As filed with the Securities and Exchange Commission on July 31, 1998
Registration No. 333-[ ]
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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
incorporation or organization) Identification Number)
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 registrant's principal executive offices)
Robert Rosenkranz
Chairman of the Board,
President and Chief Executive Officer
Delphi Financial Group, Inc.
(same address and telephone number as above)
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Geoffrey E. Liebmann, Esq.
Cahill Gordon & Reindel
80 Pine Street
New York, New York 10005
(212) 701-3000
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
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, other than securities offered only in connection with dividend or interest
reinvestment plans, 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, please 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. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Each Class of Amount To Be Offering Price per Aggregate Amount of
Securities To Be Registered Registered Unit(1) Offering Price(1) Registration Fee
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<S> <C> <C> <C> <C>
Class A Common Stock, par value
$.01 per share................ 385,810 $58 1/4 $22,473,433 $6,630
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</TABLE>
(1) Estimated solely for purposes of computing the registration fee pursuant
to Rule 457(c). Estimated based on the average of the high and low sales
price reported on the New York Stock Exchange for July 30, 1998.
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The Registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this registration
statement shall
<PAGE>
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.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 31, 1998
385,810 Shares
DELPHI FINANCIAL GROUP, INC.
CLASS A COMMON STOCK
This Prospectus relates to 385,810 shares of Class A Common Stock, par
value $.01 per share (the "Class A Common Stock"), of Delphi Financial Group,
Inc., which have been registered for sale from time to time by the selling
stockholders named herein or their permitted transferees or successors (the
"Selling Stockholders"). Any or all of the Class A Common Stock being registered
hereby may be sold from time to time to purchasers directly by the Selling
Stockholders. Alternatively, the Selling Stockholders may from time to time
offer the Class A Common Stock through underwriters, dealers or agents who may
receive compensation in the form of underwriting discounts, concessions or
commissions from the Selling Stockholders and/or the purchasers of Class A
Common Stock for whom they may act as agent. To the extent required, the names
of the Selling Stockholders, the number of shares of Class A Common Stock to be
sold, the purchase price, the public offering price, the name of any agent,
dealer or underwriter and any applicable commission or discount or other items
constituting compensation or indemnification arrangements with respect to a
particular offering will be set forth in an accompanying Prospectus Supplement.
The Company will receive no proceeds from the sale by the Selling Stockholders
of the Class A Common Stock offered hereby. The shares of Class A Common Stock
to which this Prospectus relates were issued to the Selling Stockholders in
connection with the Matrix Acquisition (as defined herein). All Registration
Expenses (as defined herein) incurred in connection with the registration of the
Class A Common Stock to which this Prospectus relates will be borne by the
Company. The Company has agreed to indemnify and hold harmless each of the
Selling Stockholders against certain liabilities to which they may become
subject under the Securities Act of 1933, as amended (the "Securities Act"), the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or other
federal or state law. See "Plan of Distribution."
The Class A Common Stock is traded on the New York Stock Exchange under the
symbol "DFG." The last reported sale price of the Class A Common Stock as
reported by the New York Stock Exchange on July 30, 1998 was $58.375 per share.
See "Risk Factors" beginning on page 3 hereof for certain information
relevant to an investment in the securities offered hereby.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this Prospectus is , 1998.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files reports and other information with the
Securities and Exchange Commission, Washington, D.C. (the "Commission").
Reports, proxy and information statements and other information filed by the
Company in accordance with the Exchange Act may be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the following Regional Offices of the
Commission: New York Regional Office, Seven World Trade Center, New York, New
York 10048; and Chicago Regional Office, Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661, and copies of such material can be
obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The SEC also
maintains a World Wide Website at http://www.sec.gov that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the SEC. The Company's Class A Common Stock is
listed on the New York Stock Exchange, and such reports and other information
concerning the Company can be inspected at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005.
The Company has filed with the Commission a registration statement under
the Securities Act with respect to the Class A Common Stock offered hereby (the
"Registration Statement"). This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission.
Statements made in this Prospectus as to the contents of any contract, agreement
or other document referred to herein are not necessarily complete. With respect
to each such contract or agreement filed as an exhibit to the Registration
Statement, reference is made to the exhibit for a more complete description of
the matter involved, and each such statement shall be deemed to be qualified in
its entirety by such reference. Reference is made to the Registration Statement
and to the exhibits relating thereto for further information with respect to the
Company and the Class A Common Stock offered hereby.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference in this Prospectus (i) its
Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and (ii)
its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1998.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Class A Common Stock offered hereby shall
be deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company undertakes to provide without charge to each person to whom
this Prospectus is delivered, on the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by reference
(not including exhibits to such documents unless exhibits are specifically
incorporated by reference into such documents). Requests should be directed to
Delphi Financial Group, Inc., at 1105 North Market Street, Suite 1230, P.O. Box
8985, Wilmington, Delaware 19899, Attention: Secretary. Telephone requests may
be directed to (302) 478-5142.
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The term "Delphi", as used herein, refers to Delphi Financial Group, Inc.
and does not include its subsidiaries, and the term the "Company", as used
herein, refers to Delphi Financial Group, Inc. and all its subsidiaries, except
where another definition is indicated or the context otherwise requires.
RISK FACTORS
An investment in the Class A Common Stock 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 accompanying Prospectus
Supplement, if any, before purchasing any shares of the Class A Common Stock
offered hereby.
Voting Power of Rosenkranz & Company. Each share of Class A Common Stock
entitles the holder thereof to one vote and each share of Class B Common Stock,
par value $.01 per share, of the Company (the "Class B Common Stock" and
together with the Class A Common Stock, the "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 the number of votes represented by the
aggregate of all outstanding shares of the Common Stock or (2) ten votes. 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. 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. See
"Description of Common Stock." As of June 30, 1998, Mr. Robert Rosenkranz, by
means of beneficial ownership of the corporate general partner of Rosenkranz &
Company, an irrevocable proxy 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 the Company's stockholders have the
power to elect all of the members of the Company's Board of Directors (other
than the director elected by the holders of the 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 the
assets of the Company. The Company is a party to consulting and other agreements
with certain affiliates of Rosenkranz & Company which are expected to continue
in accordance with their terms.
