UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 8, 2006
DELCATH SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 001-16133 06-1245881
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
1100 Summer Street, Stamford, StateConnecticut 06905
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 323-8668
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2 below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Section 1 - Registrant's Business and Operations
Item 1.01 Entry into a Material Definitive Agreement
Delcath Systems, Inc. (the "Company") reported on October 9, 2006, it
entered into a Settlement Agreement dated as of October 8, 2006 with Laddcap
Value Partners LP, a Delaware limited partnership; Laddcap Value Advisors LLC, a
Delaware limited liability company; Laddcap Value Associates LLC, a Delaware
limited liability company; affiliates of the foregoing; and Mr. Robert B. Ladd
(the "Settlement Agreement"). The Settlement Agreement is filed as Exhibit 10.1
hereto.
Details regarding the terms and conditions of the Settlement Agreement are
contained in the press release of the Company dated October 9, 2006, and filed
with this Current Report on Form 8-K as Exhibit 99, which is incorporated herein
by this reference.
Section 5 - Corporate Governance and Management
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officer; Compensatory Arrangements of Certain Officers.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) In accordance with the Settlement Agreement, on October 11, 2006, the
Company's Board of Directors (the "Board") elected Robert B. Ladd as a Class I
Director of the Company to serve until the 2007 Annual Meeting of Stockholders.
This election was made pursuant to the Settlement Agreement described in the
press release of the Company dated October 9, 2006, and filed with this Current
Report on Form 8-K as Exhibit 99, which is incorporated herein by this
reference.
The Board has not yet determined the Committees of the Board to which Mr.
Ladd will be appointed.
(e) Not applicable.
Section 9 - Financial Statements and Exhibits.
Item 9.01. Financial Statements and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) Exhibits:
Exhibit Description
10.1 Settlement Agreement, dated as of October 8, 2006, by and between
Delcath Systems, Inc., Laddcap Value Partners LP, Laddcap Value
Advisors LLC, Laddcap Value Associates LLC, any affiliates of any
of the foregoing, and Robert B. Ladd.
10.2 Delcath Systems, Inc. Change in Control Arrangement for
Directors.
99 Press Release dated October 9, 2006 of Delcath Systems, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DELCATH SYSTEMS, INC.
By: /s/ M. S. KOLY
-----------------------
M. S. Koly
President and Chief Executive
Officer
Date: October 12, 2006
EXHIBIT INDEX
Exhibit Description
10.1 Settlement Agreement, dated as of October 8, 2006, by and between
Delcath Systems, Inc., Laddcap Value Partners LP, Laddcap Value
Advisors LLC, Laddcap Value Associates LLC, any affiliates of any
of the foregoing, and Robert B. Ladd.
10.2 Delcath Systems, Inc. Change in Control Arrangement for
Directors.
99 Press Release dated October 9, 2006 of Delcath Systems, Inc.
EXECUTION COPY
SETTLEMENT AGREEMENT
SETTLEMENT AGREEMENT, dated as of October 8, 2006 (this "Agreement"), by
and between Delcath Systems, Inc., a Delaware corporation ("Delcath"), on the
one hand, and Laddcap Value Partners LP, a Delaware limited partnership, Laddcap
Value Advisors LLC, a Delaware limited liability company, Laddcap Value
Associates LLC, a Delaware limited liability company, any affiliates (as defined
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of
any of the foregoing, and Mr. Robert B. Ladd ("Ladd"), in his individual
capacity (collectively, "Laddcap," and together with Delcath, the "Parties"), on
the other hand.
WHEREAS, on June 27, 2006, Delcath announced, in response to concerns
raised by Delcath stockholders at Delcath's annual stockholders meeting, held on
June 13, 2006, plans to, among other things, expand its Board of Directors (the
"Board") to add two new independent directors;
WHEREAS, following this announcement, the Board promptly commenced an
extensive search and reviewed a number of qualified Board candidates;
WHEREAS, on July 27, 2006, Laddcap initiated a consent solicitation (the
"Consent Solicitation") to, among other things, remove the Board, including any
director elected after commencement of the Consent Solicitation, and replace
them with a new slate of nominees selected by Laddcap;
WHEREAS, on August 4, 2006, Delcath initiated litigation against Laddcap in
the United States District Court for the District of Columbia, which litigation
was subsequently transferred to the United States District Court for the
Southern District of New York (No. 06-CV-6420 (LAP)), alleging, among other
things, that Laddcap had violated various United States securities laws, and
which litigation was subsequently appealed to the United States Circuit Court of
Appeals for the Second Circuit (the "NY Litigation");
WHEREAS, on August 4, 2006, Delcath initiated litigation against Jonathan
A. Foltz ("Foltz") in the Connecticut Superior Court (Docket No.
CV-06-4009802-S), alleging, among other things, that Foltz misappropriated and
misused Delcath's intellectual property (the "CT Litigation");
WHEREAS, on September 21, 2006, the Board elected Harold S. Koplewicz to be
a new Class I member of the Board; and
WHEREAS, Delcath and Laddcap have each determined that it is in their
respective best interests and in the best interests of their stockholders and/or
investors, as applicable, that the Parties enter into a global settlement
involving (i) the Consent Solicitation, (ii) the NY Litigation and (iii) certain
other associated matters, as more fully set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual execution of this Agreement,
and the mutual covenants, agreements, promises, releases and representations set
forth herein, the Parties agree as follows:
1. Settlement of Consent Solicitation, Litigation and Related Matters
(a) Immediately after execution and delivery of this Agreement by the
Parties (the "Effective Time"), and without further action by the Parties, (i)
any and all written consents delivered to Delcath and/or its registered agent by
Laddcap in connection with the Consent Solicitation, including, but not limited
to, the written consents delivered on July 27, 2006 and September 25, 2006 (the
"Written Consents"), shall be deemed withdrawn, and (ii) the Consent
Solicitation shall be terminated and be deemed null and void, with the same
effect as if the Consent Solicitation had never been initiated. In addition, the
Parties will take all necessary action to seek and obtain an order from the
Honorable Judge Loretta A. Preska of the United States District Court for the
Southern District of New York declaring the Written Consents withdrawn and
considered null and void.
(b) As soon as practicable after the Effective Time, the Parties shall
cause their respective counsel to dismiss with prejudice the NY Litigation.
