DELCATH SYSTEMS, INC. WARRANT
DELCATH
SYSTEMS, INC.
WARRANT
|
Warrant
No. _____
|
Original
Issue Date: June 15, 2009
|
|
(“Issue
Date”)
|
DELCATH SYSTEMS, INC., a
Delaware corporation (the “Company”), hereby certifies that, for
value received, __________ or its permitted registered assigns (the “Holder”), is entitled to purchase
from the Company up to a total of ________ shares of common stock, $0.01 par
value (the “Common
Stock”), of the Company (each such share, a “Warrant
Share” and all
such shares, the “Warrant
Shares”) at an
exercise price equal to $3.99 per share (as adjusted from time to time as
provided herein, the “Exercise
Price”), at any time and from time to time on or after the Closing Date
(the “Original
Issue Date”) and
through and including 5:00 P.M., New York City time, on June 15, 2014 (the “Expiration
Date”), and
subject to the following terms and conditions:
This
Warrant is being issued pursuant to that certain Subscription Agreement, dated
June 9, 2009, by and between the Company and the purchaser identified therein
(the “Subscription
Agreement”). All such warrants are referred to herein, collectively, as
the “Warrants.” The
original issuance of the Warrants and the Warrant Shares by the Company pursuant
to the Subscription Agreement has been registered pursuant to a Registration
Statement on Form S-3 (File No. 333-143280) (together with any registration
statement filed by the Company pursuant to Rule 462(b) under the Securities Act,
the “Registration
Statement”).
1. Definitions. In
addition to the terms defined elsewhere in this Warrant, capitalized terms that
are not otherwise defined herein have the meanings given to such terms in the
Subscription Agreement.
“Affiliate” of a person means a
person that, directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, the person
specified.
“Convertible Securities” means
any stock or securities (other than Options) directly or indirectly convertible
into or exercisable or exchangeable for shares of Common Stock.
“Options” means any rights,
warrants or options to subscribe for or purchase shares of Common Stock or
Convertible Securities.
“Person” means an individual, a
limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization and a government or any department or
agency thereof.
“Trading Day” means any day on
which trading of the Common Stock occurs on the applicable Trading
Market.
“Trading Market” means the
NASDAQ Capital Market or, if the Company’s Common Stock is not then listed on
the NASDAQ Capital Market, then such exchange or quotation system on which the
Common Stock then primarily trades.
“Weighted Average Price” means,
for any security as of any date, the dollar volume-weighted average price for
such security on the applicable Trading Market during the period beginning at
9:30:01 a.m., New York City time, and ending at 4:00:00 p.m., New York City
time, as reported by Bloomberg through its “Volume at Price”
function
or, if the foregoing does not apply, the dollar volume-weighted average price of
such security in the over-the-counter market on the electronic bulletin board
for such security during the period beginning at 9:30:01 a.m., New York City
time, and ending at 4:00:00 p.m., New York City time, as reported by Bloomberg,
or, if no dollar volume-weighted average price is reported for such security by
Bloomberg for such hours, the average of the highest closing bid price and the
lowest closing ask price of any of the market makers for such security as
reported in the “pink sheets” by Pink Sheets LLC (formerly the National
Quotation Bureau, Inc.). If the Weighted Average Price cannot be calculated for
such security on such date on any of the foregoing bases, the Weighted Average
Price of such security on such date shall be the fair market value as mutually
determined by the Company and the Holder. If the Company and the Holder are
unable to agree upon the fair market value of such security, then such dispute
shall be resolved pursuant to Section 15(b) hereof. All such determinations
shall be appropriately adjusted for any share dividend, share split or other
similar transaction during such period.
2. List of Warrant
Holders. The Company shall register this Warrant, upon records
to be maintained by the Company for that purpose (the “Warrant
Register”), in
the name of the record Holder (which shall include the initial Holder or, as the
case may be, any registered assignee to which this Warrant is permissibly
assigned hereunder from time to time). The Company may deem and treat the
registered Holder of this Warrant as the absolute owner hereof for the purpose
of any exercise hereof or any distribution to the Holder, and for all other
purposes, absent actual notice to the contrary.
3. List of Transfers;
Restrictions on Transfer.
(a) This
Warrant and the Warrant Shares are subject to the restrictions on transfer set
forth in this Section 3.
(b) The
Company shall register any such transfer of all or any portion of this Warrant
in the Warrant Register, upon surrender of this Warrant, with the Form of
Assignment attached hereto duly completed and signed, to the Company at its
address specified herein. Upon any such registration or transfer, a new Warrant
to purchase Common Stock, in substantially the form of this Warrant (any such
new Warrant, a “New
Warrant”),
evidencing the portion of this Warrant so transferred shall be issued to the
transferee and a New Warrant evidencing the remaining portion of this Warrant
not so transferred, if any, shall be issued to the transferring Holder. The
acceptance of the New Warrant by the transferee thereof shall be deemed the
acceptance by such transferee of all of the rights and obligations in respect of
the New Warrant that the Holder has in respect of this Warrant.
4. Exercise and Duration of
Warrants.
