WARRANT AGREEMENT dated as of _________, 2000 between Delcath Systems,
Inc., a Delaware corporation (the "Company"), and Whale Securities Co., L.P.
(hereinafter referred to as the "Underwriter").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company proposes to issue to the Underwriter warrants (the
"Warrants") to purchase up to 120,000 (as such number may be adjusted from time
to time pursuant to Article 8 of this Agreement) "Units" (as herewith defined in
Article 1 hereof); and
WHEREAS, the Underwriter has agreed, pursuant to the underwriting agreement
(the "Underwriting Agreement") dated ____________, 2000 between the Underwriter
and the Company, to act as the underwriter in connection with the Company's
proposed public offering (the "Public Offering") of 1,200,000 Units at an
initial public offering price of $6.00 per Public Share; and
WHEREAS, the Warrants issued pursuant to this Agreement are being issued by
the Company to the Underwriter or to its designees who are officers and partners
of the Underwriter or to members of the selling group participating in the
distribution of the Public Shares to the public in the Public Offering and/or
their respective officers or partners (collectively, the "Designees"), in
consideration for, and as part of the Underwriter's compensation in connection
with, the Underwriter acting as the Underwriter pursuant to the Underwriting
Agreement;
NOW, THEREFORE, in consideration of the premises, the payment by the
Underwriter to the Company of ONE HUNDRED DOLLARS ($100.00), the agreements
herein set forth and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Grant.
The Underwriter and/or the Designees are hereby granted the right to
purchase, at any time from ____________, 2000 until 5:00 P.M., New York time, on
_______, 2005 (the "Warrant Exercise Term"), up to 120,000 Units at an initial
exercise price (subject to adjustment as provided in Article 8 hereof) of $6.60
per Unit. Each Unit consists of 120,000 fully-paid and non-assessable shares
(the "Shares") of the Company's Common stock, $.01 par value ("Common Stock"),
and 120,000 Common Stock Purchase Warrants (the "Unit Warrants"). The Unit
Warrants are each exercisable to purchase one fully-paid and non-assessable
share of Common Stock at a price of $10.50 per share (the "Unit Warrant
Shares"). The Unit Warrants are exercisable commencing October __, 2001 (or such
earlier date as to which the Underwriter consents to the Units becoming
detachable and separately transferable) (the "Separation Date") until 5:00 P.M.,
New York City time on _______, 2005. Except as provided in Section 13 hereof,
the Units and the Unit Warrants are in all respects identical to the units and
warrants being sold to the public pursuant to the terms and provisions of the
Underwriting Agreement.
2. Warrant Certificates.
The warrant certificates delivered and to be delivered pursuant to this
Agreement (the "Warrant Certificates") shall be in the form set forth in Exhibit
A attached hereto and made a part hereof, with such appropriate insertions,
omissions, substitutions and other variations as required or permitted by this
Agreement.
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3. Exercise of Warrant.
3.1. Cash Exercise. The Warrants initially are exercisable at a price of
$6.60 per Unit, payable in cash or by check to the order of the Company, or any
combination thereof, subject to adjustment as provided in Article 8 hereof. Upon
surrender of the Warrant Certificate with the annexed Form of Election to
Purchase duly executed, together with payment of the Exercise Price (as
hereinafter defined) for the Shares purchased, at the Company's principal
offices in New York (currently located at 0000 Xxxxxx Xxxxxx, Xxxxxxxx,
Xxxxxxxxxxx 06905) the registered holder of a Warrant Certificate ("Holder" or
"Holders") shall be entitled to receive a certificate or certificates for the
Shares so purchased and a certificate or certificates for the Unit Warrants so
purchased. The purchase rights represented by each Warrant Certificate are
exercisable at the option of the Holder thereof, in whole or in part (but not as
to fractional Shares or fractional Unit Warrants). In the case of the purchase
of less than all the Units purchasable under any Warrant Certificate, the
Company shall cancel said Warrant Certificate upon the surrender thereof and
shall execute and deliver a new Warrant Certificate of like tenor for the
balance of the Units purchasable thereunder.