(c) Delcath shall no later than 9:30 a.m., New York City time, on Monday,
October 9, 2006, communicate an offer of settlement in the CT Litigation to
Foltz and to Foltz's counsel. The offer shall have the terms set forth on
Exhibit A hereto. The offer shall remain open to at least 5:30 p.m., New York
City time, Monday, October 9, 2006.
(d) On or prior to October 23, 2006, the Parties shall return or destroy
all materials (which includes any and all copies thereof) obtained pursuant to
any discovery order in the NY Litigation or pursuant to any request for
inspection of Delcath's books and records (collectively, the "Produced
Materials") and shall certify that the materials returned are all of the ever
existent copies of the Produced Materials ever in their possession, custody or
control (or in the possession, custody or control of the Parties' agents), or
shall similarly certify the destruction of the same.
(e) Any information obtained by any of the Parties relating to the other
party as a result, directly or indirectly, of such party's possession of the
Produced Materials (collectively, the "Confidential Information") shall be kept
confidential by the party receiving such Confidential Information (the
"Receiving Party") and shall not, directly or indirectly, be misappropriated,
disclosed, copied, used, reproduced, sold or made available to any third party
at any time without the express written consent of the party disclosing such
Confidential Information (the "Disclosing Party"). Notwithstanding the
foregoing, Confidential Information does not include information (i) that is or
becomes generally available to the public other than as a result of an act or
omission by the Receiving Party or as a result of the breach of this Agreement
by the Receiving Party, (ii) that the Receiving Party receives on a
non-confidential basis from a source other than the Disclosing Party or any of
its current or former officers, directors, employees, consultants, stockholders
or affiliates, provided that such source is not subject to a contractual, legal,
fiduciary or other obligation of confidentiality with respect to such
information or (iii) that the Receiving Party is required by applicable law to
disclose; provided, that, the Receiving Party promptly shall notify the
Disclosing Party in the event the Receiving Party is required by applicable law
to disclose any Confidential
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Information. The Parties further agree and covenant that (i) none of the Parties
shall disclose to any third party, directly or indirectly, any information
relating to the final or any intermediate tally of Written Consents, regardless
of the source of such information, (ii) each of the Parties shall cause their
respective agents and representatives to comply with such prohibition and (iii)
within three business days after the Effective Time, Laddcap shall cause all
Written Consents in its possession or under its control to be destroyed and will
provide a written certification to Delcath that such action has been taken.
2. Board Representation and Related Matters
(a) (i) Delcath shall obtain the resignation of Victor Nevins, which
resignation shall be effective within 10 business days after the Effective Time,
(ii) immediately following the Effective Time, the Board shall increase the
number of directors to seven (7) through the creation of a new Class I
directorship and appoint Ladd to such Class I directorship (the "Class I
Director") and (iii) within five business days after the Effective Time, (A)
Laddcap shall provide the Board with a list of five individuals (the "Candidate
List") whom Laddcap considers acceptable for appointment to the Board, and each
of whom is unaffiliated with, and not a "family member" (as such term is defined
in Rule 4200(a)(14) of the NASDAQ Manual) of, Laddcap and meets the standard for
"independence" set forth in Rule 4200(a)(15) of the NASDAQ Manual, (B) within 10
business days after receipt of the Candidate List, Delcath shall notify Laddcap
if one or more individuals listed on the Candidate List are reasonably
acceptable to Delcath and (C) if so, Delcath shall select such an individual
from the Candidate List and immediately thereafter, the Board shall elect such
individual as a Class II director of the Board (the "Class II Director");
provided, however, that if none of the individuals on the Candidate List are
reasonably acceptable to Delcath, the process described in clauses (A) and (B)
of this sentence shall be repeated as necessary until an individual who is
reasonably acceptable to Delcath is appointed as the Class II Director.
(b) Until the fifth anniversary of the Effective Time (the "Standstill
Period"), Delcath agrees to nominate the Class I Director and the Class II
Director for re-election to the Board provided that the 5% Ownership Threshold
(as defined below) is met with respect to the Class I Director and the 10%
Ownership Threshold (as defined below) is met with respect to the Class II
Director at the time that Delcath files a proxy statement in connection with the
annual meeting at which such director is up for re-election. In addition, if
either or both of the Class I Director and the Class II Director shall no longer
be able to serve as a Delcath director for any reason, Laddcap shall have the
right (and Delcath shall do all things reasonably necessary) to nominate
individuals to serve as the Class I Director and the Class II Director, and the
Board shall nominate such individuals to fill any vacancy caused by the
inability of either the Class I Director or the Class II Director to serve;
provided, however, that Laddcap's right to fill a vacancy of the Class II
Director is subject in all respects to Laddcap's ownership of Delcath common
stock, par value $0.01 per share (the "Common Stock"), remaining above the 10%
Ownership Threshold and Laddcap's right to fill a vacancy of the Class I
Director is subject in all respects to Laddcap's ownership of Common Stock
remaining above the 5% Ownership Threshold, as more fully set forth in Section
2(c) below. Any such individual selected by Laddcap to fill such a vacancy must
be reasonably acceptable to Delcath; provided, that Laddcap shall not select,
and the Board shall not be required to nominate, Foltz, Mr. Fred S. Zeidman
("Zeidman"), Dr. Michael Karpf, M.D. ("Karpf"), or Mr. Paul William Frederick
Nicholls ("Nicholls") to the Board. As a condition to the appointment of the
Class I Director and the Class II Director to serve on
3
the Board, Laddcap shall procure from each of the Class I Director and the Class
II Director such director's irrevocable resignation from the Board, effective
immediately upon Laddcap's ownership of Common Stock dropping below the 5%
Ownership Threshold and the 10% Threshold, respectively, which resignations the
Board can accept or reject in its sole discretion, and Laddcap further covenants
and agrees that it shall take all additional actions necessary to cause the
Class I Director and the Class II Director to resign from the Board upon
Laddcap's ownership of Common Stock dropping below the 5% Ownership Threshold
and the 10% Ownership Threshold, respectively.
