and appoint
_________________________________ attorney to transfer said Warrant on the books
of the within named Company, with full power of substitution in the premises,
Dated: _________________________
Signature:_______________________________
Note: The above signature must
correspond with the name as
written upon the face of the
Warrant in every particular
without alteration or
enlargement or any change
whatever.
*Signature
Guaranteed:___________________
*In the case of assignment, or if the Common Stock issued is to be registered in
the name of a person other than the holder, the holder's signature must be
guaranteed by a commercial bank, trust company or an NASD member firm.
[As Amended]
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") amends and restates the agreement
made April 30, 1996 by and among Delcath Systems, Inc., a Delaware Corporation
with its principal offices at 1100 Summer Street, Stamford, Connecticut 06905
("the Company ") and Mr. M.S. Koly ("the Executive"). This Agreement is
effective as of July 1, 2003. [The Agreement was amended by Amendment No. 1
effective as of June 15, 2004.]
1. Position and Responsibilities.
1.1 The Executive currently serves as a Director and as Chief Executive Officer
of the Company. The Executive shall continue to serve in that capacity, or in
such other executive capacity as shall be designated by the Board of Directors
of the Company and reasonably acceptable to the Executive, and shall perform the
duties customarily associated with such capacity from time to time and at such
place or places as the Board of Directors of the Company shall designate as
appropriate and necessary in connection with such employment.
1.2 The Executive will, to the best of his ability, devote his full business
time (except for his existing directorships listed in Exhibit A or directorships
otherwise approved in advance by the Board of Directors), and his best efforts
and ability to the performance of his duties hereunder and to the business and
affairs of the Company. The Executive agrees to perform such executive duties as
may be assigned to him by or on authority of the Company's Board of Directors
from time to time. After receipt of notice of termination of his employment
hereunder, the Executive shall continue to be available to the Company on a
part-time basis at reasonable and customary hourly rates to assist in any
necessary transition.
1.3 The Executive will duly, punctually, and faithfully perform and observe any
and all rules and regulations which the Company may now or shall hereafter
reasonably establish governing his conduct as an employee and the conduct of its
business.
1.4 The Executive hereby ratifies and affirms the agreement relating to
proprietary information and inventions dated May 20, 1996 and attached hereto as
Exhibit B between the Executive and the Company (the "Proprietary Information
and Inventions Agreement").
2. Term of Employment.
2.1 The term of this Agreement shall be for a term ending on September 30, 2008.
Thereafter, this Agreement shall be automatically renewed for successive periods
of one (1) year, unless the Executive shall give
1 of 14
the Company not less than ninety (90) days prior written notice of non-renewal.
The Company may terminate the Executive's employment as provided in Sections 2.4
or 2.5.
2.2 The Executive agrees that, subject to the terms and conditions of this
Agreement, in the event of a Potential Change in Control, as defined in this
Section 2, he will remain in the employ of the Company until the earliest of (a)
a date which is 180 days from the occurrence of such Potential Change in
Control, (b) his termination of employment by the Company, (c) the termination
by him of his employment by reason of death, disability or Regular Retirement
after age 70.
2.3 For purposes of this Agreement, a "Potential Change in Control" shall be
deemed to have occurred if:
(a) the Company enters into an agreement, the consummation of which would result
in the occurrence of a Change in Control;
(b) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), including the
Company, publicly announces an intention to take or to consider taking actions
which if consummated would constitute a Change in Control;
(c) any person, other than a trustee or other fiduciary holding securities under
an employee benefit plan of the Company (or a company owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company), who is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 9.5% or more of the combined voting power of the Company's then
outstanding securities increases his beneficial ownership of such securities by
5% or more over the percentage so owned by such person prior thereto; or
(d) The Board adopts a resolution to the effect that, for the purposes of this
Agreement, a Potential Change in Control has occurred.
2.4 The Company shall have the right to terminate the Executive's employment at
any time under this Agreement prior to the stated term in any of the following
ways:
(a) upon the death of the Executive;
(b) upon the disability of the Executive (disability shall be defined as his
inability to perform duties under this Agreement for an aggregate of ninety (90)
days out of any one hundred eighty (180) day period due to mental or physical
injury or illness);
2 of 14
(c) immediately without prior notice to the Executive by the Company for Cause,
as hereinafter defined provided, however, that prior to any such termination for
Cause, he shall have had a reasonable opportunity to be heard thereon;
(d) immediately without prior notice to the Executive, in the event of the
liquidation or reorganization of the Company under the federal Bankruptcy Act or
any state insolvency or bankruptcy law;
(e) at any time without Cause, provided the Company shall be obligated to pay to
the Executive upon notice of termination, the Termination Payments, as defined
in Section 3.2.
2.5. The Executive shall also have the right to terminate his employment
hereunder in the event of a material change, without his consent, in his duties
or responsibilities. For the purposes of this Section 2.3, a material change
includes, but is not limited to:
(a) without the express written consent of the Executive, a material diminution
in his position, duties, responsibilities or status with the Company, a material
reduction or alteration (not in the nature of a promotion) in his reporting
responsibilities, titles or offices, or the removal from or failure to be
re-elected to the director or officer positions previously held;
(b) a reduction by the Company of the annual base salary of the Executive as the
same may be increased from time to time hereafter, or a failure by the Company
to increase such base salary each year at least by the percentage specified in
Section 4.1;
(c) the failure of the Company to continue in effect any incentive, benefit,
bonus or compensation, insurance, pension or other employee benefit plan of the
Company (or plans and benefits which are, in the aggregate, no less favorable to
the Executive than those he enjoyed immediately prior thereto);
(d) the relocation of the Company's principal executive offices to a location
outside a fifty mile radius of its present headquarters, the requirement by the
Company that he, without his consent, be based anywhere other than the Company's
principal executive offices, or, in the event he consents to such move, the
failure of the Company to reimburse him for moving expenses and any loss
realized on the sale of his principal residence in connection with such move;
(e) a reduction in the number of the Executive's yearly paid leave business
days;
(f) the failure by the Company to pay to the Executive any portion of his then
current compensation or to pay any portion of an installment of deferred
compensation under any
3 of 14
deferred compensation program of the Company within seven (7) days of the date
such compensation is due.
