As filed with the Securities and Exchange Commission on April 19, 2002
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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DELPHI FINANCIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3427277
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
DELPHI FINANCE TRUST I
(Exact name of registrant as specified in its charter)
Delaware Applied For
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
1105 North Market Street
Suite 1230
P.O. Box 8985
Wilmington, Delaware 19899
(302) 478-5142
(Address, including zip code, and telephone number, including area code, of
registrants' principal executive office)
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Robert Rosenkranz
Chairman of the Board,
President and Chief Executive Officer
Delphi Financial Group, Inc.
1105 North Market Street
Suite 1230
P.O. Box 8985
Wilmington, Delaware 19899
(302) 478-5142
(Address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
Chad W. Coulter, Esq. Geoffrey E. Liebmann, Esq.
General Counsel Cahill Gordon & Reindel
Delphi Financial Group, Inc. 80 Pine Street
1105 North Market Street New York, New York 10005-1702
Suite 1230 (212) 701-3000
P.O. Box 8985
Wilmington, Delaware 19899
(302) 478-5142
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Approximate date of commencement of proposed sale to the public: From time
to time after the registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum Amount of
Amount to Be Offering Price Per Aggregate Offering Registration
Title of Each Class of Securities Registered (2) (3) Security (4) Price (3) (4) (5) Fee (7)(8)
to Be Registered (1) (6)
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Class A Common Stock (par value
$.01 per share) of Delphi
Financial Group, Inc. (9)
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Preferred Stock (par value
$0.01 per share) of Delphi
Financial Group, Inc. (9)
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Debt Securities of Delphi
Financial Group, Inc.
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Class A Common Stock Warrants {$200,750,007 100% $200,750,007 $18,469}
of Delphi Financial Group,
Inc.
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Subordinated Deferrable
Interest Debentures of
Delphi Financial Group, Inc.
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Trust Preferred Securities of
Delphi Finance Trust I
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Trust Preferred Securities
Guarantees by Delphi
Financial Group, Inc. (10)
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(1) These Offered Securities may be sold separately, together as units or with
other offered securities.
(2) There is being registered hereunder an indeterminate amount of Delphi
Financial Group, Inc. Class A Common Stock, Delphi Financial Group, Inc.
preferred stock, Delphi Financial Group, Inc. debt securities, Delphi
Financial Group, Inc. Class A Common Stock warrants, Delphi Financial
Group, Inc. subordinated deferrable interest debentures, trust preferred
securities and guarantees by Delphi Financial Group, Inc. of trust
preferred securities, which may be issued from time to time (collectively,
the "Offered Securities").
(3) In U.S. dollars or the equivalent thereof in foreign currency or currency
units.
(4) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(o) under the Securities Act of 1933, as amended.
(5) Exclusive of accrued interest or dividends, if any.
(6) In the case of debt securities issued at any original issuance discount,
such greater amount as shall result in net proceeds of up to $250,000,000
to the registrant.
(7) Pursuant to Rule 429 under the Securities Act of 1933, the prospectus
included in this Registration Statement also relates to $49,249,993
proposed maximum offering price of unissued securities previously
registered under the registrant's Registration Statement on Form S-3 (File
No. 33-77028, filed on March 29, 1994), for which a registration fee of
$16,983.04 was previously paid. This registration statement shall act, upon
effectiveness, as Post-Effective Amendment No. 1 to Registration Statement
No. 33-77028.
(8) The registration fee has been calculated in accordance with Rule 457(o)
under the Securities Act of 1933 and reflects the offering price rather
than the principal amount of any debt securities issued at a discount. The
registration fee does not include the registration fee previously paid with
respect to $49,249,993 of securities covered by the registrant's
Registration Statement No. 33-77028 (filed on March 29, 1994) being carried
over to this Registration Statement.
(9) There is being registered hereunder (i) an indeterminate number of shares
of Delphi Financial Group, Inc. Class A Common Stock into which certain
series of Delphi Financial Group, Inc. debt securities and Delphi Financial
Group, Inc. preferred stock may be converted and for which no separate
consideration will be received, (ii) an indeterminate number of shares of
Delphi Financial Group, Inc. preferred stock into which certain series of
Delphi Financial Group, Inc. debt securities may be converted and for which
no separate consideration will be received and (iii) an indeterminate
number of shares of Delphi Financial Group, Inc. debt securities into which
certain series of the of Delphi Financial Group, Inc. preferred stock may
be converted and for which no separate consideration will be received. In
addition, pursuant to Rule 416 under the Securities Act of 1933, as
amended, any additional shares of preferred stock or common stock issued as
a re-
sult of the anti-dilution provisions of any convertible securities or
warrants issued hereunder are deemed to be registered herewith.
(10) No separate consideration will be received for the guarantees. The
guarantees include the rights of holders of the trust preferred securities
under the guarantees and certain backup undertakings, comprised of
obligations of Delphi Financial Group, Inc. under the subordinated
deferrable interest debentures indenture and any supplemental indentures
thereto and under the declaration of trust to provide certain indemnities
in respect of, and be responsible for certain costs, expenses, debts and
liabilities of, Delphi Finance Trust I, as described in the Registration
Statement. All obligations under the declaration of trust, including the
indemnity obligation, are included in the back-up undertakings.
The registrants hereby amend this registration statement on such date or
dates as may be necessary to delay its effective date until the registrants
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and we are not soliciting offers to buy these
securities in any jurisdiction where the offer is not permitted.
PRELIMINARY PROSPECTUS
Subject to Completion, April 19, 2002
$250,000,000
DELPHI FINANCIAL GROUP, INC.
Debt Securities
Preferred Stock
Class A Common Stock and Class A Common Stock Warrants
DELPHI FINANCE TRUST I
Trust Preferred Securities fully and unconditionally guaranteed to the
extent provided in this prospectus by Delphi Financial Group, Inc.
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The following are types of securities that may be offered and sold under this
prospectus:
o Debt Securities o Trust Preferred Securities
o Preferred Stock (par value $0.01 per share) o Guarantees of Trust Preferred Securities
o Class A Common Stock (par value $0.01 per share) o Subordinated Deferrable Interest
o Class A Common Stock Warrants Debentures
A prospectus supplement, which must accompany this prospectus, will describe the
securities Delphi Financial Group, Inc. and/or Delphi Finance Trust I are
offering and selling, as well as the specific terms of the securities. Those
terms may include, among others, as applicable:
o Maturity o Redemption terms
o Interest rate o Conversion terms
o Dividend rate o Listing on a securities exchange
o Sinking fund terms o Amount payable at maturity
o Ranking
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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See "Risk Factors" beginning on page 4 for certain information relevant to an
investment in the securities offered hereby.
The securities may be offered in amounts, at prices and on terms determined at
the time of offering. The securities may be sold directly to you, through agents
which Delphi Financial Group, Inc. and/or Delphi Finance Trust I may elect, or
through underwriters and dealers which Delphi Financial Group, Inc. and/or
Delphi Finance Trust I may select. If Delphi Financial Group, Inc. and/or Delphi
Finance Trust I use agents, underwriters or dealers to sell the securities,
Delphi Financial Group, Inc. and/or Delphi Finance Trust I, as applicable, will
name them and describe their compensation in a prospectus supplement.
, 2002
TABLE OF CONTENTS
Page
Prospectus Summary............................................................1
Risk Factors..................................................................4
Where You Can Find More Information...........................................9
Incorporation of Documents by Reference.......................................9
Use of Proceeds..............................................................10
Accounting Treatment Relating to Trust Securities............................10
Ratio of Earnings to Fixed Charges...........................................12
General Description of Offered Securities....................................12
Description of Debt Securities...............................................13
Description of Capital Stock of Delphi.......................................26
Description of Preferred Stock...............................................26
Description of Common Stock..................................................29
Description of Class A Common Stock Warrants.................................32
Description of Trust Preferred Securities....................................35
Description of the Trust Preferred Securities Guarantees.....................50
Description of the Subordinated Deferrable Interest Debentures...............54
Plan of Distribution.........................................................63
Legal Opinions...............................................................64
Experts......................................................................64
PROSPECTUS SUMMARY
This prospectus is part of a registration statement that Delphi Financial
Group, Inc. and Delphi Finance Trust I filed with the Securities and Exchange
Commission utilizing a "shelf" registration process, relating to:
(i) Delphi Financial Group, Inc.'s debt securities, preferred stock,
Class A Common Stock, Class A Common Stock warrants, subordinated
deferrable interest debentures and guarantees of trust preferred
securities; and
(ii) trust preferred securities of Delphi Finance Trust I.
Under this shelf process, Delphi Financial Group, Inc. and Delphi Finance
Trust I may sell the securities described in this prospectus in one or more
offerings up to a total initial offering price of $250,000,000. This prospectus
provides you with a general description of the securities that Delphi Financial
Group, Inc. and Delphi Finance Trust I may offer. This prospectus does not
contain all of the information set forth in the registration statement as
permitted by the rules and regulations of the SEC. For additional information
regarding Delphi Financial Group, Inc. or Delphi Finance Trust I and the Offered
Securities, please refer to the registration statement. Each time Delphi
Financial Group, Inc. or Delphi Finance Trust I sells securities it will provide
a prospectus supplement that will contain specific information about the terms
of that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. You should read both this prospectus
and any prospectus supplement together with additional information described
under the heading "Where You Can Find More Information."
In this prospectus and in the accompanying prospectus supplement, unless
the context requires otherwise, "we," "us," "our" and the "Company" refer to
Delphi Financial Group, Inc. and its subsidiaries, "Delphi" refers to Delphi
Financial Group, Inc. only and not any of its subsidiaries, and "Delphi trust"
or the "trust" refers to Delphi Finance Trust I.
Delphi Financial Group, Inc.
Delphi is a holding company, organized as a Delaware corporation in 1987,
whose subsidiaries provide integrated employee benefit services. We manage all
aspects of employee absence to enhance the productivity of our clients and
provide the related insurance coverages: long-term and short-term disability,
excess and primary workers' compensation, group life and travel accident. Our
asset accumulation business emphasizes individual annuity products. We offer our
products and services in all fifty states and the District of Columbia. Our two
reportable segments are group employee benefit products and asset accumulation
products.
Operating Strategy
Our operating strategy is to offer financial products and services that
have the potential for significant growth, that require specialized expertise to
meet the individual needs of our customers and which provide us the opportunity
to achieve superior operating earnings growth and returns on our shareholders'
capital.
We have concentrated our efforts within certain niche insurance markets,
primarily group employee benefits for small to mid-sized employers, where nearly
all of the employment growth in the American economy has occurred in the last
few years. We also market our group employee benefit products and services to
large employers, emphasizing unique programs that integrate both employee
benefit insurance coverages and absence management services. We also operate an
asset accumulation business that focuses primarily on offering fixed annuities
to individuals planning for retirement.
Our primary operating subsidiaries are as follows:
Reliance Standard Life Insurance Company, founded in 1907 and having
administrative offices in Philadelphia, Pennsylvania, and its subsidiary, First
Reliance Standard Life Insurance Company, underwrite a diverse portfolio of life
and accident and health insurance products targeted principally to the employee
benefits market. These companies also market asset accumulation products,
primarily fixed annuities, to individuals and groups. Delphi, through Reliance
Standard Life Insurance Company of Texas, acquired Reliance Standard Life and
First Reliance Standard Life in November 1987.
Safety National Casualty Corporation focuses primarily on providing
workers' compensation products to the self-insured market. Founded in 1942 and
located in St. Louis, Missouri, Safety National is one of the oldest continuous
writers of excess workers' compensation insurance in the United States. We
acquired Safety National in March 1996.
Matrix Absence Management, Inc., headquartered in San Jose, California,
provides integrated disability and absence management services to the employee
benefits market across the United States. We acquired Matrix in June 1998.
We are incorporated in the State of Delaware. Our principal executive
offices are located at 1105 North Market Street, Suite 1230, Wilmington,
Delaware 19899. Our telephone number is (302) 478-5142. Our website is
www.delphifin.com. The information contained on our website is not incorporated
by reference into this prospectus.
The Trust
Delphi Finance Trust I is a statutory business trust formed under Delaware
law pursuant to (i) a declaration of trust, executed by Delphi, as sponsor for
such trust, and the trustees and (ii) the filing of a certificate of trust with
the Delaware Secretary of State. The declaration of trust of the trust will be
amended and restated in its entirety substantially in the form filed as an
exhibit to the registration statement that includes this prospectus.
The trust exists for the exclusive purposes of
o issuing and selling the trust preferred securities representing
preferred undivided beneficial interests in the assets of the trust
and trust common securities representing common undivided beneficial
interests in the assets of the trust,
o investing the gross proceeds of the trust securities in a series of
subordinated deferrable interest debentures of Delphi and
o engaging only in other necessary or incidental activities.
All of the trust common securities will be directly or indirectly owned by
Delphi. The trust common securities will rank equal with the trust preferred
securities except that upon an event of default under the declaration, the
rights of the holders of the trust common securities to payment in respect of
distributions and payments will be junior, or subordinated, to the rights of the
holders of the trust preferred securities. Delphi will, directly or indirectly,
acquire trust common securities in an aggregate liquidation amount equal to 3%
of the total capital of the trust. The trust has a term of approximately 55
years, but may terminate earlier as provided in the declaration of trust.
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The trust's business and affairs will be conducted by the trustees
appointed by Delphi as the direct or indirect holder of all the trust common
securities. The holder of the trust common securities will be entitled to
appoint, remove or replace any of, or increase or reduce the number of, the
trustees of the trust. The duties and obligations of such trustees shall be
governed by the declaration of the trust, the Trust Indenture Act of 1939, as
amended, and the Delaware Business Trust Act. A majority of the trustees of the
trust will be persons who are employees or officers of or affiliated with
Delphi.
One trustee of the trust will be a financial institution which will be
unaffiliated with Delphi and which will act as property trustee and as indenture
trustee for purposes of the Trust Indenture Act, pursuant to the terms set forth
in a prospectus supplement. In addition, unless the property trustee maintains a
principal place of business in the State of Delaware, and otherwise meets the
requirements of applicable law, another trustee of the trust will have its
principal place of business or reside in the State of Delaware. Delphi will pay
all fees, expenses, debts and obligations (other than the trust securities)
related to the trust and the offering of trust securities. The office of the
Delaware trustee for the trust in the State of Delaware is Christiana Bank &
Trust Company, 1314 King Street, Wilmington, Delaware 19801 (telephone number
(302) 888-7400).
The principal place of business of the trust shall be c/o Delphi Financial
Group, Inc., 1105 North Market Street, Suite 1230, Wilmington, Delaware 19899
(telephone number (302) 478-5142).
Cautionary Note Regarding Forward-Looking Statements
In connection with, and because we desire to take advantage of, the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995, we
caution readers regarding certain forward-looking statements in this prospectus
and in any other statement made by us, or on our behalf, whether in future
filings with the SEC or elsewhere. Forward-looking statements are statements not
based on historical information and which relate to future operations,
strategies, financial results, prospects, outlooks or other developments. Some
forward-looking statements may be identified by the use of terms such as
"expects," "believes," "anticipates," "intends," "judgment" or other similar
expressions. Forward-looking statements are necessarily based upon estimates and
assumptions that are inherently subject to significant business, economic,
competitive and other uncertainties and contingencies, many of which are beyond
our control and many of which, with respect to future business decisions, are
subject to change. Examples of such uncertainties and contingencies include,
among other important factors, those affecting the insurance industry generally,
such as the economic and interest rate environment, federal and state
legislative and regulatory developments, including but not limited to changes in
financial services and tax laws and regulations, market pricing and competitive
trends relating to insurance products and services, acts of terrorism, and
availability of reinsurance, and those relating specifically to our business,
such as the level of our insurance premiums and fee income, the claims
experience, persistency and other factors affecting the profitability of our
insurance products, the performance of our investment portfolio and changes in
our investment strategy, acquisitions of companies or blocks of business, and
ratings by major rating organizations of our insurance subsidiaries. These
uncertainties and contingencies can affect actual results and could cause actual
results to differ materially from those expressed in any forward-looking
statements made by us, or on our behalf.
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RISK FACTORS
An investment in the offered securities involves a degree of risk.
Prospective investors should carefully evaluate the following considerations in
addition to the other information in this prospectus, including the information
in the documents incorporated by reference, and the prospectus supplement before
purchasing any of the securities offered hereby.
Risks Related to Us and Our Business
Because Delphi is a holding company, its ability to make payments in
respect of the Offered Securities will depend on receipt of funds from
subsidiaries and Delphi's other financial resources.
Because Delphi is a holding company, its ability to meet debt service
obligations (including service obligations on any debt securities) and to make
any payment required under the guarantees of any trust preferred securities, as
well as to pay dividends on the Class A Common Stock or preferred stock and
expenses, will depend upon receipt of sufficient funds from its subsidiaries, as
well as our financial resources at the holding company level.
We had approximately $62.6 million of financial resources available at the
holding company level at December 31, 2001, which was primarily comprised of
investments in the common stock of Delphi's investment subsidiaries. The assets
of the investment subsidiaries are primarily invested in fixed maturity
securities and balances with independent investment managers. Financial
resources available at the holding company level have decreased $204.3 million
since December 31, 2000 primarily due to the liquidation of a substantial
majority of the investments of Delphi's investment subsidiaries. The balances
with independent investment managers are substantially all withdrawable by us at
least annually, subject to applicable notice requirements.
Other current sources of liquidity at the holding company level include
dividends paid from subsidiaries, primarily generated from operating cash flows
and investments, and borrowings available under the revolving credit facilities
pursuant to two credit agreements dated as of June 1, 2000 among Delphi and its
lenders and their agents. Reliance Standard Life's ability to pay dividends is
subject to regulatory restrictions and, in the absence of regulatory approval,
are generally limited within any 12-month period, in the aggregate, to the
greater of Reliance Standard Life's statutory net income for the preceding
calendar year, or 10% of Reliance Standard Life's statutory surplus as of the
preceding December 31, determined in accordance with state insurance
regulations. Reliance Standard Life will be permitted to make dividend payments
of $24.3 million during 2002 without prior regulatory approval. Safety
National's ability to pay dividends is subject to regulatory restrictions and,
in the absence of the requisite approvals, dividends are generally limited
within any 12-month period, in the aggregate, to the lesser of 10% of Safety
National's statutory surplus as of the preceding December 31, or Safety
National's statutory net investment income for the preceding calendar year,
determined in accordance with state insurance regulations. Safety National will
be permitted to make dividend payments of $19.8 million during 2002 without
prior regulatory approval. Additional dividends may also be paid by Reliance
Standard Life and Safety National with the requisite approvals. At December 31,
2001, we had $165.0 million of borrowings available to us under our revolving
credit facilities.
Our current liquidity needs, in addition to funding lease commitments and
other operating expenses, include principal and interest payments on outstanding
borrowings under our revolving credit facilities, our 8.0% Senior Notes due
2003, the 8.5% senior secured notes of Safety National's immediate parent
company and our 8% subordinated notes due 2003, and distributions on the capital
securities of our subsidiary, Delphi Funding L.L.C. The maximum amount of
borrowings available under our revolving credit facilities, which expire in
April 2003, is currently $190.0 million and will be reduced to $140.0 million in
October 2002. Our Senior Notes mature in their entirety on October 1, 2003 and
are not subject to any sinking fund requirements nor are they redeemable prior
to maturity. The senior secured notes began maturing in $9.0 million annual
installments in 1999 with a final maturity
-4-
in May 2003 and have an outstanding principal balance of $18.0 million at
December 31, 2001. Our subordinated notes mature in their entirety in June 2003.
The junior subordinated debentures underlying the capital securities of Delphi
Funding are not redeemable prior to March 25, 2007. We intend to refinance the
revolving credit facilities and our Senior Notes prior to maturity.
Reserves established for future policy benefits and claims may prove
inadequate.
We establish reserves for future policy benefits and unpaid claims and
claims expenses relating to our insurance products. These reserves are
calculated using various generally recognized actuarial methodologies and are
based upon assumptions that management believes are appropriate and which vary
by type of product. The estimation process is complex and involves information
obtained from company-specific and industry-wide data, as well as general
economic information. The most significant assumptions made in the estimation
process for future policy benefits relate to mortality, withdrawal, claim
termination and interest rates. The reserves for unpaid claims and claim
expenses are determined on an individual basis for reported claims and estimates
of incurred but not reported losses are developed on the basis of past
experience. The most significant assumptions made in the estimation process for
unpaid claims and claim expenses are the trend in loss costs, the expected
frequency and severity of claims, changes in the timing of the reporting of
losses from the loss date to the notification date, and expected costs to settle
unpaid claims. The assumptions vary based on the year the claim is incurred.
Disability reserves for unpaid claims and claim expenses are discounted using
interest rate assumptions based upon projected portfolio yield rates for the
assets supporting the liabilities. The assets selected to support these
liabilities produce cash flows that are intended to match the timing and amount
of anticipated liability payments. Workers' compensation claim reserves are
discounted using interest rate assumptions based on the risk-free rate of return
for U.S. Government securities with a duration comparable to the expected
duration and payment pattern of the claims at the time the claims are settled.
The methods for establishing such estimates and the resulting liabilities are
continually reviewed and updated based on current circumstances, and any
resulting adjustments are reflected in earnings currently.
Our projected ultimate insurance liabilities and associated reserves are
estimates. As estimates, these values are subject to variability. This
variability arises because the factors and events affecting the ultimate
liability for claim reserves have not all taken place, and thus cannot be
evaluated with absolute certainty. If our actual loss experience is different
from our assumptions or estimates, our reserves could be inadequate. In such
event, our results of operations, liquidity or financial condition could be
materially adversely affected.