(c) Notwithstanding anything to the contrary contained in this Section 2,
at any time during the Standstill Period, (i) if Laddcap's ownership of Common
Stock falls below 1,988,904 shares (which number shall be subject to adjustment
to the extent of any stock split or stock dividend) (the "10% Ownership
Threshold), then Laddcap's right to nominate any Class II Director shall
immediately terminate and without further action, the irrevocable resignation of
the Class II Director shall be deemed accepted, effective immediately, and, if
requested by the Board, Laddcap shall take all additional actions necessary to
cause the immediate resignation of the Class II Director and (ii) if Laddcap's
ownership of Common Stock falls below 994,452 shares (which number shall be
subject to adjustment to the extent of any stock split or stock dividend) (the
"5% Ownership Threshold), then Laddcap's right to nominate any Class I Director
shall immediately terminate and without further action, the irrevocable
resignation of the Class I Director shall be deemed accepted, effective
immediately, and, if requested by the Board, Laddcap shall take all additional
actions necessary to cause the immediate resignation of the Class I Director.
(d) It shall be a condition of this Agreement that the Class I Director and
the Class II Director (i) shall comply with all duly authorized lawful policies
and practices of the Board now in effect or hereinafter adopted and provided to
such directors, and (ii) shall provide Delcath with completed Directors' &
Officers' Questionnaires, in a form which Delcath shall provide and which form
of questionnaire Delcath ordinarily uses, within five business days after being
provided such questionnaire by Delcath after the execution of this Agreement and
annually thereafter during their terms of office, in accordance with Board
policy and practice as applicable to all directors.
(e) During the Standstill Period, Delcath covenants and agrees that it
shall not convene an annual, regular or special meeting of the Board or of any
committee of the Board on which either the Class I Director or the Class II
Director serves without providing advance notice, in accordance with Sections 3
and 4 of Article III of the Amended and Restated Bylaws of Delcath (the
"Bylaws"), of such meeting to, or obtaining a waiver thereof from, the
applicable director, and which notice, in any event and at a minimum, shall be
the same notice as provided to all directors and shall provide reasonable detail
of the purpose of the meeting.
(f) During the Standstill Period, one of the Class I Director or the Class
II Director shall be appointed to serve as a member of each of the nominating
committee, the compensation and stock option committee and the audit committee
of the Board so long as such director is willing to serve and meets any and all
qualifications for service on such committee and Laddcap's ownership of Common
Stock does not drop below the 5% Ownership Threshold.
4
(g) Except to the extent specifically provided in this Settlement
Agreement, the Class I Director and the Class II Director shall have the same
powers, protections, obligations and compensation as other directors, and shall
have the rights provided to directors under Delaware law.
3. Standstill Subject to the last paragraph of this Section 3 and except to
the extent specifically provided in Section 4 of this Agreement, Laddcap
covenants and agrees that until the expiration of the Standstill Period, unless
specifically requested in writing in advance by a majority of the Board,
excluding Ladd for as long as he is a director, neither Laddcap nor any of its
representatives will (and Laddcap and they will not assist, encourage or
participate with others to), directly or indirectly:
(a) acquire, announce an intention to acquire, offer, seek or propose to
acquire, or agree to acquire, directly or indirectly, by purchase, gift, tender
or exchange offer, or otherwise, beneficial or record ownership of any common
shares or any other voting securities of Delcath, including any rights,
warrants, options or other securities convertible into or exchangeable for
common shares or any other voting securities of Delcath from Delcath or third
parties;
(b) form, join or in any way participate in a "group" within the meaning of
Section 13(d)(3) of the Exchange Act with respect to the common shares or any
other voting securities of Delcath or otherwise act in concert with any Person
in respect of any such securities;
(c) arrange, or in any way participate in, any financing for the purchase
by any individual, corporation, partnership, limited liability company, limited
liability partnership, syndicate, person, trust, association, organization or
other entity, including any successor, by merger or otherwise, of any of the
foregoing (collectively, "Persons" and each, a "Person") of common shares or any
other voting securities or assets or businesses of Delcath or any of its
affiliates;
(d) join in or in any way participate in any pooling agreement, voting
trust or other arrangement or agreement with respect to the voting of any of
Delcath's voting securities;
(e) make, seek to propose or participate in making a proposal to Delcath or
any third party (by public announcement, submission to Delcath or a third party
or otherwise) in respect of any extraordinary corporate transaction involving
Delcath, its voting securities or any of its affiliates, including a merger,
reorganization, recapitalization, extraordinary dividend, dissolution,
restructuring, liquidation, sale or transfer of assets other than in the
ordinary course of Delcath's business, or the acquisition or purchase by Laddcap
or any other Person of all or any portion of the assets or capital stock of
Delcath, whether by merger, consolidation, tender or exchange offer or
otherwise;
(f) (i) solicit proxies or consents for the voting of any voting or other
securities of Delcath or otherwise become a "participant," directly or
indirectly, in any "solicitation" of "proxies" or consents to vote, or become a
"participant" in any "election contest" involving Delcath or Delcath's
securities (all terms used herein and defined in Regulation 14A under the
Exchange Act having the meanings assigned to them therein), (ii) call or seek to
call, directly or indirectly, any special meeting of stockholders of Delcath for
any reason whatsoever, (iii) seek, request, or take any action to obtain or
retain, directly or indirectly, any list of holders of any
5
voting or other securities of Delcath or to obtain or retain, directly or
indirectly, the books and records of Delcath or its affiliates, (iv) seek to
advise or influence any Person with respect to the voting of any securities of
Delcath, (v) initiate, propose or otherwise "solicit" Delcath stockholders for
the approval of shareholder proposals, whether made pursuant to Rule 14a-8 or
Rule 14a-4 under the Exchange Act, or otherwise, (vi) otherwise communicate with
Delcath's stockholders or others pursuant to Rule 14a-1(l)(2)(iv) under the
Exchange Act, (vii) participate in, or take any action pursuant to, any
"shareholder access" proposal which may be adopted by the Securities and
Exchange Commission whether in accordance with previously proposed Rule 14a-11
or otherwise, (vii) otherwise engage in any course of conduct with the purpose
of causing stockholders of Delcath to vote contrary to the recommendation of the
Board on any matter presented to Delcath's stockholders for their vote or
challenging the policies of Delcath or (viii) otherwise act, alone or in concert
with others, to seek to control or influence the management, the Board, policies
or affairs of Delcath;
(g) except as specifically and expressly set forth in this Agreement, seek
any change in the composition or classification of the Board or management of
Delcath, including any plans or proposals to change the number or term of
directors, vote against any candidate for the Board nominated for election or
re-election by the Nominating Committee (or any successor committee) of the
then-existing Board, or fill any vacancies on the Board;
(h) seek to change the determination or direction of the basic business
decisions of Delcath, the present capitalization or dividend policy of Delcath,
Delcath's Amended and Restated Certificate of Incorporation (the "Charter") or
Bylaws or Delcath's business or corporate structure or otherwise take any action
inconsistent with the ownership of common shares "solely for the purpose of
investment";
(i) (i) make or disclose any statement regarding any intent, purpose, plan
or proposal with respect to the Board, Delcath, its management, policies or
affairs or any of its securities or assets or this Agreement that is
inconsistent with the provisions of this Agreement, including, but not limited
to, a request (by submission to Delcath, public announcement or otherwise) in
any form that the prohibitions set forth in this Agreement be waived or that
Delcath take any action which would permit Laddcap to take any of the actions
prohibited by this Agreement, (ii) otherwise seek in any fashion a waiver,
amendment or modification of this Agreement or make any statement (to Delcath or
a third party or by public announcement) relating to Laddcap's willingness to
pursue any such prohibited action conditioned upon waiver of this Agreement or
(iii) take any action that could require Delcath to make any public disclosure
relating to any such intent, purpose, plan, proposal or condition; and
(j) (i) initiate, solicit, advise, assist, facilitate, finance, or
encourage or otherwise participate in the taking of any of the foregoing actions
by any other Person, (ii) make any investments in any third party that engages,
or offers or proposes to engage, in any of the foregoing, or (iii) otherwise
enter into any discussions, negotiations, arrangements or understandings with,
any third party with respect to any of the foregoing actions.