(a) All
or any part of this Warrant shall be exercisable by the registered Holder in any
manner permitted by Section 10 hereof at any time and from time to time on
or after the Original Issue Date and through and including the Expiration Date.
Subject to Section 11 hereof, at 5:00 p.m., New York City time, on the
Expiration Date, the portion of this Warrant not exercised prior thereto shall
be and become void and of no value and this Warrant shall be terminated and no
longer outstanding. In addition, if cashless exercise would be permitted under
Section 10(b) hereof, then all or part of this Warrant may be exercised by the
registered Holder utilizing such cashless exercise provisions at any time, or
from time to time, on or after the Original Issue Date and through and including
the Expiration Date.
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(b) The
Holder may exercise this Warrant by delivering to the Company (i) an
exercise notice, in the form attached hereto (the “Exercise
Notice”), completed and duly signed, and (ii) if such Holder is not
utilizing the cashless exercise provisions set forth in this Warrant, payment of
the Exercise Price for the number of Warrant Shares as to which this Warrant is
being exercised. The date such items are delivered to the Company (as determined
in accordance with the notice provisions hereof) is an “Exercise
Date.” The Holder shall not be required to deliver the original Warrant
in order to effect an exercise hereunder. Execution and delivery of the Exercise
Notice shall have the same effect as cancellation of the original Warrant and
issuance of a New Warrant evidencing the right to purchase the remaining number
of Warrant Shares. On or before the first (1st) business day
following the date on which the Company has received the Exercise Notice, the
Company shall transmit to a facsimile number set forth in the Exercise Notice a
confirmation of receipt of the Exercise Notice to the Holder and also will
notify the Company's transfer agent.
5. Delivery of Warrant
Shares.
(a) Upon
exercise of this Warrant, the Company shall promptly (but in no event later than
three Trading Days after the Exercise Date) issue or cause to be issued and
cause to be delivered to or upon the written order of the Holder and in such
name or names as the Holder may designate (provided that, if the Registration
Statement is not then effective and the Holder directs the Company to deliver a
certificate for the Warrant Shares in a name other than that of the Holder or an
Affiliate of the Holder, it shall deliver to the Company on the Exercise Date an
opinion of counsel reasonably satisfactory to the Company to the effect that the
issuance of such Warrant Shares in such other name may be made pursuant to an
available exemption from the registration requirements of the Securities Act of
1933, as amended (the “Securities
Act”) and all applicable state securities or blue sky laws), a
certificate for the Warrant Shares issuable upon such exercise, free of
restrictive legends unless the Registration Statement is not then effective or
the Warrant Shares are not freely transferable without volume restrictions
pursuant to Rule 144 under the Securities Act. The Holder, or any Person
permissibly so designated by the Holder to receive Warrant Shares, shall be
deemed to have become the holder of record of such Warrant Shares as of the
Exercise Date. If the Warrant Shares can be issued without
restrictive legends, the Company shall, upon the written request of the Holder,
use its best efforts to deliver, or cause to be delivered, Warrant Shares
hereunder electronically through the Depository Trust and Clearing Corporation
(“DTC”)
or another established clearing corporation performing similar functions, if
available; provided, that, the Company may, but will not be required to, change
its transfer agent if its current transfer agent cannot deliver Warrant Shares
electronically through DTC.
(b) If
by the close of the third Trading Day after delivery of an Exercise Notice, duly
completed and executed by the Holder, the Company fails to deliver to the Holder
a certificate representing the required number of Warrant Shares in the manner
required pursuant to Section 5(a) hereof, and if after such third Trading
Day and prior to the receipt of such Warrant Shares, the Holder purchases (in an
open market transaction or otherwise) shares of Common Stock to deliver in
satisfaction of a sale by the Holder of the Warrant Shares which the Holder
anticipated receiving upon such exercise (a “Buy-In”),
then the Company shall, within three Trading Days after the Holder’s request,
and in the Holder’s sole discretion, either (i) pay in cash to the Holder
an amount equal to the Holder’s total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased (the “Buy-In
Price”), at which point the Company’s obligation to deliver such
certificate (and to issue such Warrant Shares) shall terminate or
(ii) promptly honor its obligation to deliver to the Holder a certificate
or certificates representing such Warrant Shares and pay cash to the Holder in
an amount
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equal to
the excess (if any) of the Buy-In Price over the product of (A) such number
of Warrant Shares, times (B) the closing bid price on the date of the event
giving rise to the Company’s obligation to deliver such
certificate.
(c) To
the extent permitted by law, the Company’s obligations to issue and deliver
Warrant Shares in accordance with the terms hereof are absolute and
unconditional, irrespective of any action or inaction by the Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the
recovery of any judgment against any Person or any action to enforce the same,
or any setoff, counterclaim, recoupment, limitation or termination, or any
breach or alleged breach by the Holder or any other Person of any obligation to
the Company or any violation or alleged violation of law by the Holder or any
other Person, and irrespective of any other circumstance that might otherwise
limit such obligation of the Company to the Holder in connection with the
issuance of Warrant Shares. Nothing herein shall limit a Holder’s right to
pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company’s failure to timely deliver
certificates representing shares of Common Stock upon exercise of the Warrant as
required pursuant to the terms hereof.