3.2. Cashless Exercise. At any time during the Warrant Exercise Term, the
Holder may, at the Holder's option, exchange, in whole or in part, the Warrants
represented by such Holder's Warrant Certificate (a "Warrant Exchange"), into
the number of shares of Common Stock determined in accordance with this Section
3.2, by surrendering such Warrant Certificate at the principal office of the
Company or at the office of its transfer agent, accompanied by a notice stating
such Holder's intent to effect such exchange, the number of Units to be so
exchanged and the date on which the Holder requests that such Warrant Exchange
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occur (the "Notice of Exchange"). The Warrant Exchange shall take place on the
date specified in the Notice of Exchange or, if later, the date the Notice of
Exchange is received by the Company (the "Exchange Date"). Certificates for the
shares of Common Stock issuable upon such Warrant Exchange and, if applicable, a
new Warrant Certificate of like tenor representing the Warrants which were
subject to the surrendered Warrant Certificate and not included in the Warrant
Exchange, shall be issued as of the Exchange Date and delivered to the Holder
within three (3) days following the Exchange Date. In connection with any
Warrant Exchange, the Holder shall be entitled to subscribe for and acquire the
number of shares of Common Stock (rounded to the next higher integer) equal to
the sum of (i) (A) the number of Units specified by the Holder in its Notice of
Exchange (the "Total Number") less (B) the number of Units equal to the quotient
obtained by dividing (I) the product of the Total Number and the existing
Exercise Price (as hereinafter defined) by (II) the Market Price (as hereinafter
defined) of a share of Common Stock, plus (ii) the Total Number less (B) the
number of Units equal to the quotient obtained by dividing (I) the product of
the Total Number and the exercise price of the Unit Warrant by (II) the current
Market Price (as hereinafter defined) of a share of Common Stock. "Market Price"
at any date shall be deemed to be the last reported sale price, or, in case no
such reported sales takes place on such day, the average of the last reported
sale prices for the last three (3) trading days, in either case as officially
reported by the principal securities exchange on which the Common Stock is
listed or admitted to trading or as reported in the NASDAQ National Market
System, or, if the Common Stock is not listed or admitted to trading on any
national securities exchange or quoted on the NASDAQ National Market System, the
closing bid
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price as furnished by (i) the National Association of Securities Dealers, Inc.
through Nasdaq or (ii) a similar organization if Nasdaq is no longer reporting
such information.
4. Issuance of Certificates.
Upon the exercise of the Warrants, the issuance of certificates for the
Shares purchased and certificates for the Unit Warrants purchased, and upon
exercise of the Unit Warrants, the issuance of certificates for the Unit Warrant
Shares purchased shall be made forthwith (and in any event within three (3)
business days thereafter) without charge to the Holder thereof including,
without limitation, any tax which may be payable in respect of the issuance
thereof, and such certificates shall (subject to the provisions of Article 5
hereof) be issued in the name of, or in such names as may be directed by, the
Holder thereof; 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 issuance
and delivery of any such certificates in a name other than that of the Holder
and the Company shall not be required to issue or deliver such certificates
unless or until the person or persons requesting the issuance thereof shall have
paid to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Shares and
the Unit Warrants shall be executed on behalf of the Company by the manual or
facsimile signature of the present or any future Chairman or Vice Chairman of
the Board of Directors, Chief Executive Officer or President or Vice President
of the Company under its corporate seal reproduced thereon, attested to by the
manual or facsimile signature of the present or any future Secretary or
Assistant Secretary of the Company. Warrant Certificates shall be dated the date
of execution by the Company upon initial issuance, division, exchange,
substitution or transfer.
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Upon exercise, in part or in whole, of the Warrants, certificates
representing the Shares and the Unit Warrants purchased, and upon exercise, in
whole or in part, of the Unit Warrants, certificates representing the Unit
Warrant Shares purchased (collectively, the "Warrant Securities"), shall bear a
legend substantially similar to the following:
"The securities represented by this certificate have not been registered
for purposes of public distribution under the Securities Act of 1933, as
amended (the "Act"), and may not be offered or sold except (i) pursuant to
an effective registration statement under the Act, (ii) to the extent
applicable, pursuant to Rule 144 under the Act (or any similar rule under
such Act relating to the disposition of securities), or (iii) upon the
delivery by the holder to the Company of an opinion of counsel, reasonably
satisfactory to counsel to the Company, stating that an exemption from
registration under such Act is available."