Limitations on Standstill. Except as set forth herein, no provision in this
Section 3 shall prevent Laddcap from selling shares of Common Stock.
Notwithstanding any other provision of this
6
Agreement to the contrary, nothing in this Section 3 shall limit either the
Class I Director or the Class II Director, during the term of their service as
directors of Delcath, from discussing, proposing, or voting for any of the above
actions on a confidential basis with or to the Board, from having such actions
recorded in the minutes of the Board of Directors and from otherwise acting as
directors and complying in good faith with their fiduciary duties as directors
of Delcath.
4. Acquisition of Additional Common Stock and Related Matters
(a) Notwithstanding anything in Section 3 of this Agreement to the
contrary, during the Standstill Period, Laddcap may acquire additional shares of
Common Stock in an aggregate amount that, when added to all shares then owned by
Laddcap (including shares received by Laddcap pursuant to Section 11 of this
Agreement), do not exceed 14.9% of the then-outstanding shares of Common Stock
(and Delcath agrees to sell such shares to Laddcap) subject to compliance with
the provisions of this Section 4, if such shares are purchased directly from
Delcath pursuant to a customary stock purchase agreement containing customary
representations, warranties and indemnification provisions in a form to be
negotiated in good faith by the Parties; provided, however, that at any annual
meeting, special meeting or consent solicitation in lieu of such meeting,
Laddcap shall vote any and all shares of Common Stock then owned by it in favor
of all director candidates nominated by the Nominating Committee of the Board,
or any successor committee.
(b) Purchases of Delcath stock by Laddcap from Delcath pursuant to Section
4(a) may be made up to a maximum of three times during the Standstill Period and
shall be made as follows:
(i) Laddcap shall deliver a written request (a "Purchase Request") to
Delcath at least 10 business days prior to the date on which it intends to wire
to Delcath the amount of funds necessary to pay for the Purchased Stock (the
"Payment Date"), which notice shall specify the Payment Date and the number of
shares of Delcath stock that Laddcap intends to purchase from Delcath (the
"Purchased Stock"); and
(ii) The price per share of Delcath stock to be purchased by Laddcap
from Delcath pursuant to any Purchase Request shall be equal to the average of
the closing price per share of such stock over the 10 trading days prior to the
date that Delcath receives such Purchase Request from Laddcap.
5. Mutual Release and Waiver
(a) Laddcap (for itself, its agents, heirs, successors, assigns, executors
and/or administrators) does hereby and forever release and discharge Delcath and
its directors, officers, employees, agents, attorneys, partners, representatives
and affiliates, past or present, (each, a "Delcath Person"), from any and all
causes of action, actions, judgments, liens, debts, contracts, indebtedness,
damages, losses, claims, liabilities, rights, interests and demands of
whatsoever kind or character, known or unknown, suspected to exist or not
suspected to exist, anticipated or not anticipated, whether or not heretofore
brought before any state or federal court, which Laddcap has or may have against
any Delcath Person by reason of any and all acts, omissions, events or facts
occurring or existing prior to the Effective Time, including, without
limitation, all claims arising under contract, tort, common law, or any federal,
state or other governmental statute, regulation or
7
ordinance or common law, excepting only those obligations expressly recited to
be performed hereunder.
(b) Delcath (for itself, its agents, heirs, successors, assigns, executors
and/or administrators) does hereby and forever release and discharge Laddcap and
its directors, officers, employees, agents, attorneys, partners, representatives
and affiliates, past or present (each, a "Laddcap Person"), from any and all
causes of action, actions, judgments, liens, debts, contracts, indebtedness,
damages, losses, claims, liabilities, rights, interests and demands of
whatsoever kind or character, known or unknown, suspected to exist or not
suspected to exist, anticipated or not anticipated, whether or not heretofore
brought before any state or federal court, which Delcath has or may have against
any Laddcap Person by reason of any and all acts, omissions, events or facts
occurring or existing prior to the Effective Time, including, without
limitation, all claims arising under contract, tort, common law, or any federal,
state or other governmental statute, regulation or ordinance or common law,
excepting only those obligations expressly recited to be performed hereunder;
provided, however, that Delcath only releases and discharges Foltz to the extent
expressly provided for in a separate, stand-alone agreement between Delcath and
Foltz, and Foltz shall not be deemed to be a Laddcap Person for purposes of this
release.
