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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, check the following box. o

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. o

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. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) 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. o

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o

The Registrants hereby amend the Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrants shall file a further amendment which specifically states that the Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date or dates as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Terms of the Delphi Properties Series A preferred stock include:


•	Dividends are:


•	payable quarterly only if authorized and declared, and
•	non-cumulative, which means that you will not receive them later if they are not authorized and declared in the applicable period.


•	Redeemable at our option on or after , 2008.

•	Entitled to 1/10th of one vote per share on all matters submitted to holders of our common stock.

•	Automatic exchange upon the occurrence of any exchange event, without your approval or any action on your part, for Series AA preferred stock of Delphi Corporation, our parent company, with substantially equivalent terms as to dividends, liquidation preference and redemption.

•	The Series AA preferred stock of Delphi Corporation received upon an automatic exchange:


•	will not have any voting rights,
•	will not have the benefit of favorable covenants similar to Delphi Properties Series A preferred stock, and
•	is not expected to be listed on any securities exchange.

We intend to elect to be treated as a real estate investment trust, or REIT, for federal income tax purposes.

Prior to this offering, there has been no public market for Delphi Properties Series A preferred stock. We have applied for the listing of the Series A preferred stock on the New York Stock Exchange under the symbol “DPS”. Trading in the Series A preferred stock is expected to commence not later than 30 days after the delivery of the Series A preferred stock. Consequently, there will be no trading market for the Series A preferred stock, at least in the short term.

Investing in the Series A preferred stock involves risks that are described in the “Risk Factors” section beginning on page 13 of this prospectus.

Shares of Delphi Properties Series A preferred stock solely represent an interest in Delphi Properties, Inc. and are not the obligations of, or guaranteed by, any other entity.

The underwriters may also purchase up to 1,800,000 additional shares of Delphi Properties Series A preferred stock, at the public offering price, less the underwriting commission, within 30 days of the date of this prospectus to cover over-allotments, if any.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

These shares of Delphi Properties Series A preferred stock will be ready for delivery in book-entry form only through The Depository Trust Company on or about , 2003.

The following table of contents has been designed to help you find important information contained in this prospectus. We encourage you to read the entire prospectus.

“Delphi Properties”, “we”, “our” and “us” refer to Delphi Properties, Inc., including its consolidated subsidiary, Delphi Properties Holdings, LLC (“Holdings”), and “Delphi” refers to Delphi Corporation, including its consolidated subsidiaries, in each case except as the context otherwise requires.

You should rely only on the information contained or incorporated by reference in this prospectus. We have not, and the underwriters have not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our or Delphi’s business, financial condition, results of operations and prospects may have changed since that date.

This prospectus summary highlights selected information found in greater detail elsewhere in this prospectus. This summary does not contain all the information that is important to you. Before you decide to invest in shares of Delphi Properties Series A preferred stock, automatically exchangeable upon the occurrence of an exchange event into Delphi Series AA preferred stock, you should carefully read the following summary, together with the more detailed information and financial statements and related notes contained elsewhere in this prospectus or incorporated by reference herein, especially the risks of investing in our Series A preferred stock discussed under “Risk Factors”.

We are a Maryland corporation, incorporated on March 13, 2003 as a wholly owned subsidiary of Delphi. Our principal business objective is to acquire and hold mortgage assets and other authorized investments that will generate net income for distribution to our stockholders. We will elect to be treated as a real estate investment trust, or REIT, for federal income tax purposes. As a REIT, we generally will not be required to pay federal income tax on distributed income if we distribute annually at least 90% of our REIT taxable income, as determined before any deduction for dividends paid, and excluding any net capital gains, to our stockholders and continue to meet a number of other requirements as discussed below. Our sole subsidiary is Delphi Properties Holdings, LLC, which is a member-managed limited liability company organized under the laws of Maryland. Immediately following this offering, we will control Holdings through a 99% interest therein, and Delphi will own the remaining 1% interest.

Our principal executive offices are located at 5725 Delphi Drive, Troy, Michigan 48098, and our telephone number is (248) 813-2000.

Upon the closing of this offering, we will issue 10,800,000 (12,420,000 if the underwriters’ over-allotment option is exercised in full) shares of our common stock, pay the net proceeds of this offering to Delphi, and agree to transfer a 1% interest in Holdings to Delphi in return for mortgage notes issued to us by Delphi that will be secured by mortgage liens in our favor on certain properties owned by subsidiaries of Delphi. In turn, we will contribute the mortgage notes and the related mortgage liens to Holdings in exchange for our interest therein, and immediately transfer 1% of such interest to Delphi. Thereafter our only material asset will consist of a 99% interest in Holdings. The mortgage notes are required to be repaid upon maturity and may be prepaid at any time, in which case Holdings’ sources of income may change. Our investment policy is described under the heading “Business of Delphi Properties — Investment Policies”.

Because we expect that the Series A preferred stock would be exchanged for Delphi Series AA preferred stock before we would foreclose on the mortgage liens, we have not included specific details on events which may affect the value of the collateral securing the mortgage liens.

We intend to cause Holdings to make distributions to us in sufficient amounts and at such intervals so as to enable us to make full dividend payments on our Series A preferred stock. We expect to pay an aggregate amount of dividends with respect to the outstanding shares of our capital stock equal to substantially all of our REIT taxable income, as determined before any deduction for dividends paid and excluding any net capital gains. To remain qualified as a REIT, we must distribute annually at least 90% of our REIT taxable income, as determined before any deduction for dividends paid, and excluding any net capital gains, to our stockholders. Dividends will be authorized and declared at the discretion of our board of directors after considering our distributable funds, financial condition and capital needs, the effect of current and pending legislation and regulations, economic conditions, tax consequences, our continued

qualification as a REIT and other factors. Although there can be no assurance, we currently expect that both our cash available for distribution and our REIT taxable income will be in excess of amounts needed to pay full dividends on our Series A preferred stock for the foreseeable future because:


	•	substantially all of the assets we hold through Holdings will be interest-earning investments;

	•	we anticipate that distributions on our assets will equal or exceed full dividend payment amounts on our Series A preferred stock as well as our other payment obligations; and

	•	we do not anticipate incurring any indebtedness, although we may incur indebtedness that in an aggregate amount does not exceed 20% of our stockholders’ equity.

Our board of directors may authorize dividends on our common stock, subject to any preferential dividend rights of holders of any outstanding shares of preferred stock, to the extent necessary to avoid imposition of federal income or excise tax.

Each share of our Series A preferred stock will be exchanged automatically on a share-for-share basis for Delphi Series AA preferred stock without your approval or any action on your part under the circumstances described below in “Description of Delphi Properties Capital Stock — Series A Preferred Stock — Automatic Exchange”.

Holders of shares of Delphi Series AA preferred stock received upon an exchange will be entitled to receive, if, when and as declared by Delphi’s board of directors, non-cumulative cash dividends at the rate of % per year of the liquidation preference of $25 per share. The Delphi Series AA preferred stock will be perpetual, non-voting preferred stock of Delphi ranking equally upon issuance with the most senior preferred stock of Delphi then outstanding. See “Description of Delphi Capital Stock—Series AA Preferred Stock”.

Our board of directors currently consists of four directors. Following this offering, we intend to elect three additional directors, each of whom we believe will qualify as “independent” for the purposes of the New York Stock Exchange. We currently have seven executive officers and two additional officers but have no other employees and we do not anticipate that we will need additional employees. All of our officers are also officers and/or employees of Delphi. All of our day-to-day activities are administered by Delphi pursuant to a management and servicing agreement.

A purchase of our Series A preferred stock is subject to a number of risks described in more detail under “Risk Factors” beginning on page 13. These risks include, but are not limited to, the following:


	•	Dividends on our Series A preferred stock are not cumulative. Consequently, our board of directors may decide to authorize and declare less than a full dividend or no dividend on our Series A preferred stock for any quarterly period and you will not be entitled to receive that dividend regardless of whether or not funds are or subsequently become available.

	•	We must distribute annually at least 90% of our REIT taxable income, as determined before any deduction for dividends paid and excluding any net capital gain, to remain qualified as a REIT. If we fail to do so and lose our REIT qualification, your shares of Series A preferred stock will be exchanged automatically on a share-for-share basis for Delphi Series AA preferred stock, unless your shares of Series A preferred stock are redeemed prior to an automatic exchange as described below.

	•	Shares of our Series A preferred stock solely represent an interest in us and are not the obligation of, or guaranteed by, any other entity.


	•	Our ability to make dividend payments on our Series A preferred stock will, initially and in the foreseeable future, depend upon the timely payment by Delphi of its obligations under the mortgage notes. A default by Delphi on its payment obligations under the mortgage notes will result in your shares of Series A preferred stock being exchanged automatically for Delphi Series AA preferred stock.

	•	A decline in Delphi’s financial performance may result in shares of our Series A preferred stock being subject to an automatic exchange on a share-for-share basis into Delphi Series AA preferred stock at a time when Delphi’s financial condition is deteriorating.

	•	Delphi will be able to control or influence the timing or occurrence of certain of the events that would result in shares of our Series A preferred stock being automatically exchanged for shares of Delphi Series AA preferred stock.

	•	As a result of, among other things, changes in law, the nature of our assets, our manner of operation, our organization, our capital structure, or the ownership of our equity, we could fail to qualify as a REIT from the outset, or we could fail to remain qualified as a REIT. If a future change in law would deny us the right to deduct dividend payments for tax purposes, we will have the right, but not the obligation, to redeem our Series A preferred stock under certain circumstances. If we fail to qualify as a REIT and have not redeemed our Series A preferred stock, your shares of Series A preferred stock will be exchanged automatically for shares of Delphi Series AA preferred stock.

	•	Our close relationship with Delphi will create potential conflicts of interest. Delphi is involved in virtually every aspect of our existence.

	•	We cannot assure you that we will acquire or dispose of assets in the future at their fair market value.

	•	The exchange of your Series A preferred stock for Delphi Series AA preferred stock would be a taxable event to you under the Internal Revenue Code, and you generally would recognize a gain or loss.

	•	The Delphi Series AA preferred stock received upon the occurrence of an automatic exchange:


	•	will not have voting rights,

	•	will not have the benefit of favorable covenants similar to our Series A preferred stock, and

	•	is not expected to be listed on any securities exchange.

Because our day-to-day business affairs are managed by Delphi, potential conflicts of interest will arise from time to time between Delphi and us. We have adopted policies, such as the requirement in our charter that certain of our actions be approved by a majority or, in certain cases, all of our independent directors, with a view to ensuring that all financial dealings between Delphi and us will be fair to both parties. See “Business of Delphi Properties — Conflicts of Interest and Related Policies and Programs”.

Under the terms of a management and servicing agreement, we will pay Delphi an annual fee of 0.1% of the average daily outstanding principal balance of our mortgage notes receivable plus any other REIT-qualified assets held through Holdings during the year for administering our day-to-day activities. We intend to pay each of our independent directors $15,000 per year for their services. Our officers and directors who are officers and/or employees of Delphi will receive no additional compensation for their services on our behalf. None of our other affiliates receives compensation directly from us, other than dividends on any of our stock owned by such affiliates and distributions by Holdings to Delphi in respect of its 1% interest in Holdings.

Shares of our Series A preferred stock will not be redeemable prior to , 2008, except upon the occurrence of a Tax Event. Redemptions of our Series A preferred stock upon the occurrence of a Tax Event are subject to the further conditions described below in “Description of Delphi Properties Capital Stock — Series A Preferred Stock — Redemption”.

Delphi is a leading global supplier of vehicle electronics, transportation components, integrated systems and modules and other electronic technology. Delphi’s common stock is listed on the New York Stock Exchange under the symbol “DPH”. It was incorporated in Delaware in late 1998, as a wholly owned subsidiary of General Motors Corporation, or GM. Prior to January 1, 1999, GM conducted its business through various divisions and subsidiaries. Effective January 1, 1999, the assets and liabilities of the Delphi business sector were transferred to Delphi and its subsidiaries in accordance with the terms of a Master Separation Agreement to which Delphi and GM are parties. Delphi became an independent company during 1999 in two stages, the first of which involved an initial public offering on February 5, 1999, and the second of which involved the distribution of Delphi’s remaining shares owned by GM on May 28, 1999.

Delphi’s net sales for 2002 were $27.4 billion, up 5% from 2001, with $9.6 billion or 35% of sales to non-GM customers. Delphi’s GM sales in 2002 were $17.9 billion and were stable relative to 2001. Net income for 2002 was $343 million. Delphi’s results for 2002 benefited from stable production in the U.S. automotive market, steady growth in its non-GM business, and savings related to ongoing restructuring and cost containment.

Delphi’s extensive technical expertise in a broad range of product lines and strong systems integration skills enables it to provide comprehensive, systems-based solutions to vehicle manufacturers. It has established an expansive global presence, with a network of manufacturing sites, technical centers, sales offices and joint ventures located in every major region of the world. Through December 31, 2002, Delphi operated its business along three major product sectors, which worked closely together to coordinate product development and marketing efforts. The three product sectors were: Electronics & Mobile Communication, which included automotive electronics and audio and communication systems; Safety, Thermal & Electrical Architecture, which included safety and interior systems, thermal systems, electrical power and signal distribution systems; and Dynamics & Propulsion, which included engine and emission management systems, energy systems, and vehicle dynamic systems, including braking, steering, and ride control. Delphi’s Annual Report on Form 10-K for the year ended December 31, 2002 and the consolidated financial statements and notes included therein, which are incorporated by reference into this prospectus, contain additional product sector and geographical information.

Effective January 1, 2003, Delphi realigned its management structure and financial reporting. The realignment and the resultant assignment of new responsibilities to certain of Delphi’s senior leadership was done to strengthen the company’s focus on customer relationships and growth, accelerate lean transformation across key business processes and place more emphasis on initiatives to address under-performing assets in its portfolios. Beginning January 1, 2003, Delphi has three reporting segments that are grouped on the basis of similar product, market and operating factors:


	•	Dynamics, Propulsion & Thermal Sector, which includes selected businesses from Delphi’s energy and engine management systems, chassis, steering and thermal systems product lines.

	•	Electrical, Electronics, Safety & Interior Sector, which includes selected businesses from Delphi’s automotive electronics, audio, consumer and aftermarket products, communication systems, safety and power and signal distribution systems product lines.


	•	Automotive Holdings Group, which is comprised of product lines and plant sites that do not meet Delphi’s targets for net income or other financial metrics, allowing for consistent and targeted management focus on finding solutions for these businesses.

The realignment is designed to increase focus on products and services for the greatest long-term benefit for Delphi while at the same time placing an equal focus on businesses requiring additional management attention. It is a further step in the implementation of Delphi’s long-term portfolio plans. The realignment is further described in Delphi’s 2002 Form 10-K under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Outlook” and “Notes to Consolidated Financial Statements — Note 13”.

Delphi’s principal executive offices are located at 5725 Delphi Drive, Troy, Michigan 48098, and its telephone number is (248) 813-2000.

Delphi Properties Holdings, LLC, or Holdings, is a member-managed limited liability company, organized under the laws of the State of Maryland on March 25, 2003, through which we will hold our assets. Immediately after this offering, we will own a 99% interest in Holdings and Delphi will own the remaining 1% interest. Upon the closing of this offering, we will contribute the mortgage notes and the related mortgage liens to Holdings, and Holdings’ income will consist of the interest payments made by Delphi in respect of the mortgage notes, except to the extent that the mortgage notes are replaced with third-party assets. Under the terms of Holdings’ operating agreement, members owning a majority of the interests in Holdings have the exclusive right to manage the business of Holdings, including determining the timing and amount of distributions to members. As a result, assuming the timely payment of interest in respect of the mortgage notes, our 99% interest in Holdings would enable us to cause Holdings to make distributions to us in sufficient amounts and at such intervals so as to enable us to make full dividend payments on our Series A preferred stock, when declared. Under the terms of Holdings’ operating agreement, neither Delphi nor we may transfer our respective interests in Holdings without the prior written consent of the other party, and without the consent of holders of two-thirds of the shares of our Series A preferred stock, we may not transfer our controlling interest in Holdings.

Holdings’ executive offices are located at 5725 Delphi Drive, Troy, Michigan 48098, and its telephone number is (248) 813-2000.

The following diagram outlines the relationship among Delphi Properties, Delphi and Holdings following the closing of the offering:


		declared and paid on our Series A preferred stock for a quarterly dividend period, the payment of dividends on shares of our stock that is at parity with our Series A preferred stock will be made on a pro rata basis with our Series A preferred stock. If a dividend is not declared on our Series A preferred stock for any two quarterly periods within a rolling 60-month time period, our Series A preferred stock will be exchanged automatically on a share-for-share basis for Delphi Series AA preferred stock.

		Holders of shares of our Series A preferred stock will also have the right to elect two directors in addition to the directors then in office if we fail to pay, or declare and set aside for payment, dividends on the Series A preferred stock for any six dividend periods.

Liquidation preference		The liquidation preference of our Series A preferred stock is $25 per share, plus an amount equal to the quarterly declared and unpaid dividends, if any, to the date of the liquidation distribution.

Redemption		Shares of our Series A preferred stock are not redeemable prior to , 2008, except upon the occurrence of a Tax Event. Redemptions of our Series A preferred stock upon the occurrence of a Tax Event are subject to the further conditions described below in “Description of Delphi Properties Capital Stock — Series A Preferred Stock — Redemption”.

Automatic exchange		Each share of our Series A preferred stock will be exchanged automatically on a share-for-share basis for Delphi Series AA preferred stock upon the occurrence of an exchange event. An exchange event occurs upon:

		• our failure to declare dividends on our Series A preferred stock for any two quarterly periods within a rolling 60-month period;

		• the maturity or prepayment of the mortgage notes or the transfer (other than to Holdings) or liquidation of any assets with respect to which Delphi is the primary obligor or guarantor, and the failure of Delphi to refinance such matured or prepaid mortgage notes or to contribute or sell to us within 90 days

		• other mortgage notes;

		• residential mortgage loans or commercial mortgage loans, including participation interests in residential or commercial mortgage loans;

		• mortgage-backed securities eligible to be held by REITs;

		• cash, cash items (which includes receivables) and government securities; or

		• other real estate assets,

		that would yield investment income substantially similar to the matured or prepaid notes or the transferred or liquidated assets, as applicable, such that in all cases our aggregate


		investment income is expected to be sufficient to pay full dividends on our Series A preferred stock, plus reasonably anticipated expenses;

		• an event of default in respect of any of the mortgage notes issued by Delphi to us or the related mortgage liens;

		• the failure of Delphi to remain at all times the primary obligor or guarantor in respect of investments accounting for at least two-thirds of our investment income;

		• the failure of Delphi to maintain its long-term senior unsecured debt ratings at or above “Ba2” from Moody’s Investors Service Inc. and “BB” from Standard & Poor’s Ratings Services;

		• the acceleration of any debt of Delphi in a principal amount in excess of $50 million;

		• bankruptcy, insolvency or liquidation events of Delphi;

		• the receipt by us of an opinion of counsel, rendered by a law firm experienced in such matters, in form and substance satisfactory to us, which states that there is more than an insubstantial risk that we are or will be considered an “investment company” that is required to be registered under the Investment Company Act, as a result of the occurrence of a change in law or regulation or a written change in interpretation or application of law or regulation by any legislative body, court, governmental agency, or regulatory authority, or we are required to be registered under the Investment Company Act; or

		• our failure to qualify as a REIT from the outset, or to remain qualified as a REIT for federal income tax purposes, and we do not exercise our right to redeem the Series A preferred stock.

		Upon the occurrence of an exchange event, our Series A preferred stock shall be immediately and automatically exchanged on a share-for-share basis for newly issued shares of Delphi Series AA preferred stock. The Delphi Series AA preferred stock will be non-cumulative and redeemable after , 2008, will have a dividend rate of % per year of the liquidation preference of $25 per share, if, when and as declared by Delphi’s board of directors, and, upon issuance, will be at parity with the most senior preferred stock of Delphi outstanding on the exchange date.

		Holders of Delphi Series AA preferred stock received upon the occurrence of an exchange event will not have any voting rights and will not have the benefit of favorable covenants similar to those of our Series A preferred stock. Delphi Series AA preferred stock is not expected to be listed on any securities exchange.

		Holders of our Series A preferred stock that is exchanged for Delphi Series AA preferred stock will be entitled to dividends on


		the Delphi Series AA preferred stock received that are equivalent to the dividends that, at the time of the exchange, were declared and unpaid, subject to a declaration of dividends on the Delphi Series AA preferred stock by Delphi’s board of directors.

		Our Series A preferred stockholders, by purchasing shares of our Series A preferred stock, whether in the initial offering or in the secondary market after the initial offering, will be deemed to have agreed to be bound by the automatic exchange provisions described in “Description of Delphi Properties Capital Stock — Series A Preferred Stock — Automatic Exchange” and to exchange each share of our Series A preferred stock for one share of Delphi Series AA preferred stock upon the occurrence of an exchange event.

Voting rights		In general, holders of shares of our Series A preferred stock are entitled to 1/10th of one vote per share on all matters to be voted on by stockholders, voting as a single class with the holders of shares of our common stock and the holders of any other class of shares entitled to vote as a single class with the holders of shares of our common stock.

		The consent or vote of the holders of at least two-thirds of our outstanding shares of Series A preferred stock is required for the adoption of any matter on which the holders of our Series A preferred stock have a right to vote separately as a single class. See “Description of Delphi Properties Capital Stock — Series A Preferred Stock — Voting Rights”.

		Holders of shares of our Series A preferred stock will also have the right to elect two directors in addition to the directors then in office if we fail to pay, or declare and set aside for payment, dividends on the Series A preferred stock for any six dividend periods.

		Holders of Delphi Series AA preferred stock will not have any voting rights, except as expressly required by law.

Covenants		Our charter contains certain covenants requiring the consent or affirmative vote of the holders of at least two-thirds of shares of our Series A preferred stock to authorize us to:

		• make or permit to be made any payment to Delphi or its affiliates relating to (1) any indebtedness we may have to Delphi or any such affiliate or (2) Delphi’s or any such affiliate’s beneficial interests in us, in each case when we are precluded from making payment on our common stock or when we anticipate our dissolution, liquidation or winding up;

		• incur indebtedness in an aggregate amount exceeding 20% of our stockholders’ equity;

		• pay dividends on our common stock under certain circumstances;

You should consider carefully the following risks before purchasing our Series A preferred stock, automatically exchangeable into Delphi Series AA preferred stock upon the occurrence of an exchange event. The risks below are not the only ones facing us or Delphi. Additional risks that are not presently known to us or that are currently deemed immaterial may also materially and adversely affect our or Delphi’s business or financial condition.

Dividends are not cumulative and you are not entitled to receive dividends unless they are authorized by our board of directors and declared by us.

Dividends on our Series A preferred stock are not cumulative. Consequently, if our board of directors does not authorize or we do not declare a dividend on our Series A preferred stock for any dividend period, you will not be entitled to receive that dividend, regardless of whether or not funds are or subsequently become available. Nonetheless, because we must distribute annually at least 90% of our REIT taxable income, determined before any deduction for dividends paid and excluding any net capital gains, to remain qualified as a REIT, we intend to authorize and distribute (1) full dividends on our Series A preferred stock quarterly and (2) at least 90% of our REIT taxable income annually. If we fail to make dividends sufficient to remain qualified as a REIT, which may occur if we fail to pay dividends in any one quarter, your shares of Series A preferred stock will be exchanged automatically on a share-for-share basis for Delphi Series AA preferred stock, unless our failure to remain qualified as a REIT is a consequence of a Tax Event and we elect to redeem the Series A preferred stock.

Notwithstanding our general intention to remain qualified as a REIT, and, as a consequence, our intention to declare and distribute dividends on a quarterly basis if we have the income or funds to do so, our board of directors could determine in specific circumstances that it would be in our best interests to pay less than the full amount of the stated dividend on our Series A preferred stock or no dividend for any quarter even though funds are available. In making this determination, our board of directors generally will consider the amount of our distributable funds, our financial condition and capital needs, the effect of current and pending legislation and regulations, economic conditions, tax consequences, and our continued qualification as a REIT.

The shares of our Series A preferred stock solely represent interests in us and are not the obligation of, or guaranteed by, any other entity.

The shares of our Series A preferred stock do not constitute obligations or equity securities of Delphi or any entity other than Delphi Properties and our obligations with respect to our Series A preferred stock are not guaranteed by any other entity. In particular, neither Delphi nor any other entity guarantees that we will declare or pay any dividends nor are they obligated to provide additional capital or other support to us to enable us to pay dividends in the event our assets are insufficient for such purpose. Our Series A preferred stock is not exchangeable for Delphi Series AA preferred stock except in connection with an exchange event. No holder of our Series A preferred stock will have the right to require us to exchange such holder’s Series A preferred stock for shares of Delphi Series AA preferred stock.

A decline in Delphi’s financial performance may result in the non-payment of dividends on your shares of Series A preferred stock and/or such shares being subject to an automatic exchange into shares of Delphi Series AA preferred stock at a time when Delphi’s financial condition is deteriorating.

The returns from your investment in our Series A preferred stock will be dependent largely on the performance of Delphi. We will rely on Delphi’s timely payments with respect to its obligations under the mortgage notes to make dividend payments on your shares of our Series A preferred stock. A decline in the performance of Delphi could result in the non-payment of dividends or the automatic exchange of your shares of our Series A preferred stock for shares of Delphi Series AA preferred stock, without your approval or any action on your part. In the event of such an automatic exchange, you would own an

investment in Delphi and not in Delphi Properties. Under circumstances in which an automatic exchange has been triggered by a deterioration of Delphi’s financial condition, the likelihood of dividend payments, as well as the liquidation preference, voting rights and liquidity of the Delphi Series AA preferred stock you would own could be negatively affected.

Delphi has the ability to control or influence the timing and occurrence of certain of the exchange events that would result in the automatic exchange of our Series A preferred stock into shares of Delphi Series AA preferred stock.

Because of Delphi’s ownership of 90% of our voting power, its status as the issuer of the mortgage notes upon which we will rely to make dividend payments on our Series A preferred stock, and the nature of several of the exchange events in our charter, Delphi will have the ability to control or influence the timing and occurrence of some of the exchange events that would result in the automatic exchange of your shares of Series A preferred stock into shares of Delphi Series AA preferred stock. These exchange events include Delphi:


	•	defaulting in respect of its payment obligations under the mortgage notes;

	•	causing us (through its control of our board of directors) not to declare dividends on our shares of Series A preferred stock (1) during any quarterly period, resulting in our failure to distribute 90% of our REIT taxable income annually and our disqualification as a REIT, or (2) during any two quarterly periods within a rolling 60-month period (if the failure to pay any quarterly dividends has not already resulted in our disqualification as a REIT);

	•	failing to refinance the mortgage notes or to contribute or sell assets to us that will yield an amount of investment income that is substantially similar to matured or prepaid mortgage notes;

	•	causing the acceleration of certain debt of Delphi;

	•	causing bankruptcy, insolvency or liquidation events with respect to Delphi; and

	•	causing us to revoke our election to be treated as a REIT for federal income tax purposes or to otherwise fail to qualify for such tax treatment.

As a result, Delphi can trigger an exchange event without regard to your interests and without your prior approval.

The collateral securing the mortgage notes will not be a source of payment support for the Series A preferred stock because a default by Delphi on the mortgage notes will trigger an automatic exchange before any foreclosure on the collateral.

Although the mortgage notes are secured by mortgage liens on certain properties owned by subsidiaries of Delphi, if Delphi fails to make a payment on the mortgage notes, your shares of Series A preferred stock will be exchanged for shares of Delphi Series AA preferred stock prior to our foreclosing on these properties, which means that any proceeds realized from a foreclosure would not be available to make any payments on your Series A preferred stock. Therefore you should not look to the collateral securing the mortgage notes as a source of payment support for your Series A preferred stock.

We may redeem our Series A preferred stock upon the occurrence of a Tax Event, subject to additional conditions. If such redemption does not occur, your shares of Series A preferred stock may become subject to an automatic exchange for shares of Delphi Series AA preferred stock.

At any time following the occurrence of a Tax Event, even if such Tax Event occurs prior to , 2008, we will have the right but not the obligation to redeem our Series A preferred stock in whole for an amount equal to the liquidation preference per share, subject to certain additional conditions. The occurrence of a Tax Event will not, however, give a stockholder any right to require us to redeem our Series A preferred stock. A Tax Event will occur if we receive an opinion of counsel to the effect that, as a result of a judicial decision or official administrative pronouncement, ruling, or regulatory procedure or as

a result of changes in the tax laws, regulations, or related official interpretations, there is a more than insubstantial risk that dividends with respect to our capital stock will not be fully deductible by us or we will be subject to additional taxes or governmental charges. See “Description of Delphi Properties Capital Stock — Series A Preferred Stock — Redemption”. If we redeem our Series A preferred stock, you may not be able to invest your redemption proceeds in securities with a dividend yield comparable to that of our Series A preferred stock. If we choose not to or are not eligible to redeem your shares of our Series A preferred stock upon the occurrence of a Tax Event, your shares will be exchanged automatically into shares of Delphi Series AA preferred stock if we fail to remain qualified as a REIT for federal income tax purposes.

Our Series A preferred stock will rank subordinate to all claims of our creditors. In addition, with the approval of a majority of our board of directors, subject, in certain instances, to the prior election of, and obtaining the approval of a majority of, our independent directors, we may issue authorized parity stock at any time in the future without your consent or approval. Accordingly, if


	•	we do not have funds legally available to pay full dividends on our Series A preferred stock and any other parity stock we may issue; or

	•	we do not have funds legally available to pay the full liquidation value of our Series A preferred stock and any parity stock in the event of our liquidation, dissolution or winding up,

any funds that are legally available to pay such amounts will be paid pro rata to holders of our Series A preferred stock and any of our parity stock then outstanding.

Prior to this offering, there has been no public market for our Series A preferred stock. We have applied for the listing of our Series A preferred stock on the New York Stock Exchange under the symbol “DPS”. Trading in our Series A preferred stock is expected to commence not later than 30 days after the date of delivery of our Series A preferred stock. We cannot assure you that an active and liquid trading market for our Series A preferred stock will develop or be sustained. If such a market were to develop, the price at which our Series A preferred stock trades would depend on many factors, including prevailing interest rates, our financial condition, and the market for similar securities. You may not be able to resell your shares of our Series A preferred stock at or above the initial price to the public or at all.

We intend to be owned, organized and operated so as to qualify as a REIT under the Internal Revenue Code. Although we believe we will be owned and organized and will operate in such a manner, and Shearman & Sterling will render certain opinions as described in “Federal Income Tax Considerations”, it is not certain we will be able to become and remain qualified as a REIT for federal income tax purposes. Our qualification as a REIT depends, among other factors, on our distribution annually of at least 90% of our REIT taxable income, determined before any deduction for dividends paid and excluding any net capital gains, the nature of our assets, our manner of operation, our organization, our capital structure, and the ownership of our equity. Qualification as a REIT involves the application of highly technical and complex tax law provisions for which there are only limited judicial or administrative interpretations and involves the satisfaction of various requirements not entirely within our control. No assurance can be given that new legislation, regulations, administrative interpretations, or court decisions will not significantly change the tax laws with respect to qualification as a REIT or the federal income tax

consequences of such qualification in a way that would materially and adversely affect our ability to qualify as a REIT. Any such new legislation, regulation, interpretation, or decision could be the basis of a Tax Event that would permit us to redeem our Series A preferred stock, subject to certain conditions, for the amount of the liquidation preference per share of our Series A preferred stock. If we fail to qualify as a REIT and have not redeemed our Series A preferred stock, your shares of Series A preferred stock would be exchanged automatically on a share-for-share basis for Delphi Series AA preferred stock.

Although we intend to be owned, organized and operated in a manner that allows us to qualify and remain qualified as a REIT, future economic, market, legal, tax or other considerations may cause us to determine that it is in our best interests and the best interests of holders of our common stock and preferred stock to revoke our REIT election. Any such determination by us may be made without stockholder approval but, as long as any shares of our Series A preferred stock are outstanding, will require the prior election of, and approval of a majority of, our independent directors.

Proposed changes to federal tax law could make stock in non-REIT corporations more attractive to investors than stock in REITs and thereby negatively affect the value of and market for your shares of our Series A preferred stock.

On January 7, 2003, the Bush Administration released a proposal that would exclude corporate dividends from a shareholder’s taxable income, to the extent that corporate income tax has been paid on the earnings from which the dividends are paid. REIT dividends would not be exempt from income tax in the hands of an individual shareholder because a REIT’s income generally is not subject to corporate-level tax. This proposal could cause stock in non-REIT corporations to be more attractive to investors than stock in REITs, which may negatively affect the value and market for your shares of Series A preferred stock. There can be no assurance regarding the form in which this proposal ultimately will be enacted or whether it in fact will be enacted.

If we lose our exemption under the Investment Company Act it could have a material adverse effect on us and would result in an automatic exchange of your shares of Series A preferred stock for shares of Delphi Series AA preferred stock.

We believe that we are not, and intend to conduct our operations so as not to become, regulated as an investment company under the Investment Company Act. Under the Investment Company Act, a non-exempt entity that is an investment company is required to register with the SEC and is subject to extensive, restrictive and potentially adverse regulation relating to, among other things, operating methods, management, capital structure, dividends and transactions with affiliates. The Investment Company Act exempts entities that are “primarily engaged in the business of purchasing or otherwise acquiring mortgages and other liens on and interests in real estate” (which we refer to as “Qualifying Interests”). Under current interpretations of the staff of the SEC, in order to qualify for this exemption, we, among other things, must maintain at least 55% of our assets in Qualifying Interests and also may be required to maintain an additional 25% in Qualifying Interests or other real estate-related assets. The assets that we may acquire therefore are limited by the provisions of the Investment Company Act. We have established a policy of limiting authorized investments that are not Qualifying Interests to no more than 20% of the value of our total assets. The Investment Company Act does not treat cash and cash equivalents as either Qualifying Interests or other real estate-related assets.

Based on the criteria outlined above, we believe that, as of the time of this offering, all of our assets will be Qualifying Interests. As a result, we believe that we are not required to register as an investment company under the Investment Company Act. We do not intend, however, to seek an exemptive order, no-action letter or other form of interpretive guidance from the SEC or its staff on this position. If the SEC or its staff were to take a different position with respect to whether our assets constitute Qualifying Interests, we could be required either (1) to change the manner in which we conduct our business to avoid being required to register as an investment company or (2) to register as an investment company, either of which could have a material adverse effect on us, the price of our securities and our ability to make payments in respect of our Series A preferred stock. Further, in order to ensure that we at all times

continue to qualify for the above exemption from the Investment Company Act, we may be required at times to adopt less efficient methods of financing certain of our assets than would otherwise be the case and may be precluded from acquiring certain types of assets whose yield is somewhat higher than the yield on assets that could be purchased in a manner consistent with the exemption. The net effect of these factors may be to lower at times our net interest income. An automatic exchange of our Series A preferred stock for Delphi Series AA preferred stock would be triggered in the event we were ever considered an investment company under the Investment Company Act. If we were an unregistered investment company, there would be a risk that we would be subject to monetary penalties and injunctive relief in an action brought by the SEC, that we would be unable to enforce contracts with third parties and that third parties could seek to obtain rescission of transactions undertaken during the period we were determined to be an unregistered investment company.

To qualify as a REIT under the Internal Revenue Code, not more than 50% in value of our outstanding shares of capital stock may be owned, directly or constructively, by five or fewer individuals (as defined in the Internal Revenue Code to include certain entities) at any time during the last half of a taxable year, and the shares of our capital stock must be beneficially owned by 100 or more persons during at least 335 days of a taxable year of 12 months (or during a proportionate part of a shorter taxable year, other than our first 12 months as a REIT). Therefore, our charter contains provisions restricting the ownership and transfer of our preferred stock.

Our charter provides that those shares that are transferred so as to result in an individual owning more than 5% of the aggregate liquidation value of our issued and outstanding preferred stock, under the applicable attribution rules of the Internal Revenue Code, will either be automatically transferred to a trust for the benefit of a charitable beneficiary or such transfer will be null and void. In either case, the purported transferee will acquire no rights or economic interest in such shares. Similarly, our charter provides that a transfer of shares that would cause our shares of capital stock to be beneficially owned by fewer than 100 persons, will be null and void and the purported transferee will acquire no rights or economic interest in such shares. These transfer restrictions imposed by us could impair the liquidity of our Series A preferred stock and thereby affect the secondary market for our Series A preferred stock.

Delphi has the ability to direct our business and affairs, and Delphi’s interests could conflict with yours.

Holders of our Series A preferred stock are entitled to 1/10th of one vote per share of our Series A preferred stock on all matters to be voted on by all of our stockholders. Immediately after the offering, Delphi, through its ownership of all of our outstanding shares of common stock, will have the right to cast 90% of the votes entitled to be cast by holders of all shares of our outstanding voting stock and the holders of our Series A preferred stock will have the right to cast 10% of the votes entitled to be cast by holders of all shares of our outstanding voting stock on any matter to be voted on by all of our stockholders. As a result, Delphi will generally have the ability to direct our business and affairs and elect our board of directors. All of our officers and all of our current directors are also officers and/or employees of Delphi. In addition, we will rely on payments made by Delphi under the mortgage notes to make dividend payments on your shares of Series A preferred stock. In light of our relationship with Delphi, Delphi will also have control over or be able to influence the occurrence or timing of exchange events without regard to your interests and without the need to obtain your approval. Delphi may have investment goals and strategies that differ from yours as a holder of our Series A preferred stock. Consequently, conflicts between Delphi’s interests, on the one hand, and your interests on the other hand, may arise. The consent or vote of the holders of at least two-thirds of our outstanding Series A preferred stock is only required for the adoption of matters on which the holders of our Series A preferred stock have a right to vote separately as a single class. See “Description of Delphi Properties Capital Stock — Series A Preferred Stock — Voting Rights”.

We are dependent on the officers and employees of Delphi for the administration of our day-to-day activities and our relationship with Delphi may create conflicts of interest.

Delphi is involved in virtually every aspect of our existence. Delphi administers our day-to-day activities under the terms of a management and servicing agreement between Delphi and us. We are dependent on the diligence and skill of the officers and employees of Delphi for the selection, structuring and monitoring of our authorized investments.

This dependence and our close relationship with Delphi may create conflicts of interest. Specifically, such conflicts of interest may arise because employees of Delphi were directly involved in deciding to issue mortgage notes to us, in setting the interest rate applicable to the mortgage notes, and in selecting properties that underlie the mortgage liens, and will make decisions on the amount, type and price of future acquisitions of assets from and dispositions of assets to Delphi or third parties.

At the closing of this offering, our only significant asset will be our interest in Holdings, whose only significant asset will in turn be the mortgage notes.

At the closing of this offering, our only significant asset will be our interest in Holdings, to which we will have contributed the mortgage notes and the mortgage liens on certain properties owned by subsidiaries of Delphi securing the mortgage notes. We will rely on distributions from Holdings of amounts received by Holdings from Delphi as payments under the mortgage notes to make dividend payments in respect of our Series A preferred stock. If Delphi defaults in its payment obligations under the mortgage notes, we would likely not be able to pay dividends on your shares of Series A preferred stock and a default by Delphi under the mortgage notes would trigger an automatic exchange of your shares of Series A preferred stock for shares of Delphi Series AA preferred stock.

We cannot assure you that we will acquire or dispose of assets in the future at their fair market value or that the assets will maintain their value.

The terms of our Series A preferred stock contain covenants requiring the approval of two-thirds of the holders of shares of our Series A preferred stock before taking certain actions, and the election of, and approval of a majority of, our independent directors before taking other actions to help ensure that all financial dealings between Delphi and us will be fair to both parties. We have also obtained third party valuations of the properties underlying the mortgage liens to help ensure fair financial dealings between Delphi and us. However, there is no requirement that third party valuations will be obtained in connection with future acquisitions or dispositions of assets, even in circumstances where Delphi or another affiliate of ours is selling assets to us, or purchasing assets from us. In addition, we may in the future acquire REIT-qualified assets from parties that are not affiliated with Delphi, subject to the condition that the failure of Delphi to remain at all times the primary obligor or guarantor in respect of investments accounting for at least two-thirds of our investment income will trigger an exchange event. We cannot assure you that the purchase price we pay or the price we receive for such assets will be equal to the fair value of the assets replaced. Furthermore, Delphi may substitute the properties securing the mortgage liens with replacement properties, mortgage liens and mortgage notes.

In addition, the fair market value of REIT-qualified assets acquired by us in substitution for or upon the maturity or prepayment of the mortgage notes could be affected by various conditions in the economy, such as interest rates, local conditions affecting real estate and other collateral values, factors such as the discovery of environmental liabilities associated with the REIT-qualified assets and sudden or unexpected changes, such as those that might result from terrorist attacks and the United States’ response to such attacks. If we were forced to foreclose on collateral with respect to which Delphi is not the primary obligor or guarantor prior to the occurrence of an exchange event, the value realized upon such a foreclosure may be less than the value of the collateralized obligation and therefore would increase the risk that our assets may be insufficient to pay the liquidation preference of your shares of our Series A preferred stock.