Insurance Regulations. The Company's insurance subsidiaries 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 (as described below
under "-- Holding Company Structure") and impose restrictions on the amount and
type of investments such subsidiaries may have. These regulations also affect
many other aspects of the Company's insurance subsidiaries' businesses,
including, for example, risk-based capital requirements, various reserve
requirements and the terms and conditions and manner of sale and marketing of
such subsidiaries' insurance products. These regulations are intended to protect
policyholders rather than investors.
Holding Company Structure. Because Delphi is a holding company, its ability
to pay cash dividends on the Class A Common Stock, as well as to meet its debt
service obligations and pay expenses, will depend upon receipt of sufficient
funds from its subsidiaries, as well as the Company's financial resources at the
holding company level.
The Company had approximately $249.5 million of available investments as a
source of liquidity at the holding company level at March 31, 1998, primarily
held through its non-insurance subsidiaries, which are generally not subject to
any significant restrictions on their ability to pay dividends or make
distributions to
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Delphi. These investments consist primarily of fixed maturity securities,
balances with independent investment managers and marketable securities. The
balances with independent investment managers are substantially all withdrawable
by the Company at least annually, subject to applicable notice requirements.
Other current sources of liquidity include principal and interest payments
received on a surplus debenture (the "Surplus Debenture") issued by Reliance
Standard Life Insurance Company of Texas ("RSLIC-Texas") to Delphi, dividends
paid from insurance subsidiaries, primarily generated from operating cash flows
and investments, and borrowings available under the $200.0 million Third Amended
and Restated Credit Agreement dated as of December 5, 1996 among Delphi and the
lenders named therein (the "Credit Agreement"). During 1998, the Company's
insurance subsidiaries will be permitted to make dividend payments totaling
$47.0 million without prior regulatory approval, and as of March 31, 1998,
$133.0 million was available for borrowing under the Credit Agreement, $98.0
million of which is restricted for use in connection with, among other things,
acquisitions or redemption of SIG Holdings, Inc.'s ("SIG") 8.5% Senior Secured
Notes due 2003 (the "SIG Senior Notes"). At March 31, 1998, the unpaid principal
balance of the Surplus Debenture, which is payable in quarterly installments
through December 31, 1999, was $38.8 million. RSLIC-Texas generates less than 1%
of the Company's premiums, policyholder fees and deposits; therefore, payments
on the Surplus Debenture are generally funded by dividend payments made by
Reliance Standard Life Insurance Company ("RSLIC") to RSLIC-Texas. These
dividends are 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 RSLIC's statutory net income for the preceding
calendar year, or 10% of RSLIC's statutory surplus as of the preceding December
31, determined in accordance with state insurance regulations. RSLIC will be
permitted to make dividend payments of $30.1 million during 1998 without prior
regulatory approval. Safety National Casualty Corporation's ("SNCC") ability to
pay dividends is subject to regulatory and certain other contractual
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 SNCC's statutory surplus as of the preceding December 31, or SNCC's
statutory net investment income for the preceding calendar year, determined in
accordance with state insurance regulations. SNCC will be permitted to make
dividend payments of $16.9 million during 1998 without prior regulatory
approval. Additional dividends may also be paid by RSLIC and SNCC with the
requisite approvals.
The Company's current liquidity needs, in addition to funding operating
expenses, include principal and interest payments on outstanding borrowings
under the Credit Agreement, its 8.0% Senior Notes due 2003 (the "Senior Notes"),
its 9.31% Junior Subordinated Deferrable Interest Debentures (the "Junior
Debentures") and the SIG Senior Notes, which borrowings and notes outstanding
totaled $300.1 million as of March 31, 1998. Beginning in 1999, the maximum
amount available to Delphi under the Credit Agreement will be reduced on October
1 of each year with the balance due on April 1, 2003. At Delphi's current level
of borrowing, no principal repayments would be required until October 1, 2002.
The 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
Junior Debentures mature in their entirety on March 25, 2027, but Delphi has the
option to shorten their maturity to a date not earlier than March 25, 2012 upon
the occurrence of certain tax events. The Junior Debentures are not subject to
any sinking fund requirements, but may be redeemed at the option of Delphi on or
after March 25, 2007 or at any time after the occurrence of certain tax events.
The SIG Senior Notes mature in $9.0 million annual installments beginning in May
1999. See Notes F and K to the Consolidated Financial Statements incorporated
herein by reference.
Investment Performance and Strategy. The market value of the Company's
investments varies depending on economic and market conditions. The Company's
profitability is also significantly affected by its investment results. In
addition, in the event that investments are called, redeemed or otherwise repaid
prior to stated maturity, the Company may be unable to reinvest the proceeds in
securities with comparable interest rates. The Company may, depending on its
liquidity requirements, also be required in the future to sell certain
invest-
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ments at a price and a time when the market value of such investments is less
than the book value of such investments. As of March 31, 1998, 39% of the
Company's invested assets consisted of mortgage-backed securities which subject
the Company to a degree of extension risk and prepayment risk. As of March 31,
1998, non-investment grade fixed maturity investments, balances with independent
investment managers and equity securities represented 4% and 3% and 1% of total
invested assets, respectively.
Shares Eligible for Future Sale. As of June 30, 1998, the Company has
outstanding 5,749,844 shares of Class B Common Stock. All of such Class B Common
Stock may be converted into Class A Common Stock, in whole or in part, at any
time by the holders thereof and must be converted in certain other
circumstances, including upon transfer thereof other than to a limited class of
transferees and upon the registration of such shares under the Securities Act.
The Company does not intend to list the Class B Common Stock on any exchange or
to make any other arrangements for secondary trading thereof. However, an
increase in the number of shares of Common Stock that become available for sale
in the public market may adversely affect the trading price of the Class A
Common Stock in the public market and could impair the Company's ability to
raise additional capital through the sale of its equity securities.
Competition; Ratings; Other Factors Affecting Business. The insurance
industry is highly competitive. The Company competes with numerous other
insurance and financial services companies both in connection with sales of
insurance and asset accumulation products and in acquiring blocks of business.
