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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
Schedule TO
Tender Offer Statement under Section 14(d)(1) or 13(e)(1)
of the Securities Exchange Act of 1934
DELCATH SYSTEMS, INC.
(Name of Subject Company (issuer) and Filing Person (offeror))
Redeemable Common Stock Purchase Warrants Issued in 2000
(Title of Class of Securities)
24661P112
(CUSIP Number of Class of Securities)
M. S. Koly
President and Chief Executive Officer
Delcath Systems, Inc.
1100 Summer Street
3rd Floor
Stamford, Connecticut 06905
(203) 323-8668
(Name, address and telephone number of person authorized to receive
notices and communications on behalf of filing person)
Copies to:
Paul G. Hughes
Murtha Cullina LLP
Two Whitney Avenue
P. O. Box 704
New Haven, Connecticut 06503-0704
(203) 772-7726
CALCULATION OF FILING FEE
- --------------------------------------------------------------------------------
Transaction Valuation* Amount of Filing Fee
$324,000 $64.80
- --------------------------------------------------------------------------------
* Calculated solely for purposes of determining the filing fee under Rule
0-11(a)(4) based on the last sale of the Redeemable Common Stock Purchase
Warrants issued by the filing person in 2000 on July 7, 2005 of $0.27 per
warrant.
|_| Check the box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
Amount Previously Paid:
Form or Registration No.:
Filing party:
Date filed:
|_| Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
|_| third party tender offer subject to Rule 14d-1.
|X| issuer tender offer subject to Rule 13e-4.
|_| going-private transaction subject to Rule 13e-3.
|_| amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: |_|
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This Issuer Tender Offer Statement on Schedule TO (this "Schedule TO")
relates to an offer by Delcath Systems, Inc., a Delaware corporation (the
"Company"), to exchange any or all of the Company's 1,200,000 outstanding
Redeemable Common Stock Purchase Warrants that it issued in connection with its
initial public offering in 2000 (the "2000 Warrants") for the Company's 2005
Redeemable Common Stock Purchase Warrants - Series A (the "Exchange Warrants")
upon the terms and subject to the conditions contained in the Offer to Exchange
dated the date hereof (the "Offer to Exchange") and the related Letter of
Transmittal (collectively, the "Exchange Offer") which are filed as exhibits to
this Schedule TO.
This Schedule TO is being filed in satisfaction of the reporting
requirements of Rule 13e-4(c)(2) promulgated under the Securities Exchange Act
of 1934, as amended.
Item 1. Summary Term Sheet.
The information under the caption "Summary of the Exchange Offer" in the
Exchange Offer includes the information required by Item 1001 of Regulation M-A
and is incorporated herein by reference. Terms used herein which are defined in
the Exchange Offer are used herein as defined in the Exchange Offer.
Item 2. Subject Company Information
The information required by Item 1002(a) of Regulation M-A is contained on
the cover page of the Offer to Exchange and is incorporated herein by reference.
The information required by Item 1002(c) of Regulation M-A is contained in
the Offer to Exchange under the caption "Market Values of the 2000 Warrants" and
is incorporated herein by reference.
Item 3. Identity and Background of Filing Person
The information required by Item 1003(a) of Regulation M-A is contained on
the cover page of the Offer to Exchange or under the caption "Interests of
Certain Persons in the Exchange Offer" in the Offer to Exchange and is
incorporated herein by reference.
There is no other person who may be deemed to control the Company, and
there is no other corporation or other person ultimately in control of the
Company.
Item 4. Terms of the Transaction
The information required by Item 1004(a) of Regulation M-A contained in the
Offer to Exchange on the cover page and under the captions "Summary of the
Exchange Offer," "The Exchange Offer" and "Federal Income Tax Consequences of
the Exchange Offer" is incorporated herein by reference.
The information required by Item 1004(b) of Regulation M-A is contained
under the caption "Interests of Certain Persons in the Exchange Offer" in the
Offer to Exchange and is incorporated herein by reference.
Item 5. Past Contacts, Transactions, Negotiations and Agreements
Not applicable.
1
Item 6. Purposes of the Transaction and Plans or Proposals
The information required by Item 1106(a) of Regulation M-A is included in
the Offer to Exchange under the caption "Summary of the Exchange Offer" and "The
Exchange Offer" and is incorporated herein by reference.
There are no plans, proposals or negotiations that relate to or would
result in any of the transactions or changed enumerated in Item 1106(c) of
Regulation M-A.
Item 7. Source and Amount of Funds or Other Consideration
No funds, borrowed or otherwise, will be expended in connection with the
Exchange Offer other than funds to pay expenses incurred by the Company which
will be paid from the Company's working capital. The following is an estimate of
the expenses incurred or to be incurred by the Company in connection with the
Exchange Offer:
Filing fee $ 65
Legal 75,000
Printing and reproduction 1,000
Miscellaneous 435
All such expenses will be paid by the Company.
Item 8. Interest in Securities of the Subject Company
(a) The information required by Item 1008(a) of Regulation M-A is contained
under the caption "Interests of Certain Persons in the Exchange Offer" in the
Offer to Exchange and is incorporated herein by reference.
(b) None.
Item 9. Persons/Assets, Retained, Employed Compensated or Used
(a) No person has been employed or retained or will be compensated to make
solicitations or recommendations in connection with the Exchange Offer.
(b) The executive officers of the Company will provide certain ministerial
services in connection with the preparation and distribution of the Offer to
Exchange and the issuance of Exchange Warrants for any 2000 Warrants that are
exchanged in accordance with the terms of the Exchange Offer. No executive
officer will receive additional compensation for providing such services.
Item 10. Financial Statements
The Company believes that the information described in Item 1010(a) and (b)
of Regulation M-A is not material in connection with the Exchange Offer and is,
therefore, as provided in Item 10 of Schedule TO, not required herein or in the
Offer to Exchange.
Item 11. Additional Information
None.
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Item 12. Exhibits
Exhibit No. Description
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(a)(1)(i) Cover letter and Offer to Exchange dated July 13, 2005.
(a)(1)(ii) Form of Letter of Transmittal.
(a)(1)(iii) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(1)(iv) Form of Letter to Clients.
(a)(1)(v) Form of Notice of Guaranteed Delivery.
Item 13. Information Required by Schedule 13E-3.
Not applicable.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Delcath Systems, Inc.
By: M. S. KOLY
-----------------------------
M. S. Koly
President and Chief Executive
Officer
Date: July 13, 2005
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EXHIBIT INDEX
Exhibit No. Description
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(a)(1)(i) Cover letter and Offer to Exchange dated July 13, 2005.
(a)(1)(ii) Form of Letter of Transmittal.
(a)(1)(iii) Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees.
(a)(1)(iv) Form of Letter to Clients.
(a)(1)(v) Form of Notice of Guaranteed Delivery.
DELCATH SYSTEMS, INC.
1100 Summer Street
3rd Floor
Stamford, Connecticut 06905
July 13, 2005
To: The holders of the Redeemable Common Stock
Purchase Warrants of Delcath Systems, Inc. issued
in 2000
I am writing to you as a holder of Redeemable Common Stock Purchase
Warrants (the "2000 Warrants") of Delcath Systems, Inc. that were issued as part
of our initial public offering in 2000.
The terms of the 2000 Warrants provide, among other things, for (i) an
exercise price of $6.60 per share; (ii) a right for the Company to redeem the
2000 Warrants if the price of our common stock on each of the 20 trading days
ending on the third day prior to the date notice of redemption is given has been
at least 150% of the exercise price (i.e., $9.90) and if, at the time the notice
of redemption is sent, there is an effective registration statement under the
Securities Act of 1933 covering the offer and sale of our shares upon exercise
of the 2000 Warrants; and (iii) an expiration date of October 18, 2005.
The Board of Directors of the Company has determined that, in light of the
recent trading prices for our Common Stock and our anticipated need for
additional capital to continue the development of our product, it will offer to
exchange on a one-for-one basis any or all of the outstanding 2000 Warrants for
new warrants (the "Exchange Warrants"). The substantive terms of the Exchange
Warrants and the related Warrant Agreement would be the same as the terms of the
2000 Warrants except that:
1. The exercise price per share of the Exchange Warrants would be $2.75
per share;
2. The expiration date for the Exchange Warrants would be December 31,
2005;
3. The Company would have the right to redeem the Exchange Warrants for
$0.10 per Exchange Warrant, upon not less than 30 days' prior written
notice, at any time after issuance of the Exchange Warrants without
regard to the market value of our common stock at the time notice of
redemption is given and even if the holders would not be permitted to
exercise the Exchange Warrants at the time because the Company does
not have an effective registration statement under the Securities Act
covering the offer and sale of shares upon exercise of the Exchange
Warrants; in that circumstance, the Company may permit one or more
holders to exercise Exchange Warrants if such exercise would qualify
for an exemption from the registration requirements of applicable
securities laws;
4. The Company's right to redeem the Exchange Warrants would not require
the written consent of the managing underwriter of the Company's 2000
public offering (which is no longer conducting business); and
5. The managing underwriter of our initial public offering (which is no
longer conducting business) would not be a party to the Warrant
Agreement relating to the Exchange Warrants.
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The Company currently intends to apply to list the Exchange Warrants on
either the Nasdaq Small Cap Market or the Boston Stock Exchange. However, you
should realize that such listing may not be practicable.
The offer to exchange 2000 Warrants for Exchange Warrants will expire at
5:00 P.M., New York time, on August 15, 2005, unless we, in our sole discretion,
extend it (such date, as extended if applicable, the "Expiration Date"). The
Exchange Warrants will be issued and mailed as promptly as practicable after the
Expiration Date to those holders of 2000 Warrants who have taken the necessary
steps to accept the offer to exchange by the Expiration Date and have not
withdrawn their 2000 Warrants. Any 2000 Warrants that are exchanged for Exchange
Warrants will be cancelled.
Whether you choose to exchange your 2000 Warrants for Exchange Warrants is
entirely up to you. Neither the Company nor its Board of Directors makes any
recommendation as to whether or not you should choose to accept the exchange
offer.