2.6 If the Executive elects to terminate his employment due to a material change
in his duties or responsibilities, the Company shall be obligated to pay to him
immediately in one lump sum, upon notice to the Company, the Termination
Payments, as defined in Section 3.2.
2.7 "Cause" for the purpose of Section 2.4 of this Agreement shall mean:
(a) the falseness or material inaccuracy of any of the Executive's warranties or
representations herein;
(b) the willful failure or refusal to comply with explicit directives of the
Board of Directors or to render the services required herein;
(c) fraud or embezzlement involving assets of the Company, its customers,
suppliers or affiliates or other misappropriation of the Company's assets or
funds;
(d) the conviction of a criminal felony offense;
(e) the willful breach or habitual neglect of obligations under this Agreement
or duties as an employee of the Company.
The existence of Cause for termination of employment by the Company shall be
subject, upon the written election of the Executive or the Company, to binding
arbitration as provided in Section 9 hereof.
2.8 Notwithstanding the foregoing, after a "Change in Control" has occurred, the
Executive shall not be deemed to have been terminated for Cause without delivery
to him of a Notice of Termination, from the Board finding that in the good faith
opinion of at least three-fifths (3/5) of the Board (after reasonable notice to
him and an opportunity for the Executive, together with his counsel, to be heard
before the Board), he was guilty of conduct set forth above in Section 2.7,
above, and specifying the particulars thereof in detail. In the event of a
dispute concerning the application of this Section, no claim by the Company that
Cause exists shall be given effect unless the Company establishes to the Board
by clear and convincing evidence that Cause exists.
2.9 If his employment is terminated under Section 2.4 (a) through (d), above,
all obligations of the Company hereunder cease, except with respect to amounts
and obligations accrued to the Executive through the last day of the month
during which his employment ended.
3. Change in Control
3.1 For purposes of this Agreement, a "Change in Control" shall be deemed to
have occurred if:
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(a) any person (other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any company owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of the stock of the Company), is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 30% or more of
the voting power of all classes of capital stock of the Company;
(b) the following individuals cease for any reason to constitute a majority of
the number of directors then serving: individuals, who on the date hereof,
constitute the Board, and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation, relating to the
election of directors of the Company) whose appointment or election by the Board
or nomination for election by the Company's stockholders was approved or
recommended by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors on the date hereof or whose appointment or
election or nomination for election was previously so approved or recommended
(the "Continuing Directors");
(c) the stockholders of the Company approve a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any other
company, other than (1) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent thereof) more than
50% of the combined voting power of the voting securities of the Company or such
surviving entity or any parent thereof outstanding immediately after such merger
or consolidation or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no "person"
(as hereinabove defined) acquires more than 50% of the combined voting power of
the Company's then outstanding securities; or
(d) the stockholders of the Company approve a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
(e) The foregoing to the contrary notwithstanding, a Change in Control shall not
be deemed to have occurred with respect to the Executive (i) if the event first
giving rise to the Potential Change in Control involves a publicly-announced
transaction or publicly-announced proposed
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transaction which at the time of the announcement has not been previously
approved by the Board and (ii) the Executive is part of a purchasing group
proposing the transaction. A Change in Control shall also not be deemed to have
occurred with respect to the Executive if he is part of a purchasing group which
consummates the Change in Control transaction. The Executive shall be deemed
"part of a purchasing group" for purpose of the two preceding sentences if he is
an equity participant or has agreed to become an equity participant in the
purchasing company or group (except for (i) passive ownership of less than 5% of
the stock of a public company, (ii) ownership of equity participation in the
purchasing company or group which is otherwise not deemed to be significant, as
determined prior to the Change in Control by a majority of the non-employee
Continuing Directors, or (iii) beneficial ownership of any equity interest in
the purchasing company or group as a result of the grant to the Employee of an
incentive compensation award under one or more incentive plans of the purchasing
company or group (including, but not limited to, the conversion in connection
with a transaction of incentive compensation awards of the Company into
incentive compensation awards of the purchasing company or group), on terms and
conditions substantially equivalent to those applicable to other executives of
the Company immediately prior to the transaction, after taking into account
normal differences attributable to job responsibilities, title and the like).
3.2 In the event of a Change in Control, the Company shall pay to the Executive
immediately in one lump sum, and he shall be entitled to a payment (together
with the payments provided in Sections 3.3 and 3.4 below, the "Termination
Payments") equal to two times the sum of the amounts set forth in clauses (A),
(B) and (C) below:
(A) the Executive's base salary as in effect immediately prior to the Change in
Control;
(B) the average of the bonuses received by the Executive with respect to the
three completed fiscal years of the Company immediately preceding the Change in
Control; and
(C) the annual cost to the Company of all benefits to which the Executive is
entitled (other than contingent stock, stock options and other similar benefits)
immediately preceding the Change in Control, including, without limitation (but
without duplication), any pension, savings, or other employee benefit plans.
