<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, for the Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
DELPHI INTERNATIONAL LTD.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
April 12, 1999
Dear Shareholder,
You are cordially invited to attend the Annual General Meeting of Shareholders
of Delphi International Ltd. (the "Company") on May 10, 1999 at Marriott's
Castle Harbour Hotel, Bermuda, commencing at 10:00 a.m. We look forward to
greeting those shareholders who are able to attend.
At this meeting you will be asked to consider and vote upon the following:
1. The election of directors.
2. The adoption of the consolidated financial statements of the Company
for the period ended December 31, 1998 together with the auditors'
report thereon.
3. The appointment of Ernst & Young as the Company's independent auditors
for the fiscal year ending December 31, 1999.
4. The approval of the Company's Director and Employee Stock Option Plan.
5. Amendment of the Company's Bye-Law 42 concerning the quorum required at
General Meetings of the Company.
6. Proposals to be considered by the Company, as the holder of all
outstanding voting common shares of Oracle Reinsurance Company Ltd. and
O.R. Investments Ltd., at the Annual General Meetings of Oracle
Reinsurance Company Ltd. and O.R. Investments Ltd.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR THESE PROPOSALS.
Your vote is important. Whether or not you plan to attend the Annual General
Meeting in person and regardless of the number of shares you own, we urge you to
promptly complete, sign, date and return the enclosed proxy card in the envelope
provided. You may attend the Annual General Meeting and vote in person even if
you have previously returned your card. We look forward to meeting with you.
Sincerely,
/s/ Colin O'Connor
Colin O'Connor
President & Chief Executive Officer
<PAGE> 3
DELPHI INTERNATIONAL LTD.
NOTICE OF 1999 ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD MONDAY MAY 10, 1999
Notice is hereby given that the 1999 Annual General Meeting of Shareholders (the
"Meeting") of Delphi International Ltd. (the "Company") will be held at
Marriott's Castle Harbour Hotel, Bermuda on May 10, 1999 commencing at 10:00
a.m. for the following purposes:
1. To elect three Directors to serve for a term of three years.
2. To receive and adopt the consolidated financial statements of the
Company for the period ended December 31, 1998 together with the
auditors' report thereon.
3. To approve the recommendation by the Board of Directors that Ernst &
Young be appointed as the Company's independent auditors for the fiscal
year ending December 31, 1999.
4. To approve the Company's Director and Employee Stock Option Plan.
5. To accept the recommendation of the Board of Directors that Bye-Law 42
of the Company's Bye-Laws be amended by deleting the reference therein
to "30%" and by substituting therefor "33 1/3%."
6. In accordance with the Company's Bye-Laws, (A) to vote on a proposal to
be considered by the Company, as the holder of all of the outstanding
voting common shares of Oracle Reinsurance Company Ltd. ("Oracle Re"),
to (i) elect three Directors to the Board of Oracle Re and (ii) to
approve the recommendation of the Board of Oracle Re that Ernst & Young
be appointed as the independent auditors of Oracle Re for the financial
year ending December 31, 1999, and (B) to vote on a proposal to be
considered by the Company, as the indirect holder of all of the
outstanding voting common shares of O.R. Investments Ltd., to (i)
approve the minutes of the shareholders' meeting held on February 3,
1998 (the first or statutory meeting of shareholders), (ii) elect 5
Directors to the Board of O.R. Investments Ltd., and (iii) waive the
preparation of audited financial statements for the period ended
December 31, 1998 of O.R. Investments Ltd. and that no auditor be
appointed to the close of the next Annual General Meeting.
If you do not expect to be present at the Meeting, please sign, date and fill in
the enclosed form of proxy and return it by mail in the enclosed addressed
envelope. All instruments appointing proxies to be used at the Meeting must be
deposited at the offices of the Company's transfer agent, First Union National
Bank, Attn: Proxy Department, Shareholders Services Group, 1525 West W.T. Harris
Blvd - 3C3, Charlotte, NC 28288-1153, USA or with the Secretary of the Company
at the Company's offices at 11 Church Street, Hamilton HM12, Bermuda, not later
than 5:00 p.m. Bermuda time on May 5, 1999. Shares represented by instruments
appointing proxies that are not deposited will not be voted at the Meeting.
By Order of the Board of Directors
/s/ Nicolas Trollope
______________________ Nicolas Trollope
Hamilton, Bermuda Director & Secretary
April 12, 1999
<PAGE> 4
DELPHI INTERNATIONAL LTD.
PROXY STATEMENT
ANNUAL GENERAL MEETING OF SHAREHOLDERS
THIS PROXY STATEMENT IS FURNISHED IN CONNECTION WITH THE SOLICITATION BY DELPHI
INTERNATIONAL LTD. (THE "COMPANY") OF PROXIES TO BE VOTED AT THE ANNUAL GENERAL
MEETING OF SHAREHOLDERS (THE "MEETING") TO BE HELD ON MAY 10, 1999 AT 10:00 A.M.
AT MARRIOTT'S CASTLE HARBOUR HOTEL, BERMUDA.
The close of business on March 19, 1999 has been fixed as the record date for
the determination of shareholders entitled to receive notice of the Meeting and
vote thereat. The Company expects to mail this proxy material to Shareholders,
on or about April 12, 1999 together with a copy of the Company's Annual Report
to Shareholders, including its Annual Report on Form 10-K for the period ended
December 31, 1998.
The cost of soliciting proxies will be borne by the Company. The Company will
reimburse brokers, custodians, nominees and other fiduciaries for their
reasonable charges and expenses incurred in forwarding proxy material to
beneficial owners of shares. In addition to solicitation by mail, certain
officers and employees of the Company may solicit proxies personally. These
officers and employees will receive no compensation other than their regular
salaries.
Any person giving a proxy may revoke it by depositing an instrument in writing
executed by him or by his attorney authorized in writing at the registered
office of the Company at any time up to the close of business on the last
business day preceding the Meeting or any adjournment thereof, with the Chairman
of the Meeting or in any other manner permitted by law. All properly executed
proxies, not theretofore revoked, will be voted on any poll taken at the Meeting
in accordance with the instructions contained therein. If no instructions are
given with respect to any particular matter, the proxy authorizes a vote in
favor of such matter and it will be voted accordingly. Proxies must be duly
executed and deposited at the office of the Company's transfer agent, First
Union National Bank, in Charlotte or with the Secretary of the Company at the
Company's office in Bermuda, prior to 5:00 p.m. Bermuda time on May 5, 1999, in
order to be voted at the Meeting.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
No person who has been a Director or Officer of the Company and no person who is
a proposed nominee for election as a Director of the Company and no associate or
affiliate of any such Director, Officer or Proposed Nominee has any material
interest, direct or indirect, by way of beneficial ownership of securities or
otherwise, in any matter to be acted upon at the Meeting except as may
hereinafter be disclosed.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of March 19, 1999, the Company had outstanding 4,079,014 Common Shares, par
value $0.01 per share (the "Common Shares"), entitled to be voted at the
Meeting. Each holder of Common Shares of the Company is entitled to one vote per
share on all matters submitted to a vote of shareholders, except that if and as
long as the Controlled Shares of any person constitute 9.5% or more of the
issued and outstanding Common Shares, the voting rights with respect to the
Controlled Shares owned by such person shall be
<PAGE> 5
limited, in the aggregate, to a voting power of 9.5%, pursuant to a formula
specified in the Company's Bye-Laws. "Controlled Shares" means (i) all shares of
the Company directly, indirectly or constructively owned by any person within
the meaning of Section 958 of the United States Internal Revenue Code of 1986
(the "Code") and (ii) all shares of the Company directly, indirectly or
beneficially owned by such person within the meaning of Section 13(d) of the
United States Securities Exchange Act of 1934 (the "Exchange Act") (including
any shares owned by a group of persons as so defined and including any shares
that would otherwise be excluded by the provisions of Section 13(d)(6) of the
Exchange Act). Under these provisions, if, and so long as, any person directly,
indirectly or constructively owns, within the meaning of Section 958 of the
Code, Controlled Shares having more than 9.5% of the total number of votes
exercisable in respect of all shares of voting stock of the Company, the voting
rights attributable to such shares will be limited, in the aggregate, to 9.5% of
the total number of votes. If the person solicited does not specify a choice
with respect to the election of any nominee for Director, the shares will be
voted "for" such nominee. Proxies marked as abstaining (including proxies
containing broker non-votes) on any matter to be acted upon by shareholders will
be treated as present at the Meeting for purposes of determining a quorum but
will not be counted as votes cast on such matters.