If you do not accept the offer, your 2000 Warrants will remain outstanding
and the terms of them will remain unchanged. Enclosed are two documents that we
encourage you to review in deciding whether or not to accept the offer to
exchange your 2000 Warrants for Exchange Warrants. They are: (1) the Offer to
Exchange dated the date of this letter; and (2) a Letter of Transmittal that you
would complete and return to American Stock Transfer & Trust Company together
with your 2000 Warrants if you choose to accept the offer to exchange. An
investment in the Exchange Warrants involves various risks. Please see "RISK
FACTORS - Risks Related to an Investment in the Exchange Warrants" in the Offer
to Exchange.
We intend to file a registration statement under the Securities Act of 1933
covering the offer and sale of our Common Stock upon exercise of the Exchange
Warrants. After that registration statement becomes effective, we will send each
holder of Exchange Warrants a copy of the prospectus contained therein. Please
note that you will not be permitted to exercise any Exchange Warrants until that
registration statement becomes effective and you receive the related prospectus.
However, the Company may permit one or more holders to exercise Exchange
Warrants even if no such registration statement is effective, provided such
exercise would qualify for an exemption from the registration requirements of
applicable securities laws. If the registration statement becomes effective
prior to our sending the Exchange Warrants to those holders who accept the
offer, we will send the prospectus together with the Exchange Warrants.
The offer to exchange 2000 Warrants for Exchange Warrants is not being
registered under the Securities Act of 1933, as amended, in reliance on the
exemption from registration contained in Section 3(a)(9) of that Act for
exchange offers by an issuer with its existing security holders exclusively
where no commission or other remuneration is paid or given directly or
indirectly for soliciting such exchange.
If you wish to exchange some or all of your 2000 Warrants for Exchange
Warrants, you should complete the enclosed Letter of Transmittal and send it,
together with the certificate representing your 2000 Warrants to be exchanged,
to the Warrant Agent, American Stock Transfer & Trust Company, 6201 15th Avenue,
Brooklyn, New York 11219.
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If you have any questions concerning the exchange offer or if you need
assistance in completing the Letter of Transmittal, please contact American
Stock Transfer & Trust Company at (800) 937-5449 or the undersigned at (203)
323-8668.
Very truly yours,
DELCATH SYSTEMS, INC.
By: M. S. KOLY
-------------------------------------
M. S. Koly
President and Chief Executive Officer
DELCATH SYSTEMS, INC.
1100 Summer Street
3rd Floor
Stamford, Connecticut 06905
OFFER TO EXCHANGE
ITS
2005 REDEEMABLE COMMON STOCK PURCHASE WARRANTS - SERIES A
FOR ALL OF ITS OUTSTANDING
COMMON STOCK PURCHASE WARRANTS ISSUED IN 2000
THE EXCHANGE OFFER WILL REMAIN OPEN UNTIL AUGUST 15, 2005 UNLESS EXTENDED.
July 13, 2005
DELCATH SYSTEMS, INC., a Delaware corporation (the "Company"), hereby
offers to exchange (the "Exchange Offer"), upon the terms and subject to the
conditions set forth herein and in the accompanying Letter of Transmittal (the
"Letter of Transmittal"), any or all of the 1,200,000 outstanding Redeemable
Common Stock Purchase Warrants issued by it in 2000 (the "2000 Warrants") for an
equal number of 2005 Redeemable Common Stock Purchase Warrants - Series A (the
"Exchange Warrants").
The Exchange Warrants will be substantially the same as the 2000 Warrants,
except that:
1. The exercise price per share of the Exchange Warrants will be $2.75
rather than $6.60;
2. The expiration date for the Exchange Warrants will be December 31,
2005 rather than October 18, 2005;
3. The Company would have the right to redeem the Exchange Warrants for
$0.10 per Exchange Warrant, upon not less than 30 days' prior written
notice, at any time after issuance without regard to the then market
value of its Common Stock rather than having such right only if the
closing bid quotation for its Common Stock on each of the 20 trading
days ending on the third day prior to the date a notice of redemption
is given is at least 150% of the exercise price;
4. The Company would have the right to redeem the Exchange Warrants, upon
not less than 30 days' prior written notice, whether or not, at the
time of redemption, there is an effective registration statement under
the Securities Act of 1933 covering the offer and sale of the
Company's Common Stock upon exercise of the Exchange Warrants rather
than having the right to redeem only if there is an effective
registration statement covering such offer and sale; however, the
Company may permit one or more holders to exercise Exchange Warrants
even if no such registration statement is effective, provided such
exercise would qualify for an exemption from the registration
requirements of applicable securities law;
5. The Company's right to redeem the Exchange Warrants would not require
the consent of the managing underwriter of the Company's 2000 public
offering (which is no longer conducting business); and
6. The managing underwriter of our initial public offering (which is no
longer conducting business) would not be a party to the Warrant Agent
Agreement relating to the Exchange Warrants.
-----------------------------
NEITHER THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER
FEDERAL OR STATE AGENCY HAS APPROVED OR DISAPPROVED OF THE SECURITIES TO BE
DISTRIBUTED IN THE EXCHANGE OFFER. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THIS OFFER TO EXCHANGE DOES NOT CONSTITUTE AN OFFER TO EXCHANGE IN ANY
JURISDICTION IN WHICH, OR FROM ANY PERSON TO OR FROM WHOM, IT IS UNLAWFUL TO
MAKE SUCH OFFER OR TO ACCEPT SUCH EXCHANGE UNDER APPLICABLE STATE SECURITIES
LAWS.
The Company currently intends to apply to list the Exchange Warrants on
either the Nasdaq SmallCap Market or the Boston Stock Exchange. However, you
should realize that such listing may not be practicable.
All other terms of the Exchange Warrants would be the same as the terms of
the 2000 Warrants. Any 2000 Warrants not tendered and accepted in the Exchange
Offer will remain outstanding and their terms will remain unchanged. Any 2000
Warrants that are exchanged for Exchange Warrants will be cancelled.
The Exchange Offer will expire at 5:00 P.M., New York time, on August 15,
2005, unless we, in our sole discretion, extend it (such date, as extended if
applicable, the "Expiration Date"). The Exchange Warrants will be issued and
mailed as promptly as practicable after the Expiration Date to those holders of
2000 Warrants who have taken the necessary steps to accept the Exchange Offer by
the Expiration Date.
Exercise of the Exchange Warrants will not be permitted until the holders
thereof receive a prospectus meeting the requirements of the Securities Act of
1933, as amended, relating to the offer and sale of the shares issuable on such
exercise. However, the Company may permit one or more holders to exercise
Exchange Warrants even if no such registration statement is effective, provided
such exercise would qualify for an exemption from the registration requirements
of applicable securities laws. The Company will file a registration statement
containing such a prospectus as promptly as practicable following the date
hereof. After that registration statement becomes effective, we will send each
holder of Exchange Warrants a copy of the prospectus contained therein. If the
registration statement becomes effective prior to our sending the Exchange
Warrants, we will send the prospectus with the Exchange Warrants.
Whether you choose to exchange your 2000 Warrants for Exchange Warrants is
entirely up to you. While the Company's Board of Directors has approved the
Company's making the Exchange Offer, neither the Company nor its Board of
Directors makes a recommendation as to whether or not you should accept the
Exchange Offer.
An investment in the Exchange Warrants involves various risks. Please see
"RISK FACTORS - Risks Related to an Investment in the Exchange Warrants."
The Exchange Warrants will be, issued under a Warrant Agent Agreement
between the Company and American Stock Transfer & Trust Company, as warrant
agent (the "Warrant Agent").
There will be no proceeds to the Company from the Exchange Offer, although
the Company would receive the proceeds of any exercise of the Exchange Warrants.
The Exchange Offer has not been registered under the Securities Act of
1933, as amended, in reliance on the exemption from registration contained in
Section 3(a)(9) of that Act for exchange offers by an issuer with its existing
security holders exclusively where no commission or other remuneration is paid
or given directly or indirectly for soliciting such exchange.
TABLE OF CONTENTS
Page
----
SUMMARY......................................................................1
SUMMARY OF THE EXCHANGE OFFER................................................1
RISK FACTORS.................................................................3
Risks Related to an Investment in the Exchange Warrants...................3
Risks Related to an Investment in our Common Stock........................4
AVAILABLE INFORMATION........................................................4
THE EXCHANGE OFFER...........................................................5
Description of the Exchange Offer.........................................5
Procedure for Tendering 2000 Warrants.....................................6
Guaranteed Delivery Procedures............................................7
WITHDRAWAL OF 2000 WARRANTS TENDERED.........................................7
INTERESTS OF CERTAIN PERSONS IN THE EXCHANGE OFFER...........................7
DESCRIPTION OF THE COMPANY'S CAPITAL STOCK AND OTHER SECURITIES..............8
Description of the Exchange Warrants......................................8
Description of Other Securities...........................................9
MARKET VALUES OF THE 2000 WARRANTS...........................................9
FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER.......................10
Exchange of 2000 Warrants for Exchange Warrants..........................11
Ownership, Disposition, Redemption and Expiration of Exchange
Warrants............................................................11
Adjustments to the Exercise Price........................................12
EXCHANGE AGENT..............................................................12
-i-
SUMMARY
The following is a summary that highlights the information contained
elsewhere in this Offer to Exchange. You should read the entire Offer to
Exchange carefully before making a decision whether to exchange your 2000
Warrants for Exchange Warrants. (For a more complete description of the Exchange
Offer see "The Exchange Offer.")
SUMMARY OF THE EXCHANGE OFFER
SECURITIES OFFERED .................... Up to 1,200,000 Exchange Warrants
that may be issued upon exchange
of an equal number of 2000
Warrants.
THE EXCHANGE OFFER .................... Any holder of 2000 Warrants may
exchange any or all of such
holder's 2000 Warrants for
Exchange Warrants on the basis of
one Exchange Warrant for each
2000 Warrant exchanged.
EXPIRATION DATE OF THE EXCHANGE OFFER . The Exchange Offer will expire at
5:00 P.M., New York time, on
August 15, 2005, unless we, in
our sole discretion, extend it.
WITHDRAWAL OF 2000 WARRANTS TENDERED... Any 2000 Warrants tendered
pursuant to the Exchange Offer may
be withdrawn, by notice to the
Exchange Agent, at any time prior
to the Expiration Date or, if not
accepted for exchange, after 40
business days from the date
hereof.