The market values of our investments fluctuate.
The market values of our investments vary depending on economic and market
conditions, including interest rates, and such values can decline as a result of
changes in such conditions. Increasing interest rates, for example, will
typically have an adverse impact on the market values of the fixed maturity
securities in our investment portfolio. If interest rates decline, we generally
achieve a lower overall rate of return on investments of cash generated from our
operations. In addition, in the event that investments are called or mature in a
declining interest rate environment, we may be unable to reinvest the proceeds
in securities with comparable interest rates. We may also be required in the
future to sell certain investments at a price and a time when the market value
of such investments is less than the book value of such investments.
Our investment and financing strategy exposes us to default, prepayment,
extension and other risks.
The management of our investment portfolio is an important component of our
profitability since a substantial portion of our operating income is generated
from the difference between the yield achieved on invested assets and the
interest credited on policyholder funds and reserves.
-5-
We are subject to the risk that the issuers of the fixed maturity
securities we own will default on principal and interest payments. Although the
weighted average credit rating of our fixed maturity portfolio as rated by
Standard & Poor's Corporation was "AA" at December 31, 2001, a major economic
downturn or any of the various other factors that affect issuers' ability to pay
could result in issuer defaults. Because our investments consist primarily of
fixed maturity securities and short-term investments, such defaults could
materially adversely affect our results of operations, liquidity or financial
condition. We continually monitor our investment portfolio and attempt to ensure
that the risks associated with concentrations of investments in either a
particular sector of the market or a single entity are limited.
At December 31, 2001, approximately 25% of our total invested assets were
comprised of mortgage-backed securities, of which approximately 36% are
guaranteed by U.S. Government sponsored entities as to the full amount of
principal and interest and the remaining 64% consists of investments in trusts
created by banks and finance and mortgage companies. Mortgage-backed securities
subject us to a degree of interest rate risk, including prepayment and extension
risk, which is generally a function of the sensitivity of each security's
underlying collateral to prepayments under varying interest rate environments
and the repayment priority of the securities in the particular securitization
structure.
Through our insurance subsidiaries, we maintain a program in which
investments are financed using advances from various Federal Home Loan Banks. At
December 31, 2001, we had outstanding advances of $162.0 million, of which $20.0
million were obtained during 2001. In 2001, we also repaid $6.5 million of FHLB
advances that had been obtained in 2000. The advances, of which $150.0 million
were obtained at a fixed rate and $12.0 million were obtained at a variable
rate, have a weighted average term to maturity of 7.7 years. In addition, we
have utilized reverse repurchase agreements, futures and option contracts and
interest rate swap contracts from time to time in connection with our investment
strategy. These transactions require us to maintain securities or cash on
deposit with the applicable counterparty as collateral. As the market value of
the collateral or contracts changes, we may be required to deposit additional
collateral.
The ability of our insurance subsidiaries to make investments is subject to
the insurance laws and regulations of their respective states of domicile. Each
of these states has comprehensive investment regulations. In addition, our
revolving credit facilities and the 8.5% senior secured notes of Safety
National's immediate parent company also contain limitations on the composition
of our investment portfolio.
Our financial position exposes us to interest rate risks.
Because our primary assets and liabilities are financial in nature, our
consolidated financial position and earnings are subject to risks resulting from
changes in interest rates. We manage this risk by active portfolio management
focusing on minimizing our exposure to fluctuations in interest rates by
matching our invested assets and related liabilities and by periodically
adjusting the crediting rates on our annuity products.
We regularly analyze the results of our asset/liability matching through
cash flow analysis and duration matching under multiple interest rate scenarios.
These analyses enable us to measure the potential gain or loss in fair value of
our interest-rate sensitive financial instruments due to hypothetical changes in
interest rates. Based on these analyses, if interest rates were to immediately
increase by 10% from their year-end levels, the fair value of our
interest-sensitive assets, net of corresponding changes in the fair value of
cost of business acquired and insurance and investment-related liabilities,
would decline by approximately $38.0 million at December 31, 2001. These
analyses incorporate numerous assumptions and estimates and assume no changes in
the composition of our investment portfolio in reaction to such interest rate
changes. Consequently, the results of this analysis will likely be materially
different from the actual changes experienced under given interest rate
scenarios.
-6-
Our ability to reduce our exposure to risks depends on the availability and
cost of reinsurance.
We transfer our exposure to some risks to others through reinsurance
arrangements with other insurance and reinsurance companies. Under our
reinsurance arrangements, another insurer assumes a specified portion of our
losses and loss adjustment expenses in exchange for a specified portion of
policy premiums. The availability, amount and cost of reinsurance depend on
market conditions and may vary significantly. Any decrease in the amount of our
reinsurance will increase our risk of loss. Furthermore, we are subject to
credit risk with respect to reinsurance. We obtain reinsurance primarily through
indemnity reinsurance transactions in which we are still liable for the
transferred risks if the reinsurers fail to meet their financial obligations to
us. Such failures could materially affect our results of operations, liquidity
or financial condition.
Some reinsurers experienced significant losses related to the terrorist
events of September 11, 2001. As a result, we may incur higher reinsurance costs
and less favorable terms and conditions. Also, there may be reduced availability
of reinsurance for some types of exposures.
The insurance business is a heavily regulated industry.
Our insurance subsidiaries, like other insurance companies, are highly
regulated by state insurance authorities in the states in which they are
domiciled and the other states in which they conduct business. Such regulations,
among other things, limit the amount of dividends and other payments that can be
made by such subsidiaries without prior regulatory approval and impose
restrictions on the amount and type of investments such subsidiaries may have.
These regulations also affect many other aspects of our insurance subsidiaries'
businesses, including, for example, risk-based capital requirements, various
reserve requirements, the terms, conditions and manner of sale and marketing of
insurance products and the form and content of required financial statements.
These regulations are intended to protect policyholders rather than investors.
The ability of our insurance subsidiaries to continue to conduct their
businesses is dependent upon the maintenance of their licenses in these various
states.
From time to time, increased scrutiny has been placed upon the insurance
regulatory framework, and a number of state legislatures have considered or
enacted legislative measures that alter, and in many cases increase, state
authority to regulate insurance companies. In addition to legislative
initiatives of this type, the National Association of Insurance Commissioners
and insurance regulators are continuously involved in a process of reexamining
existing laws and regulations and their application to insurance companies.
Furthermore, while the federal government currently does not directly regulate
the insurance business, federal legislation and administrative policies in a
number of areas, such as employee benefits regulation, age, sex and
disability-based discrimination, financial services regulation and federal
taxation, can significantly affect the insurance business. It is not possible to
predict the future impact of changing regulation on our operations and those of
our insurance subsidiaries.
The National Association of Insurance Commissioners' risk-based capital
requirements for insurance companies take into account asset risks, insurance
risks, interest rate risks and other relevant risks with respect to the
insurer's business and specify varying degrees of regulatory action to occur to
the extent that an insurer does not meet the specified risk-based capital
thresholds, with increasing degrees of regulatory scrutiny or intervention
provided for companies in categories of lesser risk-based capital compliance.
Although we believe that our insurance subsidiaries are adequately capitalized
under the risk-based capital requirements and that the thresholds will not have
any significant regulatory effect on us, were our insurance subsidiaries'
risk-based capital position to materially decline in the future, the insurance
subsidiaries' continued ability to pay dividends and the degree of regulatory
supervision or control to which they are subjected may be affected.
Our insurance subsidiaries can also be required, under solvency or guaranty
laws of most states in which they do business, to pay assessments to fund
policyholder losses or liabilities of insurance companies that become insolvent.
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Almost half of the voting power of Delphi is controlled by Robert
Rosenkranz, whose interests may differ from those of other securityholders.
Each share of our Class A Common Stock entitles the holder to one vote and
each share of our Class B Common Stock entitles the holder to a number of votes
per share equal to the lesser of (1) the number of votes such that the aggregate
of all outstanding shares of Class B Common Stock will be entitled to cast 49.9%
of all of the votes represented by the aggregate of all outstanding shares of
Class A Common Stock and Class B Common Stock or (2) ten votes. Each share of
Class B Common Stock is convertible at any time into one share of Class A Common
Stock. The holders of the Class A Common Stock vote as a separate class to elect
one director of the Company. As of March 22, 2002, Mr. Robert Rosenkranz, our
Chairman, President and Chief Executive Officer, by means of beneficial
ownership of the corporate general partner of Rosenkranz & Company and direct or
beneficial ownership, had the power to vote all of the outstanding shares of
Class B Common Stock, which as of such date represented 49.9% of the voting
power of the Common Stock. Holders of a majority of the combined voting power of
our stockholders have the power to elect all of the members of our Board of
Directors (other than the director elected by the holders of Class A Common
Stock) and to determine the outcome of fundamental corporate transactions,
including mergers and acquisitions, consolidations and sales of all or
substantially all of our assets. We are a party to consulting and other
agreements with certain affiliates of Rosenkranz & Company which are expected to
continue in accordance with their terms.
The financial services industry is highly competitive.
We compete with numerous other insurance and financial services companies
both in connection with sales of insurance and asset accumulation products and
integrated disability and absence management services and in acquiring blocks of
business and companies. Many of these organizations have substantially greater
asset bases, higher ratings from rating agencies, larger and more diversified
portfolios of insurance products and larger agency sales operations. Competition
in asset accumulation product markets is also encountered from the expanding
number of banks, securities brokerage firms and other financial intermediaries
marketing alternative savings products, such as mutual funds, traditional bank
investments and retirement funding alternatives.
We may be adversely impacted by a decline in the ratings of our insurance
subsidiaries.
Ratings with respect to claims-paying ability and financial strength have
become an increasingly important factor impacting the competitive position of
insurance companies. Each of the rating agencies reviews its ratings of
companies periodically and there can be no assurance that current ratings will
be maintained in the future. Claims-paying and financial strength ratings are
based upon factors relevant to policyowners and are not directed toward
protection of investors. A downgrade in the ratings of our insurance
subsidiaries could adversely affect sales of their products and could have a
material adverse effect on the results of our operations.
Risks Related to the Offered Securities
The material risks relating to the securities being offered will be
described in the prospectus supplement relating to the offering of those
securities.
-8-
WHERE YOU CAN FIND MORE INFORMATION
We and the trust have filed with the SEC under the Securities Act of 1933,
as amended (the "Securities Act"), a combined registration statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"registration statement") relating to the offered securities.
Delphi
Delphi is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy and information statements and other information
with the SEC. Such reports, proxy statements and other information can be
inspected and copied at prescribed rates at the public reference facilities
maintained by the SEC at Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. The SEC also maintains a website that contains reports, proxy and
information statements and other information. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. The
website address is http://www.sec.gov. In addition, such material can be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
The Trust
The trust is not currently subject to the information reporting
requirements of the Exchange Act. No separate financial statements of the trust
have been included herein. We do not believe that such financial statements
would be material to holders of the trust preferred securities because:
(i) all of the voting securities of the trust will be owned, directly or
indirectly, by Delphi, a reporting company under the Exchange Act,
(ii) the trust has no independent operations and exists for the sole
purpose of issuing securities representing undivided beneficial
interests in the assets of the trust and investing the proceeds
thereof in the subordinated deferrable interest debentures issued by
Delphi and
(iii) the obligations of the trust under the trust securities are fully and
unconditionally guaranteed by Delphi to the extent that the trust has
funds available to meet such obligations.
See "The Trust," "Description of the Trust Preferred Securities," "Description
of the Trust Preferred Securities Guarantees," and "Description of the
Subordinated Deferrable Interest Debentures."
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows Delphi to "incorporate by reference" into this prospectus
the information it files with the SEC, which means that it can disclose
important information to you by referring to another document filed separately
with the SEC. The information that Delphi files after the date of the initial
registration statement and prior to the effectiveness of the registration
statement will be deemed to be incorporated by reference into this prospectus.
The information that Delphi files after the date of this prospectus with the SEC
will automatically update and supersede this information. Delphi incorporates by
reference into this prospectus the document listed below and any future filings
made with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act.
o Annual Report on Form 10-K for the year ended December 31, 2001, filed
on March 28, 2002.
-9-
Any statement contained in a document incorporated or considered to be
incorporated by reference in this prospectus shall be considered to be modified
or superseded for purposes of this prospectus to the extent that a statement
contained in this prospectus or in any subsequently filed document that is or is
considered to be incorporated by reference modifies or supersedes such
statement. Any statement that is modified or superseded shall not, except as so
modified or superseded, constitute a part of this prospectus.
You may request a copy of any of the documents which are incorporated by
reference in this prospectus, other than exhibits which are not specifically
incorporated by reference into such documents, and Delphi's and the trust's
constitutional documents, at no cost, by writing or telephoning us at the
following:
Delphi Financial Group, Inc.
1105 North Market Street
Suite 1230
P.O. Box 8985
Wilmington, Delaware 19899
Attention: Secretary
Telephone: (302) 478-5142
Neither Delphi nor the trust have authorized anyone to give any information
or make any representation about Delphi or the trust that is different from, or
in addition to, that contained in this prospectus or in any of the materials
that Delphi or the trust have incorporated by reference into this document.
Therefore, if anyone does give you information of this sort, you should not rely
on it. If you are in a jurisdiction where offers to exchange or sell, or
solicitations of offers to exchange or purchase, the securities offered by this
document or the solicitation of proxies is unlawful, or if you are a person to
whom it is unlawful to direct these types of activities, then the offer
presented in this document does not extend to you. The information contained in
this document speaks only as of the date of this document, unless the
information specifically indicates that another date applies.
USE OF PROCEEDS
Except as may otherwise be described in the prospectus supplement relating
to an offering of securities, the net proceeds from the sale of the securities
included in this prospectus will be used for general corporate purposes. The
trust will invest all proceeds received from the sale of its trust securities in
a particular series of subordinated deferrable interest debentures of Delphi,
which will use such funds for general corporate purposes. Any specific
allocation of the net proceeds of an offering of securities to a specific
purpose will be determined at the time of such offering and will be described in
the related prospectus supplement.
ACCOUNTING TREATMENT RELATING TO TRUST SECURITIES
The financial statements of the trust that has issued trust securities will
be consolidated with Delphi's financial statements, with the trust preferred
securities of the trust shown on Delphi's consolidated financial statements as
Delphi Financial Group, Inc. obligated mandatorily redeemable preferred
securities of a subsidiary trust holding solely subordinated debt securities of
Delphi Financial Group, Inc. Delphi's financial statements will include a
footnote that discloses, among other things, that the sole asset of the trust
included therein consists of subordinated deferrable interest debentures of
Delphi, and will specify the designation, principal amount, interest rate and
maturity date of such subordinated deferrable interest debentures.
The accounting treatment of trust preferred securities may change as
proposed in the Financial Accounting Standards Board concurrent Exposure Drafts
"Accounting for Financial Instruments with Characteristics of Liabilities,
Equity or Both" and "Proposed Amendment to FASB Concepts Statement No. 6 to
Revise the Definition of Liabilities," both dated October 27, 2000. These
proposals, if accepted, would change the current accounting stan-
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dard that allows trust preferred securities to be categorized into its own
mezzanine (so-called temporary equity) line item on the balance sheet between
debt and equity and instead, would reclassify such trust preferred securities as
liabilities, which may have a significant impact on the debt/equity ratio of
Delphi.
-11-
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges of the Company for each of the
periods indicated is set forth below for the periods indicated. For periods in
which earnings before fixed charges were insufficient to cover fixed charges,
the dollar amount of coverage deficiency (in millions), instead of the ratio, is
disclosed.
Fiscal Year Ended December 31,
------------------------------
2001 (1) 2000 (1) 1999 1998 1997
---- ---- ---- ---- ----
Ratio of earnings to fixed $(4.6) $(6.1) 4.02x 5.57x 5.74x
charges..........................
(1) The deficiency of $4.6 million and $6.1 million in 2001 and 2000,
respectively, is primarily attributable to net realized investment losses which
resulted from the other than temporary decline in the market value of certain
fixed maturity securities in 2001 and the liquidation of a substantial majority
of the investments of Delphi's investment subsidiaries in 2000. These net
realized investment losses, which totaled $70.3 million and $138.0 million in
2001 and 2000, respectively, are non-recurring charges which are included in the
losses from continuing operations. In addition, the deficiency for 2001 reflects
the impact of a charge of $44.3 million for reserve strengthening primarily
related to an unusually high number of large losses in our excess workers'
compensation business.
For the purpose of computing the ratios of earnings to fixed charges,
earnings consist of pre-tax (loss) income from continuing operations adjusted to
include distributed earnings of equity investees plus fixed charges. Fixed
charges consist of interest expense, including amortization of debt discount,
and such portion of rental expense as is estimated to be representative of the
interest factor, all on a pre-tax basis.
Because the Company had no preferred stock outstanding during any of the
periods presented, the ratio of earnings to combined fixed charges and preferred
stock dividends is identical to the ratio of earnings to fixed charges for each
of the periods presented.
GENERAL DESCRIPTION OF OFFERED SECURITIES
Delphi may offer from time to time under this prospectus, separately or
together:
o unsecured senior or subordinated debt securities,
o preferred stock,
o common stock, and
o warrants to purchase common stock.
The trust may offer from time to time under this prospectus trust preferred
securities representing undivided beneficial interests in its respective assets,
which will be fully and unconditionally guaranteed to the extent described in
this prospectus by Delphi.
The aggregate initial offering price of the offered securities will not
exceed $250,000,000.
-12-
DESCRIPTION OF DEBT SECURITIES
General
Delphi may issue debt securities from time to time in one or more series,
under one or more indentures, each dated as of a date on or prior to the
issuance of the debt securities to which it relates. Senior debt securities and
subordinated debt securities may be issued pursuant to separate indentures, a
senior indenture and a subordinated indenture, respectively, in each case
between us and a trustee qualified under the Trust Indenture Act. The form of
such indentures have been filed as an exhibit to the registration statement of
which this prospectus is a part, subject to such amendments or supplements as
may be adopted from time to time. The senior indenture and the subordinated
indenture, as amended or supplemented from time to time, are sometimes referred
to individually as an "indenture" and collectively as the "indentures." Each
indenture will be subject to and governed by the Trust Indenture Act. The
aggregate principal amount of debt securities which may be issued under each
indenture will be unlimited and each indenture will set forth the specific terms
of any series of debt securities or provide that such terms shall be set forth
in, or determined pursuant to, an authorizing resolution, as defined in the
applicable prospectus supplement, and/or a supplemental indenture, if any,
relating to such series.
The statements made below relating to the debt securities and the
indentures are summaries of the anticipated provisions thereof, do not purport
to be complete and are subject to, and are qualified in their entirety by
reference to, all of the provisions of the applicable indenture and any
applicable U.S. federal income tax considerations as well as any applicable
modifications of or additions to the general terms described below in the
applicable prospectus supplement. The applicable prospectus supplement may also
state that any of the terms set forth herein are inapplicable to such series of
debt securities.
Terms
The debt securities will be our unsecured obligations.
The senior debt securities will rank equal in right of payment with all our
other unsecured and unsubordinated indebtedness.
The subordinated debt securities will be subordinated in right of payment
to the prior payment in full of all our senior indebtedness, which is defined in
the section called "Ranking of Debt Securities" below.
The specific terms of each series of debt securities will be set forth in
the applicable prospectus supplement relating thereto, including the following,
as applicable:
(1) the title of such debt securities and whether such debt securities are
senior debt securities or subordinated debt securities and, if
subordinated debt securities, the specific subordination provisions
applicable thereto;
(2) the aggregate principal amount of such debt securities and any limit
on such aggregate principal amount;
(3) the price (expressed as a percentage of the principal amount thereof)
at which such debt securities will be issued and, if other than the
principal amount thereof, the portion of the principal amount thereof
payable upon declaration of acceleration of the maturity thereof, or,
if applicable, the portion of the principal amount of such debt
securities that is convertible into shares of Class A Common Stock or
preferred stock or the method by which any such portion shall be
determined;
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(4) if convertible into Class A Common Stock or preferred stock, the terms
on which such debt securities are convertible, including the initial
conversion price, the conversion period, any events requiring an
adjustment of the applicable conversion price and any requirements
relating to the reservation of such Class A Common Stock or preferred
stock for purposes of conversion;
(5) the date(s), or the method for determining such date or dates, on
which the principal of such debt securities will be payable and, if
applicable, the terms on which such maturity may be extended;
(6) the rate(s) (which may be fixed or floating), or the method by which
such rate or rates shall be determined, at which such debt securities
will bear interest, if any;
(7) the date(s), or the method for determining such date or dates, from
which any such interest will accrue, the dates on which any such
interest will be payable, the record dates for such interest payment
dates, or the method by which such dates shall be determined, the
persons to whom such interest shall be payable, and the basis upon
which interest shall be calculated if other than that of a 360-day
year of twelve 30-day months;
(8) the place(s) where the principal of and interest, if any, on such debt
securities will be payable, where such debt securities may be
surrendered for registration of transfer or exchange and where notices
or demands to or upon us in respect of such debt securities and the
applicable indenture may be served;
(9) the period(s), if any, within which, the price or prices at which and
the other terms and conditions upon which such debt securities may,
pursuant to any optional or mandatory redemption provisions, be
redeemed, as a whole or in part, at our option;
(10) our obligation, if any, to redeem, repay or purchase such debt
securities pursuant to any sinking fund (as defined in the applicable
indenture) or analogous provision or at the option of a holder
thereof, and the period or periods within which, the price or prices
at which and the other terms and conditions upon which such debt
securities will be redeemed, repaid or purchased, as a whole or in
part, pursuant to such obligations;
(11) if other than U.S. dollars, the currency or currencies in which the
principal of and interest, if any, on such debt securities are
denominated and payable, which may be a foreign currency or units of
two or more foreign currencies or a composite currency or currencies,
and the terms and conditions relating thereto;
(12) whether the amount of payments of principal of or interest, if any, on
such debt securities may be determined with reference to an index,
formula or other method (which index, formula or method may, but need
not be, based on the yield on or trading price of other securities,
including United States Treasury securities, or on a currency,
currencies, currency unit or units, or composite currency or
currencies) and the manner in which such amounts shall be determined;
(13) whether the principal of or interest, if any, on the debt securities
of the series are to be payable, at our election or a holder thereof,
in a currency or currencies, currency unit or units or composite
currency or currencies other than that in which such debt securities
are denominated or stated to be payable and the period or periods
within which, and the terms and conditions upon which, such election
may be made;
-14-
(14) provisions, if any, granting special rights to the holders of debt
securities of the series upon the occurrence of such events as may be
specified;
(15) any deletions from, modifications of or additions to the events of
default or our covenants with respect to debt securities of the
series, whether or not such events of default or covenants are
consistent with the events of default or covenants described herein;
(16) whether debt securities of the series are to be issuable initially in
temporary global form and whether any debt securities of the series
are to be issuable in permanent global form and, if so, whether
beneficial owners of interests in any such security in permanent
global form may exchange such interests for debt securities of such
series and of like tenor of any authorized form and denomination and
the circumstances under which any such exchanges may occur, if other
than in the manner provided in the applicable indenture, and, if debt
securities of the series are to be issuable as a global security, the
identity of the depository for such series;
(17) the applicability, if any, of the defeasance and covenant defeasance
provisions of the applicable indenture to the debt securities of the
series;
(18) if exchangeable into another series of debt securities, the terms on
which such debt securities are exchangeable; and
(19) any other terms of the series of debt securities and any additions,
deletions or modifications to the applicable indenture.