As of March 19, 1999, Mr. Robert Rosenkranz, Chairman of the Board of Directors
of the Company, by means of direct and indirect ownership of Common Shares, had
the power to vote 1,094,996 Common Shares which, as of such date, represented
26.84% of the Common Shares. Under the Bye-Laws as referred to above, the voting
rights attaching to these Common Shares are limited to a voting power of 9.5%.
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Shares as of March 19, 1999, by each person
who is known by the Company to own beneficially more than 5% of the Company's
Common Shares, by each of the Company's Directors and by all Executive Officers
and Directors as a group. Unless otherwise indicated, each beneficial owner
listed below is believed by the Company to have sole voting and dispositive
power with respect to the indicated shares.
<TABLE>
<CAPTION>
Amount and
Nature of Percent
Name of Beneficial Owner Ownership Of Class
------------------------ --------- --------
<S> <C> <C>
Five or greater percent owner:
Robert Rosenkranz(1)................................... 1,094,996 26.84%
Harold F. Ilg(1)....................................... 269,812 6.62%
David Elenowitz(1)..................................... 272,624 6.68%
Directors and Executive Officers:
Robert Rosenkranz...................................... 1,094,996 26.84%
Colin O'Connor......................................... 30,000 0.74%
David Ezekiel.......................................... 3,000 0.07%
Edward A. Fox.......................................... 71,198 1.74%
Nicolas G. Trollope.................................... - -
Charles P. O'Brien..................................... 86,846 2.13%
Lewis S. Ranieri....................................... 116,094 2.85%
Thomas L. Rhodes....................................... 33,922 0.83%
Robert M. Smith, Jr.................................... 51,308 1.26%
Harold F. Ilg.......................................... 269,812 6.62%
Directors and Officers as a group (11 persons).............. 2,029,800 49.76%
</TABLE>
------------------
(1) Mr. Rosenkranz's address is c/o Delphi Capital Management, Inc.,
153 East 53rd Street, New York, New York 10022. Mr. Ilg's address
is c/o Safety National Casualty Corp., 2043 Woodland Parkway,
Suite 200, St. Louis, Missouri 63146. Mr. Elenowitz's address is
c/o Mercury Capital, Inc., 153 East 53rd Street, New York, New
York 10022.
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<PAGE> 6
ELECTION OF DIRECTORS
(ITEM 1 OF NOTICE OF MEETING)
The Company's Bye-Laws provide that the Board of Directors shall be divided into
three classes, which classes will be as follows: the First Class, whose initial
term expires at the first Annual General Meeting of the Company's shareholders
following the completion of the rights offering in January 1998; the Second
Class, whose initial term expires at the second Annual General Meeting following
completion of the rights offering; and the Third Class, whose initial term
expires at the third Annual Meeting of the Company's shareholders following
completion of the rights offering. Following their initial terms all classes of
Directors shall be elected to three year terms. In accordance with the Bye-Laws,
the three Directors comprising the First Class of Directors will be eligible for
re-appointment on a three year term.
It is intended that the Common Shares represented by Proxies will be voted "for"
the election of the nominees listed below, unless a contrary direction is
indicated on the Proxy. While it is not expected that any of the nominees will
be unable to qualify for or accept office, if for any reason any nominee shall
be unable to do so, Proxies that would otherwise have been voted "for" such
nominee will instead be voted "for" a substitute nominee selected by the Board.
NOMINEES FOR DIRECTOR
The following sets forth information as to each nominee for election at the 1999
Annual General Meeting, including his age, positions with the Company, length of
service as Director of the Company, other Directorships currently held, if any,
principal occupations and employment during the past five years and other
business experience.
MR. O'CONNOR (51) has served as President, Chief Executive Officer and Director
of each of the Company and Oracle Re since their inception in September 1997.
Mr. O'Connor served as President of Belvedere Insurance Company Ltd. for more
than five years. Mr. O'Connor is a Director of Lombard Odier International Trust
(Bermuda) Ltd. and Midland Management Co.
MR. O'BRIEN (62) has served as a Director of each the Company and Oracle Re
since their inception in September 1997. Mr. O'Brien has served as President,
Chief Executive Officer and a Director of Reliance Standard Life Insurance
Company since August 1976. Mr. O'Brien also serves as President, Chief Executive
Officer and a Director of First Reliance Standard Life Insurance Company and
Reliance Standard Life Insurance Company of Texas. Mr. O'Brien is a Director of
Delphi Financial Group, Inc. ("DFG") and Safety National Casualty Corporation.
MR. FOX (62) has served as Director of each of the Company and Oracle Re since
their inception in September 1997. Mr. Fox is the Chairman of SLM Holding Corp,
the parent of Sallie Mae, a financial intermediary serving the education credit
market and served as the Dean of the Amos Tuck School of Business Administration
at Dartmouth College from May 1990 until September 1994. From April 1973 until
May 1990, Mr. Fox was President and Chief Executive Officer of Sallie Mae. Mr.
Fox is a Director of DFG.
-3-
<PAGE> 7
COMMITTEES OF THE BOARD OF DIRECTORS
The Executive Committee is responsible for the Company's underwriting guidelines
and the review of the execution of such guidelines. The members of the Committee
are Messrs Rosenkranz, Ilg, O'Connor and Smith. The Committee did not meet in
1998.
The Compensation Committee, whose membership consists of Messrs Ezekiel and
Rhodes, reviews compensation of the Company's Chief Executive Officer and any
discretionary grants of stock options. The Committee did not meet in 1998.
The Audit Committee is responsible for reviewing the activities of the Company's
independent accountants. The Committee, whose membership consists of Messrs.
Smith and Ezekiel, held one meeting during 1998.
The Board of Directors does not have a nominating committee. It is anticipated
that, following the Meeting, the Board of Directors will reappoint these
Committees with the same membership composition. However, the Board will
consider a proposal to reconstitute the Executive Committee so as to consist of
Messrs. O'Connor, Ezekiel and Trollope and to expand the powers of the Executive
Committee so that, subject to certain limitations, such committee will be
empowered to exercise all the powers and authorities of the Board in relation to
the management and business of the Company when the Board is not in session.