PURPOSE OF THE EXCHANGE OFFER ......... The Company is making the Exchange
Offer in recognition that the
current exercise price of the 2000
Warrants is significantly above
recent market prices for our
common stock and that, by their
terms, the 2000 Warrants will
expire on October 18, 2005. In
addition, we anticipate the need
for additional capital to continue
the development of our product. If
the applicable conditions for the
redemption of the Exchange
Warrants are satisfied, we may
determine to call the Exchange
Warrants for redemption. See
"Redemption of the Exchange
Warrants" below.
DELIVERY OF EXCHANGE WARRANTS.......... The Exchange Warrants will be
issued and mailed as promptly as
practicable after the Expiration
Date to those holders of 2000
Warrants who have taken the
necessary steps to accept the
Exchange Offer and have not
withdrawn such 2000 Warrants.
EXERCISE PRICE OF THE EXCHANGE WARRANTS Each Exchange Warrant will entitle
the holder thereof to purchase one
share of common stock at an
exercise price of $2.75, subject
to adjustment. (The exercise price
of the 2000 Warrants is currently
$6.60 per share.)
EXPIRATION DATE OF THE EXCHANGE WARRANTS The Exchange Warrants will expire
on December 31, 2005. (The
expiration date of the 2000
Warrants is October 18, 2005.)
1
REDEMPTION OF THE EXCHANGE WARRANTS ... The Company may redeem some or all
of the Exchange Warrants at a
price of $0.10 per warrant, upon
not less than 30 days' prior
written notice, at any time after
issuance without regard to the
then market value of its Common
Stock. The Company would have the
right to redeem the Exchange
Warrants whether or not, at the
time of redemption is sent, there
is an effective registration
statement under the Securities Act
of 1933 covering the offer and
sale of its Common Stock upon
exercise of the Exchange Warrants.
The holders of the Exchange
Warrants will have the right to
exercise their Exchange Warrants
until the close of business on the
date fixed for redemption if such
a registration statement is
effective.
EXERCISE OF THE EXCHANGE WARRANTS .... Exercise of the Exchange Warrants
will not be permitted until there
is an effective registration
statement under the Securities Act
covering the offer and sale of the
Common Stock issuable on such
exercise. The Company will file
such a registration statement as
promptly as practicable after the
date hereof. If the Company
elects to redeem the Exchange
Warrants and such a registration
statement is not effective by the
redemption date, holders of
Exchange Warrants will not be able
to exercise their Exchange
Warrants. In that circumstance,
the only right that holders of
Exchange Warrants would have would
be to receive the redemption price
of $0.10 per warrant. However, the
Company may permit one or more
holders to exercise Exchange
Warrants even if no such
registration statement is
effective, provided such exercise
would qualify for an exemption
from the registration requirements
of applicable securities laws.
FEDERAL INCOME TAX CONSEQUENCES ....... In general, the exchange of 2000
Warrants for Exchange Warrants
would be a taxable transaction for
the U.S. federal income tax
purposes, but the position that
the Internal Revenue Service would
take is not entirely clear. See
"Federal Income Tax Consequences
of the Exchange Offer."
MARKET FOR THE EXCHANGE WARRANTS ...... The Company currently intends to
list the Exchange Warrants on
either the Nasdaq SmallCap Market
or the Boston Stock Exchange. If
the Company is not able to list
the Exchange Warrants, it may be
more difficult to buy or sell the
Exchange Warrants. You should
realize that listing the Exchange
Warrants on the Nasdaq SmallCap
Market or the Boston Stock
Exchange may not be practicable.
2
RISK FACTORS
Risks Related to an Investment in the Exchange Warrants
The market for the Exchange Warrants may be limited and you may be
unable to sell Exchange Warrants when you wish to do so.
We intend to apply to list the Exchange Warrants on the Nasdaq SmallCap
Market or the Boston Stock Exchange. If it is impracticable for us to do so, the
ability of a holder of Exchange Warrants to sell his Exchange Warrants may be
more limited than it might otherwise be. A limited market for the Exchange
Warrants could adversely affect their market value.
The Exchange Warrants will be derivative securities the value of which
will likely vary with the value of our Common Stock. The market value
of our Common Stock has historically been volatile.
As a derivative security (i.e., a security whose value is expected to
fluctuate as the value of another security fluctuates), the market value of our
Exchange Warrants will likely fluctuate as the value of our Common Stock
fluctuates. Historically, the market value of our Common Stock has been
volatile.
The Exchange Warrants will not be exercisable until a registration
statement covering the offer and sale of Common Stock on exercise of
the Exchange Warrants has become effective which may limit the ability
of a holder of Exchange Warrants to exercise the Exchange Warrants and
sell the Common Stock underlying his Exchange Warrants.
Except as the Company may otherwise permit (as described below), none of
the Exchange Warrants will be exercisable until we have filed a registration
statement under the Securities Act of 1933 covering the offer and sale of our
Common Stock on exercise of the Exchange Warrants and such registration
statement has become effective. Until such time, a holder of an Exchange Warrant
would be unable to realize any value of the underlying Common Stock over the
exercise price of the Exchange Warrants by exercising the Exchange Warrant and
selling the Common Stock received on exercise.
The Exchange Warrants will be redeemable, upon not less than 30 days'
prior written notice, at any time after their issuance without regard
to the market price of the Company's Common Stock at the time of
redemption.
The Company will have the right to redeem the Exchange Warrants, upon not
less than 30 days' prior written notice, at any time whether the market value of
its Common Stock is more or less than the exercise price of the Exchange
Warrants. If the Company chooses to redeem the Exchange Warrants, a holder would
need either to exercise the Exchange Warrants prior to the redemption date at a
price that could be higher than the then market value (assuming there is then an
effective registration statement covering such exercise) or to accept the
redemption price of $0.10. However, the Company may permit one or more holders
to exercise Exchange Warrants even if no such registration statement is
effective, provided such exercise would qualify for an exemption from the
registration requirements of applicable securities laws.
The Exchange Warrants will be redeemable even if a holder would be
precluded from exercising the Exchange Warrants at the time of
redemption.
No Exchange Warrants can be exercised unless, at the time of exercise,
there is an effective registration statement under the Securities Act of 1933
covering the offer and sale of shares upon exercise of the Exchange Warrants.
The Exchange Warrants could be redeemed by the Company even if there is no such
effective registration statement. In those circumstances, a holder of Exchange
Warrants would only have the right to receive the
3
redemption price of $0.10 even if the market price of the Common Stock at the
time is higher than the exercise price of the Exchange Warrant.
Risks Related to an Investment in our Common Stock
In prior filings with the Securities and Exchange Commission, we have
identified a number of risks and uncertainties relating to an investment in our
Common Stock, including:
o risks related to our business and financial condition;
o risks related to approval of the Delcath System by the U.S. Food and
Drug Administration and foreign regulatory authorities;
o risks related to manufacturing, commercialization and market
acceptance of the Delcath System;
o risks related to patents, trade secrets and proprietary rights;
o risks related to products liability; and
o risks related to an investment in our securities.
We encourage you to review the factors described in our prior filings in
evaluating whether you wish to tender 2000 Warrants in the Exchange Offer.
The prospectus relating to the offer and sale of our Common Stock upon
exercise of the Exchange Warrants will also describe these risks in greater
detail.
AVAILABLE INFORMATION
The Company files periodic reports under the Securities Exchange Act of
1934, as amended, that include information about it. The reports that the
Company files with the U.S. Securities and Exchange Commission may be inspected
without charge at the public reference facilities maintained by the SEC,
Washington, D.C. 20549, and copies of such materials can be obtained from the
Public Reference Section of the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. In addition, the SEC maintains a website that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC at
http://www.sec.gov.
In connection with evaluating the Exchange Offer, holders of the 2000
Warrants may wish to consider the information contained in the following reports
that we have filed with the Securities and Exchange Commission:
1. Our Annual Report on Form 10-KSB for the fiscal year ended December
31, 2004, filed on March 21, 2005;
2. Our Current Report on Form 8-K dated March 22, 2005, filed on March
23, 2005;
3. Our Current Report on Form 8-K dated April 5, 2005, filed on April 7,
2005;
4. Our Current Report on Form 8-K dated April 25, 2005, filed on April
29, 2005, as amended by an amendment filed May 2, 2005;
5. Our Current Report on Form 8-K dated May 11, 2005, filed on May 11,
2005;
6. Our definitive proxy statement dated April 29, 2005, filed on April
29, 2005, relating to our 2005 Annual Meeting of Stockholders;
4
7. Our Quarterly Report on Form 10-QSB for the quarter ended March 31,
2005, filed on May 16, 2005;
8. The description of the 2000 Warrants contained under the caption
"Description of Our Capital Stock and Other Securities - Warrants -
2000 Warrants" in the Prospectus included in the Company's
Registration Statement on Form SB-2 (No. 333-101661); and
9. The description of the Company's Common Stock contained under the
caption "Description of Our Capital Stock and Other Securities -
Units" in the Prospectus included in the Company's Registration
Statement on Form SB-2 (No. 333-101661).
Copies of any of the reports described above, which are available at the
SEC's website, are also available from the Company. The SEC's website address is
www.sec.gov. Any requests for such information should be addressed to the
Company's Chief Financial Officer, 1100 Summer Street, 3rd Floor, Stamford,
Connecticut 06905; telephone: (203) 323-8668.
In addition, holders of the 2000 Warrants may wish to review such
additional reports and other documents that the Company files with the SEC after
the date hereof.
THE EXCHANGE OFFER
Description of the Exchange Offer
The Company is offering to exchange any or all of its 1,200,000 outstanding
2000 Warrants for Exchange Warrants. The Exchange Warrants will have terms that
are substantially the same as the 2000 Warrants, except that:
1. The exercise price per share of the Exchange Warrants will be $2.75
rather than $6.60;
2. The expiration date for the Exchange Warrants will be December 31,
2005 rather than October 18, 2005;
3. The Company would have the right to redeem the Exchange Warrants for
$0.10 per Exchange Warrant, upon not less than 30 days' prior written
notice, at any time after issuance without regard to the then market
value of its Common Stock rather than having such right only if the
closing bid quotation for its Common Stock on each of the 20 trading
days ending on the third day prior to the date a notice of redemption
is given is at least 150% of the exercise price;
4. The Company would have the right to redeem the Exchange Warrants
whether or not, at the time of redemption, there is an effective
registration statement under the Securities Act of 1933 covering the
offer and sale of the Company's Common Stock upon exercise of the
Exchange Warrants rather than having the right to redeem only if there
is an effective registration statement covering such offer and sale;
5. The written consent of the managing underwriter of the Company's
initial public offering in 2000 (which is no longer conducting
business) will not be required for redemption of the Exchange
Warrants; and
6. The managing underwriter of our initial public offering (which is no
longer conducting business) would not be a party to the Warrant
Agreement relating to the Exchange Warrants.
