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DELCATH SYSTEMS, INC.
2000 STOCK OPTION PLAN
1. Purpose of Plan
The purpose of this 2000 Stock Option Plan (the "Plan") is to further
the growth and development of Delcath Systems, Inc. (the "Company") and any
direct and indirect subsidiaries thereof (collectively, "Subsidiaries", and
each, singly, a "Subsidiary") by encouraging selected employees, directors and
other persons who contribute and are expected to contribute materially to the
Company's success to obtain a proprietary interest in the Company through the
ownership of stock, thereby providing such persons with an added incentive to
promote the best interests of the Company and affording the Company a means of
attracting to its service persons of outstanding ability.
2. Stock Subject to the Plan
An aggregate of 300,000 shares (post-split) of the Company's Common
Stock, $.01 par value ("Common Stock"), subject, however, to adjustment or
change pursuant to paragraph 12 hereof, shall be reserved for issuance upon the
exercise of incentive stock options ("Incentive Stock Options") within the
meaning of Section 422(b) of the Internal Revenue Code of 1986, as amended (the
"Code") and nonqualified stock options ("Nonqualified Stock Options")
(hereinafter collectively referred to as "Options") which may be granted from
time to time in accordance with the Plan. Such shares may be, in whole or in
part, as the Stock Option Committee (the "Committee") shall from time to time
determine, authorized but unissued shares or issued shares which have been
reacquired by the Company. If, for any reason, an Option shall lapse, expire or
terminate without having been exercised in full, the unpurchased shares covered
thereby shall again be available for purposes of the Plan. Notwithstanding
anything in the Plan to the contrary, (i) during the term of the Plan, the
maximum aggregate number of shares of Common Stock that shall be subject to
options granted under the Plan to any single employee during any calendar year
shall be 350,000 shares and (ii) the total amount of shares subject to issued
and outstanding options shall not exceed 10% of the shares outstanding during
the pendency of the Company's initial public offering.
3. Administration
(a) The Board of Directors shall appoint the Committee from among its
members. Such Committee shall be composed of two or more Directors who shall be
"disinterested persons" as defined under Rule 16b-3 under the Securities
Exchange Act of 1934, as amended. Such Committee shall have and may exercise any
and all of the powers relating to the administration of the Plan and the grant
of Options thereunder as are set forth in subparagraph 3(b) hereof. The Board of
Directors shall have the power at any time to fill vacancies in, to change the
membership of, or to discharge such Committee. The Committee shall select one of
its members as its chairman and shall hold its meetings at such times and at
such places as it shall deem advisable. A majority of such Committee shall
constitute a quorum, and such majority shall determine its action. Any action
may be taken without a meeting by written consent of all the members of the
Committee. The Committee shall keep minutes of its proceedings and shall report
the same to the Board of Directors at the meeting next succeeding.
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(b) The Committee shall administer the Plan and, subject to the
provisions of the Plan, shall have sole authority in its discretion to determine
the persons to whom, and the time or times at which, Options shall be granted,
and the number of shares to be subject to each such Option. In making such
determinations, the Committee may take into account the nature of the services
rendered by such persons, their present and potential contributions to the
Company's success and such other factors as the Committee in its sole discretion
may deem relevant. Subject to the express provisions of the Plan, the Committee
shall also have the authority to interpret the Plan, to prescribe, amend
and-rescind rules and regulations relating thereto, to determine the terms and
provisions of the respective Option Agreements, which shall be substantially in
the form attached hereto as Exhibit A, and to make all other determinations
necessary or advisable for the administration of the Plan, all of which
determinations shall be conclusive and not subject to review.
4. Eligibility for Receipt of Options
Options hereunder may be granted to any employees, directors,
consultants, agents, independent contractors and other persons whom the
Committee determines will contribute to the Company's success, provided that
non-employees shall only be eligible to receive grants of Nonqualified Stock
Options.
The aggregate Fair Market Value (as defined in paragraph 5 of the
Plan), determined as of the time the Option is granted, of the shares of the
Company's Common Stock purchasable thereunder exercisable for the first time by
an employee during any calendar year may not exceed $100,000.
