EXHIBIT 1.1
Delphi Properties, Inc.
(A Maryland corporation)
12,000,000 Shares
Non-Cumulative Redeemable Exchangeable
Perpetual Series A
Preferred Stock
PURCHASE AGREEMENT
Dated June [__], 2003
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DELPHI PROPERTIES, INC.
(a Maryland corporation)
12,000,000 Shares
Non-Cumulative Redeemable Exchangeable Perpetual Series A Preferred Stock
(liquidation preference $25 per share) exchangeable in specified circumstances
into Series AA Preferred Stock of Delphi Corporation
PURCHASE AGREEMENT
June [__], 2003
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
as Representative of the several Underwriters
4 World Financial Center
New York, New York 10080
Ladies and Gentlemen:
Delphi Properties, Inc., a Maryland corporation (the "Company"), and
Delphi Corporation, a Delaware corporation ("Delphi" and, together with the
Company, the "Delphi Parties") each confirms its agreement with Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and
each of the other Underwriters named in Schedule A hereto (collectively, the
"Underwriters", which term shall also include any underwriter substituted as
hereinafter provided in Section 9 hereof), for whom Merrill Lynch is acting as
representative (in such capacity, the "Representative"), with respect to the
issue and sale by the Company and the purchase by the Underwriters, acting
severally and not jointly, of the respective numbers of shares of the Company's
[_]% Non-Cumulative Redeemable Exchangeable Perpetual Series A Preferred Stock
set forth in said Schedule A, and with respect to the grant by the Company to
the Underwriters, acting severally and not jointly, of the option described in
Section 2(b) hereof to purchase all or any part of 1,800,000 additional shares
of such preferred stock to cover overallotments, if any. The aforesaid
12,000,000 shares of preferred stock (the "Initial Securities") to be purchased
by the Underwriters and all or any part of the 1,800,000 shares of preferred
stock subject to the option described in Section 2(b) hereof (the "Option
Securities") are hereinafter called, collectively, the "Securities".
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representative deems advisable after
this Agreement has been executed and delivered.
The Delphi Parties and Delphi Properties Holdings, LLC, a Maryland
limited liability company ("Holdings") have filed with the Securities and
Exchange Commission (the "Commission") registration statements on Form S-11 and
Form S-3 (Nos. 333-104130-02, 333-104130 and 333-104130-01), including the
related preliminary prospectus, covering the registration of the Securities and
the Non-Cumulative Redeemable Perpetual Series AA Preferred Stock of Delphi (the
"Delphi Securities") into which the Securities will be automatically exchanged
upon the occurrence of an exchange event (as described in the registration
statements) under the Securities Act of 1933, as amended (the "1933 Act").
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Promptly after execution and delivery of this Agreement, the Delphi Parties will
prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations. The information included in such prospectus that was
omitted from such registration statement at the time it became effective but
that is deemed to be part of such registration statement at the time it became
effective pursuant to paragraph (b) of Rule 430A is referred to as "Rule 430A
Information." Each prospectus used before such registration statement became
effective, and any prospectus that omitted the Rule 430A Information, is herein
called a "preliminary prospectus." Such registration statement, including the
exhibits and any schedules thereto, at the time it became effective, and
including the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the 1933 Act at such time and the Rule 430A Information, is
herein called the "Registration Statement." Any registration statement filed
pursuant to Rule 462(b) of the 1933 Act Regulations is herein referred to as the
"Rule 462(b) Registration Statement," and after such filing the term
"Registration Statement" shall include the Rule 462(b) Registration Statement.
The final prospectus in the form furnished to the Underwriters for use in
confirming sales of the Securities, including the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the 1933 Act at the time
of the execution of this Agreement, is herein called the "Prospectus." For
purposes of this Agreement, all references to the Registration Statement, any
preliminary prospectus, the Prospectus or any amendment or supplement to any of
the foregoing shall be deemed to include the copy filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("EDGAR").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which is
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectus, as the case may be.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Delphi Parties. Each of the
Delphi Parties severally and jointly represents and warrants to each Underwriter
as of the date hereof, and agrees with each Underwriter, as follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement, any Rule 462(b) Registration Statement and any
post-effective amendment thereto has become effective under the 1933
Act and no stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereto is in effect and no
proceedings for that purpose are pending or, to the knowledge of either
of the Delphi Parties, are threatened by the Commission.
At the respective times the Registration Statement, any Rule
462(b) Registration Statement and any post-effective amendments thereto
became effective and at the Closing Time (and, if any Option Securities
are purchased, at the Date of Delivery), the Registration Statement,
the Rule 462(b) Registration Statement and any amendments and
supplements thereto complied and will comply in all material respects
with the requirements of the 1933 Act and the 1933 Act Regulations and
did not and will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not
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misleading. Neither the Prospectus nor any amendments or supplements
thereto, as of the date each bears and at the Closing Time and, if any
Option Securities are purchased, at the Date of Delivery, included or
will include an untrue statement of a material fact or omitted or will
omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. The representations and warranties in this subsection
shall not apply to statements in or omissions from the Registration
Statement or Prospectus (as amended or supplemented) based upon and in
conformity with written information furnished to the Company by the
Representative or any Underwriter through Merrill Lynch expressly for
use in the Registration Statement (or any amendment thereto) or the
Prospectus (or any amendment or supplement thereto).
(ii) Incorporated Documents. The documents incorporated or
deemed to be incorporated by reference in the Registration Statement
and the Prospectus, when they became effective or at the time they were
or hereafter are filed with the Commission, complied and will comply in
all material respects with the requirements of the 1933 Act and the
1933 Act Regulations or the 1934 Act and the rules and regulations of
the Commission thereunder (the "1934 Act Regulations"), as applicable.
(iii) Independent Accountants. The accountants who certified
the financial statements included in the Registration Statement are
independent public accountants of the Delphi Parties and their
subsidiaries as required by the 1933 Act and the 1933 Act Regulations.
(iv) Financial Statements. The balance sheets included in the
Registration Statement and the Prospectus, together with the related
notes, present fairly the financial position of the Company and its
consolidated subsidiary as of the date indicated; said balance sheets
have been prepared in conformity with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the
periods involved.