DIRECTORS' ATTENDANCE
Messrs. Rosenkranz, Ezekiel, Trollope, Fox, Ilg, O'Brien, Ranieri, Rhodes and
Smith attended fewer than 75% of the total number of meetings of the Board and
of the applicable Committees on which such individuals served. However, all of
such individuals, with the exception of Messrs. Ranieri and Rhodes, attended at
least 75% of the four regular Board Meetings held in 1998.
DIRECTORS' COMPENSATION
Directors, other than Mr. Trollope, are entitled to an annual cash retainer of
$10,000 for serving on the Company's Board plus expenses for each meeting
attended. Subject to the approval of the Company's stock option plan at the May
1999 Annual General Meeting, a Director, unless electing otherwise in advance,
is entitled to receive, in lieu of such annual cash retainer, a number of stock
options determined pursuant to the formula set forth in such plan. See "Proposal
to Approve the Director and Employee Stock Option Plan."
ADOPTION OF CONSOLIDATED FINANCIAL STATEMENTS
(ITEM 2 OF NOTICE OF MEETING)
The Company's Board of Directors has approved the consolidated financial
statements of the Company for the period ended December 31, 1998 together with
the auditors' report thereon, and two Directors of the Company have signed the
balance sheet of the consolidated financial statements on behalf of the Company.
The Board has unanimously recommended that the shareholders formally adopt the
consolidated financial statements for the period ended December 31, 1998.
In accordance with Bermuda company law and practice, the consolidated financial
statements will be laid before the Meeting and it is intended that the Common
Shares represented by proxies solicited by or on behalf of the Company will be
voted in favor of the adoption of the consolidated financial statements for the
period ended December 31, 1998 together with the auditors report thereon, unless
otherwise indicated.
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<PAGE> 8
PROPOSAL TO APPROVE THE APPOINTMENT OF AUDITORS
(ITEM 3 OF NOTICE OF MEETING)
The Board of Directors recommends that Ernst & Young be appointed as auditors of
the Company to hold office until the next Annual General Meeting of
Shareholders. Representatives of Ernst & Young are expected to be present at the
Meeting and will be available to answer appropriate questions. Such
representatives of Ernst & Young will also be given an opportunity to make a
statement to the shareholders if they so wish.
It is intended that the Common Shares represented by proxies solicited by or on
behalf of the Company will be voted in favor of the appointment of Ernst & Young
as auditors of the Company and authorizing the Directors to fix their
remuneration, unless otherwise indicated.
PROPOSAL TO APPROVE THE DIRECTOR AND EMPLOYEE STOCK OPTION PLAN
(ITEM 4 OF NOTICE OF MEETING)
The Company's Board of Directors has adopted the Director and Employee Stock
Option Plan (the "Plan"), subject to shareholder approval. The Plan is being
submitted to the shareholders of the Company for approval. The following summary
describes the material terms of the Plan, but is qualified in its entirety by
reference to the full text of the Plan which is annexed to this Proxy Statement
as Exhibit A.
The purpose of the Plan is to attract and retain Directors, employees and other
eligible persons, motivate such persons, provide competitive incentive
opportunities, further align such persons' interests with those of the Company's
shareholders and increase their proprietary interest in the Company. The Plan is
administered by a Committee (the "Committee") appointed by the Company's Board
of Directors, which may consist of the full Board of Directors. The Committee
will have the authority and discretion to interpret the Plan, to establish,
amend, and rescind any rules and regulations relating to the Plan, to determine
the terms and provisions of any agreements made pursuant to the Plan, and to
make all other determinations that may be necessary or advisable for the
administration of the Plan.
The following persons are eligible to participate in the Plan: Directors,
employees of the Company and its subsidiaries, members of the Board of Directors
of any of the Company's subsidiaries, and any other person who in the
Committee's judgment can make substantial contributions to the long-term
profitability and value of the Company or its subsidiaries.
The Plan provides for the grant of options ("Options") to purchase shares of
common stock of the Company ("Shares"). The Plan provides for an automatic
annual grant of Options to Directors and for discretionary Option grants for
those employees, Directors and other eligible persons designated by the
Committee.
Directors who do not elect otherwise will receive non-qualified Options as of
the date of adoption of the Plan, and as of the date they are elected,
re-elected or appointed to the Board of Directors of the Company, in lieu of the
annual cash retainer for serving as a Director (the "Retainer Amount"). The
number of Shares subject to the Options will be determined in accordance with
the following formula: Number of Option Shares = (Retainer Amount multiplied by
3), divided by the fair market value of a Share on the grant date. A grant of an
Option entitles the optionee to purchase from the Company a specified number of
Shares at an option price per Share equal to 100% of the fair market value of a
Share on the date of grant. In the
-5-
<PAGE> 9
discretion of the Committee, the Options granted to an employee may be either
non-qualified stock options ("NQSOs") or incentive stock options ("ISOs"). The
Options granted to non-employee Directors and other eligible persons shall only
be NQSOs.
The automatic Director Option grants shall become exercisable in four
substantially equal installments on the 90, 180, 270 and 360-day anniversaries
of the date of grant. The discretionary Option grants shall be exercisable in
accordance with the terms established by the Committee. Upon a change in control
(as defined in the Plan) all outstanding Options will become fully exercisable.
The expiration date of Options granted to Directors will be the tenth
anniversary of the date of grant, except in the case of termination for cause.
The expiration date of Options granted to employees and other eligible persons
shall be established by the Committee at the time of grant, provided that the
expiration shall not be later than the tenth anniversary of the date of grant.
Additionally, in the case of Options granted to employees, the expiration date
will occur, if earlier, upon the one-year anniversary of termination for death
or disability, the three-year anniversary of retirement, or the three-month
anniversary of any other termination.
The full purchase price of each Share acquired upon the exercise of any Option
shall be paid at the time of exercise. Except as otherwise determined by the
Committee, the purchase price shall be payable in cash or in Shares or in any
combination thereof. NQSOs are transferable to family members at the discretion
of the Committee.
The Plan is effective as of the date it was approved by the Board of Directors,
subject to shareholder approval. The Plan may be amended or terminated by the
Company's Board of Directors at any time, provided that no amendment or
termination may adversely affect the rights of optionees under outstanding
Options.
The aggregate number of Shares available under the Plan is 300,000. The Plan
provides for adjustments to the number of Shares available under the Plan and to
outstanding Options to reflect stock dividends, stock splits, recapitalizations
and other corporate events.
NEW PLAN BENEFITS
<TABLE>
<CAPTION>
Number of Shares
Name and Position. Subject to Option
------------------ -----------------
<S> <S> <C>
Robert Rosenkranz - Chairman of the Board.............................. 1,644
Colin O'Connor - President, Chief Executive Officer and Director....... 1,644
David Ezekiel - Vice President and Director............................ 1,644
Nicolas G. Trollope - Secretary and Director........................... 1,644
Edward A. Fox - Director............................................... 1,644
Harold F. Ilg - Director............................................... 1,644
Charles P. O'Brien - Director.......................................... 1,644
Lewis S. Ranieri - Director............................................ 1,644
Thomas L. Rhodes - Director............................................ 1,644
Robert M. Smith, Jr. - Director........................................ 1,644
</TABLE>
-6-
<PAGE> 10
United States Federal Income Tax Consequences
The following is a summary of the federal income tax consequences to optionees
in the Plan who are subject to United States federal income taxation, based upon
current provisions of the Internal Revenue Code of 1986, as amended (the "Code")
and the regulations and rulings thereunder, and does not address the
consequences under state or local or any other applicable tax laws. The Company
is not subject to United States federal income taxes.