5. Restriction on Transfer of Warrants.
The Holder of a Warrant Certificate, by the Holder's acceptance thereof,
covenants and agrees that the Warrants are being acquired as an investment and
not with a view to the distribution thereof, and that the Warrants may not be
sold, transferred, assigned, hypothecated or otherwise disposed of, in whole or
in part, for a period of one (1) year from the date hereof, except to the
Designees.
6. Price.
6.1. Initial and Adjusted Exercise Price. The initial exercise price of
each Warrant shall be $6.60 per Unit. The adjusted exercise price shall be the
price which shall result from time to time from any and all adjustments of the
initial exercise price in accordance with the provisions of Article 8 hereof.
6.2. Exercise Price. The term "Exercise Price" herein shall mean the
initial exercise price or the adjusted exercise price, depending upon the
context.
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7. Registration Rights.
7.1. Registration Under the Securities Act of 1933. None of the Warrants,
Shares, Unit Warrants or Unit Warrant Shares have been registered for purposes
of public distribution under the Securities Act of 1933, as amended (the "Act").
7.2. Registrable Securities. As used herein the term "Registrable Security"
means each of the Warrants, the Shares, the Unit Warrants, the Unit Warrant
Shares and any shares of Common Stock issued upon any stock split or stock
dividend in respect of such Shares or Unit Warrant Shares; provided, however,
that with respect to any particular Registrable Security, such security shall
cease to be a Registrable Security when, as of the date of determination, (i) it
has been effectively registered under the Act and disposed of pursuant thereto,
(ii) registration under the Act is no longer required for the subsequent public
distribution of such security or (iii) it has ceased to be outstanding. The term
"Registrable Securities" means any and/or all of the securities falling within
the foregoing definition of a "Registrable Security." In the event of any
merger, reorganization, consolidation, recapitalization or other change in
corporate structure affecting the Common Stock, such adjustment shall be made in
the definition of "Registrable Security" as is appropriate in order to prevent
any dilution or enlargement of the rights granted pursuant to this Article 7.
7.3. Piggyback Registration. If, at any time during the seven (7) years
following the effective date of the Public Offering, the Company proposes to
prepare and file one or more post-effective amendments to the registration
statement filed in connection with the Public Offering or any new registration
statement or post-effective amendments thereto covering equity or debt
securities of the Company, or any such securities of the Company held by its
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stockholders (in any such case, other than in connection with a merger,
acquisition or pursuant to Form S-8 or successor form), (for purposes of this
Article 7, collectively, the "Registration Statement"), it will give written
notice of its intention to do so by registered mail ("Notice"), at least thirty
(30) business days prior to the filing of each such Registration Statement, to
all holders of the Registrable Securities. Upon the written request of such a
holder (a "Requesting Holder"), made within twenty (20) business days after
receipt of the Notice, that the Company include any of the Requesting Holder's
Registrable Securities in the proposed Registration Statement, the Company
shall, as to each such Requesting Holder, use its best efforts to effect the
registration under the Act of the Registrable Securities which it has been so
requested to register ("Piggyback Registration"), at the Company's sole cost and
expense and at no cost or expense to the Requesting Holders (except as provided
in Section 7.5(b) hereof).
7.4. Demand Registration.
(a) At any time during the Warrant Exercise Term, any "Majority
Holder" (as such term is defined in Section 7.4(c) below) of the Registrable
Securities shall have the right (which right is in addition to the piggyback
registration rights provided for under Section 7.3 hereof), exercisable by
written notice to the Company (the "Demand Registration Request"), to have the
Company prepare and file with the Securities and Exchange Commission (the
"Commission"), on one occasion, at the sole expense of the Company (except as
provided in Section 7.5(b) hereof), a Registration Statement and such other
documents, including a prospectus, as may be necessary (in the opinion of both
counsel for the Company and counsel for such Majority Holder), in order to
comply with the provisions of the Act, so as to permit a public offering and
sale of the Registrable Securities by the holders thereof. The Company shall use
its
8
best efforts to cause the Registration Statement to become effective under the
Act, so as to permit a public offering and sale of the Registrable Securities by
the holders thereof. Once effective, the Company will use its best efforts to
maintain the effectiveness of the Registration Statement until the earlier of
(i) the date that all of the Registrable Securities have been sold or (ii) the
date that the holders of the Registrable Securities receive an opinion of
counsel to the Company that all of the Registrable Securities may be freely
traded (without limitation or restriction as to quantity or timing and without
registration under the Act) under Rule 144(k) promulgated under the Act or
otherwise.