The consolidated financial statements included in the
Registration Statement and the Prospectus, together with the related
schedules and notes, present fairly the financial position of Delphi
and its consolidated subsidiaries at the dates indicated and the
statement of operations, stockholders' equity and cash flows of Delphi
and its consolidated subsidiaries for the periods specified; said
financial statements have been prepared in conformity with GAAP applied
on a consistent basis throughout the periods involved. The supporting
schedules, if any, included in the Registration Statement present
fairly in accordance with GAAP the information required to be stated
therein. The selected financial data and the summary financial
information included in the Prospectus present fairly the information
shown therein and have been compiled on a basis consistent with that of
the audited financial statements included in the Registration
Statement.
(v) No Material Adverse Change in Business. Since the
respective dates of the Registration Statement and the Prospectus,
except as otherwise stated therein, (A) there has been no material
adverse change in the condition, financial or otherwise, or in the
results of operations, business affairs or business prospects of
Delphi, together with its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business (a "Material
Adverse Effect"), (B) there have been no transactions entered into by
Delphi or the Company or any of their respective subsidiaries, other
than those in the ordinary course of business, which would result in a
Material Adverse Effect, and (C) except for regular quarterly dividends
on Delphi's Common Stock, par value $0.01 per share in amounts per
share that are consistent with past practice, there has been no
dividend or distribution of any kind declared, paid or made by either
Delphi Party on any class of its capital stock.
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(vi) Good Standing of the Delphi Parties. The Company has been
duly organized and is validly existing as a corporation in good
standing under the laws of the State of Maryland and has corporate
power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and to enter into
and perform its obligations under this Agreement; and the Company is
duly qualified as a foreign corporation to transact business and is in
good standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure so to qualify or to
be in good standing would not result in a Material Adverse Effect.
Delphi has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of Delaware and has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under this
Agreement; and Delphi is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect.
(vii) Good Standing of Subsidiaries. Each "significant
subsidiary" of Delphi and the Company (as such term is defined in Rule
1-02 of Regulation S-X) (each a "Subsidiary" and, collectively, the
"Subsidiaries"), has been duly organized and is validly existing and in
good standing under the laws of the jurisdiction of its organization,
has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus
and, in the case of the subsidiaries owning a property (each, a
"Property") that will secure the mortgage notes to be issued by Delphi
to the Company (the "Mortgage Notes"), to own such Property, and is
duly qualified as a foreign company to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in
good standing would not result in a Material Adverse Effect; except as
otherwise disclosed in the Registration Statement, all of the issued
and outstanding capital stock of each such Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and is
owned by Delphi or the Company, directly or through subsidiaries, free
and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity; none of the outstanding shares of capital
stock of any Subsidiary was issued in violation of the preemptive or
similar rights of any securityholder of such Subsidiary. The only
subsidiaries of Delphi are (A) the Subsidiaries listed on Schedule C
hereto and (B) certain other subsidiaries, each of which is not a
"significant subsidiary" as defined in Rule 1-02 of Regulation S-X.
Holdings is the only Subsidiary of the Company.
(viii) Capitalization of the Delphi Parties. The authorized,
issued and outstanding capital stock of the Company is, in all material
respects, as set forth in the Prospectus in the column entitled
"Actual" under the caption "Capitalization" (except for subsequent
issuances, if any, pursuant to this Agreement.) The shares of issued
and outstanding capital stock of the Company have been duly authorized
and validly issued and are fully paid and non-assessable; none of the
outstanding shares of capital stock of the Company was issued in
violation of the preemptive or other similar rights of any
securityholder of the Company.
The authorized, issued and outstanding capital stock
of Delphi is, in all material respects, as set forth in the Prospectus
in the column entitled "Actual" under the caption "Capitalization"
(except for subsequent issuances, if any, pursuant to this Agreement,
or pursuant to the exercise of options referred to in the Prospectus).
The shares of issued and outstanding capital stock of Delphi have been
duly authorized and validly issued and are fully paid and non-
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assessable; none of the outstanding shares of capital stock of Delphi
was issued in violation of the preemptive or other similar rights of
any securityholder of Delphi.
(ix) Authorization of Agreement and Transaction Documents.
Each of this Agreement and the contribution and loan agreement to be
entered into by and between the Delphi Parties as of [___], 2003 (the
"Contribution and Loan Agreement") has been duly authorized, and when
executed and delivered by each of the Delphi Parties, as applicable
and, in the case of the Contribution and Loan Agreement, will
constitute a valid and binding obligation of the Delphi Parties
enforceable in accordance with its terms; the Mortgage Notes, the
Holdings operating agreement between the Company and Delphi, the Series
A preferred stock exchange agreement between the Company and Delphi,
the management and servicing agreement between the Company and Delphi,
and the deeds of trust, security agreements, assignments of rents and
leases and fixture filings relating to each of the Properties (together
with the Contribution and Loan Agreement, the "Transaction Documents")
have each been duly authorized and, upon execution and delivery by the
Delphi Parties and the subsidiaries of Delphi who are parties thereto
as contemplated by the Prospectus, will be valid and binding
obligations of the Delphi Parties and the Delphi subsidiaries that are
parties thereto, including Holdings, enforceable in accordance with
their terms.
(x) Authorization and Description of Securities. The
Securities have been duly authorized for issuance and sale to the
Underwriters pursuant to this Agreement and, when issued and delivered
by the Company pursuant to this Agreement against payment of the
consideration set forth herein, will be validly issued and fully paid
and non-assessable; the Securities conform to the statements relating
thereto contained in the Prospectus and such description conforms, in
all material respects, to the rights set forth in the instruments
defining the same; no holder of the Securities will be subject to
personal liability by reason of being such a holder; and the issuance
of the Securities is not subject to the preemptive or other similar
rights of any securityholder of the Company.
(xi) Authorization and Description of the Delphi Securities.
The Delphi Securities conform to all statements relating thereto
contained or incorporated by reference in the Prospectus and such
description conforms, in all material respects, to the rights set forth
in the instruments defining the same. The Delphi Securities have been
duly authorized and reserved for issuance and when issued upon the
occurrence of an exchange event will be validly issued and fully paid
and non-assessable; no holder of such shares will be subject to
personal liability by reason of being such a holder; and the issuance
of such shares upon such event will not be subject to the preemptive or
other similar rights of any security holder of Delphi.
