Delcath Systems
Annual Report 2018

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549 FORM 10-K ☒☒Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the fiscal year ended December 31, 2018☐☐Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from____________ to ____________Commission file number: 001-16133 DELCATH SYSTEMS, INC. Delaware 06-1245881(State or other jurisdiction ofincorporation or organization) (I.R.S. EmployerIdentification No.) 1633 Broadway, Suite 22C New York, NY 10019(Address of principal executive offices) (Zip Code) 212-489-2100(Registrant’s telephone number, including area code)Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registeredCommon stock DCTH OTCQB Securities registered pursuant to Section 12(g) of the Act: None. Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 ofthis chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).Yes ☒ No ☐Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of theregistrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company or an emerging growth company.See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐Accelerated filer ☐ Non-accelerated filer ☐Smaller reporting company ☒ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒ The aggregate market value of the voting common stock held by non-affiliates of the registrant, based on the closing sale price on the OTC of $2.78 per share, was $2,591,399 as ofJune 30, 2018. At June 14, 2019, the registrant had outstanding 18,277,807 shares of common stock, par value $0.01 per share. DOCUMENTS INCORPORATED BY REFERENCENone. TABLE OF CONTENTS PagePART I Item 1.Business1Item 1A.Risk Factors20Item 1B.Unresolved Staff Comments39Item 2.Properties39Item 3.Legal Proceedings39Item 4.Mine Safety Disclosures40 PART II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of EquitySecurities41Item 6.Selected Financial Data41Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations42Item 7A.Quantitative and Qualitative Disclosure About Market Risk48Item 8.Consolidated Financial Statements and Supplementary Data49Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure50Item 9A.Controls and Procedures50Item 9B.Other Information51 PART III Item 10.Directors, Executive Officers and Corporate Governance52Item 11.Executive Compensation57Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters61Item 13.Certain Relationships and Related Transactions, and Director Independence62Item 14.Principal Accountant Fees and Services63 PART IV Item 15.Exhibits and Consolidated Financial Statement Schedules64Item 16.Form 10-K Summary64 SIGNATURES69 Disclosure Regarding Forward-Looking StatementsThis Annual Report on Form 10-K for the period ended December 31, 2018 contains certain “forward-looking statements” within the meaning of the “safeharbor” provisions of the Private Securities Litigation Reform Act of 1995 with respect to our business, financial condition, liquidity and results ofoperations. Words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “could,” “would,” “will,” “may,” “can,”“continue,” “potential,” “should,” and the negative of these terms or other comparable terminology often identify forward-looking statements. Statements inthis Annual Report on Form 10-K for the period ending December 31, 2018 that are not historical facts are hereby identified as “forward-looking statements”for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act) and Section 27A of theSecurities Act of 1933, as amended (Securities Act). These forward-looking statements are not guarantees of future performance and are subject to risks anduncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements, including the risksdiscussed in this Annual Report on Form 10-K for the fiscal year ended December 31, 2018 in Item 1A under “Risk Factors” as well as in Item 7A“Quantitative and Qualitative Disclosures About Market Risk,” and the risks detailed from time to time in our future SEC reports. These forward-lookingstatements include, but are not limited to, statements about: •our estimates regarding sufficiency of our cash resources, anticipated capital requirements and our need for additional financing; •the commencement of future clinical trials and the results and timing of those clinical trials; •our ability to successfully commercialize CHEMOSAT and Melphalan/HDS, generate revenue and successfully obtain reimbursement for theprocedure and system; •the progress and results of our research and development programs; •submission and timing of applications for regulatory approval and approval thereof; •our ability to successfully source certain components of the system and enter into supplier contracts; •our ability to successfully manufacture CHEMOSAT and Melphalan/HDS; •our ability to successfully negotiate and enter into agreements with distribution, strategic and corporate partners; and •our estimates of potential market opportunities and our ability to successfully realize these opportunities.Many of the important factors that will determine these results are beyond our ability to control or predict. You are cautioned not to put undue reliance onany forward-looking statements, which speak only as of the date of this Annual Report on Form 10-K. Except as otherwise required by law, we do not assumeany obligation to publicly update or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this AnnualReport on Form 10-K or to reflect the occurrence of unanticipated events. Item 1. Business. Unless the context otherwise requires, all references in this Annual Report on Form 10-K to the “Company”, “Delcath”, “Delcath Systems”, “we”, “our”, and“us” refers to Delcath Systems, Inc., a Delaware corporation, incorporated in August 1988, and all entities included in our consolidated financial statements.Our corporate offices are located at 1633 Broadway, Suite 22C, New York, New York 10019. Our telephone number is (212) 489-2100 and our internetaddress is www.delcath.com. Company Overview Delcath Systems, Inc. is an interventional oncology company focused on the treatment of primary and metastatic liver cancers. Our investigational product,“Melphalan Hydrochloride for Injection for use with the Delcath Hepatic Delivery System” (“Melphalan/HDS”), is designed to administer high-dosechemotherapy to the liver while controlling systemic exposure and associated side effects. 1In the United States, Melphalan/HDS is considered a combination drug and device product, is referred to by its chemical name and delivery system,Melphalan/HDS, and is regulated as a drug by the Federal Food and Drug Administration (the “FDA”). The FDA has granted us six orphan drug designations,including three orphan designations for the use of the drug melphalan for the treatment of patients with ocular melanoma liver metastases (“mOM”),hepatocellular carcinoma (“HCC”) and intrahepatic cholangiocarcinoma, a type of primary livery cancer (“ICC”). Melphalan/HDS has not been approved forsale in the United States. In Europe, our delivery system, without the drug, is commercially available under the trade name Delcath Hepatic CHEMOSAT® Delivery System forMelphalan (marketed under the name CHEMOSAT and referred to herein as “CHEMOSAT”), where it has been used at major medical centers to treat a widerange of cancers of the liver. The current version of CHEMOSAT is regulated as a Class IIb medical device and received its CE Mark in 2012. We are in anearly phase of commercializing CHEMOSAT in select markets in the European Union (the “EU”) where the prospect of securing reimbursement coverage forthe procedure is strongest. In 2015 national reimbursement coverage for CHEMOSAT procedures was awarded in Germany. In 2016, coverage levels werenegotiated between hospitals in Germany and regional sickness funds. Coverage levels determined via this process are expected to be renegotiated annually.In 2017, Dutch health authorities added CHEMOSAT to their treatment guidelines for patients with ocular melanoma metastatic to the liver, an importantstep toward eventual reimbursement in the Dutch market. Our primary research focus is on mOM and ICC and certain other cancers that are metastatic to the liver. Currently there are few effective treatment optionsfor certain cancers in the liver. Traditional treatment options include surgery, systemic chemotherapy, liver transplant, radiation therapy, interventionalradiology techniques, and isolated hepatic perfusion. We believe that Melphalan/HDS and CHEMOSAT represent a potentially important advancement inregional therapy for primary liver cancer and certain other cancers metastatic to the liver and are uniquely positioned to treat the entire liver either as astandalone therapy or as a complement to other therapies. We believe the disease states we are investigating represent a multi-billion dollar global marketopportunity and a clear unmet medical need. Our clinical development program for Melphalan/HDS is comprised of the FOCUS Clinical Trial for Patients with Hepatic Dominant Ocular Melanoma (the“FOCUS Trial”), a global registration clinical trial that is investigating objective response rate in mOM, and the ALIGN Trial, a global Phase 3 clinical trialfor ICC (the “ALIGN Trial”). Our product also includes a registry for CHEMOSAT commercial cases performed in Europe and sponsorship of selectInvestigator Initiated Trials. The direction and focus of our product is informed by prior clinical development conducted between 2004 and 2010, commercial CHEMOSAT treatment ofpatients in Europe, and prior regulatory experience with the FDA. Experience gained from this research and development, early European commercial casesand United States regulatory opinion has led to the implementation of several safety improvements to our product and the associated medical procedure. While we currently utilize third parties to manufacture some components of our product, we also have our own medical device manufacturing operations forcertain components of our product and assemble, label and package our products in Queensbury, New York. See the discussion below under the caption“Manufacturing and Quality Assurance.” We commercialize our product in Europe through alliances with third parties. Cancers in the Liver – A Significant Unmet NeedCancers of the liver remain a major unmet medical need globally. According to the American Cancer Society’s Cancer Facts & Figures 2018 report, canceris the second leading cause of death in the United States, with an estimated 609,640 deaths and 1.7 million new cases expected to be diagnosed in 2018.Cancer is one of the leading causes of death worldwide, accounting for approximately 9.6 million deaths and 18.1 million new cases in 2018 according toGLOBOCAN, the database of the International Association of Cancer Registries. The financial burden of cancer is enormous for patients, their families andsociety. The Agency for Healthcare Quality and Research estimates that the direct medical costs (total of all healthcare expenditures) for cancer in the UnitedStates in 2015 was $80.2 billion. The liver is often the life-limiting organ for cancer patients and one of the leading causes of cancer death. Patient prognosisis generally poor once cancer has spread to the liver.2Liver Cancers—Incidence and MortalityThere are two types of liver cancers: primary liver cancer and metastatic liver disease. Primary liver cancer (hepatocellular carcinoma or HCC, includingintrahepatic bile duct cancers or ICC) originates in the liver or biliary tissue and is particularly prevalent in populations where the primary risk factors for thedisease, such as hepatitis-B, hepatitis-C, high levels of alcohol consumption, aflatoxin, cigarette smoking and exposure to industrial pollutants, are present.Metastatic liver disease, also called liver metastasis, or secondary liver cancer, is characterized by microscopic cancer cell clusters that detach from theprimary site of disease and travel via the blood stream and lymphatic system into the liver, where they grow into new tumors. These metastases often continueto grow even after the primary cancer in another part of the body has been removed. Given the vital biological functions of the liver, including processingnutrients from food and filtering toxins from the blood, it is not uncommon for metastases to settle in the liver. In many cases patients die not as a result oftheir primary cancer, but from the tumors that metastasize to their liver. In the United States, metastatic liver disease is more prevalent than primary livercancer.Ocular MelanomaOcular melanoma is one of the cancer histologies with a high likelihood of metastasizing to the liver. Based on third party research that we commissioned in2018, we estimate that up to 4,700 cases of ocular melanoma are diagnosed in the United States and Europe annually, and that approximately 55% of thesepatients will develop metastatic disease. Of metastatic cases of ocular melanoma, we estimate that approximately 90% of patients will develop liverinvolvement. Once ocular melanoma has spread to the liver, current evidence suggests median overall survival for these patients is generally six to eightmonths. Currently, there is no standard of care for patients with ocular melanoma liver metastases. Based on the research conducted in 2018, we estimate thatapproximately 2,000 patients with ocular melanoma liver metastases in the United States and Europe may be eligible for treatment with the Melphalan/HDS.Intrahepatic CholangiocarcinomaHepatobiliary cancers include HCC and ICC, and are among the most prevalent and lethal forms of cancer. According to GLOBOCAN, an estimated 78,500new cases of hepatobiliary cancers are diagnosed in the United States and Europe annually. According to the American Cancer Society, approximately42,030 new cases of these cancers are expected to be diagnosed in the United States in 2019, leading to approximately 31,780 deaths.ICC is the second most common primary liver tumor and accounts for 3% of all gastrointestinal cancers and 15% of hepatobiliary cases diagnosed in theUnited States and Europe annually. We believe that 90% of ICC patients are not candidates for surgical resection, and that approximately 20-30% of thesemay be candidates for certain focal interventions. According to third party research that we commissioned in 2018 we estimate that approximately 11,000ICC patients in the United States and Europe annually could be candidates for treatment with Melphalan/HDS, which we believe represents a significantmarket opportunity.According to the American Cancer Society, the overall five-year survival rate for hepatobiliary cancers in the United States is approximately 18%. Forpatients diagnosed with a localized stage of disease, the American Cancer Society estimates 5-year survival at 31%. The American Cancer Society estimatesthat 5-year survival for all cancers is 68%.About CHEMOSAT and Melphalan/HDSOur product administers concentrated regional chemotherapy to the liver. This “whole organ” therapy is performed by isolating the circulatory system of theliver, infusing the liver with a chemotherapeutic agent, and then filtering the blood prior to returning it to the patient. During the procedure, known aspercutaneous hepatic perfusion, PHP®, (“PHP therapy”), three catheters are placed percutaneously through standard interventional radiology techniques. Thecatheters temporarily isolate the liver from the body’s circulatory system, allow administration of the chemotherapeutic agent melphalan hydrochloridedirectly to the liver, and collect blood exiting the liver for filtration by our proprietary filters. The filters absorb chemotherapeutic agent in the blood, therebyreducing systemic exposure to the drug and related toxic side effects, before the filtered blood is returned to the patient’s circulatory system.PHP therapy is performed in an interventional radiology suite in approximately two to three hours. Patients remain in an intensive care or step-down unitovernight for observation following the procedure. Treatment with CHEMOSAT and Melphalan/HDS is repeatable, and a new disposable system is used foreach treatment. Patients treated in clinical settings are permitted up to six treatments. In commercial treatment settings, patients have received up to eighttreatments. In the United States, melphalan hydrochloride for injection will be included as part of the product offering, if approved. In Europe, the system issold separately and used in conjunction with melphalan hydrochloride commercially available from a third party. In our clinical trials, melphalanhydrochloride for injection is provided to both European and United States clinical trial sites.3Risks associated with CHEMOSAT and Melphalan/HDS ProcedureAs with many cancer therapies, treatment with CHEMOSAT and Melphalan/HDS is associated with toxic side effects and certain risks, some of which arepotentially life threatening. An integrated safety population comprised of patients treated during our prior clinical development using early versions of theMelphalan/HDS showed these risks to include grade 3 or 4 bone marrow suppression and febrile neutropenia, as well as risks of hepatic injury, severehemorrhage, gastrointestinal perforation, stroke, and myocardial infarction in the setting of an incomplete cardiac risk assessment. Deaths due to certainadverse reactions within this integrated safety population were not observed to occur again during the clinical trials following the adoption of relatedprotocol amendments.Optimization of Procedure and Improvement of Medical Device Engineering of Key ComponentsThe trials that comprised this integrated safety population used early versions of the device and procedure. As a consequence of these identified risks andexperience gained in commercial treatment use in Europe, we have continued to develop and refine both CHEMOSAT and Melphalan/HDS and the PHPtherapy. The refinements have included modifications to the pre-, peri- and post-procedure patient management and monitoring, as well as the use of thefollowing: prophylactic administration of proton pump inhibitors, prophylactic platelet transfusions, prophylactic hydration at key pre-treatment intervals,use of vasopressor agents coupled with continuous monitoring for maintenance of blood pressure and prophylactic administration of growth factors to reducerisk of serious myelosuppression. In addition, in 2012 we introduced the Generation Two version of CHEMOSAT, which offered improved hemofiltration andother product enhancements.Reports from treating physicians in both Europe and the United States using the Generation Two CHEMOSAT and Melphalan/HDS, respectively, in a EUcommercial setting have suggested that these product improvements and procedure refinements have improved the safety profile. In 2017, physicians inEurope and the United States also presented the results of research that signaled an improved safety profile as well as efficacy in multiple tumor types atseveral major medical conferences.Phase 3 - Melanoma Metastases TrialIn February 2010, using an early version of our device and procedure, we concluded a randomized Phase 3 multi-center study for patients with unresectablemetastatic ocular or cutaneous melanoma exclusively or predominantly in the liver. In the trial, patients were randomly assigned to receive PHP therapy withmelphalan using the Melphalan/HDS, or to a control group providing “best alternative care”. Patients assigned to the PHP therapy were eligible to receive upto six cycles of treatment at approximately four to six week intervals. Patients assigned to the “best alternative care” were permitted to cross-over into thePHP therapy at radiographic documentation of hepatic disease progression. A majority of the “best alternative care” patients did in fact cross over to the PHPtherapy. The primary endpoint of the study was hepatic progression-free survival while secondary objectives of the study were to determine the response rate,safety, tolerability and overall survival.On April 21, 2010, we announced that our randomized Phase 3 clinical trial of PHP with melphalan using Melphalan/HDS for patients with unresectablemetastatic ocular and cutaneous melanoma in the liver had successfully achieved the study’s primary endpoint of extended hepatic progression-free survival(“hPFS”). An updated summary of the results was presented at the European Multidisciplinary Cancer Congress organized by the European CancerOrganization and the European Society of Medical Oncology in September 2011. Data submitted in October 2012 to the FDA in Delcath’s New DrugApplication (“NDA”) comparing treatment with PHP therapy with melphalan (the “treatment group”) to “best alternative care” (the “control group”), showedthat patients in the PHP therapy had a statistically significant longer median hPFS of 7.0 months compared to 1.7 months in the “best alternative care”control group, according to the Independent Review Committee assessment. This reflects a 4-fold increase of hPFS over that of the “best alternative care”therapy, with 50% reduction in the risk of progression and/or death in the PHP therapy compared to the “best alternative care” therapy. Results of this studywere published in the December 2015 issue of Annals of Surgical Oncology. Phase 2 - Multi-Histology, Unresectable Hepatic Tumor TrialAlso, in 2010, we concluded a separate multi-arm Phase 2 clinical trial of PHP therapy with melphalan using an early version of the Melphalan/HDS inpatients with primary and metastatic liver cancers, stratified into four arms: neuroendocrine tumors (carcinoid and pancreatic islet cell tumors), ocular orcutaneous melanoma, metastatic colorectal adenocarcinoma (mCRC), and HCC. In the metastatic neuroendocrine (“mNET”) cohort (n=24), the objectivetumor response rate was 42%, with 66% of patients achieving hepatic tumor shrinkage and durable disease stabilization. In the mCRC cohort, there wasinconclusive efficacy possibly due to advanced disease status of the patients. Similar safety profiles were seen across all tumor types studied in the trial.4Phase 2 - Multi-Histology Clinical Trial - HCC CohortIn the HCC cohort (n=8) of our Phase 2 Multi-Histology trial, a positive signal in hepatic malignancies was observed in 5 patients. Among these patients,one patient received four treatments, achieved a partial response lasting 12.22 months, and survived 20.47 months. Three other patients with stable diseasereceived 3-4 treatments, with hPFS ranging 3.45 to 8.15 months, and overall survival ranging 5.26 to 19.88 months. There was no evidence of extrahepaticdisease progression. The observed duration of hPFS and overall survival in this limited number of patients exceeded that generally associated with thispatient population.Prior United States Regulatory ExperienceBased on the results from our prior clinical development in August 2012, we submitted an NDA under Section 505(b)(2) of the Federal Food, Drug, andCosmetic Act (FDCA) seeking an indication for the percutaneous intra-arterial administration of melphalan for use in the treatment of patients with metastaticmelanoma in the liver and, subsequently, amended the indication to ocular melanoma metastatic to the liver. Data submitted to the FDA used the earlyclinical trial versions of the system along with early clinical procedure techniques. Our NDA was accepted for filing by the FDA on October 15, 2012 and wasdesignated for standard review with an initial Prescription Drug User Fee Act (PDUFA) goal date of June 15, 2013. On April 3, 2013, the FDA extended itsPDUFA goal date to September 13, 2013.On May 2, 2013 we announced that an Oncologic Drug Advisory Committee (ODAC) panel convened by the FDA voted 16 to 0, with no abstentions, that thebenefits of treatment with the early version of Melphalan/HDS did not outweigh the risks associated with the procedure. A significant portion of FDA’spresentation to the ODAC panel was focused on the FDA’s assessment of treatment related risks, including the analysis of treatment-related deaths thatoccurred during clinical trials. The FDA also expressed concerns about hypotension (low blood pressure) during the procedure, length of hospital stay, aswell as risks of stroke, heart attack, renal failure, and bone marrow suppression. We believe that the protocol amendments and other procedure refinementsinstituted during clinical trials and subsequently in commercial treatment usage in Europe, including changes to the way blood pressure is managed andmonitored, may help address these procedure related risks. Collection of adequate safety data on all aspects of the procedure is a major focus of the clinicaltrials in our current clinical development program. Briefing materials presented to the 2013 ODAC panel by both the FDA and Delcath are available on ourwebsite at www.delcath.com/clinical-bibliography.2013 Complete Response LetterIn September 2013, the FDA issued a complete response letter (CRL) relating to our NDA. The FDA issues a CRL after the review of an NDA has beencompleted and questions remain that preclude approval of the NDA in its current form. The deficiencies identified by FDA included, without limitation, astatement that Delcath must perform another “well-controlled randomized trial(s) to establish the safety and efficacy of Melphalan/HDS using overallsurvival as the primary efficacy outcome measure,” and which “demonstrates that the clinical benefits of Melphalan/HDS outweigh its risks.” The FDA alsorequired that the additional clinical trial(s) be conducted using the product the Company intends to market, and that certain clinical, clinical pharmacology,human factors and product quality elements be addressed. In January 2016, we announced the conclusion of a Special Protocol Assessment (SPA) with the FDA on the design of a new Phase 3 clinical trial ofMelphalan/HDS to treat patients with hepatic dominant ocular melanoma. This SPA represented an agreement with FDA that a specific Phase 3 trial wouldadequately address objectives that, if met, would support the submission for regulatory approval of Melphalan/HDS. The primary endpoint was overallsurvival, and secondary endpoints included progression-free survival, overall response rate and quality-of-life measures. However, on July 27, 2018, weannounced an amendment to our Phase 3, randomized clinical trial in ocular melanoma liver metastases which, after much discussion regarding improvementof the enrollment rate with FDA, altered the trial protocol design to become a non-randomized, single-arm study with a different primary endpoint, thusinvalidating the SPA agreement.Current Clinical Development ProgramThe focus of our current clinical development program is to generate clinical data for CHEMOSAT and Melphalan/HDS in various disease states and validatethe safety profile of the current version of the product and treatment procedure. We believe that the improvements we have made to CHEMOSAT andMelphalan/HDS and to the PHP therapy have addressed the severe toxicity and procedure-related risks observed during the previous Phase 2 and 3 clinicaltrials. The clinical development program is also designed to support clinical adoption of and reimbursement for CHEMOSAT in Europe, and to supportregulatory approvals in various jurisdictions, including the United States.5The FOCUS Trial – NCT02678572Our amended Phase 3 trial now entitled “A Single-arm, Multi-Center, Open-Label Study to Evaluate the Efficacy, Safety and Pharmacokinetics ofMelphalan/HDS Treatment in Patients with Hepatic-Dominant Ocular Melanoma”, contemplates enrollment of a minimum of 80 patients with ocularmelanoma metastatic to the liver. The rarity of ocular melanoma, absence of crossover to the experimental trial arm, and the availability of PHP® Therapy in acommercial setting in Europe all combined to inhibit enrollment in this trial under its previous protocol. Under the new protocol, the primary endpoint forthe amended FOCUS trial will be objective response rate. Secondary endpoints will include duration of response, disease control rate, overall survival andprogression-free survival. Additional exploratory outcome measures include time to objective response, hepatic progression-free survival, hepatic objectiveresponse, and quality of life, safety and other pharmacokinetic measures. Inclusion and exclusion criteria remain unchanged. Patients previously enrolled inthe Melphalan/HDS arm of the trial under the previous protocol will continue to be treated and evaluated as part of the amended trial. In addition, Delcathintends to provide to the FDA interpretable comparative survival data, even if the study is underpowered to demonstrate a statistically positive overallsurvival effect. We believe trial enrollment will complete in the second half of 2019 and will provide evidence to support an application for approval. The Phase 3 clinical trial, as amended, invalidates the prior SPA agreement for the randomized version of the trial design. Full details of the registration Phase3 clinical trial are available at www.clinicaltrials.gov. In December 2018, we announced that that the independent Data Safety Monitoring Board (“DSMB”) for this trial completed its fourth review of safety datafor treated patients in the trial under the prior protocol. The DSMB again recommended that the study continue without modification. The trial amendmentdoes not change safety related procedures or invalidate prior DSMB evaluations.The FOCUS Trial is being conducted at leading cancer centers in the United States and Europe. The Moffitt Cancer Center in Tampa, Florida was activated asa participating center in January, 2016, with Jonathan Zager, M.D., FACS, Professor of Surgery in the Cutaneous Oncology and Sarcoma Departments and aSenior Member at Moffitt Cancer Center, serving as the trial's lead investigator. In October 2018, we announced continued rollout of the amended protocol toparticipating centers in the United States and are working with approximately 30 leading cancer centers in the United States and Europe to participate in thetrial.Melphalan hydrochloride has been granted orphan drug status by the FDA for the treatment of patients with ocular melanoma. Based on the strength of theefficacy data in this disease observed in our prior Phase 3 clinical trial and the reports of an improved safety profile observed in treatment experience inEurope, we are confident that this program can address the concerns raised by the FDA in its CRL.The ALIGN Trial- NCT03086993In April 2018, we announced the initiation of a new pivotal trial of Melphalan/HDS to treat patients with ICC titled “A Randomized, Controlled Study toCompare the Efficacy, Safety and Pharmacokinetics of Melphalan/HDS Treatment Given Sequentially Following Cisplatin/Gemcitabine versusCisplatin/Gemcitabine (Standard of Care) in Patients with Intrahepatic Cholangiocarcinoma” (the “ALIGN Trial”). The ALIGN Trial is being conductedunder an SPA announced in March 2017. Under the terms of the SPA, the ALIGN Trial will enroll approximately 295 ICC patients at approximately 40clinical sites in the United States and Europe. The primary endpoint is overall survival and secondary and exploratory endpoints include safety, progression-free survival, overall response rate and quality-of-life measures. The SPA agreement for the ALIGN Trial indicates that the pivotal trial design adequatelyaddresses objectives that, if met, would support regulatory requirements for approval of Melphalan/HDS in ICC. However, final determinations for marketingapplication approval are made by FDA after a complete review of a marketing application and are based on the totality of data in the application.In October 2018, we announced the enrollment of the first patient in the ALIGN Trial at The University of Tennessee Health Science Center, MethodistUniversity Hospital, and West Cancer Center in Memphis, Tennessee. 6Phase 2 Hepatocellular Carcinoma (HCC) & Intrahepatic Cholangiocarcinoma (ICC) ProgramIn 2014, we initiated a Phase 2 clinical trial program in Europe and the United States, with the goal of obtaining an efficacy and safety signal forMelphalan/HDS in the treatment of HCC and ICC. Due to differences in treatment practice patterns between Europe and the United States, we establishedseparate European and United States trial protocols for the HCC Phase 2 program with different inclusion and exclusion patient selection criteria:Protocol 201 NCT02406508 – Conducted in the United States, this trial was intended to assess the safety and efficacy of Melphalan/HDS followed bysorafenib. This trial was terminated earlier than planned and is now closed to enrollment.Protocol 202 NCT02415036 – Conducted in Europe, this trial was intended to assess the safety and efficacy of Melphalan/HDS without sorafenib.The trial will also evaluate overall response rate via mRECIST criteria, progression free survival, characterize the systemic exposure of melphalan andassess patient quality of life. This trial was terminated earlier than planned and is now closed to enrollment.ICC Cohort – In 2015 we expanded Protocol 202 to include a cohort of patients with ICC. The trial for this cohort was conducted at the same centersparticipating in the Phase 2 HCC trial. This trial has completed enrollment and data from this study are being analyzed and will be disseminatedpublicly by the investigators.ICC Retrospective Data Collection - The original goal to obtain an efficacy signal for the Phase 2 ICC cohort has been satisfied by the result ofmulticenter patient outcomes identified in the retrospective data collection of our commercial ICC cases conducted by our European investigators.These promising outcomes and observations were discussed with Key Opinion Leaders at a Delcath-organized medical advisory panel meeting and ledto the agreement that PHP therapy does “demonstrate an efficacy signal in ICC and is worthy of full clinical investigation.” Data from thisretrospective data collection provided important scientific support during our negotiations with the FDA for our SPA for the Pivotal ICC Trial. Datafor the retrospective data collection were published in European Radiology in a paper entitled “Percutaneous Hepatic Perfusion (Chemosaturation)with Melphalan in Patients with Intrahepatic Cholangiocarcinoma: European Multicentre Study on Safety, Short Term Effects and Survival”. Detailsof the findings from this study are discussed below under “Recent Data Presentations”.With the objectives of identifying an efficacy signal worthy of further clinical investigation now met, we have terminated enrollment in our Phase 2 programand have closed the Phase 2 trials in order to focus available resources on the FOCUS Trial and the ALIGN Trial.Clinical trials are long in duration, expensive and highly uncertain processes and failure can unexpectedly occur at any stage of clinical development. Thestart or end of a clinical trial is often delayed or halted due to changing regulatory requirements, manufacturing challenges, required clinical trialadministrative actions, slower than anticipated patient enrollment, changing standards of care, availability or prevalence of use of a comparator treatment orrequired prior therapy. A substantial portion of the Company’s operating expenses consist of research and development expenses incurred in connection withits clinical trials. See the Company’s consolidated financial statements provided under Item 8 of this Annual Report on Form 10-K.European Investigator Initiated TrialsIn addition to the clinical trials in our clinical development program, we are supporting data generation in other areas. We are currently conducting oneInvestigator Initiated Trial in colorectal carcinoma metastatic to the liver (“mCRC”) at Leiden University Medical Center in the Netherlands. We continue toevaluate other Investigatory Initiated Trials as suitable opportunities present themselves in Europe. We believe Investigatory Initiated Trials will serve tobuild clinical experience at key cancer centers and will help support efforts to obtain full reimbursement in Europe.European Clinical Data GenerationOn April 2, 2015, we announced the activation of our prospective patient registry in Europe to collect uniform essential patient safety, efficacy, and Qualityof Life information using observational study methods. This registry will gather data in multiple tumor types from commercial cases performed byparticipating cancer centers in Europe. A prospective registry is an organized system that uses observational study methods to collect defined clinical dataunder normal conditions of use to evaluate specified outcomes for a population defined by a particular disease, condition, or exposure. Registry data arenon-randomized, and as such cannot be used for approval or promotional claims. However, we believe the patient registry will provide a valuable supportivedata repository from a commercial setting that can be used to identify further clinical development opportunities, support clinical adoption andreimbursement in Europe.7 Recent Data PresentationsIn April 2019 we announced that results from a prospective Phase 2 study conducted by Leiden University Medical Center (“LUMC”) in the Netherlands onthe use of CHEMOSAT to treat patients with metastatic ocular melanoma with liver metastases were presented at the European Conference on InterventionalOncology annual meeting.The LUMC study entitled “Percutaneous hepatic perfusion with melphalan in patients with unresectable liver metastases from ocular melanoma using theDelcath System's second-generation hemofiltration system: a prospective phase II study” was conducted by a team led and presented by Dr. Mark Burgmans.The study evaluated 35 patients with unresectable liver metastases from ocular melanoma treated with CHEMOSAT between February 2014 and June 2017.The 35 patients underwent a total of 72 PHP therapy treatments, and tumor response was evaluable in 32 patients. Primary endpoints were overall response,overall survival, and progression free survival. Secondary measures included safety measures and hematologic toxicity.Results of the study showed that one patient had a complete response and 22 had partial response, for a combined overall response rate of 74.1%. Overallsurvival was 20.3 months and mean progression free survival was 8.1 months.Safety analysis showed a total of 14 serious adverse events were recorded. The hematologic toxicities were in a majority of the cases self-limiting andmanageable. Investigators concluded that “PHP Therapy with the Generation Two version of CHEMOSAT is an effective and safe treatment for patients withhepatic metastases from ocular melanoma.”The presentation at the European Conference, an Interventional Oncology updated data previously presented at the 2018 annual conference of theCardiovascular and Interventional Radiological Society of Europe.In October 2018, we announced that results of a multicenter retrospective analysis of outcomes in patients with ICC treated with CHEMOSAT were publishedin the journal European Radiology. The study is the first analysis on the use of Delcath’s PHP therapy for the treatment of ICC. The retrospective analysis,“Percutaneous Hepatic Perfusion (Chemosaturation) with Melphalan in Patients with Intrahepatic Cholangiocarcinoma: European Multicentre Study onSafety, Short Term Effects and Survival” was conducted by investigators in Germany, Italy, Netherlands, Spain and France with Dr. Steffen Marquardt ofHannover Medical School serving as lead author. The study evaluated 15 patients with ICC who were selected for PHP therapy after failing prior therapies.The patients were treated at nine hospitals throughout Europe between 2012 and 2016. Treatment outcomes were assessed by imaging every three monthsfollowing PHP treatment.After the first PHP therapy treatment, one patient (7%) had a complete response (“CR”), two patients (13%) had a partial response (“PR”), and stable disease(“SD”) was observed in eight patients (53%). This equates to a control rate (CR+PR+SD) of 73%. The complete response patient was not retreated and is stillalive. Three patients (20%) progressed after the first treatment and one patient died prior to post-procedure imaging. Five of the patients with SD received asecond PHP therapy treatment, resulting in one PR (20%), three SD (60%), and one PD (20%). During the follow-up phase, two of the SD patients receivedadditional PHP therapy treatments. Median overall survival was 26.9 months from initial diagnosis and 7.6 months from first PHP treatment. One-year overallsurvival from first PHP was 40%. Median progression free survival (“PFS”) was 122 days, and median hepatic progression free survival (“hPFS”) was 131days.In their retrospective data collection, investigators stated that side-effects were potentially under-reported but were considered by the investigators to betolerable and comparable to other systemic and local therapies. Nevertheless, in the context of the patient selection, baseline characteristics and number ofPHP therapy treatments provided in this retrospective study, practitioners observed no adverse events of grades 3 or 4 severity during the PHP therapytreatment. Post-procedurally, significant hematological toxicity was observed in the form of anemia and thrombocytopenia 5-7 days after the PHP therapytreatment. Management with Granulocyte Colony Stimulating Factor was employed in some patients. These toxicities were considered consistent with thosetoxicities reported in the ABC 02 trial of systemic chemotherapy in this patient population. The ABC-02 trial was a randomized, controlled, phase 3 trial thatwas designed and developed by the ABC-02 Trial Management Group under the auspices of the Upper Gastrointestinal Cancer Clinical Studies Group of theUnited Kingdom National Cancer Research Institute. The study was conducted by investigators at 37 centers in the United Kingdom, and data were collectedand analyzed at the Cancer Research United Kingdom and University College London Cancer Trials Centre, London. In this trial, patients were randomlyassigned to receive cisplatin plus gemcitabine or gemcitabine alone for up to 24 weeks.Investigators concluded that PHP therapy provides “promising response rates in patients with ICC,” and that side-effects were tolerable and comparable toother treatment strategies.8The study entitled “Survival and Response of Patients with Metastatic Ocular Melanoma after Chemosaturation Percutaneous Hepatic Perfusion” wasconducted by M. Zeile, and A. Stang, et al of the Asklepios Barmbek Clinic in Hamburg, Germany. The study retrospectively evaluated response rates andoverall survival in 12 patients with ocular melanoma liver metastases after treatment with Delcath’s PHP therapy. Five patients had metastases confined to theliver, and seven had additional extra-hepatic metastases. A total of 30 PHP therapy treatments were performed in the sample, and patients received an averageof 2.5 treatments.The objective response rate was 58.3%, and the disease control rate was 91.7% (1 complete response, 6 partial responses, 4 stable disease, and 1 progressivedisease). Following the first PHP therapy treatment, progression free survival was 11.7 months and hPFS was 18.6 months. Median overall survival was 30.6months following the treatment. Of the cohort of 12 patients, three patients were judged to be candidates for surgery following treatment with PHP therapy.Median overall survival among these patients was 76.8 months, though investigators cautioned that statistical conclusions cannot be drawn from the smallsample size.In May 2018, we announced that PHP therapy was featured in a Video Learning Session presented at the Annual Meeting of the European Conference ofInterventional Oncology (“ECIO”). Dr. M.C. Burgmans of LUMC presented an overview of the PHP therapy, discussed the therapy’s developmental history,demonstrating how to perform the procedure, as well as outlining its potential in ocular melanoma liver metastases and intrahepatic cholangiocarcinoma, andhighlighting ongoing clinical research. In his presentation, Dr. Burgmans stated his belief that PHP therapy should be considered as first line therapy inocular melanoma liver metastases, an opinion informed by both our commercial experience in Europe and our prior research into this tumor type. LUMC isan experienced treatment center and has recently completed its 100th treatment using CHEMOSAT. We believe Dr. Burgmans’ comments reflect growingconfidence in PHP therapy’s role in treating ocular melanoma liver metastases.In January 2018, we announced the publication of a multi-center retrospective analysis of Delcath’s PHP therapy published in the peer-reviewed Journal ofSurgical Oncology. The study entitled “Percutaneous Hepatic Perfusion with Melphalan in Uveal Melanoma: A Safe and Effective Treatment Modality in anOrphan Disease”, was conducted by researchers from Moffitt Cancer Center (Moffitt) in Tampa, Florida and the University Hospital Southampton (UHS) inthe United Kingdom. The retrospective analysis of outcomes in 51 patients with liver metastases from ocular melanoma represents the largest data setcompilation on the use of PHP therapy in this tumor type outside of a clinical trial setting.Patients in the study were treated at the two centers between December 2008 and October 2016. Patients received up to four PHP therapy treatments at UHSand up to six PHP therapy treatments at Moffitt. All patients received at least one PHP therapy treatment, the median number of treatments per patient wastwo, and a total of 134 PHP therapy treatments were administered. Results showed that of the 51 treated patients, 22 (43.1%) showed a partial response, 3(5.9%) showed a complete response, and 17 (33.3%) had stable disease. The six-month overall and hepatic disease control rates were 64.7% and 70.6%respectively. Survival analysis showed median overall survival of 15.3 months at the time of data cut off. One year overall survival was 64.6%.Safety analysis showed that 19 patients (37.5%) had Grade 3 or 4 non-hematologic toxicity. Cardiovascular toxicity was seen in 17.6% of patients, a ratecomparable to the company’s prior Phase 3 study. Further to implementation of the Gen 2 filter along with prophylactic use of growth factors, severeneutropenia was seen in 16 (31.3%) patients as opposed to 60 (85.7%) patients in the prior Phase 3 trial. Most significantly, as compared to the prior Phase 3trial, there were no treatment related deaths. Researchers stated that PHP therapy “can be safely employed in appropriately selected ocular melanoma patientsin institutions with appropriate expertise.”The study authors further concluded that “results clearly demonstrate that PHP therapy appears to be an effective means of obtaining rapid intrahepaticdisease control and is a sensible option in patients with predominant liver disease.” Researchers reported that their results support the use of PHP therapy inan integrated approach to the management of metastatic ocular melanoma and looked to the Company’s Phase 3 FOCUS Trial to further quantify the benefitand optimize treatment strategies for these patients.Market Access and Commercial Clinical AdoptionEuropeDelcath’s marketing strategy in the European Economic Area (the “EEA”) includes establishing strategic alliances with partners that include license, supply,sales and marketing arrangements.In December 2018, Delcath entered into a definitive licensing agreement (the “medac License”) for CHEMOSAT commercialization in Europe with medacGesellschaft für klinische Spezialpräparate mbH (“medac”), a privately held, multi-national pharmaceutical company based in Wedel, Germany. Founded in1970, medac specializes in the treatment and diagnosis of oncological, urological and autoimmune diseases. medac has offices globally, worldwide partneragreements in over 90 countries, and approximately 1,200 employees.9Under the terms of the medac License, Delcath’s European subsidiary, Delcath Systems, Ltd., exclusively licenses to medac the right to sell and marketCHEMOSAT in all member states of the European Union, Norway, Liechtenstein, Switzerland, and the United Kingdom. The medac License provides forpayment by medac to Delcath in a combination of upfront and success-based milestone payments as well as a fixed transfer price per unit of CHEMOSAT andspecified royalties. We believe that medac is a well-suited partner to help advance CHEMOSAT commercialization in the European Union and neighboringcountries. medac has offices throughout Europe, a well-established network among oncology key opinion leaders, and organizational scale necessary to helpestablish CHEMOSAT in the European treatment landscape for cancers of the liver.Since launching CHEMOSAT in Europe, over 600 commercial treatments have been performed at over 25 leading European cancer centers. Physicians inEurope have used CHEMOSAT to treat patients with a variety of cancers in the liver, primarily ocular melanoma liver metastases, and other tumor types,including cutaneous melanoma, hepatocellular carcinoma, cholangiocarcinoma, and liver metastases from colorectal cancer, breast, pancreatic andneuroendocrine. Patients treated in Europe have received up to eight CHEMOSAT treatments, and the average number of repeat treatments performed on aper patient basis has consistently increased. In 2018, Leiden University Medical Centre in the Netherlands surpassed 100 treatments with CHEMOSAT sinceinitiating procedures, the third European center to achieve the milestone.In March 2018, we announced that we entered into a commercial supply agreement with Tillomed Laboratories, an EMCURE company, for the procurementof melphalan for use with CHEMOSAT in Europe. Tillomed Laboratories specializes in the licensing, marketing and supply of generic and brandedpharmaceutical products to hospitals, wholesalers and pharmacists nationwide, in a cost-effective and timely manner. We believe this agreement establishesfirm control over our melphalan supply chain in Europe, and over time will provide economies of scale. The supply agreement with Tillomed also givesDelcath access to the drug dossier for melphalan hydrochloride, an important asset that potentially provides a drug approval pathway with the EuropeanMedicines Agency (“EMA”) in Europe. As many of the cancers of the liver we are treating with CHEMOSAT are orphan indications in the United States, aMarketing Authorization Application approval by the EMA for CHEMOSAT could potentially provide added market protection for these indications inEurope.European ReimbursementA critical driver of utilization growth for CHEMOSAT in Europe is the expansion of reimbursement mechanisms for the procedure in our priority markets. InEurope, there is no centralized pan-European medical device reimbursement body. Reimbursement is administered on a regional and national basis. Medicaldevices are typically reimbursed under Diagnosis Related Groups (“DRG”) as part of a procedure. Prior to obtaining permanent DRG reimbursement codes, incertain jurisdictions, we are actively seeking interim reimbursement from existing mechanisms that include specific interim reimbursement schemes, newtechnology payment programs as well as existing DRG codes. In most EU countries, the government provides healthcare and controls reimbursement levels.Since the EU has no jurisdiction over patient reimbursement or pricing matters in its member states, the methodologies for determining reimbursement ratesand the actual rates may vary by country.Effective with the execution of our license agreement with medac, medac will provide support for reimbursement applications in the European marketscovered by our agreement.GermanyIn October 2015, we announced that the Institut fϋr das Entgeltsystem im Krankenhaus (“InEk”), the German federal reimbursement agency, established anational Zusatzentgeld (“ZE”) reimbursement code for procedures performed with CHEMOSAT in Germany. The ZE diagnostic-related group code is anational reimbursement code that augments existing DRG codes until a specific new DRG code can be created, and will replace the previous NeueUntersuchungs und Behandlungsmethoden (“NUB”) procedure that required patients in Germany to apply individually for reimbursement of theirCHEMOSAT treatment. With the establishment of a ZE code for CHEMOSAT, the procedure is now permanently represented in the DRG catalog inGermany. Coverage levels under this process are negotiated between hospitals in Germany and regional sickness funds, with coverage levels renegotiatedannually. United KingdomIn May 2014, National Institute for Health and Care Clinical Excellence (“NICE”), a non-departmental public body that provides guidance and advice toimprove health and social care in the UK, completed a clinical review of CHEMOSAT. The NICE review indicated that as the current body of evidence on thesafety and efficacy of PHP therapy with CHEMOSAT for primary or metastatic liver cancer is limited, the procedure should be performed within the contextof research by clinicians with specific training in its use and techniques.10Medac will continue consultations begun by Delcath with the Interventional Procedures Advisory Committee at NICE in England, providing recent clinicalevidence with a view to moving existing Interventional Procedural Guidance from a research recommendation to specialist recommendation. This wouldenable greater scope for commercialization access to the therapy because it would allow more use by National Health Service (“NHS”) clinicians of thetherapy. It might also pave the way for a full Medical Technology Assessment as a way towards longer term reimbursement within the NHS. In the short term, public patients will continue to be treated in the UK through clinical trials. Private patients will continue to be treated through theestablished private treatment pathway such as private insurance coverage or self-pay.NetherlandsIn the Netherlands CHEMOSAT has been performed at the Netherlands Cancer Institute in 2013 and at Leiden University Medical Centre since 2014. In June2017, the Medical Oncology National Treatment Guidelines for Uveal Melanoma were updated and now include recommendations to consider CHEMOSATin the treatment of liver metastases. We are hopeful that inclusion in the national guidelines and the support of clinicians treating patients with CHEMOSATwill eventually support an application for reimbursement in this market.SpainIn Spain, the Company has determined that there was no benefit to continuing with its relationship with a local sales agency. The Spanish market will now beserved by medac. TurkeyIn April 2016, we announced the activation of the Hacettepe University Clinic in Ankara, Turkey as a CHEMOSAT treatment center. Hacettepe UniversityClinic successfully completed its first CHEMOSAT treatments in March 2016, and the center represents the first CHEMOSAT commercial location to beactivated outside of the European Union. In 2018, a second center has been activated in Turkey. We believe that these centers can serve as important locationfor CHEMOSAT treatment to patients in Turkey and throughout the region. The Company is represented in Turkey through a distribution partner.Regulatory StatusOur products are subject to extensive and rigorous government regulation by foreign regulatory agencies and the FDA. Foreign regulatory agencies, the FDAand comparable regulatory agencies in state and local jurisdictions impose extensive requirements upon the clinical development, pre-market clearance andapproval, manufacturing, labeling, marketing, advertising and promotion, pricing, storage and distribution of pharmaceutical and medical device products.Failure to comply with applicable foreign regulatory agency or FDA requirements may result in Warning Letters, fines, civil or criminal penalties, suspensionor delays in clinical development, recall or seizure of products, partial or total suspension of production or withdrawal of a product from the market.United States Regulatory EnvironmentIn the United States, the FDA regulates drug and device products under the FDCA, and its implementing regulations. Melphalan/HDS is subject to regulationas a combination product, which means it is composed of both a drug product and a device product. If marketed individually, each component wouldtherefore be subject to different regulatory pathways and reviewed by different centers within the FDA. A combination product, however, is assigned to acenter that will have primary jurisdiction over its pre-market review and regulation based on a determination of its primary mode of action, which is thesingle mode of action that provides the most important therapeutic action. In the case of the Melphalan/HDS, the primary mode of action is attributable to thedrug component of the product, which means that the Center for Drug Evaluation and Research, has primary jurisdiction over its pre-market development andreview.The process required by the FDA before drug product candidates may be marketed in the United States generally involves the following: •submission to the FDA of an IND, which must become effective before human clinical trials may begin and must be updated annually; •completion of extensive preclinical laboratory tests and preclinical animal studies, all performed in accordance with the FDA’s Good LaboratoryPractice, or GLP, regulations;11 •performance of adequate and well-controlled human clinical trials to establish the safety and efficacy of the product candidate for each proposedindication; •submission to the FDA of an NDA after completion of all pivotal clinical trials; •a determination by the FDA within 60 days of its receipt of an NDA to file the NDA for review; •satisfactory completion of an FDA pre-approval inspection of the manufacturing facilities at which the product is produced and tested to assesscompliance with current good manufacturing practice, or cGMP, regulations; and •FDA review and approval of an NDA prior to any commercial marketing or sale of the drug in the United States.The development and approval process requires substantial time, effort and financial resources, and we cannot be certain that any approvals for our productwill be granted on a timely basis, if at all.The results of preclinical tests (which include laboratory evaluation as well as GLP studies to evaluate toxicity in animals) for a particular product candidate,together with related manufacturing information and analytical data, are submitted as part of an Investigational New Drug Application (IND) to the FDA. TheIND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises concerns or questions about theconduct of the proposed clinical trial, including concerns that human research subjects will be exposed to unreasonable health risks. In such a case, the INDsponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. IND submissions may not result in FDA authorization tocommence a clinical trial. A separate submission to an existing IND must also be made for each successive clinical trial conducted during productdevelopment. Further, an independent institutional review board, or IRB, for each medical center proposing to conduct the clinical trial must review andapprove the plan for any clinical trial before it commences at that center and it must monitor the study until completed. The FDA, the IRB or the sponsor maysuspend a clinical trial at any time on various grounds, including a finding that the subjects or patients are being exposed to an unacceptable health risk.Clinical testing also must satisfy extensive good clinical practice regulations and regulations for informed consent and privacy of individually identifiableinformation. Similar requirements to the United States IND are required in the European Economic Area and other jurisdictions in which we may conductclinical trials.Clinical TrialsFor purposes of NDA submission and approval, clinical trials are typically conducted in the following sequential phases, which may overlap: •Phase 1 Clinical Trials. Studies are initially conducted in a limited population to test the product candidate for safety, dose tolerance, absorption,distribution, metabolism and excretion, typically in healthy humans, but in some cases in patients. •Phase 2 Clinical Trials. Studies are generally conducted in a limited patient population to identify possible adverse effects and safety risks,explore the initial efficacy of the product for specific targeted indications and to determine dose range or pharmacodynamics. Multiple Phase 2clinical trials may be conducted by the sponsor to obtain information prior to beginning larger and more expensive Phase 3 clinical trials. •Phase 3 Clinical Trials. These are commonly referred to as pivotal studies. When Phase 2 evaluations demonstrate that a dose range of theproduct is effective and has an acceptable safety profile, Phase 3 clinical trials are undertaken in large patient populations to further evaluatedosage, provide substantial evidence of clinical efficacy and further test for safety in an expanded and diverse patient population at multiple,geographically dispersed clinical trial centers. •Phase 4 Clinical Trials. The FDA may approve an NDA for a product candidate, but require that the sponsor conduct additional clinical trials tofurther assess the drug after NDA approval under a post-approval commitment. In addition, a sponsor may decide to conduct additional clinicaltrials after the FDA has approved an NDA. Post-approval trials are typically referred to as Phase 4 clinical trials.12Sponsors of clinical trials may submit proposals for the design, execution, and analysis for their pivotal trials under an SPA. An SPA is an evaluation by theFDA of a protocol with the goal of reaching an agreement that the Phase 3 trial protocol design, clinical endpoints, and statistical analyses are acceptable tosupport regulatory approval of the drug product candidate with respect to effectiveness for the indication studied. Under an SPA, the FDA agrees to not lateralter its position with respect to adequacy of the design, execution or analyses of the clinical trial intended to form the primary basis of an effectiveness claimin an NDA, without the sponsor’s agreement, unless the FDA identifies a substantial scientific issue essential to determining the safety or efficacy of the drugafter testing begins.New Drug ApplicationsThe results of drug development, preclinical studies and clinical trials are submitted to the FDA as part of an NDA. NDAs also must contain extensivechemistry, manufacturing and control information. An NDA must be accompanied by a significant user fee, which may be waived in certain circumstances.Once the submission has been accepted for filing, the FDA’s goal is to review applications within ten months of submission or, if the application relates to anunmet medical need in a serious or life-threatening indication, six months from submission. The review process is often significantly extended by FDArequests for additional information or clarification. The FDA may refer the application to an advisory committee for review, evaluation and recommendationas to whether the application should be approved. For new oncology products, the FDA will often solicit an opinion from an ODAC, a panel of expertauthorities knowledgeable in the fields of general oncology, pediatric oncology, hematologic oncology, immunologic oncology, biostatistics, and otherrelated professions. The ODAC panel reviews and evaluates data concerning the safety and effectiveness of marketed and investigational human drugproducts for use in the treatment of cancer, and makes recommendations to the Commissioner of Food and Drugs. The FDA is not bound by therecommendation of an advisory committee. The FDA will deny approval of an NDA by issuing a Complete Response Letter (CRL) if the applicable statutorycriteria are not satisfied. A CRL may require additional clinical data and/or an additional pivotal Phase 3 clinical trial(s), and/or other significant, expensiveand time-consuming requirements related to clinical trials, preclinical studies or manufacturing. Data from clinical trials are not always conclusive and theFDA may interpret data differently than we or our collaborators interpret data. Approval may be contingent on a Risk Evaluation and Mitigation Strategy thatlimits the labeling, distribution or promotion of a drug product. Once issued, the FDA may withdraw product approval if ongoing regulatory requirements arenot met or if safety problems occur after the product reaches the market. In addition, the FDA may require testing, including Phase 4 clinical trials, andsurveillance programs to monitor the safety effects of approved products which have been commercialized, and the FDA has the power to prevent or limitfurther marketing of a product based on the results of these post-marketing programs or other information.There are three primary regulatory pathways for a New Drug Application under Section 505 of the FDCA: Section 505(b)(1), Section 505(b)(2) and Section505(j). A Section 505(b)(1) application is used for approval of a new drug (for clinical use) whose active ingredients have not been previously approved. ASection 505(b)(2) application is used for a new drug that relies on data not developed by the applicant. Section 505(b)(2) of the FDCA was enacted as part ofthe Drug Price Competition and Patent Term Restoration Act of 1984, also known as the Hatch-Waxman Act. This statutory provision permits the approval ofan NDA where at least some of the information required for approval comes from studies not conducted by or for the applicant and for which the applicant hasnot obtained a right of reference. The Hatch-Waxman Act permits the applicant to rely in part upon the FDA’s findings of safety and effectiveness forpreviously approved products. A Section 505(j) application, also known as an abbreviated NDA, is used for a generic version of a drug that has already beenapproved.Orphan Drug ExclusivitySome jurisdictions, including the United States, may designate drugs for relatively small patient populations as orphan drugs. Pursuant to the Orphan DrugAct, the FDA grants orphan drug designation to drugs intended to treat a rare disease or condition, which is generally a disease or condition that affects fewerthan 200,000 individuals in the United States. The orphan designation is granted for a combination of a drug entity and an indication and therefore it can begranted for an existing drug with a new (orphan) indication. Applications are made to the Office of Orphan Products Development at the FDA and a decisionor request for more information is usually rendered in about 60 days. NDAs for designated orphan drugs are exempt from user fees, obtain additional clinicalprotocol assistance, are eligible for tax credits up to 50% of research and development costs, and are granted a seven-year period of exclusivity uponapproval. Exclusivity begins on the date that the marketing application is approved by the FDA for the designated orphan drug and prevents FDA fromapproving the same drug for the same condition during this period of exclusivity, except in certain circumstances such as where the subsequent applicant candemonstrate clinical superiority to the originally approved orphan drug. However, orphan drug exclusivity does not prevent FDA from approving the samedrug for a different indication, or different drugs for the same indication.13The FDA has granted Delcath six orphan drug designations. In November 2008, the FDA granted Delcath two orphan drug designations for the drugmelphalan for the treatment of patients with cutaneous melanoma as well as patients with ocular melanoma. In May 2009, the FDA granted Delcath anadditional orphan drug designation of the drug melphalan for the treatment of patients with neuroendocrine tumors. In August 2009, the FDA grantedDelcath an orphan drug designation of the drug doxorubicin for the treatment of patients with primary liver cancer. In October 2013, the FDA granted Delcathan orphan drug designation of the drug melphalan for the treatment of HCC. In July 2015, the FDA granted Delcath an orphan drug designation of the drugmelphalan for the treatment of cholangiocarcinoma, which includes ICC.The granting of orphan drug designations does not mean that the FDA has approved a new drug. Companies must still pursue the rigorous development andapproval process that requires substantial time, effort and financial resources, and we cannot be certain that any approvals for our product will be granted atall or on a timely basis.Other Regulatory RequirementsProducts manufactured or distributed pursuant to FDA approvals are subject to continuing regulation by the FDA, including recordkeeping, annual productquality review and reporting requirements. Adverse event experience with the product must be reported to the FDA in a timely fashion andpharmacovigilance programs to proactively look for these adverse events are mandated by the FDA. Drug manufacturers and their subcontractors are requiredto register their establishments with the FDA and certain state agencies, and are subject to periodic unannounced inspections by the FDA and certain stateagencies for compliance with ongoing regulatory requirements, including cGMPs, which impose certain procedural and documentation requirements upon usand our third-party manufacturers. Following such inspections, the FDA may issue notices on Form 483 and Untitled Letters or Warning Letters that couldcause us or our third-party manufacturers to modify certain activities. A Form 483 Notice, if issued at the conclusion of an FDA inspection, can list conditionsthe FDA investigators believe may have violated cGMP or other FDA regulations or guidelines. In addition to Form 483 Notices and Untitled Letters orWarning Letters, failure to comply with the statutory and regulatory requirements can subject a manufacturer to possible legal or regulatory action, such assuspension of manufacturing, seizure of product, injunctive action recalls of products from the market, withdrawal of any potential approvals of a product, orcivil or criminal penalties.The FDA closely regulates the post-approval marketing and promotion of drugs, including standards and regulations for direct-to-consumer advertising,dissemination of off-label information, industry-sponsored scientific and educational activities and promotional activities involving the Internet. Drugs maybe marketed only for the approved indications and in accordance with the provisions of the approved labeling. Further, if there are any modifications to thedrug, including changes in indications, labeling, or manufacturing processes or facilities, we may be required to submit and obtain FDA approval of a new orsupplemental NDA, which may require us to develop additional data or conduct additional preclinical studies and clinical trials. Failure to comply with theserequirements can result in adverse publicity, Warning Letters, corrective advertising and potential civil and criminal penalties.Physicians may prescribe legally available products for uses that are not described in the product’s labeling and that differ from those tested by us andapproved by the FDA. Such off-label uses are common across medical specialties, in particular in oncology. Physicians may believe that such off-label usesare the best treatment for many patients in varied circumstances. The FDA does not regulate the behavior of physicians in their choice of treatments. The FDAdoes, however, impose stringent restrictions on manufacturers’ communications regarding off-label use.European Regulatory EnvironmentIn the EEA, CHEMOSAT is subject to regulation as a medical device. The EEA is composed of the 27 Member States of the EU plus Norway, Iceland andLiechtenstein. Under the EU Medical Devices Directive (Directive No 93/42/ECC of 14 June 1993, as last amended), drug delivery products such as theCHEMOSAT system is governed by the EU laws on pharmaceutical products only if they are (i) placed on the market in such a way that the device and thepharmaceutical product form a single integral unit which is intended exclusively for use in the given combination, and (ii) the product is not reusable. Insuch cases, the drug delivery product is governed by the EU Code on Medicinal Products for Human Use (Directive 2001/83/EC, as last amended), while theessential requirements of the EU Medical Devices Directive apply to the safety and performance-related device features of the product. Because we do notintend to place CHEMOSAT on the EEA market as a single integral unit with melphalan, the product is governed solely by the EU Medical DevicesDirective, while the separately marketed drug is governed by the EU Code relating to Medicinal Products for Human Use and other EU legislation applicableto drugs for human use.14Before we may commercialize a medical device in the EEA, we must comply with the essential requirements of the EU Medical Devices Directive.Compliance with these requirements entitles a manufacturer to affix a CE conformity mark, without which the products cannot be commercialized in theEEA. To demonstrate compliance with the essential requirements and obtain the right to affix the CE conformity mark, medical device manufacturers mustundergo a conformity assessment procedure, which varies according to the type of medical device and its classification. In April 2011, we obtainedauthorization to affix a CE Mark for the Generation One CHEMOSAT system and began European commercialization with this version of the CHEMOSATsystem in early 2012. In April 2012, the Company obtained authorization to affix a CE Mark for the Generation Two version of CHEMOSAT, and since thistime all procedures in Europe have been performed with this version of the system.The Medical Devices Directive establishes a classification system placing devices into Class I, IIa, IIb, or III, depending on the risks and characteristics of themedical device. For certain types of low risk medical devices (i.e., Class I devices which are non-sterile and do not have a measuring function), themanufacturer may issue an EC Declaration of Conformity based on a self-assessment of the conformity of its products with the essential requirements of theEU Medical Devices Directives. Other devices are subject to a conformity assessment procedure requiring the intervention of a Notified Body, which is anorganization designated by a Member State of the EEA to conduct conformity assessments.CHEMOSAT is regulated as a Class IIb medical device. As a Class IIb medical device, the Notified Body is not required to carry out an examination of theproduct’s design dossier as part of its conformity assessment prior to commercialization. The Company must continue to comply with the essentialrequirements of the EU Medical Devices Directive (Directive 93/42 EC) and is subject to a conformity assessment procedure requiring the intervention of aNotified Body. The conformity assessment procedure for Class IIb medical devices requires the manufacturer to apply for the assessment of its quality systemfor the design, manufacture and inspection of its medical devices by a Notified Body. The Notified Body will audit the system to determine whether itconforms to the provisions of the Medical Devices Directive. If the Notified Body’s assessment is favorable it will issue a Full Quality Assurance Certificate,which enables the manufacturer to draw a Declaration of Conformity and affix the CE mark to the medical devices covered by the assessment. Thereafter, theNotified Body will carry out periodic audits to ensure that the approved quality system is applied by the manufacturer.A manufacturer without a registered place of business in a Member State of the EU which places a medical device on the market under its own name mustdesignate an Authorized Representative established in the European Union who can act before, and be addressed by, the Competent Authorities on themanufacturer’s behalf with regard to the manufacturer’s obligations under the EU Medical Devices Directive. We appointed such a representative prior toestablishing our infrastructure in the EEA. With the Delcath Systems Ltd. infrastructure now firmly in place, the Authorized Representative responsibilitieshave been formally transferred internally and there is no longer a need for a third party representative.In the EEA, we must also comply with the Medical Device Vigilance System, which is designed to improve the protection of health and safety of patients,users and others by reducing the likelihood of recurrence of incidents related to the use of a medical device. Under this system, incidents are defined as anymalfunction or deterioration in the characteristics and/or performance of a device, as well as any inadequacy in the labeling or the instructions for use which,directly or indirectly, might lead to or might have led to the death of a patient, or user or of other persons or to a serious deterioration in their state of health.When a medical device is suspected to be a contributory cause of an incident, its manufacturer or authorized representative in the EU must report it to theCompetent Authority of the Member State where the incident occurred. Incidents are generally investigated by the manufacturer. The manufacturer’sinvestigation is monitored by the Competent Authority, which may intervene, or initiate an independent investigation if considered appropriate. Aninvestigation may conclude in the adoption of a Field Safety Corrective Action (“FSCA”). An FSCA is an action taken by a manufacturer to reduce a risk ofdeath or serious deterioration in the state of health associated with the use of a medical device that is already placed on the market. An FSCA may includedevice recall, modification exchange and destruction. FSCAs must be notified by the manufacturer or its authorized representative to its customers and/or theend users of the medical device via a Field Safety Notice.In the EEA, the off-label promotion of a pharmaceutical product is strictly prohibited under the EU Community Code on Medicinal Products, which providesthat all information provided within the context of the promotion of a drug must comply with the information contained in its approved summary of productcharacteristics. Our product instructions and indication reference the chemotherapeutic agent melphalan hydrochloride. However, no melphalan labels in theEEA reference our product, and the labels vary from country to country with respect to the approved indication of the drug and its mode of administration. Inthe exercise of their professional judgment in the practice of medicine, physicians are generally allowed, under certain conditions, to use or prescribe aproduct in ways not approved by regulatory authorities. Physicians intending to use our device must obtain melphalan separately for use with theCHEMOSAT system and must use melphalan independently at their discretion.15In the EEA, the advertising and promotion of our products is also subject to EEA Member States laws implementing the EU Medical Devices Directive,Directive 2006/114/EC concerning misleading and comparative advertising and Directive 2005/29/EC on unfair commercial practices, as well as other EEAMember State legislation governing the advertising and promotion of medical devices. These laws may further limit or restrict the advertising and promotionof our products to the general public and may also impose limitations on our promotional activities with health care professionals.Failure to comply with the EEA Member State laws implementing the Medical Devices Directive, with the EU and EEA Member State laws on the promotionof medicinal products or with other applicable regulatory requirements can result in enforcement action by the EEA Member State authorities, which mayinclude any of the following: fines, imprisonment, orders forfeiting products or prohibiting or suspending their supply to the market, or requiring themanufacturer to issue public warnings, or to conduct a product recall.The European Commission recently reviewed the Medical Device Directive legislative framework and promulgated Regulation (the “EU”) 2017/745 of theEuropean Parliament and of the Council of 5 April 2017 on Medical Devices, Amending Directive 2001/83/EC, Regulation EC) No 178/2002 andRegulation (“EC”) No 1223/2009 and repealing Council Directives 90/385/EEC and 93/42/EEC. This new Medical Device Regulation became effective onMay 25, 2017, marking the start of a 3-year transition period for manufacturers selling medical device in Europe to comply with the new medical deviceregulation which governs all facets of medical devices. The transition task is highly complex and touches every aspect of product development,manufacturing production, distribution and post marketing evaluation.Effectively addressing these changes will require a complete review of our device operations to determine what is necessary to comply. We do not believethe medical device regulatory changes will impact our business at this time, though implementation of the medical device legislation may adversely affectour business, financial condition and results of operations or restrict our operations.Other International RegulationsCHEMOSAT has received registrations in the following countries: Australia, New Zealand, Argentina, Taiwan, and Singapore. With limited resources and ourattention focused on European commercial and clinical adoption efforts, pursuing other markets at this time is not practical. We will continue to evaluatecommercial opportunities in these and other markets when resources are available and at an appropriate time.Intellectual Property and Other RightsOur success depends in part on our ability to obtain patents and trademarks, maintain trade secret and know-how protection, enforce our proprietary rightsagainst infringers, and operate without infringing on the proprietary rights of third parties. Because of the length of time and expense associated withdeveloping new products and bringing them through the regulatory approval process, the health care industry places considerable emphasis on obtainingpatent protection and maintaining trade secret protection for new technologies, products, processes, know-how, and methods. The Company currently holdsrights in six United States utility patents, one United States design patent, three pending United States utility patent applications, four issued foreigncounterpart utility patents (including a European patent directed to our filter apparatus that has been validated in eight European countries and a Europeanpatent directed to our filter media apparatus), six issued foreign counterpart design patents, and two pending foreign counterpart patent applications. InOctober 2018 and February 2019 patents directed to our chemotherapy filtration system and a method of using our filter and frame apparatus were issued bythe United States Patent and Trademark Office. A Notice of Allowance was obtained from the United States Patent and Trademark Office for the patentapplication entitled “Apparatus For Removing Chemotherapy Compounds from Blood” with allowed claims to a kit of parts capable of being assembled fordelivering a small molecule chemotherapeutic agent to a subject. The allowed claims are directed to CHEMOSAT. A Hong Kong patent directed to our Filterand Frame Apparatus was issued in March of 2018. A European patent was granted for our chemotherapy filtration system in November 2018 and a Europeanpatent application directed to a method of using our filter and frame apparatus was granted in April 2019 by the European Patent Office.When appropriate, the Company actively pursues protection of our proprietary products, technologies, processes, and methods by filing United States andinternational patent and trademark applications. We seek to pursue additional patent protection for technology invented through research and development,manufacturing, and clinical use of CHEMOSAT and Melphalan/HDS that will enable us to expand our patent portfolio around advances to our currentsystems, technology, and methods for our current applications as well as beyond the treatment of cancers in the liver.There can be no assurance that the pending patent applications will result in the issuance of patents, that patents issued to or licensed by us will not bechallenged or circumvented by competitors, or that these patents will be found to be valid or sufficiently broad to protect our technology or provide us with acompetitive advantage.16To maintain our proprietary position, we also rely on trade secrets and proprietary technological experience to protect proprietary manufacturing processes,technology, and know-how relating to our business. We rely, in part, on confidentiality agreements with our marketing partners, employees, advisors,vendors and consultants to protect our trade secrets and proprietary technological expertise. In addition, we also seek to maintain our trade secrets throughmaintenance of the physical security of the premises where our trade secrets are located. There can be no assurance that these agreements will not bebreached, that we will have adequate remedies for any breach, that others will not independently develop equivalent proprietary information or that thirdparties will not otherwise gain access to our trade secrets and proprietary knowledge.In certain circumstances, United States patent law allows for the extension of a patent’s duration for a period of up to five years after FDA approval. TheCompany intends to seek extension for one of our patents after FDA approval if it has not expired prior to the date of approval. In addition to our proprietaryprotections, the FDA has granted Delcath five orphan drug designations that provide us a seven-year period of exclusive marketing beginning on the datethat our NDA is approved by the FDA for the designated orphan drug. While the exclusivity only applies to the indication for which the drug has beenapproved, the Company believes that it will provide us with added protection once commercialization of an orphan drug designated product begins.There has been and continues to be substantial litigation regarding patent and other intellectual property rights in the pharmaceutical and medical deviceareas. If a third party asserts a claim against Delcath, the Company may be forced to expend significant time and money defending such actions and anadverse determination in any patent litigation could subject us to significant liabilities to third parties, require us to redesign our product, require us to seeklicenses from third parties, and, if licenses are not available, prevent us from manufacturing, selling or using our system. Additionally, Delcath plans toenforce its intellectual property rights vigorously and may find it necessary to initiate litigation to enforce our patent rights or to protect our trade secrets orknow-how. Patent litigation can be costly and time consuming and there can be no assurance that the outcome will be favorable to us. Patent No. TitleIssuanceDateOwned or LicensedExpirationDate 7,022,097 Method For Treating Glandular Diseases and Malignancies4/4/2006Owned6/24/2023 9,707,331 Apparatus For Removing Chemotherapy Compounds from Blood7/18/2017Owned9/17/2034 10,098,997 Appartus For Removing Chemotherapy Compounds from Blood10/16/2018Owned11/7/2032D708749 Dual Filter7/8/2014Owned7/8/2028 9,314,561 Filter and Frame Apparatus and Method of Use4/19/2016Owned2/7/2034 10,195,334 Filter and Frame Apparatus and Method of Use2/5/2019Owned1/16/2033 9,541,544 A Method of Selecting Chemotherapeutic Agents for an IsolatedOrgan or Regional Therapy1/10/2017Owned8/28/2033 Patent Applications in the United States Application No.Application TitleFiling DateOwned or Licensed16/127,008Apparatus For Removing Chemotherapy Compounds from Blood9/10/2018Owned16/231,486Filter and Frame Apparatus and Method of Use12/22/2018Owned15/346,239A Method of Selecting Chemotherapeutic Agents for an Isolated Organ orRegional Therapy11/8/2016Owned17 Foreign Patents Patent No. TitleIssuanceDateOwned or LicensedExpirationDate 84.098 Dual Filter (Argentina)6/29/2012Owned6/29/2027343454 Dual Filter (Australia)7/23/2012Owned6/25/2022146201 Dual Filter (Canada)5/15/2013Owned5/15/2023ZL 201230277905.5 Dual Filter (China)3/20/2013Owned6/22/20221333173 Dual Filter (Europe)6/27/2012Owned6/25/20371456186 Dual Filter Cartridge for Fluid Filtration (Japan)10/26/2012Owned10/26/20322797644 Filter and Frame Apparatus and Method of Use (Belgium)4/12/2017Owned12/29/20322797644 Filter and Frame Apparatus and Method of Use (France)4/12/2017Owned12/29/2032602012031191.6 Filter and Frame Apparatus and Method of Use (Germany)4/12/2017Owned12/29/20322797644 Filter and Frame Apparatus and Method of Use (Great Britain)4/12/2017Owned12/29/20322797644 Filter and Frame Apparatus and Method of Use (Ireland)4/12/2017Owned12/29/2032 502017000073120 Filter and Frame Apparatus and Method of Use (Italy)4/12/2017Owned12/29/20322797644 Filter and Frame Apparatus and Method of Use (Luxembourg)4/12/2017Owned12/29/20322797644 Filter and Frame Apparatus and Method of Use (Switzerland)4/12/2017Owned12/29/20322776086 Apparatus For Removing Chemotherapy Compounds from Blood(Europe)11/29/2018Owned11/7/20321203425 Filter and Frame Apparatus and Method of Use (Hong Kong)3/23/2018Owned12/29/20323238762 Filter and Frame Apparatus and Method of Use (Europe)4/17/2019Owned12/29/2032 Foreign Patent Applications Application No. TitleFiling DateOwned or Licensed 17,176,952.400 Apparatus For Removing Chemotherapy Compounds from Blood(Europe)11/7/2012Owned18164476.6 Filter and Frame Apparatus and Method of Use (Europe)12/29/2012Owned CompetitionThe healthcare industry is characterized by extensive research, rapid technological progress and significant competition from numerous healthcarecompanies and academic institutions. Competition in the cancer treatment industry is intense. We believe that the primary competitive factors for productsaddressing cancer include safety, efficacy, ease of use, reliability and price. We also believe that physician relationships, especially relationships with leadersin the medical and surgical oncology communities, are important competitive factors. We also believe that the current global economic conditions and newhealthcare reforms could put competitive pressure on us, including reduced selling prices and potential reimbursement rates, and overall procedure rates.Certain markets in Europe are experiencing the effects of continued economic weakness, which is affecting healthcare budgets and reimbursement.CHEMOSAT and Melphalan/HDS compete with all forms of liver cancer treatments, including surgery, systemic chemotherapy, focal therapies and palliativecare. In the disease states we are targeting there are also numerous clinical trials sponsored by third-parties, which can compete for potential patients in thenear term and may ultimately lead to new competitive therapies.For ocular melanoma liver metastases, there are currently no approved or effective treatment options, and patients are generally treated with a variety of focaland regional techniques. There are numerous companies developing and marketing devices for the performance of focal therapies, including Covidian,Biocompatibles, Merit, CeleNova, SirTex, AngioDynamics, and many others.For ICC, gemcitabine plus cisplatin remains the standard of care for the treatment of ICC in patients who are not candidates for surgery.18Several therapies have been recently approved for unresectable or metastatic cutaneous melanoma, which may encompass liver metastases. Dabrafenib(Tafinlar™, GlaxoSmithKline), is indicated as single agent for the treatment of patients with unresectable or metastatic melanoma with BRAF V600Emutation, and in combination with trametinib in unresectable or metastatic melanoma with BRAF V600E or V600K mutations. Furthermore, trametinib(MEKINIST™, GlaxoSmithKline) is indicated as single agent (in addition to in combination with dabrafinib) for treatment of patients with unresectable ormetastatic melanoma with BRAF V600E or V600K mutations. Previously approved melanoma therapies such as the biologic ipilimumab (Yervoy™, BristolMyers Squibb) and the B-RAF targeted drug vemurafenib (Zelboraf™, Genentech) may also make up the competitive landscape for the treatment ofmetastatic liver disease. Many of these treatments are approved in Europe and other global markets.Many of our competitors have substantially greater financial, technological, research and development, marketing and personnel resources. In addition, someof our competitors have considerable experience in conducting clinical trials, regulatory, manufacturing and commercialization capabilities. Our competitorsmay develop alternative treatment methods, or achieve earlier product development, in which case the likelihood of us achieving meaningful revenues orprofitability will be substantially reduced.Manufacturing and Quality AssuranceWe manufacture certain components of our product, including our proprietary filter media, and assemble and package CHEMOSAT and Melphalan/HDS atour facility in Queensbury, New York. We have established our European headquarters and packaging/labeling/distribution facility in Galway, Ireland wherewe intend to conduct final manufacturing and assembly in the future. We currently utilizes third-parties to manufacture some components of CHEMOSATand Melphalan/HDS. CHEMOSAT and Melphalan/HDS and their components must be manufactured and sterilized in accordance with approvedmanufacturing and pre-determined performance specifications. In addition, certain components will require sterilization prior to distribution and Delcathrelies on third-party vendors to perform the sterilization process.We are committed to providing high quality products to our customers. To honor this commitment, Delcath has implemented updated quality systemsthroughout our organization. Delcath’s quality system starts with the initial product specification and continues through the design of the product,component specification process and the manufacturing, sale and servicing of the product. These systems are designed to enable us to satisfy the variousinternational quality system regulations including those of the FDA with respect to products sold in the United States and those established by theInternational Standards Organization (“ISO”) with respect to products sold in the EEA. The Company is required to maintain ISO 13485 certification formedical devices to be sold in the EEA, which requires, among other items, an implemented quality system that applies to component quality, suppliercontrol, product design and manufacturing operations. On February 17, 2011, we announced that we had achieved ISO 13485 certification for ourQueensbury manufacturing facility. On December 28, 2011, we announced that we had achieved ISO 13485 certification for our Galway, Ireland facility. AllDelcath facilties are presently ISO 13485:2016 certified.EmployeesAs of December 31, 2018, Delcath had 43 full-time employees. None of our employees are represented by a union and we believe our employee relationshipsare good. 19Item 1A.Risk FactorsRisks Related to Our Business and Financial ConditionAn investment in our securities involve a high degree of risk. You should carefully consider the risks described below, together with the financial and otherinformation contained in this annual report, before you decide to purchase our securities. If any of the following risks actually occurs, our business,financial condition, results of operations, cash flows and prospects could be materially and adversely affected. If any of these risks actually occur, ourbusiness, financial condition and results of operations would suffer. In that event, the trading price of our common stock and the market value of oursecurities could decline, and you may lose all or part of your investment in our securities.Our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern.Our independent registered public accounting firm issued a report dated May XX, 2019 in connection with the audit of our financial statements as ofDecember 31, 2018, which included an explanatory paragraph describing the existence of conditions that raise substantial doubt about our ability tocontinue as a going concern. In addition, the notes to our financial statements for the year ended December 31, 2018 included in this Annual Report on Form10-K contain a disclosure describing the existence of conditions that raise substantial doubt about our ability to continue as a going concern. Our ability tocontinue as a going concern is dependent upon our ability to obtain substantial additional funding in connection with our continuing operations. Adequateadditional financing may not be available to us on acceptable terms, or at all. If the Company is unable to raise additional capital and/or enter into strategicalliances when needed or on attractive terms, Delcath would be forced to delay, reduce or eliminate its research and development programs or anycommercialization efforts. The Company’s consolidated financial statements do not include any adjustments that might result from the outcome of thisuncertainty. If the Company is not able to continue as a going concern, it is likely that holders of its common stock will lose all of their investment.Drug development is an inherently uncertain process with a high risk of failure at every stage of development. Delcath received a complete response letterfrom the FDA declining to approve our existing New Drug Application, or NDA, in its current form.Preclinical testing and clinical trials are long, expensive and highly uncertain processes and failure can unexpectedly occur at any stage of clinicaldevelopment. Drug development is very risky, and it takes several years to complete clinical trials. The start or end of a clinical trial is often delayed or halteddue to changing regulatory requirements, manufacturing challenges, required clinical trial administrative actions, slower than anticipated patient enrollment,changing standards of care, availability or prevalence of use of a comparator treatment or required prior therapy, clinical outcomes including insufficientefficacy, safety concerns, or our own financial constraints.In response to our NDA, which the Company submitted to FDA in August 2012 seeking approval for use of our Melphalan/HDS Kit for the treatment ofpatients with ocular melanoma of the liver, in September 2013, the FDA denied approval of the NDA in its current form and issued a complete response letter(CRL). A CRL is issued by the FDA when the review of an NDA is completed, and deficiencies remain that preclude approval of the NDA in its current form.The deficiencies in the CRL included, but were not limited to, a statement that Delcath must perform additional “well-controlled randomized trial(s) toestablish the safety and efficacy of Melphalan/HDS Kit using overall survival as the primary efficacy outcome measure” and which “demonstrates that theclinical benefits of Melphalan/HDS Kit outweigh its risks.” The FDA also required that the additional clinical trial(s) be conducted using the product theCompany intends to market. Prior to conducting additional clinical trials, Delcath must satisfy certain other requirements of the CRL, including, but notlimited to, product quality testing and human factors information.Delcath has initiated a pivotal Phase 3 trial in ocular melanoma metastases. Delcath had a SPA agreement with FDA for this study, which was initiallydesigned as a randomized trial with a primary endpoint of overall survival. We subsequently amended the protocol so that the trial is a non-randomized,single-arm study with a primary endpoint of objective response rate. Although the changes to the protocol invalidated the SPA agreement, FDA stated that itwould not object to Delcath conducting a study outside of a SPA agreement. However, Delcath will need to justify how the results of the study support afavorable risk-benefit assessment, particularly whether the response rate is sufficient to overcome the toxicity of Melphalan/HDS.20In addition, Delcath conducts and participates in numerous clinical trials with a variety of study designs, patient populations and trial endpoints to supportadditional indications for Melphalan/HDS and HDS with other drug therapies. In 2014, Delcath initiated a Phase 2 clinical trial with Melphalan/HDS forhepatocellular carcinoma (“HCC”) in both the United States and Europe. In 2015, the Phase 2 clinical trial for HCC was expanded to include a cohort ofpatients with intrahepatic cholangiocarcinoma, a type of primary livery cancer (“ICC”). The trial for this cohort was conducted at the same centersparticipating in the Phase 2 HCC trial. Unfavorable or inconsistent clinical data from clinical trials, including the Phase 2 clinical trial for HCC, the market’sperception of these clinical data or FDA’s perception of this clinical data, may adversely impact our ability to obtain approval, and our financial condition.Additionally, even if the results of our Phase 2 clinical trial for HCC and ICC are positive, there is a substantial risk that it will fail to have positive results inPhase 3 clinical trials with regard to efficacy, safety or other clinical outcomes and may never obtain regulatory approval.The Company does not expect to generate significant revenue for the foreseeable future.Delcath’s entire focus has been on developing, commercializing, and obtaining regulatory authorizations and approvals of CHEMOSAT® andMelphalan/HDS and currently has only developed this system for the treatment of cancers in the liver. If CHEMOSAT and Melphalan/HDS for the treatmentof cancers in the liver fail as commercial products, the Company has no other products to sell. In addition, since CHEMOSAT currently is approved forcommercialization solely in the European Economic Area (the “EEA”) and limited other jurisdictions, if medac is unsuccessful in commercializing theproduct in the EEA and/or if Melphalan/HDS is not approved in the United States and elsewhere, the Company will have no means of generating revenue. InSeptember 2013, the FDA issued a CRL with respect to the Company’s NDA for Melphalan/HDS. A CRL is issued by the FDA when the review of a file iscompleted and questions remain that preclude approval of the NDA in its then current form. Accordingly, Delcath does not expect to realize any revenuesfrom product sales in the United States in the next several years, if at all. As a result, our revenue sources are, and will remain, extremely limited until theCompany’s product candidates are approved by the FDA or other additional foreign regulatory agencies and successfully marketed. CHEMOSAT andMelphalan/HDS may not be successful in clinical trials, approved by the FDA or other additional foreign regulatory agency or marketed at any time in theforeseeable future or at all.Continuing losses may exhaust our capital resources.As of December 31, 2018, the Company had $2.5 million in cash and cash equivalents. Delcath has had minimal revenue to date, and has a substantialaccumulated deficit, recurring operating losses and negative cash flow. For the years ended December 31, 2018 and 2017, the Company incurred net lossesof approximately $19.2 million and $45.1 million, respectively and expects to continue to incur losses in 2019. Management believes its capital resourcesare adequate to fund operations through June 2019. To date, the Company has funded operations through a combination of private placements and publicofferings of its securities, including convertible notes. If Delcath continues to incur losses, the Company may exhaust its capital resources, and as a result maybe unable to complete its clinical trials, engage in product development and the regulatory approval process and commercialization of CHEMOSAT andMelphalan/HDS or any other versions of these products. If Delcath is unable to raise capital or generate sufficient revenue, it may not be able to pay its debtswhen they become due and may have to seek protection from the bankruptcy courts or enter into a receivership.If the Company cannot raise additional capital, its potential to generate future revenues will be significantly limited since it may not be able to furthercommercialize CHEMOSAT and Melphalan/HDS, complete its clinical trials or conduct future product development and clinical trials.The Company will require additional financing to complete its clinical trial program or seek other approvals, to conduct future development and clinicaltrials and to further commercialize its product in the EEA and any other markets where the Company may receive approval for its products. In addition,Delcath is obligated to make payments under long-term research and development obligations and lease agreements. If financing is unavailable to make therequired payments under these agreements, the Company could be subject to legal liability and its ability to complete product development projects orclinical trials could be impaired. The Company does not know if additional financing will be available when needed at all or on acceptable terms. If unableto obtain additional financing as needed, the Company may not be able to further commercialize CHEMOSAT and Melphalan/HDS, obtain regulatoryapprovals or complete its development projects or clinical trials, which would result in a complete loss of an investment in our securities. Our liquidity and capital requirements will depend on numerous factors, including: •clinical studies, including a Phase 3 clinical trial in ocular melanoma liver metastases and a registration trial in ICC; •the timing and costs of our various United States and foreign regulatory filings, obtaining approvals and complying with regulations;21 •the timing and costs associated with developing our manufacturing operations; •the timing of product commercialization activities, including marketing and distribution arrangements overseas; •the timing and costs involved in preparing, filing, prosecuting, defending and enforcing intellectual property rights; and •the impact of competing technological and market developments.Insufficient funds may require us to curtail or stop our commercialization activities, regulatory submissions or ongoing activities for regulatory approval,research and development and clinical trials, which will significantly limit our potential to generate future revenues.Risks Related to FDA and Foreign Regulatory ApprovalOur failure to obtain, or delays in obtaining, regulatory approvals may have a material adverse effect on our business, financial condition and results ofoperations.CHEMOSAT and Melphalan/HDS are subject to extensive and rigorous government regulation by the FDA and other foreign regulatory agencies. The FDAregulates the research, development, pre-clinical and clinical testing, manufacture, safety, effectiveness, record keeping, reporting, labeling, storage,approval, advertising, promotion, sale, distribution, import and export of pharmaceutical and medical device products. Failure to comply with FDA and otherapplicable regulatory requirements may, either before or after product approval, subject us to either civil or criminal administrative or judicially-imposedsanctions and/or other penalties.In the United States, the FDA regulates drug and device products under the Federal Food, Drug, and Cosmetic Act and its implementing regulations.Melphalan/HDS is subject to regulation by the FDA as a combination product, which means it is composed of both a drug product and device product. Ifmarketed individually, each component would therefore be subject to different regulatory pathways and reviewed by different centers within the FDA. Acombination product, however, is assigned to a center that will have primary jurisdiction over its pre-market review and regulation based on a determinationof the product’s primary mode of action, which is the single mode of action that provides the most important therapeutic action. In the case ofMelphalan/HDS, the primary mode of action is attributable to the drug component of the product, which means that the Center for Drug Evaluation andResearch has primary jurisdiction over its pre-market development and review.The Company is not permitted to market Melphalan/HDS in the United States unless and until it obtains regulatory approval from the FDA. To market theproduct in the United States, Delcath must submit to the FDA and obtain FDA approval of an NDA. An NDA must be supported by extensive clinical andpreclinical data, as well as extensive information regarding chemistry, manufacturing and controls, or CMC, to demonstrate the safety and effectiveness of theapplicable product candidate. The number and types of preclinical studies and clinical trials that will be required varies depending on the product candidate,the disease or condition that the product candidate is designed to target and the regulations applicable to any particular product candidate. Despite the timeand expense associated with preclinical and clinical studies, failure can occur at any stage, and the Company could encounter problems that cause it to repeator perform additional preclinical studies, CMC studies or clinical trials. The FDA and similar foreign authorities could delay, limit or deny approval of aproduct candidate for many reasons, including because they: •may not deem a product candidate to be adequately safe and effective; •may determine that the risk:benefit profile is not favorable; •may not find the data from preclinical studies, CMC studies and clinical trials to be sufficient to support a claim of safety and efficacy; •may interpret data from preclinical studies, CMC studies and clinical trials significantly differently than the Company; •may not approve the manufacturing processes or facilities associated with our product candidates; •may change approval policies (including with respect to our product candidates’ class of drugs) or adopt new regulations; or •may not accept a submission due to, among other reasons, the content or formatting of the submission.22Furthermore, we cannot be certain that we or our present or future third-party manufacturers or suppliers will be able to comply with the cGMP regulationsand other ongoing FDA regulatory requirements. If we or our present or future third-party manufacturers or suppliers are not able to comply with theserequirements, the FDA may require us to recall our products from distribution or withdraw any potential approvals of an NDA for that product. Undesirable side effects caused by any product candidate that Delcath develops could result in the denial of regulatory approval by the FDA or otherregulatory authorities for any or all targeted indications or cause us to evaluate the future of our development programs. The regulatory review and approvalprocess is lengthy, expensive and inherently uncertain. As part of the U.S. Prescription Drug User Fee Act, the FDA has a goal to review and act on apercentage of all submissions in a given time frame. In August 2012, the Company submitted the Melphalan/HDS NDA seeking an indication for ocularmelanoma liver metastases. In September 2013, the FDA declined to approve the NDA and issued a CRL. The deficiencies in the CRL included, but were notlimited to, a statement that the Company must perform additional “well-controlled randomized trial(s) to establish the safety and efficacy of Melphalan/HDSusing overall survival as the primary efficacy outcome measure” and which “demonstrates that the clinical benefits of Melphalan/HDS outweigh its risks.”The FDA also requires that the additional clinical trial(s) be conducted using the product the Company intends to market. Prior to conducting additionalclinical trials, Delcath must satisfy certain other requirements of the CRL, including, but not limited to, product quality testing and human factorsinformation. However, even if the Company completes its clinical trials and satisfies all the requirements of the CRL, it may not obtain regulatory approvalfrom the FDA. Continued failure to obtain, or additional delays in obtaining, regulatory approvals may: •adversely affect the commercialization of the current version of CHEMOSAT and Melphalan/HDS or any products that the Company develops inthe future; •impose additional costs on Delcath; •diminish any competitive advantages that may be attained; and •adversely affect the Company’s ability to generate revenues.Delcath has obtained the right to affix the CE Mark for the Delcath Hepatic CHEMOSAT Delivery System as a medical device for the delivery ofmelphalan. Since the Company may only promote the device within this specific indication, if physicians are unwilling to obtain melphalan separately foruse with CHEMOSAT, Delcath’s ability to commercialize CHEMOSAT in the EEA will be significantly limited.In the EEA, CHEMOSAT is regulated as a Class IIb medical device indicated for the intra-arterial administration of a chemotherapeutic agent, melphalanhydrochloride, to the liver with additional extracorporeal filtration of the venous blood return. Delcath’s ability to market and promote CHEMOSAT islimited to this approved indication. To the extent that the Company’s promotion of CHEMOSAT is found to be outside the scope of its approved indication,Delcath may be subject to fines or other regulatory action, limiting its ability to commercialize CHEMOSAT in the EEA.The Company is limited to marketing CHEMOSAT in the EEA as a medical device for the delivery of melphalan. If physicians are unwilling to obtainmelphalan separately for use with CHEMOSAT, Delcath’s ability to commercialize CHEMOSAT in the EEA will be significantly limited. Delcath’s productinstructions and indication reference the chemotherapeutic agent melphalan. However, no melphalan labels in the EEA reference Delcath’s product, and thelabels vary from country to country with respect to the approved indication of the drug and its mode of administration. As a result, the delivery of melphalanwith Delcath’s device may not be within the applicable label with respect to some indications in some Member States of the EEA where the drugs areauthorized for marketing. Physicians intending to use CHEMOSAT must obtain melphalan separately for use with CHEMOSAT and must use melphalanindependently at their discretion. If physicians are unwilling to obtain melphalan separately from CHEMOSAT and/or to prescribe the use of melphalanindependently, the Company’s sales opportunities in the EEA will be significantly impaired.While the Company has obtained the right to affix the CE Mark, it will be subject to significant ongoing regulatory obligations and oversight in the EEAand in any other country where it receives marketing authorization or approval.In April 2012, the Company obtained the required certification from its European Notified Body, enabling Delcath to complete an EC Declaration ofConformity with the essential requirements of the EU Medical Devices Directive and affix the CE Mark to the Generation Two version of CHEMOSAT. Inorder to maintain the right to affix the CE Mark in the EEA, the Company is subject to compliance obligations, and any material changes to the approvedproduct, such as manufacturing changes, product improvements or revised labeling, may require further regulatory review. Additionally, the Company issubject to ongoing audits by its European Notified Body, and the right to affix the CE Mark to the Generation Two version of CHEMOSAT may bewithdrawn for a number of reasons, including the later discovery of previously unknown problems with the product.23To the extent that CHEMOSAT or Melphalan/HDS is approved by the FDA or any other regulatory agency, Delcath will be subject to similar ongoingregulatory obligations and oversight in those countries where approval is obtained. For example, the Company may be subject to limitations on the approvedindicated uses for which the product may be marketed or to the conditions of approval, or requirements for potentially costly post-marketing testing,including Phase IV clinical trials, and surveillance to monitor the safety and efficacy of the product candidate. In addition, if the FDA approves a productcandidate, the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion and recordkeeping for theproduct will be subject to extensive and ongoing regulatory requirements. These requirements include submissions of safety and other post-marketinginformation and reports, registration, as well as continued compliance with current good manufacturing practice (“cGMPs”), good clinical practices (“GCPs”),and good laboratory practices, which are regulations and guidelines enforced by the FDA for all products in clinical development, for any pre-clinical orclinical trials that the Company conducts post-approval. In addition, post-marketing requirements for CHEMOSAT and Melphalan/HDS may includeimplementation of a risk evaluation and mitigation strategies (“REMS”) program to ensure that the benefits of the product outweigh its risks. A REMS mayinclude a medication guide, a patient package insert, a communication plan to healthcare professionals, restrictions on distribution or use and/or otherelements to assure safe use of the product.Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, or with our third-partymanufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things: •refusals or delays in the approval of applications or supplements to approved applications; •refusal of a regulatory authority to review pending market approval applications or supplements to approved applications; •restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market or voluntary or mandatory productrecalls or seizures; •fines, Warning Letters or untitled letters, or holds on clinical trials; •import or export restrictions; •injunctions or the imposition of civil or criminal penalties; •restrictions on product administration, requirements for additional clinical trials or changes to product labeling or REMS programs; or •recommendations by regulatory authorities against entering into governmental contracts with us.If the Company is not able to maintain regulatory compliance, it may lose any marketing approval that it may have obtained and may not achieve or sustainprofitability, which would have a material adverse effect on the business, results of operations, financial condition and prospects of the Company.The development and approval process in the United States will take many years, require substantial resources and may never lead to the approval ofMelphalan/HDS by the FDA for use in the United States.The Company cannot sell or market Melphalan/HDS with melphalan or other chemotherapeutic agents in the United States without prior FDA approval of anNDA for Melphalan/HDS. Although melphalan and other drugs have been approved by the FDA for use as chemotherapeutic agents, regulatory approval isrequired in the United States for the combined medical device component and drug component and the specific indication, dose and route of administrationof melphalan or other chemotherapeutic agents or compounds used in our system. The Company is seeking approval of Melphalan/HDS for a substantiallyhigher dose of melphalan than prior approved doses of melphalan and such other chemotherapeutic agents or other compounds. Delcath must obtain separateregulatory approvals for Melphalan/HDS with melphalan and every other chemotherapeutic agent or other compound used with the system that Delcathintends to market, and all the manufacturing facilities used to manufacture components or assemble our system must be inspected and meet legalrequirements. Securing regulatory approval requires the submission of extensive pre-clinical and clinical data and other supporting information for eachproposed therapeutic indication in order to establish to the FDA’s satisfaction the product’s safety, efficacy, potency and purity for each intended use.The pre-clinical testing and clinical trials of Melphalan/HDS with melphalan or any other chemotherapeutic agent or compound the Company uses in itssystem must comply with the regulations of the FDA and other federal, state and local government authorities in the United States. Clinical development is along, expensive and uncertain process and is subject to delays. Delcath may encounter delays or rejections for various reasons, including its inability toenroll enough patients to complete the clinical trials. Moreover, approval policies or regulations may change. If the Company does not obtain and maintainregulatory approval for Melphalan/HDS and the use of melphalan or other chemotherapeutic agents, the value of the Company, results of operations and itsability to raise additional capital will be harmed.24In August 2012, Delcath submitted a NDA seeking an indication for ocular melanoma liver metastases for Melphalan/HDS. In September 2013, the FDAissued a CRL indicating that the Company must perform additional well-controlled randomized trial(s) to establish the safety and efficacy of Melphalan/HDSusing overall survival as the primary efficacy outcome measure and which demonstrates that the clinical benefits of Melphalan/HDS outweigh its risks. Ourcurrent Phase 3 trial in ocular melanoma liver metastases, the FOCUS Trial, is not randomized and uses a different primary efficacy outcome measure. Failureto obtain FDA approval will have a material adverse effect on Delcath’s business, financial condition and results of operations.Even if the Company obtains regulatory approval for Melphalan/HDS in the United States, its ability to market Melphalan/HDS would be limited to thoseuses that are approved.The FDA closely regulates the post-approval marketing and promotion of drugs, including standards and regulations for direct-to-consumer advertising,dissemination of off-label information, industry-sponsored scientific and educational activities and promotional activities involving the Internet. Drugs maybe marketed only for the approved indications and in accordance with the provisions of the approved label. If the FDA approves an application forMelphalan/HDS, our ability to market and promote Melphalan/HDS would be limited to the approved indication, so even with FDA approval,Melphalan/HDS may only be promoted in this limited market. Physicians may prescribe legally available drugs for uses that are not described in theproduct’s labeling and that differ from those tested by us and approved by the FDA. The FDA does not regulate the behavior of physicians in their choice oftreatments. The FDA does, however, impose stringent restrictions on manufacturers’ communications regarding off-label use, and FDA approval mayotherwise limit our sales practices and our ability to promote, sell and distribute the product. Thus, the Company may only market Melphalan/HDS, ifapproved by the FDA, for its approved indication and could be subject to enforcement action for off-label marketing. Further, if there are any modifications tothe product, including changes in indications, labeling or manufacturing processes or facilities, Delcath may be required to submit and obtain FDA approvalof a new or supplemental NDA, which may require the Company to develop additional data or conduct additional preclinical studies and clinical trials.Failure to comply with these requirements can result in adverse publicity, Warning Letters, corrective advertising and potential civil and criminal penalties.If future clinical trials are unsuccessful, significantly delayed or not completed, the Company may not be able to market Melphalan/HDS for otherindications.The clinical trial data on our product is limited to specific types of liver cancer. In 2010, the Company concluded a Phase 3 clinical trial of Melphalan/HDSin patients with metastatic ocular and cutaneous melanoma to the liver and also completed a multi-arm Phase 2 clinical trial of Melphalan/HDS in patientswith primary and metastatic melanoma stratified into four arms.The Company has initiated an open-label Phase 3 clinical trial in ocular melanoma liver metastases called the FOCUS Trial. The Company has also initiateda Phase 3 registration trial to treat patients with intrahepatic cholangiocarcinoma (ICC), called the ALIGN trial, for which the Company has receivedagreement on a SPA from the FDA.It may take several years to complete the testing of Melphalan/HDS for use in the treatment of these indications, and failure can occur at any stage ofdevelopment, for many reasons, including: •any pre-clinical or clinical test may fail to produce results satisfactory to the FDA or foreign regulatory authorities; •pre-clinical or clinical data can be interpreted in different ways, which could delay, limit or prevent regulatory approval; •negative or inconclusive results from a pre-clinical study or clinical trial or adverse medical events during a clinical trial could cause a pre-clinical study or clinical trial to be repeated or a program to be terminated, even if other studies or trials relating to the program are successful; •the FDA or foreign regulatory authorities can place a clinical hold on a trial if, among other reasons, it finds that patients enrolled in the trial areor would be exposed to an unreasonable and significant risk of illness or injury; •Delcath may encounter delays or rejections based on changes in regulatory agency policies during the period in which it is developing a systemor the period required for review of any application for regulatory agency approval; •enrollment in the Company’s clinical trials may proceed more slowly than expected; •the Company’s clinical trials may not demonstrate the safety and efficacy of any system or result in marketable products; •the FDA or foreign regulatory authorities may request additional clinical trials, including an additional Phase 3 trial, relating to the Company’sNDA submissions;25 •the FDA or a foreign regulatory authority may change its approval policies or adopt new regulations that may negatively affect or delayDelcath’s ability to bring a system to market or require additional clinical trials; and •a system may not be approved for all the requested indications.The failure or delay of clinical trials could cause an increase in the cost of product development, delay filing of an application for marketing approval orcause the Company to cease the development of Melphalan/HDS for other indications. If Delcath is unable to develop Melphalan/HDS for other indications,the future growth of our business could be negatively impacted. In addition, Delcath has limited clinical data relating to the effectiveness of Melphalan/HDSin certain types of cancer. Such limited data could slow the adoption of CHEMOSAT and Melphalan/HDS and significantly reduce Delcath’s ability tocommercialize CHEMOSAT and Melphalan/HDS.The Company relies on third parties to conduct certain elements of the clinical trials for CHEMOSAT and Melphalan/HDS, and if they do not performtheir obligations to Delcath, the Company may not be able to obtain regulatory approvals for its system.The Company designs the clinical trials for Melphalan/HDS, but relies on academic institutions, corporate partners, contract research organizations and otherthird parties to assist in managing, monitoring and otherwise carrying out these trials. Delcath relies heavily on these parties for the execution of its clinicalstudies and control only certain aspects of their activities. Accordingly, the Company may have less control over the timing and other aspects of theseclinical trials than if Delcath conducted them entirely on its own. The Company relies upon third parties to conduct monitoring and data collection of itsongoing and future clinical trials, including its Phase 3 ocular melanoma trial and pivotal ICC trial. Although Delcath relies on these third parties to managethe data from these clinical trials, Delcath is responsible for confirming that each of its clinical trials is conducted in accordance with its generalinvestigational plan and protocol. Moreover, the FDA and foreign regulatory agencies require Delcath to comply with GCPs for conducting, recording andreporting the results of clinical trials to assure that the data and results are credible and accurate and that the trial participants are adequately protected. TheFDA enforces these GCP regulations through periodic inspections of trial sponsors, principal investigators and trial sites. The Company’s reliance on thirdparties does not relieve it of these responsibilities and requirements and if Delcath or the third parties upon whom the Company relies for its clinical trials failto comply with the applicable GCPs, the data generated in its clinical trials may be deemed unreliable and the FDA or other foreign regulatory agencies mayrequire Delcath to perform additional trials before approving our marketing application. The Company cannot assure you that, upon inspection, the FDA willdetermine that any of its clinical trials comply or complied with GCPs. In addition, Delcath’s clinical trials must be conducted with product that complieswith the FDA’s cGMP requirements. The Company’s failure to comply with these regulations may require it to repeat clinical trials, which would delay theregulatory approval process, and may result in a failure to obtain regulatory approval for Melphalan/HDS if these requirements are not met.Purchasers of CHEMOSAT in the EEA may not receive third-party reimbursement or such reimbursement may be inadequate. Without adequatereimbursement, Delcath may not be able to successfully commercialize CHEMOSAT in the EEA.The Company has obtained the right to affix the CE Mark for CHEMOSAT, and under the medac License, medac intends to seek third-party or governmentreimbursement within those countries in the EEA where it expects to market and sell CHEMOSAT. In Germany, the Company had received a ZE diagnostic-related group code (“ZE Code”), which, beginning in 2016, permits hospitals in Germany to obtain reimbursement for CHEMOSAT procedures. Negotiationson the amount of reimbursement to be received under the ZE Code were concluded in 2016 and the procedure was reimbursed under the ZE Code in 2017.Reimbursement negotiations under the ZE system are conducted annually. Consequently, reimbursement obtained may not be for the full amount sought. Incountries where medac is able to obtain reimbursement, local policy could limit the Company’s ability to obtain adequate and consistent reimbursement andlimit other sales opportunities in those countries.In other countries, until medac obtains government reimbursement, it will rely on private payors or local pre-approved funds where available. There are alsono assurances that third-party payors or government health agencies of Member States of the EEA will reimburse use of CHEMOSAT in the long term or atall. Further, each country has its own protocols regarding reimbursement, so successfully obtaining third party or government health agency reimbursementin one country does not necessarily translate to similar reimbursement in other EEA countries. Physicians, hospitals and other health care providers may bereluctant to purchase CHEMOSAT if they do not receive substantial reimbursement for the cost of using the product from third-party payors or governmententities. The lack of adequate reimbursement may significantly limit sales opportunities in the EEA.26The success of our products may be harmed if the government, private health insurers and other third-party payers do not provide sufficient coverage orreimbursement.The Company’s ability to commercialize CHEMOSAT under the medac License and Melphalan/HDS successfully will depend in part on the extent to whichreimbursement for the costs of such products and related treatments will be available from government health administration authorities, private healthinsurers and other third-party payors. Melphalan/HDS is currently not approved by the FDA. Medicare, Medicaid, private health insurance plans and theirforeign equivalents will not reimburse the use of Melphalan/HDS since the product is currently not approved outside the EEA. Delcath will seekreimbursement by third-party payors of the cost of Melphalan/HDS after its use is approved, but there are no assurances that adequate third-party coveragewill be available for Delcath to establish and maintain price levels sufficient for the Company to realize an appropriate return on its investment in developingnew therapies. Government, private health insurers and other third-party payors are increasingly attempting to contain healthcare costs by limiting bothcoverage and the level of reimbursement for new therapeutic products approved for marketing. Accordingly, even if coverage and reimbursement areprovided by government, private health insurers and third-party payors for uses of our products, market acceptance of these products would be adverselyaffected if the reimbursement available proves to be unprofitable for healthcare providers.Implementation of healthcare reforms in the United States and in significant overseas markets may limit the ability to commercialize CHEMOSAT andMelphalan/HDS and the demand for CHEMOSAT and Melphalan/HDS. Healthcare providers may respond to such cost-containment pressures by choosinglower cost products or other therapies. In March 2010, the Patient Protection and Affordable Care Act and Health Care and Education Reconciliation Act of2010 (“ACA”) was enacted into law in the United States, which included a number of provisions aimed at improving quality and decreasing costs. The Trumpadministration has taken executive actions and members of Congress have recently introduced legislative proposals to significantly alter the ACA. It isuncertain if such executive actions will be upheld or legislative proposals will be enacted or what consequences these actions and legislative proposals or theimplementation of existing provisions of ACA will have on our efforts to commercialize CHEMOSAT and Melphalan/HDS.CHEMOSAT and Melphalan/HDS may not achieve sufficient acceptance by the medical community to sustain our business.The commercial success of CHEMOSAT and Melphalan/HDS, if approved, will depend upon their acceptance by the medical community and third-partypayers as clinically useful, cost effective and safe. Acceptance by the medical community may depend on the extent to which leaders in the scientific andmedical communities publish scientific papers in reputable academic journals. If testing and clinical practice do not confirm the safety and efficacy ofCHEMOSAT and Melphalan/HDS or even if further testing and clinical practice produce positive results but the medical community does not view thesefavorably, and CHEMOSAT and Melphalan/HDS as effective and desirable, our efforts to market CHEMOSAT and Melphalan/HDS may fail, which wouldcause us to cease operation.Consolidation in the healthcare industry could lead to demands for price concessions.The cost of healthcare has risen significantly over the past decade and numerous initiatives and reforms initiated by legislators, regulators and third-partypayors to curb these costs have resulted in a consolidation trend in the medical device industry. Group purchasing organizations, independent deliverynetworks and large single accounts in the United States and foreign markets may result in a consolidation of purchasing decisions for potential healthcareprovider customers. The Company expects that market demand, government regulation, third-party reimbursement policies and societal pressures willcontinue to change the worldwide healthcare industry, resulting in further business consolidations and alliances which may exert further downward pressureon the price of CHEMOSAT and Melphalan/HDS and adversely impact our business, financial condition and results of operations.Further, third-party payors may deny reimbursement if they determine that CHEMOSAT and/or Melphalan/HDS is not used in accordance with establishedpayor protocols regarding cost effective treatment methods or is used outside its approved indication or for forms of cancer or with drugs not specificallyapproved by the FDA or other foreign regulatory bodies in the future. Without reimbursement, physicians, hospitals and other health care providers will beless likely to purchase CHEMOSAT and/or Melphalan/HDS, thereby harming our results of operations.Risks Related to Manufacturing, Commercialization and Market Acceptance of CHEMOSAT and Melphalan/HDSThere are three third-party manufacturers of melphalan in certain countries of the EEA of which the Company is aware. If any of these manufacturers fails toprovide end-users with adequate supplies of melphalan or fails to comply with the requirements of regulatory authorities, Delcath may be unable tosuccessfully commercialize our product in the EEA.27Under the current regulatory scheme in the EEA, CHEMOSAT is approved for marketing as a device only, and doctors will separately obtain melphalan foruse with CHEMOSAT. Although melphalan has been approved in the EEA for over a decade, the Company is aware that there are currently three approvedmanufacturers of melphalan in certain countries of the EEA. As a result, there may not be sufficient supply of melphalan for use with CHEMOSAT, and anyadverse change in a manufacturer’s commercial operations or regulatory approval status may seriously impair Delcath’s sales opportunities in the EEA.Additionally, melphalan is not available in certain foreign countries outside the EEA where Delcath may seek to market CHEMOSAT. If supply of melphalanremains limited or unavailable, the Company will be unable to commercialize CHEMOSAT in these markets, thereby limiting future sales opportunities.If the Company cannot maintain or enter into acceptable arrangements for the production of melphalan and other chemotherapeutic agents it will beunable to successfully commercialize Melphalan/HDS in the United States or complete its global Phase 3 trial in ocular melanoma liver metastases,registration trial in ICC, or any future clinical trials.The Company has entered into a manufacturing and supply agreement with Synerx Pharma, LLC (“Synerx”) and Bioniche Teoranta (“Bioniche”) an affiliateof Mylan, Inc., for the supply of its branded melphalan for injection. The agreement with Synerx and Bioniche currently represents Delcath’s sole source ofbranded melphalan in the United States. The Company intends to use the melphalan supplied by Synerx and Bioniche to conduct its global Phase 3 trials forocular melanoma liver metastases and ICC. Delcath may pursue agreements with additional contract manufacturers to produce melphalan and otherchemotherapeutic agents that it will use in the future for its clinical trial program and the commercialization of CHEMOSAT and Melphalan/HDS, as well asfor labeling and finishing services. The Company may not be able to enter into such arrangements on acceptable terms or at all. Every manufacturer is subjectto inspection by FDA and must meet all cGMP regulatory requirements. To manufacture melphalan or other chemotherapeutic agents on its own, Delcathwould first have to develop a manufacturing facility that complies with FDA requirements and regulations for the production of melphalan and each otherchemotherapeutic agent the Company chooses to manufacture for its system. Developing these resources would be an expensive and lengthy process andwould have a material adverse effect on the Company’s revenues and profitability. If Delcath is unable to obtain sufficient melphalan and labeling serviceson acceptable terms, if it should encounter delays or difficulties in its relationships with current and future suppliers or if current and future suppliers ofmelphalan do not comply with applicable regulations for the manufacturing and production of melphalan, Delcath’s business, financial condition and resultsof operations may be materially harmed.If we cannot successfully manufacture CHEMOSAT and Melphalan/HDS, our ability to develop and commercialize the system would be impaired.We manufacture certain components of our products, including our proprietary filter media, and assemble and package CHEMOSAT and Melphalan/HDS atour facility in Queensbury, New York. We have established our European headquarters and packaging/labeling/distribution facility in Galway, Ireland wherewe intend to conduct final manufacturing and assembly in the future. We currently utilizes third-parties to manufacture some components of CHEMOSATand Melphalan/HDS. We have a limited manufacturing history and we may not be able to manufacture our products in sufficient commercial quantities, in a cost-effective manneror in compliance with the regulatory requirements applicable to such manufacturing. Additionally, we may have difficulty obtaining components for ourproducts from our third-party suppliers in a timely manner or at all which may adversely affect our ability to deliver CHEMOSAT and Melphalan/HDS topurchasers.In addition to limiting sales opportunities, delays in manufacturing CHEMOSAT and Melphalan/HDS may adversely affect our ability to obtain regulatoryapproval in the United States and other jurisdictions. Our ability to conduct timely clinical trials in the United States and abroad depends on our ability tomanufacture the system, including sourcing the chemotherapeutic agents or other compounds through third parties in accordance with FDA and otherregulatory requirements. If we are unable to manufacture CHEMOSAT and Melphalan/HDS in a timely manner, we may not be able to conduct the clinicaltrials required to obtain regulatory approval and commercialize our product.The Company has implemented updated quality systems throughout our organization designed to enable us to satisfy the various international qualitysystem regulations including those of the FDA with respect to products sold in the United States and those established by the International StandardsOrganization (“ISO”) with respect to products sold in the EEA. The Company is required to maintain ISO 13485 certification for medical devices to be soldin the EEA, which requires, among other items, an implemented quality system that applies to component quality, supplier control, product design andmanufacturing operations. On February 17, 2011, we announced that we had achieved ISO 13485 certification for our Queensbury manufacturing facility. OnDecember 28, 2011, we announced that we had achieved ISO 13485 certification for our Galway, Ireland facility. All Delcath facilties are presently ISO13485:2016 certified. If our Queensbury, NY fails to maintain compliance with ISO 13485 and FDA cGMP or fails to pass facility inspection or audits, ourability to manufacture at the facility could be limited or terminated. In the future, we may manufacture and assemble CHEMOSAT and Melphalan/HDS inour Galway, Ireland facility or elsewhere in the EEA, and any facilities in the EEA would have to obtain and maintain similar approvals or certifications ofcompliance.28The Company does not have written contracts with all of its suppliers for the manufacture of components for CHEMOSAT and Melphalan/HDS.The Company does not have written contracts with all suppliers for the manufacture of components for CHEMOSAT and Melphalan/HDS. If Delcath isunable to obtain an adequate supply of the necessary components or negotiate acceptable terms, it may not be able to manufacture CHEMOSAT andMelphalan/HDS in commercial quantities or in a cost-effective manner, and commercialization of CHEMOSAT and Melphalan/HDS in the United States, theEEA and elsewhere may be delayed. In addition, certain components are available from only a limited number of sources. Components of CHEMOSAT andMelphalan/HDS are currently manufactured for Delcath in small quantities and may require significantly greater quantities to further commercialize theproduct. The Company may not be able to find alternate sources of comparable components. If Delcath is unable to obtain adequate supplies of componentsfrom existing suppliers or needs to switch to an alternate supplier and obtain FDA or other regulatory agency approval of that supplier, commercialization ofCHEMOSAT and Melphalan/HDS may be delayed.Even if the Company receives FDA or other foreign regulatory approvals, Delcath may be unsuccessful in commercializing CHEMOSAT andMelphalan/HDS in markets outside the EEA, because of inadequate infrastructure or an ineffective commercialization strategy.Outside the EEA, even if the Company obtains regulatory approval from the FDA or other foreign regulatory agencies, its ability to commercializeCHEMOSAT and Melphalan/HDS may be limited due to Delcath’s inexperience in developing a sales, marketing and distribution infrastructure. If theCompany is unable to develop this infrastructure in the United States or elsewhere or to collaborate with an alliance partner to market its products in theUnited States or foreign countries, particularly in Asia, Delcath’s efforts to commercialize CHEMOSAT and Melphalan/HDS or any other product outside ofthe EEA may be less successful.Even if the Company is successful in commercializing CHEMOSAT and Melphalan/HDS in the EEA, Delcath may not be successful in the United States andother foreign countries. Each country requires a different commercialization strategy, so the Company’s EEA marketing strategy may not translate to othermarkets. Without a successful commercialization strategy tailored for each market, Delcath’s efforts to promote and market CHEMOSAT in each of its targetmarkets may fail in any or all of those markets.The Company’s plan to use collaborative arrangements with third parties to help finance and to market and sell CHEMOSAT and Melphalan/HDS maynot be successful.The Company may be unable to enter into collaborative agreements without additional clinical data or unable to continue a collaborative agreement as aresult of unsuccessful future clinical trials. Additionally, Delcath may face competition in its search for alliances. As a result, the Company may not be able toenter into any additional alliances on acceptable terms, if at all. The Company’s collaborative relationships may never result in the successful developmentor commercialization of CHEMOSAT and Melphalan/HDS or any other product. The success of any collaboration will depend upon Delcath’s ability toperform its obligations under any agreements as well as factors beyond its control, such as the commitment of its collaborators and the timely performance oftheir obligations. The terms of any such collaboration may permit Delcath’s collaborators to abandon the alliance at any time for any reason or prevent usfrom terminating arrangements with collaborators who do not perform in accordance with the Company’s expectations or its collaborators may breach theiragreements with the Company. In addition, any third parties with which the Company collaborates may have significant control over important aspects of thedevelopment and commercialization of Delcath’s products, including research and development, market identification, marketing methods, pricing,composition of sales force and promotional activities. Delcath is not able to control or influence the amount and timing of resources that any collaboratormay devote to the Company’s research and development programs or the commercialization, marketing or distribution of its products. The Company may notbe able to prevent any collaborators from pursuing alternative technologies or products that could result in the development of products that compete withCHEMOSAT and Melphalan/HDS or the withdrawal of their support for its products. The failure of any such collaboration could have a material adverseeffect on its business.29If the Company fails to overcome the challenges inherent in international operations, its business and results of operations may be materially adverselyaffected.Currently the Company has only received authorization to market CHEMOSAT in the EEA, and intends to seek similar authorization or approvals in otherforeign countries. As a result, Delcath expects international sales of its products to account for a significant portion of its revenue, which exposes Delcath torisks inherent in international operations. To accommodate the Company’s international sales, Delcath will need to further invest financial and managementresources to develop an international infrastructure that will meet the needs of its customers. Accordingly, Delcath will face additional risks resulting from itsinternational operations including: •difficulties in enforcing agreements and collecting receivables in a timely manner through the legal systems of many countries outside theUnited States; •the failure to satisfy foreign regulatory requirements to market its products on a timely basis or at all; •availability of, and changes in, reimbursement within prevailing foreign healthcare payment systems; •difficulties in managing foreign relationships and operations, including any relationships that the Company establishes with foreign sales ormarketing employees and agents; •limited protection for intellectual property rights in some countries; •fluctuations in currency exchange rates; •the possibility that foreign countries may impose additional withholding taxes or otherwise tax its foreign income, impose tariffs or adopt otherrestrictions on foreign trade; •the possibility of any material shipping delays; •significant changes in the political, regulatory, safety or economic conditions in a country or region; •protectionist laws and business practices that favor local competitors; and •trade restrictions, including the imposition of, or significant changes to, the level of tariffs, customs duties and export quotas.If the Company fails to overcome the challenges it encounters in its international operations, Delcath’s business and results of operations may be materiallyadversely affected.Rapid technological developments in treatment methods for liver cancer and competition with other forms of liver cancer treatments could affect theCompany’s ability to achieve meaningful revenues or profit.Competition in the cancer treatment industry is intense. CHEMOSAT and Melphalan/HDS compete with all forms of liver cancer treatments that arealternatives to the “gold standard” treatment of surgical resection. Many of the Company’s competitors have substantially greater resources and considerableexperience in conducting clinical trials and obtaining regulatory approvals. If these competitors develop more effective or more affordable products ortreatment methods, or achieve earlier product development, Delcath’s revenues or profitability will be substantially reduced.Delcath has the following six orphan drug designations: •the drug melphalan for the treatment of patients with cutaneous melanoma (November 2008) •the drug melphalan for the treatment of patients with ocular melanoma (November 2008) •the drug melphalan for the treatment of patients with neuroendocrine tumors (May 2009) •the drug doxorubicin for the treatment of patients with primary liver cancer (August 2009)30 •the drug melphalan for the treatment of HCC (October 2013) •the drug melphalan or the treatment of ICC (July 2015)If another company has orphan drug designations for the same drug and indication and receives marketing approval before Delcath does, then the Companywill be blocked from marketing approval for seven years from the date of its approval for the same indication of use unless the Company can make a showingof the clinical superiority of its drug.The loss of key personnel could adversely affect the Company’s business.Our success depends upon the efforts of our employees. The loss of any of the Company’s senior executives or other key employees could harm its business.Competition for experienced personnel is intense and, if key individuals leave us, we could be adversely affected if suitable replacement personnel are notquickly identified and hired. The competition for qualified individuals exists in all functional areas, which makes it difficult to attract and retain thequalified employees we need to operate our business. Our success also depends in part on our ability to attract and retain highly qualified scientific,technical, commercial and administrative personnel. If we are unable to attract new employees and retain our current key employees, Delcath’s ability tocompete could be adversely affected and the development and commercialization of our products could be delayed or negatively impacted.We rely on the proper function, availability and security of information technology systems to operate our business and a cyber-attack or other breach ofthese systems could have a material adverse effect on our business, financial condition or results of operations.We rely on information technology systems to process, transmit, and store electronic information in our day-to-day operations. Similar to other companies,the size and complexity of our information technology systems makes them vulnerable to a cyber-attack, malicious intrusion, breakdown, destruction, loss ofdata privacy, or other significant disruption. Our information systems require an ongoing commitment of significant resources to maintain, protect, andenhance existing systems and develop new systems to keep pace with continuing changes in information processing technology, evolving systems andregulatory standards. Any failure by us to maintain or protect our information technology systems and data integrity, including from cyber-attacks, intrusionsor other breaches, could result in the unauthorized access to personally identifiable information, theft of intellectual property or other misappropriation ofassets, or otherwise compromise our confidential or proprietary information and disrupt our operations. Any of these event may cause us to have difficultypreventing, detecting, and controlling fraud, be subject to legal claims and liability, have regulatory sanctions or penalties imposed, have increases inoperating expenses, incur expenses or lose revenues as a result of a data privacy breach or theft of intellectual property, or suffer other adverse consequences,any of which could have a material adverse effect on our business, financial condition or results of operations.We are subject to certain data privacy and security requirements, which are complex and varied among jurisdictions. Any failure to ensure adherence tothese requirements could subject us to fines and penalties, and damage our reputation. We are required to comply with numerous federal and state laws, including state security breach notification laws, state health information privacy laws andfederal and state consume protection laws, which govern the collection, use and disclosure of personal information. Other countries also have, or aredeveloping, laws governing the collection, use and transmission of personal information. In addition, most healthcare providers who may prescribe theproducts we currently sell or may sell in the future and from whom we may obtain patient health information are subject to privacy and security requirementsunder the Health Insurance Portability and Accountability Act of 1996 and comparable state laws. The legislative landscape for privacy and data protectioncontinues to evolve, and there has been an increasing amount of focus on privacy and data protection issues with the potential to affect our business,including recently enacted laws in a majority of states requiring security breach notifications. Any of these laws could create liability for us or increase ourcost of doing business, and any failure to comply could result in harm to our reputation, and potentially fines and penalties. Risks Related to Intellectual PropertyIntellectual property rights may not provide adequate protection, which may permit third parties to compete against us more effectively.Our success depends significantly on our ability to maintain and protect our proprietary rights in the technologies and inventions used in or embodied by ourproduct. To protect our proprietary technology, we rely on patent protection, as well as a combination of copyright, trade secret and trademark laws, as well asnondisclosure, confidentiality, license and other contractual restrictions in our manufacturing, consulting, employment and other third party agreements.These legal means may afford only limited protection, however, and may not adequately protect our rights or permit us to gain or keep any competitiveadvantage.31We have not and may not be able to adequately protect our intellectual property rights throughout the world.Filing, prosecuting and defending patents on our product and technologies in any or all countries throughout the world could be prohibitively expensive.The requirements for patentability may differ in certain countries, particularly developing countries, and the breadth of patent claims allowed can beinconsistent. In addition, the laws of some foreign countries may not protect our intellectual property rights to the same extent as laws in the United States.Consequently, we may not be able to prevent third parties from copying our inventions in all countries outside the United States. Competitors may use ourtechnologies in jurisdictions where we have not obtained patent protection that covers the commercial products to develop their own competing productsthat are the same or substantially the same as our commercial product and, further, may export otherwise infringing products to territories where we havepatent protection, but judicial systems do not adequately enforce patents to cause infringing activities to be ceased.We do not have patent rights in certain foreign countries in which a market for our product and technologies exists or may exist in the future. Moreover, inforeign jurisdictions where we do have patent rights, proceedings to enforce such rights could result in substantial costs and divert our efforts and attentionfrom other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly, and our patent applications at risk of not issuing,and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, ifany, may not be commercially meaningful. Thus, we may not be able to stop a competitor from marketing and selling in foreign countries products that arethe same as or similar to our product and technologies.Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and otherrequirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with theserequirements.Moreover, the United States Patent and Trademark Office (“USPTO”) and various foreign governmental patent agencies require compliance with a number ofprocedural, documentary, fee payment and other similar provisions during the patent application process. In addition, periodic maintenance fees on issuedpatents often must be paid to the USPTO and foreign patent agencies over the lifetime of the patent. While an unintentional lapse can in many cases be curedby payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment orlapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that couldresult in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed timelimits, non-payment of fees and failure to properly legalize and submit formal documents. If we fail to maintain the patents and patent applications coveringour product or procedures, we may not be able to stop a competitor from marketing products that are the same as or similar to our product and technologies.Our success depends in part on our ability to obtain patents, which can be an expensive, time consuming, and uncertain process, and the value of thepatents is dependent in part on the breadth of coverage and the relationship between the coverage and the commercial product.The patent position of medical drug and device companies is generally highly uncertain. The degree of patent protection we require may be unavailable orseverely limited in some cases and may not adequately protect our rights or permit us sufficient exclusivity, or to gain or keep our competitive advantage. Forexample: •we might not have been the first to invent or the first to file patent applications on the inventions covered by each of our pending patentapplications and issued patents; •others may independently develop similar or alternative technologies or duplicate any of our technologies; •the patents of others may have an adverse effect on our business; •any patents we obtain or license from others in the future may not encompass commercially viable products, may not provide us with anycompetitive advantages or may be challenged by third parties; •any patents we obtain or license from others in the future may not be valid or enforceable; and •we may not develop additional proprietary technologies that are patentable32The process of applying for patent protection itself is time consuming and expensive and we cannot assure you that we have prepared or will be able toprepare, file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is possible that innovation over thecourse of development and commercialization may lead to changes in CHEMOSAT and Melphalan/HDS methods and/or devices that cause such methodsand/or devices to fall outside the scope of the patent protection we have obtained and the patent protection we have obtained may become less valuable. It isalso possible that we will fail to identify patentable aspects of inventions made in the course of development and commercialization activities before it is toolate to obtain patent protection on them. In addition, our patents and applications may not be prosecuted and enforced in a manner consistent with the bestinterests of our business. It is possible that defects of form in the preparation or filing of our patents or patent applications may exist, or may arise in thefuture, for example, with respect to proper priority claims, inventorship, claim scope or patent term adjustments. Moreover, we cannot assure you that all ofour pending patent applications will issue as patents or that, if issued, they will issue in a form that will be advantageous to us.Our success depends in part on our ability to commercialize CHEMOSAT and Melphalan/HDS prior to the expiration of our patent protection.Due to the uncertainty of the patent prosecution process, there are no guarantees that any of our pending patent applications will result in the issuance of apatent. Even if we are successful in obtaining a patent, patents have a limited lifespan. In the United States, the natural expiration of a utility patent typicallyis generally 20 years after it is filed. Various extensions may be available; however, the life of a patent, and the protection it affords, is limited. Withoutpatent protection for our CHEMOSAT and Melphalan/HDS methods and devices, we may be open to competition from generic versions of such methods anddevices.We may in the future become involved in lawsuits to protect or enforce our intellectual property, or to defend our products against assertion of intellectualproperty rights by a third party, which could be expensive, time consuming and unsuccessful.Competitors may infringe our patents or misappropriate or otherwise violate our intellectual property rights. To stop any such infringement or unauthorizeduse, litigation may be necessary. Our intellectual property has not been tested in litigation. There is no assurance that any of our issued patents will be upheldif later challenged or will provide significant protection or commercial advantage. A court may declare our patents invalid or unenforceable, may refuse tostop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question, or may interpret the claims ofour patents narrowly, thereby substantially narrowing the scope of patent protection they afford. Because of the length of time and expense associated withbringing new medical drugs and devices to the market, the healthcare industry has traditionally placed considerable emphasis on patent and trade secretprotection for significant new technologies. Other parties may challenge patents, patent claims or patent applications licensed or issued to us or may designaround technologies we have patented, licensed or developed.In addition, third parties may initiate legal or administrative proceedings against us to challenge the validity or scope of our intellectual property rights, ormay allege an ownership right in our patents, as a result of their past employment or consultancy with us. Many of our current and potential competitors havethe ability to dedicate substantially greater resources to defend their intellectual property rights than we can. Accordingly, despite our efforts, we may not beable to prevent third parties from infringing upon or misappropriating our intellectual property. Competing products may also be sold in other countries inwhich our patent coverage might not exist or be as strong. If we lose a foreign patent lawsuit, alleging our infringement of a competitor’s patents, we could beprevented from marketing our product in one or more foreign countries.The medical device industry has been characterized by frequent and extensive intellectual property litigation. Our competitors or other patent holders mayassert that our products and the methods employed in our products are covered by their patents. Although we have performed a search for third-party patentsand believe we have adequate defenses available if faced with any allegations that we infringe these third-party patents, it is possible that CHEMOSAT andMelphalan/HDS could be found to infringe these patents. It is also possible that our competitors or potential competitors may have patents, or have appliedfor, will apply for, or will obtain patents that will prevent, limit or interfere with our ability to make, have made, use, sell, import or export our product. If ourproducts or methods are found to infringe, we could be prevented from manufacturing or marketing our product.33Companies in the medical drug/device industry may use intellectual property infringement litigation to gain a competitive advantage. In the United States,patent applications filed in recent years are confidential for 18 months, while older applications are not publicly available until the patent issues. As a result,avoiding patent infringement may be difficult. Litigation may be necessary to enforce any patents issued or assigned to us or to determine the scope andvalidity of third-party proprietary rights. Litigation could be costly and could divert our attention from our business. There are no guarantees that we willreceive a favorable outcome in any such litigation. If a third party claims that we infringed its patents, any of the following may occur: •we may become liable for substantial damages for past infringement if a court decides that our technologies infringe upon a competitor’s patent; •a court may prohibit us from selling or licensing our product without a license from the patent holder, which may not be available oncommercially acceptable terms or at all, or which may require us to pay substantial royalties or grant cross-licenses to our patents; and •we may have to redesign our product so that it does not infringe upon others’ patent rights, which may not be possible or could requiresubstantial funds or time.Litigation related to infringement and other intellectual property claims such as trade secrets, with or without merit, is unpredictable, can be expensive andtime-consuming, and can divert management’s attention from our core business. If we lose this kind of litigation, a court could require us to pay substantialdamages, treble damages, and attorneys’ fees, and could prohibit us from using technologies essential to our product, any of which would have a materialadverse effect on our business, results of operations, and financial condition. If relevant patents are upheld as valid and enforceable and we are found toinfringe, we could be prevented from selling our product unless we can obtain licenses to use technology or ideas covered by such patents. We do not knowwhether any necessary licenses would be available to us on satisfactory terms, if at all. If we cannot obtain these licenses, we could be forced to design aroundthose patents at additional cost or abandon the product altogether. Furthermore, because of the substantial amount of discovery required in connection withintellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investorsperceive these results to be negative, it could cause the price of our common stock to decline.If others have filed patent applications with respect to inventions for which we already have patents issued to us or have patent applications pending, we maybe forced to participate in interference or derivation proceedings declared by the USPTO to determine priority of invention, which could also be costly andcould divert our attention from our business. If the USPTO declares an interference and determines that our patent or application is not entitled to a prioritydate earlier than that of the other patent application, our ability to maintain or obtain those patent rights will be curtailed. Similarly, if the USPTO declares aderivation proceeding and determines that the invention covered by our patent application was derived from another, we will not be able to obtain patentcoverage of that invention.Because of the extensive time required for development, testing and regulatory review of a potential product, it is possible that, before CHEMOSAT andMelphalan/HDS or any other Delcath product can be commercialized, any related patent may expire or remain in force for only a short period followingcommercialization, thereby reducing any advantages of the patent. Not all of our United States patent rights have corresponding patent rights effective inEurope or other foreign jurisdictions. Similar considerations apply in any other country where we are prosecuting patent applications, have been issuedpatents, or have decided not to pursue patent protection relating to our technology. The laws of foreign countries may not protect our intellectual propertyrights to the same extent as do laws of the United States.Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our product and our technologies.Legislation introduced earlier this decade increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement ordefense of our issued patents. The Leahy-Smith Act includes a number of significant changes to United States patent law. These include provisions that affectthe way patent applications are prosecuted, redefine prior art, may affect patent litigation, and switch the United States patent system from a “first-to-invent”system to a “first-inventor-to-file” system. Under a “first-inventor-to-file” system, assuming the other requirements for patentability are met, the first inventorto file a patent application generally will be entitled to the patent on an invention regardless of whether another inventor had made the invention earlier. TheUSPTO recently developed new regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patentlaw associated with the Leahy-Smith Act, in particular, the first-inventor-to-file provisions, only became effective on March 16, 2013. As case law continuesto develop in response to this legislation, it is not yet clear what the full impact of the Leahy-Smith Act will have on the operation of our business. However,the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and theenforcement or defense of our issued patents.34In addition, patent reform legislation may pass in the future that could lead to additional uncertainties and increased costs surrounding the prosecution,enforcement, and defense of our patents and applications. Furthermore, the United States Supreme Court and the United States Court of Appeals for theFederal Circuit have made, and will likely continue to make, changes in how the patent laws of the United States are interpreted. Similarly, foreign courtshave made, and will likely continue to make, changes in how the patent laws in their respective jurisdictions are interpreted. We cannot predict futurechanges in the interpretation of patent laws or changes to patent laws that might be enacted into law by United States and foreign legislative bodies. Thosechanges may materially affect our patents or patent applications and our ability to obtain and enforce or defend additional patent protection in the future.Our trademarks may be infringed or successfully challenged, resulting in harm to our business.We rely on our trademarks as one means to distinguish our product from the products of our competitors, and we have registered or applied to register manyof these trademarks. The USPTO or foreign trademark offices may deny our trademark applications, however, and even if published or registered, thesetrademarks may be ineffective in protecting our brand and goodwill and may be successfully opposed or challenged. Third parties may oppose our trademarkapplications, or otherwise challenge our use of our trademarks. In addition, third parties may use marks that are confusingly similar to our own, which couldresult in confusion among our customers, thereby weakening the strength of our brand or allowing such third parties to capitalize on our goodwill. In such anevent, or if our trademarks are successfully challenged, we could be forced to rebrand our product, which could result in loss of brand recognition and couldrequire us to devote resources to advertising and marketing new brands. Our competitors may infringe our trademarks and we may not have adequateresources to enforce our trademark rights in the face of any such infringement.We may rely primarily on trade secret protection for important proprietary technologies in the European Economic Area.In addition to patent and trademark protection, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information,to maintain our competitive position. Specifically in the European Economic Area (“EEA”), we rely on design patent and trade secret protection forCHEMOSAT and Melphalan/HDS. Without utility patent protection in the EEA covering the current version of CHEMOSAT and Melphalan/HDS,CHEMOSAT and Melphalan/HDS will only be covered by design patent and trade secret protection. Unlike patents, trade secrets are only recognized underapplicable law if they are kept secret by restricting their disclosure to third parties. We protect our trade secrets and proprietary knowledge in part throughconfidentiality agreements with employees, consultants and other parties. However, certain consultants and third parties with whom we have businessrelationships, and to whom in some cases we have disclosed trade secrets and other proprietary knowledge, may also provide services to other parties in themedical device industry, including companies, universities and research organizations that are developing competing products. In addition, some of ourformer employees who were exposed to certain of our trade secrets and other proprietary knowledge in the course of their employment may seek employmentwith, and become employed by, our competitors. We cannot be assured that consultants, employees and other third parties with whom we have entered intoconfidentiality agreements will not breach the terms of such agreements by improperly using or disclosing our trade secrets or other proprietary knowledge.Monitoring unauthorized uses and disclosures of our intellectual property is difficult, and we do not know whether the steps we have taken to protect ourintellectual property will be effective. In addition, we may not be able to obtain adequate remedies for any such breaches. Enforcing a claim that a partyillegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courtsinside and outside the United States are less willing or unwilling to protect trade secrets.Trade secret protection does not prevent independent discovery of the technology or proprietary information or use of the same. Competitors mayindependently duplicate or exceed our technology in whole or in part. If any of our trade secrets were to be lawfully obtained or independently developed bya competitor, we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us.If we are not successful in maintaining the confidentiality of our technology, the loss of trade secret protection or know-how relating to CHEMOSAT andMelphalan/HDS will significantly impair our ability to commercialize CHEMOSAT in the EEA, and our value and results of operations will be harmed. Inparticular, we rely on trade secret protection for the filter media, which is a key component of our system.Similar considerations apply in other foreign countries not mentioned above in the “Intellectual Property and Other Rights” section of Item 1 hereof wherewe receive approval. Since we do not have issued patents for the current version of CHEMOSAT and Melphalan/HDS in these countries, our ability tosuccessfully commercialize CHEMOSAT and Melphalan/HDS will depend on our ability to maintain trade secret protection in these markets.35We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of our competitorsor are in breach of non-competition or non-solicitation agreements with our competitors.We could in the future be subject to claims that we or our employees have inadvertently or otherwise used or disclosed alleged trade secrets or otherproprietary information of former employers, competitors, or other third parties. Although we endeavor to ensure that our employees and consultants do notuse the intellectual property, proprietary information, know-how or trade secrets of others in their work for us, we may in the future be subject to claims thatwe caused an employee to breach the terms of his or her non-competition or non-solicitation agreement, or that we or these individuals have, inadvertently orotherwise, used or disclosed the alleged trade secrets or other proprietary information of a former employer or competitor. Litigation may be necessary todefend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and could be a distractionto management. If our defense to those claims fails, in addition to paying monetary damages, a court could prohibit us from using technologies or featuresthat are essential to our product, if such technologies or features are found to incorporate or be derived from the trade secrets or other proprietary informationof the former employers or other third parties. An inability to incorporate technologies or features that are important or essential to our product may preventus from selling our product. In addition, we may lose valuable intellectual property rights or personnel. Moreover, any such litigation or the threat thereofmay adversely affect our ability to hire employees or contract with independent sales representatives. A loss of key personnel or their work product couldhamper or prevent our ability to commercialize our product.Risks Related to Products LiabilityThe Company may be the subject of product liability claims or product recalls, and it may be unable to maintain insurance adequate to cover potentialliabilities.The Company’s business exposes Delcath to potential liability risks that may arise from clinical trials and the testing, manufacture, marketing, sale and use ofCHEMOSAT and Melphalan/HDS. In addition, because CHEMOSAT and Melphalan/HDS are intended for use in patients with cancer, there is an increasedrisk of death among the patients treated with Delcath’s system which may increase the risk of product liability lawsuits related to clinical trials or commercialsales. The Company may be subject to claims against it even if the injury is due to the actions of others. For example, if the medical personnel that useDelcath’s system on patients are not properly trained or are negligent in the use of the system, the patient may be injured, which may subject Delcath toclaims. Were such a claim asserted, the Company would likely incur substantial legal and related expenses even if Delcath prevails on the merits. Claims fordamages, whether or not successful, could cause delays in clinical trials and result in the loss of physician endorsement, adverse publicity and/or limit theCompany’s ability to market and sell the system, resulting in loss of revenue. In addition, it may be necessary for Delcath to recall products that do not meetapproved specifications, which would also result in adverse publicity, as well as resulting in costs connected to the recall and loss of revenue. A successfulproducts liability claim or product recall would have a material adverse effect on Delcath’s business, financial condition and results of operations. TheCompany currently carries product liability and clinical trial insurance coverage, but it may be insufficient to cover one or more large claims.Risks Related to Delcath’s Common StockThe market price of Delcath common stock has been, and may continue to be volatile and fluctuate significantly, which could result in substantial lossesfor investors.The trading price for Delcath’s common stock has been, and the Company expects it to continue to be, volatile. The price at which Delcath’s common stocktrades depends upon a number of factors, including historical and anticipated operating results, the Company’s financial situation, announcements oftechnological innovations or new products by Delcath or its competitors, its ability or inability to raise the additional capital needed and the terms on whichit may be raised, and general market and economic conditions. Some of these factors are beyond the Company’s control. Broad market fluctuations may lowerthe market price of Delcath’s common stock and affect the volume of trading, regardless of the Company’s financial condition, results of operations, businessor prospects. Among the factors that may cause the market price of its common stock to fluctuate are the risks described in this “Risk Factors” section andother factors, including: •fluctuations in quarterly operating results or the operating results of competitors; •variance in financial performance from the expectations of investors; •changes in the estimation of the future size and growth rate of its markets; •changes in accounting principles or changes in interpretations of existing principles, which could affect financial results;36 •failure of its products to achieve or maintain market acceptance or commercial success; •conditions and trends in the markets served; •changes in general economic, industry and market conditions; •success of competitive products and services; •changes in market valuations or earnings of competitors; •changes in pricing policies or the pricing policies of competitors; •announcements of significant new products, contracts, acquisitions or strategic alliances by the Company or its competitors; •potentially negative announcements, such as a review of any of our filings by the SEC, changes in accounting treatment or restatements ofpreviously reported financial results or delays in our filings with the SEC: •changes in legislation or regulatory policies, practices or actions; •the commencement or outcome of litigation involving Delcath, its general industry or both; •our filing for protection under federal bankruptcy laws; •recruitment or departure of key personnel; •changes in capital structure, such as future issuances of securities or the incurrence of additional debt; •actual or expected sales of common stock by stockholders; and •the trading volume of Delcath’s common stock.In addition, the stock markets, in general, the OTC and the market for pharmaceutical companies in particular, may experience a loss of investor confidence.Such loss of investor confidence may result in extreme price and volume fluctuations in Delcath’s common stock that are unrelated or disproportionate to theoperating performance of its business, financial condition or results of operations. These broad market and industry factors may materially harm the marketprice of Delcath’s common stock and expose it to securities class action litigation. Such litigation, even if unsuccessful, could be costly to defend and divertmanagement’s attention and resources, which could further materially harm the Company’s financial condition and results of operations.The exercise price and number of certain outstanding warrants may be adjusted in future offerings.The 0.2 million warrants issued in the Company’s February 2015, July 2015, October 2016 and February 2018 offerings are subject to an exercise priceadjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting Delcath’s common stock. The exercise price of thewarrants is also subject to anti-dilution adjustments for any issuance of common stock or rights to acquire common stock for consideration per share less thanthe exercise price of the warrants. In addition, to the potential dilutive effect of this provision, there is the potential that a large number of the shares may besold in the public market at any given time, which could place additional downward pressure on the trading price of Delcath’s common stock.37The issuance of additional stock in connection with acquisitions or otherwise will dilute all other stockholdings.The Company is not restricted from issuing additional shares of common stock, or from issuing securities that are convertible into or exchangeable for, or thatrepresent the right to receive, common stock. As of June 14, 2019, the Company had an aggregate of 1 billion shares of common stock authorized and 18.3million shares of common stock issued and outstanding. The 981.7 million shares of common stock not issued or outstanding include 53.4 million pre-funded warrants and 4.3 million shares issuable upon the exercise of the outstanding warrants at a weighted average price of $2.98. The Company may issueall of these shares without any action or approval by its shareholders. Delcath may expand its business through complementary or strategic businesscombinations or acquisitions of other companies and assets, and may issue shares of common stock in connection with those transactions. The market price ofDelcath’s common stock could decline as a result of the issuance of a large number of shares of common stock, particularly if the per share considerationreceived for the stock issued is less than the per share book value of Delcath’s common stock or if the Company is not expected to be able to generateearnings with the proceeds of the issuance that are as great as the earnings per share generated before the issuance of the additional shares. In addition, anyshares issued in connection with these activities, the exercise of warrants or stock options or otherwise would dilute the percentage ownership held byinvestors. The Company cannot predict the size of future issuances or the effect, if any, that they may have on the market price of its common stock.The Company has a history of reverse splits, which have severely impacted its common stock price.Since Delcath’s initial public offering in 2000, it has executed four reverse stock splits, for a cumulative ratio since its IPO of 1:44,800,000. Each such reversesplit has resulted in an effective decline in the price of Delcath’s common stock. For example, the most recent reverse split of 1:500 was effected on May 2,2018, resulting in an opening price of $2.50.Anti-takeover provisions in the Company’s Certificate of Incorporation and By-laws may reduce the likelihood of a potential change of control, or make itmore difficult for its stockholders to replace management.Certain provisions of the Company’s Certificate of Incorporation and By-laws could have the effect of making it more difficult for its stockholders to replacemanagement at a time when a substantial number of stockholders might favor a change in management. These provisions include: •providing for a staggered board; and •authorizing the board of directors to fill vacant directorships or increase the size of its board of directors.Furthermore, Delcath’s board of directors has the authority to issue up to 10,000,000 shares of preferred stock in one or more series and to determine the rightsand preferences of the shares of any such series without stockholder approval. Any series of preferred stock is likely to be senior to the common stock withrespect to dividends, liquidation rights and, possibly, voting rights. The board’s ability to issue preferred stock may have the effect of discouragingunsolicited acquisition proposals, thus adversely affecting the market price of Delcath’s common stock.The Company is subject to the risks relating to penny stocks.Trading in the Company’s common stock is subject to the requirements of certain rules promulgated under the Exchange Act. These rules require additionaldisclosure by broker-dealers in connection with any trades involving a stock defined as a “penny stock” and impose various sales practice requirements onbroker-dealers who sell penny stocks to persons other than established customers and accredited investors, generally institutions. These additionalrequirements may discourage broker-dealers from effecting transactions in securities that are classified as penny stocks, which could severely limit the marketprice and liquidity of such securities and the ability of purchasers to sell such securities in the secondary market. A penny stock is defined generally as anynon-exchange listed equity security that has a market price of less than $5.00 per share, subject to certain exceptions.The Company has never declared or paid any dividends to the holders of its common stock and does not expect to pay cash dividends in the foreseeablefuture.The Company currently intends to retain all earnings for use in connection with the expansion of its business and for general corporate purposes. The boardof directors will have the sole discretion in determining whether to declare and pay dividends in the future. The declaration of dividends will depend onprofitability, financial condition, cash requirements, future prospects and other factors deemed relevant by the Company’s board of directors. Delcath’sability to pay cash dividends in the future could be limited or prohibited by the terms of financing agreements that it may enter into or by the terms of anypreferred stock that may be authorized and issued. The Company does not expect to pay dividends in the foreseeable future. As a result, holders of Delcath’scommon stock must rely on stock appreciation for any return on their investment.38If the Company engages in acquisitions, reorganizations or business combinations, it will incur a variety of risks that could adversely affect its businessoperations or its stockholders.The Company may consider strategic alternatives, such as acquiring businesses, technologies or products or entering into a business combination withanother company. If Delcath does pursue such a strategy, the Company could, among other things: •issue equity securities that would dilute current stockholders’ percentage ownership; •incur substantial debt that may place strains on its operations; •spend substantial operational, financial and management resources in integrating new businesses, personnel, intellectual property, technologiesand products; •assume substantial actual or contingent liabilities; •reprioritize its programs and even cease development and commercialization of CHEMOSAT and Melphalan/HDS; •suffer the loss of key personnel, or •merge with, or otherwise enter into a business combination with, another company in which Delcath stockholders would receive cash or shares ofthe other company or a combination of both on terms that certain of the Company’s stockholders may not deem desirable.Although we intend to evaluate and consider different strategic alternatives, we have no agreements or understandings with respect to any acquisition,reorganization or business combination at this time. Item 1B. Unresolved Staff Comments.Not applicable. Item 2. Properties.Delcath’s corporate offices currently occupy 6,877 square feet of office space at 1633 Broadway, Suite 22C, New York, New York under a sub-leaseagreement that expires in February 2021. The Company leases two additional spaces in the United States comprised of approximately 6,000 square feet at 95-97 Park Road in Queensbury, New York and 17,320 square feet of office space at 810 Seventh Avenue, New York, New York. The lease agreements expire inNovember 2020 and March 2021 respectively. The Company has subleased the office space at 810 Seventh Avenue to unaffiliated third-parties. See Note 13to the Company’s audited consolidated financial statements contained in this Annual Report on Form 10-K for more details. Delcath also owns a buildingcomprised of approximately 10,320 square feet at 566 Queensbury Avenue in Queensbury, New York. These facilities house manufacturing, qualityassurance and quality control, research and development, and office space functions. The Company also owns approximately four acres of land at 12 and 14Park Road in Queensbury, New York. In addition, the Company leases a facility for office and manufacturing comprised of approximately 19,200 square feetat 19 Mervue, Industrial Park in Galway, Ireland under a lease agreement that expires in August 2021. The Company has sublet a portion of this facility to anunaffiliated third-party. The Company believes substantially all of its property and equipment is in good condition and that it has sufficient capacity to meetcurrent operational needs. Item 3. Legal Proceedings. From time to time, claims are made against the Company in the ordinary course of business, which could result in litigation. Claims and associated litigationare subject to inherent uncertainties and unfavorable outcomes could occur, such as monetary damages, fines, penalties or injunctions prohibiting us fromselling our products or engaging in other activities.The occurrence of an unfavorable outcome in any specific period could have a material adverse effect on the Company’s results of operations for that periodor future periods.39As previously reported, on March 26, 2019, the Company commenced an action (the “Action”) in the Commercial Division of the Supreme Court for theState of New York, County of New York, styled as Delcath Systems, Inc., v. Iroquois Capital Investment Group LLC, Iroquois Master Fund Ltd., L1 CapitalGlobal Opportunities Master Fund and First Fire Global Opportunities Fund LLC (Index No. 651749/2019). The Action seeks expedited equitable relief inthe form of reformation and a declaratory judgement to remedy a scrivener’s error in the Series D Warrants issued in the Company’s February 2018 publicoffering such that those warrants do not contain a price and quantity ratchet upon a sale of Company securities at a price lower than the offering price in theFebruary 2018 offering. The defendant, L1 Capital Global Opportunities Master Fund, settled with the Company by exchanging its Series D Warrants forCompany common stock on a one-for-one basis, which is the same ratio for which other investors in the February 2018 round exchanged their Series DWarrants in December 2018. The Company and the remaining defendants in the Action, Iroquois Capital Investment Group LLC, Iroquois Master Fund Ltd.and First Fire Global Opportunities Fund LLC, entered into a settlement agreement on April 18, 2019, the full text of which is annexed as Exhibit 10.42 tothis Annual Report on Form 10-K, pursuant to which such defendants surrendered the Series D Warrants and waived all rights granted to them by or inconnection with the Series D Warrants and all rights afforded to them to participate in the Company’s future common stock offerings. In considerationtherefor, pursuant to the settlement agreement, (i) the Company paid one-fifth of the reasonable fees and expenses of defendants’ counsel incurred inconnection with the action and negotiation of the settlement agreement, the total of which shall not exceed $50,000 (the “Settlement Fees”) and (ii) subjectto the Company securing and closing certain contemplated financing, the Company agreed to pay to the defendants $400,000 and the remaining SettlementFees. As previously reported, on July 27, 2018, Hudson Bay Master Fund Ltd. filed a summons and complaint against the Company in the New York State SupremeCourt, New York County alleging breaches by the Company of Hudson Bay’s rights of participation in future Company offerings granted in the September2017 Securities Purchase Agreement between the Company and Hudson Bay and in the February 2018 Securities Purchase Agreement among, inter alia, theCompany and Hudson Bay. In terms of relief sought, Hudson Bay claimed both monetary damages (which it claims to be in excess of $1 million) and specificperformance. The Company denied any liability with respect to the claims set forth in the lawsuit. As previously reported, on January 4, 2019, the Companywas notified by its litigation counsel that on December 28, 2018, the Suit was dismissed with prejudice by the filing of a Stipulation for Discontinuance inthe New York State Supreme Court, New York County. Item 4. Mine Safety Disclosures. Not applicable.40Part IIItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.Delcath’s common stock is traded on the OTC Markets LLC under the symbol “DCTH”.On June 14, 2019 there were approximately 40 stockholders of record of Delcath’s common stock. The Company’s website is www.delcath.com. Delcathmakes available free of charge on or through its website the Company’s 10-K, 10-Q and 8-K reports, including exhibits, as soon as reasonably practicableafter being filed with or furnished to the SEC.Dividend PolicyThe Company has never declared or paid cash dividends on its common stock and has no intention to do so in the foreseeable future.Recent Sales of Unregistered SecuritiesAll unregistered sales of equity securities during the period covered by this annual report on Form 10-K were previously disclosed in current reports on Form8-K and Quarterly Reports on Form 10-Q.Repurchases of Equity SecuritiesNone. Item 6. Selected Financial Data.Not required. 41Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.Overview Delcath Systems, Inc. is an interventional oncology company focused on the treatment of primary and metastatic liver cancers. Our investigational product,“Melphalan Hydrochloride for Injection for use with the Delcath Hepatic Delivery System” (“Melphalan/HDS”), is designed to administer high-dosechemotherapy to the liver while controlling systemic exposure and associated side effects. In the United States, Melphalan/HDS is considered a combination drug and device product, is referred to by its chemical name and delivery system,Melphalan/HDS, and is regulated as a drug by the Federal Food and Drug Administration (the “FDA”). The FDA has granted us six orphan drug designations,including three orphan designations for the use of the drug melphalan for the treatment of patients with ocular melanoma liver metastases (“mOM”),hepatocellular carcinoma (“HCC”) and intrahepatic cholangiocarcinoma, a type of primary livery cancer (“ICC”). Melphalan/HDS has not been approved forsale in the United States. In Europe, our delivery system, without the drug, is commercially available under the trade name Delcath Hepatic CHEMOSAT® Delivery System forMelphalan (marketed under the name CHEMOSAT and referred to herein as “CHEMOSAT”), where it has been used at major medical centers to treat a widerange of cancers of the liver. The current version of CHEMOSAT is regulated as a Class IIb medical device and received its CE Mark in 2012. We are in anearly phase of commercializing CHEMOSAT in select markets in the European Union (the “EU”) where the prospect of securing reimbursement coverage forthe procedure is strongest. In 2015 national reimbursement coverage for CHEMOSAT procedures was awarded in Germany. In 2016, coverage levels werenegotiated between hospitals in Germany and regional sickness funds. Coverage levels determined via this process are expected to be renegotiated annually.In 2017, Dutch health authorities added CHEMOSAT to their treatment guidelines for patients with ocular melanoma metastatic to the liver, an importantstep toward eventual reimbursement in the Dutch market. Our primary research focus is on mOM and ICC and certain other cancers that are metastatic to the liver. Currently there are few effective treatment optionsfor certain cancers in the liver. Traditional treatment options include surgery, systemic chemotherapy, liver transplant, radiation therapy, interventionalradiology techniques, and isolated hepatic perfusion. We believe that Melphalan/HDS and CHEMOSAT represent a potentially important advancement inregional therapy for primary liver cancer and certain other cancers metastatic to the liver and are uniquely positioned to treat the entire liver either as astandalone therapy or as a complement to other therapies. We believe the disease states we are investigating represent a multi-billion dollar global marketopportunity and a clear unmet medical need. Our clinical development program for Melphalan/HDS is comprised of the FOCUS Clinical Trial for Patients with Hepatic Dominant Ocular Melanoma (the“FOCUS Trial”), a global registration clinical trial that is investigating objective response rate in mOM, and the ALIGN Trial, a global Phase 3 clinical trialfor ICC (the “ALIGN Trial”). Our product also includes a registry for CHEMOSAT commercial cases performed in Europe and sponsorship of selectInvestigator Initiated Trials. The direction and focus of our product is informed by prior clinical development conducted between 2004 and 2010, commercial CHEMOSAT treatment ofpatients in Europe, and prior regulatory experience with the FDA. Experience gained from this research and development, early European commercial casesand United States regulatory opinion has led to the implementation of several safety improvements to our product and the associated medical procedure. While we currently utilize third parties to manufacture some components of our product, we also have our own medical device manufacturing operations forcertain components of our product and assemble, label and package our products in Queensbury, New York. See the discussion in Part 1, Item 1 hereof underthe caption “Manufacturing and Quality Assurance.” We commercialize our product in Europe through alliances with third parties. 42Our Ability to Continue as a Going ConcernThe notes to our consolidated financial statements contained in this Annual Report on Form 10-K for the year ended December 31, 2018 include disclosuredescribing the existence of certain conditions that raise substantial doubt about our ability to continue as a going concern. Our ability to continue as a goingconcern is dependent upon our ability to obtain substantial additional funding in connection with our continuing operations. Adequate additional financingmay not be available to us on acceptable terms, or at all. If we are unable to raise additional capital and/or enter into strategic alliances when needed or onattractive terms, we would be forced to delay, reduce or eliminate our research and development programs or any commercialization efforts. Our consolidatedfinancial statements as of December 31, 2018 have been prepared under the assumption that we will continue as a going concern. If we are not able tocontinue as a going concern, it is likely that holders of our common stock will lose all of their investment. Our consolidated financial statements do notinclude any adjustments that might result from the outcome of this uncertainty. See risk factors relating to our financial condition as well as other risk factorsthat we face in Part 1, Item 1A hereof under the caption “Risk Factors” above.Our independent registered public accounting firm has issued its report dated June 14, 2019 in connection with the audit of our consolidated financialstatements as of December 31, 2018 that included an explanatory paragraph describing the existence of conditions that raise substantial doubt about ourability to continue as a going concern.Liquidity and Capital ResourcesThe Company’s future results are subject to substantial risks and uncertainties. As noted above, Delcath has operated at a loss for its entire history andanticipates that losses will continue over the coming year. There can be no assurance that Delcath will ever generate significant revenues or achieveprofitability. The Company expects to use cash, cash equivalents and investment proceeds to fund its operating activities. Delcath’s future liquidity andcapital requirements will depend on numerous factors, including the progress of clinical trials and research and product development programs, obtainingapprovals and complying with regulations; the timing and effectiveness of product commercialization activities, including marketing arrangements; thetiming and costs involved in preparing, filing, prosecuting, defending and enforcing intellectual property rights; and the effect of competing technologicaland market developments. At December 31, 2018, the Company had cash and cash equivalents totaling $2.5 million, as compared to cash and cash equivalents totaling $4.0 million atDecember 31, 2017. During the year ended December 31, 2018, the Company used $14.7 million of cash for its operating activities, which compares to $15.4million used for operating activities during the year ended December 31, 2017. The increase of $0.7 million was primarily driven by an increase in operatingexpenses primarily related to the Company’s clinical trial effort discussed in the Overview section above. In light of recent financing activities describedbelow, the Company believes it has sufficient capital to fund its operating activities through June 2019.Our consolidated financial statements as of December 31, 2018 have been prepared under the assumption that we will continue as a going concern for thenext twelve months. We expect to incur significant expenses and operating losses for the foreseeable future. These factors raise substantial doubt about ourability to continue as a going concern. Because Delcath’s business does not generate positive cash flow from operating activities, the Company will need toobtain substantial additional capital in order to fund clinical trial research and support our development efforts and to fully commercialize our product. TheCompany believes it will be able to raise additional capital in the event it is in its best interest to do so. The Company anticipates raising such additionalcapital by either selling shares of Delcath’s capital stock, borrowing money or entering into strategic alliances with appropriate partners. To the extentadditional capital is not available when needed or on acceptable terms, the Company may be forced to abandon some or all of its development andcommercialization efforts, which would have a material adverse effect on the prospects of its business. Further, the Company’s assumptions relating to itscash requirements may differ materially from its actual requirements because of a number of factors, including significant unforeseen delays in the regulatoryapproval process, changes in the timing, scope, focus and direction of clinical trials and costs related to commercializing the product.The Company has funded its operations through a combination of private placements and public offerings of its securities in 2000, 2003, 2009, 2010, 2011,2012, 2013, 2015, 2016 and 2018, including registered direct offerings in 2007, 2009 and 2013, “at the market” equity offering programs in 2012 and 2013,a rights offering in 2018 and by the private placement of convertible notes in 2016 and 2018. For a detailed discussion of the Company’s various sales ofdebt and equity securities see Notes 10 and 11 to the Company’s audited consolidated financial statements contained in this Annual Report on Form 10-K.43In October 2018, the Company filed a registration statement on Form S-3 with the SEC, which was declared effective on December 21, 2018 and allowed theCompany to offer and sell, from time to time in one or more offerings, up to $100.0 million of common stock, preferred stock, warrants, debt securities andstock purchase contracts as it deems prudent or necessary to raise capital at a later date. The Company has lost its Form S-3 eligibility due to the late filing ofits Form 10-K for the year ended December 31, 2018.Since the close of our most recent fiscal year, we have borrowed an aggregate of $3.3 million from institutional investors. See Note 15 to the Company’saudited consolidated financial statements contained in this Annual Report on Form 10-K for a discussion of these subsequent events.Contractual Obligations, Commercial Commitments and Off-Balance Sheet ArrangementsThe Company is obligated to make future payments under various operating lease agreements. The following table provides a summary of significantcontractual obligations at December 31, 2018: Payments Due by Period (in millions) Total Less than1 year 1-3 years 3-5 years More than5 years Operating Activities: Future minimum lease payments, net of receipts due under subleases $2.1 $0.9 $1.3 $— $— Delcath’s operating lease obligations at December 31, 2018 include: (in millions) Annual Lease Payment Expiration1633 Broadway, Suite 22C, NY, NY $0.5 February 2021810 Seventh Ave, 35Fl, NY, NY1 0.5 March 202195 Park Road, Queensbury, NY 0.05 November 202019 Mervue Galway, Ireland2 0.2 August 2021Total $1.3 1 A certain amount of expense related to the lease at 810 Seventh Ave. has been offset by two sub-leases2 A certain amount of expense related to the lease at 19 Mervue has been offset by a sub-lease See Part I, Item 2, “Properties” and Notes 9 and 13 to the Company’s audited consolidated financial statements contained in this Annual Report on Form 10-K.Future Capital Needs; Additional Future FundingThe Company’s future results are subject to substantial risks and uncertainties. The Company has operated at a loss for its entire history and there can be noassurance that it will ever achieve consistent profitability. Based upon recent financing activities described above, the Company believes that it has adequateresources to fund operations through June 2019. Additional working capital will be required to continue operations. There can be no assurance that suchworking capital will be available on acceptable terms, if at all.Results of Operations for the Year Ended December 31, 2018; Comparisons of Results of the Years Ended December 31, 2018 and 2017 RevenueThe Company recorded approximately $3.4 million in product revenue during the year ended December 31, 2018. During the same period in 2017, Delcathrecorded $2.7 million in total revenue related to product sales. The year over year increase is a result of greater product sales in 2018 as Delcath continues tosee increased market acceptance of its product in the EU, particularly in Germany where the establishment of the ZE code has contributed to increasedtreatments.Additionally, the Company recorded approximately $29,000 in other revenue which is related to the amortization of certain payments pursuant to adefinitive licensing agreement for CHEMOSAT commercialization in Europe between the Company and medac Gesellschaft für klinische SpezialpräparatembH (“Medac”) signed on December 17, 2018 and discussed further in Part I, Item 1 under the section captioned “Market Access and Commercial ClinicalAdoption” above.The adoption of ASC 606 on January 1, 2018 had no impact on the amount and timing of revenue recognition related to product sales.44Cost of Goods SoldDuring the year ended December 31, 2018, the Company recognized cost of goods sold of approximately $1.0 million related to product revenue of $3.4million as compared to cost of goods sold of approximately $0.7 million related to product revenue of $2.7 million in the comparable prior period.The increase in cost of goods sold is commensurate with the increase in revenue. Selling, General and Administrative Expenses For the year ended December 31, 2018, selling, general and administrative expenses increased to $9.8 million from $9.7 million for the year ended December31, 2017. The slight increase reflects the Company’s efforts to focus its resources on its clinical development program. Research and Development Expenses For the year ended December 31, 2018, research and development expenses increased to $19.7 million from $10.5 million for the year ended December 31,2017. The increase of $9.2 million is primarily due to the ongoing efforts of the FOCUS Trial which is discussed in further detail in Part 1, Item 1 in thesection captioned “Current Clinical Development Program” above.Other Income/Expense and Interest ExpenseOther expense is primarily related to foreign currency exchange gains and losses. Interest expense is related to the restructuring lease liability discussed in Note 9 of the Company’s audited consolidated financial statements contained inthis Annual Report on Form 10-K and the amortization of debt discounts discussed in Note 10 of the Company’s audited consolidated financial statementscontained in this Annual Report on Form 10-K. Interest income is from a money market account and interest earned on operating accounts. Change in Fair Value of Derivative Liability For the year ended December 31, 2018, derivative instrument income increased to $19.7 million from $15.1 million for the year ended December 31, 2017.The increase of $4.6 million is primarily related to the mark-to-market adjustments to the warrant liability discussed in more detail in Note 12 to theCompany’s audited consolidated financial statements contained in this Annual Report on Form 10-K. Net LossThe Company had a net loss for the year ended December 31, 2018 of $19.2 million, a decrease of $25.9 million, or 57.4%, compared to the net loss for thesame period in 2017. This decrease is due in significant part to a $34.7 million decrease in various non-cash items primarily related to the amortization ofdebt discounts and other transaction costs related to convertible notes issued in 2016 and 2018, and discussed in greater detail in Note 10 of the Company’sconsolidated financial statements contained in this Annual Report on Form 10-K, offset by a $9.3 million increase in operating expenses primarily related toincreased investment in clinical trial initiatives. Income Taxes The Company has not recorded a provision for income taxes for the years ending December 31, 2018 and 2017, respectively, due to being in a net taxoperating loss position for each of those years. 45On December 22, 2017, the 2017 Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law and the new legislation contains several key tax provisions thataffected the Company, including a one-time mandatory transition tax on accumulated foreign earnings and a reduction of the corporate income tax rate to21% effective January 1, 2018, among others. The Company was required to recognize the effect of the tax law changes in the period of enactment, such asdetermining the transition tax, remeasuring our U.S. deferred tax assets and liabilities as well as reassessing the net realizability of our deferred tax assets andliabilities. In December 2017, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications ofthe Tax Cuts and Jobs Act (“SAB 118”), which allowed the Company to record provisional amounts during a measurement period not to extend beyond oneyear of the enactment date. Since the Tax Act was passed late in the fourth quarter of 2017, and ongoing guidance and accounting interpretation wereexpected in 2018, the Company considered the accounting of deferred tax re-measurements and the transition tax to be incomplete due to the forthcomingguidance and our ongoing analysis of final year-end data and tax positions. However, during the year ended December 31, 2017 the Company was able todetermine a provisional amount of $143,500 (offset by valuation allowance) and $0, respectively, related to the deferred tax re-measurement and one-timetransition tax. See Note 14 to the Company’s audited consolidated financial statements contained in this Annual Report on Form 10-K. The Companyfinalized its accounting of the effects of tax reform in 2018, which resulted in insignificant adjustments. Application of Critical Accounting PoliciesThe Company’s consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ofAmerica (“GAAP”). Certain accounting policies have a significant impact on amounts reported in the consolidated financial statements. A summary of thosesignificant accounting policies can be found in Note 3 to the Company’s audited consolidated financial statements contained in this Annual Report on Form10-K. The Company considers the valuation allowance for the deferred tax assets to be a significant accounting estimate. A valuation allowance has been recordedagainst the Company’s deferred tax assets as management believes it is more likely than not that the deferred tax assets will not be realized. In assessingwhether it is more likely than not that the Company will realize the benefits of its deferred tax assets, management considers all forms of available evidence,including the Company’s history of cumulative losses, estimates of future taxable income and losses (including reversals of deferred tax liabilities), andavailable tax planning strategies. Since the Company is in a cumulative loss position, it cannot rely on future taxable income as a source of taxable incomebecause the Company views a cumulative loss position as significant objective negative evidence that would be difficult to overcome with the othersubjective tests discussed. The Company does not have taxable income in prior years to absorb the carryback of net operating losses, nor has it implementedtax-planning strategies that would, if necessary, be implemented to allow for the usage of net operating losses. Prior to ASU 2016-16, GAAP prohibited the recognition of current and deferred income taxes for intra-entity asset transfers until the asset has been sold to anoutside party. ASU 2016-16 eliminates this prohibition for intra-entity transfers of assets other than inventory but retain the prohibition for intra-entitytransfers of inventory. This standard is effective for public entities for fiscal years beginning after December 15, 2017. On January 1, 2012, Delcath Systems,Inc. sold a portion of its intellectual property to affiliate, Delcath Holdings Limited, resulting in a taxable gain of $15.8 million in the U.S. based on the fairmarket value of the intangible that was transferred. The arms-length price, which was determined in accordance with Section 482 of the Internal RevenueCode, is a significant accounting estimate. Prior to ASU 2016-2016, the gain was deferred under GAAP principles until the asset is sold outside of theconsolidated financial statements. The remaining deferred gain on the intercompany sale of intangible assets is $2.0 million as of December 31, 2017. TheCompany adopted ASU 2016-16, effective on January 1, 2018. As a result of adoption, the Company immediately recognized the $2.0 million deferred gainand none remains as of December 31, 2018.The Company has adopted the provisions of Accounting Standard Codification (“ASC”) 718, Stock-Based Compensation, which establishes accounting forequity instruments exchanged for employee services. Under the provisions of ASC 718, share-based compensation is measured at the grant date, based uponthe fair value of the award, and is recognized as an expense over the option holders’ requisite service period (generally the vesting period of the equity grant).The Company expenses its share-based compensation under the accelerated method, which treats each vesting tranche as if it were an individual grant.The Company has adopted the provisions of ASC 505-50, Equity-Based Payments to Non-Employees, which establishes accounting for equity-basedpayments to non-employees. Measurement of compensation cost related to common shares issued to non-employees for services is based on the value of theservices provided or the fair value of the shares issued. Each transaction is reviewed to determine the more reliably measurable basis for the valuation. Themeasurement of non-employee stock-based compensation is subject to periodic adjustment as the underlying equity instrument vests. Non-employee stock-based compensation charges are amortized over the vesting period or period of performance of the services.The Company has adopted the provisions of ASC 820, Fair Value Measurement, which defines fair value, establishes a framework for measuring fair value,and expands disclosures about fair value measurements.46ASC 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should bedetermined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participantassumptions in fair value measurements, ASC 820 establishes a fair value hierarchy that distinguishes between market participant assumptions based onmarket data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and thereporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputsare inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs may includequoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), suchas interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for theasset or liability which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where thedetermination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy withinwhich the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’sassessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset orliability. See Note 12 to the Company’s audited consolidated financial statements contained in this Annual Report on Form 10-K for assets and liabilities theCompany has evaluated under ASC 820. 47Item 7A. Quantitative and Qualitative Disclosures About Market Risk The Company may be minimally exposed to market risk through changes in market interest rates that could affect the interest earned on its cash balances. The Company measures all derivatives, including certain derivatives embedded in contracts, at fair value and recognizes them on the balance sheet as anasset or a liability, depending on the Company’s rights and obligations under the applicable derivative contract.In February 2018, the Company completed the sale of 424,000 shares of its common stock, 76,000 pre-funded warrants and the issuance of warrants topurchase 1.0 million common shares (the “February 2018 Warrants”) pursuant to a placement agent agreement, with net proceeds after expenses of $4.3million. The Company allocated an estimated fair value of $18.3 million to the February 2018 Warrants. The exercise price is subject to appropriateadjustment in the event of stock dividends, stock splits, reorganizations or similar events affecting our common stock. The exercise price of the February2018 Warrants is also subject to anti-dilution adjustments for any issuance of common stock or rights to acquire common stock for consideration per shareless than the exercise price of the February 2018 Warrants. For purposes of these adjustments, dilutive issuances do not include securities issued underexisting instruments, under board-approved equity incentive plans or in certain strategic transactions. At December 31, 2018, the February 2018 Warrantswere exercisable at $10.00 per share with 0.2 million February 2018 Warrants outstanding. The February 2018 Warrants have a six-year term and are notexercisable until the first anniversary of issuance.The proceeds allocated to the Company’s issuance of warrants in 2013, 2015, 2016, 2017, and 2018 (collectively, the “Warrants”) were initially classified asderivative instrument liabilities that are subject to mark-to-market adjustments each period. As discussed in Note 10, the 2018 Series D Warrants weresubsequently reclassified to equity. For the twelve months ended December 31, 2018 , the Company recorded pre-tax derivative instrument income of $19.7million. The fair value of the Warrants totaled $0.03 million at December 31, 2018. Management expects that the warrants outstanding at December 31, 2018will either be exercised or expire worthless. The fair value of the Warrants at December 31, 2018 was determined by using option pricing models assumingthe following: December 31, December 31, 2018 2017Expected life (in years) 1.13 - 5.11 0.82 - 4.88Expected volatility 145.7% - 265.3% 130.9% - 266.9%Risk-free interest rates 2.5% - 2.6% 1.7% - 2.1% 48Item 8. Financial Statements and Supplementary Data Report of Marcum LLP - Independent Registered Public Accounting FirmF-1 Report of Grant Thornton LLP - Independent Registered Public Accounting FirmF-2 Consolidated Balance Sheets at December 31, 2018 and 2017F-3 Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2018 and 2017F-4 Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2018 and 2017F-5 Consolidated Statements of Cash Flows for the years ended December 31, 2018 and 2017F-6 Notes to Consolidated Financial StatementsF-7 49 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors ofDelcath Systems, Inc.Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheet of Delcath Systems, Inc. (the “Company”) as of December 31, 2018, the related consolidatedstatements of operations and comprehensive loss, stockholders’ equity and cash flows for the year ended December 31, 2018, and the related notes(collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position ofthe Company as of December 31, 2018, and the results of its operations and its cash flows for the year ended December 31, 2018, in conformity withaccounting principles generally accepted in the United States of America.Explanatory Paragraph - Going ConcernThe accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fullydescribed in Note 2, the Company has a working capital deficiency, has incurred losses and needs to raise additional funds to meet its obligations and sustainits operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to thesematters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of thisuncertainty.Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financialstatements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations ofthe Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, norwere we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding ofinternal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financialreporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, andperforming procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures inthe financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well asevaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion. /s/ Marcum LLP We have served as the Company’s auditor since 2018. New York, New YorkJune 14, 2019 F-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and ShareholdersDelcath Systems, Inc. Opinion on the financial statementsWe have audited the accompanying consolidated balance sheet of Delcath Systems Inc. (a Delaware corporation) and subsidiaries (the “Company”) as ofDecember 31, 2017, the related consolidated statement of operations, changes in stockholders’ equity, and cash flow for the year ended December 31, 2017,and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in allmaterial respects, the financial position of the Company as of December 31, 2017, and the results of its operations and its cash flow for the year endedDecember 31, 2017, in conformity with accounting principles generally accepted in the United States of America.Basis for opinionThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financialstatements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”)and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of theSecurities and Exchange Commission and the PCAOB.We conducted our audit in accordance with the auditing standards of the PCAOB and in accordance with auditing standards generally accepted in the UnitedStates of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are freeof material misstatement, whether due to error or fraud.Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, andperforming procedures that respond to those risks. Such procedures include examining, on a test basis, evidence supporting the amounts and disclosures inthe financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well asevaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. We served as the Company’s auditor from 2015 to 2017. /s/Grant Thornton LLP New York, New YorkMarch 16, 2018 (except for the matter described in Note 2, second paragraph, as to which the date is May 2, 2018) F-2 DELCATH SYSTEMS, INC.Consolidated Balance Sheets(in thousands, except share and per share data) December 31, December 31, 2018 2017 Assets Current assets Cash and cash equivalents $2,516 $3,999 Restricted cash 1,062 1,325 Accounts receivables, net 585 317 Inventories 858 1,248 Prepaid expenses and other current assets 898 700 Total current assets 5,919 7,589 Property, plant and equipment, net 925 1,298 Total assets $6,844 $8,887 Liabilities and Stockholders' Equity (Deficit) Current liabilities Accounts payable $7,715 $3,846 Accrued expenses 7,964 3,408 Convertible notes payable, net of debt discount 2,038 — Warrant liability 33 560 Total current liabilities 17,750 7,814 Deferred revenue 3,405 — Other non-current liabilities 628 395 Total liabilities 21,783 8,209 Commitments and contingencies Stockholders' Equity (Deficit) Preferred stock, $.01 par value; 10,000,000 shares authorized; 101 and 0 shares issued and outstanding at December 31, 2018 and December 31, 2017, respectively — — Common stock, $.01 par value; 1,000,000,000 shares authorized; 10,299,954 and 228,140 shares issued and 10,229,954 and 228,139 shares outstanding at December 31, 2018 and December 31, 2017, respectively* 103 2 Additional paid-in capital 328,962 325,517 Accumulated deficit (344,054) (324,832)Treasury stock, at cost; 0 and 1 share at December 31, 2018 and December 31, 2017, respectively* — (51)Accumulated other comprehensive loss 50 42 Total stockholders' equity (deficit) (14,939) 678 Total liabilities and stockholders' equity (deficit) $6,844 $8,887 *reflects a one-for-three hundred and fifty (1:350) reverse stock split effected on November 6, 2017 and a one-for-five hundred (1:500) reverse stock split effected on May 2,2018. See Accompanying Notes to these Consolidated Financial Statements. F-3 DELCATH SYSTEMS, INC.Consolidated Statements of Operations and Comprehensive Loss(in thousands, except share and per share data) Year ended December 31, 2018 2017 Product revenue $3,378 $2,715 Other revenue 29 — Cost of goods sold (1,009) (701)Gross profit 2,398 2,014 Operating expenses: Research and development expenses 19,650 10,495 Selling, general and administrative expenses 9,819 9,684 Total operating expenses 29,469 20,179 Operating loss (27,071) (18,165) Change in fair value of the warrant liability, net 19,706 15,103 Gain on warrant extinguishment — 9,613 Loss on debt extinguishment (1,123) (29,924)Loss on issuance of financial instrument (2,826) — Interest expense (7,959) (21,703)Other income (expense) 51 (41)Net loss $(19,222) $(45,117)Other comprehensive loss: Foreign currency translation adjustments $8 $83 Comprehensive loss $(19,214) $(45,034) Common share data: Basic and diluted loss per share* $(0.72) $(3,250) Weighted average number of basic and diluted shares outstanding* 26,705,375 14,039 *reflects a one-for-three hundred and fifty (1:350) reverse stock split effected on November 6, 2017 and a one-for-five hundred (1:500) reverse stock split effected on May 2,2018. See Accompanying Notes to these Consolidated Financial Statements. F-4 DELCATH SYSTEMS, INC.Consolidated Statements of Stockholders’ Equity (Deficit)for the Years Ended December 31, 2018 and 2017(in thousands, except share data) Common Stock Issued Preferred Stock Issued $0.01 Par Value* $0.01 Par Value* In Treasury* Accumulated Total # of shares Amount # of shares Amount # of shares Amount AdditionalPaid-inCapital* AccumulatedDeficit OtherComprehensive(loss) income Stockholders'Equity(Deficit) Balance at January 1, 2017 24 — — — (1) $(51) $277,790 $(279,188) $(41) $(1,490)Compensation expense for issuance ofstock options — — — — — — 50 — — 50 Compensation expense for issuance ofrestricted stock — — — — — — 79 — — 79 Issuance of common stock and rights for payments made in shares on convertible notes payable 262,462 2 — — — — 40,119 — — 40,121 Fair value of beneficial conversion featureof convertible note — — — — — — 4,908 — — 4,908 Series B preferred stock dividend — — — — — — — (527) — (527)Warrants exercised 736 — — — — — 19 — — 19 Fair value of warrants exercised — — — — — — 2,552 — — 2,552 Adjustment for rounding related to Nov2017 reverse stock split 93 — — — — — — — — — Net loss — — — — — — (45,117) — (45,117)Foreign currency translation — — — — — — — — 83 83 Balance at December 31, 2017 263,315 2 — — (1) (51) 325,517 (324,832) 42 678 Compensation income related tocancellation of stock options — - — — — — (40) — — (40)Compensation expense for issuance ofrestricted stock 164,989 2 — — — — 96 — — 98 Sale of common stock, net of expenses 5,336,665 54 — — — — 10,862 — — 10,916 Fair value of warrants issued in Feb 2018public offering — - — — — — (18,306) — — (18,306)Cashless exercise of warrants 34,467 - — — — — — — — - Issuance of pre-funded warrants — - — — — — 520 — — 520 Exercise of pre-funded warrants 3,675,516 37 — — — — (37) — — - Fair value of warrants issued withConvertible Notes — - — — — — 5,007 — — 5,007 Fair value of warrants reclassified fromliability to equity — - — — — — 4,210 — — 4,210 Beneficial conversion feature ofconvertible note — - — — — — 44 — — 44 Issuance of Series D Preferred Stock — - 101 — — — 1,004 — — 1,004 Exchange of warrants for common stock 825,002 8 — — — — (8) — — - Fair value of warrants exchanged forcommon stock — - — — — — 144 — — 144 Retirement of Treasury Stock — - — — 1 51 (51) — — - Net loss — - — — — — — (19,222) — (19,222)Foreign currency translation — - — — — — — — 8 8 Balance at December 31, 2018 10,299,954 103 101 — — 0 328,962 (344,054) 50 (14,939) *reflects a one-for-three hundred and fifty (1:350) reverse stock split effected on November 6,2017 and a one-for-five hundred (1:500) reverse stock split effected on May 2, 2018. See Accompanying Notes to these Consolidated Financial Statements. F-5 DELCATH SYSTEMS, INC.Consolidated Statements of Cash Flows(in thousands) Year ended December 31, 2018 2017 Cash flows from operating activities: Net loss $(19,222) $(45,117)Adjustments to reconcile net loss to net cash used in operating activities: Stock option compensation expense (40) 50 Restricted stock compensation expense 98 79 Depreciation expense 444 310 Loss on disposal of equipment — 18 Warrant liability fair value adjustment (19,706) (15,103)Gain on warrant extinguishment — (9,613)Non-cash interest income (1) (1)Interest expense accrued related to convertible notes 402 — Debt discount and deferred finance costs amortization 7,572 21,544 Loss on issuance of financial instrument 2,826 — Loss on debt settlements and extinguishments 1,123 29,924 Changes in assets and liabilities: Prepaid expenses and other assets (218) 7 Accounts receivable (293) 108 Inventories 385 (543)Accounts payable and accrued expenses 8,163 3,180 Deferred revenue 3,503 (32)Other non-current liabilities 232 (209)Net cash used in operating activities (14,732) (15,398) Cash flows from investing activities: Purchase of property, plant and equipment (76) (524)Net cash (used in) provided by investing activities (76) (524) Cash flows from financing activities: Expenses from the release of restricted cash — (1,212)Cash paid to extinguish of Series C Warrants — (7,876)Net proceeds from sale of Series B and Series C preferred shares — 2,310 Cash paid to redeem Series A and Series B preferred shares — (2,360)Cash paid to redeem Series C preferred shares — (590)Cash paid pursuant to Exchange Agreement — (804)Net proceeds from convertible note debt financing 5,664 — Net proceeds from sale of stock 10,917 15 Net proceeds from exercise of warrants 520 — Net proceeds from the sale of Series D preferred shares 1,005 — Repayment of convertible note debt (4,870) — Net cash provided by (used in) financing activities 13,236 (10,517)Foreign currency effects on cash, cash equivalents and restricted cash (174) 67 Net decrease in cash, cash equivalents and restricted cash (1,746) (26,372) Cash, cash equivalents and restricted cash: Beginning of period 5,324 31,696 End of period $3,578 $5,324 Supplemental non-cash activities: Conversion of convertible notes $— $40,121 Fair value of warrants issued $28,539 $16,953 Cashless exercise of warrants $— $2,537 Deemed dividend $— $527 Fair value of warrants exercised for cash $— $19See Accompanying Notes to these Consolidated Financial Statements. F-6 DELCATH SYSTEMS, INC.Notes to Consolidated Financial Statementsfor the Years Ended December 31, 2018 and 2017 (1)Description of Business Delcath Systems, Inc. is an interventional oncology company focused on the treatment of primary and metastatic liver cancers. Our investigationalproduct, “Melphalan Hydrochloride for Injection for use with the Delcath Hepatic Delivery System” (“Melphalan/HDS”), is designed to administerhigh-dose chemotherapy to the liver while controlling systemic exposure and associated side effects. Our primary research focus is on ocular melanoma liver metastases (“mOM”) and intrahepatic cholangiocarcinoma (“ICC”) and certain other cancersthat are metastatic to the liver. Currently there are few effective treatment options for certain cancers in the liver. Traditional treatment options includesurgery, systemic chemotherapy, liver transplant, radiation therapy, interventional radiology techniques, and isolated hepatic perfusion. We believethat Melphalan/HDS and CHEMOSAT represent a potentially important advancement in regional therapy for primary liver cancer and certain othercancers metastatic to the liver and are uniquely positioned to treat the entire liver either as a standalone therapy or as a complement to other therapies. Our clinical development program for Melphalan/HDS is comprised of the FOCUS Clinical Trial for Patients with Hepatic Dominant OcularMelanoma (the “FOCUS Trial”), a global registration clinical trial that is investigating objective response rate in mOM, and the ALIGN Trial, a globalPhase 3 clinical trial for ICC (the “ALIGN Trial”). Our product also includes a registry for CHEMOSAT commercial cases performed in Europe andsponsorship of select Investigator Initiated Trials. While we currently utilize third parties to manufacture some components of our product, we also have our own manufacturing operations for certaincomponents of our product and assemble and package our products in Queensbury, New York. See the discussion in Part 1, Item 1 under the caption“Manufacturing and Quality Assurance” above. We commercialize our product in Europe through alliances with third parties.LiquidityThe accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfactionof liabilities in the normal course of business. As shown in the accompanying financial statements during the year ended December 31, 2018, theCompany incurred net losses of $19.2 million and used $14.7 million of cash for its operating activities. These factors among others raise substantialdoubt about the Company’s ability to continue as a going concern for a reasonable period of time.The Company’s existence is dependent upon management’s ability to obtain additional funding sources or to enter into strategic alliances. Adequateadditional financing may not be available to us on acceptable terms, or at all. If the Company is unable to raise additional capital and/or enter intostrategic alliances when needed or on attractive terms, it would be forced to delay, reduce or eliminate our research and development programs or anycommercialization efforts. There can be no assurance that the Company’s efforts will result in the resolution of the Company’s liquidity needs. IfDelcath is not able to continue as a going concern, it is likely that holders of its common stock will lose all of their investment. The accompanyingconsolidated financial statements do not include any adjustments that might result should the Company be unable to continue as a going concern.The Company anticipates incurring additional losses until such time, if ever, that it can generate significant sales. At December 31, 2018, managementbelieved that its capital resources were adequate to fund operations through March 2019. Additional working capital will be required to continueoperations. Operations of the Company are subject to certain risks and uncertainties, including, among others, uncertainty of product developmentand clinical trial results; uncertainty regarding regulatory approval; technological uncertainty; uncertainty regarding patents and proprietary rights;comprehensive government regulations; limited commercial manufacturing, marketing or sales experience; and dependence on key personnel. SeeNote 15 of these notes to the Company’s audited consolidated financial statements relating to subsequent events. (2)Basis of Consolidated Financial Statement PresentationThe accounting and financial reporting policies of the Company conform to generally accepted accounting principles in the United States of America(“GAAP”). The preparation of consolidated financial statements in conformity with GAAP requires management to make assumptions and estimatesthat impact the amounts reported in the Company’s consolidated financial statements. The consolidated financial statements include the accounts ofall entities controlled by Delcath. All significant inter-company accounts and transactions are eliminated. F-7DELCATH SYSTEMS, INC.Notes to Consolidated Financial Statementsfor the Years Ended December 31, 2018 and 2017 Reverse Stock SplitsAll share numbers presented in this footnote reflect a one-for-three hundred and fifty (1:350) reverse stock split effected on November 6, 2017 and a one-for-five hundred(1:500) reverse stock split effected on May 2, 2018. (3)Summary of Significant Accounting PoliciesUse of EstimatesThe Company bases its estimates and judgments on historical experience and on various other assumptions that it believes are reasonable under thecircumstances. The amounts of assets and liabilities reported in the Company’s consolidated balance sheets and the amount of revenues and expensesreported for each of the periods presented are affected by estimates and assumptions, which are used for, but not limited to, the accounting forderivative instrument liabilities, stock-based compensation, valuation of inventory, impairment of long-lived assets, income taxes and operatingexpense accruals. Such assumptions and estimates are subject to change in the future as additional information becomes available or as circumstancesare modified. Actual results could differ from these estimates. Cash Equivalents and Concentrations of Credit RiskThe Company considers investments with original maturities of three months or less at date of acquisition to be cash equivalents. The Company hasdeposits that exceed amounts insured by the Federal Deposit Insurance Corporation (“FDIC”), however, the Company does not consider this asignificant concentration of credit risk based on the strength of the financial institution.Restricted CashCash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements are recorded as restricted cashon the accompanying consolidated balance sheets.Accounts ReceivableAccounts receivable, principally trade, are generally due within 30 days and are stated at amounts due from customers. Collections and payments fromcustomers are monitored and a provision for estimated credit losses may be created based upon historical experience and specific customer collectionissues that may be identified.InventoriesInventories are valued at the lower of cost or market value using the first-in, first-out method. The reported net value of inventory includes finishedsaleable products, work-in-process, and raw materials that will be sold or used in future periods. The Company reserves for expired, obsolete, andslow-moving inventory.Property, Plant and EquipmentProperty, plant and equipment are recorded at cost, less accumulated depreciation. The Company provides for depreciation on a straight line basisover the estimated useful lives of the assets which range from three to seven years. Leasehold improvements will be amortized over the shorter of thelease term or the estimated useful life of the related assets when they are placed into service. The Company evaluates property, plant and equipmentfor impairment periodically to determine if changes in circumstances or the occurrence of events suggest the carrying value of the asset or asset groupmay not be recoverable. Maintenance and repairs are charged to operations as incurred. Expenditures which substantially increase the useful lives ofthe related assets are capitalized. Derivative Instrument LiabilityThe Company accounts for derivative instruments in accordance with Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging,which establishes accounting and reporting standards for derivative instruments and hedging activities, including certain derivative instrumentsembedded in other financial instruments or contracts and requires recognitionF-8DELCATH SYSTEMS, INC.Notes to Consolidated Financial Statementsfor the Years Ended December 31, 2018 and 2017 of all derivatives on the balance sheet at fair value, regardless of the hedging relationship designation. Accounting for changes in the fair value of thederivative instruments depends on whether the derivatives qualify as hedge relationships and the types of relationships designated are based on theexposures hedged. At December 31, 2018 and 2017, the Company did not have any derivative instruments that were designated as hedges.Fair Value MeasurementsThe Company adheres to ASC 820, Fair Value Measurement, which defines fair value, establishes a framework for measuring fair value, and expandsdisclosures about fair value measurements. ASC 820 applies to reported balances that are required or permitted to be measured at fair value underexisting accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances.ASC 820 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement shouldbe determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering marketparticipant assumptions in fair value measurements, ASC 820 establishes a fair value hierarchy that distinguishes between market participantassumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 ofthe hierarchy). •Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. •Level 2 inputs are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset orliability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quotedintervals. •Level 3 inputs are unobservable inputs for the asset or liability, which is typically based on an entity’s own assumptions, as there is little, if any,related market activity.In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in thefair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair valuemeasurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requiresjudgment and considers factors specific to the asset or liability.Revenue RecognitionRevenue is generated from proprietary and partnered product sales and license and royalty arrangements. Revenue is recognized when or as wetransfer control of the promised goods or services to our customers in an amount that reflects the consideration to which we expect to be entitled to inexchange for those goods or services. When obligations or contingencies remain after the products are shipped, such as training and certifying thetreatment centers, revenue is deferred until the obligations or contingencies are satisfied.We may enter into contracts with partners that contain multiple elements such as licensing, development, manufacturing and commercializationcomponents. These arrangements are often complex and we may receive various types of consideration over the life of the arrangement, including: up-front fees, reimbursements for research and development services, milestone payments, payments on product shipments, margin sharing arrangements,license fees and royalties.F-9DELCATH SYSTEMS, INC.Notes to Consolidated Financial Statementsfor the Years Ended December 31, 2018 and 2017 Our results of operations for reporting periods beginning on or after January 1, 2018 are presented under ASC 606, Revenue from Contracts withCustomers, while prior period amounts, as reported, are not adjusted. The effects of the adoption of the new standard in 2018 were not material to ourconsolidated financial statements. In assessing our revenue arrangements in accordance with ASC 606, Revenue from Contracts with Customers, wemust identify the contract, determine the transaction price including an estimation of any variable consideration we expect to receive in connectionwith the contract, identify the promises of goods or services to the customer and each distinct performance obligation, allocate the transaction price toeach of the performance obligations, and recognize revenue when or as the performance obligations are satisfied. Each of these steps in the revenuerecognition process requires management to make judgements and/or estimates. The most significant judgements and estimates involve thedetermination of variable consideration to be included in the transaction price. Variable consideration is recognized at an amount we believe is notsubject to significant reversal and is adjusted at each reporting period if the most likely amount of expected consideration changes or becomes fixed.We believe this provides a reasonable basis for recognizing revenue, however, actual results could differ from estimates and significant changes inestimates could impact our results of operations in future periods.Deferred RevenueLicense fees and milestones received in exchange for the grant of a license for the commercialization of CHEMOSAT are generally recognized overthe development period, as the license is considered distinct from the delivery of product. Milestone payments that are contingent upon theoccurrence of future events, are evaluated and recorded at the most likely amount, and to the extent that it is probable that a significant reversal willnot occur when the associated uncertainty is resolved.Selling, General and AdministrativeSelling, general and administrative costs include personnel costs and related expenses for the Company’s sales, marketing, general management andadministrative staff, recruitment, costs related to the Company’s commercialization efforts in Europe, professional service fees, professional licensefees, business development and certain general legal activities. All such costs are charged to expense when incurred.Research and DevelopmentResearch and development costs include the costs of materials used for clinical trials and R&D, personnel costs associated with device andpharmaceutical R&D, clinical affairs, medical affairs, medical science liaisons, and regulatory affairs, costs of outside services and applicable indirectcosts incurred in the development of the Company’s proprietary drug delivery system. All such costs are charged to expense when incurred.Stock Based CompensationThe Company accounts for its share-based compensation in accordance with the provisions of ASC 718, Stock-Based Compensation, whichestablishes accounting for equity instruments exchanged for employee services and ASC 505-50, Equity-Based Payments to Non-Employees, whichestablishes accounting for equity-based payments to non-employees. Under the provisions of ASC 718, share-based compensation is measured at thegrant date, based upon the fair value of the award, and is recognized as an expense over the option holders’ requisite service period (generally thevesting period of the equity grant). The Company is required to record compensation cost for all share-based payments granted to employees basedupon the grant date fair value, estimated in accordance with the provisions of ASC 718. Under the provisions of ASC 505-50, measurement ofcompensation cost related to common shares issued to non-employees for services is based on the value of the services provided or the fair value of theshares issued. The measurement of non-employee stock-based compensation is subject to periodic adjustment as the underlying equity instrumentvests. The Company expenses its share-based compensation for share-based payments granted under the accelerated method, which treats each vestingtranche as if it were an individual grant.F-10DELCATH SYSTEMS, INC.Notes to Consolidated Financial Statementsfor the Years Ended December 31, 2018 and 2017 The Company periodically grants stock options for a fixed number of shares of common stock to its employees, directors and non-employeecontractors, with an exercise price greater than or equal to the fair market value of Delcath’s common stock at the date of the grant. The Companyestimates the fair value of stock options using an option pricing model. Key inputs used to estimate the fair value of stock options include theexercise price of the award, the expected post-vesting option life, the expected volatility of Delcath’s stock over the option’s expected term, the risk-free interest rate over the option’s expected term, and Delcath’s expected annual dividend yield. Estimates of fair value are not intended to predictactual future events or the value ultimately realized by persons who receive equity awards. Income TaxesThe Company accounts for income taxes following the asset and liability method in accordance with the ASC 740, Income Taxes. Under such method,deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the consolidated financialstatement carrying amounts of existing assets and liabilities and their respective tax bases. The Company applies the accounting guidance issued toaddress the accounting for uncertain tax positions. This guidance clarifies the accounting for income taxes, by prescribing a minimum recognitionthreshold a tax position is required to meet before being recognized in the financial statements as well as provides guidance on derecognition,measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company classifies interest andpenalty expense related to uncertain tax positions as a component of income tax expense. Deferred tax assets and liabilities are measured usingenacted tax rates expected to apply to taxable income in the years that the asset is expected to be recovered or the liability settled. A valuationallowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization ofdeferred tax assets depends on the generation of future taxable income during the period in which related temporary differences become deductible.The Company considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in its assessmentof a valuation allowance. See Note 14 for additional information.Net Loss per Common ShareBasic net loss per share is determined by dividing net loss by the weighted average shares of common stock outstanding during the period. Diluted netloss per share is determined by dividing net loss by diluted weighted average shares outstanding. Diluted weighted average shares reflects the dilutiveeffect, if any, of potentially dilutive common shares, such as stock options and warrants calculated using the treasury stock method. In periods withreported net operating losses, all stock options, unvested restricted stock and warrants are deemed anti-dilutive such that basic net loss per share anddiluted net loss per share are equal. The calculation of net loss and the number of shares used to compute basic and diluted earnings per share for the years ended December 31, 2018 and2017: December 31, (in thousands, except share data) 2018 2017 Net loss - basic $(19,222) $(45,117)Preferred stock dividends — (527)Net loss - diluted $(19,222) $(45,644) Weighted average shares outstanding - basic 26,705,375 14,039 Weighted average shares outstanding - diluted 26,705,375 14,039 Net loss per share - basic $(0.72) $(3,250)Net loss per share - diluted $(0.72) $(3,250) In the third quarter of 2017, the Company issued Series B Preferred Shares. A portion of the redemption price of the Series B Preferred Shares wasaccounted for as a deemed dividend. F-11DELCATH SYSTEMS, INC.Notes to Consolidated Financial Statementsfor the Years Ended December 31, 2018 and 2017 At December 31, 2018, the Company has 61.3 million pre-funded warrants outstanding. The following table provides a reconciliation of the weightedaverage shares outstanding calculation at December 31, 2018: December 31, 2018 Weighted average shares issued 2,738,944 Weighted average pre-funded warrants 23,966,431 Weighted average shares outstanding 26,705,375 For the years ended December 31, 2018 and 2017 the following potentially dilutive securities were excluded from the computation of diluted earningsper share because their effects would be antidilutive.Shares excluded from the computation of diluted earnings per share: 2018 2017 Common stock warrants - equity 4,202,909 14,049 Common stock warrants - liability 189,029 — Assumed conversion of convertible notes 2,576,203 — Total 6,968,141 14,049 Segment InformationThe Company currently operates in one business segment, which is the development and commercialization of Melphalan/HDS and CHEMOSAT. Asingle management team that reports to the CEO and President comprehensively manages the business. Accordingly, the Company does not haveseparately reportable segments.Foreign Currency and Currency TranslationTransactions that are denominated in a foreign currency are remeasured into the functional currency at the current exchange rate on the date of thetransaction. Any foreign currency-denominated monetary assets and liabilities are subsequently remeasured at current exchange rates, with gains orlosses recognized as foreign exchange (losses)/gains in the statements of operations.The assets and liabilities of the Company’s international subsidiaries are translated from their functional currencies into United States dollars atexchange rates prevailing at the balance sheet date. The majority of the foreign subsidiaries revenues and operating expenses are denominated inEuros. The reporting currency for the Company is the United States Dollar (“USD”). Average rates of exchange during the period are used to translatethe statement of operations, while historical rates of exchange are used to translate any equity transactions.Translation adjustments arising on consolidation due to differences between average rates and balance sheet rates, as well as unrealized foreignexchange gains or losses arising from translation of intercompany loans that are of a long-term-investment nature, are recorded in other comprehensiveincome.Recently Adopted Accounting PronouncementsIn May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contractswith Customers, that updates the principles for recognizing revenue. The core principle of the guidance is that an entity should recognize revenue todepict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled inexchange for those goods or services. ASU 2014-09 also amends the required disclosures of the nature, amount, timing and uncertainty of revenue andcash flows arising from contracts with customers. ASU 2014-09 is effective for the Company beginning in its fiscal year 2018, and may be appliedretrospectively to all prior periods presented or through a cumulative adjustment to the opening retained earnings balance in the year of adoption. TheCompany has adopted this guidance.F-12DELCATH SYSTEMS, INC.Notes to Consolidated Financial Statementsfor the Years Ended December 31, 2018 and 2017 In June 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), which is intended to reduce diversity in practice in how certaintransactions are classified in the statement of cash flows. The ASU is effective for public companies for fiscal years beginning after December 15, 2017,and interim periods within those fiscal years. Early adoption was permitted, including interim periods within those fiscal years provided that thoseelecting early adoption must adopt all of the amendments in the same period. The guidance requires application using a retrospective transitionmethod. The Company has adopted this guidance.In October 2016, the FASB issues ASU 2016-16 which simplifies the income tax consequences of intra-entity transfers other than inventory. Prior toASU 2016-16, GAAL prohibited the recognition of current and deferred income taxes for intra-entity asset transfers until the asset has been sold to anoutside party. ASU 2016-16 eliminates this prohibition for intra-entity transfers of assets other than inventory but retains the prohibition for intra-entity transfers of inventory. This standard is effective go r public entities for fiscal years beginning after December 15, 2017. The Company hasadopted this guidance. The adoption did not have a material impact on the Company’s consolidated financial statements.In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which requires that the statement of cashflows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cashequivalents. Entities are also required to reconcile such total to amounts on the balance sheet and disclose the nature of the restrictions. ASU 2016-18is effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years, and early adoption was permitted. TheCompany adopted this standard. SEC Disclosure Update and Simplification In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, Disclosure Update and Simplification, amending certain disclosurerequirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosurerequirements on the analysis of stockholders' equity for interim financial statements. Under the amendments, an analysis of changes in each caption ofstockholders' equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation ofthe beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule waseffective on November 5, 2018. The adoption did not have a material impact on the Company’s consolidated financial statements. Recent Accounting Standards to be Adopted In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), superseding ASC Topic 840, Leases. ASU 2016-02 requires lessees torecognize a right-of-use asset and a lease liability on their balance sheets for all the leases with terms greater than twelve months. Based on certaincriteria, leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the incomestatement. For leases with a term of twelve months or less, a lessee is permitted to make an accounting policy election by class of underlying asset notto recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those years,with early adoption permitted. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest periodpresented using a modified retrospective approach. In July 2018, the FASB issued ASU No. 2018-11, Leases (Topic 842): Targeted Improvements thatallows entities to apply the provisions of the new standard at the effective date (e.g. January 1, 2019), as opposed to the earliest period presented underthe modified retrospective transition approach (January 1, 2017) and recognize a cumulative-effect adjustment to the opening balance of retainedearnings in the period of adoption. The modified retrospective approach includes a number of optional practical expedients primarily focused onleases that commenced before the effective date of Topic 842, including continuing to account for leases that commence before the effective date inaccordance with previous guidance, unless the lease is modified. The Company is currently evaluating the effect the guidance will have on ouraudited consolidated financial statements. F-13DELCATH SYSTEMS, INC.Notes to Consolidated Financial Statementsfor the Years Ended December 31, 2018 and 2017 In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260) Distinguishing Liabilities from Equity (Topic 480) Derivatives andHedging (Topic 815). This guidance was intended to reduce the complexity associated with the issuer’s accounting for certain financial instrumentswith characteristics of liabilities and equity. Specifically, the Board determined that a down round feature would no longer cause a freestandingequity-linked financial instrument (or an embedded conversion option) to be accounted for as a derivative liability at fair value with changes in fairvalue recognized in current earnings. In addition, the Board re-characterized the indefinite deferral of certain provisions of Topic 480 to a scopeexception. The re-characterization has no accounting effect. ASU 2017-11 is effective for public entities for fiscal years beginning after December 15,2018. The Company intends to adopt this standard on January 1, 2019 and is evaluating the effects, if any, that the adoption of this guidance willhave on the Company’s consolidated financial statements. (4)Restricted Cash Cash and cash equivalents that are restricted as to withdrawal or use under the terms of certain contractual agreements are recorded in Restricted Cashon the balance sheet. Restricted cash does not include required minimum balances. (in thousands) December 31,2018 December 31,2017 Cash and cash equivalents $2,516 $3,999 Convertible Notes — 238 Letters of credit 1,012 1,012 Security for credit cards 50 75 Total cash, cash equivalents and restricted cash shown in the statement of cash flows $3,578 $5,324 (5)InventoriesInventories consist of: (in thousands) December 31,2018 December 31,2017 Raw materials $358 $298 Work-in-process 500 721 Finished goods — 229 Total Inventory $858 $1,248 (6)Prepaid Expenses and Other Current AssetsPrepaid expenses and other current assets include the following: (in thousands) December 31,2018 December 31,2017 Insurance premiums $140 $421 Financing costs — 70 Security deposit 51 50 Income tax and VAT receivable 579 29 Other1 128 130 Total prepaid expenses and other current assets $898 $700 1Other consists of various prepaid expenses and other current assets, with no individual item accounting for more than 5% at December 31, 2018 and2017. F-14DELCATH SYSTEMS, INC.Notes to Consolidated Financial Statementsfor the Years Ended December 31, 2018 and 2017 (7)Property, Plant, and EquipmentProperty, plant, and equipment consists of: (in thousands) December 31,2018 December 31,2017 Estimated Useful LifeBuildings and land $589 $579 30 years - BuildingsEnterprise hardware and software 1,742 1,744 3 yearsLeaseholds 1,701 1,705 Lesser of lease term orestimated useful lifeEquipment 1,002 971 7 yearsFurniture 198 175 5 yearsProperty, plant and equipment, gross 5,232 5,174 Accumulated depreciation (4,307) (3,876) Property, plant and equipment, net $925 $1,298 Depreciation expense for the years ended December 31, 2018 and 2017 was $0.4 million, $0.3 million, respectively. (8)Current Accrued ExpensesCurrent accrued expenses include the following: (in thousands) December 31, 2018 December 31, 2017 Clinical trial expenses $4,530 $869 Compensation, excluding taxes 1,785 1,124 Professional fees 190 221 Short-term portion of lease restructuring 184 209 Other1 1,275 985 Total accrued expenses $7,964 $3,408 1Other consists of various accrued expenses, with no individual item accounting for more than 5% of current liabilities at December 31, 2018 and2017. (9)Restructuring ExpensesIn order to help reduce operating costs and more appropriately align its office space with the size of its workforce, the Company entered into two sub-leases for office space at its 810 Seventh Avenue office. On May 22, 2014, the Company entered into a sub-lease agreement (“Sub-lease #1”) forapproximately one-half of the office space at this location (“Suite 3500”), resulting in a lease restructuring reserve of approximately $0.9 million. OnAugust 18, 2014, the Company entered into a sub-lease agreement (“Sub-lease #2”) for the remaining one-half of office space at its 810 SeventhAvenue office (“Suite 3505”), resulting in a lease restructuring reserve of approximately $0.7 million. As of December 31, 2018, the total remaininglease restructuring liability for its leased office space was approximately $0.4 million, of which approximately $0.2 million and $0.2 million wereincluded in Accrued expenses and Other non-current liabilities on the consolidated balance sheets, respectively. The following table provides the year-to-date activity of the Company’s restructuring reserves as of December 31, 2018: (in thousands) Lease Liability Reserve balance at December 31, 2017 $604 Charges — Payments/Utilizations (208)Reserve balance at December 31, 2018 $396 F-15DELCATH SYSTEMS, INC.Notes to Consolidated Financial Statementsfor the Years Ended December 31, 2018 and 2017 (10)Convertible Notes Payable(Secured Convertible Notes and related Common Stock Purchase Warrants) On June 4, 2018, July 21, 2018, August 29, 2018, and September 21, 2018, the Company issued 8% senior secured convertible notes (collectively,“the Notes”) to investors with aggregate principal of $9.4 million and maturity dates between December 2018 and March 2021. The Notes are securedpursuant to a Security Agreement which creates a first priority security interest in all of the personal property (other than Excluded Collateral (asdefined in the Security Agreement) of the Company of every kind and description, tangible or intangible, whether currently owned and existing orcreated or acquired in the future. At December 31, 2018, the Notes were convertible at $1.75 per share subject to customary terms. In April 2019, the Company received notices of default from the investors in the Notes. In connection with the issuance of the Notes, the Company also issued 4.2 million Series D Warrants with exercise prices ranging from $1.75 - $4.00and 65.0 million Pre-Funded Series D Warrants with a purchase price of $0.01. The warrants expire 5 years from the date they could first be exercised.The provisions in the Series D Warrants and Pre-Funded Series D Warrants issued in June 2018 required the Company to initially account for thewarrants as derivative liabilities. The warrants were valued at $5.1 million. As a result, the Company recognized a discount to debt of $2.3 million anda loss on issuance of a financial instrument of $2.8 million. The Company valued the June 2018 Series D Warrants using the following inputs: June 2018Series DWarrant June 2018 Pre-Funded Series DWarrantsContractual life 5.0 5.5 - 6.5Expected volatility 194.10% 215.0% - 389.0%Risk-free interest rates 2.78% 2.13% - 2.30% First Amendment to June 2018 Series D WarrantsIn July 2018, the Company and the investor from the June 2018 transaction amended the June 2018 Pre-Funded Series D Warrants so that they areexercisable as of July 20, 2018 and the Company may redeem them at any time the Notes are no longer outstanding and the Company is not in default.The Company and the investor from the June 2018 transaction also amended the definition of a Fundamental Transaction in the June 2018 Warrants.This amendment resulted in $4.2 million related to the fair value of the June 2018 Warrants being reclassified from a liability to equity. Amendment to June 2018 and July 2018 Notes and Pre-Funded WarrantsIn August 2018, the Company amended its June 2018 Notes and July 2018 Notes such that the conversion price was reduced to $1.75, interest shallaccrue until maturity, and the first $2.5 million and 50% of any subsequent financings shall be used to satisfy the Company’s obligations under theNotes. Effective the same date, the Company also amended its Pre-Funded Warrants such that the total number of June 2018 Pre-Funded Warrants wasincreased from 13.0 million to 22.2 million and the total number of July 2018 Pre-Funded Warrants was increased from 9.2 million to 15.8 million.This amendment was accounted for as an extinguishment of debt as the change in cash flows exceeded 10%. The original June 2018 and July 2018notes were written off and the amended June 2018 and July 2018 Notes were recorded at fair value as of the date of this amendment. The Companyrecorded $1.1 million loss on debt extinguishment related to this amendment.F-16DELCATH SYSTEMS, INC.Notes to Consolidated Financial Statementsfor the Years Ended December 31, 2018 and 2017 The following table provides a summary of the Notes by their maturity dates (absent provisions of default): (in millions) Interestrate Conversionprice Principal UnamortizedDiscount Carryingvalue December 4, 2018 8.0% $1.75 $1.7 $— $1.7 March 1, 2019 8.0% 1.75 0.6 (0.5) 0.1 March 21, 2019 8.0% 1.75 0.4 (0.2) 0.2 December 4, 2019 8.0% 1.75 0.9 (0.9) — March 1, 2020 8.0% 1.75 0.8 (0.8) — March 21, 2020 8.0% 1.75 0.1 (0.1) — Total Convertible Notes Payable, net $4.5 $(2.5) $2.0 (11)Stockholders’ EquityPreferred Stock Issuances Series D Preferred StockOn November 5, 2018, the Company’s Board authorized the establishment of a new series of preferred stock designated as Series D Preferred Stock,$0.01 par value, the terms of which are set forth in the certificate of designations for such series of Preferred Stock which was filed with the State ofDelaware on November 5, 2018. On November 6, 2018 and November 30, 2018, the Company entered into a securities purchase agreements with aninstitutional investor which had purchased 101 shares of Series D Preferred Stock. At issuance, the Series D Preferred Stock would convert to1,655,738 common shares.On March 29, 2019, the Company exchanged all of its Series D Preferred Stock (with a stated value of $1,160,000) and received $400,000 in proceedsand issued a senior secured promissory note to an investor with a principal amount of $1,560,000. As a result, the Series D Preferred Stock is no longeroutstanding.Stock and Warrant IssuancesFebruary 2018 FinancingIn February 2018, the Company completed the sale of 424,000 shares of its common stock, 76,000 pre-funded warrants and the issuance of warrants topurchase 1.0 million common shares (the “February 2018 Warrants”) pursuant to a placement agent agreement, with net proceeds after expenses of$4.3 million. The February 2018 Warrants are exercisable one year after the anniversary date of their issuance. At December 31, 2018, the February2018 Warrants were exercisable at $10.00 per share with 0.2 million warrants outstanding. The Company allocated an estimated fair value of $18.3million to the February 2018 Warrants. The Company valued the February 2018 Warrants using the following inputs: exercise price of $10.00;contractual term of six years; volatility of 122.68% and risk-free rate of approximately one percent. Due to certain price protection features in theagreement, the February 2018 Warrants were accounted for as a derivative liability at issuance and will be subsequently marked to market through thestatement of operations. September 2018 Rights OfferingIn September 2018, the Company completed the sale of 4,667,811 shares of its common stock, with net proceeds after expenses of approximately $7.0million. The rights offering was made pursuant to a Registration Statement on Form S-1 that was made effective on August 3, 2018. December 2018 Warrant ExchangeIn December 2018, the Company entered into exchange agreements with several institutional investors with respect to their November 2017 Warrantsand February 2018 Warrants. The Company issued to the investors 0.8 million shares of Common Stock (the “Exchange Shares”) in exchange for theExisting Warrants (the “Exchange”). The Exchange was made in reliance upon the exemption from registration provided by Section 3(a)(9) of theSecurities Act of 1933, as amended. F-17DELCATH SYSTEMS, INC.Notes to Consolidated Financial Statementsfor the Years Ended December 31, 2018 and 2017 Pre-Funded Series D Warrant Exercises3.7 million Pre-Funded Series D Warrants were exercised during 2018. In October 2018, the Company filed a registration statement on Form S-3 with the SEC, which was declared effective on December 21, 2018 andallows the Company to offer and sell, from time to time in one or more offerings, up to $100.0 million of common stock, preferred stock, warrants, debtsecurities and stock purchase contracts as it deems prudent or necessary to raise capital at a later date. The Company has lost its Form S-3 eligibilitydue to the late filing of its Form 10-K for the year ended December 31, 2018. Stock Incentive Plans As a result of the May 2, 2018 reverse stock split, the Company’s Stock Incentive Plan has no active grants and no further shares available to begranted.As previously reported, on February 1, 2019 the Board of Directors of the Company adopted the Company’s 2019 Equity Incentive Plan (the “2019Plan”), pursuant to which 1,500,000 shares of common stock of the Company are available for grants through February 1, 2029 to the Company’semployees, directors and consultants. On February 1, 2019, options to purchase 1,250,000 shares of common stock, at an exercise price of $0.281 pershare, were granted under the 2019 Plan to certain executive officers and employees of the Company. The stock options are vesting over a period ofone year commencing from the date of grant in twelve equal monthly increments commencing on the one month anniversary of the grant date. Thestock options carry a ten year term and expire on February 1, 2029. For the years ended December 31, 2018 and December 31, 2017, the Company recognized compensation income of $0.04 million and $0.05 million,respectively, related to stock options granted to employees.For the years ended December 31, 2018 and December 31, 2017, the Company recognized compensation expense of approximately $0.1 million and$0.1 million, respectively, related to restricted stock granted to employees and consultants.Warrants The Company issued warrants as part of its offerings in 2013, 2015, 2016 and 2018 as well as part of its issuance of convertible notes in 2016 and2018 and an exchange agreement in 2017. A summary of warrant activity is as follows: Warrants Exercise Price perShare Weighted AverageExercise Price Weighted AverageRemaining Life(Years) Outstanding at January 1, 2017 78 $281,750 - $19,712,000 $910,000 5.59 Warrants issued 14,256 2,299 Warrants exercised (246) 4,221 Warrants expired (39) 845,250 Outstanding at December 31, 2017 14,049 $1,225 - $19,712,000 $1,569 4.88 Warrants issued in Feb 2018 registered direct offering 1,076,002 9.33 Warrants issued with convertible notes 69,169,756 0.18 Exercised (4,574,529) 1.79 Expired (9) 19,712,000 Outstanding at December 31, 2018 65,685,269 $0.01 - $10.00 $0.22 5.75 F-18DELCATH SYSTEMS, INC.Notes to Consolidated Financial Statementsfor the Years Ended December 31, 2018 and 2017 (12)Derivative Financial Instruments Management expects that the Warrants will either be exercised or expire worthless. The fair value of the Warrants at December 31, 2018 wasdetermined by using option pricing models assuming the following: December 31, December 31, 2018 2017Expected life (in years) 1.13 - 5.11 0.82 - 4.88Expected volatility 145.7% - 265.3% 130.9% - 266.9%Risk-free interest rates 2.5% - 2.6% 1.7% - 2.1% The table below presents the Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2018 and 2017,aggregated by the level in the fair value hierarchy within which those measurements fall.Assets and Liabilities Measured at Fair Value on a Recurring Basis Assets and Liabilities Measured at Fair Value on a Recurring Basis Level 1 Level 2 Level 3 Balance atDecember 31, (in thousands) 2018 2017 2018 2017 2018 2017 2018 2017 Liabilities Derivative instrument liabilities $— $— $— $— $33 $560 $33 $560 For the twelve months ended December 31, 2018 and December 31, 2017 there were no transfers in or out of Level 1, 2 or 3 inputs. The table below presents the activity within Level 3 of the fair value hierarchy for the twelve months ended December 31, 2018: Fair Value Measurements Using Significant UnobservableInputs (Level 3) (in thousands) Warrant Liability Balance at January 1, 2017 $18,751 Total change in the liability included in earnings (15,103)Extinguishment of convertible note warrant (17,489)Fair value of warrants issued 16,953 Fair value of warrants exercised (2,552)Balance at December 31, 2017 560 Fair value of warrants issued 23,533 Total change in the liability included in earnings (19,706)Reclass from liability to equity (4,210)Fair value of warrants exchanged (144)Balance at December 31, 2018 $33 F-19DELCATH SYSTEMS, INC.Notes to Consolidated Financial Statementsfor the Years Ended December 31, 2018 and 2017 (13)CommitmentsOperating LeasesIn February 2010, the Company entered into an agreement to lease (Initial Lease) 8,629 square feet of office space at 810 Seventh Avenue, New York,NY with an option to expand an additional 8,629 square feet. The term of the Initial Lease began in March, 2010. In September 2010, the Companyexercised its option right under the Initial Lease and entered into an agreement to lease (Lease Amendment) an additional 8,629 square feet of officespace. The term of the Lease Amendment began in January 2011 and will expire in March 2021. In addition, the Lease Amendment extends the term ofthe Initial Lease to March 2021. The Initial Lease and the Lease Amendment provide for annual rent of $1.0 million in 2015, $1.0 million in 2016,and $1.2 million in 2017-2020. As discussed in Note 9, the Company has sub-leased this office space. In August 2011, Delcath Systems Ltd. entered into an agreement of lease for an office and manufacturing facility located in the city of Galway, Ireland.This facility is approximately 19,200 square feet and is intended to be the location of Delcath’s European headquarters. The Lease is for a term of tenyears, commencing August, 2011. The Lease provides for fixed annual lease amounts payable in advance in equal quarterly installments. Theremaining annual lease amount is $0.2 million. Delcath Systems Ltd. is also required to pay for customary building operating expenses. DelcathSystems Ltd.’s payment obligations and performance of the Lease are guaranteed by Delcath. The Company has sub-leased a portion of this facility.In September 2018, the Company entered into an amendment (the “1633 Sublease Amendment”) to a sub-lease agreement executed in March 2016(the “1633 Sublease) for approximately 6,877 square feet of office space at 1633 Broadway, New York, NY. The term began in April 2016 and underthe terms of the 1633 Sublease Amendment is extended through February 2021 and provides for total annual base rent of $0.5 million.In January 2019, the Company entered into an amendment (the “Park Road Lease Amendment”) to a lease agreement entered into in October 2018(the “Park Road Lease”) for approximately 6,000 square feet of space located at 95-97 Park Road in Queensbury, New York. Under the terms of thePark Road Lease Amendment, the original two year term which began on October 31, 2018 was extended through November 2020 and provides fortotal annual base rent of $50,000 per year. Future minimum lease payments, net of receipts due under the terms of subleases, under all operating leases at December 31, 2018 are as follows: (in thousands) Future LeasePayment 2019 885 2020 916 2021 348 $2,149 For the years ended December 31, 2018 and 2017 rent expense, net of receipts under the terms of subleases, totaled approximately $0.6 million and$0.6 million, respectively. LitigationAs previously reported, on March 26, 2019, the Company commenced an action (the “Action”) in the Commercial Division of the Supreme Court forthe State of New York, County of New York, styled as Delcath Systems, Inc., v. Iroquois Capital Investment Group LLC, Iroquois Master Fund Ltd., L1Capital Global Opportunities Master Fund and First Fire Global Opportunities Fund LLC (Index No. 651749/2019). The Action seeks expeditedequitable relief in the form of reformation and a declaratory judgement to remedy a scrivener’s error in the Series D Warrants issued in the Company’sFebruary 2018 public offering such that those warrants do not contain a price and quantity ratchet upon a sale of Company securities at a price lowerthan the offering price in the February 2018 offering. The defendant, L1 Capital Global Opportunities Master Fund, settled with the Company byexchanging its Series D Warrants for Company common stock on a one-for-one basis, which is the same ratio for which other investors in the February2018 round exchanged their Series D Warrants in December 2018. The Company and the remaining defendants in the Action, Iroquois CapitalInvestment Group LLC, Iroquois Master Fund Ltd. and First Fire Global Opportunities Fund LLC, entered into a settlement agreement on April 18,2019, the full text of which is annexed as Exhibit 10.42 to this Annual Report on Form 10-K, pursuant to which such defendants surrendered the SeriesD Warrants andF-20DELCATH SYSTEMS, INC.Notes to Consolidated Financial Statementsfor the Years Ended December 31, 2018 and 2017 waived all rights granted to them by or in connection with the Series D Warrants and all rights afforded to them to participate in the Company’s futurecommon stock offerings. In consideration therefor, pursuant to the settlement agreement, (i) the Company paid one-fifth of the reasonable fees andexpenses of defendants’ counsel incurred in connection with the Action and negotiation of the settlement agreement, the total of which shall notexceed $50,000 (the “Settlement Fees”) and (ii) subject to the Company securing and closing certain contemplated financing, the Company agreed topay to the defendants $400,000 and the remaining Settlement Fees. As previously reported, on July 27, 2018, Hudson Bay Master Fund Ltd. filed a summons and complaint against the Company in the New York StateSupreme Court, New York County alleging breaches by the Company of Hudson Bay’s rights of participation in future Company offerings granted inthe September 2017 Securities Purchase Agreement between the Company and Hudson Bay and in the February 2018 Securities Purchase Agreementamong, inter alia, the Company and Hudson Bay. In terms of relief sought, Hudson Bay claimed both monetary damages (which it claims to be inexcess of $1 million) and specific performance. The Company denied any liability with respect to the claims set forth in the lawsuit. As previouslyreported, on January 4, 2019, the Company was notified by its litigation counsel that on December 28, 2018, the Suit was dismissed with prejudice bythe filing of a Stipulation for Discontinuance in the New York State Supreme Court, New York County.On May 9, 2018, the Company received a Demand Letter from a vendor for an outstanding balance owed at that time of $2.1 million. The Companyhas worked with the vendor since that time to establish a payment plan for the balance owed.Letters of CreditUnder the terms of the lease agreement for office space at 810 Seventh Avenue, New York, NY, the Company is required to maintain a letter of credit inthe amount of $0.9 million which will expire in February 2021 if not renewed by the Company. Under the terms of a sub-lease agreement for officespace at 1633 Broadway, New York, NY, the Company is required to maintain a letter of credit in the amount of $0.1 million which will expire withthe sublease in February 2021. (14)Income Taxes Income (loss) before income taxes consists of: Year Ended December 31, (in thousands) 2018 2017 Domestic $(12,961) $(41,313)Foreign (6,261) (3,804)Income (loss) before taxes $(19,222) $(45,117) F-21DELCATH SYSTEMS, INC.Notes to Consolidated Financial Statementsfor the Years Ended December 31, 2018 and 2017 The provision for income taxes differs from the amount computed by applying the statutory rate as follows: Year Ended December 31, (in thousands) 2018 2017 Income taxes using U.S federal statutory rate $(4,037) $(15,340)Tax Cuts and Jobs Act — 143 Nondeductible interest 2,273 6,912 Loss on extinguishment of debt 236 10,174 Loss of tax benefit of federal net operating loss carryforwards (588) 5,067 Loss of tax benefit of state net operating loss carryforwards 1,040 1,373 Loss of tax benefit of federal tax credit carryforwards 495 324 Amortization of gain on IP migration — 767 State income taxes, net of federal benefit (2,355) (1,339)Foreign rate differential 1,166 1,196 Valuation allowance 6,323 (1,423)Derivative charge (4,138) (8,403)Stock option exercises and cancellations 215 841 Research and development costs (636) (295)Other 6 3 $— $— Significant components of the Company’s deferred tax assets are as follows: Year Ended December 31, (in thousands) 2018 2017 Deferred tax assets: Employee compensation accruals $— $292 Accrued liabilities 519 353 Research tax credits 161 17 Other 60 34 Net operating losses 10,624 5,289 Total deferred tax assets 11,364 5,985 Deferred tax liabilities: Beneficial conversion feature — — Other — 13 Total deferred tax liabilities 13 Valuation allowance 11,364 5,972 Net deferred tax assets $— $— As of December 31, 2018 and 2017 the Company had net operating loss carryforwards for U.S. federal income tax purposes of approximately $230.0million and $211.3 million respectively. A significant portion of the federal amount is subject to an annual limitation as low as $27,500 as a result ofchanges in the Company’s ownership in May 2003, November 2016, and multiple dates throughout 2017 and 2018, as defined by Federal InternalRevenue Code Section 382 and the related income tax regulations. As a result of the limitations caused by the May 2003, November 2016 andmultiple 2017 and 2018 ownership changes, approximately $208.1 million of the total net operating loss carryforwards is expected to expireunutilized and will be unavailable to offset future federal taxable income. Approximately $21.9 million of net operating loss carryforwards remainsavailable to offset future federal taxable income, of which $1.7 million will expire between 2019 and 2037 and $20.2 million will have an unlimitedcarryforward period as a result of the Tax Cuts and Jobs Act. F-22DELCATH SYSTEMS, INC.Notes to Consolidated Financial Statementsfor the Years Ended December 31, 2018 and 2017 In addition, the Company’s state net operating losses are also subject to annual limitations that generally follow the federal Section 382 provisions(with the exception of Connecticut), adjusted for each state’s respective income apportionment percentages. As of December 31, 2018 and 2017, theCompany had net operating loss carryforwards for state and city income tax purposes between approximately $27.3 million and $167.3 million andbetween approximately $27.3 million and $150.3 million, respectively, which expire through 2038. As a result of the 382 limitations, approximately$157.2 million and $141.5 million of New York State and New York City net operating losses are expected to expire unutilized and will beunavailable to offset future taxable income. Approximately $10.1 million and $10.1 million of net operating loss carryforwards, respectively, will beavailable to offset future state and city taxable income. As of December 31, 2018 and 2017 the Company had a net operating loss carryforward forforeign income tax purposes of $25.2 million and $25.0 million, respectively, which have indefinite carryforward periods. As of December 31, 2018and 2017, the Company had federal research and development tax credit carryforwards of approximately $5.0 million and $4.3 million respectively,which expire through 2038. As a result of the section 382 limitations, all but $0.2 million of the tax credit carryforwards is expected to expireunutilized. Management has established a 100% valuation allowance against the deferred tax assets as management does not believe it is more likely than notthat these assets will be realized. The Company’s valuation allowance decreased by approximately $5.4 million and decreased by $1.1 million in2018 and 2017, respectively. The change in valuation allowance is as follows: (in thousands) December 31,2018 December 31,2017 Beginning balance $5,972 $7,094 Charged to costs and expenses 6,323 (1,423)Charged to additional paid-in capital — — Charged to retained earnings (834) — Charged to other comprehensive income (97) 301 Ending balance $11,364 $5,972 On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the “Act”). The Act, which is also commonly referred to as “U.S. taxreform”, significantly changes U.S. corporate income tax laws by, among other provisions, reducing the maximum U.S. corporate income tax rate from35% to 21% starting in 2018. During the year ended December 31, 2017, the Company reduced deferred tax assets by a provisional amount of$143,500, offset by a corresponding reduction to its valuation allowance, as a result of the re-measurement of deferred tax assets and liabilities from its34% effective rate under existing law to the new lower statutory rate of 21%. The Company finalized its accounting of the effects of tax reform in2018, which resulted in insignificant adjustments.The Act also requires a mandatory one-time inclusion of the deferred foreign income of controlled foreign corporations. The one-time transition tax isbased on Delcath’s total post-1986 earnings and profits (E&P) for which the Company has previously deferred from U.S. income taxes. During the yearended December 31, 2017, the Company’s reasonable estimate resulted in no provisional amount for the one-time transition tax liability, as theCompany’s international subsidiaries are expected to have a cumulative deficit in E&P. As the Company’s international subsidiaries have acumulative deficit in earnings and profits, the Company did not anticipate being affected by the mandatory inclusion provisions of the Act. TheCompany finalized its calculation of the total post-1986 foreign E&P (including deficits) for these foreign subsidiaries during 2018 and was notimpacted by the mandatory inclusion provisions of the Act. On December, 22, 2017, Staff Accounting Bulletin 118 was issued due to the complexities involved in accounting for the recently enacted Act. SAB118 requires the Company to include in its financial statements a reasonable estimate of the impact of the Act on earnings to the extent such estimatehas been determined. Accordingly, the U.S. provision for income tax for December 31, 2017 was based on the reasonable estimate guidance providedby SAB 118. The Company finalized the impact from the Act and recorded insignificant adjustments. F-23DELCATH SYSTEMS, INC.Notes to Consolidated Financial Statementsfor the Years Ended December 31, 2018 and 2017 The Company complies with the provisions of ASC 740-10, Income Taxes, in accounting for its uncertain tax positions. ASC 740-10 addresses thedetermination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under ASC740-10, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will besustained on examination by the taxing authorities, based on the technical merits of the position. The Company has determined that the Company hasno significant uncertain tax positions requiring recognition under ASC 740-10 and therefore has not included a tabular rollforward of unrecognizedtax benefits. As there are no uncertain tax positions recognized, interest and penalties have not been accrued. The Company is subject to income tax in the U.S., as well as various state and international jurisdictions. The Company has not been audited by anystate tax authorities in connection with income taxes. The Company has not been audited by international tax authorities or any states in connectionwith income taxes. The Company’s New York State tax returns have been subject to annual desk reviews which have resulted in insignificantadjustments to the related franchise tax liabilities and credits. The Company is no longer subject to federal and state examination for tax years endingprior to December 31, 2015; tax years ending December 31, 2015 through December 31, 2018 remain open to examination. The Republic of Ireland isthe Company’s only significant foreign jurisdiction. The Company is no longer subject to Ireland tax examination for tax years ending prior toDecember 31, 2014 (as Ireland has not initiated an audit of 2013 as of December 31, 2018); tax years ending December 31, 2014 through December31, 2018 remain open to examination. However, the Company’s tax years December 31, 1998 through December 31, 2018 generally remain open toadjustment for all federal, state and foreign tax matters until its net operating loss and tax credit carryforwards are utilized or expire prior to utilization,and the applicable statutes of limitation have expired in the utilization year. The federal and state tax authorities can generally reduce a net operatingloss (but not create taxable income) for a period outside the statute of limitations in order to determine the correct amount of net operating loss whichmay be allowed as a deduction against income for a period within the statute of limitations. Delcath recognizes interest accrued related to unrecognized tax benefits and penalties, if incurred, as a component of income tax expense. (15)Subsequent Events Since January 1, 2019, the Company has issued 7.9 million shares pursuant to exercises of Pre-Funded Series D Warrants. As previously reported, in January 2019, the Company terminated Backstop Commitment Purchase Agreements with four institutional investors, bytheir mutual agreement. The Company and such institutional investors entered into Backstop Commitment Purchase Agreements in connection with arights offering conducted by the Company that closed in September 2018 in which the Company proposed to raise up to $50 million by distributing,at no charge, to holders of its common stock non-transferable rights to subscribe for and purchase shares of the Company’s common stock at a price of$1.75 per share (the “Subscription Price”). Pursuant to the Backstop Commitment Purchase Agreements, such institutional investors agreed topurchase, at the Subscription Price, shares not issued in the rights offering following the expiration of the rights offering subscription period, subjectto certain conditions, including the requirement that the closing price of a share of the Company’s common stock as reported by the OTCQB or highermarket for each of the five business days immediately preceding a purchase exceeded the Subscription Price. The Backstop Commitment PurchaseAgreements were terminated by mutual agreement of the parties thereto due to the fact that the closing price of the Company’s common stock had notexceeded the Subscription Price since October 1, 2018 and, thus, the institutional investors had no obligation to purchase shares. On March 29, 2019, the Company exchanged all of its Series D Preferred Stock (with a stated value of $1,160,000) and received $400,000 in proceedsand issued a senior secured promissory note to an investor with a principal amount of $1,560,000. The note is due on April 1, 2020, bears interest at8% per annum and is nonconvertible. On April 19, 2019, April 26, 2019, May 9, 2019 and May 23, 2019, the Company borrowed an aggregate $3.3 million from two institutional investorsand issued promissory notes to the investors. The promissory notes have an aggregate principal amount of $3.3 million, bear interest at the rate of 8%per annum and are due six months from the issuance of each note. The promissory notes are nonconvertible. The notes contain standard events ofdefault and remedies therefor. The Company’s obligations under the promissory notes to the institutional investor are secured by a lien on theCompany’s assets. F-24DELCATH SYSTEMS, INC.Notes to Consolidated Financial Statementsfor the Years Ended December 31, 2018 and 2017 On June 6, 2019, the Company entered into an agreement with two institutional investors, pursuant to which the investors agreed to transfer andsurrender to the Company for cancellation of 3.9 million Series D Warrants and 53.4 million Pre-Funded Series D Warrants. Under the terms of thePurchase Agreement, the investors agreed to defer the payment of the purchase price for the Series D Warrants and Pre-Funded Series D Warrants and,accordingly, the Company agreed to sell and issue to the investors 8% Senior Secured Promissory Notes in an aggregate principal amount of $2million in full payment and satisfaction of the purchase price for the Series D Warrants and Pre-Funded Series D Warrants. F-25 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNone. Item 9A. Controls and ProceduresEvaluation of Disclosure Controls and ProceduresThe Company’s management, with the participation of its Chief Executive Officer, evaluated the effectiveness of the design and operation of its disclosurecontrols and procedures (as defined in Rule 13a-15(e) or 15d-15(e) of the Exchange Act. Based on that evaluation, Delcath’s Chief Executive Officerconcluded that the Company’s disclosure controls and procedures as of December 31, 2018 (the end of the period covered by this Annual Report on Form 10-K), have been designed and are functioning effectively to provide reasonable assurance that the information required to be disclosed by the Company in itsreports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities andExchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the ChiefExecutive Officer, as appropriate to allow timely decisions regarding required disclosure.Changes in Internal Control Over Financial Reporting There were no changes to the Company’s internal control over financial reporting that occurred during the fourth fiscal quarter ended December 31, 2018 thathave materially affected, or are reasonably likely to materially affect, its internal control over financial reporting. Management’s Annual Report on Internal Control over Financial ReportingDelcath’s management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financialreporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company’sprincipal executive and principal financial officers and effected by the Company’s board of directors, management and other personnel, to providereasonable assurance regarding reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordancewith generally accepted accounting principles and includes those policies and procedures that: •Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of theCompany; •Provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordancewith generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance withauthorizations of management and directors of the Company; and •Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assetsthat could have a material effect on the consolidated financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate.Delcath’s management assessed the effectiveness of its internal control over financial reporting as of December 31, 2018. In making this assessment, it usedthe criteria set forth in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission(COSO). Based on such assessment, management has concluded that, as of December 31, 2018, the Company’s internal control over financial reporting waseffective based on those criteria. 50 Report of Independent Registered Public Accounting Firm Item 9B. Other InformationNone. 51 PART IIIItem 10. Directors, Executive Officers, and Corporate Governance.Information About Directors. The following table sets forth certain information about our directors. Name Age Position with Delcath Director SinceWilliam D. Rueckert 66 Director 2014Marco Taglietti, M.D. 59 Director 2014Roger G. Stoll, Ph.D. 76 Chairman 2008Jennifer K. Simpson, Ph.D. 50 Director 2015 William D. Rueckert was appointed as a Director in December 2014. Mr. Rueckert has served on many public and private corporate boards in both the lifescience and banking industries. He is currently President of Oyster Management Group, LLC, an investment partnership specializing in community banking.From 2007 until 2012 he served on the board of Novogen Ltd. (ASX, NASDAQ) a biotechnology company based in Sydney, Australia. He acted as Chairmanfrom 2010 until 2012, and as acting CEO led the restructuring of the company, spinning off its major subsidiary, Marshall Edwards, Inc. (now MEI Pharma,Inc. NASDAQ.) He is currently a director of MEI Pharma, Inc. (NASDAQ), a San Diego based company that is developing novel oncology therapies. Until itssale to H. Lundbeck A/S, he was a director of Chelsea Therapeutics International, Ltd. (NASDAQ) whose drug candidate, Northera, was approved by the FDAin 2014. He has also served on the boards of several banks including Westport Bank and Trust, Lafayette American Bank and Hudson United Bank (allNASDAQ.) He currently serves on the board of Fairfield County Bank, a mutually owned, community bank based in Ridgefield, Connecticut, and Bleachers,Inc., a privately held company that streams live and archived sports and entertainment events from independent schools. Among his civic associations,Mr. Rueckert is a Director and President of the Cleveland H. Dodge Foundation, Co-Chairman of the Board of Trustees of Teachers College, ColumbiaUniversity, a Director of the Y Retirement Fund, a Trustee of International House, an Emeritus Director of the YMCA of Greater New York, a Trustee of theAmerican University of Beirut and a Director of Wave Hill, Inc. He earned a BA in Spanish in 1977 from the University of New Hampshire. The NominatingCommittee considered Mr. Rueckert’s experience and qualifications, in addition to his relevant executive management and operational pharmaceuticalexperience, as well as the overall composition of the Board, in making the determination that Mr. Rueckert should serve as director of Delcath. Roger G. Stoll, PhD. was appointed as a director of in December 2008. Executive Chairman in September, 2014 and has served as Chairman of theBoard since October 1, 2015. From 2002 to 2010 he served as Chairman and Chief executive Officer of Cortex Pharmaceuticals, Inc. In August of 2010 hewas appointed Executive Chairman of the board Cortex and retired in 2012. From 2001 to 2002 he was a consultant to several east coast venture capitalfirms and startup ventures. From 1998 to 2001, he was Executive Vice President of Fresenius Medical Care-North America, in charge of the dialysis productsdivision and the diagnostic business units, which included hemodialysis machines, dialysis filters, dialysate solutions, and attendant devices used in thedialysis procedure. From 1991 - 1998, Dr. Stoll was Chief Executive of Ohmeda, a global leader in anesthetic agents, critical care drugs and related operatingroom devices with sales of $1 billion annually. From 1994 until the sale of Ohmeda in 1998, he was also a member of the board of directors of The BOCGroup,plc in London. From 1986 - 1991, Dr. Stoll held several positions of increasing responsibility at Bayer, AG including, Chief Administrative Office,President of Consumer Healthcare business unit, and Executive Vice-President and General Manager for its worldwide Diagnostic Business Group w whichincluded the acquisition of The Tecnicon Company and globally integrating the Bayer and Techincon business units. This resulted in a global diagnosticbusiness in excess of $1billion in sales annually. Prior to that he worked for American Hospital Supply Corporation, where he rose from Director of ClinicalPharmacology to President of the American Critical Care drug division of AHSC. He began his pharmaceutical career at the Upjohn Company working indrug metabolism and pharmacokinetic studies in a clinical development unit in 1972. Dr. Stoll obtained his BS in Pharmacy degree at Ferris StateUniversity, his PhD in Biopharmaceutics and drug metabolism at the University of Connecticut and was a post-doctoral fellow for two years at the Universityof Michigan. He served on the board of Agensys, Inc from 2003 until its sale to Astellas in late 2007. Also on the board of Questcor Pharmaceuticals, andChelsea Therapeutics until it was acquired in 2008 by Lundbeck A/S. From 1991 to 2002 he also served on the board of directors of St.Jude Medical. Healso served on the boards of HIMA and PMA (now PhRMA). Dr. Stoll also serves on the University of Connecticut School of Pharmacy Advisory Board. Thenominations committee considered Dr. Stoll's experience and qualifications in both pharmaceuticals and medical devices and equipment in addition to hisrelevant executive management experience. as well as, the overall composition of the Board, in making the determination that Dr. Stoll should serve as adirector of Delcath. Dr. Marco Taglietti, M.D. was appointed as a Director in December 2014. Dr. Taglietti serves as CEO and on the Board of Directors of NASDAQ-listedSCYNEXIS, Inc., a pharmaceutical company committed to the discovery, development and commercialization of novel anti-infectives. Prior to its acquisitionin February 2014, Dr. Taglietti served as Executive Vice President, Research and Development, and Chief Medical Officer of Forest Laboratories. He alsoserved as President of the Forest Research Institute. Prior to52 joining Forest Labs in 2007, Dr. Taglietti held the position of Senior Vice President, Head of Global Research and Development, at Stiefel Laboratories, Inc.for three years. He joined Stiefel after 12 years at Schering-Plough Corporation where he last held the position of Vice President, Worldwide ClinicalResearch for Anti-Infectives, Oncology, CNS, Endocrinology and Dermatology. Dr. Taglietti began his career at Marion Merrell Dow Research Institute. Hereceived his medical degree and board certifications from the University of Pavia in Italy. The Nominating Committee considered Dr. Taglietti’s experienceand qualifications, in addition to his relevant executive management and operational pharmaceutical experience, as well as the overall composition of theBoard, in making the determination that Dr. Taglietti should serve as director of Delcath.Simon Pedder resigned as a member of the Board of Directors of the Company effective April 10, 2019. Mr. Pedder’s decision to resign was not the result ofany disagreement with the Company on any matter relating to its operations, policies or practices.In addition, information concerning Jennifer K. Simpson, one of our Directors and our President and Chief Executive Officer, is provided under “—Information About Our Executive Officers” Information About our Executive OfficersThe following table provides information concerning the current executive officers of Delcath: Name Age Office Currently HeldJennifer K. Simpson 50 President and Chief Executive OfficerBarbra C. Keck 41 Chief Financial Officer and SecretaryJohn Purpura 57 Executive Vice President, Global Head of Operations The following is a brief description of the business experience of our executive officers:Jennifer K. Simpson was appointed as a Director in October 2015. Dr. Simpson joined Delcath as Executive Vice President, Global Marketing in March 2012and was promoted to Executive Vice President, Global Head of Business Operations in April 2013 and Interim Co-President and Co-Chief Executive Officer,Executive Vice President, Global Head of Business Operations in September 2013. In September 2014, Dr. Simpson was named Interim President and ChiefExecutive Officer and named President and Chief Executive Officer in October 2015. From May 2011 to March 2012, Dr. Simpson served as the VicePresident, Global Marketing, Oncology Brand Lead at ImClone Systems, Inc. (a wholly owned subsidiary of Eli Lilly and Company), where she wasresponsible for all product commercialization activities and launch preparation for one of the late-stage assets. From June 2009 to May 2011, Dr. Simpsonserved as the Vice President, Product Champion and from 2008 to 2009 as the Associate Vice President, Product Champion for ImClone’s productRamucirumab. From 2006 to 2008, Dr. Simpson served as Product Director, Oncology Therapeutics Marketing at Ortho Biotech (now Janssen Biotech), aPennsylvania-based biotech company that focuses on innovative solutions in immunology, oncology and nephrology. Earlier in her career, Dr. Simpsonspent over a decade as a hematology/oncology nurse practitioner and educator. Dr. Simpson earned a Ph.D. in Epidemiology from the University ofPittsburgh, an M.S. in Nursing from the University of Rochester, and a B.S. in Nursing from the State University of New York at Buffalo.Barbra C. Keck joined Delcath as Controller in January 2009, was promoted to Vice President in October 2009, to Senior Vice President in March 2015 andto Chief Financial Officer in February 2017. Prior to joining Delcath, she was an audit assistant with Deloitte & Touche, LLP from August 2008 to December2008. From June 2006 to August 2008, Ms. Keck was the Assistant to the Vice President and Dean of Baruch College, Zicklin School of Business, and fromSeptember 2005 to May 2006 she was the Donor Relations and Communications Manager for Young Audiences New York. From 2002 to 2005, Ms. Keckwas the Manager, UD Arts Series at the University of Dayton, where she also served as the Manager, Arts and Cultural Events from 1999 to 2002. Betweenthose positions, from 2002 to 2003, she was the Director of Teacher Programs at the Muse Machine. Ms. Keck served as the General Manager of Dayton BachSociety and the Manager of UD Arts Series from 1999 to 2002. She earned her M.B.A. in Accountancy from Baruch College and Bachelor of Music in MusicEducation from the University of Dayton.John Purpura joined Delcath as Executive Vice President, Regulatory Affairs and Quality Assurance in November 2009 and was promoted to Executive VicePresident, Global Head of Operations on July 19, 2016. Prior to joining Delcath, he was with Bracco Diagnostics (formerly E-Z-EM,Inc.) as Vice President andthen Executive Director of International Regulatory Affairs from 2007 to 2008 and Head of Regulatory Affairs for North America and Latin America from2008 to 2009. Prior to E-Z-EM, Inc., Mr. Purpura had an 11-year career with Sanofi-Aventis, ultimately serving as Associate Vice President for RegulatoryCMC from 2005 to 2007. From 1985 to 1995, he had various quality and regulatory management roles with Bolar Pharmaceuticals, Luitpold Pharmaceuticalsand Eon Labs Manufacturing. He earned his M.S. in Management & Policy and B.S. degrees in Chemistry and Biology at the State University of New York atStony Brook.53 Board of Directors. We have currently have four directors serving on the Board of Directors. The Board of Directors oversees the business affairs of theCompany and monitors the performance of management. In accordance with our corporate governance principles, our Board does not involve itself in day-to-day operations. The directors keep themselves informed through discussions with the Chairman of the Board, Roger G. Stoll, Jennifer K. Simpson, in hercapacity as Director and Chief Executive Officer, or CEO, and other key executives, and by reading the reports and other materials that management sendsthem and by participating in Board and committee meetings. Our directors hold office until their successors have been elected and qualified unless thedirector resigns or is removed or by reason of death or other cause is unable to serve in the capacity of director.Board Independence. The Board has determined that three of our four directors (each of Roger Stoll, William D. Rueckert and Marco Taglietti) are“independent” directors within the meaning of the NASDAQ listing rules.Attendance. The Board of Directors met 12 times in 2018 (including regularly scheduled and special meetings). During 2018, each director attended at least75% of the aggregate of: (i) the total number of meetings of the Board (held during the period for which he or she served as a director) and (ii) the totalnumber of meetings held by all committees of the Board of Directors on which he or she served (held during the period that he or she served). It is Delcath’spolicy that, absent unusual or unforeseen circumstances, all directors are expected to attend annual meetings of stockholders.Board Leadership Structure. Roger G. Stoll, Ph.D. was appointed Executive Chairman effective September 2014 and designated Chairman in connectionwith the appointment of Dr. Simpson as director effective October 2015. Dr. Stoll has been a member of the Board of Directors since 2008.It is our policy to separate the Chairman and Chief Executive Officer roles. We believe this structure is appropriate for Delcath because it allows our Presidentand CEO to concentrate on Delcath’s day-to-day operations, while providing for effective oversight by the Chairman, who is involved in strategic and keymatters, such as business strategy, major transactions and the broader business of Delcath. For a company like Delcath that is focused on the development,approval and commercialization of a specialized product in an extremely technical, highly regulated and intensely competitive industry, we believe ourPresident and CEO is in the best position to lead our management team, in part because of the depth of her experience in conducting clinical trials inoncology, and to respond to the current pressures and needs of a company in the stage of growth and development of Delcath, with assistance from ourChairman who also focuses the Board’s attention on the broader issues of corporate business strategy and corporate governance. We believe that splitting theroles between Chairman, on the one hand, and President and CEO, on the other hand, minimizes any potential conflicts that may result from combining theroles of CEO, President and Chairman, and maximizes the effectiveness of our management and governance processes to the benefit of our stockholders. OurPresident and CEO and Chairman regularly consult with each other as part of this structure.Board’s Role in Risk Oversight. The Board as a whole is responsible for risk oversight, with reviews in certain areas being conducted by the relevant Boardcommittees. Each of the Board’s committees oversees the management of risks associated with their respective areas of responsibility. In performing thisoversight function, the committees are assisted by management which provides visibility about the identification, assessment and monitoring of potentialrisks and management’s strategy to mitigate such risks. Key members of management responsible for a particular area report directly to the Board committeecharged with oversight of the associated function and, if the circumstances require, the whole Board. The Board committees review various risk exposureswith the full Board and otherwise keep the full Board abreast of the committees’ risk oversight activities throughout the year, as necessary or appropriate.Risk Assessment of Compensation Programs. Our Compensation and Stock Option Committee annually evaluates whether our compensation programsencourage excessive risk-taking by employees at the expense of long-term Company value. Based upon its assessment, including a review of the overallannual award limitations and individual annual limitations in the Company’s stock incentive plans and the Compensation Committee’s role in theconsideration and approval of certain awards, the Compensation and Stock Option Committee does not believe that our compensation programs encourageexcessive or inappropriate risk-taking, motivate imprudent risk-taking or create risks that are reasonably likely to have a material adverse effect on theCompany.Board Committees. Our Board has three standing committees: an Audit Committee, a Compensation and Stock Option Committee and a Nominating andCorporate Governance Committee. No individual director is the chairman of more than one committee.54 Audit Committee. The Audit Committee provides assistance to the Board in fulfilling its oversight responsibilities with respect to the Company’s financialstatements, the Company’s system of internal accounting and financial controls and the independent audit of the Company’s financial statements. Functionsof the Audit Committee include: •the selection, evaluation and, where appropriate, replacement of our outside auditors; •an annual review and evaluation of the qualifications, performance and independence of our outside auditors; •the approval of all auditing services and permitted non-audit services provided by our outside auditors; •the review of the adequacy and effectiveness of our accounting and internal controls over financial reporting; and •the review and discussion with management and with our outside auditors of the Company’s financial statements to be filed with the Securitiesand Exchange Commission (the “SEC”).The Board has determined that each member of the Audit Committee, William D. Rueckert (Chair), Marco Taglietti and Roger Stoll qualifies as an “auditcommittee financial expert” as defined by SEC rules. During 2018, the Audit Committee met five times. Each member of the Audit Committee is“independent” within the meaning of the NASDAQ listing rules and otherwise meets the financial statement proficiency requirements of the NASDAQ listingrules. The Audit Committee has a written charter, which is available on our website; go to www.delcath.com, click on “Investors,” then “CorporateGovernance.”Compensation and Stock Option Committee. The Compensation and Stock Option Committee (the “Compensation Committee”) assists the Board ofDirectors in the discharge of the Board’s responsibilities with respect to the compensation of Delcath’s directors, executive officers, and other key employeesand consultants. The Compensation Committee establishes our overall compensation philosophy and is authorized to approve the compensation payable toour executive officers, including our named executive officers, and other key employees, including all perquisites, equity incentive awards, cash bonuses,and severance packages. The Compensation Committee also administers certain of the Company’s employee benefit plans, including its equity incentiveplans, and is responsible for assessing the independence of compensation consultants and legal advisors. The Compensation Committee has concluded thateach of Wexler, Burkhart, Hirschberg & Unger, LLP, outside legal counsel to the Compensation Committee and the Company, as well as Pearl Meyer &Partners, compensation consultant to the Compensation Committee, qualified as independent. The Compensation Committee exercises sole power to retaincompensation consultants and advisors and to determine the scope of the associated engagements. The current members of the Compensation and StockOption Committee are Marco Taglietti (Chair) and William D. Rueckert, and Roger Stoll, each of whom is “independent” within the meaning of NASDAQlisting rules. During 2018, the Compensation and Stock Option Committee met one time. The Compensation and Stock Option Committee has a writtencharter, which is available on our website; go to www.delcath.com, click on “Investors,” then “Corporate Governance.” Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee (the “Nominating Committee”) is responsiblefor identifying individuals qualified to become Board members, and recommends to the Board the director nominees to be proposed by the Board for electionby the stockholders (as well as any director nominees to be appointed by the Board to fill interim vacancies). The Nominating Committee also recommendsthe directors to be selected for membership on each Board committee.The Nominating Committee is also responsible for developing and recommending to the Board appropriate corporate governance guidelines and policies,and for leading the Board in its annual review of the Board’s performance.The current members of the Nominating Committee are Roger Stoll (Chairman), William D. Rueckert and Marco Taglietti, each of whom is “independent,”within the meaning of NASDAQ listing rules. During 2018, the Nominating Committee met one time. The Nominating Committee has a written charter,which is available on our website; go to www.delcath.com, click on “Investors,” then “Corporate Governance.”The Nominating Committee, with, when it deems it necessary, the assistance of a third-party search firm, identifies candidates for director nominees. Inconsidering candidates for the Board, the Nominating Committee considers each candidate’s credentials as a whole, including, but not necessarily limited to,outstanding achievement in a candidate’s personal career, broad and relevant experience, integrity, sound and independent judgment, experience andknowledge of the business environment and markets in which the Company operates, business acumen, and willingness and ability to devote adequate timeto Board duties. The Nominating Committee considers the diversity of its members in the context of the Board as a whole, including the personalcharacteristics, experience and background of directors and nominees to facilitate Board deliberations that reflect a broad range of perspectives.55 Recommendations by Stockholders of Director Nominees. The Nominating Committee will consider any recommendation by a stockholder of a candidatefor nomination as a director. If a stockholder wants to recommend a director candidate for consideration by the Nominating Committee, the stockholdershould submit the name of the proposed nominee, together with the reasons why the stockholder believes the election of the candidate would be beneficial tothe Company and its stockholders and the information about the nominee that would be required in a proxy statement requesting proxies to vote in favor ofthe candidate. The stockholder’s submission must be accompanied by the written consent of the proposed nominee to being nominated by the Board and thecandidate’s agreement to serve if nominated and elected. Any such submission should be directed to the Nominating Committee at Delcath’s principal office,1633 Broadway, Suite 22C, New York, New York 10019. If a stockholder intends to nominate a person for election to the Board of Directors at an annualmeeting, the stockholder must provide Delcath with written notice of his or her intention no later than the deadline for receiving a stockholder proposal forinclusion in Delcath’s proxy statement for such meeting and must otherwise comply with our amended and restated certificate of incorporation. Copies of anyrecommendation received in accordance with these procedures will be distributed to each member of the Nominating Committee. One or more members of theNominating Committee may contact the proposed candidate to request additional information.Stockholder Communications with the Board of Directors. Any stockholder wishing to communicate with the Board or with any specified director shouldaddress his or her communication to the Board of Directors or to the particular director(s) in care of the Corporate Secretary, Delcath Systems, Inc., 1633Broadway, Suite 22C, New York, New York 10019. All such written communication, other than items determined by our legal counsel to be inappropriate forsubmission to the intended recipient(s), will be submitted to the Board or to the particular director(s). Any stockholder communication not so delivered, willbe made available upon request to any director. Examples of stockholder communications that would be considered inappropriate for submission include,without limitation, customer complaints, business solicitations, product promotions, job inquiries, junk mail and mass mailings, as well as material that isunduly hostile, threatening, illegal or similarly unsuitable. Code of Ethics. We maintain a Code of Business Conduct and Ethics (Code) that applies to all employees, including our principal executive officer,principal financial officer, principal accounting officer, controller and persons performing similar functions, and including our independent directors, who arenot employees of the Company, with regard to their Delcath-related activities. The Code incorporates guidelines designed to deter wrongdoing and topromote honest and ethical conduct and compliance with applicable laws, rules and regulations. The Code also incorporates our expectations of ouremployees that enable us to provide accurate and timely disclosure in our filings with the SEC and other public communications. In addition, the Codeincorporates guidelines pertaining to topics such as complying with applicable laws, rules, and regulations; insider trading; reporting Code violations; andmaintaining accountability for adherence to the Code. The full text of our Code is published on our website at http://delcath.com/investors/governance. Weintend to disclose future amendments to certain provisions of our Code, or waivers of such provisions granted to our principal executive officer, principalfinancial officer or principal accounting officer and persons performing similar functions on our website. Except as expressly stated herein, the information contained on Delcath’s website does not constitute a part of this Annual Report on Form 10-K and is notincorporated by reference herein. REPORT OF THE AUDIT COMMITTEEThe Audit Committee reviewed and discussed the Company’s audited financial statements for the fiscal year ended December 31, 2018, with managementand Marcum LLP, the Company’s independent registered public accounting firm for the fiscal year ended December 31, 2018. The Audit Committee alsodiscussed with Marcum LLP the matters required to be discussed by the Statement on Auditing Standards No. 16, as amended, as adopted by the PublicCompany Accounting Oversight Board in Rule 3200T regarding “Communication with Audit Committees.” The Audit Committee has received and reviewedthe written disclosures and the letter from Marcum LLP required by applicable requirements of the Public Company Accounting Oversight Board regardingMarcum LLP’s communications with the Audit Committee concerning independence, and has discussed with Marcum LLP its independence from theCompany.Based on the review and discussions referred to above, the Audit Committee recommended to the Board of Directors that the Company’s audited financialstatements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, for filing with the SEC.Submitted by the Audit Committee of the Board of Directors,William Rueckert (Chair)June 14, 201956 SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCESection 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and officers, and persons who are beneficial owners of more than10% of our common stock to file with the SEC reports of holdings and changes in beneficial ownership of Delcath’s equity securities. Based on a review ofcopies of reports furnished to Delcath or written representations that no reports were required, with the exception of one late filed Form 4 for each of JenniferSimpson, Barbra Keck, John Purpura, Roger Stoll and William Rueckert, we believe that all reports were timely filed in 2018.Item 11. Executive Compensation.Our Compensation Committee is responsible for formulating and establishing our overall compensation philosophy with respect to our executive officers.The Company believes that a strong executive management team comprised of talented individuals in key positions at the Company is critical to thedevelopment and growth of our business and to increasing stockholder value. Accordingly, a key objective of executive compensation is to attract and retaintalented and experienced individuals, while motivating them to perform and make decisions consistent with the Company’s business objectives, goals andculture. We emphasize pay-for-performance by linking executive compensation to Company performance. For each executive, the amount of pay that isactually realized is primarily driven by the Company’s performance and each executive’s contribution to that performance.Our Compensation Committee considers the input it receives from our stockholders when designing and evaluating our executive compensation practices.Compensation Components. The three primary components of executive compensation are base salary, annual incentive cash awards and long-term equityincentive awards: •Base Salary. We pay our executive officers a base salary, which our Compensation Committee reviews and determines annually. Base salaries areused to compensate our executive officers for performing the core responsibilities of their positions and to provide them with a level of securitywith respect to a portion of their total compensation. Base salaries are set in part based on the executive’s unique skills, experience and expectedcontribution to the Company, as well as individual performance, including the impact of such performance on our business results, and theperiod of the executive’s performance. Decisions regarding base salary increases take into account the executive’s current base salary, third-partybenchmark and survey data, and the salary compensation paid to executive officers within and outside the Company, as well as the Company’soverall performance, its ability to afford such increases, its success in achieving its operational and strategic goals and objectives, and theexecutive officer’s contribution to Company performance. •Annual Incentive Cash Awards. Annual incentive compensation is intended to establish a direct correlation between annual cash awards and theperformance of the Company. The Company’s Annual Incentive Plan (“AIP”) is an annual incentive cash bonus plan designed to align theinterests of participants with the interests of the Company and its stockholders. The AIP is designed to strengthen the link between a participant’spay and his or her overall performance and the Company’s performance, focus participants on critical individual and corporate objectives, offer acompetitive cash incentive, and encourage and reward performance and competencies critical to the Company’s success. •Long-Term Incentive Compensation. In addition to using base salaries and annual incentive cash bonuses, which our Compensation Committeeviews as short-term compensation, a portion of our executive compensation is in the form of long-term equity compensation. Our Long-TermIncentive Plan (“LTIP”) is an annual equity-based incentive plan designed to align participants’ interests with those of the Company and itsstockholders by rewarding participants for their contributions to the long-term success of the Company. The LTIP is designed to incentivizeCompany leaders to focus on the long-term performance of the Company, offer participants competitive, market-based long-term incentive awardopportunities, and strengthen the link between a participant’s compensation and his or her overall performance and the Company’s overall long-term performance. We believe the LTIP assists us in achieving an appropriate balance between short- and long-term executive compensation. Base Salary. The following table summarizes the amount of base salary and year-over-year increase for each of our named executive officers for 2017 and2018: 57 Executive Hire Date 2016 BaseSalary PercentIncreasein 2017 2017 BaseSalary PercentIncreasein 2018 2018 BaseSalary Jennifer K. Simpson, Ph.D. 3/23/2012 $439,810 3.0% $453,004 3.0% $466,594 Barbra C. Keck, M.B.A. 1/5/2009 $247,200 21.4% $300,000 8.0% $324,000 John Purpura, M.S. 11/16/2009 $307,000 3.0% $316,210 5.9% $335,000 Annual Incentive Plan. Under the AIP, annual incentive target award opportunities are expressed as a percentage of a participant’s actual base salary for theperformance year, beginning January 1. The following table sets forth, for each executive, the applicable target bonus percentage of base salary to which eachexecutive could have been entitled. Given the Company’s current position, no annual bonus was awarded or paid to any named executive officer for 2018. Executive Target BonusExpressed as% of BaseSalary Dollars ($) ActualPayout as% of BaseSalary Dollars ($) Jennifer K. Simpson, Ph.D. 50.0% $233,297 0.0% $— Barbra C. Keck, M.B.A. 45.0% $145,800 0.0% $— John Purpura, M.S. 45.0% $150,750 0.0% $— For 2018, AIP goals were based entirely on Company performance to focus all the executives on the same critical challenges facing the Company. Companyperformance in 2018 has been measured based upon achievement of objectives in the following areas: (1) Clinical Trials; (2) Capital; and (3) Sales. Whilecertain performance goals were met in 2018, the Board determined that no annual bonus should be granted to our named executive officers due to theCompany’s current position and challenges.Long Term Incentive Plan. Grants under the LTIP are typically comprised of a mix of restricted stock and stock option awards granted in the first quarter ofeach year with the number of shares subject to the awards designed to deliver a competitive value targeted at the mid-market of the executive compensationcomparison group. These guidelines are reviewed periodically based on prevailing compensation comparison group levels, however, and the CompensationCommittee then uses these guidelines to determine long-term equity incentive awards for our named executive officers based upon a holistic assessment ofCompany and individual performance for the prior year and its view of the appropriate incentives to best help achieve the Company’s business objectives.Our ability to provide awards at the mid-market level has been difficult to do in the past few years due to share availability. Such awards in the past few yearshave typically been at or below the market 25th percentile.There were no long-term equity awards to our named executive officers in 2018. Due to the lack of available shares for issuance under the Company’s 2009Stock Incentive Plan, the Board of Directors did not grant any long-term equity awards to our named executive officers in 2018 which in no way shouldcreate any negative inference concerning the Compensation Committee’s evaluation of their performance. 58 Summary Compensation Table.The following table sets forth the total compensation awarded to, earned by or paid to: (i) each person who served as a principal executive officer during2018, and (ii) our two other most highly-compensated executive officers who were serving as executive officers on December 31, 2018. We refer to theseindividuals as our “named executive officers.” Name and Position Year Salary($)(1) Bonus($)(2) StockAwards($)(3) OptionsAwards($) Non-EquityIncentive PlanCompensation($) All OtherCompensation($) Total ($) Jennifer K. Simpson, Ph.D. 2018 $466,594 $75,000 $— $— $— $— $541,594 President and ChiefExecutive Officer 2017 453,004 147,226 7,476 — — — 607,706 Barbra C. Keck, M.B.A. 2018 324,000 50,000 — — — — 374,000 Chief FinancialOfficer and Secretary 2017 293,400 68,250 4,788 — — — 366,438 John Purpura, M.S. 2018 335,000 50,000 — — — — 385,000 Executive VicePresident, GlobalHead of Operations 2017 316,210 92,491 7,140 — — — 415,841 (1)For 2018, Dr. Simpson was paid $177,102, Ms. Keck was paid $128,037 and Mr. Purpura was paid $132,053. The balance of their salaries hasbeen accrued. (2)For 2017 and 2018, all bonus amounts have been accrued and not yet paid. (3)Due to the lack of available shares for issuance under the Company’s 2009 Stock Incentive Plan, the Board of Directors did not grant any long-term equity awards to our named executive officers in 2017 or 2018 which in no way should create any negative inference concerning theCompensation Committee’s evaluation of their performance.Outstanding Equity Awards at Fiscal Year-End Table—2018.The following table sets forth information relating to unexercised options and unvested restricted shares held by the named executive officers as ofDecember 31, 2018. As a result of the May 2, 2018 reverse stock split, the Company’s 2009 Stock Incentive Plan has no active grants and no further sharesavailable to be granted. Name Number ofSecuritiesUnderlyingUnexercisedOptions (#)Exercisable Number ofSecuritiesUnderlyingUnexercisedOptions (#)Unexercisable OptionExercisePrice OptionExpirationDate Number ofShares ofStock ThatHave NotVested (#) Market Valueof Shares ofStock ThatHave NotVested ($) Jennifer K. Simpson, Ph.D. — — — — — — Barbra C. Keck, M.B.A. — — — — — — John Purpura, M.S. — — — — — — 59 Potential Payments upon Termination or Change of Control.The following table shows the potential incremental value transfer to each named executive officer under various termination or change-in-control scenariosas of December 31, 2018, the last business day of 2018. Unvested, unexercised stock options and unvested restricted stock awards are valued at the closingmarket price of the Company’s common stock on that date. The actual amounts to be paid out in respect of the named executive officers can only bedetermined at the time of such named executive officer’s actual separation from the Company. Name Retirementor VoluntaryTerminationWithout"GoodReason" Terminationfor "Cause" InvoluntaryTermination(TerminationWithoutCause, orTerminationfor GoodReason) Upon aChange inControl Death orDisabilityTermination Jennifer K. Simpson, Ph.D. — — $726,650 $726,650 — Barbra C. Keck, M.B.A. — — $530,860 $530,860 — John Purpura, M.S. — — $518,240 $518,240 — Severance Arrangements The Company has entered into an Executive Security Agreement with each of the named executive officers. The Executive Security Agreements provide forthe payment of severance to each of our named executive officers upon a qualifying termination (a termination which is involuntary but not “for cause” or atermination for “good reason” as defined therein) to be paid within 10 days of such event as follows: (i) all base salary owed to the date of the qualifyingevent, (ii) a one-time lump sum fee equal to the named executive officer’s monthly base salary for a term of two years for Jennifer Simpson and 18 months forBarbra Keck and John Purpura, and (iii) COBRA payments should the named executive officer remain on the Company’s health benefit plans. The namedexecutive officer would also be entitled to a pro-rata portion of any AIP payment for the fiscal year in which termination of employment occurs due by March15th of the following year. The term of the Executive Security Agreements continues until terminated by mutual agreement of each named executive officerand the Company. Director Compensation—2018The Compensation Committee reviews and recommends to the Board of Directors appropriate director compensation programs for service as directors,committee chairs, and committee members. In lieu of per-meeting fees, non-employee directors of the Company are paid an annual retainer of $43,000 and certain additional annual retainers for chairingor serving as a member of the committees of the Board as follows: Name Annual Retainer Board Service $43,000 Chair of Audit Committee $20,000 Member of Audit Committee $8,000 Chair of Compensation and Stock Option Committee $12,000 Member of Compensation and Stock Option Committee $5,000 Chair of Nominating and Corporate Governance Committee $8,000 Member of Nominating and Corporate Governance Committee $4,000 Dr. Stoll receives an annual retainer fee as Director and Chairman of the Board of $68,000. Additionally, we reimburse all non-employee directors for theirreasonable out-of-pocket travel expenses incurred in attending meetings of our Board of Directors or any committees of the Board. Due to the lack of sharesavailable for issuance under the Company’s 2009 Stock Incentive Plan, the Board of Directors did not grant any equity awards to non-employee directorsduring 2018 which in no way should create any negative inference concerning the Compensation Committee’s evaluation of their performance.60 The following table sets forth the compensation awarded to, earned by or paid to each non-employee director who served on our Board of Directors in 2018. Name Fees Earnedor Paid inCash StockAwards OptionAwards All OtherCompensation Total Simon Pedder, Ph.D. (1) $56,000 $— $— $— $56,000 William D. Rueckert 72,000 — — — 72,000 Roger G. Stoll, Ph.D. 84,000 — — — 84,000 Marco Taglietti, M.D. 59,000 — — — 59,000 (1)Dr. Pedder resigned as a director effective April 10, 2019. (2)No non-employee director was paid his 2018 fees. All amounts have been accrued. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.The following table contains information regarding the beneficial ownership of our common stock as of June 14, 2019, held by: (i) each of our directors;(ii) each of our named executive officers; (iii) all of our directors and executive officers as a group; and (iv) each person or group known by us to ownbeneficially more than 5% of the outstanding shares of common stock of the Company. We are not aware of any 5% or more holders of our common stock asof June 14, 2019 except as set forth below. The information set forth in the table below excludes shares issuable upon exercise of outstanding warrants topurchase shares of our common stock held by certain investors that are presently exercisable, subject to limitations on exercisability for more than 4.9% or9.9% of our outstanding shares of common stock, depending upon the particular investor. Except as indicated in the footnotes below, the address of thepersons or groups named below is c/o Delcath Systems, Inc., 1633 Broadway, Suite 22C, New York, New York 10019. Name of Beneficial Owner SharesBeneficiallyOwnedNumber(1) PercentNamed Executive Officers and Directors: Jennifer K. Simpson, Ph.D.(2) 182,500 *Barbra C. Keck, M.B.A.(3) 132,500 *John Purpura, M.S.(4) 130,501 *William D. Rueckert(5) 57,926 *Roger G. Stoll, Ph.D.(6) 55,901 *Marco Taglietti, M.D.(7) 50,001 *All directors and executive officers as a group (6 people)(8): 609,329 * *Less than 1% (1)Except as indicated in these footnotes: (i) the persons named in this table have sole voting and investment power with respect to all shares ofcommon stock beneficially owned; (ii) the number of shares beneficially owned by each person as of June 14, 2019, includes any vested andunvested shares of restricted stock and any shares of common stock that such person or group has the right to acquire within 60 days of June 14,2019, upon the exercise of stock options; and (iii) for each person or group included in the table, percentage ownership is calculated bydividing the number of shares beneficially owned by such person or group by the sum of the 18,277,807 shares of common stock outstandingon June 14, 2019, plus the number of shares of common stock that such person or group has the right to acquire within 60 days of June 14,2019. (2)Includes 175,000 shares of common stock, which Dr. Simpson has the right to acquire upon exercise of outstanding options exercisable within60 days of June 14, 2019. (3)Includes 125,000 shares of common stock, which Ms. Keck has the right to acquire upon exercise of outstanding options exercisable within 60days of June 14, 2019. (4)Includes 125,000 shares of common stock, which Mr. Purpura has the right to acquire upon exercise of outstanding options exercisable within60 days of June 14, 2019. (5)Includes 50,000 shares of common stock, which Mr. Rueckert has the right to acquire upon exercise of outstanding options exercisable within60 days of June 14, 2019.61 (6)Includes 50,000 shares of common stock, which Dr. Stoll has the right to acquire upon exercise of outstanding options exercisable within 60days of June 14, 2019. (7)Includes 50,000 shares of common stock, which Dr. Taglietti has the right to acquire upon exercise of outstanding options exercisable within60 days of June 14, 2019. (8)Includes 50,000 shares of common stock, which certain directors and executive officers have the right to acquire upon exercise of outstandingoptions exercisable within 60 days of June 14, 2019. Item 13. Certain Relationships and Related Transactions, and Director Independence.Transactions with Related Persons. We have adopted a written policy for the review and approval or ratification of transactions between Delcath andRelated Parties (as defined below). Under the policy, our Nominating Committee will review the material facts of proposed transactions involving Delcath inwhich a Related Party will have a direct or indirect material interest. The Nominating Committee will either approve or disapprove Delcath’s entry into thetransaction or, if advance approval is not feasible, will consider whether to ratify the transaction. The Nominating Committee may establish guidelines forongoing transactions with a Related Party, and will review such transactions at least annually. If the aggregate amount of the transaction is expected to beless than $200,000, such approval or ratification may be made by the Chair of the Committee. In determining whether to approve or ratify a transaction with aRelated Party, the Nominating Committee (or Chair) will consider, among other factors, whether the transaction is on terms no less favorable than termsgenerally available to an unaffiliated third-party and the extent of the Related Party’s interest in the transaction.Certain transactions are deemed pre-approved under the policy, including compensation of executive officers and directors (except that employment of animmediate family member of an executive officer requires specific approval), and transactions with a company at which the Related Party’s only relationshipis as a non-officer employee, director, or less than 10% owner if the aggregate amount involved does not exceed 2% of such company’s total annual revenues(or, in the case of charitable contributions by Delcath, 2% of the charity’s total annual receipts). Pre-approval is not required if the amount involved in thetransaction is not expected to exceed $120,000 in any calendar year. For purposes of the policy, a Related Party is generally anyone who since the beginning of the last full fiscal year is or was an executive officer, director ordirector nominee, owner of more than 5% of the common stock, or immediate family member of any of such persons.No Related Party transactions occurred during 2018.Certain Anti-Takeover Provisions of Delaware Law and our Certificate of Incorporation and BylawsWe are not subject to Section 203 of the Delaware General Corporation Law, which prohibits Delaware corporations from engaging in a wide range ofspecified transactions with any interested stockholder, defined to include, among others, any person other than such corporation and any of its majorityowned subsidiaries who own 15% or more of any class or series of stock entitled to vote generally in the election of directors, unless, among other exceptions,the transaction is approved by (i) our board of directors prior to the date the interested stockholder obtained such status or (ii) the holders of two-thirds of theoutstanding shares of each class or series of stock entitled to vote generally in the election of directors, not including those shares owned by the interestedstockholder.Staggered Board of DirectorsOur certificate of incorporation and by-laws provide that our board of directors be classified into three classes of directors of approximately equal size. As aresult, in most circumstances, a person can gain control of our board only by successfully engaging in a proxy contest at two or more annual meetings.Authorized But Unissued SharesOur authorized but unissued shares of common stock and preferred stock are available for future issuances without stockholder approval and could beutilized for a variety of corporate purposes, including future offerings to raise additional capital, corporate acquisitions, employee benefit plans andstockholder rights plans. The existence of authorized but unissued and unreserved common stock and preferred stock could render more difficult ordiscourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.62 Item 14. Accounting Fees and Services.The aggregate fees billed by Marcum LLP and Grant Thornton LLP for services rendered as our independent registered public accounting firm during thefiscal years ended December 31, 2018 and 2017, respectively: Fiscal Year(1) 2018 2017 Audit Fees $104,063 $576,450 Audit-Related Fees — — Tax Fees — — Total $104,063 $576,450 (1)Marcum LLP audited Delcath’s annual financial statements for the fiscal year ended December 31, 2018 and Grant Thornton LLP auditedDelcath’s financial statements for the fiscal year ended December 31, 2017Audit Fees. These are fees for services rendered in connection with the audit of the annual financial statements included in our annual reports on Forms 10-K;the review of the financial statements included in our Quarterly Reports on Forms 10-Q; the audit of our internal control over financial reporting; and forservices that are normally provided by an independent auditor in connection with statutory and regulatory filings or engagements.Pre-approval Policies: Audit and Non-Audit Services. The Audit Committee pre-approves all audit services and the terms of such services and permissiblenon-audit services provided by Delcath’s independent registered public accounting firm, prior to its engagement for the provision of such services. The Chairof the Audit Committee has been delegated the authority by the committee to pre-approve interim services by Delcath’s independent registered publicaccounting firm; provided the Chair reports all such pre-approvals to the entire Audit Committee at the next Committee meeting. There were no non-auditservices provided to Delcath by our independent registered public accounting firm for 2018 and 2017 that required review by the Audit Committee. 63 PART IVItem 15. Exhibits and Financial Statement SchedulesThe following documents are filed as part of this Annual Report on Form 10-K:1. Consolidated Financial Statements: The following Consolidated Financial Statements and Supplementary Data of Delcath and the Report ofIndependent Registered Public Accounting Firm included in Part II, Item 8: •Consolidated Balance Sheets at December 31, 2018 and 2017 •Consolidated Statements of Comprehensive Loss for the years ended December 31, 2018 and 2017 •Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2018 and 2017 •Consolidated Statements of Cash Flows for the years ended December 31, 2018 and 2017 •Notes to Consolidated Financial Statements2. Exhibits: The exhibits listed in the accompanying Exhibit Index are filed or incorporated by reference as part of this Annual Report on Form 10-K. Item 16. Form 10-K Summary.None. 64 Exhibit Index ExhibitNo. Description 1.1 Form of Placement Agency Agreement (incorporated by reference to the Exhibit 1.1 to Amendment No. 2 to Registration Statement on FormS-1, filed on January 17, 2018 (Commission File No. 333-220898)) 1.2 Form of Placement Agency Agreement (incorporated by reference to the Exhibit 1.2 to Amendment No. 2 to Registration Statement on FormS-1, filed on January 17, 2018 (Commission File No. 333-220898)) 1.3 Form of Placement Agency Agreement (incorporated by reference to the Exhibit 1.3 to Amendment No. 2 to Registration Statement on FormS-1, filed on January 17, 2018 (Commission File No. 333-220898)) 3.1 Amended and Restated Certificate of Incorporation of the Company, as amended to June 30, 2005 (incorporated by reference to Exhibit 3.1to Company’s Current Report on Form 8-K filed June 5, 2006 (Commission File No. 001-16133) 3.2 Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company, effective as of April 8, 2014(incorporated by reference to Exhibit 3.1 to Company’s Current Report on Form 8-K filed April 8, 2014 (Commission File No. 001-16133) 3.3 Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company, effective as of July 20, 2016(incorporated by reference to Exhibit 3.1 to Company’s Current Report on Form 8-K filed July 21, 2016 (Commission File No. 001-16133) 3.4 Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company, effective as of July 20, 2016(incorporated by reference to Exhibit 3.2 to Company’s Current Report on Form 8-K filed July 21, 2016 (Commission File No. 001-16133) 3.5 Amended and Restated By-Laws of the Company (incorporated by reference to Exhibit 3.2 to Amendment No. 1 to Company’sRegistration Statement on Form SB-2 (Registration No. 333-39470)) 3.6 Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company, effective as of June 30, 2017(incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed July 3, 2017 (Commission File No. 001-16133)) 3.7 Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company, effective as of July 5, 2017(incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed July 6, 2017 (Commission File No. 001-16133)) 3.8 Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company, effective as of September 20, 2017(incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed September 21, 2017 (Commission File No.001-16133)) 3.9 Amendment to Amended and Restated Certificate of Incorporation of the Company, effective as of April 21, 2018 (incorporated byreference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed April 26, 2018 (Commission File No. 001-16133)) 3.10**Amendment to Amended and Restated Certificate of Incorporation of the Company, effective as of April 21, 2018 3.11 Certificate of Designation of Series D Preferred Stock of the Company effective November 5, 2018 (incorporated by reference to Exhibit 3.1to the Company’s Current Report on Form 8-K filed on November 7, 2018 (Commission File No. 001-16133)) 4.1 Form of Warrant to Purchase Shares of Common Stock dated February 17, 2015 (incorporated by reference to Exhibit 4.1 to the Company’sCurrent Report on Form 8-K filed February 17, 2015 (Commission File No. 001-16133)). 4.2 Form of Series A Warrant to Purchase Shares of Common Stock dated July 21, 2015 (incorporated by reference to Exhibit 1.2 to theCompany’s Amendment No. 1 to Form S-1 filed July 7, 2015). 4.3 Form of Senior Secured Convertible Note (incorporated by reference to Exhibit A to the Securities Purchase Agreement included as Exhibit10.1 to the Company’s Current Report on Form 8-K filed on June 7, 2017 (Commission File No. 001-16133)). 65 ExhibitNo. Description 4.4 Form of Series C Warrant to Purchase Shares of Common Stock (incorporated by reference to Exhibit B to the Securities PurchaseAgreement included as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 7, 2017 (Commission File No. 001-16133)). 4.5 Form of Warrant to Purchase Shares of Common Stock dated October 5, 2016 (incorporated by reference to Exhibit 4.1 to the Company’sCurrent Report on Form 8-K filed October 4, 2016 (Commission File No. 001-16133)). 10.1*2009 Stock Incentive Plan (incorporated by reference to Appendix B to the Company’s definitive Proxy Statement dated April 30, 2009(Commission File No. 001-16133)). 10.2 Form of Indemnification Agreement dated April 8, 2009 between the Company and members of the Company’s Board of Directors(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 10, 2009 (Commission File No. 001-16133)). 10.3 Lease between SLG 810 Seventh Lessee LLC and the Company dated as of February 5, 2010 (incorporated by reference to Exhibit 10.1 tothe Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 (Commission File No. 001-16133)). 10.4 Amended and Restated Supply Agreement between B. Braun Medical Inc and the Company dated as of May 4, 2010 (incorporated byreference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 (Commission File No.001-16133)). 10.5 Lease Modification, Extension and Additional Space Agreement between SLG 810 Seventh Lessee LLC and the Company dated as ofSeptember 27, 2010 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed September 30, 2010(Commission File No. 001-16133)). 10.6†License, Supply and Contract Manufacturing Agreement between Synerx Pharma, LLC and Bioniche Teoranta and the Company dated asof October 13, 2010 (incorporated by reference to Exhibit 10.32 to the Company’s Annual Report on Form 10-K for the year endedDecember 31, 2010 (Commission File No. 001-16133)). 10.7 Form of Employee Confidentiality and Restrictive Covenant Agreement (incorporated by reference to Exhibit 10.2 to the Company'sCurrent Report on Form 8-K filed September 26, 2011 (Commission File No. 001-16133)). 10.8 Lease Agreement, dated August 2, 2011 (incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for thequarter ended September 30, 2011 (Commission File No. 001-16133)). 10.9 Sublease between Delcath Systems, Inc. and SLG 810 Seventh Lessee LLC, dated May 22, 2014. (incorporated by reference to Exhibit 10.1to the Company’s Current Report on Form 8-K filed May 28, 2014 (Commission File No. 001-16133)) 10.10 Sublease Agreement between Delcath Systems, Inc. and ICV Partners, LLC dated August 18, 2014 (incorporated by reference to Exhibit10.1 to the Company’s Current Report on Form 8-K filed September 30, 2014 (Commission File No. 001-16133)) 10.11 Form of Warrant Repurchase Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filedApril 3, 2017 (Commission File No. 001-16133)) 10.12 Exchange Agreement dated July 2, 2017 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed onJuly 2, 2017 (Commission File No. 001-16133)) 10.13 Securities Purchase Agreement dated July 5, 2017 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-Kfiled on July 6, 2017 (Commission File No. 001-16133)) 10.14 Form of Leak-Out Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on July 2,2017 (Commission File No. 001-16133)) 10.15 Amended and Restated Securities Purchase Agreement dated July 5, 2017 (incorporated by reference to Exhibit 10.1 to the Company’sCurrent Report on Form 8-K/A filed on July 12, 2017 (Commission File No. 001-16133)) 10.16 Form of Restructuring Agreement and Warrant (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-Kfiled on August 28, 2017 (Commission File No. 001-16133)) 10.17 Securities Purchase Agreement dated September 19, 2017 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report onForm 8-K filed on September 21, 2017 (Commission File No. 001-16133)) 10.18 Amendment No. 1 to Restructuring Agreement dated October 10, 2017 (incorporated by reference to Exhibit 10.1 to the Company’s CurrentReport on Form 8-K filed on October 11, 2017 (Commission File No. 001-16133)) 66 ExhibitNo. Description 10.19 Exchange Agreement, dated November 15, 2017 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-Kfiled on November 16, 2017 (Commission File No. 001-16133)) 10.20 Form of Exchange Note (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on November 16,2017 (Commission File No. 001-16133)) 10.21 Form of Exchange Warrant (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on November 16,2017 (Commission File No. 001-16133)) 10.22 Exchange Agreement, dated December 28, 2017 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-Kfiled on December 29, 2017 (Commission File No. 001-16133)) 10.23 Form of Leak-Out Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December29, 2017 (Commission File No. 001-16133)) 10.24*Executive Agreement between the Company and Jennifer Simpson (incorporated by reference to Exhibit 10.1 to the Company’s CurrentReport on Form 8-K filed on March 26, 2018 (Commission File No. 001-16133)) 10.25*Executive Agreement between the Company and Barbra Keck (incorporated by reference to Exhibit 10.2 to the Company’s Current Reporton Form 8-K filed on March 26, 2018 (Commission File No. 001-16133)) 10.26*Executive Agreement between the Company and John Purpura (incorporated by reference to Exhibit 10.3 to the Company’s Current Reporton Form 8-K filed on March 26, 2018 (Commission File No. 001-16133)) 10.27 Securities Purchase Agreement dated as of June 4, 2018 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report onForm 8-K filed on June 8, 2018 (Commission File No. 001-16133) 10.28 First Amendment to Securities Purchase Agreement dated as of July 20, 2018 to Securities Purchase Agreement dated as of June 4, 2018(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 26, 2018 (Commission File No. 001-16133)) 10.29 First Amendment to Warrants to Purchase Common Stock dated July 20, 2018 (incorporated by reference to Exhibit 10.2 to the Company’sCurrent Report on Form 8-K filed on July 26, 2018 (Commission File No. 001-16133)) 10.30 Form of Securities Purchase Agreement dated August 31, 2018 (incorporated by reference to Exhibit 10.1 to the Company’s Current Reporton Form 8-K filed on September 7, 2018 (Commission File No. 001-16133)) 10.31 Form of Backstop Commitment Purchase Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form8-K filed on September 7, 2018 (Commission File No. 001-16133)) 10.32 Form of 8% Senior Secured Convertible Promissory Note (incorporated by reference to Exhibit 10.3 to the Company’s Current Report onForm 8-K filed on September 7, 2018 (Commission File No. 001-16133)) 10.33 Form of Warrant to Purchase Common Stock (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filedon September 7, 2018 (Commission File No. 001-16133)) 10.34 Form of Pre-Funded Warrant to Purchase Common Stock (incorporated by reference to Exhibit 10.5 to the Company’s Current Report onForm 8-K filed on September 7, 2018 (Commission File No. 001-16133)) 10.35 Form of First Amendment to 8% Senior Secured Convertible Promissory Notes issued June 4, 2018 (incorporated by reference to Exhibit10.6 to the Company’s Current Report on Form 8-K filed on September 7, 2018 (Commission File No. 001-16133)) 10.36 Form of Second Amendment to Warrants to Purchase Common Stock issued June 4, 2018 and July 20, 2018 (incorporated by reference toExhibit 10.7 to the Company’s Current Report on Form 8-K filed on September 7, 2018 (Commission File No. 001-16133)) 10.37 Form of Stock Purchase Agreement dated as of November 6, 2018 (incorporated by reference to Exhibit 10.1 to the Company’s CurrentReport on Form 8-K filed on November 7, 2018 (Commission File No. 001-16133)) 10.38†**License, Supply and Marketing Agreement for CHEMOSAT® dated as of December 10, 2018 between the Company and medacGesellschaft für klinische Spezialpräparate mbH67 ExhibitNo. Description 10.39**Form of Exchange Agreement dated December 2018 10.40**Form of Leak-Out Agreement dated December 2018 10.41*2019 Equity Incentive Plan (incorporated by reference to Exhibit 4.01 to the Company’s Current Report on Form 8-K filed on February 7,2019 (Commission File No. 001-16133)) 10.42**Global Settlement Agreement dated as of April 18, 2019 by and among the Company, Iroquois Capital Investment Group, LLC, IroquoisMaster Fund Ltd. and FirstFire Global Opportunities Fund LLC 10.43**Securities Purchase Agreement dated as of April 19, 2019 10.44**Securities Purchase Agreement dated as of April 26, 2019 10.45**Securities Purchase Agreement dated as of May 9, 2019 10.46**Securities Purchase Agreement dated as of May 23, 2019 10.47**Note Purchase Agreement dated as of June 6, 2019 by and among Delcath Systems, Inc., Rosalind Master Fund LP and RosalindOpportunities Fund I 10.48**Form of 8% Secured Promissory Note Due June 6, 2021 31.1**Certification by Principal executive officer Pursuant to Rule 13a 14. 31.2**Certification by Principal financial officer Pursuant to Rule 13a 14. 32.1**Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Actof 2002. 32.2**Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Actof 2002. 101.INS**XBRL Instance Document 101.SCH**XBRL Taxonomy Extension Schema Document 101.CAL**XBRL Taxonomy Extension Calculation Linkbase Document 101.DEF**XBRL Taxonomy Extension Definition Linkbase Document 101.LAB**XBRL Taxonomy Extension Label Linkbase Document 101.PRE**XBRL Taxonomy Extension Presentation Linkbase Document †Portions of this exhibit have been omitted.*Indicates management contract or compensatory plan or arrangement.**Filed herewith. 68 SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized. DELCATH SYSTEMS, INC. /s/ Jennifer K. Simpson Jennifer K. Simpson President and Chief Executive Officer (Principal Executive Officer) Dated: June 14, 2019 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrantand in the capacities and on the dates indicated. Signature Title Date /s/ Jennifer K. Simpson President and Chief Executive Officer June 14, 2019Jennifer K. Simpson (Principal Executive Officer) /s/ Barbra C. Keck Chief Financial Officer June 14, 2019Barbra C. Keck (Principal Financial Officer and Principal Accounting Officer) /s/ Roger G. Stoll, Ph.D. Chairman of the Board June 14, 2019Roger G. Stoll, Ph.D. /s/ William Rueckert Director June 14, 2019William Rueckert /s/ Marco Taglietti Director June 14, 2019Marco Taglietti 69Exhibit 3.10Amendments to Amended and Restated Certificate of Incorporation to Effectuate Reverse Stock SplitPursuant to Section 242 of the GeneralCorporation Law of the State of DelawareDELCATH SYSTEMS, INC., a Delaware corporation (hereinafter called the “Corporation”), does hereby certify as follows:FIRST: Upon the filing and effectiveness (the “Effective Time”) pursuant to the General Corporation Law of the State of Delaware (the “DGCL”) ofthis Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Corporation, the Corporation’s Amended and RestatedCertificate of Incorporation shall be amended by adding the following paragraph at the end of Article FOURTH:each 500 shares of the Corporation’s common stock, par value $0.01 per share (“Common Stock”), issued and outstanding or held by the Corporationin treasury stock immediately prior to the Effective Time shall automatically be combined into one (1) validly issued, fully paid and non-assessable share ofCommon Stock without any further action by the Corporation or the holder thereof, subject to the treatment of fractional interests as described below.Notwithstanding the immediately preceding sentence, no fractional shares will be issued in connection with the reverse stock split. Stockholders of recordwho otherwise would be entitled to receive fractional shares, will be entitled to rounding up of their fractional share to the nearest whole share. Nostockholders will receive cash in lieu of fractional shares. Each certificate that immediately prior to the Effective Time represented shares of Common Stock(“Old Certificates”) shall thereafter represent that number of shares of Common Stock into which the shares of Common Stock represented by the OldCertificate shall have been combined, subject to the adjustment for fractional shares as described above.SECOND: The foregoing amendment was duly adopted in accordance with Section 242 of the General Corporation Law of the State of Delaware.THIRD: This Certificate of Amendment shall become effective as of April 21, 2018 at 4:30 PM, New York City time.IN WITNESS WHEREOF, DELCATH SYSTEMS, INC., has caused this certificate to be duly executed in its corporate name this 17th Day of April,2018. DELCATH SYSTEMS, INC. /s/ Barbra Keck Barbra Keck CFO  Exhibit 10.38 CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROMTHIS EXHIBIT BECAUSE IT IS BOTH NOT MATERIAL AND WOULDBE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED. License, Supply and Marketing AgreementChemosat® This License, Supply and Agreement is made as of December 10th, 2018 (hereinafter referred to as “EFFECTIVEDATE”) by and between Delcath Systems, Ltd.,a company duly organised and existing under the laws of Ireland, having its registered office at Unit 19, MervueBusiness Park, Mervue, Galway(VAT No. IE9795453G) - hereinafter referred to as "Delcath"- and medac Gesellschaft für klinische Spezialpräparate mbH,a company duly organised and existing under the laws of Germany,having its registered office at Theaterstrasse 6, 22880 Wedel, Germany(VAT No. DE 118579535) - hereinafter referred to as "medac"- hereinafter individually and collectively referred to respectively as "a Party" and "the Parties"WHEREAS the Parties are established pharmaceutical companies;WHEREAS Delcath has developed the medical device Delcath Hepatic CHEMOSAT® Delivery System for theapplication of Melphalan and has obtained CE mark approval thereof;WHEREAS medac is interested in receiving a license to use the EC certificate and its underlying KNOW-HOW in orderto market and sell the PRODUCT in the TERRITORY, and whereas medac is interested in being supplied by Delcathwith the medical device for this purpose. Delcath is willing to grant a respective license and to supply the medical deviceto medac under the terms and conditions set forth in this Agreement;WHEREAS medac hereby appoints Delcath as its exclusive supplier of the PRODUCT in the TERRITORY; License, Supply and Marketing Agreement – Delcath/medac_2018 December 10th NOW, THEREFORE, in consideration of the mutual covenants and the premises contained herein, the Parties heretoenter into this License, Supply and Marketing Agreement (the "Agreement") as follows:1.DefinitionsFor the purposes of this Agreement, each word or expression set out in capital letters in this Agreement and allgrammatical variations of such word or expression shall, when capitalized in the manner shown in this Article and usedin this Agreement, have the meaning correspondingly assigned to such word or expression in this Article. When notcapitalized in the manner shown in this Article and used in this Agreement, such word or expression shall have itsordinary meaning:1.1."AFFILIATE" shall mean with respect to either Party, any person, corporation, company, partnership, jointventure, firm or other entity which is controlled by, controls or is under direct or indirect common control withsuch Party. For the purposes of this definition "control" shall mean (a) in the case of corporate entities, direct orindirect ownership of at least fifty percent (50%) of the stock or shares entitled to vote for the election ofdirectors, managing directors and (b) in the case of non-corporate entities, direct or indirect ownership of atleast fifty percent (50%) of the equity interest with the power to direct management and policies of such non-corporate entities.1.2."APPLICABLE LAWS" shall mean all laws, guidelines, directives, ordinances, rules and regulations applicableto the manufacture of the PRODUCT and the obligations of either Party, as the context requires under thisAgreement, including, without limitation and if applicable, (i) all applicable federal, state and local laws andregulations; (ii) the EU Commission Directive and regulations on the Community code relating to medicinalproducts for human use; (iii) the EU GMPs; and (iv) any other requirements by any other Regulatory Authority,government or governmental agency.1.3."CONFIDENTIAL INFORMATION" shall mean all documents, methods, technical KNOW-HOW and all otherinformation that is non-public, confidential and proprietary in nature irrespective of its form (including but notlimited to oral, written, printed form or forms of electronic data) disclosed by one Party to the other or any of itsdirectors, officers, employees, agents, consultants or representatives relating to the business of the disclosingParty.1.4.“EX FACTORY PRICE” shall mean the selling price in the various countries, exclusive of taxes and beforesubtraction of the deductions defined in Schedule 1 of this Agreement. EX-FACTORY PRICE is referred to asthe EXF.1.5.