In general, the grant of an Option will not be a taxable event to the recipient.
The tax consequences associated with the exercise of an Option and the
subsequent disposition of Shares acquired on the exercise of such option depend
on whether the Option is an ISO or a NQSO.
Upon the exercise of a NQSO, the participant will recognize ordinary taxable
income equal to the excess of the fair market value of the Shares received upon
exercise over the exercise price. Any gain or loss upon a subsequent sale or
exchange of the Shares will be capital gain or loss. If the holding period for
the shares is not more than one year, the gain or loss will be short-term
capital gain or loss. Short-term capital gain is taxable at the same rates as
ordinary income. If the holding period is more than one year, the gain or loss
will be long-term capital gain or loss.
Generally, upon exercise of an ISO, a participant will not recognize ordinary
taxable income. If, however, the ISO is not exercised until the participant is
no longer an employee and three months have elapsed following termination of
employment (longer, in the case of disability or death) the exercise will be
treated as the exercise of a NQSO. Also, an ISO will be treated as a NQSO to the
extent it (together with other ISOs granted by the Company and its parent and
subsidiaries, if any) first becomes exercisable in any calendar year for stock
having a fair market value, determined as of the date of grant, in excess of
$100,000. If shares acquired upon exercise of an ISO are sold or exchanged more
than one year after the date of exercise and more than two years from the date
of grant of the Option, any gain or loss will be long-term capital gain or loss.
If shares acquired upon exercise of an ISO are disposed of prior to the
expiration of these one-year and two-year holding periods (a "disqualifying
disposition"), the participant will recognize ordinary income at the time of
disposition, in an amount equal to the excess of the fair market value of the
shares on the date of exercise over the exercise price (or, in certain
circumstances, the gain on sale, if less). Any additional gain will be treated
as capital gain, long-term or short-term, depending on how long the shares have
been held. Although the exercise of an ISO as described above would not produce
ordinary taxable income to the participant, it would result in an increase to
the participant's alternative minimum taxable income and may result in an
alternative minimum tax liability.
PROPOSAL TO APPROVE AMENDMENT TO BYE-LAWS
(ITEM 5 OF NOTICE OF MEETING)
Bye-Law 42 of the Company's Bye-Laws currently reads as follows:
"No business shall be transacted at any General Meeting unless it shall have
been properly brought before the Annual or Special General Meeting in accordance
with Bye-Law 40(2) hereof and a quorum is present when the Meeting proceeds to
business, but the absence of a quorum shall not preclude the appointment, choice
or election of a chairman which shall not be treated as part of the business of
the Meeting. Save as otherwise provided in these Bye-Laws, at least two Members
representing not less than 30% of the outstanding shares carrying the right to
vote in the Company, represented in person or by proxy, shall constitute a
quorum for all purposes."
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<PAGE> 11
In August 1998, the Company's Common Shares were admitted to trading on the
Nasdaq National Market. In order to comply with Nasdaq's requirements regarding
the minimum quorum for shareholder meetings, the Company's Board has approved,
and proposes for approval by the Company's shareholders, the amendment of this
Bye-Law by deleting the reference therein to "30%" and by substituting therefor
"33 1/3%."
APPROVAL OF ACTIONS AT SUBSIDIARY LEVEL
(ITEM 6 OF NOTICE OF MEETING)
In accordance with the Bye-Laws of the Company, with respect to any matter
required to be submitted to a vote of the shareholders of a subsidiary (as that
term is defined in the Bye-Laws), the Company is required to submit a proposal
relating to such matter to the shareholders of the Company who will vote at a
General Meeting with respect to such matter in accordance with the Bye-Laws and
the shareholders of the Company shall be entitled to all of the voting rights
with respect to the shares of the subsidiary. For these purposes, the Company
has two subsidiaries namely Oracle Reinsurance Company Ltd. and O.R. Investments
Ltd.
Shareholder approval is being sought to authorize any one Director of the
Company to execute unanimous written consents of the shareholders of Oracle
Reinsurance Company Ltd. and O.R. Investments Ltd. relating to their respective
annual statutory meetings as follows:
In the case of Oracle Re, the unanimous written consent will contain two
resolutions: (1) that Messrs. Colin O'Connor, Charles P. O'Brien and Edward A.
Fox be re-elected for a further three year term in accordance with the Bye-Laws
of Oracle Re and (2) that Ernst & Young be appointed as the Company's
independent auditors for the financial year ending December 31, 1999.
In the case of O.R. Investments Ltd., the unanimous written consent will contain
three resolutions: (1) that the minutes of the statutory meeting of shareholders
dated February 3, 1998 be approved, (2) that Messrs. Robert Rosenkranz, Robert
M. Smith, Jr., Colin O'Connor, David Ezekiel and Nicolas G. Trollope be
re-elected Directors of O.R. Investments Ltd. to serve until the next Annual
General Meeting of the Company and that (3) O.R. Investments Ltd. waive the
preparation of financial statements for the period ended December 31, 1998 and
that no auditor be appointed to the close of the next Annual General Meeting.
Approval of the actions of the subsidiaries as outlined above and for the
execution by any one Director of the Company of the unanimous written consents
of both Oracle Reinsurance Company Ltd. and O.R. Investments Ltd. as aforesaid
requires the affirmative vote of a majority of the voting common shares in the
Company present in person or represented by proxy at the Meeting.
EXECUTIVE COMPENSATION
The Company has entered into an oral employment agreement with Mr. Colin
O'Connor pursuant to which Mr. O'Connor serves as President and Chief Executive
Officer of the Company.
The following table sets forth aggregate compensation paid by the Company and
its subsidiaries for services rendered in all capacities to the Company and its
subsidiaries during the fiscal year ended December 31, 1998.
-8-
<PAGE> 12
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------------ --------------------------
Restricted Securities
Name and Other Annual Stock Underlying All Other
Principal Position Year Salary Compensation Award Options Compensation
- ------------------ ---- ------ ------------ ----- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Colin O'Connor 1998 $150,000 $25,000 - - -
President & Chief
Executive Officer
of the Company
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the Board of Directors are "insiders" within the meaning of the
Securities Act and there were no "interlocks" within the meaning of the
Securities Act.
PERFORMANCE GRAPH
In order to further assist stockholders in analyzing disclosure on compensation,
a graph comparing the total return on the Company's Common Shares to the total
return on the common stock of the companies included in the Nasdaq Composite
Index and the Standard & Poor's Property-Casualty Insurance Index ("S&P P-C
Insurance Index") has been provided. The performance graph should be analyzed in
connection with the preceding table detailing the payment of compensation. The
graph assumes $100 was invested in the Company's Common Shares and the indices
reflected therein on January 27, 1998, the date the rights offering of the
Company's Common Shares was completed, and reflects the value of that investment
through December 31, 1998.
[GRAPH OMITTED]
<TABLE>
<CAPTION>
-------------------------------------------------------------
01/27/1998 12/31/1998
-------------------------------------------------------------
<S> <C> <C>
Delphi International 100 171
-------------------------------------------------------------
Nasdaq Composite Index 100 143
-------------------------------------------------------------
S&P P-C Insurance Index 100 95
-------------------------------------------------------------
</TABLE>
-9-
<PAGE> 13
REPORT ON EXECUTIVE COMPENSATION
Compensation of the Company's Executive Officer (including the named Executive
Officer) is supervised by the Compensation Committee of the Board of Directors.