(xii) Absence of Defaults and Conflicts. Neither the Company
nor Delphi or any of their subsidiaries is in violation of its charter
or by-laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Company or Delphi
or any of their subsidiaries is a party or by which it or any of them
may be bound, or to which any of the property or assets of the Company
or Delphi or any subsidiary is subject (collectively, "Agreements and
Instruments") except for such defaults that would not result in a
Material Adverse Effect; and the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated
herein and in the Registration Statement and compliance by the Delphi
Parties with their respective obligations hereunder have been duly
authorized by all necessary corporate action and do not and will not,
whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of, or default or Repayment
Event (as defined below) under, or result in the creation or
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imposition of any lien, charge or encumbrance upon any property or
assets of the Company or Delphi or any subsidiary pursuant to, the
Agreements and Instruments (except for the liens and encumbrances to be
created pursuant to the Contribution and Loan Agreement and such
conflicts, breaches, defaults or Repayment Events or liens, charges or
encumbrances that would not result in a Material Adverse Effect), nor
will such action result in any violation of the provisions of the
charter or by-laws of the Company or Delphi or any subsidiary or any
applicable law, statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over the Company or Delphi or any
subsidiary or any of their assets, properties or operations. As used
herein, a "Repayment Event" means any event or condition which gives
the holder of any note, debenture or other evidence of indebtedness (or
any person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or Delphi or any subsidiary.
(xiii) Absence of Labor Dispute. Except as disclosed in the
documents Delphi has filed with the Commission pursuant to the 1934 Act
and except for disputes occurring in the ordinary course of business,
no labor dispute with the employees of Delphi or any of its
Subsidiaries exists or, to Delphi's knowledge, is imminent, and Delphi
is not aware of any existing or imminent labor disturbance by Delphi's
or any of its Subsidiaries' employees which would result in a Material
Adverse Effect.
(xiv) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Delphi
Parties of their respective obligations hereunder, in connection with
the offering, issuance or sale of the Securities hereunder, the
issuance of the Delphi Securities upon the occurrence of an exchange
event, or the consummation of the transactions contemplated by this
Agreement, except such as have been already obtained or as may be
required under the 1933 Act or the 1933 Act Regulations or state
securities laws.
(xv) Possession of Licenses and Permits. Delphi is not aware
of any failure by Delphi and its subsidiaries to possess such permits,
licenses, approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by the appropriate federal, state,
local or foreign regulatory agencies or bodies necessary to conduct the
business now operated by them, as would result in a Material Adverse
Effect; Delphi is not aware of any failure by Delphi and its
subsidiaries to be in material compliance with the terms and conditions
of all such Governmental Licenses, except where the failure so to
comply would not, in the aggregate, result in a Material Adverse
Effect; Delphi is not aware of any failure of the Governmental Licenses
to be valid and in full force and effect, except when the invalidity of
such Governmental Licenses or the failure of such Governmental Licenses
to be in full force and effect would not, in the aggregate, result in a
Material Adverse Effect; and neither Delphi nor any of its subsidiaries
has received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would
result in a Material Adverse Effect.
(xvi) Title to Property. To Delphi's knowledge, (A) Delphi and
its subsidiaries have good and marketable title to all real property
owned by Delphi and its subsidiaries and good title to all other
properties owned by them, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (i) are described in the
Prospectus or (ii) will not, in the aggregate, result in a Material
Adverse Effect; and, (B) all of the leases and subleases material to
the business of Delphi and its subsidiaries,
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considered as one enterprise, are in full force and effect, and neither
Delphi nor any subsidiary has any notice of any material claim of any
sort that has been asserted by anyone adverse to the rights of Delphi
or any subsidiary under any of the leases or subleases mentioned above,
or affecting or questioning the rights of Delphi or such subsidiary to
the continued possession of the leased or subleased premises under any
such lease or sublease, in each case which could reasonably be expected
to result in a Material Adverse Effect.
(xvii) Title to Mortgage Notes. After the consummation of the
transactions contemplated by the Contribution and Loan Agreement,
including, without limitation, the Initial Advance, as defined in the
Contribution and Loan Agreement, the execution and delivery of the
Mortgage Notes by Delphi to the Company and the contribution by the
Company of the Mortgage Notes to Holdings, which are to occur on or
about the Closing Time, Holdings will have good and marketable title to
the Mortgage Notes free and clear of all pledges, liens, security
interests, claims, restrictions, encumbrances or defects of any kind.
(xviii) Properties.
(A) The Properties conform in all material respects
to the descriptions thereof contained in the Registration
Statement and the Prospectus.
(B) No condemnation proceeding involving any of the
Properties or any portion thereof or parking facility used in
connection therewith has been commenced or, to the knowledge
of Delphi or the Company, is contemplated by any governmental
authority, nor has any portion of any of the Properties or any
parking facility used in connection therewith been materially
damaged due to fire or other casualty which would result in a
Material Adverse Effect; and each Property has adequate water,
gas, telephone, electrical supply, storm and sanitary sewerage
facilities and means of access to and from public streets or
highways for the purposes for which it is being used.
(C) Delphi is not aware that any of the Properties is
being operated in violation of any law, rule or regulation or
determination of any court or other governmental authority (a
"Requirement of Law") or any building permits, restrictions of
record, or any agreement affecting any such Property or part
thereof, or any judgment, decree or order applicable to such
Property which would result in a Material Adverse Effect.
(D) Delphi currently maintains in full force and
effect and with responsible and reputable insurance companies
(i) a customary All Risk insurance policy for each mortgaged
property for the full replacement cost of such mortgaged
property and (ii) a commercial general liability insurance
policy for each mortgaged property in an amount customary for
the industry.
(E) There are no ground leases from Delphi or any of
its subsidiaries affecting any of the mortgaged properties.
(xix) Investment Company Act. Neither the Company nor Delphi
is required, and upon the issuance and sale of the Securities as herein
contemplated and the application of the net proceeds therefrom as
described in the Prospectus neither will be required, to register as an
"investment company" under the Investment Company Act of 1940, as
amended (the "1940 Act").