(b) The Company covenants and agrees to give written notice of any
Demand Registration Request to all holders of the Registrable Securities within
ten (10) business days from the date of the Company's receipt of any such Demand
Registration Request. After receiving notice from the Company as provided in
this Section 7.4(b), holders of Registrable Securities may request the Company
to include their Registrable Securities in the Registration Statement to be
filed pursuant to Section 7.4(a) hereof by notifying the Company of their
decision to have such securities included within ten (10) days of their receipt
of the Company's notice.
(c) The term "Majority Holder" as used in Section 7.4 hereof shall
mean any holder or any combination of holders of Registrable Securities, if
included in such holders' Registrable Securities are that aggregate number of
shares of Common Stock (including Shares already issued and Shares issuable
pursuant to the exercise of outstanding Warrants, Unit Warrant Shares already
issued and Unit Warrant Shares issuable pursuant to the exercise of outstanding
Unit Warrants) as would constitute a majority of the aggregate number of Shares
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(including Shares already issued and Shares issuable pursuant to the exercise of
outstanding Warrants, Unit Warrant Shares already issued and Unit Warrant Shares
issuable pursuant to the issue of outstanding Unit Warrants) included in all the
Registrable Securities.
7.5. Covenants of the Company With Respect to Registration. The Company
covenants and agrees as follows:
(a) In connection with any registration under Section 7.4 hereof, the
Company shall file the Registration Statement as expeditiously as possible, but
in any event no later than twenty (20) days following receipt of any demand
therefor, shall use its best efforts to have any such Registration Statement
declared effective at the earliest possible time, and shall furnish each holder
of Registrable Securities such number of prospectuses as shall reasonably be
requested.
(b) The Company shall pay all costs, fees and expenses (other than
underwriting fees, discounts and nonaccountable expense allowance applicable to
the Registrable Securities and the fees and expenses of counsel retained by the
holders of Registrable Securities) in connection with all Registration
Statements filed pursuant to Sections 7.3 and 7.4(a) hereof including, without
limitation, the Company's legal and accounting fees, printing expenses, and blue
sky fees and expenses.
(c) The Company will take all necessary action which may be required
in qualifying or registering the Registrable Securities included in the
Registration Statement for offering and sale under the securities or blue sky
laws of such states as are reasonably requested by the holders of such
securities.
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(d) The Company shall indemnify any holder of the Registrable
Securities to be sold pursuant to any Registration Statement and any underwriter
or person deemed to be an underwriter under the Act and each person, if any, who
controls such holder or underwriter or person deemed to be an underwriter within
the meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange
Act of 1934, as amended ("Exchange Act"), against all loss, claim, damage,
expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which any
of them may become subject under the Act, the Exchange Act or otherwise, arising
from such Registration Statement to the same extent and with the same effect as
the provisions pursuant to which the Company has agreed to indemnify the
Underwriter as set forth in Section 7 of the Underwriting Agreement and to
provide for just and equitable contribution as set forth in Section 8 of the
Underwriting Agreement.
(e) Any holder of Registrable Securities to be sold pursuant to a
Registration Statement, and such holder's successors and assigns, shall
severally, and not jointly, indemnify, the Company, its officers and directors
and each person, if any, who controls the Company within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, against all loss, claim,
damage or expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which
they may become subject under the Act, the Exchange Act or otherwise, arising
from information furnished by or on behalf of such holder, or such holder's
successors or assigns, for specific inclusion in such Registration Statement to
the same extent and with the same effect as the provisions pursuant to which the
Underwriter has agreed to indemnify the Company as set forth
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in Section 7 of the Underwriting Agreement and to provide for just and equitable
contribution as set forth in Section 8 of the Underwriting Agreement.
(f) Nothing contained in this Agreement shall be construed as
requiring any Holder to exercise the Warrants or the Unit Warrants included in
the Units underlying such Warrants prior to the initial filing of any
Registration Statement or the effectiveness thereof.