The objective of the Company's compensation program is to provide a total
compensation package that will enable the Company to attract, motivate and
retain outstanding individuals and to reward such individuals for increasing
levels of profit and shareholder value.
STOCK OPTION AND COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
David Ezekiel Thomas L. Rhodes
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
INVESTMENT ADVISORY AGREEMENT
The allocation of the Company's assets to the strategies and among investment
managers within the strategies is performed by Acorn Advisory Capital L.P. (the
"Investment Advisor") pursuant to an investment advisory agreement (the
"Investment Advisory Agreement"). This agreement provides for the payment to the
Investment Advisor of a fee equal to 50 basis points of assets under management.
The Investment Advisor has to date waived the fee under the Investment Advisory
Agreement and has at its option the ability to waive future fees, although there
can be no assurance that it will do so. In addition, the Investment Advisory
Agreement allows the Investment Advisor to defer payment of its fee, although
there can be no assurance that it will do so. Mr. Rosenkranz, Chairman of the
Board of Directors of the Company and Oracle Re, may be deemed to be the
beneficial owner of substantially all of the Investment Advisor.
The initial term of the Investment Advisory Agreement ended on December 31,
1998. The agreement has been renewed until December 31, 2000. Termination is
subject to notice 60 days prior to the end of the then-current term by either
the Company or the Investment Advisor.
AGREEMENT WITH INTERNATIONAL ADVISORY SERVICES LTD. (IAS)
The Company has engaged IAS to provide certain management and administrative
services to the Company. David Ezekiel, Vice President and Director of the
Company and Oracle Re, is the President and Managing Director of IAS. These
services include underwriting support and administration, preparation of
financial statements, liaison with auditors, legal advisors and other service
providers, together with such other duties as may be agreed upon.
DELPHI FINANCIAL GROUP, INC.
During 1998, the Company, through its wholly owned subsidiary, Oracle
Reinsurance Company Ltd., entered into various reinsurance agreements with
subsidiaries of DFG, of which Mr. Rosenkranz is Chairman of the Board, President
and Chief Executive Officer and beneficially owns or has the power to vote 100%
of the shares of the Class B Common Stock and of which Messrs Fox, O'Brien,
Ranieri, Rhodes and Smith also serve as Directors. Under these agreements,
approximately $101.5 million of group
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<PAGE> 14
employee benefit reserves ($35 million of long-term disability insurance
reserves and $66.5 million of net excess workers' compensation and casualty
reserves) were ceded to Oracle Re. Also in 1998, DFG and certain of its
subsidiaries purchased subordinated notes from the Company with an aggregate
principal amount of $40 million of which a $10 million note was sold by DFG to
an unrelated party prior to December 31, 1998. Such notes bear interest at the
rate of 9% per annum (which, during any five years, may be paid in additional
notes bearing the same terms in lieu of cash) and mature in full in January
2028.
FINANCIAL STATEMENTS AVAILABLE
Consolidated financial statements for Delphi International Ltd. are included in
the Company's 1998 Annual Report on Form 10-K for the period ended December 31,
1998 which is being mailed together with this Proxy Statement. Additional copies
of the Form 10-K and the Annual Report to shareholders may be obtained without
charge by submitting a written request to the Investor Relations Department,
Delphi International Ltd., Chevron House, 11 Church Street, Hamilton, Bermuda.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To the Company's knowledge, based solely on its review of Forms 3, 4 and 5 and
amendments thereto furnished to the Company pursuant to Section 16 of the
Securities Exchange Act of 1934 and other information obtained from such
persons, all persons subject to these reporting requirements filed the required
reports on a timely basis.
SHAREHOLDER PROPOSALS
Pursuant to the Company's Bye-Laws, resolutions intended to be presented by
shareholders for action at the 2000 Annual General Meeting must comply with the
provisions of the Bermuda Companies Act, 1981 (the "Companies Act") and the
Bye-Laws and be deposited at the Company's head office not later than six weeks
prior to the 2000 Annual General Meeting.
Pursuant to United States securities law regulations, proposals intended to be
presented by shareholders for action at the 2000 Annual Meeting must comply with
such regulations and be received by the Secretary of the Company not later than
December 1, 1999 in order to be considered for inclusion in the Company's proxy
statement relating to such meeting.
By Order of the Board of Directors
/s/ Nicolas Trollope
Nicolas Trollope
Director & Secretary
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<PAGE> 15
EXHIBIT A
DELPHI INTERNATIONAL LTD. 1998
DIRECTOR AND EMPLOYEE STOCK OPTION PLAN
SECTION 1 - GENERAL
1.1 Purpose. The Delphi International Ltd. 1998 Director and Employee
Stock Option Plan (the "Plan") has been established by Delphi International Ltd.
(the "Company") to:
(a) attract and retain the services of Directors, Employees and Eligible
Persons;
(b) motivate participating Optionees, by means of appropriate incentives,
to achieve long-range goals;
(c) provide competitive incentive compensation opportunities;
(d) further align Optionees' interests with those of the Company's
shareholders through compensation that is based on the Company's common
stock; and
(e) to increase the proprietary interest in the Company of Optionees whose
continued services are important to the continued success of the
Company, thereby providing them with additional incentive to continue
to provide such services;
and thereby promote the long-term financial interests of the Company and the
Related Companies, including the growth in value of the Company's equity and
enhancement of long-term shareholder return.
1.2 Participation. Subject to the terms and conditions of the Plan, the
Committee shall determine and designate, from time to time, from among the
Directors, Employees and Eligible Persons, those persons who will be granted one
or more Options under the Plan. In addition, Directors shall receive Options
under the Plan in accordance with the formula set forth in subsection 2.3.
Except as otherwise agreed by the Committee and the Optionee, or except as
otherwise provided in the Plan, a grant of an Option under the Plan shall not
affect any previous grant under the Plan or a grant under any other plan
maintained by the Company or any Related Company.
1.3 Operation and Administration; Definitions. The operation and
administration of the Plan, including grants made under the Plan, shall be
subject to the provisions of Section 3. Capitalized terms used in this Plan
shall be defined as set forth in Section 7 or elsewhere in the Plan.
SECTION 2 - TERMS OF THE PLAN
2.1 Definitions. The grant of an Option under this Plan entitles the
Optionee to purchase Shares at a price fixed at the time the Option is granted
subject to the terms of this Plan. Options granted under this Plan to Directors
and Eligible Persons shall be Non-Qualified Stock Options. Options granted under
this Plan to Employees may be either Incentive Stock Options or Non-Qualified
Stock Options, as determined in the discretion of the Committee. An "Incentive
Stock Option" is an Option that is intended to satisfy the requirements
applicable to an "incentive stock option" as described in section 422(b) of the
Code. A "Non-Qualified Stock Option" is an Option that is not intended to
satisfy such requirements.
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<PAGE> 16
2.2 Eligibility. The persons who shall be eligible to receive Options
under this Plan shall be Directors, Employees, and Eligible Persons.