Incentive Stock Options may not be granted to any person who, at the
time the Incentive Stock Option is granted, owns (or is considered as owning
within the meaning of Section 425 (d) of the Code) stock possessing more than
10% of the total combined voting powers of all classes of stock of the Company
or any Subsidiary (a "10% Owner"), unless at the time the Incentive Stock Option
is granted to a 10% Owner, the option price is at least 110% of the fair market
value of the Common Stock subject thereto and such Incentive Stock Option by its
terms is not exercisable subsequent to five years from the date of grant.
Nothing herein contained shall prohibit the Company from granting
Options hereunder to any holder of any other incentive or non-incentive stock
options of the Company, if any, provided the prospective recipient of Options
hereunder is otherwise eligible to receive such Options pursuant to the terms of
this Plan, and each type of option is clearly designated.
5. Option Price
The purchase price of the shares of Common Stock subject to an Option
shall be determined by the Committee but shall be no less than 100% of the fair
market value of a share of such Stock on the date such Option is granted;
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provided, however, that (i) an Incentive Stock Option shall not be granted to
any individual who, at the time of grant, owns stock possessing more than 10% of
the total combined voting power or value of all classes of stock of the Company
or parent of the Company, unless the option price per share is not less than
110% of the fair market value of a share of Common Stock on the date of grant,
and (ii) in no event, based upon the facts known at the time of the grant, may a
purchase price be established hereunder that would result in the disallowance of
the Company's expense deduction pursuant to Section 162(m) of the Code.
In determining the fair market value of the Common Stock as of a
specified date (the "Fair Market Value"), the Committee shall consider, if the
Common Stock is: (a) publicly traded and listed on the New York Stock Exchange
or another national securities exchange, the closing price of the Common Stock
on the business day immediately preceding the date as of which the Fair Market
Value is being determined, or on the next preceding date on which such Common
Stock is traded if no Common Stock was traded on such immediately preceding
business day, or, if the Common Stock is not so listed on a national securities
exchange, but publicly traded, the representative closing bid price in the
over-the- counter market as reported by NASDAQ or as quoted by the National
Quotation Bureau or a recognized dealer in the Common Stock, on the date
immediately preceding the date as of which the Fair Market Value is being
determined, or on the next preceding date on which such Common Stock is traded
if no Common Stock was traded on such immediately preceding business day; or (b)
not publicly traded, the fair market value as determined by the Committee in
good faith based on such factors as it shall deem appropriate. The Committee may
also consider such other factors as it shall deem appropriate.
For purposes of the Plan, the date of grant of an Option shall be the
date on which the Committee shall by resolution duly authorize such Option.
6. Term of Options
The term of each Option shall be such number of years as the Committee
shall determine, subject to earlier termination as herein provided for employee
holders, and subject to the limitations set forth in paragraph 4 of this Plan
with respect to grants to 10% owners, and for non-employee holders upon or
following the occurrence of such events, all as the Committee may determine at
the time of grant of an Option, which events may include, without limitation,
the termination or cessation of the holder's performance of services to the
Company or any subsidiary or the holder's death or disability. In no event shall
any Option be for a term of more than ten years from the date of grant.
Notwithstanding the foregoing, the term of options intended to qualify as
Incentive Stock Options shall not exceed five (5) years from the date of
granting thereof if such option is granted to any employee who at the time such
option is granted owns more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company. No Option may be exercised
following termination thereof.
7. Exercise of Options
(a) (i) Vesting. No Option granted under the Plan shall be exercisable
until such date or dates (inclusive of the date of grant and thereafter) as
shall be determined by the Committee, but in no event until at least six months
from the date of grant, with each Option to be so exercisable to the extent
determined by the Committee.
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(ii) Minimum Exercise. An Option may not be exercised for
fewer than ten shares at any one time (or the remaining shares then purchasable
if less than ten) and may not be exercised for fractional shares of the
Company's Common Stock.
(b) Except as provided in paragraphs 9, 10 and 11 hereof, no Option
shall be exercisable unless the holder thereof shall have been an employee of
the Company and/or a Subsidiary continuously from the date of grant to the date
of exercise.