Immediately after this offering our portfolio will consist of our consolidated interest in Holdings, which will hold the mortgage notes and the mortgage liens. The mortgage notes are prepayable without penalty. While we presently intend to reinvest proceeds of the mortgage notes in similar assets through Holdings, we are not required to limit our investments to assets of the types currently in our portfolio, subject to the condition that the failure of Delphi to remain at all times the primary obligor or guarantor in respect of investments accounting for at least two-thirds of our investment income will trigger an exchange event. Assets such as commercial real estate and residential loan interests or real estate may involve different risks not described in this prospectus, may be located outside the United States, and may be acquired from entities other than Delphi.

You may have adverse tax consequences as a result of an automatic exchange of your shares of our Series A preferred stock for shares of Delphi Series AA preferred stock.

The exchange of shares of our Series A preferred stock for shares of Delphi Series AA preferred stock would be a taxable event to you under the Internal Revenue Code and, in that event, you generally would recognize a gain or loss, as the case may be, measured by the difference between your adjusted tax basis in your shares of Series A preferred stock and the fair market value of the Delphi Series AA preferred stock received in the exchange. Moreover, your holding period for determining the tax rate applicable to any gain on any sale or other disposition of shares of Delphi Series AA preferred stock that you receive upon an automatic exchange will not include your holding period for your Series A preferred stock.

A decline in Delphi’s financial condition may restrict its ability to pay dividends and could result in a loss on your investment.

If Delphi’s financial condition were to deteriorate, the holders of the Delphi Series AA preferred stock could suffer direct and materially adverse consequences, including suspension of the payment of non-cumulative dividends on the Delphi Series AA preferred stock and, if a liquidation, dissolution or winding up of Delphi were to occur, loss by holders of Delphi Series AA preferred stock of all or part of their investment. See “Description of Delphi Capital Stock — Series AA Preferred Stock”.

Upon the occurrence of an automatic exchange, the holders of Delphi Series AA preferred stock will not have any voting rights or the benefit of the same favorable covenants as our Series A preferred stock.

Upon the occurrence of an automatic exchange, the holders of Delphi Series AA preferred stock will not have voting rights or the benefit of the same favorable covenants as our Series A preferred stock relating to the requirement to submit certain matters to a vote of Delphi Properties’ independent directors and certain matters to a vote of the holders of our Series A preferred stock, voting as a class. In addition, Delphi may authorize and issue additional shares of preferred stock that may rank on parity with or senior to the Delphi Series AA preferred stock as to dividend rights and rights upon liquidation, winding up, or dissolution, without the consent of the holders of the Delphi Series AA preferred stock.

Delphi is not obligated to pay dividends on the Delphi Series AA preferred stock and dividends on these securities are not cumulative.

The Delphi board of directors may determine that it would be in Delphi’s best interests to pay less than the full amount of the stated dividends on the Delphi Series AA preferred stock or no dividends for any quarter even if funds are available. Factors that would be considered by the Delphi board of directors in making this determination are Delphi’s financial condition and capital needs, the effect of current and pending legislation and regulations, economic conditions, tax considerations, and such other factors as the board of directors may deem relevant.

Dividends on the Delphi Series AA preferred stock are not cumulative. Consequently, if Delphi’s board of directors does not declare dividends on the Delphi Series AA preferred stock for any quarterly period, the holders of the Delphi Series AA preferred stock would not be entitled to any such dividend regardless of whether or not funds are or subsequently become available. If you acquire Delphi Series AA preferred stock as a result of an exchange event that has been triggered by a deterioration in Delphi’s financial condition, the likelihood of dividend payments, as well as the liquidation preference, voting rights and liquidity of the Delphi Series AA preferred stock you would own could be negatively affected. See “Description of Delphi Capital Stock — Series AA Preferred Stock — Dividends”.

There is no active trading market for the Delphi Series AA preferred stock and no such trading market may develop.

The Delphi Series AA preferred stock will be a new issue of securities. There is no public market for the Delphi Series AA preferred stock. Delphi does not expect to cause the listing or quotation of the Delphi Series AA preferred stock on the New York Stock Exchange or on any other national securities exchange or quotation system. Consequently, it is unlikely that an active and liquid trading public market for the Delphi Series AA preferred stock will develop or be maintained. The lack of liquidity and an active trading market for the Delphi Series AA preferred stock could adversely affect your ability to dispose of the Delphi Series AA preferred stock.

The cyclical nature of automotive production and sales can adversely affect Delphi’s business.

Delphi’s business is directly related to automotive sales and automotive vehicle production by its customers. Automotive production and sales are highly cyclical and depend on general economic conditions and other factors, including consumer spending and preferences. In addition, automotive production and sales can be affected by labor relations issues, regulatory requirements, trade agreements and other factors. Any significant economic decline that results in a reduction in automotive production and sales by Delphi’s customers can have a material adverse effect on Delphi’s business, results of operations and financial condition.

Delphi depends on GM as a customer and may not be successful at attracting new customers.

GM accounted for 65.1% of Delphi’s total net sales in fiscal 2002. To compete effectively, Delphi needs to continue to satisfy GM’s pricing, service, technology and increasingly stringent quality and reliability requirements, which, because Delphi is GM’s largest supplier, particularly affect Delphi. Additionally, Delphi’s revenues may be affected by decreases in GM’s business or market share. For these reasons, Delphi cannot provide any assurance as to the amount of its future business with GM. While Delphi intends to continue to focus on retaining and winning GM’s business, Delphi cannot assure you that it will succeed in doing so. To the extent that Delphi does not maintain its existing level of business with GM, Delphi will need to attract new customers or Delphi’s results of operations and financial condition will be adversely affected. Delphi cannot assure you that it will be successful in expanding its existing customer base.

Continued depreciation in the value of the securities held by Delphi’s employee benefit plans and other factors could materially increase its pension and other postretirement benefit expense and underfunding levels.

Delphi sponsors defined benefit pension plans covering certain hourly and salaried employees in the United States. At December 31, 2002, the projected benefit obligation exceeded the market value of plan assets by $4.1 billion, compared to $2.4 billion at December 31, 2001. The increase in the underfunded status of Delphi’s plans was primarily due to a 50 basis point decline in the discount rate used to value the liabilities and the impact of the unfavorable asset return environment. Despite the underfunded status of Delphi’s plans, Delphi is not required by employee benefit and tax laws to make contributions prior to

2004. Delphi voluntarily contributed $350 million to its U.S. pension plans in January 2003 and expects that it will make additional voluntary contributions. Even with additional voluntary contributions, however, continued declines in interest rates or the market values of the securities held by the plans, or certain other changes, could materially increase their underfunded status and affect the level and timing of required contributions in 2004 and beyond. An increase in the underfunded status of the plans could materially increase Delphi’s pension expense, reduce profitability and adversely affect its access to capital. In addition, Delphi maintains other postretirement benefit plans that are not funded. At December 31, 2002 and 2001, the other postretirement benefit obligations on Delphi’s balance sheet were $5.5 billion and $5.0 billion, respectively. See Delphi’s 2002 Form 10-K (as updated by future filings Delphi makes with the SEC and which are incorporated by reference into this prospectus) for a further discussion of pension and other postretirement benefit matters.

Delphi faces an inherent business risk of exposure to warranty and product liability claims in the event that Delphi’s products fail to perform as expected or such failure of Delphi’s products results, or is alleged to result, in bodily injury and/or property damage. In addition, if any Delphi-designed products are or are alleged to be defective, Delphi may be required to participate in a recall of such products. As suppliers become more integrally involved in the vehicle design process and assume more of the vehicle assembly functions, vehicle manufacturers are increasingly looking to their suppliers for contributions when faced with product liability claims or recalls. In addition, vehicle manufacturers, who have traditionally borne the cost associated with warranty programs offered on their vehicles, are increasingly requiring suppliers to guarantee or warrant their products and may seek to hold Delphi responsible for some or all of the costs related to the repair and replacement of parts supplied by Delphi to the vehicle manufacturer. In particular, GM continues to assert pre-separation warranty claims that Delphi is challenging. A successful warranty claim or product liability claim against Delphi in excess of Delphi’s available insurance coverage or established warranty reserves or a requirement that Delphi participate in a product recall may have a material adverse effect on Delphi’s business. Delphi establishes warranty reserves for products sold using management estimates of the amount that will eventually be required to settle such obligations, which estimates are based on several factors including past experience, production changes, industry developments and various other considerations. Although Delphi regularly evaluates the appropriateness of these reserves and makes adjustments when appropriate consistent with generally accepted accounting principles, the final amounts determined to be due related to warranty matters could differ materially from management’s estimates.

Approximately 143,000, or 91%, of all hourly employees in Delphi’s operations are represented by unions and are covered by collective bargaining agreements. Several of the agreements restrict Delphi’s ability to close plants, restructure operations and take other steps to make its business more efficient. In addition, two of Delphi’s national labor agreements, covering over 41,000 employees, expire in 2003. The negotiation of these and other new collective bargaining agreements with labor groups in the future could result in higher labor costs and more restrictive work rules than those currently in effect. A work stoppage could occur as a result of certain types of disputes under Delphi’s existing collective bargaining agreements or in connection with the negotiation of the new collective bargaining agreements. A work stoppage could adversely affect Delphi’s business and disrupt its operations. Work stoppages at Delphi’s key suppliers could have similar consequences if alternative sources are not readily available.

Delphi uses a broad range of materials and supplies, including metals, castings, chemicals and electronic components in its products. A significant disruption in the supply of these materials could decrease production and shipping levels, materially increase Delphi’s operating costs and materially adversely affect its profit margins.

This prospectus contains or incorporates statements that are forward-looking statements. These statements can be identified by the use of forward-looking language such as “will likely result”, “may”, “are expected to”, “is anticipated”, “estimate”, “projected”, “intends to”, or other similar words. Delphi Properties’ and Delphi’s actual results, performance or achievements could be significantly different from the results expressed in or implied by these forward-looking statements. These statements are subject to certain risks and uncertainties, including but not limited to certain risks described in this prospectus and the documents incorporated by reference into this prospectus. When considering these forward-looking statements, you should keep in mind these risks, uncertainties and other cautionary statements made in this prospectus. You should not place undue reliance on any forward-looking statement, which speaks only as of the date made. You should also refer to Delphi’s periodic and current reports filed with the SEC for specific risks that could cause actual results to be significantly different from those expressed or implied by these forward-looking statements.

The net proceeds to us from the sale of our Series A preferred stock offered hereby are expected to be $289 million, or $332 million if the underwriters’ over-allotment is exercised in full.

The net proceeds from this offering will be paid to Delphi in exchange for mortgage notes and mortgage liens. In addition to the net proceeds, Delphi will receive 10,800,000 (12,420,000 if the underwriters’ over-allotment option is exercised in full) shares of our common stock in exchange for mortgage notes and mortgage liens. Delphi will use the cash proceeds from the issuance of the mortgage notes to us for general corporate purposes, which may include contributions to its pension plans. We will pay all expenses and the underwriting commission relating to the offering to the public.

The Delphi Series AA preferred stock will be made available, if ever, in connection with an automatic exchange of our Series A preferred stock. Delphi will not receive any proceeds, directly or indirectly, from the subsequent exchange of our Series A preferred stock for Delphi Series AA preferred stock.

The following table sets forth our capitalization at March 25, 2003, and our capitalization as adjusted to reflect the issuance of our Series A preferred stock and the payment of proceeds from the Series A preferred stock offering, the issuance of our common stock and the transfer of a 1% interest in Holdings in exchange for the receipt of mortgage notes issued to us by Delphi. When you read this data, you should also read the detailed information and our unaudited pro forma financial information included elsewhere in this prospectus.


(1)	Delphi Properties, Inc. was formed on March 13, 2003 and capitalized on March 25, 2003, with an initial capital contribution of one hundred dollars by Delphi and the authorization and issuance of one hundred shares of common stock.

(2)	Prior to the consummation of this offering, our charter will be amended and restated to authorize the issuance of 40,000 shares of our Series A preferred stock, and we will issue 12,000 shares of our Series A preferred stock. The amended and restated charter also authorizes the issuance of up to 36,000 shares of common stock and we will issue an additional 10,800 shares of common stock to Delphi, and the issuance of up to .125 shares of Series B preferred stock, which will be junior to our Series A preferred stock with respect to dividends and liquidation preference and which we may issue in amounts sufficient to ensure that we will at all times comply with the One Hundred Persons Test. See “Formation of Delphi Properties” and “Description of Delphi Properties Capital Stock — Series A Preferred Stock”.

(3)	If the underwriters’ over-allotment option is exercised in full, minority interest will be $4,000, preferred stock will be $332,309 with 13,800 shares issued, common stock will be $124 with 12,420 additional shares issued, additional paid in capital will be $63,567 and notes receivable from issuance of stock will be $(63,691).

(4)	In connection with the issuance of our Series A preferred stock, Delphi will contribute $350 million of mortgage notes ($400 million if the underwriters’ over-allotment option is exercised in full) to Delphi Properties and Holdings in exchange for the cash proceeds of the Series A preferred issuance, common stock shares and a 1% interest in Holdings. The mortgage notes received from Delphi in exchange for stock is reflected as a reduction of stockholders’ equity in accordance with Generally Accepted Accounting Principles (“GAAP”).

The following table sets forth Delphi’s capitalization at December 31, 2002, and its capitalization as adjusted to give effect to the issuance of our Series A preferred stock. When you read this data, you should also read the detailed information relating to Delphi and the consolidated financial statements of Delphi included in documents incorporated by reference in this prospectus.


(1)	Adjusted to give effect to the issuance of Delphi Properties Series A preferred stock, excluding the underwriters’ over-allotment option.

(2)	If the underwriters’ over-allotment option is exercised in full, preferred stock of subsidiary will be $332 million.

The following unaudited consolidated pro forma financial data is presented to illustrate the effects of the issuance of our Series A preferred stock and the payment of proceeds from the Series A preferred stock offering, the issuance of our common stock and the transfer of a 1% interest in Holdings in exchange for the receipt of mortgage notes issued to us by Delphi, assuming that the transaction had taken place at the beginning of 2002. Since we intend to contribute our portion of the mortgage notes to Holdings in exchange for an interest in Holdings immediately following the closing of this offering, and Holdings is our consolidated subsidiary, the financial data for Holdings is included in the consolidated pro forma financial data below. Such information should not be construed as being a representation of the future financial position or results of our operations.

We were incorporated on March 13, 2003 and capitalized on March 25, 2003. We have not yet commenced operations and do not have any historical audited or unaudited income statement data other than the unaudited pro forma income statement data below. We do have an audited balance sheet as of March 25, 2003 in addition to the unaudited pro forma balance sheet data below. Upon the closing of this offering, we will have only the assets and liabilities described in the unaudited pro forma condensed balance sheet data below.


	Amounts included below are in thousands, except per share and ratio data or unless indicated otherwise.


	(1)	Delphi Properties, Inc. was formed on March 13, 2003 and capitalized on March 25, 2003, with an initial capital contribution of one hundred dollars by Delphi and the authorization and issuance of one hundred shares of common stock. It had no operations prior to this offering.

	(2)	Prior to the consummation of this offering, our charter will be amended and restated to authorize the issuance of 40,000 shares of our Series A preferred stock, and we will issue 12,000 shares of our Series A preferred stock. The amended and restated charter also authorizes the issuance of up to 36,000 shares of common stock and we will issue an additional 10,800 shares to Delphi, and the issuance of up to .125 shares of Series B preferred stock, which will be junior to our Series A preferred stock with respect to dividends and liquidation preference and which we may issue in amounts sufficient to ensure that we will at all times comply with the One Hundred Persons Test. See “Formation of Delphi Properties” and “Description of Delphi Properties Capital Stock — Series A Preferred Stock”.

	(3)	If the underwriters’ over-allotment option is exercised in full, interest income will be $31,000, management fees and other expenses will be $1,190, minority interest in earnings of Holdings will be $310, net income will be $29,500, dividends to preferred stockholders will be $29,325, net income available for common stockholders will be $175, earnings per share will be $0.01, ratio of combined fixed charges to preferred dividends will be 1.01, mortgage notes receivable will be $336,309, minority interest in Holdings will be $4,000, preferred stock will be $332,309 with 13,800 shares issued, common stock will be $124 with 12,420 additional shares issued, additional paid in capital will be $63,567 and notes receivable from issuance of stock will be $(63,691).

	(4)	Represents mortgage interest income at 7.75% on $350 million ($400 million if the underwriters’ over-allotment option is exercised in full) of mortgage notes receivable.

	(5)	Represents management fees paid to Delphi of 0.1% of total assets of $350 million ($400 million if the underwriters’ over-allotment option is exercised in full), plus estimated direct costs of $790.

	(6)	Represents Delphi’s 1% minority interest in Holdings.

	(7)	Represents dividends to preferred stockholders at 8.50% per annum.

	(8)	Common shares outstanding are 10,800 (12,420 if the underwriters’ over-allotment option is exercised in full).

	(9)	Represents mortgage notes receivable from Delphi, which will be obtained with proceeds from this offering, issuance of common stock and transfer of a 1% interest in Holdings. The amount is net of notes receivable from issuance of common stock to Delphi, which is reflected as a reduction of stockholders’ equity in accordance with GAAP.


(10)	Represents proceeds from this offering net of underwriters discount and other offering costs.

(11)	Represents Delphi’s ownership interest from the mortgage notes receivable that were contributed in exchange for 10,800 shares (12,420 shares if the underwriters’ over-allotment option is exercised in full) of Delphi Properties common stock.

(12)	The mortgage notes receivable received from Delphi in exchange for common stock is reflected as a reduction of stockholders’ equity in accordance with GAAP.

The effect of the issuance of our Series A preferred stock on Delphi’s consolidated statement of income for the year ended December 31, 2002 would be additional expense included in other income (expense), net of $27 million ($30 million if the underwriters’ over-allotment option is exercised in full), comprised of $26 million ($29 million if the underwriters’ over-allotment option is exercised in full) for dividends to preferred stockholders of Delphi Properties and approximately $1 million of additional direct costs related to Delphi Properties. This additional expense will result in a $10 million ($11 million if the underwriters’ over-allotment option is exercised in full) decrease in income tax expense. Net income would be $326 million ($324 million if the underwriters’ over-allotment option is exercised in full) for the year ended December 31, 2002 on a pro forma basis. The effect of the issuance of our Series A preferred stock on Delphi’s consolidated balance sheet is an increase of $289 million ($332 million if the underwriters’ over-allotment option is exercised in full) in cash and cash equivalents and preferred stock of subsidiary. This would result in cash and cash equivalents of $1,303 million ($1,346 million if the underwriters’ over-allotment option is exercised in full) and preferred stock of subsidiary of $289 million ($332 million if the underwriters’ over-allotment option is exercised in full) as of December 31, 2002 on a pro forma basis.

When you read this data, you should also read the detailed information and consolidated financial statements included in documents incorporated by reference in this prospectus.

The following selected financial data reflects the results of operations and cash flows for Delphi. Selected financial data for 1998 reflects the historical results of operations and cash flows of the businesses that were considered part of the Delphi business sector of GM at that time and does not necessarily reflect what Delphi’s financial position and results of operations would have been had it operated as a separate, stand-alone entity during that year. The historical consolidated statement of income data for 1998 does not reflect many significant changes that have occurred in the operations and funding of Delphi as a result of its separation from GM and its initial public offering. The historical consolidated balance sheet data in 1998 reflects the assets and liabilities transferred to Delphi in accordance with the terms of the agreement governing its separation from GM. The selected financial data of Delphi should be read in conjunction with, and are qualified by reference to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and notes thereto of Delphi included in Delphi’s 2002 Form 10-K, which is incorporated by reference in this prospectus. The financial information presented may not be indicative of Delphi’s future performance.


(1)	Delphi became a separate company in 1999. The data for 1998 represent results when Delphi was an operating sector within GM.

(2)	Effective January 1, 2002, Delphi adopted Statement of Financial Accounting Standards (“SFAS”) No. 142 “Goodwill and Other Intangible Assets” and no longer amortizes purchased goodwill.

(3)	Because Delphi became a public company on February 5, 1999, dividend data for 1998 is not applicable. Due to the timing of Delphi’s separation from GM, only three quarters of dividends were paid in 1999.

(4)	Fixed charges exceeded earnings by $561 million and $320 million for the years ended December 31, 2001 and 1998, respectively, resulting in a ratio of less than one.

(5)	In 2002, cash provided by operating activities includes the sale of accounts receivable of approximately $639 million, primarily in the U.S. Excluding these transactions, on a comparable basis with prior years, cash provided by operating activities would have been $1,434 million.

(6)	“EBITDA” is defined as earnings before provision for interest expense and interest income, income taxes, depreciation and amortization. EBITDA is not presented as an alternative measure of operating results or cash flow from operations, as determined in accordance with generally accepted accounting principles, but because we believe it is a widely accepted indicator of our ability to incur and service debt. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect funds available for dividends, reinvestment or other discretionary uses. In addition, EBITDA as presented herein may not be comparable to similarly titled measures reported by other companies.

The following is the reconciliation of cash provided by (used in) operating activities to EBITDA:

Our source of capital will be the net proceeds from the offering of our Series A preferred stock. Our primary source of liquidity will be distributions from Holdings. Holdings will receive cash payments from Delphi for interest payable on the mortgage notes.

As of the date of this prospectus, we do not have an operating history. Our future earnings, through our consolidated subsidiary, Holdings, will consist of interest income from Delphi on the mortgage notes and/or any other assets Holdings may acquire in the future. Expenses will include payments to Delphi for management fees, general and administrative costs and preferred stock dividends.

In connection with the consummation of this offering, we will engage in the transactions with Delphi described below, which are designed to (1) facilitate the offering of our Series A preferred stock, (2) transfer the ownership of the mortgage notes to us, which we will in turn contribute to Holdings, and (3) enable us to qualify as a REIT for federal income tax purposes, commencing with our taxable year ending December 31, 2003.

The transactions constituting and related to our formation have or will include the following:


	•	We have entered into a contribution and loan agreement with Delphi pursuant to which we will acquire the mortgage notes from Delphi, secured by mortgage liens on certain properties owned by subsidiaries of Delphi, subsequent to the closing of this offering in exchange for the proceeds of this offering, 10,800,000 shares of our common stock (12,420,000 shares if the underwriters’ over-allotment option is exercised in full) and our agreement to transfer a 1% interest in Holdings to Delphi.

	•	Our charter has been amended and restated to authorize the issuance of 40,000,000 shares of our Series A preferred stock and to establish the terms of our Series A preferred stock. The amended and restated charter also authorizes the issuance by us of up to 36,000,000 shares of common stock, which we intend to issue to Delphi, and up to 125 shares of Series B preferred stock, each with a liquidation preference of $2,500, which will rank junior to our Series A preferred stock.

	•	We will sell 12,000,000 shares of our Series A preferred stock (13,800,000 shares if the underwriters’ over-allotment option is exercised in full) in this offering, the proceeds of which will be used to purchase mortgage notes from Delphi, secured by mortgage liens on certain properties owned by subsidiaries of Delphi.

	•	We will enter into a management and servicing agreement with Delphi pursuant to which Delphi will manage our day-to-day operations and affairs.

	•	We will contribute the mortgage notes and mortgage liens to Holdings in exchange for a 100% interest in Holdings and transfer 1% of such interest to Delphi immediately upon the closing of this offering.

To qualify as a REIT under the Internal Revenue Code, we are required to have not less than 100 individuals or entities own shares of our capital stock for at least 335 days of a taxable year of twelve months. We have authorized the Series B preferred stock for issuance in connection with our continued compliance with this requirement. See “Description of Delphi Properties Capital Stock — Series B Preferred Stock”. Immediately following the closing of this offering, Delphi will own all of our issued and outstanding shares of common stock. Delphi has indicated to us that it intends to maintain its ownership of all of our issued and outstanding shares of common stock. See “Description of Delphi Properties Capital Stock — Restrictions on Ownership and Transfer”.

The principal amount of the mortgage notes issued pursuant to the transactions described above will equal at least $350 million, or at least $400 million if the underwriters’ over-allotment option is exercised in full. See “Business of Delphi Properties — General”.

We are a Maryland corporation, formed on March 13, 2003 as a wholly owned subsidiary of Delphi. Through the 99% interest in Holdings that we will own immediately following the closing of this offering, our principal business objective is to acquire, hold and manage mortgage assets and other authorized investments that will generate net income for distribution to our stockholders. Under the terms of Holdings’ operating agreement, members owning a majority of the interests in Holdings will have the exclusive right to manage the business of Holdings, including determining the timing and amount of distributions to members. As a result, we expect that our 99% interest in Holdings would allow us to cause Holdings to make distributions to us in sufficient amounts and at such intervals so as to enable us to make full dividend payments on our Series A preferred stock, when declared. We intend to elect to be treated as a REIT for federal income tax purposes. If we qualify for treatment as a REIT, we generally will not be liable for federal income tax to the extent that we distribute our income to our stockholders.

In connection with this offering, we will acquire mortgage notes from Delphi in an aggregate amount of at least $350 million (or at least $400 million if the underwriters’ over-allotment option is exercised in full), which we will in turn contribute to Holdings. See “Formation of Delphi Properties”. All of the assets to be acquired by us from Delphi and contributed to Holdings will consist of mortgage notes secured by mortgage liens. After the transactions, we believe we will continue to meet all of the REIT qualification tests, as described in more detail below under the heading “Federal Income Tax Considerations”. Thus, our acquisition of mortgage notes and their contribution to Holdings will not prevent us from qualifying as a REIT.

Although we have the authority to acquire interests in REIT-qualified assets from unaffiliated third parties, all of the interests in the mortgage notes to be acquired in connection with this offering will be acquired from Delphi pursuant to a contribution and loan agreement between Delphi and us. We have no present plans to purchase mortgage assets or other assets from unaffiliated third parties, although it is possible that we may do so in the future. We may also acquire from time to time a limited amount of additional securities that are not REIT-qualified assets.

We will elect to be treated as a REIT under the Internal Revenue Code. To qualify as a REIT under the Internal Revenue Code, at least 75% of the total value of our assets must, broadly speaking, consist of real estate assets, which include:


	•	residential mortgage loans and commercial mortgage loans, including participation interests in residential or commercial or residential mortgage loans;

	•	mortgage-backed securities eligible to be held by REITs;

	•	cash, cash items (which include receivables) and government securities; and

	•	other real estate assets.

We refer to these types of assets as REIT-qualified assets. Our interest in Holdings, to the extent that Holdings’ assets consist of the mortgage notes or other real estate assets, will constitute a REIT-qualified asset.

The mortgage notes will be issued to us by Delphi under the terms of a contribution and loan agreement between Delphi and us dated , 2003. The mortgage notes will be in an aggregate principal amount of $350 million ($400 million if the over-allotment option is exercised), bear interest at a rate of 7.75% per year, be secured by mortgage liens in our favor on certain properties of subsidiaries of Delphi, and will mature on , 2033. The mortgage notes will be issued to us in exchange for

10,800,000 shares (12,420,000 shares if the underwriters’ overallotment option is exercised in full) of our common stock and the net proceeds of this offering. Interest on the mortgage notes will accrue from , 2003 and will be payable quarterly, on , , and of each year, beginning on , 2003. Delphi may prepay all or any portion of the mortgage notes without premium or penalty. Upon Delphi’s repayment of any mortgage note, the mortgage lien securing the prepaid mortgage note will be released. We may assign or transfer the mortgage notes to Holdings, but any other assignment or transfer is permitted only with the consent of Delphi and Delphi may substitute the properties securing the mortgage liens with replacement properties, mortgage liens and mortgage notes.

An event of default under the mortgage notes will trigger an exchange event that will result in each share of our Series A preferred stock being exchanged automatically on a share-for-share basis for Delphi Series AA preferred stock. Under the contribution and loan agreement, the terms of which are incorporated by reference into the mortgage notes, an event of default will occur if


	•	Delphi defaults in the payment of any principal, interest, fees or other sums due under the mortgage notes, the mortgage liens or the contribution and loan agreement when payable, whether at maturity or by acceleration or as part of any payment or prepayment or otherwise, and such default continues for a period of five business days following written notice to Delphi from us;

	•	there is a default in the observance or performance of any other covenant, condition or agreement in the mortgage notes, the mortgage liens or the contribution and loan agreement or in any other document which evidences or secures the transactions contemplated thereby (collectively the “Transaction Documents”), and the default continues for a period of 120 days after notice thereof has been given to Delphi by us, or such shorter grace period as may be provided for in such documents or, if the default is not reasonably susceptible of being cured during such 120 days or shorter grace period, so long as Delphi diligently proceeds to cure the default, such longer period as may be reasonably required to cure the default so long as such longer period is not reasonably likely to result in a material adverse effect;

	•	if any representation or warranty made by Delphi in the contribution and loan agreement was materially incorrect when made and reasonably likely to result in a material adverse effect, or if any other representation or warranty made to us in the Transaction Documents was materially incorrect in any material respect when made and reasonably likely to result in a material adverse effect;

	•	if by order of a court of competent jurisdiction, a trustee, receiver or liquidator of Delphi is appointed and such order is not discharged or dismissed within 90 days, or, so long as Delphi diligently proceeds to effect the discharge or dismissal, such longer period as may be reasonably required to effect the discharge or dismissal;

	•	if Delphi files a petition in bankruptcy or for an arrangement or for reorganization pursuant to Chapter 11 of the United States Bankruptcy Code or any similar federal or state law, or if, by decree of a court of competent jurisdiction, Delphi is adjudicated bankrupt, or declared insolvent, or makes an assignment for the benefit of creditors, or admits in writing its inability to pay its debts generally as they become due, or consents to the appointment of a receiver or receivers of all or any part of its property;

	•	if any of the creditors of Delphi file a petition in bankruptcy against Delphi or for reorganization of Delphi pursuant to the Bankruptcy Code or any similar federal or state law, and if such a petition is not discharged, stayed or dismissed within 120 days after the date on which such petition was filed or, so long as Delphi diligently proceeds to effect the discharge or dismissal, such longer period as may be reasonably required to effect the discharge or dismissal;

	•	if a final judgment for the payment of money in excess of the greater of 10% of the value of the property underlying the mortgage liens or $1 million is filed as a lien against such property and Delphi does not discharge or cause the discharge of, or otherwise provide adequate security (which may include insurance) with respect to the final judgment within 120 days, or does not appeal or


		cause the appeal from the final judgment or from the order pursuant to which the final judgment was granted and secure a stay of execution pending such appeal;

	•	if a default occurs which is not cured within the applicable grace period under any mortgage, deed of trust or other security instrument covering all or part of the property owned by a subsidiary of Delphi underlying the mortgage liens regardless of whether any such mortgage, deed of trust or other security instrument is prior or subordinate to the mortgage liens, but only if such default is reasonably likely to result in a material adverse effect;

	•	if, except as permitted under the Transaction Documents, Delphi or any of its subsidiaries granting mortgage liens transfers all or any portion of a mortgaged property, or any interest or rights therein without our prior consent (which we agree not to unreasonably withhold), except that, if certain conditions are satisfied, Delphi or any of its subsidiaries granting mortgage liens may transfer, a portion, but not all, of a mortgaged property and Delphi or any of its subsidiaries granting mortgage liens may transfer all or any portion of a mortgaged property if Delphi prepays the mortgage note secured by the related mortgage lien; or

	•	if Delphi or any of its subsidiaries granting mortgage liens encumber all or any portion of a mortgaged property, or any interest or rights therein, where the encumbrance is reasonably likely to result in a material adverse effect, except for permitted liens or as otherwise provided for in the Transaction Documents, without our prior consent and Delphi or subsidiary of Delphi granting a mortgage lien fails to bond over or discharge or otherwise provide adequate assurance to us (which may include affirmative title insurance) with respect to the encumbrance within 120 days of receipt of notice thereof or such sooner date if forfeiture is imminent, unless a specified loan to value ratio is maintained.

Upon the occurrence of any event of default under the contribution and loan agreement, we may declare the entire principal amount of the mortgage notes to be due and payable immediately.

Under the terms of the contribution and loan agreement, Delphi has agreed to indemnify us and our directors, officers, employees and agents from any and all liabilities, and losses (1) arising out of or by reason of any investigation or litigation or other proceedings (including any threatened investigation or litigation or other proceedings) relating to any actual or proposed use by Delphi of the proceeds of this offering; (2) arising out of any matter relating, directly or indirectly, to the mortgage liens or the ownership, condition, development, construction, sale, rental or financing of the mortgaged properties or Improvements (as defined in the contribution and loan agreement) or any part thereof (except as incurred solely by reason of our gross negligence or willful misconduct); (3) arising due to the contribution and loan agreement or any documents furnished by or on behalf of Delphi or the subsidiaries granting the mortgage liens to us in connection with the negotiation of the contribution and loan agreement or the other Transaction Documents or the consummation of the transactions contemplated thereby, or required to be furnished by or on behalf of Delphi or the subsidiaries granting the mortgage liens to us, containing any untrue or misleading statement of a material fact or omitting a material fact necessary to make the statements therein not misleading, or due to Delphi not disclosing to us in writing any fact which has a material adverse effect or, so far as Delphi can now foresee, will result in a material adverse effect; (4) due to violations of any requirement of any governmental authorities with respect to the mortgaged properties or the Improvements; and (5) arising out of any failure of the Premises Documents (as defined in the contribution and loan agreement) to be in full force and effect, or any defaults thereunder.

Delphi will also indemnify us against liabilities and losses arising due to ERISA violations or that may be asserted or awarded against us in connection with (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) the actual or alleged presence of Hazardous Materials (as defined in the contribution and loan agreement) on any of the mortgaged properties or any Environmental Action (as defined in the contribution and loan agreement) relating in any way to any of the mortgaged properties, except to the extent resulting from our gross negligence or willful misconduct.

Our material assets will initially consist solely of the mortgage notes issued to us by Delphi, which we will contribute to Holdings. The mortgage notes will be secured by mortgage liens in our favor on 14 industrial properties owned in fee by subsidiaries of Delphi. The industrial properties, which house facilities that range in use from light to heavy manufacturing, contain approximately 86.6 million square feet of land and 20.5 million square feet of manufacturing and office space. To the extent that the aggregate principal amount of mortgage notes outstanding changes at any time (whether because the underwriters’ over-allotment option is not exercised or only partially exercised, mortgage notes are prepaid, or any other reason), mortgage liens, and their underlying properties, will be released or additionally secured to reflect such change to the outstanding aggregate principal amount of mortgage notes. The location and size of any additional properties secured under new mortgage liens, or released, would be determined at the time of the change in the outstanding aggregate principal amount of the mortgage notes.

The following table shows data as of March 28, 2003, with respect to the geographic distribution of the properties on which there will initially be mortgage liens in our favor, assuming the underwriters’ over-allotment option is exercised in full:

The largest property on which there will be a mortgage lien in our favor is a manufacturing, engineering and office campus located in Kokomo, Howard County, Indiana, which comprises approximately 10.42% of the total land area of the properties subject to the mortgage liens. The facility consists of several buildings containing a total of 2,922,379 square feet, and the property encompasses a total of 9,022,147 square feet of land area. Delco Electronics Corporation, a subsidiary of Delphi, owns and occupies the facility, in which it manufactures a wide variety of electronics products.

As discussed under “— General Description of Assets and Other Authorized Investments” above, at least 75% of our assets must be REIT-qualified assets. We may invest up to 20% of the value of our total assets in other types of securities (within the meaning of the Investment Company Act). Under the Investment Company Act, the term “security” is defined broadly to include, among other things, any note, stock, treasury stock, debenture, evidence of indebtedness, or certificate of interest or participation in any profit sharing agreement or group or index of securities. The Internal Revenue Code also generally requires that the value of any one issuer’s securities, other than those securities included in the 75% test, may not exceed 5% by value of the total assets of the REIT. In addition, under the Internal Revenue Code, we generally may not own more than 10% of the voting securities nor more than 10% of the value of the outstanding securities of any one issuer, other than those securities included in the 75% test.

All of the assets to be acquired by us in connection with this offering will be REIT-qualified assets. Following the acquisition of assets by us in connection with this offering and their contribution to Holdings as described in “Formation of Delphi Properties,” our only material asset will be our interest in Holdings. We will cause Holdings to comply with our investment policies.

While we intend to make investments and operate our business in a manner consistent with the requirements of the Internal Revenue Code to qualify as a REIT and to elect to be treated as a REIT for federal income tax purposes, future economic, market, legal, tax or other considerations may cause our board of directors, subject to the prior election of, and approval by a majority of, our independent directors, to determine that it is in our best interest and the best interest of our stockholders to revoke our status as a REIT. The Internal Revenue Code prohibits us from electing REIT status for the four taxable years following the year of such revocation.

We also intend to operate in a manner that will not subject us to regulation under the Investment Company Act. We do not intend to:


	•	borrow money at any time other than indebtedness incurred by us with the prior election of, or approval of, our independent directors in an aggregate amount not to exceed 20% of our stockholders’ equity as determined in accordance with generally accepted accounting principles; provided, that we may incur indebtedness in an aggregate amount not to exceed $10 million without such prior approval so long as, at the time of incurrence of such indebtedness, our outstanding common equity is at least $150 million;

	•	invest in the securities of other issuers for the purpose of exercising control over such issuers;

	•	underwrite securities of other issuers;

	•	actively trade in loans or other investments;

	•	offer securities in exchange for property; or

	•	make loans to third parties, including our officers, directors, or other affiliates, other than the mortgage notes contributed in the contribution and loan agreement.

The Investment Company Act exempts entities that, directly or through majority-owned subsidiaries, are “primarily engaged in the business of purchasing or otherwise acquiring mortgages and other liens on and interests in real estate”. We refer to these interests as Qualifying Interests. Under current interpretations by the staff of the SEC, in order to qualify for this exemption, we, among other things, must maintain at least 55% of our total assets in Qualifying Interests and also may be required to maintain an additional 25% of our total assets in Qualifying Interests or other real estate-related assets. The assets that we may acquire therefore may be limited by the provisions of the Investment Company Act. We intend to limit authorized investments that are not Qualifying Interests or real estate-related assets to no more than 20% of the value of our total assets.

We further intend to allow for reinvestment of the proceeds of our assets in other interest-earning assets in respect of which Delphi is not the primary obligor or guarantor, only to the extent that the return from such assets over any period of four fiscal quarters is anticipated to equal or exceed the annualized dividend rate on our Series A preferred stock by 150%, except as may be necessary to maintain our status as a REIT, subject to the further condition that the failure of Delphi to at all times be the primary obligor or guarantor in respect of investments accounting for at least two-thirds of our investment income will trigger an exchange event.

Under the terms of Holdings’ operating agreement, members owning a majority of the interests in Holdings have the exclusive right to manage the business of Holdings, including determining the timing and amount of distributions to members. We intend to cause Holdings to make distributions to us in sufficient amounts and at such intervals so as to enable us to make full dividend payments on our Series A preferred stock.

We intend to distribute annually an aggregate amount of dividends with respect to our outstanding capital stock equal to substantially all of our REIT taxable income, as determined before any deduction for dividends paid and excluding any net capital gains. In order to remain qualified as a REIT, we are

Dividends will be authorized and declared at the discretion of our board of directors. Factors that would generally be considered by our board of directors in making this determination are our distributable funds, financial condition and capital needs, the effect of current and pending legislation and regulations, economic conditions, tax considerations and our continued qualification as a REIT. We currently expect that both our cash available for distribution and our REIT taxable income will be in excess of the amounts needed to pay dividends on all our outstanding Series A preferred stock because:


	•	substantially all of the assets we hold through Holdings will be interest-earning investments;

	•	we anticipate that interest payments on our assets will equal or exceed full dividend payment amounts on our Series A preferred stock as well as our other payment obligations; and

	•	we do not anticipate incurring any indebtedness, although we may incur indebtedness that in an aggregate amount does not exceed 20% of our stockholders’ equity.

Accordingly, after paying the dividends on all classes of preferred stock, we intend to pay dividends to holders of shares of our common stock in an amount sufficient to comply with applicable requirements regarding qualification as a REIT. There are, however, certain limitations that restrict our ability to pay dividends on our common stock that are more fully described in this prospectus under the heading “Description of Delphi Properties Capital Stock — Series A Preferred Stock — Dividends”.

Upon consummation of this offering, Delphi will own all of the shares of our common stock, which, assuming the sale of the shares of Series A preferred stock being offered hereby, will represent 90% of our outstanding voting power. Accordingly, Delphi will continue to have the right to elect all of our directors, including our independent directors, subject to the right of holders of our Series A preferred stock to elect two directors in addition to the directors then in office if we fail to pay, or declare and set aside for payment, dividends on the Series A preferred stock for any six dividend periods. In addition, all of our officers and our current directors and the additional directors to be elected following the consummation of this offering who are not independent directors, are also officers and/or employees of Delphi. Because of the nature of our relationship with Delphi, it is likely that conflicts of interest will arise with respect to certain transactions because Delphi has interests that are not identical to our interests.

We are dependent on Delphi and others for administering our day-to-day activities under the terms of a management and servicing agreement between Delphi and us. See “Business of Delphi Properties — Management and Servicing Agreement”. Since the parties to this agreement are affiliated, the agreement is not the result of arm’s-length negotiations. Any modification of the management and servicing agreement will require the approval of a majority of our independent directors. However, since Delphi, through its ownership of all of our common stock, controls the election of all of our directors, including our independent directors, any such modification may not be the same as would result from arm’s-length negotiations between unaffiliated parties. While we believe that Delphi will diligently pursue its management and servicing obligations, there can be no guarantee that this will be the case. Delphi could also control or influence the occurrence or timing of an exchange event or seek to exercise its influence over our affairs so as to cause the replacement of the mortgage notes with lesser quality assets purchased from Delphi or elsewhere. Although these potential conflicts exist, we believe that Delphi will monitor our activities with a view toward protecting our interests.