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(xx) Environmental Laws. Except as described in the
Registration Statement, as amended or supplemented or through
information incorporated by reference, and except as would not result
in a Material Adverse Effect, (A) neither Delphi nor any of its
Subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of
common law or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or
judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum or petroleum
products, asbestos-containing materials or mold (collectively,
"Hazardous Materials") or to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous
Materials (collectively, "Environmental Laws") and (B) there are no
pending or threatened administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, liens, notices of noncompliance
or violation, investigation or proceedings relating to any
Environmental Law against Delphi or any of its Subsidiaries.
(xxi) Insurance. Delphi and its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the
businesses in which they are engaged.
(xxii) Taxes. The Delphi Parties have filed all foreign,
federal, state and local tax returns that are required to be filed or
have requested extensions thereof (except in any case in which the
failure so to file would not result in a Material Adverse Effect), and
has paid all taxes required to be paid by it and any other assessment,
fine or penalty levied against it, to the extent that any of the
foregoing is due and payable, except for any such assessment, fine or
penalty that is currently being contested in good faith or as would not
result in a Material Adverse Effect.
(xxiii) REIT Qualification. Commencing with the Closing Time,
the Company will be organized in conformity with the requirements for
qualification as a real estate investment trust (a "REIT") under the
Internal Revenue Code of 1986, as amended (the "Code"), and, following
the payment of the "earnings and profits" distribution contemplated by
the Prospectus, will have no earnings and profits accumulated in a
non-REIT year within the meaning of Section 857(a)(3)(B) of the Code,
and the proposed method of operation of the Company will enable the
Company to meet the requirements for taxation as a REIT under the Code
beginning with its taxable year ending December 31, 2003 and for its
subsequent taxable years. All statements in the Prospectus regarding
the Company's qualification as a REIT are true, complete and correct in
all material respects.
(xxiv) ERISA. Neither of the Delphi Parties nor any trade or
business (whether or not incorporated) that would be treated together
with either of the Delphi Parties as a single employer under Title IV
of the United States Employee Retirement Income Security Act of 1974,
as amended ("ERISA") (each, an "ERISA Affiliate"), has incurred, or
reasonably expects to incur, any material liability with respect to any
employee benefit plan which is subject to Title IV of ERISA, except as
disclosed in the Prospectus; and any such employee benefit plan in
which employees of any of the Delphi Parties or any ERISA Affiliate are
eligible to participate is in compliance in all material respects with
the presently applicable provisions of ERISA and the Code and
regulations and published interpretations thereunder.
(xxv) Payment of Dividends. No subsidiary of Delphi or the
Company is currently prohibited, directly or indirectly, from paying
any dividends to Delphi or the Company, from
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making any other distribution on such subsidiary's capital stock, from
repaying to Delphi or the Company, respectively, any loans or advances
to such subsidiary from Delphi, or from transferring any of such
subsidiary's property or assets to Delphi or any other subsidiary of
Delphi, as the case may be.
(xxvi) Internal Accounting Controls. Delphi and its
subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurances that (A) transactions are
executed in accordance with management's general or specific
authorization, (B) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to
maintain accountability for assets, (C) access to assets is permitted
only in accordance with management's general or specific authorization
and (D) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(xxvii) Disclosure Controls. Each of the Delphi Parties has
established and maintains disclosure controls and procedures (as such
term is defined in Rule 13a-14 and 15d-14 under the 1934 Act); such
disclosure controls and procedures (A) are designed to ensure that
material information relating to such Delphi Party, including its
consolidated subsidiaries, is made known to such Delphi Party's Chief
Executive Officer and its Chief Financial Officer by others within
those entities, particularly during the periods in which the periodic
reports required under the 1934 Act are being prepared, (B) in the case
of Delphi, have been evaluated for effectiveness as of a date within 90
days prior to the filing of Delphi's most recent annual or quarterly
report filed with the Commission, and (C) are effective to perform the
functions for which they were established; Delphi's auditors and the
Audit Committee of the Board of Directors have been advised of: (i) any
significant deficiencies in the design or operation of internal
controls which could adversely affect Delphi's ability to record,
process, summarize, and report financial data and (ii) any fraud,
whether or not material, that involves management or other employees
who have a role in Delphi's internal controls; any material weaknesses
in internal controls have been identified for Delphi's auditors; and
since the date of the most recent evaluation of such disclosure
controls and procedures, there have been no significant changes in
internal controls or in other factors that could significantly affect
internal controls, including any corrective actions with regard to
significant deficiencies and material weaknesses.
(xxviii) Loans to Directors or Executive Officers. Delphi has
provided the Underwriters true, correct, and complete copies of all
documentation pertaining to any extension of credit in the form of a
personal loan made, directly or indirectly, by Delphi to any director
or executive officer of Delphi, or to any family member or affiliate of
any director or executive officer of Delphi; and since July 30, 2002,
Delphi has not, directly or indirectly, including through any
subsidiary: (A) extended credit, arranged to extend credit, or renewed
any extension of credit, in the form of a personal loan, to or for any
director or executive officer of Delphi, or to or for any family member
or affiliate of any director or executive officer of Delphi or (B) made
any material modification, including any renewal thereof, to any term
of any personal loan to any director or executive officer of Delphi, or
any family member or affiliate of any director or executive officer,
which loan was outstanding on July 30, 2002.
(xxix) Offer and Sale of the Securities. The Company and
Delphi have not distributed and, prior to the later to occur of (A) the
Closing Time and (B) completion of the distribution of the Securities,
they will not distribute any offering materials in connection with the
offering and sale of the Securities other than the Registration
Statement, the preliminary prospectus, the Prospectus or other
materials, if any, permitted by the 1933 Act.
9
(xxx) Collateral. Delphi Automotive Systems LLC and Delco
Electronics Corporation own all of the Properties free and clear of
any liens, claims or interests, except for Permitted Liens (as defined
in the Contribution and Loan Agreement). Each deed of trust, security
agreement, assignment of rents and leases and fixture filings by
Delphi Automotive Systems LLC or Delco Electronics Corporation, as the
case may be, for the benefit of the Company, creates valid,
enforceable first priority liens and security interests against the
Mortgaged Property (as defined therein).
