LADDCAP
ASKS STOCKHOLDERS TO REVIEW AND DECIDE FOR
THEMSELVES
THE NATURE OF ANY INCONSISTENCIES AND AMENDMENTS
TO
DELCATH’S CHANGE OF CONTROL ARRANGEMENT
New
York,
September 6, 2006 - Laddcap Value Partners LP read Delcath Systems, Inc.’s
(Nasdaq: DCTH) press release of this morning which, among other things,
states
that the “current
change
of control arrangement has been disclosed in each and every annual proxy
statement that the Company has provided to shareholders since April 2004.”
(emphasis added). Moreover, Delcath stated that Laddcap misrepresented
a
transcribed court proceeding and took a word out of context.
As
detailed below, from Delcath’s own filings with the Securities and Exchange
Commission (the “SEC”),
we
note that Delcath’s disclosures regarding its change of control arrangement
differs significantly from its prior public filings. These significantly
different provisions were not disclosed by Delcath until after Laddcap
initiated
its written consent campaign to remove the current Board.
So
that
our fellow Delcath stockholders can decided for themselves when and if
the
change of control arrangement has been amended, set forth below, please
find (i)
an excerpt of the transcript from a court hearing held on August 29, 2006,
(ii)
Delcath’s disclosure of its change of control arrangement from its consent
revocation statements filed with the SEC in August 2006, and (iii) Delcath’s
disclosures of its change of control arrangement from its proxy statements
filed
with the SEC in connection with Delcath’s annual meetings held in 2006, 2005 and
2004 (each of these documents are available online at www.sec.gov).
As
you
review these excerpts of Delcath’s own disclosures, ask yourself the following
questions:
1)
In
response to the court’s inquiry, as set forth in the excerpt of the transcript
below, did Delcath’s attorney confirm to the court that Delcath’s change of
control arrangement has been recently changed?
2)
Compare the disclosure of the change of control arrangement set forth in
Delcath’s consent revocation statements filed in August 2006, with the
disclosure of the change of control arrangement set forth in Delcath’s proxy
statement filed just a few months earlier for its 2006 annual meeting (as
well
as the proxy statements filed by Delcath in connection with its 2005 and
2004
annual meeting), are there material changes to the change of control
arrangement?
Laddcap
believes that our fellow Delcath stockholders can decide for themselves,
by
reviewing Delcath’s own disclosures, if there have been amendments to the change
of control arrangement for Delcath’s directors and when those changes
occurred.
_________________________________
Excerpt
from transcript of court hearing held on August 29, 2006 from which Laddcap
obtained confirmation from Delcath’s lawyers that Delcath’s change of control
arrangement has been recently amended (in addition, a longer excerpt has
been
filed today with the SEC by Delcath on Form 8-K).
Laddcap’s
Attorney:
Here's
the greater harm: They are the incumbent board of directors; they can make
changes; they can do extraordinary things right now that we cannot. They've
done
one already, Judge. They've changed the change-in-control provision which
runs
the risk of giving a greater package to management if there's a change
in
control. That didn't used to exist.
The
Court:
When
was that?
Laddcap’s
Attorney:
I'm
sorry?
The
Court:
When?
Laddcap’s
Attorney:
We
first learned of that in their first preliminary consent revocation materials
on
August 7th.
The
Court:
What
about that?
Delcath’s
Attorney:
Your
Honor, I don't know the exact timing of that, but --
The
Court:
Recently is the answer.
Delcath’s
Attorney:
Recently. Your Honor, if I may, two responses to that: One, that really
highlights the difference between what my adversary is talking about and
what we
are talking about. If they win, if at the PI hearing your Honor decides
that our
claims are not correct or we're wrong, and there was a change, something
happened that was inappropriate, the new board can take steps to correct
that.
That's a normal run-of-the-mill process. That's something that can be addressed,
addressed quickly, corrected. Moreover, your Honor, we are not here trying
to
gain anything. We are here because we believe we have very serious issues
to be
dealt with. While I find it odd that they, in effect, are moving for a
TRO
without actually putting in any papers, without making any showing, without
--
_________________________________
Disclosure
of change of control arrangement filed by Delcath in (i) its definitive
consent
revocation statement filed with the SEC on August
21, 2006,
and
(ii) its preliminary consent revocation statement filed with the SEC on
August
7, 2006,
both in
connection with its consent revocation campaign. Both documents available
online
at www.sec.gov.
Change
of
Control Payments
In
2003,
the Compensation and Stock Option Committee approved payments to each of
its
directors (including officers who are also directors) in the case of a
“change
of control” of the Company, which is defined as any time when:
(a)
any
person is or becomes the beneficial owner, directly or indirectly, of more
than
30% of the Company’s outstanding Common Stock;
(b)
Messrs. Koly, Herschkowitz, Isdaner, Corigliano and Nevins (the “Current
Directors”) (and any director who was elected by the vote of at least two-thirds
of the Current Directors or directors whose election was previously so
approved)
cease to constitute a majority of the Board;
(c)
the
shareholders of the Company approve a merger or consolidation of the Company
with any other company, other than (i) a merger or consolidation which
would
result in the Company’s Common Stock outstanding immediately prior thereto
continuing to represent more than 50% of the combined voting power of the
voting
securities of the Company or such surviving entity outstanding immediately
after
such merger or consolidation or (ii) a merger or consolidation effected
to
implement a recapitalization of the Company in which no person acquires
more
than 50% of the combined voting power of the Company’s then outstanding Common
Stock; and
(d)
the
shareholders 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.