If the applicable prospectus supplement provides, the debt securities may
be issued at a discount below their principal amount and provide for less than
the entire principal amount thereof to be payable upon declaration of
acceleration of the maturity thereof. In such cases, all material U.S. federal
income tax considerations will be described in the applicable prospectus
supplement.
The terms of the debt securities may allow all or a portion of an
installment of interest to be paid, for all or a part of the period of time such
series of debt securities is outstanding, through the issuance of additional
debt securities of such series in lieu of cash in satisfaction of the interest
payment due ("Payment-in-Kind"), in accordance with the terms of the relevant
indenture. The terms of such series of debt securities will be set forth in the
prospectus supplement relating thereto.
The applicable prospectus supplement will describe any material covenants
in respect of a series of debt securities and will contain information with
respect to any deletions from, modifications of or additions to the events of
default described below, including any addition of a provision providing event
risk or similar protection. Except as may be set forth in the applicable
prospectus supplement, the debt securities will not contain any provisions that
would limit our ability to incur indebtedness or that would afford holders of
debt securities protection in the event of a highly leveraged transaction
involving us or in the event of a change in control.
Denomination, Interest, Registration and Transfer
We will issue the debt securities of each series only in registered form,
without coupons, in denominations of $1,000, or in such other currencies or
denominations as may be set forth in the applicable indenture or specified in,
or pursuant to, an authorizing resolution and/or supplemental indenture, if any,
relating to such series of debt securities.
-15-
The principal of and interest, if any, on any series of debt securities
will be payable at the corporate trust office of the trustee, the address of
which will be stated in the applicable prospectus supplement. However, at our
option, interest payment may be made by check mailed to the address of the
person entitled thereto as it appears in the applicable register for such debt
securities.
Subject to certain limitations imposed upon debt securities issued in
book-entry form, the debt securities of any series:
o will be exchangeable for any authorized denomination of other debt
securities of the same series and of a like aggregate principal amount
and tenor upon surrender of such debt securities at the trustee's
corporate trust office or at the office of any registrar designated by
us for such purpose; and
o may be surrendered for registration of transfer or exchange thereof at
the corporate trust office of the trustee or at the office of any
registrar designated by us for such purpose.
No service charge will be made for any registration of transfer or
exchange, but we may require payment of a sum sufficient to cover any tax or
other governmental charge payable in connection with certain transfers and
exchanges. We may act as registrar and may change any registrar without notice.
Ranking of Debt Securities
General
We currently conduct substantially all of our operations through our
subsidiaries and our subsidiaries generate substantially all of our operating
income and cash flow. As a result, distributions and advances from our
subsidiaries are the principal source of funds necessary to meet our debt
service obligations. Regulatory restrictions, as well as our subsidiaries'
financial condition and operating and regulatory requirements, may limit our
ability to obtain cash from our subsidiaries that we require to pay our debt
service obligations. In addition, holders of the debt securities will have a
junior position to the claims of creditors of our subsidiaries on their assets
and earnings.
Senior Debt Securities
The senior debt securities will be our unsecured unsubordinated obligations
and will:
o rank equal in right of payment with all our other unsecured and
unsubordinated indebtedness;
o be effectively subordinated in right of payment to all our secured
indebtedness to the extent of the value of the assets securing such
indebtedness; and
o be effectively subordinated to all of our subsidiaries' indebtedness
and all mandatorily redeemable preferred stock of our subsidiaries.
Except as otherwise set forth in the applicable senior indenture or
specified in an authorizing resolution and/or supplemental indenture, if any,
relating to a series of senior debt securities to be issued, there will be no
limitations in any senior indenture on the amount of additional indebtedness
which may rank equal with the senior debt securities or on the amount of
indebtedness, secured or otherwise, which may be incurred or preferred stock
which may be issued by any of our subsidiaries.
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Subordinated Debt Securities
The subordinated debt securities will be our unsecured subordinated
obligations. Unless otherwise provided in the applicable prospectus supplement,
the payment of principal of, interest on and all other amounts owing in respect
of the subordinated debt securities will be subordinated in right of payment to
the prior payment in full in cash of principal of, interest on and all other
amounts owing in respect of all of our senior indebtedness (as defined below).
Upon any payment or distribution of our assets of any kind or character, whether
in cash, property or securities, to creditors upon any total or partial
liquidation, dissolution, winding up, reorganization, assignment for the benefit
of creditors or marshaling of our assets or in a bankruptcy, reorganization,
insolvency, receivership or other similar proceeding relating to us or our
property, whether voluntary or involuntary, all principal of, interest on and
all other amounts due or to become due shall be paid, first, to all senior
indebtedness in full in cash, or such payment duly provided for to the
satisfaction of the holders of senior indebtedness, before any payment or
distribution of any kind or character is made on account of any principal of,
interest on or other amounts owing in respect of the subordinated debt
securities, or for the acquisition of any of the subordinated debt securities
for cash, property or otherwise.
If any default occurs and is continuing in the payment when due, whether at
maturity, upon any redemption, by declaration or otherwise, of any principal of,
interest on, unpaid drawings for letters of credit issued in respect of, or
regularly accruing fees with respect to, any senior indebtedness, no payment of
any kind or character shall be made by or on behalf of us or any other person on
our or their behalf with respect to any principal of, interest on or other
amounts owing in respect of the subordinated debt securities or to acquire any
of the subordinated debt securities for cash, property or otherwise.
If any other event of default occurs and is continuing with respect to any
senior indebtedness, as such event of default is defined in the instrument
creating or evidencing such senior indebtedness, permitting the holders of such
senior indebtedness then outstanding to accelerate the maturity thereof and if
the representative (as defined in the applicable indenture) for the respective
issue of senior indebtedness gives written notice of the event of default to the
trustee (a "default notice"), then, unless and until all events of default have
been cured or waived or have ceased to exist or the trustee receives notice from
the representative for the respective issue of senior indebtedness terminating
the blockage period (as defined below), during the 179 days after the delivery
of such default notice (the "blockage period"), neither we nor any other person
on its behalf shall:
(1) make any payment of any kind or character with respect to any
principal of, interest on or other amounts owing in respect of the
subordinated debt securities; or
(2) acquire any of the subordinated debt securities for cash, property or
otherwise.
Notwithstanding anything herein to the contrary, in no event will a
blockage period extend beyond 179 days from the date the payment on the
subordinated debt securities was due and only one such blockage period may be
commenced within any 360 consecutive days. No event of default which existed or
was continuing on the date of the commencement of any blockage period with
respect to the senior indebtedness shall be, or be made, the basis for
commencement of a second blockage period by the representative of such senior
indebtedness whether or not within a period of 360 consecutive days unless such
event of default shall have been cured or waived for a period of not less than
90 consecutive days (it being acknowledged that any subsequent action, or any
breach of any financial covenants for a period commencing after the date of
commencement of such blockage period that, in either case, would give rise to an
event of default pursuant to any provisions under which an event of default
previously existed or was continuing shall constitute a new event of default for
this purpose).
-17-
The subordinated indentures will not restrict the amount of our or our
subsidiaries' senior indebtedness or other indebtedness. As a result of the
foregoing provisions, in the event of our insolvency, holders of the
subordinated debt securities may recover ratably less than our general
creditors.
"senior indebtedness," unless otherwise specified in one or more applicable
supplemental indentures or approved pursuant to a board resolution in accordance
with the applicable indenture, means, with respect to us,
(1) the principal (including redemption payments), premium, if any,
interest and other payment obligations in respect of (A) our
indebtedness for money borrowed and (B) our indebtedness evidenced by
securities, debentures, bonds, notes or other similar instruments
issued by us, including any such securities issued under any deed,
indenture or other instrument to which we are a party (including, for
the avoidance of doubt, indentures pursuant to which senior debt
securities have been or may be issued);
(2) all of our capital lease obligations;
(3) all of our obligations issued or assumed as the deferred purchase
price of property, all of our conditional sale obligations, all of our
hedging agreements and agreements of a similar nature thereto and all
agreements relating to any such agreements, and all of our obligations
under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business);
(4) all of our obligations for reimbursement on any letter of credit,
banker's acceptance, security purchase facility or similar credit
transaction;
(5) all obligations of the type referred to in clauses (1) through (4)
above of other persons for the payment of which we are responsible or
liable as obligor, guarantor or otherwise;
(6) all obligations of the type referred to in clauses (1) through (5)
above of other persons secured by any lien on any of our property or
asset (whether or not such obligation is assumed by us) and
(7) any deferrals, amendments, renewals, extensions, modifications and
refundings of all obligations of the type referred to in clauses (1)
through (6) above, in each case whether or not contingent and whether
outstanding at the date of effectiveness of the applicable indenture
or thereafter incurred,
except, in each case, for the subordinated debt securities and any such other
indebtedness or deferral, amendment, renewal, extension, modification or
refunding that contains express terms, or is issued under a deed, indenture or
other instrument which contains express terms, providing that it is subordinate
to or ranks equal with the subordinated debt securities.
Such senior indebtedness shall continue to be senior indebtedness and be
entitled to the benefits of the subordination provisions of the applicable
indenture irrespective of any amendment, modification or waiver of any term of
such senior indebtedness and notwithstanding that no express written
subordination agreement may have been entered into between the holders of such
senior indebtedness and the trustee or any of the holders.
Discharge
Under the terms of the indenture, we will be discharged from any and all
obligations in respect of the debt securities of any series and the applicable
indenture (except in each case for certain obligations to register the transfer
or exchange of debt securities, replace stolen, lost or mutilated debt
securities, maintain paying agencies and
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hold moneys for payment in trust) if we deposit with the applicable trustee, in
trust, moneys or U.S. government obligations in an amount sufficient to pay all
the principal of, and interest on, the debt securities of such series on the
dates such payments are due in accordance with the terms of such debt
securities.
In addition, unless the applicable prospectus supplement and supplemental
indenture provide otherwise, we may elect either (1) to defease and be
discharged from any and all obligations with respect to such debt securities
("defeasance") or (2) to be released from our obligations with respect to such
debt securities under certain covenants in the applicable indenture, and any
omission to comply with such obligations will not constitute a default or an
event of default with respect to such debt securities ("covenant defeasance"):
(1) by delivering all outstanding debt securities of such series to the
trustee for cancellation and paying all sums payable by it under such
debt securities and the indenture with respect to such series; or
(2) after giving notice to the trustee of our intention to defease all of
the debt securities of such series, by irrevocably depositing with the
trustee or a paying agent
(a) in the case of any debt securities of any series denominated in
U.S. dollars, cash or U.S. government obligations sufficient to
pay all principal of and interest on such debt securities; and
(b) in the case of any debt securities of any series denominated in
any currency other than U.S. dollars, an amount of the applicable
currency in which the debt securities are denominated sufficient
to pay all principal of and interest on such debt securities.
Such a trust may only be established if, among other things:
(1) the applicable defeasance or covenant defeasance does not result in a
breach or violation of, or constitute a default under or any material
agreement or instrument to which we are a party or by which we are
bound;
(2) no event of default or event which with notice or lapse of time or
both would become an event of default with respect to the debt
securities to be defeased will have occurred and be continuing on the
date of establishment of such a trust after giving effect to such
establishment and, with respect to defeasance only, no bankruptcy
proceeding with respect to us will have occurred and be continuing at
any time during the period ending on the 91st day after such date; and
(3) we have delivered to the trustee an opinion of counsel (as specified
in the applicable supplemental indenture) to the effect that the
holders will not recognize income, gain or loss for United States
federal income tax purposes as a result of such defeasance or covenant
defeasance and will be subject to United States federal income tax on
the same amounts, in the same manner and at the same times as would
have been the case if such defeasance or covenant defeasance had not
occurred, and such opinion of counsel, in the case of defeasance, must
refer to and be based upon a letter ruling of the Internal Revenue
Service received by us, a Revenue Ruling published by the Internal
Revenue Service or a change in applicable United States federal income
tax law occurring after the date of the applicable supplemental
indenture.
In the event we effect covenant defeasance with respect to any debt
securities and such debt securities are declared due and payable because of the
occurrence of any event of default, other than an event of default with respect
to any covenant as to which there has been covenant defeasance, the government
obligations on deposit with
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the trustee will be sufficient to pay amounts due on such debt securities at the
time of the stated maturity but may not be sufficient to pay amounts due on such
debt securities at the time of the acceleration resulting from such event of
default.
Modification and Waiver
We, when authorized by a board resolution, and the trustee may modify,
amend and/or supplement the applicable indenture and the applicable debt
securities with the consent of the holders of not less than a majority in
principal amount of the outstanding debt securities of all series affected
thereby (voting as a single class); provided, however, that such modification,
amendment or supplement may not, without the consent of each holder of the debt
securities affected thereby:
(1) change the stated maturity of the principal of or any installment of
interest with respect to the debt securities;
(2) reduce the principal amount of, or the rate of interest on, the debt
securities;
(3) change the currency of payment of principal of or interest on the debt
securities;
(4) modify the redemption provisions, if any, of any debt securities in
any manner adverse to the holders of such series of debt securities;
(5) impair the right to institute suit for the enforcement of any payment
on or with respect to the debt securities;
(6) reduce the above-stated percentage of holders of the debt securities
of any series necessary to modify or amend the indenture relating to
such series;
(7) modify the foregoing requirements or reduce the percentage of
outstanding debt securities necessary to waive any covenant or past
default;
(8) in the case of any subordinated indenture, modify the subordination
provisions thereof in any manner adverse to the holders of
subordinated debt securities of any series then outstanding; or
(9) in the case of any convertible debt securities, adversely affect the
right to convert the debt securities into Class A Common Stock or
preferred stock in accordance with the provisions of the applicable
indenture.
Holders of not less than a majority in principal amount of the outstanding
debt securities of all series affected thereby (voting as a single class) may
waive certain past defaults and may waive compliance by us with any provision of
the indenture relating to such debt securities (subject to the immediately
preceding sentence); provided, however, that:
(1) without the consent of each holder of debt securities affected
thereby, no waiver may be made of a default in the payment of the
principal of or interest on any debt security; and
(2) only the holders of a majority in principal amount of debt securities
of a particular series may waive compliance with a provision of the
indenture relating to such series or the debt securities of such
series having applicability solely to such series.
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We, when authorized by a board resolution, and the trustee may amend or
supplement the indentures or waive any provision of such indentures and the debt
securities without the consent of any holders of debt securities in some
circumstances, including:
o to cure any ambiguity, omission, defect or inconsistency;
o to make any change that does not, in the good faith opinion of our
board of directors and the trustee, adversely affect the interests of
holders of such debt securities in any material respect;
o to provide for the assumption of our obligations under the applicable
indenture by a successor upon any merger, consolidation or asset
transfer permitted under the applicable indenture;
o to provide any security for or guarantees of such debt securities;
o to add events of default with respect to such debt securities;
o to add covenants that would benefit the holders of such debt
securities or to surrender any rights or powers we have under the
applicable indenture;
o to make any change necessary for the registration of the debt
securities under the Securities Act or to comply with the Trust
Indenture Act of 1939, or any amendment thereto, or to comply with any
requirement of the SEC in connection with the qualification of the
applicable indenture under the Trust Indenture Act of 1939; provided,
however, that such modification or amendment does not, in the good
faith opinion of our board of directors and the trustee, adversely
affect the interests of the holders of such debt securities in any
material respect;
o to provide for uncertificated debt securities in addition to or in
place of certificated debt securities or to provide for bearer debt
securities;
o to add to or change any of the provisions of the applicable indenture
to such extent as shall be necessary to permit or facilitate the
issuance of the debt securities in bearer form, registrable or not
registrable as to principal, and with or without interest coupons;
o to change or eliminate any of the provisions of the applicable
indenture, provided, however, that any such change or elimination
shall become effective only when there is no debt security outstanding
of any series created prior to the execution of such supplemental
indenture which is entitled to the benefit of such provision;
o to establish the form or terms of debt securities of any series as
permitted by the applicable indenture; or
o to evidence and provide for the acceptance of appointment by a
successor trustee with respect to the debt securities of one or more
series and to add to or change any of the provisions of the applicable
indenture as shall be necessary to provide for or facilitate the
administration of the trust under the applicable indenture by more
than one trustee, pursuant to the requirements of the applicable
indenture.
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Events of Default and Notice Thereof
The following events are "events of default" with respect to any series of
debt securities issued thereunder:
(1) failure to pay interest on any debt securities of such series within
60 days of when due or principal of any debt securities of such series
when due (including any sinking fund installment);
(2) failure to perform any other agreement contained in the debt
securities of such series or the indenture relating to such series
(other than an agreement relating solely to another series of debt
securities) for 60 days after notice; and
(3) certain events of bankruptcy, insolvency or reorganization with
respect to us.
Additional or different events of default, if any, applicable to the series
of debt securities in respect of which this prospectus is being delivered will
be specified in the applicable prospectus supplement.
The trustee under such indenture shall, within 90 days after the occurrence
of any default (the term "default" to include the events specified above without
grace or notice) with respect to any series of debt securities actually known to
it, give to the holders of such debt securities notice of such default;
provided, however, that, except in the case of a default in the payment of
principal of or interest on any of the debt securities of such series or in the
payment of a sinking fund installment, the trustee for such series shall be
protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interest of the holders of such debt
securities; and provided, further, that in the case of any default of the
character specified in clause (2) above with respect to debt securities of such
series, no such notice to holders of such debt securities will be given until at
least 30 days after the occurrence thereof. We shall certify to the trustee
annually as to whether any default exists.
In the case of an event of default, other than an event of default
resulting from bankruptcy, insolvency or reorganization, with respect to any
series of debt securities shall occur and be continuing, the trustee for such
series or the holders of at least 25% in aggregate principal amount of the debt
securities of such series then outstanding, by notice in writing to us (and to
the trustee for such series if given by the holders of the debt securities of
such series), will be entitled to declare all unpaid principal of and accrued
interest on such debt securities then outstanding to be due and payable
immediately.
In the case of an event of default resulting from certain events of
bankruptcy, insolvency or reorganization, all unpaid principal of and accrued
interest on all debt securities of such series then outstanding shall be due and
payable immediately without any declaration or other act on the part of the
trustee for such series or the holders of any debt securities of such series.
Such acceleration may be annulled and past defaults (except, unless
theretofore cured, a default in payment of principal of or interest on the debt
securities of such series) may be waived by the holders of a majority in
principal amount of the debt securities of such series then outstanding upon the
conditions provided in the applicable indenture.
No holder of the debt securities of any series issued thereunder may pursue
any remedy under such indenture unless the trustee for such series shall have
failed to act after, among other things, notice of an event of default and
request by holders of at least 25% in principal amount of the debt securities of
such series of which the event of default has occurred and the offer to the
trustee for such series of indemnity satisfactory to it; provided, however, that
such provision does not affect the right to sue for enforcement of any overdue
payment on such debt securities.
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Conversion and Exchange Rights
The terms and conditions, if any, upon which the debt securities of any
series will be convertible into Class A Common Stock or preferred stock or upon
which the senior debt securities of any series will be exchangeable into another
series of debt securities will be set forth in the prospectus supplement
relating thereto. Such terms will include the conversion or exchange price (or
manner of calculation thereof), the conversion or exchange period, provisions as
to whether conversion or exchange will be at the option of the holders of such
series of debt securities or at our option or automatic, the events requiring an
adjustment of the conversion or exchange price and provisions affecting
conversion or exchange in the event of the redemption of such series of debt
securities.