6. Charges, Taxes and
Expenses. Issuance and delivery of certificates for shares of Common
Stock upon exercise of this Warrant shall be made without charge to the Holder
for any issue or transfer tax, withholding tax, transfer agent fee or other
incidental tax or expense in respect of the issuance of such certificates, all
of which taxes and expenses shall be paid by the Company; provided, however, that the
Company shall not be required to pay any tax that may be payable in respect of
any transfer involved in the registration of any certificates for Warrant Shares
or Warrants in a name other than that of the Holder. The Holder shall be
responsible for all other tax liability that may arise as a result of holding or
transferring this Warrant or receiving Warrant Shares upon exercise
hereof.
7. Replacement of
Warrant. If this Warrant is mutilated, lost, stolen or destroyed, the
Company shall issue or cause to be issued in exchange and substitution for and
upon cancellation hereof, or in lieu of and substitution for this Warrant, a New
Warrant, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity (which shall not include a surety bond), if requested. Applicants for
a New Warrant under such circumstances shall also comply with such other
reasonable regulations and procedures and pay such other reasonable third-party
costs as the Company may prescribe. If a New Warrant is requested as a result of
a mutilation of this Warrant, then the Holder shall deliver such mutilated
Warrant to the Company as a condition precedent to the Company’s obligation to
issue the New Warrant.
8. Reservation of Warrant
Shares; Listing. The Company covenants that it will at all times reserve
and keep available out of the aggregate of its authorized but unissued and
otherwise unreserved Common Stock, solely for the purpose of enabling it to
issue Warrant Shares upon exercise of this Warrant as herein provided, the
number of Warrant Shares that are then issuable and deliverable upon the
exercise of this entire Warrant, free from preemptive rights or any other
contingent purchase rights of persons other than the Holder (taking into account
the adjustments and restrictions of Section 9 hereof). The Company
covenants that all Warrant Shares so issuable and deliverable shall, upon
issuance and the payment of the applicable Exercise Price in accordance with the
terms hereof, be duly and validly authorized, issued and fully paid and
nonassessable. The Company shall use its best efforts to cause the
Warrant Shares to be listed for quotation on the NASDAQ Capital Market and to
maintain such listing.
9. Certain Adjustments.
The Exercise Price and number of Warrant Shares issuable upon exercise of this
Warrant are subject to adjustment from time to time as set forth in this
Section 9.
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(a) Stock Dividends and
Splits. If the Company, at any time while this Warrant is outstanding,
(i) pays a stock dividend on its Common Stock or otherwise makes a
distribution on any class of capital stock that is payable in shares of Common
Stock, (ii) subdivides outstanding shares of Common Stock into a larger
number of shares, or (iii) combines outstanding shares of Common Stock into
a smaller number of shares, then in each such case the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock outstanding immediately before such event and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately after such event. Any adjustment made pursuant to clause (i) of
this paragraph shall become effective immediately after the record date for the
determination of stockholders entitled to receive such dividend or distribution,
and any adjustment pursuant to clause (ii) or (iii) of this paragraph
shall become effective immediately after the effective date of such subdivision
or combination.
(b) Pro Rata
Distributions. If the Company, at any time while this Warrant is
outstanding, distributes to all holders of Common Stock for no consideration
(i) evidences of its indebtedness, (ii) any security (other than a
distribution of Common Stock covered by the preceding paragraph),
(iii) rights or warrants to subscribe for or purchase any security, or
(iv) any other asset (including cash) (in each case, “Distributed
Property”), then, upon any exercise of this Warrant that occurs after the
record date fixed for determination of stockholders entitled to receive such
distribution, the Holder shall be entitled to receive, in addition to the
Warrant Shares otherwise issuable upon such exercise (if applicable), the
Distributed Property that such Holder would have been entitled to receive in
respect of such number of Warrant Shares had the Holder been the record holder
of such Warrant Shares immediately prior to such record date.
(c) Fundamental
Transactions. If, at any time while this Warrant is outstanding (i) the
Company effects any merger or consolidation of the Company with or into another
Person, in which the shareholders of the Company as of immediately prior to the
transaction own less than a majority of the outstanding stock of the surviving
entity, (ii) the Company effects any sale of all or substantially all of
its assets in one or a series of related transactions, (iii) any tender
offer or exchange offer (whether by the Company or another Person) is completed
pursuant to which holders of a majority of the outstanding shares of Common
Stock tender or exchange their shares for other securities, cash or property, or
(iv) the Company effects any reclassification of all outstanding Common
Stock or any compulsory share exchange pursuant to which all outstanding Common
Stock is effectively converted into or exchanged for other securities, cash or
property (each, a “Fundamental
Transaction”), then the Holder shall have the right thereafter to
receive, upon any subsequent exercise of this Warrant, the same amount and kind
of securities, cash or property as it would have been entitled to receive upon
the occurrence of such Fundamental Transaction if it had been, immediately prior
to such Fundamental Transaction, the holder of the number of Warrant Shares then
issuable upon exercise in full of this Warrant (the “Alternate
Consideration”).