(c) Except for those obligations created by or arising out of this
Agreement and except as limited in this Agreement, it is the intention of
Laddcap and Delcath in executing this Agreement that the same shall be effective
as a bar to each and every claim, demand and cause of action hereinabove
specified. In furtherance of this intention, Laddcap and Delcath hereby
expressly and mutually consent that this Agreement shall be given full force and
effect according to each and all of its express terms and provisions, including
those related to unknown and unsuspected claims, demands and causes of action,
if any, as well as those relating to any other claims, demands and causes of
action hereinabove specified.
(d) Laddcap and Delcath acknowledge that each party may hereafter discover
claims or facts in addition to or different from those which each party now
knows or believes to exist with respect to the subject matter of this Agreement
and which, if known or suspected at the time of executing this Agreement, may
have materially affected this settlement. Laddcap and Delcath hereby waive any
right, claim or cause of action that might arise as a result of such different
or additional claims or facts.
6. Mutual Non-Disparagement Each of the Parties covenants and agrees that
none of it or its respective subsidiaries, affiliates, successors, assigns,
officers, employees or directors shall in any way disparage, attempt to
discredit, or otherwise call into disrepute, the other Parties or such other
Parties' subsidiaries, affiliates, successors, assigns, officers, directors,
employees, stockholders, agents, attorneys or representatives, or any of their
products or services, in any manner that would damage the business or reputation
of such other Parties, their products or services or their subsidiaries,
affiliates, successors, assigns, officers, directors, employees, agents,
attorneys or representatives. Each of the Parties further covenants and agrees
that it shall not otherwise engage in conduct which could reasonably be expected
to disrupt, damage, impair or interfere with the business reputation of the
other Parties or their subsidiaries, affiliates, successors, assigns, officers,
directors, employees, agents, attorneys or representatives. Without limiting the
foregoing, none of the Parties shall make any comments or statements to the
press, employees or former employees of
8
any of the Parties, any client or prospective or former client of any of the
Parties, any individual or entity with whom any of the Parties has a business
relationship or any other Person, if such comment or statement reasonably could
adversely affect the conduct of the business of the other Parties, or any of
their plans or prospects or the business reputation of such other Parties or any
of such other Parties' products or services or that of any of its subsidiaries,
affiliates, successors, assigns, officers, directors, employees, agents,
attorneys or representatives, except as may be required by applicable law or
subpoena. Notwithstanding anything to the contrary contained in this Section 6,
Delcath's ability to pursue the litigation currently pending in Connecticut
state court captioned Delcath Systems, Inc. v. Jonathan Foltz or any related
future litigation shall only be limited to the extent expressly provided for in
a separate, stand-alone agreement between Delcath and Foltz.
7. Non-Solicitation During the Standstill Period, Laddcap shall not,
directly or indirectly, either on Laddcap's own behalf or on behalf of any other
Person, encourage, facilitate or attempt to persuade or solicit any Person who
is an employee of, or consultant, independent contractor or other vendor for,
either Delcath or any governmental agency or medical, research or non-profit
institution to the extent of such agency's or institution's dealings with any
Delcath product or device or proposed product or device, (i) to terminate or
materially and adversely alter such employment, consulting, independent
contractor or vendor relationship, (ii) to take any action against, or that
would materially and adversely affect, Delcath, the Board or Delcath's current
management, or (iii) to use any Confidential Information for the benefit of any
Person other than Delcath.
8. Restrictions on Certain Actions
(a) Until the period ending on the earlier of the end of the Standstill
Period or the date that Laddcap's ownership of Common Stock drops below the 10%
Ownership Threshold, the Board shall not, (i) without the affirmative vote of a
majority of the Board, which vote shall include at least one of the Class I
Director or the Class I Director, increase the number of directors beyond seven
(7) and (ii) without the affirmative vote of a majority of the non-management
members of the Board who are disinterested, (A) amend Delcath's Rights
Agreement, dated as of October 30, 2001 (the "Rights Agreement"), or adopt a
similar agreement; provided, however, that after October 30, 2010, the Board may
amend the Rights Agreement to extend its term or adopt a new rights agreement on
substantially the same terms as the Rights Agreement but having a term extending
beyond October 30, 2011, or (B) adopt, amend or repeal the Bylaws. Delcath
represents and warrants that the Amended and Restated Bylaws of Delcath filed
with the Securities and Exchange Commission on August 23, 2000 as Exhibit 3.2 to
Amendment No. 1 to Delcath's Registration Statement on Form SB-2 is a true and
correct copy of the Bylaws.
(b) Effective as of the Effective Time and for so long as Laddcap
beneficially owns any shares of Delcath capital stock, Laddcap agrees that,
without the prior written consent of Delcath in its sole and absolute
discretion, Laddcap will not retain, engage, hire or employ, directly or
indirectly, in any capacity whatsoever, Foltz in connection with the provision
of any services to Laddcap relating to Laddcap's investment in, or other
involvement with, Delcath or any past, present or future officer, employee or
director of Delcath; provided, however, that Laddcap may retain Foltz to provide
services unrelated to Delcath without the prior written consent of Delcath.
9
9. Public Announcements Immediately after the Effective Time, the Parties
shall issue a joint press release in the form attached hereto as Exhibit B (the
"Press Release"). Thereafter, none of the Parties shall issue or make any
statements, public or otherwise, regarding this Agreement, its terms, the
obligations of the Parties hereunder, or any other matters discussed in the
Press Release, which statements are inconsistent with such Press Release.
10. Change of Control Provisions Delcath covenants and agrees that as of
the Effective Time, no event has occurred that shall be deemed to be a change of
control that would trigger any payments to officers, directors or employees of
Delcath, including, but not limited to, change of control payments under the
2003 Change of Control payment plan, pursuant to provisions in any Delcath stock
option plan, employment agreement, or otherwise; provided, that nothing in this
Section 10 shall affect any rights that Mr. M. S. Koly has under the terms of
his Employment Agreement, dated October 1, 2003, with Delcath.
11. Expenses
(a) Except as otherwise provided in this Section 11, the Parties shall bear
their own expenses related to the Consent Solicitation, the NY Litigation and
the preparation, negotiation and delivery of this Agreement.
