FORM OF EMPLOYEE STOCK OPTION GRANT
LETTER
DELCATH SYSTEMS, INC.
2009 STOCK INCENTIVE PLAN
July 6, 2009
Eamonn
Hobbs
c/o Delcath
Systems, Inc.
Rockefeller
Center
600 Fifth
Avenue, 23rd Floor
New York,
NY 10020
Dear Mr.
Hobbs:
This letter sets forth the terms and conditions
of the stock option granted to you by Delcath Systems, Inc. (the
“ Company ”) on July 6, 2009, in accordance with
the provisions of its 2009 Stock Incentive Plan (the “
Plan ”). You have been granted an option
(the “ Option ”) to purchase 500,000 shares of
the Company’s Common Stock (“ Common Stock
”). The Option is not intended to be an
incentive stock option within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the “ Code
”). You are party to an employment agreement
entered into with the Company on July 4, 2009 (as the same may be
amended or restated from time to time, the “ Employment
Agreement ”).
The Option is subject to the terms and
conditions set forth in the Plan, any rules and regulations adopted
by the Committee (as defined in the Plan) from time to time, and
this letter. Any terms used in this letter and not
defined herein have the meanings set forth in the Plan.
The price at which you may purchase the shares
of Common Stock covered by the Option is $3.36 per share, which is
the Fair Market Value of a share on the date of grant of your
Option.
Your Option expires on July 6,
2019. However, your Option may terminate prior to such
expiration date as provided in paragraph 6 of this letter or
pursuant to the Plan. Regardless of the provisions of
paragraph 6 and the Plan, in no event can your Option be exercised
after the expiration date set forth in this paragraph 2.
3.
Exercisability of
Option
(a) Unless it becomes
exercisable on an earlier date as provided in paragraph 6 or
pursuant to the Plan, your Option will become exercisable in
installments as provided below.
(b) Provided that you
remain in continuous service as an employee of the Company or its
Subsidiaries on such date:
|
Date
|
Number of shares as to which
Option
becomes exercisable
|
|
July 6, 2009
|
50,000 (vested at grant)
|
|
July 6, 2010
|
150,000
|
|
July 6, 2011
|
150,000
|
|
July 6, 2012
|
150,000
|
|
|
|
(c) If earlier than
provided in Section 3(a) (and, without duplication, reduced
by any shares that have previously become exercisable pursuant to
Section 3(a) ), provided you remain in continuous service as
an employee of the Company or its Subsidiaries on such date: (i)
112,500 of the shares subject to the Option shall become
exercisable upon receipt by the Company of financing from third
party investors of $15 million or more (gross proceeds), (ii)
112,500 of the shares subject to the Option shall become
exercisable on submission to the U.S. Food and Drug Administration
(the “ FDA ”), with the consent of the Board, of
a Premarket Approval or New Drug Approval (as such terms are used
by the FDA) for the Company’s percutaneous hepatic perfusion
treatment system, and (iii) 225,000 of the shares subject to the
Option shall become exercisable upon the FDA’s formal written
notice of such approval including FDA-approved labeling language
for the percutaneous hepatic perfusion treatment.
(d) Notwithstanding
the foregoing, all shares subject to the Option shall immediately
become exercisable upon (i) your Involuntary Termination (as
defined in the Employment Agreement) after July 6, 2010 or (ii) a
Change of Control (as such term is defined in subsections (a)-(d)
of the definition of “Change of Control” contained in
the Plan). Upon your Involuntary Termination between
July 6, 2009 and July 6, 2010, an additional number of shares
subject to the Option shall become exercisable such that the Option
shall be exercisable as to a total of 250,000 shares as of your
employment termination date.
(e) To the extent your
Option has become exercisable, you may exercise the Option to
purchase all or any part of such shares at any time on or before
the date the Option expires or terminates.
You may exercise your Option by giving written
notice to the Company of the number of shares of Common Stock you
desire to purchase and paying the option price for such shares. The
notice must be in the form provided by the Company from time to
time (the “ Option Exercise Form ”), which may
be obtained from the Company’s Controller. The
notice must be hand delivered or mailed to the Company at the
address of its executive offices, 600 Fifth Avenue, 23
rd Floor, New York, NY 10020; Attention:
Controller, or may be provided electronically to the extent and in
the manner provided under procedures adopted by the
Company. Payment of the option price may be made in any
manner permitted under paragraph 5. The cash, Common
Stock or documentation described in the applicable provision of
paragraph 5 must accompany the Option Exercise
Form. Subject to Section 5, your Option will be deemed
exercised on the
date the Option Exercise Form (and payment of
the option price) is hand delivered, received by electronic
transmission (if permitted), received by overnight courier, or if
mailed, postmarked.
5.
Satisfaction of Option
Price. Your
Option may be exercised by payment of the option price in cash
(including check, bank draft, money order, or wire transfer to the
order of the Company). Unless prohibited by the
Committee in its discretion (at any time prior to completion of the
desired Option exercise), your Option may also be exercised using
any of the following methods or a combination thereof:
(a) Payment of
Common Stock. You may satisfy the option price by
tendering shares of Common Stock that you own. For this
purpose, the shares of Common Stock so tendered shall be valued at
the closing sales price of the Common Stock on The Nasdaq Capital
Market (or the exchange or market determined by the Committee to be
the primary market for the Common Stock) for the day before the
date of exercise or, if no such sale of Common Stock occurs on such
date, the closing sales price on the nearest trading date before
such date. The certificate(s) evidencing shares tendered
in payment of the option price must be duly endorsed or accompanied
by appropriate stock powers. Only stock certificates
issued solely in your name may be tendered to exercise your
Option. Fractional shares may not be tendered in
satisfaction of the option price; any portion of the option price
that is in excess of the aggregate value (as determined under this
paragraph 5(a)) of the number of whole shares tendered must be paid
in cash. If a certificate tendered in exercise of the
Option evidences more shares than are required pursuant to the
immediately preceding sentence for satisfaction of the portion of
the option price being paid in Common Stock, an appropriate
replacement certificate will be issued to you for the number of
excess shares.
(b) Broker-Assisted
Cashless Exercise. You may satisfy the option price
by delivering to the Company a copy of irrevocable instructions to
a broker acceptable to the Company to sell shares of Common Stock
(or a sufficient portion of such shares) acquired upon exercise of
the Option and remit to the Company a sufficient portion of the
sale proceeds to pay the total option pr