The Company shall not effect any such Fundamental Transaction unless prior to or
simultaneously with the consummation thereof, any successor to the Company,
surviving entity or the corporation purchasing or otherwise acquiring such
assets or other appropriate corporation or entity shall assume the obligation to
deliver to the Holder, such Alternate Consideration as, in accordance with the
foregoing provisions, the Holder may be entitled to purchase, and the other
obligations under this Warrant. Notwithstanding anything to the contrary, in the
event of a Fundamental Transaction, the Company or any successor entity shall
pay in exchange for this Warrant at the Holder’s option, exercisable at any time
concurrently with or within 30 days after the consummation of the Fundamental
Transaction, an amount of cash equal to the value of this Warrant as determined
in accordance with the Black Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg L.P. using (i) a price per share of Common Stock equal to
the VWAP of the Common Stock for the Trading Day immediately preceding the
date
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of
consummation of the applicable Fundamental Transaction, (ii) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period equal to the
remaining term of this Warrant as of the date of consummation of the applicable
Fundamental Transaction and (iii) an expected volatility equal to the 60 day
volatility obtained from the “HVT” function on Bloomberg L.P. determined as of
the Trading Day immediately following the public announcement of the applicable
Fundamental Transaction. The provisions of this paragraph (c) shall
similarly apply to subsequent Fundamental Transactions.
(d) Number of Warrant
Shares. Simultaneously with any adjustment to the Exercise Price pursuant
to paragraph (a) of this Section 9, the number of Warrant Shares that
may be purchased upon exercise of this Warrant shall be increased or decreased
proportionately, so that after such adjustment the aggregate Exercise Price
payable hereunder for the adjusted number of Warrant Shares shall be the same as
the aggregate Exercise Price in effect immediately prior to such
adjustment.
(e) Subsequent Equity
Sales.
(i) If
the Company shall at any time issue shares of Common Stock or Convertible
Securities entitling any Person to acquire shares of Common Stock, at a price
per share less than the Exercise Price in effect immediately prior to the time
of such issuance (if the holder of the Common Stock or Convertible Securities so
issued shall at any time, whether by operation of purchase price adjustments,
reset provisions, floating conversion, exercise or exchange prices or otherwise,
or due to warrants, options or rights issued in connection with such issuance,
be entitled to receive shares of Common Stock at a price less than the Exercise
Price, such issuance shall be deemed to have occurred for less than the Exercise
Price), then, the Exercise Price shall be reduced to equal such lower price, but
the number of Warrant Shares which the Holder may acquire under this Warrant
will not be affected thereby. Such adjustment shall be made whenever such Common
Stock or Convertible Securities are issued. The Company shall notify the Holder
in writing, no later than the Trading Day following the issuance of any Common
Stock or Convertible Securities subject to this Section, indicating therein the
applicable issuance price, or the applicable reset price, exchange price,
conversion price and other pricing terms.
(ii) For
purposes of this subsection 9(e), the following subsections (e)(ii)(l) to
(e)(ii)(7) shall also be applicable:
(1) Issuance of Rights or
Options. In case at any time the Company shall in any manner grant
(directly and not by assumption in a merger or otherwise) any warrants or other
rights to subscribe for or to purchase, or any options for the purchase of,
Common Stock or any stock or security convertible into or exchangeable for
Common Stock (such warrants, rights or options being called “Options”
and such convertible or exchangeable stock or securities being called “Convertible
Securities”), whether or not such Options or the right to convert or
exchange any such Convertible Securities are immediately exercisable, and the
price per share for which Common Stock is issuable upon the exercise of such
Options or upon the conversion or exchange of such Convertible Securities
(determined by dividing (i) the sum (which sum shall constitute the
applicable consideration) of (x) the total amount, if any, received or
receivable by the Company as consideration for the granting of such Options,
plus (y) the aggregate amount of additional consideration payable to the
Company upon the exercise of all such Options, plus (z), in the case of such
Options that relate to Convertible Securities, the aggregate amount of
additional consideration, if any, payable upon the issue or sale of such
Convertible Securities and upon the conversion or exchange thereof, by
(ii) the total maximum number of shares of Common Stock issuable upon the
exercise of such Options or upon the conversion or exchange of all
such
6
Convertible
Securities issuable upon the exercise of such Options) shall be less than the
Exercise Price in effect immediately prior to the time of the granting of such
Options, then the total number of shares of Common Stock issuable upon the
exercise of such Options or upon conversion or exchange of the total amount of
such Convertible Securities issuable upon the exercise of such Options shall be
deemed to have been issued for such price per share as of the date of granting
of such Options or the issuance of such Convertible Securities and thereafter
shall be deemed to be outstanding for purposes of adjusting the Exercise Price.
Except as otherwise provided in subsection 9(e)(ii)(3), no adjustment of
the Exercise Price shall be made upon the actual issue of such Common Stock or
of such Convertible Securities upon exercise of such Options or upon the actual
issue of such Common Stock upon conversion or exchange of such Convertible
Securities.