The Exchange Offer will expire at the close of business on the Expiration
Date (August 15, 2005, unless we, in our sole discretion, extend it).
5
We are making the Exchange Offer in recognition that the current exercise
price of the 2000 Warrants is significantly above recent market prices for our
common stock and that, by their terms, the 2000 Warrants will expire on October
18, 2005. In addition, we anticipate the need for additional capital to continue
the development of our product. We may determine to call the Exchange Warrants
for redemption even if the exercise of the Exchange Warrants would not then be
permitted.
Procedure for Tendering 2000 Warrants
Any holder of a 2000 Warrant who wishes to exchange some or all of such
holder's 2000 Warrants for Exchange Warrants must complete, sign and return to
the Exchange Agent the form of Letter of Transmittal that accompanies this Offer
to Exchange on or before the Expiration Date. If the certificates representing
2000 Warrants held by any holder have been mutilated, lost, stolen or destroyed,
such holder should review the instructions to the Letter of Transmittal and
contact the Exchange Agent for additional information.
While the method of delivery of outstanding 2000 Warrants, the Letter of
Transmittal and other required documents to the Exchange Agent is at the
holder's election and risk, we recommend that the completed and signed Letter of
Transmittal and other documents be sent by registered or certified mail, by
overnight courier or by hand to:
American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, New York 11219
Any beneficial owner whose 2000 Warrants are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to exchange should contact the registered holder promptly and instruct it to
tender on the owner's behalf.
If a holder of 2000 Warrants needs assistance in completing the Letter of
Transmittal, the holder should contact American Stock Transfer & Trust Company
at (800) 937-5449.
The Exchange Warrants will be issued and mailed as promptly as practicable
after the Expiration Date to those holders of 2000 Warrants who have taken the
steps necessary to accept the Exchange Offer by the Expiration Date. All 2000
Warrants that are exchanged for Exchange Warrants will be cancelled.
Notwithstanding any other provision of the Exchange Offer, we will not be
required to accept for exchange, or to issue Exchange Warrants for, any 2000
Warrants and may terminate or amend the Exchange Offer if at any time before the
acceptance of those 2000 Warrants for exchange or the exchange of the Exchange
Warrants for outstanding 2000 Warrants, we determine that the Exchange Offer
violates any applicable law or applicable interpretation thereof by any federal
or state regulatory agency. The Company also reserves the right to extend, amend
or terminate the Exchange Offer at any time in its sole discretion.
The foregoing conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to any such condition or may be
waived by us in whole or in part at any time and from time to time in our sole
discretion. The failure by us at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any of those rights and each of those
rights shall be deemed an ongoing right which may be asserted at any time and
from time to time.
We will not make any payments to brokers, dealers or others soliciting
acceptances of the Exchange Offer. The principal solicitation is being made by
mail; however, additional solicitations may be made in person or by telephone by
our officers and employees. The cash expenses to be incurred in connection with
the Exchange Offer will be paid by us and will include accounting, legal,
reproduction and related fees and expenses.
6
Guaranteed Delivery Procedures
If a registered holder of 2000 Warrants desires to tender 2000 Warrants and
the outstanding 2000 Warrants are not immediately available, or time will not
permit the holder's 2000 Warrants or other required documents to reach the
Exchange Agent before the Expiration Date, a tender may be effected if:
o the tender is made through an eligible institution;
o prior to the Expiration Date, the Exchange Agent receives from that
eligible institution a properly completed and duly executed Letter of
Transmittal or a facsimile of a duly executed Letter of Transmittal
and notice of guaranteed delivery, substantially in the form provided
by us, by fax transmission, mail or hand delivery, setting forth the
name and address of the holder of the 2000 Warrants and the number of
2000 Warrants tendered and stating that the tender is being made by
guaranteed delivery and guaranteeing that within three New York Stock
Exchange trading days after the date of execution of the notice of
guaranteed delivery, the physical certificates for all tendered 2000
Warrants, in proper form for transfer, will be deposited by the
eligible institution with the Exchange Agent; and
o the physical certificates for all tendered 2000 Warrants, in proper
form for transfer, are received by the Exchange Agent within three New
York Stock Exchange trading days after the date of execution of the
notice of guaranteed delivery.
WITHDRAWAL OF 2000 WARRANTS TENDERED
Any holder of 2000 Warrants who tenders 2000 Warrants pursuant to the
Exchange Offer may withdraw all or any portion of such warrants at any time
prior to the Expiration Date or, if not accepted for exchange, after 40 business
days from the date hereof. Any such withdrawal may be effected by giving written
notice of withdrawal to the Exchange Agent at the following address:
American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, New York 11219
Any such notice of withdrawal must specify:
o the name(s) and address(es) of the registered owner(s) of the 2000
Warrants being withdrawn;
o the certificate number(s) of the 2000 Warrants being withdrawn; and
o the number of 2000 Warrants represented by each such certificate that
are being withdrawn.
If the notice of withdrawal is signed by the registered holder(s) of the
2000 Warrants being withdrawn, the signature must correspond with the name(s) as
written on the face of the certificate(s) being withdrawn without alteration or
enlargement or any change whatsoever. If the notice of withdrawal is signed by a
participant in the Depository, the signature must correspond with the name as it
appears on the security position listing as the owner of the 2000 Warrants being
withdrawn.
INTERESTS OF CERTAIN PERSONS IN THE EXCHANGE OFFER
Each of the directors and executive officers of the Company - M. S. Koly,
Samuel Herschkowitz, Mark Corigliano, Daniel Isdaner, Victor Nevins and Paul M.
Feinstein - has a business address c/o the Company, 1000 Summer Street, 3rd
Floor, Stamford, Connecticut 06095.
7
Mark Corigliano, Daniel Isdaner and Victor Nevins, each of whom is a
director of the Company, beneficially own 1,500, 7,500 and 5,000 2000 Warrants,
respectively. If any such director chooses to accept the Exchange Offer, he
would receive an equal number of Exchange Warrants on the same terms and
conditions as specified in the Exchange Offer applicable to any other holder of
2000 Warrants who accepts the Exchange Offer.
DESCRIPTION OF THE COMPANY'S CAPITAL STOCK AND OTHER SECURITIES
The Company's capital stock consists of 70,000,000 shares of Common Stock,
$0.01 par value per share, and 10,000,000 shares of preferred stock, $.01 par
value per share, whose rights and designation have not yet been established.
As of May 13, 2005, 15,483,445 shares of Common Stock were outstanding, and
no shares of preferred stock were outstanding. The Company's Board of Directors
has the authority to issue the authorized preferred stock in one or more series
and to fix the relative rights and preferences of each series without any action
by the holders of the Common Stock.
Description of the Exchange Warrants
General
Each Exchange Warrant will entitle the holder thereof to purchase one share
of common stock at a price of $2.75, subject to adjustment, until December 31,
2005.
The Exchange Warrants will be issued under a warrant agreement between the
Company and American Stock Transfer & Trust Company, as warrant agent.
Redemption
The Company may redeem some or all of the Exchange Warrants at a price of
$0.10 per warrant, upon not less than 30 days' prior written notice, at any time
after issuance without regard to the then market value of its Common Stock. The
Company would have the right to redeem the Exchange Warrants whether or not, at
the time the notice of redemption is sent, there is an effective registration
statement under the Securities Act of 1933 covering the offer and sale of its
Common Stock upon exercise of the Exchange Warrants. The holders of the Exchange
Warrants will have the right to exercise their Exchange Warrants until the close
of business on the date fixed for redemption. Redemption of the Exchange
Warrants could force the holders to exercise the Exchange Warrants and pay the
exercise price at a time when it may be disadvantageous for the holders to do
so, to sell the Exchange Warrants at the then current market price when they
might otherwise wish to hold the Exchange Warrants or to accept the redemption
price, which is likely to be substantially less than the market value of the
Exchange Warrants at the time of redemption. If, however, at the date fixed for
redemption, there is no effective registration statement under the Securities
Act of 1933 covering the offer and sale of Common Stock upon exercise of
Exchange Warrants, holders of Exchange Warrants would have no right other than
the right to receive the redemption price of $0.10 per Exchange Warrant.
However, the Company may permit one or more holders to exercise Exchange
Warrants even if no such registration statement is effective, provided such
exercise would qualify for an exemption from the registration requirements of
applicable securities laws.
Exercise
The Exchange Warrants may be exercised upon surrender of the warrant
certificate on or prior to the expiration date of the Exchange Warrants at the
offices of the Warrant Agent, with the exercise form on the reverse side of the
warrant certificate completed and executed as indicated, accompanied by full
payment of the exercise price for the number of warrants being exercised. The
holders of Exchange Warrants will not have the rights or privileges of holders
of Common Stock until the issuance of the Common Stock upon exercise thereof.
8
No Exchange Warrants will be exercisable unless, at the time of exercise,
we have an effective registration statement under the Securities Act covering
the shares of Common Stock issuable upon exercise of the Exchange Warrants and
the shares have been registered or qualified or deemed to be exempt from
registration or qualification under the securities laws of the state of
residence of the holder of the Exchange Warrant. We will file a registration
statement covering the offer and sale of the Common Stock issuable upon exercise
of the Exchange Warrants as promptly as practicable after the date hereof and
use our best efforts to have all the shares so registered or qualified and to
maintain a current prospectus relating thereto until the expiration of the
Exchange Warrants. After that registration statement becomes effective, we will
send each holder of Exchange Warrants a copy of the prospectus contained therein
which could be simultaneously with the delivery of the Exchange Warrants.
However, the Company may permit one or more holders to exercise Exchange
Warrants even if no such registration statement is effective, provided such
exercise would qualify for an exemption from the registration requirements of
applicable securities laws.
No fractional shares will be issued upon exercise of the Exchange Warrants.
However, if a warrant holder exercises all Exchange Warrants then owned of
record by him or her, the Company will pay to the warrant holder, in lieu of the
issuance of any fractional share which is otherwise issuable, an amount in cash
based on the closing price or last reported sale price of the Common Stock on
the last trading day prior to the exercise date.