(b) As reimbursement for a portion of the expenses incurred by Laddcap
related to the Consent Solicitation and related matters, Delcath agrees as
follows. On or prior to October 23, 2006 and provided that Delcath has received
from Laddcap written documentation of reasonable and actual out-of-pocket
expenses incurred by Laddcap in connection with the Consent Solicitation in an
amount at least equal to $306,000, Delcath shall issue to Laddcap 100,000
unregistered shares of Common Stock. Each of the Parties agrees that it will
execute and deliver such documents as are reasonably necessary to effect the
transfer by Delcath to Laddcap of such Common Stock.
12. Representations and Warranties Each of the Parties hereby represents
and warrants to the other party that:
(a) it is duly organized, validly existing and in good standing under the
laws of the state of its jurisdiction of organization;
(b) it has full power and authority to execute and deliver this Agreement
and to perform its obligations hereunder, all of which have been duly authorized
by all requisite corporate, partnership or limited liability company action, as
the case may be; and
(c) this Agreement has been duly and validly executed and delivered by such
party and constitutes the legal, valid and binding obligation of such party,
enforceable against it in accordance with its terms, except as enforcement may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally and by general principles of
equity (regardless of whether considered in a proceeding in equity or at law).
13. Miscellaneous Provisions
10
(a) This Agreement and all disputes or controversies arising out of or
relating to this Agreement or the obligations of the Parties hereunder shall be
governed by, and construed in accordance with, the internal laws of the State of
New York, without regard to the laws of any other jurisdiction that might be
applied because of the conflict of laws principles of the State of New York
other than Section 5-1401 of the New York General Obligations Law.
(b) Each of the Parties irrevocably agrees that any legal action or
proceeding arising out of or relating to this Agreement or for recognition and
enforcement of any judgment in respect hereof brought by the other party or its
successors or assigns shall be brought and determined in a New York State or
federal court sitting in the Borough of Manhattan in the City of New York, and
each of the Parties hereby irrevocably submits to the co-exclusive jurisdiction
of the aforesaid courts for itself and with respect to its property, generally
and unconditionally, with regard to any such action or proceeding arising out of
or relating to this Agreement and the obligations of the Parties hereunder (and
agrees not to commence any action, suit or proceeding relating thereto except in
such courts, except to enforce judgments rendered by such state or federal
courts located in the City of New York; such actions to enforce a New York
judgment may be brought in any court of competent jurisdiction). Each of the
Parties further agrees to accept service of process in any manner permitted by
such courts. Each of the Parties hereby irrevocably and unconditionally waives,
and agrees not to assert, by way of motion or as a defense, counterclaim or
otherwise, in any action or proceeding arising out of or relating to this
Agreement or the obligations of the Parties hereunder, (a) any claim that it is
not personally subject to the jurisdiction of the above-named courts for any
reason other than the failure lawfully to serve process, (b) that it or its
property is exempt or immune from jurisdiction of any court anywhere or from any
legal process commenced in such courts (whether through service of notice,
attachment prior to judgment, attachment in aid of execution of judgment,
execution of judgment or otherwise), (c) that the suit, action or proceeding in
any such court is brought in an inconvenient forum, (d) that the venue of such
suit, action or proceeding is improper or (e) that this Agreement, or the
subject matter hereof, may not be enforced in or by such courts.
(c) Neither this Agreement nor any of the rights, interests or obligations
under this Agreement may be assigned or delegated, in whole or in part, by
operation of law or otherwise, by any of the Parties without the prior written
consent of the other Parties, and any such assignment without such prior written
consent shall be null and void. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the Parties and their respective successors and assigns.
(d) This Agreement may not be amended, modified or supplemented in any
manner, whether by course of conduct or otherwise, except by an instrument in
writing signed on behalf of each party and otherwise as expressly set forth
herein.
(e) No failure or delay of any of the Parties in exercising any right or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such right or power, or any course of
conduct, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Parties hereunder are
cumulative and are not exclusive of any rights or remedies which they would
otherwise have hereunder. Any agreement on the part of any of the Parties to any
11
such waiver shall be valid only if set forth in a written instrument executed
and delivered by a duly authorized officer on behalf of such party.
(f) Nothing in this Agreement, express or implied, is intended to or shall
confer upon any Person other than the Parties and their respective successors
and permitted assigns any legal or equitable right, benefit or remedy of any
nature under or by reason of this Agreement.
(g) This Agreement constitutes the entire agreement, and supersedes all
prior written agreements, arrangements, communications and understandings and
all prior and contemporaneous oral agreements, arrangements, communications and
understandings among the Parties with respect to the subject matter of this
Agreement. This Agreement shall not be deemed to contain or imply any
restriction, covenant, representation, warranty, agreement or undertaking of any
party with respect to the matters contemplated hereby other than those expressly
set forth herein, and none shall be deemed to exist or be inferred with respect
to the subject matter hereof. Notwithstanding any oral agreement of the Parties
or their representatives to the contrary, no party to this Agreement shall be
under any legal obligation to enter into or complete the matters contemplated
hereby unless and until this Agreement shall have been executed and delivered by
each of the Parties.
(h) The Parties agree that irreparable damage would occur in the event that
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached (a "Breach"). Accordingly, each
of the Parties shall be entitled to specific performance of the terms hereof,
including an injunction or injunctions to prevent breaches of this Agreement and
to enforce specifically the terms and provisions of this Agreement in any New
York State or federal court sitting in the Borough of Manhattan in the City of
New York, this being in addition to any other remedy to which they are entitled
at law or in equity. Each of the Parties further hereby waives (a) any defense
in any action for specific performance that a remedy at law would be adequate
and (b) any requirement under any law to post security as a prerequisite to
obtaining equitable relief. In addition, each of the Parties agrees that in the
event of a Breach by such party, the non-breaching party shall be entitled to
payment by the breaching party of any expenses, including without limitation,
the reasonable fees and expenses of legal counsel, that such non-breaching party
may incur in connection with its enforcement of the provisions of this
Agreement.
(i) Whenever possible, each provision or portion of any provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision or portion of any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under
any applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other provision or portion of any
provision in such jurisdiction, and this Agreement shall be reformed, construed
and enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision or portion of any provision had never been contained herein.
(j) THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVE ALL RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE OBLIGATIONS OF EACH OF THE PARTIES HEREUNDER.