(2) Issuance of Convertible
Securities. In case the Company shall in any manner issue (directly and
not by assumption in a merger or otherwise) or sell any Convertible Securities,
whether or not the rights to exchange or convert any such Convertible Securities
are immediately exercisable, and the price per share for which Common Stock is
issuable upon such conversion or exchange (determined by dividing (i) the
sum (which sum shall constitute the applicable consideration) of (x) the
total amount received or receivable by the Company as consideration for the
issue or sale of such Convertible Securities, plus (y) the aggregate amount
of additional consideration, if any, payable to the Company upon the conversion
or exchange thereof, by (ii) the total number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities)
shall be less than the Exercise Price in effect immediately prior to the time of
such issue or sale, then the total maximum number of shares of Common Stock
issuable upon conversion or exchange of all such Convertible Securities shall be
deemed to have been issued for such price per share as of the date of the issue
or sale of such Convertible Securities and thereafter shall be deemed to be
outstanding for purposes of adjusting the Exercise Price, provided that
(a) except as otherwise provided in subsection 9(e)(ii)(3), no
adjustment of the Exercise Price shall be made upon the actual issuance of such
Common Stock upon conversion or exchange of such Convertible Securities and (b)
no further adjustment of the Exercise Price shall be made by reason of the issue
or sale of Convertible Securities upon exercise of any Options to purchase any
such Convertible Securities for which adjustments of the Exercise Price have
been made pursuant to the other provisions of subsection 9(e). No adjustment
pursuant to this Section 9 shall be made if such adjustment would result in an
increase of the Exercise Price then in effect.
(3) Change in Option Price or
Conversion Rate. Upon the happening of any of the following events,
namely, if the purchase price provided for in any Option referred to in
subsection 9(e)(ii)(l) hereof, the additional consideration, if any,
payable upon the conversion or exchange of any Convertible Securities referred
to in subsections 9(e)(ii)(l) or 9(e)(ii)(2), or the rate at which Convertible
Securities referred to in subsections 9(e)(ii)(l) or 9(e)(ii)(2) are convertible
into or exchangeable for Common Stock shall change at any time (including, but
not limited to, changes under or by reason of provisions designed to protect
against dilution), the Exercise Price in effect at the time of such event shall
forthwith be readjusted to the Exercise Price that would have been in effect at
such time had such Options or Convertible Securities still outstanding provided
for such changed purchase price, additional consideration or conversion rate, as
the case may be, at the time initially granted, issued or sold.
(4) Stock
Dividends. Subject to the provisions of this Section 9(e), in
case the Company shall declare a dividend or make any other distribution upon
any stock of the Company (other than the Common Stock) payable in Common Stock,
Options or Convertible Securities, then any Common Stock, Options or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without
consideration.
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(5)
Consideration
for Stock. In case any shares of Common Stock, Options or
Convertible Securities shall be issued or sold for cash, the consideration
received therefor shall be deemed to be the gross amount received by the Company
therefor. In case any shares of Common Stock, Options or Convertible Securities
shall be issued or sold for a consideration other than cash, the amount of the
consideration other than cash received by the Company shall be deemed to be the
fair value of such consideration as determined in good faith by the Board of
Directors of the Company. In case any Options shall be issued in connection with
the issue and sale of other securities of the Company, together comprising one
integral transaction in which no specific consideration is allocated to such
Options by the parties thereto, such Options shall be deemed to have been issued
for such consideration as determined in good faith by the Board of Directors of
the Company. If Common Stock, Options or Convertible Securities shall be issued
or sold by the Company and, in connection therewith, other Options or
Convertible Securities (the “Additional
Rights”) are issued, then the consideration received or deemed to be
received by the Company shall be reduced by the fair market value of the
Additional Rights (as determined using the Black-Scholes option pricing model or
another method mutually agreed to by the Company and the Holder). The Board of
Directors of the Company shall respond promptly, in writing, to an inquiry by
the Holder as to the fair market value of the Additional Rights. In the event
that the Board of Directors of the Company and the Holder are unable to agree
upon the fair market value of the Additional Rights, the Company and the Holder
shall jointly select an appraiser who is experienced in such matters. The
decision of such appraiser shall be final and conclusive, and the cost of such
appraiser shall be borne evenly by the Company and the Holder.
(6) Record
Date. In case the Company shall take a record of the holders
of its Common Stock for the purpose of entitling them (i) to receive a dividend
or other distribution payable in Common Stock, Options or Convertible Securities
or (ii) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.
(7) Treasury
Shares. The number of shares of Common Stock outstanding at
any given time shall not include shares owned or held by or for the account of
the Company or any of its wholly-owned subsidiaries, and the disposition of any
such shares (other than the cancellation or retirement thereof) shall be
considered an issue or sale of Common Stock for the purpose of this subsection
(e).