3.3 In the event of a Change in Control, the Company shall continue, for a
period of thirty six (36) months, to cover the Executive and his dependents
under those life, disability, accident and
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health insurance benefits which were applicable to him on the date of the Change
in Control at the same benefit levels then in effect, or shall provide
substantially similar benefits.
3.4 In the event of a Change in Control, upon the election of the Executive at
his sole discretion, the Company shall pay to him, in cash, an amount equivalent
to the excess, if any, of the aggregate market value (measured as of the close
of trading on the date of the Change in Control) of all shares of any class or
series of the Company's capital stock issuable upon exercise of then outstanding
employee stock options granted to him (whether or not then exercisable) over the
aggregate exercise price of such options, and such options shall thereupon be
cancelled and of no further force or effect.
3.5 The Company shall pay to the Executive legal fees and expenses incurred by
him as a result of any termination during the thirty-six (36) month period
following a Change in Control (including such fees and expenses, if any,
incurred in contesting or disputing any such termination or in seeking to obtain
or enforce any right or benefit provided by this Agreement or in connection with
any tax audit or proceeding to the extent attributable to the application of
section 4999 of the Code, to any payment or benefit provided hereunder.
3.6 In the event that the Executive becomes entitled to the Termination
Payments, if those Termination Payments would be subject to the tax imposed by
section 4999 of the Code (or any similar tax that may hereafter be imposed) (the
"Excise Tax"), the Executive shall return to the Company any amount which
constitutes an "excess parachute payment" within the meaning of section
280G(b)(2) of Code, unless, in the opinion of tax counsel selected by the
Company's independent auditors and acceptable to the Executive such other
payments or benefits (in whole or in part) do not constitute parachute payments,
or such excess parachute payments (in whole or part) represent reasonable
compensation for services actually rendered within the meaning of section
280G(b)(4) of the Code in excess of the base amount within the meaning of
section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax.
3.7 Any payment required to be made to the Executive under Section 3.2 shall be
independent of, and may be in addition to, any payment required to be made under
Section 2.4 or 2.6.
4. Compensation
4.1 Base Salary. The Executive's Base Salary shall be $300,000 per annum as of
July 1, 2004, payable in accordance with the Company's payroll policies and
practices, and subject to increases thereafter in amounts equal to the greater
of the change in the Cost of Living Index, as published by the
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American Chamber of Commerce Researchers Association, or the rate of increase
applied to employees, generally.
4.2 Bonus. The Executive may receive bonuses at the discretion of the Company's
Board of Directors or the Compensation Committee.
4.3 Vacation. The Executive shall be entitled to thirty paid leave business days
per annum, in lieu of all legal holidays, religious holidays, vacation days and
sick days. The Executive shall make all reasonable efforts to arrange for paid
leave business days in advance at such time or times as shall be mutually
agreeable to him and the Company. Any paid leave days not used in any particular
year may be carried forward into the subsequent year. The Executive may not
receive cash in lieu of paid leave business days.
4.4 Insurance and Benefits. The Executive shall be eligible for participation in
any health or other group insurance plan which may be established by the Company
or which the Company is required to maintain by law. He shall also be entitled
to participate in any employee benefit program which the Company may establish
for its key employees or for its employees generally, including, but in no way
limited to, bonuses and stock purchase or option plans. The Company shall
provide comprehensive health insurance for the Executive and his dependents.
Additionally, the Company shall maintain term life insurance in the amount of at
least three times his then annual base salary payable to a beneficiary or
beneficiaries of his own choosing in the event of his death. The Company shall
also maintain a long-term disability insurance policy payable to a beneficiary
or beneficiaries of his choosing should he suffer a long-term disability. Should
his employment be terminated for any reason, the Company will use its best
efforts to allow the Executive to assume these policies.
4.5 Expenses. The Company shall reimburse the Executive promptly for all
reasonable and ordinary business and out-of-pocket expenses incurred by him in
connection with the Company's business and in the scope of his employment
hereunder, as approved by the Company, including, without limitation, reasonable
and necessary travel, lodging, entertainment and meals incurred by him during
the term of this Agreement, provided the expenses are incurred in furtherance of
the Company's business and at the request of the Company. The Executive agrees
to keep and maintain records of the aforesaid expenses as may be requested by
the Company and to account to the Company for the expenses prior to
reimbursement.
5. Other Activities During Employment
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5.1 Except for the outside employments, consultancies and directorships
currently held by the Executive as listed on Exhibit A attached hereto, and
except with the prior written consent of the Company's Board of Directors,
exclusive of himself, which consent will not be unreasonably withheld, the
Executive will not, during the term of this Agreement, undertake or engage in
any other employment, occupation or business enterprise which directly competes
with the Company other than one in which he is an inactive investor.
5.2 The Executive hereby agrees that, except as disclosed on Exhibit A attached
hereto, during his employment hereunder, he will not, directly or indirectly,
engage (i) individually, (ii) as an officer, (iii) as a director, (iv) as an
employee, (v) as a consultant, (vi) as an advisor, (vii) as an agent (whether a
salesperson or otherwise), (viii) as a broker, or (ix) as a partner,
co-venturer, stockholder or other proprietor owning directly or indirectly more
than a five percent (5%) interest in any firm, corporation, partnership, trust,
association, or other organization which is engaged in the planning, research,
development, production, manufacture, marketing, sales, or distribution of drug
delivery and filtration systems, related products, equipment, or services (such
firm, corporation, partnership, trust, association, or other organization being
hereinafter referred to as a "Prohibited Enterprise"). Except as may be shown on
Exhibit A attached hereto, the Executive hereby represents that he is not
engaged in any of the foregoing capacities (i) through (ix) in any Prohibited
Enterprise.