Delphi may have investment goals and strategies that differ from those of the holders of shares of our Series A preferred stock. Nevertheless, our investment and operating strategies will largely be directed by Delphi. Delphi has no obligation to direct new business opportunities to us.

The officers and employees of Delphi were directly involved in deciding to issue mortgage notes to us, in setting the interest rate applicable to the mortgage notes, and in selecting the properties that secure the

mortgage notes, and will make decisions on the amount, type and price of future acquisitions of assets from and dispositions of assets to Delphi or third parties. After the sale of our Series A preferred stock to the public, we anticipate that we will continue to acquire all or substantially all of our assets from Delphi.

It is our intention that any agreements and transactions, including, without limitation, any refinancing of the mortgage notes, loans, and the sale and purchase of assets (such as any real estate purchased from and leased back to Delphi), between Delphi, on the one hand, and us, on the other hand, be fair to both parties. The requirement in our charter that certain of our actions be approved by a majority of our independent directors also is intended to ensure fair dealings between Delphi and us. There can be no assurance, however, that any such agreement or transaction will be on terms as favorable to us as could have been obtained from unaffiliated third parties.

There are no provisions in our charter limiting any of our officers, directors, stockholders, or affiliates from having any direct or indirect pecuniary interest in any asset to be acquired or disposed of by us or in any transaction in which we have an interest or from engaging in acquiring, holding, and managing our assets. As described in this prospectus, it is expected that Delphi will generally have direct interests in transactions with us including, without limitation, the sale of assets to us; however, it is not anticipated that any of our officers or directors will have any interests in such assets.

We intend to distribute to our stockholders, in accordance with the Exchange Act, annual reports containing financial statements prepared in accordance with generally accepted accounting principles and certified by our independent auditors. Our charter provides that we will maintain our status as a reporting company under the Exchange Act for so long as any of our Series A preferred stock is outstanding and held by unaffiliated stockholders.

We may purchase our Series A preferred stock and other stock in the open market or otherwise. We have no present intention to repurchase any of our stock, and any such action would be taken only in conformity with applicable federal and state laws and regulations.

Our day-to-day operations will be managed pursuant to the terms of a management and servicing agreement between Delphi and us. Delphi, in its role as manager and servicer under the terms of the management and servicing agreement, will receive a management fee designed to reimburse Delphi for costs incurred to manage us and to service any investments with respect to which Delphi is not the primary obligor. Delphi is required to pay all expenses related to the performance of its duties under the management and servicing agreement, including any payment to its affiliates for managing us. We will pay Delphi an annual fee of 0.1% of the average daily outstanding principal balance of our mortgage notes receivable plus any other REIT-qualified assets held through Holdings during the year for administering our day-to-day activities. No specific term is specified in the management and servicing agreement; it may be terminated by mutual agreement of the parties (which for us would require first the election of, and obtaining the approval of a majority of, our independent directors) at any time, without penalty. Due to the relationship between Delphi and us, we do not anticipate that the management and servicing agreement will be terminated by either party in the foreseeable future.

We have seven executive officers, each of whom is described further below under “Management of Delphi Properties”, and two additional non-executive officers. We do not anticipate that we will require any additional employees because employees of Delphi are managing our day-to-day operations and affairs under the management and servicing agreement. All of our officers are also officers and/or employees of Delphi. We intend to maintain corporate records and audited financial statements that are separate from those of Delphi.

Although there are no restrictions or limitations contained in our charter or Bylaws, we do not anticipate that our officers, employees or directors will have any direct or indirect pecuniary interest in any asset to be acquired or disposed of by us or in any transaction in which we have an interest or will engage in acquiring, holding and managing assets.

We are not party to any pending legal proceedings. Delphi is not party to any pending legal proceedings other than routine litigation incidental to its business and matters from time to time disclosed in its filings with the SEC, including its 2002 Form 10-K, which are incorporated by reference into this prospectus. Delphi does not believe that such litigation will have a material adverse effect on its business or financial condition.

Our board of directors currently consists of four directors. Following this offering we intend to elect three additional directors, each of whom we believe will qualify as “independent” for the purposes of the New York Stock Exchange.

Each of our directors will serve until our next annual meeting of stockholders and until his or her successor is duly elected and qualified. There is no current intention to further alter the number of directors comprising the board of directors after the increase to seven members. Pursuant to our charter, the independent directors are required to consider the interests of the holders of shares of both the common stock and the preferred stock, including our Series A preferred stock, in determining whether any proposed action requiring their approval is in our best interest.

We have seven executive and two non-executive officers, all of whom are officers and/or employees of Delphi. We estimate that our officers will devote less than 5% of their time to managing our business. We have no other employees and do not anticipate that we will require additional employees.

The principal occupation for at least the last five years of each of our directors and executive officers is set forth below.

Mr. Blahnik was named Chairman of the Board, Chief Executive Officer and President of Delphi Properties in March 2003. He is also treasurer of Delphi since August 1998 and has been a Delphi vice president since November 1998. He had been executive director of Finance for Delphi since June 1996. Previously, he was senior vice president and chief financial officer for Delco Electronics since 1995. From 1994 to 1995, he was director of finance for GM’s Lansing Automotive Division. From 1991 to 1994, he was executive director for GM’s Latin American Operations and president of Banco General Motors, and from 1988 until 1991, he was the comptroller of GM do Brasil. Prior to 1988, he held several finance positions at GM since 1978. Mr. Blahnik is a member of The Conference Board.

Mrs. Healy was named Director and Chief Operating Officer of Delphi Properties in March 2003. She is also vice president of Corporate Affairs and Worldwide Facilities for Delphi since January 2000. She had been vice president of Corporate Affairs since November 1998 and executive director of Communications since June 1997. From July 1996 to June 1997, she was manufacturing manager for Delphi’s Energy and Engine Management Systems Flint East Operations Plants 6 and 7. From June 1995 to July 1996, she was director of Corporate Communications for GM. From January 1995 to June 1995, she was director of Communications for Delphi. Prior thereto, Mrs. Healy held several personnel, labor relations and communications positions at GM since 1976. She serves on the Board of Trustees for the Music Hall Center for the Performing Arts in Detroit, the Executive Board of the Troy, Mich. Chamber of Commerce, the Board of Trustees for Forgotten Harvest and the Oakland University Business School.

Mr. Pasricha was named Director and Treasurer of Delphi Properties in March 2003. He is also the vice president of Mergers, Acquisitions and New Markets for Delphi since March 2002. He was executive director of Delphi’s New Markets Unit since February 2001. Previously, he was acting general director of finance for Delphi Delco Electronics since October 2000. He was assistant treasurer from 1998 to 2000. From 1989 to 1998, he held various treasury positions for General Motors in New York and Singapore, and prior thereto worked for Ernst and Young LLP. Mr. Pasricha is a member of the Corporate Executive Board.

Mr. Sheehan was appointed Director and Chief Financial Officer of Delphi Properties in March 2003. He is also the Chief Accounting Officer and Controller for Delphi, a position he has held since July 2002. For the twenty years prior to joining Delphi, he held various domestic and international positions at KPMG LLP, including most recently as a partner. Mr. Sheehan is a certified public accountant in the States of Michigan and Connecticut and member of the American Institute of Certified Public Accountants.

Mr. Arle was named General Auditor for Delphi Properties in March 2003. He is also the vice president of Audit Services and Corporate Auditor for Delphi and has held that position since March 2002. He had been vice president of Mergers, Acquisitions and Planning for Delphi since November 1998. Previously, he had been executive director of Planning for Delphi since February 1998. Prior thereto, he was vice president and chief financial officer for Saab Automobile AB since 1993. From 1992 to 1993, he was vice president and finance manager for GM of Canada, Ltd. From 1988 to 1992, he was general manager and comptroller for the GM/Toyota NUMMI joint venture. Previously, he held several finance positions at GM since 1975.

Mr. Robinson was named General Counsel of Delphi Properties in March 2003. He is also General Counsel and a vice president for Delphi, a position he has held since December 1998. Previously, he was of counsel to the Corporate, Securities and Business Law group at Dickinson Wright PLLC, a Michigan law firm, since April 1998. From February 1996 to April 1998, he was senior vice president, secretary and general counsel for ITT Automotive, Inc. From April 1987 to February 1996, he was a lawyer for Chrysler Corporation serving, among other positions, as vice president and general counsel for Chrysler International Corporation, a subsidiary of Chrysler Corporation, and managing director of Chrysler Austria GmbH. Prior thereto, he held legal positions with TRW Inc. in Cleveland, Ohio, and Coudert Brothers and Wender, Murase & White in New York City.

Mr. Whitson was named Chief Tax Officer of Delphi Properties in March 2003. He is also the Chief Tax Officer for Delphi, a position he has held since November 1998. Prior to joining Delphi in August 1998, Mr. Whitson was the Vice President, Assistant Treasurer and Director of Taxes at ITT Corporation. Mr. Whitson is a member of the Executive Committee of the Tax Division of the American Institute of Certified Public Accountants, the Fiscal Policy Coordinating Committee of the Business Roundtable, the Committee on Taxation of Financial Executives International, the Board of Directors of the Tax Council, Tax Executives Institute, and the International Fiscal Association.

Our charter requires that, once the independent directors have been elected, which we intend to effect following the closing of this offering, so long as any of our Series A preferred stock is outstanding, certain of our actions must be approved by a majority or all of our independent directors. The actions requiring independent director approval are described in more detail under the heading “Description of Delphi Properties Capital Stock — Series A Preferred Stock — Independent Director Approval”. In addition, although not restricted from doing so, our board of directors does not currently intend to approve the following transactions without the prior election of, and approval of a majority of, its independent directors:


	•	the modification of the general distribution policy or the authorization or declaration of any distribution in respect of shares of common stock for any year if, after taking into account any such proposed distribution, total distributions on our preferred stock and common stock would exceed an


		amount equal to the sum of 150% of our taxable income, excluding capital gains, for such year plus our net capital gains for that year; and

	•	the redemption of any of our common stock.

If we fail to pay, or declare and set aside for payment, dividends on shares of our Series A preferred stock for any six dividend periods, the number of our directors will increase by two and holders of our Series A preferred stock will have the right to elect the two additional directors.

Following the closing of this offering, we will establish an audit committee comprised of at least three of our directors. We believe that all members of the audit committee will satisfy the audit committee membership independence requirements of the SEC and the independence and other standards of the New York Stock Exchange. At least one member of the audit committee will be an audit committee “financial expert” within the meaning of the rules adopted by the SEC relating to the disclosure of financial experts on audit committees in periodic filings pursuant to the Exchange Act. The audit committee will have a written charter that will, among other things, require the audit committee to:


	•	oversee the financial reporting process on behalf of our board of directors and report the results of its activities to the board;

	•	review the engagement and independence of our auditors;

	•	review the adequacy of our internal accounting controls and financial reporting process; and

	•	review transactions between Delphi and us.

We intend to pay our independent directors a fee of $15,000 per year for their services as directors. Our officers and directors who are officers and/or employees of Delphi will receive no additional compensation for their services on our behalf.

Upon the closing of this offering, we will have 10,800,100 shares of common stock issued and outstanding (12,420,100 shares if the underwriters’ over-allotment option is exercised in full). The following table sets forth, as of the time of this offering, the expected number of shares and percentage of ownership beneficially owned by all persons known by us to own more than five percent of the shares of our common stock.

None of our directors or executive officers owns any of our common stock. Holders of our Series A preferred stock will have 1/10th of a vote per share.

Upon the closing of this offering, we will issue 10,800,000 shares of our common stock (12,420,000 shares if the underwriters’ over-allotment option is exercised in full) and pay the net proceeds of this offering to Delphi in return for mortgage notes issued to us by Delphi that will be secured by mortgage liens on certain properties owned by subsidiaries of Delphi. In turn, we will contribute the mortgage notes and the mortgage liens to Holdings, and, upon such contribution, we will control through a 99% interest therein. Thereafter, Holdings will hold the mortgage notes and the mortgage liens. After this offering, Delphi will control 90% of our voting power.

Delphi administers our day-to-day activities. Under the terms of a management and servicing agreement, we will pay Delphi an annual fee of 0.1% of the average daily outstanding principal balance of our mortgage notes receivable plus any other REIT-qualified assets held through Holdings during the year for administering our day-to-day activities.

The following description of the terms of our stock and of certain provisions of Maryland law is only a summary. For a complete description, we refer you to the Maryland General Corporation Law, our charter and our Bylaws. We have filed our charter and Bylaws as exhibits to the registration statement of which this prospectus is a part. You should read our charter and Bylaws for the provisions that are important to you.

The shares of our Series A preferred stock issued in connection with this offering will be validly issued, fully paid and non-assessable Series A preferred stock of Delphi Properties. The holders of our Series A preferred stock will have no preemptive rights with respect to any of our capital stock or any of our other securities convertible into, or carrying rights or options to purchase, any such capital stock. Our Series A preferred stock is perpetual and will not be convertible into our common stock or any other class or series of our capital securities and will not be subject to any sinking fund or other obligation for its repurchase or retirement. Our Series A preferred stock will be exchanged automatically under the circumstances described below into Delphi Series AA preferred stock.

The transfer agent, registrar and dividend disbursement agent for our Series A preferred stock will be . We will send notices to stockholders of any meetings at which holders of our Series A preferred stock have the right to elect directors or to vote on any other matter or are otherwise entitled to notice under applicable law.

Holders of shares of our Series A preferred stock will be entitled to receive, if, when, and as authorized by our board of directors and declared by us out of our legally available assets, non-cumulative quarterly cash dividends at the rate of $ per share. Dividends on our Series A preferred stock will be payable, if, when and as authorized and declared, quarterly in arrears on , , and of each year or, if any such day is not a business day, on the next business day, commencing on , 2003. Each such quarter is a “dividend period”. Dividend periods will commence on and include the first day following the last dividend payment date and end on and include the current dividend payment date; provided, however, that the first dividend period will commence on and include the original issue date of the shares of our Series A preferred stock and will end on and include , 2003. Each authorized and declared dividend will be payable to holders of record as they appear on our stock register on the relevant record date, which will be the first day of the month in which the dividend payment date falls. Dividends payable on our Series A preferred stock for any period greater or less than a full dividend period will be computed on the basis of twelve 30-day months, a 360-day year, and the actual number of days elapsed in the period. In the event of an automatic exchange of our Series A preferred stock for Delphi Series AA preferred stock, any authorized and unpaid dividends on our Series A preferred stock as of the time of exchange will be deemed to be authorized and unpaid dividends on the Delphi Series AA preferred stock, and will be paid upon declaration by Delphi’s board of directors.

The right of holders of our Series A preferred stock to receive dividends is non-cumulative. If our board of directors does not authorize a dividend on our Series A preferred stock or authorizes less than a full dividend in respect of any dividend period, you will have no right to receive any dividend or a full dividend, as the case may be, for that dividend period, and we will have no obligation to pay a dividend or to pay full dividends for that dividend period, regardless of whether or not dividends are authorized and declared and paid for any future dividend period with respect to our Series A preferred stock. Nonetheless, because we must distribute annually at least 90% of our REIT taxable income, determined before any deduction for dividends paid and excluding any net capital gain, to remain qualified as a REIT, our board of directors intends to authorize and distribute (i) full dividends on our Series A preferred stock on a quarterly basis and (ii) at least 90% of our REIT taxable income annually. If we fail to remain qualified

as a REIT, and we do not exercise any right that we may have to redeem the Series A preferred stock, our Series A preferred stock will be exchanged automatically on a share-for-share basis for Delphi Series AA preferred stock. In addition, if we fail to pay, or declare and set aside for payment, dividends on shares of our Series A preferred stock for any six dividend periods, holders of our Series A preferred stock will be entitled to elect two directors in addition to those then in office. See “— Voting Rights” below.

If full dividends on our Series A preferred stock for any dividend period have not been declared and paid, or declared and a sum sufficient for such payment has not been set apart for such payment, no dividends will be declared or paid or set aside for payment and no other distribution will be declared or made or set aside for payment upon our common stock or any of our securities that are junior to our Series A preferred stock, nor will any such common stock or junior securities be redeemed, purchased, or otherwise acquired for any consideration, nor will any monies be paid to or made available for a sinking fund for the redemption of any such securities by us, except in each case for payment of additional shares of common stock or shares of securities that are junior to our Series A preferred stock, until such time as dividends on our Series A preferred stock have been declared and paid or declared and a sum sufficient for such payment has been set apart for payment for four consecutive dividend periods. If the full dividend is not declared and paid on our Series A preferred stock for a dividend period, the payment of dividends on any of our stock that is at parity with our Series A preferred stock will be made on a pro rata basis with our Series A preferred stock.

For a discussion of the tax treatment of distributions to holders of our Series A preferred stock, see “Federal Income Tax Considerations — Taxation of Holders of Preferred Stock”.

Each share of our Series A preferred stock will be immediately and automatically exchanged on a share-for-share basis for newly issued shares of Delphi Series AA preferred stock upon the occurrence of an exchange event. An exchange event occurs upon:


	•	our failure to declare dividends on our Series A preferred stock for any two quarterly periods within a rolling 60-month period;

	•	the maturity or prepayment of any of the mortgage notes or the transfer (other than to Holdings) or liquidation of any assets with respect to which Delphi is the primary obligor or guarantor, and the failure of Delphi to refinance such matured or prepaid mortgage notes or to contribute or sell to us, within 90 days;


	•	other mortgage notes;

	•	residential mortgage loans or commercial mortgage loans, including participation interests in residential or commercial mortgage loans;

	•	mortgage-backed securities eligible to be held by REITs;

	•	cash, cash items (which includes receivables) and government securities; or

	•	other real estate assets


	that would yield investment income substantially similar to the matured or prepaid notes or the transferred or liquidated assets, as applicable, such that in all cases that our aggregate investment income is expected to be sufficient to pay full dividends on our Series A preferred stock, plus reasonably anticipated expenses;


	•	an event of default in respect of any of the mortgage notes issued by Delphi to us or the related mortgage liens;

	•	the failure of Delphi to remain at all times the primary obligor or guarantor in respect of investments accounting for at least two-thirds of our investment income;


	•	the failure of Delphi to maintain its long-term senior unsecured debt ratings at or above “Ba2” from Moody’s Investors Service Inc. (or any successor thereto) and “BB” from Standard & Poor’s Ratings Services (or any successor thereto);

	•	the acceleration of any debt of Delphi in a principal amount in excess of $50 million;

	•	bankruptcy, insolvency or liquidation events of Delphi;

	•	the receipt by us of an opinion of counsel, rendered by a law firm experienced in such matters, in form and substance satisfactory to us, which states that there is more than an insubstantial risk that we are or will be considered an “investment company” that is required to be registered under the Investment Company Act, as a result of the occurrence of a change in law or regulation or a written change in interpretation or application of law or regulation by any legislative body, court, governmental agency, or regulatory authority, or we are required to be registered under the Investment Company Act; or

	•	our failure to qualify as a REIT from the outset, or to remain qualified as a REIT for federal income tax purposes, whether because of a failure to distribute annually 90% of our REIT taxable income, the nature of our assets, our manner of operation, our organization, our capital structure, the ownership of our equity, or other factor; provided, however, that the automatic exchange in this event will occur at the time the IRS officially determines that we will no longer qualify as a REIT for federal income tax purposes or upon the receipt by us of an opinion of counsel, rendered by a law firm experienced in such matters, in form and in substance satisfactory to us that we no longer qualify as a REIT and we do not exercise our right to redeem the Series A preferred stock.

The exchange will occur as of the earliest possible date such exchange could occur, as evidenced by the issuance by Delphi of a press release prior to such time. As of the time of exchange, all of the shares of our Series A preferred stock will be deemed cancelled and exchanged for shares of Delphi Series AA preferred stock without any further action by us or Delphi, all rights of the holders of our Series A preferred stock as stockholders of us will cease and each holder of our Series A preferred stock will then be a holder of Delphi Series AA preferred stock. Any shares of our Series A preferred stock purchased or redeemed by us prior to the time of exchange will not be outstanding and will not be subject to the automatic exchange.

The registrar will mail notice of the occurrence of an exchange event to each holder of our Series A preferred stock within 30 days of such occurrence.

Holders of shares of our Series A preferred stock, by purchasing such shares of stock, whether in this offering or in the secondary market after this offering, will be deemed to have agreed to be bound by the unconditional obligation to exchange our Series A preferred stock for Delphi Series AA preferred stock upon the occurrence of an exchange event. In accordance with an exchange agreement between Delphi and us to be signed on the date the shares of our Series A preferred stock are issued, Delphi is unconditionally obligated to issue shares of Delphi Series AA preferred stock in exchange for shares of our Series A preferred stock upon the occurrence of an exchange event.

Holders of our Series A preferred stock cannot exchange shares of our Series A preferred stock for shares of Delphi Series AA preferred stock voluntarily. Absent the occurrence of an exchange event, no exchange of our Series A preferred stock for Delphi Series AA preferred stock will occur. The Delphi Series AA preferred stock will be non-cumulative and redeemable after , 2008, and will have a dividend rate and liquidation preference equivalent to our Series A preferred stock. At the time of issuance, the Delphi Series AA preferred stock would rank on an equal basis in terms of dividend payments and liquidation preference with Delphi’s most senior preferred stock outstanding at the time of the automatic exchange, if any. However, the shares of Delphi Series AA preferred stock are not expected to be listed on any national securities exchange or national quotation system and will not have any voting rights, except as required by Delaware law.

Holders of our Series A preferred stock that is exchanged for the Delphi Series AA preferred stock will be entitled to receive dividends on the Delphi Series AA preferred stock received that are equivalent to the dividends that, at the time of the exchange, were declared but unpaid on our Series A preferred stock, upon declaration by Delphi’s board of directors. The right of holders of Delphi Series AA preferred stock to receive dividends is non-cumulative. The terms of the Delphi Series AA preferred stock are provided in more detail in “Description of Delphi Capital Stock — Series AA Preferred Stock”. Absent the occurrence of an exchange event, Delphi will not issue any Delphi Series AA preferred stock, although Delphi will be able to issue preferred stock in classes or series other than Delphi Series AA preferred stock. There can be no assurance as to the liquidity of the Delphi Series AA preferred stock, if issued. In addition, because the shares of Delphi Series AA preferred stock are not expected to be listed on any national securities exchange or national quotation system, it is highly unlikely that an active public market for the Delphi Series AA preferred stock would develop or be maintained.

Absent the occurrence of the exchange, holders of our Series A preferred stock will have no dividend, liquidation preference, or other rights with respect to any security of Delphi; such rights as are conferred by our Series A preferred stock exist solely as to us.

Our Series A preferred stock will rank senior to our common stock and any junior preferred stock as to dividend rights and rights upon liquidation, winding up or dissolution. Our Series A preferred stock will rank junior to all our indebtedness, if any. If and when issued, the Series B preferred stock will be junior to our Series A preferred stock.

Holders of our Series A preferred stock are entitled to 1/10th of one vote per share on all matters to be voted on by stockholders, voting as a single class with the holders of the common stock and the holders of any other class of shares entitled to vote as a single class with the holders of the common stock.

If we fail to pay, or declare and set aside for payment, full dividends on shares of our Series A preferred stock for any six dividend periods, the authorized number of our directors will increase by two. Holders of our Series A preferred stock would then have the right to elect two directors in addition to the directors then in office at our next annual meeting of stockholders. This right will continue at each subsequent annual meeting until we pay dividends for three consecutive dividend periods and pay or declare and set aside for payment dividends for the fourth consecutive dividend period.

The term of such additional directors will terminate, and the total number of directors will decrease by two, at the first annual meeting of stockholders after we pay dividends for three consecutive dividend periods and declare and pay or set aside for payment dividends on our Series A preferred stock for the fourth consecutive dividend period or, if earlier, upon the redemption of all shares of our Series A preferred stock or upon an automatic exchange of shares of our Series A preferred stock for shares of Delphi Series A preferred stock. After the term of such additional directors terminates, the holders of shares of our Series A preferred stock will not be able to elect additional directors unless dividends on shares of our Series A preferred stock have again not been paid or declared and set aside for payment for any six dividend periods thereafter.

Any additional director elected by the holders of our Series A preferred stock may only be removed by the vote of the holders of record of the outstanding shares of Series A preferred stock at a meeting of our stockholders called for that purpose. As long as dividends on shares of our Series A preferred stock have not been paid for any six dividend periods, (1) any vacancy created by the removal of any such director may be filled only by the vote of the holders of the outstanding shares of Series A preferred stock at the same meeting at which such removal is considered, and (2) any other vacancy in the office of any such director as a result of the director’s death or resignation or for any other reason may be filled by an instrument in writing signed by any such remaining director and filed with us.

So long as any shares of our Series A preferred stock are outstanding, we will not, without the consent or vote of the holders of at least a two-thirds of the outstanding shares of our Series A preferred stock, voting separately as a class:


	•	amend, alter, repeal or otherwise change any provision of our charter, including the terms of our Series A preferred stock, if such amendment, alteration, repeal or change would materially and adversely affect the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications, or terms or conditions of redemption of our Series A preferred stock;

	•	authorize, create or increase the authorized amount of or issue any class or series of our equity securities, or any warrants, options or other rights exercisable for or convertible or exchangeable into any class or series of our equity securities, ranking senior to our Series A preferred stock, either as to dividend rights or rights on our liquidation, dissolution or winding up;

	•	effect our consolidation, conversion or merger with or into, or share exchange with (other than an exchange of our Series A preferred stock for Delphi Series AA preferred stock upon the occurrence of an automatic exchange) another entity, except that we may consolidate or merge with or into, or enter into a share exchange with, another entity if:


	•	such entity is an entity that is controlled by or under common control with Delphi;

	•	such entity is a corporation, business trust or other entity organized under the laws of the United States or a political subdivision of the United States that is not regulated as an investment company under the Investment Company Act and that, according to an opinion of counsel rendered by a firm experienced in such matters, is a REIT for federal income tax purposes;

	•	such other entity expressly assumes all of our obligations and commitments pursuant to such consolidation, merger or share exchange;

	•	the outstanding shares of our Series A preferred stock are exchanged for or converted into shares of preferred stock substantially identical to those of our Series A preferred stock, including limitations on personal liability of the stockholders;

	•	after giving effect to such merger, consolidation or share exchange, no breach, or event which, with the giving of notice or passage of time or both, could become a breach, by us of our obligations under our charter will have occurred and be continuing; and

	•	we will have received written notice from each of Moody’s Investors Service Inc. and Standard & Poor’s Ratings Services (or their respective successors) and delivered a copy of such written notice to the transfer agent confirming that such merger, consolidation or share exchange will not result in a downgrade of the rating assigned by any of such rating agencies to our Series A preferred stock or the preferred interests of any surviving corporation, trust, or entity issued in replacement of our Series A preferred stock.

As a condition to effecting any such merger, consolidation or share exchange, we will deliver to the transfer agent and cause to be mailed to each record holder of shares of our Series A preferred stock, at least 30 days prior to such transaction becoming effective, a notice describing such merger, consolidation or share exchange, together with a certificate of one of our executive officers and an opinion of counsel to us, each stating that such merger, consolidation or share exchange does not violate the requirements of our charter and that all conditions precedent provided for in such charter relating to such transaction have been complied with.

An amendment to our charter that increases the number of authorized shares of our Series A preferred stock, and a concurrent increase in the number of authorized shares of our common stock in order to ensure that Delphi controls 90% of all shares of our voting power will not be deemed to be a material and adverse change requiring a vote of the holders of our Series A preferred stock.

Our charter provides certain covenants in favor of the holders of our Series A preferred stock. Except with the consent or affirmative vote of the holders of at least two-thirds of the shares of our Series A preferred stock, voting as a separate class, we agree not to:


	•	make or permit to be made any payment to Delphi or its affiliates relating to (1) any indebtedness we may have to Delphi or any such affiliate or (2) Delphi’s or any such affiliates’ beneficial interests in us, in each case when we are precluded, as described under the subheading “— Dividends” above, from making payments in respect of our common stock, or make such payment or permit such payment to be made in anticipation of any liquidation, dissolution or winding up;

	•	incur indebtedness at any time other than indebtedness incurred by us with the prior election of, and approval of, our independent directors in an aggregate amount not to exceed 20% of our stockholders’ equity as determined in accordance with generally accepted accounting principles; provided, that we may incur indebtedness in an aggregate amount not to exceed $10 million without such prior election and approval so long as, at the time of incurrence of such indebtedness, our outstanding common stockholder’s equity as determined in accordance with generally accepted accounting principles is at least $150 million;

	•	pay dividends on our common stock unless our funds from operations for the fiscal quarter immediately preceding such payment will, after the payment of such dividend on the common stock, enable us to pay full dividends on our Series A preferred stock for the then current dividend period, plus reasonably anticipated expenses, except as may be necessary to maintain our status as a REIT;

	•	make any payment of interest or principal with respect to our indebtedness, if any, to Delphi or its affiliates, unless our funds from operations for the fiscal quarter immediately preceding such payment will, after the payment of such interest and principal, enable us to pay full dividends on our Series A preferred stock for the then current dividend period, plus reasonably anticipated expenses, except as may be necessary to maintain our status as a REIT;

	•	amend or otherwise change our policy, once adopted, permitting the reinvestment of the proceeds of our assets in other interest-earning assets in respect of which Delphi is not the primary obligor or guarantor, only to the extent that the return from such assets over any period of four fiscal quarters is anticipated to equal or exceed the annualized dividend rate on our Series A preferred stock by 150%, except as may be necessary to maintain our status as a REIT;

	•	sell, convey, transfer or otherwise cease to own an interest in Holdings such that we no longer have a majority interest in Holdings or modify Holdings’ operating agreement such that we no longer determine the timing and amount of distributions;

	•	remove “Delphi” from our name unless the name of Delphi changes and we change our name to be consistent with the new name of Delphi;

	•	issue any additional common stock in an amount that would result in Delphi or its controlled affiliates owning less than 100% of our outstanding common stock; or

	•	commence proceedings for the voluntary liquidation of our business.

Shares of our Series A preferred stock will be redeemable at our option, in whole or in part, at any time or from time to time, out of funds legally available therefor (1) upon the occurrence of a Tax Event, subject to satisfaction of the conditions described below, or (2) on or after , 2008, and in each case at a redemption price of $25 per share of our Series A preferred stock, plus an amount equal to declared and unpaid dividends with respect to the immediately preceding quarter, if any. If fewer than all of the shares of our Series A preferred stock are to be redeemed, the shares to be redeemed shall be selected by lot or pro rata or in some other equitable manner determined by us.

A Tax Event will occur upon the receipt by us of an opinion of counsel, rendered by a law firm experienced in such matters, in form and substance satisfactory to us, to the effect that there is more than an insubstantial risk that dividends paid or to be paid by us with respect to our capital stock are not or will not be fully deductible by us for federal income tax purposes or that we are or will be subject to additional taxes, duties, or other governmental charges, in an amount we reasonably determine to be significant as a result of:


	•	any actual or proposed amendment to, clarification of, or change in (including any announced prospective change) the laws, treaties, or related regulations of the United States or any of its political subdivisions or their taxing authorities affecting taxation,

	•	any judicial decision, official administrative pronouncement, published or private ruling, technical advice memorandum, Chief Counsel Advice, as that term is defined in the Internal Revenue Code, regulatory procedure, notice, or official announcement (including any notice or announcement of intent to adopt such procedures or regulations), collectively referred to as Administrative Actions, which is effective, or such official pronouncement or decision is announced, on or after the date of issuance of shares of our Series A preferred stock, or

	•	any amendment to, clarification of, or change in the official position or the interpretation of such Administrative Actions or any interpretation or pronouncement that provides for a position with respect to such Administrative Actions that differs from the theretofore generally accepted position,

in each case, by any legislative body, court, governmental authority, taxing authority or regulatory body, and in each case, irrespective of the manner in which such amendment, clarification or change is made known.

No shares of our Series A preferred stock may be redeemed in the case of a Tax Event unless (1) another series of our preferred stock is issued that differs from our Series A preferred stock only in respect of the dividend rate and the proceeds from the issuance are used to fund the redemption or are paid to Delphi; (2) Delphi sells the shares of our common stock held by it; (3) shares of our common stock are issued by us and the proceeds from the issuance are used to fund the redemption or are paid to Delphi; (4) non-cumulative perpetual preferred securities or common stock of Delphi is sold by Delphi; (5) non-cumulative perpetual preferred securities have been issued by another subsidiary of Delphi and the proceeds from the issuance are used to fund the redemption or are paid to Delphi; (6) within the six-month period ending on the redemption date, we have issued shares that rank at parity with or junior to our Series A preferred stock; or (7) within the six-month period ending on the redemption date, Delphi or a REIT that is a subsidiary of Delphi shall have issued eligible replacement securities that result in net proceeds to Delphi that are at least equal to the aggregate liquidation preference of the shares of our Series A preferred stock to be redeemed. Eligible replacement securities include securities similar to perpetual non-cumulative preferred shares of Delphi Properties, or perpetual preferred or common stock of Delphi.

On and after the date fixed for redemption, provided that the redemption price (including any authorized, declared and unpaid dividends to the date fixed for redemption) has been duly paid or provided for, dividends shall cease to accrue on our Series A preferred stock called for redemption, our Series A preferred stock shall no longer be deemed to be outstanding and all rights of the holders of such shares as stockholders of us shall cease except the right to receive payment upon the redemption, without interest from the date of notice of redemption, upon surrender of the certificates evidencing shares of our Series A preferred stock.

Notice of any redemption will be mailed at least 30 days, but not more than 60 days, prior to any redemption date to each holder of our Series A preferred stock to be redeemed at each holder’s registered address.

In the event we liquidate, dissolve, or wind up prior to an automatic exchange into Delphi Series AA preferred stock, the holders of our Series A preferred stock at the time outstanding will be entitled to receive liquidation distributions equal to the sum of (1) the liquidation preference of our Series A preferred stock, which is $25 per share, and (2) any authorized and unpaid distributions for the current period to the date of liquidation, out of our assets legally available for distribution to our stockholders, before any distribution of assets is made to holders of any shares of common stock upon liquidation, subject to the rights of our general creditors. Our Series A preferred stockholders (and the holders of parity stock, if any) will be entitled to receive liquidation distributions before distributions are made to any common stockholders and any other of our junior stock. After payment of the full amount of the liquidation distributions to which they are entitled, the holders of our Series A preferred stock will have no right or claim to any of our remaining assets. In the event that, upon any liquidation, dissolution, or winding up, our available assets are insufficient to pay the amount of the liquidation distributions on all outstanding shares of our Series A preferred stock, then the holders of our Series A preferred stock will share ratably in any such distribution of assets in proportion to the full liquidation distributions to which they would otherwise be respectively entitled. For these purposes, our consolidation or merger with or into any other entity, the consolidation or merger of any other entity with or into us, or the sale of all or substantially all of our property or business, will not be deemed to constitute our liquidation, dissolution or winding up. In determining whether a distribution (other than upon voluntary or involuntary dissolution, liquidation or winding up of us), by dividend, redemption or otherwise, is permitted under the Maryland General Corporation Law, amounts that would be needed, if we were to be dissolved at the time of the distribution, to satisfy the liquidation preference of the shares of Series A preferred stock will not be added to our total liabilities.

Our charter requires that, once the independent directors have been elected, which we intend to effect following the closing of this offering, so long as any shares of our Series A preferred stock are outstanding, certain actions by us must be approved by a majority of our independent directors. Any members of our board of directors elected by holders of preferred stock, including our Series A preferred stock, voting separately as a class from the holders of our common stock, will be deemed to be independent directors for purposes of approving actions requiring the approval of a majority of the independent directors.

Actions that may not be taken prior to the election of, and without the approval of a majority of, independent directors include:


	•	the issuance of additional stock; provided that we may issue up to a total of 40,000,000 shares of Series A preferred stock, 36,000,000 shares of our common stock and 125 shares of our Series B preferred stock, in each case inclusive of the shares already outstanding or being issued in connection with this offering, prior to the election of, and without the approval of a majority of, the independent directors;

	•	the termination or modification of, or the election not to renew, the management and servicing agreement or the subcontracting of any duties under these agreements to third parties unaffiliated with Delphi;

	•	a change in our policy, once adopted, of limiting authorized investments which are not Qualifying Interests or real estate-related assets to no more than 20% of the value of our total assets or a change in the investment policy, once adopted, that would be inconsistent with our exemption under the Investment Company Act;

	•	any consolidation, conversion, merger or share exchange (other than pursuant to an automatic exchange) that is not tax-free to holders of our Series A preferred stock unless such transaction is required to be approved by two-thirds of the holders of our Series A preferred stock; or


	•	the determination to revoke our status as a REIT or any amendment to the transfer restrictions related to REIT status on our securities.

In addition, with the prior election of, and approval of, all of our independent directors, we may incur indebtedness in an aggregate amount of no more than 20% of our stockholders’ equity (as determined in accordance with generally accepted accounting principles); provided, that we may incur indebtedness in an aggregate amount not to exceed $10 million without such prior approval so long as, at the time of incurrence of such indebtedness, our outstanding common stockholders’ equity (as determined in accordance with generally accepted accounting principles) is at least $150 million.

Our charter requires that, in assessing the benefits to us of any proposed action requiring their consent, the independent directors take into account the interests of holders of shares of both the common stock and the preferred stock, including holders of our Series A preferred stock. Our charter provides that in considering the interests of the holders of preferred stock, including the holders of our Series A preferred stock, the independent directors owe the same duties which the independent directors owe to the holders of common stock.

We have authorized the issuance of up to 125 shares of Series B preferred stock. The Series B preferred stock, if and when issued, will be junior to our Series A preferred stock.

In connection with the consummation of this offering, our charter has been amended to authorize the issuance of up to 36,000,000 shares of common stock, par value $0.01 per share, which will be issued to Delphi. Currently, we have 100 shares of common stock outstanding, all of which are held by Delphi. See “Formation of Delphi Properties”.

All outstanding shares of common stock are fully paid and non-assessable. There is no established trading market for the shares of common stock. Holders of common stock have no preemptive rights. There are no redemption or sinking fund provisions with respect to the shares of common stock.

Holders of common stock are entitled to one vote per share on all matters to be voted on by such stockholders. There are no cumulative voting rights. As the holder of all of the shares of our common stock, Delphi will be able, subject to the rights of the holders of preferred stock, to elect and remove directors, amend our charter, and approve other actions requiring such stockholder approval.

Holders of common stock are entitled to receive such dividends, if any, as may be authorized from time to time by our board of directors and declared by us. In order to remain qualified as a REIT, we must distribute annually at least 90% of our annual taxable income to stockholders. In addition, we will be subject to an excise tax if we fail to distribute annually 85% of our ordinary income plus 95% of our capital gain net income for each calendar year. Our board of directors may authorize and we may declare dividends on our common stock to the extent necessary to avoid imposition of federal income or excise tax, subject to any preferential dividend rights of holders of any outstanding shares of preferred stock.

Upon our dissolution or liquidation, holders of shares of common stock will be entitled to receive all of our assets that are available for distribution to our stockholders, subject to any preferential rights of holders of then outstanding shares of preferred stock.


	•	No more than 50% of the value of the outstanding shares of our capital stock may be owned, directly or indirectly, by five or fewer individuals during the last half of a taxable year, other than the first taxable year of the REIT. This is known as the Five or Fewer Test.

	•	Our capital stock must be beneficially owned by 100 or more persons during at least 335 days of a taxable year or during a proportionate part of a shorter taxable year, other than the first taxable year of the REIT. This is known as the One Hundred Persons Test.

The ownership by Delphi of all of our common stock should not adversely affect our qualification as a REIT because each stockholder of Delphi counts as a separate beneficial owner of us for purposes of the Five or Fewer Test. Delphi has indicated to us that, for so long as any shares of our Series A preferred stock are outstanding, Delphi intends to maintain its ownership of all of our issued and outstanding shares of common stock. In addition, our charter provides that those shares that are transferred so as to result in an individual owning more than 5% of the aggregate liquidation value of our issued and outstanding preferred stock, under the applicable attribution rules of the Internal Revenue Code, will either be automatically transferred to a trust for the benefit of a charitable beneficiary or such transfer will be null and void. In either case, the purported transferee will acquire no rights or economic interest in such shares.

Further, our charter contains restrictions on the acquisition of shares of our preferred stock that are intended to ensure compliance with the One Hundred Persons Test. These restrictions provide that, if any transfer of shares of our preferred stock would cause us to be beneficially owned by fewer than 100 persons, such transfer will be null and void ab initio and the intended transferee will acquire no rights to the shares.

Consistent with our intention to maintain our status as a REIT, our charter provides that, subject to certain exceptions, no individual or entity, other than Delphi or a direct or indirect stockholder of Delphi, may own, either actually or by virtue of the constructive ownership rules of the Internal Revenue Code, more than a specified amount of our stock. The ownership limit prohibits any such person, subject to certain exceptions, from owning, either actually or by virtue of the constructive ownership rules, more than 5% of the aggregate liquidation value of all of our issued and outstanding preferred stock, including our Series A preferred stock.

Although the Five or Fewer Test references the aggregate value of all shares of our capital stock, the ownership limit has been established with reference to the aggregate initial liquidation preference of the outstanding preferred stock. If (1) the relative values of the shares of common stock and any outstanding preferred stock authorized by us, or (2) the relative values of the different series or classes of preferred stock were to change significantly, there is a risk that the Five or Fewer Test would be violated notwithstanding compliance with the ownership limit. Although we believe that it is unlikely that the relative value of the shares of common stock will decrease by an amount sufficient to cause a violation of the Five or Fewer Test, there can be no assurance that such a change in value will not occur. If we fail the Five or Fewer Test, we will fail to qualify as a REIT.