(iii)
Notwithstanding the foregoing, no adjustment will be made under this
paragraph (e) in respect of: (i) the issuance of securities upon the
exercise or conversion of any Common Stock or Convertible Securities issued by
the Company prior to the date hereof; provided that neither the conversion
price, exercise price nor number of shares issuable under such Convertible
Securities (excluding any Convertible Securities covered by clause (ii) below)
is amended, modified or changed after the issuance date thereof other than
pursuant to the provisions of such Convertible Securities as they exist as of
such issuance date, (ii) the grant of options, warrants, Common Stock or
other Convertible Securities (but not including any amendments to such
instruments) under any duly authorized Company stock option, restricted stock
plan or stock purchase plan whether now existing or hereafter approved by the
Company and its stockholders in the future (including without limitation the
Company’s 2004 and 2009 Stock Incentive Plan and the employment agreement of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ as currently filed with the Commission), and the issuance of
Common Stock in respect thereof, (iii) the
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issuance
of securities in connection with a Strategic Transaction, (iv) in the event the
Company’s securities are included in a nationally recognized stock index, the
issuance in any manner whatsoever by the Company of Common Stock to certain
index funds that track such stock index, or (v) the issuance of securities
in a transaction described in Section 9(a) or 9(b) (collectively, “Excluded
Issuances”). For purposes of this paragraph, a “Strategic
Transaction” means a transaction or relationship in which (1) the
Company issues shares of Common Stock to a Person that the Board of Directors of
the Company determined in good faith is, itself or through its Subsidiaries, an
operating company in a business synergistic with the business of the Company (or
a shareholder thereof) and (2) the Company expects to receive benefits in
addition to the investment of funds.
(f) Calculations. All
calculations under this Section 9 shall be made to the nearest cent or the
nearest 1/100th of a share, as applicable. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Company, and the disposition of any such shares shall be
considered an issue or sale of Common Stock.
(g) De Minimis
Adjustments. No adjustment in the Exercise Price shall be required unless
such adjustment would require an increase or decrease of at least $0.01 in such
price; provided, however, that any adjustment which by reason of this Section
9(g) is not required to be made shall be carried forward and taken into account
in any subsequent adjustments under this Section 9. All calculations under this
Section 9 shall be made by the Company in good faith and shall be made to the
nearest cent or to the nearest one hundredth of a share, as applicable. No
adjustment need be made for a change in the par value or no par value of the
Company’s Common Stock.
(h) Notice of
Adjustments. Upon the occurrence of each adjustment pursuant to this
Section 9, the Company at its expense will, at the written request of the
Holder, promptly compute such adjustment in accordance with the terms of this
Warrant and prepare a certificate setting forth such adjustment, including a
statement of the adjusted Exercise Price and adjusted number or type of Warrant
Shares or other securities issuable upon exercise of this Warrant (as
applicable), describing the transactions giving rise to such adjustments and
showing in detail the facts upon which such adjustment is based. Upon written
request, the Company will promptly deliver a copy of each such certificate to
the Holder and to the American Stock Transfer & Trust Company, the transfer
agent of the Company.
(i) Notice of Corporate
Events. If, while this Warrant is outstanding, the Company (i) declares a
dividend or any other distribution of cash, securities or other property in
respect of its Common Stock, including without limitation any granting of rights
or warrants to subscribe for or purchase any capital stock of the Company or any
Subsidiary, (ii) authorizes or approves, enters into any definitive
agreement for or solicits stockholder approval for any Fundamental Transaction
or (iii) authorizes the voluntary dissolution, liquidation or winding up of
the affairs of the Company, then, except if such notice and the contents thereof
shall be deemed to constitute material non-public information, the Company shall
deliver to the Holder a notice describing the material terms and conditions of
such transaction at least 10 Trading Days prior to the applicable record or
effective date on which a Person would need to hold Common Stock in order to
participate in or vote with respect to such transaction, and the Company will
take all reasonable steps to give Holder the practical opportunity to exercise
this Warrant prior to such time; provided, however, that the
failure to deliver such notice or any defect therein shall not affect the
validity of the corporate action required to be described in such
notice.
10. Payment of Exercise
Price. The Holder may pay the Exercise Price in one of the following
manners:
9
(a) Cash Exercise. The
Holder may deliver immediately available funds; or
(b) Cashless Exercise. If
an Exercise Notice is delivered at a time when the Registration Statement is not
then effective, then the Holder may notify the Company in an Exercise Notice of
its election to utilize cashless exercise, in which event the Company shall
issue to the Holder the number of Warrant Shares determined as
follows:
X =
Y [(A-B)/A]
Where
X =
the number of Warrant Shares to be issued to the Holder
Y =
the number of Warrant Shares with respect to which this Warrant is
being exercised
A =
the Weighted Average Price for the five Trading Days immediately
prior to (but not including) the Exercise Date
B =
the Exercise Price
For
purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a cashless
exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced, on
the date this Warrant was originally issued.
If, but
only if, at any time after the Original Issue Date there is no effective
Registration Statement registering the Warrant Shares, the Company shall use its
best efforts to file a new Registration Statement on Form S-3 pursuant to
General Instruction I.B.4(a)(3) (including compliance with General Instruction
I.B.4(b) and I.B.4(c) as required thereby) registering the Warrant Shares
issuable upon exercise of the Warrant.