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.
The Company believes that its reputation in the marketplace, quality of
service and investment returns have enabled it to compete effectively for new
insurance business in its targeted markets. The Company reacts to changes in the
marketplace generally by focusing on products with adequate margins and avoiding
those with low margins. The Company believes that its smaller size, relative to
some of its competitors, enables it to more easily tailor its products to the
demands of customers.
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 policy owners and are not directed toward
protection of investors. A downgrade in the ratings of the Company's insurance
subsidiaries could adversely affect sales of their products and could have a
material adverse effect on the results of operations of the Company.
Changing economic conditions can have an impact on underwriting results for
the Company's insurance products and the returns on the Company's investment
portfolio.
THE COMPANY
Delphi, organized as a Delaware corporation in 1987, is an insurance
holding company engaged through its subsidiaries in offering a diverse portfolio
of group employee benefit products and services including life, disability,
excess workers' compensation and personal accident insurance, as well as
integrated disability and other absence management services. The Company also
offers asset accumulation products, primarily annuities, to individuals and
groups. The Company's two product categories are group employee bene-
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fit products and asset accumulation products. The Company offers its insurance
products in all fifty states and the District of Columbia.
Operating Strategy
The Company's operating strategy is to offer financial products and
services which have the potential for significant growth or which require
expertise to meet the specialized needs of its customers. The Company has
concentrated its efforts within certain niche insurance markets, primarily group
employee benefits for small to mid-sized employers where much of the employment
growth in the U.S. economy has occurred in the last few years. It has also
developed complementary investment management skills which, together with its
insurance business, are aimed at achieving above average returns on the capital
of the Company. The Company's operating strategy has also emphasized the
acquisition of blocks of insurance business and financial services companies and
the active management of its investment portfolio.
The Company acquired RSLIC and its subsidiary, First Reliance Standard Life
Insurance Company ("FRSLIC"), in November 1987. RSLIC, founded in 1907, and
FRSLIC underwrite a diverse portfolio of life, accident and health insurance
products targeted principally to the employee benefits market and RSLIC also
market assets accumulation products, primarily annuities, to individuals and
groups.
SIG, the parent company of SNCC, was merged into the Company in March 1996.
SNCC is an insurance specialist providing excess workers' compensation insurance
products to the self-insured market. Founded in 1942, SNCC is one of the oldest
continuous writers of excess workers' compensation insurance in the United
States.
Matrix Absence Management, Inc. ("Matrix") was merged into the Company on
June 30, 1998 (the "Matrix Acquisition"). Matrix provides integrated disability
and other absence management services to the employee benefits market.
The Company's management of its investment portfolio is an important
component of its profitability. The Company's strategy emphasizes liquidity and
yield, while seeking to limit risks associated with interest rate fluctuations
and credit quality.
The Company's principal executive offices are located at 1105 North Market
Street, Suite 1230, P.O. Box 8985, Wilmington, Delaware 19899. Its telephone
number is (302) 478-5142.
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SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of Class A Common Stock by the Selling Stockholders as of June 30,
1998, and the number of shares of Class A Common Stock covered by this
Prospectus.
Beneficial Ownership
Name of of Class A Common Stock Number of
Selling Stockholder prior to the Offering Shares Offered
- ------------------- --------------------------------- ---------------
Number of Percent
Shares of Class
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John H. Payne 186,253 1.3% 186,253
David F. Nolan 75,388 * 75,388
Thomas E. Sitter 70,954 * 70,954
Martin A. Grable 53,215 * 53,215
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* Indicates less than 1%
DESCRIPTION OF COMMON STOCK
General
The following description does not purport to be complete and is subject
to, and qualified in its 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 and 10,000,000 shares of
preferred stock, par value $.01 per share ("Preferred Stock"). As of June 30,
1998, there were 14,166,300 shares of Class A Common Stock and 5,749,844 shares
of Class B Common Stock outstanding. There are no shares of Preferred Stock
outstanding.
Subject to the limitations imposed by the terms of the Preferred Stock,
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 the Preferred Stock, holders of the Common Stock have the
right to share ratably in the
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remaining net assets available for distribution. All shares of Class A Common
Stock sold hereunder are fully paid and non-assessable.
State Street Bank and Trust Company is the Transfer Agent for the Class A
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
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 the number of votes represented by the
aggregate of all outstanding shares of the Common Stock or (2) ten votes.
Proposals submitted to a vote of stockholders will be voted on by holders of the
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 so long
as the outstanding shares of Class A Common Stock represent at least 10% of the
aggregate number of outstanding shares of the Company's 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 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 holders of Class B Common Stock,
the trustee of a trust exclusively for the benefit of such holders of Class B
Common Stock and/or one or more of such holders' Permitted Transferees, the
estate of such holders of Class B Common Stock and certain corporations or
partnerships of which two-thirds of the voting power is controlled by or under
common control with such holders 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
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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 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 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. Delphi's stock dividends to date have been paid in
the manner described in clause (iii).
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; (iii) upon exercise of options
or warrants previously issued to certain key employees of Delphi; 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.
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
-9-
<PAGE>
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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<PAGE>
PLAN OF DISTRIBUTION
Any or all of the Class A Common Stock being registered hereby may be sold
from time to time to purchasers directly by any Selling Stockholder.
Alternatively, any Selling Stockholder may from time to time offer the Class A
Common Stock through underwriters, dealers or agents who may receive
compensation in the form of underwriting discounts, concessions or commissions
from such Selling Stockholder and/or the purchasers of Class A Common Stock for
whom they may act as agent. Any such Selling Stockholder, and any such
underwriters, dealers or agents that participate in the distribution of Class A
Common Stock, may be deemed to be underwriters, and any profit on the sale of
the Class A Common Stock by them and any discounts, commissions or concessions
received by them may be deemed to be underwriting discounts and commissions
under the Securities Act. Any such shares of Class A Common Stock may be so
offered or sold in the open market, on the New York Stock Exchange, in privately
negotiated transactions, in an underwritten offering, or a combination of such
methods, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. To the extent required,
the names of the Selling Stockholders, the number of shares of Class A Common
Stock to be sold, purchase price, public offering price, the name of any agent,
dealer or underwriter and any applicable commission or discount or other items
constituting compensation or indemnification arrangements with respect to a
particular offering will be set forth in an accompanying Prospectus Supplement.