The Trustee
A trustee will be named under each indenture to act in such capacity in
connection with each series of debt securities. Each indenture will contain
certain limitations on a right of the trustee, as our creditor, to obtain
payment of claims in certain cases, or to realize on certain property received
in respect of any such claim as security or otherwise. The trustee will be
permitted to engage in other transactions; provided, however, that if it
acquires any conflicting interest, it must eliminate such conflict or resign.
The holders of a majority in principal amount of all outstanding debt
securities of a series (or if more than one series is affected thereby, of all
series so affected, voting as a single class) will have the right to direct the
time, method and place of conducting any proceeding for exercising any remedy or
power available to the trustee for such series or all such series so affected.
In case an event of default shall occur (and shall not be cured) under any
indenture relating to a series of debt securities and is actually known to a
responsible officer of the trustee for such series, such trustee shall exercise
such of the rights and powers vested in it by such indenture and use the same
degree of care and skill in its exercise as a prudent person would exercise or
use under the circumstances in the conduct of his own affairs. Subject to such
provisions, the trustee will not be under any obligation to exercise any of its
rights or powers under the applicable indenture at the request of any of the
holders of debt securities unless they shall have offered to the trustee
security and indemnity satisfactory to it.
Governing Law
The indentures and the debt securities will be governed by the laws of the
State of New York.
Global Securities; Book-Entry System
We may issue the debt securities of any series in whole or in part in the
form of one or more global securities to be deposited with, or on behalf of, a
depository (the "depository") identified in the prospectus supplement relating
to such series. Global securities, if any, issued in the United States are
expected to be deposited with The Depository Trust Company ("DTC"), as
depository. Global securities will be issued in fully registered form and may be
issued in either temporary or permanent form. Unless and until it is exchanged
in whole or in part for the individual debt securities represented thereby, a
global security may not be transferred except as a whole by the depository for
such global security to a nominee of such depository or by a nominee of such
depository to such depository or another nominee of such depository or by such
depository or any nominee of such depository to a successor depository or any
nominee of such successor.
The specific terms of the depository arrangement with respect to any series
of debt securities will be described in the prospectus supplement relating to
such series. We expect that unless otherwise indicated in the applicable
prospectus supplement, the following provisions will apply to depository
arrangements.
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Upon the issuance of a global security, the depository for such global
security or its nominee will credit on its book-entry registration and transfer
system the respective principal amounts of the individual debt securities
represented by such global security to the accounts of persons that have
accounts with such depository ("participants"). Such accounts will be designated
by the underwriters, dealers or agents with respect to such debt securities or
by us if such debt securities are offered directly by us. Ownership of
beneficial interests in such global security will be limited to participants or
persons that may hold interests through participants.
We expect that, pursuant to procedures established by DTC, ownership of
beneficial interests in any global security with respect to which DTC is the
depository will be shown on, and the transfer of that ownership will be effected
only through, records maintained by DTC or its nominee (with respect to
beneficial interests of participants) and records of participants (with respect
to beneficial interests of persons who hold through participants). Neither we
nor the trustee will have any responsibility or liability for any aspect of the
records of DTC or for maintaining, supervising or reviewing any records of DTC
or any of its participants relating to beneficial ownership interests in the
debt securities. The laws of some states require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and laws may impair the ability to own, pledge or transfer beneficial
interest in a global security.
So long as the depository for a global security or its nominee is the
registered owner of such global security, such depository or such nominee, as
the case may be, will be considered the sole owner or holder of the debt
securities represented by such global security for all purposes under the
applicable indenture. Except as described below or in the applicable prospectus
supplement, owners of beneficial interest in a global security will not be
entitled to have any of the individual debt securities represented by such
global security registered in their names, will not receive or be entitled to
receive physical delivery of any such debt securities in definitive form and
will not be considered the owners or holders thereof under the applicable
indenture. Beneficial owners of debt securities evidenced by a global security
will not be considered the owners or holders thereof under the applicable
indenture for any purpose, including with respect to the giving of any
direction, instructions or approvals to the trustee thereunder. Accordingly,
each person owning a beneficial interest in a global security with respect to
which DTC is the depository must rely on the procedures of DTC and, if such
person is not a participant, on the procedures of the participant through which
such person owns its interests, to exercise any rights of a holder under the
applicable indenture. We understand that, under existing industry practice, if
it requests any action of holders or if an owner of a beneficial interest in a
global security desires to give or take any action which a holder is entitled to
give or take under the applicable indenture, DTC would authorize the
participants holding the relevant beneficial interest to give or take such
action, and such participants would authorize beneficial owners through such
participants to give or take such actions or would otherwise act upon the
instructions of beneficial owners holding through them.
Payments of principal of, and any interest on, individual debt securities
represented by a global security registered in the name of a depository or its
nominee will be made to or at the direction of the depository or its nominee, as
the case may be, as the registered owner of the global security under the
applicable indenture. Under the terms of the applicable indenture, we and the
trustee may treat the persons in whose name debt securities, including a global
security, are registered as the owners thereof for the purpose of receiving such
payments. Consequently, neither we nor the trustee has or will have any
responsibility or liability for the payment of such amounts to beneficial owners
of debt securities (including principal and interest). We believe, however, that
it is currently the policy of DTC to immediately credit the accounts of relevant
participants with such payments, in amounts proportionate to their respective
holdings of beneficial interests in the relevant global security as shown on the
records of DTC or its nominee. We also expect that payments by participants to
owners of beneficial interests in such global security held through such
participants will be governed by standing instructions and customary practices,
as is the case with securities held for the account of customers in bearer form
or registered in street name, and will be the responsibility of such
participants. Redemption notices with respect to any debt securities represented
by a global security will be sent to the depository or its nominee. If less than
all of the debt securities of any series are to be redeemed, we expect the
depository to determine the amount of the interest of each participant in such
debt securi-
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ties to be redeemed to be determined by lot. None of us, the trustee, any paying
agent or the registrar for such debt securities will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the global security for such debt
securities or for maintaining any records with respect thereto.
Neither we nor the trustee will be liable for any delay by the holders of a
global security or the depository in identifying the beneficial owners of debt
securities and we and the trustee may conclusively rely on, and will be
protected in relying on, instructions from the holder of a global security or
the depository for all purposes. The rules applicable to DTC and its
participants are on file with the SEC.
If a depository for any debt securities is at any time unwilling, unable or
ineligible to continue as depository and a successor depository is not appointed
by us within 90 days, we will issue individual debt securities in exchange for
the global security representing such debt securities. In addition, we may at
any time and in our sole discretion, subject to any limitations described in the
prospectus supplement relating to such debt securities, determine not to have
any of such debt securities represented by one or more global securities and in
such event we will issue individual debt securities in exchange for the global
security or securities representing such debt securities. Individual debt
securities so issued will be issued in denominations of $1,000 and integral
multiples thereof.
All moneys paid by us to a paying agent or a trustee for the payment of the
principal of or interest on any debt security which remain unclaimed at the end
of two years after such payment has become due and payable will be repaid to us,
and the holder of such debt security thereafter may look only to us for payment
thereof.
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DESCRIPTION OF CAPITAL STOCK OF DELPHI
The following descriptions contained in "Description of Preferred Stock"
and "Description of Common Stock" do not purport to be complete and are subject
to, and qualified in their entirety by reference to, the more complete
descriptions thereof set forth in the following documents: (i) Delphi's Restated
Certificate of Incorporation, as amended (the "Certificate of Incorporation");
and (ii) its By-Laws, which documents have been incorporated by reference as
exhibits to the Registration Statement of which this Prospectus forms a part.
Delphi currently is authorized to issue 40,000,000 shares of Class A Common
Stock, 20,000,000 shares of Class B Common Stock (the Class A Common Stock and
Class B Common Stock shall be referred to collectively herein as the "Common
Stock") and 10,000,000 shares of preferred stock, par value $.01 per share. As
of April 15, 2002, there were 16,869,820 shares of Class A Common Stock and
3,600,105 shares of Class B Common Stock outstanding. There are no shares of
preferred stock outstanding.
All issued outstanding shares are fully paid and nonassessable.
DESCRIPTION OF PREFERRED STOCK
General
The following description of the terms of the preferred stock sets forth
certain general terms and provisions of the preferred stock to which any
prospectus supplement may relate. Certain terms of any series of the preferred
stock offered by any prospectus supplement will be described in the prospectus
supplement relating to such series of the preferred stock. If so indicated in
the prospectus supplement relating thereto, the terms of any such series may
differ from the terms set forth below. The description of certain provisions of
the preferred stock set forth below and the description of the terms of a
particular series of preferred stock set forth in the prospectus supplement
relating thereto do not purport to be complete and are subject to, and qualified
in their entirety by reference to, the Certificate of Incorporation, which is
incorporated by reference as an exhibit to the Registration Statement of which
this Prospectus is a part, and the certificate of designation relating to such
series of preferred stock, which will be filed with the SEC in connection with
the offering of such series of preferred stock.
Under the Certificate of Incorporation, the Board of Directors of Delphi is
authorized without further shareholder action to provide for the issuance of up
to 10,000,000 shares of preferred stock in one or more series, with such voting
powers, full or limited, and with such designations, preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions thereon, as shall be stated in the resolution or resolutions
providing for the issue of a series of such stock, adopted at any time or from
time to time by the Board of Directors of Delphi (as used herein the term "Board
of Directors of Delphi" includes any duly authorized committee thereof). The
preferred stock shall rank senior to the Common Stock as to payments of
dividends or payments upon liquidation. Delphi may amend from time to time its
Certificate of Incorporation to increase the number of authorized shares of
preferred stock. Any such amendment would require the approval of the holders of
a majority of the voting power of the Class A Common Stock and Class B Common
Stock, and the approval of the holders of a majority of the outstanding shares
of all series of preferred stock voting together as a single class.
The preferred stock shall have the dividend, liquidation, redemption and
voting rights set forth below, unless otherwise provided in the prospectus
supplement relating to a particular series of the preferred stock. Reference is
made to the prospectus supplement relating to the particular series of the
preferred stock offered thereby for specific terms, including: (i) the title of
such preferred stock and the number of shares offered; (ii) the liquidation
preference per share; (iii) the price at which such preferred stock will be
issued; (iv) the dividend rate (or method of calculation), the dates on which
dividends shall be payable, whether such dividends shall be cumulative or
noncumulative and, if cumulative, the dates from which dividends shall commence
to cumulate; (v) any redemption or
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sinking fund provisions; (vi) the terms of any right to convert or exchange the
preferred stock into other securities or property of Delphi; and (vii) any
additional voting, dividend, liquidation, redemption, sinking fund and other
rights, preferences, privileges, limitations and restrictions of such preferred
stock.
The preferred stock will, when issued, be fully paid and nonassessable and
have no preemptive rights. Unless otherwise specified in the prospectus
supplement relating to a particular series of the preferred stock, each series
of the preferred stock will rank on a parity as to dividends and liquidation
rights in all respects with any other series of the preferred stock.
Dividend Rights
Holders of the preferred stock of each series will be entitled to receive,
when, as and if declared by the Board of Directors of Delphi, out of assets of
Delphi legally available therefor, cash dividends at such rates and on such
dates as are set forth in the prospectus supplement relating to such series of
the preferred stock. Such rate may be fixed, variable or both. Each such
dividend will be payable to the holders of record as they appear on the stock
record books of Delphi on such record dates as will be fixed by the Board of
Directors of Delphi. Dividends on any series of the preferred stock may be
cumulative or noncumulative, as provided in the prospectus supplement relating
thereto.
Each series of preferred stock will be entitled to dividends as described
in the prospectus supplement relating to such series, which may be based upon
one or more methods of determination. Different series of the preferred stock
may be entitled to dividends at different rates or based upon different methods
of determination.
Rights Upon Liquidation
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of Delphi, the holders of each series of preferred stock will be
entitled to receive out of assets of Delphi available for distribution to
shareholders, before any distribution of assets is made to holders of Common
Stock or any other class of stock ranking junior to such series of the preferred
stock upon liquidation, liquidating distributions in the amount set forth in the
prospectus supplement relating to such series of the preferred stock plus an
amount equal to accrued and unpaid dividends for then-current dividend period
and, if such series of the preferred stock is cumulative, for all dividend
periods prior thereto, all as set forth in the prospectus supplement relating to
such shares.
Redemption
Any series of the preferred stock may be redeemable, in whole or in part,
at the option of Delphi, and may be subject to mandatory redemption pursuant to
a sinking fund, in each case upon terms, at the times and at the redemption
prices set forth in the prospectus supplement relating to such series.
Conversion and Exchange
The terms, if any, on which shares of any series of the preferred stock are
convertible into Class A Common Stock or exchangeable for debt securities will
be set forth in the prospectus supplement relating thereto. Such terms may
include provisions for conversion or exchange, either mandatory, at the option
of the holder or at the option of Delphi, in which case the number of shares of
Class A Common Stock or the amount of debt securities to be received by the
holders of preferred stock would be calculated as of a time and in the manner
stated in the prospectus supplement.
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Transfer Agent and Registrar
First Union National Bank will be the transfer agent, registrar and
dividend disbursement agent for the preferred stock. The registrar for shares of
preferred stock will send notices to shareholders of meetings, if any, at which
holders of the preferred stock have the right to vote on any matter.
Voting Rights
Except as indicated in the prospectus supplement relating to a particular
series of preferred stock, or except as expressly required by applicable law,
the holders of the preferred stock will not be entitled to any voting rights.
In addition to any voting rights that may be described in any prospectus
supplement, under the Delaware General Corporation Law, the holders of the
preferred stock will have the voting rights set forth under the caption
"General" above with respect to amendments to the Certificate of Incorporation
which would increase the number of authorized shares of preferred stock of
Delphi.
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DESCRIPTION OF COMMON STOCK
General
Subject to the limitations imposed by the terms of Delphi's preferred stock
described above, holders of the Common Stock are entitled to participate equally
in dividends as and when declared by the Board of Directors out of legally
available funds. There are no sinking fund or redemption provisions applicable
to the Common Stock and the shares of Common Stock are not convertible and do
not have any preemptive rights. On liquidation, dissolution, or winding up of
Delphi, whether voluntary or involuntary, after payments have been made to
holders of outstanding shares of Delphi's preferred stock, holders of the Common
Stock have the right to share ratably in the remaining net assets available for
distribution. All shares of Class A Common Stock sold hereunder will be fully
paid and non-assessable.
First Union National Bank is the Transfer Agent for the Common Stock. The
Class A Common Stock is listed on the New York Stock Exchange.
Class A Common Stock and Class B Common Stock
All currently outstanding shares of the Class B Common Stock and shares of
the Class A Common Stock are fully paid and nonassessable. The holders of the
currently outstanding Class B Common Stock and Class A Common Stock do not have
any preemptive rights to subscribe for or purchase any additional securities
issued by Delphi. No redemption or sinking fund provisions are associated with
the Class A Common Stock or Class B Common Stock. Cumulative voting is not
permitted by holders of either the Class A Common Stock or Class B Common Stock.
Voting. Each share of Class A Common Stock entitles the holder thereof to
one vote per share. Each share of Class B Common Stock entitles the holder
thereof to a number of votes per share equal to the lesser of (1) the number of
votes such that the aggregate of all outstanding shares of Class B Common Stock
will be entitled to cast 49.9% of all of the votes represented by the aggregate
of all outstanding shares of Class A Common Stock and Class B Common Stock or
(2) ten votes. Proposals submitted to a vote of stockholders will be voted on by
holders of Class A Common Stock and Class B Common Stock voting together as a
single class (subject to any voting rights which may be granted to holders of
preferred stock), except that holders of the Class A Common Stock will vote as a
separate class to elect one director (the "Class A Director") so long as the
outstanding shares of Class A Common Stock represent at least 10% of the
aggregate number of outstanding shares of Common Stock. At all meetings of the
stockholders of Delphi, unless a separate vote of any class is required, the
holders of a majority of the voting power of the Class A Common Stock and Class
B Common Stock, represented in person or by proxy, shall constitute a quorum for
the transaction of business; and, generally, the affirmative vote of the holders
of a majority of the votes cast at a meeting at which a quorum is present shall
be the act of the stockholders of Delphi. The superior voting rights of the
Class B Common Stock might discourage unsolicited merger proposals and
unfriendly tender offers and may therefore deprive stockholders of any
opportunity to sell their shares at a premium over prevailing market prices.
Transfer. The Certificate of Incorporation does not contain any
restrictions on the transfer of shares of Class A Common Stock. Upon transfer of
shares of Class B Common Stock to any person except to a "Permitted Transferee"
(as defined therein), such shares of Class B Common Stock will automatically be
converted into an equal number of shares of Class A Common Stock. Permitted
Transferees of any holder of Class B Common Stock include persons or entities
who on January 24, 1990 were holders or beneficial owners of Class B Common
Stock or had the right to acquire shares of Class B Common Stock upon the
exercise of warrants, certain relatives of such holder of Class B Common Stock,
the trustee of a trust exclusively for the benefit of such holder of Class B
Common Stock and/or one or more of such holder's Permitted Transferees, the
estate of such holder of Class B Common
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Stock and certain corporations or partnerships of which two-thirds of the voting
power is controlled by or under common control with such holder of Class B
Common Stock.
Conversion. Class A Common Stock has no conversion rights. Class B Common
Stock is convertible into Class A Common Stock, in whole or in part, at any time
and from time to time at the option of the holder, on the basis of one share of
Class A Common Stock for each share of Class B Common Stock converted. If at any
time the number of outstanding shares of Class B Common Stock falls below 5% of
the aggregate number of issued and outstanding shares of Common Stock or the
Board of Directors and the holders of a majority of the outstanding shares of
Class B Common Stock approve the conversion of all of the Class B Common Stock
into Class A Common Stock, then each outstanding share of Class B Common Stock
shall automatically convert into one share of Class A Common Stock. In the event
of a transfer of shares of Class B Common Stock, other than to a Permitted
Transferee, each share of Class B Common Stock so transferred shall be
automatically converted into one share of Class A Common Stock.
Dividends. Holders of Class A Common Stock and Class B Common Stock are
entitled to receive cash dividends pro rata on a per share basis if and when
such dividends are declared by the Board of Directors of Delphi from funds
legally available therefor. In the case of any dividend paid other than in cash,
holders of Class A Common Stock and Class B Common Stock are entitled to receive
such dividend pro rata on a per share basis. Dividends paid in common stock may
be paid (i) in shares of Class A Common Stock on the Class A Common Stock and
Class B Common Stock, (ii) in shares of Class B Common Stock on the Class A
Common Stock and Class B Common Stock and (iii) in shares of Class A Common
Stock on the Class A Common Stock and in shares of Class B Common Stock on the
Class B Common Stock.
Liquidation, Merger or Consolidation. Holders of Class A Common Stock and
Class B Common Stock share with each other, after payments of any preferential
amounts to which the holders of preferred stock are entitled, on a ratable basis
as a single class, in the net assets of the Company available for distribution
in respect of Class A Common Stock and Class B Common Stock in the event of
liquidation or any payments made on the Common Stock in the event of a merger or
consolidation of Delphi.
Other Terms. Neither the Class A Common Stock nor the Class B Common Stock
may be subdivided or combined in any manner unless contemporaneously therewith
the other class of shares is subdivided or combined in the same proportion.
Additional shares of Class B Common Stock may not be issued except (i) in
payment of a stock dividend on then outstanding shares of Class B Common Stock;
(ii) in connection with a stock split, reclassification or other subdivision of
then outstanding shares of Class B Common Stock; and (iv) pursuant to the
Company's Long-Term Performance-Based Incentive Plan.
Delaware Law and Certain Provisions of Delphi's Certificate of
Incorporation
Delphi is subject to the provisions of Section 203 of the Delaware General
Corporation Law ("Section 203"). In general, Section 203 prohibits a publicly
held Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date that the
person became an interested stockholder unless (with certain exceptions) the
business combination or the transaction in which the person became an interested
stockholder is approved in a prescribed manner. Generally, a "business
combination" includes a merger, asset or stock sale, or other transaction
resulting in a financial benefit to the stockholder. Generally, an "interested
stockholder" is a person who, together with affiliates and associates, owns (or
within three years prior, did own) 15% or more of the corporation's voting
stock.
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The Certificate of Incorporation prohibits stockholders from taking any
action without a meeting, except upon unanimous written consent. In addition,
special meetings of stockholders may only be called by the Board of Directors.
These provisions may have the effect of delaying consideration of a stockholder
proposal until the next annual meeting unless a special meeting is called by the
Board of Directors of Delphi. The Certificate of Incorporation also provides
that the Board of Directors has the exclusive power to fill newly created
directorships and vacancies in the Board. The Certificate of Incorporation
provides that directors of Delphi will not be personally liable for monetary
damages for breach of the director's fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to Delphi or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for unlawful
payments of dividends or unlawful stock repurchase or redemptions as provided in
section 174 of the Delaware General Corporation Law or (iv) for any transaction
from which the director derived an improper personal benefit. The Certificate of
Incorporation provides that Delphi shall indemnify its officers and directors to
the fullest extent permitted by Delaware law.
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DESCRIPTION OF CLASS A COMMON STOCK WARRANTS
General
Delphi may issue Class A Common Stock warrants independently or together
with any securities offered by any prospectus supplement and such Class A Common
Stock warrants may be attached to or separate from such securities. Each series
of Class A Common Stock warrants will be issued under a separate warrant
agreement to be entered into between Delphi and a bank or trust company, as
warrant agent, all as set forth in the applicable prospectus supplement. The
warrant agent will act solely as our agent in connection with the certificates
representing the Class A Common Stock warrants and will not assume any
obligation or relationship of agency or trust for or with any holders of Class A
Common Stock warrant certificates or beneficial owners of Class A Common Stock
warrants.