(c) Company-Elected
Conversion. (i) The Company shall provide to the Holder prompt written
notice of any time that the Company is unable to issue the Warrant Shares via
DTC transfer (or otherwise without restrictive legend), because (A) the
Securities and Exchange Commission (the “Commission”)
has issued a stop order with respect to the Registration Statement, (B) the
Commission otherwise has suspended or withdrawn the effectiveness of the
Registration Statement, either temporarily or permanently, (C) the Company has
suspended or withdrawn the effectiveness of the Registration Statement, either
temporarily or permanently, or (D) otherwise (each a “Restrictive
Legend Event”).
To the extent that a Restrictive Legend Event occurs after the Holder has
exercised this Warrant in accordance with Section 4(b) but prior to the delivery
of the Warrant Shares, the Company shall (i) if the Weighted Average Price (as
calculated above) of the Warrant Shares is greater than the Exercise Price,
provide written notice to the Holder that the Company will deliver that number
of Warrant Shares to the Holder as should be delivered in a Cashless Exercise in
accordance with Section 10(b), and return to the Holder all consideration paid
to the Company in connection with the Holder’s attempted exercise of this
Warrant pursuant to Section 4(b) (a “Company-Elected
Conversion”), or (ii) at the election of the Holder to be given within
five (5) days of receipt of notice of a Company-Elected Conversion, the Holder
shall be entitled to rescind the previously submitted Notice of Exercise and the
Company shall return all consideration paid by ▇▇▇▇▇▇ for such shares upon such
rescission. The Company shall
10
provide
to the Holder prompt written notice of the termination of the Restrictive Legend
Event. If a Restricted Legend Event is occurring as of the
Expiration Date, the term of this Warrant shall be extended until the fifth
(5th)
business day after the termination of such Restricted Legend Event.
11. Limitations on
Exercise. Notwithstanding anything to the contrary contained
herein, the number of Warrant Shares that may be acquired by the Holder upon any
exercise of this Warrant (or otherwise in respect hereof) shall be limited to
the extent necessary to ensure that, following such exercise (or other
issuance), the total number of shares of Common Stock then beneficially owned by
the Holder and its affiliates and any other Persons whose beneficial ownership
of Common Stock would be aggregated with the Holder’s for purposes of Section
13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), does not exceed 4.99% of the total number of issued and
outstanding shares of Common Stock (including for such purpose the shares of
Common Stock issuable upon such exercise). For such purposes, beneficial
ownership shall be determined in accordance with Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder. Each delivery of an
Exercise Notice by the Holder will constitute a representation by the Holder
that it has evaluated the limitation set forth in this Section and determined
that issuance of the full number of Warrant Shares requested in such Exercise
Notice is permitted under this Section. The Company’s obligation to
issue shares of Common Stock in excess of the limitation referred to in this
Section shall be suspended (and, except as provided below, shall not terminate
or expire notwithstanding any contrary provisions hereof) until such time, if
any, as such shares of Common Stock may be issued in compliance with such
limitation; provided, that, if, as of 5:30 p.m., New York City time, on the
Expiration Date, the Company has not received written notice that the shares of
Common Stock may be issued in compliance with such limitation, the Company’s
obligation to issue such shares shall terminate. This provision shall
not restrict the number of shares of Common Stock which a Holder may receive or
beneficially own in order to determine the amount of securities or other
consideration that such Holder may receive in the event of a Fundamental
Transaction as contemplated in Section 9 of this Warrant. By written
notice to the Company, which will not be effective until the 61st day after such
notice is delivered to the Company, the Holder may waive the provisions of this
Section to change the beneficial ownership limitation to 9.9% of the number of
shares of the Common Stock outstanding immediately after giving effect to the
issuance of shares of Common Stock upon exercise of this Warrant, and the
provisions of this Section 11 shall continue to apply. Upon such a change by a
Holder of the beneficial ownership limitation from such 4.99% limitation to such
9.9% limitation, the beneficial ownership limitation may not be further waived
by such Holder.
12. No Fractional Shares.
No fractional Warrant Shares will be issued in connection with any exercise of
this Warrant. In lieu of any fractional shares that would otherwise be issuable,
the Company shall pay cash equal to the product of such fraction multiplied by
the closing price of one Warrant Share as reported by the applicable Trading
Market on the Exercise Date.
13. Notices. Any and all
notices or other communications or deliveries hereunder (including, without
limitation, any Exercise Notice) shall be in writing and shall be deemed given
and effective on the earliest of (i) the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile number
specified in this Section 13 at or prior to 5:00 p.m. (New York City time) on a
Trading Day, (ii) the next Trading Day after the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section 13 on a day that is not a Trading Day or later than
5:00 p.m. (New York City time) on any Trading Day, (iii) the Trading Day
following the date of mailing, if sent by nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such
notice is required to be given. The addresses for such notices or communications
shall be: (a) if to the Company, to Delcath Systems, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Chief Executive Officer,
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇ (or such other address as the Company shall
indicate in writing in accordance with this Section 13) or (b) if to the
Holder, to the address or facsimile number appearing on the Warrant Register (or
such other address as the Company shall indicate in writing in accordance with
this Section 13).