Adjustment of Exercise Price
The exercise price and number of shares of Common Stock or other securities
issuable upon exercise of the Exchange Warrants will be subject to adjustment in
specified circumstances, including in the event of a stock dividend,
recapitalization, reorganization, merger or consolidation of the Company.
However, the Exchange Warrants will not be subject to adjustment for issuances
of Common Stock at prices below the exercise price of the Exchange Warrants.
Description of Other Securities
For a description of our Common Stock and our preferred stock, please refer
to the information contained under "Description of Our Capital Stock and Other
Securities" included in the Company's Registration Statement on Form SB-2 (No.
333-101661).
MARKET VALUES OF THE 2000 WARRANTS
The following table shows the high and low market values as reported on the
Nasdaq SmallCap Market for the 2000 Warrants for each quarter in the years ended
December 31, 2003 and December 31, 2004, and for the quarters ended March 31,
2005 and June 30, 2005.
2005
----
High Low
---- ---
Quarter ended March 31, 2005 $1.10 $0.15
Quarter ended June 30, 2005 0.92 0.15
2004
----
High Low
---- ---
Quarter ended March 31, 2004 $1.10 $0.13
Quarter ended June 30, 2004 0.99 0.36
Quarter ended September 30, 2004 0.59 0.17
Quarter ended December 31, 2004 0.74 0.26
9
2003
----
High Low
---- ---
Quarter ended March 31, 2003 $0.38 $0.12
Quarter ended June 30, 2003 0.80 0.06
Quarter ended September 30, 2003 0.49 0.19
Quarter ended December 31, 2003 0.29 0.14
FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OFFER
The following is a summary of the material U.S. federal income tax
consequences relating to:
o the exchange of 2000 Warrants for Exchange Warrants; and
o the ownership, disposition, redemption and expiration of the
Exchange Warrants.
This summary is based on provisions of the U.S. Internal Revenue Code of
1986, or the Code, Treasury regulations promulgated under the Code,
administrative rulings, and judicial interpretations of the Code, as of the date
hereof, all of which are subject to change, possibly retroactively. This summary
is limited to U.S. Holders (as defined below) that are entitled to exchange 2000
Warrants for the Exchange Warrants pursuant to the Exchange Offer. This summary
does not address all aspects of U.S. federal income taxation that may be
important to you in light of your individual circumstances, such as, for
example, if you are an investor subject to special tax rules (e.g., if you are a
bank, thrift, real estate investment trust, regulated investment company,
insurance company, dealer in securities or currencies, a person who acquired the
2000 Warrants as compensation, an expatriate or a tax-exempt investor) or if you
would hold the 2000 Warrant or Exchange Warrant or would hold a share of Common
Stock acquired as a result of an exercise of the Exchange Warrant as a position
in a "straddle," as part of a "synthetic security" or "hedge," as part of a
"conversion transaction" or other integrated investment, or as other than a
capital asset. In addition, this summary does not address any aspect of state,
local or foreign taxation.
For purposes of this summary, a "U.S. Holder" means a beneficial owner of
the 2000 Warrants or Exchange Warrants or shares of Common Stock received upon
exercise of Exchange Warrants, as the case may be, who is the owner of record
thereof and is for U.S. federal income tax purposes:
o an individual who is a citizen or resident of the United States;
o a corporation, or other entity taxable as a corporation that is
created or organized in the United States or under the laws of
the United States or any state thereof (including the District of
Columbia);
o an estate the income of which is includible in gross income for
U.S. federal income tax purposes regardless of its source; or
o a trust if a court within the United States is able to exercise
primary supervision over the administration of such trust and one
or more United States persons have the authority to control all
substantial decisions of such trust.
If a partnership (including any entity treated as a partnership for U.S.
federal income tax purposes) holds the 2000 Warrants or Exchange Warrants, the
U.S. federal income tax treatment of a partner in such partnership will
generally depend upon the status of the partner and the activities of the
partnership.
10
No ruling has been sought from the Internal Revenue Service with respect to
any of the tax consequences discussed below. The IRS could challenge some or all
of the tax consequences described below or a court could sustain such a
challenge.
Because the tax characterization and treatment of the exchange of 2000
Warrants for Exchange Warrants is unclear, you are urged to consult with your
own tax advisor regarding how you should characterize and treat the exchange of
2000 Warrants for Exchange Warrants under federal, state, local and foreign tax
laws applicable to you. You are also urged to consult with your own tax advisor
regarding the particular tax consequences to you of the offer to exchange and
the ownership, disposition, redemption and expiration of the Exchange Warrants
in light of your particular tax situation and under federal, state, local and
foreign tax laws applicable to you.
Exchange of 2000 Warrants for Exchange Warrants
The tax treatment of a U.S. Holder's exchange of a 2000 Warrant for an
Exchange Warrant is unclear. The exchange could be treated as a tax-free
recapitalization, a partly tax-free and partly taxable transaction or as a
taxable sale or exchange.
If the exchange of the Exchange Warrant for the 2000 Warrant is treated as
a tax-free recapitalization, the U.S. Holder will not recognize taxable income
for U.S. federal income tax purposes as a result of such exchange; the tax basis
of the U.S. Holder in the Exchange Warrant will be the same as the U.S. Holder's
tax basis in the 2000 Warrant; and the holding period of the U.S. Holder in the
Exchange Warrant will include the holding period of the U.S. Holder in the 2000
Warrant.
The exchange of the 2000 Warrant for the Exchange Warrant could be treated
as a partly tax-free and partly taxable transaction under various
characterizations. For example, under one possible characterization of the
exchange, the U.S. Holder could have capital gain or loss in an amount equal to
the difference between (1) the excess, if any, of the value of the Exchange
Warrant over the value of the 2000 Warrant, and (2) the portion of the basis in
the 2000 Warrant that is attributable to that excess value. In that case, any
gain or loss recognized by the U.S. Holder could be long-term capital gain or
loss if the U.S. Holder has held the 2000 Warrant for more than one year. In
addition, the tax basis of the U.S. Holder in the Exchange Warrant could equal
the sum of (1) the portion of the basis in the 2000 Warrant that is not
attributable to that excess value, and (2) the amount of that excess value. The
holding period of the U.S. Holder in the Exchange Warrant could include the
holding period of the U.S. Holder in the 2000 Warrant with respect to the
portion of the Exchange Warrant that is not attributable to that excess value
and could begin on the day of the exchange with respect to the portion of the
Exchange Warrant that is attributable to that excess value.
If the exchange of the 2000 Warrant for the Exchange Warrant is treated as
a taxable sale or exchange, the U.S. Holder will recognize taxable gain or loss
for U.S. federal income tax purposes. In that case, such taxable gain or loss
will be equal to the difference between the fair market value of the Exchange
Warrant on the date of the exchange of the Exchange Warrant and the U.S.
Holder's tax basis in its 2000 Warrant. In addition, the U.S. Holder's tax basis
in the Exchange Warrant will be equal to the fair market value of the Exchange
Warrant on the date of the exchange. The U.S. Holder's holding period in the
Exchange Warrant will commence on the day after the exchange. Any gain or loss
recognized by the U.S. Holder generally will be long-term capital gain or loss
if the U.S. Holder has held the 2000 Warrant for more than one year. The
deductibility of capital losses is subject to limitations.
Ownership, Disposition, Redemption and Expiration of Exchange Warrants
The U.S. Holder generally will recognize gain or loss on the sale, exchange
or redemption of an Exchange Warrant, measured by the difference between the
amount realized from the sale, exchange or redemption of the Exchange Warrant,
and the tax basis of the Exchange Warrant. Any gain or loss generally will be
capital gain or loss and will be long-term if the U.S. Holder's holding period
of the Exchange Warrant exceeds one year at the time of the sale or exchange.
11
The U.S. Holder generally will not recognize taxable income on receipt of
shares of Common Stock upon the exercise of the Exchange Warrants, except to the
extent cash is received in lieu of a fractional share of Common Stock. Such U.S.
Holder's tax basis in the shares of Common Stock so acquired will be equal to
the sum of the tax basis and exercise price of the Exchange Warrants so
exercised, less the portion of such tax basis, if any, allocable to any
fractional share of Common Stock for which cash is received. The holding period
of a share of Common Stock so acquired generally will begin with the date on
which the Exchange Warrant is exercised.
Any U.S. Holder who receives cash in lieu of acquiring a fractional share
of Common Stock upon the exercise of the Exchange Warrants generally will
recognize gain or loss in an amount equal to the difference between the amount
of cash received and the U.S. Holder's allocable tax basis in the fractional
interest for which cash was received. Any gain or loss generally will be capital
gain or loss and will be long-term if the U.S. Holder's holding period in the
Exchange Warrant exceeds one year at the time of the receipt of cash.
If the U.S. Holder's Exchange Warrants have not been previously redeemed
and expire in accordance with their terms without payment, the U.S. Holder will
recognize a loss equal to the amount of the tax basis of the Exchange Warrants.
Such expiration will be deemed a sale or exchange as of the expiration date and
the loss, if any, will be a capital loss. Such capital loss will be a long-term
capital loss if the U.S. Holder's holding period in the Exchange Warrant exceeds
one year at the time of expiration.
Adjustments to the Exercise Price
Some adjustments to the exercise price of the Exchange Warrants may result
in a deemed distribution taxable to U.S. Holders of Exchange Warrants if the
adjustments have the effect of increasing the U.S. Holder's proportionate
interest in the earnings and profits or assets of the Company.
EXCHANGE AGENT
American Stock Transfer & Trust Company is the exchange agent for the
Exchange Offer and also the Warrant Agent for the Exchange Warrants. American
Stock Transfer & Trust Company is also the transfer agent for the Company's
Common Stock.
Any holder of 2000 Warrants who has questions concerning the Exchange Offer
may contact the Exchange Agent at the following address:
American Stock Transfer &Trust Company
6201 15th Avenue
Brooklyn, New York 11219
(800) 937-5549
12
LETTER OF TRANSMITTAL
DELCATH SYSTEMS, INC
OFFER TO EXCHANGE
REDEEMABLE COMMON STOCK PURCHASE WARRANTS EXPIRING OCTOBER 18, 2005
FOR
2005 REDEEMABLE COMMON STOCK PURCHASE WARRANTS - SERIES A
EXPIRING DECEMBER 31, 2005
By Registered or Certified Mail, By Overnight
Courier or By Hand
American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, New York 11219
Delivery of this instrument to an address other than as set forth above
will not constitute a valid delivery. The instructions accompanying this Letter
of Transmittal should be read carefully before this Letter of Transmittal is
completed.
