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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.__)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Soliciting Material Pursuant to
[_] Confidential, For Use of the SS.240.14a-11(c) or SS.240.14a-12
Commission Only (as permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
DELCATH SYSTEMS, INC.
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
5) Total fee paid:
- --------------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
- --------------------------------------------------------------------------------
4) Date Filed:
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SEC 1913 (3-99)
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---------------------------------
DELCATH SYSTEMS, INC.
1100 SUMMER STREET
STAMFORD, CONNECTICUT 06905
(203) 323-8668
---------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 23, 2002
Notice is hereby given that an Annual Meeting of Stockholders of Delcath
Systems, Inc., a Delaware corporation ("Delcath"), will be held on Thursday, May
23, 2002, at 11:00 a.m. (Eastern Daylight Time) at the Hyatt Regency Greenwich,
1800 East Putnam Avenue, Old Greenwich, Connecticut, for the following purpose:
1. To elect two Class II directors to serve until the 2005 Annual Meeting
of Stockholders and until their successors are elected and qualified;
The stockholders will also consider and act upon any other business that
may properly come before the Annual Meeting.
Reference is hereby made to the accompanying Proxy Statement for more
complete information concerning the matters to be acted upon at the Annual
Meeting.
Only holders of record of Delcath's Common Stock, $0.01 par value per
share, at the close of business on March 25, 2002 will be entitled to vote at
the Annual Meeting and any adjournments thereof.
Stockholders are requested to complete, sign, date, and return the enclosed
proxy card in the enclosed envelope.
By Order of the Board of Directors
M. S. Koly, President and Chief Executive Officer
Stamford, Connecticut
April 5, 2002
---------------------------------
DELCATH SYSTEMS, INC.
1100 SUMMER STREET
STAMFORD, CONNECTICUT 06905
(203) 323-8668
---------------------------------
PROXY STATEMENT
---------------------------------
Proxies in the form enclosed with this Proxy Statement are being solicited
by the Board of Directors of Delcath Systems, Inc., a Delaware corporation
("Delcath"), for use at an Annual Meeting of Stockholders of Delcath to be held
at 10:30 a.m. (Eastern Daylight Time) on Thursday May 23, 2002, at the Hyatt
Regency Greenwich, 1800 East Putnam Avenue, Old Greenwich, Connecticut, and any
adjournments thereof (the "Meeting"). This proxy is dated April 5, 2002.
Only holders of record as of the close of business on March 25, 2002 (the
"Record Date"), of Delcath's Common Stock, $0.01 par value per share (the
"Common Stock"), will be entitled to notice of, and to vote at, the Meeting. As
of the Record Date, 3,903,816 shares of Common Stock were issued and
outstanding. Holders of Common Stock are entitled to one vote per share held by
them. Stockholders may vote in person or by proxy. Granting a proxy does not in
any way affect a stockholder's right to attend the Meeting and vote in person.
Any stockholder giving a proxy has the right to revoke that proxy by (i) filing
a later-dated proxy or a written notice of revocation with Delcath's Secretary
at the address set forth above at any time before the original proxy is
exercised, or (ii) voting in person at the Meeting.
Each of M. S. Koly and Samuel Herschkowitz, M.D. are named as attorneys in
the proxy. Mr. Koly is the President, Chief Executive Officer and Treasurer of
Delcath and is also a member of Delcath's Board of Directors. Dr. Herschkowitz
is the Chief Technology Officer of Delcath and is also the Chairman of Delcath's
Board of Directors. Mr. Koly or Dr. Herschkowitz will vote all shares
represented by properly executed proxies returned in time to be counted at the
Meeting, as described below under "Voting Procedures." Any stockholder granting
a proxy has the right to withhold authority to vote for any individual nominee
to the Board of Directors. Where a vote has been specified in the proxy with
respect to the matters identified in the Notice of the Annual Meeting, including
the election of directors, the shares represented by the proxy will be voted in
accordance with those voting specifications. Shares represented by proxy will be
voted FOR each proposal identified on the Notice of the Annual Meeting if no
voting instructions are indicated.
The stockholders will consider and vote upon the proposal to elect two
Class II directors to serve until the 2005 Annual Meeting of Stockholders.
Stockholders will also consider and act upon such other business as may properly
come before the Meeting.
Delcath's Board of Directors knows of no other matters to be presented at
the Meeting. If any other matter should be presented at the Meeting upon which a
vote may properly be taken, including any proposal to adjourn the Meeting, Mr.
Koly or Dr. Herschkowitz will vote shares represented by all proxies received by
the Board of Directors in accordance with their judgment.