(g) If the Company shall fail to comply with the provisions of this
Article 7, the Company shall, in addition to any other equitable or other relief
available to the holders of Registrable Securities, be liable for any or all
incidental, special and consequential damages sustained by the holders of
Registrable Securities, requesting registration of their Registrable Securities.
(h) The Company shall promptly deliver copies of all correspondence
between the Commission and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission or its staff with respect
to the Registration Statement to each holder of Registrable Securities included
for such registration in such Registration Statement pursuant to Section 7.3
hereof or Section 7.4 hereof requesting such correspondence and memoranda and to
the managing underwriter, if any, of the offering in connection with which such
holder's Registrable Securities are being registered and shall permit each
holder of Registrable Securities and such underwriter to do such reasonable
investigation, upon reasonable advance notice, with respect to information
contained in or omitted from the Registration Statement as it deems reasonably
necessary to comply with applicable securities laws or rules of the National
Association of Securities Dealers, Inc. Such investigation shall include access
to
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books, records and properties and opportunities to discuss the business of the
Company with its officers and independent auditors, all to such reasonable
extent and at such reasonable times and as often as any such holder of
Registrable Securities or underwriter shall reasonably request.
8. Adjustments of Exercise Price and Number of Units.
8.1. Computation of Adjusted Price. 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 Exercise 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
Exercise 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 8.1, the 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.
8.2. Subdivision and Combination. In case the Company shall at any time
subdivide or combine the outstanding shares of Common Stock, the Exercise Price
shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
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8.3. Adjustment in Number of Units. Upon each adjustment of the Exercise
Price pursuant to the provisions of this Article 8, the number of Units issuable
upon the exercise of each Warrant shall be adjusted to the nearest full number
of Units by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of Units issuable upon
exercise of the Warrants immediately prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.
8.4. Reclassification, Consolidation, Merger, etc. In case of any
reclassification or change of the outstanding shares of Common Stock (other than
a change in par value to no par value, or from no par value to par value, or as
a result of a subdivision or combination), or in the 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 surviving corporation
and which does not result in any reclassification or change of the outstanding
shares of Common Stock, except a change as a result of a subdivision or
combination of such shares or a change in par value, as aforesaid), or in the
case of a sale or conveyance to another corporation of the property of the
Company as an entirety, the Holders shall thereafter have the right to purchase
the kind and number of shares of stock and other securities and property
receivable upon such reclassification, change, consolidation, merger, sale or
conveyance as if the Holders were the owners of the shares of Common Stock
underlying the Warrants and the Unit Warrant Shares contained in the Unit
Warrants underlying such Warrants immediately prior to any such events at a
price equal to the product of (x) the number of shares of Common Stock issuable
upon exercise of the Warrants and the Unit Warrants underlying such
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Warrants and (y) the Exercise Price in effect immediately prior to the record
date for such reclassification, change, consolidation, merger, sale or
conveyance as if such Holders had exercised the Warrants and the Unit Warrants
underlying such Warrants.
8.5. Adjustment of Unit Warrants Exercise Price and Securities on Exercise
of Unit Warrant. With respect to any of the Unit Warrants underlying the
Warrants, whether or not the Warrants have been exercised and whether or not the
Warrants are issued and outstanding, the exercise price for, and the number of,
shares of Common Stock issuable upon exercise of the Unit Warrants shall be
automatically adjusted in accordance with Section 9 of the Unit Warrant
Agreement, upon the occurrence of any of the events described therein.
Thereafter, the underlying Unit Warrants shall be exercisable at such adjusted
exercise price and for such adjustment number of underlying shares of Common
Stock.
8.6. Determination of Outstanding Shares of Common Stock. The number of
shares of Common Stock at any one time outstanding shall include the aggregate
number of shares of Common Stock issued and the aggregate number of shares of
Common Stock issuable upon the exercise of options, rights, warrants and upon
the conversion or exchange of convertible or exchangeable securities.
8.7. Dividends and Other Distributions with Respect to Outstanding
Securities. In the event that the Company shall at any time prior to the
exercise of all 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
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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 his Warrant on the record date for the determination of those
entitled to such distribution. At the time of any such dividend or distribution,
the Company shall make appropriate reserves to ensure the timely performance of
the provisions of this Subsection 8.6.