(c) (i) The exercise of an Option shall be contingent upon receipt by
the Company from the holder of such Option of:
(1) cash, or a check to the order of the Company, for
the full purchase price of the Option shares;
(2) a written representation that at the time of such
exercise it is the optionee's then present intention to acquire the Option
shares for investment and not with a view to the distribution or resale thereof
(unless a Registration Statement covering the shares purchasable upon exercise
of the Options shall have been declared effective by the Securities and Exchange
Commission, the Company being under no obligation to file such registration
statement or process it to effectiveness);
(3) a written acknowledgement by the Optionholder, in
such form as may be determined by the Committee, that an investment in the
Common Stock of the Company involves a high degree of risk, that the
Optionholder has received a copy of the Company's financial statements for the
most recently ended fiscal year for which such statement is available (which
shall be provided annually by the Company to each Optionholder), and that the
Optionholder has had the opportunity to ask questions of management concerning
the Company prior to the exercise of the Option (the Company to provide such
information as the Optionholder may reasonably request};
(4) such Stockholders' Agreement as the Company may
require at the time of exercise of such Option (the "Stockholders' Agreement"),
executed and delivered by the holder, the form of which the Company reserves the
right to change at any time and from time to time, and which, among other
things, may restrict the sale of the Option shares and other shares of capital
stock of the Company subsequently acquired by the holder. Specifically, these
restrictions may include, without limitation, that Venkol Ventures, L.P. and
Venkol Ventures, Ltd. have a right of first refusal to purchase any or all
shares of the Company's capital stock owned by the holder following a bona fide
offer therefore by a third party. Additionally, in the event the two Venkol
entities shall agree to sell all of their holdings in the Company to a third
party, such Venkol entities may cause the holder to sell all shares of capital
stock of the Company then owned by such holder to the third party. Further, the
Stockholders' Agreement may provide that to the extent requested by the managing
underwriter in the event of and in respect of an underwritten offering of
securities of the Company, the holder will agree to refrain from selling or
offering to sell any securities of the Company for such reasonable period of
time after the effective date of the registration statement relating to the
underwritten offering as the holders of at least seventy-five percent (75%) of
the outstanding shares of the Company's Class A Preferred Stock will have agreed
to refrain from selling or offering to sell their Class A Preferred Stock and/or
Common Stock in the Company issuable upon conversion thereof (the "Underwriter's
Lockup"); and
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(5) in the event such holder is an employee of the
Company or a Subsidiary, such Escrow Agreement, Pledge Agreement or other
agreement as the Company may require (the "Deposit Agreement"), pursuant to
which such holder shall deposit, upon such exercise by the holder, with the
Company or such third party as may be designated by the Company therefore, the
Option shares acquired pursuant to the exercise of such Option, together with
stock powers executed in blank by such holder with respect to such Option shares
as may be determined by the Company, all so as to facilitate the enforcement of
the Underwriter's Lockup described above, the other provisions of the
Stockholders' Agreement, and/or the repurchase by the Company of the Option
shares described in Paragraph 14 below, and which Deposit Agreement shall
.remain in effect until the termination, if at all, of the Stockholders'
Agreement (at which time. the Option Shares and related stock powers would be
returned).
(ii) No shares shall be issued until full payment therefore
has been made.
(iii) In the event the representation described in Paragraph
7(c)(i)(2) above is required and made and/or the holder executes and delivers
the Stockholders' Agreement, the Committee may cause each certificate evidencing
the purchased Common Stock to be endorsed with one or more legends setting forth
the restrictions on transfer or otherwise of such Common Stock.
(d) The holder of an Option shall have none of the rights of a
stockholder with respect to the shares purchasable upon exercise of the Option
until a certificate for such shares shall have been issued to the holder upon
due exercise of the Option.
(e) The proceeds received by the Company upon exercise of an Option
shall be added to the Company's working capital and be available for general
corporate purposes.
8. Non-Transferability of Options
No Option granted pursuant to the Plan shall be transferable otherwise
than by will or the laws of descent and distribution, and an Option may be
exercised during the lifetime of the holder only by such holder.
9. Termination of Employment of Holder of Option
In the event the employment with the Company or a Subsidiary of the
holder of an Option shall be terminated for any reason other than by reason of
death, disability within the meaning of Section 22(e)(3) of the Code, or
retirement at or after age 65, such holder's Option shall immediately terminate,
lapse and expire. Absence on leave approved by the employer corporation or
entity shall not be considered an interruption of employment for any purpose
under the Plan.
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Nothing in the Plan or in any Option Agreement granted hereunder shall
confer upon any Optionholder any right to commence or continue in the employ of
the Company or any Subsidiary or obligate the Company or any Subsidiary to
commence or continue the employment of any Optionholder or interfere in any way
with the right of the Company or any such Subsidiary to terminate such
Optionholder's employment, if any, at any time.