“INTELLECTUAL PROPERTY” shall mean patents, designs (registered or not), utility models includingapplications for any of the foregoing, copyright, rights in KNOW-HOW, brand / trademark, trade or businessnames trade secrets, and other similar rights or forms of protection of a similar nature or having equivalent orsimilar effect to any of these which may subsist anywhere in the world whether registrable or not and anylicenses of any of the foregoing.License, Supply and Marketing Agreement – Delcath/medac_2018 December 10th 2/23 1.6."INTELLECTUAL PROPERTY OF DELCATH” shall mean any and all INTELLECTUAL PROPERTY relatingto the manufacture of the PRODUCT generally, that is; (i) owned by or licensed to Delcath or Delcath'sAFFILIATES or Delcath’s Subcontractor at the Effective Date; and (ii) developed, filed or acquired by, orlicensed to, Delcath or Delcath's AFFILIATES or Subcontractor after the Effective Date of this Agreement.1.7."KNOW-HOW" shall mean any and all techniques, data and information in the control of Delcath as of the dateof this agreement that are necessary or useful to the development, manufacture or commercialization of thePRODUCT, including, but not limited to inventions and intellectual property rights (if any) pertaining thereto,discoveries, practices, processes, procedures, formulae, methods, knowledge, skill, trade secrets, experience,test data, data, records and information derived from development, adverse reactions, analytical and qualitycontrol data, including data included in or necessary or useful for obtaining regulatory approval.1.8."IMPROVEMENT" shall mean any further development, enhancements or improvement relating to thePRODUCT and its underlying KNOW-HOW, whether patentable or not.1.9.“MARKETABILITY” shall mean that the PRODUCT can be lawfully distributed within the TERRITORY whichincludes that the PRODUCT is free of any defects as well as no administrative orders or jurisdiction can hinderthe lawful distribution of the PRODUCT.1.10."NET SALES" shall mean the amount medac invoices to distributors and/or end users (hospitals, clinics,cancer centers, etc.) for the PRODUCT lessa) cash discounts, returns as well as purchase taxes and VAT, including but not limited to rebates like theGerman "Herstellerrabatt/Generikarabatt" and respective official rebates and tender related rebates;b) credits or allowances granted on account of rejections, returns and invoicing errors; andc) logistic costs.1.11."PRODUCT" shall mean the medical device Delcath Hepatic CHEMOSAT® Delivery System for theadministration of Melphalan including the labelling, packaging and promotional material.1.12."PRICE" shall have the meaning as set forth in Schedule 1.1.13."TERRITORY" shall mean the territory of commercialization of the PRODUCT in the following countries: allmember states of the European Union, Norway, Iceland, Liechtenstein, Switzerland and United Kingdom. TERRITORY can be extended by mutual agreement between the Parties. Financial consideration should takeinto consideration the amounts already paid by medac under this Agreement.License, Supply and Marketing Agreement – Delcath/medac_2018 December 10th 3/23 2.Condition precedent2.1.As a condition precedent to this contract, medac will visit the premises of Delcath Ltd. which includes theoffices and depots in Ireland and the Agreement shall only be set in force if medac approves Delcath Ltd. as acontractual partner.3.Scope of the Agreement3.1.Delcath grants to medac an exclusive license for the PRODUCT in the TERRITORY including any trademarksand/or EC-certificates and/or any approvals which might be necessary for lawful marketing of the PRODUCTand use of the underlying KNOW-HOW and INTELLECTUAL PROPERTY OF DELCATH. Delcath furthermoregrants medac the rights for the commercialisation of the PRODUCT in the TERRITORY which shall amongothers include the rights of promotion, sale and distribution. Other than for countries under 12.3, Delcath is notentitled to commercialise the PRODUCT in the TERRITORY and will refrain from any of these measures.3.2.Delcath shall transfer a copy of all existing EC-certificates and/or approvals as well as of any other documentswhich might be necessary for lawful marketing of the PRODUCT within thirty (30) calendar days after executionof this Agreement and shall provide medac with each and any update and/or amendment of these documents.3.3.medac agrees to use any document and/or information as well as INTELLECTUAL PROPERTY OFDELCATH licensed by Delcath in compliance with this Agreement. In particular medac must not market thePRODUCT in- or outside the TERRITORY for other pharmaceuticals than Melphalan.3.4.Delcath hereby agrees to sell and supply the PRODUCT only and exclusively to medac for the TERRITORYand medac agrees to purchase the PRODUCT exclusively from Delcath.3.5.All existing INTELLECTUAL PROPERTY OF DELCATH and any IMPROVEMENT made to the PRODUCTand its underlying KNOW-HOW during the Term shall belong to Delcath and will be considered as part of thePRODUCT with no additional milestone or other payments due by medac. Delcath will notify medac as soonas reasonably possible after making any such IMPROVEMENT giving reasonable details of theIMPROVEMENT and provide medac with all necessary information to evaluate the intellectual propertysituation, if needed. Any IMPROVEMENT of the PRODUCT and respective INTELLECTUAL PROPERTY OFDELCATH shall be automatically included in this Agreement and medac shall be granted a license within thescope of the license granted under 2.1 for this INTELLECTUAL PROPERTY OF DELCATH.License, Supply and Marketing Agreement – Delcath/medac_2018 December 10th 4/23 3.6.In the event Delcath desires to grant a license for commercialization of an invention or discovery which doesnot meet the definition of PRODUCT or IMPROVEMENT in this Agreement, but is marketed or intended to bemarketed at least in one of the indications of the PRODUCT, then Delcath shall inform medac of such desireand grant medac an exclusive right of first negotiation to acquire exclusive rights to commercialize thisopportunity.The exclusive negotiation period shall have a duration of ninety (90) days commencing on the date of deliveryto medac by Delcath of a notice pursuant to advising medac of the opportunity. After expiration of this periodwithout a definitive agreement effective upon signing between the negotiating parties, Delcath shall be free tonegotiate with any other third party, provided however the definitive agreement with the third party shall notcontain terms more favourable than those offered to medac.3.7.The name of the PRODUCT in the TERRITORY shall be Chemosat®. Delcath owns a respective trademark forthe medical device in the TERRITORY and will uphold the respective trademark rights at their own costsincluding in Switzerland, Norway, Lichtenstein, and Iceland4.Regulatory Affairs4.1.Delcath is responsible to fully ensure the MARKETABILITY of the PRODUCT within the TERRITORY. Inparticular Delcath is responsible to obtain and maintain the EC-certificate and similar certificates as required byapplicable law to uphold such MARKETABILITY.4.2.Delcath is responsible that within the TERRITORY the PRODUCT is fully compliant with any APPLICABLELAWS and provisions. Delcath is in particular aware of the directive regarding medical devices of the EuropeanUnion (EU directive 2017/745) including UDI requirements as well as of other APPLICABLE LAWS within theTERRITORY such as medical devices laws and as a material obligation ensures full compliance with thePRODUCT with any terms and provisions of these and any other laws.4.3.Delcath shall bear all the fees which occur for ensuring the MARKETABILITY of the PRODUCT within theTERRITORY including but not exclusively trademark costs, costs for the EC-Certificate and similar certificates.4.4.The Parties will enter into a separate Quality Assurance Agreement which also describes activities andresponsibilities concerning vigilance.License, Supply and Marketing Agreement – Delcath/medac_2018 December 10th 5/23 5.Allowance5.1.In consideration of the rights granted under this Agreement medac shall pay to Delcath [*] including VAT in thefollowing instalments:[*]Both Parties agree that if any payments under this agreement are subject to withholding tax according to localGerman tax law, e.g. allowance, royalties, all payments of medac shall be reduced by the applicable local taxrate. The respective tax amount will be paid by medac to the responsible local tax office. After that medac shallprovide Delcath with a certificate stating the withheld tax amount which was transferred to the local tax office forthe account of Delcath.The reduced tax rate according to the corresponding double taxation treaty between Germany and Ireland isapplicable if Delcath provides medac with a valid certificate of exemption issued by the German federal centraltax office (Bundeszentralamt für Steuern) prior to the date the instalments are due. The Parties mutually assureeach other all reasonable assistance in order to receive the certificate of exemption.6.Purchase of the PRODUCT6.1.Subject to the terms and conditions of this Agreement, medac shall purchase the PRODUCT from Delcathexclusively for [*] starting with the first commercial supply from Delcath to medac, provided that there is noinfringement issue or third party´s right at medac´s discretion. After the initial term the Parties intend to renewthis Agreement for [*]. They will negotiate this in good faith at least six months in advance of expiry of the initialterm.6.2.Delcath designs and manufactures the PRODUCT including material, packaging, instructions for use andlabelling according to the Regulation (EU) 2017/745 on medical devices. Delcath ensures that the PRODUCTfulfills appropriate conformity assessment procedure established for its class as IIb according to Regulation(EU) 2017/745. Delcath is certified according to EN ISO 13485 via the notified body.6.2.1.The PRODUCT is legally compliant, has a valid EU declaration of conformity, CE marking of conformity,accompanied by the required instruction for use.6.2.2.Where Delcath as manufacturer of the PRODUCT is not established in the European Union, Delcath ensuresthat the PRODUCT is placed on the European Union market according to the provisions of Article 11 of theRegulation (EU) 2017/745.6.2.3.In order to ensure the applicable requirements and responsibilities, Parties enter into a separate QualityAssurance Agreement at the latest before the PRODUCT is placed on the market.[*] Confidential Treatment RequestedLicense, Supply and Marketing Agreement – Delcath/medac_2018 December 10th 6/23 6.2.4.The Quality Agreement defines the responsibilities with respect to quality assurance including, but not limitedto, the following obligations of Delcath, sole authorized representative and medac: •carrying out the manufacturing, quality testing and release of the PRODUCT in accordance with therequirements of the Regulation (EU) 2017/745 in a timely and efficient manner; •maintaining the certification of the PRODUCT; •verifying EU declaration of conformity, carrying out the of the appropriate conformity assessmentprocedure by authorized representative; •regulation concerning qualification, selection, approval, purchase and maintenance of supplier inaccordance with the requirements of quality management system.6.2.5.In case there is divergence between the Quality Agreement and this Agreement regarding quality issues theQuality Agreement shall be decisive. In all other respects this Agreement shall prevail.7.Forecast / Orders / Terms of delivery[*]8.Auditsmedac shall have the right to audit the manufacturing site and quality system of Delcath and its AFFILIATES,e.g. Delcath Systems Inc., USA, for the compliance with regulatory requirements for the manufacturing of thePRODUCT. These audits shall be limited to one time a year and shall take place on any business day afterarrangement with Delcath and without unnecessary disturbance of operational procedures. Each Party shallbear its own costs, including, but not limited to, personnel and travel costs, itself. In case there is a reasonableindication that Delcath does not comply with this Agreement or other applicable legal regulations related to themanufacturing of the PRODUCT, medac shall always and without any limitation be entitled to audit the facilitiesof Delcath and AFFILIATES. In such an event and for any activities required to enhance compliance withregulatory requirements the respective costs shall be borne by Delcath. medac will audit the manufacturingsite, the EU release site and the quality system of Delcath prior to the execution of this Agreement.Delcath shall have the auditing right in order to confirm medac´s sales reporting. This audit shall be limited toone time a year and shall take place on any business day after arrangement with medac and withoutunnecessary disturbance of operational procedures. Each Party shall bear its own costs, including but notlimited to personnel and travel costs, itself. In case there is a reasonable indication that medac does not complywith this Agreement, the GxP or other applicable legal regulations, Delcath shall always and without anylimitation be entitled to audit the facilities of medac. In such an event the respective costs shall be borne bymedac.[*] Confidential Treatment RequestedLicense, Supply and Marketing Agreement – Delcath/medac_2018 December 10th 7/23 9.PRICES and Payment for the Supply of the PRODUCT9.1.medac shall pay the PRICE for the PRODUCT as stated in Schedule 1.9.2.Payment of invoices for PRODUCT are due thirty (30) days after receipt of each invoice for PRODUCT.9.3.All payments shall be made in Euro.10.Warranty, Defects in quality/quantity, recalls10.1.Delcath warrants that the PRODUCT is manufactured according to cGMP and that the PRODUCT has fullMARKETABILITY in the TERRITORY.10.2.medac shall be obliged to inspect and examine the quantity and apparent defects of the PRODUCTimmediately upon receipt. Should there be any apparent damage to the packaging of the PRODUCT, medacshall draw up a report of defects to be submitted to Delcath, if applicable. In the event that the PRODUCT doesnot conform to specifications and warranties of this Agreement or do not comply with legal requirements,medac shall inform Delcath within 10 working days after receipt of the PRODUCT of apparent defects in qualityor quantity in writing. Failure or delay shall mean acceptance of the delivered PRODUCT and waiver anypotential rights medac may have with respect to the delivered PRODUCT.10.3.Hidden defects shall be announced to Delcath in writing as soon as possible after detection.10.4.As soon as possible [*] shall dispose and replace defective PRODUCT.10.5.If there is a disagreement between the Parties as to the compliance of the PRODUCT with specifications,warranties and legal requirements sample may be sent to an independent laboratory for final evaluation, whichshall be binding for both Parties. The independent laboratory shall be selected by both Parties jointly. In casethe Parties do not agree upon an independent laboratory, such shall be chosen by the Chamber of Commercein Hamburg, Germany. If the independent laboratory finds the PRODUCT to conform to the specifications,warranties and legal requirements medac shall bear the costs of the laboratory and the Chamber of Commerce.Otherwise the costs shall be borne by Delcath.[*] Confidential Treatment RequestedLicense, Supply and Marketing Agreement – Delcath/medac_2018 December 10th 8/23 10.6.If a recall of the PRODUCT from the market is necessary, or if a health authority requires such withdrawal orrecall from a Party, the respective Party shall immediately advise the other Party of such necessity or request,and both Parties shall without delay discuss the modalities of such withdrawal or recall. The final decision on awithdrawal or recall in the TERRITORY shall rest with [*]. To the extent such withdrawal or recall is due to thenon-compliance of the PRODUCT with specifications, warranties, cGMP about which medac informed Delcathin accordance with 9.2 or 9.3 and legal requirements and/or an infringement of third party rights.[*].10.7.In the event that a Party recommends initiating a batch recall or that the health authority requires such batchrecall, the Parties shall cooperate in good faith to determine the measures that should be taken. The Partiesshall immediately commence research in order to determine the cause of the defect in the batch. The Partieswill support each other and provide any necessary assistance in the handling of any PRODUCT return, qualitycomplaint, vigilance activities, and recalls or other Field Safety Corrective Actions (responsibilities are furtherdefined in the Quality Agreement). •In the event of a batch recall in the following situations: onon-observance by Delcath of the APPLICABLE LAWS, the Quality Assurance Agreement, theGMPs, or any other document relevant to the execution of this Agreement; or odefects in the PRODUCT or its design (including defects of components) odefect in the quality control of the PRODUCT,[*]10.8.In an event as listed in Article 10.7, the disposal of the defective batch shall be carried out at [*]’s expense. TheParty carrying out the disposal shall provide the other Party with a certificate of disposal including the followinginformation: •The reference number of the corresponding batch; and •The name of the company which carried out the disposal; and •The quantity of the PRODUCT of which Delcath, or the company it has nominated, has disposed.10.9.The Parties shall inform each other immediately of any claims with regard to the PRODUCT arising from a thirdparty or health authority and give each other all reasonable support.[*] Confidential Treatment RequestedLicense, Supply and Marketing Agreement – Delcath/medac_2018 December 10th 9/23 11.Responsibilities, Warranties, Indemnity and Liability11.1.Delcath is responsible for maintaining any CE mark as required by national law. Delcath is also responsible touphold trademark protection for the PRODUCT within the TERRITORY.11.2.Delcath will name medac on the PRODUCT sold under the Agreement as Delcath’s exclusive marketing,sales, and distribution partner for the Territory. medac is entitled to apply a respective signature on PRODUCT,packaging and all other material relating to the PRODUCT.11.3.Delcath will identify and transfer all existing customers in the TERRITORY to medac in accordance withSchedule 4.11.4.Delcath will provide all the background information and correspondence with authorities regardingreimbursement in the TERRITORY.11.5.Delcath will supply medac with the PRODUCT from Delcath’s own manufacturing facility in the United Statesthrough its distribution center in Ireland.11.6.Delcath will be responsible for gaining, maintaining and or renewing import licenses and other regulatoryclearances and approvals needed to import the PRODUCT into each country of the TERRITORY.11.7.Delcath will be responsible to prosecute, maintain, enforce and defend INTELLECTUAL PROPERTY OFDELCATH using commercially reasonable efforts.11.8.Delcath warrants and represents to and for the benefit of medac under this Agreement that all PRODUCTsupplied by Delcath shall be manufactured, packaged, tested, stored, delivered in accordance with thisAgreement, the general and specific manufacturing procedures, the Quality Agreement, the EU GMP,APPLICABLE LAWS and the specifications.11.9.Delcath further warrants and represents to and for the benefit of medac: •that the PRODUCT has been lawfully assembled by Delcath in compliance with all industry norms andthat all related documents disclosed by Delcath to medac will be true, correct and complete and there is noother fact or matter not disclosed to medac under this Agreement, which might reasonably affect medac’swillingness to enter into this Agreement; •that the PRODUCT is feasible at an industrial level and is of merchantable quality; •the PRODUCT and related documents are provided to medac free and clear of all liens, claims andencumbrances.License, Supply and Marketing Agreement – Delcath/medac_2018 December 10th 10/23 11.10.medac, in its turn, guarantees, warrants and represents to and for the benefit of Delcath under this Agreementfull compliance with all APPLICABLE LAWS and regulations in the TERRITORY as regards storage and/orhandling and/or promotion and/or distribution and/or marketing of the PRODUCT in the TERRITORY.11.11.medac will be responsible for commercializing, including promoting the sale of, and distributing, thePRODUCT in the TERRITORY and will bear all costs related to the distribution and commercialization of thePRODUCT in the TERRITORY. Medac shall at its own cost employ, train and maintain suitably qualifiedpersonnel to ensure the proper fulfilment of all of its obligations in the TERRITORY.11.12.medac will commercialize and distribute the PRODUCT in each country of the TERRITORY where it iscommercially reasonable to do so and will commence these activities in a commercially reasonable timeframe.Medac will be responsible for marketing on a regional, local and hospital level in the TERRITORY. To theextent permitted by any APPLICABLE LAWS, the Parties will cooperate with each other with respect to allreimbursement and price negotiations as well as health technology assessments.11.13.medac will provide Delcath with quarterly reports of sales of PRODUCT in the TERRITORY.11.14.Each Party warrants to the other that: •it is a company duly incorporated, validly existing and in good standing under the law of the country of itsincorporation and has the requisite capacity, power and authority to enter into and to perform itsobligations under this Agreement; •execution, delivery of and the performance by the Party of its obligations under this Agreement shall not: oresult in a breach of any provisions of the memorandum or Articles of association of that Party; oresult in a breach of, or constitute a default under, any instrument by which the Party is boundincluding any agreement or arrangement between itself, one of its AFFILIATES and any third party; or oresult in a breach of any order, judgment or decree of any court or governmental agency by which theParty is bound; or result in breach by that Party (or any of its employees or agents) of any regulatoryrequirements.11.15.The warranties provided for in this Article 11 shall be in addition to those implied by law.License, Supply and Marketing Agreement – Delcath/medac_2018 December 10th 11/23 11.16.Either Party shall defend, indemnify and hold the other Party harmless from and against any third party claim,damage, costs, expenses, injury or loss except indirect losses whatsoever based upon or arising out of any (a)breach of warranties by the former Party and/or (b) any gross negligence or wilful misconduct of the formerParty under this Agreement and/or (c) any material breach, non-observance or non-performance by the formerParty of its obligations under this Agreement.11.17.To the extent permitted by law, neither Party shall be liable for indirect, punitive, consequential or specialdamages whatsoever, unless not otherwise expressively agreed in this Agreement.11.18.Nothing in this Agreement shall operate to exclude or restrict either Party's liability for: •death or personal injury resulting from wilful misconduct; •fraud or deceit; •any other form of liability which may not be excluded or limited by APPLICABLE LAWS.11.19.In the light of this Article, the Parties agree to take out and keep up to date for the duration of this Agreementand any extensions thereof, an insurance policy financially substantial enough to cover all and any liabilityincurred by virtue of the said clauses. Each Party agrees that on request by the other Party it shall prove bywritten records the existence and conditions of such an insurance policy.11.20.The Parties each designate individuals who will participate in a monthly conference call, which can becomeless frequent as time goes on, to discuss clinical programs, medical information, customer feedback andissues.Medac appoints the following individuals: 1.[*] (Vice President Therapeutic Area Oncology) 2.[*] (Director Therapeutic Area Oncology) 3.[*](Global Portfolio Manager Oncology) 4.[*] (Responsible Person for Scientific Information)[*] Confidential Treatment RequestedLicense, Supply and Marketing Agreement – Delcath/medac_2018 December 10th 12/23 Delcath appoints the following individuals: 1.[*] CEO, Delcath Systems, Inc. 2.[*] Executive Vice President, Global Head of Operations, Delcath Systems, Inc. 3.[*] Vice President – Medical Affairs, Delcath Systems, Inc. 4.Delcath Systems, Ltd.: within 10 (ten) days after signing of this Agreement Delcath will appoint aRepresentative of Delcath Systems, Ltd. and will notify medac accordingly.11.21.If there are no positive results of the FOCUS trial with respect to the efficacy as defined in the trial protocol, theParties will, in good faith, discuss ways in which to maintain commercially reasonable viability. For theavoidance of doubt in this case medac is not obliged to pay the respective instalment according to Article 4.1.11.22.Delcath will inform medac about any changes in information material relating to the PRODUCT.12.Third party rights and enforcement of IP against third parties12.1.To the best of Delcath´s knowledge, the execution of this Agreement by Delcath and/or medac, in particular thedistribution/commercialisation of the PRODUCT in the TERRITORY, the manufacture of the PRODUCT in thecountry of manufacture, of batch release, of storage or importing the PRODUCT do not infringe any third partyINTELLECTUAL PROPERTY rights. All relevant INTELLECTUAL PROPERTY rights were provided byDelcath in September 2017 and there were no relevant updates, e.g. concerning divisional applications. Ifneeded by medac, Delcath will provide medac with further documents and data to perform future IP checks. Ifmedac infringes any third party INTELLECTUAL PROPERTY rights due to incorrect or missing informationprovided by Delcath, Delcath shall fully indemnify medac of any costs including lawyers’ fees occurring in thisregard.12.2.If medac is charged with the infringement of third party rights based on the execution of this Agreement, thenmedac shall immediately inform Delcath about this allegation. In this case Delcath has the obligation to supportmedac in any way and provide help to counterclaim; especially if analyses are requested on the PRODUCTprovided by Delcath and/ or any data on the PRODUCT or the manufacturing process of the PRODUCT andwill pay reasonable costs incurred by medac in defense of any such charge.12.3.Delcath shall be solely responsible for the prosecution and maintenance of the underlying INTELLECTUALPROPERTY OF DELCATH of the PRODUCT and for the conduct of any claims or proceedings relating to theINTELLECTUAL PROPERTY OF DELCATH including any validity challenges of third parties, nullity oropposition proceedings. Delcath shall keep medac reasonably informed at all times as to the status of theprosecution and maintenance of all INTELLECTUAL PROPERTY OF DELCATH and in any event providing awritten update if requested by medac.[*] Confidential Treatment Requested License, Supply and Marketing Agreement – Delcath/medac_2018 December 10th 13/23 Delcath shall enforce and defend the underlying INTELLECTUAL PROPERTY OF DELCATH of thePRODUCT at its own cost and expense, if such defence is judged by the patent attorneys in power aspromising. medac shall fully co-operate with Delcath and its legal counsel, or otherwise assist in suchproceedings. Delcath shall keep medac and its counsel reasonably informed at all times as to the status of theproceedings.If Delcath fails to enforce or defend the underlying INTELLECTUAL PROPERTY OF DELCATH of thePRODUCT within ten (10) days of becoming aware or of being notified of the same, then, medac may withoutprejudice to any other right it may have under this Agreement or otherwise give Delcath written notice requiringDelcath to take such proceedings within five (5) days of the date of the notice. If Delcath fails to do so, medacshall be entitled to enforce or defend the underlying INTELLECTUAL PROPERTY OF DELCATH of thePRODUCT at its cost and expense. The reasonable costs of any such settlement (including, without limitation,damages, legal costs, lump sums or other amounts) or, if no settlement is reached, of any judgement or awardmade against medac or its AFFILIATES, distributors or sublicenses, may be set off by medac against thePRICE payable by medac hereunder. However, medac shall only be entitled to a reimbursement if it candemonstrate that Delcath has wrongfully assessed insufficient prospects of success. Delcath shall provide allreasonable assistance to medac in relation to such proceedings at its own cost and expenses in a timelymanner. Delcath is aware of the fact that especially in Germany but also in the further TERRITORY effectiveremedies against IP-infringements require immediate legal actions.13.Term and Termination13.1.This Agreement becomes effective on the EFFECTIVE DATE and the supply of the PRODUCT shall continuefor a period of seven (7) years starting with the first delivery of the PRODUCT. After the initial term the Partiesintend to renew this agreement for another five (5) years. They will negotiate this in good faith at least sixmonths in advance of expiry of the initial term.[*]13.2.Either Party shall be entitled, by notice to the other, to terminate this Agreement immediately only, if •the other Party loses a necessary approval for importing, manufacture, marketing or selling of thePRODUCT; •the other Party culpably commits or permits a material breach or default of any of the provisions of thisAgreement and fails to remedy or cure such breach or default within sixty (60) calendar days after writtennotice of such breach has been received; •the other Party should be dissolved, becomes insolvent, bankrupt or otherwise be faced withcircumstances reasonably warranting the conclusion that the Party will not be able within the foreseeablefuture, to adequately comply with its obligations under this agreement; •[*][*] Confidential Treatment RequestedLicense, Supply and Marketing Agreement – Delcath/medac_2018 December 10th 14/23 •in case of Force Majeure Event as described in Article 14. 13.3.Either Party may terminate this Agreement because of an uncured breach provided the Party claiming a breachgives the other Party 50 day advanced written notice of such breach and the possibility to remedy suchbreach. [*] b)with immediate effect by medac: •in the event that any health authority and/or a competent court takes any action, or raises anyobjection, that prevents medac from commercialising the PRODUCT in theTERRITORY. Additionally, medac will have the right to terminate this Agreement immediately in theevent that the PRODUCT cannot be reasonably commercialised for medical or scientific reasons inthe TERRITORY, unless a remedy is impossible neither of these 2 events is grounds for terminationby medac if they are remedied within 60 days of written notification to Delcath of either events and thegrounds on which the event is based; •in the event of an INTELLECTUAL PROPERTY infringement claim brought by any third party againstmedac or Delcath (or its subcontractor) which prevents or hinders the commercialisation, manufactureof the PRODUCT or which prevents medac or Delcath from exercising its obligations hereunder.13.4.[*]13.5.At the sole discretion of medac, medac may resell any remaining non-expired PRODUCT to Delcath at thepurchase price, and may assign to Delcath any trademarks obtained for the PRODUCT against a reasonableconsideration payable by Delcath, which shall at the minimum cover the costs of medac for obtaining andmaintaining the trademarks.13.6.Orders placed and confirmed and for which manufacture has started prior to the date of termination shall remainvalid (except in the event of termination by for breach by Delcath pursuant to Article 11.3 or in the event oftermination for quality failure), and for other orders placed by medac but not confirmed by Delcath, or for whichmanufacture has not started as of the termination date, the Parties shall discuss and agree on whether theyshall remain valid or shall be cancelled.13.7.The expiry or termination of this Agreement for any reason shall not affect the rights and obligations of theParties already accrued prior to the effective date of expiry or termination of the Agreement.13.8.[*]13.9.Termination or expiration of this Agreement will not relieve either Party of any obligation accruing prior to suchexpiration or termination, including any breach of such obligations, and all provisions which are expressed to orby implication survive this Agreement will remain in full force and effect. (Provisions relating to Confidentiality,Indemnification and Liabilities; APPLICABLE LAWS, Quality, Effect of termination and INTELLECTUALPROPERTY shall survive expiration or termination of this Agreement).[*] Confidential Treatment RequestedLicense, Supply and Marketing Agreement – Delcath/medac_2018 December 10th 15/23 13.10.[*]14.Force Majeure14.1.The Parties hereto shall not be responsible for any damage if the performance of all or parts of this Agreementis hindered or prevented by causes beyond the performing Party’s control and without its fault or negligence,including, but not limited to, acts of God or acts, laws, orders or regulations of any government or department oragency thereof acting in either its sovereign or contractual capacity, fires, floods, machinery breakages, strikes,work stoppages or other job actions, freight embargoes, boycotts, riots and wars.14.2.Either Party may, in the event that any Force Majeure cannot be removed or overcome within three (3) monthsfrom the date the Party affected first became affected, at the expiration of this period by notice to the other Partyterminate this Agreement.15.Confidentiality15.1.The Parties agree to keep secret and not to communicate all CONFIDENTIAL INFORMATION. The Partiesshall disclose such CONFIDENTIAL INFORMATION only to those employees, agents, etc. who have a need toknow and only if such employees, agents etc. are bound by confidential obligations comparable to thisprovision.15.2.This secrecy obligation does not apply to any information of which the receiving Party can prove by writtendocuments that it •was known to the public at the time of the receiving Party’s receipt; •was lawfully received by the Party from a third Party who has no obligation of Confidentiality to thedisclosing Party; •was independently developed by the Party or available to it prior to this agreement; •was released from the restrictions of this provision by the express prior written consent of the disclosingParty; or •has been disclosed in compliance with any legal requirement, provided that the disclosing Party hasnotified the other Party prior to the disclosure of the information and provided that the Party shall discloseonly the minimum amount of information required for the purpose of the said legal requirement;[*] Confidential Treatment RequestedLicense, Supply and Marketing Agreement – Delcath/medac_2018 December 10th 16/23 15.3.This provision shall continue in full force and effect, notwithstanding the expiration or termination of thisAgreement for any reason for a period of five (5) years after expiration/termination.15.4.Notwithstanding the above provisions of this Article 14, medac shall be free to disclose the information receivedfrom Delcath i) to any AFFILIATES, or ii) in the course of executing the Agreement or in anticipation oftermination or expiration of this Agreement, to any consultant or sub-contractor of its choosing; or iii) to thehealth authorities; or iv) to any third party provided such disclosure is necessary to achieve the purpose of thisAgreement. Any party to whom medac discloses the information will be bound to the same confidentialityobligations as set forth herein.16.Miscellaneous16.1The Parties hereto agree that in connection with this Agreement the status of each of them in relation to theothers is that of an independent trader acting in its own name and for its own account. Accordingly, none of theParties has, or will be considered to have, any power of authority to act as an agent or representative of theother Party, nor have any power of authority to contract in the name, or create or assume any obligation orliability against, or otherwise legally bind the other Party in any way for any purpose, unless otherwiseexpressly provided herein. All costs and expenses connected with each Party's activities and performanceunder this Agreement are to be borne solely by the Party incurring such costs and expenses.16.2The general terms and conditions of both Parties shall be excluded, even if specific reference is made inrespective order forms, order confirmations etc.16.3The failure by any Party at any time to enforce any of the terms, provisions or conditions of this Agreement or toexercise any right hereunder shall not constitute a waiver of the same or affect the validity of this Agreement orany part hereof, or that Party's right thereafter to enforce or to exercise the same. No waiver by a Party shall bevalid or binding unless in writing and signed by a duly authorised representative of the waiving Party.16.4Other than a change of control, the Parties shall not assign any of their rights or obligations hereunder withoutthe prior written consent of the other Party, provided that medac may assign all rights and obligationshereunder to any of its AFFILIATES.16.5The fulfilment of contractual rights and obligations arising out of this Agreement is subject to the compliancewith (a) all requirements medac as a registered AEO (Authorised Economic Operator) is obliged to fulfil and torequest from Delcath and (b) all relevant national and international regulations including but not limited torequired export/import licenses, shipment authorisations, foreign trade legislation requirements or releases bythe competent authorities and embargo or export/import regulations.16.6The Parties hereto acknowledge that this Agreement and possible future written amendments hereto set forththe entire Agreement.License, Supply and Marketing Agreement – Delcath/medac_2018 December 10th 17/23 16.7Modifications of this Agreement have to be made in writing. This applies to this modification provision as well.16.8This Agreement is construed in accordance with and shall exclusively be governed by the laws of [*]. The [*]and [*] shall not apply.16.9All disputes, controversies or claims arising out of or in connection with this contract, including any questionregarding its existence, validity or termination, shall be referred to and finally resolved by arbitration under theRules of the London Court of International Arbitration (LCIA), which Rules are deemed to be incorporated byreference into this clause. The arbitration shall be before a single arbitrator mutually agreed upon by the Partieswho shall interpret this Agreement in accordance with the laws of England. The seat of the arbitration shall bein London. The language to be used in the arbitration shall be English.16.10Should provisions of the present Agreement not be legally effective, completely or partially, or later lose theirlegal effectiveness, the validity of the remaining provisions of the contract shall not thereby be affected. Insteadof the ineffective provision an appropriate provision shall be inserted, which – as far as legally permitted –comes close to that which the contracting Parties wanted or is nearest in meaning to their intended economicpurpose.16.11During the Term, medac shall not market, promote or sell within the TERRITORY any other percutaneoushepatic perfusion devices intended to deliver a therapy directly (as opposed to systemically) into the liver andspecifically reimbursed for the same indications as the PRODUCT. Galway, date: Wedel, date: For and behalf of For and behalf ofDelcath Ltd. medac GmbH /s/ Jennifer K. Simpson /s/Heiner WillJennifer K. Simpson Heiner WillDirector CMO /s/Jorg Hans Jörg Hans CEO /s/Bergit Buettner Bergit Buettner Legal Council [*] Confidential Treatment RequestedLicense, Supply and Marketing Agreement – Delcath/medac_2018 December 10th 18/23 Schedule 1: Product, PriceSchedule 2: Supply chain at effective dateSchedule 3: Package SizeSchedule 4: Customer Transition PlanLicense, Supply and Marketing Agreement – Delcath/medac_2018 December 10th 19/23 Schedule 1:PRODUCT, PRICE[*]Within [*] during the Term, medac shall submit a report of the NET SALES of the preceding quarter to Delcath includingthe quantity of the sold PRODUCT (PS) differentiated by the respective countries of the TERRITORY. Simultaneously,medac will, by wire transfer, send to Delcath an amount calculated according to the calculation schemes above.medac shall keep a true and accurate accountancy and record all relevant data to illustrate the NET SALES pursuant tothe generally accepted guidelines of the accountancy.In accordance with Article 7 of this Agreement, Delcath shall have the right to inspect these books by an independentpublic account at reasonable times and to such an extent as will not interfere with normal operations of medac. The costsfor such an audit shall by borne by Delcath. However, in case of the discovery of any inaccuracies the costs shall beborne by medac. [*] Confidential Treatment RequestedLicense, Supply and Marketing Agreement – Delcath/medac_2018 December 10th 20/23 Schedule 2:SUPPLY CHAIN AT EFFECTIVE DATE CompanyAddressActivityDelcath Systems, Inc. 566 Queensbury AvenueQueensbury, NY 12804USADesign, manufacture,distribution of sterile hepaticdrug delivery and filtration devicesDelcath Systems, Inc95 Park Rd.Queensbury, NY 12804USADesign, manufacture(packaging, labelling and finalrelease) and distribution ofsterile hepatic drug delivery andfiltration devicesDelcath Systems, Ltd Unit 19 – Mervue BusinessParkGalway IrelandManufacture (packaging,labelling and final release) anddistribution of sterile hepaticdrug delivery and filtration devicesDonawa Consulting S.r.l.Piazza Albania 10,00153 RomaItalyEU representative License, Supply and Marketing Agreement – Delcath/medac_2018 December 10th 21/23 Schedule 3:PACKAGE SIZE[*] [*] Confidential Treatment RequestedLicense, Supply and Marketing Agreement – Delcath/medac_2018 December 10th 22/23 Schedule 4:CUSTOMER TRANSITION PLANWithin 10 business days following execution of this Agreement and receipt of initial exclusive marketing license upfrontfee, Delcath will provide medac with a list of present customers by country, purchasing decision makers and related keypeople and contact coordinates for each along with a purchasing history. In the same period, Delcath will also providemedac with a list of prospective customers, a brief history of interaction, and key people and contact coordinates foreach.If not already provided, Delcath will provide medac with copies of all sales and marketing materials used in each country.Within 20 business days after receipt of these materials from Delcath, medac will provide its plan for sales and marketingmaterials and anticipated timing for use in the market as they will be subject to Delcath’ approval.On or about [*], Delcath will notify present and prospective customers that medac will be marketing Chemosat in Europeand will introduce the appropriate medac personnel to said present and prospective customers.Delcath to provide reasonable support to medac sales efforts through existing Delcath Sales staff for as long as feasible. [*] Confidential Treatment RequestedLicense, Supply and Marketing Agreement – Delcath/medac_2018 December 10th 23/23Exhibit 10.39EXCHANGE AGREEMENTThis Exchange Agreement (the “Agreement”) is entered into as of the ____ day of December, 2018, by andbetween Delcath Systems, Inc., a Delaware corporation with offices located at 1633 Broadway, Suite 22C, New York, New York10019 (the “Company”) and the investor signatory hereto (the “Holder”), with reference to the following facts:A.The Company issued to Holder that certain Warrant to Purchase Common Stock (the “ExistingWarrant”), issued to the Holder on February 9, 2018, pursuant to (i) that certain Placement Agency Agreement (the “PlacementAgency Agreement”), dated February 8, 2018, (ii) the Company’s Registration Statement on Form S-1 (File number 333-220898)and (iii) the Company’s final prospectus dated as of February 8, 2018 (the “Final Prospectus”) pursuant to, issued on February 9, 2018and which Existing Warrant is currently exercisable into _______ (as adjusted for stock splits, stock dividends, stock combinations,recapitalizations and similar events) shares of Common Stock (as defined in the Existing Warrant). B.The Company and the Holder desire to issue such aggregate number of shares of Common Stock as setforth on the signature page of the Holder (the “Exchange Shares”) in exchange for the Existing Warrant (collectively, the“Exchange” or the “Transaction”). The Exchange Shares, the Leak-Out Agreement (as defined below) and this Agreement and suchother documents and certificates related thereto are collectively referred to herein as the “Exchange Documents”.C.The Exchange is being made in reliance upon the exemption from registration provided by Section 3(a)(9) of the Securities Act of 1933, as amended (the “1933 Act”).D.Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the ExistingWarrant.NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants hereinafter contained,the parties hereto agree as follows:1.Exchange. On the date hereof, pursuant to Section 3(a)(9) of the 1933 Act, the Holder hereby agrees toconvey, assign and transfer the Existing Warrant to the Company in exchange for which the Company agrees to issue the ExchangeShares to the Holder. On the date hereof, in exchange for the Existing Warrant, the Company shall deliver (a) the Exchange Shares tothe Holder by deposit/withdrawal at custodian in accordance with the instructions attached hereto as Schedule I, which ExchangeShares shall be issued without restricted legend and shall be freely tradable by the Holder. Concurrently herewith, the Holder hasexecuted and delivered to the Company a leak-out agreement, in the form attached hereto as Exhibit A (the “Leak-Out Agreement”).2.No Amendment or Waiver. Nothing herein shall amend, modify or waive any term or condition in anyagreement by and between the Company and the Holder or any security issued by the Company to the Holder.  3.Representations and Warranties. As of the date hereof:3.1Organization and Qualification. Each of the Company and each of its Subsidiaries are entities dulyorganized and validly existing and in good standing under the laws of the jurisdiction in which they are formed, and have the requisitepower and authority to own their properties and to carry on their business as now being conducted and as presently proposed to beconducted. Each of the Company and each of its Subsidiaries is duly qualified as a foreign entity to do business and is in goodstanding in every jurisdiction in which its ownership of property or the nature of the business conducted by it makes such qualificationnecessary, except to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to have aMaterial Adverse Effect (as defined below). As used in this Agreement, “Material Adverse Effect” means any material adverseeffect on (i) the business, properties, assets, liabilities, operations (including results thereof), condition (financial or otherwise) orprospects of the Company or any Subsidiary, individually or taken as a whole, (ii) the transactions contemplated hereby or in any ofthe other Transaction Documents or (iii) the authority or ability of the Company or any of its Subsidiaries to perform any of theirrespective obligations under any of the Transaction Documents (as defined below). Other than the Persons (as defined below) listed inthe SEC Documents, the Company has no Subsidiaries. “Subsidiaries” means any Person in which the Company, directly orindirectly, (I) owns any of the outstanding capital stock or holds any equity or similar interest of such Person or (II) controls or operatesall or any part of the business, operations or administration of such Person, and each of the foregoing, is individually referred to hereinas a “Subsidiary.” For purposes of this Agreement, (x) “Person” means an individual, a limited liability company, a partnership, ajoint venture, a corporation, a trust, an unincorporated organization, any other entity and any Governmental Entity or any departmentor agency thereof and (y) “Governmental Entity” means any nation, state, county, city, town, village, district, or other politicaljurisdiction of any nature, federal, state, local, municipal, foreign, or other government, governmental or quasi-governmental authorityof any nature (including any governmental agency, branch, department, official, or entity and any court or other tribunal), multi-national organization or body; or body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, police,regulatory, or taxing authority or power of any nature or instrumentality of any of the foregoing, including any entity or enterpriseowned or controlled by a government or a public international organization or any of the foregoing.3.2Authorization and Binding Obligation. The Company has the requisite power and authority to enterinto and perform its obligations under this Agreement and each of the other agreements entered into by the parties hereto in connectionwith the transactions contemplated by the Exchange Documents and to consummate the Transaction (including, without limitation, theissuance of the Exchange Shares in accordance with the terms hereof). The execution and delivery of the Exchange Documents by theCompany and the consummation by the Company of the transactions contemplated hereby and thereby, including, without limitation,the issuance of the Exchange Shares has been duly authorized by the Company’s Board of Directors and no further filing, consent, orauthorization is required by the Company, its Board of Directors or its stockholders. This Agreement and the other ExchangeDocuments have been duly executed and delivered by the Company, and constitute the legal, valid and binding obligations of theCompany, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited bygeneral principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, oraffecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification and tocontribution may be limited by federal or state securities laws. 2  3.3No Conflict. Except as set forth on Schedule 3.3, the execution, delivery and performance of theExchange Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby(including, without limitation, the issuance of the Exchange Shares) will not (i) result in a violation of the Certificate of Incorporation(as defined below) or any other organizational documents of the Company or any of its Subsidiaries, any capital stock of the Companyor any of its Subsidiaries or Bylaws (as defined below) of the Company or any of its Subsidiaries, (ii) conflict with, or constitute adefault (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights oftermination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of itsSubsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including foreign, federal andstate securities laws and regulations and the rules and regulations of the OTCQB (the “Principal Market”) and including allapplicable federal laws, rules and regulations) applicable to the Company or any of its Subsidiaries or by which any property or assetof the Company or any of its Subsidiaries is bound or affected except, in the case of clause (ii) or (iii) above, to the extent suchviolations that would not reasonably be expected to have a Material Adverse Effect.3.4No Consents. Neither the Company nor any Subsidiary is required to obtain any consent from,authorization or order of, or make any filing or registration with (other than the filing with the Securities and Exchange Commission(the “SEC”) of a Form D with the SEC, any other filings as may be required by any state securities agencies, filing of UCC financingstatements and approval by the Principal Market of a listing of additional shares application in respect of the Exchange Shares asrequired by Section 7 hereof), any court, governmental agency or any regulatory or self-regulatory agency or any other Person in orderfor it to execute, deliver or perform any of its respective obligations under or contemplated by the Exchange Documents, in each case,in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company orany Subsidiary is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof,and neither the Company nor any of its Subsidiaries are aware of any facts or circumstances which might prevent the Company or anyof its Subsidiaries from obtaining or effecting any of the registration, application or filings contemplated by the Exchange Documents. Except as disclosed in the SEC Documents, the Company is not in violation of the requirements of the Principal Market and has noknowledge of any facts or circumstances which would reasonably lead to delisting or suspension of the Common Stock in theforeseeable future.3.5Securities Law Exemptions. Assuming the accuracy of the representations and warranties of theHolder contained herein, the offer and issuance by the Company of the Exchange Shares is exempt from registration under the 1933Act pursuant to the exemption provided by Rule 3(a)(9) thereof. 3.6Issuance of Exchange Shares. The issuance of the Exchange Shares has been duly authorized andupon issuance in accordance with the terms of the Exchange Documents, the Exchange Shares will be validly issued, fully paid andnonassessable and free from all Liens with respect to the issue thereof, with the holders being entitled to all rights accorded to a holderof Common Stock. By virtue of Rule 3(a)(9) under the 1933 Act, each of the Exchange Shares shall be freely tradeable and shall notbear any restrictive legends. 3  3.7Transfer Taxes. On the date hereof, all share transfer or other taxes (other than income or similar taxes)which are required to be paid in connection with the issuance of the Exchange Shares to be exchanged with the Holder hereunder willbe, or will have been, fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been compliedwith. 3.8SEC Documents; Financial Statements. During the two (2) years prior to the date hereof, the Companyhas timely filed all reports, schedules, forms, proxy statements, statements and other documents required to be filed by it with the SECpursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date hereof, including without limitation,Current Reports on Form 8-K filed by the Company with the SEC whether required to be filed or not (but excluding Item 7.01thereunder), and all exhibits and appendices included therein (other than Exhibits 99.1 to Form 8-K) and financial statements, notesand schedules thereto and documents incorporated by reference therein being hereinafter referred to as the “SEC Documents”). TheCompany has delivered or has made available to the Holder or its representatives true, correct and complete copies of each of the SECDocuments not available on the EDGAR system. As of their respective dates, the SEC Documents complied in all material respectswith the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SECDocuments, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a materialfact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light ofthe circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Companyincluded in the SEC Documents complied in all material respects with applicable accounting requirements and the published rules andregulations of the SEC with respect thereto as in effect as of the time of filing. Such financial statements have been prepared inaccordance with generally accepted accounting principles (“GAAP”), consistently applied, during the periods involved (except (i) asmay be otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to theextent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financialposition of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, inthe case of unaudited statements, to normal year-end audit adjustments which will not be material, either individually or in theaggregate). No other information provided by or on behalf of the Company to the Holder which is not included in the SECDocuments (including, without limitation, information in the disclosure schedules to this Agreement) contains any untrue statement of amaterial fact or omits to state any material fact necessary in order to make the statements therein not misleading, in the light of thecircumstance under which they are or were made. The Company is not currently contemplating to amend or restate any of thefinancial statements (including, without limitation, any notes or any letter of the independent accountants of the Company with respectthereto) included in the SEC Documents (the “Financial Statements”), nor is the Company currently aware of facts or circumstanceswhich would require the Company to amend or restate any of the Financial Statements, in each case, in order for any of the FinancialsStatements to be in compliance with GAAP and the rules and regulations of the SEC. The Company has not been informed by itsindependent accountants that they recommend that the Company amend or restate any of the Financial Statements or that there is anyneed for the Company to amend or restate any of the Financial Statements.4  3.9Absence of Certain Changes. Except as set forth in the SEC Documents, since the date of theCompany’s most recent audited financial statements contained in a Form 10-K, there has been no material adverse change and nomaterial adverse development in the business, assets, liabilities, properties, operations (including results thereof), condition (financial orotherwise) or prospects of the Company or any of its Subsidiaries. Since the date of the Company’s most recent audited financialstatements contained in a Form 10-K, neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) soldany assets, individually or in the aggregate, outside of the ordinary course of business or (iii) except as disclosed in the SECDocuments, made any capital expenditures, individually or in the aggregate, outside of the ordinary course of business. Neither theCompany nor any of its Subsidiaries has taken any steps to seek protection pursuant to any law or statute relating to bankruptcy,insolvency, reorganization, receivership, liquidation or winding up, nor does the Company or any Subsidiary have any knowledge orreason to believe that any of their respective creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge ofany fact which would reasonably lead a creditor to do so. The Company and its Subsidiaries, individually and on a consolidated basis,are not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur on the date hereof, will not beInsolvent (as defined below). For the purpose of this Agreement (x) “Insolvent” means, (i) with respect to the Company and itsSubsidiaries, on a consolidated basis, (A) the present fair saleable value of the Company’s and its Subsidiaries’ assets is less than theamount required to pay the Company’s and its Subsidiaries’ total Indebtedness (as defined below), (B) the Company and itsSubsidiaries are unable to pay their debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities becomeabsolute and matured or (C) the Company and its Subsidiaries intend to incur or believe that they will incur debts that would bebeyond their ability to pay as such debts mature; and (ii) with respect to the Company and each Subsidiary, individually, (A) thepresent fair saleable value of the Company’s or such Subsidiary’s (as the case may be) assets is less than the amount required to pay itsrespective total Indebtedness, (B) the Company or such Subsidiary (as the case may be) is unable to pay its respective debts andliabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured or (C) the Company orsuch Subsidiary (as the case may be) intends to incur or believes that it will incur debts that would be beyond its respective ability topay as such debts mature; (y) “Indebtedness” of any Person means, without duplication (A) all indebtedness for borrowed money, (B)all obligations issued, undertaken or assumed as the deferred purchase price of property or services (including, without limitation,“capital leases” in accordance with GAAP) (other than trade payables entered into in the ordinary course of business consistent withpast practice), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar instruments,(D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred inconnection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any conditional sale orother title retention agreement, or incurred as financing, in either case with respect to any property or assets acquired with the proceedsof such indebtedness (even though the rights and remedies of the seller or bank under such agreement in the event of default are limitedto repossession or sale of such property), (F) all monetary obligations under any leasing or similar arrangement which, in connectionwith GAAP, consistently applied for the periods covered thereby, is classified as a capital lease, (G) all indebtedness referred to inclauses (A) through (F) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise,to be secured by) any Lien upon or in any property or assets (including accounts and contract rights) owned by any Person, eventhough the Person which owns such assets or property has not assumed or become liable for the payment of such indebtedness, and(H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds referred to in clauses (A) through (G)above; and (z) “Contingent Obligation” means, as to any Person, any direct or indirect liability, contingent or otherwise, of thatPerson with respect to any Indebtedness, lease, dividend or other obligation of another Person if the primary purpose or intent of thePerson incurring such liability, or the primary effect thereof, is to provide assurance to the obligee of such liability that such liabilitywill be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders of such liability will beprotected (in whole or in part) against loss with respect thereto.3.10No Undisclosed Events, Liabilities, Developments or Circumstances. Except as set forth in the SECDocuments, no event, liability, development or circumstance has occurred or exists, or is reasonably expected to exist or occur withrespect to the Company, any of its Subsidiaries or any of their respective businesses, properties, liabilities, prospects, operations(including results thereof) or condition (financial or otherwise), that (i) would be required to be disclosed by the Company underapplicable securities laws on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Companyof its Common Stock and which has not been publicly announced, (ii) would reasonably expected to have a material adverse effect onthe Holder’s investment hereunder or (iii) would reasonably be expected to have a Material Adverse Effect. 3.11Conduct of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is inviolation of any term of or in default under its Certificate of Incorporation, any certificate of designation, preferences or rights of anyother outstanding series of preferred stock of the Company or any of its Subsidiaries or Bylaws or their organizational charter,certificate of formation, memorandum of association, articles of association, Certificate of Incorporation or bylaws,respectively. Except as set forth in the SEC Documents, neither the Company nor any of its Subsidiaries is in violation of anyjudgment, decree or order or any statute, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries, and neitherthe Company nor any of its Subsidiaries will conduct its business in violation of any of the foregoing, except in all cases for possibleviolations which could not, individually or in the aggregate, have a Material Adverse Effect. Except as set forth in the SECDocuments, without limiting the generality of the foregoing, the Company is not in violation of any of the rules, regulations orrequirements of the Principal Market and has no knowledge of any facts or circumstances that could reasonably lead to delisting orsuspension of the Common Stock by the Principal Market in the foreseeable future. During the two years prior to the date hereof, (i)the Common Stock has been listed or designated for quotation on the Principal Market, (ii) trading in the Common Stock has not beensuspended by the SEC or the Principal Market and (iii) the Company has received no communication, written or oral, from the SEC orthe Principal Market regarding the suspension or delisting of the Common Stock from the Principal Market. The Company and eachof its Subsidiaries possess all certificates, authorizations and permits issued by the appropriate regulatory authorities necessary toconduct their respective businesses, except where the failure to possess such certificates, authorizations or permits would not have,individually or in the aggregate, a Material Adverse Effect, and neither the Company nor any such Subsidiary has received any noticeof proceedings relating to the revocation or modification of any such certificate, authorization or permit. There is no agreement,commitment, judgment,5  injunction, order or decree binding upon the Company or any of its Subsidiaries or to which the Company or any of its Subsidiaries isa party which has or would reasonably be expected to have the effect of prohibiting or materially impairing any business practice of theCompany or any of its Subsidiaries, any acquisition of property by the Company or any of its Subsidiaries or the conduct of businessby the Company or any of its Subsidiaries as currently conducted other than such effects, individually or in the aggregate, which havenot had and would not reasonably be expected to have a Material Adverse Effect on the Company or any of its Subsidiaries. 3.12Transactions With Affiliates. Except as set forth in the SEC Documents, no current or formeremployee, partner, director, officer or stockholder (direct or indirect) of the Company or its Subsidiaries, or any associate, or, to theknowledge of the Company, any affiliate of any thereof, or any relative with a relationship no more remote than first cousin of any ofthe foregoing, is presently, or has ever been, (i) a party to any transaction with the Company or its Subsidiaries (including any contract,agreement or other arrangement providing for the furnishing of services by, or rental of real or personal property from, or otherwiserequiring payments to, any such director, officer or stockholder or such associate or affiliate or relative Subsidiaries (other than forordinary course services as employees, consultants, officers or directors of the Company or any of its Subsidiaries)) or (ii) the direct orindirect owner of an interest in any corporation, firm, association or business organization which is a competitor, supplier or customerof the Company or its Subsidiaries (except for a passive investment (direct or indirect) in less than 5% of the common stock of acompany whose securities are traded on or quoted through an Eligible Market), nor does any such Person receive income from anysource other than the Company or its Subsidiaries which relates to the business of the Company or its Subsidiaries or should properlyaccrue to the Company or its Subsidiaries. No employee, officer, stockholder or director of the Company or any of its Subsidiaries ormember of his or her immediate family is indebted to the Company or its Subsidiaries, as the case may be, nor is the Company or anyof its Subsidiaries indebted (or committed to make loans or extend or guarantee credit) to any of them, other than (i) for payment ofsalary for services rendered, (ii) reimbursement for reasonable expenses incurred on behalf of the Company, and (iii) for other standardemployee benefits made generally available to all employees or executives (including stock option agreements outstanding under anystock option plan approved by the Board of Directors of the Company). 3.13Equity Capitalization. (a)Definitions:(i)“Common Stock” means (x) the Company’s shares of common stock,$0.01 par value per share, and (y) any capital stock into which such common stock shall have been changed orany share capital resulting from a reclassification of such common stock.(ii)“Preferred Stock” means (x) the Company’s blank check preferred stock,$0.01 par value per share, the terms of which may be designated by the board of directors of the Company in acertificate of designations and (y) any capital stock into which such preferred stock shall have been changed orany share capital resulting from a reclassification of such preferred stock (other than a conversion of such preferredstock into Common Stock in accordance with the terms of such certificate of designations).6  (b)Authorized and Outstanding Capital Stock. As of the date hereof, the authorized capital stockof the Company consists of (A) 1.0 billion shares of Common Stock, of which, 9.0 million are issued and outstanding as of the datehereof and 71.1 million are reserved for issuance pursuant to Convertible Securities (as defined below), in each case exercisable orexchangeable for, or convertible into, shares of Common Stock, and (B) 10.0 million shares of Preferred Stock, of which 85 shares areissued and outstanding. One share of Common Stock is held in the treasury of the Company. “Convertible Securities” means anycapital stock or other security of the Company or any of its Subsidiaries that is at any time and under any circumstances directly orindirectly convertible into, exercisable or exchangeable for, or which otherwise entitles the holder thereof to acquire, any capital stockor other security of the Company (including, without limitation, Common Stock) or any of its Subsidiaries.(c)Valid Issuance; Available Shares; Affiliates. All of such outstanding shares are duly authorizedand have been, or upon issuance will be, validly issued and are fully paid and nonassessable. Schedule 3.13 sets forth the number ofshares of Common Stock that are (A) reserved for issuance pursuant to Convertible Securities and (B) that are, as of the date hereof,owned by Persons who are “affiliates” (as defined in Rule 405 of the 1933 Act and calculated based on the assumption that onlyofficers, directors and holders of at least 10% of the Company’s issued and outstanding Common Stock are “affiliates” withoutconceding that any such Persons are “affiliates” for purposes of federal securities laws) of the Company or any of its Subsidiaries.(d)Existing Securities; Obligations. Except as disclosed in the SEC Documents: (A) none of theCompany’s or any Subsidiary’s shares, interests or capital stock is subject to from all preemptive or similar rights, mortgages, defects,claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security interests and other encumbrances (collectively“Liens”) suffered or permitted by the Company or any Subsidiary; (B) there are no outstanding options, warrants, scrip, rights tosubscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable orexchangeable for, any shares, interests or capital stock of the Company or any of its Subsidiaries, or contracts, commitments,understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares,interests or capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls orcommitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, anyshares, interests or capital stock of the Company or any of its Subsidiaries; (C) there are no agreements or arrangements under whichthe Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act; (D) there are nooutstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions,and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or maybecome bound to redeem a security of the Company or any of its Subsidiaries; (E) there are no securities or instruments containinganti-dilution or similar provisions that will be triggered by the issuance of the Exchange Shares; and (F) neither the Company nor anySubsidiary has any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement.7  (e)Organizational Documents. The Company has furnished to the Holder true, correct andcomplete copies of the Company’s Certificate of Incorporation, as amended and as in effect on the date hereof (the “Certificate ofIncorporation”), and the Company’s bylaws, as amended and as in effect on the date hereof (the “Bylaws”), and the terms of allConvertible Securities and the material rights of the holders thereof in respect thereto.3.14Indebtedness and Other Contracts. Neither the Company nor any of its Subsidiaries, (i) except asdisclosed in the SEC Documents or Schedule 3(s) of the Securities Purchase Agreement, has any outstanding debt securities, notes,credit agreements, credit facilities or other agreements, documents or instruments evidencing Indebtedness of the Company or any of itsSubsidiaries or by which the Company or any of its Subsidiaries is or may become bound, (ii) is a party to any contract, agreement orinstrument, except as disclosed in the SEC Documents, the violation of which, or default under which, by the other party(ies) to suchcontract, agreement or instrument could reasonably be expected to result in a Material Adverse Effect, (iii) has any financing statementssecuring obligations in any amounts filed in connection with the Company or any of its Subsidiaries, except as disclosed in the SECDocuments; (iv) is in violation of any term of, or in default under, any contract, agreement or instrument relating to any Indebtedness,except where such violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect, or (v) is aparty to any contract, agreement or instrument relating to any Indebtedness, the performance of which, in the judgment of theCompany’s officers, has or is expected to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries have anyliabilities or obligations required to be disclosed in the SEC Documents which are not so disclosed in the SEC Documents, other thanthose incurred in the ordinary course of the Company’s or its Subsidiaries’ respective businesses and which, individually or in theaggregate, do not or could not have a Material Adverse Effect. 3.15Litigation. There is no action, suit, arbitration, proceeding, inquiry or investigation before or by thePrincipal Market, any court, public board, other Governmental Entity, self-regulatory organization or body pending or, to theknowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries, the Common Stock or any of theCompany’s or its Subsidiaries’ officers or directors that would reasonably be expected to have a Material Adverse Effect on theCompany or its Subsidiaries, whether of a civil or criminal nature or otherwise, in their capacities as such, except as disclosed in theSEC Documents or in Schedule 3(t) of the Securities Purchase Agreement. No director, officer or employee of the Company or any ofits subsidiaries has willfully violated 18 U.S.C. §1519 or engaged in spoliation in reasonable anticipation of litigation. Withoutlimitation of the foregoing, there has not been, and to the knowledge of the Company, there is not pending or contemplated, anyinvestigation by the SEC involving the Company, any of its Subsidiaries or any current or former director or officer of the Company orany of its Subsidiaries. The SEC has not issued any stop order or other order suspending the effectiveness of any registration statementfiled by the Company under the 1933 Act or the 1934 Act. Neither the Company nor any of its Subsidiaries is subject to any order,writ, judgment, injunction, decree, determination or award of any Governmental Entity. 8  3.16Disclosure. The Company confirms that neither it nor any other Person acting on its behalf hasprovided the Holder or its agents or counsel with any information that constitutes or would reasonably be expected to constitutematerial, non-public information concerning the Company or any of its Subsidiaries, other than the existence of the transactionscontemplated by this Agreement and the other Exchange Documents. The Company understands and confirms that the Holder willrely on the foregoing representations in effecting transactions in securities of the Company. All disclosure provided to the Holderregarding the Company and its Subsidiaries, their businesses and the transactions contemplated hereby, including the schedules to thisAgreement, furnished by or on behalf of the Company or any of its Subsidiaries is true and correct and does not contain any untruestatement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of thecircumstances under which they were made, not misleading. Each press release issued by the Company or any of its Subsidiariesduring the twelve (12) months preceding the date of this Agreement did not at the time of release contain any untrue statement of amaterial fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the lightof the circumstances under which they are made, not misleading. No event or circumstance has occurred or information exists withrespect to the Company or any of its Subsidiaries or its or their business, properties, liabilities, prospects, operations (including resultsthereof) or conditions (financial or otherwise), which, under applicable law, rule or regulation, requires public disclosure at or beforethe date hereof or announcement by the Company but which has not been so publicly announced or disclosed. 4.Holder’s Representations and Warranties. As a material inducement to the Company to enter into thisAgreement and consummate the Exchange, the Holder represents, warrants and covenants with and to the Company as follows:4.1Reliance on Exemptions. The Holder understands that the Exchange Shares are being offered andexchanged in reliance on specific exemptions from the registration requirements of United States federal and state securities laws andthat the Company is relying in part upon the truth and accuracy of, and the Holder’s compliance with, the representations, warranties,agreements, acknowledgments and understandings of the Holder set forth herein and in the Exchange Documents in order to determinethe availability of such exemptions and the eligibility of the Holder to acquire the Exchange Shares. 4.2No Governmental Review. The Holder understands that no United States federal or state agency orany other government or governmental agency has passed on or made any recommendation or endorsement of the Exchange Shares orthe fairness or suitability of the investment in the Exchange Shares nor have such authorities passed upon or endorsed the merits of theoffering of the Exchange Shares.4.3Validity; Enforcement. This Agreement and the Exchange Documents to which the Holder is a partyhave been duly and validly authorized, executed and delivered on behalf of the Holder and shall constitute the legal, valid and bindingobligations of the Holder enforceable against the Holder in accordance with their respective terms, except as such enforceability maybe limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and othersimilar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies. 9  4.4No Conflicts. The execution, delivery and performance by the Holder of this Agreement and theExchange Documents to which the Holder is a party, and the consummation by the Holder of the transactions contemplated herebyand thereby will not (i) result in a violation of the organizational documents of the Holder or (ii) conflict with, or constitute a default (oran event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination,amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Holder is a party, or (iii) result in aviolation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to the Holder,except in the case of clauses (ii) and (iii) above, for such conflicts, defaults, rights or violations which would not, individually or in theaggregate, reasonably be expected to have a material adverse effect on the ability of the Holder to perform its obligations hereunder. 4.5Investment Risk; Sophistication. The Holder is acquiring the Exchange Shares hereunder in theordinary course of its business. The Holder has such knowledge, sophistication, and experience in business and financial matters so asto be capable of evaluation of the merits and risks of the prospective investment in the Exchange Shares, and has so evaluated themerits and risk of such investment. The Holder is an “accredited investor” as defined in Regulation D under the 1933 Act.4.6Ownership of Existing Warrant. The Holder owns the Existing Warrant free and clear of any Liens(other than the obligations pursuant to this Agreement and applicable securities laws). 5.Disclosure of Transaction. The Company shall, on or before 8:30 a.m., New York City Time, on or prior tothe first business day after the date of this Agreement, file a Current Report on Form 8-K describing the terms of the transactionscontemplated hereby in the form required by the 1934 Act and attaching the Exchange Documents, to the extent they are required to befiled under the 1934 Act, that have not previously been filed with the SEC by the Company (including, without limitation, thisAgreement) as exhibits to such filing (including all attachments, the “8-K Filing”). From and after the filing of the 8-K Filing, theCompany shall have disclosed all material, non-public information (if any) provided up to such time to the Holder by the Company orany of its Subsidiaries or any of their respective officers, directors, employees or agents. In addition, effective upon the filing of the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement withrespect to the transactions contemplated by the Exchange Documents or as otherwise disclosed in the 8-K Filing, whether written ororal, between the Company, any of its Subsidiaries or any of their respective officers, directors, affiliates, employees or agents, on theone hand, and any of the Holder or any of their affiliates, on the other hand, shall terminate. Neither the Company, its Subsidiaries northe Holder shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided,however, the Company shall be entitled, without the prior approval of the Holder, to make a press release or other public disclosurewith respect to such transactions (i) in substantial conformity with the 8-K Filing and contemporaneously therewith or (ii) as is requiredby applicable law and regulations (provided that in the case of clause (i) the Holder shall be consulted by the Company in connectionwith any such press release or other public disclosure prior to its release). Without the prior written consent of the Holder (which maybe granted or withheld in the Holder’s sole discretion), except as required by applicable law, the Company shall not (and shall causeeach of its Subsidiaries and affiliates to not) disclose the name of the Holder in any filing, announcement, release or otherwise. 10  6.No Integration. None of the Company, its Subsidiaries, any of their affiliates, or any Person acting on theirbehalf shall, directly or indirectly, make any offers or sales of any security (as defined in the 1933 Act) or solicit any offers to buy anysecurity or take any other actions, under circumstances that would require registration of any of the Exchange Shares under the 1933Act or cause this offering of the Exchange Shares to be integrated with such offering or any prior offerings by the Company forpurposes of Regulation D under the 1933 Act. 7.Listing. The Company shall promptly secure the listing or designation for quotation (as applicable) of all ofthe Exchange Shares upon the Principal Market (subject to official notice of issuance) and shall maintain such listing of all theExchange Shares from time to time issuable under the terms of the Exchange Documents. The Company shall maintain the CommonStock’s authorization for quotation on the Principal Market. Neither the Company nor any of its Subsidiaries shall take any actionwhich would be reasonably expected to result in the delisting or suspension of the Common Stock on the Principal Market. TheCompany shall pay all fees and expenses in connection with satisfying its obligations under this Section 7. 8.Fees. Each party to this Agreement shall bear its own expenses in connection with the structuring,documentation, negotiation and closing of the transactions contemplated hereby, except as provided in the previous sentence andexcept that the Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, transfer agentfees, Depository Trust Company (“DTC”) fees relating to or arising out of the transactions contemplated hereby. 9.Holding Period. For the purposes of Rule 144, the Company acknowledges that the holding period of theExchange Shares may be tacked onto the holding period of the Existing Warrant, and the Company agrees not to take a positioncontrary to this Section 9. The Company acknowledges and agrees that (assuming the Holder is not an affiliate of the Company) (i)the Exchange Shares are as of the date hereof, eligible to be resold pursuant to Rule 144, (ii) the Company is not aware of any eventreasonably likely to occur that would reasonably be expected to result in the Exchange Shares (assuming the issuance thereof pursuantto a cashless exercise) becoming ineligible to be resold by the Holder pursuant to Rule 144 and (iii) in connection with any resale ofany Exchange Shares pursuant to Rule 144, the Holder shall solely be required to provide reasonable assurances that such ExchangeShares are eligible for resale, assignment or transfer under Rule 144, which shall not include an opinion of Holder’s counsel. TheCompany shall be responsible for any transfer agent fees or DTC fees or legal fees of the Company’s counsel with respect to theremoval of legends, if any, or issuance of Exchange Shares in accordance herewith. 10.Blue Sky. The Company shall make all filings and reports relating to the Exchange required under applicablesecurities or “Blue Sky” laws of the states of the United States following the date hereof, if any. 11  11.Most Favored Nation. The Company hereby represents and warrants as of the date hereof and covenantsand agrees from and after the date hereof until the first anniversary of the date hereof, that none of the terms offered to any Person withrespect to any consent, release, amendment, settlement or waiver relating to the terms, conditions and transactions contemplated hereby(each a “Settlement Document”), is or will be more favorable to such Person than those of the Holder and this Agreement or wouldotherwise result in such other holder (each, an “Other Holder”) of the Existing Warrant (each, a “Settlement Warrant”), or itsdesignee, directly or indirectly, acquiring more than (or having the right to acquire more than, as applicable) one share of CommonStock, in exchange for (whether by exchange, reduction, cancelation or any other transaction with respect to) any one share ofCommon Stock issuable upon exercise (without regard to any cashless exercise) of such Settlement Warrant (a “Settlement Make-Whole Event”). If, and whenever on or after the date hereof, the Company enters into a Settlement Document, then (i) the Companyshall provide notice thereof to the Holder immediately following the occurrence thereof and (ii) the terms and conditions of thisAgreement shall be, without any further action by the Holder or the Company, automatically amended and modified in aneconomically and legally equivalent manner such that the Holder shall receive the benefit of the more favorable terms and/or conditions(as the case may be) set forth in such Settlement Document and, if a Settlement Make-Whole Event occurs, the Company shall deliverto the Holder, as additional securities issuable pursuant to the Exchange hereunder for the Existing Warrant, such aggregate number ofadditional shares of Common Stock as equal to the product of (a) ______ multiplied by (b) the difference of (i) the quotient of (x) theaggregate number of shares of Common Stock (on an as-converted and as-exercised (without regard to cashless exercise) basis) issued(or issuable to) such Other Holder (or its designee) pursuant to such Settlement Agreement and (y) the aggregate number of shares ofCommon Stock issuable upon exercise (without regard to any cashless exercise) of the Settlement Warrants subject to reduction,exchange, cancellation or otherwise pursuant to such Settlement Make-Whole Event, less (ii) one (1). Notwithstanding the foregoing,upon written notice to the Company at any time the Holder may elect not to accept the benefit of any such amended or modified termor condition, in which event the term or condition contained in this Agreement shall apply to the Holder as it was in effect immediatelyprior to such amendment or modification as if such amendment or modification never occurred with respect to the Holder. Theprovisions of this Section 11 shall apply similarly and equally to each Settlement Document.12  12.Independent Nature of Holder’s Obligations and Rights. The obligations of the Holder under thisAgreement are several and not joint with the obligations of any Other Holder, and the Holder shall not be responsible in any way forthe performance of the obligations of any Other Holder under any other agreement with the Company (each, an “OtherAgreement”). Nothing contained herein or in any Other Agreement, and no action taken by the Holder pursuant hereto, shall bedeemed to constitute the Holder and Other Holders as a partnership, an association, a joint venture or any other kind of entity, or createa presumption that the Holder and Other Holders are in any way acting in concert or as a group with respect to such obligations or thetransactions contemplated by this Agreement or any Other Agreement and the Company acknowledges that, to the best of itsknowledge, the Holder and the Other Holders are not acting in concert or as a group with respect to such obligations or the transactionscontemplated by this Agreement or any Other Agreement. The Company and the Holder confirm that the Holder has independentlyparticipated in the negotiation of the transactions contemplated hereby with the advice of its own counsel and advisors. The Holdershall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement,and it shall not be necessary for any Other Holder to be joined as an additional party in any proceeding for such purpose.13.Miscellaneous Provisions. Section 9 of the Securities Purchase Agreement is hereby incorporated byreference herein, mutatis mutandis.[The remainder of the page is intentionally left blank]13  IN WITNESS WHEREOF, Holders and the Company have executed this Agreement as of the date set forth on the first page of thisAgreement. COMPANY: DELCATH SYSTEMS, INC. By: Name: Jennifer K. Simpson Title: President & CEO 14  IN WITNESS WHEREOF, Holders and the Company have executed this Agreement as of the date set forth on the firstpage of this Agreement. HOLDER: By: Name: Title: Aggregate Number of Exchange Shares: 15 Exhibit 10.40LEAK-OUT AGREEMENTDecember __, 2018This agreement (the “Leak-Out Agreement”) is being delivered to you in connection with an understanding by and amongDelcath Systems, Inc., a Delaware corporation (the “Company”), and the person or persons named on the signature pages hereto(collectively, the “Holder”).Reference is hereby made to (a) that certain Warrant Exchange Agreement, dated December __, 2018 (the “WarrantExchange Agreement”), by and between the Company and the Holder, pursuant to which, among other things, the Holder (in itscapacity as a holder of certain Existing Warrants (as defined in the Warrant Exchange Agreement”), acquired certain shares ofCommon Stock (“Shares”) in exchange for such Existing Warrants (the “Warrant Exchange”). Capitalized terms not defined hereinshall have the meaning as set forth in the Warrant Exchange Agreement.The Holder agrees solely with the Company that from the date of issuance of the Shares to the Holder (the “Effective Date”)and ending at 4:00 pm (New York City time) on ________ __, 20__ (such period, the “Restricted Period”), neither the Holder, norany Affiliate of such Holder which (x) had or has knowledge of the transactions contemplated by the Warrant Exchange Agreement,(y) has or shares discretion relating to such Holder’s investments or trading or information concerning such Holder’s investments,including in respect of the Securities, or (z) is subject to such Holder’s review or input concerning such Affiliate’s investments ortrading (together, the “Holder’s Trading Affiliates”), collectively, shall sell, dispose or otherwise transfer, directly or indirectly,(including, without limitation, any sales, short sales, swaps or any derivative transactions that would be equivalent to any sales or shortpositions) on any Trading Day during the Restricted Period (any such date, a “Date of Determination”), shares of Common Stock, orshares of Common Stock underlying any Common Stock Equivalents, held by the Holder on the date hereof, including the Shares(collectively, the “Restricted Securities”), in an amount more than the Holder’s Leak-Out Percentage (as defined in that certain Leak-Out Agreement, dated ________ __, 20__, by and between the Company and the Holder (such percentage, the “February Leak-OutPercentage”), which for the Holder is ___% of the trading volume of Common Stock as reported by Bloomberg, LP for the applicableDate of Determination (“Leak-Out Percentage”).Notwithstanding anything herein to the contrary, until the end of the Restricted Period the Holder may, directly or indirectly,sell or transfer all, or any part, of any Restricted Securities to any Person (an “Assignee”) in a transaction which does not need to bereported on the consolidated tape on the Trading Market, without complying with (or otherwise limited by) the restrictions set forth inthis Leak-Out Agreement; provided, that as a condition to any such sale or transfer an authorized signatory of the Company and suchAssignee duly execute and deliver a leak-out agreement in the form of this Leak-Out Agreement (an “Assignee Agreement”, and eachsuch transfer a “Permitted Transfer”) and, subsequent to a Permitted Transfer, sales of the Holder and the Holder’s Trading Affiliatesand all Assignees (other than any such sales that constitute Permitted Transfers) shall be aggregated for all purposes of this Leak-OutAgreement and all Assignee Agreements.1 Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Leak-OutAgreement must be in writing and shall be given in accordance with the terms of the SPA.This Leak-Out Agreement constitutes the entire agreement among the parties hereto with respect to the subject matter hereofand supersedes all prior negotiations, letters and understandings relating to the subject matter hereof and are fully binding on the partieshereto.This Leak-Out Agreement may be executed simultaneously in any number of counterparts. Each counterpart shall bedeemed to be an original, and all such counterparts shall constitute one and the same instrument. This Leak-Out Agreement may beexecuted and accepted by facsimile or PDF signature and any such signature shall be of the same force and effect as an originalsignature.The terms of this Leak-Out Agreement shall be binding upon and shall inure to the benefit of each of the parties hereto andtheir respective successors and assigns.This Leak-Out Agreement may not be amended or modified except in writing signed by each of the parties hereto.All questions concerning the construction, validity, enforcement and interpretation of this Leak-Out Agreement shall begoverned by the terms of the Exchange Agreement.Each party hereto acknowledges that, in view of the uniqueness of the transactions contemplated by this Leak-OutAgreement, the other party or parties hereto may not have an adequate remedy at law for money damages in the event that this Leak-Out Agreement has not been performed in accordance with its terms, and therefore agrees that such other party or parties shall beentitled to seek specific enforcement of the terms hereof in addition to any other remedy it may seek, at law or in equity.The obligations of the Holder under this Leak-Out Agreement are several and not joint with the obligations of any otherholder of securities issued upon exercise (other than pursuant to the terms of such securities in effect as of the date hereof andassuming, for such purpose, no amendment or waiver thereof except such amendments and waiver in effect prior to the date hereof) orexchange, as applicable, of any outstanding warrants to purchase Common Stock of the Company (each, an “Other Holder”), and theHolder shall not be responsible in any way for the performance of the obligations of any Other Holder under any other agreement(including, without limitation, any other leak-out agreement (each, an “Other Leak-Out Agreement”). Nothing contained herein or inthis Leak-Out Agreement, and no action taken by the Holder pursuant hereto, shall be deemed to constitute the Holder and OtherHolders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Holder and theOther Holders are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by thisLeak-Out Agreement and the Company acknowledges that the Holder and the Other Holders are not acting in concert or as a groupwith respect to such obligations or the transactions contemplated by this Leak-Out Agreement or any other agreement. The Companyand the Holder confirm that the Holder has independently participated in the negotiation of the transactions contemplated hereby withthe advice of its own counsel and advisors. The Holder shall be entitled to independently protect and enforce its rights, including,without limitation, the rights arising out of this Leak-Out Agreement, and it shall not be necessary for any Other Holder or anyProspectus Purchaser Other Holder to be joined as an additional party in any proceeding for such purpose.2 The Company hereby represents and warrants as of the date hereof and covenants and agrees from and after the date hereofthat it will enforce the provisions of each Other Leak-Out Agreement, if any, in accordance with its terms. If any party to any OtherLeak-Out Agreement breaches any provision of such Other Leak-Out Agreement, the Company shall promptly use its best efforts toseek specific performance of the terms of such Other Leak-Out Agreement.The Company hereby represents and warrants as of the date hereof and covenants and agrees from and after the date hereofthat none of the terms offered to any Other Holder with respect to (x) any exchange of any of the ________ and ________ Warrants(as defined in the Warrant Exchange Agreement) into any other securities of the Company or (y) any restrictions on (or failure torestrict) the sale of any such securities (including, without limitation, any Other Leak-Out Agreement or the failure by the Company toobtain any Other Leak-Out Agreement with respect thereto) (each a “Settlement Document”), is or will be more favorable to suchOther Holder or any Prospectus Purchaser Other Holder than those of the Holder and this Leak-Out Agreement (for the avoidance ofdoubt, a Leak Out Percentage (as defined in each Other Leak-Out Agreement) of an Other Holder that is the same as the FebruaryLeak-Out Percentage (as defined in each Other Leak-Out Agreement) of such Other Holder shall not be a more favorable term of suchOther Leak-Out Agreement). If, and whenever on or after the date hereof, the Company enters into a Settlement Document with termsthat are materially different from this Leak-Out Agreement, then (i) the Company shall provide notice thereof to the Holder promptlyfollowing the occurrence thereof and (ii) the terms and conditions of this Leak-Out Agreement shall be, without any further action bythe Holder or the Company, automatically amended and modified in an economically and legally equivalent manner such that theHolder shall receive the benefit of the more favorable terms and/or conditions (as the case may be) set forth in such SettlementDocument, provided that upon written notice to the Company at any time the Holder may elect not to accept the benefit of any suchamended or modified term or condition, in which event the term or condition contained in this Leak-Out Agreement shall apply to theHolder as it was in effect immediately prior to such amendment or modification as if such amendment or modification never occurredwith respect to the Holder. The provisions of this paragraph shall apply similarly and equally to each Settlement Document.[The remainder of the page is intentionally left blank] 3Exhibit 10.40The parties hereto have executed this Leak-Out Agreement as of the date first set forth above. Sincerely, DELCATH SYSTEMS, INC. By: Name: Title: Agreed to and Acknowledged: By: Name: Title: 4Exhibit 10.42GLOBAL SETTLEMENT AGREEMENTTHIS GLOBAL SETTLEMENT AGREEMENT (the “Agreement”) is made as of April 18, 2019 (the “Effective Date”)by and among Delcath Systems, Inc. (“Plaintiff” or the “Company”), Iroquois Capital Investment Group, LLC (“Iroquois Capital”),Iroquois Master Fund Ltd. (“Iroquois Master”), and FirstFire Global Opportunities Fund LLC (“FirstFire” and with Iroquois Capitaland Iroquois Master, “Defendants” each of which is a “Defendant” and with Plaintiff, the “Parties” each of which is a “Party”).RECITALSA.On or about February 9, 2018, Defendants and twelve other parties (the “Consenting Warrant Holders” and withDefendants, the “Warrant Holders”) purchased Series D Warrants to Purchase Two Shares of Common Stock (the “Warrants”) whichPlaintiff issued pursuant to a prospectus and related documents filed with the United States Securities and Exchange Commission.B.Plaintiff later identified what it has alleged is an erroneous cross-reference in the Warrants.C.In late 2018, Plaintiff offered the Warrant Holders an opportunity to exchange their Warrants for shares ofcommon stock in the Company pursuant to an exchange agreement (the “Exchange Agreement”).D.As of March 26, 2019, eleven of the Consenting Warrant Holders had executed the Exchange Agreement.E.On March 26, 2019, Plaintiff commenced an action against Defendants and the twelfth Consenting WarrantHolder in Supreme Court of the State of New York, New York County, captioned Delcath Systems, Inc. v. Iroquois CapitalInvestment Group LLC, et al., Index No. 651749/2019 (the “Reformation Action”). The Reformation Action sought to reform theWarrants in the manner that Plaintiff contends is their intended meaning. The twelfth Consenting Warrant Holder subsequentlyexecuted the Exchange Agreement.F.As of the date of this Agreement, Defendants are the only Warrant Holders who have not executed the ExchangeAgreement and they are the only Defendants in the Reformation Action.G.The Parties desire to resolve the Reformation Action without further litigation and, after arm’s length negotiations,have agreed to the settlement set forth in this Agreement.  SETTLEMENT TERMSFor good and valuable consideration, the receipt and sufficiency of which the Parties hereby acknowledge, the Parties agreeto the following terms: 1.Representations and Warranties of the PartiesEach of the Parties represents and warrants as follows:(a)such Party is duly organized, validly existing and in good standing under the laws of the jurisdiction ofits organization and has all necessary power and authority to enter into this Agreement, to carry out the obligations it imposes and toconsummate the transactions it requires to be consummated (the “Transactions”);(b)the execution, delivery and performance by such Party of its obligations hereunder and consummationby such Party of the Transactions have been duly authorized by all necessary actions on the part of such Party;(c)this Agreement constitutes a legal, valid and binding obligation of such Party enforceable against suchParty in accordance with its terms; and(d)the execution, delivery and performance by such Party of its obligations hereunder will not be ultravires or violate, conflict with or result in the breach of any provision of the organizational documents of such Party. 2.Settlement TermsIn consideration of this Agreement:(a)On the Effective Date, Defendants shall surrender the Warrants to the Company and shall thereuponwaive all of the rights granted by or in connection with the Warrants;(b)On the Effective Date, Defendants shall waive any and all rights under the Defendants’ respectiveStock Purchase Agreements dated as of February 9, 2018 with respect to participation in the Company’s future common stockofferings;(c)Within three business days of the Effective Date, Plaintiff shall pay Defendants’ counsel one-fifth of thereasonable, documented, out-of-pocket fees, costs, and expenses Defendants’ counsel incurred in connection with the ReformationAction and this Agreement, the total of which shall not exceed $50,000.00 (“Defendants’ Legal Fees”);(d)Plaintiff shall pay Defendants $400,000.00 (the “Settlement Payment”); provided, however, that thispayment will be made only if Plaintiff secures and closes financing in the form of a Private Investment in Public Equity or similar-typetransaction (“PIPE Financing”) such that Plaintiff can continue its operations without filing for bankruptcy protection; and providedfurther, that Plaintiff’s failure to secure and close such PIPE Financing  and make the Settlement Payment within five business days of securing and closing such PIPE Financing, shall void this Agreement inits entirety;1(e)Contemporaneously with Plaintiff’s payment of the Settlement Payment, Plaintiff shall pay Defendants’counsel the remaining eighty percent (80%) of Defendants’ Legal Fees; and(f)Plaintiff shall either withdraw the Reformation Action or file a notice of discontinuance of theReformation Action, either as applicable, within five business days of making the Settlement Payment. 3.General Releases(a)As of the Effective Date, Plaintiff hereby forever releases (i) each of Defendants and (ii) each of theirrespective past and present parent companies, divisions, subsidiaries, affiliates, joint ventures, predecessors, successors, transferees,assigns, subrogees, insurers, co-insurers, reinsurers, representatives, agents, stockholders or owners of Defendants (collectively,the “Defendant Releasees”), from any and all claims, including, without limitation, defaults, obligations, rights, damages, causes ofaction, demands, suits, judgments, remedies, setoffs, recoupments, defenses, debts, and liabilities of any kind or nature whatsoever,under any legal theory, including under contract, tort, or otherwise, whether at law, in equity, or otherwise, whether known orunknown, matured or unmatured, fixed or contingent, liquidated or unliquidated, disputed or undisputed, asserted or unasserted,suspected or unsuspected, foreseen or unforeseen, direct or indirect, choate or inchoate, now existing or hereafter arising) (eacha “Claim”) that Plaintiff may now have, has ever had or may in the future have, against a Defendant Releasee arising prior to theEffective Date hereof.(b)As of the Effective Date, each Defendant hereby forever releases (i) Plaintiff and (ii) its past and presentparent companies, divisions, affiliates, joint ventures, predecessors, successors, transferees, assigns, subrogees, insurers, co-insurers,reinsurers, representatives, agents, stockholders or owners (collectively, the “Plaintiff Releasees”), from any Claim that any Defendantor any affiliate of any Defendant may now have, has ever had or may in the future have, against a Plaintiff Releasee arising prior to theEffective Date hereof.(c)Notwithstanding the foregoing, no Party hereby releases claims arising out of, related to or inconnection with (i) its rights or obligations under, or actions required by, this Agreement, or (ii) rights under or in connection with theCompany’s securities other than the Warrants. 4.CounterpartsThis Agreement may be executed in counterparts, each of which shall be an original and all which together shall constitute asingle agreement. 1For the avoidance of doubt, the Settlement Payment shall not be due and payable upon any bridge financings of up to and cumulatively including $5.0million.  5.AmendmentsNo amendment, modification or waiver in respect of this Agreement will be effective unless in writing (including writingevidenced by facsimile transmission or electronic transmission of a Portable Document Format file) and executed by each of the partieshereto. 6.SeverabilityIf any term or other provision of this Agreement is invalid, illegal or incapable of being enforced under any Law or publicpolicy, all other terms and provisions of this Agreement shall nevertheless remain in full force and effect. Upon a determination thatany term or other provision is invalid, illegal or incapable of being enforced, the parties shall negotiate in good faith to modify thisAgreement so as to effectuate the original intent of the parties as closely as possible so that the Transactions are consummated asoriginally contemplated to the greatest extent possible. 7.Entire AgreementThis Agreement sets forth the entire understanding and agreement between the parties as to the matters addressed herein andsupersedes and replaces any prior understanding, agreement or statement of intent, written or oral. 8.Binding NatureThe terms and provisions of this Agreement shall be binding in all respects on, and shall inure to the benefit of, the Parties,their successors and assigns. No other person or entity shall have rights under this Agreement. 9.Joint DraftingThis Agreement is the product of arm’s length negotiations between the Parties and any rule of construction that ambiguitiesare to be resolved against the drafting Party shall not apply in the interpretation of this Agreement. 10.No AdmissionsThis Agreement reflects a compromise of disputed claims and shall not be construed as an admission against any Party’sinterest and shall not be used as or deemed to be evidence of any liability by any Party in any proceeding before any court, except in aproceeding to enforce the terms of this Agreement. 11.Governing LawExcept as provided for herein, this Agreement shall be interpreted under and governed by the laws of the State of New Yorkwithout giving effect to any conflicts of law provisions thereof that would make the law of any other jurisdiction applicable to thisAgreement.  IN WITNESS WHEREOF, Plaintiff and the Defendants each caused this instrument to be signed by their duly authorizedrepresentatives, as of the date first above written. DELCATH SYSTEMS, INC. By: Name: Title: IROQUOIS CAPITAL INVESTMENT GROUP, LLC By: Name: Title: IROQUOIS MASTER FUND LTD. By: Name: Title: FIRSTFIRE GLOBAL OPPORTUNITIES FUND LLC By: Name: Title: Exhibit 10.43 SECURITIES PURCHASE AGREEMENT This Securities Purchase Agreement (this “Agreement”) is dated as of April 18, 2019, by and among Delcath Systems, Inc.,a Delaware corporation (the “Company”), and the purchasers identified on the signature pages hereto (each, a “Purchaser,” or in theaggregate, the “Purchasers”). WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the SecuritiesAct of 1933, as amended (the “Securities Act”), Regulation S and Rule 506(b) promulgated thereunder, the Company desires to sell,and the Purchasers desire to purchase from the Company, the Securities (as defined herein). NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other goodand valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree asfollows: ARTICLE I.DEFINITIONS 1.1Definitions. In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwisedefined herein have the meanings given to such terms in the Transaction Documents (as defined herein), and (b) the following termshave the meanings set forth in this Section 1.1: “Action” shall have the meaning ascribed to such term in Section 3.1(k). “Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or isunder common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act. “BHCA” shall have the meaning ascribed to such term in Section 3.1(ll). “Board of Directors” means the board of directors of the Company. “Business Day” means any day except any Saturday, any Sunday, or any other day on which the Federal Reserve Bank ofNew York is closed. “Closing Date” means the Trading Day(s) on which all of the Transaction Documents have been executed and delivered bythe applicable parties thereto in connection with a Closing, and all conditions precedent to (i) the Purchaser’s obligations topay the Subscription Amount as to the Closing and (ii) the Company’s obligations to deliver the Securities as to the Closing,in each case, have been satisfied or waived. “Closing” means closing of the purchase and sale of the Securities pursuant to Section 2.2. 1 “Commission” means the United States Securities and Exchange Commission. “Common Stock” means the common stock of the Company, par value $0.01 per share, and any other class of securities intowhich such securities may hereafter be reclassified or changed. “Disclosure Schedules” shall have the meaning ascribed to such term in Section 3.1. “Evaluation Date” shall have the meaning ascribed to such term in Section 3.1(t). “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgatedthereunder. “Exchange Transaction” shall have the meaning ascribed to such term in Section 4.15(b). “Exempt Issuance” means the issuance of (a) shares of Common Stock, restricted stock units or options to employees,officers, directors, advisors or independent contractors of the Company pursuant to any stock or option plan duly adopted forsuch purpose, (b) shares of Common Stock, warrants or options to advisors or independent contractors of the Company forcompensatory purposes, (c) securities exercisable or exchangeable for or convertible into shares of Common Stock issuedand outstanding on the date hereof, provided that such securities have not been amended since the date hereof to increase thenumber of such securities or to decrease the exercise price, exchange price or conversion price of such securities, (d)securities issuable pursuant to any contractual anti-dilution, most favored nations or similar obligations of the Company ineffect as of the date hereof, provided that such obligations have not been materially amended since the date of hereof, and (e)securities issued pursuant to acquisitions or any other strategic transactions approved by the Board of Directors, providedthat any such issuance shall not include a transaction in which the Company is issuing securities primarily for the purpose ofraising capital or to an entity whose primary business is investing in securities.“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.“Federal Reserve” shall have the meaning ascribed to such term in Section 3.1(ll).“GAAP” shall have the meaning ascribed to such term in Section 3.1(i).“Guarantors” mean collectively, the Subsidiaries of the Company who are party to the Subsidiary Guarantee. “Indebtedness” means except for Permitted Indebtedness, (a) any liabilities for borrowed money or amounts owed in excessof $100,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsementsand other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected inthe Company’s consolidated balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instrumentsfor deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any leasepayments in excess of $100,000 due under leases required to be capitalized in accordance with GAAP.2 “Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(q). “Intellectual Property Security Agreement” means that certain Intellectual Property Security Agreement required to bedelivered pursuant to Section 2.3 of this Agreement, in the form attached hereto as Exhibit B. “Liabilities” means all direct or indirect liabilities, Indebtedness and obligations of any kind of Company to the Purchaser,howsoever created, arising or evidenced, whether now existing or hereafter arising (including those acquired by assignment),absolute or contingent, due or to become due, primary or secondary, joint or several, whether existing or arising throughdiscount, overdraft, purchase, direct loan, participation, operation of law, or otherwise, including, but not limited to, pursuantto the Note, this Agreement and/or any of the other Transaction Documents, all accrued but unpaid interest on the Note, anyletter of credit, any standby letter of credit, and/or outside attorneys’ and paralegals’ fees or charges relating to thepreparation of the Transaction Documents and the enforcement of the Purchaser’s rights, remedies and powers under thisAgreement, the Note and/or the other Transaction Documents. “Liens” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or otherrestriction. “Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b). “Material Permits” shall have the meaning ascribed to such term in Section 3.1(n). “Maximum Rate” shall have the meaning ascribed to such term in Section 5.17. “Money Laundering Laws” shall have the meaning ascribed to such term in Section 3.1(qq). “Notes” means collectively, the 8% Senior Secured Promissory Notes issued by the Company to each Purchaser hereunder,each in the form of Exhibit A attached hereto. “Off-balance Sheet Arrangement” shall have the meaning ascribed to such term in Section 3.1(pp). “Permitted Indebtedness” means the letters of credit and secured accounts listed in Schedule 3.1(h). “Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture,limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. 3 “Principal Amount” means, as to the Purchaser, the principal amount of the Notes set forth opposite such Purchaser’s namein column (2) on the Schedule of Purchasers attached hereto in United States Dollars. “Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informalinvestigation or partial proceeding, such as a deposition), whether commenced or threatened. “Purchaser Party” shall have the meaning ascribed to such term in Section 4.9. “Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e). “Rosalind Note” means the Note originally held by Rosalind Master Fund, LP. “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such rule may be amendedfrom time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effectas such rule. “SEC Reports” shall have the meaning ascribed to such term in Section 3.1(i). “Securities” means the Notes to be issued to the Purchaser pursuant to this Agreement. “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. “Security Agreement” means the Security Agreement dated on the date hereof by and among the Company, the Company’sSubsidiaries, and the Purchaser, as hereinafter amended and/or supplemented altogether with all exhibits, schedules andannexes to such Security Agreement, pursuant to which all Liabilities of the Company to the Purchaser under theTransaction Documents are secured by the Collateral (as defined in the Security Agreement), which security interest in theCollateral shall be perfected by the Purchaser’s UCC-1, filed with the Secretary of State of the State of Delaware, to theextent perfectable by the filing of a UCC-1 Financing Statement, or if applicable, a UCC-3 Financing StatementAmendment and such other documents and instruments related thereto, which Security Agreement is annexed hereto asExhibit C. “Shell Company” means an entity that fits within the definition of “shell company” under Section 12b-2 of the ExchangeAct and Rule 144. “Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act. “Subscription Amount” means, as to the Purchaser, the aggregate amount to be paid for the Notes purchased hereunder asspecified below the Purchaser’s name on the signature page of this Agreement and next to the heading “SubscriptionAmount,” in United States dollars and in immediately available funds. 4 “Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, also includeany direct or indirect subsidiary of the Company formed or acquired after the date hereof. “Subsidiary Guarantee” means the Subsidiary Guarantee, dated as of the date hereof, pursuant to which the Subsidiarieshave jointly and severally agreed to guarantee and act as surety for the Company’s obligation to repay the Notes, in the formattached hereto as Exhibit D. “Third Party Exchange Transfer” shall have the meaning ascribed to such term in Section 4.14(b). “Trading Day” means a day on which the principal Trading Market is open for trading. “Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted fortrading on the date in question: the NYSE American; the Nasdaq Capital Market; the Nasdaq Global Market; the NasdaqGlobal Select Market; the New York Stock Exchange; OTC Markets or the OTC Bulletin Board (or any successors to anyof the foregoing). “Transaction Documents” means this Agreement, the Notes, the Security Agreement, the Intellectual Property SecurityAgreement, the Subsidiary Guarantee and all exhibits and schedules thereto and hereto and any other documents oragreements executed in connection with the transactions contemplated hereunder. “Variable Rate Transaction” shall have the meaning ascribed to such term in Section 4.14(a). ARTICLE II.PURCHASE AND SALE 2.1Purchase. On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent withthe execution and delivery of this Agreement by the parties hereto, the Company shall sell and issue to each Purchaser, and eachPurchaser shall purchase, severally and not jointly, from the Company, Notes with an aggregate Principal Amount equal to the amountset forth opposite such Purchaser’s name in column (2) on the Schedule of Purchasers attached hereto. The purchase of the Notes willbe completed in a single tranche as provided herein. 2.2Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, concurrent with the executionand delivery of this Agreement by the parties hereto, the Company agrees to sell, and each Purchaser agrees to purchase, theSubscription Amount of Notes as set forth on the signature page hereto executed by such Purchaser. At the Closing, each Purchasershall deliver to the Company, via wire transfer to an account designated by the Company, immediately available funds equal to suchPurchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser, and the Company shall deliverto5 such Purchaser its Notes as set forth in Section 2.3(a), and the Company and such Purchaser shall deliver the other items set forth inSection 2.3 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.3 and 2.4 for Closing,such Closing shall be undertaken remotely by electronic exchange of Closing documentation. There may be multiple closings so longas at each Closing the obligations under Section 2.3 are met. 2.3Deliveries. (a)On or prior to the Closing Date (except as otherwise agreed by the Purchaser), the Company shall deliver or causeto be delivered to each Purchaser the following: (i) this Agreement duly executed by the Company; (ii) the Notes with an aggregate Principal Amount equal to the amount set forth opposite such Purchaser’s namein column (2) on the Schedule of Purchasers attached hereto, registered in the name of the Purchaser; (iii)the Security Agreement, duly executed by the Company (and for all Closings after the first Closing,additional Purchasers shall merely sign a signature page and be an additional party to the Security Agreement); (iv) the Intellectual Property Security Agreement, duly executed by the Company (and for all Closingsafter the first Closing, additional Purchasers shall merely sign a signature page and be an additional party to theIntellectual Property Security Agreement); (v) the Subsidiary Guarantee, duly executed by the Company’s Subsidiaries (and for all Closings after thefirst Closing, additional Purchasers shall merely sign a signature page and be an additional party to the SubsidiaryGuarantee); (vi)[Reserved]; (vii)the opinion of Wexler Burkhart Hirschberg & Unger, LLP, the Company’s counsel, dated as of theClosing Date; (viii)[Reserved]; (ix)a certificate evidencing the Company’s qualification as a foreign corporation and good standing issuedby the Secretary of State (or comparable office) of each jurisdiction, if any, in which the Company conductsbusiness and is required to so qualify, as of a date within ten (10) days of the Closing Date; (x)a certificate executed by the Secretary of the Company and dated as of the Closing Date, as to (i) theresolutions, as adopted by the Board of Directors in a form reasonably acceptable to the Purchasers, approving (A)the entering into and performance of this Agreement and the other Transaction Documents and the6 issuance, offering and sale of the Securities and (B) the performance of the Company of its obligations under theTransaction Documents contemplated therein, (ii) referencing links to the Company’s amended and restatedcertificate of incorporation, as amended, (iii) referencing links to the Company’s amended and restated by-laws,each as in effect at the Closing and (iv) attaching a certificate of incumbency; (xi)a certificate executed by the Secretary of the each Guarantor and dated as of the Closing Date, as to (i)the resolutions, as adopted by the board of directors of such Guarantor in a form reasonably acceptable to thePurchasers, approving (A) the entering into and performance of Transaction Documents to which it is a party and(B) the performance of Guarantor of its obligations under the Transaction Documents to which it is a partycontemplated therein, (ii) referencing links to Guarantor’s constating documents and (iii) attaching a certificate ofincumbency; and (xii)such other documents, instruments or certificates relating to the transactions contemplated by thisAgreement as such Purchaser or its counsel may reasonably request. (b)On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company, asapplicable, the following: (i) this Agreement, duly executed by the Purchaser; (ii) the Purchaser’s Subscription Amount by wire transfer to the account specified in writing by theCompany; (iii) the Security Agreement, duly executed by the Purchaser; and (iv) the Intellectual Property Security Agreement, duly executed by the Purchaser. 