8.8. Subscription Rights for Shares of Common Stock or Other Securities. In
the case that the Company or an affiliate of the Company shall at any time after
the date hereof and prior to the exercise of all the Warrants issue any rights,
warrants or options to subscribe for shares of Common Stock or any other
securities of the Company or of such affiliate to all the stockholders of the
Company, the Holders of unexercised Warrants on the record date set by the
Company or such affiliate in connection with such issuance of rights, warrants
or options shall be entitled, in addition to the shares of Common Stock or other
securities receivable upon the exercise of the Warrants, to receive such rights,
warrants or options that such Holders would have been entitled to receive had
they been, on such record date, the holders of record of the number of whole
shares of Common Stock then issuable upon exercise of their outstanding Warrants
(assuming for purposes of this Section 8.8), that the exercise of the Warrants
is permissible immediately upon issuance).
9. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable without expense, upon the
surrender thereof by the registered Holder at the principal executive office of
the Company, for a new
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Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of securities in such denominations as shall
be designated by the Holder thereof at the time of such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrant
Certificate, if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor, in lieu thereof.
10. Elimination of Fractional Interests.
The Company shall not be required to issue certificates representing
fractions of Shares, nor shall it be required to issue scrip or pay cash in lieu
of fractional interests, it being the intent of the parties that all fractional
interests shall be eliminated by rounding any fraction up to the nearest whole
number of Shares and Unit Warrants.
11. Reservation and Listing of Securities.
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Warrants and the Unit Warrants, such number of shares of Common
Stock as shall be issuable upon the exercise thereof. The Company covenants and
agrees that, upon exercise of the Warrants and payment of the Exercise Price
therefor, all Shares issuable upon such exercise shall be duly and validly
issued, fully paid, non-assessable and not subject to the preemptive rights of
any stockholder. The Company further covenants and agrees that upon exercise of
the Unit Warrants
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underlying the Warrants and payment of the Unit Warrant exercise price therefor,
all Unit Warrant Shares issuable upon such exercise shall be duly and validly
issued, fully paid, non-assessable and not subject to the preemptive rights of
any stockholder. As long as the Warrants shall be outstanding, the Company shall
use its best efforts to cause all shares of Common Stock issuable upon the
exercise of the Warrants and Unit Warrants underlying the Warrants to be listed
on or quoted by Nasdaq or listed on such national securities exchange, in the
event the Common Stock is listed on a national securities exchange.
12. Notices to Warrant Holders.
Nothing contained in this Agreement shall be construed as conferring upon
the Holder or Holders the right to vote or to consent or to receive notice as a
stockholder in respect of any meetings of stockholders for the election of
directors or any other matter, or as having any rights whatsoever as a
stockholder of the Company. If, however, at any time prior to the expiration of
the Warrants and their exercise, any of the following events shall occur:
(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable otherwise than in cash, or a cash dividend or distribution
payable otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or
(b) the Company shall offer to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible into
or exchangeable for shares of capital stock of the Company, or any option, right
or warrant to subscribe therefor; or
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(c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall be
proposed; or
(d) reclassification or change of the outstanding shares of Common
Stock (other than a change in par value to no par value, or from no par value to
par value, or as a result of a subdivision or combination), 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 surviving corporation and
which does not result in any reclassification or change of the outstanding
shares of Common Stock, except a change as a result of a subdivision or
combination of such shares or a change in par value, as aforesaid), or a sale or
conveyance to another corporation of the property of the Company as an entirety
is proposed; or
(e) The Company or an affiliate of the Company shall propose to issue
any rights to subscribe for shares of Common Stock or any other securities of
the Company or of such affiliate to all the shareholders of the Company;
then, in any one or more of said events, the Company shall give written notice
to the Holder or Holders of such event at least fifteen (15) days prior to the
date fixed as a record date or the date of closing the transfer books for the
determination of the stockholders entitled to such dividend, distribution,
convertible or exchangeable securities or subscription rights, options or
warrants, or entitled to vote on such proposed dissolution, liquidation, winding
up or sale. Such notice shall specify such record date or the date of closing
the transfer books, as the case may be. Failure to
19
give such notice or any defect therein shall not affect the validity of any
action taken in connection with the declaration or payment of any such dividend
or distribution, or the issuance of any convertible or exchangeable securities
or subscription rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale.