1
An Annual Report to the Stockholders, containing financial statements for
the fiscal years ended December 31, 2000 and 2001, has been furnished to all
stockholders entitled to vote. This Proxy Statement and the form of proxy will
be first mailed to stockholders on or about April 5, 2002.
VOTING PROCEDURES
Mr. Koly or Dr. Herschkowitz will vote all shares represented by properly
executed proxies returned in time to be counted at the Meeting. The presence, in
person or by proxy, of at least a majority of the issued and outstanding shares
of Common Stock entitled to vote at the Meeting is necessary to establish a
quorum for the transaction of business. Shares represented by proxies pursuant
to which votes have been withheld for any nominee for director, or which contain
one or more abstentions, are counted as present for purposes of determining the
presence or absence of a quorum for the Meeting.
All properly executed proxies delivered pursuant to this solicitation and
not revoked will be voted at the Meeting as specified in such proxies.
Directors will be elected by a plurality of the votes cast, in person or by
proxy, at the Meeting. The two nominees receiving the highest number of
affirmative votes of the shares present or represented at the Meeting and voting
on the election of directors will each be elected as a director. Only shares
that are voted in favor of a particular nominee will be counted toward that
nominee's achievement of a plurality. Shares present at the Meeting that are not
voted for a particular nominee or shares present by proxy where the stockholder
properly withheld authority to vote for such nominee will not be counted toward
that nominee's achievement of a plurality. Votes at the Meeting will be
tabulated by one or more independent inspectors of elections appointed by
Delcath.
For all other matters being submitted to stockholders at the Meeting, the
affirmative vote of the majority of shares present (in person or represented by
proxy) and voting on that matter is required for approval. Shares voted to
abstain, since they are not affirmative votes for the matter, will have the same
effect as votes against those matters.
ELECTION OF DIRECTORS
(PROXY ITEM 1)
Delcath's board of directors is divided into three classes of directors
serving staggered three-year terms. As a result, approximately one-third of the
board of directors will be elected each year. These provisions, together with
the provision of our amended and restated certificate of incorporation and
by-laws, allow the board of directors to fill vacancies on or increase the size
of the board of directors, and may deter a stockholder from removing incumbent
directors and filling such vacancies with its own nominees in order to gain
control of the board. The staggering of the election of our directors may have
the effect of delaying, deferring or discouraging a change of control. Delcath's
by-laws provide that its Board of Directors will consist of not fewer than three
members. The Board of Directors has fixed the number of directors for Delcath at
five, currently.
A plurality of the votes cast by the holders of Common Stock present or
represented by proxy and entitled to vote at the Meeting is required for the
election of a nominee. Proxies cannot be voted for a greater number of persons
than the number of nominees named or for persons other than the named nominees.
Delcath's Board of Directors has nominated the following persons for
election as Class II directors of Delcath at the Meeting. The nominees are
currently members of Delcath's Board of Directors. The nominees and the year
they first joined the Board of Directors are:
2
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YEAR FIRST
NOMINEE AGE JOINED BOARD CURRENT POSITION(S)
- ------- --- ------------ -------------------
M. S. KOLY 61 1988 President, Chief Executive
Officer, Treasurer and Director
- --------------------------------------------------------------------------------
SAMUEL HERSCHKOWITZ, M.D. 52 1988 Chief Technical Officer and
Chairman of the Board
================================================================================
BACKGROUND OF NOMINEES FOR THE BOARD OF DIRECTORS AND CERTAIN KEY OFFICERS
M. S. KOLY, 61, has been President, Chief Executive Officer and Treasurer
of Delcath since 1998 and has served as a Director since 1988. From 1987 until
June 1998, Mr. Koly managed Venkol Ventures, L.P. and Venkol Ventures, Ltd.,
firms he co-founded with Dr. Herschkowitz. From 1983 to 1987, Mr. Koly was
president of Madison Consulting Corporation, a firm he founded. From 1978 to
1983, Mr. Koly was president of Becton-Dickinson Respiratory Systems. Prior to
that time, he held various senior management positions at Abbott Laboratories,
Stuart Pharmaceuticals and National Patent Development Corp. He received a B.A.
from American University and an M.B.A. in marketing and finance from
Northwestern University.
SAMUEL HERSCHKOWITZ, M.D, 51, has been Chairman of the Board of Delcath
since 1998 and Delcath's Chief Technical Officer since 1991. In 1987, he
co-founded Venkol Ventures L.P. and Venkol Ventures, Ltd., two affiliated
venture capital funds specializing in medical technology investments, which are
no longer active. Dr. Herschkowitz is board certified in psychiatry and
neurology. He is an assistant professor at New York University Medical Center,
and has held academic positions at Beth Israel Hospital, Mount Sinai Medical
School and Downstate Medical Center. Dr. Herschkowitz graduated from Syracuse
University and received his medical degree from Downstate Medical Center College
of Medicine.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR ELECTION OF
THE NOMINEE AS A DIRECTOR OF DELCATH.