2.3 Annual Director Options. Options shall automatically be granted to
each Director on the effective date of the adoption by the Board of this Plan
and, thereafter, the first business day following each date on which such
Director is elected, re-elected or appointed, as applicable, to the Board (each
such date, a "Grant Date"), in lieu of the Retainer Amount that such Director
would be entitled to receive for serving on the Board in the period from the
Grant Date up to the date of the Company's next following annual meeting of
stockholders, exclusive of meeting fees, fees for serving on any committee of
the Board, or fees associated with any other services provided to the Company or
any Related Company. Such Options will be exercisable for the nearest number of
whole Shares determined pursuant to the following formula: Number of Option
Shares = (Retainer Amount multiplied by 3), divided by (the Fair Market Value of
a Share on the Grant Date). Notwithstanding the foregoing, Options will not be
granted to a Director on a Grant Date pursuant to this subsection 2.3 if such
Director files with the Secretary of the Company, on or prior to the
commencement of the calendar year in which such Grant Date is to occur, a
written election not to receive Options in lieu of the Retainer Amount (other
than the Grant Date following the date on which such Director is first elected
or appointed, in which case such election may be made at any time prior to such
Grant Date).
2.4 Discretionary Options. The Committee shall designate the Employees,
Eligible Persons and, without limiting the operation of subsection 2.3,
Directors to whom Options are to be granted under this Plan and shall determine
the number of Shares to be subject to each such Option.
2.5 Price. The determination and payment of the purchase price of a
Share under each Option granted under this Plan shall be subject to the
following:
(a) The purchase price of options granted under subsection 2.3 shall be no
less than one hundred percent (100%) of the Fair Market Value of a
Share as of the date on which the Option is granted. If the Shares did
not trade on the date on which the Option is granted, the purchase
price shall be one hundred percent (100%) of the Fair Market Value of a
Share on the last business day preceding the date of the grant on which
the Shares traded.
(b) The purchase price of options granted under subsection 2.4 shall be no
less than one hundred percent (100%) of the Fair Market Value of a
Share as of the date on which the Option is granted. If the Shares did
not trade on the date on which the Option is granted, the purchase
price shall be no less than one hundred percent (100%) of the Fair
Market Value of a Share on the last business day preceding the date of
the grant on which the Shares traded.
(c) The full purchase price of each Share purchased upon the exercise of
any Option shall be paid at the time of such exercise and, as soon as
practicable thereafter, the Shares so purchased shall be delivered to
the person entitled thereto.
(d) The purchase price shall be payable in cash or in Shares (valued at
Fair Market Value as of the date of exercise), any combination thereof,
or such other consideration as may be acceptable to the Committee,
including but not limited to any acceptable financing arrangements.
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<PAGE> 17
2.6 Incentive Stock Options. The Committee shall cause any Option that
is intended to qualify as an Incentive Stock Option to state such intention, and
shall provide for such terms with respect thereto as may be necessary for such
Option to so qualify. To the extent that the aggregate fair market value of
Shares with respect to which Incentive Stock Options are exercisable for the
first time by any individual during any calendar year (under all plans of the
Company and all Related Companies) exceeds the maximum permitted under section
422 of the Code, such options shall be treated as Non-Qualified Stock Options.
2.7 Exercise. Except as otherwise expressly provided in this Plan, an
Option granted under this Plan shall be exercisable in accordance with the
following terms of this subsection 2.6:
(a) Options granted pursuant to subsection 2.3 shall become exercisable in
four substantially equal installments (without taking into account any
fractional shares) on the dates which follow the date of the grant by
90, 180, 270 and 360 days, respectively.
(b) The terms and conditions relating to exercisability of an Option
granted pursuant to subsection 2.4 shall be established by the
Committee.
2.8 Post-Exercise Limitations. The Committee may in its discretion, in
connection with and at the time of the grant of an Option, impose such
restrictions on Shares acquired pursuant to the exercise of such Option as it
determines to be desirable.
2.9 Expiration Date. The Expiration Date of an Option shall be
determined in accordance with the following:
(a) With respect to Options granted to Directors, the Expiration Date shall
be the ten-year anniversary of the date on which the Option is granted,
regardless of whether service on the Board continues, provided however,
that if the Optionee's Date of Termination occurs by reason of any act
of (a) fraud or intentional misrepresentation or (b) embezzlement,
misappropriation or conversion of assets or opportunities of the
Company, or any unauthorized disclosure or confidential information or
trade secrets of the Company, the Expiration Date shall be the Date of
Termination.
(b) With respect to Options granted to Employees, the Expiration Date shall
be established by the Committee at the time of grant, provided however,
that the Expiration Date with respect to any Option shall not be later
than the earliest to occur of: (i) the ten-year anniversary of the date
on which the Option is granted; (ii) if the Optionee's Date of
Termination occurs by reason of death or Disability, the one-year
anniversary of such Date of Termination; (iii) if the Optionee's Date
of Termination occurs by reason of Retirement, the three year
anniversary of such Date Of Termination; or (iv) if the Optionee's Date
of Termination occurs for reasons other than Retirement, death or
Disability, the three-month anniversary of such Date of Termination.
The Committee shall, at the time of grant or thereafter, in its sole
discretion, have the authority to extend the Expiration Date of an
Option that would otherwise occur due to any of the events described in
clauses (ii), (iii) and (iv) of the immediately preceding sentence.
(c) With respect to Options granted to Eligible Persons, the Expiration
Date or manner of determination thereof shall be established by the
Committee at the time of grant, provided however, that such date shall
not be later than the ten-year anniversary of the date on which the
Option is granted.
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<PAGE> 18
Notwithstanding anything contained in this subsection 2.9, Options which are not
exercisable on the Date of Termination shall expire immediately.
2.10 Modification. Subject to the terms and conditions and within the
limitations of the Plan, the Committee may modify, extend or renew outstanding
Options granted under the Plan, or accept the surrender of outstanding Options
(to the extent not theretofore exercised), except that no modification of an
Option shall, without the consent of the Optionee, adversely affect any rights
under any Option theretofore granted under the Plan.
SECTION 3 - OPERATION AND ADMINISTRATION
3.1 Effective Date. Subject to the approval of the shareholders of the
Company at the Company's next following annual meeting of shareholders, the Plan
shall be effective as of the date on which it is adopted by the Board, provided
however, that to the extent that Options are granted under the Plan prior to its
approval by shareholders, such Options shall be contingent upon approval of the
Plan by the shareholders of the Company. The Plan shall be unlimited in duration
and, in the event of Plan termination, shall remain in effect as long as any
Options granted hereunder are outstanding, provided however, that no new Options
shall be granted under the Plan after the tenth anniversary of the Effective
Date.
3.2 Shares Subject to Plan. The Shares with respect to which Options
may be granted under the Plan shall be currently authorized but unissued shares,
or shares purchased in the open market by the Company or a direct or indirect
wholly owned subsidiary of the Company. The number of Shares available for
grants of Options under the Plan on any date shall, subject to adjustment in
accordance with subsection 3.4, equal: (a) 150,000 Shares, less (b) any Shares
then having been delivered pursuant to Options under the Plan, and any Shares
subject to any outstanding Options under the Plan. No reduction shall be made in
the number of Shares available under this subsection 3.2 for any Shares subject
to Options previously granted under the Plan to the extent that such Options
have lapsed, expired or otherwise terminated prior to exercise.
3.3 Administration. The authority to administer the Plan shall be
vested in a committee of the Board (the "Committee") in accordance with Section
5. Such Committee may, but need not, consist of the full Board.
3.4 Adjustments to Shares.
(a) If the Company shall effect any subdivision or consolidation of Shares
or other capital readjustment, stock dividend, stock split, combination
of Shares or recapitalization or other increase or reduction of the
number of Shares outstanding without receiving compensation therefor in
money, services or property, then each of the (i) number of Shares
available under the Plan; (ii) number of Shares available under any
limits; (iii) number of Shares subject to outstanding Options; and (iv)
per-Share price under any outstanding Option shall automatically be
proportionately adjusted accordingly.