Upon the receipt of a ruling from the IRS or the advice of counsel satisfactory to our board of directors, our board may, but will not be required to, waive the ownership limit with respect to an individual or entity if such individual’s or entity’s proposed ownership is not expected, then or in the future, to jeopardize our status as a REIT. If any purported transfer of our Series A preferred stock or any other event would otherwise result in any person violating the stock ownership limit, then the purported transferee will acquire no right or interest in the shares of preferred stock in excess of the applicable limit. Our charter provides that any such excess shares of preferred stock will automatically be transferred, by operation of law, to a trust for the benefit of a charity to be named by us as of the day prior to the day the prohibited transfer took place. Any dividends paid on shares of preferred stock prior to the discovery of the prohibited transfer must be repaid by the original transferee to us and by us to the trustee. Subject to applicable law, any vote of the shares while the excess shares of preferred stock were held by the original

transferee prior to the discovery by us of the prohibited transfer will be void and the original transferee will be deemed to have given its proxy to the trustee. Any unpaid distributions with respect to the original transferee will be rescinded as void. In liquidation, the original transferee’s ratable share of our assets would be limited to the price paid by the original transferee for the excess shares of preferred stock or, if no value was given, the price per share equal to the closing market price on the date of the purported transfer. The trustee of the trust will sell the securities to any person whose ownership is not prohibited within 20 days after receipt of notice from us that shares of our preferred stock have been transferred to the trust. As a result of the sale, the interest of the trust will terminate. Proceeds of the sale will be paid to the original transferee up to its purchase price or, if the original transferee did not purchase the shares of preferred stock, the value on its date of acquisition, and any remaining proceeds will be paid to a charity to be named by us.

All certificates representing shares of our preferred stock will bear a legend referring to the restrictions described above. The ownership limit provisions will not be automatically removed even if the requirements for qualifying as a REIT are changed so as to eliminate any ownership concentration limitation or if the ownership concentration limitation is increased. Our charter may not be amended to alter, change, repeal, or amend any of the ownership limit provisions without the prior election of, and approval of a majority of, our independent directors.

The foregoing restrictions on transferability and ownership will not apply, however, if our board of directors, including a majority of the independent directors, determines that it is no longer in our best interest or the best interests of our stockholders to attempt to qualify, or continue to qualify, as a REIT.

Our charter requires that any person who beneficially owns at least 1/2% (or such higher percentage as may be permitted by the Internal Revenue Code or the Treasury Regulations if it is established that we have more than 200 stockholders of record) of the outstanding shares of preferred stock of any class or series must provide certain information to us within 30 days of June 30 and December 31 of each year. In addition, each stockholder will be required to disclose to us in writing upon demand such information as we may request in order to determine the effect, if any, of such stockholder’s actual and constructive ownership on our status as a REIT and to ensure compliance with the ownership limit.

Certain Provisions of Maryland Law and of Delphi Properties’ Charter and Bylaws

Our Bylaws provide that the number of our directors may be established by our board of directors but may not be fewer than one nor more than fifteen. Subject to the rights of holders of preferred stock, any vacancy will be filled, at any regular meeting or at any special meeting called for that purpose, by a majority of the remaining directors even if less than a quorum of the board of directors remains.

Under Maryland law, a director may be removed with or without cause by the affirmative vote of at least a majority of the votes entitled to be cast in the election of directors.

Under Maryland law, “business combinations” between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations


	•	any person who beneficially owns 10% or more of the voting power of the corporation’s shares; or

	•	an affiliate or associate of the corporation who, at any time within the previous two years, was the beneficial owner of 10% or more of the voting power of the then outstanding voting stock of the corporation.

A person is not an interested stockholder under the statute if the board of directors approved in advance the transaction by which he otherwise would have become an interested stockholder. However, in approving a transaction, the board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board.

After the five-year prohibition, any business combination between the Maryland corporation and an interested stockholder generally must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least:


	•	80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and

	•	two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder.

These super-majority vote requirements do not apply if the corporation’s common stockholders receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares.

The statute permits various exemptions from its provisions, including business combinations that are exempted by the board of directors before the time that the interested stockholder becomes an interested stockholder. Pursuant to the statute, our board of directors has exempted any business combination involving Delphi and its affiliates. Consequently, the five-year prohibition and the super-majority vote requirements will not apply to business combinations between Delphi and us. As a result, Delphi may be able to enter into business combinations with us that may not be in the best interest of our stockholders, without compliance with the super-majority vote requirements and the other provisions of the statute, but subject to the requirement under the terms of our charter and Bylaws to obtain the consent of at least two-thirds of the outstanding shares of our Series A preferred stock, voting as a class, unless certain specified conditions are met. See “— Series A Preferred Stock — Voting Rights.”

The business combination statute may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer.

Maryland law provides that control shares of a Maryland corporation acquired in a control share acquisition have no voting rights except to the extent approved by a vote of two-thirds of the votes entitled to be cast on the matter. Shares owned by the acquiror, or by officers or directors who are employees of the corporation are excluded from shares entitled to vote on the matter. Control shares are voting shares of stock which, if aggregated with all other shares of stock owned by the acquiror or in respect of which the acquiror is able to exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquiror to exercise voting power in electing directors within one of the following ranges of voting power:


	•	one-tenth or more but less than one-third,

	•	one-third or more but less than a majority, or

	•	a majority or more of all voting power.

Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval. A control share acquisition means the acquisition of control shares, subject to certain exceptions.

A person who has made or proposes to make a control share acquisition may compel the board of directors of the corporation to call a special meeting of stockholders to be held within 50 days of demand to consider the voting rights of the shares. The right to compel the calling of a special meeting is subject to the satisfaction of certain conditions, including an undertaking to pay the expenses of the meeting. If no request for a meeting is made, the corporation may itself present the question at any stockholders meeting.

If voting rights are not approved at the stockholders’ meeting or if the acquiring person does not deliver an acquiring person statement as required by the statute, then the corporation may redeem for fair value any or all of the control shares, except those for which voting rights have previously been approved. The right of the corporation to redeem control shares is subject to certain conditions and limitations. Fair value is determined, without regard to the absence of voting rights for the control shares, as of the date of the last control share acquisition by the acquiror or of any meeting of stockholders at which the voting rights of the shares are considered and not approved. If voting rights for control shares are approved at a stockholders meeting and the acquiror becomes entitled to vote a majority of the shares entitled to vote, all other stockholders may exercise appraisal rights. The fair value of the shares as determined for purposes of appraisal rights may not be less than the highest price per share paid by the acquiror in the control share acquisition.

The control share acquisition statute does not apply (1) to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction, or (2) to acquisitions approved or exempted by the charter or bylaws of the corporation.

Our Bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of shares of our stock. There can be no assurance that this provision will not be amended or eliminated at any time in the future.

Subject to the requirement in certain circumstances to obtain the vote of two-thirds of our outstanding shares of Series A preferred stock voting as a single class, our charter may generally be amended only by the affirmative vote of the holders of not less than a majority of all of the votes entitled to be cast on the matter.

Our dissolution must be approved by the affirmative vote of the holders of not less than a majority of all of the votes entitled to be cast on the matter.

Our Bylaws provide that with respect to an annual meeting of stockholders, nominations of persons for election to the board of directors and the proposal of business to be considered by stockholders may be made only (1) pursuant to our notice of the meeting, (2) by the board of directors or (3) by a stockholder who is entitled to vote at the meeting and who has complied with the advance notice procedures of the Bylaws. With respect to special meetings of stockholders, only the business specified in our notice of the meeting may be brought before the meeting. Nominations of persons for election to the board of directors at a special meeting may be made only (1) pursuant to our notice of the meeting, (2) by the board of directors, or (3) provided that the board of directors has determined that directors will be elected at the meeting, by a stockholder who is entitled to vote at the meeting and who has complied with the advance notice provisions of the Bylaws.

The business combination provisions and, if the applicable provision in our Bylaws is rescinded, the control share acquisition provisions of Maryland law, the restrictions in our charter on ownership and transfer of shares of our capital stock relating to our qualification as a REIT, the provisions of our charter on removal of directors and the advance notice provisions of our Bylaws could delay, defer or prevent a transaction or a change in control of us that might involve a premium price for holders of our common stock or otherwise be in their best interest.

The following summary describes the material terms of Delphi’s Amended and Restated Certificate of Incorporation (“Certificate of Incorporation”) and Bylaws and applicable provisions of law. This description is qualified in its entirety by reference to Delphi’s Certificate of Incorporation and Bylaws and the provisions of the Delaware General Corporation Law, or the DGCL. You should read Delphi’s Certificate of Incorporation and Bylaws for the provisions that are important to you.

Under Delphi’s Certificate of Incorporation, the authorized capital stock of Delphi is 2,000,000,000 shares, of which 1,350,000,000 shares are common stock, par value $0.01 per share, and 650,000,000 shares are preferred stock, par value $0.10 per share. As of December 31, 2002, 558,099,080 shares of common stock and no shares of preferred stock were outstanding.

Holders of Delphi’s common stock are entitled to one vote per share with respect to each matter presented to Delphi’s shareholders on which the holders of common stock are entitled to vote. There are no cumulative voting rights. Except as may be provided in connection with any preferred stock in a certificate of designation filed pursuant to the DGCL, or as may otherwise be required by law or the Certificate of Incorporation, the common stock will be the only capital stock of Delphi entitled to vote in the election of directors and on all other matters presented to the shareholders of Delphi; provided that holders of common stock, as such, are not entitled to vote on any matter that solely relates to the terms of any outstanding series of preferred stock or the number of shares of such series and does not affect the number of authorized shares of preferred stock or the powers, privileges and rights pertaining to the common stock. See below under “— Certain Limitations on Changes in Control — Certain Provisions of Delphi’s Certificate of Incorporation and Bylaws” for additional discussion of common stock voting rights.

Subject to the prior rights of holders of preferred stock, if any, holders of common stock are entitled to receive such dividends as may be lawfully declared from time to time by Delphi’s board of directors. Upon any liquidation, dissolution or winding up of Delphi, whether voluntary or involuntary, holders of common stock will be entitled to receive such assets as are available for distribution to shareholders after there shall have been paid or set apart for payment the full amounts necessary to satisfy any preferential or participating rights to which the holders of each outstanding series of preferred stock are entitled by the express terms of such series.

The outstanding shares of Delphi’s common stock are validly issued, fully paid and non-assessable. Additional shares of authorized common stock may be issued, as determined by Delphi’s board of directors from time to time, without shareholder approval, except as may be required by applicable stock exchange requirements.

See below under “— Certain Limitations on Changes in Control — Shareholder Rights Plan” for a description of certain rights that are attached to the shares of Delphi’s common stock.

Under Delphi’s Certificate of Incorporation, Delphi’s board of directors is authorized to issue additional classes of preferred stock in one or more series, each with such voting powers (full, limited or none), designations, preferences and relative, participating, optional or other special rights, and such qualifications, limitations or restrictions thereof, as they may fix or designate without any further vote or action by Delphi’s shareholders. The Series A Junior Preferred Stock described below under “— Certain Limitations on Changes in Control — Shareholder Rights Plan” is a series of preferred stock that has been authorized by Delphi’s board of directors.

Under the DGCL, the holders of a majority of the outstanding shares of preferred stock may vote together as a single class to approve any amendment to Delphi’s Certificate of Incorporation that would increase or decrease the aggregate number of authorized shares of preferred stock or the par value of the preferred stock, or change the powers, preferences or special rights of the preferred stock so as to affect

them adversely. If the proposed amendment will change the powers, preferences or special rights of one or more series of shares of preferred stock, but will not impact all outstanding shares of preferred stock, the holders of a majority of the outstanding shares of preferred stock of the series which will be affected may vote together as a single class to approve the amendment.

The following summary describes the material terms and provisions of the Delphi Series AA preferred stock. This description is qualified in its entirety by reference to the terms and provisions of the DGCL and the Certificate of Incorporation and Bylaws of Delphi.

If and when issued, the Delphi Series AA preferred stock will be validly issued, fully paid and, except as required by the law of the State of Delaware, non-assessable. The holders of the Delphi Series AA preferred stock will have no preemptive rights with respect to any shares of Delphi’s capital stock or any of Delphi’s other securities convertible into or carrying rights or options to purchase capital stock. The Delphi Series AA preferred stock will be perpetual and will not be convertible into common shares or any other class or series of Delphi’s capital stock or subject to any sinking fund or other obligation for its redemption, repurchase or retirement.

The Delphi Series AA preferred stock would rank senior to Delphi’s common shares. As of the date of this prospectus, no securities that would rank senior to or on parity with the Delphi Series AA preferred stock are authorized, issued or outstanding. As of the date of this prospectus, there are no other securities authorized or issued that would rank on a parity with the Delphi Series AA preferred stock.

Holders of shares of the Delphi Series AA preferred stock will be entitled to receive, if, when and as authorized by Delphi’s board of directors out of Delphi’s legally available assets, non-cumulative cash dividends at the rate of % per annum of the liquidation preference, which is $25 per share. If authorized and declared, dividends on the Delphi Series AA preferred stock will be payable quarterly in arrears on , , and of each year, or, if any such day is not a business day, on the next business day, commencing on the date of an automatic exchange. Each such quarter is a “dividend period”. Each authorized and declared dividend will be payable to holders of record as they appear on Delphi’s stock register on the relevant record dates, which will be on the first day of each month in which a dividend payment date falls. Dividends payable on the shares of the Delphi Series AA preferred stock will be computed on the basis of a 360-day year consisting of twelve 30-day months.

Holders of our Series A preferred stock that is exchanged for the Delphi Series AA preferred stock will be entitled to receive dividends on the Delphi Series AA preferred stock received that are equivalent to the dividends that, at the time of the exchange, were authorized and declared but unpaid, subject to a declaration by Delphi’s board of directors. The right of holders of Delphi Series AA preferred stock to receive dividends is non-cumulative. If Delphi’s board of directors does not authorize a dividend on the Delphi Series AA preferred stock or authorizes less than a full dividend in respect of any dividend period, the holders of the Delphi Series AA preferred stock will have no right to receive any dividend or a full dividend, as the case may be, for that dividend period, and Delphi will have no obligation to pay a dividend or to pay full dividends for that dividend period, regardless of whether or not dividends are declared and paid for any future dividend period with respect to the Delphi Series AA preferred stock or the common shares. If full dividends on the Delphi Series AA preferred stock for any dividend period shall


	•	no dividends will be declared or paid or set aside for payment and no other distribution will be declared or made or set aside for payment upon Delphi’s common stock or any other of Delphi’s capital stock ranking junior to the Delphi Series AA preferred stock as to dividends or amounts upon liquidation for that dividend period, except by conversion into, or exchange for, other shares of Delphi’s capital stock ranking junior to the Delphi Series AA preferred stock as to dividends and amounts upon liquidation; and

	•	no common shares or any other of Delphi’s capital stock will be redeemed, purchased or otherwise acquired for any consideration.

Legal and regulatory limitations on the payment of dividends by Delphi could also affect Delphi’s ability to pay dividends to unaffiliated third parties, including the holders of Delphi’s preferred stock.

When dividends are not paid in full on, or a sum sufficient for such full payment is not set apart for, the Delphi Series AA preferred stock and any other parity stock, all dividends declared upon Delphi Series AA preferred stock and any other parity stock will be declared pro rata. Thus, the amount of dividends declared per share of the Delphi Series AA preferred stock and such other parity stock will in all cases bear to each other the same ratio that (1) full dividends per our Series A preferred security for the then-current dividend period, which will not include any accumulation in respect of unpaid dividends for prior dividend period, and (2) full dividends, including required or permitted accumulations, if any, on such other parity stock, bear to each other.

After an automatic exchange has occurred, shares of Delphi Series AA preferred stock will not be redeemable prior to , 2008. Shares of Delphi Series AA preferred stock will be redeemable at the option of Delphi, in whole or in part, at any time or from time to time, out of funds legally available therefor, on and after , 2008 at a redemption price of $25 per share of Delphi Series AA preferred stock, plus in each case an amount equal to declared and unpaid dividends, if any, to the date of redemption. If fewer than all of the shares of Delphi Series AA preferred stock are to be redeemed, the shares to be redeemed shall be selected by lot or pro rata or in some other equitable manner determined by Delphi.

In the event that full cumulative dividends on the Delphi Series AA preferred stock and any other series of stock ranking, as to dividends, on a parity with the Delphi Series AA preferred stock have not been paid or declared and set apart for payment, the Delphi Series AA preferred stock may not be redeemed in part and Delphi may not purchase or acquire shares of Delphi Series AA preferred stock or such other stock except pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Delphi Series AA preferred stock and such other stock.

On and after the date fixed for redemption, provided that the redemption price (including any declared and unpaid dividends to the date fixed for redemption) has been duly paid or provided for, dividends shall cease to accrue on the Delphi Series AA preferred stock called for redemption, Delphi Series AA preferred stock shall no longer be deemed to be outstanding and all rights of the holders of such shares as stockholders of Delphi shall cease except the right to receive the monies payable upon such redemption, without interest from the date of notice of redemption, upon surrender of the certificates evidencing the Delphi Series AA preferred stock.

Notice of any redemption will be mailed at least 30 days, but not more than 60 days, prior to any redemption date to each holder of the Delphi Series AA preferred stock to be redeemed at such holder’s registered address.

In the event Delphi liquidates, dissolves, or winds up, the holders of Delphi Series AA preferred stock at the time outstanding will be entitled to receive liquidation distributions in the amount of $25 per share, plus in each case, the declared and unpaid quarterly dividend to the date of liquidation, out of the assets of Delphi legally available for distribution to Delphi’s shareholders, before any distribution of assets is made to holders of Delphi’s common shares or any securities ranking junior to the Delphi Series AA preferred stock and subject to the rights of the holders of any class or series of securities ranking senior to or on a parity with the Delphi Series AA preferred stock upon liquidation and the rights of Delphi’s depositors and creditors. After payment of the full amount of the liquidation distributions to which they are entitled, the holders of the Delphi Series AA preferred stock will have no right or claim to any of Delphi’s remaining assets. In the event that, upon any liquidation, dissolution, or winding up, Delphi’s available assets are insufficient to pay the amount of the liquidation distributions on all outstanding Delphi Series AA preferred stock and the corresponding amounts payable on any other securities of equal ranking, then the holders of the Delphi Series AA preferred stock and any other securities of equal ranking will share ratably in any such distribution of assets in proportion to the full liquidation distributions to which they would otherwise be respectively entitled.

For these purposes, Delphi’s consolidation or merger with or into any other entity, the consolidation or merger of any other entity with or into Delphi, or the sale of all or substantially all of Delphi’s property or business, will not be deemed to constitute the liquidation, dissolution or winding up of Delphi.

Holders of the Delphi Series AA preferred stock will not have any voting rights, except as expressly required by law, and will not be entitled to elect any directors.

The Delphi Series AA preferred stock is to be issued, if ever, only in connection with an automatic exchange, on a share for share basis, for all of our outstanding Series A preferred stock. The exchange will take place upon the occurrence of an exchange event. See “Description of Delphi Properties Capital Stock — Series A Preferred Stock — Automatic Exchange” above.

Certain provisions of the DGCL, Delphi’s Certificate of Incorporation and Delphi’s Bylaws summarized below may have an anti-takeover effect. This may delay, deter or prevent a tender offer or takeover attempt that a shareholder might consider in its best interests, including those attempts that might result in a premium over the market price for its shares.

Delphi is a Delaware corporation and subject to Section 203 of the DGCL. Generally, Section 203 prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested shareholder” for a period of three years after the time such shareholder became an interested shareholder unless, as described below, certain conditions are satisfied. Thus, it may make acquisition of control of Delphi more difficult. The prohibitions in Section 203 of the DGCL do not apply if:


	•	prior to the time the shareholder became an interested shareholder, the board of directors of the corporation approved either the business combination or the transaction which resulted in the shareholder becoming an interested shareholder;


	•	upon consummation of the transaction which resulted in the shareholder becoming an interested shareholder, the interested shareholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; or

	•	at or subsequent to the time the shareholder became an interested shareholder, the business combination is approved by the board of directors and authorized by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested shareholder.


	•	any merger or consolidation of the corporation with the interested shareholder;

	•	any sale, lease, exchange or other disposition, except proportionately as a shareholder of such corporation, to or with the interested shareholder of assets of the corporation having an aggregate market value equal to 10% or more of either the aggregate market value of all the assets of the corporation or the aggregate market value of all the outstanding stock of the corporation;

	•	certain transactions resulting in the issuance or transfer by the corporation of stock of the corporation to the interested shareholder;

	•	certain transactions involving the corporation which have the effect of increasing the proportionate share of the stock of any class or series of the corporation which is owned by the interested shareholder; or

	•	certain transactions in which the interested shareholder receives financial benefits provided by the corporation.


	•	any person that owns 15% or more of the outstanding voting stock of the corporation;

	•	any person that is an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting stock of the corporation at any time within the three-year period prior to the date on which it is sought to be determined whether such person is an interested shareholder; and

	•	the affiliates or associates of any such person.

Delphi’s Bylaws contain provisions requiring that advance notice be delivered to Delphi of any business to be brought by a shareholder before an annual or special meeting of shareholders and providing for certain procedures to be followed by shareholders in nominating persons for election to Delphi’s board. Generally such advance notice provisions require that the shareholder must give written notice to the secretary:


	•	in the case of an annual meeting, not less than 90 days nor more than 120 days before the first anniversary of the preceding year’s annual meeting of shareholders; and

	•	in the case of a special meeting, not less than 90 days, or, if later, 10 days after the first public announcement of the date of the special meeting, nor more than 120 days prior to the scheduled date of such special meeting.

Delphi’s Bylaws provide, in accordance with Delphi’s Certificate of Incorporation, that except as may be provided in connection with the issuance of any series of preferred stock, the number of directors shall be fixed from time to time exclusively pursuant to a resolution adopted by a majority of the Whole Board (as such term is defined in Delphi’s Certificate of Incorporation), but shall not be less than three. Delphi’s Certificate of Incorporation provides for a classified board of directors, consisting of three classes as nearly equal in size as practicable. Each class holds office until the third annual shareholders’ meeting for election of directors following the most recent election of such class.

Subject to the rights of the holders of any series of preferred stock to elect and remove additional directors under specified circumstances, a director of Delphi may be removed only for cause by affirmative vote of the holders of at least a majority of the voting power of all Delphi’s outstanding shares generally entitled to vote in the election of directors (the “Voting Stock”), voting together as a single class, and vacancies on Delphi’s board may only be filled by the affirmative vote of a majority of the remaining directors.

Delphi’s Bylaws permit the board to specify, from time to time, certain categories of matters that will require prior board or board committee approval and further permit the board to specify particular matters which require approval of up to 80% of the Whole Board. Currently, no categories of matters have been specified as subject to this Bylaw provision.

Delphi’s Certificate of Incorporation provides that shareholders may not act by written consent in lieu of a meeting. Special meetings of the shareholders may be called only by a majority of the Whole Board, but may not be called by shareholders.

Delphi’s Certificate of Incorporation also contains a “fair price” provision that applies to certain business combination transactions involving any person or group that is or has announced or publicly disclosed a plan or intention to become the beneficial owner of at least 10% of Delphi’s outstanding Voting Stock (an “Interested Shareholder”). The “fair price” provision requires that, except as described below, the affirmative vote of the holders of at least 66 2/3% of the Voting Stock not beneficially owned by the Interested Shareholder is required to approve a business combination transaction with Delphi and its subsidiaries involving or proposed by the Interested Shareholder, or its affiliates and associates, or to approve any agreement or other arrangement providing for any such business combination transaction. For such purpose, “business combination” includes:


	•	any merger or consolidation;

	•	any (1) sale, lease, exchange, mortgage, pledge, transfer or other disposition of assets of Delphi or any of its subsidiaries to or for the benefit of, (2) purchase by Delphi or any of its subsidiaries from, (3) issuance of securities by Delphi or any of its subsidiaries to, (4) investment, loan, advance, guarantee, participation or other extension of credit by Delphi or any of its subsidiaries to, from, or with, or (5) establishment of a partnership, joint venture or other joint enterprise with or for the benefit of, the Interested Shareholder having an aggregate fair market value of $25 million or more;

	•	the adoption of any plan or proposal for the liquidation or dissolution of Delphi; and

	•	certain reclassifications of securities or recapitalizations of Delphi.

This voting requirement will not apply to any transaction approved by a majority of Delphi’s Continuing Directors (as such term is defined in Delphi’s Certificate of Incorporation). This voting requirement will also not apply to any transaction involving the payment of consideration to holders of Delphi’s outstanding capital stock in which the following “fair price” conditions, among others, are met:


	•	the consideration to be received by the holders of each class of capital stock of Delphi is at least equal to the greater of:


	(a)	the highest per share price paid for shares of such class by the Interested Shareholder in the two years prior to the proposed business combination or in the transaction in which it became an Interested Shareholder, whichever is higher, or

	(b)	the fair market value of the shares of such class on the date of the announcement of the proposed business combination or the date on which it became an Interested Shareholder, whichever is higher; and


	•	the consideration to be received by the holders of each class of capital stock of Delphi is the same form and amount as that paid by the Interested Shareholder in connection with its acquisition of such class of capital stock.

This provision could have the effect of delaying or preventing a change in control of Delphi in a transaction or series of transactions that did not satisfy the “fair price” criteria.

The provisions of Delphi’s Certificate of Incorporation relating to Delphi’s board, the limitation of actions by shareholders taken by written consent, the calling of special shareholder meetings and other shareholder actions and proposals may be amended only by the affirmative vote of the holders of at least 80% of the Voting Stock. The “fair price” provisions of Delphi’s Certificate of Incorporation may be amended by the affirmative vote of the holders of at least 66 2/3% of the Voting Stock, excluding the Interested Shareholder, unless such amendment is unanimously recommended by Delphi’s board, a majority of whom are Continuing Directors.

In general, Delphi’s Bylaws may be altered or repealed and new Bylaws adopted by the holders of a majority of the Voting Stock or by a majority of the Whole Board. However, certain provisions, including those relating to the limitation of actions by shareholders taken by written consent, the calling of special shareholder meetings, other shareholder actions and proposals and certain matters related to Delphi’s board, may be amended only by the affirmative vote of holders of at least 80% of the Voting Stock.

Delphi has adopted a shareholder rights plan that provides each Delphi shareholder with one right to purchase 1/100th of a share of Delphi’s Series A Junior Preferred Stock (a “Right”). The Rights have certain anti-takeover effects and are intended to discourage coercive or unfair takeover tactics and to encourage any potential acquiror to negotiate a price fair to all shareholders. The Rights may cause substantial dilution to an acquiring party that attempts to acquire us on terms not approved by Delphi’s board, but they will not interfere with any merger or other business combination that is approved by Delphi’s board.

The Rights are not exercisable until a party acquires beneficial ownership of 15% or more of the outstanding shares of Delphi’s common stock or commences or publicly announces for the first time a tender offer to do so. Until a Right is exercised, the holder thereof will have no rights as a preferred shareholder.

The following is a summary of the material federal income tax consequences of the offering to us and to holders of our Series A preferred stock and Delphi Series AA preferred stock. This discussion addresses only holders that hold preferred stock as capital assets and does not deal with all aspects of taxation that may be relevant to particular holders in light of their personal investment or tax circumstances. This section also does not deal with all aspects of taxation that may be relevant to certain types of holders to which special provisions of the federal income tax laws apply, including: dealers in securities or currencies; traders in securities that elect to use a mark-to-market method of accounting for their securities holdings; banks; tax-exempt organizations; certain insurance companies; persons liable for the alternative minimum tax; persons that hold securities that are a hedge, that are hedged against currency risks or that are part of a straddle or conversion transaction; and persons whose functional currency is not the United States dollar.

This summary is based on the Internal Revenue Code, its legislative history, existing and proposed regulations under the Internal Revenue Code, published rulings and court decisions. This summary describes the provisions of these sources of law only as they are currently in effect. All of these sources of law may change at any time, and any change in the law may apply retroactively.

We urge you to consult with your own tax advisors regarding the tax consequences to you of acquiring, owning and selling preferred stock, and of our election to be taxed as a real estate investment trust, including the tax consequences under state, local, foreign and other tax laws and the possible effects of changes in federal or other tax laws.

We will elect to be taxable as a REIT under Section 856 through 859 of the Internal Revenue Code and the applicable Treasury regulations and any other federal income tax authorities relating to qualification as a REIT, commencing with our taxable year ending December 31, 2003. We believe that, commencing with our taxable year ending December 31, 2003, we will be owned and organized and operated in such a manner as to qualify for taxation as a REIT. While it is our intention to do so, it is not certain that we will continue to be owned and organized and operated in a manner so as to qualify or remain qualified as a REIT for federal income tax purposes.

Shearman & Sterling, acting as our counsel in connection with the offering, has rendered an opinion as to our qualification and taxation as a REIT, which is described below. Shearman & Sterling also has reviewed this summary of federal income tax consequences and has rendered an opinion that the information in the summary, to the extent it relates to matters of law or legal conclusions, is accurate in all material respects. The provisions of the Internal Revenue Code, Treasury regulations promulgated thereunder and other federal income tax laws relating to the qualification as and taxation of REITs are highly technical and complex. The following discussion summarizes material aspects of such provisions. In the opinion of Shearman & Sterling, commencing with our taxable year ending December 31, 2003, we will be organized in conformity with the requirements for qualification as a REIT, and our proposed method of operation will enable us to meet the federal income tax requirements for qualification as a REIT. You should be aware, however, that opinions of counsel are not binding on the IRS or any court. The opinion of Shearman & Sterling is based upon various factual assumptions and conditions, upon certain factual representations by us (including representations regarding the nature of our assets and income and the future conduct of our business) and, as to certain factual matters, upon the statements and representations contained in the certificate provided to Shearman & Sterling by our officers (in each case without independent investigation).

Our qualification as a REIT will depend upon our ability to meet, through actual annual operating results, the distribution levels, diversity of stock ownership and other requirements discussed below, the satisfaction of which will not be reviewed by Shearman & Sterling on a continuing basis. No assurance can be given that the actual results of our operation for any one taxable year will satisfy such requirements. See “Risk Factors — Risks Relating to Our Status as a REIT — We may fail to qualify as a REIT, which would permit us to redeem your shares of Series A preferred stock under certain circumstances, or result

As a REIT, we generally will not have to pay federal corporate income taxes on our net income that we currently distribute to stockholders. This treatment substantially eliminates the “double taxation” at the corporate and stockholder levels that generally results from investment in a regular corporation.


	•	First, we will have to pay tax at regular corporate rates on any undistributed REIT taxable income, including undistributed net capital gains.

	•	Second, under certain circumstances, we may have to pay the alternative minimum tax on our items of tax preference.

	•	Third, if we have (1) net income from the sale or other disposition of “foreclosure property”, as defined in the Internal Revenue Code, which is held primarily for sale to customers in the ordinary course of business, or (2) other non-qualifying income from foreclosure property, we will have to pay tax at the highest corporate rate on that income.

	•	Fourth, if we have net income from “prohibited transactions”, as defined in the Internal Revenue Code, we will have to pay a 100% tax on that income. Prohibited transactions are, in general, certain sales or other dispositions of property, other than foreclosure property, held primarily for sale to customers in the ordinary course of business.

	•	Fifth, if we should fail to satisfy the 75% gross income test or the 95% gross income test, as discussed below under “— Requirements for Qualification — Income Tests”, but have nonetheless maintained our qualification as a REIT because we have satisfied some other requirements, we will have to pay a 100% tax on an amount equal to (1) the gross income attributable to the greater of (a) 75% of our gross income over the amount of gross income that is qualifying income for purposes of the 75% test, and (b) 90% of our gross income over the amount of gross income that is qualifying income for purposes of the 95% test, multiplied by (2) a fraction intended to reflect our profitability.

	•	Sixth, if we should fail to distribute during each calendar year at least the sum of (1) 85% of our REIT ordinary income for that year, (2) 95% of our REIT capital gain net income for that year, and (3) any undistributed taxable income from prior periods, we will have to pay a 4% excise tax on the excess of that required distribution over the amounts actually distributed.

	•	Seventh, if we acquire any asset from a C corporation in one of certain transactions in which we must adopt the basis of the asset or any other property in the hands of the C corporation as the basis of the asset in our hands, and we recognize gain on the disposition of that asset during the 10-year period beginning on the date on which we acquire that asset, then we will have to pay tax on the built-in gain at the highest regular corporate rate. A “C corporation” means generally a corporation that has to pay full corporate-level tax. “Built-in gain” is the excess of the fair market value of the asset at the time it is acquired by us from a C corporation over our adjusted basis in the asset at such time.

	•	Eighth, if we receive certain non-arm’s length income from a taxable REIT subsidiary (as defined under “— Requirements for Qualification — Asset Tests”), or as a result of services provided by a taxable REIT subsidiary to tenants, we will be subject to a 100% tax on the amount of our non-arm’s length income.

The Internal Revenue Code defines a REIT as a corporation, trust or association:


	•	which is managed by one or more trustees or directors;

	•	the beneficial ownership of which is evidenced by transferable shares, or by transferable certificates of beneficial interest;

	•	which would otherwise be taxable as a domestic corporation, but for Sections 856 through 859 of the Internal Revenue Code;

	•	which is neither a financial institution nor an insurance company to which certain provisions of the Internal Revenue Code apply;

	•	the beneficial ownership of which is held by 100 or more persons;

	•	during the last half of each taxable year, not more than 50% in value of the outstanding stock of which is owned, directly or constructively, by five or fewer individuals, as defined in the Internal Revenue Code to include certain entities; and

	•	which meets certain other tests, described below, regarding the nature of its income and assets.

The Internal Revenue Code provides that the conditions described in the first through fourth bullet points above must be met during the entire taxable year and that the condition described in the fifth bullet point above must be met during at least 335 days of a taxable year of 12 months, or during a proportionate part of a taxable year of less than 12 months. The conditions described in the fifth and sixth bullet points will not apply in our first taxable year as a REIT.

We have satisfied the conditions described in the first through fifth bullet points of the first paragraph of this section and believe that we have also satisfied the condition described in the sixth bullet point of the preceding paragraph. In addition, our charter provides for restrictions regarding the transfer of our shares. These restrictions are intended to assist us in continuing to satisfy the share ownership requirements described in the fifth and sixth bullet points of the preceding paragraph. The ownership and transfer restrictions pertaining to the shares are described above in this prospectus under the heading “Description of Delphi Properties Capital Stock — Series A Preferred Stock — Restrictions on Ownership and Transfer”.

Income Tests. To maintain our qualification as a REIT, we annually must satisfy two gross income requirements.


	•	First, we must derive at least 75% of our gross income, excluding gross income from prohibited transactions, for each taxable year directly or indirectly from investments relating to real property or mortgages on real property, including interest on loans secured by real estate and “rents from real property,” as defined in the Internal Revenue Code, or from certain types of temporary investments.

	•	Second, we must derive at least 95% of our gross income, excluding gross income from prohibited transactions, for each taxable year from real property investments as described in the preceding bullet point, dividends, interest and gain from the sale or disposition of stock or securities, or from any combination of the foregoing.

As of the date of this prospectus, we do not own any rental income generating property nor do we have any plans to acquire any such property.

If we fail to satisfy one or both of the 75% or 95% gross income tests for any taxable year, we may nevertheless qualify as a REIT for that year if we satisfy the requirements of other provisions of the


	•	our failure to meet the income tests was due to reasonable cause and not due to willful neglect;

	•	we attach a schedule of the sources of our income to our federal income tax return; and

	•	any incorrect information on the schedule was not due to fraud with intent to evade tax.

We might not be entitled to the benefit of these relief provisions, however. As discussed in “— Requirements for Qualification — Annual Distribution Requirements” below, even if these relief provisions apply, we would have to pay a tax on our income in excess of that permitted under the 75% or 95% gross income test.

Asset Tests. At the close of each quarter of our taxable year, we must also satisfy three tests relating to the nature of our assets.


	•	First, at least 75% of the value of our total assets must be represented by real estate assets, including (1) stock issued by another REIT, (2) for a period of one year from the date of our receipt of proceeds of an offering of our shares of capital stock or publicly offered debt with a term of at least five years, stock or debt instruments purchased with these proceeds, and (3) cash, cash items and government securities.

	•	Second, not more than 25% of the value of our total assets may be represented by securities other than those in the 75% asset class.

	•	Third, not more than 20% of the value of our total assets may constitute securities issued by one or more taxable REIT subsidiaries, and of the investments included in the 25% asset class, the value of any one issuer’s securities, other than securities qualifying as assets under the 75% of value test or issued by a taxable REIT subsidiary, owned by us may not exceed 5% of the value of our total assets. Moreover, we may not own more than 10% of the vote or value of the outstanding securities of any one issuer, unless the securities qualify as assets under the 75% of value test, are issued by taxable REIT subsidiaries, or are debt instruments that are considered straight debt under a safe harbor provision of the Internal Revenue Code. For these purposes, a taxable REIT subsidiary is any corporation in which we own an interest that joins with us in making an election to be treated as a “taxable REIT subsidiary” and certain subsidiaries of a taxable REIT subsidiary, if the subsidiaries do not engage in certain activities.

Annual Distribution Requirements. To qualify as a REIT, we are required to distribute dividends, other than capital gain dividends, to our stockholders in an amount at least equal to (1) the sum of (a) 90% of our “real estate investment trust taxable income,” computed without regard to the dividends paid deduction and our net capital gain, and (b) 90% of the net after-tax income, if any, from foreclosure property, minus (2) the sum of certain items of non-cash income.

In addition, if we dispose of any asset within 10 years of acquiring it, we will be required to distribute at least 90% of the after-tax built-in gain, if any, recognized on the disposition of the asset.

These distributions must be paid in the taxable year to which they relate, or in the following taxable year if declared before we timely file our tax return for the year to which they relate and if paid on or before the first regular dividend payment after the declaration.

To the extent that we do not distribute or are not treated as having distributed all of our net capital gain or distribute or are treated as having distributed at least 90%, but less than 100%, of our real estate investment trust taxable income, as adjusted, we will have to pay tax on those amounts at regular ordinary and capital gain corporate tax rates. Furthermore, if we fail to distribute during each calendar year at least the sum of (1) 85% of our ordinary income for that year, (2) 95% of our capital gain net income for that year, and (3) any undistributed taxable income from prior periods, we would have to pay a 4% excise tax on the excess of the required distribution over the amounts that are actually distributed.

From time to time, we may not have sufficient cash or other liquid assets to meet the 90% distribution requirement due to timing differences between (1) when we actually receive income and when we actually pay deductible expenses, and (2) when we include the income and deduct the expenses in arriving at our taxable income. If timing differences of this kind occur, to meet the 90% distribution requirement, we may find it necessary to arrange for short-term, or possibly long-term, borrowings or to pay dividends in respect of our Series A preferred stock in the form of taxable stock dividends.

Under certain circumstances, we may be able to rectify a failure to meet the distribution requirement for a year by paying “deficiency dividends” to stockholders in a later year, which may be included in our deduction for dividends paid for the earlier year. Thus, we may be able to avoid being taxed on amounts distributed as deficiency dividends; however, we will be required to pay interest based upon the amount of any deduction taken for deficiency dividends.

If we fail to qualify for taxation as a REIT in any taxable year and we have not redeemed the Series A preferred stock, your shares of Series A preferred stock will be exchanged automatically on a share-for-share basis for Delphi Series AA preferred stock. Further, to the extent the statutory relief provisions do not apply, we will have to pay tax, including any applicable alternative minimum tax, on our taxable income at regular corporate rates. In addition, we might be taxed as a member of the consolidated group that includes Delphi. We will not be able to deduct distributions to stockholders in any year in which we fail to qualify, nor will we be required to make distributions to stockholders. In this event, to the extent of current and accumulated earnings and profits, all distributions to stockholders will be taxable to the stockholders as ordinary income and corporate distributees may be eligible for the dividends received deduction if they satisfy the relevant provisions of the Internal Revenue Code. Unless entitled to relief under specific statutory provisions, we will also be disqualified from taxation as a REIT for the four taxable years following the year during which qualification was lost. We might not be entitled to such statutory relief in all circumstances.

On January 7, 2003, the Bush Administration released a proposal that would exclude corporate dividends from a shareholder’s taxable income, to the extent that corporate income tax has been paid on the earnings from which the dividends are paid. REIT dividends would not be exempt from income tax in the hands of an individual shareholder because a REIT’s income generally is not subject to corporate level tax. This proposal could cause stock in non-REIT corporations to be more attractive to inventors than stock in REITs, which may negatively affect the value and market for your shares of Series A preferred stock. There can be no assurance regarding the form in which this proposal ultimately will be enacted or whether it in fact will be enacted.

As used in this section, the term “U.S. shareholder” means a holder of preferred stock who, for federal income tax purposes, is:


	•	a citizen or resident of the United States;

	•	a domestic corporation;

	•	an estate whose income is subject to federal income taxation regardless of its source; or

	•	a trust if a U.S. court can exercise primary supervision over the trust’s administration and one or more United States persons have authority to control all substantial decisions of the trust.