The following individuals are currently directors of Delcath whose terms of
office do not expire at the Annual Meeting and who consequently are not nominees
for re-election at the Annual Meeting:
MARK A. CORIGLIANO, 38, was appointed a Class III director of Delcath in
2001. His term expires at the 2003 Annual Meeting. Since 1991, Mr. Corigliano
has been Managing Director of Coast Cypress Associates, a company that designs
and implements microcomputer systems. Since 1993, he has also served as Officer
and Manager of Special Projects for DC Associates, a restaurant management
organization located in New York City. He holds a B.S. degree from Seton Hall
University.
DANIEL ISDANER, 37, was appointed a Class I director of Delcath in 2001.
His term expires at the 2004 Annual Meeting. Since 1994, Mr. Isdaner has been
the owner and director of Camp Mataponi, Inc., a childrens' summer camp located
in Naples, Maine. He also serves on the Board of Directors of the American
Camping Association-New England Division and the Jewish Community Center of
Southern New Jersey. Mr. Isdaner holds a B.S.B.A. degree from the Boston
University School of Management.
VICTOR NEVINS, 80, was appointed a Class III director of Delcath in 2001.
His term expires at the 2003 Annual Meeting. Since 1957, Mr. Nevins has been
Chief Executive Officer of Max Abramson Enterprises, a medium size conglomerate
headquartered in Flushing, New York. He also is a licensed real estate broker
and, since 1962, been the owner of Victor Nevins Realty. From 1968-1997, he
served on the Board of Directors of Flushing Hospital and Medical Center as Vice
President of the Board, member of the Finance Committee, Chairman of both the
House and Grounds and Human Resouces Committees and liaison to the Medical
Board. He currently is a Director and past President of the Flushing Chamber of
Commerce, a Director of the Flushing Merchants Association, and a Director of
the American Red Cross, North Shore Chapter.
3
BOARD AND COMMITTEE MEETINGS
The Board of Directors met four times during fiscal year ended December 31,
2001. Each of the directors attended at least 75% of the aggregate of (i) the
total number of meetings of the Board of Directors (held during the period for
which he or she has been a director); and (ii) the total number of meetings held
by all committees of the Board of Directors on which he or she served (during
the period in which he or she served).
The Compensation and Stock Option Committee of the Board of Directors
reviews and recommends to the Board of Directors the salaries, benefits and
stock option grants of all employees, consultants, directors and other
individuals compensated by the Company. The directors may be paid their expenses
and a fixed sum for their attendance at each meeting of the Board or a stated
salary as a director, and each may be reimbursed for his or her expenses.
Directors who are employees of Delcath do not currently receive any compensation
for serving on the board of directors. Non-employee directors receive $750 for
each meeting of the board of directors attended in person or participated in
telephonically. The Compensation Committee also administers the Company's stock
option and other employee benefits plans. Currently, the members of the
Compensation and Stock Option Committee are Victor Nevins and Mark A.
Corigliano.
The Audit Committee of the Board of Directors approves the selection of
Delcath's independent accountants and meets and interacts with the independent
accountants to discuss questions in regard to Delcath's financial reporting. In
addition, the Audit Committee reviews the scope and results of the audit with
the independent accountants, reviews with management and the independent
accountants Delcath's annual operating results, considers the adequacy of
Delcath's internal accounting procedures and considers and reports to the Board
of Directors with respect to other auditing and accounting matters. The Audit
Committee also reviews the fees to be paid to and the performance of Delcath's
independent auditors. Currently, the members of the Audit Committee are Mark A.
Corigliano and Daniel Isdaner
REPORT OF THE AUDIT COMMITTEE
The Audit Committee, at the direction of the Board, has prepared the
following report for inclusion in this Proxy Statement. The Audit Committee is
comprised of Mark A. Corigliano and Daniel Isdaner, two non-employee directors
who are "independent" within the meaning of Rule 4200(a)(15) of the National
Association of Securities Dealers ("NASD") listing standards. The Audit
Committee has the responsibility for reviewing the Company's accounting
practices, internal accounting controls and financial results and overseas the
engagement of the Company's independent auditors.
The Audit Committee has reviewed and discussed the audited financial
statements with the Company's management.
The Audit Committee has discussed with the independent auditors the matters
required to be discussed by SAS 61 (Codification of Statements on Auditing
Standards, AU Section 380), as may be modified or supplemented.