The Company will receive no proceeds from the sale by any Selling Stockholder of
the Class A Common Stock offered hereby.
In connection with distributions of the Class A Common Stock, any Selling
Stockholder may enter into hedging transactions with broker-dealers and the
broker-dealers may engage in short sales of the Class A Common Stock in the
course of hedging the positions they assume with such Selling Stockholder. Any
Selling Stockholder also may sell the Class A Common Stock short and deliver the
Class A Common Stock to close out such short positions. Any Selling Stockholder
also may enter into option or other transactions with broker-dealers that
involve the delivery of the Class A Common Stock to the broker-dealers, which
may then resell or otherwise transfer such Class A Common Stock. Any Selling
Stockholder also may loan or pledge the Class A Common Stock to a broker-dealer
and the broker-dealer may sell the Class A Common Stock so loaned or upon a
default may sell or otherwise transfer the pledged Class A Common Stock.
The shares of Class A Common Stock covered by this Prospectus were issued
to the Selling Stockholders in connection with the Matrix Acquisition.
All Registration Expenses incurred in connection with the registration of
the Class A Common Stock to which this Prospectus relates, estimated to be
approximately $[ ], will be borne by the Company. As and when the Company is
required to update this Prospectus, it may incur additional expenses in excess
of this estimated amount. "Registration Expenses" means all fees and expenses
incident to the registration of the Class A Common Stock to which this
Prospectus relates, including fees and expenses of counsel to the Company but
excluding all fees and disbursements of counsel to the Selling Stockholders,
stock transfer taxes that may be payable by the Selling Stockholders and all
underwriting discounts and commissions relating to the Class A Common Stock to
which this Prospectus relates.
The Company has agreed to indemnify and hold harmless each of the Selling
Stockholders against certain liabilities to which they may become subject under
the Securities Act, the Exchange Act or other federal or state law.
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<PAGE>
LEGAL OPINIONS
Certain legal matters in connection with the offering of the Class A Common
Stock will be passed upon for the Company by Cahill Gordon & Reindel, a
partnership including a professional corporation, New York, New York.
EXPERTS
The consolidated financial statements and schedules of Delphi Financial
Group, Inc. and subsidiaries at December 31, 1997 and 1996, and for each of the
three years in the period ended December 31, 1997, appearing in Delphi Financial
Group, Inc.'s Annual Report (Form 10-K) for the year ended December 31, 1997,
are incorporated by reference in this Prospectus and have been audited by Ernst
& Young LLP, independent auditors, as set forth in their report thereon also
incorporated by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
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<PAGE>
<TABLE>
<CAPTION>
======================================================= =====================================================
<S> <C>
No dealer, salesman or other person has been
authorized to give any information or to make
representations other than those contained in this 385,810 Shares
Prospectus, and, if given or made, such information
or representations must not be relied upon as having
been authorized by the Company or the Selling DELPHI FINANCIAL GROUP, INC.
Stockholders. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under
any circumstances, create an implication that the
information herein is correct as of any time Class A Common Stock
subsequent to its date. This Prospectus does not
constitute an offer or solicitation by anyone in any
jurisdiction in which such offer or solicitation is
not authorized or in which the person making such ________________
offer or solicitation is not qualified to do so or to
anyone to whom it is unlawful to make such offer or PROSPECTUS
solicitation. _________________
------------------
TABLE OF CONTENTS
Page
Available Information.........................2
Information Incorporated by Reference.........2
Risk Factors..................................3
The Company...................................5
Selling Stockholders..........................7
Description of Common Stock...................8
Plan of Distribution..........................11 , 1998
Legal Opinions................................12
Experts.......................................12
======================================================= =====================================================
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Securities and Exchange Commission Registration Fee........ $ 6,630
New York Stock Exchange Listing Fees....................... 1,500
Legal Fees (including Blue Sky)............................ 25,000
Accounting Fees and Expenses............................... 4,000
Miscellaneous.............................................. 5,000
--------
Total...................................................... $ 42,130
All amounts other than Securities and Exchange Commission Registration Fee
are estimated.
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
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.
II-1
<PAGE>
Item 16. Exhibits.
3.1 Restated Certificate of Incorporation of the Company (exhibit 3.2)(1).
3.2 Certificate of Amendment of Restated Certificate of Incorporation of
the Company (exhibit 3.1)(2).
3.3 Restated Certificate of Incorporation of the Company (exhibit 3.2)(2).
3.4 Amended and Restated By-laws of the Company (exhibit 3.4)(1).
5 Opinion of Cahill Gordon & Reindel.
10.1 Registration Rights Agreement, dated as of June 30, 1998, relating to
the shares of Class A Common Stock of the Selling Stockholders.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Cahill Gordon & Reindel (contained in Exhibit 5).
24 Powers of Attorney.
- --------------------------
(1) Incorporated herein by reference to the designated exhibit of the Company's
Registration Statement on Form S-1 dated March 13, 1990 (Registration No.
33-32827).
(2) Incorporated herein by reference to the designated exhibit to the Company's
Report on Form 10-Q for the quarter ended June 30, 1997.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(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;
(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 (a)(1)(i) and (a)(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 Company pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
II-2
<PAGE>
(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.
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 in 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 Act 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, controlling persons in
connection with the securities being registered, and the Commission is still of
the same opinion, the Registrant 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 them is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Company'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.
II-3
<PAGE>
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 31st day of
July, 1998.
DELPHI FINANCIAL GROUP, INC.
/s/ Robert Rosenkranz
--------------------------------------
Robert Rosenkranz
Chairman of the Board, President
and Principal Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons on the 31st day
of July, 1998, in the capacities indicated.
Signature Title
/s/ Robert Rosenkranz
- ----------------------------- Chairman of the Board, President and
Robert Rosenkranz Chief Executive Officer (Principal
Executive Officer)
* Director and Vice President
- -----------------------------
Robert M. Smith, Jr.