The following summaries of certain provisions of the warrant agreement and
Class A Common Stock warrant certificate are not complete. You should review the
warrant agreement relating to, and the Class A Common Stock warrant certificate
representing, a series of Class A Common Stock warrants.
The applicable prospectus supplement may also state that any of the terms
set forth herein are inapplicable to such series. Class A Common Stock warrants
for the purchase of Class A Common Stock will be offered and exercisable for
U.S. dollars only and will be in registered form only.
Terms
An applicable prospectus supplement will set forth and describe other
specific terms regarding each series of Class A Common Stock warrants offered
hereby, including:
(1) the offering price;
(2) the number of shares of Class A Common Stock purchasable upon exercise
of each such Class A Common Stock warrant and the price at which such
number of shares of Class A Common Stock may be purchased upon such
exercise;
(3) the date on which the right to exercise such Class A Common Stock
warrants shall commence and the date on which such right shall expire;
and
(4) any other terms of such Class A Common Stock warrants.
Exercise of Class A Common Stock Warrants
Each Class A Common Stock warrant will entitle the holder thereof to
purchase such shares of Class A Common Stock at such exercise price as shall in
each case be set forth in, or calculable from, the prospectus supplement
relating to the offered Class A Common Stock warrants. After the close of
business on the expiration date of each Class A Common Stock warrant or such
later date to which such expiration date may be extended by us, unexercised
Class A Common Stock warrants will become void.
Class A Common Stock warrants may be exercised by delivering to the warrant
agent payment as provided in the applicable prospectus supplement of the amount
required to purchase the shares of Class A Common Stock purchasable upon such
exercise, together with certain information set forth on the reverse side of the
Class A Common Stock warrant certificate. Upon receipt of such payment and the
Class A Common Stock warrant certificate properly completed and duly executed at
the corporate trust office of the warrant agent or any other office indicated
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in the applicable prospectus supplement, we will, as soon as practicable, issue
and deliver the shares of Class A Common Stock purchasable upon such exercise.
If fewer than all of the Class A Common Stock warrants represented by such Class
A Common Stock certificate are exercised, a new Class A Common Stock warrant
certificate will be issued for the remaining amount of Class A Common Stock
warrants.
Amendments and Supplements to Warrant Agreement
The warrant agreement for a series of Class A Common Stock warrants may be
amended or supplemented without the consent of the holders of the Class A Common
Stock warrants issued thereunder to effect changes that are not inconsistent
with the provisions of the Class A Common Stock warrants and that do not
adversely affect the interests of the holders of the Class A Common Stock
warrants.
Class A Common Stock Warrant Adjustments
Unless otherwise indicated in the applicable prospectus supplement, the
exercise price of, and the number of shares of Class A Common Stock covered by,
a Class A Common Stock warrant are subject to adjustment in certain events,
including:
(1) the issuance of shares of Class A Common Stock as a dividend or
distribution on the Class A Common Stock;
(2) certain subdivisions and combinations of Class A Common Stock;
(3) the issuance to all holders of shares of Class A Common Stock of
certain rights or warrants entitling them to subscribe for or purchase
shares of Class A Common Stock, at less than the current market value,
as defined in the applicable warrant agreement for such series of
Class A Common Stock warrants; and
(4) the distribution to all holders of shares of Class A Common Stock of
certain evidences of our indebtedness or assets, other than certain
cash dividends and distributions described below.
No adjustment in the exercise price of, and the number of shares of Class A
Common Stock covered by, a Class A Common Stock warrant will be made for regular
quarterly or other periodic or recurring cash dividends or distributions or for
cash dividends or distributions to the extent paid from retained earnings. No
adjustment will be required unless such adjustment would require a change of at
least one percent in the exercise price and exercise rate then in effect;
provided, however, that any such adjustment not so made will be carried forward
and taken into account in any subsequent adjustment; provided, further, that any
such adjustment not so made shall be made no later than three years after the
occurrence of the event requiring such adjustment to be made or carried forward.
Except as stated above, the exercise price of, and the number of shares of Class
A Common Stock covered by, a Class A Common Stock warrant will not be adjusted
for the issuance of shares of Class A Common Stock or any securities convertible
into or exchangeable for shares of Class A Common Stock, or securities carrying
the right to purchase any of the foregoing.
In the case of:
(1) a reclassification or change of the shares of Class A Common Stock;
(2) certain consolidation or merger events involving us; or
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(3) a sale or conveyance to another corporation of our property and assets
as an entirety or substantially as an entirety,
in each case as a result of which holders of our shares of Class A Common Stock
shall be entitled to receive stock, securities, other property or assets
(including cash) with respect to or in exchange for such shares of Class A
Common Stock, the holders of the Class A Common Stock warrants then outstanding
will be entitled thereafter to convert such Class A Common Stock warrants into
the kind and amount of shares of Class A Common Stock and other securities or
property which they would have received upon such reclassification, change,
consolidation, merger, sale or conveyance had such Class A Common Stock warrants
been exercised immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance.
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DESCRIPTION OF TRUST PREFERRED SECURITIES
The trust may issue only one series of trust preferred securities having
terms described in the prospectus supplement relating thereto. The declaration
of the trust authorizes the regular trustees of the trust to issue on behalf of
the trust one series of trust preferred securities. The declaration will be
qualified as an indenture under the Trust Indenture Act. The trust preferred
securities will have such terms, including distributions, redemption, voting,
liquidation rights and such other preferred, deferred or other special rights or
such restrictions as shall be set forth in the declaration or made part of the
declaration by the Trust Indenture Act and the Delaware Business Trust Act. The
following summary of the principal terms and provisions of the trust preferred
securities does not purport to be complete and is subject to, and qualified in
its entirety by reference to, the applicable prospectus supplement, the
declaration (the form of which is filed as an exhibit to the registration
statement of which this prospectus is a part), the Delaware Business Trust Act
and the Trust Indenture Act.
General
The declaration of the trust will authorize the regular trustees, on behalf
of the trust, to issue the trust preferred securities, which will represent
preferred undivided beneficial interests in the assets of the trust, and the
trust common securities, which represent common undivided beneficial interests
in the assets of the trust. All of the trust common securities will be owned
directly or indirectly by Delphi.
The trust common securities will rank equally, and payments will be made
thereon on a pro rata basis, with the trust preferred securities, except that
upon the occurrence and during the continuation of a declaration event of
default, the rights of the holders of the trust common securities to receive
payment of periodic distributions and payments upon liquidation, redemption and
otherwise will be subordinated to the rights to payment of the holders of the
trust preferred securities.
The declaration of the trust will not permit the issuance by the trust of
any securities other than the trust securities or the incurrence of any
indebtedness by the trust.
Pursuant to the declaration of the trust, the property trustee will own and
hold the subordinated deferrable interest debentures of Delphi for the benefit
of the trust and the holders of the trust securities. The payment of
distributions out of money held by the trust, and payments upon redemption of
the trust preferred securities or liquidation of the trust, will be guaranteed
by Delphi as described under "Description of the Trust Preferred Securities
Guarantee."
The trust preferred guarantee trustee will hold the trust preferred
securities guarantee for the benefit of the holders of such trust preferred
securities. The trust preferred securities guarantee will not cover payment of
distributions on such trust preferred securities when the trust does not have
sufficient available funds in the property account to make such distributions.
Terms
The specific terms of the trust preferred securities of the trust will
be set forth in the applicable prospectus supplement relating thereto, including
the following, as applicable:
(1) the distinctive designation of such trust preferred securities;
(2) the number of trust preferred securities issued by the trust;
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(3) the annual distribution rate (or method of determining such rate) for
trust preferred securities issued by the trust and the date or dates
upon which such distributions will be payable on a quarterly basis to
holders of trust preferred securities outstanding;
(4) whether distributions on trust preferred securities issued by the
trust shall be cumulative and, in the case of trust preferred
securities having cumulative distribution rights, the date(s) or
method of determining the date(s) from which distributions on trust
preferred securities issued by the trust will be cumulative;
(5) the amount(s) which will be paid out of the assets of the trust to
purchase or redeem trust preferred securities issued by the trust and
the price(s) at which, the period(s) within which, and the terms and
conditions upon which trust preferred securities issued by the trust
shall be purchased or redeemed, in whole or in part, pursuant to such
obligation;
(6) the voting rights, if any, of trust preferred securities issued by the
trust in addition to those required by law, including any requirement
for the approval by the holders of trust preferred securities, as a
condition to specified action or amendments to the declaration of the
trust; and
(7) any other relevant rights, preferences, privileges, limitations or
restriction of trust preferred securities issued by the trust not
inconsistent with the declaration of the trust or with applicable law.
All trust preferred securities offered hereby will be guaranteed by Delphi
to the extent described under "Description of the Trust Preferred Securities
Guarantees" below.
Any applicable United States federal income tax considerations applicable
to any offering of trust preferred securities will be described in the
prospectus supplement relating thereto.
In connection with the issuance of trust preferred securities, the trust
will issue one series of trust common securities. The declaration of the trust
authorizes the regular trustees of the trust to issue on behalf of the trust one
series of trust common securities having terms including distributions,
redemption, voting, liquidation rights or such restrictions as shall be set
forth therein. The terms of the trust common securities issued by the trust will
be substantially identical to the terms of the trust preferred securities issued
by the trust and the trust common securities will rank equal, and payments will
be made thereon pro rata, with the trust preferred securities except that, upon
an event of default under the declaration, the rights of the holders of the
common securities to payment in respect of distributions and payments upon
liquidation, redemption and otherwise will be subordinated to the rights of the
holders of the trust preferred securities. All of the trust common securities of
the trust will be directly or indirectly owned by Delphi.
Distributions
Unless the applicable prospectus supplement and applicable supplemental
indenture provide otherwise, Delphi will have the right under the indenture to
defer payments of interest on the subordinated deferrable interest debentures by
extending the interest payment period from time to time on the subordinated
deferrable interest debentures which, if exercised, would defer quarterly
distributions on the trust preferred securities (though such distributions would
continue to accrue interest since interest would continue to accrue on the
subordinated deferrable interest debentures) during any such extended interest
payment period.
In the event that Delphi exercises this right, then during the term of such
deferral Delphi shall not:
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(a) declare or pay any dividend on, make any distributions with respect
to, or redeem, purchase or make a liquidation payment with respect to,
any of its capital stock,
(b) make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities issued by Delphi which
rank equal with or junior to the subordinated deferrable interest
debentures, and
(c) make any guarantee payments (other than pursuant to the trust
preferred securities guarantee) with respect to the foregoing.
Notwithstanding the foregoing restrictions, Delphi will be permitted, in
any event, to make dividend, redemption, liquidation and guarantee payments on
capital stock, and interest, principal, redemption and guarantee payments on
debt securities issued by Delphi ranking equal with or junior to subordinated
deferrable interest debentures, where the payment is made by way of securities
(including capital stock) that rank junior to the securities on which such
payment is being made.
Prior to the termination of any such extension period, Delphi may further
extend the interest payment period; provided, however, that such extension
period, together with all such previous and further extensions thereof, may not
exceed 20 consecutive quarters or extend beyond the maturity of the subordinated
deferrable interest debentures.
Upon the termination of any extension period and the payment of all amounts
then due, Delphi may select a new extension period as if no extension period had
previously been declared, subject to the above requirements. See "-- Voting
Rights" below and "Description of the Subordinated Deferrable Interest
Debentures -- Certain Covenants."
If distributions are deferred, the deferred distributions and accrued
interest thereon shall be paid to holders of record of the trust preferred
securities, if funds are available therefor, as they appear on the books and
records of the trust on the record date immediately following the termination of
such extension period.
Distributions on the trust preferred securities of the trust must be paid
on the dates payable to the extent that the trust has funds available for the
payment of such distributions in the property account. The trust's funds
available for distribution to the holders of the trust preferred securities will
be limited to payments received under the subordinated deferrable interest
debentures. See "Description of the Subordinated Deferrable Interest
Debentures." The payment of distributions out of moneys held by the trust will
be guaranteed by Delphi as described under "Description of the Trust Preferred
Securities Guarantee."
Distributions on the trust preferred securities will be payable to the
holders thereof as they appear on the books and records of the trust on the
relevant record dates, which, as long as the trust preferred securities remain
in book-entry only form, will be one business day (as defined herein) prior to
the relevant payment dates, which payment dates correspond to the interest
payment dates on the subordinated deferrable interest debentures. Such
distributions will be paid through the property trustee, who will hold amounts
received in respect of the subordinated deferrable interest debentures in the
property account for the benefit of the trust and the holders of trust
securities.
Subject to any applicable laws and regulations and the provisions of the
declaration of trust, each such payment will be made as described under
"--Global Securities; Book-Entry System" below.
In the event the trust preferred securities did not continue to remain in
book-entry only form, the regular trustees will have the right to select
relevant record dates which shall be at least one business day, but less than 60
business days, prior to the relevant payment dates.
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In the event that any date on which distributions are to be made on the
trust preferred securities is not a business day, then payment of the
distributions payable on such date will be made on the next succeeding day which
is a business day (and without any interest or other payment in respect of any
such delay) except that if such business day is in the next succeeding calendar
year, such payment will be made on the immediately preceding business day, in
each case with the same force and effect as if made on such date. A "business
day" shall mean any day other than a Saturday, Sunday or other day on which
banking institutions in New York, New York are authorized or required by law to
close.
Mandatory and Optional Redemption
Unless provided otherwise in the applicable prospectus supplement, upon the
repayment of the subordinated deferrable interest debentures, whether at
maturity or upon acceleration, redemption or otherwise, the proceeds from such
repayment or payment will simultaneously be applied to redeem trust securities
on a pro rata basis having an aggregate liquidation amount equal to the
aggregate principal amount of the subordinated deferrable interest debentures so
repaid or redeemed at the redemption price; provided, however, that except in
the case of payments upon maturity, holders of trust securities shall be given
not less than 30 nor more than 60 days' notice of such redemption. See "--
Redemption Procedures" and "Description of the Subordinated Deferrable Interest
Debentures." In the event that fewer than all of the outstanding trust preferred
securities are to be redeemed, the trust preferred securities will be redeemed
as described under "--Global Securities; Book-Entry System" below.
Special Event Redemption or Distribution
Distribution Upon the Occurrence of a Special Event. If, at any time, a Tax
Event or an Investment Company Event (each, as defined below, a "Special Event")
shall occur and be continuing, the trust shall, except in the circumstances
described below under "Redemption Upon the Occurrence of a Tax Event," be
dissolved with the result that, after satisfaction of liabilities to creditors,
subordinated deferrable interest debentures, with an aggregate principal amount
equal to the aggregate stated liquidation amount of, with an interest rate
identical to the distribution rate of, and accrued and unpaid interest equal to
accrued and unpaid distributions on, the trust securities, would be distributed
to the holders of the trust securities, in liquidation of such holders'
interests in the trust on a pro rata basis, within 90 days following the
occurrence of such Special Event; provided, however, that in the case of the
occurrence of a Tax Event, as a condition of such termination, dissolution and
distribution, the regular trustees shall have received an opinion from a
nationally recognized independent tax counsel experienced in such matters (a "No
Recognition Opinion"), which opinion may rely on published revenue rulings of
the Internal Revenue Service, to the effect that neither the trust nor the
holders of the trust securities will recognize any gain or loss for United
States federal income tax purposes as a result of such termination and
dissolution of the trust and the distribution of the subordinated deferrable
interest debentures; and provided, further, that, if there is available to the
trust the opportunity to eliminate, within such 90-day period, the Special Event
by taking some ministerial action, such as filing a form or making an election,
or pursuing some other similar reasonable measure, which has no adverse effect
on the trust, Delphi or the holders of the trust securities, the trust will
pursue such measure in lieu of dissolution.
If subordinated deferrable interest debentures are distributed to the
holders of the trust preferred securities, then Delphi will use its best efforts
to have the subordinated deferrable interest debentures listed on such
securities exchange as the trust preferred securities are then listed, if any.
After the date for any distribution of subordinated deferrable interest
debentures upon termination of the trust, (i) the trust preferred securities and
trust preferred securities guarantee will no longer be deemed to be outstanding,
(ii) the depositary or its nominee, as the record holder of the trust preferred
securities, will receive a registered global certificate or certificates
representing subordinated deferrable interest debentures to be delivered upon
such distribution and (iii) any certificates representing trust preferred
securities not held by the depositary or its nominee will be deemed to represent
subordinated deferrable interest debentures having an aggregate principal
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amount equal to the aggregate stated liquidation amount of, with an interest
rate identical to the distribution rate of, and accrued and unpaid interest
equal to accrued and unpaid distributions on, the trust preferred securities,
until such certificates are presented to Delphi or its agent for transfer or
reissuance.
There can be no assurance as to the market prices for the subject trust
preferred securities or the subordinated deferrable interest debentures that may
be distributed in exchange for the trust preferred securities if a termination
and liquidation of the trust were to occur. Accordingly, the trust preferred
securities that an investor may purchase, whether pursuant to the offer hereby
or in the secondary market, or the subordinated deferrable interest debentures
that the investor may receive on termination and liquidation of the trust, may
trade at a discount to the price that the investor paid to purchase the trust
preferred securities.
Redemption Upon the Occurrence of a Tax Event. If, in the case of the
occurrence and continuation of a Tax Event, and (i) the applicable regular
trustees shall have been informed by such tax counsel that a No Recognition
Opinion cannot be delivered or (ii) Delphi has provided the applicable regular
trustees with a Dissolution Tax Opinion (as defined below); then Delphi shall
have the right, upon not less than 30 nor more than 60 days' notice, to redeem
the subordinated deferrable interest debentures in whole or in part for cash
within 90 days following the occurrence of such Tax Event at a price equal to
the sum of
(x) 100% of the principal amount of the subordinated deferrable interest
debentures to be redeemed and
(y) accrued and unpaid interest thereon to the date fixed for redemption,
and,
following such redemption, trust securities with an aggregate liquidation amount
equal to the aggregate principal amount of the subordinated deferrable interest
debentures so redeemed shall be redeemed by the trust at the redemption price on
a pro rata basis; provided, however, that, if there is available to Delphi or
the trust the opportunity to eliminate, within such 90-day period, the Tax Event
by taking some ministerial action, such as filing a form or making an election,
or pursuing some other similar reasonable measure which has no adverse effect on
the trust, Delphi or the holders of the trust securities, Delphi or the trust
will pursue such measure in lieu of redemption.
Definitions. As used herein the following terms have the meanings specified
below:
"Investment Company Event" means that Delphi has provided the regular
trustees with an opinion from a nationally recognized independent counsel
experienced in practice under the 1940 Act (as hereinafter defined) to the
effect that, as a result of the occurrence of a change in law or regulation or a
written change in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority (a "Change
in 1940 Act Law"), there is more than an insubstantial risk that the trust is or
will be considered an "investment company" which is required to be registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), which
Change in 1940 Act Law becomes effective on or after the date of this
prospectus. "Tax Event" means that Delphi has provided the regular trustees with
an opinion from a nationally recognized independent tax counsel experienced in
such matters (a "Dissolution Tax Opinion") to the effect that, on or after the
date of the applicable prospectus supplement, as a result of (a) any amendment
to, or change (including any announced prospective change) in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein or (b) any amendment to, or change in, an
interpretation or application of such laws or regulations by any legislative
body, court, governmental agency or regulatory authority, in each case which
amendment or change is enacted, promulgated, issued or announced or which
interpretation is issued or announced or which action is taken, on or after the
date of the applicable prospectus, there is more than an insubstantial risk that
(i) the trust is, or will be within 90 days of the date thereof, subject to
United States federal income tax with respect to interest accrued or received on
the subordinated deferrable interest debentures, or (ii)
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the trust is, or will be within 90 days of the date thereof, subject to more
than a de minimis amount of other taxes, duties or other governmental charges or
(iii) interest payable by Delphi to the trust on the subordinated deferrable
interest debentures is not, or within 90 days of the date thereof will not be,
deductible, in whole or in part, by Delphi for United States federal income tax
purposes.
Redemption Procedures
The trust may not redeem fewer than all of the outstanding trust preferred
securities unless all accrued and unpaid distributions have been paid on all
applicable trust securities for all quarterly distribution periods terminating
on or prior to the date of redemption.
If the trust gives a notice of redemption in respect of the trust preferred
securities (which notice will be irrevocable), then, by 12:00 noon, New York
City time, on the redemption date, provided that Delphi has paid to the property
trustee a sufficient amount of cash in connection with the related redemption or
maturity of the subordinated deferrable interest debentures, the trust will
irrevocably deposit with the depositary funds sufficient to pay the applicable
redemption price and will give the depositary irrevocable instructions and
authority to pay the redemption price to the holders of trust preferred
securities. See "--Global Securities; Book-Entry System."
If notice of redemption shall have been given and funds deposited as
required, then immediately prior to the close of business on the date of such
deposit, distributions will cease to accrue and all rights of holders of the
trust preferred securities so called for redemption will cease, except the right
of the holders of the trust preferred securities to receive the redemption
price, but without interest on such redemption price.
In the event that any date fixed for redemption of the trust preferred
securities is not a business day, then payment of the redemption price payable
on such date will be made on the next succeeding day which is a business day
(and without any interest or other payment in respect of any such delay), except
that, if such business day falls in the next calendar year, such payment will be
made on the immediately preceding business day.