The Audit Committee has received the written disclosures and the letter
from the independent accountants required by Independence Standards Board
Standard No. 1 (Independence Standards Board Standard No. 1, Independence
Discussions with Audit Committees), as may be modified or supplemented, and has
discussed with the independent accountant the independent accountant's
independence.
Based on the review and discussions referred to in the foregoing three
paragraphs, the Audit Committee recommended to the Board that the audited
financial statements be included in the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 2001 for filing with the Securities and
Exchange Commission.
4
AUDIT FEES
Audit Fees. Fees for KPMG LLP's professional services rendered for the
Company's fiscal year 2001 audit and quarterly review of Forms 10-QSB were
$77,000.
Financial Information Systems Design and Implementation Fees. None.
All Other Fees. None.
COMPENSATION AND OTHER INFORMATION CONCERNING DIRECTORS AND OFFICERS
EXECUTIVE COMPENSATION
The following table sets forth, for the fiscal years ended December 31,
2001, 2000, and 1999, certain compensation paid by the Company, including
salary, bonuses and certain other compensation, to its Chief Executive Officer
and all other executive officers whose annual compensation for the years ended
December 31, 2001, 2000, and 1999, exceeded $100,000 (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
=============================================================================================
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) COMPENSATION
=============================== ==== ========== ========== =========== ============
M. S. KOLY, President, Chief 2001 164,750 17,500 (1) 100,000 0
Executive Officer and Treasurer ---- ---------- ---------- ----------- ------------
2000 98,200 0 102,000 0
---- ---------- ---------- ----------- ------------
1999 101,250 0 139,746 0
- ------------------------------- ---- ---------- ---------- ----------- ------------
SAMUEL HERSCHKOWITZ, 2001 120,000 10,000 (1) 30,000 0
Chairman of the Board
=============================================================================================
(1) Bonuses were declared payable in January 2002
OPTION GRANTS IN LAST FISCAL YEAR
Stock options were granted to the Named Executive Officers during the 2001
fiscal year as follows:
=============================================================================================
NAME NUMBER OF SHARES PERCENT OF TOTAL
OF COMMON STOCK OPTIONS GRANTED TO EXERCISE PRICE
UNDERLYING OPTION EMPLOYEES IN 2001 ($/SH.) EXPIRATION DATE
================ ================= ================== ============== ================
M. S. Koly 100,000 52.6% .60 November 2006
- ---------------- ----------------- ------------------ -------------- ----------------
S. Herschkowitz 30,000 15.8% .85 December 2006
=============================================================================================
5
AGGREGATED FISCAL YEAR END OPTION VALUES
============================================================================================================
NUMBER OF SHARES OF COMMON STOCK UNDERLYING VALUE OF UNEXERCISED IN-THE-MONEY OPTIONS
NAME UNEXERCISED OPTIONS AT DECEMBER 31, 2001 AT DECEMBER 31, 2001 (1)
================ =========================================== ===========================================
Exercisable Unexercisable Exercisable Unexercisable
- ---------------- -------------------- -------------------- -------------------- --------------------
M. S. Koly 86,263 0 0 0
- ---------------- -------------------- -------------------- -------------------- --------------------
M. S. Koly 53,483 0 0 0
- ---------------- -------------------- -------------------- -------------------- --------------------
M. S. Koly 102,000 0 0 0
- ---------------- -------------------- -------------------- -------------------- --------------------
M. S. Koly 0 100,000 0 52,000
- ---------------- -------------------- -------------------- -------------------- --------------------
S. Herschkowitz 51,757 0 0 0
- ---------------- -------------------- -------------------- -------------------- --------------------
S. Herschkowitz 32,779 0 0 0
- ---------------- -------------------- -------------------- -------------------- --------------------
S. Herschkowitz 60,300 0 0 0
- ---------------- -------------------- -------------------- -------------------- --------------------
S. Herschkowitz 0 30,000 0 8,100
============================================================================================================
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information with respect to the Named
Executive Officers concerning the exercise of options during fiscal years ended
December 31, 2001, 2000, and 1999 and unexercised options held as of the end of
fiscal 2001.
=================================================================================
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT
SHARES TO OPTIONS AT FY- FY-END ($)(1)
BE RECEIVED END EXERCISABLE/ EXERCISABLE/
NAME YEAR ON EXERCISE UNEXERCISABLE UNEXERCISABLE
========================== ==== =========== =============== =============
M. S. KOLY 2001 0 241,746/100,000 0/52,000
President, Chief Executive ---- ----------- --------------- -------------
Officer and Treasurer 2000 0 191,307/50,439 0/0
---- ----------- --------------- -------------
1999 0 119,457/20,289 0/0
- -------------------------- ---- ----------- --------------- -------------
- -------------------------- ---- ----------- --------------- -------------
S. HERSCHKOWITZ 2001 0 144,836/30,000 0/8,100
Chairman of the Board ---- ----------- --------------- -------------
2000 0 112,616/32,220 0/0
---- ----------- --------------- -------------
1999 0 66,077/18,459 0/0
=================================================================================
- ----------------------
(1) Calculated based on the fair market value of $1.12 per share at the close
of trading on December 31, 2001 as reported by THE WALL STREET JOURNAL,
minus the exercise price of the option.