6. Former Employees.
6.1 The Executive represents and warrants that his employment by the Company
will not conflict with and will not be constrained by any prior or current
employment, consulting agreement or relationship whether oral or written. The
Executive represents and warrants that he does not possess confidential
information arising out of any such employment, consulting agreement or
relationship which, in his best judgment, would be utilized in connection with
his employment by the Company in the absence of Section 6.2.
6.2 If, in spite of the second sentence of Section 6.1, the Executive should
find that confidential information belonging to any other person or entity might
be usable in connection with the Company's business, he will not intentionally
disclose to the Company or use on behalf of the Company any confidential
information belonging to any of his former employers; but during his employment
by the Company he will use in the performance of his duties all information
which is generally known and used by persons with training and experience
comparable to his own all
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information which is common knowledge in the industry or otherwise legally in
the public domain.
7. Post-Employment Activities.
7.1 For a period of one (1) year after the termination, for any reason, of his
employment with the Company hereunder, absent the Board of Directors' prior
written approval, the Executive will not directly or indirectly engage in
activities similar to those described in Section 5.2, nor render services
similar or reasonably related to those which he shall have rendered hereunder to
any person or entity whether now existing or hereafter established which
directly competes with (or proposes or plans to directly compete with) the
Company ("Direct Competitor") in the drug filtration and delivery systems
business, or any line of business engaged in or under demonstrable development
by the Company. Nor shall he entice, induce or encourage any of the Company's
other employees to engage in any activity which, were it done by him, would
violate any provision of the Proprietary Information and Inventions Agreement or
this Section 7. As used in this Section 7.1, the term "any line of business
engaged in or under demonstrable development by the Company" shall be applied as
at the date of termination of his employment, or, if later, as at the date of
termination of any post-employment consultation,
7.2 For a period of one (1) year after the termination of his employment with
the Company, the provisions of Section 5.2 shall be applicable to the Executive
and he shall comply therewith.
7.3 For a period of three (3) months after termination, for any reason, of his
employment with the Company hereunder, the Executive shall be entitled to the
use of his then current executive office space, with the continuation of his
then current secretarial and administrative assistance.
7.4 No provision of this Agreement shall be construed to preclude the Executive
from performing the same services which the Company hereby retains him to
perform for any person or entity which is not a Direct Competitor of the Company
upon the expiration or termination of his employment (or any post-employment
consultation) so long as he does not thereby violate any term of this Agreement
or the Proprietary Information and Inventions Agreement.
8. Remedies.
The obligations under the Proprietary Information and Inventions Agreement and
the provisions of Sections 5.2, 7, 8, 9, and 11 of this Agreement (as modified
by Section 15, if applicable) shall survive the expiration or termination of
employment (whether through his resignation or otherwise) with the Company. The
Executive acknowledgess that a remedy at law for any breach
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or threatened breach by him of the provisions of the Proprietary Information and
Inventions Agreement or Section 5 or 7 hereof would be inadequate and he
therefore agrees that the Company shall be entitled to such injunctive relief in
case of any such breach or threatened breach.
9. Arbitration.
Any dispute concerning this Agreement including, but not limited to, its
existence, validity, interpretation, performance or non-performance, arising
before or after termination or expiration of this Agreement, shall be settled by
a single arbitrator in Stamford, Connecticut, in accordance with the expedited
procedures of the commercial rules then in effect of the American Arbitration
Association. The cost of arbitration, exclusive of the cost of each party's
legal representation (which, except as otherwise provided in this Agreement,
shall be borne by the party incurring the expense), shall be borne by the
instigating party; provided, however, that the arbitrators' award may require
either party to reimburse the other for the reasonable cost of legal
representation in the arbitration proceedings.
10. Assignment.
This Agreement and the rights and obligations of the parties hereto shall bind
and inure to the benefit of any successor or successors of the Company by
reorganization, merger or consolidation and any assignee of all or substantially
all of its business and properties, but, except as to any such successor or
assignee of the Company, neither this Agreement nor any rights or benefits
hereunder may be assigned by the Company or by The Executive, except by
operation of law or by a further written agreement by the parties hereto.
11. Interpretation.
It is the intent of the parties that, in case any one or more of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein. Moreover, it is the intent of the
parties that, if any one or more of the provisions contained in this Agreement
is or becomes or is deemed invalid, illegal or unenforceable or in case any
shall for any reason be held to be excessively broad as to duration,
geographical scope, activity or subject, such provision shall be construed by
amending, limiting and/or reducing it to conform to applicable laws so as to be
valid and enforceable or, if it
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cannot be so amended without materially altering the intention of the parties,
it shall be stricken and the remainder of this Agreement shall remain in full
force and effect.
12. Notices.
Any notice which the Company is required to or may desire to give the Executive
shall be given by registered or certified mail, return receipt requested,
addressed to him at his address of record with the Company, or at such other
place as he may from time to time designate in writing under the terms of this
Section 12. Any notice which the Executive is required or may desire to give to
the Company hereunder shall be given by registered or certified mail, return
receipt requested, addressed to the Company at its principal office, or at such
other office as the Company may from time to time designate in writing under the
terms of this Section 12.
13. Waivers.
No waiver of any right under this Agreement shall be deemed effective unless
contained in a writing signed by the party charged with such waiver, and no
waiver of any right arising from any breach or failure to perform shall be
deemed to be a waiver of any future such right or of any other right arising
under this Agreement.
14. Complete Agreement.
The foregoing, including Exhibits A and B attached hereto, is the entire
agreement of the parties with respect to the subject matter hereof, superseding
any previous oral or written communications, representations, understandings, or
agreements with the Company or any officer or representative thereof.