11
14. Warrant Agent. The
Company shall serve as warrant agent under this Warrant. Upon 30 days’
notice to the Holder, the Company may appoint a new warrant agent. Any
corporation into which the Company or any new warrant agent may be merged or any
corporation resulting from any consolidation to which the Company or any new
warrant agent shall be a party or any corporation to which the Company or any
new warrant agent transfers substantially all of its corporate trust or
shareholders services business shall be a successor warrant agent under this
Warrant without any further act. Any such successor warrant agent shall promptly
cause notice of its succession as warrant agent to be mailed (by first class
mail, postage prepaid) to the Holder at the Holder’s last address as shown on
the Warrant Register.
15. Miscellaneous.
(a) This
Warrant shall be binding on and inure to the benefit of the parties hereto and
their respective successors and assigns. Subject to the preceding sentence,
nothing in this Warrant shall be construed to give to any Person other than the
Company and the Holder any legal or equitable right, remedy or cause of action
under this Warrant. This Warrant may be amended only in writing signed by the
Company and the Holder, or their successors and assigns.
(b) All
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal
proceedings concerning the interpretations, enforcement and defense of this
Warrant and the transactions herein contemplated (“Proceedings”) (whether brought against a
party hereto or its respective Affiliates, employees or agents) shall be
commenced exclusively in the courts of the State of New York located in the City
and County of New York or in the United States District Court for the Southern
District of New York (the “New York
Courts”). Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any Proceeding, any claim that it is not personally subject to the jurisdiction
of any New York Court, or that such Proceeding has been commenced in an improper
or inconvenient forum. Each party hereto hereby irrevocably waives personal
service of process and consents to process being served in any such Proceeding
by mailing a copy thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect for notices
to it under this Warrant and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any manner permitted
by law. Each party hereto hereby irrevocably waives, to the fullest extent
permitted by applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Warrant or the transactions
contemplated hereby. If either party shall commence a Proceeding to enforce any
provisions of this Warrant, then the prevailing party in such Proceeding shall
be reimbursed by the other party for its attorney’s fees and other costs and
expenses incurred with the investigation, preparation and prosecution of such
Proceeding.
(c) The
headings herein are for convenience only, do not constitute a part of this
Warrant and shall not be deemed to limit or affect any of the provisions
hereof.
(d) In
case any one or more of the provisions of this Warrant shall be invalid or
unenforceable in any respect, the validity and enforceability of the remaining
terms and provisions of this Warrant shall not in any way be affected or
impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefore, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
12
(e) Prior
to exercise of this Warrant, the Holder hereof shall not, by reason of by being
a Holder, be entitled to any rights of a stockholder with respect to the Warrant
Shares
13
IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its
authorized officer as of the date first indicated above.
|
DELCATH
SYSTEMS, INC.
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By:
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Name:
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||||
|
Title:
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14
EXERCISE
NOTICE
DELCATH
SYSTEMS, INC.
WARRANT
NO. ___DATED JUNE 15, 2009
Ladies
and Gentlemen:
(1) The
undersigned hereby elects to exercise the above-referenced Warrant with respect
to ____________ shares of Common Stock. Capitalized terms used herein and not
otherwise defined herein have the respective meanings set forth in the
Warrant.
(2) The
Holder intends that payment of the Exercise Price shall be made as (check
one):
Cash
Exercise under Section 10(a)
Cashless
Exercise under Section 10(b)
(3) If
the Holder has elected a Cash Exercise, the holder shall pay the sum of $___to
the Company in accordance with the terms of the Warrant.
(4) Pursuant
to this Exercise Notice, the Company shall deliver to the Holder the number of
Warrant Shares determined in accordance with the terms of the
Warrant.
(5) By
its delivery of this Exercise Notice, the undersigned represents and warrants to
the Company that in giving effect to the exercise evidenced hereby the Holder
will not beneficially own in excess of the number of shares of Common Stock (as
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934) permitted to be owned under Section 11 of this Warrant to which this
notice relates.
|
HOLDER:
|
||||
|
(Print
Name)
|
||||
|
By:
|
||||
|
Name:
|
||||
|
Title:
|
||||
WARRANT
ORIGINALLY ISSUED JUNE 15, 2009
WARRANT
NO. ____
FORM
OF ASSIGNMENT
To be
completed and signed only upon transfer of Warrant
FOR VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto __________
the right represented by the within Warrant to purchase __________ shares of
Common Stock to which the within Warrant relates and appoints __________
attorney to transfer said right on the books of the Company with full power of
substitution in the premises.
Dated:
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TRANSFEROR:
|
||||
|
(Print
Name)
|
||||
|
By:
|
||||
|
Name:
|
||||
|
Title:
|
||||
|
TRANSFEREE:
|
||
|
(Print
Name)
|
||
|
(Address
of Transferee)
|
|
In
the presence of:
|
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