6
DIRECTOR COMPENSATION
Directors who are employees of Delcath do not currently receive any
compensation for serving on the board of directors. Non-employee directors
receive $750 for each meeting of the board of directors attended in person or
participated in telephonically. In addition, three former non-employee directors
each received a one-time grant in January 1999 of stock options to purchase
34,505 shares of Common Stock at a price of $4.93 per share, all of which have
vested. Each one also received a separate one-time grant in December 1999 of
stock options to purchase 22,428 shares of Common Stock at a price of $2.90 per
share, all of which have vested.
On November 12, 2001, Delcath's Compensation Committee granted stock
options to a director of Delcath, at an exercise price equal to $ .60 per share,
the fair market value at the close of trading on that date as reported by THE
WALL STREET JOURNAL. On December 17, 2001, Delcath's Compensation Committee
granted stock options to directors, at an exercise price of $ .85 per share, the
fair market value at the close of trading on that date as reported by THE WALL
STREET JOURNAL. The stock options granted to the directors are indicated below:
=============================================================
INCENTIVE NON-QUALIFIED
NAME STOCK OPTIONS STOCK OPTIONS
========================= ============= =============
M. S. Koly 100,000 0
- ------------------------- ------------- -------------
Samuel Herschkowitz, M.D. 30,000 0
- ------------------------- ------------- -------------
Mark. Corigliano 0 30,000
- ------------------------- ------------- -------------
D. Isdaner 0 30,000
- ------------------------- ------------- -------------
V. Nevins 0 30,000
=============================================================
KEY EMPLOYEE AGREEMENTS
On October 30, 2001 the Company amended the Key Employee Agreements dated
April 30, 1996, respectively, with M. S. Koly and Samuel Herschkowitz, M.D. Mr.
Koly's amendment provides for a base salary of $225,000 per annum, and a
lump-sum severance payment of one year's base salary upon notice of termination
at any time without cause, and, in the event of termination without cause due to
a change in control (as defined) a lump sum severance payment equal to the
greater of two years' base salary or the base salary due for the remaining term
of the Agreement. The term of the Agreement was extended until December 1, 2004.
Dr. Herschkowitz's amendment provides for a base salary of $140,000 per annum.
SECURITY OWNERSHIP BY MANAGEMENT AND PRINCIPAL STOCKHOLDERS
The following table sets forth, as of February 21, 2002, certain
information regarding the ownership of Delcath's voting securities by (i) each
person who, to the knowledge of Delcath, beneficially owned more than 5% of
Delcath's voting securities outstanding on such date, (ii) each director (or
nominee for director) of Delcath, (iii) each Named Executive Officer (as defined
below under "Compensation and Other Information Concerning Directors and
Officers--Executive Compensation"), and (iv) all directors (and the nominee for
director) and executive officers as a group.
7
==========================================================================
DIRECTORS, SHARES PERCENTAGE OF
EXECUTIVE OFFICERS BENEFICIALLY COMMON SHARES
AND 5% STOCKHOLDERS (1): OWNED (2) OUTSTANDING (3)
==================================== =========== ===============
M. S. Koly (4) 1,673,497 40.4%
- ------------------------------------ ----------- ---------------
Venkol Trust (5) 1,374,013 35.2%
- ------------------------------------ ----------- ---------------
Samuel Herschkowitz, M.D. (6) 343,472 8.5%
- ------------------------------------ ----------- ---------------
Frank G. Mancuso, Jr. (7) 110,891 2.8%
- ------------------------------------ ----------- ---------------
James V. Sorrentino, PhD (8) 68,663 1.7%
- ------------------------------------ ----------- ---------------
William I. Bergman (9) 63,833 1.6%
- ------------------------------------ ----------- ---------------
Mark A. Corigliano (10) 3,000 *
- ------------------------------------ ----------- ---------------
Daniel Isdaner (11) 15,000 *
- ------------------------------------ ----------- ---------------
Victor Nevins (12) 10,000 *
- ------------------------------------ ----------- ---------------
Thomas S. Grogan (13) -- *
- ------------------------------------ ----------- ---------------
All directors and executive officers 2,092,981 46.9%
as a group (nine persons) (14)
==========================================================================
* Less than 1% of total voting securities
(1) Except as otherwise noted in the footnotes to this table, each person or
entity named in the table has sole voting and investment power with respect
to all shares owned, based on the information provided to use by the
persons or entities named in the table.