15. Amendments.
This Agreement may be amended or modified or certain provisions waived only by a
written instrument signed by the parties hereto, upon authorization of the
Company's Board of Directors.
16. Headings.
The headings of the Sections contained in this Agreement are inserted for
convenience and reference only and in no way define, limit, extend or describe
the scope of this Agreement, the intent of any provisions hereof, and shall not
be deemed to constitute a part hereof nor to affect the meaning of this
Agreement in any way.
17. Governing Law.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Connecticut.
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In Witness Whereof, the Company has caused this Agreement to be signed by its
duly authorized officer and its seal affixed hereto, and the Executive has
hereunto set his hand and seal as of the day and year first above written.
Delcath Systems Inc.
By: /s/ MARK A CORIGLIANO 9/25/03 /s/ M. S. KOLY
------------------------------------- --------------------
Mark A. Corigliano, Director and M.S. Koly
Chairman of the Compensation Committee
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Exhibit A
Outside Employments and Directorships of M.S. Koly
Madison Consulting, Inc.
Venkol, Inc.
14 of 14
DELCATH SYSTEMS, INC.
2004 STOCK INCENTIVE PLAN
Incentive Stock Option Agreement
To: [NAME OF OPTIONEE]
We are pleased to notify you that, by action of the Compensation and Stock
Option Committee (hereinafter called the "Committee") on [DATE OF GRANT], an
incentive stock option to purchase [NUMBER] shares of the Common Stock, $0.01
par value, of Delcath Systems, Inc. (herein called the "Company"), at the price
of $[EXERCISE PRICE] per share (herein called the "Exercise Price") was approved
pursuant to the Company's 2004 Stock Incentive Plan (the "2004 Plan"). In
accordance with the provisions of Section 6.2 of the 2004 Plan, this Agreement
shall become effective upon your execution hereof. This option may be exercised
only upon the terms and conditions set forth below.
Exercising options may not be a prudent business decision for some persons.
Therefore, we urge you to review this opportunity carefully and consult with
your own tax advisor prior to exercising this option as the decision as to
whether to exercise this option and the manner in which you exercise the option
should be guided by your personal financial and tax considerations.
1. Purpose of Option.
The purpose of the 2004 Plan under which this incentive stock option has
been granted is to further the growth and development of the Company and its
direct and indirect subsidiaries by encouraging selected employees (including
officers) who contribute and are expected to contribute materially to the
Company's success to obtain a proprietary interest in the Company through the
ownership of stock, thereby providing such persons with an added incentive to
promote the best interests of the Company, and affording the Company a means of
attracting to its service persons of outstanding ability.
2. Acceptance of Option Agreement.
Your execution of this incentive stock option agreement will indicate your
acceptance of and your willingness to be bound by its terms; it imposes no
obligation upon you to purchase any of the shares subject to the option. Your
obligation to purchase shares can arise only upon your exercise of the option in
the manner set forth in paragraph 4 hereof.
3. When Option May Be Exercised.
This option shall be exercisable as follows:
2
(a) this option shall become exercisable on [DATE] as to [NUMBER] of
the shares covered hereby; and
(b) this option shall become exercisable on [DATE] as to the remaining
[NUMBER] shares covered hereby.
This option may not be exercised for fewer than ten shares at any one time
(or the remaining shares then purchasable if less than ten), may not be
exercised for fractional shares of the Company's Common Stock, and expires on
[EXPIRATION DATE], unless sooner terminated as provided in paragraphs 5, 6 and 7
hereof.
4. How Option May Be Exercised.
This option is exercisable by a written notice signed by you and delivered
to the Company at its executive offices, signifying your election to exercise
the option ("Notice of Exercise"). The Notice of Exercise must state the number
of shares of Common Stock as to which your option is being exercised, must
contain a statement by you that such shares are being acquired by you for
investment and not with a view to their distribution or resale (unless a
registration statement covering the shares purchasable has been declared
effective by the Securities and Exchange Commission, with its being acknowledged
by you that the Company shall not be under any obligation to file any such
registration statement). A form of the Notice of Exercise is attached hereto as
Exhibit A. The payment of the Exercise Price of an option shall be subject to
the following:
(a) Payment of Exercise Price. The Exercise Price shall be payable in
cash, check to the order of the Company or by tendering shares of Common Stock
that (i) you have held for at least six (6) months and (ii) are valued at Fair
Market Value, as defined in the Plan, as of the day of exercise, or in any
combination thereof, as determined by the Committee, for the full purchase price
of the shares being purchased, plus such amount, if any, as is required for
withholding taxes.
(b) Net Issuance Exercise Right. You may elect to pay the Exercise
Price upon the exercise of this option by surrendering this option (or a portion
hereof) on a cash-free basis in exchange for shares of Common Stock acquired
upon exercise of this option. If you surrender this option (or a portion hereof)
as payment for the exercised shares, the number of exercised shares to be issued
to you will be equal to the product of (i) a fraction, the numerator of which
will be (a) the Fair Market Value of one share of Common Stock on the date of
exercise, less (b) the Exercise Price, and the denominator of which will be the
Fair Market Value of a share of Common Stock on the date of exercise, multiplied
by (ii) the number of options to be exercised (the "Formula"). The Formula may
also be represented as:
X = (A - B) Y
-------
A
3
Where: X = the number of shares of Common Stock to be issued to the
Optionholder;
Y = the number of options to be exercised;
A = the Fair Market Value of one share of Common Stock on the
date of exercise; and
B = Exercise Price.
(c) Unless the Company determines that it would not be permitted under
applicable law, you may elect to have the Company lend you sufficient funds to
pay the Exercise Price and any tax withholding resulting from such exercise upon
the exercise of an option.