The undersigned hereby acknowledges receipt of the Offer to Exchange dated
June 23, 2005 (the "Offer to Exchange") of Delcath Systems, Inc. (the "Company")
and this Letter of Transmittal, which together constitute the Company's offer
(the "Exchange Offer") to exchange all of its Redeemable Common Stock Purchase
Warrants that were issued in conjunction with its public offering in 2000 (the
"2000 Warrants") for new 2005 Redeemable Common Stock Purchase Warrants - Series
A (Expiring December 31, 2005) (the "Exchange Warrants"). The term "Expiration
Date" shall mean 5:00 p.m., New York City time, on August 15, 2005, unless the
Company, in its sole discretion, extends the Exchange Offer, in which case
"Expiration Date" shall mean such date as so extended.
YOUR BANK OR BROKER CAN ASSIST YOU IN COMPLETING THIS FORM. THE
INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THIS LETTER OF
TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE AGENT. YOU MAY CONTACT THE EXCHANGE
AGENT AT (800) 937-5449.
List below the 2000 Warrants to which this Letter of Transmittal relates.
If the space indicated below is inadequate, the Certificate Numbers and the
number of shares that would be acquired upon exercise should be listed on a
separately signed schedule affixed hereto. Partial tenders of 2000 Warrants
represented by a certificate will not be accepted.
- --------------------------------------------------------------------------------
DESCRIPTION OF 2000 WARRANTS TENDERED HEREBY
- --------------------------------------------------------------------------------
Number of 2000
Warrants
Name(s) and Address(es) of Registered Owner(s) Certificate Represented by
(Please fill in) Number(s) Certificate
- -----------------------------------------------------------------------------------------------
------------ ----------------
------------ ----------------
- -----------------------------------------------------------------------------------------------
This Letter of Transmittal is to be used if certificates representing 2000
Warrants are forwarded herewith.
The term "Holder" with respect to the Exchange Offer means any person in
whose name 2000 Warrants are registered on the books of the Company or any other
person who has obtained a properly completed transfer document from the
registered holder. The undersigned has completed, executed and delivered this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer. Holders who wish to tender their 2000
Warrants for exchange must complete this letter in its entirety.
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the 2000 Warrants indicated above.
Subject to, and effective upon, the acceptance for exchange of such 2000
Warrants tendered hereby, the undersigned hereby exchanges, assigns and
transfers to, or upon the order of, the Company all right, title and interest in
and to such 2000 Warrants as are being tendered hereby. The undersigned hereby
irrevocably constitutes and appoints the Exchange Agent the true and lawful
agent and attorney-in-fact of the undersigned (with full knowledge that said
Exchange Agent acts as the agent of the Company in connection with the Exchange
Offer) to cause the 2000 Warrants to be assigned, transferred and exchanged. The
undersigned represents and warrants that it has full power and authority to
tender, exchange, assign and transfer the 2000 Warrants and to acquire the
Exchange Warrants issuable upon the exchange of such tendered 2000 Warrants, and
that, when the same are accepted for exchange, the Company will acquire good and
unencumbered title to the tendered 2000 Warrants, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim.
If the undersigned or the person receiving the Exchange Warrants covered by
this letter is an affiliate (as defined under Rule 405 of the Securities Act) of
the Company, the undersigned represents to the Company that the undersigned
understands and acknowledges that such Exchange Warrants may not be offered for
resale, resold or otherwise transferred by the undersigned or such other person
without registration under the Securities Act or an exemption therefrom.
The undersigned also warrants that it will, upon request, execute and
deliver any additional documents deemed by the Exchange Agent or the Company to
be necessary or desirable to complete the exchange, assignment and transfer of
tendered 2000 Warrants.
The Exchange Offer is subject to certain conditions set forth in the Offer
to Exchange. The undersigned recognizes that as a result of these conditions
(which may be waived, in whole or in part, by the Company), as more particularly
set forth in the Offer to Exchange, the Company may not be required to exchange
any of the 2000 Warrants tendered hereby and, in such event, the 2000 Warrants
not exchanged will be returned to the undersigned at the address shown below the
signature of the undersigned.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned and every obligation of the undersigned
hereunder shall be binding upon the heirs, personal representatives, successors
and assigns of the undersigned. Tendered 2000 Warrants may be withdrawn at any
time prior to the Expiration Date or, if not yet accepted for exchange, after 40
business days from the date of the Offer to Exchange.
Unless otherwise indicated in the box entitled "Special Registration
Instructions" or the box entitled "Special Delivery Instructions" in this Letter
of Transmittal, certificates for all Exchange Warrants delivered in exchange for
tendered 2000 Warrants will be registered in the name of the undersigned and
shall be delivered to the undersigned at the address shown below the signature
of the undersigned. If an Exchange Warrant is to be issued to a person other
than the person(s) signing this Letter of Transmittal, or if the Exchange
Warrant is to be mailed to someone other than the person(s) signing this Letter
of Transmittal or to the person(s) signing this Letter of Transmittal at an
address different than the address shown on this Letter of Transmittal, the
appropriate boxes of this Letter of Transmittal should be completed. If 2000
Warrants are surrendered by Holder(s) that have completed either the box
entitled "Special Registration Instructions" or the box entitled "Special
Delivery Instructions" in this Letter of Transmittal, signature(s) on this
Letter of Transmittal must be guaranteed by an Eligible Institution (defined in
Instruction 2).
2
- --------------------------------------------------------------------------------
SPECIAL REGISTRATION INSTRUCTIONS
To be completed ONLY if the Exchange Warrants are to be issued in the name
of someone other than the undersigned.
Name:
---------------------------------------
Address:
---------------------------------------
Employer Identification
or Social Security Number:
---------------------------------------
(Please print or type)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
To be completed ONLY if the Exchange Warrants are to be sent to someone
other than the undersigned, or to the undersigned at an address other than that
shown under "Description of Warrants Tendered Hereby."
Name:
---------------------------------------
Address:
---------------------------------------
Employer Identification
or Social Security Number:
---------------------------------------
(Please print or type)
- --------------------------------------------------------------------------------
REGISTERED HOLDER(S) OF 2000 WARRANTS SIGN HERE
(IN ADDITION, COMPLETE SUBSTITUTE FORM W-9 BELOW)
------------------------------------------------------------
------------------------------------------------------------
Must be signed by registered holder(s) exactly as name(s) appear(s) on the
tendered 2000 Warrants or on a security position listing as the owner or the
tendered 2000 Warrants or by person(s) authorized to become registered holder(s)
by properly completed warrant powers transmitted herewith. If signature is by
attorney-in-fact, trustee, executor, administrator, guardian, officer of a
corporation or other person acting in a fiduciary capacity, please provide the
following information:
3
(Please print or type)
---------------------------------------------------------
Name and capacity (full title)
---------------------------------------------------------
Address (including zip code)
---------------------------------------------------------
(Area Code and Telephone Number)
---------------------------------------------------------
(Taxpayer Identification or Social Security Number)
Dated: _______________________, 2005
SIGNATURE GUARANTEE
(IF REQUIRED -- SEE INSTRUCTION 4)
---------------------------------------------------------
(Signature of Representative of Signature Guarantor)
---------------------------------------------------------
(Name and Title)
---------------------------------------------------------
(Name of Firm)
---------------------------------------------------------
(Area Code and Telephone Number)
Dated: _______________________, 2005
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES. All physically
delivered 2000 Warrants, as well as a properly completed and duly executed copy
of this Letter of Transmittal or facsimile hereof, and any other documents
required by this Letter of Transmittal, must be received by the Exchange Agent
at its address set forth herein on or prior to the Expiration Date (as defined
in the Offer to Exchange). The method of delivery of this Letter of Transmittal,
the 2000 Warrants and any other required documents is at the election and risk
of the Holder, and, except as otherwise provided below, the delivery will be
deemed made only when actually received by the Exchange Agent. If such delivery
is by mail, it is suggested that registered mail with return receipt requested,
properly insured, be used.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders, by execution of this Letter of Transmittal (or
facsimile hereof), shall waive any right to receive notice of the acceptance of
the 2000 Warrants for exchange.
Delivery to an address other than as set forth herein will not constitute a
valid delivery.
4
2. GUARANTEED DELIVERY PROCEDURES. Holders who wish to tender their 2000
Warrants, but whose 2000 Warrants are not immediately available and thus cannot
deliver their 2000 Warrants, the Letter of Transmittal or any other required
documents to the Exchange Agent prior to the Expiration Date, may effect a
tender if:
(a) the tender is made through a member firm of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
a commercial bank or trust company having an office or correspondent in the
United States or an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act (an "Eligible Institution"); and
(b) prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of Guaranteed
Delivery (by facsimile transmission, mail or hand delivery) setting forth the
name and address of the Holder, the registration number(s) of such 2000
Warrants, stating that the tender is being made thereby and guaranteeing that,
within three New York Stock Exchange trading days after the Expiration Date, the
Letter of Transmittal (or facsimile thereof), together with the 2000 Warrants
and any other documents required by the Letter of Transmittal, will be deposited
by the Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as all tendered 2000 Warrants in proper form for
transfer and all other documents required by the Letter of Transmittal, are
received by the Exchange Agent within three New York Stock Exchange trading days
after the Expiration Date.
3. PARTIAL TENDERS NOT PERMITTED; WITHDRAWAL. A holder of 2000 Warrants may
not tender fewer than all of the 2000 Warrants represented by a certificate.
Partial tenders will not be accepted.
All 2000 Warrants tendered pursuant to the Exchange Offer may be withdrawn
at any time prior to the Expiration Date or, if not yet accepted for exchange,
after 40 business days from the date of the Offer to Exchange.
4. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed
by the registered Holder(s) of the 2000 Warrants tendered hereby, the signature
must correspond with the name(s) as written on the face of the certificates
without alteration or enlargement or any change whatsoever. If this Letter of
Transmittal is signed by a participant in the Depository, the signature must
correspond with the name as it appears on the security position listing as the
owner of the 2000 Warrants.
If any of the 2000 Warrants tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.