12
(k) All notices and other communications hereunder shall be in writing and
shall be deemed duly given (a) on the date of delivery if delivered personally,
or if by facsimile, upon written confirmation of receipt by facsimile or
otherwise, (b) on the first business day following the date of dispatch if
delivered utilizing a next-day service by a recognized next-day courier or (c)
on the earlier of confirmed receipt or the fifth business day following the date
of mailing if delivered by registered or certified mail, return receipt
requested, postage prepaid. All notices hereunder shall be delivered to the
addresses set forth below, or pursuant to such other instructions as may be
designated in writing by the party to receive such notice:
if to Delcath to:
Delcath Systems, Inc.
1100 Summer Street
Stamford, Connecticut 06905
Attention: Mr. M. S. Koly
Facsimile: (203) 961-0120
with a copy (which shall not constitute notice) to:
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, New York 10166
Attention: Scott A. Kislin, Esq.
Adam H. Offenhartz, Esq.
Facsimile: (212) 351-4035
if to Laddcap to:
Laddcap Value Partners LP
650 Fifth Avenue, Suite 600
New York, New York 10019
Attention: Mr. Robert B. Ladd
Facsimile: (212) 259-2052
with a copy (which shall not constitute notice) to:
Lowey Dannenberg Bemporad & Selinger, P.C.
One North Lexington Avenue, 11th Floor
White Plains, New York 10601
Attention: Richard W. Cohen, Esq.
Facsimile: (914) 997-0035
(l) When a reference is made in this Agreement to a Section of this
Agreement, such reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for
convenience of reference purposes only and shall not affect in any way the
13
meaning or interpretation of this Agreement. All words used in this Agreement
will be construed to be of such gender or number as the circumstances require.
The word "including" and words of similar import when used in this Agreement
will mean "including, without limitation," unless otherwise specified.
(m) Each of the Parties acknowledges that each party to this Agreement has
been represented by counsel in connection with this Agreement and the
obligations of each of the Parties hereunder. Accordingly, any rule of law or
any legal decision that would require interpretation of any claimed ambiguities
in this Agreement against the drafting party has no application and is expressly
waived.
(n) This Agreement may be executed in two or more counterparts, all of
which shall be considered as one and the same instrument and shall become
effective when one or more counterparts have been signed by each of the Parties
and delivered to the other party.
(o) This Agreement may be executed by facsimile signature and a facsimile
signature shall constitute an original for all purposes.
[Remainder of page intentionally left blank.]
14
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
LADDCAP VALUE PARTNERS LP
By LADDCAP VALUE ASSOCIATES LLC,
its General Partner
By: /s/ ROBERT B. LADD
----------------------------
Name: Robert B. Ladd
Title: Managing Member
LADDCAP VALUE ASSOCIATES LLC
By: /s/ ROBERT B. LADD
----------------------------
Name: Robert B. Ladd
Title: Managing Member
LADDCAP VALUE ADVISORS LLC
By: /s/ ROBERT B. LADD
----------------------------
Name: Robert B. Ladd
Title: Managing Member
ROBERT B. LADD
/s/ ROBERT B. LADD
----------------------------
DELCATH SYSTEMS, INC.
By: /s/ M. S. KOLY
----------------------------
Name: M. S. Koly
Title: President
[Signature Page to Settlement Agreement]
Exhibit A
Terms of Foltz Settlement
1. Foltz admits to deleting certain Delcath emails and computer files and to
taking possession of Delcath confidential and proprietary information.
2. Foltz provides a letter to Delcath's Board and employees acknowledging that
he deleted Delcath emails and computer files and that he took possession of
Delcath confidential and proprietary information.
3. Foltz agrees to abide by the current terms of the temporary restraining
order issued in connection with the CT Litigation (the "TRO") and will
refrain from any use or disclosure of any Delcath information in any way.
Terms of TRO to be incorporated into settlement agreement. TRO to be
dissolved per #6 below.
4. Foltz provides hard drive to Kroll; Kroll removes personal information and
returns personal information to Foltz; hard drive provided to Delcath.
5. Foltz returns to Delcath all Delcath material in his possession, custody
and control.
6. CT Litigation is dismissed with prejudice (TRO dissolved). Exchange of
mutual releases (carve out for breach of settlement agreement).
7. Foltz to agree to have no further contact with a list to be provided of
Delcath employees, consultants and other individuals with whom Delcath has
a business relationship.
8. Foltz to agree to a 12-month non-compete clause and thereafter agrees to
have nothing to do with Delcath in any capacity and will not participate or
assist in any manner with any individual or group attempting to change the
board composition, management or activities of Delcath.
9. Each party bears its own costs and legal fees (i.e., no indemnification
from Delcath sought for legal fees).
Exhibit B
Form of Joint Press Release
DELCATH SYSTEMS, INC.
CHANGE IN CONTROL ARRANGEMENT FOR DIRECTORS
Section 1: Effective Date. The effective date of the Arrangement is April 29,
2004, the date of notice of the Arrangement to the Company's shareholders.
Section 2: Definitions.
o Arrangement. This Change in Control Arrangement for Directors.
o Company. Delcath Systems, Inc.
o Compensation and Stock Option Committee. The Committee of the Board of
Directors responsible for salaries and benefits paid, and stock
options granted, to employees, consultants, directors and others.
o Deemed Shares. The number of shares of Delcath Systems, Inc., detailed
in Schedule A, as adjusted for any stock splits, stock dividends or
recapitalizations after the Effective Date.
o Directors. Any member of the Board of Directors.
o Excess Value. The excess of the highest price per share paid in any
transaction by which any person becomes a beneficial owner (as defined
in Section 3(a)) over $0.985, the fair market value per share on
December 11, 2003.
o Non-employee Director. Any Director who was not, during the twelve
months prior to a Change in Control, an employee of the Company.