(d) If requested by the Company, a written acknowledgement by you, in
the form contained in the Notice of Exercise that an investment in the Common
Stock of the Company involves a high degree of risk, that you have received a
copy of the Company's financial statements for the most recently ended fiscal
year for which such statement is available (which shall be provided annually to
you by the Company), and that you have had the opportunity to ask questions of
management concerning the Company prior to the exercise of this option (the
Company to provide such information as you may reasonably request).
The full Exercise Price for share of Common Stock purchased upon the
exercise of this option shall be paid at the time of such exercise.
The Committee may cause each certificate evidencing the purchased Common
Stock to be endorsed with one or more legends setting forth the restrictions on
transfer or otherwise of such Common Stock.
Certificates for shares of the Common Stock so purchased will be issued as
soon as practicable. The Company, however, shall not be required to issue or
deliver a certificate for any shares until it has complied with all requirements
of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934,
as amended, any stock exchange on which the Common Stock may then be listed and
all applicable state laws in connection with the issuance or sale of such shares
or the listing of such shares on said exchange. Until the issuance of the
certificate for such shares, you or such other person as may be entitled to
exercise this option, shall have none of the rights of a stockholder with
respect to shares subject to this option.
You shall promptly advise the Company of any sale of shares of Common Stock
issued upon exercise of this option which occurs within one year from the date
of the exercise of this option.
4
5. Subject to Terms of the 2004 Plan.
This Incentive Stock Option Agreement shall be subject in all respects to
the terms and conditions of the 2004 Plan and, in the event of any question or
controversy relating to the terms of the 2004 Plan, the decision of the
Committee shall be conclusive. THIS AGREEMENT SHALL BE NULL AND VOID AB INITIO,
AND THE OPTION GRANT REFLECTED HEREIN SHALL BE DEEMED FORFEITED, UNLESS THE
COMPANY RECEIVES, WITHIN TWO WEEKS OF ITS TENDER OF THIS AGREEMENT TO YOU, ONE
COPY HEREOF BEARING YOUR ORIGINAL COUNTERSIGNATURE BELOW.
Sincerely yours,
DELCATH SYSTEMS, INC.
By:____________________________
Name:
Title:
Agreed to and Accepted
this ___ day of [DATE].
- ----------------------------------
[NAME]
EXHIBIT A
NOTICE OF EXERCISE
(To be Executed by an Optionholder to Purchase Shares of
Common Stock of Delcath Systems, Inc. under its 2004 Stock Incentive Plan)
The undersigned hereby irrevocably elects to exercise his or her right to
purchase ___________________ (__________) shares of Common Stock, $0.01 par
value per share (the "Shares"), of Delcath Systems, Inc. ("Delcath") as provided
by the Incentive Stock Option Agreement between the undersigned and Delcath,
dated ________________, and according to the conditions thereof, and hereby
makes payment of the Exercise Price for such Shares in the full amount of
$______________, by wire transfer or by check delivered herewith.
By executing this Notice of Exercise, the undersigned represents and
warrants to Delcath that the following statements are true and correct:
1. I am acquiring the shares of the Company's Common Stock for investment
purposes only and not with a view to their distribution or resale.
2. I understand that an investment in the Common Stock of the Company
involves a high degree of risk and is suitable only for persons of adequate
financial means and should not be made by anyone who cannot afford the loss of
his or her entire investment.
3. I have received and carefully read and am familiar with the Company's
financial statements for the most recently ended fiscal year for which such
statements are available.
4. I acknowledge that I have had an opportunity to consult with counsel and
other advisers about acquiring the shares of the Company's Common Stock for
investment purposes.
5. I have had the opportunity to ask questions of management concerning the
Company prior to the exercise of the option and the Company has made available
such information pertaining to my acquiring the Shares as I have reasonably
requested.
Signature: ______________________________
Print Name:
Address: ______________________________
______________________________
DELCATH SYSTEMS, INC.
2004 STOCK INCENTIVE PLAN
Nonqualified Stock Option Agreement
To: [NAME]
We are pleased to notify you that, by action of the Compensation and Stock
Option Committee (hereinafter called the "Committee") on [DATE] a nonqualified
stock option to purchase [NUMBER] shares of the Common Stock, $0.01 par value,
of Delcath Systems, Inc. (herein called the "Company"), at the price of
$[EXERCISE PRICE] per share (herein called the "Exercise Price") was approved
pursuant to the Company's 2004 Stock Incentive Plan (the "2004 Plan"). In
accordance with the provisions of Section 6.2 of the 2004 Plan, this Agreement
shall become effective upon your execution hereof. This option may be exercised
only upon the terms and conditions set forth below.
Exercising options may not be a prudent business decision for some persons.
Therefore, we urge you to review this opportunity carefully and consult with
your own tax advisor prior to exercising this option as the decision as to
whether to exercise this option and the manner in which you exercise the option
should be guided by your personal financial and tax considerations.
1. Purpose of Option.
The purpose of the 2004 Plan under which this nonqualified stock option has
been granted is to further the growth and development of the Company and its
direct and indirect subsidiaries by encouraging selected employees, directors,
consultants, agents, independent contractors and other persons who contribute
and are expected to contribute materially to the Company's success to obtain a
proprietary interest in the Company through the ownership of stock, thereby
providing such persons with an added incentive to promote the best interests of
the Company, and affording the Company a means of attracting to its service
persons of outstanding ability.
2. Acceptance of Option Agreement.
Your execution of this nonqualified stock option agreement will indicate
your acceptance of and your willingness to be bound by its terms; it imposes no
obligation upon you to purchase any of the shares subject to the option. Your
obligation to purchase shares can arise only upon your exercise of the option in
the manner set forth in paragraph 4 hereof.