In the event that payment of the redemption price in respect of the trust
preferred securities is improperly withheld or refused and not paid either by
the trust or by Delphi pursuant to the related trust preferred securities
guarantee, distributions on the trust preferred securities will continue to
accrue, from the original redemption date to the actual date of payment, in
which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the redemption price.
In the event that fewer than all of the outstanding trust preferred
securities are to be redeemed, the trust preferred securities will be redeemed
as described under "--Global Securities; Book-Entry System" below.
Subject to the foregoing and to applicable law (including, without
limitation, United States federal securities laws), Delphi or its affiliates
may, at any time and from time to time, purchase outstanding trust preferred
securities by tender, in the open market or by private agreement.
Liquidation Distribution Upon Termination
In the event of any voluntary or involuntary termination, dissolution or
winding-up of the trust, the holders of the trust preferred securities at that
time will be entitled to receive out of the assets of the trust, after
satisfaction of liabilities to creditors, distributions in an amount equal to
the aggregate of the liquidation amount plus accrued and unpaid distributions
thereon to the date of payment (the "liquidation distribution"), unless, in
connection with such termination, dissolution or winding-up, subordinated
deferrable interest debentures in an aggregate principal amount equal to the
aggregate liquidation amount of, with an interest rate identical to the
distribution rate of, and bearing accrued and unpaid interest equal to accrued
and unpaid distributions on, the trust preferred securities, have
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been distributed on a pro rata basis to the holders of trust preferred
securities in exchange for the trust preferred securities.
If, upon any such termination, dissolution or winding-up, the liquidation
distribution can be paid only in part because the trust has insufficient assets
available to pay in full the aggregate liquidation distribution, then the
amounts payable directly by the trust on the trust preferred securities shall be
paid on a pro rata basis. The holders of the trust common securities will be
entitled to receive distributions upon any such dissolution pro rata with the
holders of the trust preferred securities, except that if a declaration event of
default has occurred and is continuing, the trust preferred securities shall
have a preference over the trust common securities with regard to such
distributions.
Pursuant to the declaration, the trust shall dissolve
(i) on the expiration of the term of the trust,
(ii) upon the bankruptcy of Delphi or the holder of the trust common
securities,
(iii) upon the filing of a certificate of dissolution or its
equivalent with respect to Delphi or the holder of the common securities or
the revocation of the charter of Delphi or the holder of the trust common
securities and the expiration of 90 days after the date of revocation
without a reinstatement thereof,
(iv) upon the distribution of the subordinated deferrable interest
debentures following the occurrence of a Special Event,
(v) upon the entry of a decree of a judicial dissolution of Delphi or
the holder of the common securities or the trust or
(vi) upon the redemption of all of the trust securities.
Declaration Events of Default
An event of default under an applicable indenture (an "indenture event of
default") (see "Description of the Subordinated Deferrable Interest Debentures
- -- Events of Default") constitutes an event of default under the declaration
with respect to the trust securities (a "Declaration Event of Default");
provided, however, that pursuant to the declaration, the holder of the trust
common securities will be deemed to have waived any declaration event of default
with respect to the trust common securities or its consequences until all
declaration events of default with respect to the trust preferred securities
have been cured, waived or otherwise eliminated.
Until the declaration events of default with respect to the trust preferred
securities have been so cured, waived or otherwise eliminated, the applicable
property trustee will be deemed to be acting solely on behalf of the holders of
the trust preferred securities and only the holders of the trust preferred
securities will have the right to direct the property trustee with respect to
certain matters under the declaration, and therefore the indenture.
If a declaration event of default with respect to the trust preferred
securities is waived by holders of trust preferred securities, such waiver will
also constitute the waiver of such declaration event of default with respect to
the trust common securities for all purposes under the declaration, without any
further act, vote or consent of the holders of the trust common securities.
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During the existence of a declaration event of default, the applicable
property trustee, as the sole holder of the subordinated deferrable interest
debentures, will have the right under the indenture to declare the principal of,
and interest on, the subordinated deferrable interest debentures to be
immediately due and payable.
If a declaration event of default occurs that results from the failure of
Delphi to pay principal of or interest on the subordinated deferrable interest
debentures when due, during the continuance of such an event of default a holder
of trust preferred securities may institute a legal proceeding directly against
Delphi to obtain payment of such principal or interest on subordinated
deferrable interest debentures having a principal amount equal to the aggregate
liquidation amount of the trust preferred securities owned of record by such
holder. The holders of trust preferred securities will not be able to exercise
directly against Delphi any other remedy available to the property trustee
unless the property trustee first fails to do so.
Voting Rights
Except as provided below and except as provided under the Delaware Business
Trust Act, the Trust Indenture Act and under "Description of the Trust Preferred
Securities Guarantee -- Amendments and Assignment" below, and except as
otherwise required by law and the declaration, and the applicable prospectus
supplement, the holders of the trust preferred securities will have no voting
rights. In the event that Delphi elects to defer payments of interest on the
subordinated deferrable interest debentures as described above under "--
Distributions," the holders of the trust preferred securities do not have the
right to appoint a special representative or trustee or otherwise act to protect
their interests.
Subject to the requirement of the property trustee obtaining a tax opinion
as set forth below, the holders of a majority in aggregate liquidation amount of
the trust preferred securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the property
trustee, or to direct the exercise of any trust or power conferred upon the
property trustee under the declaration of trust, including the right to direct
such property trustee, as the holder of the subordinated deferrable interest
debentures, to:
(i) direct the time, method and place of conducting any proceeding for any
remedy available to the subordinated debt trustee (as hereinafter
defined) under the indenture with respect to the subordinated
deferrable interest debentures,
(ii) waive any past indenture event of default which is waivable under the
indenture,
(iii) exercise any right to rescind or annul a declaration that the
principal of all the subordinated deferrable interest debentures shall
be due and payable, or
(iv) consent to any amendment, modification or termination of the indenture
or the subordinated deferrable interest debentures, where such consent
shall be required; provided, however, that where a consent under the
indenture would require the consent of the holders of greater than a
majority in principal amount of subordinated deferrable interest
debentures affected thereby (a "super-majority"), only the holders of
at least the proportion in liquidation amount of the trust preferred
securities which the relevant super-majority represents of the
aggregate principal amount of the subordinated deferrable interest
debentures may direct such property trustee to give such consent.
If the property trustee fails to enforce its rights under the declaration
(including, without limitation, its rights, powers and privileges as the holder
of the subordinated deferrable interest debentures under the indenture), a
holder of trust preferred securities may to the extent permitted by applicable
law institute a legal proceeding directly against any person to enforce the
property trustee's rights under the declaration without first instituting any
legal proceeding against the property trustee or any other person or entity.
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Following and during the continuance of a declaration event of default that
results from the failure of Delphi to pay principal of or interest on the
subordinated deferrable interest debentures when due, a holder of trust
preferred securities may also proceed directly against Delphi, without first
waiting to determine if the property trustee has enforced its rights under the
declaration, to obtain payment of such principal or interest on subordinated
deferrable interest debentures having a principal amount equal to the aggregate
liquidation amount of the trust preferred securities owned of record by such
holder.
The property trustee shall notify all holders of the trust preferred
securities of any notice of default received from the subordinated debt trustee
with respect to the subordinated deferrable interest debentures. Such notice
shall state that such indenture event of default also constitutes a declaration
event of default.
The property trustee shall not take any action described in clauses (i),
(ii), (iii) or (iv) above unless the property trustee has obtained an opinion of
independent tax counsel to the effect that, as a result of such action, the
trust will not be classified as other than a grantor trust for United States
federal income tax purposes and each holder of trust securities will not cease
to be treated as owning an undivided beneficial interest in the subordinated
deferrable interest debentures.
In the event the consent of the property trustee, as the holder of the
subordinated deferrable interest debentures, is required under the indenture
with respect to any amendment, modification or termination of the indenture, the
property trustee shall request the direction of the holders of the trust
securities with respect to such amendment, modification or termination.
The property trustee shall vote with respect to such amendment,
modification or termination as directed by a majority in liquidation amount of
the trust preferred securities and, if no declaration event of default has
occurred and is continuing, a majority in liquidation amount of the trust common
securities, voting together as a single class, provided that where a consent
under the indenture would require the consent of a super-majority, such property
trustee may only give such consent at the direction of the holders of at least
the proportion in liquidation amount of the trust preferred securities and trust
common securities, respectively, which the relevant super-majority represents of
the aggregate principal amount of the subordinated deferrable interest
debentures outstanding.
A waiver of an indenture event of default will constitute a waiver of the
corresponding declaration event of default.
Any required approval or direction of holders of trust preferred securities
may be given at a separate meeting of holders of trust preferred securities
convened for such purpose, at a meeting of all of the holders of trust
securities or pursuant to written consent. The applicable regular trustees will
cause a notice of any meeting at which holders of trust preferred securities are
entitled to vote, or of any matter upon which action by written consent of such
holders is to be taken, to be mailed to each holder of record of trust preferred
securities. Each such notice will include a statement setting forth:
(i) the date of such meeting or the date by which such action is to be
taken,
(ii) a description of any resolution proposed for adoption at such meeting
on which such holders are entitled to vote or of such matter upon
which written consent is sought and
(iii) instructions for the delivery of proxies or consents.
No vote or consent of the holders of trust preferred securities will be required
for the trust to redeem and cancel trust preferred securities or distribute
subordinated deferrable interest debentures in accordance with the declaration.
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Notwithstanding that holders of trust preferred securities are entitled to
vote or consent under any of the circumstances described above, any of the trust
preferred securities that are owned at such time by Delphi or any entity
directly or indirectly controlling or controlled by, or under direct or indirect
common control with, Delphi, shall not be entitled to vote or consent and shall,
for purposes of such vote or consent, be treated as if they were not
outstanding.
Holders of the trust preferred securities will have no rights to appoint or
remove the trustees, who may be appointed, removed or replaced solely by Delphi,
as the direct or indirect holder of all the trust common securities.
Modification of the Declaration
The declaration may be amended or modified if approved and executed by a
majority of the regular trustees (or if there are two or fewer such regular
trustees, by all of the regular trustees); provided, however, that if any
proposed amendment provides for:
(i) any action that would adversely affect the powers, preferences or
special rights of the trust securities, whether by way of amendment to
such declaration or otherwise or
(ii) the dissolution, winding-up or termination of the trust other than
pursuant to the terms of such declaration,
then the holders of the trust securities as a single class will be entitled to
vote on such amendment or proposal and such amendment or proposal shall not be
effective except with the approval of a majority in liquidation amount of the
trust securities; provided, however, that a reduction of the principal amount or
the distribution rate, or a change in the payment dates or maturity of the trust
preferred securities, shall not be permitted without the consent of each holder
of trust preferred securities.
In the event any amendment or proposal referred to in clause (i) above
would adversely affect only the trust preferred securities or the trust common
securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a majority in liquidation amount of such class of
trust securities. In addition, if any such proposed amendment or modification
affects the rights, powers, duties, obligations or immunities of the applicable
property trustee or the applicable Delaware Trustee, such amendment or
modification shall also require the written approval of the applicable property
trustee or the applicable Delaware Trustee, as the case may be.
Notwithstanding the foregoing, no amendment or modification may be made to
any declaration if such amendment or modification would (i) cause the trust to
be classified for purposes of United States federal income taxation as other
than a grantor trust, (ii) reduce or otherwise adversely affect the powers of
the applicable property trustee in contravention of the Trust Indenture Act or
(iii) cause the trust to be deemed to be an "investment company" which is
required to be registered under the 1940 Act.
Expenses and Taxes
In the declaration, Delphi has agreed to pay for all debts and other
obligations (other than with respect to the trust securities) and all costs and
expenses of the trust (including costs and expenses relating to the organization
of the trust, the fees and expenses of the trustees and the costs and expenses
relating to the operation of the trust) and to pay any and all taxes and all
costs and expenses with respect thereto (other than United States withholding
taxes) to which the trust might become subject.
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The foregoing obligations of the trust under the declaration are for the
benefit of, and shall be enforceable by, the property trustee and any person to
whom any such debts, obligations, costs, expenses and taxes are owed (a
"Creditor") whether or not such Creditor has received notice thereof.
Such property trustee and any such Creditor may enforce such obligations of
the trust directly against Delphi, and Delphi has irrevocably waived any right
or remedy to require that the property trustee or any such Creditor take any
action against the trust or any other person before proceeding against Delphi.
Delphi has also agreed in such declaration to execute such additional agreements
as may be necessary or desirable to give full effect to the foregoing agreement
of Delphi.
Mergers, Consolidations or Amalgamations
The trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, unless, with the
consent of a majority of the regular trustees but without the consent of the
holders of the trust securities, the Delaware Trustee or the property trustee:
(i) such successor entity either
(x) expressly assumes all of the obligations of the trust with
respect to the trust securities or
(y) substitutes for the trust securities other securities having
substantially the same terms as the trust securities (the
"successor securities") so long as the successor securities rank
at least the same as the trust securities rank in priority with
respect to distributions and payments upon termination,
liquidation, redemption, maturity and otherwise,
(ii) Delphi expressly acknowledges the trustee of such successor entity
which possesses the same powers and duties as the property trustee as
the holder of the subordinated deferrable interest debentures,
(iii) if the trust preferred securities are at such time listed on any
national securities exchange or with another organization, the
successor securities will be listed, upon notification of issuance, on
any national securities exchange or other organization on which the
trust preferred securities are then listed,
(iv) such merger, consolidation, amalgamation or replacement does not cause
the trust preferred securities (including any successor securities) to
be downgraded by any nationally recognized statistical rating
organization,
(v) such merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the holders
of the trust preferred securities (including any successor securities)
in any material respect (other than with respect to any dilution of
the holders' interest in the successor entity),
(vi) such successor entity has a purpose identical to that of the trust,
(vii) prior to such merger, consolidation, amalgamation or replacement,
Delphi has received an opinion from independent counsel to the trust
experienced in such matters to the effect that
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(A) such merger, consolidation, amalgamation or replacement does not
adversely affect the rights, preferences and privileges of the
holders of the trust preferred securities (including any
successor securities) in any material respect (other than with
respect to any dilution of the holders' interest in the successor
entity), and
(B) following such merger, consolidation, amalgamation or
replacement, neither the trust nor such successor entity will be
required to register as an investment company under the 1940 Act,
and
(viii) Delphi guarantees the obligations of such successor entity under the
successor securities at least to the extent provided by the trust
preferred securities guarantee.
Notwithstanding the foregoing, the trust shall not, except with the consent of
holders of 100% in liquidation amount of the trust securities, consolidate,
amalgamate, merge with or into, or be replaced by any other entity or permit any
other entity to consolidate, amalgamate, merge with or into, or replace it if
such consolidation, amalgamation, merger or replacement would cause the trust or
the successor entity to be classified for United States federal income tax
purposes as other than a grantor trust for United States federal income tax
purposes and any holder of trust securities not to be treated as owning an
undivided beneficial interest in the subordinated deferrable interest
debentures.
Global Securities; Book-Entry System
The trust may issue the trust preferred securities of any series in whole
or in part in the form of one or more global securities to be deposited with, or
on behalf of, the depository identified in the prospectus supplement relating to
such series. Global securities, if any, issued in the United States are expected
to be deposited with DTC, as depository. Global securities will be issued in
fully registered form and may be issued in either temporary or permanent form.
Unless and until it is exchanged in whole or in part for the individual trust
preferred securities represented thereby, a global security may not be
transferred except as a whole by the depository for such global security to a
nominee of such depository or by a nominee of such depository to such depository
or another nominee of such depository or by such depository or any nominee of
such depository to a successor depository or any nominee of such successor.
The specific terms of the depository arrangement with respect to any series
of trust preferred securities will be described in the prospectus supplement
relating to such series. The trust expects that unless otherwise indicated in
the applicable prospectus supplement, the following provisions will apply to
depository arrangements.
Upon the issuance of a global security, the depository for such global
security or its nominee will credit on its book-entry registration and transfer
system the respective principal amounts of the individual trust preferred
securities represented by such global security to the accounts of participants.
Such accounts will be designated by the underwriters, dealers or agents with
respect to the trust preferred securities or by the trust if the trust preferred
securities are offered directly by the trust. Ownership of beneficial interests
in such global security will be limited to participants or persons that may hold
interests through participants.
The trust expects that, pursuant to procedures established by DTC,
ownership of beneficial interests in any global security with respect to which
DTC is the depository will be shown on, and the transfer of that ownership will
be effected only through, records maintained by DTC or its nominee (with respect
to beneficial interests of participants) and records of participants (with
respect to beneficial interests of persons who hold through participants).
Neither the trust, Delphi or any trustee will have any responsibility or
liability for any aspect of the records of DTC or for maintaining, supervising
or reviewing any records of DTC or any of its participants relating to
beneficial ownership interests in the trust preferred securities. The laws of
some states require that certain purchasers of secu-
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rities take physical delivery of such securities in definitive form. Such limits
and laws may impair the ability to own, pledge or transfer beneficial interest
in a global security.
So long as the depository for a global security or its nominee is the
registered owner of such global security, such depository or such nominee, as
the case may be, will be considered the sole owner or holder of the trust
preferred securities represented by such global security for all purposes under
the declaration of trust. Except as described below or in the applicable
prospectus supplement, owners of beneficial interest in a global security will
not be entitled to have any of the individual trust preferred securities
represented by such global security registered in their names, will not receive
or be entitled to receive physical delivery of any the trust preferred
securities in definitive form and will not be considered the owners or holders
thereof under the declaration. Beneficial owners of trust preferred securities
evidenced by a global security will not be considered the owners or holders
thereof under the declaration for any purpose, including with respect to the
giving of any direction, instructions or approvals to the trustee thereunder.
Accordingly, each person owning a beneficial interest in a global security with
respect to which DTC is the depository must rely on the procedures of DTC and,
if such person is not a participant, on the procedures of the participant
through which such person owns its interests, to exercise any rights of a holder
under the declaration. We understand that, under existing industry practice, if
it requests any action of holders or if an owner of a beneficial interest in a
global security desires to give or take any action which a holder is entitled to
give or take under the declaration, DTC would authorize the participants holding
the relevant beneficial interest to give or take such action, and such
participants would authorize beneficial owners through such participants to give
or take such actions or would otherwise act upon the instructions of beneficial
owners holding through them.
Distribution payments on individual trust preferred securities represented
by a global security registered in the name of a depository or its nominee will
be made to or at the direction of the depository or its nominee, as the case may
be, as the registered owner of the global security under the declaration. Under
the terms of the declaration, the trust, Delphi Financial Group, Inc. or any
relevant trustee may treat the persons in whose name trust preferred securities,
including a global security, are registered as the owners thereof for the
purpose of receiving such payments. Consequently, neither the trust, Delphi nor
any trustee has or will have any responsibility or liability for the payment of
such amounts to beneficial owners of trust preferred securities. The trust
believes, however, that it is currently the policy of DTC to immediately credit
the accounts of relevant participants with such payments, in amounts
proportionate to their respective holdings of beneficial interests in the
relevant global security as shown on the records of DTC or its nominee. The
trust also expects that payments by participants to owners of beneficial
interests in such global security held through such participants will be
governed by standing instructions and customary practices, as is the case with
securities held for the account of customers in bearer form or registered in
street name, and will be the responsibility of such participants. Redemption
notices with respect to any trust preferred securities represented by a global
security will be sent to the depository or its nominee. If less than all of the
trust preferred securities of any series are to be redeemed, the trust expects
the depository to determine the amount of the interest of each participant in
the trust preferred securities to be redeemed to be determined by lot. Neither
the trust, Delphi Financial Group Inc., any trustee, any paying agent nor the
registrar for the trust preferred securities will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the global security for the trust preferred
securities or for maintaining any records with respect thereto.
Neither the trust, Delphi nor any trustee will be liable for any delay by
the holders of a global security or the depository in identifying the beneficial
owners of trust preferred securities and the trust, Delphi Financial Group, Inc.
and any relevant trustee may conclusively rely on, and will be protected in
relying on, instructions from the holder of a global security or the depository
for all purposes. The rules applicable to DTC and its participants are on file
with the SEC.
If a depository for any trust preferred securities is at any time
unwilling, unable or ineligible to continue as depository and a successor
depository is not appointed by the trust within 90 days, the trust will issue
individual
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trust preferred securities in exchange for the global security representing the
trust preferred securities. In addition, the regular trustees (after
consultation with Delphi Financial Group, Inc.) may at any time, subject to any
limitations described in the prospectus supplement relating to the trust
preferred securities, determine not to have any of the trust preferred
securities represented by one or more global securities and in such event the
trust will issue individual trust preferred securities in exchange for the
global security or securities representing the trust preferred securities.
All moneys paid by the trust to a paying agent or the trustee for the
payment of distributions on any trust preferred security which remain unclaimed
at the end of two years after such payment has become due and payable will be
repaid to the trust, and the holder of the trust preferred security thereafter
may look only to the trust for payment thereof.
Information Concerning the Property Trustee
The property trustee, prior to the occurrence of a default with respect to
the trust securities and after the curing of all such defaults that may have
occurred, undertakes to perform only such duties as are specifically set forth
in the relevant declaration and, after default, shall exercise the same degree
of care as a prudent individual would exercise in the conduct of his or her own
affairs. Subject to such provisions, the property trustee is under no obligation
to exercise any of the powers vested in it by such declaration at the request of
any holder of the trust preferred securities, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which might
be incurred thereby but the foregoing shall not relieve the property trustee,
upon the occurrence of a declaration event of default, from exercising the
rights and powers vested in it by the such declaration. The property trustee
also serves as the subordinated deferrable interest debentures trustee under the
indenture and as the preferred guarantee trustee under the trust preferred
securities guarantee.