2.4Closing Conditions. (a)The obligations of the Company hereunder in connection with the Closing are subject to the following conditionsbeing met: (i) the accuracy in all material respects as at Closing Date of the representations and warranties of thePurchaser contained herein (unless as of a specific date therein in which case they shall be accurate as of suchdate); (ii) all obligations, covenants and agreements of the Purchaser required to be performed at or prior to theClosing Date shall have been performed; and 7 (iii) the delivery by the Purchaser of the items set forth in Section 2.3(b) of this Agreement. (b)The respective obligations of each Purchaser hereunder in connection with the Closing are subject to thefollowing conditions being met: (i)the accuracy in all material respects when made as to the Closing Date of the representations andwarranties of the Company contained herein (unless as of a specific date therein); (ii)all obligations, covenants and agreements of the Company required to be performed at or prior to theClosing Date shall have been performed; (iii)the delivery by the Company of the items set forth in Section 2.3(a) of this Agreement; (iv)there is no existing Event of Default (as defined in the Notes) and no existing event which, with thepassage of time or the giving of notice, would constitute an Event of Default; (v)there is no breach of any obligations, covenants and agreements under the Transaction Documents andno existing event which, with the passage of time or the giving of notice, would constitute a breach under theTransaction Documents; (vi)there shall have been no Material Adverse Effect with respect to the Company since the date hereof; (vii)from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspendedby the Commission or the Company’s principal Trading Market and, at any time prior to the Closing Date, tradingin securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum pricesshall not have been established on securities whose trades are reported by such service, or on any Trading Market,nor shall a banking moratorium have been declared either by the United States or New York State authorities norshall there have occurred any material outbreak or escalation of hostilities or other national or internationalcalamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in eachcase, in the reasonable judgment of the Purchaser, and without regard to any factors unique to the Purchaser,makes it impracticable or inadvisable to purchase the Securities at the Closing; (viii) [reserved]; (ix) [reserved]; and 8 (x)any other conditions contained herein or the other Transaction Documents, including, without limitationthose set forth in Section 2.3 herein. 2.5Minimum and Maximum. Each Purchaser must purchase Securities for a minimum subscription amount of at least$100,000. Provided, however, that if necessary to meet Company’s existing obligations under rights of participation, the minimumsubscription amount per party may be reduced pro rata to the extent necessary to enable all persons with such rights that desire toparticipate to so participate. The aggregate subscription amount for all securities to all Purchasers may not exceed $4,000,000. ARTICLE III.REPRESENTATIONS AND WARRANTIES 3.1Representations and Warranties of the Company. Except as set forth in the disclosure schedules attached hereto (the“Disclosure Schedules”), which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or otherwisemade herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules, the Company (whichfor purposes of this Section 3.1 means the Company and all of its Subsidiaries) hereby makes the following representations andwarranties to each Purchaser as of the Closing Date: (a)Subsidiaries. All of the direct and indirect Subsidiaries and parent entities of the Company are set forth onSchedule 3.1(a) hereto. The Company owns, directly or indirectly, all of the capital stock or other equity interests of eachSubsidiary free and clear of any Liens, other than as set forth on Schedule 3.1(a) hereto, and all of the issued and outstandingshares of capital stock or other equity interests of each Subsidiary are validly issued and are fully paid, non-assessable andfree of preemptive and similar rights to subscribe for or purchase securities. (b)Organization and Qualification. The Company is an entity duly incorporated or otherwise organized and validlyexisting, and, other than as set forth on Schedule 3.1(b) hereto, the Company is in good standing, under the laws of thejurisdiction of its incorporation or organization, as applicable, with the requisite power and authority to own and use itsproperties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary or parententity of the Company is in violation or default of any of the provisions of its respective certificate or articles ofincorporation, bylaws or other organizational or charter documents. The Company is duly qualified to conduct business andis in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conductedor property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing,as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validityor enforceability of any Transaction Document; (ii) a material adverse effect on the results of operations, assets, business,prospects or condition (financial or otherwise) of the Company, its parent entities and the Subsidiaries, taken as a whole; or(iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligationsunder any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been institutedin any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority orqualification.9 (c)Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and toconsummate the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwiseto carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and each of the otherTransaction Documents by the Company and the consummation by it of the transactions contemplated hereby and therebyhave been duly authorized by all necessary action on the part of the Company and no further action is required by theCompany, the Board of Directors or the Company’s stockholders in connection herewith or therewith other than inconnection with the Required Approvals. This Agreement and each other Transaction Documents to which it is a party hasbeen (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the termshereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company inaccordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency,reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally; (ii) aslimited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies; and(iii) insofar as indemnification and contribution provisions may be limited by applicable law. (d)No Conflicts. The execution, delivery and performance by the Company of this Agreement and the otherTransaction Documents to which it is a party, the issuance and sale of the Securities and the consummation by it of thetransactions contemplated hereby and thereby do not and will not, except as set forth on Schedule 3.1(d): (i) conflict with orviolate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or otherorganizational or charter documents; (ii) conflict with, or constitute a default (or an event that with notice or lapse of time orboth would become a default) under, result in the creation of any Lien (except Liens in favor of the Purchaser) upon any ofthe properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment,acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or otherinstrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or anySubsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected; or(iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment,injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary issubject (including federal and state securities laws and regulations), or by which any property or asset of the Company or aSubsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably beexpected to result in a Material Adverse Effect. (e)Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization ororder of, give any notice to, or make any filing or registration with, any court or other federal, state, local or othergovernmental authority or other Person in connection with the execution, delivery and performance by the Company of theTransaction Documents, other than: (i) the filings required pursuant to10 Section 4.13 of this Agreement; (ii) the notice and/or application(s) to each applicable Trading Market for the issuance andsale of the Securities in the time and manner required thereby; and (iii) the filing of Form D with the Commission and suchfilings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”). (f)Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance withthe applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of allLiens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. (g)Capitalization; Corporate Governance. (i) The capitalization of the Company is as set forth on Schedule 3.1(g)(i), which Schedule 3.1(g)(i) shall alsoinclude (A) the number of shares of Common Stock owned beneficially, and of record, by Affiliates of theCompany as of the date hereof and (B) the number of authorized and reserved shares of capital stock of theCompany. The Company has not issued capital stock since its most recently filed periodic report under theExchange Act except as set forth on Schedule 3.1(g)(i), except the issuance of shares of Common Stock toemployees pursuant to the Company’s employee stock purchase plans and except pursuant to the conversionand/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic reportunder the Exchange Act except as set forth on Schedule 3.1(g)(i). No Person has any right of first refusal,preemptive right, right of participation, or any similar right to participate in the transactions contemplated by theTransaction Documents except as set forth on Schedule 3.1(g)(i). There are no outstanding options, warrants, scriprights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights orobligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for oracquire any shares of Common Stock, or contracts, commitments, understandings or arrangements by which theCompany or any Subsidiary is or may become bound to issue additional shares of Common Stock or CommonStock Equivalents except as set forth on Schedule 3.1(g)(i). The issuance and sale of the Securities will notobligate the Company to issue shares of Common Stock or other securities to any Person and will not result in aright of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any ofsuch securities except as set forth on Schedule 3.1(g)(i). All of the outstanding shares of capital stock of theCompany are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance withall federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptiverights or similar rights to subscribe for or purchase securities. No further approval or authorization of anystockholder, the Board of Directors or others is required for the issuance and sale of the Securities. There are nostockholders’ agreements, voting agreements or other similar agreements with respect to the Company’s capitalstock to which the Company is a party or, to the knowledge of the Company, between or among any of theCompany’s stockholders. 11 (ii) The names and titles of each of the Company’s principal officers, directors and beneficial holders of at leastfive percent (5%) of the outstanding shares of each class of the Company’s capital stock on a fully diluted basisare as set forth on Schedule 3.1(g)(ii), which Schedule 3.1(g)(ii) shall also include each committee of directors aswell as the names and titles of each director currently serving on each such committee. (h)Indebtedness. Schedule 3.1(h) sets forth as of the date hereof all outstanding secured and unsecured Indebtednessof the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. Except as set forth onSchedule 3.1(h), neither the Company nor any Subsidiary is in default with respect to any Indebtedness. (i)SEC Reports; Financial Statements. Other than as set forth on Schedule 3.1(i) hereto, the Company has filed allreports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act andthe Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two (2) years preceding the date hereof (theforegoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectivelyreferred to herein as the “SEC Reports”). As of their respective dates, the SEC Reports complied in all material respectswith the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed,contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessaryin order to make the statements therein, in the light of the circumstances under which they were made, not misleading. TheCompany has never been an issuer subject to Rule 144(i) under the Securities Act. The financial statements of the Companyincluded in the SEC Reports comply in all material respects with applicable accounting requirements and the rules andregulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have beenprepared in accordance with United States generally accepted accounting principles applied on a consistent basis during theperiods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto andexcept that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all materialrespects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the resultsof operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial,year-end audit adjustments. (j)Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financialstatements included within the SEC Reports, except as specifically disclosed in the Company’s Annual Report on Form 10-K, including such latest audited financial statements, or in a subsequent SEC Report filed prior to the date hereof and exceptas set forth in Schedule 3.1(g), Schedule 3.1(m), and Schedule 3.1(j): (i) there has been no event, occurrence or developmentthat has had or that could reasonably be expected to result in a Material Adverse Effect; (ii) the Company has not incurredany liabilities or obligations (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in theordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’sfinancial12 statements pursuant to GAAP or disclosed in filings made with the Commission; (iii) the Company has not altered its methodof accounting; (iv) the Company has not declared or made any dividend or distribution of cash or other property to itsstockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock; (v) theCompany has not sold, assigned or transferred any other tangible assets or Intellectual Property Rights, or canceled any debtsor claims, except in the ordinary course of business, (vi) the Company has not suffered any substantial loss contingencies orwaived any rights of material value, whether or not in the ordinary course of business, or suffered the loss of any materialamount of prospective business, (vii) the Company has not entered into any acquisition or financing transactions, whether ornot in the ordinary course of business, other than with respect to the Transaction Documents and (v) the Company has notissued any equity securities to any officer, director or Affiliate, no event, liability, fact, circumstance, occurrence ordevelopment has occurred or exists or is reasonably expected to occur or exist with respect to the Company or itsSubsidiaries or their respective businesses, properties, operations, assets or financial condition, that would be required to bedisclosed by the Company under applicable securities laws at the time this representation is made or deemed made that hasnot been publicly disclosed at least one (1) Trading Day prior to the date that this representation is made. (k)Litigation. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to theknowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respectiveproperties except as set forth in Schedule 3.1(k), or against or affecting the Company’s current or former officers or directorsin their capacity as such, before or by any court, arbitrator, governmental or administrative agency or regulatory authority(federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality,validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorabledecision, have or reasonably be expected to result in a Material Adverse Effect, and neither the Company nor anySubsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of orliability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to theknowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving theCompany or any current or former director or officer of the Company that is likely to lead to action that can reasonably beexpected to result in a Material Adverse Effect. There has not been, and to the knowledge of the Company, there is notpending or contemplated, any investigation by the Commission involving the Company or any current or former director orofficer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of anyregistration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act. 13 (l)Labor Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any ofthe employees of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of theCompany’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with theCompany or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargainingagreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. To theknowledge of the Company, no executive officer of the Company or any Subsidiary, is, or is now expected to be, inviolation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreementor non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, andthe continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to anyliability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S.federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditionsof employment and wages and hours, except where the failure to be in compliance could not, individually or in theaggregate, reasonably be expected to have a Material Adverse Effect. (m)Compliance. Neither the Company nor any Subsidiary, except as set forth in Schedule 3.1(m): (i) is in defaultunder or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, wouldresult in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of aclaim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement orinstrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation hasbeen waived); (ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority; or(iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including withoutlimitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety,product quality and safety and employment and labor matters, except in each case as could not have or reasonably beexpected to result in a Material Adverse Effect. (n)Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issuedby the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses asdescribed in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result ina Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice ofproceedings relating to the revocation or modification of any Material Permit. 14 (o)Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all realproperty owned by them and good and marketable title in all personal property owned by them that is material to thebusiness of the Company and the Subsidiaries, in each case free and clear of all Liens, except as set forth in Schedule 3.1(o)and except for (i) Liens as do not materially affect the value of such property and do not materially interfere with the usemade and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for the payment offederal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and thepayment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by theCompany and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company andthe Subsidiaries are in compliance. (p)Material Agreements. Except for the Transaction Documents (with respect to clause (i) only) or as set forth onSchedule 3.1(p) hereto, or as would not be reasonably likely to have a Material Adverse Effect, (i) the Company and each ofits Subsidiaries have performed all obligations required to be performed by them to date under any written or oral contract,instrument, agreement, commitment, obligation, plan or arrangement, filed or required to be filed with the Commission (the“Material Agreements”), (ii) neither the Company nor any of its Subsidiaries has received any notice of default under anyMaterial Agreement and, (iii) to the best of the Company's knowledge, neither the Company nor any of its Subsidiaries is indefault under any Material Agreement now in effect. (q)Intellectual Property. The Company and the Subsidiaries have, or have rights to use, all patents, patentapplications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licensesand other intellectual property rights and similar rights as necessary or required for use in connection with their respectivebusinesses as presently conducted and which the failure to so have could have a Material Adverse Effect (collectively, the“Intellectual Property Rights”). Neither the Company nor any Subsidiary has received a notice (written or otherwise) thatany of the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or beabandoned, within two (2) years from the date of this Agreement. Neither the Company nor any Subsidiary has received,since the date of the latest audited financial statements included within the SEC Reports, a written notice of a claim orotherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except ascould not have or could not reasonably be expected to have a Material Adverse Effect. To the knowledge of the Company,all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of theIntellectual Property Rights except as disclosed in Schedule 3.1(q). The Company and its Subsidiaries have takenreasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, exceptwhere failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 15 (r)Transactions with Affiliates and Employees. Except as disclosed in Schedule 3.1(r), none of the officers ordirectors of the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Companyor any Subsidiary is presently a party to any transaction with the Company or any Subsidiary (other than for services asemployees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing ofservices to or by, providing for rental of real or personal property to or from providing for the borrowing of money from orlending of money to, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledgeof the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer,director, trustee, stockholder, member or partner, in each case in excess of $120,000 other than for: (i) payment of salary orconsulting fees for services rendered; (ii) reimbursement for expenses incurred on behalf of the Company; and (iii) otheremployee benefits. (s)Payments of Cash. Except as disclosed on Schedule 3.1(s), neither the Company, its directors or officers, or anyAffiliates or agents of the Company, have withdrawn or paid cash to any vendor in an aggregate amount that exceeds FiveThousand Dollars ($5,000) for any purpose. (t)Sarbanes-Oxley; Internal Accounting Controls. The Company and the Subsidiaries are in compliance with anyand all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and allapplicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as ofthe Closing Date. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to providereasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations;(ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and tomaintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specificauthorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals andappropriate action is taken with respect to any differences. The Company and the Subsidiaries have established disclosurecontrols and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiariesand designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company inthe reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the timeperiods specified in the Commission’s rules and forms. The Company’s certifying officers have evaluated the effectivenessof the disclosure controls and procedures of the Company and the Subsidiaries as of the end of the period covered by themost recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented inits most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about theeffectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since theEvaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in theExchange Act) that have materially affected, or is reasonably likely to materially affect, the internal control over financialreporting of the Company and its Subsidiaries.16 (u)Certain Fees. Other than as set forth on Schedule 3.1(u), no brokerage or finder’s fees or commissions are or willbe payable by the Company or any Subsidiaries to any broker, financial advisor or consultant, finder, placement agent,investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. ThePurchaser shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of otherPersons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated bythe Transaction Documents. (v)Private Placement. Assuming the accuracy of each Purchaser’s representations and warranties set forth in Section3.2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to thePurchaser as contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules andregulations of the Trading Market. (w)Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of paymentfor the Securities, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment CompanyAct of 1940, as amended. The Company shall conduct its business in a manner so that it will not become an “investmentcompany” subject to registration under the Investment Company Act of 1940, as amended. (x)Registration Rights. Other than as set forth on Schedule 3.1(x) and pursuant to this Agreement, no Person has anyright to cause the Company to effect the registration under the Securities Act of any securities of the Company or anySubsidiaries. (y)Listing and Maintenance Requirements; Trading Market Regulation. The Common Stock is registered pursuantto Section 12(b) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likelyto have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Companyreceived any notification that the Commission is contemplating terminating such registration. Except as disclosed in the SECreports, the Company has not, in the twelve (12) months preceding the date hereof, received notice from any Trading Marketon which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with thelisting or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not inthe foreseeable future continue to be, in compliance with all such listing and maintenance requirements. (z)Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, ifany, in order to render inapplicable any control share acquisition, business combination, poison pill (including anydistribution under a rights agreement) or other similar anti-takeover provision under the Company’s amended and restatedcertificate of incorporation, as amended (or similar charter documents), or the laws of its state of incorporation that is orcould become applicable to the Purchaser as a result of the Purchaser and the Company fulfilling their obligations orexercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuanceof the Securities and the Purchaser’s ownership of the Securities.17 (aa)Disclosure. All of the disclosure furnished by or on behalf of the Company to the Purchaser regarding theCompany and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the DisclosureSchedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to stateany material fact necessary in order to make the statements made therein, in light of the circumstances under which theywere made, not misleading. The press releases disseminated by the Company during the twelve months preceding the dateof this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material factrequired to be stated therein or necessary in order to make the statements therein, in light of the circumstances under whichthey were made and when made, not misleading. The Company acknowledges and agrees that no Purchaser makes or hasmade any representations or warranties with respect to the transactions contemplated hereby other than those specifically setforth in Section 3.2 hereof. (bb)No Integrated Offering. Assuming the accuracy of the Purchaser’s representations and warranties set forth inSection 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly orindirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances thatwould cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) theSecurities Act which would require the registration of any such securities under the Securities Act, or (ii) any applicableshareholder approval provisions of any Trading Market on which any of the securities of the Company are listed ordesignated. (cc)No General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered orsold any of the Securities by any form of general solicitation or general advertising. The Company has offered the Securitiesfor sale only to the Purchaser and certain other “accredited investors” within the meaning of Rule 501 under the SecuritiesAct. (dd)Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company orany Subsidiary, any agent or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly,used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domesticpolitical activity; (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreignor domestic political parties or campaigns from corporate funds; (iii) failed to disclose fully any contribution made by theCompany or any Subsidiary (or made by any person acting on its behalf of which the Company is aware) which is inviolation of law; or (iv) violated in any material respect any provision of FCPA. (ee)Accountants. The Company’s accounting firm is set forth on Schedule 3.1(ee). To the knowledge and belief ofthe Company, such accounting firm is a registered public accounting firm as required by the Exchange Act. 18 (ff)No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, orreasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly orpresently employed by the Company and the Company is current with respect to any fees owed to its accountants andlawyers which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents. (gg)Acknowledgment Regarding Purchaser’s Purchase of Securities. The Company acknowledges and agrees thatthe Purchaser is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and thetransactions contemplated thereby. The Company further acknowledges that the Purchaser is not acting as a financialadvisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and thetransactions contemplated thereby and any advice given by the Purchaser or any of their respective representatives or agentsin connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to thePurchaser’s purchase of the Securities. The Company further represents to the Purchaser that the Company’s decision toenter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of thetransactions contemplated hereby by the Company and its representatives. (hh)Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has,(i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price ofany security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid anycompensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensationfor soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii),compensation paid to the Company’s placement agent in connection with the placement of the Securities. (ii)Stock Option Plans. The Company has not knowingly granted, and there is no and has been no Company policyor practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, therelease or other public announcement of material information regarding the Company or its Subsidiaries or their respectivefinancial results or prospects. (jj)Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge,any director, officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctionsadministered by the Office of Foreign Assets Control of the U.S. Treasury Department. (kk)U.S. Real Property Holding Corporation. The Company is not and has never been a U.S. real property holdingcorporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shallso certify upon Purchaser’s request. 19 (ll)Bank Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the BankHolding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the FederalReserve System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls,directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-fivepercent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the FederalReserve. Neither the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over themanagement or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. (mm)Promotional Stock Activities. Neither the Company, its officers, its directors, nor any affiliates or agents of theCompany have engaged in any stock promotional activity that could give rise to a complaint, inquiry, or trading suspensionby the Commission alleging (i) a violation of the anti-fraud provisions of the federal securities laws, (ii) violations of the anti-touting provisions, (iii) improper “gun-jumping”; or (iv) promotion without proper disclosure of compensation. (nn)Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected toresult in a Material Adverse Effect, the Company (i) has made or filed all United States federal, state and local income andall foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject,(ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined tobe due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for thepayment of all material taxes for periods subsequent to the periods to which such returns, reports or declarationsapply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, andthe officers of the Company know of no basis for any such claim. (oo)Seniority. As of the Closing Date, other than as set forth on Schedule 3.1(oo), no Indebtedness or other claimagainst the Company is senior to the Notes in right of payment, whether with respect to interest or upon liquidation ordissolution, or otherwise, other than indebtedness secured by purchase money security interests (which is senior only as tounderlying assets covered thereby) and capital lease obligations (which is senior only as to the property covered thereby). (pp)No “Off-balance Sheet Arrangements”. Other than as set forth in Schedule 3.1(pp), neither the Company norany of its Affiliates is involved in any “Off-balance Sheet Arrangements”. For purposes hereof an “Off-balance SheetArrangement” means any transaction or contract to which an entity unconsolidated with the Company or any of its Affiliatesis a party and under which either the Company or any such Affiliate has: (i) any obligation under a guarantee contractpursuant to which the Company or any of its Affiliates could be required to make payments to the guaranteed party,including any standby letter of credit, market value guarantee, performance guarantee, indemnification agreement, keep-wellor other support agreement; (ii) any retained or contingent interest20 in assets transferred to such unconsolidated entity that serves as credit, liquidity or market risk support to the entity in respectof such assets; (iii) any variable interest held in such unconsolidated entity where such entity provides financing, liquidity,market risk or credit risk support to, or engages in leasing, hedging or research and development services with the Companyof any of its Affiliates; and (iv) any liability or obligation of the same nature as those described in clauses (i) through (iii) ofthis sentence even if of a different name (whether absolute, accrued, contingent or otherwise) that would not be required tobe reflected in the Company or any of its Affiliates’ financial statements. (qq)Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at alltimes in compliance with applicable financial record-keeping and reporting requirements of the Currency and ForeignTransactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulationsthereunder (collectively, the “Money Laundering Laws”), and no action, suit or proceeding by or before any court orgovernmental agency, authority or body or any arbitrator involving the Company or any Subsidiary with respect to theMoney Laundering Laws is pending or, to the knowledge of the Company or any Subsidiary, threatened. (rr)Subsidiary Rights. The Company has the unrestricted right to vote, and (subject to limitations imposed byapplicable law) to receive dividends and distributions on, all capital securities of each of its Subsidiaries as owned by theCompany or any Subsidiary. (ss)Shell Company Status. The Company has never been, and is not presently, an issuer identified as a ShellCompany. (tt)Investor Relations. Other than as set forth in Schedule 3.1(tt), the Company is not currently a party, nor does itintend to become a party, to any agreement pursuant to which the Company will receive investor relations services. (uu)Full Disclosure. No representation or warranty by the Company in this Agreement and no statement contained inthe Disclosure Schedules to this Agreement or any certificate or other document furnished or to be furnished to thePurchasers pursuant to this Agreement contains any untrue statement of a material fact, or omits to state a material factnecessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading. (vv)No Bad Actor Disqualification Event. After reasonable inquiry, none of the “Bad Actor” disqualifying eventsdescribed in Rule 506(d)(l) under the Securities Act (a “Disqualification Event”) is applicable to Company or to Company’sknowledge any of its Affiliates, except a Disqualification Event as to which Rule 506(d)(2)(iii) applies. (ww)Company has not, and will not, engage in any directed selling efforts in the United States in respect of theSecurities. Company is offering and selling the Securities only to non U.S. Persons, in compliance with the offeringrestriction requirements of Regulation S. 21 3.2Representations and Warranties of the Purchaser. Each Purchaser, for itself and for no other Purchaser, hereby representsand warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein in whichcase they shall be accurate as of such date): (a)Organization; Authority. The Purchaser is either an individual or an entity duly incorporated or formed, validlyexisting and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate,partnership, limited liability company or similar power and authority to enter into and to consummate the transactionscontemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. Theexecution and delivery of the Transaction Documents and performance by the Purchaser of the transactions contemplated bythe Transaction Documents have been duly authorized by all necessary corporate, partnership, limited liability company orsimilar action, as applicable, on the part of the Purchaser. Each Transaction Document to which it is a party has been dulyexecuted by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute thevalid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms, except: (i) as limitedby general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of generalapplication affecting enforcement of creditors’ rights generally; (ii) as limited by laws relating to the availability of specificperformance, injunctive relief or other equitable remedies; and (iii) insofar as indemnification and contribution provisionsmay be limited by applicable law. (b)Own Account. The Purchaser understands that the Securities are “restricted securities” and have not beenregistered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for itsown account (this representation and warranty not limiting the Purchaser’s right to sell the Securities in compliance withapplicable federal and state securities laws). The Purchaser is acquiring the Securities hereunder in the ordinary course of itsbusiness. (c)Purchaser Status. At the time the Purchaser was offered the Securities, it was, and as of the date hereof it is an“accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act. (d)Experience of the Purchaser. The Purchaser, either alone or together with its representatives, has suchknowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits andrisks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. ThePurchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford acomplete loss of such investment. (e)General Solicitation. The Purchaser is not purchasing the Securities as a result of any advertisement, article, noticeor other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast overtelevision or radio or presented at any seminar or any other general solicitation or general advertisement.22 (f)Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, thePurchaser has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with thePurchaser, executed any purchases or sales, including Short Sales, of the securities of the Company during the periodcommencing as of the time that the Purchaser first received a term sheet (written or oral) from the Company or any otherPerson representing the Company setting forth the material terms of the transactions contemplated hereunder and endingimmediately prior to the execution hereof. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managedinvestment vehicle whereby separate portfolio managers manage separate portions of the Purchaser’s assets and the portfoliomanagers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions ofthe Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by theportfolio manager that made the investment decision to purchase the Securities covered by this Agreement. Other than toother Persons party to this Agreement, the Purchaser has maintained the confidentiality of all disclosures made to it inconnection with this transaction (including the existence and terms of this transaction). (g)Non U.S. Person. The Purchaser is not a “U.S. Person” as that term is defined in Regulation S under theSecurities Act, and is not acquiring the Securities for the account or beneficial ownership of any U.S. Person. (h)No Short Sales. Neither Purchaser nor any Affiliate of Purchaser (i) holds any short position in the CommonStock, (ii) has ever engaged in, directly or indirectly, any Short Sale of the Common Stock, or (iii) has ever engaged in,directly or indirectly, any hedging transaction with regard to the Common Stock. (i)Not a Bad Actor. After reasonable inquiry, none of the “Bad Actor” disqualifying events described in Rule 506(d)(l) under the Securities Act is applicable to the Purchaser or any of its Affiliates. The Purchaser is not now, and has neverbeen, subject to any final cease and desist order or any penalty from the Commission or any court of competent jurisdictionfor any violation of any provision of the Securities Act or the Exchange Act, or any of the regulations promulgatedthereunder. (j)Not an Affiliate. The Purchaser is not now, and has never been, an Affiliate of the Company or any otherPurchaser. The Purchaser is not now, and has never been, part of any group of Persons that would be required underSection 13(d) of the Exchange Act, or the rules and regulations promulgated thereunder, to file a statement on Schedule 13Dor Schedule 13G with regard to the Company. The Company acknowledges and agrees that the representations contained in Section 3.2 shall not modify, amend or affect thePurchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations andwarranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connectionwith this Agreement or the consummation of the transaction contemplated hereby. 23 ARTICLE IV.OTHER AGREEMENTS OF THE PARTIES 4.1Transfer Restrictions. (a)The Securities may only be disposed of in compliance with state and federal securities laws. In connection withany transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to anAffiliate of a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may require thetransferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable tothe Company, at the Company’s sole expense in the form and substance of which opinion shall be reasonably satisfactory tothe Company, to the effect that such transfer does not require registration of such transferred Securities under the SecuritiesAct. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement andshall have the rights and obligations of a Purchaser under this Agreement. (b)The Purchaser agrees to the imprinting, so long as is required by this Section 4.1, of a legend on any of theSecurities in the following form: THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSIONOR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON REGULATION S OR ANEXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TOREGULATION S OR AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT ORPURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THEREGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLESTATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFERORTO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THECOMPANY. The Company acknowledges and agrees that the Purchaser may from time to time pledge, pursuant to a bona fide marginagreement with a registered broker-dealer, or grant a security interest in some or all of the Securities to a financial institutionthat is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by theprovisions of this Agreement and, if required under the terms of such arrangement, the Purchaser may transfer pledged orsecured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of theCompany and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connectiontherewith. Further, no notice shall be required of such pledge. At the Company’s expense, the Company will execute anddeliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection witha pledge or transfer of the Securities. 24 4.2[Reserved]. 4.3[Reserved]. 4.4Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of anysecurity (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner thatwould require the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale ofthe Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior tothe closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction. 4.5[Reserved]. 4.6Shareholder Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, anyother Person, that the Purchaser is an “acquiring person” or such similar term under any control share acquisition, businesscombination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect orhereafter adopted by the Company, or that the Purchaser could be deemed to trigger the provisions of any such plan or arrangement, byvirtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and thePurchaser. 4.7[Reserved]. 4.8Use of Proceeds. The Company shall use the net proceeds as set forth in Schedule 4.8. 4.9Indemnification of Purchaser. Subject to the provisions of this Section 4.9, the Company will indemnify and hold thePurchaser and its directors, officers, managers, shareholders, members, partners, employees and agents (and any other Persons with afunctionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person whocontrols the Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors,officers, managers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role ofa Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “PurchaserParty”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including alljudgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any the PurchaserParty may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreementsmade by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the PurchaserParties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of thePurchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based inwhole or in part upon a breach of the Purchaser Party’s representations, warranties or covenants under the Transaction Documents orany agreements or understandings the Purchaser Party may25 have with any such stockholder or any violations by such Purchaser Party of state or federal securities laws or any conduct by thePurchaser Party which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought againstany Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, the Purchaser Party shall promptlynotify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosingreasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such actionand participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the Purchaser Party except tothe extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed aftera reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion ofcounsel, a material conflict on any material issue between the position of the Company and the position of the Purchaser Party, inwhich case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. TheCompany will not be liable to any Purchaser Party under this Agreement (x) for any settlement by a Purchaser Party effected withoutthe Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (y) to the extent, but only to the extentthat a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenantsor agreements made by the Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required bythis Section 4.9 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as andwhen bills are received or are incurred. The indemnification contained herein shall be in addition to any cause of action or similar rightof any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law. 4.10[Reserved]. 4.11Certain Transactions. The Purchaser covenants and agrees that neither it, nor any Affiliate acting on its behalf or pursuantto any understanding with it will execute any Short Sales of the Common Stock or (ii) hedging transaction, which establishes a netshort position with respect to the Company’s Common Stock) during the period commencing with the execution of this Agreement andending on the earlier of the Maturity Date (as defined in the Notes) of the Notes or the full repayment of the Notes; provided that thisprovision shall not operate to restrict a Purchaser’s trading under any prior securities purchase agreement containing contractual rightsthat explicitly protects such trading in respect of the previously issued securities. 4.12 Securities Laws Disclosure; Publicity. The Company and the Purchaser shall consult with each other in issuing anypublic disclosure with respect to the transactions contemplated hereby, and neither the Company nor the Purchaser shall issue any suchpublic disclosure nor otherwise make any such public statement without the prior consent of the Company, with respect to any pressrelease of the Purchaser, or without the prior consent of the Purchaser, with respect to any press release of the Company, whichconsent shall not unreasonably be withheld or delayed, except if such disclosure is required by law or rules of the principal TradingMarket, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement orcommunication. Notwithstanding the foregoing, the Company shall not26 publicly disclose the name of the Purchaser, or include the name of the Purchaser in any filing with the Commission or any regulatoryagency or Trading Market, without the prior written consent of the Purchaser, except: (a) as required by federal securities law inconnection with any registration statement contemplated by this Agreement and (b) to the extent such disclosure is required by law orTrading Market regulations, in which case the Company shall provide the Purchaser with prior notice of such disclosure permittedunder this clause (b). 4.13 Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required underRegulation D and to provide a copy thereof, promptly upon request of the Purchaser. The Company shall take such action as theCompany shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to thePurchaser at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence ofsuch actions promptly upon request of the Purchaser. 4.14 Subsequent Equity Sales. (a) For so long as any of the Notes remain outstanding, the Company shall be prohibited from effecting or entering into anagreement to effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common StockEquivalents (or a combination of units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction” means atransaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable orexercisable for, or include the right to receive, additional shares of Common Stock either (A) at a conversion price, exerciseprice or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the sharesof Common Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise orexchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security orupon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or themarket for the Common Stock or (ii) enters into any agreement, including, but not limited to, an equity line of credit,whereby the Company may issue securities at a future determined price. (b) For as long as any of the Notes remain outstanding, neither the Company nor any of its affiliates or Subsidiaries, nor anyof its or their respective officers, employees, directors, agents or other representatives, will (without the prior written consentof the Purchaser), directly or indirectly: (a) solicit, initiate, encourage or accept any other inquiries, proposals or offers fromany Person relating to any exchange (i) of any security of the Company or any of its Subsidiaries for any other security ofthe Company or any of its Subsidiaries, except to the extent (x) consummated pursuant to the terms of Common ShareEquivalents of the Company as in effect as of the date hereof and disclosed in filings with the Commission prior to the datehereof (without giving effect to any amendment, modification, change or waiver of any terms thereof occurring on or afterthe date hereof or not disclosed in a filing by the Company with the Commission prior to the date hereof) or (ii) of anyindebtedness or other securities of, or claim against, the Company or any of its Subsidiaries pursuant to a registrationstatement filed with the Commission or relying on any exemption under the Securities Act (including, without27 limitation, Section 3(a)(10) of the Securities Act (any such transaction described in clauses (i) or (ii), an “ExchangeTransaction”); (b) enter into, effect, alter, amend, announce or recommend to its stockholders any Exchange Transactionwith any Person; or (c) participate in any discussions, conversations, negotiations or other communications with any Personregarding any Exchange Transaction, or furnish to any Person any information with respect to any Exchange Transaction, orotherwise cooperate in any way, assist or participate in, facilitate or encourage any effort or attempt by any Person to seek anExchange Transaction involving the Company or any of its Subsidiaries. For as long as the Notes remain outstanding,neither the Company nor any of its affiliates or Subsidiaries, nor any of its or their respective officers, employees, directors,agents or other representatives, will, directly or indirectly, cooperate in any way, assist or participate in, facilitate orencourage any effort or attempt by any Person to effect any acquisition of securities or indebtedness of, or claim against, theCompany by such Person from an existing holder of such securities, indebtedness or claim in connection with a proposedexchange of such securities or indebtedness of, or claim against, the Company (whether pursuant to Section 3(a)(9) or 3(a)(10) of the Securities Act or otherwise) (a “Third Party Exchange Transfer”). The Company, its affiliates and Subsidiaries,and each of its and their respective officers, employees, directors, agents or other representatives shall immediately cease andcause to be terminated all existing discussions, conversations, negotiations and other communications with any Persons withrespect to any of the foregoing. For all purposes of this Agreement, violations of the restrictions set forth in this Section 4.14by any Subsidiary or affiliate of the Company, or any officer, employee, director, agent or other representative of theCompany or any of its Subsidiaries or affiliates shall be deemed a direct breach of this Section 4.14 by the Company. (c) From the date hereof until sixty (60) calendar days after the Closing Date, neither the Company nor any Subsidiary shall,directly or indirectly, except with respect to the proposed $20,000,000 private investment in public equities contemplated tobe completed by May 31, 2019, and as otherwise permitted under this Agreement, issue, offer, sell, grant any option or rightto purchase, or otherwise dispose of (or announce any issuance, offer, sale, grant of any option or right to purchase or otherdisposition of) any equity security or any equity-linked or related security (including, without limitation, any “equitysecurity” (as that term is defined under Rule 405 promulgated under the Securities Act), any Common Shares or CommonShare Equivalents, any debt securities, any preferred stock or any purchase rights) or otherwise amend, modify, waiver oralter any terms of conditions of any Common Share Equivalents outstanding as of the date hereof to decrease the exercise,conversion and/or exchange price, as applicable, thereunder or otherwise increase the aggregate number of Common Sharesissuable in connection therewith. (d) The Purchaser shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, whichremedy shall be in addition to any right to collect damages. Notwithstanding the foregoing, this Section 4.14 shall not applyin respect of an Exempt Issuance, except that no Variable Rate Transaction shall be an Exempt Issuance. 28 4.15.Regulation S Compliance. Each Purchaser agrees that, during the six (6) months following the Closing, it shall notengage in any transaction involving any securities of the Company that would be prohibited or restricted by, or would otherwise renderunavailable any applicable safe harbor provided by Regulation S. ARTICLE V.MISCELLANEOUS 5.1Termination. This Agreement may be terminated by the Purchaser, as to the Purchaser’s obligations hereunder only andwithout any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties,if the Closing has not been consummated on or before April 23, 2019; provided, however, that such termination will not affect the rightof any party to sue for any breach by any other party (or parties). 5.2Fees and Expenses. The Company has agreed to bear all fees, disbursements, and expenses in connection with thetransactions contemplated herein, including, without limitation, the Company’s legal and accounting fees and disbursements, the costsincident to the preparation, printing and distribution of any registration statement, filing fees, UCC fees, and costs associated with theIntellectual Property Security Agreement. The Company shall pay all stamp taxes and other taxes and duties levied in connection withthe delivery of any Securities to the Purchasers in connection with the transactions contemplated hereby.5.3Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entireunderstanding of the parties hereto with respect to the subject matter hereof and thereof and supersede all prior agreements andunderstandings, oral or written, with respect to such matters, which the parties hereto acknowledge have been merged into suchdocuments, exhibits and schedules. 5.4Notices. Any and all notices or other communications or deliveries to be provided by the Purchaser hereunder shall be inwriting and delivered personally, by email or facsimile, or sent by a nationally recognized overnight courier service, addressed to theCompany at 1633 Broadway, Suite 22C, New York, New York 10019, 917-591-5970, bkeck@delcath.com or such other address,facsimile number, or email address as the Company may specify for such purposes by notice to the Purchaser delivered in accordancewith this Section 5.4. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be inwriting and delivered personally, by email or facsimile, or sent by a nationally recognized overnight courier service addressed to eachPurchaser at the email address, facsimile number, or address of the Purchaser appearing on the books of the Company, or if no suchemail address, facsimile number, or address appears on the books of the Company, at the principal place of business of suchPurchaser. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest (i) the dateof transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address set forth onthe signature pages attached hereto prior to 12:00 p.m. (New York City time) on any date, (ii) the next Trading Day after the date oftransmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address set forth onthe signature pages attached hereto on a day that is not a Trading Day or later than 12:00 p.m. (New York City time) on any TradingDay, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (iv)upon actual receipt by the party to whom such notice is required to be given.29 5.5Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in awritten instrument signed, in the case of an amendment, by the Company and Purchasers holding at least 50.1% in interest of theNotes, including the holder of the Rosalind Note, then outstanding or, in the case of a waiver, by the party against whom enforcementof any such waived provision is sought, provided that if any amendment, modification or waiver disproportionately and adverselyimpacts a Purchaser (or group of Purchasers), the consent of such disproportionately impacted Purchaser (or group of Purchasers) shallalso be required. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemedto be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition orrequirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise ofany such right. Any proposed amendment or waiver that disproportionately, materially and adversely affects the rights and obligationsof any Purchaser relative to the comparable rights and obligations of the other Purchasers shall require the prior written consent of suchadversely affected Purchaser. Any amendment effected in accordance with accordance with this Section 5.5 shall be binding uponeach Purchaser and holder of Securities and the Company. 5.6Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not bedeemed to limit or affect any of the provisions hereof. 5.7No Assignment. No party may assign this Agreement or any rights or obligations hereunder. 5.8No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respectivesuccessors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, exceptas otherwise set forth in Sections 4.9 and 5.5. 5.9Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the TransactionDocuments shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, withoutregard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations,enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether broughtagainst a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall becommenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to theexclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of anydispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect tothe enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action orproceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding isimproper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process andconsents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail orovernight30 delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that suchservice shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit inany way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceedingto enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under Section 4.9, theprevailing party in such action, suit or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and othercosts and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. 5.10Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Securities. 5.11Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall beconsidered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered toeach other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered byfacsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of theparty executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signaturepage were an original thereof. 5.12Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction tobe invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remainin full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commerciallyreasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated bysuch term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would haveexecuted the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declaredinvalid, illegal, void or unenforceable. 5.13Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similarprovisions of) any of the other Transaction Documents, whenever the Purchaser exercises a right, election, demand or option under aTransaction Document and the Company does not timely perform its related obligations within the periods therein provided, then thePurchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice,demand or election in whole or in part without prejudice to its future actions and rights.5.14Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed,the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation),or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to theCompany of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also payany reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.31 5.15Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery ofdamages, the Purchaser and the Company will be entitled to specific performance under the Transaction Documents. The parties agreethat monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained inthe Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligationthe defense that a remedy at law would be adequate. 5.16Payment Set Aside. To the extent that the Company makes a payment or payments to the Purchaser pursuant to anyTransaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds ofsuch enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside,recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or anyother Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause ofaction), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived andcontinued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. 5.17Usury. To the extent it may lawful do so, the Company hereby agrees not to insist upon or plead or in any mannerwhatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted,now or at any time hereafter in force, in connection with any claim, action or proceeding that may be brought by the Purchaser in orderto enforce any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in anyTransaction Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents forpayments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”),and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with anyother sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed suchMaximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documentsis increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rateof interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date thereof forward,unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the MaximumRate is paid by the Company to the Purchaser with respect to indebtedness evidenced by the Transaction Documents, such excess shallbe applied by the Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner ofhandling such excess to be at the Purchaser’s election.5.18Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under theTransaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damagesand other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidateddamages or other amounts are due and payable shall have been cancelled. 32 5.19Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any rightrequired or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the nextsucceeding Business Day. 5.20Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity torevise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolvedagainst the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. Inaddition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject toadjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the CommonStock that occur after the date of this Agreement. 5.21WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTIONBROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY ANDINTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBYABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY. [Signature Pages Follow]33 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by theirrespective authorized signatories as of the date first indicated above. DELCATH SYSTEMS, INC. Address for Notice:By: 1633 Broadway Name: Suite 22C Title: New York, New York 10019 Attention: Barbra Keck With a copy to (which shall not constitute notice): E-Mail: bkeck@delcath.com Wexler Burkhart Hirschberg & Unger, LLP 377 Oak StreetConcourse LevelGarden City, NY 11530Attention: Jolie Kahne-mail: jkahn@WBHULAW.COM [REMAINDER OF PAGE INTENTIONALLY LEFT BLANKSIGNATURE PAGE FOR PURCHASER FOLLOWS]34 [PURCHASER SIGNATURE PAGES TO DELCATH SYSTEMS, INC. SECURITIES PURCHASE AGREEMENT] IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respectiveauthorized signatories as of the date first indicated above. Name of Purchaser: Rosalind Master Fund, LP Signature of Authorized Signatory of Advisor (Rosalind Advisors, Inc.) of Purchaser: Name of Authorized Signatory: Title of Authorized Signatory: Email Address of Authorized Signatory: Address for Notice to Purchaser: 175 Bloor Street EastSuite 1316, North TowerToronto, ON M4W 3R8Canada Subscription Amount: $180,000 EIN Number (if applicable): 35 SCHEDULE OF PURCHASERS (1)(2)(3)PurchaserPrincipal Amount ofNotesSubscription AmountRosalind Master Fund, LP180,000180,000 36 EXHIBIT A Form of Senior Secured Promissory Notes37 EXHIBIT B Form of Intellectual Property Security Agreement38 EXHIBIT C Form of Security Agreement39 EXHIBIT D Form of Subsidiary Guarantee40 DISCLOSURE SCHEDULES TO THE SECURITIES PURCHASE AGREEMENT BY AND AMONG DELCATH SYSTEMS, INC. AND EACH OF THE PURCHASERS SIGNATORY THERETO DATED April 18, 2019 These Sections (these “Sections”) of this Disclosure Schedule are numbered to correspond to the corresponding sections of theSecurities Purchase Agreement (the “Agreement”). These Sections have been prepared in accordance with, and subject to, thefollowing terms and conditions: (a)To the extent a Section is intended to qualify a representation or warranty of the Company contained in the Article III of theAgreement, the information and disclosures contained in such Section are intended only to qualify and limit such representation orwarranty and not in any way expand the scope or effect of such representation or warranty. (b)The disclosure of any item in any Section of this Disclosure Schedule will constitute disclosure for purposes of anotherSection if it is reasonably clear from a reading of the disclosure that such disclosure is applicable to such other Sections or Sub-Sections. (c)Inclusion of any item in a Section of this Disclosure Schedule does not constitute a determination by the Company that suchitem is material and shall not be deemed to establish a standard or materiality. No disclosure in any Section of this Disclosure Schedulerelating to any possible breach or violation of any agreement, law or any potential adverse contingency shall be construed as anadmission or indication that any such breach or violation exists or has actually occurred or that such adverse contingency will actuallyoccur. (d)Any capitalized terms not defined in this Disclosure Schedule shall have the meanings assigned thereto in theAgreement. Any section headings or titles used herein are included for convenience only and shall not be considered asrepresentations or warranties as to the type, character or content of the matters referred to thereunder.41 SCHEDULE 3.1(a) SUBSIDIARIES OF THE COMPANY 1. Delcath Holdings Limited2. Delcath Systems Limited3. Delcath Systems UK Limited4. Delcath Systems GmBH5. Delcath Systems B.V.42 SCHEDULE 3.1(b) Organization and Qualification The Company is not in good standing in the State of Delaware as a result of its inability to pay the franchise taxes due in March 2019.The Company is not in good standing in the State of New York as a result of its inability to pay taxes due in March 2019.43 SCHEDULE 3.1(d) ConflictsNone.44 SCHEDULE 3.1(g)(i) Capitalization A.Shares beneficially owned by Affiliates: 1,284,329B.11.8 million shares issued since most recent periodic report Rights of Participation: September 2017 Hudson Bay and AltoFebruary 2018: Registered Direct InvestorsJune 2018: Discover Fund Delcath Systems, Inc.Capitalization table as of April 16, 2019 Authorized Issued Treasury Outstanding Preferred Shares 10,000,000 - - - Common Shares 1,000,000,000 17,464,807 - 17,464,807 Fully diluted common shares: Feb 2015 Warrants ($0.01; exp 2/2020) 9 July 2015 Warrants ($0.01; exp 7/2020) 9 Oct 2016 Warrants ($0.01; exp 10/2021) 11 Feb 2018 Warrants ($10.00; exp 2/2024) 189,000 Pre-funded Warrants (Discover Fund; $0.01, exp through 6/2024) 16,615,317 June 2018 Warrants (Discover Fund, $4.00; exp 6/2023) 1,116,256 Pre-funded Warrants (Discover Fund; $0.01; exp through 7/2024) 12,981,926 July 2018 Warrants (Discover Fund, $4.00 exp 7/2023) 785,737 Pre-funded Warrants (Discover Fund; $0.01, exp through 8/2024) 23,777,381 August 2018 Warrants (Discover Fund, $1.75; exp 8/2023) 2,021,410 Pre-funded Warrants (Bigger; $0.01, exp through 9/2024) 830,854 Sept 2018 Warrants (Bigger, $1.75; exp 9/2023) 279,506 Options 1,250,000 Total shares reserved for warrants and options 59,847,416 Total shares issued and reserved: 77,312,223 Total shares available to issue: 922,687,777 45 SCHEDULE 3.1(g)(ii) Corporate Governance of Delcath Systems, Inc. Roger Stoll, Ph.D., ChairmanWilliam RueckertDr. Marco TagliettiDr. Jennifer SimpsonAudit Committee – William Rueckert, Chair; Roger StollCompensation Committee – Marco Taglietti, Chair; William RueckertNominating and Corp. Governance Committee – Roger Stoll, Chair; William Rueckert; Marco Taglietti46 SCHEDULE 3.1(h) Indebtedness 1. Letter of credit issued by Silicon Valley Bank to Kasowitz, Benson, Torres and Friedman LLP with face amount of $130,663.00. 2. Letter of credit issued by Silicon Valley Bank to SLG 810 7th Avenue Lessee LLC with face amount of $881,297.08. 3. Indebtedness in a maximum amount of $75,000 owed to Silicon Valley Bank under corporate credit card services agreement. 4. Indebtedness between Delcath Systems, Inc. and Delcath Holdings Limited pursuant to a License and Agreement to ShareIntangible Development Costs dated as of January 1, 2012. 5. Indebtedness of $5,478,559 between Delcath Systems, Inc. and Discover Growth Fund and Discover Growth Fund, LLC signatoryto Securities Purchase Agreements dated as of June 4, 2018; July 20, 2018; August 29, 2018; and a Note Purchase and ExchangeAgreement dated March 29, 2019 and the 8% Senior Secured Promissory Notes issued pursuant thereto. 6. Indebtedness of $469,975 between Delcath Systems, Inc. and the institutional investors signatory to Securities Purchase Agreementsdated as of September 21, 2018 and the 8% Senior Secured Convertible Promissory Notes issued pursuant thereto. Existing Liens 1. Liens of Silicon Valley Bank on account nos. 3301246486 and 3301264690, respectively, securing the letters of credit described innumbers 1 and 2 above. 2. Lien of Silicon Valley Bank account no. 3301464115 securing the Indebtedness described in number 3 above.3. Lien of the institutional investor securing the Obligations described in numbers 5 and 6 above.47 SCHEDULE 3.1(i) SEC Reports; Financial Statements The Company has not timely filed its Annual Report on Form 10-K for the year ended December 31, 2018.48 SCHEDULE 3.1(j) Material Changes; Undisclosed Events, Liabilities or Developments See Schedule 3.1(m).49 SCHEDULE 3.1(k) Litigation 1.In March 2019, the Company sued two affiliated Iroquois Funds and FirstFire seeking declaratory judgment, among otherremedies, that the February 2018 warrants issued to them are deemed to not including an “exploding” antidilution featureupon a down round financing. The suit was filed in New York State Supreme Court in NY County, NY.See Schedule 3.1(m) below for any potential claims.50 SCHEDULE 3.1(m) ComplianceUBC Demand Letter for $2,106,116.00.Payables to Roth Capital in the amount of $552,642.60.Notice of Default from Discover Growth Fund and Discover Growth Fund, LLC in respect of the Indebtedness listed in paragraph 5of Schedule 3.1(h).51 SCHEDULE 3.1(o) Title to AssetsSee Schedule 3.1(h).52 SCHEDULE 3.1(p) Material AgreementsSee Schedule 3.1(m).53 SCHEDULE 3.1(q) Intellectual Property None.54 SCHEDULE 3.1(r) Transactions with Affiliates and Employees Herein below are all back salaries and unreimbursed employee expenses through April 15, 2019: Jennifer Simpson$862,376Barbra Keck$536,181John Purpura$553,491All other employees$335,670 $2,287,718 55 SCHEDULE 3.1(s) Cash Payments None.56 SCHEDULE 3.1(u) Certain Fees Fees to Roth Capital Partners, LLC under waiver letter with Roth Capital Partners, LLCFees to Think Equity under Engagement Letter57 SCHEDULE 3.1(x) Registration Rights Warrants issued in February 2018September 21, 2018 Securities Purchase Agreement58 SCHEDULE 3.1(ee) AccountantsMarcum LLPGrant Thornton LLP (with respect to 2015, 2016 and 2017 audited financials only)59 SCHEDULE 3.1(oo) SenioritySee Schedule 3.1(h).60 SCHEDULE 3.1(pp) Off-balance Sheet Arrangements None.61 SCHEDULE 3.1(tt) Investor Relations62 SCHEDULE 4.8 Use of Proceeds General working capital purposes.63Exhibit 10.44 SECURITIES PURCHASE AGREEMENT This Securities Purchase Agreement (this “Agreement”) is dated as of April 26, 2019, by and among Delcath Systems, Inc.,a Delaware corporation (the “Company”), and the purchasers identified on the signature pages hereto (each, a “Purchaser,” or in theaggregate, the “Purchasers”). WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the SecuritiesAct of 1933, as amended (the “Securities Act”), Regulation S and Rule 506(b) promulgated thereunder, the Company desires to sell,and the Purchasers desire to purchase from the Company, the Securities (as defined herein). NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other goodand valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree asfollows: ARTICLE I.DEFINITIONS 1.1Definitions. In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwisedefined herein have the meanings given to such terms in the Transaction Documents (as defined herein), and (b) the following termshave the meanings set forth in this Section 1.1: “Action” shall have the meaning ascribed to such term in Section 3.1(k). “Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or isunder common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act. “BHCA” shall have the meaning ascribed to such term in Section 3.1(ll). “Board of Directors” means the board of directors of the Company. “Business Day” means any day except any Saturday, any Sunday, or any other day on which the Federal Reserve Bank ofNew York is closed. “Closing Date” means the Trading Day(s) on which all of the Transaction Documents have been executed and delivered bythe applicable parties thereto in connection with a Closing, and all conditions precedent to (i) the Purchaser’s obligations topay the Subscription Amount as to the Closing and (ii) the Company’s obligations to deliver the Securities as to the Closing,in each case, have been satisfied or waived. “Closing” means closing of the purchase and sale of the Securities pursuant to Section 2.2. “Commission” means the United States Securities and Exchange Commission.1 “Common Stock” means the common stock of the Company, par value $0.01 per share, and any other class of securities intowhich such securities may hereafter be reclassified or changed. “Disclosure Schedules” shall have the meaning ascribed to such term in Section 3.1. “Evaluation Date” shall have the meaning ascribed to such term in Section 3.1(t). “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgatedthereunder. “Exchange Transaction” shall have the meaning ascribed to such term in Section 4.15(b). “Exempt Issuance” means the issuance of (a) shares of Common Stock, restricted stock units or options to employees,officers, directors, advisors or independent contractors of the Company pursuant to any stock or option plan duly adopted forsuch purpose, (b) shares of Common Stock, warrants or options to advisors or independent contractors of the Company forcompensatory purposes, (c) securities exercisable or exchangeable for or convertible into shares of Common Stock issued andoutstanding on the date hereof, provided that such securities have not been amended since the date hereof to increase thenumber of such securities or to decrease the exercise price, exchange price or conversion price of such securities, (d)securities issuable pursuant to any contractual anti-dilution, most favored nations or similar obligations of the Company ineffect as of the date hereof, provided that such obligations have not been materially amended since the date of hereof, and (e)securities issued pursuant to acquisitions or any other strategic transactions approved by the Board of Directors, provided thatany such issuance shall not include a transaction in which the Company is issuing securities primarily for the purpose ofraising capital or to an entity whose primary business is investing in securities. “FCPA” means the Foreign Corrupt Practices Act of 1977, as amended. “Federal Reserve” shall have the meaning ascribed to such term in Section 3.1(ll).“GAAP” shall have the meaning ascribed to such term in Section 3.1(i). “Guarantors” mean collectively, the Subsidiaries of the Company who are party to the Subsidiary Guarantee. “Indebtedness” means except for Permitted Indebtedness, (a) any liabilities for borrowed money or amounts owed in excessof $100,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsementsand other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in theCompany’s consolidated balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments fordeposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any lease paymentsin excess of $100,000 due under leases required to be capitalized in accordance with GAAP. 2 “Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(q). “Intellectual Property Security Agreement” means that certain Intellectual Property Security Agreement required to bedelivered pursuant to Section 2.3 of this Agreement, in the form attached hereto as Exhibit B. “Liabilities” means all direct or indirect liabilities, Indebtedness and obligations of any kind of Company to the Purchaser,howsoever created, arising or evidenced, whether now existing or hereafter arising (including those acquired by assignment),absolute or contingent, due or to become due, primary or secondary, joint or several, whether existing or arising throughdiscount, overdraft, purchase, direct loan, participation, operation of law, or otherwise, including, but not limited to, pursuantto the Note, this Agreement and/or any of the other Transaction Documents, all accrued but unpaid interest on the Note, anyletter of credit, any standby letter of credit, and/or outside attorneys’ and paralegals’ fees or charges relating to the preparationof the Transaction Documents and the enforcement of the Purchaser’s rights, remedies and powers under this Agreement, theNote and/or the other Transaction Documents. “Liens” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction. “Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b). “Material Permits” shall have the meaning ascribed to such term in Section 3.1(n). “Maximum Rate” shall have the meaning ascribed to such term in Section 5.17. “Money Laundering Laws” shall have the meaning ascribed to such term in Section 3.1(qq). “Notes” means collectively, the 8% Senior Secured Promissory Notes issued by the Company to each Purchaser hereunder,each in the form of Exhibit A attached hereto. “Off-balance Sheet Arrangement” shall have the meaning ascribed to such term in Section 3.1(pp). “Permitted Indebtedness” means the letters of credit and secured accounts listed in Schedule 3.1(h). “Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture,limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. “Principal Amount” means, as to the Purchaser, the principal amount of the Notes set forth opposite such Purchaser’s name incolumn (2) on the Schedule of Purchasers attached hereto in United States Dollars.3 “Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informalinvestigation or partial proceeding, such as a deposition), whether commenced or threatened. “Purchaser Party” shall have the meaning ascribed to such term in Section 4.9. “Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e). “Rosalind Notes” means the Notes originally held by Rosalind Opportunities Fund I LP and Rosalind Master Fund LP. “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such rule may be amendedfrom time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effectas such rule. “SEC Reports” shall have the meaning ascribed to such term in Section 3.1(i). “Securities” means the Notes to be issued to the Purchaser pursuant to this Agreement. “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. “Security Agreement” means the Security Agreement dated on the date hereof by and among the Company, the Company’sSubsidiaries, and the Purchaser, as hereinafter amended and/or supplemented altogether with all exhibits, schedules andannexes to such Security Agreement, pursuant to which all Liabilities of the Company to the Purchaser under the TransactionDocuments are secured by the Collateral (as defined in the Security Agreement), which security interest in the Collateral shallbe perfected by the Purchaser’s UCC-1, filed with the Secretary of State of the State of Delaware, to the extent perfectable bythe filing of a UCC-1 Financing Statement, or if applicable, a UCC-3 Financing Statement Amendment and such otherdocuments and instruments related thereto, which Security Agreement is annexed hereto as Exhibit C. “Shell Company” means an entity that fits within the definition of “shell company” under Section 12b-2 of the Exchange Actand Rule 144. “Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act. “Subscription Amount” means, as to the Purchaser, the aggregate amount to be paid for the Notes purchased hereunder asspecified below the Purchaser’s name on the signature page of this Agreement and next to the heading “SubscriptionAmount,” in United States dollars and in immediately available funds. 4 “Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, also includeany direct or indirect subsidiary of the Company formed or acquired after the date hereof. “Subsidiary Guarantee” means the Subsidiary Guarantee, dated as of the date hereof, pursuant to which the Subsidiaries havejointly and severally agreed to guarantee and act as surety for the Company’s obligation to repay the Notes, in the formattached hereto as Exhibit D. “Third Party Exchange Transfer” shall have the meaning ascribed to such term in Section 4.14(b). “Trading Day” means a day on which the principal Trading Market is open for trading. “Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted fortrading on the date in question: the NYSE American; the Nasdaq Capital Market; the Nasdaq Global Market; the NasdaqGlobal Select Market; the New York Stock Exchange; OTC Markets or the OTC Bulletin Board (or any successors to any ofthe foregoing). “Transaction Documents” means this Agreement, the Notes, the Security Agreement, the Intellectual Property SecurityAgreement, the Subsidiary Guarantee and all exhibits and schedules thereto and hereto and any other documents oragreements executed in connection with the transactions contemplated hereunder. “Variable Rate Transaction” shall have the meaning ascribed to such term in Section 4.14(a). ARTICLE II.PURCHASE AND SALE 2.1Purchase. On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent withthe execution and delivery of this Agreement by the parties hereto, the Company shall sell and issue to each Purchaser, and eachPurchaser shall purchase, severally and not jointly, from the Company, Notes with an aggregate Principal Amount equal to the amountset forth opposite such Purchaser’s name in column (2) on the Schedule of Purchasers attached hereto. The purchase of the Notes willbe completed in a single tranche as provided herein. 2.2Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, concurrent with the executionand delivery of this Agreement by the parties hereto, the Company agrees to sell, and each Purchaser agrees to purchase, theSubscription Amount of Notes as set forth on the signature page hereto executed by such Purchaser. At the Closing, each Purchasershall deliver to the Company, via wire transfer to an account designated by the Company, immediately available funds equal to suchPurchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser, and the Company shall deliverto such Purchaser its Notes as set forth in Section 2.3(a), and the Company and such Purchaser shall deliver the other items set forth inSection 2.3 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.3 and 2.4 for Closing,such Closing shall be undertaken remotely by electronic exchange of Closing documentation. There may be multiple closings so longas at each Closing the obligations under Section 2.3 are met. 5 2.3Deliveries. (a)On or prior to the Closing Date (except as otherwise agreed by the Purchaser), the Company shall deliver or causeto be delivered to each Purchaser the following: (i)this Agreement duly executed by the Company; (ii)the Notes with an aggregate Principal Amount equal to the amount set forth opposite such Purchaser’s name incolumn (2) on the Schedule of Purchasers attached hereto, registered in the name of the Purchaser; (iii)the Security Agreement, duly executed by the Company (and for all Closings after the first Closing,additional Purchasers shall merely sign a signature page and be an additional party to the Security Agreement); (iv) the Intellectual Property Security Agreement, duly executed by the Company (and for all Closings afterthe first Closing, additional Purchasers shall merely sign a signature page and be an additional party to theIntellectual Property Security Agreement); (v) the Subsidiary Guarantee, duly executed by the Company’s Subsidiaries (and for all Closings after thefirst Closing, additional Purchasers shall merely sign a signature page and be an additional party to the SubsidiaryGuarantee); (vi)[Reserved]; (vii)the opinion of Wexler Burkhart Hirschberg & Unger, LLP, the Company’s counsel, dated as of theClosing Date; (viii)[Reserved]; (ix)a certificate evidencing the Company’s qualification as a foreign corporation and good standing issuedby the Secretary of State (or comparable office) of each jurisdiction, if any, in which the Company conductsbusiness and is required to so qualify, as of a date within ten (10) days of the Closing Date; (x)a certificate executed by the Secretary of the Company and dated as of the Closing Date, as to (i) theresolutions, as adopted by the Board of Directors in a form reasonably acceptable to the Purchasers, approving (A)the entering into and performance of this Agreement and the other Transaction Documents and the issuance,offering and sale of the Securities and (B) the performance of the Company of its obligations under the TransactionDocuments contemplated therein, (ii) referencing links to the Company’s amended and restated certificate ofincorporation, as amended, (iii) referencing links to the Company’s amended and restated by-laws, each as in effectat the Closing and (iv) attaching a certificate of incumbency;6 (xi)a certificate executed by the Secretary of the each Guarantor and dated as of the Closing Date, as to (i)the resolutions, as adopted by the board of directors of such Guarantor in a form reasonably acceptable to thePurchasers, approving (A) the entering into and performance of Transaction Documents to which it is a party and(B) the performance of Guarantor of its obligations under the Transaction Documents to which it is a partycontemplated therein, (ii) referencing links to Guarantor’s constating documents and (iii) attaching a certificate ofincumbency; and (xii)such other documents, instruments or certificates relating to the transactions contemplated by thisAgreement as such Purchaser or its counsel may reasonably request. (b)On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company, asapplicable, the following: (i) this Agreement, duly executed by the Purchaser; (ii) the Purchaser’s Subscription Amount by wire transfer to the account specified in writing by theCompany; (iii) the Security Agreement, duly executed by the Purchaser; and (iv) the Intellectual Property Security Agreement, duly executed by the Purchaser. 2.4Closing Conditions. (a)The obligations of the Company hereunder in connection with the Closing are subject to the following conditionsbeing met: (i) the accuracy in all material respects as at Closing Date of the representations and warranties of thePurchaser contained herein (unless as of a specific date therein in which case they shall be accurate as of such date); (ii) all obligations, covenants and agreements of the Purchaser required to be performed at or prior to theClosing Date shall have been performed; and (iii) the delivery by the Purchaser of the items set forth in Section 2.3(b) of this Agreement. (b)The respective obligations of each Purchaser hereunder in connection with the Closing are subject to the followingconditions being met: 7 (i)the accuracy in all material respects when made as to the Closing Date of the representations andwarranties of the Company contained herein (unless as of a specific date therein); (ii)all obligations, covenants and agreements of the Company required to be performed at or prior to theClosing Date shall have been performed; (iii)the delivery by the Company of the items set forth in Section 2.3(a) of this Agreement; (iv)there is no existing Event of Default (as defined in the Notes) and no existing event which, with thepassage of time or the giving of notice, would constitute an Event of Default; (v)there is no breach of any obligations, covenants and agreements under the Transaction Documents and noexisting event which, with the passage of time or the giving of notice, would constitute a breach under theTransaction Documents; (vi)there shall have been no Material Adverse Effect with respect to the Company since the date hereof; (vii)from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspendedby the Commission or the Company’s principal Trading Market and, at any time prior to the Closing Date, tradingin securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum pricesshall not have been established on securities whose trades are reported by such service, or on any Trading Market,nor shall a banking moratorium have been declared either by the United States or New York State authorities norshall there have occurred any material outbreak or escalation of hostilities or other national or international calamityof such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, inthe reasonable judgment of the Purchaser, and without regard to any factors unique to the Purchaser, makes itimpracticable or inadvisable to purchase the Securities at the Closing; (viii) [reserved]; (ix) [reserved]; and (x)any other conditions contained herein or the other Transaction Documents, including, without limitationthose set forth in Section 2.3 herein. 2.5Minimum and Maximum. Each Purchaser must purchase Securities for a minimum subscription amount of at least$100,000. Provided, however, that if necessary to meet Company’s existing obligations under rights of participation, the minimumsubscription amount per party may be reduced pro rata to the extent necessary to enable all persons with such rights that desire toparticipate to so participate. The aggregate subscription amount for all securities to all Purchasers may not exceed $4,000,000. 8 ARTICLE III.REPRESENTATIONS AND WARRANTIES 3.1Representations and Warranties of the Company. Except as set forth in the disclosure schedules attached hereto (the“Disclosure Schedules”), which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or otherwisemade herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules, the Company (whichfor purposes of this Section 3.1 means the Company and all of its Subsidiaries) hereby makes the following representations andwarranties to each Purchaser as of the Closing Date: (a)Subsidiaries. All of the direct and indirect Subsidiaries and parent entities of the Company are set forth onSchedule 3.1(a) hereto. The Company owns, directly or indirectly, all of the capital stock or other equity interests of eachSubsidiary free and clear of any Liens, other than as set forth on Schedule 3.1(a) hereto, and all of the issued and outstandingshares of capital stock or other equity interests of each Subsidiary are validly issued and are fully paid, non-assessable andfree of preemptive and similar rights to subscribe for or purchase securities. (b)Organization and Qualification. The Company is an entity duly incorporated or otherwise organized and validlyexisting, and, other than as set forth on Schedule 3.1(b) hereto, the Company is in good standing, under the laws of thejurisdiction of its incorporation or organization, as applicable, with the requisite power and authority to own and use itsproperties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary or parententity of the Company is in violation or default of any of the provisions of its respective certificate or articles of incorporation,bylaws or other organizational or charter documents. The Company is duly qualified to conduct business and is in goodstanding as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or propertyowned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the casemay be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity orenforceability of any Transaction Document; (ii) a material adverse effect on the results of operations, assets, business,prospects or condition (financial or otherwise) of the Company, its parent entities and the Subsidiaries, taken as a whole; or(iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligationsunder any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been institutedin any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority orqualification. (c)Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and toconsummate the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwise tocarry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and each of the otherTransaction Documents by the Company and the consummation by it of the transactions contemplated hereby and therebyhave been duly authorized by all necessary action on the part of the Company and no further action is required by theCompany, the9 Board of Directors or the Company’s stockholders in connection herewith or therewith other than in connection with theRequired Approvals. This Agreement and each other Transaction Documents to which it is a party has been (or upondelivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof andthereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance withits terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization,moratorium and other laws of general application affecting enforcement of creditors’ rights generally; (ii) as limited by lawsrelating to the availability of specific performance, injunctive relief or other equitable remedies; and (iii) insofar asindemnification and contribution provisions may be limited by applicable law. (d)No Conflicts. The execution, delivery and performance by the Company of this Agreement and the otherTransaction Documents to which it is a party, the issuance and sale of the Securities and the consummation by it of thetransactions contemplated hereby and thereby do not and will not, except as set forth on Schedule 3.1(d): (i) conflict with orviolate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or otherorganizational or charter documents; (ii) conflict with, or constitute a default (or an event that with notice or lapse of time orboth would become a default) under, result in the creation of any Lien (except Liens in favor of the Purchaser) upon any ofthe properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment,acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or otherinstrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or anySubsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected; or (iii) subjectto the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction,decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (includingfederal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is boundor affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in aMaterial Adverse Effect. (e)Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization ororder of, give any notice to, or make any filing or registration with, any court or other federal, state, local or othergovernmental authority or other Person in connection with the execution, delivery and performance by the Company of theTransaction Documents, other than: (i) the filings required pursuant to Section 4.13 of this Agreement; (ii) the notice and/orapplication(s) to each applicable Trading Market for the issuance and sale of the Securities in the time and manner requiredthereby; and (iii) the filing of Form D with the Commission and such filings as are required to be made under applicable statesecurities laws (collectively, the “Required Approvals”). 10 (f)Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with theapplicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liensimposed by the Company other than restrictions on transfer provided for in the Transaction Documents. (g)Capitalization; Corporate Governance. (i)The capitalization of the Company is as set forth on Schedule 3.1(g)(i), which Schedule 3.1(g)(i) shallalso include (A) the number of shares of Common Stock owned beneficially, and of record, by Affiliates of theCompany as of the date hereof and (B) the number of authorized and reserved shares of capital stock of theCompany. The Company has not issued capital stock since its most recently filed periodic report under theExchange Act except as set forth on Schedule 3.1(g)(i), except the issuance of shares of Common Stock toemployees pursuant to the Company’s employee stock purchase plans and except pursuant to the conversionand/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic reportunder the Exchange Act except as set forth on Schedule 3.1(g)(i). No Person has any right of first refusal,preemptive right, right of participation, or any similar right to participate in the transactions contemplated by theTransaction Documents except as set forth on Schedule 3.1(g)(i). There are no outstanding options, warrants, scriprights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights orobligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for oracquire any shares of Common Stock, or contracts, commitments, understandings or arrangements by which theCompany or any Subsidiary is or may become bound to issue additional shares of Common Stock or CommonStock Equivalents except as set forth on Schedule 3.1(g)(i). The issuance and sale of the Securities will notobligate the Company to issue shares of Common Stock or other securities to any Person and will not result in aright of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any ofsuch securities except as set forth on Schedule 3.1(g)(i). All of the outstanding shares of capital stock of theCompany are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance withall federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptiverights or similar rights to subscribe for or purchase securities. No further approval or authorization of anystockholder, the Board of Directors or others is required for the issuance and sale of the Securities. There are nostockholders’ agreements, voting agreements or other similar agreements with respect to the Company’s capitalstock to which the Company is a party or, to the knowledge of the Company, between or among any of theCompany’s stockholders. (ii)The names and titles of each of the Company’s principal officers, directors and beneficial holders of atleast five percent (5%) of the outstanding shares of each class of the Company’s capital stock on a fully dilutedbasis are as set forth on Schedule 3.1(g)(ii), which Schedule 3.1(g)(ii) shall also include each committee ofdirectors as well as the names and titles of each director currently serving on each such committee.11 (h)Indebtedness. Schedule 3.1(h) sets forth as of the date hereof all outstanding secured and unsecured Indebtednessof the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. Except as set forth onSchedule 3.1(h), neither the Company nor any Subsidiary is in default with respect to any Indebtedness. (i)SEC Reports; Financial Statements. Other than as set forth on Schedule 3.1(i) hereto, the Company has filed allreports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act andthe Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two (2) years preceding the date hereof (theforegoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectivelyreferred to herein as the “SEC Reports”). As of their respective dates, the SEC Reports complied in all material respects withthe requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed,contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary inorder to make the statements therein, in the light of the circumstances under which they were made, not misleading. TheCompany has never been an issuer subject to Rule 144(i) under the Securities Act. The financial statements of the Companyincluded in the SEC Reports comply in all material respects with applicable accounting requirements and the rules andregulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have beenprepared in accordance with United States generally accepted accounting principles applied on a consistent basis during theperiods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and exceptthat unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respectsthe financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results ofoperations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. (j)Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financialstatements included within the SEC Reports, except as specifically disclosed in the Company’s Annual Report on Form 10-K,including such latest audited financial statements, or in a subsequent SEC Report filed prior to the date hereof and except asset forth in Schedule 3.1(g), Schedule 3.1(m), and Schedule 3.1(j): (i) there has been no event, occurrence or developmentthat has had or that could reasonably be expected to result in a Material Adverse Effect; (ii) the Company has not incurred anyliabilities or obligations (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinarycourse of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financialstatements pursuant to GAAP or disclosed in filings made with the Commission; (iii) the Company has not altered its methodof accounting; (iv) the Company has not declared or made any dividend or distribution of cash or other property to itsstockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock; (v) theCompany has not sold, assigned or transferred any other tangible assets or Intellectual Property Rights, or canceled any debtsor claims, except in the ordinary course of business, (vi) the Company12 has not suffered any substantial loss contingencies or waived any rights of material value, whether or not in the ordinarycourse of business, or suffered the loss of any material amount of prospective business, (vii) the Company has not entered intoany acquisition or financing transactions, whether or not in the ordinary course of business, other than with respect to theTransaction Documents and (v) the Company has not issued any equity securities to any officer, director or Affiliate, noevent, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur orexist with respect to the Company or its Subsidiaries or their respective businesses, properties, operations, assets or financialcondition, that would be required to be disclosed by the Company under applicable securities laws at the time thisrepresentation is made or deemed made that has not been publicly disclosed at least one (1) Trading Day prior to the date thatthis representation is made. (k)Litigation. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to theknowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective propertiesexcept as set forth in Schedule 3.1(k), or against or affecting the Company’s current or former officers or directors in theircapacity as such, before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal,state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity orenforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, haveor reasonably be expected to result in a Material Adverse Effect, and neither the Company nor any Subsidiary, nor anydirector or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federalor state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company,there is not pending or contemplated, any investigation by the Commission involving the Company or any current or formerdirector or officer of the Company that is likely to lead to action that can reasonably be expected to result in a MaterialAdverse Effect. There has not been, and to the knowledge of the Company, there is not pending or contemplated, anyinvestigation by the Commission involving the Company or any current or former director or officer of the Company. TheCommission has not issued any stop order or other order suspending the effectiveness of any registration statement filed bythe Company or any Subsidiary under the Exchange Act or the Securities Act. (l)Labor Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any ofthe employees of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of theCompany’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with theCompany or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargainingagreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. To theknowledge of the Company, no executive officer of the Company or any Subsidiary, is, or is now expected to be, in violationof any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and thecontinued employment of13 each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of theforegoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign lawsand regulations relating to employment and employment practices, terms and conditions of employment and wages and hours,except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have aMaterial Adverse Effect. (m)Compliance. Neither the Company nor any Subsidiary, except as set forth in Schedule 3.1(m): (i) is in defaultunder or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, wouldresult in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of aclaim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement orinstrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation hasbeen waived); (ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority; or(iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including withoutlimitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety,product quality and safety and employment and labor matters, except in each case as could not have or reasonably beexpected to result in a Material Adverse Effect. (n)Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issuedby the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses asdescribed in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in aMaterial Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice ofproceedings relating to the revocation or modification of any Material Permit. (o)Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real propertyowned by them and good and marketable title in all personal property owned by them that is material to the business of theCompany and the Subsidiaries, in each case free and clear of all Liens, except as set forth in Schedule 3.1(o) and except for(i) Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposedto be made of such property by the Company and the Subsidiaries and (ii) Liens for the payment of federal, state or othertaxes, for which appropriate reserves have been made therefor in accordance with GAAP and the payment of which is neitherdelinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries areheld by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance. 14 (p)Material Agreements. Except for the Transaction Documents (with respect to clause (i) only) or as set forth onSchedule 3.1(p) hereto, or as would not be reasonably likely to have a Material Adverse Effect, (i) the Company and each ofits Subsidiaries have performed all obligations required to be performed by them to date under any written or oral contract,instrument, agreement, commitment, obligation, plan or arrangement, filed or required to be filed with the Commission (the“Material Agreements”), (ii) neither the Company nor any of its Subsidiaries has received any notice of default under anyMaterial Agreement and, (iii) to the best of the Company's knowledge, neither the Company nor any of its Subsidiaries is indefault under any Material Agreement now in effect. (q)Intellectual Property. The Company and the Subsidiaries have, or have rights to use, all patents, patentapplications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licensesand other intellectual property rights and similar rights as necessary or required for use in connection with their respectivebusinesses as presently conducted and which the failure to so have could have a Material Adverse Effect (collectively, the“Intellectual Property Rights”). Neither the Company nor any Subsidiary has received a notice (written or otherwise) that anyof the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or beabandoned, within two (2) years from the date of this Agreement. Neither the Company nor any Subsidiary has received,since the date of the latest audited financial statements included within the SEC Reports, a written notice of a claim orotherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except ascould not have or could not reasonably be expected to have a Material Adverse Effect. To the knowledge of the Company,all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of theIntellectual Property Rights except as disclosed in Schedule 3.1(q). The Company and its Subsidiaries have taken reasonablesecurity measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure todo so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. (r)Transactions with Affiliates and Employees. Except as disclosed in Schedule 3.1(r), none of the officers ordirectors of the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Companyor any Subsidiary is presently a party to any transaction with the Company or any Subsidiary (other than for services asemployees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing ofservices to or by, providing for rental of real or personal property to or from providing for the borrowing of money from orlending of money to, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledgeof the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer,director, trustee, stockholder, member or partner, in each case in excess of $120,000 other than for: (i) payment of salary orconsulting fees for services rendered; (ii) reimbursement for expenses incurred on behalf of the Company; and (iii) otheremployee benefits. 15 (s)Payments of Cash. Except as disclosed on Schedule 3.1(s), neither the Company, its directors or officers, or anyAffiliates or agents of the Company, have withdrawn or paid cash to any vendor in an aggregate amount that exceeds FiveThousand Dollars ($5,000) for any purpose. (t)Sarbanes-Oxley; Internal Accounting Controls. The Company and the Subsidiaries are in compliance with any andall applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and allapplicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as ofthe Closing Date. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to providereasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations;(ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and tomaintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specificauthorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals andappropriate action is taken with respect to any differences. The Company and the Subsidiaries have established disclosurecontrols and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiariesand designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company inthe reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the timeperiods specified in the Commission’s rules and forms. The Company’s certifying officers have evaluated the effectivenessof the disclosure controls and procedures of the Company and the Subsidiaries as of the end of the period covered by themost recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in itsmost recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness ofthe disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, therehave been no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) that havematerially affected, or is reasonably likely to materially affect, the internal control over financial reporting of the Companyand its Subsidiaries. (u)Certain Fees. Other than as set forth on Schedule 3.1(u), no brokerage or finder’s fees or commissions are or willbe payable by the Company or any Subsidiaries to any broker, financial advisor or consultant, finder, placement agent,investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. ThePurchaser shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of otherPersons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated bythe Transaction Documents. (v)Private Placement. Assuming the accuracy of each Purchaser’s representations and warranties set forth in Section3.2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to thePurchaser as contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules andregulations of the Trading Market. 