2
3. When Option May Be Exercised.
This option shall be exercisable as follows:
(a) this option shall become exercisable on [DATE] as to [NUMBER]
of the shares covered hereby; and
(b) this option shall become exercisable on [DATE] as to the
remaining [NUMBER] shares covered hereby.
This option may not be exercised for fewer than ten shares at any one time
(or the remaining shares then purchasable if less than ten), may not be
exercised for fractional shares of the Company's Common Stock, and expires on
July 7, 2010 unless sooner terminated as provided in paragraph 5 hereof.
4. How Option May Be Exercised.
This option is exercisable by a written notice signed by you and delivered
to the Company at its executive offices, signifying your election to exercise
the option ("Notice of Exercise"). The Notice of Exercise, substantially in the
form attached hereto as Exhibit A, must state the number of shares of Common
Stock as to which your option is being exercised and must contain a statement by
you that such shares are being acquired by you for investment and not with a
view to their distribution or resale (unless a registration statement covering
the shares purchasable has been declared effective by the Securities and
Exchange Commission, with it being acknowledged by you that the Company shall
not be under any obligation to file any such registration statement). The
payment of the Exercise Price of an option shall be subject to the following:
(a) Payment of Exercise Price. The Exercise Price shall be payable in
cash, check to the order of the Company or by tendering shares of Common Stock
that (i) you have held for at least six (6) months and (ii) are valued at Fair
Market Value, as defined in the Plan, as of the day of exercise, or in any
combination thereof, as determined by the Committee, for the full purchase price
of the shares being purchased, plus such amount, if any, as is required for
withholding taxes.
(b) Net Issuance Exercise Right. You may elect to pay the Exercise
Price upon the exercise of this option by surrendering this option (or a portion
hereof) on a cash-free basis in exchange for shares of Common Stock acquired
upon exercise of this option. If you surrender this option (or a portion hereof)
as payment for the exercised shares, the number of exercised shares to be issued
to you will be equal to the product of (i) a fraction, the numerator of which
will be (a) the Fair Market Value of one share of Common Stock on the date of
exercise, less (b) the Exercise Price, and the denominator of which will be the
Fair Market Value of a share of Common Stock on the date of exercise, multiplied
by (ii) the number of options to be exercised (the "Formula"). The Formula may
also be represented as:
2
X = (A - B) Y
-------
A
Where: X = the number of shares of Common Stock to be issued to the
Optionholder;
Y = the number of options to be exercised;
A = the Fair Market Value of one share of Common Stock on
the date of exercise; and
B = Exercise Price.
(c) Unless the Company determines that it would not be permitted under
applicable law, you may elect to have the Company lend you sufficient funds to
pay the Exercise Price and any tax withholding resulting from such exercise upon
the exercise of an option.
(d) If requested by the Company, a written acknowledgement by you, in
the form contained in the Notice of Exercise that an investment in the Common
Stock of the Company involves a high degree of risk, that you have received a
copy of the Company's financial statements for the most recently ended fiscal
year for which such statement is available (which shall be provided annually to
you by the Company), and that you have had the opportunity to ask questions of
management concerning the Company prior to the exercise of this option (the
Company to provide such information as you may reasonably request).
The full Exercise Price for share of Common Stock purchased upon the
exercise of this option shall be paid at the time of such exercise.
The Committee may cause each certificate evidencing the purchased Common
Stock to be endorsed with one or more legends setting forth the restrictions on
transfer or otherwise of such Common Stock.
Certificates for shares of the Common Stock so purchased will be issued as
soon as practicable. The Company, however, shall not be required to issue or
deliver a certificate for any shares until it has complied with all requirements
of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934,
as amended, any stock exchange on which the Common Stock may then be listed and
all applicable state laws in connection with the issuance or sale of such shares
or the listing of such shares on said exchange. Until the issuance of the
certificate for such shares, you or such other person as may be entitled to
exercise this option, shall have none of the rights of a stockholder with
respect to shares subject to this option.
You shall promptly advise the Company of any sale of shares of Common Stock
issued upon exercise of this option which occurs within one year from the date
of the exercise of this option.
3
By your acceptance hereof, you agree that you will not sell, transfer,
pledge or otherwise dispose of any shares of Common Stock you acquire upon an
exercise of this option prior to the first anniversary of the date of such
exercise.
5. Subject to Terms of the 2004 Plan.
This Nonqualified Stock Option Agreement shall be subject in all respects
to the terms and conditions of the 2004 Plan and, in the event of any question
or controversy relating to the terms of the 2004 Plan, the decision of the
Committee shall be conclusive. THIS AGREEMENT SHALL BE NULL AND VOID AB INITIO,
AND THE OPTION GRANT REFLECTED HEREIN SHALL BE DEEMED FORFEITED, UNLESS THE
COMPANY RECEIVES, WITHIN TWO WEEKS OF ITS TENDER OF THIS AGREEMENT TO YOU, ONE
COPY HEREOF BEARING YOUR ORIGINAL COUNTERSIGNATURE BELOW.
6. Tax Status.
This option does not qualify as an "incentive stock option" under the
provisions of Section 422 of the Code, and the income tax implications of your
receipt of a nonqualified stock option and your exercise of such an option
should be discussed with your tax advisor.
Sincerely yours,
DELCATH SYSTEMS, INC.
By:_______________________________
Name:
Title:
Agreed to and Accepted
this ___ day of [DATE].