Payment
would, in each case, be determined by multiplying the excess of the price
per
share paid in the takeover transaction over $0.98 (the fair market value
per
share on December 11, 2003) multiplied by a number of shares (that would
be
subject to adjustment in the event of stock dividends, stock splits or
recapitalizations). Such numbers are 500,000 in the case of Mr. Koly and
300,000
each in the case of Dr. Herschkowitz, Mr. Corigliano, Mr. Isdaner and Mr.
Nevins. In the event of a change of control, each non-employee director
would
also receive a $100,000 cash payment in recognition of past service. See
also,
“Key Employee Agreement,” above.
_________________________________
Disclosure
of change of control arrangement filed by Delcath in its proxy statement
filed
with the SEC on April
24, 2006
in
connection with its annual meeting held on June 13, 2006. Available online
at
www.sec.gov.
Change
of
Control Payments
In
2003,
the Compensation and Stock Option Committee approved payments to its directors
(including officers who are also directors) in the case of a hostile takeover
of
the Company. The payment would, in each case, be determined by multiplying
the
excess of the price per share paid in the takeover transaction over $0.98
(the
fair market value per share on December 11, 2003) multiplied by a number
of
shares (that would be subject to adjustment in the event of stock dividends,
stock splits or recapitalizations). Such numbers are 500,000 in the case
of Mr.
Koly and 300,000 each in the case of Dr. Herschkowitz, Mr. Corigliano,
Mr.
Isdaner and Mr. Nevins. In the event of a hostile takeover, each non-employee
director other than Dr. Herschkowitz would also receive a $100,000 cash
payment
in recognition of past service. See also, "Key Employee Agreement,"
above.
_________________________________
Disclosure
of change of control arrangement filed by Delcath in its proxy statement
filed
with the SEC on April
29, 2005
in
connection with its annual meeting held on June 14, 2005. Available online
at
www.sec.gov.
Change
of
Control Payments
In
2003,
the Compensation and Stock Option Committee approved payments to its directors
(including officers who are also directors) in the case of a hostile takeover
of
the Company. The payment would, in each case, be determined by multiplying
the
excess of the price per share paid in the takeover transaction over $0.98
(the
fair market value per share on December 11, 2003) multiplied by a number
of
shares (that would be subject to adjustment in the event of stock dividends,
stock splits or recapitalizations). Such numbers are 500,000 in the case
of Mr.
Koly and 300,000 each in the case of Dr. Herschkowitz, Mr. Corigliano,
Mr.
Isdaner and Mr. Nevins. In the event of a hostile takeover, each non-employee
director would also receive a $100,000 cash payment in recognition of past
service. See also, "Key Employee Agreements," above.
_________________________________
Disclosure
of change of control arrangement filed by Delcath in its proxy statement
filed
with the SEC on April
29, 2004
in
connection with its annual meeting held on June 15, 2004. Available online
at
www.sec.gov.
Change
of
Control Payments
In
2004,
the Compensation and Stock Option Committee approved payments to its directors
(including officers who are also directors) in the case of a hostile takeover
of
the Company. The payment would, in each case be determined by multiplying
the
excess of the price per share paid in the takeover transaction over the
fair
market value per share on December 11, 2003 multiplied by a number of shares
(that would be subject to adjustment in the event of stock dividends, stock
splits or recapitalizations). Such numbers are 500,000 in the case of Mr.
Koly
and 300,000 each in the case of Dr. Herschkowitz, Mr. Corigliano, Mr. Isdaner
and Mr. Nevins. In the event of a hostile takeover, each non-employee director
would also receive a $100,000 cash payment in recognition of past service.
See
also, "Key Employee Agreements," above.
CONTACT
US
If
anything in this press release or in other materials you may receive from
us or
Delcath raises any questions for you, please
contact us.
We
believe it is important to maintain an open and on-going dialogue with
stockholders. We want to hear from you, hear your views concerning Delcath
and
answer any questions that you may have about our proposals or our slate
of
Directors. Therefore, please call, write, fax or email us your name, address,
email address and number of shares of Delcath stock you held on July 27,
2006;
please also include your phone number. Our contact information is set forth
below or you may call our consent solicitor, The Altman Group toll free
at (800)
581-5375.
|
PLEASE
SIGN, DATE AND RETURN YOUR BLUE
CONSENT CARD
If
you have any questions or require any assistance in executing
your written
consent, please call:
The
Altman Group, Inc.
1200
Wall Street West, 3rd Floor, Lyndhurst, NJ 07071
(800)
581-5375
Banks
and Brokers Call Collect: (201) 806-7300
Laddcap
Value Partners LP
650
Fifth Avenue, Suite 600
New
York, NY 10019
(212)
259-2070
info@laddcapvalue.com
|
In
connection with our consent solicitation, on August 17, 2006 we filed a
definitive consent solicitation statement with the Securities and Exchange
Commission (the “SEC”).
In
addition, we may file other consent solicitation materials regarding this
consent solicitation. STOCKHOLDERS ARE URGED TO READ THE DEFINITIVE CONSENT
SOLICITATION STATEMENT BECAUSE IT CONTAINS IMPORTANT INFORMATION. Definitive
consent solicitation statements and BLUE
consent
cards have been mailed to Delcath stockholders. Stockholders are also able
to
obtain a free copy of the definitive consent solicitation statement at
the SEC’s
website, www.sec.gov. The definitive consent solicitation statement may
also be
obtained free of charge from our offices by contacting us via the contact
information set forth above.