(b) Officer's Certificates. Any certificate signed by any officer of
the Company or Delphi delivered to the Representative or to counsel for the
Underwriters shall be deemed a representation and warranty by the Company or
Delphi, respectively, to each Underwriter as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Company, at the price per share set forth in Schedule B, the number of
Initial Securities set forth in Schedule A opposite the name of such
Underwriter, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 9 hereof.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Underwriters, severally
and not jointly, to purchase up to an additional 1,800,000 shares of the
Company's [_]% Non-Cumulative Redeemable Exchangeable Perpetual Series A
Preferred Stock at the price per share set forth in Schedule B. The option
hereby granted will expire 30 days after the date hereof and may be exercised in
whole or in part from time to time only for the purpose of covering
overallotments which may be made in connection with the offering and
distribution of the Initial Securities upon written notice by Merrill Lynch to
the Company setting forth the number of Option Securities as to which the
several Underwriters are then exercising the option and the time and date of
payment and delivery for such Option Securities. Any such time and date of
delivery (a "Date of Delivery") shall be determined by Merrill Lynch, but shall
not be later than seven full business days after the exercise of said option,
nor in any event prior to the Closing Time, as hereinafter defined. If the
option is exercised as to all or any portion of the Option Securities, each of
the Underwriters, acting severally and not jointly, will purchase that
proportion of the total number of Option Securities then being purchased which
the number of Initial Securities set forth in Schedule A opposite the name of
such Underwriter bears to the total number of Initial Securities, subject in
each case to such adjustments as Merrill Lynch in its discretion shall make to
eliminate any sales or purchases of fractional shares.
(c) Commission. Upon the payment of the purchase price for the
Securities, the Company agrees to pay to Merrill Lynch, for the accounts of the
several Underwriters, a commission set forth in Schedule B as compensation to
the Underwriters for their commitments under this Agreement.
(d) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of Cleary,
Gottlieb, Steen & Hamilton, One Liberty Plaza, New York, New York 10006-1470, or
at such other place as shall be agreed upon by the Representative and the
Company, at 9:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs
after 4:30 P.M. (Eastern time) on any given day) business day after the date
hereof (unless postponed in accordance with the provisions of Section 9), or
such other time not later than ten business days after such date as shall be
agreed upon by the Representative and the Company (such time and date of payment
and delivery being herein called "Closing Time").
10
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for, and delivery
of certificates for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the Representative
and the Company, on each Date of Delivery as specified in the notice from the
Representative to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Representative for the respective accounts of the Underwriters of the
Securities to be purchased by them. Delivery of the Securities shall be made
through the facilities of The Depository Trust Company unless the Representative
shall otherwise instruct. It is understood that each Underwriter has authorized
the Representative, for its account, to accept delivery of, receipt for, and
make payment of the purchase price for, the Initial Securities and the Option
Securities, if any, which it has agreed to purchase. Merrill Lynch, individually
and not as representative of the Underwriters, may (but shall not be obligated
to) make payment of the purchase price for the Initial Securities or the Option
Securities, if any, to be purchased by any Underwriter whose funds have not been
received by the Closing Time or the relevant Date of Delivery, as the case may
be, but such payment shall not relieve such Underwriter from its obligations
hereunder.
(e) Denominations; Registration. The Initial Securities and the Option
Securities, if any, shall be in such denominations and registered in such names
as the Representative may request in writing at least two full business days
before the Closing Time or the relevant Date of Delivery, as the case may be.
The certificates for the Initial Securities and the Option Securities, if any,
will be made available for examination and packaging by the Representative in
The City of New York not later than 10:00 A.M. (Eastern time) on the business
day prior to the Closing Time or the relevant Date of Delivery, as the case may
be.
SECTION 3. Covenants of the Delphi Parties. Each of the Delphi Parties
jointly and severally covenants with each Underwriter as follows:
(a) Filing of Amendments. The Delphi Parties will give the
Representative notice of their intention to file or prepare any
amendment or supplement to the Registration Statement (including any
filing under Rule 462(b)), and will furnish the Representative with a
copy of any such amendment or supplement a reasonable amount of time
prior to such proposed filing or use, as the case may be, and will not
file or use any such document to which the Representative or counsel
for the Underwriters shall reasonably object, unless counsel to the
Delphi Parties advises that such filing is required by law.
(b) Delivery of Registration Statements. The Delphi Parties
have furnished or will deliver to the Representative and counsel for
the Underwriters, without charge, two signed copies of the Registration
Statement as originally filed and of each amendment thereto (including
exhibits filed therewith) and will also deliver to the Representative,
without charge, a conformed copy of the Registration Statement as
originally filed and of each amendment thereto (without exhibits) for
each of the Underwriters. The copies of the Registration Statement and
each amendment thereto furnished to the Underwriters will be identical
to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(c) Delivery of Prospectuses. The Delphi Parties have
delivered to each Underwriter, without charge, as many copies of each
preliminary prospectus as such Underwriter reasonably requested, and
the Delphi Parties hereby consent to the use of such copies for
purposes permitted by the 1933 Act. The Delphi Parties will furnish to
each Underwriter, without charge, during the
11
period when the Prospectus is required to be delivered under the 1933
Act, such number of copies of the Prospectus (as amended or
supplemented) as such Underwriter may reasonably request. The
Prospectus and any amendments or supplements thereto furnished to the
Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T.
(d) Continued Compliance with Securities Laws. Each of the
Delphi Parties and Holdings will comply with the 1933 Act and the 1933
Act Regulations and the 1934 Act and the 1934 Act Regulations so as to
permit the completion of the distribution of the Securities as
contemplated in this Agreement and in the Prospectus. If at any time
when a Prospectus is required by the 1933 Act to be delivered in
connection with sales of the Securities, any event shall occur or
condition shall exist as a result of which it is necessary, in the
opinion of counsel for the Underwriters or for the Delphi Parties, to
amend the Prospectus in order that the Prospectus will not include any
untrue statements of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the
light of the circumstances existing at the time it is delivered to a
purchaser, or if it shall be necessary, in the opinion of such counsel,
at any such time to amend the Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations, the Delphi
Parties and Holdings will promptly prepare and file with the
Commission, subject to Section 3(b), such amendment or supplement as
may be necessary to correct such statement or omission or to make the
Registration Statement or the Prospectus comply with such requirements.
(e) Rule 158. The Delphi Parties and Holdings will make
generally available to their securityholders as soon as practicable an
earnings statement covering the 12-month period ending December 31,
2004, which shall in each case satisfy the last paragraph of Section
11(a) of the 1933 Act.