- ----------------------------------
[NAME]
EXHIBIT A
NOTICE OF EXERCISE
(To be Executed by an Optionholder to Purchase Shares of
Common Stock of Delcath Systems, Inc. under its 2004 Stock Incentive Plan)
The undersigned hereby irrevocably elects to exercise his or her right to
purchase ___________________ (__________) shares of Common Stock, $0.01 par
value per share (the "Shares"), of Delcath Systems, Inc. ("Delcath") as provided
by the Nonqualified Stock Option Agreement between the undersigned and Delcath,
dated ________________, and according to the conditions thereof, and hereby
makes payment of the Exercise Price for such Shares in the full amount of
$______________, by wire transfer or by check delivered herewith.
By executing this Notice of Exercise, the undersigned represents and
warrants to Delcath that the following statements are true and correct:
1. I am acquiring the shares of the Company's Common Stock for investment
purposes only and not with a view to their distribution or resale.
2. I understand that an investment in the Common Stock of the Company
involves a high degree of risk and is suitable only for persons of adequate
financial means and should not be made by anyone who cannot afford the loss of
his or her entire investment.
3. I have received and carefully read and am familiar with the Company's
financial statements for the most recently ended fiscal year for which such
statements are available.
4. I acknowledge that I have had an opportunity to consult with counsel and
other advisers about acquiring the shares of the Company's Common Stock for
investment purposes.
5. I have had the opportunity to ask questions of management concerning the
Company prior to the exercise of the option and the Company has made available
such information pertaining to my acquiring the Shares as I have reasonably
requested.
Signature: ______________________________
Print Name:
Address: ______________________________
______________________________
______________________________
Dated: ______________________
DELCATH SYSTEMS, INC.
2004 STOCK INCENTIVE PLAN
Stock Grant Agreement
To: [NAME]
We are pleased to notify you that, by action of the Compensation and Stock
Option Committee (hereinafter called the "Committee") on [DATE] a stock grant of
[NUMBER] shares of the Common Stock, $0.01 par value, of Delcath Systems, Inc.
(herein called the "Company"), was approved pursuant to the Company's 2004 Stock
Incentive Plan (the "2004 Plan"). Pursuant to Section 9.1 of the 2004 Plan,
please confirm your acceptance of this stock grant by signing below and
returning this agreement to the Company.
We urge you to review this opportunity carefully and consult with your own
tax advisor prior to accepting the grant so that you understand the tax
consequences of your receiving this grant. By your signature hereto, you also
acknowledge receipt of a copy of the Company's Prospectus dated October 21, 2004
relating to the 2004 Plan.
Sincerely yours,
DELCATH SYSTEMS, INC.
By:_______________________________
[NAME]
[TITLE]:
Agreed to and Accepted
this ___ day of [DATE].
- ----------------------------------
[NAME]
EXHIBIT 31.1
CERTIFICATION
BY PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14
I, M. S. Koly, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Delcath Systems,
Inc;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the small business
issuer as of, and for, the periods presented in this report;
4. The small business issuer's other certifying officer and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small
business issuer and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the small business issuer,
including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being
prepared;
(b) [Omitted as permitted by Exchange Act Release No. 47986];
(c) Evaluated the effectiveness of the small business issuer's disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the small business issuer's
internal control over financial reporting that occurred during the small
business issuer's most recent fiscal quarter (the small business issuer's fourth
fiscal quarter in the case of an annual report) that has materially affected, or
is reasonably likely to materially affect, the small business issuer's internal
control over financial reporting; and
5. The small business issuer's other certifying officer and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's
auditors and the audit committee of the small business issuer's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the small business issuer's ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the small business issuer's internal
control over financial reporting.
/s/ M. S. KOLY
-------------------------
M. S. Koly
Chief Executive Officer
(Principal executive officer)
August 11, 2005
EXHIBIT 31.2
CERTIFICATION
BY PRINCIPAL FINANCIAL OFFICER
PURSUANT TO RULE 13a-14
I, Paul M. Feinstein, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Delcath Systems,
Inc;
2. Based on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements were
made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the small business
issuer as of, and for, the periods presented in this report;
4. The small business issuer's other certifying officer and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small
business issuer and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the small business issuer,
including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being
prepared;
(b) [Omitted as permitted by Exchange Act Release No. 47986];
(c) Evaluated the effectiveness of the small business issuer's disclosure
controls and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the small business issuer's
internal control over financial reporting that occurred during the small
business issuer's most recent fiscal quarter (the small business issuer's fourth
fiscal quarter in the case of an annual report) that has materially affected, or
is reasonably likely to materially affect, the small business issuer's internal
control over financial reporting; and
5. The small business issuer's other certifying officer and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the small business issuer's
auditors and the audit committee of the small business issuer's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the small business issuer's ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the small business issuer's internal
control over financial reporting.
/s/ PAUL M. FEINSTEIN
----------------------------
Paul M. Feinstein
Chief Financial Officer
(Principal financial officer)
August 11, 2005
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES -OXLEY ACT OF 2002
In connection with the Quarterly Report of DELCATH SYSTEMS, INC. (the
"Company") on Form 10-QSB for the period ended June 30, 2005 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, M. S.
Koly, the Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C.
ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002,
that:
(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
August 11, 2005 /s/ M. S. KOLY
-----------------------
M. S. Koly
Chief Executive Officer
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES -OXLEY ACT OF 2002
In connection with the Quarterly Report of DELCATH SYSTEMS, INC. (the
"Company") on Form 10-QSB for the period ended June 30, 2005 as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), I, Paul M.
Feinstein, the Chief Financial Officer of the Company, certify, pursuant to 18
U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
August 11, 2005 /s/ PAUL M. FEINSTEIN
---------------------------
Paul M. Feinstein
Chief Financial Officer