If 2000 Warrants registered in different names are tendered, it will be
necessary to complete, sign and submit as many separate copies of this Letter of
Transmittal as there are different registrations of 2000 Warrants.
Signatures on this Letter of Transmittal must be guaranteed by an Eligible
Institution unless the 2000 Warrants tendered hereby are tendered (i) by a
registered Holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution.
If this Letter of Transmittal is signed by the registered Holder or Holders
of 2000 Warrants (which term, for the purposes described herein, shall include a
participant in the Depository whose name appears on a security position listing
as the owner of 2000 Warrants) listed and tendered hereby, no endorsements of
the tendered 2000 Warrants or separate written instruments of transfer or
exchange are required. In any other case, the registered Holder (or acting
Holder) must either properly endorse the 2000 Warrants or transmit properly
completed transfer documents with this Letter of Transmittal (in either case,
executed exactly as the name(s) of the registered Holder(s) appear(s) on the
2000 Warrants, and, with respect to a participant in the Depository whose name
appears on a security position listing as the owner of 2000 Warrants, exactly as
the name of the participant appears on such security position listing), with the
signature on the 2000 Warrants or
5
transfer documents guaranteed by an Eligible Institution (except where the 2000
Warrants are tendered for the account of an Eligible Institution).
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons should so
indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority so to act must be submitted.
5. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS. Tendering Holders should
indicate, in the applicable box, the name and address (or account at the
Depository) in which the Exchange Warrants are to be issued (or deposited), if
different from the names and addresses or accounts of the person signing this
Letter of Transmittal. In the case of issuance in a different name, the employer
identification number or social security number of the person named must also be
indicated and the tendering Holder should complete the applicable box.
If no instructions are given, the Exchange Warrants will be issued in the
name of and sent to the acting Holder of the 2000 Warrants or deposited at such
Holder's account at the Depository.
6. WAIVER OF CONDITIONS. The Company reserves the right, in its reasonable
judgment, to waive, in whole or in part, any of the conditions to the Exchange
Offer set forth in the Offer to Exchange.
7. MUTILATED, LOST, STOLEN OR DESTROYED WARRANT CERTIFICATES. Any Holder
whose certificates representing 2000 Warrants have been mutilated, lost, stolen
or destroyed should contact the Exchange Agent at the address indicated above
for further instructions.
8. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
procedure for tendering as well as requests for additional copies of the Offer
to Exchange and this Letter of Transmittal may be directed to the Exchange Agent
at the address set forth above. In addition, questions relating to the Exchange
Offer, as well as requests for assistance or additional copies of the Offer to
Exchange and this Letter of Transmittal, may be directed to Delcath Systems,
Inc., 1100 Summer Street, 3rd Floor, Stamford, Connecticut 06905, Attention:
Chief Financial Officer; telephone (203) 323-8668.
9. VALIDITY AND FORM. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance of tendered 2000 Warrants will be
determined by the Company in its sole discretion, which determination will be
final and binding. The Company reserves the absolute right to reject any and all
2000 Warrants not properly tendered or any 2000 Warrants the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right, in its reasonable judgment, to
waive any defects, irregularities or conditions of tender as to particular 2000
Warrants. The Company's interpretation of the terms and conditions of the
Exchange Offer (including the instructions in this Letter of Transmittal) will
be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of 2000 Warrants must be cured within
such time as the Company shall determine. Although the Company intends to notify
Holders of defects or irregularities with respect to tenders of 2000 Warrants,
neither the Company, the Exchange Agent nor any other person shall incur any
liability for failure to give such notification. Tenders of 2000 Warrants will
not be deemed to have been made until such defects or irregularities have been
cured or waived. Any 2000 Warrants received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering Holder
as soon as practicable following the Expiration Date.
IMPORTANT TAX INFORMATION
Under federal income tax law, a Holder tendering 2000 Warrants is required
to provide the Exchange Agent with such Holder's correct TIN on Substitute Form
W-9 below. If such Holder is an individual, the TIN is the Holder's social
security number. The Certificate of Awaiting Taxpayer Identification Number
should be completed if the tendering Holder has not been issued a TIN and has
applied for a number or intends to apply for a number in the near future. If the
Exchange Agent is not provided with the correct TIN, the Holder may be subject
to a $50 penalty imposed by the Internal Revenue Service. In addition, payments
that are made to such Holder with respect to tendered 2000 Warrants may be
subject to backup withholding.
6
Certain Holders (including, among others, all domestic corporations and
certain foreign individuals and foreign entities) are not subject to these
backup withholding and reporting requirements. Such a Holder, who satisfies one
or more of the conditions set forth in Part 2 of the Substitute Form W-9 should
execute the certification following such Part 2. In order for a foreign Holder
to qualify as an exempt recipient, that Holder must submit to the Exchange Agent
a properly completed Internal Revenue Service Form W-8, signed under penalties
of perjury, attesting to that Holder's exempt status. Such forms can be obtained
from the Exchange Agent.
If backup withholding applies, the Exchange Agent is required to withhold
28% of any amounts otherwise payable to the Holder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9. To prevent backup withholding on payments
that are made to a Holder with respect to 2000 Warrants tendered for exchange,
the Holder is required to notify the Exchange Agent of his or her correct TIN by
completing the form herein certifying that the TIN provided on Substitute Form
W-9 is correct (or that such Holder is awaiting a TIN) and that (i) such Holder
is exempt from backup withholding, (ii) such Holder has not been notified by the
Internal Revenue Service that he or she is subject to backup withholding as a
result of failure to report all interest or dividends or (iii) the Internal
Revenue Service has notified such Holder that he or she is no longer subject to
backup withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT. Each Holder is required to give the
Exchange Agent the social security number or employer identification number of
the record Holder(s) of the 2000 Warrants. If 2000 Warrants are in more than one
name or are not in the name of the actual Holder, consult the instructions on
Internal Revenue Service Form W-9, which may be obtained from the Exchange
Agent, for additional guidance on which number to report.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER. If the tendering
Holder has not been issued a TIN and has applied for a number or intends to
apply for a number in the near future, write "Applied For" in the space for the
TIN on Substitute Form W-9, sign and date the form and the Certificate of
Awaiting Taxpayer Identification Number and return them to the Exchange Agent.
If such certificate is completed and the Exchange Agent is not provided with the
TIN within 60 days, the Exchange Agent will withhold 28% of all payments made
thereafter until a TIN is provided to the Exchange Agent.
IMPORTANT: This Letter of Transmittal or a facsimile hereof (together with
2000 Warrants) or a Notice of Guaranteed Delivery must be received by the
Exchange Agent on or prior to the Expiration Date.
7
PAYOR'S NAME: AMERICAN STOCK TRANSFER & TRUST COMPANY, AS EXCHANGE AGENT
- --------------------------------------------------------------------------------
SUBSTITUTE Part 1. PLEASE PROVIDE YOUR TIN IN
Form W-9 THE BOX AT RIGHT AND CERTIFY BY ______________________
DEPARTMENT OF THE TREASURY SIGNING AND DATING BELOW Social Security Number
INTERNAL REVENUE SERVICE
OR
PAYOR'S REQUEST FOR TAXPAYER ______________________
IDENTIFICATION NUMBER ("TIN") Employer Identification
Number
- ---------------------------------------------------------------------------------------------------------
Part 2. Check the box if you are not subject to backup withholding under the Part 3. Awaiting
provisions of Section 3406(a)(1)(C) of the Internal Revenue Code because (1) you
are exempt from backup withholding, (2) you have not been notified that you are TIN[___]
subject to backup withholding as a result of failure to report all interest or
dividends or (3) the Internal Revenue Service has notified you that you are no
longer subject to backup withholding. [____]
- --------------------------------------------------------------------------------------------------------
The IRS does not require your consent to any provision of this document other
than the certifications required to avoid backup withholding.
Certification: Under penalties of perjury, I certify that the information
provided on this form is true, correct and complete.
Signature _____________________________ Date _______________________
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 28% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
EXCHANGE OFFER. PLEASE REVIEW THE GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9, COPIES OF
WHICH MAY BE OBTAINED FROM THE EXCHANGE AGENT, FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE
BOX IN PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of payment, 28%
of all reportable payments made to me will be withheld until I provide a number,
but will be refunded if I provide a certified taxpayer identification number
within 60 days.
Signature _____________________________ Date _______________________
8
DELCATH SYSTEMS, INC.
OFFER TO EXCHANGE
July 13, 2005
To: Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees:
Delcath Systems, Inc. (the "Issuer") is offering, upon the terms and
conditions set forth in the offer to exchange dated July 13, 2005 and a letter
of transmittal relating to exchange one of its new Redeemable Common Stock
Purchase Warrants - Series A for each of its outstanding Redeemable Common Stock
Purchase Warrants issued upon consummation of its initial public offering in
2000 (the "2000 Warrants"). The offer to exchange is being made in light of the
recent trading prices of the Issuer's common stock and the Issuer's anticipated
need for additional capital to continue development of its product.
We are requesting that you contact your clients for whom you hold 2000
Warrants and inform them of the exchange offer. For your information and for
forwarding to your clients for whom you hold 2000 Warrants registered in your
name or in the name of your nominees, or who hold 2000 Warrants registered in
their own names, we are enclosing the following documents:
1. the offer to exchange;
2. the letter of transmittal for your use and for the information of
your clients;
3. a notice of guaranteed delivery to be used to accept the exchange
offer if certificates for 2000 Warrants are not immediately available or
time will not permit all required documents to reach the exchange agent
prior to the time the exchange offer expires, or if the procedures for
book-entry transfer cannot be completed on a timely basis; and
4. a form of letter which may be sent to your clients for whose
accounts you hold 2000 Warrants registered in your name or in the name of
your nominee, with space provided for obtaining such clients' instructions
with regard to the exchange offer.
Your prompt action is requested. The exchange offer will expire at 5:00
p.m., New York City time, on August 15, 2005, unless we extend the offer beyond
that date. You may withdraw 2000 Warrants that have been tendered pursuant to
the exchange offer at any time before the exchange offer expires or after 40
business days from the date hereof.
To participate in the exchange offer, you should carefully read and follow
the instructions set forth in the letter of transmittal and the offer to
exchange.