* Director
- -----------------------------
Edward A. Fox
* Director
- -----------------------------
Lewis S. Ranieri
* Director
- -----------------------------
Charles P. O'Brien
* Director
- -----------------------------
Thomas L. Rhodes
* Director
- -----------------------------
B.K. Werner
II-4
<PAGE>
* Vice President and Treasurer of RSLIC
- ----------------------------- (Principal Accounting and Financial
Lawrence E. Daurelle Officer)
*By: /s/ Robert Rosenkranz
------------------------
Robert Rosenkranz
Attorney in Fact
II-5
<PAGE>
INDEX TO EXHIBITS
Exhibit Description
3.1 Restated Certificate of Incorporation of the Company (exhibit 3.2)(1).
3.2 Certificate of Amendment of Restated Certificate of Incorporation of
the Company (exhibit 3.1)(2).
3.3 Restated Certificate of Incorporation of the Company (exhibit 3.2)(2).
3.4 Amended and Restated By-laws of the Company (exhibit 3.4)(1).
5 Opinion of Cahill Gordon & Reindel.
10.1 Registration Rights Agreement, dated as of June 30, 1998, relating to
the shares of Class A Common Stock of the Selling Stockholders.
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Cahill Gordon & Reindel (contained in Exhibit 5)
24 Powers of Attorney
(1) Incorporated herein by reference to the designated exhibit of the Company's
Registration Statement on Form S-1 dated March 13, 1990 (Registration No.
33-32827).
(2) Incorporated herein by reference to the designated exhibit to the Company's
Report on Form 10-Q for the quarter ended June 30, 1997.
II-6
EXHIBIT 5
[LETTERHEAD OF CAHILL GORDON & REINDEL]
July 31, 1998
(212) 701-3000
Delphi Financial Group, Inc.
1105 North Market Street, Suite 1230
P.O. Box 8985
Wilmington, Delaware 19899
Ladies and Gentlemen:
As counsel for Delphi Financial Group, Inc. (the "Company"), we are
representing the Company in connection with the registration statement on Form
S-3 (the "Registration Statement") filed with the Securities and Exchange
Commission (the "Commission"), relating to the registration under the Securities
Act of 1933, as amended (the "Act"), of 385,810 shares (the "Shares") of the
Company's Class A Common Stock, par value $.01 per share.
We advise you that in our opinion the Shares have been validly issued and
fully paid and are non-assessable.
We hereby consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement. We also consent to the reference under
the heading "Legal Opinions" in the Registration Statement to our having passed
upon the legal matters referred to above. Our consent to such reference does not
constitute a consent under Section 7 of the Act, as in consenting to such
reference we have not certified any part of the Registration Statement and do
not otherwise come within the categories of persons whose consent is required
under said Section 7 or under the rules and regulations of the Commission
thereunder.
Very truly yours,
CAHILL GORDON & REINDEL
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of the
30th day of June, 1998 by and among DELPHI FINANCIAL GROUP, INC., a Delaware
corporation ("Delphi") and the stockholders of Matrix Absence Management, Inc.,
a California corporation ("Matrix"), listed on Schedule A hereto (the
"Holders").
WHEREAS, Delphi and Matrix have entered into that certain Agreement and
Plan of Merger (the "Merger Agreement"), pursuant to which Matrix will be merged
(the "Merger") with and into a newly-formed, wholly-owned subsidiary of Delphi
("Merger Subsidiary") and the Holders will receive pursuant to the Merger, among
other things, the shares listed in Schedule A hereto (the "Shares") of Delphi
Class A common stock, $.01 par value ("Common Stock"); and
WHEREAS, in connection with the issuance of the Shares in the Merger,
Delphi and the Holders desire to provide for the rights of the Holders with
respect to the registration of the Shares according to the terms of this
agreement.
NOW THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Definitions.
1.1. The term "Commission" means the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
1.2. The term "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar successor federal statute and the rules and regulations
thereunder, all as the same shall be in effect from time to time.
1.3. The term "Holder" means any person owning or having the right to
acquire Registrable Securities or any permitted assignee thereof in accordance
with Section 8 hereof.
1.4. The term "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document.
<PAGE>
-2-
1.5. The term "Registrable Securities" means (i) the Shares held by each
Holder and (ii) any shares of Common Stock issued prior to the effective date of
the Registration Statement (as defined below) as a dividend or other
distribution with respect to, in exchange for or in replacement of, the Shares,
excluding in all cases, however, any Registrable Securities sold by a person in
a transaction in which such person's registration rights are not assigned;
provided, however, that any Shares sold pursuant to an effective registration
statement or pursuant to Rule 144 or 145 under the Securities Act shall cease to
be Registrable Securities.
1.6. The term "Securities Act" means the Securities Act of 1933, as
amended, or any similar successor federal statute and the rules and regulations
thereunder, all as the same shall be in effect from time to time.
1.7. All other capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Merger Agreement to which this Agreement is
attached as Exhibit E.
2. Registration.
2.1. Delphi shall prepare and, on or prior to the date which is 30 days
after the Effective Date, file with the Commission a registration statement on
Form S-3 for an offering to be made on a continuous basis pursuant to Rule 415
under the Securities Act covering the then outstanding Registrable Securities
then held by each Holder (the "Registration Statement"), and shall use
commercially reasonable efforts to cause the Registration Statement to be
declared effective as soon as reasonably practicable thereafter.
2.2. A Holder may inform Delphi in writing that such Holder wishes to
exclude all or a portion of its Registrable Securities from the Registration
Statement.
2.3. The registration of the Registrable Securities provided for in this
Section 2 shall not be underwritten.
3. Obligations of Delphi. Delphi shall, as expeditiously as reasonably
possible:
3.1. Before filing the Registration Statement or prospectus or any
amendments or supplements thereto, provide copies of such documents to counsel
selected by the Holders.