16 (w)Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment forthe Securities, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Actof 1940, as amended. The Company shall conduct its business in a manner so that it will not become an “investmentcompany” subject to registration under the Investment Company Act of 1940, as amended. (x)Registration Rights. Other than as set forth on Schedule 3.1(x) and pursuant to this Agreement, no Person has anyright to cause the Company to effect the registration under the Securities Act of any securities of the Company or anySubsidiaries. (y)Listing and Maintenance Requirements; Trading Market Regulation. The Common Stock is registered pursuant toSection 12(b) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely tohave the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company receivedany notification that the Commission is contemplating terminating such registration. Except as disclosed in the SEC reports,the Company has not, in the twelve (12) months preceding the date hereof, received notice from any Trading Market onwhich the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listingor maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in theforeseeable future continue to be, in compliance with all such listing and maintenance requirements. (z)Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, ifany, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distributionunder a rights agreement) or other similar anti-takeover provision under the Company’s amended and restated certificate ofincorporation, as amended (or similar charter documents), or the laws of its state of incorporation that is or could becomeapplicable to the Purchaser as a result of the Purchaser and the Company fulfilling their obligations or exercising their rightsunder the Transaction Documents, including without limitation as a result of the Company’s issuance of the Securities and thePurchaser’s ownership of the Securities. (aa)Disclosure. All of the disclosure furnished by or on behalf of the Company to the Purchaser regarding theCompany and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the DisclosureSchedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to stateany material fact necessary in order to make the statements made therein, in light of the circumstances under which they weremade, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of thisAgreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required tobe stated therein or necessary in order to make the statements therein, in light of the circumstances under which they weremade and when made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made anyrepresentations or warranties with respect to the transactions contemplated hereby other than those specifically set forth inSection 3.2 hereof.17 (bb)No Integrated Offering. Assuming the accuracy of the Purchaser’s representations and warranties set forth inSection 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly orindirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that wouldcause this offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Actwhich would require the registration of any such securities under the Securities Act, or (ii) any applicable shareholderapproval provisions of any Trading Market on which any of the securities of the Company are listed or designated. (cc)No General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered orsold any of the Securities by any form of general solicitation or general advertising. The Company has offered the Securitiesfor sale only to the Purchaser and certain other “accredited investors” within the meaning of Rule 501 under the SecuritiesAct. (dd)Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company orany Subsidiary, any agent or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly,used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domesticpolitical activity; (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreignor domestic political parties or campaigns from corporate funds; (iii) failed to disclose fully any contribution made by theCompany or any Subsidiary (or made by any person acting on its behalf of which the Company is aware) which is inviolation of law; or (iv) violated in any material respect any provision of FCPA. (ee)Accountants. The Company’s accounting firm is set forth on Schedule 3.1(ee). To the knowledge and belief ofthe Company, such accounting firm is a registered public accounting firm as required by the Exchange Act. (ff)No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, orreasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly orpresently employed by the Company and the Company is current with respect to any fees owed to its accountants andlawyers which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents. (gg)Acknowledgment Regarding Purchaser’s Purchase of Securities. The Company acknowledges and agrees thatthe Purchaser is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and thetransactions contemplated thereby. The Company further acknowledges that the Purchaser is not acting as a financial advisoror fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactionscontemplated thereby and any advice given by the Purchaser or any of their respective representatives or agents in connection18 with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchaser’s purchase ofthe Securities. The Company further represents to the Purchaser that the Company’s decision to enter into this Agreementand the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplatedhereby by the Company and its representatives. (hh)Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken,directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any securityof the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensationfor soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for solicitinganother to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid tothe Company’s placement agent in connection with the placement of the Securities. (ii)Stock Option Plans. The Company has not knowingly granted, and there is no and has been no Company policyor practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, therelease or other public announcement of material information regarding the Company or its Subsidiaries or their respectivefinancial results or prospects. (jj)Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge,any director, officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctionsadministered by the Office of Foreign Assets Control of the U.S. Treasury Department. (kk)U.S. Real Property Holding Corporation. The Company is not and has never been a U.S. real property holdingcorporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall socertify upon Purchaser’s request. (ll)Bank Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the BankHolding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the FederalReserve System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls,directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-fivepercent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the FederalReserve. Neither the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the managementor policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. (mm)Promotional Stock Activities. Neither the Company, its officers, its directors, nor any affiliates or agents of theCompany have engaged in any stock promotional activity that could give rise to a complaint, inquiry, or trading suspensionby the Commission alleging (i) a violation of the anti-fraud provisions of the federal securities laws, (ii) violations of the anti-touting provisions, (iii) improper “gun-jumping”; or (iv) promotion without proper disclosure of compensation.19 (nn)Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected toresult in a Material Adverse Effect, the Company (i) has made or filed all United States federal, state and local income and allforeign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) haspaid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due onsuch returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of allmaterial taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaidtaxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Companyknow of no basis for any such claim. (oo)Seniority. As of the Closing Date, other than as set forth on Schedule 3.1(oo), no Indebtedness or other claimagainst the Company is senior to the Notes in right of payment, whether with respect to interest or upon liquidation ordissolution, or otherwise, other than indebtedness secured by purchase money security interests (which is senior only as tounderlying assets covered thereby) and capital lease obligations (which is senior only as to the property covered thereby). (pp)No “Off-balance Sheet Arrangements”. Other than as set forth in Schedule 3.1(pp), neither the Company nor anyof its Affiliates is involved in any “Off-balance Sheet Arrangements”. For purposes hereof an “Off-balance SheetArrangement” means any transaction or contract to which an entity unconsolidated with the Company or any of its Affiliatesis a party and under which either the Company or any such Affiliate has: (i) any obligation under a guarantee contractpursuant to which the Company or any of its Affiliates could be required to make payments to the guaranteed party, includingany standby letter of credit, market value guarantee, performance guarantee, indemnification agreement, keep-well or othersupport agreement; (ii) any retained or contingent interest in assets transferred to such unconsolidated entity that serves ascredit, liquidity or market risk support to the entity in respect of such assets; (iii) any variable interest held in suchunconsolidated entity where such entity provides financing, liquidity, market risk or credit risk support to, or engages inleasing, hedging or research and development services with the Company of any of its Affiliates; and (iv) any liability orobligation of the same nature as those described in clauses (i) through (iii) of this sentence even if of a different name (whetherabsolute, accrued, contingent or otherwise) that would not be required to be reflected in the Company or any of its Affiliates’financial statements. (qq)Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all timesin compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign TransactionsReporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder(collectively, the “Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmentalagency, authority or body or any arbitrator involving the Company or any Subsidiary with respect to the Money LaunderingLaws is pending or, to the knowledge of the Company or any Subsidiary, threatened.20 (rr)Subsidiary Rights. The Company has the unrestricted right to vote, and (subject to limitations imposed byapplicable law) to receive dividends and distributions on, all capital securities of each of its Subsidiaries as owned by theCompany or any Subsidiary. (ss)Shell Company Status. The Company has never been, and is not presently, an issuer identified as a ShellCompany. (tt)Investor Relations. Other than as set forth in Schedule 3.1(tt), the Company is not currently a party, nor does itintend to become a party, to any agreement pursuant to which the Company will receive investor relations services. (uu)Full Disclosure. No representation or warranty by the Company in this Agreement and no statement contained inthe Disclosure Schedules to this Agreement or any certificate or other document furnished or to be furnished to thePurchasers pursuant to this Agreement contains any untrue statement of a material fact, or omits to state a material factnecessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading. (vv)No Bad Actor Disqualification Event. After reasonable inquiry, none of the “Bad Actor” disqualifying eventsdescribed in Rule 506(d)(l) under the Securities Act (a “Disqualification Event”) is applicable to Company or to Company’sknowledge any of its Affiliates, except a Disqualification Event as to which Rule 506(d)(2)(iii) applies. (ww)Company has not, and will not, engage in any directed selling efforts in the United States in respect of theSecurities. Company is offering and selling the Securities only to non U.S. Persons, in compliance with the offeringrestriction requirements of Regulation S. 3.2Representations and Warranties of the Purchaser. Each Purchaser, for itself and for no other Purchaser, hereby representsand warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein in whichcase they shall be accurate as of such date): (a)Organization; Authority. The Purchaser is either an individual or an entity duly incorporated or formed, validlyexisting and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate,partnership, limited liability company or similar power and authority to enter into and to consummate the transactionscontemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. Theexecution and delivery of the Transaction Documents and performance by the Purchaser of the transactions contemplated bythe Transaction Documents have been duly authorized by all necessary corporate, partnership, limited liability company orsimilar action, as applicable, on the part of the Purchaser. Each Transaction Document to which it is a party has been dulyexecuted by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the validand legally binding obligation of the Purchaser, enforceable against it in accordance21 with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization,moratorium and other laws of general application affecting enforcement of creditors’ rights generally; (ii) as limited by lawsrelating to the availability of specific performance, injunctive relief or other equitable remedies; and (iii) insofar asindemnification and contribution provisions may be limited by applicable law. (b)Own Account. The Purchaser understands that the Securities are “restricted securities” and have not beenregistered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its ownaccount (this representation and warranty not limiting the Purchaser’s right to sell the Securities in compliance with applicablefederal and state securities laws). The Purchaser is acquiring the Securities hereunder in the ordinary course of its business. (c)Purchaser Status. At the time the Purchaser was offered the Securities, it was, and as of the date hereof it is an“accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act. (d)Experience of the Purchaser. The Purchaser, either alone or together with its representatives, has such knowledge,sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of theprospective investment in the Securities, and has so evaluated the merits and risks of such investment. The Purchaser is ableto bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of suchinvestment. (e)General Solicitation. The Purchaser is not purchasing the Securities as a result of any advertisement, article, noticeor other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast overtelevision or radio or presented at any seminar or any other general solicitation or general advertisement. (f)Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, thePurchaser has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with thePurchaser, executed any purchases or sales, including Short Sales, of the securities of the Company during the periodcommencing as of the time that the Purchaser first received a term sheet (written or oral) from the Company or any otherPerson representing the Company setting forth the material terms of the transactions contemplated hereunder and endingimmediately prior to the execution hereof. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managedinvestment vehicle whereby separate portfolio managers manage separate portions of the Purchaser’s assets and the portfoliomanagers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions ofthe Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by theportfolio manager that made the investment decision to purchase the Securities covered by this Agreement. Other than toother Persons party to this Agreement, the Purchaser has maintained the confidentiality of all disclosures made to it inconnection with this transaction (including the existence and terms of this transaction).22 (g)Non U.S. Person. The Purchaser is not a “U.S. Person” as that term is defined in Regulation S under theSecurities Act, and is not acquiring the Securities for the account or beneficial ownership of any U.S. Person. (h)No Short Sales. Neither Purchaser nor any Affiliate of Purchaser (i) holds any short position in the CommonStock, (ii) has ever engaged in, directly or indirectly, any Short Sale of the Common Stock, or (iii) has ever engaged in,directly or indirectly, any hedging transaction with regard to the Common Stock. (i)Not a Bad Actor. After reasonable inquiry, none of the “Bad Actor” disqualifying events described in Rule 506(d)(l) under the Securities Act is applicable to the Purchaser or any of its Affiliates. The Purchaser is not now, and has neverbeen, subject to any final cease and desist order or any penalty from the Commission or any court of competent jurisdictionfor any violation of any provision of the Securities Act or the Exchange Act, or any of the regulations promulgatedthereunder. (j)Not an Affiliate. The Purchaser is not now, and has never been, an Affiliate of the Company or any otherPurchaser. The Purchaser is not now, and has never been, part of any group of Persons that would be required underSection 13(d) of the Exchange Act, or the rules and regulations promulgated thereunder, to file a statement on Schedule 13Dor Schedule 13G with regard to the Company. The Company acknowledges and agrees that the representations contained in Section 3.2 shall not modify, amend or affect thePurchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations andwarranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connectionwith this Agreement or the consummation of the transaction contemplated hereby. ARTICLE IV.OTHER AGREEMENTS OF THE PARTIES 4.1Transfer Restrictions. (a)The Securities may only be disposed of in compliance with state and federal securities laws. In connection withany transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to anAffiliate of a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may require thetransferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to theCompany, at the Company’s sole expense in the form and substance of which opinion shall be reasonably satisfactory to theCompany, to the effect that such transfer does not require registration of such transferred Securities under the SecuritiesAct. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement andshall have the rights and obligations of a Purchaser under this Agreement. 23 (b)The Purchaser agrees to the imprinting, so long as is required by this Section 4.1, of a legend on any of theSecurities in the following form: THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSIONOR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON REGULATION S OR ANEXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TOREGULATION S OR AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT ORPURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THEREGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLESTATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFERORTO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THECOMPANY. The Company acknowledges and agrees that the Purchaser may from time to time pledge, pursuant to a bona fide marginagreement with a registered broker-dealer, or grant a security interest in some or all of the Securities to a financial institutionthat is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by theprovisions of this Agreement and, if required under the terms of such arrangement, the Purchaser may transfer pledged orsecured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of theCompany and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connectiontherewith. Further, no notice shall be required of such pledge. At the Company’s expense, the Company will execute anddeliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection witha pledge or transfer of the Securities. 4.2[Reserved]. 4.3[Reserved]. 4.4Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of anysecurity (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner thatwould require the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale ofthe Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior tothe closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction. 4.5[Reserved]. 24 4.6Shareholder Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, anyother Person, that the Purchaser is an “acquiring person” or such similar term under any control share acquisition, businesscombination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect orhereafter adopted by the Company, or that the Purchaser could be deemed to trigger the provisions of any such plan or arrangement, byvirtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and thePurchaser. 4.7[Reserved]. 4.8Use of Proceeds. The Company shall use the net proceeds as set forth in Schedule 4.8. 4.9Indemnification of Purchaser. Subject to the provisions of this Section 4.9, the Company will indemnify and hold thePurchaser and its directors, officers, managers, shareholders, members, partners, employees and agents (and any other Persons with afunctionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person whocontrols the Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors,officers, managers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role ofa Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “PurchaserParty”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including alljudgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any the PurchaserParty may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreementsmade by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the PurchaserParties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of thePurchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based inwhole or in part upon a breach of the Purchaser Party’s representations, warranties or covenants under the Transaction Documents orany agreements or understandings the Purchaser Party may have with any such stockholder or any violations by such Purchaser Partyof state or federal securities laws or any conduct by the Purchaser Party which constitutes fraud, gross negligence, willful misconductor malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant tothis Agreement, the Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume thedefense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have theright to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counselshall be at the expense of the Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized bythe Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or(iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of theCompany and the position of the Purchaser Party, in which case the Company shall be responsible for the reasonable fees andexpenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (x)for any settlement by a Purchaser Party effected without the Company’s prior25 written consent, which shall not be unreasonably withheld or delayed; or (y) to the extent, but only to the extent that a loss, claim,damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreementsmade by the Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by this Section4.9 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills arereceived or are incurred. The indemnification contained herein shall be in addition to any cause of action or similar right of anyPurchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law. 4.10[Reserved]. 4.11Certain Transactions. The Purchaser covenants and agrees that neither it, nor any Affiliate acting on its behalf or pursuantto any understanding with it will execute any Short Sales of the Common Stock or (ii) hedging transaction, which establishes a netshort position with respect to the Company’s Common Stock) during the period commencing with the execution of this Agreement andending on the earlier of the Maturity Date (as defined in the Notes) of the Notes or the full repayment of the Notes; provided that thisprovision shall not operate to restrict a Purchaser’s trading under any prior securities purchase agreement containing contractual rightsthat explicitly protects such trading in respect of the previously issued securities. 4.12 Securities Laws Disclosure; Publicity. The Company and the Purchaser shall consult with each other in issuing anypublic disclosure with respect to the transactions contemplated hereby, and neither the Company nor the Purchaser shall issue any suchpublic disclosure nor otherwise make any such public statement without the prior consent of the Company, with respect to any pressrelease of the Purchaser, or without the prior consent of the Purchaser, with respect to any press release of the Company, whichconsent shall not unreasonably be withheld or delayed, except if such disclosure is required by law or rules of the principal TradingMarket, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement orcommunication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of the Purchaser, or include thename of the Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior writtenconsent of the Purchaser, except: (a) as required by federal securities law in connection with any registration statement contemplated bythis Agreement and (b) to the extent such disclosure is required by law or Trading Market regulations, in which case the Companyshall provide the Purchaser with prior notice of such disclosure permitted under this clause (b). 4.13 Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required underRegulation D and to provide a copy thereof, promptly upon request of the Purchaser. The Company shall take such action as theCompany shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to thePurchaser at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence ofsuch actions promptly upon request of the Purchaser. 26 4.14 Subsequent Equity Sales. (a)For so long as any of the Notes remain outstanding, the Company shall be prohibited from effecting or enteringinto an agreement to effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common StockEquivalents (or a combination of units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction” means atransaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable orexercisable for, or include the right to receive, additional shares of Common Stock either (A) at a conversion price, exerciseprice or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the sharesof Common Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise orexchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security orupon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or themarket for the Common Stock or (ii) enters into any agreement, including, but not limited to, an equity line of credit,whereby the Company may issue securities at a future determined price. (b)For as long as any of the Notes remain outstanding, neither the Company nor any of its affiliates or Subsidiaries,nor any of its or their respective officers, employees, directors, agents or other representatives, will (without the prior writtenconsent of the Purchaser), directly or indirectly: (a) solicit, initiate, encourage or accept any other inquiries, proposals oroffers from any Person relating to any exchange (i) of any security of the Company or any of its Subsidiaries for any othersecurity of the Company or any of its Subsidiaries, except to the extent (x) consummated pursuant to the terms of CommonShare Equivalents of the Company as in effect as of the date hereof and disclosed in filings with the Commission prior to thedate hereof (without giving effect to any amendment, modification, change or waiver of any terms thereof occurring on orafter the date hereof or not disclosed in a filing by the Company with the Commission prior to the date hereof) or (ii) of anyindebtedness or other securities of, or claim against, the Company or any of its Subsidiaries pursuant to a registrationstatement filed with the Commission or relying on any exemption under the Securities Act (including, without limitation,Section 3(a)(10) of the Securities Act (any such transaction described in clauses (i) or (ii), an “Exchange Transaction”); (b)enter into, effect, alter, amend, announce or recommend to its stockholders any Exchange Transaction with any Person; or(c) participate in any discussions, conversations, negotiations or other communications with any Person regarding anyExchange Transaction, or furnish to any Person any information with respect to any Exchange Transaction, or otherwisecooperate in any way, assist or participate in, facilitate or encourage any effort or attempt by any Person to seek an ExchangeTransaction involving the Company or any of its Subsidiaries. For as long as the Notes remain outstanding, neither theCompany nor any of its affiliates or Subsidiaries, nor any of its or their respective officers, employees, directors, agents orother representatives, will, directly or indirectly, cooperate in any way, assist or participate in, facilitate or encourage anyeffort or attempt by any Person to effect any acquisition of securities or indebtedness of, or claim against, the Company bysuch Person from an existing holder of such securities, indebtedness or claim in connection with a proposed exchange ofsuch securities or27 indebtedness of, or claim against, the Company (whether pursuant to Section 3(a)(9) or 3(a)(10) of the Securities Act orotherwise) (a “Third Party Exchange Transfer”). The Company, its affiliates and Subsidiaries, and each of its and theirrespective officers, employees, directors, agents or other representatives shall immediately cease and cause to be terminatedall existing discussions, conversations, negotiations and other communications with any Persons with respect to any of theforegoing. For all purposes of this Agreement, violations of the restrictions set forth in this Section 4.14 by any Subsidiary oraffiliate of the Company, or any officer, employee, director, agent or other representative of the Company or any of itsSubsidiaries or affiliates shall be deemed a direct breach of this Section 4.14 by the Company. (c)From the date hereof until sixty (60) calendar days after the Closing Date, neither the Company nor anySubsidiary shall, directly or indirectly, except with respect to the proposed $20,000,000 private investment in public equitiescontemplated to be completed by May 31, 2019, and as otherwise permitted under this Agreement, issue, offer, sell, grantany option or right to purchase, or otherwise dispose of (or announce any issuance, offer, sale, grant of any option or right topurchase or other disposition of) any equity security or any equity-linked or related security (including, without limitation,any “equity security” (as that term is defined under Rule 405 promulgated under the Securities Act), any Common Shares orCommon Share Equivalents, any debt securities, any preferred stock or any purchase rights) or otherwise amend, modify,waiver or alter any terms of conditions of any Common Share Equivalents outstanding as of the date hereof to decrease theexercise, conversion and/or exchange price, as applicable, thereunder or otherwise increase the aggregate number ofCommon Shares issuable in connection therewith. (d)The Purchaser shall be entitled to obtain injunctive relief against the Company to preclude any such issuance,which remedy shall be in addition to any right to collect damages. Notwithstanding the foregoing, this Section 4.14 shall notapply in respect of an Exempt Issuance, except that no Variable Rate Transaction shall be an Exempt Issuance. 4.15.Regulation S Compliance. Each Purchaser agrees that, during the six (6) months following the Closing, it shall notengage in any transaction involving any securities of the Company that would be prohibited or restricted by, or would otherwise renderunavailable any applicable safe harbor provided by Regulation S. ARTICLE V.MISCELLANEOUS 5.1Termination. This Agreement may be terminated by the Purchaser, as to the Purchaser’s obligations hereunder only andwithout any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties,if the Closing has not been consummated on or before April 28, 2019; provided, however, that such termination will not affect the rightof any party to sue for any breach by any other party (or parties). 28 5.2Fees and Expenses. The Company has agreed to bear all fees, disbursements, and expenses in connection with thetransactions contemplated herein, including, without limitation, the Company’s legal and accounting fees and disbursements, the costsincident to the preparation, printing and distribution of any registration statement, filing fees, UCC fees, and costs associated with theIntellectual Property Security Agreement. The Company shall pay all stamp taxes and other taxes and duties levied in connection withthe delivery of any Securities to the Purchasers in connection with the transactions contemplated hereby.5.3Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entireunderstanding of the parties hereto with respect to the subject matter hereof and thereof and supersede all prior agreements andunderstandings, oral or written, with respect to such matters, which the parties hereto acknowledge have been merged into suchdocuments, exhibits and schedules. 5.4Notices. Any and all notices or other communications or deliveries to be provided by the Purchaser hereunder shall be inwriting and delivered personally, by email or facsimile, or sent by a nationally recognized overnight courier service, addressed to theCompany at 1633 Broadway, Suite 22C, New York, New York 10019, 917-591-5970, bkeck@delcath.com or such other address,facsimile number, or email address as the Company may specify for such purposes by notice to the Purchaser delivered in accordancewith this Section 5.4. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be inwriting and delivered personally, by email or facsimile, or sent by a nationally recognized overnight courier service addressed to eachPurchaser at the email address, facsimile number, or address of the Purchaser appearing on the books of the Company, or if no suchemail address, facsimile number, or address appears on the books of the Company, at the principal place of business of suchPurchaser. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest (i) the dateof transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address set forth onthe signature pages attached hereto prior to 12:00 p.m. (New York City time) on any date, (ii) the next Trading Day after the date oftransmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address set forth onthe signature pages attached hereto on a day that is not a Trading Day or later than 12:00 p.m. (New York City time) on any TradingDay, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (iv)upon actual receipt by the party to whom such notice is required to be given. 5.5Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in awritten instrument signed, in the case of an amendment, by the Company and Purchasers holding at least 50.1% in interest of theNotes, including the holders of the Rosalind Notes, then outstanding or, in the case of a waiver, by the party against whomenforcement of any such waived provision is sought, provided that if any amendment, modification or waiver disproportionately andadversely impacts a Purchaser (or group of Purchasers), the consent of such disproportionately impacted Purchaser (or group ofPurchasers) shall also be required. No waiver of any default with respect to any provision, condition or requirement of this Agreementshall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision,condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair theexercise of any29 such right. Any proposed amendment or waiver that disproportionately, materially and adversely affects the rights and obligations ofany Purchaser relative to the comparable rights and obligations of the other Purchasers shall require the prior written consent of suchadversely affected Purchaser. Any amendment effected in accordance with accordance with this Section 5.5 shall be binding uponeach Purchaser and holder of Securities and the Company. 5.6Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not bedeemed to limit or affect any of the provisions hereof. 5.7No Assignment. No party may assign this Agreement or any rights or obligations hereunder. 5.8No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respectivesuccessors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, exceptas otherwise set forth in Sections 4.9 and 5.5. 5.9Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the TransactionDocuments shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, withoutregard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations,enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether broughtagainst a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall becommenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to theexclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of anydispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect tothe enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action orproceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding isimproper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process andconsents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail orovernight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agreesthat such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemedto limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit orproceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under Section4.9, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees andother costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. 5.10Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Securities. 30 5.11Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall beconsidered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered toeach other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered byfacsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of theparty executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signaturepage were an original thereof. 5.12Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction tobe invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remainin full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commerciallyreasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated bysuch term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would haveexecuted the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declaredinvalid, illegal, void or unenforceable. 5.13Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similarprovisions of) any of the other Transaction Documents, whenever the Purchaser exercises a right, election, demand or option under aTransaction Document and the Company does not timely perform its related obligations within the periods therein provided, then thePurchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice,demand or election in whole or in part without prejudice to its future actions and rights. 5.14Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed,the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation),or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to theCompany of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also payany reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities. 5.15Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery ofdamages, the Purchaser and the Company will be entitled to specific performance under the Transaction Documents. The parties agreethat monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained inthe Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligationthe defense that a remedy at law would be adequate. 31 5.16Payment Set Aside. To the extent that the Company makes a payment or payments to the Purchaser pursuant to anyTransaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds ofsuch enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside,recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or anyother Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause ofaction), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived andcontinued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. 5.17Usury. To the extent it may lawful do so, the Company hereby agrees not to insist upon or plead or in any mannerwhatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted,now or at any time hereafter in force, in connection with any claim, action or proceeding that may be brought by the Purchaser in orderto enforce any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in anyTransaction Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents forpayments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”),and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with anyother sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed suchMaximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documentsis increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rateof interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date thereof forward,unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the MaximumRate is paid by the Company to the Purchaser with respect to indebtedness evidenced by the Transaction Documents, such excess shallbe applied by the Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner ofhandling such excess to be at the Purchaser’s election. 5.18Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under theTransaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damagesand other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidateddamages or other amounts are due and payable shall have been cancelled. 5.19Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any rightrequired or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the nextsucceeding Business Day. 32 5.20Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity torevise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolvedagainst the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. Inaddition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject toadjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the CommonStock that occur after the date of this Agreement. 5.21WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTIONBROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY ANDINTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBYABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY. [Signature Pages Follow] 33 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by theirrespective authorized signatories as of the date first indicated above. DELCATH SYSTEMS, INC. Address for Notice:By:____________________________________ Name: Title: With a copy to (which shall not constitute notice):1633 BroadwaySuite 22CNew York, New York 10019Attention: Barbra KeckE-Mail: bkeck@delcath.com Wexler Burkhart Hirschberg & Unger, LLP 377 Oak StreetConcourse LevelGarden City, NY 11530Attention: Jolie Kahne-mail: jkahn@WBHULAW.COM [REMAINDER OF PAGE INTENTIONALLY LEFT BLANKSIGNATURE PAGE FOR PURCHASER FOLLOWS] 34 [PURCHASER SIGNATURE PAGES TO DELCATH SYSTEMS, INC. SECURITIES PURCHASE AGREEMENT] IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respectiveauthorized signatories as of the date first indicated above. Name of Purchaser: Rosalind Opportunities Fund I LP Signature of Authorized Signatory ofAdvisor (Rosalind Advisors, Inc.)of Purchaser: Name of Authorized Signatory: Title of Authorized Signatory: Email Address of Authorized Signatory: Address for Notice to Purchaser: 175 Bloor Street EastSuite 1316, North TowerToronto, ON M4W 3R8Canada Subscription Amount: $________________________ Name of Purchaser: Rosalind Master Fund LP Signature of Authorized Signatory ofAdvisor (Rosalind Advisors, Inc.)of Purchaser: Name of Authorized Signatory: Title of Authorized Signatory: Email Address of Authorized Signatory: Address for Notice to Purchaser: 175 Bloor Street EastSuite 1316, North TowerToronto, ON M4W 3R8Canada Subscription Amount: $________________________ 35 SCHEDULE OF PURCHASERS (1)(2)(3)PurchaserPrincipal Amount ofNotesSubscription Amount Rosalind Opportunities Fund I LP$550,000$550,000 Rosalind Master Fund LP$370,000$370,00036 EXHIBIT A Form of Senior Secured Promissory Notes37 EXHIBIT B Form of Intellectual Property Security Agreement 38 EXHIBIT C Form of Security Agreement 39 EXHIBIT D Form of Subsidiary Guarantee 40 DISCLOSURE SCHEDULES TO THE SECURITIES PURCHASE AGREEMENT BY AND AMONG DELCATH SYSTEMS, INC. AND EACH OF THE PURCHASERS SIGNATORY THERETO DATED April 26, 2019 These Sections (these “Sections”) of this Disclosure Schedule are numbered to correspond to the corresponding sections of theSecurities Purchase Agreement (the “Agreement”). These Sections have been prepared in accordance with, and subject to, thefollowing terms and conditions: (a)To the extent a Section is intended to qualify a representation or warranty of the Company contained in the Article III of theAgreement, the information and disclosures contained in such Section are intended only to qualify and limit such representation orwarranty and not in any way expand the scope or effect of such representation or warranty. (b)The disclosure of any item in any Section of this Disclosure Schedule will constitute disclosure for purposes of anotherSection if it is reasonably clear from a reading of the disclosure that such disclosure is applicable to such other Sections or Sub-Sections. (c)Inclusion of any item in a Section of this Disclosure Schedule does not constitute a determination by the Company that suchitem is material and shall not be deemed to establish a standard or materiality. No disclosure in any Section of this Disclosure Schedulerelating to any possible breach or violation of any agreement, law or any potential adverse contingency shall be construed as anadmission or indication that any such breach or violation exists or has actually occurred or that such adverse contingency will actuallyoccur. (d)Any capitalized terms not defined in this Disclosure Schedule shall have the meanings assigned thereto in theAgreement. Any section headings or titles used herein are included for convenience only and shall not be considered asrepresentations or warranties as to the type, character or content of the matters referred to thereunder.SCHEDULE 3.1(a)41 SUBSIDIARIES OF THE COMPANY 1. Delcath Holdings Limited2. Delcath Systems Limited3. Delcath Systems UK Limited4. Delcath Systems GmBH5. Delcath Systems B.V.42 SCHEDULE 3.1(b)Organization and Qualification The Company is not in good standing in the State of Delaware as a result of its inability to pay the franchise taxes due in March 2019.The Company is not in good standing in the State of New York as a result of its inability to pay taxes due in March 2019.43 SCHEDULE 3.1(d) ConflictsNone. 44 SCHEDULE 3.1(g)(i) Capitalization A.Shares beneficially owned by Affiliates: 1,284,329B.12.6 million shares issued since most recent periodic report Rights of Participation: September 2017 Hudson Bay and AltoFebruary 2018: Registered Direct Investorsto the Securities Purchase Agreement dated as of June 4, 2018. Delcath Systems, Inc. Capitalization Table as of April 22, 2019 Authorized Issued Treasury Outstanding Preferred Shares 10,000,000 - - - Common Shares 1,000,000,000 18,277,807 - 18,277,807 Fully diluted common shares: Feb 2015 Warrants ($0.01; exp 2/2020) 9 July 2015 Warrants ($0.01; exp 7/2020) 9 Oct 2016 Warrants ($0.01; exp 10/2021) 11 Feb 2018 Warrants ($10.00; exp 2/2024) 189,000 June 2018 Warrants ($0.01, exp through 6/2024) 16,615,317 June 2018 Warrants ($4.00; exp 6/2023) 1,116,256 July 2018 Warrants ($0.01, exp through 7/2024) 12,168,926 July 2018 Warrants ($4.00 exp 7/2023) 785,737 August 2018 Warrants ($0.01, exp through 8/2024) 23,777,381 August 2018 Warrants ($1.75; exp 8/2023) 2,021,410 Sept 2018 Warrants ($0.01, exp through 9/2024) 830,854 Sept 2018 Warrants ($1.75; exp 9/2023) 279,506 Options 1,250,000 Total shares reserved for warrants and options 59,034,416 Total shares issued and reserved: 77,312,223 45 SCHEDULE 3.1(g)(ii) Corporate Governance of Delcath Systems, Inc. Roger Stoll, Ph.D., ChairmanWilliam RueckertDr. Marco TagliettiDr. Jennifer Simpson Audit Committee – William Rueckert, Chair; Roger StollCompensation Committee – Marco Taglietti, Chair; William RueckertNominating and Corp. Governance Committee – Roger Stoll, Chair; William Rueckert; Marco Taglietti46 SCHEDULE 3.1(h) Indebtedness 1. Letter of credit issued by Silicon Valley Bank to Kasowitz, Benson, Torres and FriedmanLLP with face amount of $130,663.00. 2. Letter of credit issued by Silicon Valley Bank to SLG 810 7th Avenue Lessee LLC with faceamount of $881,297.08. 3. Indebtedness in a maximum amount of $75,000 owed to Silicon Valley Bank under corporatecredit card services agreement. 4. Indebtedness between Delcath Systems, Inc. and Delcath Holdings Limited pursuant to aLicense and Agreement to Share Intangible Development Costs dated as of January 1, 2012. 5. Indebtedness of $5,478,559 between Delcath Systems, Inc. and Rosalind Master Fund L.P., as assigned to Rosalind Master FundL.P. by Discover Growth Fund and Discover Growth Fund, LLC as signatories to Securities Purchase Agreements dated as of June 4,2018; July 20, 2018; August 29, 2018; and a Note Purchase and Exchange Agreement dated March 29, 2019 and the 8% SeniorSecured Promissory Notes issued pursuant thereto. 6. Indebtedness of $469,975 between Delcath Systems, Inc. and the institutional investors signatory to Securities Purchase Agreementsdated as of September 21, 2018 and the 8% Senior Secured Convertible Promissory Notes issued pursuant thereto. 7. Indebtedness of $180,000 between Delcath Systems, Inc. and Rosalind Master Fund L.P. as signatory to the Securities PurchaseAgreement dated as of April 18, 2019 and the 8% Senior Secured Promissory Note issued pursuant thereto. Existing Liens 1. Liens of Silicon Valley Bank on account nos. 3301246486 and 3301264690, respectively,securing the letters of credit described in numbers 1 and 2 above. 2. Lien of Silicon Valley Bank account no. 3301464115 securing the Indebtedness described innumber 3 above.3. Lien of the institutional investor securing the Obligations described in numbers 5 -7 above. 47 SCHEDULE 3.1(i) SEC Reports; Financial Statements The Company has not timely filed its Annual Report on Form 10-K for the year ended December 31, 2018.48 SCHEDULE 3.1(j) Material Changes; Undisclosed Events, Liabilities or Developments See Schedule 3.1(m).49 SCHEDULE 3.1(k) Litigation 1.In March 2019, the Company sued two affiliated Iroquois Funds and FirstFire seeking declaratory judgment, among otherremedies, that the February 2018 warrants issued to them are deemed to not including an “exploding” antidilution featureupon a down round financing. The suit was filed in New York State Supreme Court in NY County, NY.See Schedule 3.1(m) below for any potential claims.50 SCHEDULE 3.1(m) Compliance UBC Demand Letter for $2,106,116.00.Payables to Roth Capital in the amount of $552,642.60.Notices of Default from Discover Growth Fund, Discover Growth Fund, LLC, Bigger Capital Fund, LP and District 2 Capital FundLP in respect of the Indebtedness listed in paragraph 5 of Schedule 3.1(h).51 SCHEDULE 3.1(o) Title to AssetsSee Schedule 3.1(h).52 SCHEDULE 3.1(p) Material AgreementsSee Schedule 3.1(m).53 SCHEDULE 3.1(q) Intellectual Property None.54 SCHEDULE 3.1(r) Transactions with Affiliates and Employees Herein below are all back salaries and unreimbursed employee expenses through April 15, 2019: Jennifer Simpson$ 862,376Barbra Keck$ 536,181John Purpura$ 553,491All other employees$ 335,670 $ 2,287,718 55 SCHEDULE 3.1(s) Cash Payments None.56 SCHEDULE 3.1(u) Certain Fees Fees to Roth Capital Partners, LLC under waiver letter with Roth Capital Partners, LLCFees to Think Equity under Engagement Letter 57 SCHEDULE 3.1(x) Registration Rights Warrants issued in February 2018September 21, 2018 Securities Purchase Agreement58 SCHEDULE 3.1(ee) Accountants Marcum LLPGrant Thornton LLP (with respect to 2015, 2016 and 2017 audited financials only)59 SCHEDULE 3.1(oo) Seniority See Schedule 3.1(h).60 SCHEDULE 3.1(pp) Off-balance Sheet Arrangements None.61 SCHEDULE 3.1(tt) Investor Relations62 SCHEDULE 4.8 Use of Proceeds General working capital purposes.63Exhibit 10.45SECURITIES PURCHASE AGREEMENT This Securities Purchase Agreement (this “Agreement”) is dated as of May 9, 2019, by and among Delcath Systems, Inc., aDelaware corporation (the “Company”), and the purchasers identified on the signature pages hereto (each, a “Purchaser,” or in theaggregate, the “Purchasers”). WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the SecuritiesAct of 1933, as amended (the “Securities Act”), Regulation S and Rule 506(b) promulgated thereunder, the Company desires to sell,and the Purchasers desire to purchase from the Company, the Securities (as defined herein). NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other goodand valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree asfollows: ARTICLE I.DEFINITIONS 1.1Definitions. In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwisedefined herein have the meanings given to such terms in the Transaction Documents (as defined herein), and (b) the following termshave the meanings set forth in this Section 1.1: “Action” shall have the meaning ascribed to such term in Section 3.1(k). “Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or isunder common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act. “BHCA” shall have the meaning ascribed to such term in Section 3.1(ll). “Board of Directors” means the board of directors of the Company. “Business Day” means any day except any Saturday, any Sunday, or any other day on which the Federal Reserve Bank ofNew York is closed. “Closing Date” means the Trading Day(s) on which all of the Transaction Documents have been executed and delivered bythe applicable parties thereto in connection with a Closing, and all conditions precedent to (i) the Purchaser’s obligations topay the Subscription Amount as to the Closing and (ii) the Company’s obligations to deliver the Securities as to the Closing,in each case, have been satisfied or waived. “Closing” means closing of the purchase and sale of the Securities pursuant to Section 2.2. 1 “Commission” means the United States Securities and Exchange Commission. “Common Stock” means the common stock of the Company, par value $0.01 per share, and any other class of securities intowhich such securities may hereafter be reclassified or changed. “Disclosure Schedules” shall have the meaning ascribed to such term in Section 3.1. “Evaluation Date” shall have the meaning ascribed to such term in Section 3.1(t). “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgatedthereunder. “Exchange Transaction” shall have the meaning ascribed to such term in Section 4.15(b). “Exempt Issuance” means the issuance of (a) shares of Common Stock, restricted stock units or options to employees,officers, directors, advisors or independent contractors of the Company pursuant to any stock or option plan duly adopted forsuch purpose, (b) shares of Common Stock, warrants or options to advisors or independent contractors of the Company forcompensatory purposes, (c) securities exercisable or exchangeable for or convertible into shares of Common Stock issued andoutstanding on the date hereof, provided that such securities have not been amended since the date hereof to increase thenumber of such securities or to decrease the exercise price, exchange price or conversion price of such securities, (d)securities issuable pursuant to any contractual anti-dilution, most favored nations or similar obligations of the Company ineffect as of the date hereof, provided that such obligations have not been materially amended since the date of hereof, and (e)securities issued pursuant to acquisitions or any other strategic transactions approved by the Board of Directors, provided thatany such issuance shall not include a transaction in which the Company is issuing securities primarily for the purpose ofraising capital or to an entity whose primary business is investing in securities. “FCPA” means the Foreign Corrupt Practices Act of 1977, as amended. “Federal Reserve” shall have the meaning ascribed to such term in Section 3.1(ll).“GAAP” shall have the meaning ascribed to such term in Section 3.1(i). “Guarantors” mean collectively, the Subsidiaries of the Company who are party to the Subsidiary Guarantee. “Indebtedness” means except for Permitted Indebtedness, (a) any liabilities for borrowed money or amounts owed in excessof $100,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsementsand other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in theCompany’s consolidated balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments fordeposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any lease paymentsin excess of $100,000 due under leases required to be capitalized in accordance with GAAP. 2 “Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(q). “Intellectual Property Security Agreement” means that certain Intellectual Property Security Agreement required to bedelivered pursuant to Section 2.3 of this Agreement, in the form attached hereto as Exhibit B. “Liabilities” means all direct or indirect liabilities, Indebtedness and obligations of any kind of Company to the Purchaser,howsoever created, arising or evidenced, whether now existing or hereafter arising (including those acquired by assignment),absolute or contingent, due or to become due, primary or secondary, joint or several, whether existing or arising throughdiscount, overdraft, purchase, direct loan, participation, operation of law, or otherwise, including, but not limited to, pursuantto the Note, this Agreement and/or any of the other Transaction Documents, all accrued but unpaid interest on the Note, anyletter of credit, any standby letter of credit, and/or outside attorneys’ and paralegals’ fees or charges relating to the preparationof the Transaction Documents and the enforcement of the Purchaser’s rights, remedies and powers under this Agreement, theNote and/or the other Transaction Documents. “Liens” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction. “Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b). “Material Permits” shall have the meaning ascribed to such term in Section 3.1(n). “Maximum Rate” shall have the meaning ascribed to such term in Section 5.17. “Money Laundering Laws” shall have the meaning ascribed to such term in Section 3.1(qq). “Notes” means collectively, the 8% Senior Secured Promissory Notes issued by the Company to each Purchaser hereunder,each in the form of Exhibit A attached hereto. “Off-balance Sheet Arrangement” shall have the meaning ascribed to such term in Section 3.1(pp). “Permitted Indebtedness” means the letters of credit and secured accounts listed in Schedule 3.1(h). “Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture,limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. 3 “Principal Amount” means, as to the Purchaser, the principal amount of the Notes set forth opposite such Purchaser’s name incolumn (2) on the Schedule of Purchasers attached hereto in United States Dollars. “Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informalinvestigation or partial proceeding, such as a deposition), whether commenced or threatened. “Purchaser Party” shall have the meaning ascribed to such term in Section 4.9. “Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e). “Rosalind Notes” means the Notes originally held by Rosalind Opportunities Fund I LP and Rosalind Master Fund LP. “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such rule may be amendedfrom time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effectas such rule. “SEC Reports” shall have the meaning ascribed to such term in Section 3.1(i). “Securities” means the Notes to be issued to the Purchaser pursuant to this Agreement. “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. “Security Agreement” means the Security Agreement dated on the date hereof by and among the Company, the Company’sSubsidiaries, and the Purchaser, as hereinafter amended and/or supplemented altogether with all exhibits, schedules andannexes to such Security Agreement, pursuant to which all Liabilities of the Company to the Purchaser under the TransactionDocuments are secured by the Collateral (as defined in the Security Agreement), which security interest in the Collateral shallbe perfected by the Purchaser’s UCC-1, filed with the Secretary of State of the State of Delaware, to the extent perfectable bythe filing of a UCC-1 Financing Statement, or if applicable, a UCC-3 Financing Statement Amendment and such otherdocuments and instruments related thereto, which Security Agreement is annexed hereto as Exhibit C. “Shell Company” means an entity that fits within the definition of “shell company” under Section 12b-2 of the Exchange Actand Rule 144. “Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act. 4 “Subscription Amount” means, as to the Purchaser, the aggregate amount to be paid for the Notes purchased hereunder asspecified below the Purchaser’s name on the signature page of this Agreement and next to the heading “SubscriptionAmount,” in United States dollars and in immediately available funds. “Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, also includeany direct or indirect subsidiary of the Company formed or acquired after the date hereof. “Subsidiary Guarantee” means the Subsidiary Guarantee, dated as of the date hereof, pursuant to which the Subsidiaries havejointly and severally agreed to guarantee and act as surety for the Company’s obligation to repay the Notes, in the formattached hereto as Exhibit D. “Third Party Exchange Transfer” shall have the meaning ascribed to such term in Section 4.14(b). “Trading Day” means a day on which the principal Trading Market is open for trading. “Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted fortrading on the date in question: the NYSE American; the Nasdaq Capital Market; the Nasdaq Global Market; the NasdaqGlobal Select Market; the New York Stock Exchange; OTC Markets or the OTC Bulletin Board (or any successors to any ofthe foregoing). “Transaction Documents” means this Agreement, the Notes, the Security Agreement, the Intellectual Property SecurityAgreement, the Subsidiary Guarantee and all exhibits and schedules thereto and hereto and any other documents oragreements executed in connection with the transactions contemplated hereunder. “Variable Rate Transaction” shall have the meaning ascribed to such term in Section 4.14(a). ARTICLE II.PURCHASE AND SALE 2.1Purchase. On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent withthe execution and delivery of this Agreement by the parties hereto, the Company shall sell and issue to each Purchaser, and eachPurchaser shall purchase, severally and not jointly, from the Company, Notes with an aggregate Principal Amount equal to the amountset forth opposite such Purchaser’s name in column (2) on the Schedule of Purchasers attached hereto. The purchase of the Notes willbe completed in a single tranche as provided herein. 5 2.2Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, concurrent with the executionand delivery of this Agreement by the parties hereto, the Company agrees to sell, and each Purchaser agrees to purchase, theSubscription Amount of Notes as set forth on the signature page hereto executed by such Purchaser. At the Closing, each Purchasershall deliver to the Company, via wire transfer to an account designated by the Company, immediately available funds equal to suchPurchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser, and the Company shall deliverto such Purchaser its Notes as set forth in Section 2.3(a), and the Company and such Purchaser shall deliver the other items set forth inSection 2.3 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.3 and 2.4 for Closing,such Closing shall be undertaken remotely by electronic exchange of Closing documentation. There may be multiple closings so longas at each Closing the obligations under Section 2.3 are met. 2.3Deliveries. (a)On or prior to the Closing Date (except as otherwise agreed by the Purchaser), the Company shall deliver or causeto be delivered to each Purchaser the following: (i) this Agreement duly executed by the Company; (ii) the Notes with an aggregate Principal Amount equal to the amount set forth opposite such Purchaser’s name incolumn (2) on the Schedule of Purchasers attached hereto, registered in the name of the Purchaser; (iii)the Security Agreement, duly executed by the Company (and for all Closings after the first Closing,additional Purchasers shall merely sign a signature page and be an additional party to the Security Agreement); (iv) the Intellectual Property Security Agreement, duly executed by the Company (and for all Closings afterthe first Closing, additional Purchasers shall merely sign a signature page and be an additional party to theIntellectual Property Security Agreement); (v) the Subsidiary Guarantee, duly executed by the Company’s Subsidiaries (and for all Closings after thefirst Closing, additional Purchasers shall merely sign a signature page and be an additional party to the SubsidiaryGuarantee); (vi)a certificate evidencing the Company’s qualification as a foreign corporation and good standing issuedby the Secretary of State (or comparable office) of each jurisdiction, if any, in which the Company conductsbusiness and is required to so qualify, as of a date within ten (10) days of the Closing Date; and (vii)such other documents, instruments or certificates relating to the transactions contemplated by thisAgreement as such Purchaser or its counsel may reasonably request. 6 (b)On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company, asapplicable, the following: (i) this Agreement, duly executed by the Purchaser; (ii) the Purchaser’s Subscription Amount by wire transfer to the account specified in writing by theCompany; (iii) the Security Agreement, duly executed by the Purchaser; and (iv) the Intellectual Property Security Agreement, duly executed by the Purchaser. 2.4Closing Conditions. (a)The obligations of the Company hereunder in connection with the Closing are subject to the following conditionsbeing met: (i) the accuracy in all material respects as at Closing Date of the representations and warranties of thePurchaser contained herein (unless as of a specific date therein in which case they shall be accurate as of such date); (ii) all obligations, covenants and agreements of the Purchaser required to be performed at or prior to theClosing Date shall have been performed; and (iii) the delivery by the Purchaser of the items set forth in Section 2.3(b) of this Agreement. (b)The respective obligations of each Purchaser hereunder in connection with the Closing are subject to the followingconditions being met: (i)the accuracy in all material respects when made as to the Closing Date of the representations andwarranties of the Company contained herein (unless as of a specific date therein); (ii)all obligations, covenants and agreements of the Company required to be performed at or prior to theClosing Date shall have been performed; (iii)the delivery by the Company of the items set forth in Section 2.3(a) of this Agreement; (iv)there is no existing Event of Default (as defined in the Notes) and no existing event which, with thepassage of time or the giving of notice, would constitute an Event of Default; 7 (v)there is no breach of any obligations, covenants and agreements under the Transaction Documents and noexisting event which, with the passage of time or the giving of notice, would constitute a breach under theTransaction Documents; (vi)there shall have been no Material Adverse Effect with respect to the Company since the date hereof; (vii)from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspendedby the Commission or the Company’s principal Trading Market and, at any time prior to the Closing Date, tradingin securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum pricesshall not have been established on securities whose trades are reported by such service, or on any Trading Market,nor shall a banking moratorium have been declared either by the United States or New York State authorities norshall there have occurred any material outbreak or escalation of hostilities or other national or international calamityof such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, inthe reasonable judgment of the Purchaser, and without regard to any factors unique to the Purchaser, makes itimpracticable or inadvisable to purchase the Securities at the Closing; (viii) [reserved]; (ix) [reserved]; and (x)any other conditions contained herein or the other Transaction Documents, including, without limitationthose set forth in Section 2.3 herein. 2.5Minimum and Maximum. Each Purchaser must purchase Securities for a minimum subscription amount of at least$100,000. Provided, however, that if necessary to meet Company’s existing obligations under rights of participation, the minimumsubscription amount per party may be reduced pro rata to the extent necessary to enable all persons with such rights that desire toparticipate to so participate. The aggregate subscription amount for all securities to all Purchasers may not exceed $4,000,000. ARTICLE III.REPRESENTATIONS AND WARRANTIES 3.1Representations and Warranties of the Company. Except as set forth in the disclosure schedules attached hereto (the“Disclosure Schedules”), which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or otherwisemade herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules, the Company (whichfor purposes of this Section 3.1 means the Company and all of its Subsidiaries) hereby makes the following representations andwarranties to each Purchaser as of the Closing Date: 8 (a)Subsidiaries. All of the direct and indirect Subsidiaries and parent entities of the Company are set forth onSchedule 3.1(a) hereto. The Company owns, directly or indirectly, all of the capital stock or other equity interests of eachSubsidiary free and clear of any Liens, other than as set forth on Schedule 3.1(a) hereto, and all of the issued and outstandingshares of capital stock or other equity interests of each Subsidiary are validly issued and are fully paid, non-assessable andfree of preemptive and similar rights to subscribe for or purchase securities. (b)Organization and Qualification. The Company is an entity duly incorporated or otherwise organized and validlyexisting, and, other than as set forth on Schedule 3.1(b) hereto, the Company is in good standing, under the laws of thejurisdiction of its incorporation or organization, as applicable, with the requisite power and authority to own and use itsproperties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary or parententity of the Company is in violation or default of any of the provisions of its respective certificate or articles of incorporation,bylaws or other organizational or charter documents. The Company is duly qualified to conduct business and is in goodstanding as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or propertyowned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the casemay be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity orenforceability of any Transaction Document; (ii) a material adverse effect on the results of operations, assets, business,prospects or condition (financial or otherwise) of the Company, its parent entities and the Subsidiaries, taken as a whole; or(iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligationsunder any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been institutedin any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority orqualification. (c)Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and toconsummate the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwise tocarry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and each of the otherTransaction Documents by the Company and the consummation by it of the transactions contemplated hereby and therebyhave been duly authorized by all necessary action on the part of the Company and no further action is required by theCompany, the Board of Directors or the Company’s stockholders in connection herewith or therewith other than inconnection with the Required Approvals. This Agreement and each other Transaction Documents to which it is a party hasbeen (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the termshereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company inaccordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency,reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally; (ii) aslimited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies; and(iii) insofar as indemnification and contribution provisions may be limited by applicable law. 9 (d)No Conflicts. The execution, delivery and performance by the Company of this Agreement and the otherTransaction Documents to which it is a party, the issuance and sale of the Securities and the consummation by it of thetransactions contemplated hereby and thereby do not and will not, except as set forth on Schedule 3.1(d): (i) conflict with orviolate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or otherorganizational or charter documents; (ii) conflict with, or constitute a default (or an event that with notice or lapse of time orboth would become a default) under, result in the creation of any Lien (except Liens in favor of the Purchaser) upon any ofthe properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment,acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or otherinstrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or anySubsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected; or (iii) subjectto the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction,decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (includingfederal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is boundor affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in aMaterial Adverse Effect. (e)Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization ororder of, give any notice to, or make any filing or registration with, any court or other federal, state, local or othergovernmental authority or other Person in connection with the execution, delivery and performance by the Company of theTransaction Documents, other than: (i) the filings required pursuant to Section 4.13 of this Agreement; (ii) the notice and/orapplication(s) to each applicable Trading Market for the issuance and sale of the Securities in the time and manner requiredthereby; and (iii) the filing of Form D with the Commission and such filings as are required to be made under applicable statesecurities laws (collectively, the “Required Approvals”). (f)Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with theapplicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liensimposed by the Company other than restrictions on transfer provided for in the Transaction Documents. (g)Capitalization; Corporate Governance. (i)The capitalization of the Company is as set forth on Schedule 3.1(g)(i), which Schedule 3.1(g)(i) shall alsoinclude (A) the number of shares of Common Stock owned beneficially, and of record, by Affiliates of theCompany as of the date hereof and (B) the number of authorized and reserved shares of capital stock of theCompany. The Company has not issued capital stock since its most recently filed periodic report under theExchange Act except as set forth on Schedule 3.1(g)(i), except the issuance of shares of Common Stock toemployees 10 pursuant to the Company’s employee stock purchase plans and except pursuant to the conversion and/or exercise ofCommon Stock Equivalents outstanding as of the date of the most recently filed periodic report under the ExchangeAct except as set forth on Schedule 3.1(g)(i). No Person has any right of first refusal, preemptive right, right ofparticipation, or any similar right to participate in the transactions contemplated by the Transaction Documentsexcept as set forth on Schedule 3.1(g)(i). There are no outstanding options, warrants, scrip rights to subscribe to,calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into orexercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of CommonStock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is ormay become bound to issue additional shares of Common Stock or Common Stock Equivalents except as set forthon Schedule 3.1(g)(i). The issuance and sale of the Securities will not obligate the Company to issue shares ofCommon Stock or other securities to any Person and will not result in a right of any holder of Company securities toadjust the exercise, conversion, exchange or reset price under any of such securities except as set forth onSchedule 3.1(g)(i). All of the outstanding shares of capital stock of the Company are duly authorized, validlyissued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, andnone of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for orpurchase securities. No further approval or authorization of any stockholder, the Board of Directors or others isrequired for the issuance and sale of the Securities. There are no stockholders’ agreements, voting agreements orother similar agreements with respect to the Company’s capital stock to which the Company is a party or, to theknowledge of the Company, between or among any of the Company’s stockholders. (ii)The names and titles of each of the Company’s principal officers, directors and beneficial holders of atleast five percent (5%) of the outstanding shares of each class of the Company’s capital stock on a fully diluted basisare as set forth on Schedule 3.1(g)(ii), which Schedule 3.1(g)(ii) shall also include each committee of directors aswell as the names and titles of each director currently serving on each such committee. (h)Indebtedness. Schedule 3.1(h) sets forth as of the date hereof all outstanding secured and unsecured Indebtednessof the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. Except as set forth onSchedule 3.1(h), neither the Company nor any Subsidiary is in default with respect to any Indebtedness. 11 (i)SEC Reports; Financial Statements. Other than as set forth on Schedule 3.1(i) hereto, the Company has filed allreports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act andthe Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two (2) years preceding the date hereof (theforegoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectivelyreferred to herein as the “SEC Reports”). As of their respective dates, the SEC Reports complied in all material respects withthe requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed,contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary inorder to make the statements therein, in the light of the circumstances under which they were made, not misleading. TheCompany has never been an issuer subject to Rule 144(i) under the Securities Act. The financial statements of the Companyincluded in the SEC Reports comply in all material respects with applicable accounting requirements and the rules andregulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have beenprepared in accordance with United States generally accepted accounting principles applied on a consistent basis during theperiods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and exceptthat unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respectsthe financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results ofoperations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. (j)Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financialstatements included within the SEC Reports, except as specifically disclosed in the Company’s Annual Report on Form 10-K,including such latest audited financial statements, or in a subsequent SEC Report filed prior to the date hereof and except asset forth in Schedule 3.1(g), Schedule 3.1(m), and Schedule 3.1(j): (i) there has been no event, occurrence or developmentthat has had or that could reasonably be expected to result in a Material Adverse Effect; (ii) the Company has not incurred anyliabilities or obligations (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinarycourse of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financialstatements pursuant to GAAP or disclosed in filings made with the Commission; (iii) the Company has not altered its methodof accounting; (iv) the Company has not declared or made any dividend or distribution of cash or other property to itsstockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock; (v) theCompany has not sold, assigned or transferred any other tangible assets or Intellectual Property Rights, or canceled any debtsor claims, except in the ordinary course of business, (vi) the Company has not suffered any substantial loss contingencies orwaived any rights of material value, whether or not in the ordinary course of business, or suffered the loss of any materialamount of prospective business, (vii) the Company has not entered into any acquisition or financing transactions, whether ornot in the ordinary course of business, other than with respect to the Transaction Documents and (v) the Company has notissued any equity securities to any officer, director or Affiliate, 12 no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur orexist with respect to the Company or its Subsidiaries or their respective businesses, properties, operations, assets or financialcondition, that would be required to be disclosed by the Company under applicable securities laws at the time thisrepresentation is made or deemed made that has not been publicly disclosed at least one (1) Trading Day prior to the date thatthis representation is made. (k)Litigation. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to theknowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective propertiesexcept as set forth in Schedule 3.1(k), or against or affecting the Company’s current or former officers or directors in theircapacity as such, before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal,state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity orenforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, haveor reasonably be expected to result in a Material Adverse Effect, and neither the Company nor any Subsidiary, nor anydirector or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federalor state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company,there is not pending or contemplated, any investigation by the Commission involving the Company or any current or formerdirector or officer of the Company that is likely to lead to action that can reasonably be expected to result in a MaterialAdverse Effect. There has not been, and to the knowledge of the Company, there is not pending or contemplated, anyinvestigation by the Commission involving the Company or any current or former director or officer of the Company. TheCommission has not issued any stop order or other order suspending the effectiveness of any registration statement filed bythe Company or any Subsidiary under the Exchange Act or the Securities Act. (l)Labor Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any ofthe employees of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of theCompany’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with theCompany or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargainingagreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. To theknowledge of the Company, no executive officer of the Company or any Subsidiary, is, or is now expected to be, in violationof any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and thecontinued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liabilitywith respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state,local and foreign laws and regulations relating to employment and employment practices, terms and conditions ofemployment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate,reasonably be expected to have a Material Adverse Effect. 13 (m)Compliance. Neither the Company nor any Subsidiary, except as set forth in Schedule 3.1(m): (i) is in defaultunder or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, wouldresult in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of aclaim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement orinstrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation hasbeen waived); (ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority; or(iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including withoutlimitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety,product quality and safety and employment and labor matters, except in each case as could not have or reasonably beexpected to result in a Material Adverse Effect. (n)Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issuedby the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses asdescribed in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in aMaterial Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice ofproceedings relating to the revocation or modification of any Material Permit. (o)Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real propertyowned by them and good and marketable title in all personal property owned by them that is material to the business of theCompany and the Subsidiaries, in each case free and clear of all Liens, except as set forth in Schedule 3.1(o) and except for(i) Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposedto be made of such property by the Company and the Subsidiaries and (ii) Liens for the payment of federal, state or othertaxes, for which appropriate reserves have been made therefor in accordance with GAAP and the payment of which is neitherdelinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries areheld by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance. (p)Material Agreements. Except for the Transaction Documents (with respect to clause (i) only) or as set forth onSchedule 3.1(p) hereto, or as would not be reasonably likely to have a Material Adverse Effect, (i) the Company and each ofits Subsidiaries have performed all obligations required to be performed by them to date under any written or oral contract,instrument, agreement, commitment, obligation, plan or arrangement, filed or required to be filed with the Commission (the“Material Agreements”), (ii) neither the Company nor any of its Subsidiaries has received any notice of default under anyMaterial Agreement and, (iii) to the best of the Company's knowledge, neither the Company nor any of its Subsidiaries is indefault under any Material Agreement now in effect. 14 (q)Intellectual Property. The Company and the Subsidiaries have, or have rights to use, all patents, patentapplications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licensesand other intellectual property rights and similar rights as necessary or required for use in connection with their respectivebusinesses as presently conducted and which the failure to so have could have a Material Adverse Effect (collectively, the“Intellectual Property Rights”). Neither the Company nor any Subsidiary has received a notice (written or otherwise) that anyof the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or beabandoned, within two (2) years from the date of this Agreement. Neither the Company nor any Subsidiary has received,since the date of the latest audited financial statements included within the SEC Reports, a written notice of a claim orotherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except ascould not have or could not reasonably be expected to have a Material Adverse Effect. To the knowledge of the Company,all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of theIntellectual Property Rights except as disclosed in Schedule 3.1(q). The Company and its Subsidiaries have taken reasonablesecurity measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure todo so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. (r)Transactions with Affiliates and Employees. Except as disclosed in Schedule 3.1(r), none of the officers ordirectors of the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Companyor any Subsidiary is presently a party to any transaction with the Company or any Subsidiary (other than for services asemployees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing ofservices to or by, providing for rental of real or personal property to or from providing for the borrowing of money from orlending of money to, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledgeof the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer,director, trustee, stockholder, member or partner, in each case in excess of $120,000 other than for: (i) payment of salary orconsulting fees for services rendered; (ii) reimbursement for expenses incurred on behalf of the Company; and (iii) otheremployee benefits. (s)Payments of Cash. Except as disclosed on Schedule 3.1(s), neither the Company, its directors or officers, or anyAffiliates or agents of the Company, have withdrawn or paid cash to any vendor in an aggregate amount that exceeds FiveThousand Dollars ($5,000) for any purpose. 15 (t)Sarbanes-Oxley; Internal Accounting Controls. The Company and the Subsidiaries are in compliance with any andall applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and allapplicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as ofthe Closing Date. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to providereasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations;(ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and tomaintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specificauthorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals andappropriate action is taken with respect to any differences. The Company and the Subsidiaries have established disclosurecontrols and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiariesand designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company inthe reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the timeperiods specified in the Commission’s rules and forms. The Company’s certifying officers have evaluated the effectivenessof the disclosure controls and procedures of the Company and the Subsidiaries as of the end of the period covered by themost recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in itsmost recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness ofthe disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, therehave been no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) that havematerially affected, or is reasonably likely to materially affect, the internal control over financial reporting of the Companyand its Subsidiaries. (u)Certain Fees. Other than as set forth on Schedule 3.1(u), no brokerage or finder’s fees or commissions are or willbe payable by the Company or any Subsidiaries to any broker, financial advisor or consultant, finder, placement agent,investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. ThePurchaser shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of otherPersons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated bythe Transaction Documents. (v)Private Placement. Assuming the accuracy of each Purchaser’s representations and warranties set forth in Section3.2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to thePurchaser as contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules andregulations of the Trading Market. 16 (w)Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment forthe Securities, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Actof 1940, as amended. The Company shall conduct its business in a manner so that it will not become an “investmentcompany” subject to registration under the Investment Company Act of 1940, as amended. (x)Registration Rights. Other than as set forth on Schedule 3.1(x) and pursuant to this Agreement, no Person has anyright to cause the Company to effect the registration under the Securities Act of any securities of the Company or anySubsidiaries. (y)Listing and Maintenance Requirements; Trading Market Regulation. The Common Stock is registered pursuant toSection 12(b) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely tohave the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company receivedany notification that the Commission is contemplating terminating such registration. Except as disclosed in the SEC reports,the Company has not, in the twelve (12) months preceding the date hereof, received notice from any Trading Market onwhich the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listingor maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in theforeseeable future continue to be, in compliance with all such listing and maintenance requirements. (z)Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, ifany, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distributionunder a rights agreement) or other similar anti-takeover provision under the Company’s amended and restated certificate ofincorporation, as amended (or similar charter documents), or the laws of its state of incorporation that is or could becomeapplicable to the Purchaser as a result of the Purchaser and the Company fulfilling their obligations or exercising their rightsunder the Transaction Documents, including without limitation as a result of the Company’s issuance of the Securities and thePurchaser’s ownership of the Securities. (aa)Disclosure. All of the disclosure furnished by or on behalf of the Company to the Purchaser regarding theCompany and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the DisclosureSchedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to stateany material fact necessary in order to make the statements made therein, in light of the circumstances under which they weremade, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of thisAgreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required tobe stated therein or necessary in order to make the statements therein, in light of the circumstances under which they weremade and when made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made anyrepresentations or warranties with respect to the transactions contemplated hereby other than those specifically set forth inSection 3.2 hereof. 17 (bb)No Integrated Offering. Assuming the accuracy of the Purchaser’s representations and warranties set forth inSection 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly orindirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that wouldcause this offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Actwhich would require the registration of any such securities under the Securities Act, or (ii) any applicable shareholderapproval provisions of any Trading Market on which any of the securities of the Company are listed or designated. (cc)No General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered orsold any of the Securities by any form of general solicitation or general advertising. The Company has offered the Securitiesfor sale only to the Purchaser and certain other “accredited investors” within the meaning of Rule 501 under the SecuritiesAct. (dd)Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company orany Subsidiary, any agent or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly,used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domesticpolitical activity; (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreignor domestic political parties or campaigns from corporate funds; (iii) failed to disclose fully any contribution made by theCompany or any Subsidiary (or made by any person acting on its behalf of which the Company is aware) which is inviolation of law; or (iv) violated in any material respect any provision of FCPA. (ee)Accountants. The Company’s accounting firm is set forth on Schedule 3.1(ee). To the knowledge and belief ofthe Company, such accounting firm is a registered public accounting firm as required by the Exchange Act. (ff)No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, orreasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly orpresently employed by the Company and the Company is current with respect to any fees owed to its accountants andlawyers which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents. (gg)Acknowledgment Regarding Purchaser’s Purchase of Securities. The Company acknowledges and agrees thatthe Purchaser is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and thetransactions contemplated thereby. The Company further acknowledges that the Purchaser is not acting as a financial advisoror fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactionscontemplated thereby and any advice given by the Purchaser or any of their respective representatives or agents in 18 connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchaser’spurchase of the Securities. The Company further represents to the Purchaser that the Company’s decision to enter into thisAgreement and the other Transaction Documents has been based solely on the independent evaluation of the transactionscontemplated hereby by the Company and its representatives. (hh)Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken,directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any securityof the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensationfor soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for solicitinganother to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid tothe Company’s placement agent in connection with the placement of the Securities. (ii)Stock Option Plans. The Company has not knowingly granted, and there is no and has been no Company policyor practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, therelease or other public announcement of material information regarding the Company or its Subsidiaries or their respectivefinancial results or prospects. (jj)Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge,any director, officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctionsadministered by the Office of Foreign Assets Control of the U.S. Treasury Department. (kk)U.S. Real Property Holding Corporation. The Company is not and has never been a U.S. real property holdingcorporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall socertify upon Purchaser’s request. (ll)Bank Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the BankHolding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the FederalReserve System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls,directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-fivepercent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the FederalReserve. Neither the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the managementor policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. 19 (mm)Promotional Stock Activities. Neither the Company, its officers, its directors, nor any affiliates or agents of theCompany have engaged in any stock promotional activity that could give rise to a complaint, inquiry, or trading suspensionby the Commission alleging (i) a violation of the anti-fraud provisions of the federal securities laws, (ii) violations of the anti-touting provisions, (iii) improper “gun-jumping”; or (iv) promotion without proper disclosure of compensation. (nn)Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected toresult in a Material Adverse Effect, the Company (i) has made or filed all United States federal, state and local income and allforeign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) haspaid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due onsuch returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of allmaterial taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaidtaxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Companyknow of no basis for any such claim. (oo)Seniority. As of the Closing Date, other than as set forth on Schedule 3.1(oo), no Indebtedness or other claimagainst the Company is senior to the Notes in right of payment, whether with respect to interest or upon liquidation ordissolution, or otherwise, other than indebtedness secured by purchase money security interests (which is senior only as tounderlying assets covered thereby) and capital lease obligations (which is senior only as to the property covered thereby). (pp)No “Off-balance Sheet Arrangements”. Other than as set forth in Schedule 3.1(pp), neither the Company nor anyof its Affiliates is involved in any “Off-balance Sheet Arrangements”. For purposes hereof an “Off-balance SheetArrangement” means any transaction or contract to which an entity unconsolidated with the Company or any of its Affiliatesis a party and under which either the Company or any such Affiliate has: (i) any obligation under a guarantee contractpursuant to which the Company or any of its Affiliates could be required to make payments to the guaranteed party, includingany standby letter of credit, market value guarantee, performance guarantee, indemnification agreement, keep-well or othersupport agreement; (ii) any retained or contingent interest in assets transferred to such unconsolidated entity that serves ascredit, liquidity or market risk support to the entity in respect of such assets; (iii) any variable interest held in suchunconsolidated entity where such entity provides financing, liquidity, market risk or credit risk support to, or engages inleasing, hedging or research and development services with the Company of any of its Affiliates; and (iv) any liability orobligation of the same nature as those described in clauses (i) through (iii) of this sentence even if of a different name (whetherabsolute, accrued, contingent or otherwise) that would not be required to be reflected in the Company or any of its Affiliates’financial statements. 20 (qq)Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all timesin compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign TransactionsReporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder(collectively, the “Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmentalagency, authority or body or any arbitrator involving the Company or any Subsidiary with respect to the Money LaunderingLaws is pending or, to the knowledge of the Company or any Subsidiary, threatened. (rr)Subsidiary Rights. The Company has the unrestricted right to vote, and (subject to limitations imposed byapplicable law) to receive dividends and distributions on, all capital securities of each of its Subsidiaries as owned by theCompany or any Subsidiary. (ss)Shell Company Status. The Company has never been, and is not presently, an issuer identified as a ShellCompany. (tt)Investor Relations. Other than as set forth in Schedule 3.1(tt), the Company is not currently a party, nor does itintend to become a party, to any agreement pursuant to which the Company will receive investor relations services. (uu)Full Disclosure. No representation or warranty by the Company in this Agreement and no statement contained inthe Disclosure Schedules to this Agreement or any certificate or other document furnished or to be furnished to thePurchasers pursuant to this Agreement contains any untrue statement of a material fact, or omits to state a material factnecessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading. (vv)No Bad Actor Disqualification Event. After reasonable inquiry, none of the “Bad Actor” disqualifying eventsdescribed in Rule 506(d)(l) under the Securities Act (a “Disqualification Event”) is applicable to Company or to Company’sknowledge any of its Affiliates, except a Disqualification Event as to which Rule 506(d)(2)(iii) applies. (ww)Company has not, and will not, engage in any directed selling efforts in the United States in respect of theSecurities. Company is offering and selling the Securities only to non U.S. Persons, in compliance with the offeringrestriction requirements of Regulation S. 3.2Representations and Warranties of the Purchaser. Each Purchaser, for itself and for no other Purchaser, hereby representsand warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein in whichcase they shall be accurate as of such date): 21 (a)Organization; Authority. The Purchaser is either an individual or an entity duly incorporated or formed, validlyexisting and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate,partnership, limited liability company or similar power and authority to enter into and to consummate the transactionscontemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. Theexecution and delivery of the Transaction Documents and performance by the Purchaser of the transactions contemplated bythe Transaction Documents have been duly authorized by all necessary corporate, partnership, limited liability company orsimilar action, as applicable, on the part of the Purchaser. Each Transaction Document to which it is a party has been dulyexecuted by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the validand legally binding obligation of the Purchaser, enforceable against it in accordance with its terms, except: (i) as limited bygeneral equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of generalapplication affecting enforcement of creditors’ rights generally; (ii) as limited by laws relating to the availability of specificperformance, injunctive relief or other equitable remedies; and (iii) insofar as indemnification and contribution provisions maybe limited by applicable law. (b)Own Account. The Purchaser understands that the Securities are “restricted securities” and have not beenregistered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its ownaccount (this representation and warranty not limiting the Purchaser’s right to sell the Securities in compliance with applicablefederal and state securities laws). The Purchaser is acquiring the Securities hereunder in the ordinary course of its business. (c)Purchaser Status. At the time the Purchaser was offered the Securities, it was, and as of the date hereof it is an“accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act. (d)Experience of the Purchaser. The Purchaser, either alone or together with its representatives, has such knowledge,sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of theprospective investment in the Securities, and has so evaluated the merits and risks of such investment. The Purchaser is ableto bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of suchinvestment. (e)General Solicitation. The Purchaser is not purchasing the Securities as a result of any advertisement, article, noticeor other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast overtelevision or radio or presented at any seminar or any other general solicitation or general advertisement. 22 (f)Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, thePurchaser has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with thePurchaser, executed any purchases or sales, including Short Sales, of the securities of the Company during the periodcommencing as of the time that the Purchaser first received a term sheet (written or oral) from the Company or any otherPerson representing the Company setting forth the material terms of the transactions contemplated hereunder and endingimmediately prior to the execution hereof. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managedinvestment vehicle whereby separate portfolio managers manage separate portions of the Purchaser’s assets and the portfoliomanagers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions ofthe Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by theportfolio manager that made the investment decision to purchase the Securities covered by this Agreement. Other than toother Persons party to this Agreement, the Purchaser has maintained the confidentiality of all disclosures made to it inconnection with this transaction (including the existence and terms of this transaction). (g)Non U.S. Person. The Purchaser is not a “U.S. Person” as that term is defined in Regulation S under theSecurities Act, and is not acquiring the Securities for the account or beneficial ownership of any U.S. Person. (h)No Short Sales. Neither Purchaser nor any Affiliate of Purchaser (i) holds any short position in the CommonStock, (ii) has ever engaged in, directly or indirectly, any Short Sale of the Common Stock, or (iii) has ever engaged in,directly or indirectly, any hedging transaction with regard to the Common Stock. (i)Not a Bad Actor. After reasonable inquiry, none of the “Bad Actor” disqualifying events described in Rule 506(d)(l) under the Securities Act is applicable to the Purchaser or any of its Affiliates. The Purchaser is not now, and has neverbeen, subject to any final cease and desist order or any penalty from the Commission or any court of competent jurisdictionfor any violation of any provision of the Securities Act or the Exchange Act, or any of the regulations promulgatedthereunder. (j)Not an Affiliate. The Purchaser is not now, and has never been, an Affiliate of the Company or any otherPurchaser. The Purchaser is not now, and has never been, part of any group of Persons that would be required underSection 13(d) of the Exchange Act, or the rules and regulations promulgated thereunder, to file a statement on Schedule 13Dor Schedule 13G with regard to the Company. The Company acknowledges and agrees that the representations contained in Section 3.2 shall not modify, amend or affect thePurchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations andwarranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connectionwith this Agreement or the consummation of the transaction contemplated hereby. 23 ARTICLE IV.OTHER AGREEMENTS OF THE PARTIES 4.1Transfer Restrictions. (a)The Securities may only be disposed of in compliance with state and federal securities laws. In connection withany transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to anAffiliate of a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may require thetransferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to theCompany, at the Company’s sole expense in the form and substance of which opinion shall be reasonably satisfactory to theCompany, to the effect that such transfer does not require registration of such transferred Securities under the SecuritiesAct. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement andshall have the rights and obligations of a Purchaser under this Agreement. (b)The Purchaser agrees to the imprinting, so long as is required by this Section 4.1, of a legend on any of theSecurities in the following form: THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSIONOR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON REGULATION S OR ANEXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TOREGULATION S OR AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT ORPURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THEREGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLESTATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFERORTO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THECOMPANY. The Company acknowledges and agrees that the Purchaser may from time to time pledge, pursuant to a bona fide marginagreement with a registered broker-dealer, or grant a security interest in some or all of the Securities to a financial institutionthat is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by theprovisions of this Agreement and, if required under the terms of such arrangement, the Purchaser may transfer pledged orsecured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of theCompany and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connectiontherewith. Further, no notice shall be required of such pledge. At the Company’s expense, the Company will execute anddeliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection witha pledge or transfer of the Securities. 24 4.2[Reserved]. 4.3[Reserved]. 4.4Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of anysecurity (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner thatwould require the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale ofthe Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior tothe closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction. 4.5[Reserved]. 4.6Shareholder Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, anyother Person, that the Purchaser is an “acquiring person” or such similar term under any control share acquisition, businesscombination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect orhereafter adopted by the Company, or that the Purchaser could be deemed to trigger the provisions of any such plan or arrangement, byvirtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and thePurchaser. 4.7[Reserved]. 4.8Use of Proceeds. The Company shall use the net proceeds as set forth in Schedule 4.8. 4.9Indemnification of Purchaser. Subject to the provisions of this Section 4.9, the Company will indemnify and hold thePurchaser and its directors, officers, managers, shareholders, members, partners, employees and agents (and any other Persons with afunctionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person whocontrols the Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors,officers, managers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role ofa Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “PurchaserParty”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including alljudgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any the PurchaserParty may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreementsmade by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the PurchaserParties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of thePurchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based inwhole or in part upon a breach of the Purchaser Party’s representations, warranties or covenants 25 under the Transaction Documents or any agreements or understandings the Purchaser Party may have with any such stockholder orany violations by such Purchaser Party of state or federal securities laws or any conduct by the Purchaser Party which constitutesfraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect ofwhich indemnity may be sought pursuant to this Agreement, the Purchaser Party shall promptly notify the Company in writing, and theCompany shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the PurchaserParty. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof,but the fees and expenses of such counsel shall be at the expense of the Purchaser Party except to the extent that (i) the employmentthereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time toassume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict onany material issue between the position of the Company and the position of the Purchaser Party, in which case the Company shall beresponsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to anyPurchaser Party under this Agreement (x) for any settlement by a Purchaser Party effected without the Company’s prior writtenconsent, which shall not be unreasonably withheld or delayed; or (y) to the extent, but only to the extent that a loss, claim, damage orliability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by thePurchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by this Section 4.9 shall bemade by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received orare incurred. The indemnification contained herein shall be in addition to any cause of action or similar right of any Purchaser Partyagainst the Company or others and any liabilities the Company may be subject to pursuant to law. 4.10[Reserved]. 4.11Certain Transactions. The Purchaser covenants and agrees that neither it, nor any Affiliate acting on its behalf or pursuantto any understanding with it will execute any Short Sales of the Common Stock or (ii) hedging transaction, which establishes a netshort position with respect to the Company’s Common Stock) during the period commencing with the execution of this Agreement andending on the earlier of the Maturity Date (as defined in the Notes) of the Notes or the full repayment of the Notes; provided that thisprovision shall not operate to restrict a Purchaser’s trading under any prior securities purchase agreement containing contractual rightsthat explicitly protects such trading in respect of the previously issued securities. 26 4.12 Securities Laws Disclosure; Publicity. The Company and the Purchaser shall consult with each other in issuing anypublic disclosure with respect to the transactions contemplated hereby, and neither the Company nor the Purchaser shall issue any suchpublic disclosure nor otherwise make any such public statement without the prior consent of the Company, with respect to any pressrelease of the Purchaser, or without the prior consent of the Purchaser, with respect to any press release of the Company, whichconsent shall not unreasonably be withheld or delayed, except if such disclosure is required by law or rules of the principal TradingMarket, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement orcommunication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of the Purchaser, or include thename of the Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior writtenconsent of the Purchaser, except: (a) as required by federal securities law in connection with any registration statement contemplated bythis Agreement and (b) to the extent such disclosure is required by law or Trading Market regulations, in which case the Companyshall provide the Purchaser with prior notice of such disclosure permitted under this clause (b). 4.13 Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required underRegulation D and to provide a copy thereof, promptly upon request of the Purchaser. The Company shall take such action as theCompany shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to thePurchaser at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence ofsuch actions promptly upon request of the Purchaser. 4.14 Subsequent Equity Sales. (a)For so long as any of the Notes remain outstanding, the Company shall be prohibited from effecting or enteringinto an agreement to effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common StockEquivalents (or a combination of units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction” means atransaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable orexercisable for, or include the right to receive, additional shares of Common Stock either (A) at a conversion price, exerciseprice or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the shares ofCommon Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise orexchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security orupon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or themarket for the Common Stock or (ii) enters into any agreement, including, but not limited to, an equity line of credit, wherebythe Company may issue securities at a future determined price. 27 (b)For as long as any of the Notes remain outstanding, neither the Company nor any of its affiliates or Subsidiaries,nor any of its or their respective officers, employees, directors, agents or other representatives, will (without the prior writtenconsent of the Purchaser), directly or indirectly: (a) solicit, initiate, encourage or accept any other inquiries, proposals or offersfrom any Person relating to any exchange (i) of any security of the Company or any of its Subsidiaries for any other securityof the Company or any of its Subsidiaries, except to the extent (x) consummated pursuant to the terms of Common ShareEquivalents of the Company as in effect as of the date hereof and disclosed in filings with the Commission prior to the datehereof (without giving effect to any amendment, modification, change or waiver of any terms thereof occurring on or after thedate hereof or not disclosed in a filing by the Company with the Commission prior to the date hereof) or (ii) of anyindebtedness or other securities of, or claim against, the Company or any of its Subsidiaries pursuant to a registrationstatement filed with the Commission or relying on any exemption under the Securities Act (including, without limitation,Section 3(a)(10) of the Securities Act (any such transaction described in clauses (i) or (ii), an “Exchange Transaction”); (b)enter into, effect, alter, amend, announce or recommend to its stockholders any Exchange Transaction with any Person; or (c)participate in any discussions, conversations, negotiations or other communications with any Person regarding any ExchangeTransaction, or furnish to any Person any information with respect to any Exchange Transaction, or otherwise cooperate inany way, assist or participate in, facilitate or encourage any effort or attempt by any Person to seek an Exchange Transactioninvolving the Company or any of its Subsidiaries. For as long as the Notes remain outstanding, neither the Company nor anyof its affiliates or Subsidiaries, nor any of its or their respective officers, employees, directors, agents or other representatives,will, directly or indirectly, cooperate in any way, assist or participate in, facilitate or encourage any effort or attempt by anyPerson to effect any acquisition of securities or indebtedness of, or claim against, the Company by such Person from anexisting holder of such securities, indebtedness or claim in connection with a proposed exchange of such securities orindebtedness of, or claim against, the Company (whether pursuant to Section 3(a)(9) or 3(a)(10) of the Securities Act orotherwise) (a “Third Party Exchange Transfer”). The Company, its affiliates and Subsidiaries, and each of its and theirrespective officers, employees, directors, agents or other representatives shall immediately cease and cause to be terminated allexisting discussions, conversations, negotiations and other communications with any Persons with respect to any of theforegoing. For all purposes of this Agreement, violations of the restrictions set forth in this Section 4.14 by any Subsidiary oraffiliate of the Company, or any officer, employee, director, agent or other representative of the Company or any of itsSubsidiaries or affiliates shall be deemed a direct breach of this Section 4.14 by the Company. (c)From the date hereof until sixty (60) calendar days after the Closing Date, neither the Company nor any Subsidiaryshall, directly or indirectly, except with respect to the proposed $20,000,000 private investment in public equitiescontemplated to be completed by May 31, 2019, and as otherwise permitted under this Agreement, issue, offer, sell, grant anyoption or right to purchase, or otherwise dispose of (or announce any issuance, offer, sale, grant of any option or right topurchase or other disposition of) any equity security or any equity-linked or related security (including, without limitation, any“equity 28 security” (as that term is defined under Rule 405 promulgated under the Securities Act), any Common Shares or CommonShare Equivalents, any debt securities, any preferred stock or any purchase rights) or otherwise amend, modify, waiver oralter any terms of conditions of any Common Share Equivalents outstanding as of the date hereof to decrease the exercise,conversion and/or exchange price, as applicable, thereunder or otherwise increase the aggregate number of Common Sharesissuable in connection therewith. (d)The Purchaser shall be entitled to obtain injunctive relief against the Company to preclude any such issuance,which remedy shall be in addition to any right to collect damages. Notwithstanding the foregoing, this Section 4.14 shall notapply in respect of an Exempt Issuance, except that no Variable Rate Transaction shall be an Exempt Issuance. 4.15. Regulation S Compliance. Each Purchaser agrees that, during the six (6) months following the Closing, it shall notengage in any transaction involving any securities of the Company that would be prohibited or restricted by, or would otherwise renderunavailable any applicable safe harbor provided by Regulation S.4.16. Opinion. The Company shall, forthwith (and in any event within 5 days) upon request of any Purchaser, deliver to thePurchasers an opinion of the Company’s counsel with respect to the Company, the Transaction Documents and the security granted inconnection therewith, in form and substance satisfactory to the Purchasers. ARTICLE V.MISCELLANEOUS 5.1Termination. This Agreement may be terminated by the Purchaser, as to the Purchaser’s obligations hereunder only andwithout any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties,if the Closing has not been consummated on or before May 10, 2019; provided, however, that such termination will not affect the rightof any party to sue for any breach by any other party (or parties). 5.2Fees and Expenses. The Company has agreed to bear all fees, disbursements, and expenses in connection with thetransactions contemplated herein, including, without limitation, the Company’s legal and accounting fees and disbursements, the costsincident to the preparation, printing and distribution of any registration statement, filing fees, UCC fees, and costs associated with theIntellectual Property Security Agreement. The Company shall pay all stamp taxes and other taxes and duties levied in connection withthe delivery of any Securities to the Purchasers in connection with the transactions contemplated hereby.5.3Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entireunderstanding of the parties hereto with respect to the subject matter hereof and thereof and supersede all prior agreements andunderstandings, oral or written, with respect to such matters, which the parties hereto acknowledge have been merged into suchdocuments, exhibits and schedules. 29 5.4Notices. Any and all notices or other communications or deliveries to be provided by the Purchaser hereunder shall be inwriting and delivered personally, by email or facsimile, or sent by a nationally recognized overnight courier service, addressed to theCompany at 1633 Broadway, Suite 22C, New York, New York 10019, 917-591-5970, bkeck@delcath.com or such other address,facsimile number, or email address as the Company may specify for such purposes by notice to the Purchaser delivered in accordancewith this Section 5.4. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be inwriting and delivered personally, by email or facsimile, or sent by a nationally recognized overnight courier service addressed to eachPurchaser at the email address, facsimile number, or address of the Purchaser appearing on the books of the Company, or if no suchemail address, facsimile number, or address appears on the books of the Company, at the principal place of business of suchPurchaser. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest (i) the dateof transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address set forth onthe signature pages attached hereto prior to 12:00 p.m. (New York City time) on any date, (ii) the next Trading Day after the date oftransmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address set forth onthe signature pages attached hereto on a day that is not a Trading Day or later than 12:00 p.m. (New York City time) on any TradingDay, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (iv)upon actual receipt by the party to whom such notice is required to be given. 5.5Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in awritten instrument signed, in the case of an amendment, by the Company and Purchasers holding at least 50.1% in interest of theNotes, including the holders of the Rosalind Notes, then outstanding or, in the case of a waiver, by the party against whomenforcement of any such waived provision is sought, provided that if any amendment, modification or waiver disproportionately andadversely impacts a Purchaser (or group of Purchasers), the consent of such disproportionately impacted Purchaser (or group ofPurchasers) shall also be required. No waiver of any default with respect to any provision, condition or requirement of this Agreementshall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision,condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair theexercise of any such right. Any proposed amendment or waiver that disproportionately, materially and adversely affects the rights andobligations of any Purchaser relative to the comparable rights and obligations of the other Purchasers shall require the prior writtenconsent of such adversely affected Purchaser. Any amendment effected in accordance with accordance with this Section 5.5 shall bebinding upon each Purchaser and holder of Securities and the Company. 