As long as we qualify as a REIT, distributions made by us out of our current or accumulated earnings and profits, and not designated as capital gain dividends, will constitute dividends taxable to our taxable U.S. shareholders as ordinary income. Distributions of this kind will not be eligible for the dividends received deduction in the case of U.S. shareholders that are corporations. Distributions made by us that we properly designate as capital gain dividends will be taxable to U.S. shareholders as gain from the sale of a capital asset held for more than one year, to the extent that they do not exceed our actual net capital gain for the taxable year, without regard to the period for which a U.S. shareholder has held his shares. Thus, with certain limitations, capital gain dividends received by an individual U.S. shareholder may be eligible for reduced rates of taxation. U.S. shareholders that are corporations may, however, be required to treat up to 20% of certain capital gain dividends as ordinary income. Because we do not expect, however, to recognize substantial capital gains, we expect most of our dividends to be ordinary income.

To the extent that we make distributions, not designated as capital gain dividends, in excess of our current and accumulated earnings and profits, these distributions will be treated first as a tax-free return of capital to each U.S. shareholder. Thus, these distributions will reduce the adjusted tax basis which the U.S. shareholder has in his shares by the amount of the distribution, but not below zero. Distributions in excess of a U.S. shareholder’s adjusted tax basis in his shares will be taxable as capital gains, provided that the shares have been held as a capital asset. For purposes of determining the portion of distributions on separate classes of shares that will be treated as dividends for federal income tax purposes, current and accumulated earnings and profits will be allocated to distributions resulting from priority rights of preferred shares before being allocated to other distributions.

Dividends authorized by us in October, November or December of any year and payable to a shareholder of record on a specified date in any of these months will be treated as both paid by us and received by the shareholder on December 31 of that year, provided that we actually pay the dividend on or before January 31 of the following calendar year. Shareholders may not include in their own income tax returns any of our net operating losses or capital losses.

U.S. shareholders holding shares at the close of our taxable year will be required to include, in computing their long-term capital gains for the taxable year in which the last day of our taxable year falls, the amount that we designate in a written notice mailed to our shareholders. We may not designate amounts in excess of our undistributed net capital gain for the taxable year. Each U.S. shareholder required to include the designated amount in determining the shareholder’s long-term capital gains will be deemed to have paid, in the taxable year of the inclusion, the tax paid by us in respect of the undistributed net capital gains. U.S. shareholders to whom these rules apply will be allowed a credit or a refund, as the case may be, for the tax they are deemed to have paid. U.S. shareholders will increase their basis in their shares by the difference between the amount of the includible gains and the tax deemed paid by the shareholder in respect of these gains.

Distributions made by us and gain arising from a U.S. shareholder’s sale or exchange of shares will not be treated as passive activity income. As a result, U.S. shareholders generally will not be able to apply any passive losses against that income or gain.

When a U.S. shareholder sells or otherwise disposes of shares, the shareholder will recognize gain or loss for federal income tax purposes in an amount equal to the difference between (1) the amount of cash and the fair market value of any property received on the sale or other disposition, and (2) the holder’s adjusted tax basis in the shares. This gain or loss will be capital gain or loss if the U.S. shareholder has held the shares as a capital asset. The gain or loss will be long-term gain or loss if the U.S. shareholder has held the shares for more than one year. Capital gain of an individual U.S. shareholder is generally taxed at a maximum rate of 20% where the property is held for more than one year, and 18% where the property is held for more than 5 years. In general, any loss recognized by a U.S. shareholder when the shareholder sells or otherwise disposes of shares of Series A preferred stock that the shareholder has held for six months or less, after applying certain holding period rules, will be treated as a long-term capital loss, to the extent of distributions received by the shareholder from us which were required to be treated as long-term capital gains.

The exchange of our Series A preferred stock for Delphi Series AA preferred stock upon the occurrence of an exchange event will be treated as a taxable disposition of the Series A preferred stock. You generally will recognize capital gain or loss, as described above, and your holding period for the Delphi Series AA preferred stock will not include your holding period for the Series A preferred stock surrendered in the automatic exchange.

Backup Withholding. We will report to our U.S. shareholders and the IRS the amount of dividends paid during each calendar year, and the amount of tax withheld, if any. Under the backup withholding rules, backup withholding may apply to a shareholder with respect to dividends paid unless the holder (1) is a corporation or comes within certain other exempt categories and, when required, demonstrates this fact, or (2) provides a taxpayer identification number, certifies as to no loss of exemption from backup withholding, and otherwise complies with applicable requirements of the backup withholding rules. The IRS may also impose penalties on a U.S. shareholder that does not provide us with his correct taxpayer identification number. A shareholder may credit any amount paid as backup withholding against the shareholder’s income tax liability. In addition, we may be required to withhold a portion of capital gain distributions, if any, to shareholders who fail to certify their non-foreign status to us.

Taxation of Tax-Exempt Shareholders. The IRS has ruled that amounts distributed as dividends by a REIT generally do not constitute unrelated business taxable income when received by a tax-exempt entity. Based on that ruling, provided that a tax-exempt shareholder is not an entity described in the next paragraph and has not held its shares as “debt financed property” within the meaning of the Internal Revenue Code, and the shares are not otherwise used in a trade or business, the dividend income from shares will not be unrelated business taxable income to a tax-exempt shareholder. Similarly, income from the sale of shares will not constitute unrelated business taxable income unless the tax-exempt shareholder has held the shares as “debt financed property” within the meaning of the Internal Revenue Code or has used the shares in a trade or business.

Income from an investment in our shares will constitute unrelated business taxable income for tax-exempt shareholders that are social clubs, voluntary employee benefit associations, supplemental unemployment benefit trusts, and qualified group legal services plans exempt from federal income taxation under the applicable subsections of Section 501(c) of the Internal Revenue Code, unless the organization is able to properly deduct amounts set aside or placed in reserve for certain purposes so as to offset the income generated by our shares. Prospective investors of the types described in the preceding sentence should consult their own tax advisors concerning these “set aside” and reserve requirements.

Notwithstanding the foregoing, however, a portion of the dividends paid by a “pension-held REIT” will be treated as unrelated business taxable income to any entity which:


	•	is described in Section 401(a) of the Internal Revenue Code;

	•	is tax exempt under Section 501(a) of the Internal Revenue Code; and

	•	holds more than 10% (by value) of the equity interests in the REIT.

Tax-exempt pension, profit-sharing and stock bonus funds that are described in Section 401(a) of the Internal Revenue Code are referred to below as “qualified trusts”. A REIT is a “pension-held REIT” if:


	•	it would not have qualified as a REIT but for the fact that Section 856(h)(3) of the Internal Revenue Code provides that stock owned by qualified trusts will be treated, for purposes of the “not closely held” requirement, as owned by the beneficiaries of the trust (rather than by the trust itself); and

	•	either (1) at least one qualified trust holds more than 25% by value of the interests in the REIT, or (2) one or more qualified trusts, each of which owns more than 10% by value of the interests in the REIT, hold in the aggregate more than 50% by value of the interests in the REIT.

The percentage of any REIT dividend treated as unrelated business taxable income to a qualifying trust is equal to the ratio of (1) the gross income of the REIT from unrelated trades or businesses,

determined as though the REIT were a qualified trust, less direct expenses related to this gross income, to (2) the total gross income of the REIT, less direct expenses related to the total gross income. A de minimis exception applies where this percentage is less than 5% for any year. We do not expect to be classified as a pension-held REIT.

The rules described above under the heading “U.S. Shareholders” concerning the inclusion of our designated undistributed net capital gains in the income of our shareholders will apply to tax-exempt entities. Thus, tax-exempt entities will be allowed a credit or refund of the tax deemed paid by these entities in respect of the includible gains.

The rules governing U.S. federal income taxation of nonresident alien individuals, foreign corporations, foreign partnerships and estates or trusts that in either case are not subject to United States federal income tax on a net income basis, which we call “non-U.S. shareholders”, are complex. The following discussion is only a limited summary of these rules. Prospective non-U.S. shareholders should consult with their own tax advisors to determine the effect of U.S. federal, state and local income tax laws on an investment in our Series A preferred stock, including any reporting requirements.

Ordinary Dividends. Distributions, other than distributions that are treated as attributable to gain from sales or exchanges by us of U.S. real property interests, as discussed below, and other than distributions designated by us as capital gain dividends, will be treated as ordinary income to the extent that they are made out of our current or accumulated earnings and profits. A withholding tax equal to 30% of the gross amount of the distribution will ordinarily apply to distributions of this kind to non-U.S. shareholders, unless an applicable tax treaty reduces that tax. However, if income from the investment in the shares is treated as effectively connected with the non-U.S. shareholder’s conduct of a U.S. trade or business or is attributable to a permanent establishment that the non-U.S. shareholder maintains in the United States, if that is required by an applicable income tax treaty as a condition for subjecting the non-U.S. shareholder to U.S. taxation on a net income basis, tax at graduated rates will generally apply to the non-U.S. shareholder in the same manner as U.S. shareholders are taxed with respect to dividends, and the 30% branch profits tax may also apply if the shareholder is a foreign corporation. We expect to withhold U.S. tax at the rate of 30% on the gross amount of any dividends, other than dividends treated as attributable to gain from sales or exchanges of U.S. real property interests and capital gain dividends, paid to a non-U.S. shareholder, unless (1) a lower treaty rate applies and the required form evidencing eligibility for that reduced rate is filed with us or the appropriate withholding agent, or (2) the non-U.S. shareholder files an IRS Form W-8 ECI or a successor form with us or the appropriate withholding agent claiming that the distributions are effectively connected with the non-U.S. shareholder’s conduct of a U.S. trade or business.

Distributions to a non-U.S. shareholder that are designated by us at the time of distribution as capital gain dividends which are not attributable to or treated as attributable to the disposition by us of a U.S. real property interest generally will not be subject to federal income taxation, except as described below.

Return of Capital. Distributions in excess of our current and accumulated earnings and profits, which are not treated as attributable to the gain from our disposition of a U.S. real property interest, will not be taxable to a non-U.S. shareholder to the extent that they do not exceed the adjusted tax basis of the non-U.S. shareholder’s shares. Distributions of this kind will instead reduce the adjusted tax basis of the shares. To the extent that distributions of this kind exceed the adjusted tax basis of a non-U.S. shareholder’s shares, they will give rise to tax liability if the non-U.S. shareholder otherwise would have to pay tax on any gain from the sale or disposition of our shares, as described below. If it cannot be determined at the time a distribution is made whether the distribution will be in excess of current and accumulated earnings and profits, withholding will apply to the distribution at the rate applicable to dividends. However, the non-U.S. shareholder may seek a refund of these amounts from the IRS if it is subsequently determined that the distribution was, in fact, in excess of our current and accumulated earnings and profits.

Capital Gain Dividends. For any year in which we qualify as a REIT, distributions that are attributable to gain from sales or exchanges by us of U.S. real property interests (which, unlike the definition of real estate assets for REIT qualification purposes, does not include interests in many loans secured by real property) will be taxed to a non-U.S. shareholder under the provisions of the Foreign Investment in Real Property Tax Act of 1980, as amended. Under this statute, these distributions are taxed to a non-U.S. shareholder as if the gain were effectively connected with a U.S. business. Thus, non-U.S. shareholders will be taxed on the distributions at the normal capital gain rates applicable to U.S. shareholders, subject to any applicable alternative minimum tax and special alternative minimum tax in the case of individuals. We are required by applicable Treasury regulations under this statute to withhold 35% of any distribution that we could designate as a capital gain dividend. However, if we designate as a capital gain dividend a distribution made before the day we actually effect the designation, then although the distribution may be taxable to a non-U.S. shareholder, withholding does not apply to the distribution under this statute. Rather, we must effect the 35% withholding from distributions made on and after the date of the designation, until the distributions withheld from equal the amount of the prior distribution designated as a capital gain dividend. The non-U.S. shareholder may credit the amount withheld against its U.S. tax liability. Capital gains dividends that are not subject to the Foreign Investment in Real Property Tax Act of 1980, as amended, will be subject to the same rules that apply to gains from the sale or exchange of Series A preferred stock to which the Foreign Investment in Real Property Tax Act does not apply, as described below.

Sales of Shares. Gain recognized by a non-U.S. shareholder upon a sale or exchange of Series A preferred stock generally will not be taxed under the Foreign Investment in Real Property Tax Act if we are a “domestically controlled REIT”, defined generally as a REIT, less than 50% in value of whose stock is and was held directly or indirectly by foreign persons at all times during a specified testing period. We believe that we are and will continue to be a domestically controlled REIT, and, therefore, that taxation under this statute generally will not apply to the sale of our shares. However, gain to which this statute does not apply will be taxable to a non-U.S. shareholder if investment in the shares is treated as effectively connected with the non-U.S. shareholder’s U.S. trade or business or is attributable to a permanent establishment that the non-U.S. shareholder maintains in the U.S. if that is required by an applicable income tax treaty as a condition for subjecting the non-U.S. shareholder to U.S. taxation on a net income basis. In this case, the same treatment will apply to the non-U.S. shareholder as to U.S. shareholders with respect to the gain. In addition, gain to which the Foreign Investment in Real Property Tax Act does not apply will be taxable to a non-U.S. shareholder if the non-U.S. shareholder is a nonresident alien individual who was present in the United States for 183 days or more during the taxable year and has a “tax home” in the United States, or maintains an office or a fixed place of business in the United States to which the gain is attributable. In this case, a 30% tax will apply to the nonresident alien individual’s capital gains.

If we were not a domestically controlled REIT, tax under the Foreign Investment in Real Property Tax Act would apply to a non-U.S. shareholder’s sale of shares only if the selling non-U.S. shareholder owned more than 5% of the class of shares sold at any time during a specified period. This period is generally the shorter of the period that the non-U.S. shareholder owned the shares sold or the five-year period ending on the date when the shareholder disposed of the shares. If tax under this statute applies to the gain on the sale of shares, the same treatment would apply to the non-U.S. shareholder as to U.S. shareholders with respect to the gain, subject to any applicable alternative minimum tax and a special alternative minimum tax in the case of nonresident alien individuals.

Additional issues may arise pertaining to information reporting and backup withholding with respect to a non-U.S. shareholder. A non-U.S. shareholder should consult with a tax advisor with respect to any such information reporting and backup withholding requirements. Backup withholding with respect to a non-U.S. shareholder is not an additional tax. Rather, the amount of any backup withholding with respect to a payment to a non-U.S. shareholder will be allowed as a credit against any federal income tax liability

Preferred shares held by a non-U.S. shareholder at the time of death will be included in the shareholder’s gross estate for U.S. federal estate tax purposes, unless an applicable estate tax treaty provides otherwise.

State or local taxation may apply to us and our stockholders in various state or local jurisdictions, including those in which we or they transact business or reside. The state and local tax treatment of us and our stockholders may not conform to the federal income tax consequences discussed above. Consequently, prospective stockholders should consult with their own tax advisors regarding the effect of state and local tax laws on an investment in us.

The fiduciary standards of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), should be considered by the fiduciary of a pension, profit-sharing or other employee benefit plan subject to Title I of ERISA (an “ERISA Plan”) in the context of the ERISA Plan’s particular circumstances before authorizing an investment in our Series A preferred stock (and the Delphi Series AA preferred stock into which our Series A preferred stock is exchangeable upon the occurrence of an exchange event). Among other factors, the fiduciary should consider whether such an investment is in accordance with the documents governing the ERISA Plan and whether an investment is appropriate for the ERISA Plan in view of its overall investment policy and the composition and diversification of its portfolio.

Section 406 of ERISA and Section 4975 of the Internal Revenue Code prohibit ERISA Plans, as well as individual retirement accounts, self-employment retirement plans and other pension and profit-sharing plans subject to Section 4975 of the Internal Revenue Code (together with ERISA Plans, the “Plans”) from engaging in certain transactions involving “plan assets” with persons who are “parties in interest” under ERISA or “disqualified persons” under the Internal Revenue Code with respect to the Plan. Therefore, fiduciaries of ERISA Plans and persons making investment decisions for other Plans should also consider whether an investment in our Series A preferred stock (and the Delphi Series AA preferred stock into which our Series A preferred stock is exchangeable upon the occurrence of an exchange event) might constitute or give rise to a prohibited transaction under ERISA and the Internal Revenue Code. Delphi and we may each be considered a party in interest or disqualified person with respect to a Plan to the extent Delphi, we or certain of our affiliates are engaged in businesses which provide services to such Plan. If so, the acquisition and holding by such Plan of our Series A preferred stock (or the Delphi Series AA preferred stock into which our Series A preferred stock is exchangeable upon the occurrence of an exchange event) could be a prohibited transaction.

There are five prohibited transaction class exemptions (“PTCEs”) issued by the Department of Labor which could exempt the acquisition and holding of our Series A preferred stock (or the Delphi Series AA preferred stock into which our Series A preferred stock is exchangeable upon the occurrence of an exchange event) from the prohibited transaction provisions of ERISA and the Internal Revenue Code — PTCE 84-14, for certain transactions determined by qualified professional asset managers, PTCE 90-1, for certain transactions involving insurance company pooled separate accounts, PTCE 91-38, for certain transactions involving bank collective investment funds, PTCE 95-60, for certain transactions involving insurance company general accounts, and PTCE 96-23, for certain transactions determined by in-house asset managers.

Under a regulation issued by the U.S. Department of Labor (referred to as the “Plan Asset Regulation”), which governs what constitutes the assets of a Plan, our assets will not be treated as assets of a Plan if our Series A preferred stock qualifies as “publicly-offered securities”. This will be the case under the Plan Asset Regulation if our Series A preferred stock is:


	•	widely held (that is, owned by 100 or more investors independent of us and of each other);

	•	freely transferable; and

	•	sold as part of an offering pursuant to an effective registration statement under the Securities Act and then timely registered under Section 12(b) or 12(g) of the Exchange Act.

We expect (although no assurance can be given) that (1) our Series A preferred stock will be held by at least 100 independent investors at the conclusion of the offering, (2) there are no restrictions imposed on the transfer of our Series A preferred stock that would cause our Series A preferred stock not to be considered freely transferable under the Plan Asset Regulation, (3) our Series A preferred stock will be sold as part of an offering pursuant to an effective registration statement under the Securities Act and (4) our Series A preferred stock will be timely registered under the Exchange Act. Based on the foregoing, it is expected that our Series A preferred stock will meet the requirements for “publicly-offered securities”.

The Plan Asset Regulation provides an additional exception for “operating companies” (i.e., an entity that is primarily engaged, directly or through one or more majority owned subsidiaries, in the production or sale of a product or service other than the investment of capital). Assuming that Delphi qualifies as an “operating company” at the time of the exchange, a Plan’s ownership of the Delphi Series AA preferred stock would not cause the assets of Delphi to be treated as assets of the Plan.

Regardless of whether our assets or Delphi’s assets are deemed to be “plan assets” of Plans investing in the securities, the acquisition and holding of our Series A preferred stock (or the Delphi Series AA preferred stock) with “plan assets” could itself result in a prohibited transaction. Accordingly, each purchaser and transferee of our Series A preferred stock (and each holder of the Delphi Series AA preferred stock into which our Series A preferred stock is exchangeable upon the occurrence of an exchange event) is deemed to represent that either our Series A preferred stock (and the Delphi Series AA preferred stock) are not acquired with assets of a Plan, or that the acquisition and holding of our Series A preferred stock (or the Delphi Series AA preferred stock upon the occurrence of an exchange event) is not prohibited under ERISA’s and the Internal Revenue Code’s prohibited transaction rules by reason of PTCE 84-14, PTCE 90-1, PTCE 91-38, PTCE 95-60 or PTCE 96-23 or otherwise.

Due to the complexity of these rules and the penalties imposed upon persons involved in prohibited transactions, it is important that a Plan considering an investment in our Series A preferred stock (and the Delphi Series AA preferred stock into which our Series A preferred stock is exchangeable upon the occurrence of an exchange event) consult with its counsel regarding the consequences under ERISA and the Internal Revenue Code of such investment. Plans that are governmental plans (as defined in Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33) of ERISA) generally are not subject to the requirements of ERISA or the prohibited transaction provisions of Section 4975 of the Internal Revenue Code; however, any such plan subject to federal, state or local law substantially similar to the foregoing provisions will be deemed to represent that its acquisition and holding of our Series A preferred stock (and the Delphi Series AA preferred stock into which our Series A preferred stock is exchangeable upon the occurrence of an exchange event) is not prohibited or is eligible for exemptive relief.

We intend to offer our Series A preferred stock through the underwriters named below, for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated is acting as representative. Subject to the terms and conditions in a purchase agreement among the underwriters, Delphi and us, we have agreed to sell to the underwriters, and the underwriters severally have agreed to purchase from us, the number of shares of our Series A preferred stock listed opposite their names below.

The underwriters have agreed to purchase all of the shares of our Series A preferred stock sold pursuant to the purchase agreement if any of the shares of our Series A preferred stock are purchased. If an underwriter defaults, the purchase agreement provides that the purchase commitments of the nondefaulting underwriters may be increased or the purchase agreement may be terminated.

We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the underwriters may be required to make in respect of those liabilities.

The underwriters are offering our Series A preferred stock, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel, including the validity of our Series A preferred stock, and other conditions contained in the purchase agreement, such as the receipt by the underwriters of officers’ certificates and legal opinions. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.

The underwriters have advised us that they propose initially to offer our Series A preferred stock to the public at the public offering price on the cover page of this prospectus and to dealers at that price less a concession not in excess of $ per share of our Series A preferred stock. The underwriters may allow, and the dealers may reallow, a discount not in excess of $ per share of our Series A preferred stock to other dealers. After the initial public offering, the public offering price, concession and discount may be changed. In addition, Delphi may pay the representative an advisory fee in an amount not expected to exceed approximately $1.2 million. The final fee, if any, will depend on the amount sold, the coupon rate and the total public offering price and will be reflected in the final prospectus.

The following table shows the per unit price of our Series A preferred stock and the total public offering price, underwriting commission and proceeds before expenses to us. The information assumes either no exercise or full exercise by the underwriters of their over-allotment option.

The expenses of the offering, not including the underwriting commission, are estimated to be $1.8 million and are payable by us.

We have granted an option to the underwriters to purchase up to 1,800,000 additional shares of Series A preferred stock at the initial public offering price of $25 per share of Series A preferred stock, less the underwriting commission. If Merrill Lynch & Co. exercises this option, the underwriters must purchase the additional Series A preferred stock within 30 days from the date of this prospectus, subject to certain limitations. If Merrill Lynch & Co. exercises this option, the underwriters will be obligated, subject to conditions contained in the purchase agreement, to purchase a number of additional shares of our Series A preferred stock proportionate to that underwriter’s initial amount reflected in the above table.

We expect the shares to be approved for listing on the New York Stock Exchange under the symbol “DPS”. In order to meet the requirements for listing on that exchange, the underwriters have undertaken to sell a minimum number of shares to a minimum number of beneficial owners as required by that exchange. We cannot assure the liquidity of the trading market for our Series A preferred stock or that an active market for our Series A preferred stock will develop. If an active trading market for our Series A preferred stock does not develop, the market price and the liquidity of our Series A preferred stock may be adversely affected.

Until the distribution of our Series A preferred stock offered hereby is completed, SEC rules may limit the underwriters from bidding for or purchasing our Series A preferred stock. However, the underwriters may engage in transactions that stabilize the price of our Series A preferred stock, such as bids or purchases to peg, fix or maintain the price of our Series A preferred stock.

If the underwriters create a short position in our Series A preferred stock in connection with the offering, that is, if they sell a greater number of shares of Series A preferred stock than is listed on the cover of this prospectus, the representative may reduce that short position by purchasing shares of Series A preferred stock in the open market. The representative may also elect to reduce any short position by exercising all or part of the over-allotment option described above. Purchases of Series A preferred stock to stabilize its price or to reduce a short position may cause the price of our Series A preferred stock to be higher than it might be in the absence of such purchases.

Neither the underwriters nor we make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of our Series A preferred stock. In addition, neither the underwriters nor we make any representation that the underwriters will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

A prospectus in electronic format may be made available on the websites maintained by the underwriters. The underwriters will facilitate distribution for this offering to certain of their internet subscription customers. An electronic preliminary prospectus is available on the internet websites maintained by Merrill Lynch, Pierce, Fenner & Smith Incorporated. Other than the preliminary prospectus in electronic format, the information on the respective websites maintained by the underwriters is not intended to be part of this prospectus, as amended or supplemented.

Some of the underwriters and their affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with us. They have received customary fees and commissions for these transactions.

The validity of Delphi’s Series AA preferred stock will be passed on for us by Shearman & Sterling, New York, New York and the validity of our Series A preferred stock will be passed on for us by Ballard Spahr Andrews & Ingersoll, LLP, Baltimore, Maryland, and for the underwriters by Cleary, Gottlieb, Steen & Hamilton.

The consolidated financial statements incorporated in this prospectus by reference from Delphi Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002, have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report, which is incorporated herein by reference, and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

The consolidated balance sheet for Delphi Properties, Inc. as of March 25, 2003, included in this prospectus has been audited by Deloitte & Touche LLP, independent auditors, as stated in their report, which is included herein, and has been so included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

We have filed with the SEC a registration statement on Form S-11 under the Securities Act, with respect to the Series A preferred stock. This prospectus, which forms a part of that registration statement, does not contain all the information set forth in the registration statement, certain portions of which have been omitted as permitted by the rules and regulations of the SEC. Statements contained in this prospectus as to the content of any contract or other document are not necessarily complete, and in each instance reference is made to the copy of such contract or other document filed as an exhibit to the registration statement, each such statement being qualified in all respects by such reference. We refer you to the registration statement and its exhibits for further information regarding us and the Series A preferred stock offered by this prospectus.

The registration statement and its exhibits that were filed by us with the SEC can be inspected at, and copies can be obtained from, the SEC’s public reference room, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Such material may also be accessed electronically by means of the SEC’s home page on the Internet at http://www.sec.gov.

Delphi has filed with the SEC a registration statement on Form S-3 and Form S-11 under the Securities Act, with respect to its Series AA preferred stock. This prospectus, which forms a part of that registration statement, does not contain all the information set forth in the registration statement, certain portions of which have been omitted as permitted by the rules and regulations of the SEC. Statements contained in this prospectus as to the content of any contract or other document are not necessarily complete, and in each instance reference is made to the copy of such contract or other document filed as an exhibit to the registration statement, each such statement being qualified in all respects by such reference. Delphi refers you to the registration statement and its exhibits for further information regarding Delphi and its preferred stock.

Delphi files annual quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any document that Delphi files at the SEC’s public reference room in Washington, D.C. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. In addition, Delphi’s SEC filings are available to the public at the SEC’s web site at

The SEC allows Delphi to “incorporate by reference” into this prospectus the information in documents that Delphi files with it. This means that Delphi can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be a part of this prospectus and should be read with the same care. When Delphi updates the information contained in documents that have been incorporated by reference by making subsequent filings with the SEC, the information incorporated by reference in this prospectus is considered to be automatically updated and superseded. In other words, in the case of a conflict or inconsistency between information with respect to Delphi contained in this prospectus and information incorporated by reference into this prospectus, you should rely on the information contained in the document that was filed later. Delphi incorporates by reference the documents listed below and any documents it files with the SEC in the future under Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act until this offering is completed:


	•	Annual Report on Form 10-K for the year ended December 31, 2002;

	•	Current Report on Form 8-K dated January 17, 2002.

	•	The description of Delphi capital stock contained in Registration Statement on Form 8-A dated June 21, 1999, filed under Section 12 of the Exchange Act, and any amendment or report filed for the purpose of updating this description.

You may obtain a copy of these filings at no cost, by writing or telephoning us at 5725 Delphi Drive, Troy, Michigan 48098, telephone 248-813-2000, attention: Investor Relations. You may also obtain some of the documents incorporated by reference into this prospectus at Delphi’s website at www.delphi.com, which is, and is intended to be, an inactive textual reference only and not an active hyperlink to its website. The information contained on Delphi’s website is not, and is not intended to be, part of this prospectus and is not incorporated by reference into this prospectus.

We have audited the accompanying balance sheet of Delphi Properties, Inc. (“Delphi Properties”), as of March 25, 2003. The financial statement is the responsibility of the management of Delphi Properties. Our responsibility is to express an opinion on this financial statement based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheet is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the balance sheet. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall balance sheet presentation. We believe that our audit of the balance sheet provides a reasonable basis for our opinion.

In our opinion, such balance sheet presents fairly, in all material respects, the financial position of Delphi Properties as of March 25, 2003, in conformity with accounting principles generally accepted in the United States of America.

Delphi Properties, Inc. (“Delphi Properties”, “our” or “we”) a wholly owned subsidiary of Delphi Corporation (“Delphi”), was incorporated in Maryland on March 13, 2003 and capitalized on March 25, 2003. Delphi Properties currently owns a 100% interest in Delphi Properties Holdings, LLC (“Holdings”), a Maryland limited liability company formed on March 25, 2003, which has no assets, liabilities or stockholders’ equity.

Our principal business objective is to acquire and hold mortgage-related assets and other authorized investments that will generate net income for distribution to our stockholders. We intend to operate in a manner that permits us to elect, and we intend to elect, to be subject to tax as a real estate investment trust (“REIT”) for federal income tax purposes. The company has not had any operations as of March 25, 2003, nor do we own any such mortgage-related assets.

Nature of Operations — Delphi Properties intends to invest in mortgage-related assets financed by a preferred stock offering and expects to generate income for distribution to any preferred shareholders primarily from the net interest income derived from these mortgage-related assets.

Use of Estimates — The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect amounts reported therein. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be based upon amounts that differ from those estimates.

Cash and Cash Equivalents — Cash and cash equivalents are defined as short-term, highly liquid investments with original maturities of 90 days or less.

Common Stock — Our charter currently authorizes the issuance of 100 shares of common stock with par value $0.01 per share. At March 25, 2003, we have 100 shares of common stock outstanding, all of which are held by Delphi. There is no established trading market for the shares of common stock. Holders of common stock are entitled to one vote per share on all matters to be voted on by such stockholders.

Dividends and Income Taxes — In order to remain qualified as a REIT, we must distribute annually at least 90% of our annual taxable income to stockholders. In addition, we will be subject to an excise tax if we fail to distribute annually 85% of our ordinary income plus 95% of our capital gain net income for each calendar year. Our board of directors may declare dividends on our common stock only to the extent necessary to meet the relevant distribution requirements necessary to avoid imposition of federal income or excise tax, subject to any preferential dividend rights of holders of any outstanding shares of preferred stock. We expect to distribute 100% of our annual taxable income; accordingly, our financial statements will not include a provision for income taxes.

We intend to sell preferred stock in an underwritten public offering. Upon the closing of this offering, we will issue additional shares of our common stock, pay the net proceeds of the offering and agree to transfer a 1% interest in Holdings to Delphi in return for mortgage notes. The mortgage notes will be secured by mortgage liens on certain properties of Delphi’s subsidiaries. In turn, we will contribute the mortgage notes and mortgage liens to Holdings. It is anticipated that Holdings will make distributions to us in sufficient amounts and at such intervals so as to enable us to meet any dividend requirements to our preferred stockholders. The cost of this offering will be paid by Delphi Properties with the net proceeds from the offering.

In connection with the consummation of this offering, our charter will be amended to authorize the issuance of up to 36,000,000 shares of common stock. A portion of these shares will be issued to Delphi in exchange for mortgage notes contributed in excess of cash proceeds from the offering. As the holder of all of the shares of our common stock, Delphi will be able, subject to the rights of the holders of preferred stock, to elect and remove directors, amend our charter, and approve other actions requiring such stockholder approval. The holders of common stock are entitled to receive dividends, if any, as may be authorized from time to time by our board of directors. Upon our dissolution or liquidation, holders of shares of common stock will be entitled to receive all of our assets that are available for distribution to our stockholders, subject to any preferential rights of holders of then outstanding shares of preferred stock.

Also, in connection with this offering, our charter will be amended to authorize 40,000,000 shares of our Series A preferred stock. Our Series A preferred stock will be non-cumulative and will be automatically exchangeable and redeemable for Delphi Series AA preferred stock under certain circumstances. Holders of shares of our Series A preferred stock will be entitled to receive, if, when, and as authorized and declared by our board of directors out of our legally available assets, non-cumulative quarterly cash dividends. Dividends on our Series A preferred stock will be payable, if, when and as authorized and declared, quarterly in arrears. In the event of an automatic exchange of our Series A preferred stock for Delphi Series AA preferred stock, any authorized and unpaid dividends on our Series A preferred stock as of the time of exchange will be deemed to be authorized and unpaid dividends on the Delphi Series AA preferred stock, and will be paid upon declaration by Delphi’s board of directors. If our board of directors does not authorize a dividend on our Series A preferred stock or authorizes less than a full dividend in respect of any dividend period, the stockholders will have no right to receive any dividend or a full dividend, as the case may be, for that dividend period, and we will have no obligation to pay a dividend or to pay full dividends for that dividend period, regardless of whether or not dividends are authorized and declared and paid for any future dividend period with respect to our Series A preferred stock. Series A preferred stock will rank senior to our common stock as to dividend rights and rights upon liquidation, winding up or dissolution. Series A preferred stock will rank junior to all our indebtedness, if any. If and when the Series B preferred stock is issued, it will be junior to our Series A preferred stock. Holders of our Series A preferred stock are entitled to 1/10th of one vote per share on all matters to be voted on by stockholders, voting as a single class with the holders of the common shares and the holders of any other class of shares entitled to vote as a single class with the holders of the common shares. In the event we liquidate, dissolve, or wind up prior to an automatic exchange into Delphi Series AA preferred stock, the holders of our Series A preferred stock at the time outstanding will be entitled to receive liquidation distributions equal to the sum of (1) the liquidation preference of our Series A preferred stock, which is $25 per share, and (2) any accrued and unpaid distributions for the current period to the date of liquidation, out of our assets legally available for distribution to our stockholders, before any distribution of assets is made to holders of any shares of common stock upon liquidation, subject to the rights of our general creditors.

In connection with the aforementioned offering, our charter will be amended to authorize the issuance of up to 125 shares of Series B preferred stock in connection with our continued compliance with certain tax rules governing a REIT. The Series B preferred stock, if and when issued, will be junior to our Series A preferred stock, and its dividend rate may differ. The Series B preferred stock may have other terms that differ from the terms of our Series A preferred stock.

Through and including , 2003 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

Information regarding quantitative and qualitative disclosure about market risk for Delphi Corporation is incorporated herein by reference from “Quantitative and Qualitative Disclosures about Market Risks” in Delphi Corporation’s Annual Report on Form 10-K for the year ended December 31, 2002.

The estimated expenses in connection with this offering, other than underwriting discounts and commissions are as follows:

Prior to this offering of the Delphi Properties, Inc. Series A preferred stock, liquidation preference $25 per security, Delphi Corporation, Delphi Properties, Inc.’s parent company, acquired 100 shares of Delphi Properties, Inc.’s common stock. The common stock was acquired by Delphi Corporation in exchange for $100. This issuance of Delphi Properties, Inc.’s common stock was made in a private placement exempt from registration pursuant to Section 4(2) of the Securities Act.

Delphi Properties, Inc. has agreed, upon the closing of this offering, to contribute mortgage notes and mortgage liens to Delphi Properties Holdings, LLC in exchange for a 99% interest therein. This issuance of Delphi Properties Holdings, LLC interests will be made in a private placement exempt from registration pursuant to Section 4(2) of the Securities Act.

Maryland law permits a Maryland corporation to include in its charter a provision limiting the liability of its directors and officers to the corporation and its stockholders for money damages except for liability resulting from (1) actual receipt of an improper benefit or profit in money, property or services or (2) active and deliberate dishonesty established by a final judgment and which is material to the cause of action. Delphi Properties, Inc.’s charter contains such a provision, which eliminates directors’ and officers’ liabilities to the maximum extent permitted by Maryland law.

Delphi Properties, Inc.’s charter and Bylaws obligate it, to the maximum extent permitted by Maryland law, to indemnify any present or former director or officer or any individual who, while a

director of Delphi Properties, Inc. and at the request of Delphi Properties, Inc., serves or has served another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise as a director, officer, partner, trustee, employee or agent and who is made a party to the proceeding by reason of his or her service in that capacity from and against any claim or liability to which that person may become subject or which that person may incur by reason of his or her status as a present or former director or officer of Delphi Properties, Inc. and to pay or reimburse their reasonable expenses in advance of final disposition of a proceeding. Delphi Properties, Inc.’s charter and Bylaws also permit it to indemnify and advance expenses to any person who served a predecessor of it in any of the capacities described above and any employee or agent of it or its predecessor.

Maryland law requires a corporation (unless its charter provides otherwise, which the Delphi Properties, Inc.’s charter does not) to indemnify a director or officer who has been successful in the defense of any proceeding to which he is made a party by reason of his or her service in that capacity. Maryland law permits a corporation to indemnify its present and former directors and officers, among others, against judgments, penalties, fines, settlements and reasonable expenses actually incurred by them in connection with any proceeding to which they may be made a party by reason of their service in those or other capacities unless it is established that (1) the act or omission of the director or officer was material to the matter giving rise to the proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty, (2) the director or officer actually received an improper personal benefit in money, property or services or (3) in the case of any criminal proceeding, the director or officer had reasonable cause to believe that the act or omission was unlawful. However, under Maryland law, a Maryland corporation may not indemnify for an adverse judgment in a suit by or in the right of the corporation or for a judgment of liability on the basis that personal benefit was improperly received, unless in either case a court orders indemnification and then only for expenses. In addition, Maryland law permits a corporation to advance reasonable expenses to a director or officer upon the corporation’s receipt of (1) a written affirmation by the director or officer of his good faith belief that he has met the standard of conduct necessary for indemnification by the corporation and (2) a written undertaking by him or on his behalf to repay the amount paid or reimbursed by the corporation if it is ultimately determined that the standard of conduct was not met.

For a description of the indemnification of directors and officers of Delphi Corporation, see Item 15 of Part II of the registration statement on Form S-3 below.

See page F-1 of the Prospectus for an index to financial statements of Delphi Properties, Inc. included as part of the Prospectus.

(a) Delphi Properties, Inc. hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of Delphi Properties, Inc. pursuant to the foregoing provisions, or otherwise, Delphi Properties, Inc. 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 Delphi Properties, Inc. of expenses incurred or paid by a director, officer or controlling person of Delphi Properties, Inc. in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, Delphi Properties, Inc. 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 of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.


	(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by Delphi Properties, Inc. pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

	(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

For the undertakings of Delphi Corporation, see Item 17 of Part II of the registration statement on Form S-3 below.

Pursuant to the requirements of the Securities Act of 1933, each Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-11 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Troy, State of Michigan, on this 28th day of March, 2003.


	By:	/s/ JOHN G. BLAHNIK



	Name: John G. Blahnik


	Title:	Chairman of the Board, Chief Executive Officer and President


	By:	/s/ JOHN G. BLAHNIK



	Name: John G. Blahnik


	Title:	Chairman of the Board, Chief Executive Officer and President of Delphi Properties, Inc.

Each of the officers and directors of Delphi Properties Inc. whose signature appears below hereby constitutes and appoints John G. Blahnik and John D. Sheehan, and each of them severally, his true and lawful attorney-in-fact, for him in any and all capacities, to sign any amendments (including post-effective amendments) to this registration statement and any new registration statement filed under Rule 462(b) of the Securities Act of 1933 and amendments thereto, and to file the same, with exhibits thereto, and any other documents in connection therewith, with the Securities and Exchange Commission, and hereby ratifies and confirms all that said attorney-in-fact, or his or her substitute, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

All expenses in connection with this offering are being paid by Delphi Properties, Inc.

Delphi Corporation is incorporated under the laws of the State of Delaware. Section 145 (“Section 145”) of the General Corporation Law of the State of Delaware, as the same exists or may hereafter be amended (the “General Corporation Law”), inter alia, provides that a Delaware corporation may indemnify any persons who were, are or are threatened to be made, parties to any threatened, pending or completed 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 a director, officer, employee or agent of such corporation, or is or was serving at the request of such corporation as a director, officer, 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 person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation’s best interests and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his conduct was unlawful. A Delaware corporation may indemnify any persons who are, were or threatened to be made, a party to any threatened, pending or completed action or suit by or in the right of the corporation by reason of the fact that such person is or was a director, officer, employee or agent of such corporation, or is or was serving at the request of such corporation as a director, officer, employee or agent of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit, provided such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation’s best interests, provided that no indemnification is permitted without judicial approval if the director, officer, is adjudged to be liable to the corporation. Where an officer or director is successful on the merits or otherwise in the defense of any action, suit or proceeding referred to above, the corporation must indemnify such person against the expenses (including attorneys’ fees) which such officer or director has actually and reasonably incurred by such person in connection therewith.

Section 145 further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against any liability asserted against him and incurred by him in any such capacity, arising out of his status as such, whether or not the corporation would otherwise have the power to indemnify him under Section 145.

Delphi Corporation’s Amended and Restated Certificate of Incorporation and Bylaws provide for the indemnification of officers and directors to the fullest extent permitted by the General Corporation Law.

All of Delphi Corporation’s directors and officers are insured against certain liabilities for actions taken in their capacities as such, including liabilities under the Securities Act of 1933, as amended.

(a) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of Delphi Corporation pursuant to the foregoing

provisions, or otherwise, Delphi Corporation 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 Delphi Corporation of expenses incurred or paid by a director, officer or controlling person of Delphi Corporation in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, Delphi Corporation 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 of whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(b) Delphi Corporation hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of Delphi Corporation’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act 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.