(f) Use of Proceeds. The Delphi Parties will use the net
proceeds from the sale of the Securities in the manner specified in the
Prospectus under "Use of Proceeds".
(g) Reporting Requirements. The Delphi Parties and Holdings,
during the period when the Prospectus is required to be delivered under
the 1933 Act, such period not to exceed 25 calendar days after the date
of the Prospectus, will use their reasonable best efforts to file all
documents required to be filed with the Commission pursuant to the 1934
Act within the time periods required by the 1934 Act and the 1934 Act
Regulations.
(h) Maintenance of REIT Qualification. The Company will use
its reasonable best efforts to continue to meet the requirements to
qualify as a REIT under the Code subject to future economic, market,
legal, and tax considerations and a determination by the board of
directors of the Company (including its independent directors) that
revocation of the Company's REIT status is in the best interests of the
Company and its shareholders.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to
the performance of its obligations under this Agreement, including (i)
the preparation, printing and filing of the Registration Statement
(including financial statements and exhibits) as originally filed and
of each amendment thereto, (ii) the preparation, issuance and delivery
of the Securities to the Underwriters, including any stock or other
transfer taxes and any stamp or other duties payable upon the sale,
issuance or delivery of the Securities to the Underwriters, (iii) the
fees and
12
disbursements of the Company's counsel and accountants; (iv) the
printing and delivery to the Underwriters of copies of each preliminary
prospectus, and of the Prospectus and any amendments or supplements
thereto, (v) the fees and expenses of any transfer agent or registrar
for the Securities, (vi) any fees charged by securities rating services
for rating the Securities, and (vii) the fees and expenses incurred in
connection with the listing of the Securities on the New York Stock
Exchange.
(b) Termination of Agreement. If this Agreement is terminated
by the Representative in accordance with the provisions of Section 5,
the Company shall reimburse the Underwriters for reasonable
out-of-pocket expenses actually incurred by such Underwriters,
including the reasonable fees and disbursements of counsel for the
Underwriters, it being understood that if such termination relates to
the failure of the Delphi Parties to fulfill the conditions set forth
in Section 5(l) hereof, such expenses shall be limited to reasonable
out-of-pocket expenses incurred in connection with the Underwriters'
exercise of their option provided in Section 2(b) hereof.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the Delphi Parties contained in Section 1
hereof or in certificates of any officer of the Company or Delphi delivered
pursuant to the provisions hereof, to the performance by each such Delphi Party
of its covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective and at Closing Time no stop order suspending the
effectiveness of the Registration Statement shall be in effect and
pending, or threatened by the Commission. A prospectus containing the
Rule 430A Information shall have been filed with the Commission in
accordance with Rule 424(b) (or a post-effective amendment providing
such information shall have been filed and declared effective in
accordance with the requirements of Rule 430A).
(b) Opinion of Counsel for the Delphi Parties. At Closing
Time, the Representative shall have received the favorable opinion,
dated as of Closing Time, of Shearman and Sterling LLP, counsel for the
Delphi Parties, substantially in a form and substance reasonably
satisfactory to counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters.
(c) Opinion of Maryland Counsel for the Company. At the
Closing Time, the Representative shall have received the favorable
opinion, dated as of Closing Time, of Venable, Baetjer and Howard, LLP,
Maryland counsel for the Company, substantially in a form and substance
reasonably satisfactory to counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other
Underwriters.
(d) Opinion of Counsel for Delphi. At the Closing Time, the
Representative shall have received the favorable opinion, dated as of
Closing Time, of Sean P. Corcoran, Esq., Assistant General Counsel for
Commercial and Transactional of Delphi, substantially in a form and
substance reasonably satisfactory to counsel for the Underwriters,
together with signed or reproduced copies of such letter for each of
the other Underwriters.
(e) Opinion of Counsel for the Underwriters. At Closing Time,
the Representative shall have received the favorable opinion, dated as
of Closing Time, of Cleary, Gottlieb, Steen & Hamilton, counsel for the
Underwriters, together with signed or reproduced copies of such letter
for each of the other Underwriters, substantially in a form and
substance reasonably satisfactory
13
to the Underwriters. In giving such opinion such counsel may rely, as
to all matters governed by the laws of jurisdictions other than the law
of the State of New York, the federal law of the United States and the
General Corporation Law of the State of Delaware, upon the opinions of
counsel satisfactory to the Representative. Such counsel may also state
that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers
of the Company and Delphi and certificates of public officials.
(f) Officers' Certificate. At Closing Time, there shall not
have been, since the date hereof or since the respective dates as of
which information is given in the Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of Delphi, the Company and their
subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business, and the Representative shall have
received a certificate of the President or a Vice President of each of
the Delphi Parties and of the chief financial or chief accounting
officer of each of the Delphi Parties, dated as of Closing Time, to the
effect that (i) there has been no such material adverse change, (ii)
the representations and warranties in Section 1(a) hereof are true and
correct with the same force and effect as though expressly made at and
as of Closing Time, (iii) the Company, Delphi or Holdings, as
applicable, has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to
Closing Time, and (iv) no stop order suspending the effectiveness of
the Registration Statement is in effect, pending, or, to their
knowledge, contemplated by the Commission.
(g) Accountant's Comfort Letter. At the time of the execution
of this Agreement, the Representative shall have received from Deloitte
& Touche LLP a letter dated such date, in form and substance
satisfactory to the Representative, together with signed or reproduced
copies of such letter for each of the other Underwriters containing
statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(h) Bring-down Comfort Letter. At Closing Time, the
Representative shall have received from Deloitte & Touche LLP a letter,
dated as of Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to subsection (g) of
this Section, except that the specified date referred to shall be a
date not more than three business days prior to Closing Time.
(i) Maintenance of Rating. At Closing Time, the Securities
shall be rated at least [___] by Moody's Investor's Service and [___]
by Standard & Poor's Ratings Group, a division of The McGraw-Hill
Companies, Inc., and the Company shall have delivered to the
Representative a letter dated the Closing Time, from each such rating
agency, or other evidence satisfactory to the Representative,
confirming that the Securities have such ratings; and since the date of
this Agreement, there shall not have occurred a downgrading in the
rating assigned to the Securities or any of Delphi's securities by any
"nationally recognized statistical rating agency", as that term is
defined by the Commission for purposes of Rule 436(g)(2) under the 1933
Act, and no such organization shall have publicly announced that it has
under surveillance or review its rating of the Securities or any of
Delphi's securities.