Registrar and Transfer Agent
In the event that the trust preferred securities do not remain in
book-entry only form, the property trustee will act as paying agent and may
designate an additional or substitute paying agent at any time. Registration of
transfers of trust preferred securities will be effected without charge by or on
behalf of the trust, but upon payment (with the giving of such indemnity as the
regular trustees may require) in respect of any tax or other government charges
which may be imposed in relation to it. The trust will not be required to
register or cause to be registered the transfer of trust preferred securities
after the trust preferred securities have been called for redemption.
Governing Law
The declaration and the trust preferred securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
Miscellaneous
The regular trustees are authorized and directed to operate the trust in
such a way so that the trust will not be deemed to be an "investment company"
required to be registered under the 1940 Act or characterized for United States
federal income tax purposes as other than a grantor trust. Delphi Financial
Group, Inc. is authorized and directed to conduct its affairs so that the
subordinated deferrable interest debentures will be treated as indebtedness of
Delphi Financial Group, Inc. for United States federal income tax purposes. In
this connection, the regular trustees and Delphi Financial Group, Inc. are
authorized to take any action, not inconsistent with applicable law, the
declarations or Certificate of Incorporation and by-laws of Delphi Financial
Group, Inc., that each of the regular trustees and Delphi Financial Group, Inc.
determines in their discretion to be necessary or desirable for such purposes,
as
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long as such action does not materially and adversely affect the interests of
the holders of the trust preferred securities. Holders of the trust preferred
securities will have no preemptive rights.
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DESCRIPTION OF THE TRUST PREFERRED SECURITIES GUARANTEES
Set forth below is a summary of information concerning the trust preferred
securities guarantees that will be executed and delivered by Delphi for the
benefit of the holders from time to time of the trust preferred securities. The
trust preferred securities guarantee will be qualified as an indenture under the
Trust Indenture Act. A trust preferred guarantee trustee will be named to act in
such capacity under such guarantee. The terms of the trust preferred securities
guarantee will be those set forth therein and those made part thereof by the
Trust Indenture Act. The following summary does not purport to be complete and
is subject in all respects to the provisions of, and is qualified in its
entirety by reference to, the trust preferred securities guarantee (the form of
which is filed as an exhibit to the registration statement of which this
prospectus forms a part) and the Trust Indenture Act. The trust preferred
securities guarantee will be held by the trust preferred guarantee trustee for
the benefit of the holders of the trust preferred securities of the trust.
General
Pursuant to the trust preferred securities guarantee, Delphi will
irrevocably and unconditionally agree to pay in full to the holders of the trust
preferred securities issued by the trust the guarantee payments (as defined
herein) (without duplication of amounts theretofore paid by the trust), to the
extent not paid by the trust, regardless of any defense, right of set-off or
counterclaim that the trust may have or assert.
The following payments or distributions with respect to the trust preferred
securities issued by the trust to the extent not paid or made by the trust (the
"guarantee payments") will be subject to the trust preferred securities
guarantee thereon (without duplication):
(i) any accrued and unpaid distributions that are required to be paid on
the trust preferred securities, to the extent the trust has funds
available therefor,
(ii) the redemption price, which includes all accrued and unpaid
distributions to the date of the redemption, to the extent the trust
has funds available therefor, with respect to any trust preferred
securities called for redemption by the trust and
(iii) upon a voluntary or involuntary termination, dissolution or
winding-up of the trust (other than in connection with the
distribution of subordinated deferrable interest debentures to the
holders of trust preferred securities in exchange for trust preferred
securities), the lesser of
(a) the aggregate of the liquidation amount and all accrued and
unpaid distributions on the trust preferred securities to the
date of payment, to the extent the trust has funds available
therefor, and
(b) the amount of assets of the trust remaining available for
distribution to holders of trust preferred securities in
liquidation of the trust.
Delphi's obligation to make a guarantee payment may be satisfied by direct
payment of the required amounts by Delphi to the holders of trust preferred
securities or by causing the trust to pay such amounts to such holders.
The trust preferred securities guarantee will be a full and unconditional
guarantee of the guarantee payments with respect to the trust preferred
securities issued by the trust from the time of issuance of the trust preferred
securities, but will not apply to the payment of distributions and other
payments on the trust preferred securities when the property trustee does not
have sufficient funds in the trust's property account to make such distributions
or
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other payments. If Delphi does not make interest payments on the subordinated
deferrable interest debentures held by the property trustee, the trust will not
make distributions on the trust preferred securities issued by the trust and
will not have funds available therefor.
Delphi has also agreed separately to guarantee the obligations of the trust
with respect to the trust common securities (the "trust common securities
guarantee") to the same extent as the trust preferred securities guarantee,
except that upon the occurrence and during the continuation of an indenture
event of default, holders of trust preferred securities shall have priority over
holders of trust common securities with respect to distributions and payments on
liquidation, redemption or otherwise.
Certain Covenants of Delphi
In the trust preferred securities guarantee, Delphi will covenant that, so
long as the trust preferred securities issued by the trust remain outstanding,
if there shall have occurred and be continuing any event that constitutes an
event of default under the trust preferred securities guarantee or the
declaration of the trust, then Delphi shall not:
(a) declare or pay any dividend on, or make any distribution with respect
to, or redeem, purchase, acquire or make a liquidation payment with
respect to, any of its capital stock,
(b) make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities issued by Delphi which
rank equal with or junior to the subordinated deferrable interest
debentures and
(c) make any guarantee payments (other than pursuant to the trust
preferred securities guarantee) with respect to the foregoing.
However, the foregoing restriction will not apply to any dividend,
redemption, liquidation, interest, principal or guarantee payments by
Delphi where the payment is made by way of securities (including
capital stock) that rank junior to the securities on which such
dividend, redemption, interest, principal or guarantee payment is
being made.
Amendments and Assignment
Except with respect to any changes which do not materially adversely affect
the rights of holders of trust preferred securities (in which case no consent
will be required), the trust preferred securities guarantee may be amended only
with the prior approval of the holders of not less than a majority in
liquidation amount of the outstanding trust preferred securities issued by the
trust. The manner of obtaining any such approval of holders of the trust
preferred securities will be set forth in the applicable prospectus supplement.
All guarantees and agreements contained in the trust preferred securities
guarantee shall bind the successors, assigns, receivers, trustees and
representatives of Delphi and shall inure to the benefit of the trust preferred
guarantee trustee and the holders of the trust preferred securities then
outstanding of the trust.
Termination of the Trust Preferred Securities Guarantee
The trust preferred securities guarantee will terminate and be of no
further force and effect as to the trust preferred securities issued by the
trust upon full payment of the redemption price of all trust preferred
securities of the trust, or upon distribution of the subordinated deferrable
interest debentures by the trust to the holders of the trust preferred
securities of the trust, and will terminate completely upon full payment of the
amounts payable upon liquidation of the trust. The trust preferred securities
guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any holder of trust preferred securities must repay to the
trust or Delphi, or their successors, any sums paid to them under the trust
preferred securities or the trust preferred securities guarantee.
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Events of Default
An event of default under the trust preferred securities guarantee will
occur upon the failure of Delphi to perform any of its payment or other
obligations thereunder.
The holders of a majority in liquidation amount of the trust preferred
securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the trust preferred guarantee trustee in
respect of the trust preferred securities guarantee or to direct the exercise of
any trust or power conferred upon the trust preferred guarantee trustee under
the trust preferred securities guarantee. If the trust preferred guarantee
trustee fails to enforce the trust preferred securities guarantee, any holder of
trust preferred securities may institute a legal proceeding directly against
Delphi to enforce the trust preferred guarantee trustee's rights under the trust
preferred securities guarantee, without first instituting a legal proceeding
against the trust, the trust preferred guarantee trustee or any other person or
entity. In addition, any record holder of trust preferred securities relating to
the trust shall have the right, which is absolute and unconditional, to proceed
directly against Delphi to obtain guarantee payments, without first waiting to
determine if the trust preferred guarantee trustee has enforced the trust
preferred securities guarantee or instituting a legal proceeding against the
trust which issued the trust preferred securities, the trust preferred guarantee
trustee or any other person or entity.
Status and Ranking of the Trust Preferred Securities Guarantee
Delphi's obligations under the trust preferred securities guarantee to make
the guarantee payments will constitute an unsecured obligation of Delphi and
will rank
(i) subordinate and junior in right of payment to all other liabilities of
Delphi, including the subordinated deferrable interest debentures,
except those liabilities of Delphi expressly made equal with or
subordinate to the guarantee payments by their terms,
(ii) equal with the most senior preferred stock issued from time to time by
Delphi and with any guarantee now or hereafter entered into by Delphi
in respect of any preferred stock of any subsidiary or affiliate of
Delphi and
(iii) senior to Delphi's common stock.
The terms of the trust preferred securities provide that each holder of trust
preferred securities issued by the trust by acceptance thereof agrees to the
subordination provisions and other terms of the trust preferred securities
guarantee relating thereto.
The trust preferred securities guarantee will constitute a guarantee of
payment and not of collection (that is, the guaranteed party may institute a
legal proceeding directly against the guarantor to enforce its rights under the
guarantee without instituting a legal proceeding against any other person or
entity). The trust preferred securities guarantee will be deposited with the
trust preferred guarantee trustee to be held for the benefit of the holders of
the trust preferred securities of the trust. Except as otherwise noted herein,
the trust preferred guarantee trustee has the right to enforce the trust
preferred securities guarantee on behalf of the holders of the trust preferred
securities. The trust preferred securities guarantee will not be discharged
except by payment of the guarantee payments in full (without duplication of
amounts theretofore paid by the trust).
Delphi's obligations under the trust preferred securities guarantee with
respect to the trust preferred securities issued by the trust, taken together
with its obligations under the declaration for the trust, the subordinated
deferrable interest debentures purchased by the trust and the indenture, in the
aggregate will provide a full and unconditional guarantee by Delphi of payments
due on the trust preferred securities issued by the trust.
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Information Concerning the Trust Preferred Guarantee Trustee
The trust preferred guarantee trustee, prior to the occurrence of a default
with respect to the trust preferred securities guarantee and after the curing of
all such defaults that may have occurred, undertakes to perform only such duties
as are specifically set forth in the trust preferred securities guarantee and,
after default, shall exercise the same degree of care as a prudent individual
would exercise in the conduct of his or her own affairs. Subject to such
provisions, the trust preferred guarantee trustee is under no obligation to
exercise any of the powers vested in it by the trust preferred securities
guarantee at the request of any holder of trust preferred securities unless
offered reasonable indemnity against the costs, expenses and liabilities which
might be incurred thereby; but the foregoing shall not relieve the trust
preferred guarantee trustee, upon the occurrence of an event of default under
the trust preferred securities guarantee, from exercising the rights and powers
vested in it by the trust preferred securities guarantee. The trust preferred
guarantee trustee also serves as property trustee under the declaration for the
trust and as trustee of the indenture relating to the subordinated deferrable
interest debentures.
Governing Law
The trust preferred securities guarantee will be governed by, and construed
in accordance with, the internal laws of the State of New York.
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DESCRIPTION OF THE SUBORDINATED DEFERRABLE INTEREST DEBENTURES
Subordinated deferrable interest debentures may be issued from time to time
in one or more series under an indenture (the "indenture") to be entered into by
Delphi and the trustee named thereunder (the "subordinated debt trustee"). The
terms of the subordinated deferrable interest debentures will include those
stated in the indenture and in any supplemental indenture hereto (as defined
below) and those made part of the indenture by reference to the Trust Indenture
Act. The following summary does not purport to be complete and is subject in all
respects to the provisions of, and is qualified in its entirety by reference to,
the indenture, which is filed as an exhibit to the registration statement of
which this prospectus forms a part, and the Trust Indenture Act. Whenever
particular provisions or defined terms in the indenture are referred to herein,
such provisions or defined terms are incorporated by reference herein.
General
The subordinated deferrable interest debentures will be unsecured,
subordinated obligations of Delphi. The indenture does not limit the aggregate
principal amount of subordinated deferrable interest debentures which may be
issued thereunder and provides that the subordinated deferrable interest
debentures may be issued from time to time in one or more series. The
subordinated deferrable interest debentures are issuable pursuant to an
indenture supplemental to the indenture or a resolution of Delphi's board of
directors or a special committee thereof (each, a "supplemental indenture").
In the event subordinated deferrable interest debentures are issued to the
trust or the trustee of the trust in connection with the issuance of trust
securities by the trust, such subordinated deferrable interest debentures
subsequently may be distributed pro rata the holders of the trust securities in
connection with the termination of the trust upon the occurrence of certain
events described in the prospectus supplement relating to the trust securities.
Only one series of subordinated deferrable interest debentures will be issued to
the trust or the trustee of the trust in connection with the issuance of trust
securities by the trust.
Reference is made to the indenture, any supplemental indenture and any
prospectus supplement for the following terms of the series of subordinated
deferrable interest debentures being offered thereby:
(i) the specific title of such subordinated deferrable interest
debentures;
(ii) any limit on the aggregate principal amount of such subordinated
deferrable interest debentures;
(iii) the date or dates on which the principal of such subordinated
deferrable interest debentures is payable and the right, if any, to
extend such date or dates;
(iv) the rate or rates at which such subordinated deferrable interest
debentures will bear interest or the method of determination of such
rate or rates;
(v) the date or dates from which such interest shall accrue, the interest
payment dates on which such interest will be payable or the manner of
determination of such interest payment dates and the record dates for
the determination of holders to whom interest is payable on any such
interest payment dates;
(vi) the right, if any, to extend the interest payment periods and the
duration of such extension;
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(vii) the period or periods within which, the price or prices at which, and
the terms and conditions upon which, such subordinated deferrable
interest debentures may be redeemed, in whole or in part, at the
option of Delphi;
(viii) the right and/or obligation, if any, of Delphi to redeem or purchase
such subordinated deferrable interest debentures pursuant to any
sinking fund or analogous provisions or at the option of the holder
thereof and the period(s)during which, the price(s) at which, and the
terms and conditions upon which, such subordinated deferrable interest
debentures shall be redeemed or purchased, in whole or in part,
pursuant to such right and/or obligation;
(ix) the terms of subordination of such series;
(x) if other than denominations of $25 or any integral multiple thereof,
the denominations in which such subordinated deferrable interest
debentures shall be issuable;
(xi) any and all other terms with respect to such series; and
(xii) whether such subordinated deferrable interest debentures are issuable
as a global security, and in such case, the identity of the
depositary.
The indenture does not contain any provisions that afford holders of
subordinated deferrable interest debentures protection in the event of a highly
leveraged transaction involving Delphi.
Subordination
The subordinated deferrable interest debentures will be subordinated and
junior in right of payment to certain other indebtedness of Delphi to the extent
set forth in the indenture, any supplemental indenture and any prospectus
supplement.
Certain Covenants
If subordinated deferrable interest debentures are issued to the trust or
the trustee of the trust in connection with the issuance of trust securities by
the trust and
(i) there shall have occurred and be continuing any event that would
constitute an event of default under the indenture or
(ii) Delphi shall be in default with respect to its payment of any
obligations under the related trust preferred securities guarantee or
trust common securities guarantee, and such default shall be
continuing,
then Delphi shall not:
(a) declare or pay any dividend on, make any distributions with respect
to, or redeem, purchase or make a liquidation payment with respect to,
any of its capital stock,
(b) make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities issued by Delphi which
rank equal with or junior to such subordinated deferrable interest
debentures and
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(c) make any guarantee payments (other than pursuant to the trust
preferred securities guarantees) with respect to the foregoing.
If subordinated deferrable interest debentures are issued to the trust or
the trustee of the trust in connection with the issuance of trust securities by
the trust and Delphi shall have given notice of its election to defer payments
of interest on such subordinated deferrable interest debentures by extending the
interest payment period as provided in the indenture or any supplemental
indenture and such period, or any extension thereof, shall be continuing, then
Delphi shall not:
(a) declare or pay any dividend on, make any distributions with respect
to, or redeem, purchase or make a liquidation payment with respect to,
any of its capital stock,
(b) make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities issued by Delphi which
rank equal with or junior to such subordinated deferrable interest
debentures and
(c) make any guarantee payments (other than pursuant to the trust
preferred securities guarantees) with respect to the foregoing.
Notwithstanding the foregoing restrictions, Delphi will be permitted, in
any event, to make dividend, redemption, liquidation and guarantee payments on
capital stock, and interest, principal, redemption and guarantee payments on
debt securities issued by Delphi ranking equal with or junior to subordinated
deferrable interest debentures, where the payment is made by way of securities
(including capital stock) that rank junior to the securities on which such
payment is being made.
In the event subordinated deferrable interest debentures are issued to the
trust or the trustee of the trust in connection with the issuance of trust
securities of the trust, for so long as the trust securities remain outstanding,
Delphi will covenant:
(i) to directly or indirectly maintain 100% ownership of the trust common
securities of the trust; provided, however, that any permitted
successor of Delphi under the indenture may succeed to Delphi's
ownership of the trust common securities,
(ii) not to cause, as sponsor of the trust, or to permit, as holder of the
trust common securities of the trust, the termination, dissolution or
winding-up of the trust, except in connection with a distribution of
the subordinated deferrable interest debentures as provided in the
declaration of the trust and in connection with certain mergers,
consolidations or amalgamations as permitted by the declaration of the
trust,
(iii) to use its reasonable efforts to cause the trust
(a) to remain a statutory business trust, except in connection with
the distribution of subordinated deferrable interest debentures
to the holders of trust securities in liquidation of the trust,
the redemption of all of the trust securities of the trust, or
certain mergers, consolidations or amalgamations, each as
permitted by the declaration of the trust, and
(b) to otherwise continue not to be classified as an association
taxable as a corporation or partnership for United States federal
income tax purposes and
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(iv) to use reasonable efforts to cause each holder of trust securities of
the trust to be treated as owning an undivided beneficial interest in
the subordinated deferrable interest debentures issued to the trust.
Form, Exchange, Registration and Transfer
Subordinated deferrable interest debentures of each series will be issued
in registered form and in either certificated form or represented by one or more
global securities. If not represented by one or more global securities,
subordinated deferrable interest debentures may be presented for registration of
transfer (with the form of transfer endorsed thereon duly executed) or exchange
at the office of the debt registrar or at the office of any transfer agent
designated by Delphi for such purpose with respect to any series of subordinated
deferrable interest debentures and referred to in an applicable prospectus
supplement, without service charge and upon payment of any taxes and other
governmental charges as described in the indenture or any supplemental
indenture.
Such transfer or exchange will be effected upon the debt registrar or such
transfer agent, as the case may be, being satisfied with the documents of title
and identity of the person making the request. Delphi has appointed the
subordinated debt trustee as debt registrar with respect to each series of
subordinated deferrable interest debentures.
If a prospectus supplement or supplemental indenture refers to any transfer
agents (in addition to the debt registrar) initially designated by Delphi with
respect to any series of subordinated deferrable interest debentures, Delphi may
at any time rescind the designation of any such transfer agent or approve a
change in the location through which any such transfer agent acts, except that
Delphi will be required to maintain a transfer agent in each place of payment
for such series. Delphi may at any time designate additional transfer agents
with respect to any series of subordinated deferrable interest debentures.
In the event of any redemption in part, Delphi shall be required to:
(i) issue, register the transfer of or exchange any subordinated
deferrable interest debentures during a period beginning at the
opening of business 15 days before any selection for redemption of
subordinated deferrable interest debentures of like tenor and of the
series of which such subordinated deferrable interest debentures are a
part, and ending at the close of business on the earliest date on
which the relevant notice of redemption is deemed to have been given
to all holders of subordinated deferrable interest debentures of like
tenor and of such series to be redeemed and
(ii) register the transfer of or exchange any subordinated deferrable
interest debentures so selected for redemption, in whole or in part,
except the unredeemed portion of any subordinated deferrable interest
debentures being redeemed in part.
Payment and Paying Agents
Unless otherwise indicated in an applicable prospectus supplement,
(i) payment of principal of and premium, if any, on any subordinated
deferrable interest debentures will be made only against surrender to
the paying agent of such subordinated deferrable interest debentures;
(ii) principal of, any premium, if any, and interest, if any, on
subordinated deferrable interest debentures will be payable, subject
to any applicable laws and regulations, at the office of such paying
agent or paying agents as Delphi may designate from time to time,
except that, at the option of
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Delphi, payment of any interest may be made by check mailed to the
address of the person entitled thereto as such address shall appear in
the debt register with respect to such subordinated deferrable
interest debentures; and
(iii) payment of interest on a subordinated deferrable interest debenture
on any interest payment date will be made to the person in whose name
such subordinated deferrable interest debenture (or predecessor
security) is registered at the close of business on the regular record
date for such interest payment.
The subordinated debt trustee will act as paying agent with respect to each
series of subordinated deferrable interest debentures. Delphi may at any time
designate additional paying agents or rescind the designation of any paying
agent or approve a change in the office through which any paying agent acts,
except that Delphi will be required to maintain a paying agent in each place of
payment for each series of subordinated deferrable interest debentures.
All moneys paid by Delphi to a paying agent for the payment of the
principal of or premium or interest, if any, on any subordinated deferrable
interest debentures of any series which remain unclaimed at the end of two years
after such principal or premium or interest, if any, shall have become due and
payable will be repaid to Delphi and the holder of such subordinated deferrable
interest debentures will thereafter look only to Delphi for payment thereof.