	(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by Delphi Corporation pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

	(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and Form S-11 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Troy, State of Michigan, on this 28th day of March, 2003.


	By:	/s/ J. T. BATTENBERG III



	Name: J. T. Battenberg III


	Title:	Chairman of the Board, Chief Executive Officer and President

Each of the officers and directors of the Registrant whose signature appears below hereby constitutes and appoints J. T. Battenberg III and Alan S. Dawes, and each of them severally, his true and lawful attorney-in-fact, for him in any and all capacities, to sign any amendments (including post-effective amendments) to this registration statement and any new registration statement filed under Rule 462(b) of the Securities Act of 1933 and amendments thereto, and to file the same, with exhibits thereto, and any other documents in connection therewith, with the Securities and Exchange Commission, and hereby ratifies and confirms all that said attorney-in-fact, or his or her substitute, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

II-11 EX-1.1 3 k75733exv1w1.txt UNDERWRITING AGREEMENT EXHIBIT 1.1 to S-11 and S-3 Delphi Properties, Inc. (A Maryland corporation) 12,000,000 Shares Non-Cumulative Exchangeable Perpetual Series A Preferred Securities PURCHASE AGREEMENT Dated [___________], 2003 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- DELPHI PROPERTIES, INC. (a Maryland corporation) 12,000,000 Shares Non-cumulative Exchangeable Perpetual Series A Preferred Securities (liquidation preference $25 per share) exchangeable in specified circumstances into Series AA Preferred Stock of Delphi Corporation PURCHASE AGREEMENT [____________], 2003 MERRILL LYNCH & CO. Merrill Lynch, Pierce, Fenner & Smith Incorporated as Representative of the several Underwriters 4 World Financial Center New York, New York 10080 Ladies and Gentlemen: Delphi Properties, Inc., a Maryland corporation (the "Company"), and Delphi Corporation, a Delaware corporation ("Delphi" and, together with the Company, the "Delphi Parties") each confirms its agreement with Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and each of the other Underwriters named in Schedule A hereto (collectively, the "Underwriters," which term shall also include any underwriter substituted as hereinafter provided in Section 9 hereof), for whom Merrill Lynch is acting as representative (in such capacity, the "Representative"), with respect to the issue and sale by the Company and the purchase by the Underwriters, acting severally and not jointly, of the respective numbers of shares of the Company's [_]% Non-cumulative Exchangeable Perpetual Series A Preferred Securities set forth in said Schedule A, and with respect to the grant by the Company to the Underwriters, acting severally and not jointly, of the option described in Section 2(b) hereof to purchase all or any part of 1,800,000 additional shares of such preferred stock to cover overallotments, if any. The aforesaid 12,000,000 shares of preferred stock (the "Initial Securities") to be purchased by the Underwriters and all or any part of the 1,800,000 shares of preferred stock subject to the option described in Section 2(b) hereof (the "Option Securities") are hereinafter called, collectively, the "Securities". The Company understands that the Underwriters propose to make a public offering of the Securities as soon as the Representative deems advisable after this Agreement has been executed and delivered. The Delphi Parties and Delphi Properties Holdings, LLC, a Maryland limited liability company ("Holdings") have filed with the Securities and Exchange Commission (the "Commission") registration statements on Form S-11 and Form S-3 (Nos. 333-[___], 333-[___] and 333-[___]), including the related preliminary prospectus, covering the registration of the Securities and the Series AA preferred stock of Delphi (the "Delphi Securities") into which the Securities will be automatically exchanged upon the occurrence of an exchange event (as described in the registration statements) under the Securities Act of 1933, as amended (the "1933 Act"). Promptly after execution and delivery of this Agreement, the Delphi 1 Parties will prepare and file a prospectus in accordance with the provisions of Rule 430A ("Rule 430A") of the rules and regulations of the Commission under the 1933 Act (the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of the 1933 Act Regulations. The information included in such prospectus that was omitted from such registration statement at the time it became effective but that is deemed to be part of such registration statement at the time it became effective pursuant to paragraph (b) of Rule 430A is referred to as "Rule 430A Information." Each prospectus used before such registration statement became effective, and any prospectus that omitted the Rule 430A Information, is herein called a "preliminary prospectus." Such registration statement, including the exhibits and any schedules thereto, at the time it became effective, and including the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933 Act at such time and the Rule 430A Information, is herein called the "Registration Statement." Any registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein referred to as the "Rule 462(b) Registration Statement," and after such filing the term "Registration Statement" shall include the Rule 462(b) Registration Statement. The final prospectus in the form furnished to the Underwriters for use in confirming sales of the Securities, including the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933 Act at the time of the execution of this Agreement, is herein called the "Prospectus." For purposes of this Agreement, all references to the Registration Statement, any preliminary prospectus, the Prospectus or any amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval system ("EDGAR"). All references in this Agreement to financial statements and schedules and other information which is "contained," "included" or "stated" in the Registration Statement, any preliminary prospectus or the Prospectus (or other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information which is incorporated by reference in the Registration Statement, any preliminary prospectus or the Prospectus, as the case may be; and all references in this Agreement to amendments or supplements to the Registration Statement, any preliminary prospectus or the Prospectus shall be deemed to mean and include the filing of any document under the Securities Exchange Act of 1934 (the "1934 Act") which is incorporated by reference in the Registration Statement, such preliminary prospectus or the Prospectus, as the case may be. SECTION 1. Representations and Warranties. (a) Representations and Warranties by the Delphi Parties. Each of the Delphi Parties severally and jointly represents and warrants to each Underwriter as of the date hereof, and agrees with each Underwriter, as follows: (i) Compliance with Registration Requirements. Each of the Registration Statement, any Rule 462(B) Registration Statement and any post-effective amendment thereto has become effective under the 1933 Act and no stop order suspending the effectiveness of the Registration Statement or any post-effective amendment thereto is in effect and no proceedings for that purpose are pending or, to the knowledge of either of the Delphi Parties, are threatened by the Commission. At the respective times the Registration Statement, any Rule 462(B) Registration Statement and any post-effective amendments thereto became effective and at the Closing Time (and, if any Option Securities are purchased, at the Date of Delivery), the Registration Statement, the Rule 462(b) Registration Statement and any amendments and supplements thereto complied and will comply in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations and did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not 2 misleading. Neither the Prospectus nor any amendments or supplements thereto, as of the date each bears and at the Closing Time and, if any Option Securities are purchased, at the Date of Delivery, included or will include an untrue statement of a material fact or omitted or will omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The representations and warranties in this subsection shall not apply to statements in or omissions from the Registration Statement or Prospectus (as amended or supplemented) based upon and in conformity with written information furnished to the Company by the Representative or any Underwriter through Merrill Lynch expressly for use in the Registration Statement (or any amendment thereto) or the Prospectus (or any amendment or supplement thereto). (ii) Incorporated Documents. The documents incorporated or deemed to be incorporated by reference in the Registration Statement and the Prospectus, when they became effective or at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the 1933 Act and the 1933 Act Regulations or the 1934 Act and the rules and regulations of the Commission thereunder (the "1934 Act Regulations"), as applicable. (iii) Independent Accountants. The accountants who certified the financial statements included in the Registration Statement are independent public accountants of the Delphi Parties and their subsidiaries as required by the 1933 Act and the 1933 Act Regulations. (iv) Financial Statements. The balance sheet included in the Registration Statement and the Prospectus, together with the related notes, present fairly the financial position of the Company and its consolidated subsidiary as of the date indicated; said balance sheet has been prepared in conformity with generally accepted accounting principles ("GAAP") applied on a consistent basis throughout the periods involved. The pro forma financial statements and the related notes thereto included in the Registration Statement and the Prospectus present fairly the information shown therein, have been prepared in accordance with the Commission's rules and guidelines with respect to pro forma financial statements and have been properly compiled on the bases described therein, and the assumptions used in the preparation thereof are reasonable and the adjustments used therein are appropriate to give effect to the transactions and circumstances referred to therein. The consolidated financial statements included in the Registration Statement and the Prospectus, together with the related schedules and notes, present fairly the financial position of Delphi and its consolidated subsidiaries at the dates indicated and the statement of operations, stockholders' equity and cash flows of Delphi and its consolidated subsidiaries for the periods specified; said financial statements have been prepared in conformity with GAAP applied on a consistent basis throughout the periods involved. The supporting schedules, if any, included in the Registration Statement present fairly in accordance with GAAP the information required to be stated therein. The selected financial data and the summary financial information included in the Prospectus present fairly the information shown therein and have been compiled on a basis consistent with that of the audited financial statements included in the Registration Statement. (v) No Material Adverse Change in Business. Since the respective dates of the Registration Statement and the Prospectus, except as otherwise stated therein, (A) there has been no material adverse change in the condition, financial or otherwise, or in the results of operations, business affairs or business prospects of Delphi, together with its subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business (a "Material Adverse Effect"), (B) there have been no transactions entered into by Delphi or the Company or any of 3 their respective subsidiaries, other than those in the ordinary course of business, which would result in a Material Adverse Effect, and (C) except for regular quarterly dividends on Delphi's Common Stock, par value $0.01 per share in amounts per share that are consistent with past practice, there has been no dividend or distribution of any kind declared, paid or made by either Delphi Party on any class of its capital stock. (vi) Good Standing of the Delphi Parties. The Company has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Maryland and has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and to enter into and perform its obligations under this Agreement; and the Company is duly qualified as a foreign corporation to transact business and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect. Delphi has been duly organized and is validly existing as a corporation in good standing under the laws of the State of Delaware and has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and to enter into and perform its obligations under this Agreement; and Delphi is duly qualified as a foreign corporation to transact business and is in good standing in each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect. (vii) Good Standing of Subsidiaries. Each "significant subsidiary" of Delphi and the Company (as such term is defined in Rule 1-02 of Regulation S-X) (each a "Subsidiary" and, collectively, the "Subsidiaries"), has been duly organized and is validly existing and in good standing under the laws of the jurisdiction of its organization, has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and, in the case of the subsidiaries owning a property (each, a "Property") that will secure the mortgage notes to be issued by Delphi to the Company (the "Mortgage Notes"), to own such Property, and is duly qualified as a foreign company to transact business and is in good standing in each jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except where the failure so to qualify or to be in good standing would not result in a Material Adverse Effect; except as otherwise disclosed in the Registration Statement, all of the issued and outstanding capital stock of each such Subsidiary has been duly authorized and validly issued, is fully paid and non-assessable and is owned by Delphi or the Company, directly or through subsidiaries, free and clear of any security interest, mortgage, pledge, lien, encumbrance, claim or equity; none of the outstanding shares of capital stock of any Subsidiary was issued in violation of the preemptive or similar rights of any securityholder of such Subsidiary. The only subsidiaries of Delphi are (A) the Subsidiaries listed on Schedule C hereto and (B) certain other subsidiaries, each of which is not a "significant subsidiary" as defined in Rule 1-02 of Regulation S-X. Holdings is the only Subsidiary of the Company. (viii) Capitalization of the Delphi Parties. The authorized, issued and outstanding capital stock of the Company is, in all material respects, as set forth in the Prospectus in the column entitled "Actual" under the caption "Capitalization" (except for subsequent issuances, if any, pursuant to this Agreement.) The shares of issued and outstanding capital stock of the Company have been duly authorized and validly issued and are fully paid and non-assessable; none of the outstanding shares of capital stock of the Company was issued in violation of the preemptive or other similar rights of any securityholder of the Company. 4 The authorized, issued and outstanding capital stock of Delphi is, in all material respects, as set forth in the Prospectus in the column entitled "Actual" under the caption "Capitalization" (except for subsequent issuances, if any, pursuant to this Agreement, or pursuant to the exercise of options referred to in the Prospectus). The shares of issued and outstanding capital stock of Delphi have been duly authorized and validly issued and are fully paid and non-assessable; none of the outstanding shares of capital stock of Delphi was issued in violation of the preemptive or other similar rights of any securityholder of Delphi. (ix) Authorization of Agreement and Transaction Documents. Each of this Agreement and the contribution and loan agreement to be entered into by and between the Delphi Parties as of [___], 2003 (the "Contribution and Loan Agreement") has been duly authorized, and when executed and delivered by each of the Delphi Parties, as applicable and, in the case of the Contribution and Loan Agreement, will constitute a valid and binding obligation of the Delphi Parties enforceable in accordance with its terms; the Mortgage Notes, the Holdings operating agreement between the Company and Delphi, the Series A preferred stock exchange agreement between the Company and Delphi, the management and servicing agreement between the Company and Delphi, and the deeds of trust, security agreements, assignments of rents and fixture filings relating to each of the Properties (together with the Contribution and Loan Agreement, the "Transaction Documents") have each been duly authorized and, upon execution and delivery by the Delphi Parties and the subsidiaries of Delphi who are parties thereto as contemplated by the Prospectus, will be valid and binding obligations of the Delphi Parties and the Delphi subsidiaries that are parties thereto, including Holdings, enforceable in accordance with their terms. (x) Authorization and Description of Securities. The Securities have been duly authorized for issuance and sale to the Underwriters pursuant to this Agreement and, when issued and delivered by the Company pursuant to this Agreement against payment of the consideration set forth herein, will be validly issued and fully paid and non-assessable; the Securities conform to the statements relating thereto contained in the Prospectus and such description conforms, in all material respects, to the rights set forth in the instruments defining the same; no holder of the Securities will be subject to personal liability by reason of being such a holder; and the issuance of the Securities is not subject to the preemptive or other similar rights of any securityholder of the Company. (xi) Authorization and Description of the Delphi Securities. The Delphi Securities conform to all statements relating thereto contained or incorporated by reference in the Prospectus and such description conforms, in all material respects, to the rights set forth in the instruments defining the same. The Delphi Securities have been duly authorized and reserved for issuance and when issued upon the occurrence of an exchange event will be validly issued and fully paid and non-assessable; no holder of such shares will be subject to personal liability by reason of being such a holder; and the issuance of such shares upon such event will not be subject to the preemptive or other similar rights of any security holder of Delphi. (xii) Absence of Defaults and Conflicts. Neither the Company nor Delphi or any of their subsidiaries is in violation of its charter or by-laws or in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Company or Delphi or any of their subsidiaries is a party or by which it or any of them may be bound, or to which any of the property or assets of the Company or Delphi or any subsidiary is subject (collectively, "Agreements and Instruments") except for such defaults that would not result in a Material Adverse Effect; and the execution, delivery and performance 5 of this Agreement and the consummation of the transactions contemplated herein and in the Registration Statement and compliance by the Delphi Parties with their respective obligations hereunder have been duly authorized by all necessary corporate action and do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default or Repayment Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or Delphi or any subsidiary pursuant to, the Agreements and Instruments (except for the liens and encumbrances to be created pursuant to the Contribution and Loan Agreement and such conflicts, breaches, defaults or Repayment Events or liens, charges or encumbrances that would not result in a Material Adverse Effect), nor will such action result in any violation of the provisions of the charter or by-laws of the Company or Delphi or any subsidiary or any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, government instrumentality or court, domestic or foreign, having jurisdiction over the Company or Delphi or any subsidiary or any of their assets, properties or operations. As used herein, a "Repayment Event" means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder's behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or Delphi or any subsidiary. (xiii) Absence of Labor Dispute. Except as disclosed in the documents Delphi has filed with the Commission pursuant to the 1934 Act and except for disputes occurring in the ordinary course of business, no labor dispute with the employees of Delphi or any of its Subsidiaries exists or, to Delphi's knowledge, is imminent, and Delphi is not aware of any existing or imminent labor disturbance by Delphi's or any of its Subsidiaries' employees which would result in a Material Adverse Effect. (xiv) Absence of Further Requirements. No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency is necessary or required for the performance by the Delphi Parties of their respective obligations hereunder, in connection with the offering, issuance or sale of the Securities hereunder, the issuance of the Delphi Securities upon the occurrence of an exchange event, or the consummation of the transactions contemplated by this Agreement, except such as have been already obtained or as may be required under the 1933 Act or the 1933 Act Regulations or state securities laws. (xv) Possession of Licenses and Permits. Delphi is not aware of any failure by Delphi and its subsidiaries to possess such permits, licenses, approvals, consents and other authorizations (collectively, "Governmental Licenses") issued by the appropriate federal, state, local or foreign regulatory agencies or bodies necessary to conduct the business now operated by them, as would result in a Material Adverse Effect; Delphi is not aware of any failure by Delphi and its subsidiaries to be in material compliance with the terms and conditions of all such Governmental Licenses, except where the failure so to comply would not, in the aggregate, result in a Material Adverse Effect; Delphi is not aware of any failure of the Governmental Licenses to be valid and in full force and effect, except when the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect would not, in the aggregate, result in a Material Adverse Effect; and neither Delphi nor any of its subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Governmental Licenses which, in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Material Adverse Effect. 6 (xvi) Title to Property. To Delphi's knowledge, (A) Delphi and its subsidiaries have good and marketable title to all real property owned by Delphi and its subsidiaries and good title to all other properties owned by them, in each case, free and clear of all mortgages, pledges, liens, security interests, claims, restrictions or encumbrances of any kind except such as (i) are described in the Prospectus or (ii) will not, in the aggregate, result in a Material Adverse Effect; and, (B) all of the leases and subleases material to the business of Delphi and its subsidiaries, considered as one enterprise, are in full force and effect, and neither Delphi nor any subsidiary has any notice of any material claim of any sort that has been asserted by anyone adverse to the rights of Delphi or any subsidiary under any of the leases or subleases mentioned above, or affecting or questioning the rights of Delphi or such subsidiary to the continued possession of the leased or subleased premises under any such lease or sublease, in each case which could reasonably be expected to result in a Material Adverse Effect. (xvii) Title to Mortgage Notes. After the consummation of the transactions contemplated by the Contribution and Loan Agreement the Company will have good and marketable title to the Mortgage Notes free and clear of all pledges, liens, security interests, claims, restrictions, encumbrances or defects of any kind. (xviii) Properties. (A) The Properties conform in all material respects to the descriptions thereof contained in the Registration Statement and the Prospectus. (B) No condemnation proceeding involving any of the Properties or any portion thereof or parking facility used in connection therewith has been commenced or, to the knowledge of Delphi or the Company, is contemplated by any governmental authority, nor has any portion of any of the Properties or any parking facility used in connection therewith been materially damaged due to fire or other casualty which would result in a Material Adverse Effect; and each Property has adequate water, gas, telephone, electrical supply, storm and sanitary sewerage facilities and means of access to and from public streets or highways for the purposes for which it is being used. (C) Delphi is not aware that any of the Properties is being operated in violation of any law, rule or regulation or determination of any court or other governmental authority (a "Requirement of Law") or any building permits, restrictions of record, or any agreement affecting any such Property or part thereof, or any judgment, decree or order applicable to such Property which would result in a Material Adverse Effect. (D) Delphi currently maintains in full force and effect and with responsible and reputable insurance companies (i) a customary All Risk insurance policy for each mortgaged property for the full replacement cost of such mortgaged property and (ii) a commercial general liability insurance policy for each mortgaged property in an amount customary for the industry. (E) There are no ground leases from Delphi or any of its subsidiaries affecting any of the mortgaged properties. (xix) Investment Company Act. Neither the Company nor Delphi is required, and upon the issuance and sale of the Securities as herein contemplated and the application of the net proceeds therefrom as described in the Prospectus neither will be required, to register as an 7 "investment company" under the Investment Company Act of 1940, as amended (the "1940 Act"). (xx) Environmental Laws. Except as described in the Registration Statement, as amended or supplemented or through information incorporated by reference, and except as would not result in a Material Adverse Effect, (A) neither Delphi nor any of its Subsidiaries is in violation of any federal, state, local or foreign statute, law, rule, regulation, ordinance, code, policy or rule of common law or any judicial or administrative interpretation thereof, including any judicial or administrative order, consent, decree or judgment, relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including, without limitation, laws and regulations relating to the release or threatened release of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum or petroleum products, asbestos-containing materials or mold (collectively, "Hazardous Materials") or to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials (collectively, "Environmental Laws") and (B) there are no pending or threatened administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigation or proceedings relating to any Environmental Law against Delphi or any of its Subsidiaries. (xxi) Insurance. Delphi and its subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which they are engaged. (xxii) Taxes. The Delphi Parties have filed all foreign, federal, state and local tax returns that are required to be filed or have requested extensions thereof (except in any case in which the failure so to file would not result in a Material Adverse Effect), and has paid all taxes required to be paid by it and any other assessment, fine or penalty levied against it, to the extent that any of the foregoing is due and payable, except for any such assessment, fine or penalty that is currently being contested in good faith or as would not result in a Material Adverse Effect. (xxiii) REIT Qualification. Commencing with the Closing Time, the Company will be organized in conformity with the requirements for qualification as a real estate investment trust (a "REIT") under the Internal Revenue Code of 1986, as amended (the "Code"), and, following the payment of the "earnings and profits" distribution contemplated by the Prospectus, will have no earnings and profits accumulated in a non-REIT year within the meaning of Section 857(a)(3)(B) of the Code, and the proposed method of operation of the Company will enable the Company to meet the requirements for taxation as a REIT under the Code beginning with its taxable year ending December 31, 2003 and for its subsequent taxable years. All statements in the Prospectus regarding the Company's qualification as a REIT are true, complete and correct in all material respects. (xxiv) ERISA. Neither of the Delphi Parties nor any trade or business (whether or not incorporated) that would be treated together with either of the Delphi Parties as a single employer under Title IV of the United States Employee Retirement Income Security Act of 1974, as amended ("ERISA") (each, an "ERISA Affiliate"), has incurred, or reasonably expects to incur, any material liability with respect to any employee benefit plan which is subject to Title IV of ERISA, except as disclosed in the Prospectus; and any such employee benefit plan in which employees of any of the Delphi Parties or any ERISA Affiliate are eligible to participate is in compliance in all material respects with the presently applicable provisions of ERISA and the Code and regulations and published interpretations thereunder. 8 (xxv) Payment of Dividends. No subsidiary of Delphi or the Company is currently prohibited, directly or indirectly, from paying any dividends to Delphi or the Company, from making any other distribution on such subsidiary's capital stock, from repaying to Delphi or the Company, respectively, any loans or advances to such subsidiary from Delphi, or from transferring any of such subsidiary's property or assets to Delphi or any other subsidiary of Delphi, as the case may be. (xxvi) Internal Accounting Controls. Delphi and its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurances that (A) transactions are executed in accordance with management's general or specific authorization, (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain accountability for assets, (C) access to assets is permitted only in accordance with management's general or specific authorization and (D) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. (xxvii) Disclosure Controls. Each of the Delphi Parties has established and maintains disclosure controls and procedures (as such term is defined in Rule 13a-14 and 15d-14 under the 1934 Act); such disclosure controls and procedures (A) are designed to ensure that material information relating to such Delphi Party, including its consolidated subsidiaries, is made known to such Delphi Party's Chief Executive Officer and its Chief Financial Officer by others within those entities, particularly during the periods in which the periodic reports required under the 1934 Act are being prepared, (B) in the case of Delphi, have been evaluated for effectiveness as of a date within 90 days prior to the filing of Delphi's most recent annual or quarterly report filed with the Commission, and (C) are effective to perform the functions for which they were established; Delphi's auditors and the Audit Committee of the Board of Directors have been advised of: (i) any significant deficiencies in the design or operation of internal controls which could adversely affect Delphi's ability to record, process, summarize, and report financial data and (ii) any fraud, whether or not material, that involves management or other employees who have a role in Delphi's internal controls; any material weaknesses in internal controls have been identified for Delphi's auditors; and since the date of the most recent evaluation of such disclosure controls and procedures, there have been no significant changes in internal controls or in other factors that could significantly affect internal controls, including any corrective actions with regard to significant deficiencies and material weaknesses. (xxviii) Loans to Directors or Executive Officers. Delphi has provided the Underwriters true, correct, and complete copies of all documentation pertaining to any extension of credit in the form of a personal loan made, directly or indirectly, by Delphi to any director or executive officer of Delphi, or to any family member or affiliate of any director or executive officer of Delphi; and since July 30, 2002, Delphi has not, directly or indirectly, including through any subsidiary: (A) extended credit, arranged to extend credit, or renewed any extension of credit, in the form of a personal loan, to or for any director or executive officer of Delphi, or to or for any family member or affiliate of any director or executive officer of Delphi or (B) made any material modification, including any renewal thereof, to any term of any personal loan to any director or executive officer of Delphi, or any family member or affiliate of any director or executive officer, which loan was outstanding on July 30, 2002. (xxix) Offer and Sale of the Securities. The Company and Delphi have not distributed and, prior to the later to occur of (A) the Closing Time and (B) completion of the distribution of the Securities, they will not distribute any offering materials in connection with the offering and 9 sale of the Securities other than the Registration Statement, the preliminary prospectus, the Prospectus or other materials, if any, permitted by the 1933 Act. (b) Officer's Certificates. Any certificate signed by any officer of the Company or Delphi delivered to the Representative or to counsel for the Underwriters shall be deemed a representation and warranty by the Company or Delphi, respectively, to each Underwriter as to the matters covered thereby. SECTION 2. Sale and Delivery to Underwriters; Closing. (a) Initial Securities. On the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company agrees to sell to each Underwriter, severally and not jointly, and each Underwriter, severally and not jointly, agrees to purchase from the Company, at the price per share set forth in Schedule B, the number of Initial Securities set forth in Schedule A opposite the name of such Underwriter, plus any additional number of Initial Securities which such Underwriter may become obligated to purchase pursuant to the provisions of Section 9 hereof. (b) Option Securities. In addition, on the basis of the representations and warranties herein contained and subject to the terms and conditions herein set forth, the Company hereby grants an option to the Underwriters, severally and not jointly, to purchase up to an additional 1,800,000 shares of the Company's [_]% Non-cumulative Exchangeable Perpetual Series A Preferred Securities at the price per share set forth in Schedule B. The option hereby granted will expire 30 days after the date hereof and may be exercised in whole or in part from time to time only for the purpose of covering overallotments which may be made in connection with the offering and distribution of the Initial Securities upon written notice by Merrill Lynch to the Company setting forth the number of Option Securities as to which the several Underwriters are then exercising the option and the time and date of payment and delivery for such Option Securities. Any such time and date of delivery (a "Date of Delivery") shall be determined by Merrill Lynch, but shall not be later than seven full business days after the exercise of said option, nor in any event prior to the Closing Time, as hereinafter defined. If the option is exercised as to all or any portion of the Option Securities, each of the Underwriters, acting severally and not jointly, will purchase that proportion of the total number of Option Securities then being purchased which the number of Initial Securities set forth in Schedule A opposite the name of such Underwriter bears to the total number of Initial Securities, subject in each case to such adjustments as Merrill Lynch in its discretion shall make to eliminate any sales or purchases of fractional shares. (c) Commission. Upon the payment of the purchase price for the Securities, the Company agrees to pay to Merrill Lynch, for the accounts of the several Underwriters, a commission set forth in Schedule B as compensation to the Underwriters for their commitments under this Agreement. (d) Payment. Payment of the purchase price for, and delivery of certificates for, the Initial Securities shall be made at the offices of Cleary, Gottlieb, Steen & Hamilton, One Liberty Plaza, New York, New York 10006-1470, or at such other place as shall be agreed upon by the Representative and the Company, at 9:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs after 4:30 P.M. (Eastern time) on any given day) business day after the date hereof (unless postponed in accordance with the provisions of Section 9), or such other time not later than ten business days after such date as shall be agreed upon by the Representative and the Company (such time and date of payment and delivery being herein called "Closing Time"). In addition, in the event that any or all of the Option Securities are purchased by the Underwriters, payment of the purchase price for, and delivery of certificates for, such Option Securities shall be made at the above-mentioned offices, or at such other place as shall be agreed upon by the 10 Representative and the Company, on each Date of Delivery as specified in the notice from the Representative to the Company. Payment shall be made to the Company by wire transfer of immediately available funds to a bank account designated by the Company, against delivery to the Representative for the respective accounts of the Underwriters of the Securities to be purchased by them. Delivery of the Securities shall be made through the facilities of The Depository Trust Company unless the Representative shall otherwise instruct. It is understood that each Underwriter has authorized the Representative, for its account, to accept delivery of, receipt for, and make payment of the purchase price for, the Initial Securities and the Option Securities, if any, which it has agreed to purchase. Merrill Lynch, individually and not as representative of the Underwriters, may (but shall not be obligated to) make payment of the purchase price for the Initial Securities or the Option Securities, if any, to be purchased by any Underwriter whose funds have not been received by the Closing Time or the relevant Date of Delivery, as the case may be, but such payment shall not relieve such Underwriter from its obligations hereunder. (e) Denominations; Registration. The Initial Securities and the Option Securities, if any, shall be in such denominations and registered in such names as the Representative may request in writing at least two full business days before the Closing Time or the relevant Date of Delivery, as the case may be. The certificates for the Initial Securities and the Option Securities, if any, will be made available for examination and packaging by the Representative in The City of New York not later than 10:00 A.M. (Eastern time) on the business day prior to the Closing Time or the relevant Date of Delivery, as the case may be. SECTION 3. Covenants of the Delphi Parties. Each of the Delphi Parties jointly and severally covenants with each Underwriter as follows: (a) Filing of Amendments. The Delphi Parties will give the Representative notice of their intention to file or prepare any amendment or supplement to the Registration Statement (including any filing under Rule 462(b)), and will furnish the Representative with a copy of any such amendment or supplement a reasonable amount of time prior to such proposed filing or use, as the case may be, and will not file or use any such document to which the Representative or counsel for the Underwriters shall reasonably object, unless counsel to the Delphi Parties advises that such filing is required by law. (b) Delivery of Registration Statements. The Delphi Parties have furnished or will deliver to the Representative and counsel for the Underwriters, without charge, two signed copies of the Registration Statement as originally filed and of each amendment thereto (including exhibits filed therewith) and will also deliver to the Representative, without charge, a conformed copy of the Registration Statement as originally filed and of each amendment thereto (without exhibits) for each of the Underwriters. The copies of the Registration Statement and each amendment thereto furnished to the Underwriters will be identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. (c) Delivery of Prospectuses. The Delphi Parties have delivered to each Underwriter, without charge, as many copies of each preliminary prospectus as such Underwriter reasonably requested, and the Delphi Parties hereby consent to the use of such copies for purposes permitted by the 1933 Act. The Delphi Parties will furnish to each Underwriter, without charge, during the period when the Prospectus is required to be delivered under the 1933 Act, such number of copies of the Prospectus (as amended or supplemented) as such Underwriter may reasonably request. The Prospectus and any amendments or supplements thereto furnished to the Underwriters will be 11 identical to the electronically transmitted copies thereof filed with the Commission pursuant to EDGAR, except to the extent permitted by Regulation S-T. (d) Continued Compliance with Securities Laws. Each of the Delphi Parties and Holdings will comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act Regulations so as to permit the completion of the distribution of the Securities as contemplated in this Agreement and in the Prospectus. If at any time when a Prospectus is required by the 1933 Act to be delivered in connection with sales of the Securities, any event shall occur or condition shall exist as a result of which it is necessary, in the opinion of counsel for the Underwriters or for the Delphi Parties, to amend the Prospectus in order that the Prospectus will not include any untrue statements of a material fact or omit to state a material fact necessary in order to make the statements therein not misleading in the light of the circumstances existing at the time it is delivered to a purchaser, or if it shall be necessary, in the opinion of such counsel, at any such time to amend the Prospectus in order to comply with the requirements of the 1933 Act or the 1933 Act Regulations, the Delphi Parties and Holdings will promptly prepare and file with the Commission, subject to Section 3(b), such amendment or supplement as may be necessary to correct such statement or omission or to make the Registration Statement or the Prospectus comply with such requirements. (e) Rule 158. The Delphi Parties and Holdings will make generally available to their securityholders as soon as practicable an earnings statement covering the 12-month period ending December 31, 2004, which shall in each case satisfy the last paragraph of Section 11(a) of the 1933 Act. (f) Use of Proceeds. The Delphi Parties will use the net proceeds from the sale of the Securities in the manner specified in the Prospectus under "Use of Proceeds". (g) Reporting Requirements. The Delphi Parties and Holdings, during the period when the Prospectus is required to be delivered under the 1933 Act, such period not to exceed 25 calendar days after the date of the Prospectus, will use their reasonable best efforts to file all documents required to be filed with the Commission pursuant to the 1934 Act within the time periods required by the 1934 Act and the 1934 Act Regulations. (h) Maintenance of REIT Qualification. The Company will use its reasonable best efforts to continue to meet the requirements to qualify as a REIT under the Code subject to future economic, market, legal, and tax considerations and a determination by the board of directors of the Company (including its independent directors) that revocation of the Company's REIT status is in the best interests of the Company and its shareholders. SECTION 4. Payment of Expenses. (a) Expenses. The Company will pay all expenses incident to the performance of its obligations under this Agreement, including (i) the preparation, printing and filing of the Registration Statement (including financial statements and exhibits) as originally filed and of each amendment thereto, (ii) the preparation, issuance and delivery of the Securities to the Underwriters, including any stock or other transfer taxes and any stamp or other duties payable upon the sale, issuance or delivery of the Securities to the Underwriters, (iii) the fees and disbursements of the Company's counsel and accountants; (iv) the printing and delivery to the Underwriters of copies of each preliminary prospectus, and of the Prospectus and any amendments or supplements thereto, (v) the fees and expenses of any transfer agent or registrar 12 for the Securities, (vi) any fees charged by securities rating services for rating the Securities, and (viii) the fees and expenses incurred in connection with the listing of the Securities on the New York Stock Exchange. (b) Termination of Agreement. If this Agreement is terminated by the Representative in accordance with the provisions of Section 5, the Company shall reimburse the Underwriters for reasonable out-of-pocket expenses actually incurred by such Underwriters, including the reasonable fees and disbursements of counsel for the Underwriters, it being understood that of such termination relates to the failure of the Delphi Parties to fulfill the conditions set forth in Section 5(j) hereof, such expenses shall be limited to reasonable out of pocket expenses incurred in connection with the Underwriters' exercise of their option provided in Section 2(b) hereof. SECTION 5. Conditions of Underwriters' Obligations. The obligations of the several Underwriters hereunder are subject to the accuracy of the representations and warranties of the Delphi Parties contained in Section 1 hereof or in certificates of any officer of the Company or Delphi delivered pursuant to the provisions hereof, to the performance by each such Delphi Party of its covenants and other obligations hereunder, and to the following further conditions: (a) Effectiveness of Registration Statement. The Registration Statement, including any Rule 462(b) Registration Statement, has become effective and at Closing Time no stop order suspending the effectiveness of the Registration Statement shall be in effect and pending, or threatened by the Commission. A prospectus containing the Rule 430A Information shall have been filed with the Commission in accordance with Rule 424(b) (or a post-effective amendment providing such information shall have been filed and declared effective in accordance with the requirements of Rule 430A). (b) Opinion of Counsel for the Delphi Parties. At Closing Time, the Representative shall have received the favorable opinion, dated as of Closing Time, of Shearman and Sterling, counsel for the Delphi Parties, substantially in a form and substance reasonably satisfactory to counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters. (c) Opinion of Maryland Counsel for the Company. At the Closing Time, the Representative shall have received the favorable opinion, dated as of Closing Time, of Ballard Spahr Andrews & Ingersoll, LLP, Maryland counsel for the Company, substantially in a form and substance reasonably satisfactory to counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters. (d) Opinion of Counsel for the Underwriters. At Closing Time, the Representative shall have received the favorable opinion, dated as of Closing Time, of Cleary, Gottlieb, Steen & Hamilton, counsel for the Underwriters, together with signed or reproduced copies of such letter for each of the other Underwriters with respect to the matters set forth in clauses (ii) (solely as to Delphi's valid existence and good standing), (vii), (viii) (solely as to preemptive or other similar rights arising by operation of law or under the charter or by-laws of the Company), (x), (xvi) (solely as to the information in the Prospectus under "Description of Delphi Properties Series A Preferred Stock") and the penultimate paragraph of Exhibit A hereto, with such exceptions and revisions as are agreed between such counsel and the Representative. In giving such opinion such counsel may rely, as to all matters governed by the laws of jurisdictions other than the law of the State of New York, the federal law of the United States and the General Corporation Law of the State of Delaware, upon the opinions of counsel satisfactory to the Representative. Such counsel may also state that, insofar as such opinion involves factual matters, they have relied, to the extent they deem proper, upon certificates of officers of the Company and Delphi and certificates of public officials. 13 (e) Officers' Certificate. At Closing Time, there shall not have been, since the date hereof or since the respective dates as of which information is given in the Prospectus, any material adverse change in the condition, financial or otherwise, or in the earnings, business affairs or business prospects of Delphi, the Company and their subsidiaries considered as one enterprise, whether or not arising in the ordinary course of business, and the Representative shall have received a certificate of the President or a Vice President of each of the Delphi Parties and of the chief financial or chief accounting officer of each of the Delphi Parties, dated as of Closing Time, to the effect that (i) there has been no such material adverse change, (ii) the representations and warranties in Section 1(a) hereof are true and correct with the same force and effect as though expressly made at and as of Closing Time, (iii) the Company, Delphi or Holdings, as applicable, has complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to Closing Time, and (iv) no stop order suspending the effectiveness of the Registration Statement is in effect, pending, or, to their knowledge, contemplated by the Commission. (f) Accountant's Comfort Letter. At the time of the execution of this Agreement, the Representative shall have received from Deloitte & Touche LLP a letter dated such date, in form and substance satisfactory to the Representative, together with signed or reproduced copies of such letter for each of the other Underwriters containing statements and information of the type ordinarily included in accountants' "comfort letters" to Underwriters with respect to the financial statements and certain financial information contained in the Registration Statement and the Prospectus. (g) Bring-down Comfort Letter. At Closing Time, the Representative shall have received from Deloitte & Touche LLP a letter, dated as of Closing Time, to the effect that they reaffirm the statements made in the letter furnished pursuant to subsection (f) of this Section, except that the specified date referred to shall be a date not more than three business days prior to Closing Time. (h) Maintenance of Rating. At Closing Time, the Securities shall be rated at least [___] by Moody's Investor's Service and [___] by Standard & Poor's Ratings Group, a division of The McGraw-Hill Companies, Inc., and the Company shall have delivered to the Representative a letter dated the Closing Time, from each such rating agency, or other evidence satisfactory to the Representative, confirming that the Securities have such ratings; and since the date of this Agreement, there shall not have occurred a downgrading in the rating assigned to the Securities or any of Delphi's securities by any "nationally recognized statistical rating agency", as that term is defined by the Commission for purposes of Rule 436(g)(2) under the 1933 Act, and no such organization shall have publicly announced that it has under surveillance or review its rating of the Securities or any of Delphi's securities. (i) Approval of Listing. At Closing Time, the Securities shall have been approved for listing on the New York Stock Exchange, subject only to official notice of issuance. (j) Conditions to Purchase of Option Securities. In the event that the Underwriters exercise their option provided in Section 2(b) hereof to purchase all or any portion of the Option Securities, the representations and warranties of the Delphi Parties contained herein and the statements in any certificates furnished by the Delphi Parties hereunder shall be true and correct as of each Date of Delivery and, at the relevant Date of Delivery, the Representative shall have received: (i) Officers' Certificate. A certificate, dated such Date of Delivery, of the President or a Vice President of each of the Delphi Parties and of the chief financial or chief 14 accounting officer of each of the Delphi Parties confirming that the certificate delivered at the Closing Time pursuant to Section 5(e) hereof remains true and correct as of such Date of Delivery. (ii) Opinion of Counsel for the Delphi Parties. The favorable opinion of Shearman and Sterling, counsel for the Delphi Parties dated such Date of Delivery, and substantially in a form and substance reasonably satisfactory to counsel for the Underwriters, but relating to the Option Securities to be purchased on such Date of Delivery. (iii) Opinion of Maryland Counsel for Company. The favorable opinion of Ballard, Spahr, Andrews & Ingersoll, LLP, Maryland counsel for the Company, dated such Date of Delivery, and substantially in a form and substance reasonably satisfactory to counsel for the Underwriters, but relating to the Option Securities to be purchased on such Date of Delivery. (iv) Opinion of Counsel for Underwriters. The favorable opinion of Cleary, Gottlieb, Steen and Hamilton, counsel for the Underwriters, dated such Date of Delivery, relating to the Option Securities to be purchased on such Date of Delivery and otherwise to the same effect as the opinion required by Section 5(d) hereof. (v) Bring-down Comfort Letter. A letter from Deloitte and Touche LLP, in form and substance satisfactory to the Representative and dated such Date of Delivery, substantially in the same form and substance as the letter furnished to the Representative pursuant to Section 5(g) hereof, except that the "specified date" in the letter furnished pursuant to this paragraph shall be a date not more than five days prior to such Date of Delivery. (vi) No Downgrading. Subsequent to the date notice is given by Merrill Lynch of its exercise of the option pursuant to Section 2(b), no downgrading shall have occurred in the rating accorded the Securities or of any of Delphi's securities by any "nationally recognized statistical rating organization", as that term is defined by the Commission for purposes of Rule 436(g)(2) under the 1933 Act, and no such organization shall have publicly announced that it has under surveillance or review its ratings of the Securities or any of Delphi's securities. (k) Additional Documents. At Closing Time and at each Date of Delivery counsel for the Underwriters shall have been furnished with such documents and opinions as they may reasonably require for the purpose of enabling them to pass upon the issuance and sale of the Securities as herein contemplated, or in order to evidence the accuracy of any of the representations or warranties, or the fulfillment of any of the conditions, herein contained; and all proceedings taken by the Delphi Parties in connection with the issuance and sale of the Securities as herein contemplated shall be reasonably satisfactory in form and substance to the Representative and counsel for the Underwriters. (l) Termination of Agreement. If any condition specified in this Section shall not have been fulfilled when and as required to be fulfilled, this Agreement, or, in the case of any condition to the purchase of Option Securities on a Date of Delivery which is after the Closing Time, the obligations of the several Underwriters to purchase the relevant Option Securities, may be terminated by the Representative by written notice to the Delphi Parties at any time at or prior to Closing Time or such Date of Delivery, as the case may be, and such termination shall be 15 without liability of any party to any other party except as provided in Section 4 and except that Sections 6 and 7 shall survive any such termination and remain in full force and effect. SECTION 6. Indemnification. (a) Indemnification of Underwriters. The Delphi Parties jointly and severally agree to indemnify and hold harmless each Underwriter, its selling agents and each person, if any, who controls any Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all loss, liability, claim and damage caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement (or any amendment thereto), including the Rule 430A Information, or the omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading or caused by any untrue statement or alleged untrue statement of a material fact included in any preliminary prospectus or the Prospectus (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating, defending or settling any such losses, claims, damages, or liabilities after receipt of adequate documentation relating thereto; provided, however, that the foregoing indemnity agreement, with respect to any preliminary prospectus or Prospectus, shall not inure to the benefit of any Underwriter from whom the person asserting any such losses, claims, damages, or liabilities purchased securities, or any person controlling such Underwriter, if a copy of the Prospectus (as then amended or supplemented) was not sent or given by or on behalf of such Underwriter to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the Securities to such person, and if the Prospectus (as so amended or supplemented) would have cured the defect giving rise to such losses, claims, damages, or liabilities, and; provided, further, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Delphi Parties by the Representative or any Underwriter through Merrill Lynch expressly for use in the Registration Statement (or any amendment thereto), including the Rule 430A Information, or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto). (b) Indemnification of Company, Directors and Officers. Each Underwriter severally agrees to indemnify and hold harmless the Delphi Parties, each of their directors, each of their officers who signed the Registration Statement, and each person, if any, who controls a Delphi Party within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and all loss, liability, claim, damage and expense described in the indemnity contained in subsection (a) of this Section, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendment thereto), including the Rule 430A Information or any preliminary prospectus or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information furnished to either of the Delphi Parties by the Representative or by any such Underwriter through Merrill Lynch expressly for use in the Registration Statement (or any amendment thereto) or such preliminary prospectus or the Prospectus (or any amendment or supplement thereto). (c) Actions against Parties; Notification. Each indemnified party shall give written notice as promptly as reasonably practicable to each indemnifying party of any action commenced against it in respect of which indemnity may be sought hereunder, but failure to so notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof. The indemnifying party, upon request of the indemnified party, shall retain counsel reasonably satisfactory to the indemnified party to represent the indemnified party and any others 16 the indemnifying party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any indemnified party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party shall have agreed in writing to pay such fees and expenses, (ii) the indemnifying party shall have failed to assume the defense of such proceeding and employ counsel reasonably satisfactory to the indemnified person in such proceeding, or (iii) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties. The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement, compromise, or judgment. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 6 or Section 7 hereof (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim. SECTION 7. Contribution. If the indemnification provided for in Section 6 hereof is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred by such indemnified party, as incurred, (i) in such proportion as is appropriate to reflect the relative benefits received by the Delphi Parties on the one hand and the Underwriters on the other hand from the offering of the Securities pursuant to this Agreement or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Delphi Parties on the one hand and of the Underwriters on the other hand in connection with the statements or omissions which resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative benefits received by the Delphi Parties on the one hand and the Underwriters on the other hand in connection with the offering of the Securities pursuant to this Agreement shall be deemed to be in the same respective proportions as the total net proceeds from the offering of the Securities pursuant to this Agreement (before deducting expenses) received by the Delphi Parties and the total underwriting discount received by the Underwriters, in each case as set forth on the cover of the Prospectus, bear to the aggregate initial public offering price of the Securities as set forth on the cover of the Prospectus. The relative fault of the Delphi Parties on the one hand and the Underwriters on the other hand shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Delphi Parties or by the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Delphi Parties and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this Section 7. The aggregate amount of 17 losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 7 shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. Notwithstanding the provisions of this Section 7, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of any such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 7, each person, if any, who controls an Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act and each Underwriter's Affiliates and selling agents shall have the same rights to contribution as such Underwriter, and each director of the Company or Delphi, each officer of the Company or Delphi who signed the Registration Statement, and each person, if any, who controls a Delphi Party within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Delphi Parties. The Underwriters' respective obligations to contribute pursuant to this Section 7 are several in proportion to the number of Initial Securities set forth opposite their respective names in Schedule A hereto and not joint. SECTION 8. Termination of Agreement. (a) Termination; General. The Representative may terminate this Agreement, by notice to the Company, at any time after the date of this Underwriting Agreement and prior to Closing Time (i) if there has occurred any material adverse change in the financial markets in the United States, any outbreak of hostilities or escalation thereof or other calamity or crisis or any change or development [involving a prospective change] in national political, financial or economic conditions, or (ii) if trading in any securities of Delphi has been suspended or materially limited by the Commission or the New York Stock Exchange, or if trading generally on the American Stock Exchange or the New York Stock Exchange has been suspended or materially limited by either of said exchanges or by order of the Commission or any other governmental authority, (iii) a material disruption has occurred in commercial banking or securities settlement or clearance services in the United States, or (iv) if a banking moratorium has been declared by either Federal or New York authorities, in each case the effect of which is such as to make it, in the judgment of the Representative, impracticable or inadvisable to market the Securities. (b) Liabilities. If this Agreement is terminated pursuant to this Section, such termination shall be without liability of any party to any other party except as provided in Section 4 hereof, and provided further that Sections 6 and 7 shall survive such termination and remain in full force and effect. SECTION 9. Default by One or More of the Underwriters. If one or more of the Underwriters shall fail at Closing Time or a Date of Delivery to purchase the Securities which it or they are obligated to purchase under this Agreement (the "Defaulted Securities"), the Representative shall have the right, within 24 hours thereafter, to make arrangements for one or more of the non-defaulting Underwriters, or any other underwriters, to purchase all, but not less than all, of the Defaulted Securities in such amounts 18 as may be agreed upon and upon the terms herein set forth; if, however, the Representative shall not have completed such arrangements within such 24-hour period, then: (i) if the number of Defaulted Securities does not exceed 10% of the number of Securities to be purchased on such date, each of the non-defaulting Underwriters shall be obligated, severally and not jointly, to purchase the full amount thereof in the proportions that their respective underwriting obligations hereunder bear to the underwriting obligations of all non-defaulting Underwriters, or (ii) if the number of Defaulted Securities exceeds 10% of the number of Securities to be purchased on such date, this Agreement or, with respect to any Date of Delivery which occurs after the Closing Time, the obligation of the Underwriters to purchase and of the Company to sell the Option Securities to be purchased and sold on such Date of Delivery shall terminate without liability on the part of any non-defaulting Underwriter or the Delphi Parties. No action taken pursuant to this Section shall relieve any defaulting Underwriter from liability in respect of its default under this Agreement. In the event of any such default which does not result in a termination of this Agreement or, in the case of a Date of Delivery which is after the Closing Time, which does not result in a termination of the obligation of the Underwriters to purchase and the Company to sell the relevant Option Securities, as the case may be, either the Representative or the Company shall have the right to postpone Closing Time or the relevant Date of Delivery, as the case may be, for a period not exceeding seven days in order to effect any required changes in the Registration Statement or Prospectus or in any other documents or arrangements. As used herein, the term "Underwriter" includes any person substituted for an Underwriter under this Section 9. SECTION 10. Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Underwriters shall be directed to the Representative at 4 World Financial Center, New York, New York 10080, attention of [______]; notices to Delphi shall be directed to it at 5725 Delphi Drive, Troy, Michigan 48098, attention of Treasurer; and notices to the Company shall be directed to it at 5725 Delphi Drive, Troy, Michigan 48098, attention of Chief Executive Officer. SECTION 11. Parties. This Agreement shall each inure to the benefit of and be binding upon the Underwriters and the Delphi Parties and their respective successors. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, firm or corporation, other than the Underwriters and the Delphi Parties and their respective successors and the controlling persons and officers and directors referred to in Sections 6 and 7 and their heirs and legal representatives, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. This Agreement and all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the Underwriters and the Delphi Parties and their respective successors, and said controlling persons and officers and directors and their heirs and legal representatives, and for the benefit of no other person, firm or corporation. No purchaser of Securities from any Underwriter shall be deemed to be a successor by reason merely of such purchase. SECTION 12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 19 SECTION 13. TIME. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT. EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME. SECTION 14. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same Agreement. SECTION 15. Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof. If the foregoing is in accordance with your understanding of our agreement, please sign and return to the Company a counterpart hereof, whereupon this instrument, along with all counterparts, will become a binding agreement between the Underwriters and the Delphi Parties in accordance with its terms. Very truly yours, DELPHI PROPERTIES, INC. By ----------------------------------- Title: DELPHI CORPORATION By ----------------------------------- Title: CONFIRMED AND ACCEPTED, as of the date first above written: MERRILL LYNCH & CO. MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By ---------------------------------------------- Authorized Signatory For itself and as Representative of the other Underwriters named in Schedule A hereto. 20 SCHEDULE A

