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): December 21, 2006
DELCATH SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 001-16133 06-1245881
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
1100 Summer Street, Stamford, Connecticut 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))
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Section 1 - Registrant's Business and Operations
Item 1.01 Entry into a Material Definitive Agreement
On December 21, 2006, Delcath Systems, Inc. (the "Company") entered into a
Settlement Agreement dated as of December 15, 2006 (the "Settlement Agreement")
in connection with Mr. Koly's resignation as President and Chief Executive
Officer and Treasurer of the Company. The Settlement Areement provides for the
termination of Mr. Koly's Employment Agreement and the relinquishment by Mr.
Koly of any rights he might have under change of control arrangements with the
Company. The Settlement Agreement also provides for Mr. Koly to receive his
regular salary through December 31, 2006 and a lump sum payment to Mr. Koly of
$650,000 and the continuation of his current health insurance benefits through
September 30, 2008. The Settlement Agreement is filed as Exhibit 10.1 hereto and
is incorporated herein by reference.
Item 1.02 Termination of a Material Definitive Agreement
Upon the execution of the Settlement Agreement, the Employment Agreement
between the Company and Mr. Koly was terminated. Each of Mr. Koly, Dr.
Herschkowitz, Mr. Corigliano and Mr. Isdaner has also relinquished any rights he
might have under the Company's Change of Control Arrangement for Directors or as
a beneficiary under the related Trust Agreement. The funds previously held in
trust under the Trust Agreement have been returned to the Company's general
funds.
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 December 15, 2006
between Delcath Systems, Inc. and M. S. Koly
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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/ RICHARD TANEY
----------------------------------
Richard Taney
Interim Chief Executive Officer
Date: December 21, 2006
EXHIBIT INDEX
Exhibit Description
10.1 Settlement Agreement dated as of December 15, 2006
between Delcath Systems, Inc. and M. S. Koly
SETTLEMENT AGREEMENT
This Agreement (this "Agreement") dated as of December 15, 2006 is entered
into between DELCATH SYSTEMS, INC., a Delaware corporation having its principal
place of business in Stamford, Connecticut (the "Company"), and M. S. Koly, an
individual residing in Darien, Connecticut ("Mr. Koly").
WHEREAS the Company and Mr. Koly are parties to an Employment Agreement
dated as of April 10, 1996, as amended (as so amended, the "Employment
Agreement"), pursuant to which Mr. Koly has acted as President and Chief
Executive Officer of the Company; and
WHEREAS, the Company has adopted the Delcath Systems, Inc. Change in
Control Arrangement for Directors effective April 29, 2004 (the "Change in
Control Arrangement"), which provides, among other things, that Mr. Koly will
receive a lump sum payment from the Company upon the occurrence of certain
events; and
WHEREAS, Mr. Koly is a beneficiary of the Trust Agreement under the Delcath
Systems, Inc. Executive Employment Agreement and Directors Change in Control
Arrangement made as of October 27, 2005 (the "Trust"); and
WHEREAS, the Board of Directors has determined that it is in the best
interests of the Company and its stockholders that Mr. Koly no longer serve as
President and Chief Executive Officer and Treasurer of the Company; and
WHEREAS, the Company and Mr. Koly have agreed to resolve any claims that
Mr. Koly may have under the Employment Agreement or the Change in Control
Arrangement;
NOW, THEREFORE, the Company and Mr. Koly hereby agree as follows:
1. Mr. Koly hereby resigns as President and Chief Executive Officer and
Treasurer of the Company and from any other office held by him in the Company
effective as of the date hereof.
2. Mr. Koly will be paid his regular salary through December 31, 2006 and a
lump sum amount equal to $650,000, such lump sum amount to be paid to Mr. Koly
on January 2, 2007 and, pending such payment, to be held in escrow by Murtha
Cullina LLP. Mr. Koly acknowledges that it is his current intention to use a
portion of such payment to exercise options to purchase Common Stock of the
Company held by him.
3. For the period from the date hereof through September 30, 2008, the
Company will continue to provide health insurance coverage to Mr. Koly
comparable to that currently provided to him by the Company.
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4. The Company and Mr. Koly hereby agree to the termination of the
Employment Agreement.
5. Mr. Koly hereby relinquishes any rights that he might have under the
Change in Control Arrangement or as a beneficiary of the Trust.
6. The Company hereby confirms to Mr. Koly that all outstanding options to
purchase shares of the Company's Common Stock held by him are currently
exercisable.
7. Mr. Koly hereby agrees that, for a period of 60 days from the date
hereof, he will consult with the Company's Interim Chief Executive Officer upon
the reasonable request of the Interim Chief Executive Officer, and the Company
hereby agrees to reimburse Mr. Koly for any reasonable out of pocket expenses
incurred by Mr. Koly in connection with his consultation with the Interim Chief
Executive Officer.
[SIGNATURE PAGE FOLLOWS]
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WITNESS, the signatures of the undersigned as of this 15th day of December
2006.
DELCATH SYSTEMS, INC.
By: /s/ RICHARD TANEY
-----------------------------
Richard Taney
Interim Chief Executive
Officer
/s/ M. S. KOLY
---------------------------------
M. S. Koly