(b) If the Company is reorganized, merged or consolidated, is party to a
plan of exchange or sells all or substantially all of its assets, and
as a result the shareholders of the Company receive any shares of stock
or other securities or property, or the Company shall distribute
securities of another corporation to its shareholders, there shall be
substituted for the Shares subject to outstanding
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<PAGE> 19
Options an appropriate number of shares of each class of stock or
amount of other securities or property which were distributed to the
shareholders of the Company in respect of such Shares, in each case as
determined by the Committee, provided however, that the Committee
determines that such substitution would not be fully consistent with
the purposes of the Plan or the purposes of the outstanding Options
under the Plan, the Committee may make such other adjustments to the
Options as the Committee determines to be consistent with the purposes
of the Plan and of the affected Options.
(c) The existence of this Plan and the Options granted hereunder shall not
affect in any way the right or power of the Company or its shareholders
to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or
its business, any merger or consolidation of the Company, any issue of
debt securities or preferred or other securities having priority to or
affecting the Shares or the rights thereof, the dissolution or
liquidation of the Company, any sale or transfer of all or any part of
its assets or business, or any other corporate act or proceeding,
whether or not of a similar character.
(d) Except as expressly provided by the terms of this Plan, the issue by
the Company of shares of stock of any class, or securities convertible
into shares of stock of any class, for cash or property or for labor or
services, either upon direct sale, upon the exercise of rights or
warrants to subscribe therefor or upon conversion of shares or
obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, Options then outstanding hereunder.
3.5 Compliance with Laws. Notwithstanding any other provision of the
Plan, the Company shall have no obligation to issue any Shares under the Plan or
make any other payment under the Plan unless such issuance or payment would
comply with all applicable laws and the applicable requirements of any
securities exchange or similar entity.
3.6 Withholding. Upon the exercise of Non-Qualified Stock Options
granted under the Plan, Optionees may be subject to withholding of all
applicable taxes by the Company or a Related Company, which withholding
obligations may be satisfied, with the consent of the Committee, through the
surrender of Shares which the Optionee already owns, or to which an Optionee is
otherwise entitled under the Plan.
3.7 Transferability. Options granted under the Plan are not
transferable except as designated by the Optionee by will or by the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined by the Code, Title I of the Employee Retirement Income Security Act, or
the rules thereunder. To the extent that an Optionee who has the right to
exercise an Option, the Option may be exercised during the lifetime of the
Optionee only by the Optionee. Notwithstanding the foregoing provisions of this
subsection 3.8, the Committee may permit Options under the Plan to be
transferred to or for the benefit of the Optionee's family (including, without
limitation, to a trust for the benefit of an Optionee's family), subject to such
limits as the Committee may establish. In no event shall an Incentive Stock
Option be transferable other than as permitted by Code Section 422.
3.8 Option Agreement. The acceptance of an Option granted under the
Plan by an Optionee shall be deemed for all purposes to constitute the agreement
of the Optionee to the terms and conditions of the Plan. At the grant of such
Option, the Committee may require the Optionee to enter into a written agreement
with the Company in a form specified by the Committee, agreeing to the terms and
conditions of
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<PAGE> 20
the Plan and to such additional terms and conditions, or cause to be issued to
the Optionee any other document or instrument containing the terms and
conditions of such Option, which is not in either case inconsistent with the
Plan, as the Committee may, in its sole discretion, prescribe.
3.9 Limitation of Implied Rights.
(a) Neither an Optionee nor any other person shall, by reason of the Plan,
acquire any right in or title to any assets, funds or property of the
Company or any Related Company whatsoever. This Plan does not confer
upon any person any right or claim to any benefit under the Plan,
unless such right or claim has specifically accrued under the terms of
the Plan. Except as otherwise provided in the Plan, no Option granted
under the Plan shall confer upon the Optionee any right as a
shareholder of the Company until the date of issuance of Shares to such
person.
(b) The Plan does not constitute a contract of employment, and selection as
an Optionee will not give any Employee the right to be retained in the
employ of the Company or any Related Company, nor any director the
right to be nominated for reelection to the board of directors of the
Company or any Related Company.
SECTION 4 - CHANGE IN CONTROL
Except as otherwise provided in the Plan or the agreement, document or
instrument entered into or issued pursuant to subsection 3.8 relating to the
applicable Option, upon the occurrence of a Change in Control all outstanding
Options shall become fully exercisable.
SECTION 5 - COMMITTEE
5.1 Selection of Committee. The Committee shall be selected by the
Board, and shall consist of not less than two members of the Board or such
greater number as may be required for compliance with SEC Rule 16b-3. The
Committee may, but need not, consist of the full Board.
5.2 Powers of Committee. The authority to manage and control the
operation and administration of the Plan shall be vested in the Committee, which
shall have the powers and authority provided in the Plan. The Committee will
have the authority and discretion to interpret the Plan, to establish, amend,
and rescind any rules and regulations relating to the Plan, to determine the
terms and provisions of any agreements made pursuant to the Plan, and to make
all other determinations that may be necessary or advisable for the
administration of the Plan. Any interpretation of the Plan by the Committee and
any decision made by it under the Plan is final and binding on all persons.
5.3 Delegation by Committee. Except to the extent prohibited by the
provisions of SEC Rule 16b-3, applicable local law, the applicable rules of any
stock exchange, or any other applicable rules, the Committee may allocate all or
any portion of its responsibilities and powers to any one or more of its members
and may delegate all or any part of its responsibilities and powers to any
person or persons selected by it. Any such allocation or delegation may be
revoked by the Committee at any time.
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<PAGE> 21
5.4 Liability and Indemnification of Committee. No member or authorized
delegatee of the Committee shall be liable to any person for any action taken or
omitted in connection with the administration of the Plan unless attributable to
his own fraud or willful misconduct; nor shall the Company nor any Related
Company be liable to any person for any such action unless attributable to fraud
or willful misconduct on the part of a director or employee of such company. The
Committee, the individual members thereof, and persons acting as the authorized
delegatees of the Committee under the Plan, shall be indemnified by the Company
and the Related Companies, to the fullest extent permitted by law, against any
and all liabilities, losses, costs and expenses (including legal fees and
expenses) of whatsoever kind and nature which may be imposed on, incurred by or
asserted against the Committee or its members or authorized delegatees by reason
of the performance of a Committee function if the Committee or its members or
authorized delegates did not act in bad faith or in willful violation of the law
or regulation under which such liability, loss, cost or expense arises.
SECTION 6 - AMENDMENT AND TERMINATION
The Board may, at any time, amend or terminate the Plan, provided that,
subject to subsection 3.4, no amendment or termination may adversely affect the
rights of any Optionee or beneficiary under any Option granted under the Plan
prior to the date of such amendment or termination.
SECTION 7 - DEFINED TERMS
For purposes of the Plan, the terms listed below shall be defined as
follows:
(a) Board shall mean the Board of Directors of the Company.