If the holders of 2000 Warrants wish to tender, but it is impracticable for
them to forward their certificates for 2000 Warrants prior to the expiration of
the exchange offer or to comply with the book-entry transfer procedures on a
timely basis, they may tender the 2000 Warrants by following the guaranteed
delivery procedures described in the Notice of Guaranteed Delivery and in
Instruction 2 to the Letter of Transmittal.
The Issuer will not pay any fees or commissions to brokers, dealers or
other persons for soliciting exchanges of 2000 Warrants pursuant to the exchange
offer. The Issuer will, however, upon request, reimburse you for customary
clerical and mailing expenses incurred by you in forwarding any of the enclosed
materials to your clients.
You may direct any questions and requests for assistance with respect to
the exchange offer or for additional copies of the offer to exchange, letter of
transmittal and other enclosed materials to the exchange agent at its address
and telephone number set forth on the front of the letter of transmittal.
Nothing contained in this letter or in the enclosed documents shall
constitute you or any other person an agent of the Issuer, the exchange agent,
or any affiliate of either of them, or authorize you or any other person to make
any statements or use any documents on behalf of any of them in connection with
the exchange offer other than the enclosed documents and the statements
contained therein.
Very truly yours,
DELCATH SYSTEMS, INC.
DELCATH SYSTEMS, INC.
OFFER TO EXCHANGE
July 13, 2005
To Our Clients:
We are enclosing for your consideration an offer to exchange dated July
13, 2005 and a letter of transmittal relating to the offer by Delcath Systems,
Inc. (the "Issuer") to exchange one of its new 2005 Redeemable Common Stock
Purchase Warrants - Series A for each of its outstanding Redeemable Common Stock
Purchase Warrants issued upon consummation of its initial public offering in
2000 (the "2000 Warrants"). The offer to exchange is being made in light of the
recent trading prices of the Issuer's common stock and the Issuer's anticipated
need for additional capital to continue the development of its product.
We are forwarding these materials to you as the beneficial owner of 2000
Warrants held by us for your account or benefit but not registered in your name.
An exchange of your 2000 Warrants may only be completed by us as the holder of
record and pursuant to your instructions. The letter of transmittal is furnished
to you for your information only. You may not use the letter of transmittal to
exchange 2000 Warrants that we hold for your account or benefit.
Accordingly, we request that you provide instructions as to whether you
wish us to exchange any or all 2000 Warrants held by us for your account or
benefit pursuant to the terms and conditions set forth in the offer to exchange
and the letter of transmittal. Your instructions should be forwarded to us as
promptly as possible in order to permit us to tender the 2000 Warrants on your
behalf in accordance with the provisions of the exchange offer.
We direct your attention to the following:
1. The exchange offer is for the exchange of one 2005 Redeemable
Common Stock Purchase Warrant - Series A (the "Exchange Warrants") for each
2000 Warrant. The terms of the Exchange Warrants are identical in all
material respects to the terms of the notes, except that:
o the exercise price per share of the Exchange Warrants will
be $2.75 per share;
o the expiration date for the Exchange Warrants will be
December 31, 2005;
o the Issuer will have the right to redeem the Exchange at any
time without regard to the market value of its Common Stock
at the time of redemption;
o the Issuer could redeem the Exchange Warrants at a time when
exercise would not be permitted because there is no
effective registration statement under the Securities Act of
1933 covering the offer and sale of shares on exercise of
the Exchange Warrants;
o the Issuer's right to redeem the Exchange Warrants would not
require the written consent of the managing underwriter of
the Issuer's 2000 public offering (which is no longer
conducting business); and
o the managing underwriter of the Issuer's initial public
offering (which is no longer conducting business) would not
be a party to the Warrant Agreement relating to the Exchange
Warrants.
2. The exchange offer and withdrawal rights will expire at 5:00 p.m.,
New York City time, on August 15, 2005, unless the Issuer extends the offer
beyond that date. Any 2000 Warrants tendered pursuant to the exchange offer
may be withdrawn at any time before the exchange offer expires or after 40
business days from the date hereof.
3. Any transfer taxes incident to the transfer of 2000 Warrants from
the tendering holder to the Issuer will be paid by the Issuer, except as
otherwise provided in the offer to exchange and the letter of transmittal.
If you wish us to tender your 2000 Warrants, please so instruct us by
completing, executing and returning to us the instruction included with this
letter. An envelope to return your instructions to us is enclosed.
The exchange offer is not being made to, nor will exchanges be accepted
from on or behalf of, holders of 2000 Warrants residing in any jurisdiction in
which the making of the exchange offer or acceptance thereof would not be in
compliance with the laws of such jurisdiction.
None of the 2000 Warrants held by us for your account will be tendered
unless we receive written instructions from you to do so. Unless a specific
contrary instruction is given in the space provided, your signature or
signatures on the instructions shall constitute an instruction to us to tender
all the 2000 Warrants held by us for your account.
INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFER
We acknowledge receipt of your letter and the material accompanying the
letter relating to the exchange offer being made by Delcath Systems, Inc. with
respect to its 2000 Warrants.
This will instruct you as to the action to be taken by you relating to the
exchange offer with respect to the 2000 Warrants held by you for our account.
The aggregate number of 2000 Warrants held by you for our account is
__________________.
With respect to the exchange offer, we instruct you (check appropriate
choice):
____To TENDER all 2000 Warrants held by you for our account.
____NOT to tender any 2000 Warrants held by you for our account.
If we instruct you to tender the 2000 Warrants held by you for our account,
it is understood that you are authorized:
(1) to make, on our behalf the representations and warranties
contained in the letter of transmittal that are to be made with respect to
us as a beneficial owner of 2000 Warrants, it being understood and agreed
that by our signature below we are making the same representations to you;
(2) to make such agreements, representations and warranties on our
behalf as are set forth in the letter of transmittal; and
(3) to take such other action as may be necessary under the exchange
offer or the letter of transmittal to effect the valid tender of such 2000
Warrants.
Unless a specific contrary instruction is given in the space provided, our
signature below shall constitute an instruction to you to tender all the 2000
Warrants held by you for our account.
Sign Here
Name of Beneficial Owner(s): __________________________________________________
Signature(s): _________________________________________________________________
Name(s) (Please Print): _______________________________________________________
Address: ______________________________________________________________________
________________________________________________________________________________
Area Code and Telephone Number: ________________________________________________
Taxpayer Identification or Social Security Number: ____________________________
Date: _________________________________________________________________________
NOTICE OF GUARANTEED DELIVERY
for
Tender of All Outstanding
Redeemable Common Stock Purchase Warrants Issued in 2000
in Exchange for
2005 Redeemable Common Stock Purchase Warrants - Series A
of
DELCATH SYSTEMS, INC.
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON AUGUST 15, 2005 (THE "EXPIRATION dATE") UNLESS EXTENDED BY DELCATH
SYSTEMS, iNC.
- --------------------------------------------------------------------------------
Registered holders of outstanding Redeemable Common Stock Purchase Warrants
(the "2000 Warrants") issued upon consummation of the initial public offering of
Delcath Systems, Inc. who wish to tender their 2000 Warrants in exchange for an
equal number of 2005 Redeemable Common Stock Purchase Warrants - Series A (the
"Exchange Warrants") and whose 2000 Warrants are not immediately available or
who cannot deliver their 2000 Warrants and Letter of Transmittal (and any other
documents required by the Letter of Transmittal) to American Stock Transfer &
Trust Company (the "Exchange Agent") prior to the Expiration Date, may use this
Notice of Guaranteed Delivery or one substantially equivalent hereto. This
Notice of Guaranteed Delivery may be delivered by hand or sent by facsimile
transmission (receipt confirmed by telephone and an original delivered by
guaranteed overnight courier) or mail to the Exchange Agent. See "The Exchange
Offer - Procedures for Tendering Outstanding Notes" and "The Exchange Offer -
Guaranteed Delivery Procedures" in the Offer to Exchange dated July 13, 2005
(the "Offer to Exchange").
The Exchange Agent is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
For Delivery by Registered or Certified Mail; Hand or Overnight Delivery:
American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, New York 11219
Fax: (718) 234-5501
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission via a facsimile transmission to a number other
than as set forth above will not constitute a valid delivery.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an Eligible Institution (as defined in the Offer to Exchange),
such signature guarantee must appear in the applicable space provided on the
Letter of Transmittal for Guarantee of Signatures.
Ladies and Gentlemen:
The undersigned hereby tenders the number of 2000 Warrants indicated below,
upon the terms and subject to the conditions contained in the Offer to Exchange,
receipt of which is hereby acknowledged.
- --------------------------------------------------------------------------------
Name(s) of Tendering Holder(s): ________________________________________________
(Please Print)
Address(es):
________________________________________________________________________________
________________________________________________________________________________
(Zip Code)
Daytime Area Code and Tel. No.
______________________________________________
Signature(s): __________________________________________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Number of 2000 Warrants:
________________________________________________________________________________
Certificate Nos. of 2000 Warrants Tendered (if available) ______________________
Number of Outstanding 2000 Warrants Tendered: __________________________________
(Check box if 2000 Warrants will be tendered by book-entry transfer) [__]
The Depository Trust Company
Account Number: ________________________________________________________________
Date: __________________________________________________________________________
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THE FOLLOWING GUARANTEE MUST BE COMPLETED
GUARANTEE OF DELIVERY
(Not to be Used for Signature Guarantee)
The undersigned, a member of a recognized signature guarantee medallion
program within the meaning of Rule 17Ad-15 under the Securities Exchange Act of
f1934, as amended, hereby guarantees to deliver to the Exchange Agent at its
address set forth above, the certificates representing the 2000 Warrants (or a
confirmation of book-entry transfer of such 2000 Warrants into the Exchange
Agent's account at the book-entry transfer facility), together with a properly
completed and duly executed Letter of Transmittal (or facsimile thereof), with
any required signature guarantees, and any other documents required by the
Letter of Transmittal within three New York Stock Exchange trading days after
the Expiration Date.
Name of Firm: _________________________ _______________________________________
(Authorized Signature)
Address: ______________________________ Title: ________________________________
_______________________________________ Name: _________________________________
(Zip Code) (Please type or print)
Area Code and Telephone No.:
______________________________________ Date: __________________________________
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NOTE: DO NOT SEND OUTSTANDING 2000 WARRANTS WITH THIS NOTICE OF GUARANTEED
DELIVERY. OUTSTANDING 2000 WARRANTS SHOULD BE SENT WITH YOUR LETTER OF
TRANSMITTAL.