5.6Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not bedeemed to limit or affect any of the provisions hereof. 5.7No Assignment. No party may assign this Agreement or any rights or obligations hereunder. 30 5.8No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respectivesuccessors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, exceptas otherwise set forth in Sections 4.9 and 5.5. 5.9Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the TransactionDocuments shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, withoutregard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations,enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether broughtagainst a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall becommenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to theexclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of anydispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect tothe enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action orproceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding isimproper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process andconsents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail orovernight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agreesthat such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemedto limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit orproceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under Section4.9, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees andother costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. 5.10Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Securities. 5.11Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall beconsidered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered toeach other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered byfacsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of theparty executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signaturepage were an original thereof. 31 5.12Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction tobe invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remainin full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commerciallyreasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated bysuch term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would haveexecuted the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declaredinvalid, illegal, void or unenforceable. 5.13Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similarprovisions of) any of the other Transaction Documents, whenever the Purchaser exercises a right, election, demand or option under aTransaction Document and the Company does not timely perform its related obligations within the periods therein provided, then thePurchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice,demand or election in whole or in part without prejudice to its future actions and rights. 5.14Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed,the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation),or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to theCompany of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also payany reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities. 5.15Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery ofdamages, the Purchaser and the Company will be entitled to specific performance under the Transaction Documents. The parties agreethat monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained inthe Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligationthe defense that a remedy at law would be adequate. 5.16Payment Set Aside. To the extent that the Company makes a payment or payments to the Purchaser pursuant to anyTransaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds ofsuch enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside,recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or anyother Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause ofaction), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived andcontinued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. 32 5.17Usury. To the extent it may lawful do so, the Company hereby agrees not to insist upon or plead or in any mannerwhatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted,now or at any time hereafter in force, in connection with any claim, action or proceeding that may be brought by the Purchaser in orderto enforce any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in anyTransaction Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents forpayments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”),and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with anyother sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed suchMaximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documentsis increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rateof interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date thereof forward,unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the MaximumRate is paid by the Company to the Purchaser with respect to indebtedness evidenced by the Transaction Documents, such excess shallbe applied by the Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner ofhandling such excess to be at the Purchaser’s election. 5.18Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under theTransaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damagesand other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidateddamages or other amounts are due and payable shall have been cancelled. 5.19Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any rightrequired or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the nextsucceeding Business Day. 5.20Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity torevise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolvedagainst the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. Inaddition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject toadjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the CommonStock that occur after the date of this Agreement. 5.21WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTIONBROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY ANDINTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBYABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY. [Signature Pages Follow] 33 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by theirrespective authorized signatories as of the date first indicated above. DELCATH SYSTEMS, INC. Address for Notice: By: 1633 Broadway Name: Suite 22C Title: New York, New York 10019 Attention: Barbra KeckWith a copy to (which shall not constitute notice): E-Mail: bkeck@delcath.com Wexler Burkhart Hirschberg & Unger, LLP 377 Oak Street Concourse Level Garden City, NY 11530 Attention: Jolie Kahn e-mail: jkahn@WBHULAW.COM [REMAINDER OF PAGE INTENTIONALLY LEFT BLANKSIGNATURE PAGE FOR PURCHASER FOLLOWS] 34 [PURCHASER SIGNATURE PAGES TO DELCATH SYSTEMS, INC. SECURITIES PURCHASE AGREEMENT] IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respectiveauthorized signatories as of the date first indicated above. Name of Purchaser: Rosalind Opportunities Fund I LP Signature of Authorized Signatory of Advisor (Rosalind Advisors, Inc.) of Purchaser: Name of Authorized Signatory: Title of Authorized Signatory: Email Address of Authorized Signatory: Address for Notice to Purchaser: 175 Bloor Street East Suite 1316, North Tower Toronto, ON M4W 3R8 Canada Subscription Amount: $550,000 Name of Purchaser: Rosalind Master Fund LP Signature of Authorized Signatory of Advisor (Rosalind Advisors, Inc.) of Purchaser: Name of Authorized Signatory: Title of Authorized Signatory: Email Address of Authorized Signatory: Address for Notice to Purchaser: 175 Bloor Street East Suite 1316, North Tower Toronto, ON M4W 3R8 Canada Subscription Amount: $550,000 35 SCHEDULE OF PURCHASERS (1)(2)(3)PurchaserPrincipal Amount ofNotesSubscription Amount Rosalind Opportunities Fund I LP$550,000$550,000 Rosalind Master Fund LP$550,000$550,000 36 EXHIBIT A Form of Senior Secured Promissory Notes 37 EXHIBIT B Form of Intellectual Property Security Agreement 38 EXHIBIT C Form of Security Agreement 39 EXHIBIT D Form of Subsidiary Guarantee 40 DISCLOSURE SCHEDULES TO THE SECURITIES PURCHASE AGREEMENT BY AND AMONG DELCATH SYSTEMS, INC. AND EACH OF THE PURCHASERS SIGNATORY THERETO DATED May 9, 2019 These Sections (these “Sections”) of this Disclosure Schedule are numbered to correspond to the corresponding sections of theSecurities Purchase Agreement (the “Agreement”). These Sections have been prepared in accordance with, and subject to, thefollowing terms and conditions: (a)To the extent a Section is intended to qualify a representation or warranty of the Company contained in the Article III of theAgreement, the information and disclosures contained in such Section are intended only to qualify and limit such representation orwarranty and not in any way expand the scope or effect of such representation or warranty. (b)The disclosure of any item in any Section of this Disclosure Schedule will constitute disclosure for purposes of anotherSection if it is reasonably clear from a reading of the disclosure that such disclosure is applicable to such other Sections or Sub-Sections. (c)Inclusion of any item in a Section of this Disclosure Schedule does not constitute a determination by the Company that suchitem is material and shall not be deemed to establish a standard or materiality. No disclosure in any Section of this Disclosure Schedulerelating to any possible breach or violation of any agreement, law or any potential adverse contingency shall be construed as anadmission or indication that any such breach or violation exists or has actually occurred or that such adverse contingency will actuallyoccur. (d)Any capitalized terms not defined in this Disclosure Schedule shall have the meanings assigned thereto in theAgreement. Any section headings or titles used herein are included for convenience only and shall not be considered asrepresentations or warranties as to the type, character or content of the matters referred to thereunder. 41 SCHEDULE 3.1(a) SUBSIDIARIES OF THE COMPANY 1. Delcath Holdings Limited2. Delcath Systems Limited3. Delcath Systems UK Limited4. Delcath Systems GmBH5. Delcath Systems B.V. 42 SCHEDULE 3.1(b)Organization and Qualification None. 43 SCHEDULE 3.1(d) ConflictsNone. 44 SCHEDULE 3.1(g)(i) Capitalization A.Shares beneficially owned by Affiliates: 1,284,329B.12.6 million shares issued since most recent periodic report Rights of Participation: September 2017 Hudson Bay and AltoFebruary 2018: Registered Direct InvestorsJune 2018: Discover Growth Fund, as assigned to Rosalind Master Fund LP by Discover Growth Fund as signatory to the SecuritiesPurchase Agreement dated as of June 4, 2018. Delcath Systems, Inc. Capitalization Table as of April 22, 2019 Authorized Issued Treasury Outstanding Preferred Shares 10,000,000 - - - Common Shares 1,000,000,000 18,277,807 - 18,277,807 Fully diluted common shares: Feb 2015 Warrants ($0.01; exp 2/2020) 9 July 2015 Warrants ($0.01; exp 7/2020) 9 Oct 2016 Warrants ($0.01; exp 10/2021) 11 Feb 2018 Warrants ($10.00; exp 2/2024) 189,000 June 2018 Warrants ($0.01; exp through 6/2024) 16,615,317 June 2018 Warrants ($4.00; exp 6/2023) 1,116,256 July 2018 Warrants ($0.01, exp through 7/2024) 12,168,926 July 2018 Warrants ($4.00 exp 7/2023) 785,737 August 2018 Warrants ($0.01 exp through 8/2024) 23,777,381 August 2018 Warrants ($1.75; exp 8/2023) 2,021,410 Sept 2018 Warrants ($0.01, exp through 9/2024) 830,854 Sept 2018 Warrants ($1.75; exp 9/2023) 279,506 Options 1,250,000 Total shares reserved for warrants and options 59,034,416 Total shares issued and reserved: 77,312,223 45 SCHEDULE 3.1(g)(ii) Corporate Governance of Delcath Systems, Inc. Roger Stoll, Ph.D., ChairmanWilliam RueckertDr. Marco TagliettiDr. Jennifer SimpsonAudit Committee – William Rueckert, Chair; Roger StollCompensation Committee – Marco Taglietti, Chair; William RueckertNominating and Corp. Governance Committee – Roger Stoll, Chair; William Rueckert; Marco Taglietti 46 SCHEDULE 3.1(h) Indebtedness 1. Letter of credit issued by Silicon Valley Bank to Kasowitz, Benson, Torres and Friedman LLP with face amount of $130,663.00. 2. Letter of credit issued by Silicon Valley Bank to SLG 810 7th Avenue Lessee LLC with face amount of $881,297.08. 3. Indebtedness in a maximum amount of $75,000 owed to Silicon Valley Bank under corporate credit card services agreement. 4. Indebtedness between Delcath Systems, Inc. and Delcath Holdings Limited pursuant to a License and Agreement to ShareIntangible Development Costs dated as of January 1, 2012. 5. Indebtedness of $5,478,559 between Delcath Systems, Inc. and Rosalind Master Fund L.P., as assigned to Rosalind Master FundLP by Discover Growth Fund and Discover Growth Fund, LLC as signatories to Securities Purchase Agreements dated as of June 4,2018; July 20, 2018; August 29, 2018; and a Note Purchase and Exchange Agreement dated March 29, 2019 and the 8% SeniorSecured Promissory Notes issued pursuant thereto. 6. Indebtedness of $469,975 between Delcath Systems, Inc. and the institutional investors signatory to Securities Purchase Agreementsdated as of September 21, 2018 and the 8% Senior Secured Convertible Promissory Notes issued pursuant thereto. 7. Indebtedness of $180,000 between Delcath Systems, Inc. and Rosalind Master Fund LP as signatory to the Securities PurchaseAgreement dated as of April 18, 2019 and the 8% Senior Secured Promissory Note issued pursuant thereto. 8. Indebtedness of $370,000 between Delcath Systems, Inc. and Rosalind Master Fund LP and $550,000 between Delcath Systems,Inc. and Rosalind Opportunities Fund I LP, in each case as signatories to the Securities Purchase Agreement dated as of April 26, 2019and the 8% Senior Secured Promissory Notes issued pursuant thereto. Existing Liens 1. Liens of Silicon Valley Bank on account nos. 3301246486 and 3301264690, respectively, securing the letters of credit described innumbers 1 and 2 above. 2. Lien of Silicon Valley Bank account no. 3301464115 securing the Indebtedness described in number 3 above.3. Lien of the institutional investor securing the Obligations described in numbers 5 -8 above. 47 SCHEDULE 3.1(i) SEC Reports; Financial Statements The Company has not timely filed its Annual Report on Form 10-K or its Proxy Statement for the year ended December 31, 2018.The Company will not timely file its Quarterly Report on Form 10-Q for the quarter ended March 31, 2019. 48 SCHEDULE 3.1(j) Material Changes; Undisclosed Events, Liabilities or Developments See Schedule 3.1(m). 49 SCHEDULE 3.1(k) Litigation 1.In March 2019, the Company sued two affiliated Iroquois Funds and FirstFire seeking declaratory judgment, among otherremedies, that the February 2018 warrants issued to them are deemed to not including an “exploding” antidilution featureupon a down round financing. The suit was filed in New York State Supreme Court in NY County, NY.See Schedule 3.1(m) below for any potential claims. 50 SCHEDULE 3.1(m) Compliance UBC Demand Letter for $2,106,116.00.Payables to Roth Capital in the amount of $552,642.60.Notices of Default from Discover Growth Fund, Discover Growth Fund, LLC, Bigger Capital Fund, LP and District 2 Capital FundLP in respect of the Indebtedness listed in paragraph 5 of Schedule 3.1(h). 51 SCHEDULE 3.1(o) Title to AssetsSee Schedule 3.1(h). 52 SCHEDULE 3.1(p) Material AgreementsSee Schedule 3.1(m). 53 SCHEDULE 3.1(q) Intellectual Property None. 54 SCHEDULE 3.1(r) Transactions with Affiliates and Employees Herein below are all back salaries and unreimbursed employee expenses through April 15, 2019: Jennifer Simpson $ 862,376Barbra Keck $ 536,181John Purpura $ 553,491All other employees $ 335,670 $ 2,287,718 55 SCHEDULE 3.1(s) Cash Payments None. 56 SCHEDULE 3.1(u) Certain Fees Fees to Roth Capital Partners, LLC under waiver letter with Roth Capital Partners, LLCFees to Think Equity under Engagement Letter 57 SCHEDULE 3.1(x) Registration Rights Warrants issued in February 2018September 21, 2018 Securities Purchase Agreement 58 SCHEDULE 3.1(ee) Accountants Marcum LLPGrant Thornton LLP (with respect to 2015, 2016 and 2017 audited financials only) 59 SCHEDULE 3.1(oo) Seniority See Schedule 3.1(h). 60 SCHEDULE 3.1(pp) Off-balance Sheet Arrangements None. 61 SCHEDULE 3.1(tt) Investor Relations None. 62 SCHEDULE 4.8 Use of Proceeds General working capital purposes. 63Exhibit 10.46 SECURITIES PURCHASE AGREEMENT This Securities Purchase Agreement (this “Agreement”) is dated as of May 23, 2019, by and among Delcath Systems, Inc.,a Delaware corporation (the “Company”), and the purchasers identified on the signature pages hereto (each, a “Purchaser,” or in theaggregate, the “Purchasers”). WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the SecuritiesAct of 1933, as amended (the “Securities Act”), Regulation S and Rule 506(b) promulgated thereunder, the Company desires to sell,and the Purchasers desire to purchase from the Company, the Securities (as defined herein). NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other goodand valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree asfollows: ARTICLE I.DEFINITIONS 1.1Definitions. In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwisedefined herein have the meanings given to such terms in the Transaction Documents (as defined herein), and (b) the following termshave the meanings set forth in this Section 1.1: “Action” shall have the meaning ascribed to such term in Section 3.1(k). “Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or isunder common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act. “BHCA” shall have the meaning ascribed to such term in Section 3.1(ll). “Board of Directors” means the board of directors of the Company. “Business Day” means any day except any Saturday, any Sunday, or any other day on which the Federal Reserve Bank ofNew York is closed. “Closing Date” means the Trading Day(s) on which all of the Transaction Documents have been executed and delivered bythe applicable parties thereto in connection with a Closing, and all conditions precedent to (i) the Purchaser’s obligations topay the Subscription Amount as to the Closing and (ii) the Company’s obligations to deliver the Securities as to the Closing,in each case, have been satisfied or waived. “Closing” means closing of the purchase and sale of the Securities pursuant to Section 2.2. 1 “Commission” means the United States Securities and Exchange Commission. “Common Stock” means the common stock of the Company, par value $0.01 per share, and any other class of securities intowhich such securities may hereafter be reclassified or changed. “Disclosure Schedules” shall have the meaning ascribed to such term in Section 3.1. “Evaluation Date” shall have the meaning ascribed to such term in Section 3.1(t). “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgatedthereunder. “Exchange Transaction” shall have the meaning ascribed to such term in Section 4.15(b). “Exempt Issuance” means the issuance of (a) shares of Common Stock, restricted stock units or options to employees,officers, directors, advisors or independent contractors of the Company pursuant to any stock or option plan duly adopted forsuch purpose, (b) shares of Common Stock, warrants or options to advisors or independent contractors of the Company forcompensatory purposes, (c) securities exercisable or exchangeable for or convertible into shares of Common Stock issuedand outstanding on the date hereof, provided that such securities have not been amended since the date hereof to increase thenumber of such securities or to decrease the exercise price, exchange price or conversion price of such securities, (d)securities issuable pursuant to any contractual anti-dilution, most favored nations or similar obligations of the Company ineffect as of the date hereof, provided that such obligations have not been materially amended since the date of hereof, and (e)securities issued pursuant to acquisitions or any other strategic transactions approved by the Board of Directors, providedthat any such issuance shall not include a transaction in which the Company is issuing securities primarily for the purpose ofraising capital or to an entity whose primary business is investing in securities. “FCPA” means the Foreign Corrupt Practices Act of 1977, as amended. “Federal Reserve” shall have the meaning ascribed to such term in Section 3.1(ll).“GAAP” shall have the meaning ascribed to such term in Section 3.1(i). “Guarantors” mean collectively, the Subsidiaries of the Company who are party to the Subsidiary Guarantee. “Indebtedness” means except for Permitted Indebtedness, (a) any liabilities for borrowed money or amounts owed in excessof $100,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsementsand other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected inthe Company’s consolidated balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instrumentsfor deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any leasepayments in excess of $100,000 due under leases required to be capitalized in accordance with GAAP.2 “Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(q). “Intellectual Property Security Agreement” means that certain Intellectual Property Security Agreement required to bedelivered pursuant to Section 2.3 of this Agreement, in the form attached hereto as Exhibit B. “Liabilities” means all direct or indirect liabilities, Indebtedness and obligations of any kind of Company to the Purchaser,howsoever created, arising or evidenced, whether now existing or hereafter arising (including those acquired by assignment),absolute or contingent, due or to become due, primary or secondary, joint or several, whether existing or arising throughdiscount, overdraft, purchase, direct loan, participation, operation of law, or otherwise, including, but not limited to, pursuantto the Note, this Agreement and/or any of the other Transaction Documents, all accrued but unpaid interest on the Note, anyletter of credit, any standby letter of credit, and/or outside attorneys’ and paralegals’ fees or charges relating to thepreparation of the Transaction Documents and the enforcement of the Purchaser’s rights, remedies and powers under thisAgreement, the Note and/or the other Transaction Documents. “Liens” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or otherrestriction. “Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b). “Material Permits” shall have the meaning ascribed to such term in Section 3.1(n). “Maximum Rate” shall have the meaning ascribed to such term in Section 5.17. “Money Laundering Laws” shall have the meaning ascribed to such term in Section 3.1(qq). “Notes” means collectively, the 8% Senior Secured Promissory Notes issued by the Company to each Purchaser hereunder,each in the form of Exhibit A attached hereto. “Off-balance Sheet Arrangement” shall have the meaning ascribed to such term in Section 3.1(pp). “Permitted Indebtedness” means the letters of credit and secured accounts listed in Schedule 3.1(h). “Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture,limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. 3 “Principal Amount” means, as to the Purchaser, the principal amount of the Notes set forth opposite such Purchaser’s namein column (2) on the Schedule of Purchasers attached hereto in United States Dollars. “Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informalinvestigation or partial proceeding, such as a deposition), whether commenced or threatened. “Purchaser Party” shall have the meaning ascribed to such term in Section 4.9. “Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e). “Rosalind Notes” means the Notes originally held by Rosalind Opportunities Fund I LP and Rosalind Master Fund LP. “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such rule may be amendedfrom time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effectas such rule. “SEC Reports” shall have the meaning ascribed to such term in Section 3.1(i). “Securities” means the Notes to be issued to the Purchaser pursuant to this Agreement. “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. “Security Agreement” means the Security Agreement dated on the date hereof by and among the Company, the Company’sSubsidiaries, and the Purchaser, as hereinafter amended and/or supplemented altogether with all exhibits, schedules andannexes to such Security Agreement, pursuant to which all Liabilities of the Company to the Purchaser under theTransaction Documents are secured by the Collateral (as defined in the Security Agreement), which security interest in theCollateral shall be perfected by the Purchaser’s UCC-1, filed with the Secretary of State of the State of Delaware, to theextent perfectable by the filing of a UCC-1 Financing Statement, or if applicable, a UCC-3 Financing StatementAmendment and such other documents and instruments related thereto, which Security Agreement is annexed hereto asExhibit C. “Shell Company” means an entity that fits within the definition of “shell company” under Section 12b-2 of the ExchangeAct and Rule 144. “Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act. 4 “Subscription Amount” means, as to the Purchaser, the aggregate amount to be paid for the Notes purchased hereunder asspecified below the Purchaser’s name on the signature page of this Agreement and next to the heading “SubscriptionAmount,” in United States dollars and in immediately available funds. “Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, also includeany direct or indirect subsidiary of the Company formed or acquired after the date hereof. “Subsidiary Guarantee” means the Subsidiary Guarantee, dated as of the date hereof, pursuant to which the Subsidiarieshave jointly and severally agreed to guarantee and act as surety for the Company’s obligation to repay the Notes, in the formattached hereto as Exhibit D. “Third Party Exchange Transfer” shall have the meaning ascribed to such term in Section 4.14(b). “Trading Day” means a day on which the principal Trading Market is open for trading. “Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted fortrading on the date in question: the NYSE American; the Nasdaq Capital Market; the Nasdaq Global Market; the NasdaqGlobal Select Market; the New York Stock Exchange; OTC Markets or the OTC Bulletin Board (or any successors to anyof the foregoing). “Transaction Documents” means this Agreement, the Notes, the Security Agreement, the Intellectual Property SecurityAgreement, the Subsidiary Guarantee and all exhibits and schedules thereto and hereto and any other documents oragreements executed in connection with the transactions contemplated hereunder. “Variable Rate Transaction” shall have the meaning ascribed to such term in Section 4.14(a). 5 ARTICLE II.PURCHASE AND SALE 2.1Purchase. On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent withthe execution and delivery of this Agreement by the parties hereto, the Company shall sell and issue to each Purchaser, and eachPurchaser shall purchase, severally and not jointly, from the Company, Notes with an aggregate Principal Amount equal to the amountset forth opposite such Purchaser’s name in column (2) on the Schedule of Purchasers attached hereto. The purchase of the Notes willbe completed in a single tranche as provided herein. 2.2Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, concurrent with the executionand delivery of this Agreement by the parties hereto, the Company agrees to sell, and each Purchaser agrees to purchase, theSubscription Amount of Notes as set forth on the signature page hereto executed by such Purchaser. At the Closing, each Purchasershall deliver to the Company, via wire transfer to an account designated by the Company, immediately available funds equal to suchPurchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser, and the Company shall deliverto such Purchaser its Notes as set forth in Section 2.3(a), and the Company and such Purchaser shall deliver the other items set forth inSection 2.3 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.3 and 2.4 for Closing,such Closing shall be undertaken remotely by electronic exchange of Closing documentation. There may be multiple closings so longas at each Closing the obligations under Section 2.3 are met. 2.3Deliveries. (a)On or prior to the Closing Date (except as otherwise agreed by the Purchaser), the Company shall deliver or causeto be delivered to each Purchaser the following: (i) this Agreement duly executed by the Company; (ii) the Notes with an aggregate Principal Amount equal to the amount set forth opposite such Purchaser’s namein column (2) on the Schedule of Purchasers attached hereto, registered in the name of the Purchaser; (iii)the Security Agreement, duly executed by the Company (and for all Closings after the first Closing,additional Purchasers shall merely sign a signature page and be an additional party to the Security Agreement); (iv) the Intellectual Property Security Agreement, duly executed by the Company (and for all Closingsafter the first Closing, additional Purchasers shall merely sign a signature page and be an additional party to theIntellectual Property Security Agreement); 6 (v) the Subsidiary Guarantee, duly executed by the Company’s Subsidiaries (and for all Closings after thefirst Closing, additional Purchasers shall merely sign a signature page and be an additional party to the SubsidiaryGuarantee); (vi)a certificate evidencing the Company’s qualification as a foreign corporation and good standing issuedby the Secretary of State (or comparable office) of each jurisdiction, if any, in which the Company conductsbusiness and is required to so qualify, as of a date within ten (10) days of the Closing Date; and (vii)such other documents, instruments or certificates relating to the transactions contemplated by thisAgreement as such Purchaser or its counsel may reasonably request. (b)On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company, asapplicable, the following: (i)this Agreement, duly executed by the Purchaser; (ii)the Purchaser’s Subscription Amount by wire transfer to the account specified in writing by theCompany; (iii)the Security Agreement, duly executed by the Purchaser; and (iv)the Intellectual Property Security Agreement, duly executed by the Purchaser. 2.4Closing Conditions. (a)The obligations of the Company hereunder in connection with the Closing are subject to the following conditionsbeing met: (i)the accuracy in all material respects as at Closing Date of the representations and warranties of thePurchaser contained herein (unless as of a specific date therein in which case they shall be accurate as of suchdate); (ii)all obligations, covenants and agreements of the Purchaser required to be performed at or prior to theClosing Date shall have been performed; and (iii)the delivery by the Purchaser of the items set forth in Section 2.3(b) of this Agreement. 7 (b)The respective obligations of each Purchaser hereunder in connection with the Closing are subject to thefollowing conditions being met: (i)the accuracy in all material respects when made as to the Closing Date of the representations andwarranties of the Company contained herein (unless as of a specific date therein); (ii)all obligations, covenants and agreements of the Company required to be performed at or prior to theClosing Date shall have been performed; (iii)the delivery by the Company of the items set forth in Section 2.3(a) of this Agreement; (iv)there is no existing Event of Default (as defined in the Notes) and no existing event which, with thepassage of time or the giving of notice, would constitute an Event of Default; (v)there is no breach of any obligations, covenants and agreements under the Transaction Documents andno existing event which, with the passage of time or the giving of notice, would constitute a breach under theTransaction Documents; (vi)there shall have been no Material Adverse Effect with respect to the Company since the date hereof; (vii)from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspendedby the Commission or the Company’s principal Trading Market and, at any time prior to the Closing Date, tradingin securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum pricesshall not have been established on securities whose trades are reported by such service, or on any Trading Market,nor shall a banking moratorium have been declared either by the United States or New York State authorities norshall there have occurred any material outbreak or escalation of hostilities or other national or internationalcalamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in eachcase, in the reasonable judgment of the Purchaser, and without regard to any factors unique to the Purchaser,makes it impracticable or inadvisable to purchase the Securities at the Closing; (viii)[reserved]; (ix)[reserved]; and (x)any other conditions contained herein or the other Transaction Documents, including, without limitationthose set forth in Section 2.3 herein. 8 2.5Minimum and Maximum. Each Purchaser must purchase Securities for a minimum subscription amount of at least$100,000. Provided, however, that if necessary to meet Company’s existing obligations under rights of participation, the minimumsubscription amount per party may be reduced pro rata to the extent necessary to enable all persons with such rights that desire toparticipate to so participate. The aggregate subscription amount for all securities to all Purchasers may not exceed $4,000,000. ARTICLE III.REPRESENTATIONS AND WARRANTIES 3.1Representations and Warranties of the Company. Except as set forth in the disclosure schedules attached hereto (the“Disclosure Schedules”), which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or otherwisemade herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules, the Company (whichfor purposes of this Section 3.1 means the Company and all of its Subsidiaries) hereby makes the following representations andwarranties to each Purchaser as of the Closing Date: (a)Subsidiaries. All of the direct and indirect Subsidiaries and parent entities of the Company are set forth onSchedule 3.1(a) hereto. The Company owns, directly or indirectly, all of the capital stock or other equity interests of eachSubsidiary free and clear of any Liens, other than as set forth on Schedule 3.1(a) hereto, and all of the issued and outstandingshares of capital stock or other equity interests of each Subsidiary are validly issued and are fully paid, non-assessable andfree of preemptive and similar rights to subscribe for or purchase securities. (b)Organization and Qualification. The Company is an entity duly incorporated or otherwise organized and validlyexisting, and, other than as set forth on Schedule 3.1(b) hereto, the Company is in good standing, under the laws of thejurisdiction of its incorporation or organization, as applicable, with the requisite power and authority to own and use itsproperties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary or parententity of the Company is in violation or default of any of the provisions of its respective certificate or articles ofincorporation, bylaws or other organizational or charter documents. The Company is duly qualified to conduct business andis in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conductedor property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing,as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validityor enforceability of any Transaction Document; (ii) a material adverse effect on the results of operations, assets, business,prospects or condition (financial or otherwise) of the Company, its parent entities and the Subsidiaries, taken as a whole; or(iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligationsunder any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been institutedin any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority orqualification.9 (c)Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and toconsummate the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwiseto carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and each of the otherTransaction Documents by the Company and the consummation by it of the transactions contemplated hereby and therebyhave been duly authorized by all necessary action on the part of the Company and no further action is required by theCompany, the Board of Directors or the Company’s stockholders in connection herewith or therewith other than inconnection with the Required Approvals. This Agreement and each other Transaction Documents to which it is a party hasbeen (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the termshereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company inaccordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency,reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally; (ii) aslimited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies; and(iii) insofar as indemnification and contribution provisions may be limited by applicable law. (d)No Conflicts. The execution, delivery and performance by the Company of this Agreement and the otherTransaction Documents to which it is a party, the issuance and sale of the Securities and the consummation by it of thetransactions contemplated hereby and thereby do not and will not, except as set forth on Schedule 3.1(d): (i) conflict with orviolate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or otherorganizational or charter documents; (ii) conflict with, or constitute a default (or an event that with notice or lapse of time orboth would become a default) under, result in the creation of any Lien (except Liens in favor of the Purchaser) upon any ofthe properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment,acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or otherinstrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or anySubsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected; or(iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment,injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary issubject (including federal and state securities laws and regulations), or by which any property or asset of the Company or aSubsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably beexpected to result in a Material Adverse Effect. (e)Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization ororder of, give any notice to, or make any filing or registration with, any court or other federal, state, local or othergovernmental authority or other Person in connection with the execution, delivery and performance by the Company of theTransaction Documents, other than: (i) the filings required pursuant to10 Section 4.13 of this Agreement; (ii) the notice and/or application(s) to each applicable Trading Market for the issuance andsale of the Securities in the time and manner required thereby; and (iii) the filing of Form D with the Commission and suchfilings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”). (f)Issuance of the Securities. The Securities are duly authorized and, when issued and paid for in accordance withthe applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of allLiens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. (g)Capitalization; Corporate Governance. (i) The capitalization of the Company is as set forth on Schedule 3.1(g)(i), which Schedule 3.1(g)(i) shall alsoinclude (A) the number of shares of Common Stock owned beneficially, and of record, by Affiliates of theCompany as of the date hereof and (B) the number of authorized and reserved shares of capital stock of theCompany. The Company has not issued capital stock since its most recently filed periodic report under theExchange Act except as set forth on Schedule 3.1(g)(i), except the issuance of shares of Common Stock toemployees pursuant to the Company’s employee stock purchase plans and except pursuant to the conversionand/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic reportunder the Exchange Act except as set forth on Schedule 3.1(g)(i). No Person has any right of first refusal,preemptive right, right of participation, or any similar right to participate in the transactions contemplated by theTransaction Documents except as set forth on Schedule 3.1(g)(i). There are no outstanding options, warrants, scriprights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights orobligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for oracquire any shares of Common Stock, or contracts, commitments, understandings or arrangements by which theCompany or any Subsidiary is or may become bound to issue additional shares of Common Stock or CommonStock Equivalents except as set forth on Schedule 3.1(g)(i). The issuance and sale of the Securities will notobligate the Company to issue shares of Common Stock or other securities to any Person and will not result in aright of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any ofsuch securities except as set forth on Schedule 3.1(g)(i). All of the outstanding shares of capital stock of theCompany are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance withall federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptiverights or similar rights to subscribe for or purchase securities. No further approval or authorization of anystockholder, the Board of Directors or others is required for the issuance and sale of the Securities. There are nostockholders’ agreements, voting agreements or other similar agreements with respect to the Company’s capitalstock to which the Company is a party or, to the knowledge of the Company, between or among any of theCompany’s stockholders. 11 (ii) The names and titles of each of the Company’s principal officers, directors and beneficial holders of at leastfive percent (5%) of the outstanding shares of each class of the Company’s capital stock on a fully diluted basisare as set forth on Schedule 3.1(g)(ii), which Schedule 3.1(g)(ii) shall also include each committee of directors aswell as the names and titles of each director currently serving on each such committee. (h)Indebtedness. Schedule 3.1(h) sets forth as of the date hereof all outstanding secured and unsecured Indebtednessof the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. Except as set forth onSchedule 3.1(h), neither the Company nor any Subsidiary is in default with respect to any Indebtedness. (i)SEC Reports; Financial Statements. Other than as set forth on Schedule 3.1(i) hereto, the Company has filed allreports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act andthe Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two (2) years preceding the date hereof (theforegoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectivelyreferred to herein as the “SEC Reports”). As of their respective dates, the SEC Reports complied in all material respectswith the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed,contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessaryin order to make the statements therein, in the light of the circumstances under which they were made, not misleading. TheCompany has never been an issuer subject to Rule 144(i) under the Securities Act. The financial statements of the Companyincluded in the SEC Reports comply in all material respects with applicable accounting requirements and the rules andregulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have beenprepared in accordance with United States generally accepted accounting principles applied on a consistent basis during theperiods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto andexcept that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all materialrespects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the resultsof operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial,year-end audit adjustments. (j)Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financialstatements included within the SEC Reports, except as specifically disclosed in the Company’s Annual Report on Form 10-K, including such latest audited financial statements, or in a subsequent SEC Report filed prior to the date hereof and exceptas set forth in Schedule 3.1(g), Schedule 3.1(m), and Schedule 3.1(j): (i) there has been no event, occurrence or developmentthat has had or that could reasonably be expected to result in a Material Adverse Effect; (ii) the Company has not incurredany liabilities or obligations (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in theordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’sfinancial12 statements pursuant to GAAP or disclosed in filings made with the Commission; (iii) the Company has not altered its methodof accounting; (iv) the Company has not declared or made any dividend or distribution of cash or other property to itsstockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock; (v) theCompany has not sold, assigned or transferred any other tangible assets or Intellectual Property Rights, or canceled any debtsor claims, except in the ordinary course of business, (vi) the Company has not suffered any substantial loss contingencies orwaived any rights of material value, whether or not in the ordinary course of business, or suffered the loss of any materialamount of prospective business, (vii) the Company has not entered into any acquisition or financing transactions, whether ornot in the ordinary course of business, other than with respect to the Transaction Documents and (v) the Company has notissued any equity securities to any officer, director or Affiliate, no event, liability, fact, circumstance, occurrence ordevelopment has occurred or exists or is reasonably expected to occur or exist with respect to the Company or itsSubsidiaries or their respective businesses, properties, operations, assets or financial condition, that would be required to bedisclosed by the Company under applicable securities laws at the time this representation is made or deemed made that hasnot been publicly disclosed at least one (1) Trading Day prior to the date that this representation is made. (k)Litigation. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to theknowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respectiveproperties except as set forth in Schedule 3.1(k), or against or affecting the Company’s current or former officers or directorsin their capacity as such, before or by any court, arbitrator, governmental or administrative agency or regulatory authority(federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality,validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorabledecision, have or reasonably be expected to result in a Material Adverse Effect, and neither the Company nor anySubsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of orliability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to theknowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving theCompany or any current or former director or officer of the Company that is likely to lead to action that can reasonably beexpected to result in a Material Adverse Effect. There has not been, and to the knowledge of the Company, there is notpending or contemplated, any investigation by the Commission involving the Company or any current or former director orofficer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of anyregistration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act. 13 (l)Labor Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any ofthe employees of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of theCompany’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with theCompany or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargainingagreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. To theknowledge of the Company, no executive officer of the Company or any Subsidiary, is, or is now expected to be, inviolation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreementor non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, andthe continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to anyliability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S.federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditionsof employment and wages and hours, except where the failure to be in compliance could not, individually or in theaggregate, reasonably be expected to have a Material Adverse Effect. (m)Compliance. Neither the Company nor any Subsidiary, except as set forth in Schedule 3.1(m): (i) is in defaultunder or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, wouldresult in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of aclaim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement orinstrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation hasbeen waived); (ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority; or(iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including withoutlimitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety,product quality and safety and employment and labor matters, except in each case as could not have or reasonably beexpected to result in a Material Adverse Effect. (n)Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issuedby the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses asdescribed in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result ina Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice ofproceedings relating to the revocation or modification of any Material Permit. 14 (o)Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all realproperty owned by them and good and marketable title in all personal property owned by them that is material to thebusiness of the Company and the Subsidiaries, in each case free and clear of all Liens, except as set forth in Schedule 3.1(o)and except for (i) Liens as do not materially affect the value of such property and do not materially interfere with the usemade and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for the payment offederal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and thepayment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by theCompany and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company andthe Subsidiaries are in compliance. (p)Material Agreements. Except for the Transaction Documents (with respect to clause (i) only) or as set forth onSchedule 3.1(p) hereto, or as would not be reasonably likely to have a Material Adverse Effect, (i) the Company and each ofits Subsidiaries have performed all obligations required to be performed by them to date under any written or oral contract,instrument, agreement, commitment, obligation, plan or arrangement, filed or required to be filed with the Commission (the“Material Agreements”), (ii) neither the Company nor any of its Subsidiaries has received any notice of default under anyMaterial Agreement and, (iii) to the best of the Company's knowledge, neither the Company nor any of its Subsidiaries is indefault under any Material Agreement now in effect. (q)Intellectual Property. The Company and the Subsidiaries have, or have rights to use, all patents, patentapplications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licensesand other intellectual property rights and similar rights as necessary or required for use in connection with their respectivebusinesses as presently conducted and which the failure to so have could have a Material Adverse Effect (collectively, the“Intellectual Property Rights”). Neither the Company nor any Subsidiary has received a notice (written or otherwise) thatany of the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or beabandoned, within two (2) years from the date of this Agreement. Neither the Company nor any Subsidiary has received,since the date of the latest audited financial statements included within the SEC Reports, a written notice of a claim orotherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except ascould not have or could not reasonably be expected to have a Material Adverse Effect. To the knowledge of the Company,all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of theIntellectual Property Rights except as disclosed in Schedule 3.1(q). The Company and its Subsidiaries have takenreasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, exceptwhere failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 15 (r)Transactions with Affiliates and Employees. Except as disclosed in Schedule 3.1(r), none of the officers ordirectors of the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Companyor any Subsidiary is presently a party to any transaction with the Company or any Subsidiary (other than for services asemployees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing ofservices to or by, providing for rental of real or personal property to or from providing for the borrowing of money from orlending of money to, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledgeof the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer,director, trustee, stockholder, member or partner, in each case in excess of $120,000 other than for: (i) payment of salary orconsulting fees for services rendered; (ii) reimbursement for expenses incurred on behalf of the Company; and (iii) otheremployee benefits. (s)Payments of Cash. Except as disclosed on Schedule 3.1(s), neither the Company, its directors or officers, or anyAffiliates or agents of the Company, have withdrawn or paid cash to any vendor in an aggregate amount that exceeds FiveThousand Dollars ($5,000) for any purpose. (t)Sarbanes-Oxley; Internal Accounting Controls. The Company and the Subsidiaries are in compliance with anyand all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and allapplicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as ofthe Closing Date. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to providereasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations;(ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and tomaintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specificauthorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals andappropriate action is taken with respect to any differences. The Company and the Subsidiaries have established disclosurecontrols and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiariesand designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company inthe reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the timeperiods specified in the Commission’s rules and forms. The Company’s certifying officers have evaluated the effectivenessof the disclosure controls and procedures of the Company and the Subsidiaries as of the end of the period covered by themost recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented inits most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about theeffectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since theEvaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in theExchange Act) that have materially affected, or is reasonably likely to materially affect, the internal control over financialreporting of the Company and its Subsidiaries. 16 (u)Certain Fees. Other than as set forth on Schedule 3.1(u), no brokerage or finder’s fees or commissions are or willbe payable by the Company or any Subsidiaries to any broker, financial advisor or consultant, finder, placement agent,investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. ThePurchaser shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of otherPersons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated bythe Transaction Documents. (v)Private Placement. Assuming the accuracy of each Purchaser’s representations and warranties set forth in Section3.2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to thePurchaser as contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules andregulations of the Trading Market. (w)Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of paymentfor the Securities, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment CompanyAct of 1940, as amended. The Company shall conduct its business in a manner so that it will not become an “investmentcompany” subject to registration under the Investment Company Act of 1940, as amended. (x)Registration Rights. Other than as set forth on Schedule 3.1(x) and pursuant to this Agreement, no Person has anyright to cause the Company to effect the registration under the Securities Act of any securities of the Company or anySubsidiaries. (y)Listing and Maintenance Requirements; Trading Market Regulation. The Common Stock is registered pursuantto Section 12(b) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likelyto have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Companyreceived any notification that the Commission is contemplating terminating such registration. Except as disclosed in the SECreports, the Company has not, in the twelve (12) months preceding the date hereof, received notice from any Trading Marketon which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with thelisting or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not inthe foreseeable future continue to be, in compliance with all such listing and maintenance requirements. (z)Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, ifany, in order to render inapplicable any control share acquisition, business combination, poison pill (including anydistribution under a rights agreement) or other similar anti-takeover provision under the Company’s amended and restatedcertificate of incorporation, as amended (or similar charter documents), or the laws of its state of incorporation that is orcould become applicable to the Purchaser as a result of the Purchaser and the Company fulfilling their obligations orexercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuanceof the Securities and the Purchaser’s ownership of the Securities.17 (aa)Disclosure. All of the disclosure furnished by or on behalf of the Company to the Purchaser regarding theCompany and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the DisclosureSchedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to stateany material fact necessary in order to make the statements made therein, in light of the circumstances under which theywere made, not misleading. The press releases disseminated by the Company during the twelve months preceding the dateof this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material factrequired to be stated therein or necessary in order to make the statements therein, in light of the circumstances under whichthey were made and when made, not misleading. The Company acknowledges and agrees that no Purchaser makes or hasmade any representations or warranties with respect to the transactions contemplated hereby other than those specifically setforth in Section 3.2 hereof. (bb)No Integrated Offering. Assuming the accuracy of the Purchaser’s representations and warranties set forth inSection 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly orindirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances thatwould cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) theSecurities Act which would require the registration of any such securities under the Securities Act, or (ii) any applicableshareholder approval provisions of any Trading Market on which any of the securities of the Company are listed ordesignated. (cc)No General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered orsold any of the Securities by any form of general solicitation or general advertising. The Company has offered the Securitiesfor sale only to the Purchaser and certain other “accredited investors” within the meaning of Rule 501 under the SecuritiesAct. (dd)Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company orany Subsidiary, any agent or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly,used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domesticpolitical activity; (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreignor domestic political parties or campaigns from corporate funds; (iii) failed to disclose fully any contribution made by theCompany or any Subsidiary (or made by any person acting on its behalf of which the Company is aware) which is inviolation of law; or (iv) violated in any material respect any provision of FCPA. (ee)Accountants. The Company’s accounting firm is set forth on Schedule 3.1(ee). To the knowledge and belief ofthe Company, such accounting firm is a registered public accounting firm as required by the Exchange Act. 18 (ff)No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, orreasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly orpresently employed by the Company and the Company is current with respect to any fees owed to its accountants andlawyers which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents. (gg)Acknowledgment Regarding Purchaser’s Purchase of Securities. The Company acknowledges and agrees thatthe Purchaser is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and thetransactions contemplated thereby. The Company further acknowledges that the Purchaser is not acting as a financialadvisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and thetransactions contemplated thereby and any advice given by the Purchaser or any of their respective representatives or agentsin connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to thePurchaser’s purchase of the Securities. The Company further represents to the Purchaser that the Company’s decision toenter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of thetransactions contemplated hereby by the Company and its representatives. (hh)Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has,(i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price ofany security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid anycompensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensationfor soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii),compensation paid to the Company’s placement agent in connection with the placement of the Securities. (ii)Stock Option Plans. The Company has not knowingly granted, and there is no and has been no Company policyor practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, therelease or other public announcement of material information regarding the Company or its Subsidiaries or their respectivefinancial results or prospects. (jj)Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge,any director, officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctionsadministered by the Office of Foreign Assets Control of the U.S. Treasury Department. (kk)U.S. Real Property Holding Corporation. The Company is not and has never been a U.S. real property holdingcorporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shallso certify upon Purchaser’s request. 19 (ll)Bank Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the BankHolding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the FederalReserve System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls,directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-fivepercent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the FederalReserve. Neither the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over themanagement or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. (mm)Promotional Stock Activities. Neither the Company, its officers, its directors, nor any affiliates or agents of theCompany have engaged in any stock promotional activity that could give rise to a complaint, inquiry, or trading suspensionby the Commission alleging (i) a violation of the anti-fraud provisions of the federal securities laws, (ii) violations of the anti-touting provisions, (iii) improper “gun-jumping”; or (iv) promotion without proper disclosure of compensation. (nn)Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected toresult in a Material Adverse Effect, the Company (i) has made or filed all United States federal, state and local income andall foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject,(ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined tobe due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for thepayment of all material taxes for periods subsequent to the periods to which such returns, reports or declarationsapply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, andthe officers of the Company know of no basis for any such claim. (oo)Seniority. As of the Closing Date, other than as set forth on Schedule 3.1(oo), no Indebtedness or other claimagainst the Company is senior to the Notes in right of payment, whether with respect to interest or upon liquidation ordissolution, or otherwise, other than indebtedness secured by purchase money security interests (which is senior only as tounderlying assets covered thereby) and capital lease obligations (which is senior only as to the property covered thereby). (pp)No “Off-balance Sheet Arrangements”. Other than as set forth in Schedule 3.1(pp), neither the Company norany of its Affiliates is involved in any “Off-balance Sheet Arrangements”. For purposes hereof an “Off-balance SheetArrangement” means any transaction or contract to which an entity unconsolidated with the Company or any of its Affiliatesis a party and under which either the Company or any such Affiliate has: (i) any obligation under a guarantee contractpursuant to which the Company or any of its Affiliates could be required to make payments to the guaranteed party,including any standby letter of credit, market value guarantee, performance guarantee, indemnification agreement, keep-wellor other support agreement; (ii) any retained or contingent interest20 in assets transferred to such unconsolidated entity that serves as credit, liquidity or market risk support to the entity in respectof such assets; (iii) any variable interest held in such unconsolidated entity where such entity provides financing, liquidity,market risk or credit risk support to, or engages in leasing, hedging or research and development services with the Companyof any of its Affiliates; and (iv) any liability or obligation of the same nature as those described in clauses (i) through (iii) ofthis sentence even if of a different name (whether absolute, accrued, contingent or otherwise) that would not be required tobe reflected in the Company or any of its Affiliates’ financial statements. (qq)Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at alltimes in compliance with applicable financial record-keeping and reporting requirements of the Currency and ForeignTransactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulationsthereunder (collectively, the “Money Laundering Laws”), and no action, suit or proceeding by or before any court orgovernmental agency, authority or body or any arbitrator involving the Company or any Subsidiary with respect to theMoney Laundering Laws is pending or, to the knowledge of the Company or any Subsidiary, threatened. (rr)Subsidiary Rights. The Company has the unrestricted right to vote, and (subject to limitations imposed byapplicable law) to receive dividends and distributions on, all capital securities of each of its Subsidiaries as owned by theCompany or any Subsidiary. (ss)Shell Company Status. The Company has never been, and is not presently, an issuer identified as a ShellCompany. (tt)Investor Relations. Other than as set forth in Schedule 3.1(tt), the Company is not currently a party, nor does itintend to become a party, to any agreement pursuant to which the Company will receive investor relations services. (uu)Full Disclosure. No representation or warranty by the Company in this Agreement and no statement contained inthe Disclosure Schedules to this Agreement or any certificate or other document furnished or to be furnished to thePurchasers pursuant to this Agreement contains any untrue statement of a material fact, or omits to state a material factnecessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading. (vv)No Bad Actor Disqualification Event. After reasonable inquiry, none of the “Bad Actor” disqualifying eventsdescribed in Rule 506(d)(l) under the Securities Act (a “Disqualification Event”) is applicable to Company or to Company’sknowledge any of its Affiliates, except a Disqualification Event as to which Rule 506(d)(2)(iii) applies. (ww)Company has not, and will not, engage in any directed selling efforts in the United States in respect of theSecurities. Company is offering and selling the Securities only to non U.S. Persons, in compliance with the offeringrestriction requirements of Regulation S. 21 3.2Representations and Warranties of the Purchaser. Each Purchaser, for itself and for no other Purchaser, hereby representsand warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein in whichcase they shall be accurate as of such date): (a)Organization; Authority. The Purchaser is either an individual or an entity duly incorporated or formed, validlyexisting and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate,partnership, limited liability company or similar power and authority to enter into and to consummate the transactionscontemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. Theexecution and delivery of the Transaction Documents and performance by the Purchaser of the transactions contemplated bythe Transaction Documents have been duly authorized by all necessary corporate, partnership, limited liability company orsimilar action, as applicable, on the part of the Purchaser. Each Transaction Document to which it is a party has been dulyexecuted by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute thevalid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms, except: (i) as limitedby general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of generalapplication affecting enforcement of creditors’ rights generally; (ii) as limited by laws relating to the availability of specificperformance, injunctive relief or other equitable remedies; and (iii) insofar as indemnification and contribution provisionsmay be limited by applicable law. (b)Own Account. The Purchaser understands that the Securities are “restricted securities” and have not beenregistered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for itsown account (this representation and warranty not limiting the Purchaser’s right to sell the Securities in compliance withapplicable federal and state securities laws). The Purchaser is acquiring the Securities hereunder in the ordinary course of itsbusiness. (c)Purchaser Status. At the time the Purchaser was offered the Securities, it was, and as of the date hereof it is an“accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act. (d)Experience of the Purchaser. The Purchaser, either alone or together with its representatives, has suchknowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits andrisks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. ThePurchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford acomplete loss of such investment. (e)General Solicitation. The Purchaser is not purchasing the Securities as a result of any advertisement, article, noticeor other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast overtelevision or radio or presented at any seminar or any other general solicitation or general advertisement.22 (f)Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, thePurchaser has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with thePurchaser, executed any purchases or sales, including Short Sales, of the securities of the Company during the periodcommencing as of the time that the Purchaser first received a term sheet (written or oral) from the Company or any otherPerson representing the Company setting forth the material terms of the transactions contemplated hereunder and endingimmediately prior to the execution hereof. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managedinvestment vehicle whereby separate portfolio managers manage separate portions of the Purchaser’s assets and the portfoliomanagers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions ofthe Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by theportfolio manager that made the investment decision to purchase the Securities covered by this Agreement. Other than toother Persons party to this Agreement, the Purchaser has maintained the confidentiality of all disclosures made to it inconnection with this transaction (including the existence and terms of this transaction). (g)Non U.S. Person. The Purchaser is not a “U.S. Person” as that term is defined in Regulation S under theSecurities Act, and is not acquiring the Securities for the account or beneficial ownership of any U.S. Person. (h)No Short Sales. Neither Purchaser nor any Affiliate of Purchaser (i) holds any short position in the CommonStock, (ii) has ever engaged in, directly or indirectly, any Short Sale of the Common Stock, or (iii) has ever engaged in,directly or indirectly, any hedging transaction with regard to the Common Stock. (i)Not a Bad Actor. After reasonable inquiry, none of the “Bad Actor” disqualifying events described in Rule 506(d)(l) under the Securities Act is applicable to the Purchaser or any of its Affiliates. The Purchaser is not now, and has neverbeen, subject to any final cease and desist order or any penalty from the Commission or any court of competent jurisdictionfor any violation of any provision of the Securities Act or the Exchange Act, or any of the regulations promulgatedthereunder. (j)Not an Affiliate. The Purchaser is not now, and has never been, an Affiliate of the Company or any otherPurchaser. The Purchaser is not now, and has never been, part of any group of Persons that would be required underSection 13(d) of the Exchange Act, or the rules and regulations promulgated thereunder, to file a statement on Schedule 13Dor Schedule 13G with regard to the Company. The Company acknowledges and agrees that the representations contained in Section 3.2 shall not modify, amend or affect thePurchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations andwarranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connectionwith this Agreement or the consummation of the transaction contemplated hereby. 23 ARTICLE IV.OTHER AGREEMENTS OF THE PARTIES 4.1Transfer Restrictions. (a)The Securities may only be disposed of in compliance with state and federal securities laws. In connection withany transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to anAffiliate of a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may require thetransferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable tothe Company, at the Company’s sole expense in the form and substance of which opinion shall be reasonably satisfactory tothe Company, to the effect that such transfer does not require registration of such transferred Securities under the SecuritiesAct. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement andshall have the rights and obligations of a Purchaser under this Agreement. (b)The Purchaser agrees to the imprinting, so long as is required by this Section 4.1, of a legend on any of theSecurities in the following form: THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSIONOR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON REGULATION S OR ANEXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TOREGULATION S OR AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT ORPURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THEREGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLESTATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFERORTO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THECOMPANY. The Company acknowledges and agrees that the Purchaser may from time to time pledge, pursuant to a bona fide marginagreement with a registered broker-dealer, or grant a security interest in some or all of the Securities to a financial institutionthat is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by theprovisions of this Agreement and, if required under the terms of such arrangement, the Purchaser may transfer pledged orsecured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of theCompany and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connectiontherewith. Further, no notice shall be required of such pledge. At the Company’s expense, the Company will execute anddeliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection witha pledge or transfer of the Securities.24 4.2[Reserved]. 4.3[Reserved]. 4.4Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of anysecurity (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner thatwould require the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale ofthe Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior tothe closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction. 4.5[Reserved]. 4.6Shareholder Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, anyother Person, that the Purchaser is an “acquiring person” or such similar term under any control share acquisition, businesscombination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect orhereafter adopted by the Company, or that the Purchaser could be deemed to trigger the provisions of any such plan or arrangement, byvirtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and thePurchaser. 4.7[Reserved]. 4.8Use of Proceeds. The Company shall use the net proceeds as set forth in Schedule 4.8. 4.9Indemnification of Purchaser. Subject to the provisions of this Section 4.9, the Company will indemnify and hold thePurchaser and its directors, officers, managers, shareholders, members, partners, employees and agents (and any other Persons with afunctionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person whocontrols the Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors,officers, managers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role ofa Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “PurchaserParty”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including alljudgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any the PurchaserParty may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreementsmade by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the PurchaserParties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of thePurchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based inwhole or in part upon a breach of the Purchaser Party’s representations, warranties or covenants25 under the Transaction Documents or any agreements or understandings the Purchaser Party may have with any such stockholder orany violations by such Purchaser Party of state or federal securities laws or any conduct by the Purchaser Party which constitutesfraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect ofwhich indemnity may be sought pursuant to this Agreement, the Purchaser Party shall promptly notify the Company in writing, and theCompany shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the PurchaserParty. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof,but the fees and expenses of such counsel shall be at the expense of the Purchaser Party except to the extent that (i) the employmentthereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time toassume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict onany material issue between the position of the Company and the position of the Purchaser Party, in which case the Company shall beresponsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to anyPurchaser Party under this Agreement (x) for any settlement by a Purchaser Party effected without the Company’s prior writtenconsent, which shall not be unreasonably withheld or delayed; or (y) to the extent, but only to the extent that a loss, claim, damage orliability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by thePurchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by this Section 4.9 shall bemade by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received orare incurred. The indemnification contained herein shall be in addition to any cause of action or similar right of any Purchaser Partyagainst the Company or others and any liabilities the Company may be subject to pursuant to law. 4.10[Reserved]. 4.11Certain Transactions. The Purchaser covenants and agrees that neither it, nor any Affiliate acting on its behalf or pursuantto any understanding with it will execute any Short Sales of the Common Stock or (ii) hedging transaction, which establishes a netshort position with respect to the Company’s Common Stock) during the period commencing with the execution of this Agreement andending on the earlier of the Maturity Date (as defined in the Notes) of the Notes or the full repayment of the Notes; provided that thisprovision shall not operate to restrict a Purchaser’s trading under any prior securities purchase agreement containing contractual rightsthat explicitly protects such trading in respect of the previously issued securities. 4.12 Securities Laws Disclosure; Publicity. The Company and the Purchaser shall consult with each other in issuing anypublic disclosure with respect to the transactions contemplated hereby, and neither the Company nor the Purchaser shall issue any suchpublic disclosure nor otherwise make any such public statement without the prior consent of the Company, with respect to any pressrelease of the Purchaser, or without the prior consent of the Purchaser, with respect to any press release of the Company, whichconsent shall not unreasonably be withheld or delayed, except if such disclosure is required by law or rules of the principal TradingMarket, in which case the disclosing party shall promptly provide the other party with prior notice of26 such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of thePurchaser, or include the name of the Purchaser in any filing with the Commission or any regulatory agency or Trading Market,without the prior written consent of the Purchaser, except: (a) as required by federal securities law in connection with any registrationstatement contemplated by this Agreement and (b) to the extent such disclosure is required by law or Trading Market regulations, inwhich case the Company shall provide the Purchaser with prior notice of such disclosure permitted under this clause (b). 4.13 Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required underRegulation D and to provide a copy thereof, promptly upon request of the Purchaser. The Company shall take such action as theCompany shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to thePurchaser at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence ofsuch actions promptly upon request of the Purchaser. 4.14 Subsequent Equity Sales. (a) For so long as any of the Notes remain outstanding, the Company shall be prohibited from effecting or entering into anagreement to effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common StockEquivalents (or a combination of units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction” means atransaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable orexercisable for, or include the right to receive, additional shares of Common Stock either (A) at a conversion price, exerciseprice or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the sharesof Common Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise orexchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security orupon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or themarket for the Common Stock or (ii) enters into any agreement, including, but not limited to, an equity line of credit,whereby the Company may issue securities at a future determined price. (b) For as long as any of the Notes remain outstanding, neither the Company nor any of its affiliates or Subsidiaries, nor anyof its or their respective officers, employees, directors, agents or other representatives, will (without the prior written consentof the Purchaser), directly or indirectly: (a) solicit, initiate, encourage or accept any other inquiries, proposals or offers fromany Person relating to any exchange (i) of any security of the Company or any of its Subsidiaries for any other security ofthe Company or any of its Subsidiaries, except to the extent (x) consummated pursuant to the terms of Common ShareEquivalents of the Company as in effect as of the date hereof and disclosed in filings with the Commission prior to the datehereof (without giving effect to any amendment, modification, change or waiver of any terms thereof occurring on or afterthe date hereof or not disclosed in a filing by the Company with the Commission prior to the date hereof) or (ii) of anyindebtedness or other securities of, or claim against,27 the Company or any of its Subsidiaries pursuant to a registration statement filed with the Commission or relying on anyexemption under the Securities Act (including, without limitation, Section 3(a)(10) of the Securities Act (any suchtransaction described in clauses (i) or (ii), an “Exchange Transaction”); (b) enter into, effect, alter, amend, announce orrecommend to its stockholders any Exchange Transaction with any Person; or (c) participate in any discussions,conversations, negotiations or other communications with any Person regarding any Exchange Transaction, or furnish to anyPerson any information with respect to any Exchange Transaction, or otherwise cooperate in any way, assist or participatein, facilitate or encourage any effort or attempt by any Person to seek an Exchange Transaction involving the Company orany of its Subsidiaries. For as long as the Notes remain outstanding, neither the Company nor any of its affiliates orSubsidiaries, nor any of its or their respective officers, employees, directors, agents or other representatives, will, directly orindirectly, cooperate in any way, assist or participate in, facilitate or encourage any effort or attempt by any Person to effectany acquisition of securities or indebtedness of, or claim against, the Company by such Person from an existing holder ofsuch securities, indebtedness or claim in connection with a proposed exchange of such securities or indebtedness of, or claimagainst, the Company (whether pursuant to Section 3(a)(9) or 3(a)(10) of the Securities Act or otherwise) (a “Third PartyExchange Transfer”). The Company, its affiliates and Subsidiaries, and each of its and their respective officers, employees,directors, agents or other representatives shall immediately cease and cause to be terminated all existing discussions,conversations, negotiations and other communications with any Persons with respect to any of the foregoing. For allpurposes of this Agreement, violations of the restrictions set forth in this Section 4.14 by any Subsidiary or affiliate of theCompany, or any officer, employee, director, agent or other representative of the Company or any of its Subsidiaries oraffiliates shall be deemed a direct breach of this Section 4.14 by the Company. (c) From the date hereof until sixty (60) calendar days after the Closing Date, neither the Company nor any Subsidiary shall,directly or indirectly, except with respect to the proposed minimum $20,000,000 private investment in public equitiescontemplated to be completed by June 7, 2019, and as otherwise permitted under this Agreement, issue, offer, sell, grant anyoption or right to purchase, or otherwise dispose of (or announce any issuance, offer, sale, grant of any option or right topurchase or other disposition of) any equity security or any equity-linked or related security (including, without limitation,any “equity security” (as that term is defined under Rule 405 promulgated under the Securities Act), any Common Shares orCommon Share Equivalents, any debt securities, any preferred stock or any purchase rights) or otherwise amend, modify,waiver or alter any terms of conditions of any Common Share Equivalents outstanding as of the date hereof to decrease theexercise, conversion and/or exchange price, as applicable, thereunder or otherwise increase the aggregate number ofCommon Shares issuable in connection therewith. 28 (d) The Purchaser shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, whichremedy shall be in addition to any right to collect damages. Notwithstanding the foregoing, this Section 4.14 shall not applyin respect of an Exempt Issuance, except that no Variable Rate Transaction shall be an Exempt Issuance. 4.15. Regulation S Compliance. Each Purchaser agrees that, during the six (6) months following the Closing, it shall notengage in any transaction involving any securities of the Company that would be prohibited or restricted by, or would otherwise renderunavailable any applicable safe harbor provided by Regulation S.4.16. Opinion. The Company shall, forthwith (and in any event within 5 days) upon request of any Purchaser, deliver to thePurchasers an opinion of the Company’s counsel with respect to the Company, the Transaction Documents and the security granted inconnection therewith, in form and substance satisfactory to the Purchasers. ARTICLE V.MISCELLANEOUS 5.1Termination. This Agreement may be terminated by the Purchaser, as to the Purchaser’s obligations hereunder only andwithout any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties,if the Closing has not been consummated on or before May 24, 2019; provided, however, that such termination will not affect the rightof any party to sue for any breach by any other party (or parties). 5.2Fees and Expenses. The Company has agreed to bear all fees, disbursements, and expenses in connection with thetransactions contemplated herein, including, without limitation, the Company’s legal and accounting fees and disbursements, the costsincident to the preparation, printing and distribution of any registration statement, filing fees, UCC fees, and costs associated with theIntellectual Property Security Agreement. The Company shall pay all stamp taxes and other taxes and duties levied in connection withthe delivery of any Securities to the Purchasers in connection with the transactions contemplated hereby. 5.3Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entireunderstanding of the parties hereto with respect to the subject matter hereof and thereof and supersede all prior agreements andunderstandings, oral or written, with respect to such matters, which the parties hereto acknowledge have been merged into suchdocuments, exhibits and schedules. 5.4Notices. Any and all notices or other communications or deliveries to be provided by the Purchaser hereunder shall be inwriting and delivered personally, by email or facsimile, or sent by a nationally recognized overnight courier service, addressed to theCompany at 1633 Broadway, Suite 22C, New York, New York 10019, 917-591-5970, bkeck@delcath.com or such other address,facsimile number, or email address as the Company may specify for such purposes by notice to the Purchaser delivered in accordancewith this Section 5.4. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be inwriting and delivered personally, by email or facsimile, or sent by a nationally recognized overnight29 courier service addressed to each Purchaser at the email address, facsimile number, or address of the Purchaser appearing on the booksof the Company, or if no such email address, facsimile number, or address appears on the books of the Company, at the principal placeof business of such Purchaser. Any notice or other communication or deliveries hereunder shall be deemed given and effective on theearliest (i) the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or emailaddress set forth on the signature pages attached hereto prior to 12:00 p.m. (New York City time) on any date, (ii) the next TradingDay after the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or emailaddress set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 12:00 p.m. (New York Citytime) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnightcourier service or (iv) upon actual receipt by the party to whom such notice is required to be given. 5.5Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in awritten instrument signed, in the case of an amendment, by the Company and Purchasers holding at least 50.1% in interest of theNotes, including the holders of the Rosalind Notes, then outstanding or, in the case of a waiver, by the party against whomenforcement of any such waived provision is sought, provided that if any amendment, modification or waiver disproportionately andadversely impacts a Purchaser (or group of Purchasers), the consent of such disproportionately impacted Purchaser (or group ofPurchasers) shall also be required. No waiver of any default with respect to any provision, condition or requirement of this Agreementshall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision,condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair theexercise of any such right. Any proposed amendment or waiver that disproportionately, materially and adversely affects the rights andobligations of any Purchaser relative to the comparable rights and obligations of the other Purchasers shall require the prior writtenconsent of such adversely affected Purchaser. Any amendment effected in accordance with accordance with this Section 5.5 shall bebinding upon each Purchaser and holder of Securities and the Company. 5.6Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not bedeemed to limit or affect any of the provisions hereof. 5.7No Assignment. No party may assign this Agreement or any rights or obligations hereunder. 5.8No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respectivesuccessors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, exceptas otherwise set forth in Sections 4.9 and 5.5.30 5.9Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the TransactionDocuments shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, withoutregard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations,enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether broughtagainst a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall becommenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to theexclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of anydispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect tothe enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action orproceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding isimproper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process andconsents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail orovernight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agreesthat such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemedto limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit orproceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under Section4.9, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees andother costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. 5.10Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Securities. 5.11Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall beconsidered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered toeach other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered byfacsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of theparty executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signaturepage were an original thereof. 5.12Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction tobe invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remainin full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commerciallyreasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated bysuch term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would haveexecuted the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declaredinvalid, illegal, void or unenforceable.31 5.13Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similarprovisions of) any of the other Transaction Documents, whenever the Purchaser exercises a right, election, demand or option under aTransaction Document and the Company does not timely perform its related obligations within the periods therein provided, then thePurchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice,demand or election in whole or in part without prejudice to its future actions and rights. 5.14Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed,the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation),or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to theCompany of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also payany reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities. 5.15Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery ofdamages, the Purchaser and the Company will be entitled to specific performance under the Transaction Documents. The parties agreethat monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained inthe Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligationthe defense that a remedy at law would be adequate. 5.16Payment Set Aside. To the extent that the Company makes a payment or payments to the Purchaser pursuant to anyTransaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds ofsuch enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside,recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or anyother Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause ofaction), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived andcontinued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. 5.17Usury. To the extent it may lawful do so, the Company hereby agrees not to insist upon or plead or in any mannerwhatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted,now or at any time hereafter in force, in connection with any claim, action or proceeding that may be brought by the Purchaser in orderto enforce any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in anyTransaction Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents forpayments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”),and, without limiting the foregoing, in no event shall any rate of32 interest or default interest, or both of them, when aggregated with any other sums in the nature of interest that the Company may beobligated to pay under the Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum contract rate ofinterest allowed by law and applicable to the Transaction Documents is increased or decreased by statute or any official governmentalaction subsequent to the date hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicableto the Transaction Documents from the effective date thereof forward, unless such application is precluded by applicable law. If underany circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to the Purchaser with respect toindebtedness evidenced by the Transaction Documents, such excess shall be applied by the Purchaser to the unpaid principal balanceof any such indebtedness or be refunded to the Company, the manner of handling such excess to be at the Purchaser’s election. 5.18Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under theTransaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damagesand other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidateddamages or other amounts are due and payable shall have been cancelled. 5.19Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any rightrequired or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the nextsucceeding Business Day. 5.20Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity torevise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolvedagainst the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. Inaddition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject toadjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the CommonStock that occur after the date of this Agreement. 5.21WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTIONBROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY ANDINTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBYABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY. [Signature Pages Follow] 33 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by theirrespective authorized signatories as of the date first indicated above. DELCATH SYSTEMS, INC. Address for Notice: By: 1633 Broadway Name: Suite 22C Title: New York, New York 10019 Attention: Barbra KeckWith a copy to (which shall not constitute notice): E-Mail: bkeck@delcath.com McCarter & English, LLP 100 Mulberry Street, Four Gateway Center Newark, New Jersey 07102 Attention: David Broderick e-mail: dbroderick@mccarter.com [REMAINDER OF PAGE INTENTIONALLY LEFT BLANKSIGNATURE PAGE FOR PURCHASER FOLLOWS]34 [PURCHASER SIGNATURE PAGES TO DELCATH SYSTEMS, INC. SECURITIES PURCHASE AGREEMENT] IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respectiveauthorized signatories as of the date first indicated above. Name of Purchaser: Rosalind Opportunities Fund I LP Signature of Authorized Signatory of Advisor (Rosalind Advisors, Inc.) of Purchaser: Name of Authorized Signatory: Title of Authorized Signatory: Email Address of Authorized Signatory: Address for Notice to Purchaser: 175 Bloor Street EastSuite 1316, North TowerToronto, ON M4W 3R8Canada Subscription Amount:$559,500.00 Name of Purchaser: Rosalind Master Fund LP Signature of Authorized Signatory of Advisor (Rosalind Advisors, Inc.) of Purchaser: Name of Authorized Signatory: Title of Authorized Signatory: Email Address of Authorized Signatory: Address for Notice to Purchaser: 175 Bloor Street EastSuite 1316, North TowerToronto, ON M4W 3R8Canada Subscription Amount:$559,500.00 35 SCHEDULE OF PURCHASERS (1)(2)(3)PurchaserPrincipal Amount ofNotesSubscription AmountRosalind Opportunities Fund I LP$559,500.00$559,500.00 Rosalind Master Fund LP$559,500.00$559,500.00 36 EXHIBIT A Form of Senior Secured Promissory Notes37 EXHIBIT B Form of Intellectual Property Security Agreement 38 EXHIBIT C Form of Security Agreement 39 EXHIBIT D Form of Subsidiary Guarantee 40 DISCLOSURE SCHEDULES TO THE SECURITIES PURCHASE AGREEMENT BY AND AMONG DELCATH SYSTEMS, INC. AND EACH OF THE PURCHASERS SIGNATORY THERETO DATED May 23, 2019 These Sections (these “Sections”) of this Disclosure Schedule are numbered to correspond to the corresponding sections of theSecurities Purchase Agreement (the “Agreement”). These Sections have been prepared in accordance with, and subject to, thefollowing terms and conditions: (a)To the extent a Section is intended to qualify a representation or warranty of the Company contained in the Article III of theAgreement, the information and disclosures contained in such Section are intended only to qualify and limit such representation orwarranty and not in any way expand the scope or effect of such representation or warranty. (b)The disclosure of any item in any Section of this Disclosure Schedule will constitute disclosure for purposes of anotherSection if it is reasonably clear from a reading of the disclosure that such disclosure is applicable to such other Sections or Sub-Sections. (c)Inclusion of any item in a Section of this Disclosure Schedule does not constitute a determination by the Company that suchitem is material and shall not be deemed to establish a standard or materiality. No disclosure in any Section of this Disclosure Schedulerelating to any possible breach or violation of any agreement, law or any potential adverse contingency shall be construed as anadmission or indication that any such breach or violation exists or has actually occurred or that such adverse contingency will actuallyoccur. (d)Any capitalized terms not defined in this Disclosure Schedule shall have the meanings assigned thereto in theAgreement. Any section headings or titles used herein are included for convenience only and shall not be considered asrepresentations or warranties as to the type, character or content of the matters referred to thereunder. 41 SCHEDULE 3.1(a) SUBSIDIARIES OF THE COMPANY 1. Delcath Holdings Limited2. Delcath Systems Limited3. Delcath Systems UK Limited4. Delcath Systems GmBH5. Delcath Systems B.V.42 SCHEDULE 3.1(b)Organization and Qualification None.43 SCHEDULE 3.1(d) ConflictsNone. 44 SCHEDULE 3.1(g)(i) Capitalization A.Shares beneficially owned by Affiliates: 1,284,329B.12.6 million shares issued since most recent periodic report Rights of Participation: September 2017 Hudson Bay and AltoFebruary 2018: Registered Direct InvestorsJune 2018: Discover Growth Fund, as assigned to Rosalind Master Fund LP by Discover Growth Fund as signatory to the SecuritiesPurchase Agreement dated as of June 4, 2018. Delcath Systems, Inc.Capitalization Table as of April 22, 2019 Authorized Issued Treasury Outstanding Preferred Shares 10,000,000 - - - Common Shares 1,000,000,000 18,277,807 - 18,277,807 Fully diluted common shares: Feb 2015 Warrants ($0.01; exp 2/2020) 9 July 2015 Warrants ($0.01; exp 7/2020) 9 Oct 2016 Warrants ($0.01; exp 10/2021) 11 Feb 2018 Warrants ($10.00; exp 2/2024) 189,000 June 2018 Warrants ($0.01, exp through 6/2024) 16,615,317 June 2018 Warrants ($4.00; exp 6/2023) 1,116,256 July 2018 Warrants ($0.01, exp through 7/2024) 12,168,926 July 2018 Warrants ($4.00 exp 7/2023) 785,737 August 2018 Warrants ($0.01, exp through 8/2024) 23,777,381 August 2018 Warrants ($1.75; exp 8/2023) 2,021,410 Sep 2018 Warrants ($0.01, exp through 9/2024) 830,854 Sep 2018 Warrants ($1.75; exp 9/2023) 279,506 Options 1,250,000 Total shares reserved for warrants and options 59,034,416 Total shares issued and reserved: 77,312,223 45 SCHEDULE 3.1(g)(ii) Corporate Governance of Delcath Systems, Inc. Roger Stoll, Ph.D., ChairmanWilliam RueckertDr. Marco TagliettiDr. Jennifer Simpson Audit Committee – William Rueckert, Chair; Roger StollCompensation Committee – Marco Taglietti, Chair; William RueckertNominating and Corp. Governance Committee – Roger Stoll, Chair; William Rueckert; Marco Taglietti 46 SCHEDULE 3.1(h) Indebtedness 1. Letter of credit issued by Silicon Valley Bank to Kasowitz, Benson, Torres and Friedman LLP with face amount of $130,663.00. 2. Letter of credit issued by Silicon Valley Bank to SLG 810 7th Avenue Lessee LLC with face amount of $881,297.08. 3. Indebtedness in a maximum amount of $75,000 owed to Silicon Valley Bank under corporate credit card services agreement. 4. Indebtedness between Delcath Systems, Inc. and Delcath Holdings Limited pursuant to a License and Agreement to ShareIntangible Development Costs dated as of January 1, 2012. 5. Indebtedness of $5,478,559 between Delcath Systems, Inc. and Rosalind Master Fund L.P., as assigned to Rosalind Master FundLP by Discover Growth Fund and Discover Growth Fund, LLC as signatories to Securities Purchase Agreements dated as of June 4,2018; July 20, 2018; August 29, 2018; and a Note Purchase and Exchange Agreement dated March 29, 2019 and the 8% SeniorSecured Promissory Notes issued pursuant thereto. 6. Indebtedness of $469,975 between Delcath Systems, Inc. and the institutional investors signatory to Securities Purchase Agreementsdated as of September 21, 2018 and the 8% Senior Secured Convertible Promissory Notes issued pursuant thereto. 7. Indebtedness of $180,000 between Delcath Systems, Inc. and Rosalind Master Fund LP as signatory to the Securities PurchaseAgreement dated as of April 18, 2019 and the 8% Senior Secured Promissory Note issued pursuant thereto. 8. Indebtedness of $370,000 between Delcath Systems, Inc. and Rosalind Master Fund LP and $550,000 between Delcath Systems,Inc. and Rosalind Opportunities Fund I LP, in each case as signatories to the Securities Purchase Agreement dated as of April 26, 2019and the 8% Senior Secured Promissory Notes issued pursuant thereto. 9. Indebtedness of $550,000 between Delcath Systems, Inc. and Rosalind Master Fund LP and $550,000 between Delcath Systems,Inc. and Rosalind Opportunities Fund I LP, in each case as signatories to the Securities Purchase Agreement dated as of May 9, 2019and the 8% Senior Secured Promissory Notes issued pursuant thereto. 47 Existing Liens 1. Liens of Silicon Valley Bank on account nos. 3301246486 and 3301264690, respectively,securing the letters of credit described in numbers 1 and 2 above. 2. Lien of Silicon Valley Bank account no. 3301464115 securing the Indebtedness described innumber 3 above.3. Lien of the institutional investor securing the Obligations described in numbers 5 -8 above. 48 SCHEDULE 3.1(i) SEC Reports; Financial Statements The Company has not timely filed its Annual Report on Form 10-K or its Proxy Statement for the year ended December 31, 2018.The Company will not timely file its Quarterly Report on Form 10-Q for the quarter ended March 31, 2019.49 SCHEDULE 3.1(j) Material Changes; Undisclosed Events, Liabilities or Developments See Schedule 3.1(m).50 SCHEDULE 3.1(k) Litigation 1.In March 2019, the Company sued two affiliated Iroquois Funds and FirstFire seeking declaratory judgment, among otherremedies, that the February 2018 warrants issued to them are deemed to not including an “exploding” antidilution featureupon a down round financing. The suit was filed in New York State Supreme Court in NY County, NY.See Schedule 3.1(m) below for any potential claims.51 SCHEDULE 3.1(m) Compliance UBC Demand Letter for $2,106,116.00.Payables to Roth Capital in the amount of $552,642.60.Notices of Default from Discover Growth Fund, Discover Growth Fund, LLC, Bigger Capital Fund, LP and District 2 Capital FundLP in respect of the Indebtedness listed in paragraph 5 of Schedule 3.1(h).52 SCHEDULE 3.1(o) Title to AssetsSee Schedule 3.1(h).53 SCHEDULE 3.1(p) Material AgreementsSee Schedule 3.1(m).54 SCHEDULE 3.1(q) Intellectual Property None.55 SCHEDULE 3.1(r) Transactions with Affiliates and Employees Herein below are all back salaries and unreimbursed employee expenses through April 15, 2019: Jennifer Simpson$862,376Barbra Keck$536,181John Purpura$553,491All other employees$335,670 $2,287,718 56 SCHEDULE 3.1(s) Cash Payments None.57 SCHEDULE 3.1(u) Certain Fees Fees to Roth Capital Partners, LLC under waiver letter with Roth Capital Partners, LLCFees to Think Equity under Engagement Letter 58 SCHEDULE 3.1(x) Registration Rights Warrants issued in February 2018September 21, 2018 Securities Purchase Agreement59 SCHEDULE 3.1(ee) Accountants Marcum LLPGrant Thornton LLP (with respect to 2015, 2016 and 2017 audited financials only)60 SCHEDULE 3.1(oo) Seniority See Schedule 3.1(h).61 SCHEDULE 3.1(pp) Off-balance Sheet Arrangements None.62 SCHEDULE 3.1(tt) Investor Relations None. 63 SCHEDULE 4.8 Use of Proceeds General working capital purposes. 64Exhibit 10.47 NOTE PURCHASE AGREEMENT This Note Purchase Agreement (this “Agreement”) is dated as of June 6, 2019, by and among Delcath Systems, Inc., aDelaware corporation (the “Company”), and the purchasers identified on the signature pages hereto (each, a “Purchaser”, or in theaggregate, the “Purchasers”). WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the SecuritiesAct of 1933, as amended (the “Securities Act”), Regulation S and Rule 506(b) promulgated thereunder, the Company desires to sell,and the Purchasers desire to purchase from the Company, the Notes (as defined herein). NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other goodand valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree asfollows: ARTICLE I.DEFINITIONS 1.1Definitions. In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise definedherein have the meanings given to such terms in the Transaction Documents (as defined herein), and (b) the following terms have themeanings set forth in this Section 1.1: “Action” shall have the meaning ascribed to such term in Section 3.1(k). “Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or isunder common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act. “Approved Financing” means any equity financing or financings, to be completed no later than June 21, 2019, which resultsin gross cash proceeds to the Company of not less than $20 million, and shall not, for greater certainty, include theconversion of the Company’s existing Indebtedness into Common Stock of the Company. “BHCA” shall have the meaning ascribed to such term in Section 3.1(ll). “Board of Directors” means the board of directors of the Company. “Business Day” means any day except any Saturday, any Sunday, or any other day on which the Federal Reserve Bank ofNew York is closed. “Closing Date” means the Trading Day(s) on which all of the Transaction Documents have been executed and delivered bythe applicable parties thereto in connection with a Closing, and all conditions precedent to (i) the Purchasers’ obligation topay the Subscription Amount as to the Closing and (ii) the Company’s obligations to deliver the Notes as to the Closing, ineach case, have been satisfied or waived. 1 “Closing” means closing of the purchase and sale of the Notes pursuant to Section 2.2. “Commission” means the United States Securities and Exchange Commission. “Common Stock” means the common stock of the Company, par value $0.01 per share, and any other class of securities intowhich such securities may hereafter be reclassified or changed. “Disclosure Schedules” shall have the meaning ascribed to such term in Section 3.1. “Evaluation Date” shall have the meaning ascribed to such term in Section 3.1(t). “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgatedthereunder. “Exchange Transaction” shall have the meaning ascribed to such term in Section 4.15(b). “Exempt Issuance” means the issuance of (a) shares of Common Stock, restricted stock units or options to employees,officers, directors, advisors or independent contractors of the Company pursuant to any stock or option plan duly adopted forsuch purpose, (b) shares of Common Stock, warrants or options to advisors or independent contractors of the Company forcompensatory purposes, (c) securities exercisable or exchangeable for or convertible into shares of Common Stock issuedand outstanding on the date hereof, provided that such securities have not been amended since the date hereof to increase thenumber of such securities or to decrease the exercise price, exchange price or conversion price of such securities, (d)securities issuable pursuant to any contractual anti-dilution, most favored nations or similar obligations of the Company ineffect as of the date hereof, provided that such obligations have not been materially amended since the date of hereof, and (e)securities issued pursuant to acquisitions or any other strategic transactions approved by the Board of Directors, providedthat any such issuance shall not include a transaction in which the Company is issuing securities primarily for the purpose ofraising capital or to an entity whose primary business is investing in securities. “FCPA” means the Foreign Corrupt Practices Act of 1977, as amended. “Federal Reserve” shall have the meaning ascribed to such term in Section 3.1(ll).“GAAP” shall have the meaning ascribed to such term in Section 3.1(i). “Guarantors” mean collectively, the Subsidiaries of the Company who are party to the Subsidiary Guarantee. 2 “Indebtedness” means except for Permitted Indebtedness, (a) any liabilities for borrowed money or amounts owed in excessof $100,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsementsand other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected inthe Company’s consolidated balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instrumentsfor deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any leasepayments in excess of $100,000 due under leases required to be capitalized in accordance with GAAP. “Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(q). “Intellectual Property Security Agreement” means that certain Intellectual Property Security Agreement required to bedelivered pursuant to Section 2.3 of this Agreement, in the form attached hereto as Exhibit B. “Liabilities” means all direct or indirect liabilities, Indebtedness and obligations of any kind of Company to the Purchaser,howsoever created, arising or evidenced, whether now existing or hereafter arising (including those acquired by assignment),absolute or contingent, due or to become due, primary or secondary, joint or several, whether existing or arising throughdiscount, overdraft, purchase, direct loan, participation, operation of law, or otherwise, including, but not limited to, pursuantto the Note, this Agreement and/or any of the other Transaction Documents, all accrued but unpaid interest on the Note, anyletter of credit, any standby letter of credit, and/or outside attorneys’ and paralegals’ fees or charges relating to thepreparation of the Transaction Documents and the enforcement of the Purchaser’s rights, remedies and powers under thisAgreement, the Note and/or the other Transaction Documents. “Liens” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or otherrestriction. “Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b). “Material Permits” shall have the meaning ascribed to such term in Section 3.1(n). “Maximum Rate” shall have the meaning ascribed to such term in Section 5.17. “Money Laundering Laws” shall have the meaning ascribed to such term in Section 3.1(qq). “Notes” means, collectively, the 8% Senior Secured Promissory Notes issued by the Company to each Purchaser hereunder,each in the form of Exhibit A attached hereto. 3 “Off-balance Sheet Arrangement” shall have the meaning ascribed to such term in Section 3.1(pp). “Penny Warrants” means, collectively, the 53,374,624 warrants to purchase shares of Common Stock with a strike price of$0.01 per share, originally issued pursuant to the documents listed in Schedule 1.1(a). “Permitted Indebtedness” means the letters of credit and secured accounts listed in Schedule 3.1(h). “Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture,limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. “Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informalinvestigation or partial proceeding, such as a deposition), whether commenced or threatened. “Product” means the Company’s investigational product, MelphalanHydrochloride for Injection for use with the Delcath Hepatic Delivery System, also known as CHEMOSAT. “Purchaser Party” shall have the meaning ascribed to such term in Section 4.9. “Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e). “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such rule may be amendedfrom time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effectas such rule. “SEC Reports” shall have the meaning ascribed to such term in Section 3.1(i). “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. “Security Agreement” means the Security Agreement dated on the date hereof by and among the Company, the Company’sSubsidiaries, and the Purchaser, as hereinafter amended and/or supplemented altogether with all exhibits, schedules andannexes to such Security Agreement, pursuant to which all Liabilities of the Company to the Purchaser under theTransaction Documents are secured by the Collateral (as defined in the Security Agreement), which security interest in theCollateral shall be perfected by the Purchaser’s UCC-1, filed with the Secretary of State of the State of Delaware, to theextent perfectable by the filing of a UCC-1 Financing Statement, or if applicable, a UCC-3 Financing StatementAmendment and such other documents and instruments related thereto, which Security Agreement is annexed hereto asExhibit C. 4 “Shell Company” means an entity that fits within the definition of “shell company” under Section 12b-2 of the ExchangeAct and Rule 144. “Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act. “Straight Warrants” means, collectively, the 1,901,993 warrants to purchase shares of Common Stock with a strike price of$4.00 per share and 2,021,410 warrants to purchase shares of Common Stock with a strike price of $1.75 per share,originally issued pursuant to the documents listed in Schedule 1.1(b). “Subscription Amount” means $2,000,000. “Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, also includeany direct or indirect subsidiary of the Company formed or acquired after the date hereof. “Subsidiary Guarantee” means the Subsidiary Guarantee, dated as of the date hereof, pursuant to which the Subsidiarieshave jointly and severally agreed to guarantee and act as surety for the Company’s obligation to repay the Notes, in the formattached hereto as Exhibit D. “Third Party Exchange Transfer” shall have the meaning ascribed to such term in Section 4.14(b). “Trading Day” means a day on which the principal Trading Market is open for trading. “Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted fortrading on the date in question: the NYSE American; the Nasdaq Capital Market; the Nasdaq Global Market; the NasdaqGlobal Select Market; the New York Stock Exchange; OTC Markets or the OTC Bulletin Board (or any successors to anyof the foregoing). “Transaction Documents” means this Agreement, the Notes, the Security Agreement, the Intellectual Property SecurityAgreement, the Subsidiary Guarantee and all exhibits and schedules thereto and hereto and any other documents oragreements executed in connection with the transactions contemplated hereunder. “Variable Rate Transaction” shall have the meaning ascribed to such term in Section 4.14(a). “Warrants” means, collectively, the Penny Warrants and the Straight Warrants. 1.2Currency. All dollar amounts in this Agreement refer to U.S. dollars; 5 ARTICLE II.PURCHASE AND SALE 2.1Purchase. On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with theexecution and delivery of this Agreement by the parties hereto, the Company shall sell and issue to each Purchaser, and each Purchasershall purchase, severally and not jointly, from the Company, Notes with an aggregate principal amount of $2,000,000. The purchase ofthe Notes will be completed in a single tranche as provided herein. 2.2Closing. On the Closing Date, upon the terms and subject to the conditions set forth herein, concurrent with the execution anddelivery of this Agreement by the parties hereto, the Company agrees to sell, and each Purchaser agrees to purchase, the SubscriptionAmount of Notes as set forth on the signature page hereto executed by such Purchaser. At the Closing, each Purchaser shall transferand surrender for cancellation the Warrants held by such Purchaser to the Company in full payment and satisfaction of the SubscriptionAmount, and the Company shall deliver to such Purchaser its Notes as set forth in Section 2.3(a), and the Company and suchPurchaser shall deliver the other items set forth in Section 2.3 deliverable at the Closing. Upon satisfaction of the covenants andconditions set forth in Sections 2.3 and 2.4 for Closing, such Closing shall be undertaken remotely by electronic exchange of Closingdocumentation. 2.3Deliveries. (a)On or prior to the Closing Date (except as otherwise agreed by the Purchaser), the Company shall deliver or cause tobe delivered to each Purchaser the following: (i)this Agreement duly executed by the Company; (ii)the Notes; (iii)the Security Agreement, duly executed by the Company; (iv)the Intellectual Property Security Agreement, duly executed by the Company; (v)the Subsidiary Guarantee, duly executed by the Company’s Subsidiaries; (vi)[Reserved]; (vii)the opinion of McCarter & English LLP, the Company’s counsel, dated as of the Closing Date; (viii)[Reserved]; (ix)a certificate evidencing the Company’s qualification as a foreign corporation and good standing issued bythe Secretary of State (or comparable office) of each jurisdiction, if any, in which the Company conducts businessand is required to so qualify, as of a date within ten (10) days of the Closing Date; 6 (x)a certificate executed by the Secretary of the Company and dated as of the Closing Date, as to (i) theresolutions, as adopted by the Board of Directors in a form reasonably acceptable to the Purchasers, approving (A)the entering into and performance of this Agreement and the other Transaction Documents and the issuance,offering and sale of the Notes and (B) the performance of the Company of its obligations under the TransactionDocuments contemplated therein, (ii) referencing links to the Company’s amended and restated certificate ofincorporation, as amended, (iii) referencing links to the Company’s amended and restated by-laws, each as ineffect at the Closing and (iv) attaching a certificate of incumbency; (xi)a certificate executed by the Secretary of the each Guarantor and dated as of the Closing Date, as to (i) theresolutions, as adopted by the board of directors of such Guarantor in a form reasonably acceptable to thePurchasers, approving (A) the entering into and performance of Transaction Documents to which it is a party and(B) the performance of Guarantor of its obligations under the Transaction Documents to which it is a partycontemplated therein, (ii) referencing links to Guarantor’s constating documents and (iii) attaching a certificate ofincumbency; and (xii)such other documents, instruments or certificates relating to the transactions contemplated by thisAgreement as such Purchaser or its counsel may reasonably request. (b)On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company, as applicable,the following: (i)this Agreement, duly executed by the Purchaser; (ii)an executed instrument of transfer of the Warrants held by such Purchaser in such form as the Companymay reasonably require; (iii)the Security Agreement, duly executed by the Purchaser; and (iv)the Intellectual Property Security Agreement, duly executed by the Purchaser. 