(b) Change in Control shall mean the occurrence of any one of the following
events: (i) the individuals who, as of the effective date of the Plan,
constitute the Board (the Board, as constituted on the Effective Date,
the "Incumbent Board"), cease for any reason to continue to constitute
at least a majority of the directors constituting the Board, provided
that any person becoming a director subsequent to the Effective Date of
the Plan whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least three-quarters (3/4)
of the then directors who are members of the Incumbent Board (other
than an election or nomination of an individual whose initial
assumption of office is (A) in connection with the acquisition by a
third person, including a "group" as such term is used in Section
13(d)(3) of the 1934 Act, of beneficial ownership, directly or
indirectly, of 20% or more of the combined voting securities ordinarily
having the right to vote for the election of directors (unless such
acquisition of beneficial ownership was approved by a majority of the
Board who are members of the Incumbent Board), or (B) in connection
with an actual or threatened election contest relating to the election
of the directors, as such terms are used in Rule 14a-11 of Regulation
14A promulgated under the 1934 Act) shall be, for purposes of this
Plan, considered as though such person were a member of the Incumbent
Board; or (2) the approval by the stockholders of a merger,
consolidation, recapitalization or reorganization of the Company,
reverse split of any class of voting securities of the Company, or an
acquisition of securities or assets by the Company, or the sale or
disposition by the Company of all or substantially all of the Company's
assets, or if any such transaction is consummated without stockholder
approval, other than any such transaction in which the holders of
outstanding voting securities of the Company immediately prior to the
transaction receive, with
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<PAGE> 22
respect to such voting securities, voting securities of the surviving
or transferring entity representing more than 60 percent of the total
voting power outstanding immediately after such transaction, with the
voting power of each such continuing holder relative to other such
continuing holders not substantially altered in the transaction; or (3)
the approval by the stockholders of the Company of a plan of complete
liquidation of the Company.
(c) Code means the Internal Revenue Code of 1986, as amended from time to
time. A reference to any provision of the Code shall include reference
to any successor provision of the Code.
(d) Date of Termination shall mean (i) with respect to an Employee, the
date on which his employment with the Company and all Related Companies
terminates for any reason; and (ii) with respect to a Director, the
date on which his service on the Board terminates for any reason.
(e) Directors shall mean members of the Board.
(f) Disability. An Optionee shall be considered to have a "Disability"
during the period in which he is unable, by reason of a medically
determinable physical or mental impairment, to perform the requirements
of his position with the Company or a Related Company, which condition,
in the opinion of a physician selected by the Committee, is expected to
have a duration of not less than 120 days.
(g) Effective Date shall be the date on which the Plan is adopted by the
Board.
(h) Eligible Persons shall mean members of the boards of directors of any
of the Related Companies, and any other persons other than Directors
and Employees who, in the Committee's judgment, can make substantial
contributions to the long-term profitability and value of the Company
or any Related Company.
(i) Employees shall mean employees of the Company and the Related
Companies, whether or not such persons are directors of the Company or
a Related Company.
(j) Expiration Date shall mean the date after which the Option is no longer
exercisable.
(k) Fair Market Value shall mean as to a Share as of any date, the price at
which the last trade of a Share occurred on such date, as reported on
the Electronic Bulletin Board of the National Association of Securities
Dealers, Inc., provided however, that if the Share is listed for
trading on the NASDAQ National Market System ("NASDAQ") or any stock
exchange, such price shall instead be the closing price of the Share as
reported through NASDAQ or such stock exchange, as applicable.
(l) 1934 Act shall mean the Securities Exchange Act of 1934, as amended.
(m) Option shall mean any Incentive Stock Option or Non-Qualified Stock
Option granted under the Plan.
A-8
<PAGE> 23
(n) Related Companies shall mean any company during any period in which it
is a "subsidiary corporation" (as that term is defined in Code section
424(f)) with respect to the Company or with respect to any subsidiary
of the Company.
(o) Retainer Amount shall mean the amount of cash which a director of the
Company is entitled to receive for serving as a director.
(p) Retirement shall mean the occurrence of an Employee's Date of
Termination with the consent of the Optionee's employer after the
Employee is eligible for early retirement or normal retirement.
(q) SEC shall mean the United States Securities and Exchange Commission.
(r) Shares shall mean shares of the Company's common stock, par value $.01
per share.
Gender and Number. Where the context admits, words in either gender shall
include the other gender, words in the singular shall include the plural and the
plural shall include the singular.
SECTION 8 - GOVERNING LAW
This Plan is governed by and shall be construed in accordance with the
law of Bermuda.
A-9
<PAGE> 24
DELPHI INTERNATIONAL LTD.
Dear Shareholder,
Please take note of the important information enclosed with this Proxy. Your
vote counts, and you are strongly encouraged to exercise your right to vote your
shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the 1999 Annual General Meeting of
Shareholders, scheduled to be held on May 10, 1999.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Delphi International Ltd.
- FOLD AND DETACH HERE -
- --------------------------------------------------------------------------------
DELPHI INTERNATIONAL LTD.
The undersigned stockholder hereby appoints Colin O'Connor as attorney or
proxy, with full power of substitution, and hereby authorizes him to represent
and vote in the manner designated on the reverse side of this card (or, if no
designation is made, as provided below), all of the Common Shares of Delphi
International Ltd. (the "Company") held of record by the undersigned at the
close of business on March 19, 1999 at the Company's 1999 Annual General Meeting
of Shareholders scheduled to be held on May 10, 1999 at 10:00 a.m., or any
adjournments or postponements thereof.
The undersigned acknowledges receipt of the Company's Annual Report on Form
10-K for the period ended December 31, 1998, Notice of 1999 Annual General
Meeting of Shareholders and Proxy Statement dated April 12, 1999, and grants
authority to each of said proxies or their substitutes, and ratifies and
confirms all that said proxies may lawfully do in the undersigned's name, place
and stead.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF DELPHI
INTERNATIONAL LTD. and, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder. If no direction is made, this
proxy will be voted "FOR" all nominees for Director and "FOR" Proposal 2,
Proposal 3, Proposal 4, Proposal 5, and Proposal 6.
SIGNED:
---------------------------------------
SIGNED:
---------------------------------------
Please sign exactly as your name(s)
appear(s) hereon. Joint owners should
each sign personally. Trustees and
other fiduciaries should indicate the
capacity in which they sign, and where
more than one name appears, a majority
must sign. If a corporation or
partnership, this signature should be
that of an authorized officer who
should state his or her title.
DATED:
---------------------------------------
IMPORTANT: Please mark, sign and date
this proxy and return it
promptly in the enclosed
envelope. No postage is
required if mailed in the
United States.
<PAGE> 25
- FOLD AND DETACH HERE -
- --------------------------------------------------------------------------------
1. Election of Directors.
<TABLE>
<S> <C> <C> <C>
[ ] FOR all nominees listed [ ] WITHHOLD AUTHORITY to vote for
(except as written in the space provided below) all nominees listed below
Colin O'Connor Edward A. Fox Charles P. O'Brien
INSTRUCTION: To withhold authority to vote for any individual nominee listed above, write that
nominee's name in the space provided below.
</TABLE>
2. Adoption of the consolidated financial statements of the Company for the
period ended December 31, 1998 together with the auditors' report thereon.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Appointment of Ernst & Young as the Company's independent auditors for the
fiscal year ending December 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Approval of the Company's Director and Employee Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Adoption of an amendment to the Company's Bye-Law 42 concerning the quorum
required at General Meetings of the Company.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. Adoption of proposals to be considered by the Company, as the holder of all
outstanding voting common shares of Oracle Reinsurance Company Ltd. and O.R.
Investments Ltd., at the Annual General Meetings of Oracle Reinsurance
Company Ltd. and O.R. Investments Ltd.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