Sch A-1 SCHEDULE B DELPHI PROPERTIES, INC. 12,000,000 Shares [_]% Non-cumulative Exchangeable Perpetual Series A Preferred Securities 1. The initial public offering price per share for the Securities, determined as provided in said Section 2, shall be $[_]. 2. The purchase price per share for the Securities to be paid by the several Underwriters shall be $[_] per share; provided that the purchase price per share for any Option Securities purchased upon the exercise of the overallotment option described in Section 2(b) shall be reduced by an amount per share equal to any dividends or distributions declared by the Company and payable on the Initial Securities but not payable on the Option Securities. 3. The commission to be paid to the Underwriters for their commitments hereunder shall be $[_] per share; provided that the commission payable for any Option Securities purchased upon the exercise of the overallotment option described in Section 2(b) shall be increased by an amount per share equal to any dividends or distributions declared by the Company and payable on the Initial Securities but not payable on the Option Securities. 4. The dividend rate on the Securities is [ ]% per annum. Sch B-1 EX-3.1 4 k75733exv3w1.txt ARTICLES OF INCORPORATION EXHIBIT 3.1 to S-11 ARTICLES OF INCORPORATION OF DELPHI PROPERTIES, INC. THIS IS TO CERTIFY THAT: FIRST: The undersigned, JOHN BLAHNIK, whose address is c/o Delphi Corporation, 5725 Delphi Drive, Troy, Michigan 48098, being at least 18 years of age, does hereby form a corporation under the general laws of the State of Maryland. SECOND: The name of the corporation (which is hereinafter called the "Corporation") is: Delphi Properties, Inc. THIRD: The Corporation is formed for the purpose of carrying on any lawful business. FOURTH: The address of the principal office of the Corporation in this State is c/o The Corporation Trust Incorporated whose address is 300 East Lombard Street, Baltimore, Maryland 21202. FIFTH: The name of the resident agent of the Corporation is The Corporation Trust Incorporated whose address is 300 East Lombard Street, Baltimore, Maryland 21202. The resident agent is a Maryland corporation. SIXTH: The total number of shares of stock which the Corporation has authority to issue is 100 shares, $0.01 par value per share, all of one class. The aggregate par value of all authorized shares having a par value is $1.00. SEVENTH: The Corporation shall have a board of one director unless the number is increased or decreased in accordance with the Bylaws of the Corporation. However, the number of directors shall never be less than the minimum number required by the Maryland General Corporation Law. The initial director is: JOHN BLAHNIK EIGHTH: (a) The Corporation reserves the right to make any amendment of the charter, now or hereafter authorized by law, including any amendment which alters the contract rights, as expressly set forth in the charter, of any shares of outstanding stock. (b) The Board of Directors of the Corporation may authorize the issuance from time to time of shares of its stock of any class, whether now or hereafter authorized, or securities convertible into shares of its stock of any class, whether now or hereafter authorized, for such consideration as the Board of Directors may deem advisable, subject to such restrictions or limitations, if any, as may be set forth in the Bylaws of the Corporation. (c) The Board of Directors of the Corporation may, by articles supplementary, classify or reclassify any unissued stock from time to time by setting or changing the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or terms or conditions of redemption of the stock. NINTH: To the maximum extent that Maryland law in effect from time to time permits limitation of the liability of directors and officers, no director or officer of the Corporation shall be liable to the Corporation or its stockholders for money damages. Neither the amendment nor repeal of this Article, nor the adoption or amendment of any other provision of the charter or Bylaws inconsistent with this Article, shall apply to or affect in any respect the applicability of the preceding sentence with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption. IN WITNESS WHEREOF, I have signed these Articles of Incorporation and acknowledge the same to be my act on this 12 day of March, 2003. /s/ John Blahnik ------------------------------- John Blahnik 2 EX-3.2 5 k75733exv3w2.txt BYLAWS OF DELPHI PROPERTIES, INC. EXHIBIT 3.2 to S-11 DELPHI PROPERTIES, INC. BYLAWS ARTICLE I OFFICES Section 1. PRINCIPAL OFFICE. The principal office of the Corporation in the State of Maryland shall be located at such place as the Board of Directors may designate. Section 2. ADDITIONAL OFFICES. The Corporation may have additional offices, including a principal executive office, at such places as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. PLACE. All meetings of stockholders shall be held at the principal executive office of the Corporation or at such other place as shall be set by the Board of Directors and stated in the notice of the meeting. Section 2. ANNUAL MEETING. The annual meetings of stockholders for the election of directors and the transaction of any business as may properly be brought before the meeting shall be held on such date and at such time as shall be designated from time to time by the Board of Directors during the month of May in each year. Section 3. SPECIAL MEETINGS. The chairman of the board, president, chief executive officer or Board of Directors may call special meetings of the stockholders. Special meetings of stockholders shall also be called by the secretary of the Corporation upon the written request of the holders of shares entitled to cast not less than a majority of all the votes entitled to be cast at such meeting. Such request shall state the purpose or purposes of such meeting and the matters proposed to be acted on at such meeting. The secretary shall inform such stockholders of the reasonably estimated cost of preparing and mailing notice of the meeting and, upon payment to the Corporation by such stockholders of such costs, the secretary shall give notice to each stockholder entitled to notice of the meeting. Section 4. NOTICE. Not less than ten nor more than 90 days before each meeting of stockholders, the secretary shall give to each stockholder entitled to vote at such meeting and to each stockholder not entitled to vote who is entitled to notice of the meeting written or printed notice stating the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by any statute, the purpose or purposes for which the meeting is called, either by mail, by presenting it to such stockholder personally, by leaving it at 1 the stockholder's residence or usual place of business or by any other means permitted by Maryland law. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at the stockholder's address as it appears on the records of the Corporation, with postage thereon prepaid. Any business of the Corporation may be transacted at an annual meeting of stockholders without being specifically designated in the notice, except such business as is required by any statute to be stated in such notice. No business shall be transacted at a special meeting of stockholders except as specifically designated in the notice. Section 5. ORGANIZATION AND CONDUCT. Every meeting of stockholders shall be conducted by an individual appointed by the Board of Directors to be chairman of the meeting or, in the absence of such appointment, by the chairman of the board or, in the case of a vacancy in the office or absence of the chairman of the board, by one of the following officers present at the meeting: the vice chairman of the board, if there be one, the president, the vice presidents in their order of rank and seniority, or, in the absence of such officers, a chairman chosen by the stockholders by the vote of a majority of the votes cast by stockholders present in person or by proxy. The secretary, or, in the secretary's absence, an assistant secretary, or in the absence of both the secretary and assistant secretaries, a person appointed by the Board of Directors or, in the absence of such appointment, a person appointed by the chairman of the meeting shall, act as secretary. In the event that the secretary presides at a meeting of the stockholders, an assistant secretary shall record the minutes of the meeting. The order of business and all other matters of procedure at any meeting of stockholders shall be determined by the chairman of the meeting. The chairman of the meeting may prescribe such rules, regulations and procedures and take such action as, in the discretion of such chairman, are appropriate for the proper conduct of the meeting, including, without limitation, (a) restricting admission to the time set for the commencement of the meeting; (b) limiting attendance at the meeting to stockholders of record of the Corporation, their duly authorized proxies or other such persons as the chairman of the meeting may determine; (c) limiting participation at the meeting on any matter to stockholders of record of the Corporation entitled to vote on such matter, their duly authorized proxies or other such persons as the chairman of the meeting may determine; (d) limiting the time allotted to questions or comments by participants; (e) maintaining order and security at the meeting; (f) removing any stockholder who refuses to comply with meeting procedures, rules or guidelines as set forth by the chairman of the meeting; and (g) recessing or adjourning the meeting to a later date and time and place announced at the meeting. Unless otherwise determined by the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure. Section 6. QUORUM. Except as otherwise provided by the charter of the Corporation, at any meeting of stockholders, the presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at such meeting shall constitute a quorum. If, however, such quorum shall not be present at any meeting of the stockholders, the chairman of the meeting or the stockholders entitled to vote at such meeting, present in person or by proxy, shall have the power to adjourn the meeting from time to time to a date not more than 120 days after the original record date without notice other than announcement at the meeting. At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified. 2 The stockholders present either in person or by proxy, at a meeting which has been duly called and convened, may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Section 7. VOTING. Unless otherwise required by the charter of the Corporation or these Bylaws, a plurality of all the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to elect a director. Each share may be voted for as many individuals as there are directors to be elected and for whose election the share is entitled to be voted. A majority of the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to approve any other matter that may properly come before the meeting, unless more than a majority of the votes cast is required by statute or by the charter of the Corporation. Unless otherwise provided in the charter, each outstanding share, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of stockholders. Section 8. PROXIES. A stockholder may cast the votes entitled to be cast by the shares of stock owned of record by the stockholder in person or by proxy executed by the stockholder or by the stockholder's duly authorized agent in any manner permitted by law. Such proxy or evidence of authorization of such proxy shall be filed with the secretary of the Corporation before or at the meeting. No proxy shall be valid more than eleven months after its date unless otherwise provided in the proxy. Section 9. VOTING OF STOCK BY CERTAIN HOLDERS. Stock of the Corporation registered in the name of a corporation, partnership, trust or other entity, if entitled to be voted, may be voted by the president or a vice president, a general partner or trustee thereof, as the case may be, or a proxy appointed by any of the foregoing individuals, unless some other person who has been appointed to vote such stock pursuant to a bylaw or a resolution of the governing body of such corporation or other entity or agreement of the partners of a partnership presents a certified copy of such bylaw, resolution or agreement, in which case such person may vote such stock. Any director or other fiduciary may vote stock registered in his or her name as such fiduciary, either in person or by proxy. Shares of stock of the Corporation directly or indirectly owned by it shall not be voted at any meeting and shall not be counted in determining the total number of outstanding shares entitled to be voted at any given time, unless they are held by it in a fiduciary capacity, in which case they may be voted and shall be counted in determining the total number of outstanding shares at any given time. The Board of Directors may adopt by resolution a procedure by which a stockholder may certify in writing to the Corporation that any shares of stock registered in the name of the stockholder are held for the account of a specified person other than the stockholder. The resolution shall set forth the class of stockholders who may make the certification, the purpose for which the certification may be made, the form of certification and the information to be contained in it; if the certification is with respect to a record date or closing of the stock transfer books, the time after the record date or closing of the stock transfer books within which the certification must be received by the Corporation; and any other provisions with respect to the procedure which the Board of Directors considers necessary or desirable. On receipt of such 3 certification, the person specified in the certification shall be regarded as, for the purposes set forth in the certification, the stockholder of record of the specified stock in place of the stockholder who makes the certification. Section 10. INSPECTORS. The Board of Directors, in advance of any meeting, may, but need not, appoint one or more individual inspectors or one or more entities that designate individuals as inspectors to act at the meeting or any adjournment thereof. If an inspector or inspectors are not appointed, the person presiding at the meeting may, but need not, appoint one or more inspectors. In case any person who may be appointed as an inspector fails to appear or act, the vacancy may be filled by appointment made by the Board of Directors in advance of the meeting or at the meeting by the chairman of the meeting. The inspectors, if any, shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. Each such report shall be in writing and signed by him or her or by a majority of them if there is more than one inspector acting at such meeting. If there is more than one inspector, the report of a majority shall be the report of the inspectors. The report of the inspector or inspectors on the number of shares represented at the meeting and the results of the voting shall be prima facie evidence thereof. Section 11. VOTING BY BALLOT. The Board of Directors, in its discretion, or the chairman of the meeting of stockholders, in his discretion, may require that any votes cast at such meeting shall be cast by written ballot. Section 12. CONTROL SHARE ACQUISITION ACT. Notwithstanding any other provision of the charter of the Corporation or these Bylaws, Title 3, Subtitle 7 of the Maryland General Corporation Law (or any successor statute) shall not apply to any acquisition by any person of shares of stock of the Corporation. This section may be repealed, in whole or in part, at any time, whether before or after an acquisition of control shares and, upon such repeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent control share acquisition. ARTICLE III DIRECTORS Section 1. GENERAL POWERS. The business and affairs of the Corporation shall be managed by or under the direction of its Board of Directors, which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the charter of the Corporation or by these Bylaws directed or required to be exercised or done by the stockholders. Section 2. NUMBER, TENURE AND QUALIFICATIONS. At any regular meeting or at any special meeting called for that purpose, subject to any limitations provided in 4 the charter of the Corporation, a majority of the entire Board of Directors may establish, increase or decrease the number of directors, provided that the number thereof shall never be less than the minimum number required by the Maryland General Corporation Law, nor more than 15, and further provided that the tenure of office of a director shall not be affected by any decrease in the number of directors. Section 3. ANNUAL AND REGULAR MEETINGS. An annual meeting of the Board of Directors shall be held immediately after and at the same place as the annual meeting of stockholders, no notice other than this Bylaw being necessary. In the event such meeting is not so held, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors. Section 4. SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by or at the request of the chairman of the board, the chief executive officer, the president or by a majority of the directors then in office. The person or persons authorized to call special meetings of the Board of Directors may fix any place as the place for holding any special meeting of the Board of Directors called by them. The Board of Directors may provide, by resolution, the time and place for the holding of special meetings of the Board of Directors without other notice than such resolution. Section 5. NOTICE. Notice of any special meeting of the Board of Directors shall be delivered personally or by telephone, electronic mail, facsimile transmission, United States mail or courier to each director at his or her business or residence address. Notice by personal delivery, telephone, electronic mail or facsimile transmission shall be given at least 48 hours prior to the meeting. Notice by United States mail shall be given at least three days prior to the meeting. Notice by courier shall be given at least two days prior to the meeting. Telephone notice shall be deemed to be given when the director or his or her agent is personally given such notice in a telephone call to which the director or his or her agent is a party. Electronic mail notice shall be deemed to be given upon transmission of the message to the electronic mail address given to the Corporation by the director. Facsimile transmission notice shall be deemed to be given upon completion of the transmission of the message to the number given to the Corporation by the director and receipt of a completed answer-back indicating receipt. Notice by United States mail shall be deemed to be given when deposited in the United States mail properly addressed, with postage thereon prepaid. Notice by courier shall be deemed to be given when deposited with or delivered to a courier properly addressed. Neither the business to be transacted at, nor the purpose of, any annual, regular or special meeting of the Board of Directors need be stated in the notice, unless specifically required by statute or these Bylaws. Section 6. QUORUM. A majority of the directors shall constitute a quorum for transaction of business at any meeting of the Board of Directors, provided that, if less than a majority of such directors are present at said meeting, a majority of the directors present may adjourn the meeting from time to time without further notice, and provided further that if, pursuant to the charter of the Corporation or these Bylaws, the vote of a majority of a particular group of directors is required for action, a quorum must also include a majority of such group. 5 The directors present at a meeting which has been duly called and convened may continue to transact business until adjournment, notwithstanding the withdrawal of enough directors to leave less than a quorum. Section 7. VOTING. The action of the majority of the directors present at a meeting at which a quorum is present shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable statute or the charter. If enough directors have withdrawn from a meeting to leave less than a quorum but the meeting is not adjourned, the action of the majority of the directors still present at such meeting shall be the action of the Board of Directors, unless the concurrence of a greater proportion is required for such action by applicable statute or the charter. Section 8. ORGANIZATION. At each meeting of the Board of Directors, the chairman of the board or, in the absence of the chairman, the vice chairman of the board, if any, shall act as Chairman. In the absence of both the chairman and vice chairman of the board, the chief executive officer or in the absence of the chief executive officer, the president or in the absence of the president, a director chosen by a majority of the directors present, shall act as Chairman. The secretary or, in his or her absence, an assistant secretary of the Corporation, or in the absence of the secretary and all assistant secretaries, a person appointed by the Chairman, shall act as Secretary of the meeting. Section 9. TELEPHONE MEETINGS. Directors may participate in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting. Section 10. WRITTEN CONSENT BY DIRECTORS. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting, if a consent in writing to such action is signed by each director and such written consent is filed with the minutes of proceedings of the Board of Directors. Section 11. VACANCIES. If for any reason any or all the directors cease to be directors, such event shall not terminate the Corporation or affect these Bylaws or the powers of the remaining directors hereunder (even if fewer than three directors remain). Except as provided by the charter of the Corporation, any vacancy on the Board of Directors for any cause other than an increase in the number of directors shall be filled by a majority of the remaining directors, even if such majority is less than a quorum, and any vacancy in the number of directors created by an increase in the number of directors may be filled by a majority vote of the entire Board of Directors. Any individual so elected as director shall serve until his or her successor is elected and qualifies. Section 12. COMPENSATION. Directors shall not receive any stated salary for their services as directors but, by resolution of the Board of Directors, may receive compensation per year and/or per meeting and/or per visit to real property or other facilities owned or leased by the Corporation and for any service or activity they performed or engaged in as directors. Directors may be reimbursed for expenses of attendance, if any, at each annual, regular or special meeting of the Board of Directors or of any committee thereof and for their expenses, if any, in 6 connection with each property visit and any other service or activity they performed or engaged in as directors; but nothing herein contained shall be construed to preclude any directors from serving the Corporation in any other capacity and receiving compensation therefor. Section 13. LOSS OF DEPOSITS. No director shall be liable for any loss which may occur by reason of the failure of the bank, trust company, savings and loan association, or other institution with whom moneys or stock have been deposited. Section 14. SURETY BONDS. Unless required by law, no director shall be obligated to give any bond or surety or other security for the performance of any of his or her duties. Section 15. RELIANCE. Each director, officer, employee and agent of the Corporation shall, in the performance of his or her duties with respect to the Corporation, be fully justified and protected with regard to any act or failure to act in reliance in good faith upon the books of account or other records of the Corporation, upon an opinion of counsel or upon reports made to the Corporation by any of its officers or employees or by the adviser, accountants, appraisers or other experts or consultants selected by the Board of Directors or officers of the Corporation, regardless of whether such counsel or expert may also be a director. Section 16. CERTAIN RIGHTS OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS. The directors shall have no responsibility to devote their full time to the affairs of the Corporation. Any director or officer, employee or agent of the Corporation, in his or her personal capacity or in a capacity as an affiliate, employee, or agent of any other person, or otherwise, may have business interests and engage in business activities similar to or in addition to or in competition with those of or relating to the Corporation. ARTICLE IV COMMITTEES Section 1. NUMBER, TENURE AND QUALIFICATIONS. The Board of Directors may designate one or more committees, each committee to consist of one or more directors, to serve at the pleasure of the Board of Directors. Section 2. POWERS. The Board of Directors may delegate to committees appointed under Section 1 of this Article any of the powers of the Board of Directors, except as prohibited by law or the charter of the Corporation. Section 3. MEETINGS. Notice of committee meetings shall be given in the same manner as notice for special meetings of the Board of Directors. A majority of the members of the committee shall constitute a quorum for the transaction of business at any meeting of the committee. The act of a majority of the committee members present at a meeting shall be the act of such committee. The Board of Directors may designate a chairman of any committee, and such chairman or, in the absence of a chairman, any two members of any committee (if there are at least two members of the Committee) may fix the time and place of its meeting unless the Board shall otherwise provide. In the absence of any member of any such committee, the 7 members thereof present at any meeting, whether or not they constitute a quorum, may appoint another director to act in the place of such absent member. Each committee shall keep minutes of its proceedings. Section 4. TELEPHONE MEETINGS. Members of a committee of the Board of Directors may participate in a meeting by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting. Section 5. WRITTEN CONSENT BY COMMITTEES. Any action required or permitted to be taken at any meeting of a committee of the Board of Directors may be taken without a meeting, if a consent in writing to such action is signed by each member of the committee and such written consent is filed with the minutes of proceedings of such committee. Section 6. VACANCIES. Subject to the provisions hereof, the Board of Directors shall have the power at any time to change the membership of any committee, to fill all vacancies, to designate alternate members to replace any absent or disqualified member or to dissolve any such committee. ARTICLE V OFFICERS Section 1. GENERAL PROVISIONS. The officers of the Corporation shall include a president, a secretary and a treasurer and may include a chairman of the board (who must be a director), a vice chairman of the board, a chief executive officer, one or more vice presidents, a chief operating officer, a chief financial officer, one or more assistant secretaries and one or more assistant treasurers. In addition, the Board of Directors may from time to time elect such other officers with such powers and duties as they shall deem necessary or desirable. The officers of the Corporation shall be elected annually by the Board of Directors, except that the chief executive officer or president may from time to time appoint one or more vice presidents, assistant secretaries and assistant treasurers or other officers. Each officer shall hold office until his or her successor is elected and qualifies or until his or her death, or his or her resignation or removal in the manner hereinafter provided. Any two or more offices except president and vice president may be held by the same person. Election of an officer or agent shall not of itself create contract rights between the Corporation and such officer or agent. Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the Corporation may be removed, with or without cause, by the Board of Directors if in its judgment the best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. Any officer of the Corporation may resign at any time by giving written notice of his or her resignation to the Board of Directors, the chairman of the board, the president or the secretary. Any resignation shall take effect immediately upon its receipt or at such later time specified in the notice of resignation. The acceptance of a resignation shall not be necessary to make it effective unless otherwise 8 stated in the resignation. Such resignation shall be without prejudice to the contract rights, if any, of the Corporation. Section 3. VACANCIES. A vacancy in any office may be filled by the Board of Directors for the balance of the term. Section 4. CHAIRMAN OF THE BOARD. The Board of Directors shall designate a chairman of the board. The chairman of the board shall preside over the meetings of the Board of Directors and of the stockholders at which he shall be present. The chairman of the board shall perform such other duties as may be assigned to him or her by the Board of Directors. Section 5. CHIEF EXECUTIVE OFFICER. The Board of Directors may designate a chief executive officer. In the absence of such designation, the chairman of the board shall be the chief executive officer of the Corporation. The chief executive officer shall have general responsibility for implementation of the policies of the Corporation, as determined by the Board of Directors, and for the management of the business and affairs of the Corporation. Section 6. PRESIDENT. The president shall, subject to the control of the Board of Directors and the chairman of the board, have general supervision of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. In the absence of a designation of a chief operating officer by the Board of Directors, the president shall be the chief operating officer. The president may execute any deed, mortgage, bond, contract or other instrument, except in cases where the execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation or shall be required by law to be otherwise executed; and in general shall perform all duties incident to the office of president and such other duties as may be prescribed by the Board of Directors from time to time. Section 7. VICE PRESIDENTS. In the absence of the president or in the event of a vacancy in such office, the vice president (or in the event there be more than one vice president, the vice presidents in the order designated by the Board of Directors or, in the absence of any designation, then in the order of their election) shall perform the duties of the president and when so acting shall have all the powers of and be subject to all the restrictions upon the president; and shall perform such other duties as from time to time may be assigned to such vice president by the president or by the Board of Directors. The Board of Directors may designate one or more vice presidents as executive vice president or as vice president for particular areas of responsibility. Section 8. SECRETARY. The secretary shall (a) attend and keep the minutes of all proceedings of the stockholders, the Board of Directors and committees of the Board of Directors in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the Corporation; (d) keep a register of the post office address of each stockholder which shall be furnished to the secretary by such stockholder; (e) have general charge of the stock transfer books of the Corporation; and (f) in general perform such 9 other duties as from time to time may be assigned to him by the chief executive officer, the president or by the Board of Directors. Section 9. TREASURER. The treasurer shall have the custody of the funds and securities of the Corporation and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. In the absence of a designation of a chief financial officer by the Board of Directors, the treasurer shall be the chief financial officer of the Corporation. The treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the president and Board of Directors, at the regular meetings of the Board of Directors or whenever it may so require, an account of all his or her transactions as treasurer and of the financial condition of the Corporation. If required by the Board of Directors, the treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his or her office and for the restoration to the Corporation, in case of his or her death, resignation, retirement or removal from office, of all books, papers, vouchers, moneys and other property of whatever kind in his or her possession or under his or her control belonging to the Corporation. Section 10. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The assistant secretaries and assistant treasurers, in general, shall perform such duties as shall be assigned to them by the secretary or treasurer, respectively, or by the president or the Board of Directors. The assistant treasurers shall, if required by the Board of Directors, give bonds for the faithful performance of their duties in such sums and with such surety or sureties as shall be satisfactory to the Board of Directors. Section 11. OTHER OFFICERS. Such other officers as the Board of Directors may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors. The Board of Directors may delegate to any other officer of the Corporation the power to choose such other officers and to prescribe their respective duties and powers. Section 12. SALARIES. The salaries and other compensation of the officers shall be fixed from time to time by the Board of Directors and no officer shall be prevented from receiving such salary or other compensation by reason of the fact that he is also a director. ARTICLE VI CONTRACTS, LOANS, CHECKS AND DEPOSITS Section 1. CONTRACTS. The Board of Directors may authorize any officer or agent to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the Corporation and such authority may be general or confined to specific instances. 10 Any agreement, deed, mortgage, lease or other document shall be valid and binding upon the Corporation when authorized or ratified by action of the Board of Directors and executed by an authorized person. Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or agent of the Corporation in such manner as shall from time to time be determined by the Board of Directors. Section 3. DEPOSITS. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Board of Directors may designate. ARTICLE VII STOCK Section 1. CERTIFICATES. Except as otherwise provided in these Bylaws, this Section shall not be interpreted to limit the authority of the Board of Directors to issue some or all of the shares of any or all of its classes or series without certificates. Each stockholder, upon written request to the secretary of the Corporation, shall be entitled to a certificate or certificates which shall represent and certify the number of shares of each class of stock held by him in the Corporation. Each certificate shall be signed by the chairman of the board, the president or a vice president and countersigned by the secretary or an assistant secretary or the treasurer or an assistant treasurer and may be sealed with the seal, if any, of the Corporation. The signatures may be either manual or facsimile. Certificates shall be consecutively numbered; and if the Corporation shall, from time to time, issue several classes of stock, each class may have its own number series. A certificate is valid and may be issued whether or not an officer who signed it is still an officer when it is issued. Each certificate representing shares which are restricted as to their transferability or voting powers, which are preferred or limited as to their dividends or as to their allocable portion of the assets upon liquidation or which are redeemable at the option of the Corporation, shall have a statement of such restriction, limitation, preference or redemption provision, or a summary thereof, plainly stated on the certificate. If the Corporation has authority to issue stock of more than one class, the certificate shall contain on the face or back a full statement or summary of the designations and any preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption of each class of stock and, if the Corporation is authorized to issue any preferred or special class in series, the differences in the relative rights and preferences between the shares of each series to the extent they have been set and the authority of the Board of Directors to set the relative rights and preferences of subsequent series. In lieu of such statement or summary, the certificate may state that the Corporation will furnish a full statement of such information to any stockholder upon request and without charge. If any class of stock is restricted by the Corporation as to transferability, the certificate shall contain a full statement of the restriction or state that the Corporation will furnish information about the restrictions to the stockholder on request and without charge. 11 Section 2. TRANSFERS. Upon surrender to the Corporation or the transfer agent of the Corporation of a stock certificate duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, the Corporation shall issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. The Corporation shall be entitled to treat the holder of record of any share of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Maryland. Notwithstanding the foregoing, transfers of shares of any class of stock will be subject in all respects to the charter of the Corporation and all of the terms and conditions contained therein. Section 3. REPLACEMENT CERTIFICATE. Any officer designated by the Board of Directors may direct a new certificate to be issued in place of any certificate previously issued by the Corporation alleged to have been lost, stolen or destroyed upon the making of an affidavit of that fact by the person claiming the certificate to be lost, stolen or destroyed. When authorizing the issuance of a new certificate, an officer designated by the Board of Directors may, in his or her discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or the owner's legal representative to advertise the same in such manner as he shall require and/or to give bond, with sufficient surety, to the Corporation to indemnify it against any loss or claim which may arise as a result of the issuance of a new certificate. Section 4. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE. The Board of Directors may set, in advance, a record date for the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or determining stockholders entitled to receive payment of any dividend or the allotment of any other rights, or in order to make a determination of stockholders for any other proper purpose. Except as provided in the charter of the Corporation, such date shall not be prior to the close of business on the day the record date is fixed and shall be not more than 90 days and, in the case of a meeting of stockholders, not less than ten days, before the date on which the meeting or particular action requiring such determination of stockholders of record is to be held or taken. In lieu of fixing a record date, the Board of Directors may provide that the stock transfer books shall be closed for a stated period but not longer than 20 days. If the stock transfer books are closed for the purpose of determining stockholders entitled to notice of or to vote at a meeting of stockholders, such books shall be closed for at least ten days before the date of such meeting. If no record date is fixed and the stock transfer books are not closed for the determination of stockholders, (a) the record date for the determination of stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day on which the notice of meeting is mailed or the 30th day before the meeting, whichever is the closer date to the meeting; and (b) the record date for the determination of stockholders entitled to 12 receive payment of a dividend or an allotment of any other rights shall be the close of business on the day on which the resolution of the directors, declaring the dividend or allotment of rights, is adopted. When a determination of stockholders entitled to vote at any meeting of stockholders has been made as provided in this section, such determination shall apply to any adjournment thereof, except when (i) the determination has been made through the closing of the transfer books and the stated period of closing has expired or (ii) the meeting is adjourned to a date more than 120 days after the record date fixed for the original meeting, in either of which case a new record date shall be determined as set forth herein. Section 5. STOCK LEDGER. The Corporation shall maintain at its principal office or at the office of its counsel, accountants or transfer agent, an original or duplicate share ledger containing the name and address of each stockholder and the number of shares of each class held by such stockholder. Section 6. FRACTIONAL STOCK; ISSUANCE OF UNITS. The Board of Directors may issue fractional stock or provide for the issuance of scrip, all on such terms and under such conditions as they may determine. Notwithstanding any other provision of the charter or these Bylaws, the Board of Directors may issue units consisting of different securities of the Corporation. Any security issued in a unit shall have the same characteristics as any identical securities issued by the Corporation, except that the Board of Directors may provide that for a specified period securities of the Corporation issued in such unit may be transferred on the books of the Corporation only in such unit. ARTICLE VIII ACCOUNTING YEAR The Board of Directors shall have the power, from time to time, to fix the fiscal year of the Corporation by a duly adopted resolution. ARTICLE IX DISTRIBUTIONS Section 1. AUTHORIZATION. Dividends and other distributions upon the stock of the Corporation may be authorized by the Board of Directors, subject to the provisions of law and the charter of the Corporation. Dividends and other distributions may be paid in cash, property or stock of the Corporation, subject to the provisions of law and the charter. Section 2. CONTINGENCIES. Before payment of any dividends or other distributions, there may be set aside out of any assets of the Corporation available for dividends or other distributions such sum or sums as the Board of Directors may from time to time, in its absolute discretion, think proper as a reserve fund for contingencies, for equalizing dividends or other distributions, for repairing or maintaining any property of the Corporation or for such other 13 purpose as the Board of Directors shall determine to be in the best interest of the Corporation, and the Board of Directors may modify or abolish any such reserve. ARTICLE X INVESTMENT POLICY Subject to the provisions of the charter of the Corporation, the Board of Directors may from time to time adopt, amend, revise or terminate any policy or policies with respect to investments by the Corporation as it shall deem appropriate in its sole discretion. ARTICLE XI SEAL Section 1. SEAL. The Board of Directors may authorize the adoption of a seal by the Corporation. The seal shall contain the name of the Corporation and the year of its incorporation and the words "Incorporated Maryland." The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof. Section 2. AFFIXING SEAL. Whenever the Corporation is permitted or required to affix its seal to a document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to place the word "(SEAL)" adjacent to the signature of the person authorized to execute the document on behalf of the Corporation. ARTICLE XII INDEMNIFICATION AND ADVANCE OF EXPENSES To the maximum extent permitted by Maryland law in effect from time to time, the Corporation shall indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, shall pay or reimburse reasonable expenses (including attorneys' fees) in advance of final disposition of a proceeding to (a) any individual who is a present or former director or officer of the Corporation and who is made a party to the proceeding by reason of his or her service in that capacity or (b) any individual who, while a director of the Corporation and at the request of the Corporation, serves or has served as a director, officer, partner, trustee, employee or agent of such corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise and who is made a party to the proceeding by reason of his or her service in that capacity. The Corporation may, with the approval of its Board of Directors, provide such indemnification and advance for expenses to a person who served a predecessor of the Corporation in any of the capacities described in (a) or (b) above and to any employee or agent of the Corporation or a predecessor of the Corporation. For purposes of this Article, references to "the Corporation" shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a 14 constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had the power and authority to indemnify its directors or officers, so that any person who is or was a director or officer of such constituent corporation, or is or was a director or officer of such constituent corporation serving at the request of such constituent corporation as a director, officer, partner, trustee, employee or agent of another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise, shall stand in the same position under the provisions of this Article with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. The indemnification and advancement of expenses provided by or granted pursuant to this Article shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any Bylaw, agreement, contract, vote of stockholders or disinterested directors or pursuant to the direction (howsoever embodied) of any court of competent jurisdiction or otherwise, both as to action in such person's official capacity and as to action in another capacity while holding such office, it being the policy of the Corporation that indemnification of the persons specified in this Article shall be made to the fullest extent permitted by law. The provisions of this Article shall not be deemed to preclude the indemnification of any person who is not specified in this Article IX but whom the Corporation has the power or obligation to indemnify under the provisions of the Maryland General Corporation Law, or otherwise. Neither the amendment nor repeal of this Article, nor the adoption or amendment of any other provision of the Bylaws or charter of the Corporation inconsistent with this Article, shall apply to or affect in any respect the applicability of the preceding paragraph with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption. ARTICLE XIII WAIVER OF NOTICE Whenever any notice is required to be given pursuant to the charter of the Corporation or these Bylaws or pursuant to applicable law, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at nor the purpose of any meeting need be set forth in the waiver of notice, unless specifically required by statute. The attendance of any person at any meeting shall constitute a waiver of notice of such meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened. 15 ARTICLE XIV AMENDMENT OF BYLAWS The Board of Directors shall have the exclusive power to adopt, alter or repeal any provision of these Bylaws and to make new Bylaws. ARTICLE XV VALUATION OF ASSETS The Board of Directors may authorize any entity or person to value the assets of the Corporation, and may, in its discretion, establish procedures for the valuation of such assets, including, without limitation, the real estate and mortgage assets of the Corporation. 