<PAGE>
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3.2. Once declared effective, keep the Registration Statement continuously
effective under the Securities Act until the earlier of the expiration of two
years after the Effective Date or the date on which this Agreement has
terminated with respect to all the Holders of Registrable Securities (such
period is hereinafter referred to as the "Effectiveness Period"). In the event
that, in the reasonable judgment of Delphi, it is advisable to suspend use of
the prospectus relating to the Registration Statement for a discrete period of
time (a "Deferral Period") due to pending material corporate developments or
similar material events that have not yet been publicly disclosed and as to
which Delphi believes public disclosure will be prejudicial to Delphi, Delphi
shall, if the circumstances giving rise to such Deferral Period are within
Delphi's control, at least three trading days prior to the first day of such
Deferral Period, or otherwise, as soon as reasonably practicable, deliver a
notice in writing to each Holder to the effect of the foregoing (but in no event
shall Delphi be obligated to disclose to the Holders the facts and circumstances
giving rise to the foregoing) and, upon receipt of such notice, each Holder
agrees not to dispose of such Holder's Registrable Securities covered by the
Registration Statement (other than in transactions exempt from the registration
requirements under the Securities Act) until the Holders are advised in writing
by Delphi that use of the prospectus may be resumed; provided, however, that the
aggregate number of days in any such Deferral Period or Deferral Periods shall
be no more than 60 in any 12-month period.
3.3. Prepare and file with the Commission such amendments and supplements
to the Registration Statement and the prospectus used in connection with the
Registration Statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by the
Registration Statement.
3.4. Furnish to the Holders covered by the Registration Statement such
numbers of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents
as they may reasonably request in order to facilitate the disposition of such
Registrable Securities.
3.5. Use its commercially reasonable efforts to register and qualify the
securities covered by the Registration Statement under such other securities or
Blue Sky laws of such United States jurisdictions as shall be reasonably
requested by the Holders thereof and keep such registrations and qualifica-
<PAGE>
-4-
tions in effect during the Effectiveness Period; provided that Delphi shall not
be required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions.
4. Obligations of the Holders; Procedures for Sales of Shares Under the
Registration Statement.
4.1. It shall be a condition precedent to the obligations of Delphi to take
any action pursuant to this Agreement that the selling Holders shall furnish to
Delphi such information regarding themselves, the Registrable Securities held by
them, and the intended method of disposition of such securities as shall be
required to effect the registration of the Registrable Securities.
4.2. For any offer or sale of any of the Registrable Securities under the
Registration Statement by a Holder in a transaction that is not exempt under the
Securities Act, the Holder, in addition to complying with any other federal
securities laws, shall deliver a copy of the final prospectus (together with any
amendment of or supplement to such prospectus) of Delphi covering the
Registrable Securities, in the form furnished to the Holder by Delphi, to the
purchaser of any of the Registrable Securities on or before the settlement date
for the purchase of such Registrable Securities.
4.3. Upon the receipt by a Holder of any notice from Delphi of (1) the
existence of any fact or the happening of any event as a result of which the
prospectus included in the Registration Statement, as then in effect, contains
an untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, (2) the issuance by
the Commission of any stop order or injunction suspending or enjoining the use
or the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose, or the taking of any similar action by the
securities regulators of any state or other jurisdiction, or (3) the request by
the Commission or any other federal or state governmental agency for amendments
or supplements to the Registration Statement or related prospectus or for
additional information related thereto, such Holder shall forthwith discontinue
disposition of such Holder's Registrable Securities covered by the Registration
Statement or related prospectus (other than in transactions exempt from the
registration requirements under the Securities Act) until such Holder's re-
<PAGE>
-5-
ceipt of the supplemented or amended prospectus or until such Holder is advised
in writing by Delphi that the use of the applicable prospectus may be resumed.
In such a case, subject to Section 3.2, Delphi shall as promptly as reasonably
practicable (i) prepare an amendment to correct or update the prospectus, (ii)
use its commercially reasonable efforts to remove the impediments referred to in
subclause (2) above, or (iii) comply with the requests referred to in subclause
(3) above.
5. Expenses. Delphi shall bear and pay all expenses incurred by Delphi in
connection with any registration, filing or qualification of Registrable
Securities with respect to the Registration Statement for each Holder thereof
(which right may be assigned as provided in Section 8 hereof), including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees relating or apportionable thereto, fees and disbursements of
counsel for Delphi, blue sky fees and expenses, including fees and disbursements
of counsel related to all blue sky matters, and the expenses of providing
materials pursuant to Section 3.4 hereof, but excluding the fees and
disbursements of counsel for the selling Holders, stock transfer taxes that may
be payable by the selling Holders, and all underwriting discounts and
commissions relating to Registrable Securities, which shall be borne by the
Holders.
6. Delay of Registration. No Holder shall have any right to obtain or seek
an injunction restraining or otherwise delaying the Registration Statement as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Agreement.
7. Indemnification. In the event any Registrable Securities are included in
the Registration Statement under this Agreement:
7.1. To the extent permitted by law, Delphi will indemnify and hold
harmless each Holder of such Registrable Securities, against any losses, claims,
damages or liabilities (joint or several) to which they may become subject under
the Securities Act, the Exchange Act or other federal or state law, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively, a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supple-
<PAGE>
-6-
ments thereto, (ii) the omission or alleged omission to state therein a material
fact required to be stated therein, or necessary to make the statements therein
not misleading, or (iii) any violation or alleged violation by Delphi of the
Securities Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law; and Delphi will reimburse each such Holder for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this Section 7.1 shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of Delphi (which consent
shall not be unreasonably withheld), nor shall Delphi be liable in any such case
for any such loss, claim, damage, liability or action, or any related expense,
to the extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by or on behalf of any such Holder.
7.2. To the extent permitted by law, each selling Holder will indemnify and
hold harmless Delphi, each of its directors, each of its officers who have
signed the Registration Statement, each person, if any, who controls Delphi
within the meaning of the Securities Act, and any other Holder selling
securities in the Registration Statement against any losses, claims, damages or
liabilities (joint or several) to which Delphi or any such director, officer or
controlling person, or other such Holder may become subject, under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise out
of or are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in connection
with such registration; and each such Holder will reimburse any legal or other
expenses reasonably incurred by Delphi or any such director, officer,
controlling person, or other Holder in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
that the indemnity agreement contained in this Section 7.2 shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability, or action
if such settlement is effected without the consent of the indemnifying Holder,
which consent shall not be unreasonably withheld; provided, that in no event
shall any indemnity under this Section 7.2 exceed the net pro-
<PAGE>
-7-
ceeds received by such Holder from the sale of Registrable Securities as
contemplated hereunder.