Global Securities
If any subordinated deferrable interest debentures of a series are
represented by one or more global securities (each, a "global security"), the
applicable prospectus supplement and supplemental indenture will describe the
circumstances, if any, under which beneficial owners of interests in any such
global security may exchange such interests for subordinated deferrable interest
debentures of such series and of like tenor and principal amount in any
authorized form and denomination. Principal of and premium, if any, and interest
on a global security will be payable in the manner described in the applicable
prospectus supplement.
The specific terms of the depositary arrangement with respect to any
portion of a series of subordinated deferrable interest debentures to be
represented by a global security will be described in the applicable prospectus
supplement and supplemental indenture.
Modification of the Indenture
The indenture contains provisions permitting Delphi and the subordinated
debt trustee, with the consent of the holders of not less than a majority in
principal amount of the subordinated deferrable interest debentures of each
series which are affected by the modification, to modify the indenture or any
supplemental indenture affecting that series or the rights of the holders of
that series of subordinated deferrable interest debentures; provided, however,
that no such modification may, without the consent of the holder of each
outstanding subordinated deferrable interest debenture affected thereby,
(i) extend the fixed maturity of any subordinated deferrable interest
debentures of any series, or reduce the principal amount thereof, or
reduce the rate or extend the time for payment of interest thereon, or
reduce any premium payable upon the redemption thereof;
(ii) reduce the percentage of subordinated deferrable interest debentures
the holders of which are required to consent to any such supplemental
indenture;
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(iii) change the amount or time of any payment required by any sinking fund
provisions of any subordinated deferrable interest debentures;
(iv) make any change that materially adversely affects the rights of a
holder of subordinated deferrable interest debentures to require
Delphi to purchase a subordinated deferrable interest debenture in
accordance with the terms thereof and the applicable indenture;
(v) waive a default in the payment of the principal of or interest, if
any, on any subordinated deferrable interest debenture; or
(vi) make any subordinated deferrable interest debenture payable in money
or securities other than as stated in such subordinated deferrable
interest debenture.
In addition, Delphi and the subordinated debt trustee may execute, without
the consent of any holder of subordinated deferrable interest debentures, any
supplemental indenture for certain other usual purposes including:
o to cure any ambiguity, omission, defect or inconsistency;
o to make any change that does not, in the good faith opinion of
Delphi's board of directors and the subordinated debt trustee,
adversely affect the interests of holders of such subordinated
deferrable interest debentures in any material respect;
o to provide for the assumption of Delphi's obligations under the
indenture by a successor upon any merger, consolidation or asset
transfer permitted under the indenture;
o to establish the form or terms of any series of subordinated
deferrable interest debentures as permitted by the indenture;
o to add events of default with respect to such subordinated deferrable
interest debentures;
o to add covenants that would benefit the holders of the subordinated
deferrable interest debentures or to surrender any rights or powers
Delphi has under the indenture;
o to make any change necessary for the registration of the subordinated
deferrable interest debentures under the Securities Act or to comply
with the Trust Indenture Act of 1939, or any amendment thereto, or to
comply with any requirement of the SEC in connection with the
qualification of the indenture under the Trust Indenture Act of 1939;
provided, however, that such modification or amendment does not, in
the good faith opinion of Delphi's board of directors and the
subordinated debt trustee, adversely affect the interests of the
holders of the subordinated deferrable interest debentures in any
material respect;
o to add to or change any of the provisions of the indenture to such
extent as shall be necessary to permit or facilitate the issuance of
the subordinated deferrable interest debentures in bearer form,
registrable or not registrable as to principal, and with or without
interest coupons;
o to change or eliminate any of the provisions of the indenture,
provided, however, that any such change or elimination shall become
effective only when there are no subordinated deferrable interest
debentures outstanding of any series created prior to the execution of
such supplemental indenture which is entitled to the benefit of such
provision;
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o to establish the form or terms of subordinated deferrable interest
debentures of any series as permitted by the indenture; or
o to evidence and provide for the acceptance of appointment by a
successor trustee with respect to the subordinated deferrable interest
debentures of one or more series and to add to or change any of the
provisions of the indenture as shall be necessary to provide for or
facilitate the administration of the trust under the indenture by more
than one subordinated debt trustee, pursuant to the requirements of
the indenture.
Events of Default
With respect to a particular series of subordinated deferrable interest
debentures, the indenture provides (or the supplemental indenture for such
series will provide) that any one or more of the following described events
which has occurred and is continuing constitutes an "event of default" with
respect to such series of subordinated deferrable interest debentures:
(a) failure to pay interest on the subordinated deferrable interest
debentures of such series within 60 days of when due or principal of
any debt securities of such series when due (including any sinking
fund payment); or
(b) failure to perform any other agreement contained in the subordinated
deferrable interest debentures of such series or the indenture
relating to such series (other than an agreement relating solely to
another series of subordinated deferrable interest debentures) for 90
days after notice has been given to Delphi; or
(c) certain events of bankruptcy, insolvency or reorganization of Delphi;
or
(d) in the event subordinated deferrable interest debentures are issued to
the trust or the trustee of the trust in connection with the issuance
of trust securities by the trust, the voluntary or involuntary
dissolution, winding-up or termination of the trust, except in
connection with the distribution of subordinated deferrable interest
debentures to the holders of trust securities in liquidation of the
trust, the redemption of all of the trust securities of the trust, or
certain mergers, consolidations or amalgamations, each as permitted by
the declaration of the trust.
The holders of a majority in aggregate outstanding amount of any series of
subordinated deferrable interest debentures have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
subordinated debt trustee for the series. The subordinated debt trustee or the
holders of not less than 25% in aggregate outstanding principal amount of any
particular series of the subordinated deferrable interest debentures may declare
the principal and interest, if any, accrued to the date of acceleration
immediately due and payable upon an event of default with respect to such
series, but the holders of a majority in aggregate outstanding principal amount
of such series may annul such declaration and waive the default with respect to
such series if the event of default has been cured, the rescission would not
conflict with any judgment or decree and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration and
any applicable premium has been deposited with the subordinated debt trustee. If
an event of default results from the failure of Delphi to pay when due principal
of or interest on the subordinated deferrable interest debentures issued to the
trust, during the continuance of such an event of default a holder of trust
preferred securities issued by the trust may immediately institute a legal
proceeding directly against Delphi to obtain payment of such principal or
interest on subordinated deferrable interest debentures having a principal
amount equal to the aggregate liquidation amount of the trust preferred
securities owned of record by such holder.
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The holders of a majority in aggregate outstanding principal amount of any
series of subordinated deferrable interest debentures affected thereby may, on
behalf of the holders of all the subordinated deferrable interest debentures of
such series, waive any past default, except:
(i) a default in the payment of principal, premium, if any, or interest
(unless such default has been cured and a sum sufficient to pay all
matured installments of interest and principal due otherwise than by
acceleration and any applicable premium has been deposited with the
subordinated debt trustee) or
(ii) a default in the covenants described in the first or second paragraph
under "-- Certain Covenants" above.
Consolidation, Merger and Sale
The indenture contains a covenant which restricts the ability of Delphi to
merge or consolidate with or into any other corporation, sell or convey all or
substantially all of its assets to any person, firm or corporation or otherwise
engage in restructuring transactions unless (i) either Delphi is the successor
or, if Delphi is not the surviving person, the surviving person assumes by
supplemental indenture all of the obligations of Delphi under the subordinated
deferrable interest debentures and the indenture; and (ii) immediately after
giving effect to such transaction, no event of default shall have occurred and
be continuing.
Defeasance and Discharge
Under the terms of the indenture, Delphi will be discharged from any and
all obligations in respect of the subordinate deferrable interest debentures of
any series (except in each case for certain obligations to register the transfer
or exchange of subordinated deferrable interest debentures, replace stolen, lost
or mutilated subordinated deferrable interest debentures, maintain paying
agencies and hold moneys for payment in trust) if either (i) all subordinated
deferrable interest debentures of such series previously authenticated and
delivered have been delivered to the trustee for cancellation (subject to
certain provisions of the indenture), or (ii) Delphi deposits with the
subordinated debt trustee, in trust, moneys or U.S. government obligations in an
amount sufficient to pay all the principal of, and interest on, the subordinated
deferrable interest debentures of such series on the dates such payments are due
in accordance with the terms of such subordinated deferrable interest
debentures.
Governing Law
The indenture and the subordinated deferrable interest debentures will be
governed by, and construed in accordance with, the internal laws of the State of
New York.
Information Concerning the Subordinated Debt Trustee
The subordinated debt trustee, prior to default, undertakes to perform only
such duties as are specifically set forth in the indenture or any supplemental
indenture and, after default, shall exercise the same degree of care as a
prudent individual would exercise in the conduct of his or her own affairs.
Subject to such provision, the subordinated debt trustee is under no obligation
to exercise any of the powers vested in it by the indenture or any supplemental
indenture at the request of any holder of subordinated deferrable interest
debentures, unless offered reasonable indemnity by such holder against the
costs, expenses and liabilities which might by incurred thereby. The
subordinated debt trustee is not required to expend or risk its own funds or
otherwise incur personal financial liability in the performance of its duties if
the subordinated debt trustee reasonably believes that repayment or adequate
indemnity is not reasonably assured to it.
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Miscellaneous
Delphi will have the right at all times to assign any of its rights or
obligations under the indenture or any supplemental indenture to a direct or
indirect wholly-owned subsidiary of Delphi; provided, however, that in the event
of any such assignment, Delphi will remain liable for all of its obligations
thereunder. Subject to the foregoing, the indenture and any supplemental
indenture will be binding upon and inure to the benefit of the parties thereto
and their respective successors and assigns. The indenture provides that it may
not otherwise be assigned by the parties thereto.
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PLAN OF DISTRIBUTION
Delphi and the trust may sell the securities in any of three ways: (1)
through underwriters or dealers; (2) directly to a limited number of
institutional purchasers or to a single purchaser; or (3) through agents. Any
such dealer or agent, in addition to any underwriter, may be deemed to be an
underwriter within the meaning of the Securities Act of 1933, as amended. The
terms of the offering of the securities with respect to which this prospectus is
being delivered will be set forth in the applicable prospectus supplement and
will include:
o the name or names of any underwriters, dealers or agents;
o the purchase price of such securities and the proceeds to Delphi
and/or the trust from such sale;
o any underwriting discounts and other items constituting underwriters'
compensation;
o the public offering price; and
o any discounts or concessions which may be allowed or reallowed or paid
to dealers and any securities exchanges on which the securities may be
listed.
If underwriters are used in the sale of securities, such securities will be
acquired by the underwriters for their own account and may be resold from time
to time in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
The securities may be offered to the public either through underwriting
syndicates represented by managing underwriters or directly by one or more
underwriters acting alone. Unless otherwise set forth in the applicable
prospectus supplement, the obligations of the underwriters to purchase the
securities described in the applicable prospectus supplement will be subject to
certain conditions precedent, and the underwriters will be obligated to purchase
all such securities if any are so purchased by them. Any public offering price
and any discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
The securities may be sold directly by Delphi and/or the trust or through
agents designated by Delphi and/or the trust from time to time. Any agents
involved in the offer or sale of the securities in respect of which this
prospectus is being delivered, and any commissions payable by Delphi or the
trust to such agents, will be set forth in the applicable prospectus supplement.
Unless otherwise indicated in the applicable prospectus supplement, any such
agent will be acting on a best efforts basis for the period of its appointment.
If dealers are utilized in the sale of any securities, Delphi and/or the
trust will sell the securities to the dealers, as principals. Any dealer may
resell the securities to the public at varying prices to be determined by the
dealer at the time of resale. The name of any dealer and the terms of the
transaction will be set forth in the prospectus supplement with respect to the
securities being offered.
Securities may also be offered and sold, if so indicated in the applicable
prospectus supplement, in connection with a remarketing upon their purchase, in
accordance with a redemption or repayment pursuant to their terms, or otherwise,
by one or more firms, which we refer to herein as the "remarketing firms,"
acting as principals for their own accounts or as Delphi's or the trust's
agents, as applicable. Any remarketing firm will be identified and the terms of
its agreement, if any, with Delphi or the trust and its compensation will be
described in the applicable prospectus supplement. Remarketing firms may be
deemed to be underwriters, as that term is defined in the Securities Act of
1933, as amended, in connection with the securities remarketed thereby.
If so indicated in the applicable prospectus supplement, Delphi or the
trust will authorize agents, underwriters or dealers to solicit offers by
certain specified institutions to purchase the securities to which this
prospectus
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and the applicable prospectus supplement relates from Delphi or the trust at the
public offering price set forth in the applicable prospectus supplement, plus,
if applicable, accrued interest, pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future. Such
contracts will be subject only to those conditions set forth in the applicable
prospectus supplement, and the applicable prospectus supplement will set forth
the commission payable for solicitation of such contracts.
Underwriters will not be obligated to make a market in any securities. No
assurance can be given regarding the activity of trading in, or liquidity of,
any securities.
Agents, dealers, underwriters and remarketing firms may be entitled, under
agreements entered into with Delphi or the trust to indemnification by Delphi or
the trust against certain civil liabilities, including liabilities under the
Securities Act of 1933, as amended, or to contribution to payments they may be
required to make in respect thereof. Agents, dealers, underwriters and
remarketing firms may be customers of, engage in transactions with, or perform
services for, Delphi and/or the trust in the ordinary course of business.
Each series of securities will be a new issue and, other than the Class A
Common Stock, which is listed on the New York Stock Exchange, will have no
established trading market. We may elect to list any series of securities on an
exchange, and in the case of the Class A Common Stock, on any additional
exchange, but, unless otherwise specified in the applicable prospectus
supplement, we shall not be obligated to do so. No assurance can be given as to
the liquidity of the trading market for any of the securities.
LEGAL OPINIONS
Certain legal matters in connection with the offering of the securities of
Delphi will be passed upon for the Company by Chad W. Coulter, General Counsel
of the Company. Certain legal matters in connection with the offering of the
securities of Delphi and the validity of the guarantee of the trust preferred
securities, as well as certain matters relating to U.S. federal income tax
considerations, will be passed upon for the Company by Cahill Gordon & Reindel,
New York, New York. Certain matters of Delaware law relating to the validity of
the trust preferred securities will be passed upon by Morris, Nichols, Arsht &
Tunnell, Wilmington, Delaware, special Delaware counsel to the Company and
Delphi Finance Trust I.
EXPERTS
The consolidated financial statements and schedules of Delphi Financial
Group, Inc. and subsidiaries appearing in Delphi Financial Group, Inc.'s Annual
Report (Form 10-K) for the year ended December 31, 2001 have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
included therein and incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given on the authority of such firm as experts in accounting and
auditing.
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PART II INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, incurred in connection with the
distribution of the securities being registered (all amounts are estimated
except the SEC registration fee).
SEC registration fee...................................... $18,469
New York Stock Exchange listing fee for common stock...... 3,500
Printing and engraving expenses........................... 50,000
Legal fees and expenses................................... 250,000
Accounting fees and expenses.............................. 15,000
Blue Sky fees and expenses................................ 10,000
Trustees and transfer agents fees......................... 25,000
Rating agency fees........................................ 300,000
Miscellaneous............................................. 20,000
--------
Total............................................... $691,969
========
Item 15. Indemnification of Directors and Officers.
Delphi Financial Group, Inc. is a Delaware corporation. Reference is made
to Section 145 of the Delaware General Corporation Law ("DGCL"), which provides
that a corporation may indemnify any person, including an officer or director,
who is, or is threatened to be made, party to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person is or was an officer,
director, employee, or agent of such corporation or is or was serving at the
request of such corporation as an officer, director, employee, or agent of
another corporation or enterprise. The indemnity may include expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding provided such officer, director, employee, or agent acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interest and, with respect to criminal proceedings, had no
reasonable cause to believe that his or her conduct was unlawful. Section 145 of
the DGCL provides further that a Delaware corporation may indemnify officers and
directors in an action by or in the right of the corporation under the same
conditions, except that no indemnification is permitted without judicial
approval if the officer or director is judged to be liable to the corporation.
Where an officer or director is successful on the merits or otherwise in the
defense of any action referred to above or any claim therein, the corporation
must indemnify him against the expenses that such officer or director actually
and reasonably incurred. Article Eighth of the Restated Certificate of
Incorporation of the Company provides for indemnification of its officers and
directors to the full extent permitted by the DGCL.
Article Eighth of the Restated Certificate of Incorporation also provides
that directors of the Company will not be personally liable for monetary damages
for breach of a director's fiduciary duty as a director, except for liability
(i) for any breach of the director's duty of loyalty to the Company or its
shareholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for unlawful payment
of dividends or unlawful stock repurchases or redemptions as provided in Section
174 of the DGCL, or (iv) for any transaction from which the director derived an
improper personal benefit.
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Item 16. Exhibits.
Exhibit
Number Description
1.1* Form of Underwriting Agreement (Equity).
1.2* Form of Underwriting Agreement (Non-Equity).
1.3* Form of Underwriting Agreement (Trust Preferred Securities).
3.1 Restated Certificate of Incorporation of the Company (incorporated by
reference to Exhibit 3.2 to our Registration Statement on Form S-1 dated
March 13, 1990 (Registration No. 33-32827).
3.2 Certificate of Amendment of Restated Certificate of Incorporation of the
Company (incorporated by reference to Exhibit 3.1 to our Form 10-Q for the
quarter ended June 30, 1997).
3.3 Amended and Restated By-laws of the Company (incorporated by reference to
Exhibit 3.4 to our Registration Statement on Form S-1 dated March 13, 1990
(Registration No. 33-32827).
4.1 Form of Senior Debt Indenture.
4.2 Form of Senior Debt Security.
4.3 Form of Subordinated Debt Indenture.
4.4 Form of Subordinated Debt Security.
4.5* Form of Class A Common Stock Warrant Agreement.
4.6* Form of Class A Common Stock Warrant Certificate.
4.7* Form of Certificate of Designation for Preferred Stock.
4.8 Form of Subordinated Deferrable Interest Debentures Indenture.
4.8(a) Form of Supplemental Subordinated Deferrable Interest Debentures
Indenture.
4.9 Declaration of Trust of Delphi Finance Trust I.
4.10 Form of Amended and Restated Declaration of Trust for Delphi Finance Trust
I.
4.11 Certificate of Trust of Delphi Finance Trust I.
4.12 Form of Guarantee Agreement for Trust Common Securities.
4.13 Form of Guarantee Agreement for Trust Preferred Securities.
5.1 Opinion of Cahill Gordon & Reindel.
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Exhibit
Number Description
5.2 Opinions of Morris, Nichols, Arsht & Tunnell.
12 Statement regarding Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Cahill Gordon & Reindel (included as part of Exhibit 5.1).
23.2 Consent of Morris, Nichols, Arsht & Tunnell (included as part of Exhibit
5.2).
23.3 Consent of Ernst & Young LLP.
24 Powers of Attorney.
25(a)* Form T-1 Statement of Eligibility of Trustee (Senior Indenture and
Subordinated Indenture).
25(b)* Form T-1 Statement of Eligibility of Trustee (Subordinated Deferrable
Interest Debentures Indenture).
25(c)* Form T-1 Statement of Eligibility of Trustee (Preferred Securities of
Delphi Finance Trust I).
25(d)* Form T-1 Statement of Eligibility of Trustee (Guarantee of Preferred
Securities of Delphi Finance Trust I).
- --------------------------------------
* To be filed as an amendment to this registration statement or as an exhibit
to an Exchange Act report of the Registrant and incorporated herein by
reference.
Item 17. Undertakings.
THE UNDERSIGNED REGISTRANTS HEREBY UNDERTAKE:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of the prospectus
filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
registration statement; and
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(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to section 13
or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of 1934
that is incorporated by reference in the registration statement shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(5) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as
part of a registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497 (h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was
declared effective.
(6) For the purposes of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrants will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Delphi
Financial Group, Inc. certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, State of New York, on the 19th day of
April, 2002.
DELPHI FINANCIAL GROUP, INC.
/s/ Robert Rosenkranz
-------------------------------------------
Robert Rosenkranz
Chairman of the Board, President
and Chief Executive Officer
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on the 19th day
of April, 2002, in the capacities indicated.
Signature Title
--------- -----
/s/ Robert Rosenkranz Chairman of the Board, President and
- ---------------------------------------------- Chief Executive Officer (Principal
Robert Rosenkranz Executive Officer)
/s/ Robert M. Smith, Jr. Executive Vice President and Director
- ----------------------------------------------
Robert M. Smith, Jr.
* Director
- ----------------------------------------------
Charles P. O'Brien
* Director
- ----------------------------------------------
Lewis S. Ranieri
* Director
- ----------------------------------------------
Thomas L. Rhodes
* Director
- ----------------------------------------------
B.K. Werner
* Vice President and Treasurer
- ---------------------------------------------- (Principal Accounting
Thomas W. Burghart and Financial Officer)
*By: /s/ Robert Rosenkranz
- ----------------------------------------------
Robert Rosenkranz
Attorney in Fact
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Delphi Finance
Trust I certifies that it has reasonable grounds to believe that it meets all of
the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on the 19th day of
April, 2002.
DELPHI FINANCE TRUST I
By: Delphi Financial Group Inc., as Sponsor
/s/ Robert Rosenkranz
-------------------------------------------------
Robert Rosenkranz
Chairman of the Board, President
and Chief Executive Officer
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