(2) Shares of Common Stock subject to options exercisable within 60 days of
December 31, 2001 are deemed outstanding for computing the percentage of
the person or entity holding such securities.
(3) Percentage of beneficial ownership is calculated on the basis of the amount
of outstanding securities (Common Stock) at December 31, 2001 (3,903,816
common shares) plus, for each person or entity, any securities that person
or entity has the right to acquire within 60 days pursuant to stock options
or other rights.
(4) Mr. Koly is a director of Delcath. Includes 38,507 shares held by Mr. Koly,
and 19,231 shares held by Mr. Ted Koly, Mr. Koly's minor son. The figure
above also includes the vested portion (241,746 shares) of
incentive/nonqualified stock options to purchase 114,350 shares of the
Company's Common Stock under the Company's 1992 Incentive Stock Option Plan
for a weighted average exercise price of $3.98 per share and 25,396 shares
of Common Stock under the Company's 1992 Non-Incentive Stock Option Plan
for an exercise price of $4.93 per share; and 102,000 shares of Common
Stock under the Company's 2000 Stock Option Plan for $3.3125 per share. The
figure also includes 1,374,013 shares and 2,760 shares issuable upon
exercise of Warrants held by Venkol Trust. The figure above does not
include the unvested portion (100,000 shares) of an incentive stock option
to purchase 100,000 shares of the Company's Common Stock under the
Company's 2001 Stock Option Plan for an exercise price of $0.60 per share.
(5) Mr. Koly is the trustee of Venkol Trust and is deemed the beneficial owner
of its shares.
(6) Dr. Herschkowitz is the Chairman of the Board of Directors of Delcath. The
figure above includes 17,738 shares held by Dr. Herschkowitz; 180,898
shares held by Venkol Trust; as to which Dr. Herschkowitz has a beneficial
remainder interest. The Venkol trust share amount is a maximum estimated
8
distribution because the Venkol Trust has not determined the final
distribution amounts. The figure also includes the vested portion (144,836
shares) of an incentive/non-qualified stock options to purchase 75,427
shares of the Company's Common Stock under the Company's 1992 Incentive
Stock Option Plan for a weighted average exercise price of $4.05 per share,
and 9,109 shares of Common Stock under the Company's 1992 Non-Incentive
Stock Option Plan for $4.93 per share; and 60,300 shares of Common Stock
under the Company's 2000 Stock Option Plan for an exercise price of $4.93
per share. The figure above does not include the unvested portion (30,000
shares) of an incentive stock option to purchase 30,000 shares of the
Company's Common Stock under the Company's 2001 Stock Option Plan for an
exercise price of $ .85 per share.
(7) Mr. Mancuso resigned as a director of the Company on October 1, 2001. The
figure above includes an estimated 14,477 shares held by Venkol Trust, as
to which Mr. Mancuso has a beneficial remainder interest. The Venkol Trust
share amount is a maximum estimated distribution because the Venkol Trust
has not determined the final distribution amounts. The figure above also
includes 504 shares issuable upon the exercise of Warrants at a price of
$10.87 per share until April 30, 2002. Also includes the vested portion
(56,932 shares) of a non-incentive stock option to purchase 56,932 shares
of the Company's Common Stock under the Company's 1992 Non-Incentive Stock
Option Plan for a weighted average exercise price of $4.13 per share. Also
includes 281,424 shares issuable upon exercise of Warrants.
(8) Mr. Sorrentino resigned as director on October 26, 2001. Includes vested
portion (56,932 shares) of a non-incentive stock option to purchase 56,932
shares of the Company's Common Stock under the Company's 1992 Non-Incentive
Stock Option Plan for a weighted average exercise price of $4.13 per share.
(9) Mr. Bergman resigned as director on September 21, 2001. Includes vested
portion (56,932 shares) of a non-incentive stock option to purchase 56,932
shares of the Company's Common Stock under the Company's 1992 Non-Incentive
Stock Option Plan for a weighted average exercise price of $4.13 per share.
(10) Mr.Corigliano is a director of Delcath. The figure above represents 1,500
shares owned directly by him, and 1,500 shares issuable upon the exercise
of Warrants at a price of $6.60 per share until October 18, 2005. Does not
include a non-incentive stock option to purchase 30,000 shares of the
Company's Common Stock under the Company's 2000 Stock Option Plan for an
exercise price of $.85 per share, none of which are vested.