7.3. Promptly after receipt by a party entitled to indemnification under
this Section 7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 7, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the reasonable fees and expenses
to be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate
due to actual or potential differing interests between such indemnified party
and any other party represented by such counsel in such proceeding; it being
understood, however, that the indemnifying party shall not, in connection with
any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any time for such
indemnified party, which firm shall be designated in writing by a majority in
number of shares of Registrable Securities held by the Holders, if the Holders
are the indemnified parties, or by Delphi, if it is the indemnified party, and
shall be reasonably satisfactory to the indemnifying party. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 7.
7.4. The obligations of Delphi and the Holders under this Section 7 shall
survive the completion of any offering of Registrable Securities pursuant to the
Registration Statement under this Agreement, and otherwise.
8. Assignment of Registration Rights. The rights to cause Delphi to
register Registrable Securities pursuant to this Agreement may not be assigned
by any Holder without the prior written consent of Delphi, except in connection
with a Permitted Transfer as contemplated by the Merger Agreement.
<PAGE>
-8-
9. Termination of Registration Rights. Delphi's obligations pursuant to
this Agreement (other than those in Section 7) shall terminate as to any Holder
of Registrable Securities on the earlier of (i) when the Holder can sell all of
such Holder's Registrable Securities pursuant to Rule 144 or 145 under the
Securities Act during any 90-day period or (ii) the expiration of the
Effectiveness Period.
10. Miscellaneous.
10.1. Successors and Assigns. Except as otherwise provided herein, the
terms of this Agreement shall inure to the benefit of and be binding upon the
respective permitted successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
10.2. Notices. Unless otherwise provided, any notice, request, demand or
other communication required or permitted under this Agreement shall be given in
writing and shall be deemed effectively given upon personal delivery to the
party to be notified, or when sent by facsimile transmission (with receipt
confirmed), or overnight courier service, or upon deposit with the United States
Post Office, by registered or certified mail, postage prepaid and addressed as
follows (or at such other address as a party may designate by notice to the
other in accordance with this Section 10.2):
If to Delphi: Delphi Financial Group, Inc.
1105 North Market Street, Suite 1230
P.O. Box 8985
Wilmington, Delaware 19899
Facsimile No.: (302) 427-7663
Attention: President
with copies to: Delphi Capital Management, Inc.
650 Madison Avenue
New York, NY 10022
Facsimile No.: (212) 838-7598
Attention: President
<PAGE>
-9-
Cahill Gordon & Reindel
80 Pine Street
New York, NY 10005
Facsimile No.: (212) 269-5420
Attention: Geoffrey E. Liebmann, Esq.
If to the Holders: John H. Payne
P.O. Box 8895
16517 Via Lago Azul
Rancho Santa Fe, CA 92067
David F. Nolan
1289 Mokelumne Place
San Jose, CA 95120
Martin A. Grable
18400 Overlook Road, #65
Los Gatos, CA 95030
Thomas E. Sitter
1125 Taylor Street, Suite 5
San Francisco, CA 94108
with a copy to: Graham & James LLP
600 Hansen Way
Palo Alto, California 94304
Facsimile No.: (650) 856-3619
Attention: Joe C. Sorenson, Esq.
10.3. Waivers. The observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only with the written consent of the party against whom such
waiver is sought to be enforced. No waiver by any party of any default with
respect to any provision, condition or requirement hereof shall be deemed to be
a continuing waiver in the future thereof or a waiver of any other provision,
condition or requirement hereof; nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such right
accruing to it thereafter.
10.4. Severability. If one or more provisions of this Agreement are held to
be unenforceable, invalid or void by a court of competent jurisdiction, such
provision shall be excluded from this Agreement and the balance of this
Agreement
<PAGE>
-10-
shall be interpreted as if such provision were so excluded and shall be
enforceable in accordance with its terms.
10.5. Entire Agreement; Amendments.
(a) Except as otherwise provided herein, this Agreement contains the entire
understanding of the parties with respect to the matters covered herein and
supersedes all prior agreements and understandings, written or oral, between the
parties relating to the subject matter hereof.
(b) Any term of this Agreement may be amended (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of Delphi and the holders of a majority of the Registrable
Securities then outstanding. Any amendment effected in accordance with this
paragraph shall be binding upon each holder of any Registrable Securities then
outstanding, each future holder of all such Registrable Securities, and Delphi.
10.6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflicts of law.
10.7. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.8. Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement. Any reference in this Agreement to a statutory
provision or rule or regulation promulgated thereunder shall be deemed to
include any similar successor statutory provision or rule or regulation
promulgated thereunder.
<PAGE>
-11-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
DELPHI FINANCIAL GROUP, INC.
By: /s/ Robert M. Smith, Jr.
-----------------------------------
Name: Robert M. Smith, Jr.
Title: Vice President
HOLDERS:
/s/ John H. Payne
---------------------------------------
John H. Payne
/s/ David F. Nolan
---------------------------------------
David F. Nolan
/s/ Martin A. Grable
---------------------------------------
Martin A. Grable
/s/ Thomas E. Sitter
---------------------------------------
Thomas E. Sitter
<PAGE>
SCHEDULE A
TO REGISTRATION RIGHTS AGREEMENT
Name of Holder Number of Registrable Securities
John H. Payne 186,253
David F. Nolan 75,388
Martin A. Grable 53,215
Thomas E. Sitter 70,954
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Delphi Financial
Group, Inc. for the registration of 385,810 shares of its common stock and to
the incorporation by reference therein of our report dated February 9, 1998,
with respect to the consolidated financial statements and schedules of Delphi
Financial Group, Inc. included in its Annual Report (Form 10-K) for the year
ended December 31, 1997, filed with the Securities and Exchange Commission.