2.4Closing Conditions. (a)The obligations of the Company hereunder in connection with the Closing are subject to the following conditionsbeing met: (i)the accuracy in all material respects as at Closing Date of the representations and warranties of thePurchaser contained herein (unless as of a specific date therein in which case they shall be accurate as of suchdate); 7 (ii)all obligations, covenants and agreements of the Purchaser required to be performed at or prior to theClosing Date shall have been performed; and (iii)the delivery by the Purchaser of the items set forth in Section 2.3(b) of this Agreement. (b)The respective obligations of each Purchaser hereunder in connection with the Closing are subject to the followingconditions being met: (i)the accuracy in all material respects when made as to the Closing Date of the representations andwarranties of the Company contained herein (unless as of a specific date therein); (ii)all obligations, covenants and agreements of the Company required to be performed at or prior to theClosing Date shall have been performed; (iii)the delivery by the Company of the items set forth in Section 2.3(a) of this Agreement; (iv)there is no existing Event of Default (as defined in the Notes) and no existing event which, with thepassage of time or the giving of notice, would constitute an Event of Default; (v)there is no breach of any obligations, covenants and agreements under the Transaction Documents and noexisting event which, with the passage of time or the giving of notice, would constitute a breach under theTransaction Documents; (vi)there shall have been no Material Adverse Effect with respect to the Company since the date hereof; (vii)from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended bythe Commission or the Company’s principal Trading Market and, at any time prior to the Closing Date, trading insecurities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum pricesshall not have been established on securities whose trades are reported by such service, or on any Trading Market,nor shall a banking moratorium have been declared either by the United States or New York State authorities norshall there have occurred any material outbreak or escalation of hostilities or other national or internationalcalamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in eachcase, in the reasonable judgment of the Purchaser, and without regard to any factors unique to the Purchaser,makes it impracticable or inadvisable to purchase the Notes at the Closing; 8 (viii)an Approved Financing shall have been consummated, or the Purchaser shall otherwise be satisfied, inits sole discretion, that an Approved Financing will be consummated concurrently with the Closing hereunder; (ix)the text and timing of any public announcement or filing with any governmental authority or stockexchange by the Company of the transactions contemplated hereby following execution of this Agreement shallbe approved in writing by the Purchasers, acting reasonably, in advance of such announcement or filing beingmade; and (x)any other conditions contained herein or the other Transaction Documents, including, without limitationthose set forth in Section 2.3 herein. ARTICLE III.REPRESENTATIONS AND WARRANTIES 3.1Representations and Warranties of the Company. Except as set forth in the disclosure schedules attached hereto (the“Disclosure Schedules”), which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or otherwisemade herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules, the Company (whichfor purposes of this Section 3.1 means the Company and all of its Subsidiaries) hereby makes the following representations andwarranties to each Purchaser as of the Closing Date: (a)Subsidiaries. All of the direct and indirect Subsidiaries and parent entities of the Company are set forth on Schedule3.1(a) hereto. The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiaryfree and clear of any Liens, other than as set forth on Schedule 3.1(a) hereto, and all of the issued and outstanding shares ofcapital stock or other equity interests of each Subsidiary are validly issued and are fully paid, non-assessable and free ofpreemptive and similar rights to subscribe for or purchase securities. (b)Organization and Qualification. The Company is an entity duly incorporated or otherwise organized and validlyexisting, and, other than as set forth on Schedule 3.1(b) hereto, the Company is in good standing, under the laws of thejurisdiction of its incorporation or organization, as applicable, with the requisite power and authority to own and use itsproperties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary or parententity of the Company is in violation or default of any of the provisions of its respective certificate or articles ofincorporation, bylaws or other organizational or charter documents. The Company is duly qualified to conduct business andis in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conductedor property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing,as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validityor enforceability of any Transaction Document; (ii) a material adverse effect on the results of operations, assets, business,prospects or condition (financial or otherwise) of the Company, its parent entities and the Subsidiaries, taken as a whole; or(iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligationsunder any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been institutedin any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority orqualification.9 (c)Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and toconsummate the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwiseto carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and each of the otherTransaction Documents by the Company and the consummation by it of the transactions contemplated hereby and therebyhave been duly authorized by all necessary action on the part of the Company and no further action is required by theCompany, the Board of Directors or the Company’s stockholders in connection herewith or therewith other than inconnection with the Required Approvals. This Agreement and each other Transaction Documents to which it is a party hasbeen (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the termshereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company inaccordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency,reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally; (ii) aslimited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies; and(iii) insofar as indemnification and contribution provisions may be limited by applicable law. (d)No Conflicts. The execution, delivery and performance by the Company of this Agreement and the otherTransaction Documents to which it is a party, the issuance and sale of the Notes and the consummation by it of thetransactions contemplated hereby and thereby do not and will not, except as set forth on Schedule 3.1(d): (i) conflict with orviolate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or otherorganizational or charter documents; (ii) conflict with, or constitute a default (or an event that with notice or lapse of time orboth would become a default) under, result in the creation of any Lien (except Liens in favor of the Purchaser) upon any ofthe properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment,acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or otherinstrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or anySubsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected; or(iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment,injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary issubject (including federal and state securities laws and regulations), or by which any property or asset of the Company or aSubsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably beexpected to result in a Material Adverse Effect. (e)Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or orderof, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmentalauthority or other Person in connection with the execution, delivery and performance by the Company of the TransactionDocuments, other than: (i) the filings required pursuant to Section 4.13 of this Agreement; (ii) the notice and/or application(s)to each applicable Trading Market for the issuance and sale of the Notes in the time and manner required thereby; and(iii) the filing of Form D with the Commission and such filings as are required to be made under applicable state securitieslaws (collectively, the “Required Approvals”).10 (f)Issuance of the Notes. The Notes are duly authorized and, when issued and paid for in accordance with theapplicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liensimposed by the Company other than restrictions on transfer provided for in the Transaction Documents. (g)Capitalization; Corporate Governance. (i)The capitalization of the Company is as set forth on Schedule 3.1(g)(i), which Schedule 3.1(g)(i) shall alsoinclude (A) the number of shares of Common Stock owned beneficially, and of record, by Affiliates of theCompany as of the date hereof and (B) the number of authorized and reserved shares of capital stock of theCompany. The Company has not issued capital stock since its most recently filed periodic report under theExchange Act except as set forth on Schedule 3.1(g)(i), except the issuance of shares of Common Stock toemployees pursuant to the Company’s employee stock purchase plans and except pursuant to the conversionand/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic reportunder the Exchange Act except as set forth on Schedule 3.1(g)(i). No Person has any right of first refusal,preemptive right, right of participation, or any similar right to participate in the transactions contemplated by theTransaction Documents except as set forth on Schedule 3.1(g)(i). There are no outstanding options, warrants, scriprights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights orobligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for oracquire any shares of Common Stock, or contracts, commitments, understandings or arrangements by which theCompany or any Subsidiary is or may become bound to issue additional shares of Common Stock or CommonStock Equivalents except as set forth on Schedule 3.1(g)(i). The issuance and sale of the Notes will not obligatethe Company to issue shares of Common Stock or other securities to any Person and will not result in a right ofany holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of suchsecurities except as set forth on Schedule 3.1(g)(i). All of the outstanding shares of capital stock of the Companyare duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federaland state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights orsimilar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, theBoard of Directors or others is required for the issuance and sale of the Notes. There are no stockholders’agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to whichthe Company is a party or, to the knowledge of the Company, between or among any of the Company’sstockholders. (ii)The names and titles of each of the Company’s principal officers, directors and beneficial holders of atleast five percent (5%) of the outstanding shares of each class of the Company’s capital stock on a fully dilutedbasis are as set forth on Schedule 3.1(g)(ii), which Schedule 3.1(g)(ii) shall also include each committee ofdirectors as well as the names and titles of each director currently serving on each such committee.11 (h)Indebtedness. Schedule 3.1(h) sets forth as of the date hereof all outstanding secured and unsecured Indebtedness ofthe Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. Except as set forth onSchedule 3.1(h), neither the Company nor any Subsidiary is in default with respect to any Indebtedness. (i)SEC Reports; Financial Statements. Other than as set forth on Schedule 3.1(i) hereto, the Company has filed allreports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act andthe Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two (2) years preceding the date hereof (theforegoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectivelyreferred to herein as the “SEC Reports”). As of their respective dates, the SEC Reports complied in all material respectswith the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed,contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessaryin order to make the statements therein, in the light of the circumstances under which they were made, not misleading. TheCompany has never been an issuer subject to Rule 144(i) under the Securities Act. The financial statements of the Companyincluded in the SEC Reports comply in all material respects with applicable accounting requirements and the rules andregulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have beenprepared in accordance with United States generally accepted accounting principles applied on a consistent basis during theperiods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto andexcept that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all materialrespects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the resultsof operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial,year-end audit adjustments. (j)Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financialstatements included within the SEC Reports, except as specifically disclosed in the Company’s Annual Report on Form 10-K, including such latest audited financial statements, or in a subsequent SEC Report filed prior to the date hereof and exceptas set forth in Schedule 3.1(g), Schedule 3.1(m), and Schedule 3.1(j): (i) there has been no event, occurrence or developmentthat has had or that could reasonably be expected to result in a Material Adverse Effect; (ii) the Company has not incurredany liabilities or obligations (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in theordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’sfinancial statements pursuant to GAAP or disclosed in filings made with the Commission; (iii) the Company has not alteredits method of accounting; (iv) the Company has not declared or made any dividend or distribution of cash or other propertyto its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock; (v)the Company has not sold, assigned or transferred any other tangible assets or Intellectual Property Rights, or canceled anydebts or claims, except in the12 ordinary course of business, (vi) the Company has not suffered any substantial loss contingencies or waived any rights ofmaterial value, whether or not in the ordinary course of business, or suffered the loss of any material amount of prospectivebusiness, (vii) the Company has not entered into any acquisition or financing transactions, whether or not in the ordinarycourse of business, other than with respect to the Transaction Documents and (v) the Company has not issued any equitysecurities to any officer, director or Affiliate, no event, liability, fact, circumstance, occurrence or development has occurredor exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries or their respectivebusinesses, properties, operations, assets or financial condition, that would be required to be disclosed by the Companyunder applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosedat least one (1) Trading Day prior to the date that this representation is made. (k)Litigation. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to theknowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respectiveproperties except as set forth in Schedule 3.1(k), or against or affecting the Company’s current or former officers or directorsin their capacity as such, before or by any court, arbitrator, governmental or administrative agency or regulatory authority(federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality,validity or enforceability of any of the Transaction Documents or the Notes or (ii) could, if there were an unfavorabledecision, have or reasonably be expected to result in a Material Adverse Effect, and neither the Company nor anySubsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of orliability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to theknowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving theCompany or any current or former director or officer of the Company that is likely to lead to action that can reasonably beexpected to result in a Material Adverse Effect. There has not been, and to the knowledge of the Company, there is notpending or contemplated, any investigation by the Commission involving the Company or any current or former director orofficer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of anyregistration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act. (l)Labor Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any ofthe employees of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of theCompany’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with theCompany or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargainingagreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. To theknowledge of the Company, no executive officer of the Company or any Subsidiary, is, or is now expected to be, inviolation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreementor non-competition13 agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continuedemployment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability withrespect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state,local and foreign laws and regulations relating to employment and employment practices, terms and conditions ofemployment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate,reasonably be expected to have a Material Adverse Effect. (m)Compliance. Neither the Company nor any Subsidiary, except as set forth in Schedule 3.1(m): (i) is in default underor in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would resultin a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claimthat it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement orinstrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation hasbeen waived); (ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority; or(iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including withoutlimitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety,product quality and safety and employment and labor matters, except in each case as could not have or reasonably beexpected to result in a Material Adverse Effect. (n)Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued bythe appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses asdescribed in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result ina Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice ofproceedings relating to the revocation or modification of any Material Permit. (o)Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real propertyowned by them and good and marketable title in all personal property owned by them that is material to the business of theCompany and the Subsidiaries, in each case free and clear of all Liens, except as set forth in Schedule 3.1(o) and except for(i) Liens as do not materially affect the value of such property and do not materially interfere with the use made andproposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for the payment of federal, state orother taxes, for which appropriate reserves have been made therefor in accordance with GAAP and the payment of which isneither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and theSubsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiariesare in compliance. 14 (p)Material Agreements. Except for the Transaction Documents (with respect to clause (i) only) or as set forth onSchedule 3.1(p) hereto, or as would not be reasonably likely to have a Material Adverse Effect, (i) the Company and each ofits Subsidiaries have performed all obligations required to be performed by them to date under any written or oral contract,instrument, agreement, commitment, obligation, plan or arrangement, filed or required to be filed with the Commission (the“Material Agreements”), (ii) neither the Company nor any of its Subsidiaries has received any notice of default under anyMaterial Agreement and, (iii) to the best of the Company's knowledge, neither the Company nor any of its Subsidiaries is indefault under any Material Agreement now in effect. (q)Intellectual Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications,trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and otherintellectual property rights and similar rights as necessary or required for use in connection with their respective businesses aspresently conducted and which the failure to so have could have a Material Adverse Effect (collectively, the “IntellectualProperty Rights”). Neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of theIntellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or beabandoned, within two (2) years from the date of this Agreement. Neither the Company nor any Subsidiary has received,since the date of the latest audited financial statements included within the SEC Reports, a written notice of a claim orotherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except ascould not have or could not reasonably be expected to have a Material Adverse Effect. To the knowledge of the Company,all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of theIntellectual Property Rights except as disclosed in Schedule 3.1(q). The Company and its Subsidiaries have takenreasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, exceptwhere failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. (r)Transactions with Affiliates and Employees. Except as disclosed in Schedule 3.1(r), none of the officers or directorsof the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or anySubsidiary is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees,officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to orby, providing for rental of real or personal property to or from providing for the borrowing of money from or lending ofmoney to, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of theCompany, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director,trustee, stockholder, member or partner, in each case in excess of $120,000 other than for: (i) payment of salary or consultingfees for services rendered; (ii) reimbursement for expenses incurred on behalf of the Company; and (iii) other employeebenefits.15 (s)Payments of Cash. Except as disclosed on Schedule 3.1(s), neither the Company, its directors or officers, or anyAffiliates or agents of the Company, have withdrawn or paid cash to any vendor in an aggregate amount that exceeds$5,000 for any purpose. (t)Sarbanes-Oxley; Internal Accounting Controls. The Company and the Subsidiaries are in compliance with any andall applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and allapplicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as ofthe Closing Date. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to providereasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations;(ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and tomaintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specificauthorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals andappropriate action is taken with respect to any differences. The Company and the Subsidiaries have established disclosurecontrols and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiariesand designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company inthe reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the timeperiods specified in the Commission’s rules and forms. The Company’s certifying officers have evaluated the effectivenessof the disclosure controls and procedures of the Company and the Subsidiaries as of the end of the period covered by themost recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented inits most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about theeffectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since theEvaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in theExchange Act) that have materially affected, or is reasonably likely to materially affect, the internal control over financialreporting of the Company and its Subsidiaries. (u)Certain Fees. Other than as set forth on Schedule 3.1(u), no brokerage or finder’s fees or commissions are or will bepayable by the Company or any Subsidiaries to any broker, financial advisor or consultant, finder, placement agent,investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. ThePurchaser shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of otherPersons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated bythe Transaction Documents. 16 (v)Private Placement. Assuming the accuracy of each Purchaser’s representations and warranties set forth in Section3.2, no registration under the Securities Act is required for the offer and sale of the Notes by the Company to the Purchaseras contemplated hereby. The issuance and sale of the Notes hereunder does not contravene the rules and regulations of theTrading Market. (w)Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment forthe Notes, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of1940, as amended. The Company shall conduct its business in a manner so that it will not become an “investmentcompany” subject to registration under the Investment Company Act of 1940, as amended. (x)Registration Rights. Other than as set forth on Schedule 3.1(x) and pursuant to this Agreement, no Person has anyright to cause the Company to effect the registration under the Securities Act of any securities of the Company or anySubsidiaries. (y)Listing and Maintenance Requirements; Trading Market Regulation. The Common Stock is registered pursuant toSection 12(b) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely tohave the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company receivedany notification that the Commission is contemplating terminating such registration. Except as disclosed in the SEC reports,the Company has not, in the twelve (12) months preceding the date hereof, received notice from any Trading Market onwhich the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listingor maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in theforeseeable future continue to be, in compliance with all such listing and maintenance requirements. (z)Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, ifany, in order to render inapplicable any control share acquisition, business combination, poison pill (including anydistribution under a rights agreement) or other similar anti-takeover provision under the Company’s amended and restatedcertificate of incorporation, as amended (or similar charter documents), or the laws of its state of incorporation that is orcould become applicable to the Purchaser as a result of the Purchaser and the Company fulfilling their obligations orexercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuanceof the Notes and the Purchasers’ ownership of the Notes. (aa)Disclosure. All of the disclosure furnished by or on behalf of the Company to the Purchaser regarding theCompany and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the DisclosureSchedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to stateany material fact necessary in order to make the statements made therein, in light of the circumstances under which theywere made, not misleading. The press releases17 disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do notcontain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary inorder to make the statements therein, in light of the circumstances under which they were made and when made, notmisleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations or warrantieswith respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof. (bb)No Integrated Offering. Assuming the accuracy of the Purchaser’s representations and warranties set forth inSection 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly orindirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances thatwould cause this offering of the Notes to be integrated with prior offerings by the Company for purposes of (i) the SecuritiesAct which would require the registration of any such securities under the Securities Act, or (ii) any applicable shareholderapproval provisions of any Trading Market on which any of the securities of the Company are listed or designated. (cc)No General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or soldany of the Notes by any form of general solicitation or general advertising. The Company has offered the Notes for saleonly to the Purchaser and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act. (dd)Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or anySubsidiary, any agent or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, usedany funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic politicalactivity; (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign ordomestic political parties or campaigns from corporate funds; (iii) failed to disclose fully any contribution made by theCompany or any Subsidiary (or made by any person acting on its behalf of which the Company is aware) which is inviolation of law; or (iv) violated in any material respect any provision of FCPA. (ee)Accountants. The Company’s accounting firm is set forth on Schedule 3.1(ee). To the knowledge and belief of theCompany, such accounting firm is a registered public accounting firm as required by the Exchange Act. (ff)No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, orreasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly orpresently employed by the Company and the Company is current with respect to any fees owed to its accountants andlawyers which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents. 18 (gg)Acknowledgment Regarding Purchaser’s Purchase of the Notes. The Company acknowledges and agrees that thePurchaser is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and thetransactions contemplated thereby. The Company further acknowledges that the Purchaser is not acting as a financialadvisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and thetransactions contemplated thereby and any advice given by the Purchaser or any of their respective representatives or agentsin connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to thePurchaser’s purchase of the Notes. The Company further represents to the Purchaser that the Company’s decision to enterinto this Agreement and the other Transaction Documents has been based solely on the independent evaluation of thetransactions contemplated hereby by the Company and its representatives. (hh)Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken,directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any securityof the Company to facilitate the sale or resale of any of the Notes, (ii) sold, bid for, purchased, or paid any compensation forsoliciting purchases of, the Notes, or (iii) paid or agreed to pay to any Person any compensation for soliciting another topurchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to theCompany’s placement agent in connection with the placement of the Notes. (ii)Stock Option Plans. The Company has not knowingly granted, and there is no and has been no Company policy orpractice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, therelease or other public announcement of material information regarding the Company or its Subsidiaries or their respectivefinancial results or prospects. (jj)Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company’s knowledge, anydirector, officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctionsadministered by the Office of Foreign Assets Control of the U.S. Treasury Department. (kk)U.S. Real Property Holding Corporation. The Company is not and has never been a U.S. real property holdingcorporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shallso certify upon Purchaser’s request. (ll)Bank Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the BankHolding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the FederalReserve System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls,directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-fivepercent (25%) or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the FederalReserve. Neither the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over themanagement or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.19 (mm)Promotional Stock Activities. Neither the Company, its officers, its directors, nor any affiliates or agents of theCompany have engaged in any stock promotional activity that could give rise to a complaint, inquiry, or trading suspensionby the Commission alleging (i) a violation of the anti-fraud provisions of the federal securities laws, (ii) violations of the anti-touting provisions, (iii) improper “gun-jumping”; or (iv) promotion without proper disclosure of compensation. (nn)Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected toresult in a Material Adverse Effect, the Company (i) has made or filed all United States federal, state and local income andall foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject,(ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined tobe due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for thepayment of all material taxes for periods subsequent to the periods to which such returns, reports or declarationsapply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, andthe officers of the Company know of no basis for any such claim. (oo)Seniority. As of the Closing Date, other than as set forth on Schedule 3.1(oo), no Indebtedness or other claimagainst the Company is senior to the Notes in right of payment, whether with respect to interest or upon liquidation ordissolution, or otherwise, other than indebtedness secured by purchase money security interests (which is senior only as tounderlying assets covered thereby) and capital lease obligations (which is senior only as to the property covered thereby). (pp)No “Off-balance Sheet Arrangements”. Other than as set forth in Schedule 3.1(pp), neither the Company nor anyof its Affiliates is involved in any “Off-balance Sheet Arrangements”. For purposes hereof an “Off-balance SheetArrangement” means any transaction or contract to which an entity unconsolidated with the Company or any of its Affiliatesis a party and under which either the Company or any such Affiliate has: (i) any obligation under a guarantee contractpursuant to which the Company or any of its Affiliates could be required to make payments to the guaranteed party,including any standby letter of credit, market value guarantee, performance guarantee, indemnification agreement, keep-wellor other support agreement; (ii) any retained or contingent interest in assets transferred to such unconsolidated entity thatserves as credit, liquidity or market risk support to the entity in respect of such assets; (iii) any variable interest held in suchunconsolidated entity where such entity provides financing, liquidity, market risk or credit risk support to, or engages inleasing, hedging or research and development services with the Company of any of its Affiliates; and (iv) any liability orobligation of the same nature as those described in clauses (i) through (iii) of this sentence even if of a different name(whether absolute, accrued, contingent or otherwise) that would not be required to be reflected in the Company or any of itsAffiliates’ financial statements. 20 (qq)Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all timesin compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign TransactionsReporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder(collectively, the “Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmentalagency, authority or body or any arbitrator involving the Company or any Subsidiary with respect to the Money LaunderingLaws is pending or, to the knowledge of the Company or any Subsidiary, threatened. (rr)Subsidiary Rights. The Company has the unrestricted right to vote, and (subject to limitations imposed by applicablelaw) to receive dividends and distributions on, all capital securities of each of its Subsidiaries as owned by the Company orany Subsidiary. (ss)Shell Company Status. The Company has never been, and is not presently, an issuer identified as a Shell Company. (tt)Investor Relations. Other than as set forth in Schedule 3.1(tt), the Company is not currently a party, nor does itintend to become a party, to any agreement pursuant to which the Company will receive investor relations services. (uu)Full Disclosure. No representation or warranty by the Company in this Agreement and no statement contained inthe Disclosure Schedules to this Agreement or any certificate or other document furnished or to be furnished to thePurchasers pursuant to this Agreement contains any untrue statement of a material fact, or omits to state a material factnecessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading. (vv)No Bad Actor Disqualification Event. After reasonable inquiry, none of the “Bad Actor” disqualifying eventsdescribed in Rule 506(d)(l) under the Securities Act (a “Disqualification Event”) is applicable to Company or to Company’sknowledge any of its Affiliates, except a Disqualification Event as to which Rule 506(d)(2)(iii) applies. (ww)Company has not, and will not, engage in any directed selling efforts in the United States in respect of the Notes.Company is offering and selling the Notes only to non U.S. Persons, in compliance with the offering restriction requirementsof Regulation S. 21 3.2Representations and Warranties of the Purchaser. Each Purchaser, for itself and for no other Purchaser, hereby represents andwarrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein in which casethey shall be accurate as of such date): (a)Organization; Authority. The Purchaser is either an individual or an entity duly incorporated or formed, validlyexisting and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate,partnership, limited liability company or similar power and authority to enter into and to consummate the transactionscontemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. Theexecution and delivery of the Transaction Documents and performance by the Purchaser of the transactions contemplated bythe Transaction Documents have been duly authorized by all necessary corporate, partnership, limited liability company orsimilar action, as applicable, on the part of the Purchaser. Each Transaction Document to which it is a party has been dulyexecuted by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute thevalid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms, except: (i) as limitedby general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of generalapplication affecting enforcement of creditors’ rights generally; (ii) as limited by laws relating to the availability of specificperformance, injunctive relief or other equitable remedies; and (iii) insofar as indemnification and contribution provisionsmay be limited by applicable law. (b)Own Account. The Purchaser understands that the Note is a “restricted security” and has not been registered underthe Securities Act or any applicable state securities law and is acquiring the Note as principal for its own account (thisrepresentation and warranty not limiting the Purchaser’s right to sell the Note in compliance with applicable federal and statesecurities laws). The Purchaser is acquiring the Note hereunder in the ordinary course of its business. (c)Purchaser Status. At the time the Purchaser was offered the Note, it was, and as of the date hereof it is an “accreditedinvestor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act. (d)Experience of the Purchaser. The Purchaser, either alone or together with its representatives, has such knowledge,sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of theprospective investment in the Note, and has so evaluated the merits and risks of such investment. The Purchaser is able tobear the economic risk of an investment in the Note and, at the present time, is able to afford a complete loss of suchinvestment. (e)General Solicitation. The Purchaser is not purchasing the Note as a result of any advertisement, article, notice orother communication regarding the Note published in any newspaper, magazine or similar media or broadcast over televisionor radio or presented at any seminar or any other general solicitation or general advertisement.22 (f)Certain Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, thePurchaser has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with thePurchaser, executed any purchases or sales, including Short Sales, of the securities of the Company during the periodcommencing as of the time that the Purchaser first received a term sheet (written or oral) from the Company or any otherPerson representing the Company setting forth the material terms of the transactions contemplated hereunder and endingimmediately prior to the execution hereof. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managedinvestment vehicle whereby separate portfolio managers manage separate portions of the Purchaser’s assets and the portfoliomanagers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions ofthe Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by theportfolio manager that made the investment decision to purchase the Note covered by this Agreement. Other than to otherPersons party to this Agreement, the Purchaser has maintained the confidentiality of all disclosures made to it in connectionwith this transaction (including the existence and terms of this transaction). (g)Non U.S. Person. The Purchaser is not a “U.S. Person” as that term is defined in Regulation S under the SecuritiesAct, and is not acquiring the Note for the account or beneficial ownership of any U.S. Person. (h)No Short Sales. Neither Purchaser nor any Affiliate of Purchaser (i) holds any short position in the Common Stock,(ii) has ever engaged in, directly or indirectly, any Short Sale of the Common Stock, or (iii) has ever engaged in, directly orindirectly, any hedging transaction with regard to the Common Stock. (i)Not a Bad Actor. After reasonable inquiry, none of the “Bad Actor” disqualifying events described in Rule 506(d)(l)under the Securities Act is applicable to the Purchaser or any of its Affiliates. The Purchaser is not now, and has never been,subject to any final cease and desist order or any penalty from the Commission or any court of competent jurisdiction for anyviolation of any provision of the Securities Act or the Exchange Act, or any of the regulations promulgated thereunder. (j)Not an Affiliate. The Purchaser is not now, and has never been, an Affiliate of the Company or any otherPurchaser. The Purchaser is not now, and has never been, part of any group of Persons that would be required underSection 13(d) of the Exchange Act, or the rules and regulations promulgated thereunder, to file a statement on Schedule 13Dor Schedule 13G with regard to the Company. (k)Warrants. The Purchaser is the legal and beneficial owner of the Warrants, free and clear of any lien, encumbranceor other adverse claim of any nature.23 The Company acknowledges and agrees that the representations contained in Section 3.2 shall not modify, amend or affect thePurchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations andwarranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connectionwith this Agreement or the consummation of the transaction contemplated hereby. ARTICLE IV.OTHER AGREEMENTS OF THE PARTIES 4.1Transfer Restrictions. (a)The Notes may only be disposed of in compliance with state and federal securities laws. In connection with anytransfer of the Notes other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliateof a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferorthereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to theCompany, at the Company’s sole expense in the form and substance of which opinion shall be reasonably satisfactory to theCompany, to the effect that such transfer does not require registration of the Notes under the Securities Act. As a conditionof transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rightsand obligations of a Purchaser under this Agreement. (b)The Purchaser agrees to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Notes inthe following form: THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSIONOR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON REGULATION S OR ANEXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TOREGULATION S OR AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT ORPURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THEREGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLESTATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFERORTO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THECOMPANY. The Company acknowledges and agrees that the Purchaser may from time to time pledge, pursuant to a bona fide marginagreement with a registered broker-dealer, or grant a security interest in some or all of the Notes to a financial institution thatis an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisionsof this Agreement and, if required under the terms of such arrangement,24 the Purchaser may transfer the Notes to the pledgees or secured parties. Such a pledge or transfer would not be subject toapproval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required inconnection therewith. Further, no notice shall be required of such pledge. At the Company’s expense, the Company willexecute and deliver such reasonable documentation as a pledgee or secured party of the Notes may reasonably request inconnection with a pledge or transfer of the Notes. 4.2[Reserved]. 4.3[Reserved]. 4.4Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security(as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Notes in a manner that wouldrequire the registration under the Securities Act of the sale of the Notes or that would be integrated with the offer or sale of the Notesfor purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing ofsuch other transaction unless shareholder approval is obtained before the closing of such subsequent transaction. 4.5[Reserved]. 4.6Shareholder Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any otherPerson, that the Purchaser is an “acquiring person” or such similar term under any control share acquisition, business combination,poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafteradopted by the Company, or that the Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue ofreceiving the Notes under the Transaction Documents or under any other agreement between the Company and the Purchaser. 4.7[Reserved]. 4.8Use of Proceeds. The Company shall use the net proceeds as set forth in Schedule 4.8. 4.9Indemnification of Purchaser. Subject to the provisions of this Section 4.9, the Company will indemnify and hold thePurchaser and its directors, officers, managers, shareholders, members, partners, employees and agents (and any other Persons with afunctionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person whocontrols the Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors,officers, managers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role ofa Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “PurchaserParty”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including alljudgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any the PurchaserParty may suffer or incur as a result of or relating to (a) any breach of any25 of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other TransactionDocuments or (b) any action instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, byany stockholder of the Company who is not an Affiliate of the Purchaser Party, with respect to any of the transactions contemplated bythe Transaction Documents (unless such action is based in whole or in part upon a breach of the Purchaser Party’s representations,warranties or covenants under the Transaction Documents or any agreements or understandings the Purchaser Party may have withany such stockholder or any violations by such Purchaser Party of state or federal securities laws or any conduct by the PurchaserParty which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against anyPurchaser Party in respect of which indemnity may be sought pursuant to this Agreement, the Purchaser Party shall promptly notify theCompany in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonablyacceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action andparticipate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the Purchaser Party except to theextent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after areasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion ofcounsel, a material conflict on any material issue between the position of the Company and the position of the Purchaser Party, inwhich case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. TheCompany will not be liable to any Purchaser Party under this Agreement (x) for any settlement by a Purchaser Party effected withoutthe Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (y) to the extent, but only to the extentthat a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenantsor agreements made by the Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required bythis Section 4.9 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as andwhen bills are received or are incurred. The indemnification contained herein shall be in addition to any cause of action or similar rightof any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law. 4.10[Reserved]. 4.11Certain Transactions. The Purchaser covenants and agrees that neither it, nor any Affiliate acting on its behalf or pursuant toany understanding with it will execute any Short Sales of the Common Stock or hedging transaction, which establishes a net shortposition with respect to the Company’s Common Stock) during the period commencing with the execution of this Agreement andending on the earlier of the Maturity Date (as defined in the Notes) of the Notes or the full repayment of the Notes; provided that thisprovision shall not operate to restrict a Purchaser’s trading under any prior securities purchase agreement containing contractual rightsthat explicitly protects such trading in respect of the previously issued securities. 26 4.12 Securities Laws Disclosure; Publicity. The Company and the Purchaser shall consult with each other in issuing any publicdisclosure with respect to the transactions contemplated hereby, and neither the Company nor the Purchaser shall issue any such publicdisclosure nor otherwise make any such public statement without the prior consent of the Company, with respect to any press releaseof the Purchaser, or without the prior consent of the Purchaser, with respect to any press release of the Company, which consent shallnot unreasonably be withheld or delayed, except if such disclosure is required by law or rules of the principal Trading Market, inwhich case the disclosing party shall promptly provide the other party with prior notice of such public statement orcommunication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of the Purchaser, or include thename of the Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior writtenconsent of the Purchaser, except: (a) as required by federal securities law in connection with any registration statement contemplated bythis Agreement and (b) to the extent such disclosure is required by law or Trading Market regulations, in which case the Companyshall provide the Purchaser with prior notice of such disclosure permitted under this clause (b). 4.13 Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Note as required underRegulation D and to provide a copy thereof, promptly upon request of the Purchaser. The Company shall take such action as theCompany shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Notes for, sale to the Purchaserat the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of suchactions promptly upon request of the Purchaser. 4.14 Subsequent Equity Sales. (a)For so long as any of the Notes remain outstanding, the Company shall be prohibited from effecting or entering intoan agreement to effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common StockEquivalents (or a combination of units thereof) involving a Variable Rate Transaction. “Variable Rate Transaction” means atransaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable orexercisable for, or include the right to receive, additional shares of Common Stock either (A) at a conversion price, exerciseprice or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the sharesof Common Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise orexchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security orupon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or themarket for the Common Stock or (ii) enters into any agreement, including, but not limited to, an equity line of credit,whereby the Company may issue securities at a future determined price. 27 (b)For as long as any of the Notes remain outstanding, neither the Company nor any of its affiliates or Subsidiaries, norany of its or their respective officers, employees, directors, agents or other representatives, will (without the prior writtenconsent of the Purchaser), directly or indirectly: (a) solicit, initiate, encourage or accept any other inquiries, proposals oroffers from any Person relating to any exchange (i) of any security of the Company or any of its Subsidiaries for any othersecurity of the Company or any of its Subsidiaries, except to the extent (x) consummated pursuant to the terms of CommonShare Equivalents of the Company as in effect as of the date hereof and disclosed in filings with the Commission prior to thedate hereof (without giving effect to any amendment, modification, change or waiver of any terms thereof occurring on orafter the date hereof or not disclosed in a filing by the Company with the Commission prior to the date hereof) or (ii) of anyindebtedness or other securities of, or claim against, the Company or any of its Subsidiaries pursuant to a registrationstatement filed with the Commission or relying on any exemption under the Securities Act (including, without limitation,Section 3(a)(10) of the Securities Act (any such transaction described in clauses (i) or (ii), an “Exchange Transaction”); (b)enter into, effect, alter, amend, announce or recommend to its stockholders any Exchange Transaction with any Person; or(c) participate in any discussions, conversations, negotiations or other communications with any Person regarding anyExchange Transaction, or furnish to any Person any information with respect to any Exchange Transaction, or otherwisecooperate in any way, assist or participate in, facilitate or encourage any effort or attempt by any Person to seek an ExchangeTransaction involving the Company or any of its Subsidiaries. For as long as the Notes remain outstanding, neither theCompany nor any of its affiliates or Subsidiaries, nor any of its or their respective officers, employees, directors, agents orother representatives, will, directly or indirectly, cooperate in any way, assist or participate in, facilitate or encourage anyeffort or attempt by any Person to effect any acquisition of securities or indebtedness of, or claim against, the Company bysuch Person from an existing holder of such securities, indebtedness or claim in connection with a proposed exchange ofsuch securities or indebtedness of, or claim against, the Company (whether pursuant to Section 3(a)(9) or 3(a)(10) of theSecurities Act or otherwise) (a “Third Party Exchange Transfer”). The Company, its affiliates and Subsidiaries, and each ofits and their respective officers, employees, directors, agents or other representatives shall immediately cease and cause to beterminated all existing discussions, conversations, negotiations and other communications with any Persons with respect toany of the foregoing. For all purposes of this Agreement, violations of the restrictions set forth in this Section 4.14 by anySubsidiary or affiliate of the Company, or any officer, employee, director, agent or other representative of the Company orany of its Subsidiaries or affiliates shall be deemed a direct breach of this Section 4.14 by the Company. 28 (c)From the date hereof until sixty (60) calendar days after the Closing Date, neither the Company nor any Subsidiaryshall, directly or indirectly, except with respect to the proposed $20,000,000 private investment in public equitiescontemplated to be completed by May 31, 2019, and as otherwise permitted under this Agreement, issue, offer, sell, grantany option or right to purchase, or otherwise dispose of (or announce any issuance, offer, sale, grant of any option or right topurchase or other disposition of) any equity security or any equity-linked or related security (including, without limitation,any “equity security” (as that term is defined under Rule 405 promulgated under the Securities Act), any Common Shares orCommon Share Equivalents, any debt securities, any preferred stock or any purchase rights) or otherwise amend, modify,waiver or alter any terms of conditions of any Common Share Equivalents outstanding as of the date hereof to decrease theexercise, conversion and/or exchange price, as applicable, thereunder or otherwise increase the aggregate number ofCommon Shares issuable in connection therewith. (d)The Purchaser shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, whichremedy shall be in addition to any right to collect damages. Notwithstanding the foregoing, this Section 4.14 shall not applyin respect of an Exempt Issuance, except that no Variable Rate Transaction shall be an Exempt Issuance. 4.15.Regulation S Compliance. Each Purchaser agrees that, during the six (6) months following the Closing, it shall not engagein any transaction involving any securities of the Company that would be prohibited or restricted by, or would otherwise renderunavailable any applicable safe harbor provided by Regulation S.4.16Proceeds of Commercial Arrangements. Upon receipt by the Company or any of its Subsidiaries of any payment, royaltypayment or other consideration relating to, or under the terms of, any strategic partnership, joint venture, distribution, distributor, salesor other commercial arrangement or agreement related to the distribution, sale, promotion or regulatory approval of the Product, theCompany shall forthwith (and in any event, within [3] days) give written notice of such receipt to the Purchasers. Each Purchaser may,at any time within [10] Business Days of receipt of such notice from the Company, elect to require that all or any portion of the cashvalue of such payment or other consideration be used to repay amounts outstanding under such Notes, and within [3] Business Days ofsuch election being made by such Purchaser(s), the Company shall repay the applicable Notes in the amount specified by suchPurchaser(s); provided that if more than one Purchaser gives such written notice then the Company shall repay the applicablePurchasers on a pro rata basis (based on the outstanding principal amount owing on the applicable Notes at the time of any suchpayment). 4.17Waiver. Upon the satisfaction of each of the conditions precedent set out herein and concurrently with the consummation ofthe Closing hereunder, the Purchasers agree to waive all Events of Default (as defined in the Notes) of the Company and confirm thatthe Company shall not be restricted from redeeming all of the Penny Warrants in accordance with the terms thereof. 29 4.18Public Announcement. The Company and the Purchasers agree to co-operate in the preparation of any public filing orannouncement regarding the transactions contemplated by this Agreement, and the Company shall not (a) issue any press release orotherwise make public announcements with respect to this Agreement without the prior written consent of the Purchasers (whichconsent shall not be unreasonably withheld or delayed), or (b) make any filing with any governmental authority or stock exchange withrespect thereto without the prior written consent of the Purchasers; provided, however, that the foregoing shall be subject to theCompany’s and the Purchasers’ overriding obligation to make any disclosure or filing required under applicable law or stock exchangerules, and the party making such disclosure shall use commercially reasonable efforts to give prior oral or written notice to the otherparty and reasonable opportunity to review or comment on the disclosure or filing. ARTICLE V.MISCELLANEOUS 5.1Termination. This Agreement may be terminated by the Purchaser, as to the Purchaser’s obligations hereunder only andwithout any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties,if the Closing has not been consummated on or before June 21, 2019; provided, however, that such termination will not affect the rightof any party to sue for any breach by any other party (or parties). 5.2Fees and Expenses. The Company has agreed to bear all fees, disbursements, and expenses in connection with the transactionscontemplated herein, including, without limitation, the Company’s legal and accounting fees and disbursements, the costs incident tothe preparation, printing and distribution of any registration statement, filing fees, UCC fees, and costs associated with the IntellectualProperty Security Agreement. The Company shall pay all stamp taxes and other taxes and duties levied in connection with the deliveryof the Notes to the Purchasers in connection with the transactions contemplated hereby.5.3Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entireunderstanding of the parties hereto with respect to the subject matter hereof and thereof and supersede all prior agreements andunderstandings, oral or written, with respect to such matters, which the parties hereto acknowledge have been merged into suchdocuments, exhibits and schedules. 5.4Notices. Any and all notices or other communications or deliveries to be provided by the Purchaser hereunder shall be inwriting and delivered personally, by email or facsimile, or sent by a nationally recognized overnight courier service, addressed to theCompany at 1633 Broadway, Suite 22C, New York, New York 10019, 917-591-5970, bkeck@delcath.com or such other address,facsimile number, or email address as the Company may specify for such purposes by notice to the Purchaser delivered in accordancewith this Section 5.4. Any and all notices or other communications or deliveries to be provided by the Company hereunder shall be inwriting and delivered personally, by email or facsimile, or sent by a nationally recognized overnight courier service addressed to eachPurchaser at the email address, facsimile number, or address of the Purchaser appearing on the books of the Company, or if no suchemail address, facsimile number, or address appears on the books of the Company, at the principal place of business of suchPurchaser. Any notice or other communication or deliveries hereunder shall be deemed30 given and effective on the earliest (i) the date of transmission, if such notice or communication is delivered via facsimile or email at thefacsimile number or email address set forth on the signature pages attached hereto prior to 12:00 p.m. (New York City time) on anydate, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile or email at thefacsimile number or email address set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 12:00p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationallyrecognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required to be given. 5.5Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in awritten instrument signed, in the case of an amendment, by the Company and Purchasers holding at least 50.1% in interest of the Notesthen outstanding or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. Nowaiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuingwaiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shallany delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right. Anyamendment effected in accordance with accordance with this Section 5.5 shall be binding upon each Purchaser and holder of the Noteand the Company. 5.6Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemedto limit or affect any of the provisions hereof. 5.7No Assignment. No party may assign this Agreement or any rights or obligations hereunder. 5.8No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successorsand permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwiseset forth in Sections 4.9 and 5.5. 5.9Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the TransactionDocuments shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, withoutregard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations,enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether broughtagainst a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall becommenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to theexclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of anydispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect tothe enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action orproceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or31 proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service ofprocess and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certifiedmail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement andagrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall bedeemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action,suit or proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company underSection 4.9, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for its reasonable attorneys’fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding. 5.10Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Notes. 5.11Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall beconsidered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered toeach other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered byfacsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of theparty executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signaturepage were an original thereof. 5.12Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction tobe invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remainin full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commerciallyreasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated bysuch term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would haveexecuted the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declaredinvalid, illegal, void or unenforceable. 5.13Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similarprovisions of) any of the other Transaction Documents, whenever the Purchaser exercises a right, election, demand or option under aTransaction Document and the Company does not timely perform its related obligations within the periods therein provided, then thePurchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice,demand or election in whole or in part without prejudice to its future actions and rights. 32 5.14Replacement of the Notes. If any of the Notes is mutilated, lost, stolen or destroyed, the Company shall issue or cause to beissued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, anew Note, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicantfor a new Note under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associatedwith the issuance of such replacement Note. 5.15Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery ofdamages, the Purchaser and the Company will be entitled to specific performance under the Transaction Documents. The parties agreethat monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained inthe Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligationthe defense that a remedy at law would be adequate. 5.16Payment Set Aside. To the extent that the Company makes a payment or payments to the Purchaser pursuant to anyTransaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds ofsuch enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside,recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or anyother Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause ofaction), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived andcontinued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. 5.17Usury. To the extent it may lawful do so, the Company hereby agrees not to insist upon or plead or in any mannerwhatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted,now or at any time hereafter in force, in connection with any claim, action or proceeding that may be brought by the Purchaser in orderto enforce any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in anyTransaction Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents forpayments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”),and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with anyother sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed suchMaximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documentsis increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rateof interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date thereof forward,unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the MaximumRate is paid by the Company to the Purchaser with respect to indebtedness evidenced by the Transaction Documents, such excess shallbe applied by the Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner ofhandling such excess to be at the Purchaser’s election.33 5.18Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under theTransaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damagesand other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidateddamages or other amounts are due and payable shall have been cancelled. 5.19Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any rightrequired or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the nextsucceeding Business Day. 5.20Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity torevise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolvedagainst the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. Inaddition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject toadjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the CommonStock that occur after the date of this Agreement. 5.21WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTIONBROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY ANDINTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBYABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY. [Signature Pages Follow] 34 IN WITNESS WHEREOF, the parties hereto have caused this Note Purchase Agreement to be duly executed by theirrespective authorized signatories as of the date first indicated above. DELCATH SYSTEMS, INC. Address for Notice: By: 1633 Broadway Name: Suite 22C Title: New York, New York 10019 Attention: Barbra KeckWith a copy to (which shall not constitute notice): E-Mail: bkeck@delcath.com McCarter & English 100 Mulberry Street, Four Gateway Center Newark, New Jersey 07102 Attention: David Broderick E-Mail: dbroderick@mccarter.com [REMAINDER OF PAGE INTENTIONALLY LEFT BLANKSIGNATURE PAGE FOR PURCHASER FOLLOWS] 35 [PURCHASER SIGNATURE PAGES TO DELCATH SYSTEMS, INC. NOTE PURCHASE AGREEMENT] IN WITNESS WHEREOF, the undersigned have caused this Note Purchase Agreement to be duly executed by their respectiveauthorized signatories as of the date first indicated above. Name of Purchaser: Rosalind Master Fund LP Signature of Authorized Signatory of Advisor (Rosalind Advisors, Inc.) of Purchaser: Name of Authorized Signatory: Title of Authorized Signatory: Email Address of Authorized Signatory: Address for Notice to Purchaser: 175 Bloor Street EastSuite 1316, North TowerToronto, ON M4W 3R8Canada Subscription Amount:$1,000,000 Name of Purchaser: Rosalind Opportunities Fund I Signature of Authorized Signatory of Advisor (Rosalind Advisors, Inc.) of Purchaser: Name of Authorized Signatory: Title of Authorized Signatory: Email Address of Authorized Signatory: Address for Notice to Purchaser: 175 Bloor Street EastSuite 1316, North TowerToronto, ON M4W 3R8Canada Subscription Amount:$1,000,000 36 EXHIBIT A Form of Senior Secured Promissory Notes37 EXHIBIT B Form of Intellectual Property Security Agreement 38 EXHIBIT C Form of Security Agreement 39 EXHIBIT D Form of Subsidiary Guarantee 40 DISCLOSURE SCHEDULES TO THE NOTE PURCHASE AGREEMENT BY AND AMONG DELCATH SYSTEMS, INC. ANDTHE PURCHASERS SIGNATORY THERETO DATED June 6, 2019 These Sections (these “Sections”) of this Disclosure Schedule are numbered to correspond to the corresponding sections of the NotePurchase Agreement (the “Agreement”). These Sections have been prepared in accordance with, and subject to, the following termsand conditions: (a)To the extent a Section is intended to qualify a representation or warranty of the Company contained in the Article III of theAgreement, the information and disclosures contained in such Section are intended only to qualify and limit such representation orwarranty and not in any way expand the scope or effect of such representation or warranty. (b)The disclosure of any item in any Section of this Disclosure Schedule will constitute disclosure for purposes of another Sectionif it is reasonably clear from a reading of the disclosure that such disclosure is applicable to such other Sections or Sub-Sections. (c)Inclusion of any item in a Section of this Disclosure Schedule does not constitute a determination by the Company that suchitem is material and shall not be deemed to establish a standard or materiality. No disclosure in any Section of this Disclosure Schedulerelating to any possible breach or violation of any agreement, law or any potential adverse contingency shall be construed as anadmission or indication that any such breach or violation exists or has actually occurred or that such adverse contingency will actuallyoccur. (d)Any capitalized terms not defined in this Disclosure Schedule shall have the meanings assigned thereto in the Agreement. Anysection headings or titles used herein are included for convenience only and shall not be considered as representations or warranties asto the type, character or content of the matters referred to thereunder.41 SCHEDULE 1.1(a) PENNY WARRANTS •Warrant to Purchase Common Stock no. D-1-201 issued on June 4, 2018 and issued by Delcath Systems, Inc.; •Warrant to Purchase Common Stock no. D-1-202 issued on June 4, 2018 and issued by Delcath Systems, Inc.; •Warrant to Purchase Common Stock no. D-1-203 issued on June 4, 2018 and issued by Delcath Systems, Inc.; •Warrant to Purchase Common Stock no. D-1-204 issued on June 4, 2018 and issued by Delcath Systems, Inc.; •Warrant to Purchase Common Stock no. D-1-205 issued on June 4, 2018 and issued by Delcath Systems, Inc.; •Warrant to Purchase Common Stock no. D-1-206 issued on June 4, 2018 and issued by Delcath Systems, Inc.; •Warrant to Purchase Common Stock no. D-1-207 issued on June 4, 2018 and issued by Delcath Systems, Inc.; •Warrant to Purchase Common Stock no. D-1-208 issued on June 4, 2018 and issued by Delcath Systems, Inc.; •Warrant to Purchase Common Stock no. D-1-209 issued on June 4, 2018 and issued by Delcath Systems, Inc.; •Warrant to Purchase Common Stock no. D-1-210 issued on June 4, 2018 and issued by Delcath Systems, Inc.; •Warrant to Purchase Common Stock no. D-1-211 issued on June 4, 2018 and issued by Delcath Systems, Inc.; •Warrant to Purchase Common Stock no. D-1-212 issued on June 4, 2018 and issued by Delcath Systems, Inc.; •Warrant to Purchase Common Stock no. D-1-213 issued on June 4, 2018 and issued by Delcath Systems, Inc.; •Warrant to Purchase Common Stock no. D-2-201 issued on July 20, 2018 and issued by Delcath Systems Inc.; •Warrant to Purchase Common Stock no. D-2-202 issued on July 20, 2018 and issued by Delcath Systems Inc.; •Warrant to Purchase Common Stock no. D-2-203 issued on July 20, 2018 and issued by Delcath Systems Inc.; •Warrant to Purchase Common Stock no. D-2-204 issued on July 20, 2018 and issued by Delcath Systems Inc.; •Warrant to Purchase Common Stock no. D-2-205 issued on July 20, 2018 and issued by Delcath Systems Inc.;42 •Warrant to Purchase Common Stock no. D-2-206 issued on July 20, 2018 and issued by Delcath Systems Inc.; •Warrant to Purchase Common Stock no. D-2-207 issued on July 20, 2018 and issued by Delcath Systems Inc.; •Warrant to Purchase Common Stock no. D-2-208 issued on July 20, 2018 and issued by Delcath Systems Inc.; •Warrant to Purchase Common Stock no. D-2-209 issued on July 20, 2018 and issued by Delcath Systems Inc.; •Warrant to Purchase Common Stock no. D-2-210 issued on July 20, 2018 and issued by Delcath Systems Inc.; •Warrant to Purchase Common Stock no. D-2-211 issued on July 20, 2018 and issued by Delcath Systems Inc.; •Warrant to Purchase Common Stock no. D-2-212 issued on July 20, 2018 and issued by Delcath Systems Inc.; •Warrant to Purchase Common Stock no. D-2-213 issued on July 20, 2018 and issued by Delcath Systems Inc.; •Warrant to Purchase Common Stock no. D-3-301 issued on August 29, 2018 and issued by Delcath Systems, Inc.; •Warrant to Purchase Common Stock no. D-3-302 issued on August 29, 2018 and issued by Delcath Systems, Inc.; •Warrant to Purchase Common Stock no. D-3-303 issued on August 29, 2018 and issued by Delcath Systems, Inc.; •Warrant to Purchase Common Stock no. D-3-304 issued on August 29, 2018 and issued by Delcath Systems, Inc.; •Warrant to Purchase Common Stock no. D-3-305 issued on August 29, 2018 and issued by Delcath Systems, Inc.; •Warrant to Purchase Common Stock no. D-3-306 issued on August 29, 2018 and issued by Delcath Systems, Inc.; •Warrant to Purchase Common Stock no. D-3-307 issued on August 29, 2018 and issued by Delcath Systems, Inc.; •Warrant to Purchase Common Stock no. D-3-308 issued on August 29, 2018 and issued by Delcath Systems, Inc.; •Warrant to Purchase Common Stock no. D-3-309 issued on August 29, 2018 and issued by Delcath Systems, Inc.; •Warrant to Purchase Common Stock no. D-3-310 issued on August 29, 2018 and issued by Delcath Systems, Inc.; •Warrant to Purchase Common Stock no. D-3-311 issued on August 29, 2018 and issued by Delcath Systems, Inc.; •Warrant to Purchase Common Stock no. D-3-312 issued on August 29, 2018 and issued by Delcath Systems, Inc.;43 •Warrant to Purchase Common Stock no. D-3-313 issued on August 29, 2018 and issued by Delcath Systems, Inc.; •First Amendment to Warrants to Purchase Common Stock dated July 20, 2018 between Delcath Systems, Inc. and DiscoverGrowth Fund, amending warrant nos. D-1-101 (with respect to changes 1. (b) and (d) only), D-1-201, D-1-202, D-1-203, D-1-204, D-1-205, D-1-206, D-1-207, D-1-208, D-1-209, D-1-210, D-1-211, D-1-212 and D-1-213; and •Second Amendment to Warrant to Purchase Common Stock dated August 29, 2018 between Delcath Systems, Inc. andDiscover Growth Fund, LLC, amending warrant nos. D-1-201 et. seq. and D-2-201 et seq. 44 SCHEDULE 1.1(b) STRAIGHT WARRANTS •Warrant to Purchase Common Stock no. D-1-101 issued on June 4, 2018 and issued by Delcath Systems, Inc.; •Warrant to Purchase Common Stock no. D-2-101 issued on July 20, 2018 and issued by Delcath Systems Inc.; •Warrant to Purchase Common Stock no. D-3-101 issued on August 29, 2018 and issued by Delcath Systems Inc.; 1 SCHEDULE 3.1(a) SUBSIDIARIES OF THE COMPANY 1. Delcath Holdings Limited2. Delcath Systems Limited3. Delcath Systems UK Limited4. Delcath Systems GmBH5. Delcath Systems B.V.2 SCHEDULE 3.1(b)Organization and Qualification None.3 SCHEDULE 3.1(d) ConflictsNone. 4 SCHEDULE 3.1(g)(i) Capitalization A.Shares beneficially owned by Affiliates: 1,284,329B.12.6 million shares issued since most recent periodic report Rights of Participation: September 2017 Hudson Bay and AltoFebruary 2018: Registered Direct InvestorsJune 2018: Discover Growth Fund, as assigned to Rosalind Master Fund LP by Discover Growth Fund as signatory to the SecuritiesPurchase Agreement dated as of June 4, 2018. Delcath Systems, Inc.Capitalization table as of April 22, 2019 Authorized Issued Treasury Outstanding Preferred Shares 10,000,000 - - - Common Shares 1,000,000,000 18,277,807 - 18,277,807 Fully diluted common shares: Feb 2015 Warrants ($0.01; exp 2/2020) 9 July 2015 Warrants ($0.01; exp 7/2020) 9 Oct 2016 Warrants ($0.01; exp 10/2021) 11 Feb 2018 Warrants ($10.00; exp 2/2024) 189,000 June 2018 Warrants ($0.01, exp through 6/2024) 16,615,317 June 2018 Warrants ($4.00; exp 6/2023) 1,116,256 July 2018 Warrants ($0.01, exp through 7/2024) 12,168,926 July 2018 Warrants ($4.00 exp 7/2023) 785,737 August 2018 Warrants ($0.01, exp through 8/2024) 23,777,381 August 2018 Warrants ($1.75; exp 8/2023) 2,021,410 Sept 2018 Warrants ($0.01, exp through 9/2024) 830,854 Sept 2018 Warrants ($1.75; exp 9/2023) 279,506 Options 1,250,000 Total shares reserved for warrants and options 59,034,416 Total shares issued and reserved: 77,312,223 5 SCHEDULE 3.1(g)(ii) Corporate Governance of Delcath Systems, Inc. Roger Stoll, Ph.D., ChairmanWilliam RueckertDr. Marco TagliettiDr. Jennifer Simpson Audit Committee – William Rueckert, Chair; Roger Stoll, Marco TagliettiCompensation Committee – Marco Taglietti, Chair; William Rueckert, Roger StollNominating and Corp. Governance Committee – Roger Stoll, Chair; William Rueckert; Marco Taglietti 6 SCHEDULE 3.1(h) Indebtedness 1. Letter of credit issued by Silicon Valley Bank to Kasowitz, Benson, Torres and Friedman LLP with face amount of $130,663.00. 2. Letter of credit issued by Silicon Valley Bank to SLG 810 7th Avenue Lessee LLC with face amount of $881,297.08. 3. Indebtedness in a maximum amount of $75,000 owed to Silicon Valley Bank under corporate credit card services agreement. 4. Indebtedness between Delcath Systems, Inc. and Delcath Holdings Limited pursuant to a License and Agreement to ShareIntangible Development Costs dated as of January 1, 2012. 5. Indebtedness of $5,478,559 between Delcath Systems, Inc. and Rosalind Master Fund L.P., as assigned to Rosalind Master FundLP by Discover Growth Fund and Discover Growth Fund, LLC as signatories to Securities Purchase Agreements dated as of June 4,2018; July 20, 2018; August 29, 2018; and a Note Purchase and Exchange Agreement dated March 29, 2019 and the 8% SeniorSecured Promissory Notes issued pursuant thereto. 6. Indebtedness of $469,975 between Delcath Systems, Inc. and the institutional investors signatory to Securities Purchase Agreementsdated as of September 21, 2018 and the 8% Senior Secured Convertible Promissory Notes issued pursuant thereto. 7. Indebtedness of $180,000 between Delcath Systems, Inc. and Rosalind Master Fund LP as signatory to the Securities PurchaseAgreement dated as of April 18, 2019 and the 8% Senior Secured Promissory Note issued pursuant thereto. 8. Indebtedness of $370,000 between Delcath Systems, Inc. and Rosalind Master Fund LP and $550,000 between Delcath Systems,Inc. and Rosalind Opportunities Fund I LP, in each case as signatories to the Securities Purchase Agreement dated as of April 26, 2019and the 8% Senior Secured Promissory Notes issued pursuant thereto. 9. Indebtedness of $550,000 between Delcath Systems, Inc. and Rosalind Master Fund LP and $550,000 between Delcath Systems,Inc. and Rosalind Opportunities Fund I LP, in each case as signatories to the Securities Purchase Agreement dated as of May 9, 2019and the 8% Senior Secured Promissory Notes issued pursuant thereto. 10. Indebtedness of $559,500 between Delcath Systems, Inc. and Rosalind Master Fund LP and $559,500 between Delcath Systems,Inc. and Rosalind Opportunities Fund I LP, in each case as signatories to the Securities Purchase Agreement dated as of May 23, 2019and the 8% Senior Secured Promissory Notes issued pursuant thereto. 7 Existing Liens 1. Liens of Silicon Valley Bank on account nos. 3301246486 and 3301264690, respectively, securing the letters of credit described innumbers 1 and 2 above. 2. Lien of Silicon Valley Bank account no. 3301464115 securing the Indebtedness described in number 3 above.3. Lien of the institutional investor securing the Obligations described in numbers 5 - 10 above. 8 SCHEDULE 3.1(i) SEC Reports; Financial Statements The Company has not timely filed its Annual Report on Form 10-K or its Proxy Statement for the year ended December 31, 2018.The Company has not timely filed its Quarterly Report on Form 10-Q for the quarter ended March 31, 2019.9 SCHEDULE 3.1(j) Material Changes; Undisclosed Events, Liabilities or Developments See Schedule 3.1(m).10 SCHEDULE 3.1(k) Litigation 1.In March 2019, the Company sued two affiliated Iroquois Funds and FirstFire seeking declaratory judgment, among otherremedies, that the February 2018 warrants issued to them are deemed to not including an “exploding” antidilution featureupon a down round financing. The suit was filed in New York State Supreme Court in NY County, NY.See Schedule 3.1(m) below for any potential claims.11 SCHEDULE 3.1(m) Compliance UBC Demand Letter for $2,106,116.00.Payables to Roth Capital in the amount of $552,642.60.Notices of Default from Discover Growth Fund, Discover Growth Fund, LLC, Bigger Capital Fund, LP and District 2 Capital FundLP in respect of the Indebtedness listed in paragraph 5 of Schedule 3.1(h).12 SCHEDULE 3.1(o) Title to AssetsSee Schedule 3.1(h).13 SCHEDULE 3.1(p) Material AgreementsSee Schedule 3.1(m).14 SCHEDULE 3.1(q) Intellectual Property None.15 SCHEDULE 3.1(r) Transactions with Affiliates and Employees Herein below are all back salaries and unreimbursed employee expenses through April 15, 2019: Jennifer Simpson$862,376Barbra Keck$536,181John Purpura$553,491All other employees$335,670 $2,287,718 16 SCHEDULE 3.1(s) Cash Payments None.17 SCHEDULE 3.1(u) Certain Fees None. 18 SCHEDULE 3.1(x) Registration Rights Warrants issued in February 2018September 21, 2018 Securities Purchase Agreement19 SCHEDULE 3.1(ee) Accountants Marcum LLPGrant Thornton LLP (with respect to 2015, 2016 and 2017 audited financials only)20 SCHEDULE 3.1(oo) Seniority See Schedule 3.1(h).21 SCHEDULE 3.1(pp) Off-balance Sheet Arrangements None.22 SCHEDULE 3.1(tt) Investor Relations None. 23 SCHEDULE 4.8 Use of Proceeds To redeem the Warrants listed in Schedule 1.1(a) and (b). 24Exhibit 10.48 THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THESECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDERTHE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BEOFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THESECURITIES ACT OR PURSUANT TO REGULATION D OR AN AVAILABLE EXEMPTION FROM, OR IN ATRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND INACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OFCOUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLYACCEPTABLE TO THE COMPANY. Original Issue Date: June 6, 2019 Original Principal Amount:$________ 8% SECURED PROMISSORY NOTEDUE JUNE 6, 2021 THIS 8% SECURED PROMISSORY NOTE is one of a series of duly authorized and validly issued 8% SecuredPromissory Notes of Delcath Systems, Inc., a Delaware corporation (the “Company”), having its principal place of business at 1633Broadway, Suite 22C, New York, NY 10019, designated as its 8% Secured Promissory Note due June 6, 2021, (this “Note”, orcollectively with the other Notes of such series, the “Notes”). FOR VALUE RECEIVED, the Company promises to pay to _____________ (the “Holder”), or shall have paid pursuant tothe terms hereunder, the principal sum of $______ on June 6, 2021 (the “Maturity Date”) or such earlier date as this Note is required orpermitted to be repaid as provided hereunder, and to pay interest to the Holder on the aggregate then outstanding principal amount ofthis Note in accordance with the provisions hereof. This Note is subject to the following additional provisions: Section 1.Definitions. For the purposes hereof, in addition to the terms defined elsewhere in this Note, (a) capitalizedterms not otherwise defined herein shall have the meanings set forth in the Purchase Agreement (as defined below) and (b) thefollowing terms shall have the following meanings: “Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or iscontrolled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under theSecurities Act. “Bankruptcy Event” means any of the following events: (a) the Company or any Significant Subsidiary (as suchterm is defined in Rule 1-02(w) of Regulation S-X for purposes of this definition) thereof commences a case or otherproceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvencyor liquidation or similar law of any jurisdiction relating to the Company or any Significant Subsidiary thereof, (b) there iscommenced against the Company or any Significant Subsidiary thereof any such case or proceeding that is not dismissedwithin  sixty (60) days after commencement, (c) the Company or any Significant Subsidiary thereof is adjudicated insolvent orbankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the Company or anySignificant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its propertythat is not discharged or stayed within sixty (60) calendar days after such appointment, (e) the Company or any SignificantSubsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Significant Subsidiarythereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts or (g)the Company or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval ofor acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of theforegoing. “Change of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after thedate hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the ExchangeAct) of effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract orotherwise) of in excess of thirty-three percent (33%) of the voting securities of the Company; (b) the Company merges intoor consolidates with any other Person, or any Person merges into or consolidates with the Company and, after giving effectto such transaction, the stockholders of the Company immediately prior to such transaction own less than fifty percent (50%)of the aggregate voting power of the Company or the successor entity of such transaction; (c) the Company sells or transfersall or substantially all of its assets to another Person and the stockholders of the Company immediately prior to suchtransaction own less than fifty percent (50%) of the aggregate voting power of the acquiring entity immediately after thetransaction; (d) a replacement at one time or within a one (1) year period of more than one-half (1/2) of the members of theBoard of Directors which is not approved by a majority of those individuals who are members of the Board of Directors onthe Original Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whosenomination to the Board of Directors was approved by a majority of the members of the Board of Directors who aremembers on the Original Issue Date); or (e) the execution by the Company of an agreement to which the Company is aparty or by which it is bound, providing for any of the events set forth in clauses (a) through (d) above. “Commission” means the United States Securities and Exchange Commission.“Common Stock” means the common stock of the Company, par value $0.01 per share, and any other class ofsecurities into which such securities may hereafter be reclassified or changed.“DTC” means the Depository Trust Company. “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulationspromulgated thereunder. “Event of Default” shall have the meaning set forth in Section 6(a).2 “Excluded Taxes” means, in relation to a Holder, (i) any Taxes of a Holder imposed on the net capital or incomeof the Holder by a governmental authority as a result of the Holder (a) carrying on a trade or business or having a permanentestablishment in any jurisdiction or political subdivision thereof; (b) being organized under the laws of such jurisdiction orpolitical subdivision thereof; or (c) being or being deemed to be resident in such jurisdiction or political subdivision thereof;. “Indemnified Taxes” means all Taxes other than Excluded Taxes. “Mandatory Default Amount” means the payment of one hundred twenty-five percent (125%) of the outstandingprincipal amount of this Note and accrued and unpaid interest hereon, in addition to the payment of all other amounts, costs,expenses and liquidated damages due in respect of this Note. “New York Courts” shall have the meaning set forth in Section 8(d). “Note Register” shall have the meaning set forth in Section 2(b). “Original Issue Date” means the date of the first issuance of this Note, regardless of any transfers of any Note andregardless of the number of instruments which may be issued to evidence such Note. “Other Taxes” means all present or future stamp or documentary taxes or any other excise or property taxes,charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, orotherwise with respect to, this Note. “Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, jointventure, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity ofany kind. “Purchase Agreement” means that certain Note Purchase Agreement, dated the date hereof, by and among theCompany, the original Holder and the other parties named therein, if any, as amended, modified or supplemented from timeto time in accordance with its terms. “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgatedthereunder. “Senior Indebtedness” shall have the meaning set forth in Section 7. “Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a) of the Purchase Agreementand shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the datehereof.3 “Taxes” includes all present and future income, corporation, capital gains, capital and value-added and goods andservices or harmonized sales taxes and all stamp and other taxes and levies, imposts, deductions, duties, charges andwithholdings whatsoever imposed by any governmental authority, together with interest thereon and penalties with respectthereto, if any, and charges, fees and other amounts made on or in respect thereof.“Trading Day” means a day on which the principal Trading Market is open for trading. “Trading Market” means any of the following markets or exchanges on which the Common Stock is listed orquoted for trading on the date in question: the NYSE American; the Nasdaq Capital Market; the Nasdaq Global Market; theNasdaq Global Select Market; the New York Stock Exchange; any level of the OTC Markets operated by OTC MarketsGroup, Inc. or the OTC Bulletin Board (or any successors to any of the foregoing). Section 2.Interest. a)Payment of Interest in Cash. The Company shall pay interest to the Holder on the aggregate principalamount of this Note at the rate of eight percent (8%) per annum on a quarterly basis in arrears commencing second quarter2019. Following the Closing Date, all interest payments hereunder shall be payable in cash, except as otherwise set forthherein. Accrued and unpaid interest shall be due and payable on each Conversion Date, on the Maturity Date or asotherwise set forth herein on any remaining principal balance of the Note. b)Interest Calculations. Interest shall be calculated on the basis of a 360-day year, consisting of twelve (12)thirty (30) calendar day periods, and shall accrue daily commencing on the Original Issue Date until payment in full of theoutstanding principal, together with all accrued and unpaid interest, liquidated damages and other amounts which maybecome due hereunder, has been made. Interest hereunder will be paid to the Person in whose name this Note is registeredon the records of the Company regarding registration and transfers of this Note (the “Note Register”). c)Late Fee. All overdue accrued and unpaid interest to be paid hereunder shall entail a late fee at aninterest rate equal to the lesser of eighteen percent (18%) per annum or the maximum rate permitted by applicable law (the“Late Fees”) which shall accrue daily from the date such interest is due hereunder through and including the date of actualpayment in full. d)Voluntary Prepayment. So long as no Event of Default (as defined in Section 6(a)) hereof exists, at anytime upon ten (10) days written notice to the Holder, the Company may prepay any portion of the then outstanding principalamount of this Note, any accrued and unpaid interest, and any other amounts due under this Note. If the Company exercisesits right to prepay the Note, the Company shall make payment to the Holder of an amount in cash equal to the sum of thethen outstanding principal amount of this Note, any accrued and unpaid interest and any other amounts due under this Notemultiplied by one hundred percent (100%).4 e)Mandatory Prepayment. During the term of the Note, if (in one or more transactions) the Company (i)sells any of its material assets or, subject to paragraph (ii) below, consummates an offering of equity or debt (or otherwiseincurs any indebtedness), the Company shall make payment to the Holder of an amount in cash equal to 100% of theproceeds of such sale or offering (or other incurrence) to be applied by the Holder to repay the then outstanding obligationsof the Company hereunder, or (ii) is a party to any Change of Control Transaction or offering of equity or debt (or otherwiseincurs any indebtedness) in which the Company receives net proceeds of at least $10,000,000, the Company shall makepayment to the Holder of an amount in cash equal to the Principal Amount, any accrued but unpaid interest and any otheramounts due under this Note multiplied by one hundred percent (100%). Section 3[Reserved]. Section 4.Registration of Transfers and Exchanges. a)Different Denominations. This Note is exchangeable for an equal aggregate principal amount of Note ofdifferent authorized denominations, as requested by the Holder surrendering the same. No service charge will be payable forsuch registration of transfer or exchange. b)Investment Representations. This Note has been issued subject to certain investment representations ofthe original Holder and may be transferred or exchanged only in compliance with applicable federal and state securities lawsand regulations. c)Reliance on Note Register. Prior to due presentment for transfer to the Company of this Note, theCompany and any agent of the Company may treat the Person in whose name this Note is duly registered on the NoteRegister as the owner hereof for the purpose of receiving payment as herein provided and for all other purposes, whether ornot this Note is overdue, and neither the Company nor any such agent shall be affected by notice to the contrary. Section 5.Taxes. a)Payments Subject to Taxes. All payment by the Company hereunder shall be made free and clear of and without deduction orwithholding for any and all Indemnified Taxes (including Other Taxes) paid or payable by the Holder or required to bewithheld from a payment to the Holder, unless such Indemnified Taxes or Other Taxes are required by law or theadministration thereof to be withheld or deducted. If the Holder is required by applicable law to deduct or pay anyIndemnified Taxes (including any Other Taxes) in respect of any payment by or on account of any obligation of theCompany hereunder, then (i) the sum payable by the Company shall be increased by such amount as is necessary so thatafter making or allowing for all required deductions and payments (including deductions and payments applicable toadditional sums payable under this Section 5) the Holder receives an amount equal to the sum it would have received had nosuch deductions or payments been required, (ii) the Company shall make any such deductions required to be made by itunder applicable law and (iii) the Company shall timely pay the full amount required to be deducted to the relevantgovernmental authority in accordance with applicable law.5 b)Payment of Other Taxes by the Company. Without limiting the provisions of Section 5(a), the Companyshall timely pay any Other Taxes to the relevant governmental authority in accordance with applicable law. c)Indemnification by the Company. Without duplication of any gross-up by the Company pursuant toSection 5(a), the Company shall indemnify the Holder, within 10 days after written demand therefor, for the full amount ofany Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributableto amounts payable under this Section 5) paid by the Holder and any penalties, interest and reasonable expenses arisingtherefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposedor asserted by the relevant governmental authority. A certificate as to the amount of such payment or liability delivered to theCompany by the Holder shall be conclusive absent manifest error. d)Evidence of Payment. As soon as practicable after any payment of Indemnified Taxes or Other Taxes bythe Company to a governmental authority, the Company shall deliver to the Holder the original or a certified copy of areceipt issued by such governmental authority evidencing such payment, a copy of the return reporting such payment orother evidence of such payment reasonably satisfactory to the Holder. e)If the Holder determines, in its sole discretion, that it has received a refund of Taxes or Other Taxes as towhich it has been indemnified by the Company or with respect to which the Company has paid additional amounts pursuantto this Section 5, it shall pay to the Company an amount equal to such refund or reduction (but only to the extent ofindemnity payments made, or additional amounts paid, by the Company under this Section 5 with respect to Taxes or OtherTaxes giving rise to such refund), net of all out-of-pocket expenses of the Holder, and without interest (other than any netafter-Tax interest paid by the relevant governmental authority with respect to such refund). The Company, upon the requestof the Holder, agrees to repay the amount paid over to the Company (plus any penalties, interest or other charges imposed bythe relevant governmental authority) to the Holder if the Holder is required to repay such refund or reduction to suchgovernmental authority. This paragraph shall not be construed to require the Holder to make available its tax returns (or anyother information relating to its taxes that it deems confidential) to the Company or any other Person, to arrange its affairs inany particular manner or to claim any available refund or reduction. f)Survival. The provisions of this Section 5 shall survive repayment of all obligations under this Note andthe termination of this Note. Section 6.Events of Default. a)“Event of Default” means, wherever used herein, any of the following events (whatever the reason forsuch event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to anyjudgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body): 6 i.any default in the payment of (A) the principal amount of this Note or (B) accrued but unpaidinterest, liquidated damages and other amounts owing to the Holder on this Note, as and when the same shallbecome due and payable by acceleration, which default, solely in the case of an interest payment or other defaultunder clause (B) above, is not cured within three (3) Trading Days; ii.the Company shall fail to observe or perform any other covenant, provision, or agreementcontained in this Note which failure is not cured, if possible to cure, within the earlier to occur of (A) five (5)Trading Days after notice of such failure sent by the Holder or by any other Holder to the Company and (B) ten(10) Trading Days after the Company has become or should have become aware of such failure; iii.a material default or material event of default (subject to any grace or cure period provided inthe applicable agreement, document or instrument) shall occur (A) under any of the Transaction Documents or (B)any other material agreement, contract, lease, document or instrument to which the Company or any Subsidiary isobligated (and not covered by clause (vi) below); iv.any representation or warranty made in this Note, any other Transaction Documents, anywritten statement pursuant hereto or thereto, any other agreement, contract, lease, document or instrument towhich the Company or any Subsidiary is obligated (including those covered by clause (vi) below), or any otherreport, financial statement or certificate made or delivered to the Holder or any other Holder shall be untrue orincorrect in any material respect as of the date when made or deemed made; v.the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) ofRegulation S-X) shall be subject to a Bankruptcy Event; vi.the Company or any Subsidiary shall default on any of its obligations under any mortgage,credit agreement or other facility, indenture agreement, factoring agreement or other instrument under which theremay be issued, or by which there may be secured or evidenced, any indebtedness for borrowed money or moneydue under any long term leasing or factoring arrangement that (a) involves an obligation greater than $100,000whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness becomingor being declared due and payable prior to the date on which it would otherwise become due and payable; vii.the Common Stock shall not be eligible for listing or quotation for trading on a TradingMarket and shall not be eligible to resume listing or quotation for trading thereon within five (5) Trading Days orthe transfer of shares of Common Stock through the DTC is no longer available or “chilled”; viii.the Company shall be a party to any Change of Control Transaction or shall agree to sell ordispose of all or in excess of 50% of its assets in one7 transaction or a series of related transactions (whether or not such sale would constitute a Change of ControlTransaction); ix.[Reserved]; x.[Reserved]; xi.the Company or any Subsidiary shall: (A) apply for or consent to the appointment of areceiver, trustee, custodian or liquidator of it or any of its properties; (B) admit in writing its inability to pay itsdebts as they mature; (C) make a general assignment for the benefit of creditors; (D) be adjudicated as bankrupt orinsolvent or be the subject of an order for relief under Title 11 of the United States Code or any bankruptcy,reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute of any other jurisdictionor foreign country; or (E) file a voluntary petition in bankruptcy, or a petition or an answer seeking reorganizationor an arrangement with creditors or to take advantage or any bankruptcy, reorganization, insolvency, readjustmentof debt, dissolution or liquidation law or statute, or an answer admitting the material allegations of a petition filedagainst it in any proceeding under any such law, or (F) take or permit to be taken any action in furtherance of orfor the purpose of effecting any of the foregoing; xii.if any order, judgment or decree shall be entered, without the application, approval orconsent of the Company or any Subsidiary, by any court of competent jurisdiction, approving a petition seekingliquidation or reorganization of the Company or any Subsidiary, or appointing a receiver, trustee, custodian orliquidator of the Company or any Subsidiary, or of all or any substantial part of its assets, and such order,judgment or decree shall continue unstayed and in effect for any period of sixty (60) days; xiii.the occurrence of any levy upon or seizure or attachment of, or any uninsured loss of ordamage to, any property of the Company or any Subsidiary having an aggregate fair value or repair cost (as thecase may be) in excess of $100,000 individually or in the aggregate, and any such levy, seizure or attachment shallnot be set aside, bonded or discharged within thirty (30) days after the date thereof; 8 xiv.any monetary judgment, writ or similar final process shall be entered or filed against theCompany, any Subsidiary or any of their respective property or other assets for more than $100,000, and suchjudgment, writ or similar final process shall remain unvacated, unbonded or unstayed for a period of forty-five(45) calendar days; xv.any provision of this Note or any Transaction Document shall at any time for any reason(other than pursuant to the express terms thereof) cease to be valid and binding on or enforceable against theparties thereto, or the validity or enforceability thereof shall be contested by any party thereto, or a proceedingshall be commenced by the Company or any Subsidiary or any governmental authority having jurisdiction overany of them, seeking to establish the invalidity or unenforceability thereof, or the Company or any Subsidiary shalldeny in writing that it has any liability or obligation purported to be created under any Transaction Document; or xvi.the occurrence of any event described in Rule 506(d)(1) under the Securities Act, (2) theCompany or any Subsidiary is indicted, charged with or convicted of any crime, (3) any Affiliate of the Companyor any person who is an officer, director or member of senior management of the Corporation or any Subsidiary isarrested, indicted, charged with or convicted of any felony other crime involving moral turpitude, (4) theCommission, Department of Justice, Food and Drug Administration, or any similar government enforcement orregulatory agency files a complaint in any court or institutes administrative proceedings in any jurisdiction againstthe Corporation, any Affiliate, or any member of management. b)Remedies Upon Event of Default. If any Event of Default occurs, then the outstanding principal amount of thisNote, plus accrued but unpaid interest, liquidated damages and other amounts owing in respect thereof through thedate of acceleration, shall become, at the Holder’s election, immediately due and payable in cash at the MandatoryDefault Amount. After the occurrence of any Event of Default that results in the eventual acceleration of thisNote, the interest rate on this Note shall accrue at an additional interest rate equal to the lesser of one and one-halfpercent (1.5%) per month (eighteen percent (18.0%) per annum) or the maximum rate permitted under applicablelaw. Upon the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender this Note toor as directed by the Company. In connection with such acceleration described herein, the Holder need notprovide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind (otherthan the Holder’s election to declare such acceleration), and the Holder may immediately and without expirationof any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to itunder applicable law. Such acceleration may be rescinded and annulled by Holder at any time prior to paymenthereunder and the Holder shall have all rights as a holder of the Note until such time, if any, as the Holder receivesfull payment pursuant to this Section 6(b). No such rescission or9 annulment shall affect any subsequent Event of Default or impair any right consequent thereon. [Section 7.[Reserved]. Section 8.Miscellaneous. a)Notices. Any and all notices or other communications or deliveries to be provided by the Holderhereunder shall be in writing and delivered personally, by email or facsimile, or sent by a nationally recognized overnightcourier service, addressed to the Company at 1633 Broadway, Suite 22C, New York, NY 10019, 917-591-5970,bkeck@delcath.com or such other address, facsimile number, or email address as the Company may specify for suchpurposes by notice to the Holder delivered in accordance with this Section 8(a). Any and all notices or othercommunications or deliveries to be provided by the Company hereunder shall be in writing and delivered personally, byemail or facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the email address,facsimile number, or address of the Holder appearing on the books of the Company, or if no such email address, facsimilenumber, or address appears on the books of the Company, at the principal place of business of such Holder. Any notice orother communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date oftransmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address setforth on the signature pages attached hereto prior to 12:00 p.m. (New York City time) on any date, (ii) the next Trading Dayafter the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number oremail address set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 12:00 p.m.(New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S.nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required to begiven. b)Absolute Obligation. Except as expressly provided herein, no provision of this Note shall alter or impairthe obligation of the Company, which is absolute and unconditional, to pay the principal of, liquidated damages and accruedinterest, as applicable, on this Note at the time, place, and rate, and in the coin or currency, herein prescribed. This Note is adirect debt obligation of the Company. Unless otherwise agreed by the Holder this Note ranks pari passu with thosepromissory notes hereafter issued under the terms of the Purchase Agreement. c)Lost or Mutilated Note. If this Note shall be mutilated, lost, stolen or destroyed, the Company shallexecute and deliver, in exchange and substitution for and upon cancellation of a mutilated Note, or in lieu of or insubstitution for a lost, stolen or destroyed Note, a new Note for the Principal Amount so mutilated, lost, stolen or destroyed,but only upon receipt of evidence of such loss, theft or destruction of such Note, and of the ownership hereof, reasonablysatisfactory to the Company. 10 d)Governing Law. All questions concerning the construction, validity, enforcement and interpretation ofthis Note 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 conflict of laws thereof. Each party agrees that all legal proceedings concerning theinterpretation, enforcement and defense of the transactions contemplated by any of the Transaction Documents (whetherbrought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall becommenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “New YorkCourts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for theadjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussedherein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, andagrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of suchNew York Courts, or such New York Courts are improper or inconvenient venue for such proceeding. Each party herebyirrevocably waives personal service of process and consents to process being served in any such suit, action or proceedingby mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at theaddress in effect for notices to it under this Note and agrees that such service shall constitute good and sufficient service ofprocess and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in anyother manner permitted by applicable law. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TOTHE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BYJURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR THETRANSACTIONS CONTEMPLATED HEREBY. If any party shall commence an action or proceeding to enforce anyprovisions of this Note, then the prevailing party in such action or proceeding shall be reimbursed by the other party for itsattorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action orproceeding. e)Waiver. Any waiver by the Company or the Holder of a breach of any provision of this Note shall notoperate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision ofthis Note. The failure of the Company or the Holder to insist upon strict adherence to any term of this Note on one or moreoccasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to thatterm or any other term of this Note on any other occasion. Any waiver by the Company or the Holder must be in writing. f)Amendments. The prior written consent of 50.1% in interest of the Holders, which shall be calculatedbased on the principal amount of all Notes outstanding at the time of such consent, shall be required for any change oramendment to the Notes. 11 g)Severability. If any provision of this Note is invalid, illegal or unenforceable, the balance of this Noteshall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remainapplicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest duehereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically belowered to equal the maximum rate of interest permitted under applicable law. The Company covenants (to the extent that itmay lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit oradvantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all orany portion of the principal of or interest on this Note as contemplated herein, wherever enacted, now or at any timehereafter in force, or which may affect the covenants or the performance of this Note, and the Company (to the extent it maylawfully do so) hereby expressly waives all benefits or advantage of any such law, and covenants that it will not, by resort toany such law, hinder, delay or impede the execution of any power herein granted to the Holder, but will suffer and permitthe execution of every such as though no such law has been enacted. h)Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies providedin this Note shall be cumulative and in addition to all other remedies available under this Note and any of the otherTransaction Documents at law or in equity (including a decree of specific performance and/or other injunctive relief), andnothing herein shall limit the Holder’s right to pursue actual and consequential damages for any failure by the Company tocomply with the terms of this Note. The Company covenants to the Holder that there shall be no characterization concerningthis instrument other than as expressly provided herein. Amounts set forth or provided for herein with respect to payments,conversion and the like (and the computation thereof) shall be the amounts to be received by the Holder and shall not, exceptas expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Companyacknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder and that the remedy atlaw for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach orthreatened breach, the Holder shall be entitled, in addition to all other available remedies, to an injunction restraining anysuch breach or any such threatened breach, without the necessity of showing economic loss and without any bond or othersecurity being required. The Company shall provide all information and documentation to the Holder that is requested by theHolder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this Note. i)Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day otherthan a Business Day, such payment shall be made on the next succeeding Business Day. 12 j)Payment of Collection, Enforcement and Other Costs. If (i) this Note is placed in the hands of an attorneyfor collection or enforcement or is collected or enforced through any legal proceeding or the Holder otherwise takes action tocollect amounts due under this Note or to enforce the provisions of this Note or (ii) there occurs any bankruptcy,reorganization, receivership of the Company or other proceedings affecting Company creditors’ rights and involving a claimunder this Note, then the Company shall pay the reasonable and documented out-of-pocket costs incurred by the Holder forsuch collection, enforcement or action or in connection with such bankruptcy, reorganization, receivership or otherproceeding, including, but not limited to, attorneys’ fees and disbursements. k)Headings. The headings contained herein are for convenience only, do not constitute a part of this Noteand shall not be deemed to limit or affect any of the provisions hereof. [Signature Pages Follow] 13 IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by a duly authorized officer as of thedate first above indicated. DELCATH SYSTEMS, INC. By: Name: Title: 14EXHIBIT 31.1Certificationof Principal Executive OfficerPursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange ActI, Jennifer K. Simpson, certify that: 1)I have reviewed this annual report on Form 10-K of Delcath Systems, Inc; 2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period coveredby this report; 3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4)The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as definedin Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and15d-15(f)) for the registrant and have: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to usby others within those entities, particularly during the period in which this report is being prepared; (b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accounting principles; (c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonablylikely to materially affect, the registrant’s internal control over financial reporting; and 5)The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting,to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting. DATE /s/ Jennifer K. SimpsonJune 14, 2019 Jennifer K. Simpson President and Chief Executive Officer (Principal Executive Officer) EXHIBIT 31.2Certificationof Principal Financial OfficerPursuant to Rule 13a-14(a) and 15d-14(a) of the Exchange ActI, Barbra C. Keck, certify that: 1)I have reviewed this annual report on Form 10-K of Delcath Systems, Inc; 2)Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period coveredby this report; 3)Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4)The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as definedin Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and15d-15(f)) for the registrant and have: (a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to usby others within those entities, particularly during the period in which this report is being prepared; (b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed underour supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accounting principles; (c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonablylikely to materially affect, the registrant’s internal control over financial reporting; and 5)The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting,to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting. DATE /s/ Barbra C. KeckJune 14, 2019 Barbra C. Keck Chief Financial Officer (Principal Financial Officer and Principal AccountingOfficer) EXHIBIT 32.1Certification Pursuant to18 U.S.C. Section 1350,as Adopted Pursuant toSection 906 of the Sarbanes –Oxley Act of 2002In connection with the Annual Report on Form 10-K of DELCATH SYSTEMS, INC. (the “Company”) for the fiscal year ended December 31, 2018 as filedwith the Securities and Exchange Commission on the date hereof (the “Report”), I, Jennifer K. Simpson, the President and Chief Executive Officer of theCompany, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:(1) The Report fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. DATE/s/ Jennifer K. SimpsonJune 14, 2019Jennifer K. Simpson President and Chief Executive Officer (Principal Executive Officer) EXHIBIT 32.2Certification Pursuant to18 U.S.C. Section 1350,as Adopted Pursuant toSection 906 of the Sarbanes –Oxley Act of 2002In connection with the Annual Report on Form 10-K of DELCATH SYSTEMS, INC. (the “Company”) for the fiscal year ended December 31, 2018 as filedwith the Securities and Exchange Commission on the date hereof (the “Report”), I, Barbra C. Keck, the Chief Financial Officer of the Company, herebycertify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:(1) The Report fully complies with the requirements of section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934; and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. DATE/s/ Barbra C. KeckJune 14, 2019Barbra C. Keck Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) 

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