(j) Approval of Listing. At Closing Time, the Securities shall
have been approved for listing on the New York Stock Exchange, subject
only to official notice of issuance.
14
(k) Consummation of Contemplated Transactions. At the Closing
Time, all of the transactions contemplated by and described in the
Registration Statement as occurring on or about or upon the Closing
shall have occurred.
(l) Conditions to Purchase of Option Securities. In the event
that the Underwriters exercise their option provided in Section 2(b)
hereof to purchase all or any portion of the Option Securities, the
representations and warranties of the Delphi Parties contained herein
and the statements in any certificates furnished by the Delphi Parties
hereunder shall be true and correct as of each Date of Delivery and, at
the relevant Date of Delivery, the Representative shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of each of the
Delphi Parties and of the chief financial or chief accounting
officer of each of the Delphi Parties confirming that the
certificate delivered at the Closing Time pursuant to Section
5(f) hereof remains true and correct as of such Date of
Delivery.
(ii) Opinion of Counsel for the Delphi Parties. The favorable
opinion of Shearman and Sterling LLP, counsel for the Delphi
Parties dated such Date of Delivery, and substantially in a
form and substance reasonably satisfactory to counsel for the
Underwriters, but relating to the Option Securities to be
purchased on such Date of Delivery.
(iii) Opinion of Maryland Counsel for Company. The favorable
opinion of Venable, Baetjer and Howard, LLP, Maryland counsel
for the Company, dated such Date of Delivery, and
substantially in a form and substance reasonably satisfactory
to counsel for the Underwriters, but relating to the Option
Securities to be purchased on such Date of Delivery.
(iv) Opinion of Counsel for Delphi. The favorable opinion of
Sean P. Corcoran, Esq., Assistant General Counsel for
Commercial and Transactional of Delphi, dated such Date of
Delivery, and substantially in a form and substance reasonably
satisfactory to counsel for the Underwriters, but relating to
the Option Securities to be purchased on such Date of
Delivery.
(v) Opinion of Counsel for Underwriters. The favorable opinion
of Cleary, Gottlieb, Steen and Hamilton, counsel for the
Underwriters, dated such Date of Delivery, relating to the
Option Securities to be purchased on such Date of Delivery and
otherwise to the same effect as the opinion required by
Section 5(e) hereof.
(vi) Bring-down Comfort Letter. A letter from Deloitte and
Touche LLP, in form and substance satisfactory to the
Representative and dated such Date of Delivery, substantially
in the same form and substance as the letter furnished to the
Representative pursuant to Section 5(g) hereof, except that
the "specified date" in the letter furnished pursuant to this
paragraph shall be a date not more than five days prior to
such Date of Delivery.
(vii) No Downgrading. Subsequent to the date notice is given
by Merrill Lynch of its exercise of the option pursuant to
Section 2(b), no downgrading shall have occurred in the rating
accorded the Securities or of any of Delphi's securities by
any "nationally recognized statistical rating organization",
as that term is defined by the Commission for
15
purposes of Rule 436(g)(2) under the 1933 Act, and no such
organization shall have publicly announced that it has under
surveillance or review its ratings of the Securities or any of
Delphi's securities.
(m) Additional Documents. At Closing Time and at each Date of
Delivery, counsel for the Underwriters shall have been furnished with
such documents and opinions as they may reasonably require for the
purpose of enabling them to pass upon the issuance and sale of the
Securities as herein contemplated, or in order to evidence the accuracy
of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken by the
Delphi Parties in connection with the issuance and sale of the
Securities as herein contemplated shall be reasonably satisfactory in
form and substance to the Representative and counsel for the
Underwriters.
(n) Termination of Agreement. If any condition specified in
this Section shall not have been fulfilled when and as required to be
fulfilled, this Agreement, or, in the case of any condition to the
purchase of Option Securities on a Date of Delivery which is after the
Closing Time, the obligations of the several Underwriters to purchase
the relevant Option Securities, may be terminated by the Representative
by written notice to the Delphi Parties at any time at or prior to
Closing Time or such Date of Delivery, as the case may be, and such
termination shall be without liability of any party to any other party
except as provided in Section 4 and except that Sections 6 and 7 shall
survive any such termination and remain in full force and effect.
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Delphi Parties jointly and
severally agree to indemnify and hold harmless each Underwriter, its selling
agents and each person, if any, who controls any Underwriter within the meaning
of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all
loss, liability, claim and damage caused by any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement (or
any amendment thereto), including the Rule 430A Information, or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or caused by any untrue
statement or alleged untrue statement of a material fact included in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating, defending
or settling any such losses, claims, damages, or liabilities after receipt of
adequate documentation relating thereto; provided, however, that the foregoing
indemnity agreement, with respect to any preliminary prospectus or Prospectus,
shall not inure to the benefit of any Underwriter from whom the person asserting
any such losses, claims, damages, or liabilities purchased securities, or any
person controlling such Underwriter, if a copy of the Prospectus (as then
amended or supplemented) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been delivered, at or
prior to the written confirmation of the sale of the Securities to such person,
and if the Prospectus (as so amended or supplemented) would have cured the
defect giving rise to such losses, claims, damages, or liabilities, and;
provided, further, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Delphi Parties
by the Representative or any Underwriter through Merrill Lynch expressly for use
in the Registration Statement (or any amendment thereto), including the Rule
430A Information, or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
16
(b) Indemnification of Company, Directors and Officers. Each
Underwriter severally agrees to indemnify and hold harmless the Delphi Parties,
each of their directors, each of their officers who signed the Registration
Statement, and each person, if any, who controls a Delphi Party within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any
and all loss, liability, claim, damage and expense described in the indemnity
contained in subsection (a) of this Section, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions,
made in the Registration Statement (or any amendment thereto), including the
Rule 430A Information or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to either of the Delphi Parties by the Representative or
by any such Underwriter through Merrill Lynch expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the Prospectus (or any amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give written notice as promptly as reasonably practicable to each indemnifying
party of any action commenced against it in respect of which indemnity may be
sought hereunder, but failure to so notify an indemnifying party shall not
relieve such indemnifying party from any liability hereunder to the extent it is
not materially prejudiced as a result thereof. The indemnifying party, upon
request of the indemnified party, shall retain counsel reasonably satisfactory
to the indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party shall have agreed in
writing to pay such fees and expenses, (ii) the indemnifying party shall have
failed to assume the defense of such proceeding and employ counsel reasonably
satisfactory to the indemnified person in such proceeding, or (iii) the named
parties to any such proceeding (including any impleaded parties) include both
the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. In no event shall the indemnifying parties be
liable for fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel for all indemnified parties. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement, compromise, or judgment. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim.