13. Unit Warrants
The form of the certificates representing the Unit Warrants (and the form
of election to purchase shares of Common Stock upon the exercise of the Unit
Warrants and the form of assignment printed on the reverse thereof) shall be
substantially as set forth in Exhibit "A" to the Unit Warrant Agreement;
provided, however, (i) each Unit Warrant issuable upon exercise of the Warrants
shall evidence the right to initially purchase one fully paid and non-assessable
share of Common Stock in respect of the Unit Warrant at an initial purchase
price of $10.50 per share from the Separation Date until ______________, 2005
and (ii) the Target Redemption Price (as defined in the Public Warrant
Agreement) of the Unit Warrants is 150% of the then effective exercise price of
the Unit Warrants. As set forth in Section 8.5 of this Agreement, the exercise
price of the Unit Warrants and the number of shares of Common Stock issuable
upon the exercise of the Unit Warrants are subject to adjustment, whether or not
the Warrants have been exercised and the Unit Warrants have been issued, in the
manner and upon the occurrence of the events set forth in Section 9 of the Unit
Warrant Agreement, which is hereby incorporated herein by reference and made a
part hereof as is set forth in its entirety herein. Subject to the provisions of
this Agreement and upon issuance of the Unit Warrants underlying the Warrants,
each registered holder of such Unit Warrants shall have the right to purchase
from the Company (and the Company shall issue to such registered holders) up to
the number of fully paid and non-assessable shares of Common Stock underlying
such Unit Warrants (subject to adjustment as provided herein and in the Unit
Warrant Agreement), free and
20
clear of all preemptive rights of shareholders, provided that such registered
holder complies with the terms governing exercise of the Unit Warrants set forth
in the Unit Warrant Agreement, and pays the applicable exercise price,
determined in accordance with the terms of the Unit Warrant Agreement. Upon
exercise of the Unit Warrants, the Company shall forthwith issue to the
registered holder of any such Unit Warrant in his name or in such name as may be
directed by him, certificates for the number of shares of Common Stock and the
number of Unit Warrants so purchased. Except as otherwise provided in Section
8.5 hereof, the Unit Warrants underlying the Warrants shall be governed in all
respects by the terms of the Unit Warrant Agreement. The Unit Warrants shall be
transferable in the manner provided in the Unit Warrant Agreement, and upon any
such transfer, a new Unit Warrant shall be issued promptly to the transferee.
The Company covenants to, and agrees with, each Holder that without the prior
written consent of all the Holders, the Unit Warrant Agreement will not be
modified, amended, cancelled, altered or superseded, and that the Company will
send to each Holder, irrespective of whether or not the Warrants have been
exercised, any and all notices required by the Unit Warrant Agreement to be sent
to holders of the Unit Warrants.
14. Notices.
All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been duly made when delivered, or mailed
by registered or certified mail, return receipt requested:
(a) If to a registered Holder of the Warrants, to the address of such
Holder as shown on the books of the Company; or
21
(b) If to the Company, to the address set forth in Section 3 of this
Agreement or to such other address as the Company may designate by notice to the
Holders.
15. Supplements and Amendments.
The Company and the Underwriter may from time to time supplement or amend
this Agreement without the approval of any Holders of Warrant Certificates
and/or Warrant Securities in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent
with any provisions herein, or to make any other provisions in regard to matters
or questions arising hereunder which the Company and the Underwriter may deem
necessary or desirable and which the Company and the Underwriter deem not to
adversely affect the interests of the Holders of Warrant Certificates and/or
Warrant Securities.
16. Successors.
All the covenants and provisions of this Agreement by or for the benefit of
the Company and the Holders inure to the benefit of their respective successors
and assigns hereunder.
17. Termination.
This Agreement shall terminate at the close of business on __________,
2008. Notwithstanding the foregoing, this Agreement will terminate on any
earlier date when all Warrants have been exercised and all the Shares issuable
upon exercise of the Warrants have been resold to the public; provided, however,
that the provisions of Section 7 shall survive any termination pursuant to this
Section 16 until the close of business on _________, 2011.
22
18. Governing Law.
This Agreement and each Warrant Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of New York and for all
purposes shall be construed in accordance with the laws of said State.