(11) Mr. Isdaner is a director of Delcath. The figure above represents 7,500
shares directly owned by him or jointly with his wife, and 7,500 shares
issuable upon the exercise of Warrants at a price of $6.60 per share until
October 18, 2005. Does not include a non-incentive stock option to purchase
30,000 shares of the Company's Common Stock under the Company's 2000 Stock
Option Plan for an exercise price of $.85 per share, none of which are
vested.
(12) Mr. Nevins is a director of Delcath. The figure above represents 4,000
shares owned directly by him, and 4,000 shares issuable upon the exercise
of Warrants at a price of $6.60 per share until October 18, 2005. The above
figure also represents 1,000 shares owned directly by his wife, and 1,000
shares issuable upon the exercise of Warrants at a price of $6.60 per share
until October 18, 2005. Does not include a non-incentive stock option to
purchase 30,000 shares of the Company's Common Stock under the Company's
2000 Stock Option Plan for an exercise price of $.85 per share, none of
which are vested.
(13) Mr. Grogan is the Chief Financial Officer of Delcath. Does not include an
incentive stock option to purchase 30,000 shares of the Company's Common
Stock under the Company's 2001 Stock Option Plan for an exercise price of
$.85 per share, none of which are vested.
(14) The number of shares beneficially owned by all directors and executive
officers as a group includes 1,406,773 shares of Common Stock issuable upon
exercise of certain stock options granted to directors and executive
officers pursuant to the Company's various Stock Option Plans.
9
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
All of our preferred stockholders converted their Preferred Stock into
833,873 shares of Common Stock. The preferred stockholders also accepted 690,910
shares of Common Stock as payment of $999,070 of accumulated dividends, and a
cash dividend of $499,535 as payment of the balance of the accrued dividend,
estimated through September 30, 2000. Venkol Trust held all 2,000,000 shares of
our Class A Preferred Stock and received 690,099 shares of Common Stock on
conversion of those shares, 616,127 shares of Common Stock in partial payment of
accumulated dividends and a cash dividend of $223,2027 in payment of the balance
of the accrued dividend. Frank Mancuso, Jr. and Venkol Trust owned 19,608 and
117,650 shares of our Class B Preferred Stock and received 6,766 and 40,595
shares of Common Stock, upon conversion of those shares, 3,519 shares and 21,115
shares of Common Stock in payment of $26,008 and $156,048 of accumulated
dividends and cash dividends of approximately $13,004 and $78,024, as payment of
the balance of the accrued dividends through September 2000.
In April 2000, we issued 230,873 shares of Common Stock to existing
security holders and their designees for proceeds of $501,825 in a rights
offering. Each of M. S. Koly, Samuel Herschkowitz, our Chairman and Chief
Technical Officer, and James Sorrentino, a director of Delcath, purchased 11,732
shares of Common Stock for $25,500, and William Bergman, a director of Delcath,
purchased 6,901 shares of Common Stock for $15,000.
In August and September 2000, Delcath borrowed an aggregate of $230,000 for
which it issued promissory notes due and repaid approximately $267,400,
including accrued interest on May 27, 2001. The promissory notes bear interest
at an annual rate of 22%. Of these loans, $205,000 was borrowed from existing
stockholders or relatives of existing stockholders of Delcath. M. S. Koly, Chief
Executive Officer, President, Treasurer and a director of Delcath, and Mary
Herschkowitz, the mother of Samuel Herschkowitz, M.D., Chairman and Chief
Technical Officer of Delcath, provided $50,000 and $40,000 of the loans.
We believe that each of the transactions with our officers, directors and
principal stockholders and their affiliates were on terms no less favorable than
could have been obtained from unaffiliated third parties. All future
transactions, including loans between us and our officers, directors and
stockholders beneficially owning 5% or more of our outstanding voting
securities, or their affiliates, will be on terms no less favorable to us than
could be obtained in arm's length transactions from unaffiliated third parties.
Further, all transactions and loans and any forgiveness of indebtedness owed by
any of our officers, directors and stockholders beneficially owning 5% or more
of our outstanding voting securities, or their affiliates, to us, must be
approved by a majority of our independent directors who do not have an interest
in the transactions and who have access, at our expense, to either our legal
counsel or independent legal counsel.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
directors, officers, and persons who are beneficial owners of more than ten
percent of the Company's Common Stock to file with the Securities and Exchange
Commission (the "Commission") reports of their ownership of the Company's
securities and of changes in that ownership. To the Company's knowledge, based
upon a review of copies of reports filed with the Commission with respect to the
fiscal years ended December 31, 2001 and 2000, except as noted below, all
reports required to be filed under Section 16(a) by the Company's directors and
officers and persons who were beneficial owners of more than ten percent of the
Company's Common Stock were timely filed.