SECTION 7. Contribution. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Delphi Parties on
the one hand and the Underwriters on the other hand from the offering of the
Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Delphi Parties on the one hand and of
the Underwriters
17
on the other hand in connection with the statements or omissions which resulted
in such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative benefits received by the Delphi Parties on the one hand
and the Underwriters on the other hand in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Delphi Parties and the total underwriting discount received by the
Underwriters, in each case as set forth on the cover of the Prospectus, bear to
the aggregate initial public offering price of the Securities as set forth on
the cover of the Prospectus.
The relative fault of the Delphi Parties on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Delphi Parties or by the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Delphi Parties and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act and each Underwriter's Affiliates and selling agents shall have the
same rights to contribution as such Underwriter, and each director of the
Company or Delphi, each officer of the Company or Delphi who signed the
Registration Statement, and each person, if any, who controls a Delphi Party
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as the Delphi Parties. The
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of Initial Securities set forth opposite
their respective names in Schedule A hereto and not joint.
SECTION 8. Termination of Agreement.
(a) Termination; General. The Representative may terminate this
Agreement, by notice to the Company, at any time after the date of this
Underwriting Agreement and prior to Closing Time (i) if
18
there has occurred any material adverse change in the financial markets in the
United States, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national political, financial or economic conditions, or (ii) if trading in
any securities of Delphi has been suspended or materially limited by the
Commission or the New York Stock Exchange, or if trading generally on the
American Stock Exchange or the New York Stock Exchange has been suspended or
materially limited by either of said exchanges or by order of the Commission or
any other governmental authority, (iii) a material disruption has occurred in
commercial banking or securities settlement or clearance services in the United
States, or (iv) if a banking moratorium has been declared by either Federal or
New York authorities, in each case the effect of which is such as to make it, in
the judgment of the Representative, impracticable or inadvisable to market the
Securities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
6 and 7 shall survive such termination and remain in full force and effect.
SECTION 9. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at Closing Time or a Date of Delivery to purchase
the Securities which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the Representative shall have the right, within 24
hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representative shall not have completed
such arrangements within such 24-hour period, then:
(i) if the number of Defaulted Securities does not exceed 10%
of the number of Securities to be purchased on such date, each of the
non-defaulting Underwriters shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that
their respective underwriting obligations hereunder bear to the
underwriting obligations of all non-defaulting Underwriters, or
(ii) if the number of Defaulted Securities exceeds 10% of the
number of Securities to be purchased on such date, this Agreement or,
with respect to any Date of Delivery which occurs after the Closing
Time, the obligation of the Underwriters to purchase and of the Company
to sell the Option Securities to be purchased and sold on such Date of
Delivery shall terminate without liability on the part of any
non-defaulting Underwriter or the Delphi Parties.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default under this Agreement.
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time, which does not result in a termination of the obligation of the
Underwriters to purchase and the Company to sell the relevant Option Securities,
as the case may be, either the Representative or the Company shall have the
right to postpone Closing Time or the relevant Date of Delivery, as the case may
be, for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or Prospectus or in any other documents or
arrangements. As used herein, the term "Underwriter" includes any person
substituted for an Underwriter under this Section 9.
SECTION 10. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representative at 4 World Financial
Center, New York, New York 10080, attention of Paul Nagle, Debt Capital Markets;
notices to
19
Delphi shall be directed to it at 5725 Delphi Drive, Troy, Michigan 48098,
attention of Treasurer; and notices to the Company shall be directed to it at
5725 Delphi Drive, Troy, Michigan 48098, attention of Chief Executive Officer.
SECTION 11. Parties. This Agreement shall each inure to the benefit of
and be binding upon the Underwriters and the Delphi Parties and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Delphi Parties and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Underwriters and the Delphi
Parties and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
SECTION 12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 13. TIME. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT.
EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK
CITY TIME.
SECTION 14. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
SECTION 15. Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction hereof.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters and the Delphi Parties in accordance with its terms.
Very truly yours,
DELPHI PROPERTIES, INC.
By
--------------------------------
Title:
DELPHI CORPORATION
By
--------------------------------
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By
----------------------------------------------
Authorized Signatory
For itself and as Representative of the other Underwriters named in
Schedule A hereto.
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SCHEDULE A
Number of
Initial
Name of Underwriter Securities
------------------- ----------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.............................................................
----------
Total...................................................................................
==========
Sch A - 1
SCHEDULE B
DELPHI PROPERTIES, INC.
12,000,000 Shares
[_]% Non-Cumulative Redeemable Exchangeable Perpetual Series A Preferred Stock
1. The initial public offering price per share for the Securities,
determined as provided in said Section 2, shall be $[_].
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $[_] per share; provided that the purchase price
per share for any Option Securities purchased upon the exercise of the
overallotment option described in Section 2(b) shall be reduced by an amount per
share equal to any dividends or distributions declared by the Company and
payable on the Initial Securities but not payable on the Option Securities.
3. The commission to be paid to the Underwriters for their commitments
hereunder shall be $[_] per share; provided that the commission payable for any
Option Securities purchased upon the exercise of the overallotment option
described in Section 2(b) shall be increased by an amount per share equal to any
dividends or distributions declared by the Company and payable on the Initial
Securities but not payable on the Option Securities.
4. The dividend rate on the Securities is [ ]% per annum.
Sch B - 1
SCHEDULE C
[significant subsidiaries as defined in Rule 1-02 of Regulation S-X]
Delphi Automotive Systems LLC
Delco Electronics Corporation
Sch C - 1