19. Benefits of This Agreement.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and the Underwriter and any other registered
holder or holders of the Warrant Certificates or Warrant Securities any legal or
equitable right, remedy or claim under this Agreement; and this Agreement shall
be for the sole and exclusive benefit of the Company and the Underwriter and any
other holder or holders of the Warrant Certificates or Warrant Securities.
20. Counterparts.
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and such
counterparts shall together constitute but one and the same instrument.
23
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
DELCATH SYSTEMS, INC.
By: __________________________________
Name: X.X. Xxxx
Title: Chief Executive Officer
WHALE SECURITIES CO., L.P.
By: Whale Securities Corp.,
General Partner
By: __________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman
24
EXHIBIT A
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED FOR PURPOSES OF PUBLIC
DISTRIBUTION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY
NOT BE OFFERED OR SOLD EXCEPT (i) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT, (ii) TO THE EXTENT APPLICABLE, PURSUANT TO RULE 144
UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING TO THE DISPOSITION
OF SECURITIES), OR (iii) UPON THE DELIVERY BY THE HOLDER TO THE COMPANY OF AN
OPINION OF COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE COMPANY, STATING
THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., NEW YORK TIME, _________, 2005
No. W- _______ Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that _______________ ___________________
or registered assigns, is the registered holder of ____________ (________)
Warrants to purchase, at any time from ____________, 2000 until 5:00 P.M. New
York City time on ___________, 2005 ("Expiration Date"), up to _________ units
("Units"), each consisting of one fully-paid and non-assessable share of common
stock, par value $.01 per share (the "Common Stock"), of Delcath Systems, Inc.,
a Delaware corporation (the "Company"), and one Common Stock Purchase Warrant,
each Common Stock Purchase Warrant entitling the holder thereof to purchase one
share of Common Stock (collectively, the "Unit Warrants") at the initial
exercise price, subject to adjustment in certain events (the "Exercise Price"),
of $6.60 per Unit upon surrender of this Warrant Certificate and payment of the
Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the warrant agreement dated as of
____________, 2000 between the Company and Whale Securities Co., L.P. (the
"Warrant Agreement"). Payment of the Exercise Price may be made in cash, or by
certified or official bank check in New York Clearing House funds payable to the
order of the Company, or any combination thereof.
Each Unit Warrant issuable upon the exercise of a Warrant is initially
exercisable from the Separation Date through ________, 2005, for one fully-paid
and non-assessable share of Common Stock at an initial exercise price of $10.50
per share. The Unit Warrants are issuable pursuant to the terms and provisions
of a certain agreement dated as of ________, 2000
by and among the Company, the Underwriter and American Stock Transfer & Trust
Company (the "Unit Warrant Agreement"). The Unit Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby
referred to (except as otherwise provided in the Warrant Agreement) for a
description of the rights, limitations of rights, manner of exercise,
anti-dilution provisions and other provisions with respect to the Unit Warrants.
No Warrant may be exercised after 5:00 P.M., New York City time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain events,
the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant Certificates
shall not in any way change, alter, or otherwise impair, the rights of the
holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax, or other governmental charge
imposed in connection therewith.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
2
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated: ___________, 2000
DELCATH SYSTEMS, INC.
By: __________________________
Name: X.X. Xxxx
Title: Chief Executive Officer
3
[FORM OF ELECTION TO PURCHASE]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase _________ Units and
herewith tenders in payment for such securities cash or a certified or official
bank check payable in New York Clearing House Funds to the order of Delcath
Systems, Inc. in the amount of $ _____, all in accordance with the terms hereof.
The undersigned requests that a certificate for such securities be registered in
the name of __________, whose address is __________________, and that such
Certificate be delivered to __________________, whose address is _____________.
Dated: Signature: _______________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate.)
--------------------------------
--------------------------------
(Insert Social Security or Other
Identifying Number of Holder)
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED _________________
hereby sells, assigns and transfers unto
---------------------------------------------
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________, Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.
Dated: Signature: ________________________________
(Signature must conform in all respects to
name of holder as specified on the face of
the Warrant Certificate)
-------------------------------
-------------------------------
(Insert Social Security or Other
Identifying Number of Assignee)