Section 3: Change in Control. For purposes of this Agreement, a "Change in
Control" shall be deemed to have occurred if:
(a) any person (other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company, or any company owned,
directly or indirectly, by the stockholders of the Company in substantially the
same proportions as their ownership of the stock of the Company), is or becomes
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 30% or more of
the voting power of all classes of capital stock of the Company;
2
(b) The following individuals cease for any reason to constitute a majority of
the number of directors then serving: individuals, who on the Effective Date
constitute the Board, and any new director (other than a director whose initial
assumption of office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation, relating to the
election of directors of the Company) whose appointment or election by the Board
or nomination for election by the Company's stockholders was approved or
recommended by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors on the date hereof or whose appointment or
election or nomination for election was previously so approved or recommended
(the "Continuing Directors");
(c) the stockholders of the Company approve a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any other
company, other than (1) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity or any parent thereof) more than
50% of the combined voting power of the voting securities of the Company or such
surviving entity or any parent thereof outstanding immediately after such merger
or consolidation or (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no "person"
(as hereinabove defined) acquires more than 50% of the combined voting power of
the Company's then outstanding securities; or
(d) the stockholders of the Company approve a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.
Section 4: Change of Control Payments. In the event of a Change in Control, the
Directors will be paid an amount equal to the Excess Value times the number of
each Director's Deemed Shares. In addition, in the event of a Change in Control,
each non-employee Director shall be paid $100,000, in recognition of past
service.
3
Section 5: Participant's Rights Unsecured. The right of any Participant to
receive payments under the provisions of the Arrangement shall be contractual in
nature only; however, the amounts of such payments may be held in a trust, the
assets of which shall be subject to the claims of the Company's general
creditors only in the event of bankruptcy or insolvency. Any amounts paid to a
Director form such trust shall reduce the amount owed by the Company.
Section 6: Assignability. No right to receive payments hereunder shall be
transferable or assignable by a Participant or beneficiary.
Section 7. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of placeStateDelaware.
IN WITNESS WHEREOF, the Company has caused this Change in Control Arrangement
for Directors to be duly adopted and executed effective April 29, 2004.
/s/ DANIEL ISDANER
- ------------------------
Daniel Isdaner
/s/ VICTOR NEVINS
- ------------------------
Victor Nevins
4
Schedule A
Deemed Share Amounts
M. S. Koly 500,000
Samuel Herschkowitz 300,000
Mark A. Corigliano 300,000
Daniel Isdaner 300,000
Victor Nevins 300,000
913666_1
[GRAPHIC OMITTED]
Company Contact: Investor Contacts:
Delcath Systems, Inc. Todd Fromer / Garth Russell
M. S. Koly, Chief Executive Officer KCSA Worldwide
203-323-8668 (212) 896-1215 / (212) 896-1250
www.delcath.com tfromer@kcsa.com / grussell@kcsa.com
- --------------- ---------------- -----------------
Media Contacts:
Lewis Goldberg
KCSA Worldwide
(212) 896-1216
lgoldberg@kcsa.com FOR IMMEDIATE RELEASE
- ------------------
Delcath Systems and Laddcap Reach Amicable Resolution
to End Consent placeCityBattle
- - -
Robert Ladd and One Additional Independent Member to Join Board of Directors
STAMFORD, Conn., October 9, 2006 -- Delcath Systems, Inc. (NASDAQ: DCTH)
announced today that its Board of Directors and Laddcap Value Partners, a hedge
fund holding approximately 11 percent of Delcath's total outstanding common
stock, have reached an amicable resolution to all issues outstanding between
them, bringing the two-month-long Consent battle to an end.
The agreement provides for the immediate appointment of Mr. Robert B. Ladd, 48,
Principal of Laddcap Value Partners, to the Delcath Board of Directors and one
additional independent director to be mutually agreed upon by Laddcap and the
Company in the next few weeks. The Company will also issue approximately 100,000
shares of common stock to Laddcap as partial reimbursement for its expenses
associated with the Consent Solicitation. As part of the agreement, Laddcap is
also permitted to increase its ownership in Delcath up to a maximum of 14.9% of
Delcath's total outstanding common stock by purchasing additional shares of
Delcath common stock from Delcath for a cash price equal to the 10 trading day
average of the closing price of Delcath stock prior to the time that an
additional purchase is made.
In conjunction with the resolution, Delcath has agreed to terminate its lawsuit
against Laddcap relating to its claims under Sections 13(d) and 14(a) of the
Securities Exchange Act of 1934 and Laddcap has agreed to end its attempt to
remove the Delcath Board of Directors.
"I am pleased that Delcath's Board and I have been able to move past this event.
The agreement we have been able to work out meets many of the concerns I have
raised and the Board has agreed to work with me on any remaining items I may
like to address. Now we can now work together toward our real goals, completing
the Phase III Melphalan and Doxorubicin trials, and obtaining FDA approval for
the Delcath system," Mr. Ladd stated. "I see a great deal of potential in the
Delcath system to offer cancer patients a viable therapy to extend their lives.
I am
encouraged by the results of the Phase I and II clinical trials using the
Delcath system as an advanced treatment for liver cancer patients and look
forward to seeing the results of the Phase III trials."
"The Board and I look forward to working with Robert Ladd as a partner toward
our common goal of advancing Delcath Systems. His broad experience and network
of contacts in the capital markets will be a valuable resource for the Board,"
stated M.S. Koly, President and CEO of Delcath. "While we have sometimes
disagreed on the best approach to move the Company forward, Mr. Ladd has made
several suggestions in the past which the Board has acted upon, including the
hiring of an investment bank and the expansion of our corporate communications
efforts. We are all focused on helping the Company achieve its goals and
building shareholder value."
About Delcath Systems, Inc.
Delcath Systems is a developer of isolated perfusion technology for organ or
region-specific delivery of therapeutic agents. The Company's intellectual
property portfolio currently consists of 12 patents on a worldwide basis,
including the country-regionUnited States, Europe, Asia and
placecountry-regionCanada. For more information, please visit the Company's
website, www.delcath.com.
This release contains forward-looking statements, which are subject to certain
risks and uncertainties that can cause actual results to differ materially from
those described. Factors that may cause such differences include, but are not
limited to, uncertainties relating to our ability to successfully complete Phase
III clinical trials and secure regulatory approval of our current or future
drug-delivery system and uncertainties regarding our ability to obtain financial
and other resources for any research, development and commercialization
activities. These factors, and others, are discussed from time to time in our
filings with the Securities and Exchange Commission. You should not place undue
reliance on these forward-looking statements, which speak only as of the date
they are made. We undertake no obligation to publicly update or revise these
forward-looking statements to reflect events or circumstances after the date
they are made.
# # #