10
Form 4 reports due January 10, 2001 by former directors, William Bergman
and James V. Sorrentino and Messrs. Koly and Herschkowitz were inadvertently not
timely filed. Such reports were filed in May 2001. Form 3 reports due November
10, 2001 by Messrs. Corigliano, Isdaner and Nevins were inadvertently not timely
filed. Such reports were filed in December 2001. Form 3 report due September 25,
2001 by Mr. Grogan was inadvertently not timely filed. This report was filed in
January 2002.
The Company is not aware of any other late filings pursuant to Section
16(a) of the Exchange Act.
The Company is in the process of implementing a Section 16(a) compliance
program to assist reporting persons in meeting their reporting obligations in a
timely manner.
STOCKHOLDER PROPOSALS
It is contemplated that the next Annual Meeting of Stockholders will be
held on or about May 22, 2003. To be eligible for inclusion in the proxy
statement to be furnished to all stockholders entitled to vote at the next
Annual Meeting, proposals must be addressed to the Secretary of Delcath and must
be received at Delcath's principal executive offices not later than December 4,
2002. In order to avoid controversy as to the date on which a proposal was
received by Delcath, it is suggested that any stockholder who wishes to submit a
proposal submit such proposal by Certified Mail, Return Receipt Requested.
EXPENSES AND SOLICITATION
The costs of printing and mailing proxies will be borne by Delcath. In
addition to soliciting stockholders by mail through its regular employees,
Delcath may request banks, brokers and other custodians, nominees and
fiduciaries to solicit their customers who have stock of Delcath registered in
the names of a nominee and, if so, will reimburse such banks, brokers and other
custodians, nominees and fiduciaries for their reasonable out-of-pocket costs.
Solicitation by officers and employees of Delcath may also be made of some
stockholders following the original solicitation.
OTHER BUSINESS
The Board of Directors knows of no other items that are likely to be
brought before the Meeting except those that are set forth in the foregoing
Notice of Annual Meeting of Stockholders. If any other matters properly come
before the Meeting, the persons designated on the enclosed proxy will vote in
accordance with their judgment on such matters.
By Order of the Board of Directors
M. S. Koly,
President and Chief Executive Officer
11
DELCATH SYSTEMS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 23, 2002
Revoking all prior proxies, the undersigned, a stockholder of DELCATH SYSTEMS,
INC. (the "Company"), hereby appoints M.S. Koly and Samuel Herschkowitz, M.D.,
or either of them, as attorneys and agents of the undersigned, with full power
of substitution, to vote all of the shares of the Company's Common Stock, par
value $0.01 per share ("Common Stock") owned by the undersigned at the Annual
Meeting of the Stockholders of the Company to be held at the Hyatt Regency
Greenwich, 1800 East Putnam Avenue, Old Greenwich, Connecticut, at 11:00 a.m.
local time, and at any adjournment thereof, as fully and effectively as the
undersigned could do if personally present and voting, hereby approving,
ratifying, and confirming all that said attorney and agent or his substitute may
lawfully do in place of the undersigned as indicated on the reverse.
IMPORTANT: SIGNATURE REQUIRED ON THE REVERSE SIDE
- --------------------------------------------------------------------------------
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
DELCATH SYSTEMS, INC.
MAY 23, 2002
-------------Please Detach and Mail in the Envelope Provided-------------
[X] Please mark your
votes as in this
example.
FOR NOMINEES
LISTED AT RIGHT WITHHOLD
(except as marked to AUTHORITY
the contrary below) FOR NOMINEES NOMINEES:
1. Election of [_] [_] M. S. Koly
Directors Samuel Herschkowitz, M.D.
as Class II directors.
For, except vote witheld from the following nominees:
_____________________________________________________
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION
IS MADE, THE PROXY SHALL BE VOTED FOR THE ELECTION OF THE LISTED NOMINEES AS
DIRECTOR AND, IN THE CASE OF OTHER MATTERS THAT LEGALLY COME BEFORE THE MEETING,
AS SAID ATTORNEY(S) MAY DEEM ADVISABLE.
PLEASE CHECK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS ON
THURSDAY, MAY 23, 2002 AT 11:00 A.M. AT THE HYATT REGENCY GREENWICH, 1800 EAST
PUTNAM AVENUE, OLD GREENWICH, CONNECTICUT. [_]
Signature: ________________________________ Date: __________________
Additional signature(s)
if held jointly: __________________________ Date: __________________
IMPORTANT: PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. JOINT OWNERS SHOULD EACH
SIGN. IF SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE,
GUARDIAN OR OTHER FIDUCIARY, PLEASE INDICATE TITLE OR CAPACITY IN
WHICH SIGNED.