10. Retirement or Disability of Holder of Option
If the employment with the Company or a Subsidiary of the holder of an
Option shall be terminated by reason of such holder's disability within the
meaning of Section 22(e) (3) of the Code, or retirement at or after age 65, such
holder (or such holder's legal representative, on such holder's behalf, if
applicable) may, within six months from the date of such termination, exercise
such Option, but only to the extent such Option was exercisable by such holder
at the date of such termination. Notwithstanding the foregoing, no Option may be
exercised subsequent to the date of its expiration.
11. Death of Holder of Option
If the holder of any Option shall die while in the employ of the
Company or a Subsidiary (or within six months following termination of
employment due to disability within the meaning of Section 22(e) (3) of the
Code, or retirement at or after age 65), the Option theretofore granted to such
person may be exercised, but only to the extent such Option was exercisable by
such holder at the date of death (or the date of termination of employment due
to disability or retirement at or after age 65) by the legatee or legatees of
such person under such person's Last Will, or by such person's personal
representative or distributees, within six months from the date of death but in
no event subsequent to the expiration date of the Option.
12. Adjustments Upon Changes in Capitalization
If at any time after the date of grant of an Option, the Company shall
by stock dividend, split-up, combination, reclassification or exchange, or
through merger or consolidation or otherwise, change its shares of Common Stock
into a different number or kind or class of shares or other securities or
property, then the number of shares covered by such Option and the price per
share thereof shall be proportionately adjusted for any such change by the
Committee, whose determination thereon shall be conclusive. In the event that a
fraction of a share results from the foregoing adjustment, said fraction shall
be eliminated and the price per share of the remaining shares subject to the
Option adjusted accordingly.
13. Vesting of Rights Under Options
Neither anything contained in the Plan nor in any resolution adopted
or to be adopted by the Committee or the stockholders of the Company shall
constitute the vesting of any rights under any Option. The vesting of such
rights shall take place only when a written Option Agreement, substantially in
the form of the Stock Option Agreement attached hereto as Exhibit A shall be
duly executed and delivered by and on behalf of the Company and the person to
whom the Option shall be granted.
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14. Repurchase of Option Shares by the Company
In the event Option shares are purchased by any individual who is an
employee of the Company or a Subsidiary pursuant to any Option granted under the
Plan, and such individual's employment shall terminate for any reason whatsoever
(including, without limitation, by reason of death, disability or retirement),
and the Company's Common Stock is not then listed on a national securities
exchange or traded on NASDAQ, and the Company in its sole and absolute
discretion elects to purchase such Option shares (the Company being under no
obligation to do so), such individual shall agree to sell to the Company all
Option shares acquired by such individual under this Plan for a purchase price
equal to the fair market value of such Option shares as determined by the
Committee based on a price that might be arrived at by a willing buyer and a
willing seller, neither being under a compulsion to buy or to sell, and taking
into account such factors as it shall deem appropriate, including, without
limitation, the restricted nature of such Option shares, including by virtue of
the provisions of the Stockholders' Agreement, the minority equity ownership
position represented by the Option shares (i.e.. such Option shares would be
valued at a lower price by virtue thereof than that which might otherwise be
calculated in respect of the relative percentage equity ownership of the Company
represented by such Option shares), and the option price established by the
Committee as applicable to the then most recent incentive stock options granted
by the Company (whether hereunder or otherwise within the meaning of Section 422
(b) of the Code), and such other factors as the Committee may deem appropriate.
The foregoing determination hereunder by the Committee of the fair market value
of the Option shares shall be conclusive and not subject to review.
15. Termination and Amendment
The Plan, which has been adopted by the Board of Directors on June 15,
2000 and by the stockholders of the Company on ________________, shall terminate
on June 14, 2010, and no Option shall be granted under the Plan after such date.
The Board of Directors may at any time prior to such date terminate the Plan or
make such modifications or amendments thereto as it shall deem advisable;
provided, however, that:
(i) no increase shall be made in the aggregate number of
shares which may be issued under, the Plan;
(ii) no such termination, modification or amendment shall
materially adversely affect the rights of a holder of an Option previously
granted under the Plan;
(iii) no modification shall be made to the requirements of
eligibility for participation in the Plan; and
(iv) no material increase shall be made in the benefits
accruing to participants under the Plan.