Philadelphia, Pennsylvania
July 27, 1998
POWER OF ATTORNEY
The person whose signature appears below hereby constitutes and appoints Robert
Rosenkranz and Robert M. Smith, Jr., or either of them, his true and lawful
attorney-in-fact and agent, with all power of substitution and resubstitution,
for him and in his name, place, and stead in any and all capacities, to sign one
or more Registration Statements on Form S-3 and all amendments and
post-effective amendments to the Registration Statement on Form S-3 and to file
the same, with all exhibits thereto any other documents in connection therewith,
with the Securities and Exchange Commission under the Securities Act of 1933,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully and to all intents and purposes as each might or
could do in person, hereby ratifying and confirming each act that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue thereof
In Witness Whereof, the undersigned has hereunto set his hand this 30th day of
July, 1998.
/s/ Lewis S. Ranieri
- -------------------------
Lewis S. Ranieri
Director
<PAGE>
POWER OF ATTORNEY
The person whose signature appears below hereby constitutes and appoints Robert
Rosenkranz and Robert M. Smith, Jr., or either of them, his true and lawful
attorney-in-fact and agent, with all power of substitution and resubstitution,
for him and in his name, place, and stead in any and all capacities, to sign one
or more Registration Statements on Form S-3 and all amendments and
post-effective amendments to the Registration Statement on Form S-3 and to file
the same, with all exhibits thereto any other documents in connection therewith,
with the Securities and Exchange Commission under the Securities Act of 1933,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully and to all intents and purposes as each might or
could do in person, hereby ratifying and confirming each act that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue
thereof.
In Witness Whereof, the undersigned has hereunto set his hand this 30th day of
July, 1998.
/s/ Charles P. O'Brien
- -------------------------
Charles P. O'Brien
Director
<PAGE>
POWER OF ATTORNEY
The person whose signature appears below hereby constitutes and appoints Robert
Rosenkranz and Robert M. Smith, Jr., or either of them, his true and lawful
attorney-in-fact and agent, with all power of substitution and resubstitution,
for him and in his name, place, and stead in any and all capacities, to sign one
or more Registration Statements on Form S-3 and all amendments and
post-effective amendments to the Registration Statement on Form S-3 and to file
the same, with all exhibits thereto any other documents in connection therewith,
with the Securities and Exchange Commission under the Securities Act of 1933,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully and to all intents and purposes as each might or
could do in person, hereby ratifying and confirming each act that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue
thereof.
In Witness Whereof, the undersigned has hereunto set his hand this 30th day of
July, 1998.
/s/ Edward A. Fox
- -------------------------
Edward A. Fox
Director
<PAGE>
POWER OF ATTORNEY
The person whose signature appears below hereby constitutes and appoints Robert
Rosenkranz and Robert M. Smith, Jr., or either of them, his true and lawful
attorney-in-fact and agent, with all power of substitution and resubstitution,
for him and in his name, place, and stead in any and all capacities, to sign one
or more Registration Statements on Form S-3 and all amendments and
post-effective amendments to the Registration Statement on Form S-3 and to file
the same, with all exhibits thereto any other documents in connection therewith,
with the Securities and Exchange Commission under the Securities Act of 1933,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully and to all intents and purposes as each might or
could do in person, hereby ratifying and confirming each act that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue
thereof.
In Witness Whereof, the undersigned has hereunto set his hand this 30th day of
July, 1998.
/s/ Thomas L. Rhodes
- -------------------------
Thomas L. Rhodes
Director
<PAGE>
POWER OF ATTORNEY
The person whose signature appears below hereby constitutes and appoints Robert
Rosenkranz and Robert M. Smith, Jr., or either of them, his true and lawful
attorney-in-fact and agent, with all power of substitution and resubstitution,
for him and in his name, place, and stead in any and all capacities, to sign one
or more Registration Statements on Form S-3 and all amendments and
post-effective amendments to the Registration Statement on Form S-3 and to file
the same, with all exhibits thereto any other documents in connection therewith,
with the Securities and Exchange Commission under the Securities Act of 1933,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully and to all intents and purposes as each might or
could do in person, hereby ratifying and confirming each act that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue
thereof.
In Witness Whereof, the undersigned has hereunto set his hand this 30th day of
July, 1998.
/s/ Robert M. Smith, Jr.
- -------------------------
Robert M. Smith, Jr.
Director
<PAGE>
POWER OF ATTORNEY
The person whose signature appears below hereby constitutes and appoints Robert
Rosenkranz and Robert M. Smith, Jr., or either of them, his true and lawful
attorney-in-fact and agent, with all power of substitution and resubstitution,
for him and in his name, place, and stead in any and all capacities, to sign one
or more Registration Statements on Form S-3 and all amendments and
post-effective amendments to the Registration Statement on Form S-3 and to file
the same, with all exhibits thereto any other documents in connection therewith,
with the Securities and Exchange Commission under the Securities Act of 1933,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully and to all intents and purposes as each might or
could do in person, hereby ratifying and confirming each act that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue
thereof.
In Witness Whereof, the undersigned has hereunto set his hand this 30th day of
July, 1998.
/s/ B.K. Werner
- -------------------------
B.K. Werner
Director
<PAGE>
POWER OF ATTORNEY
The person whose signature appears below hereby constitutes and appoints Robert
Rosenkranz and Robert M. Smith, Jr., or either of them, his true and lawful
attorney-in-fact and agent, with all power of substitution and resubstitution,
for him and in his name, place, and stead in any and all capacities, to sign one
or more Registration Statements on Form S-3 and all amendments and
post-effective amendments to the Registration Statement on Form S-3 and to file
the same, with all exhibits thereto any other documents in connection therewith,
with the Securities and Exchange Commission under the Securities Act of 1933,
granting unto said attorney-in-fact and agent full power and authority to do and
perform each and every act and thing requisite and necessary to be done in and
about the premises, as fully and to all intents and purposes as each might or
could do in person, hereby ratifying and confirming each act that said
attorney-in-fact and agent may lawfully do or cause to be done by virtue
thereof.
In Witness Whereof, the undersigned has hereunto set his hand this 30th day of
July, 1998.
/s/ Lawrence E. Daurelle
- -------------------------
Lawrence E. Daurelle
Principal Accounting
and Financial Officer