16 EX-3.3 6 k75733exv3w3.txt FORM OF ARTICLES OF AMENDMENT AND RESTATEMENT EXHIBIT 3.3 to S-11 DELPHI PROPERTIES, INC. ARTICLES OF AMENDMENT AND RESTATEMENT FIRST: Delphi Properties, Inc., a Maryland corporation, desires to amend and restate its charter as currently in effect and as hereinafter amended. SECOND The following provisions are all the provisions of the charter currently in effect and as hereinafter amended: ARTICLE I FORMATION The undersigned, John Blahnik, whose address is c/o Delphi Corporation, 5725 Delphi Drive, Troy, Michigan 48098, being at least eighteen years of age, does hereby form a corporation under the laws of the State of Maryland. ARTICLE II NAME The name of the corporation is Delphi Properties, Inc. (the "CORPORATION"). ARTICLE III PRINCIPAL OFFICE The principal office of the Corporation in the State of Maryland is located at c/o The Corporation Trust Incorporated, 300 East Lombard Street, Baltimore, Maryland 21202. The resident agent of the Corporation at that address is The Corporation Trust Incorporated. The resident agent is a Maryland corporation. ARTICLE IV PURPOSE The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the Maryland General Corporation Law, provided that the Corporation's activities shall be limited in such manner to qualify for and maintain status as a real estate investment trust under Section 856 of the Code (defined below) until the Restriction Termination Date (defined in Section 7.1 below). ARTICLE V CAPITAL STOCK Section 5.1 Definitions. The following terms have the following meanings: (a) "ADMINISTRATIVE ACTION" means any judicial decision, official administrative pronouncement, published or private ruling, technical advice memorandum, Chief Counsel Advice (as defined in the Code), regulatory procedure, notice, or official announcement (including any notice or announcement of intent to adopt such procedures or regulations). (b) "AFFILIATE" of any specified Person means (i) any other Person which, directly or indirectly, is in control of, is controlled by or is under common control with such specified Person or (ii) any other Person who is a director or executive officer (A) of such specified Person, (B) of any Subsidiary 1 of such specified Person, or (C) of any Person described in clause (i) above. For purposes of this definition, control of a Person means the power, direct or indirect, to direct or cause the direction of the management and policies of such Person whether by contract or otherwise. (c) "AUTOMATIC EXCHANGE" means an exchange of all of the Series A Preferred Stock for Delphi Series AA Preferred Stock, on a one share for one share basis, in accordance with the terms, conditions, and procedures specified in Section 6.5 hereof. (d) "BANKRUPTCY CODE" means Chapter 11 of the U.S. Bankruptcy Code (11 U.S.C. Sections 101 et seq.), as amended. (e) "BOARD OF DIRECTORS" means the board of directors of the Corporation. (f) "BUSINESS DAY" means any day other than a Saturday, Sunday or any other day on which banking institutions and trust companies in New York City or Troy, Michigan are permitted or required by any applicable law to close. (g) "CAPITAL STOCK" of the Corporation means the Common Stock, the Series A Preferred Stock and the Series B Preferred Stock. (h) "CODE" means the Internal Revenue Code of 1986, as amended. (i) "COMMON STOCK" means the common stock of the Corporation, par value $0.01 per share. (j) "CONTRIBUTION AND LOAN AGREEMENT" means that certain Contribution and Loan Agreement dated on or about [_________________, 2003] by and between Delphi and the Corporation, as such agreement may be amended, supplemented or otherwise modified from time to time. (k) "DELPHI" means Delphi Corporation, a Delaware corporation, and its successors and assigns. (l) "DELPHI SERIES AA PREFERRED STOCK" means shares of the non-voting Series AA preferred stock of Delphi, [$0.10] par value per share. (m) "DIVIDEND PAYMENT DATE" means [Quarterly Dividend Payment Dates] of each year, with respect to dividends payable for the Dividend Periods ending on such dates, provided that, if any such date is not a Business Day, then the Dividend Payment Date for such Dividend Period ending on such date shall be the next Business Day following such date. (n) "DIVIDEND PERIOD" (other than the Initial Dividend Period) means each of the quarterly periods (i) commencing on and including [Period Beginning the Day Following the Dividend Payment Date and ending on the following Dividend Payment Date], (ii) commencing on and including [Period Beginning the Day Following the Dividend Payment Date and ending on the following Dividend Payment Date], (iii) commencing on and including [Period Beginning the Day Following the Dividend Payment Date and ending on the following Dividend Payment Date] and (iv) commencing on and including [Period Beginning the Day Following the Dividend Payment Date and ending on the following Dividend Payment Date] of the following calendar year. 2 (o) "EFFECTIVE TIME OF EXCHANGE" means the earliest possible date the applicable Automatic Exchange could occur as evidenced by the issuance by Delphi of a press release prior to such time. (p) "EXCHANGE AGREEMENT" means that certain Series A Preferred Stock Exchange Agreement to be dated on or about [_______, 2003] by and between the Corporation and Delphi, as such agreement may be amended, supplemented or otherwise modified from time to time. (q) "EXCHANGE EVENT" means the occurrence of any of the following events: i. the failure of the Corporation to declare dividends on the Series A Preferred Stock for any two quarterly Dividend Periods within a rolling 60-month period; ii. maturity or prepayment of all or any portion of the Indebtedness of Delphi under the Contribution and Loan Agreement and (A) the failure to refinance such matured or prepaid Indebtedness or (B) the failure of Delphi to contribute or sell to the Corporation within 90 days thereafter replacement REIT Qualified Assets that would yield investment income substantially similar to the matured or prepaid notes, provided that the Corporation's aggregate investment income is expected to be sufficient to pay full dividends on the Series A Preferred Stock, plus reasonably anticipated expenses; iii. the transfer (other than to Holdings) or liquidation of substantially all the assets with respect to which Delphi is the primary obligor or guarantor and the failure of Delphi to contribute or sell to the Corporation within 90 days thereafter replacement REIT Qualified Assets that would yield investment income substantially similar to the transferred or liquidated assets, provided that the Corporation's aggregate investment income is expected to be sufficient to pay full dividends on the Series A Preferred Stock, plus reasonably anticipated expenses; iv. an event of default in respect of the Contribution and Loan Agreement or the mortgage obligations related thereto; v. the failure of Delphi to remain at all times the primary obligor or guarantor in respect of investments accounting for at least two-thirds of the Corporation's investment income; vi. the failure of Delphi to maintain its Moody's long-term senior unsecured debt rating at or above "Ba2" or its Standard & Poor's long-term senior unsecured debt rating at or above "BB"; vii. the acceleration of any Indebtedness of Delphi in a principal amount in excess of $50 million; viii. (A) Delphi's board of directors passes a resolution authorizing Delphi to (I) commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary case under any such law, (II) consent to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of Delphi for all or substantially all of the property and assets of Delphi or (III) effect any general assignment for the benefit of creditors; or (B) (I) Delphi ceases to pay its debts generally as such debts become due; or (II) a custodian, other than a trustee, receiver, or agent appointed or authorized to take charge of less than substantially all of the property of Delphi for the purpose of enforcing a lien against such property, shall be appointed or take possession of all or substantially all of the property and 3 assets of Delphi. For the purposes of this subsection, all terms used herein but not otherwise defined in this Agreement shall have the meaning given to them in the Bankruptcy Code; ix. an Investment Company Act Event; or x. the Corporation's failure to qualify, or to remain qualified, as a REIT, whether because of a failure to distribute annually 90% of the Corporation's REIT taxable income; the nature of the Corporation's assets; the Corporation's manner of operation, organization, capital structure or equity ownership; or other factor; provided, however, that this Exchange Event will occur as of the date the Internal Revenue Service officially determines that the Corporation will no longer qualify as a REIT or upon the receipt by the Corporation of an opinion of counsel, rendered by a law firm experienced in such matters, in form and substance satisfactory to the Corporation, that the Corporation will no longer qualify as a REIT and the Corporation does not exercise its right to redeem the Series A Preferred Stock. (r) "FFO" means funds from operations of the Corporation and is equal to net income of the Corporation plus depreciation of real or personal property used to generate income, less any gain on the sale of real estate plus any loss on the sale of real estate calculated according to generally accepted accounting principles in the United States. (s) "HOLDINGS" means Delphi Properties Holdings, LLC, a Maryland limited liability company. (t) "INDEBTEDNESS" means any indebtedness for borrowed money or guarantees of indebtedness for borrowed money. (u) "INDEPENDENT DIRECTORS" is defined in Section 10.1 hereof. (v) "INITIAL DIVIDEND PERIOD" means the first Dividend Period following the initial issuance of any Series A Preferred Stock, which shall commence on and include the first day upon which a share of Series A Preferred Stock shall be issued and shall end on and include the last day of the Dividend Period in which such issuance occurs. (w) "INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as amended. (x) "INVESTMENT COMPANY ACT EVENT" means (i) the receipt by the Corporation of an opinion of counsel, rendered by a law firm experienced in such matters, in form and substance satisfactory to the Corporation, to the effect that there is more than an insubstantial risk that the Corporation is or will be considered an "investment company" that is required to be registered under the Investment Company Act, as a result of the occurrence of a change in law or regulation or a written change in interpretation or application of law or regulation by any legislative body, court, governmental agency, or regulatory authority or (ii) the Corporation is required to be registered under the Investment Company Act. (y) "JUNIOR STOCK" means any and all classes or series of equity securities of the Corporation expressly designated as ranking junior to the Series A Preferred Stock as to dividend rights or rights upon the liquidation of the Corporation, including, but not limited to, the Common Stock. (z) "LIQUIDATION VALUE" means $25.00 per share of Series A Preferred Stock, plus the amount of any previously declared but unpaid dividends, without interest. 4 (aa) "MANAGEMENT AGREEMENT" means that certain Management and Servicing Agreement dated on or about [_______, 2003] by and between Delphi and the Corporation, as such agreement may be amended, supplemented or otherwise modified from time to time. (bb) "MOODY'S" means Moody's Investors Service, Inc., and any successor thereto. (cc) "OPTIONAL REDEMPTION DATE" means [_________, 2008]. (dd) "PARITY STOCK" means any and all classes or series of equity securities of the Corporation expressly designated as ranking pari passu to the Series A Preferred Stock as to dividend rights or rights upon the liquidation of the Corporation. (ee) "PERMITTED INDEBTEDNESS" means Indebtedness in an aggregate amount not to exceed $10,000,000 so long as the Corporation's outstanding common stockholder's equity as determined in accordance with generally accepted accounting principles in the United States is at least $150,000,000 upon the date of incurrence of any Indebtedness. (ff) "PERSON" means an individual, corporation, partnership, estate, trust (including a trust qualified under Sections 401(a) or 501(c)(17) of the Code), a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company, or other entity. (gg) "PREFERRED DIRECTOR" means either of the two directors elected by holders of the Series A Preferred Stock in accordance with Section 6.3(b) hereof. (hh) "PREFERRED STOCK" means the Series A Preferred Stock and the Series B Preferred Stock of the Corporation. (ii) "PURCHASE AGREEMENT" means that certain Purchase Agreement to be dated on or about [______________, 2003] by and among Delphi, the Corporation and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representative for the underwriters named therein, as such agreement may be amended, supplemented or otherwise modified, from time to time. (jj) "RATING AGENCIES" means Moody's and Standard & Poor's. (kk) "RECORD DATE" means the record dates for determination of the holders of record of the Corporation's Capital Stock, which will be on the first day of each month in which a Dividend Payment Date falls. (ll) "REDEMPTION PRICE" means $25.00 per share plus previously authorized, declared and unpaid dividends, without interest. (mm) "REIT" is defined in Section 9.1 hereof. (nn) "REIT QUALIFIED ASSETS" means (i) membership interests in Holdings, to the extent that Holdings' assets consist of mortgage notes or other real estate assets; (ii) mortgage notes; (iii) residential mortgage loans or commercial mortgage loans, including participation interests in residential or commercial mortgage loans; (iv) mortgage-backed securities eligible to be held by REITs; (v) cash, cash items (which includes receivables) and government securities; or (vi) other real estate assets, as determined by the Board of Directors. 5 (oo) "SDAT" means the State Department of Assessments and Taxation of Maryland. (pp) "SENIOR STOCK" means any and all classes or series of equity securities of the Corporation or any warrants, options or other rights exercisable for or convertible or exchangeable into any class or series of any of the Corporation's equity securities expressly designated as ranking senior to the Series A Preferred Stock as to dividend rights or rights upon the liquidation, dissolution or winding up of the Corporation. (qq) "SERIES A PREFERRED STOCK" means the Series A non-cumulative preferred stock of the Corporation, par value $0.10 per share. (rr) "SERIES B PREFERRED STOCK" means the Series B preferred stock of the Corporation, par value $.10 per share. (ss) "STANDARD & POOR'S" means Standard & Poor's Rating Services, a division of the McGraw-Hill Companies, Inc., and any successor thereto. (tt) "SUBSIDIARY" of a Person means any corporation, association, partnership, or other business entity of which more than 50% of the total voting power of shares of capital stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned, directly or indirectly, by (i) such Person, (ii) such Person and one or more Subsidiaries of such Person, or (iii) one or more Subsidiaries of such Person. (uu) "TAX EVENT" means the receipt by the Corporation of an opinion of counsel, rendered by a law firm experienced in such matters, in form and substance satisfactory to the Corporation, to the effect that there is more than an insubstantial risk that (i) dividends paid or to be paid by the Corporation with respect to the Capital Stock of the Corporation are not, or will not be, fully deductible by the Corporation for United States federal income tax purposes, or (ii) the Corporation is, or will be, subject to additional taxes, duties, or other governmental charges in an amount which the Board of Directors reasonably determines to be significant, as a result of (A) any actual or proposed amendment to, clarification of, or change in (including any announced prospective change), the laws, treaties, or related regulations of the United States or any of its political subdivisions or their taxing authorities affecting taxation, (B) an Administrative Action, which is effective, or such official pronouncement or decision is announced, on or after the date of issuance of any of the Series A Preferred Stock or (C) any amendment to, clarification of, or change in the official position or the interpretation of such Administrative Actions or any interpretation or pronouncement that provides for a position with respect to such Administrative Actions that differs from the theretofore generally accepted position, in each case, by any legislative body, court, governmental authority, taxing authority or regulatory body, and, in each case, irrespective of the manner in which such amendment, clarification or change is made known. (vv) "VOTING RATIO" means the ratio of voting power in the Corporation, which, without considering any voting power of the Series B Preferred Stock, shall be divided 90% to the authorized shares of Common Stock and 10% to the authorized shares of Series A Preferred Stock. Section 5.2 Authorized Shares. The Corporation has the authority to issue 76,000,125 shares of stock, consisting of (a) 36,000,000 shares of Common Stock, $0.01 par value per share; (b) 40,000,000 shares of Series A Preferred Stock, $0.10 par value per share and (c) 125 shares of Series B Preferred Stock, $0.10 par value per share. The aggregate par value of all authorized shares of stock having par value is $4,360,012.50. If shares of one class of stock are classified or reclassified into shares of another class of stock pursuant to this Article V, the number of authorized shares of the former class shall 6 be automatically decreased and the number of shares of the latter class shall be automatically increased, in each case by the number of shares so classified or reclassified, so that the aggregate number of shares of stock of all classes that the Corporation has authority to issue shall not be more than the total number of shares of stock set forth in the first sentence of this Section 5.2. Subject to the rights expressly granted herein to the holders of any Preferred Stock, the Board of Directors, without any action by the stockholders of the Corporation, may amend the charter to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Corporation has authority to issue. Section 5.3 Charter and Bylaws. All persons who shall acquire stock in the Corporation shall acquire the same subject to the provisions of the charter and the bylaws of the Corporation. Section 5.4 Common Stock. Each share of Common Stock shall entitle the holder thereof to one vote. The Board of Directors may reclassify any unissued shares of Common Stock from time to time into one or more classes or series of stock. Subject to Section 6.1(d), holders of the Common Stock shall be entitled to receive dividends, if, as and when authorized by the Board of Directors and declared by the Corporation, out of assets of the Corporation legally available therefor; provided, that, so long as any shares of the Series A Preferred Stock are issued and outstanding, such dividends shall only be authorized by the Board of Directors to the extent necessary to maintain the Corporation's status as a REIT or as consented to by the holders of the Series A Preferred Stock pursuant to Section 6.3(c). Section 5.5 Preferred Stock. Subject to the rights expressly granted herein to the holders of any Preferred Stock, the Board of Directors may classify any unissued shares of Preferred Stock and reclassify any previously classified but unissued shares of Preferred Stock of any series from time to time, into one or more classes or series of stock. Section 5.6 Classified or Reclassified Shares. Prior to issuance of classified or reclassified shares of any class or series, the Board of Directors by resolution shall: (a) designate that class or series to distinguish it from all other classes and series of stock of the Corporation; (b) specify the number of shares to be included in the class or series; (c) set or change, subject to the express terms of any class or series of stock of the Corporation outstanding at the time, the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms and conditions of redemption for each class or series; and (d) cause the Corporation to file articles supplementary with the SDAT. Any of the terms of any class or series of stock set or changed pursuant to clause (c) of this Section 5.6 may be made dependent upon facts or events ascertainable outside the charter (including determinations by the Board of Directors or other facts or events within the control of the Corporation) and may vary among holders thereof, provided that the manner in which such facts, events or variations shall operate upon the terms of such class or series of stock is clearly and expressly set forth in the articles supplementary filed with the SDAT. Section 5.7 Series B Preferred Stock Designation. The Series B Preferred Stock shall have preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications and terms and conditions of redemption as specified by the Board of Directors and set forth in the Articles Supplementary specifying the Series B Preferred Stock as the same may be filed with the SDAT. The Series B Preferred Stock shall rank junior to the Series A Preferred Stock. The Series B Preferred Stock shall have a liquidation preference of $2,500.00 per share. 7 ARTICLE VI SERIES A PREFERRED STOCK Section 6.1 Dividends. (a) Payment of Dividends. Holders of the Series A Preferred Stock shall be entitled to receive, if, as and when authorized by the Board of Directors and declared by the Corporation, out of assets of the Corporation legally available therefor, non-cumulative quarterly cash dividends at the rate of [$______] per share, and no more. The non-cumulative cash dividends described in this Section 6.1(a) shall be payable, if, when and as authorized and declared, quarterly in arrears on a Dividend Payment Date. Each authorized and declared dividend shall be payable to holders of record of the Series A Preferred Stock as they appear on the stock books of the Corporation at the close of business on a Record Date; provided, however, that if a redemption date for the Series A Preferred Stock occurs after a dividend is authorized and declared but before it is paid, such dividend shall be paid as part of the redemption price to the person to whom the redemption price is paid. (b) No Interest. Holders of the Series A Preferred Stock shall not be entitled to any interest, or any sum of money in lieu of interest, in respect of any dividend payment or other payments on the Series A Preferred Stock authorized by the Board of Directors and declared by the Corporation which may be unpaid. Any dividend payment made on the Series A Preferred Stock shall first be credited against the earliest authorized and declared but unpaid cash dividend with respect to the Series A Preferred Stock. (c) Dividends not Cumulative. The right of holders of the Series A Preferred Stock to receive dividends is non-cumulative. Accordingly, if the Board of Directors does not authorize or declare a dividend payable in respect of any Dividend Period, or authorizes or declares less than a full dividend payable in respect of any Dividend Period, holders of the Series A Preferred Stock shall have no right to receive any dividend or a full dividend, as the case may be, in respect of such Dividend Period, and the Corporation shall have no obligation to pay a dividend or to pay full dividends in respect of such Dividend Period, whether or not dividends are authorized and declared and payable in respect of any future Dividend Period. (d) Priority as to Dividends. No dividends or other distributions shall be authorized, declared, or paid or set apart for payment on the Common Stock or Junior Stock, if any, for any Dividend Period unless full dividends have been or contemporaneously are authorized, declared, and paid, or authorized and declared and a sum sufficient for the payment thereof set apart for such payment, on the Series A Preferred Stock for such Dividend Period. When dividends are not paid in full (or a sum sufficient for such full payment is not so set apart) for any Dividend Period on the Series A Preferred Stock, dividends authorized and declared on the Series A Preferred Stock or any Parity Stock shall only be authorized and declared pro rata based upon the respective amounts that would have been paid on the Series A Preferred Stock and such Parity Stock had dividends been authorized and declared in full. In addition to the foregoing restriction, the Corporation shall not (1) authorize, declare, pay, or set apart funds for any dividends or other distributions with respect to the Common Stock or Junior Stock, if any, (except for dividends payable solely in additional shares of Common Stock or Junior Stock) or (2) repurchase, redeem, or otherwise acquire, or set apart funds for repurchase, redemption, or other acquisition of, the Common Stock or Junior Stock, if any, through a sinking fund or otherwise (except by conversion into or exchange for such Common Stock or Junior Stock), unless and until such time as full dividends on all outstanding shares of Series A Preferred Stock have been (i) declared and paid for three consecutive Dividend Periods and (ii) declared and paid or declared and a sum sufficient for such payment has been set apart for payment for the fourth consecutive Dividend Period. 8 (e) Priority of Senior Stock. No dividend shall be paid or set aside for holders of Series A Preferred Stock for any Dividend Period unless full dividends have been paid or set aside for the holders of Senior Stock, if any, as to dividends for such Dividend Period. (f) Distributions on Liquidation. Any reference to "dividends" or "distributions" in this Article VI shall not be deemed to include any distribution made in connection with any voluntary or involuntary dissolution, liquidation or winding up of the Corporation. (g) Determination of Corporation Liabilities. In determining whether a distribution (other than upon voluntary or involuntary dissolution, liquidation or winding up of the Corporation), by dividend, redemption or otherwise, is permitted under Maryland General Corporation Law, amounts that would be needed, if the Corporation were to be dissolved at the time of the distribution, to satisfy the liquidation preference of the shares of Series A Preferred Stock will not be added to the Corporation's total liabilities. Section 6.2 Liquidation Preference. The amount payable on the outstanding Series A Preferred Stock in the event of any voluntary or involuntary liquidation, dissolution, or winding-up of the affairs of the Corporation, out of the assets of the Corporation legally available for distribution to stockholders under applicable law, or the proceeds thereof, shall be equal to the Liquidation Value. Upon any such liquidation, dissolution, or winding-up of the Corporation, the holders of the Series A Preferred Stock shall be entitled, before any distribution shall be made to the holders of the Common Stock or Junior Stock, if any, to be paid the full amount of the Liquidation Value, but the holders of the Series A Preferred Stock shall not be entitled to any further payment with respect to such shares. If the amounts available for distribution in respect of the Series A Preferred Stock upon any such voluntary or involuntary liquidation, dissolution, or winding up are not sufficient to satisfy the full liquidation rights of all of the outstanding Series A Preferred Stock, then the holders of such outstanding shares shall share ratably in any such distribution of assets in proportion to the full respective preferential amounts to which they are entitled. All distributions made in respect of the Series A Preferred Stock in connection with such a liquidation, dissolution, or winding up of the Corporation shall be made pro rata per share to the holders entitled thereto. The consolidation or merger of the Corporation with or into any other entity, the consolidation or merger of any other entity with or into the Corporation or the sale of all or substantially all of the Corporation's property or business, shall not be deemed to be a liquidation, dissolution or winding up of the Corporation for purposes of this Section. Section 6.3 Voting Rights. (a) General. In addition to the special voting rights specified in subsections (b) and (c) hereof, the holders of the Series A Preferred Stock shall be entitled to 1/10th of one vote per share on all matters submitted to a vote of the stockholders, voting as a single class with the holders of the Common Stock and the holders of any other class of stock entitled to vote as a single class with the holders of the Common Stock. (b) Right to Elect Additional Directors under Certain Circumstances. If full dividends on the Series A Preferred Stock shall not have been paid for any six Dividend Periods, the number of directors of the Corporation shall thereupon increase by two and, subject to compliance with any requirement for regulatory approval of (or non-objection to) persons serving as directors, the holders of the Series A Preferred Stock, voting separately as a class, shall have the right to elect the two Preferred Directors at the Corporation's next annual meeting of stockholders and at each subsequent annual meeting until full dividends have been authorized, declared, and paid for three consecutive Dividend Periods and authorized and declared and paid or a sum sufficient for payment thereof is set apart for payment for the fourth consecutive Dividend Period. The term of each such Preferred Director elected thereby shall 9 terminate, and the total number of directors shall decrease by two, upon the first annual meeting of stockholders after the payment or the authorization, declaration, and setting aside for payment of full dividends on the Series A Preferred Stock for four consecutive Dividend Periods, or, if earlier, upon the occurrence of an Automatic Exchange or redemption of all the Series A Preferred Stock; provided, however, that if full dividends on the Series A Preferred Stock shall not have been paid for any six Dividend Periods subsequent to such termination, the holders of the Series A Preferred Stock, voting separately as a class, shall again have the right to elect two Preferred Directors pursuant to this Section. Any Preferred Director may be removed by, and shall not be removed except by, the majority vote of the holders of record of the outstanding Series A Preferred Stock, voting separately as a class, at a meeting of such stockholders called for such purpose. As long as dividends on the Preferred Stock shall not have been paid for any six Dividend Periods, (i) any vacancy in the office of a Preferred Director may be filled (except as provided in the following clause (ii)) by an instrument in writing signed by the remaining Preferred Director and filed with the Corporation, and (ii) in the case of the removal of any Preferred Director, the vacancy may be filled by the vote of the holders of the outstanding Series A Preferred Stock, voting separately as a class, at the same meeting at which such removal shall be considered. Each director appointed as aforesaid by the remaining Preferred Director shall be deemed, for all purposes hereof, to be a Preferred Director. Each Preferred Director shall be deemed to be an "Independent Director" for purposes of approving actions requiring the approval of the Independent Directors pursuant to Article X hereof. (c) Other Voting Rights. The provisions of Section 8.3 notwithstanding, so long as any shares of Series A Preferred Stock are outstanding, the Corporation shall not, without the consent or vote of the holders of at least two-thirds of the outstanding Series A Preferred Stock, voting separately as a class: i. amend, alter, repeal or otherwise change any provision of the charter of the Corporation, including the terms of the Series A Preferred Stock, if such amendment, alteration, repeal, or change would materially and adversely affect the preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends or other distributions, qualifications, or terms or conditions of redemption of the Series A Preferred Stock; provided, however, that an amendment that (A) increases the authorized number of the shares of Series B Preferred Stock, Common Stock or any other class of Junior Stock or (B) increases the authorized number of the shares of Series A Preferred Stock with a corresponding increase in the authorized number of the shares of Common Stock made to maintain the Voting Ratio of the Corporation shall not be deemed to be a material and adverse change requiring a vote of the holders of the Series A Preferred Stock pursuant to this Section 6.3(c); ii. authorize, create, or increase the authorized amount of or issue any class or series of any equity securities of the Corporation that would constitute Senior Stock as to the Series A Preferred Stock, or any warrants, options, or other rights exercisable for or convertible or exchangeable into any class or series of any equity securities of the Corporation that would constitute Senior Stock; iii. effect a consolidation, conversion, or merger of the Corporation with or into, or a share exchange (other than an exchange of Series A Preferred Stock for Delphi Series AA Preferred Stock upon the occurrence of an Automatic Exchange) with, another entity except that the Corporation may, without the consent or vote of the holders of the Series A Preferred Stock, consolidate or merge with or into, or enter into a share exchange with, another entity, if: (A) such entity is an Affiliate of Delphi; (B) such entity is a corporation, business trust, or other entity organized under the laws of the United States or a political subdivision of the United States that is not regulated as an investment company under the Investment Company Act and that, according 10 to an opinion of counsel rendered by a firm experienced in such matters, is qualified as a REIT for United States federal income tax purposes; (C) such other entity expressly assumes all of the Corporation's obligations and commitments pursuant to such consolidation, merger, or share exchange; (D) the outstanding shares of Series A Preferred Stock are exchanged for or converted into shares of the surviving entity having preferences, limitations, and relative voting and other rights substantially identical to those of the Series A Preferred Stock, including limitations on personal liability of the holders; (E) after giving effect to such merger, consolidation or share exchange, no breach, or event which, with the giving of notice or passage of time or both, could become a breach, by the Corporation of its obligations under its charter shall have occurred and be continuing; and (F) the Corporation shall have received written notice from each of the Rating Agencies and delivered a copy of such written notice to the transfer agent of the Corporation confirming that such merger, consolidation or share exchange will not result in a reduction of the rating assigned by any of such Rating Agencies to the Series A Preferred Stock (or the preferred interests of the surviving corporation, trust, or entity issued in replacement of the Series A Preferred Stock), and as a condition to effecting any such consolidation, conversion, merger or share exchange, the Corporation shall deliver to the transfer agent and cause to be mailed to each record holder of the Series A Preferred Stock, at least 30 days prior to such transaction becoming effective, a notice describing such transaction, together with a certificate of one of the executive officers of the Corporation and an opinion of counsel issued to the Corporation, each stating that such consolidation, conversion, merger or share exchange does not violate the requirements of the charter of the Corporation and that all conditions precedent provided for in the charter relating to the transaction have been complied with; iv. make or permit to be made any payment to Delphi or its Affiliates relating to any Indebtedness of the Corporation or beneficial interests in the Corporation when the Corporation is precluded, as described under Section 6.1(d) hereof, from paying dividends or making distributions in respect of the Common Stock, or make such payment or permit such payment to be made in anticipation of any liquidation, dissolution, or winding up of the Corporation; v. incur any Indebtedness other than Permitted Indebtedness or Indebtedness approved by the Independent Directors in accordance with Section 10.5; vi. pay any dividends or make any other distributions on the Common Stock, unless FFO for the fiscal quarter immediately preceding such payment will, after the payment of such dividend on the Common Stock, enable the Corporation to pay full dividends on the Series A Preferred Stock for the then current Dividend Period, plus reasonably anticipated expenses, except as may be necessary to maintain the Corporation's status as a REIT; vii. make any payment of interest or principal with respect to any Indebtedness to Delphi or its Affiliates unless FFO for the fiscal quarter immediately preceding such payment will, after the payment of such interest and principal, enable the Corporation to pay full dividends on the Series A Preferred Stock for the then current Dividend Period, plus reasonably anticipated expenses, except as may be necessary to maintain the Corporation's status as a REIT; viii. amend or otherwise change the Corporation's policy, once adopted, permitting the reinvestment of the proceeds of its assets in other interest-earning assets in respect of which Delphi is not the primary obligor or guarantor, only to the extent that the return from such assets over any period of four fiscal quarters is anticipated to equal or exceed the annualized dividend rate on the Series A Preferred Stock by 150%, except as may be necessary to maintain the Corporation's status as a REIT; 11 ix. sell, convey, transfer or otherwise cease to hold an interest in Holdings such that the Corporation does not have a majority interest in Holdings; x. modify the operating agreement of Holdings such that the Corporation does not determine the timing and amount of distributions made to the members of Holdings; xi. remove "Delphi" from the name of the Corporation unless the name of Delphi is changed and the Corporation's name is changed to be consistent with the new name of Delphi; xii. issue any Common Stock to Persons other than to Delphi or its Affiliates such that Delphi and its Affiliates would own less than 100% of the outstanding shares of Common Stock of the Corporation; or xiii. commence proceedings for the voluntary liquidation of the Corporation's business. Section 6.4 Redemption. (a) Optional Redemption. The Series A Preferred Stock is not subject to mandatory redemption and, except as hereinafter provided in Section 6.4(b) hereof, is not subject to optional redemption by the Corporation prior to the Optional Redemption Date. On or after the Optional Redemption Date, the Series A Preferred Stock may be redeemed out of funds legally available therefor by the Corporation, at its option, in whole or in part, at any time and from time to time, upon notice as provided in Section 6.4(d), at the Redemption Price. (b) Redemption upon the Occurrence of a Tax Event. The Corporation will have the right, at any time (whether before or after the Optional Redemption Date) upon the occurrence of a Tax Event, to redeem the Series A Preferred Stock, in whole or in part, upon notice as provided in Section 6.4(d) hereof, at the Redemption Price. (c) Procedures on Redemption. If less than all of the outstanding shares of Series A Preferred Stock are to be redeemed, the Corporation will select those shares to be redeemed pro rata, by lot or by such other methods as the Board of Directors in its sole discretion determines to be equitable, provided that such methods satisfy any applicable requirements of any securities exchange or quotation system on which the Series A Preferred Stock is then listed or quoted. If redemption is being effected by the Corporation, on and as of the date fixed for redemption, the Series A Preferred Stock called for redemption shall be deemed to cease to be outstanding, provided that the Redemption Price has been duly paid or provided for. (d) Notice of Redemption. Notice of any redemption, setting forth (i) the date and place fixed for said redemption and (ii) the Redemption Price shall be mailed at least 30 days, but not more than 60 days, prior to said date fixed for redemption to each holder of record of the shares of Series A Preferred Stock to be redeemed at his or her address as the same shall appear on the stock books of the Corporation. If less than all of the shares of Series A Preferred Stock owned by such holder are then to be redeemed, such notice shall specify the number of shares thereof that are to be redeemed and the numbers of the certificates representing such shares. Notice of any redemption shall be given by first class mail, postage prepaid. Neither failure to mail such notice, nor any defect therein or in the mailing thereof, to any particular holder shall affect the sufficiency of the notice or the validity of the proceedings for redemption with respect to the other holders. Any notice which was mailed in the manner herein provided shall be conclusively presumed to have been duly given whether or not the holder receives such notice. 12 (e) Status of Redeemed Shares. If such notice of redemption shall have been so mailed, and if, on or before the date fixed for redemption specified in such notice, all funds necessary for such redemption shall have been set aside by the Corporation, or any successor or acquiring or resulting entity, separate and apart from its other funds in trust for the account of the holders of the Series A Preferred Stock to be redeemed (so as to be and continue to be available therefor) or delivered to the redemption agent with irrevocable instructions to effect the redemption in accordance with the relevant notice of redemption, then, on and after said redemption date, notwithstanding that any certificate for the Series A Preferred Stock so called for redemption shall not have been surrendered for cancellation or transfer, the Series A Preferred Stock so called for redemption by the Corporation shall be deemed to be no longer outstanding and all rights with respect to such Series A Preferred Stock so called for redemption shall forthwith cease and terminate, except in each case for the right of the holders thereof to receive, out of the funds so set aside in trust, the Redemption Price, but without interest, upon surrender (and endorsement or assignment for transfer, if required by the Corporation or such other entity) of their certificates. Shares of Series A Preferred Stock redeemed pursuant to this Section 6.4, or purchased or otherwise acquired for value by the Corporation shall, after such acquisition, have the status of authorized and unissued shares of Series A Preferred Stock and may be reclassified and issued by the Corporation at any time as shares of any series of preferred stock other than as Series A Preferred Stock. (f) Unclaimed Funds. In the event that holders of the shares of Series A Preferred Stock that shall have been redeemed shall not within two years (or any longer period if required by law) after the redemption date claim any amount deposited in trust with a bank or trust company for the redemption of such shares, such bank or trust company shall, upon demand and if permitted by applicable law, pay over to the Corporation (or other entity that redeemed the shares) any such unclaimed amount so deposited with it, and shall thereupon be relieved of all responsibility in respect thereof, and thereafter the holders of such shares shall, subject to applicable escheat laws, be deemed to be unsecured creditors of the Corporation for an amount equivalent to the amount deposited as stated above for the redemption of the Series A Preferred Stock and so paid over to the Corporation, but shall in no event be entitled to any interest. (g) Limitations on Redemption. No shares of Series A Preferred Stock may be redeemed in the case of a Tax Event, unless (i) another series of preferred stock of the Corporation is authorized and issued that differs from the Series A Preferred Stock only in respect of the dividend rate and the proceeds from the issuance of such preferred stock are used to fund the redemption or are paid to Delphi; (ii) the Common Stock of the Corporation is sold by Delphi; (iii) Common Stock of the Corporation is issued by the Corporation and the proceeds from such issuance are used to fund the redemption or are paid to Delphi; (iv) non-cumulative perpetual preferred securities or common stock of Delphi is sold by Delphi; (v) non-cumulative perpetual preferred securities have been issued by a subsidiary of Delphi and the proceeds from the issuance are used to fund the redemption or are paid to Delphi; (vi) within the six month period ending on the redemption date, the Corporation issues shares of any Parity Stock or Junior Stock; or (vii) within the six month period ending on the redemption date, Delphi or a REIT that is a subsidiary of Delphi shall have issued eligible replacement securities that result in net proceeds to Delphi that are at least equal to the aggregate Liquidation Value of the shares of Series A Preferred Stock called for redemption. Eligible replacement securities shall include securities similar to perpetual non-cumulative preferred stock of the Corporation, or perpetual preferred or common stock of Delphi. Section 6.5 Automatic Exchange. (a) Exchange Event. Upon the occurrence of an Exchange Event, then, subject to the terms and conditions of this Section 6.5, each share of Series A Preferred Stock will be immediately and automatically exchanged for one newly issued share of Delphi Series AA Preferred Stock. The preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, 13 qualifications, and terms and conditions of the Delphi Series AA Preferred Stock shall be as set forth in the Certificate of Incorporation of Delphi, which has been filed with the Secretary of State of Delaware. (b) Surrender of Certificates. Upon an Exchange Event, each holder of the Series A Preferred Stock shall be unconditionally obligated to surrender to Delphi the certificates representing each share of Series A Preferred Stock held by such holder, and Delphi shall be unconditionally obligated to issue, or cause to be issued, to such holder in exchange for each such preferred share a certificate representing one share of Delphi Series AA Preferred Stock pursuant to the Exchange Agreement. (c) Procedures for Exchange. The Automatic Exchange shall occur as of the Effective Time of the Exchange. As of the Effective Time of Exchange, (i) all of the outstanding Series A Preferred Stock to be surrendered to Delphi will be deemed canceled and exchanged for shares of Delphi Series AA Preferred Stock without any further action on the part of the Corporation or any other Person and (ii) all rights of the holders of such Series A Preferred Stock as stockholders of the Corporation shall cease and such persons shall thereupon and thereafter be deemed to be and shall be for all purposes the holders of Delphi Series AA Preferred Stock. Notice of the occurrence of the Exchange Event shall be given by the registrar by first-class mail, postage prepaid, mailed within 30 days of such event, to each holder of record of the Series A Preferred Stock, at such holder's address as the same appears on the stock books of the Corporation. Each such notice shall indicate the place or places where certificates for the Series A Preferred Stock are to be surrendered by the holders thereof, and Delphi shall deliver, or cause to be delivered, to each such holder certificates for Delphi Series AA Preferred Stock upon surrender of certificates for the Series A Preferred Stock. Until such replacement share certificates are delivered (or in the event such replacement certificates are not delivered), certificates previously representing the Series A Preferred Stock shall be deemed for all purposes to represent Delphi Series AA Preferred Stock. (d) Status of Redeemed Shares; Dividends. Any of the Series A Preferred Stock purchased by the Corporation or redeemed in accordance with Section 6.4 hereof prior to the Effective Time of Exchange shall not be deemed outstanding and shall not be subject to the Automatic Exchange. In the event of an Automatic Exchange, the holders of the Series A Preferred Stock that are exchanged for the Delphi Series AA Preferred Stock shall be entitled to receive dividends on the Delphi Series AA Preferred Stock that are equivalent to dividends that were authorized, declared and unpaid in respect of the Series A Preferred Stock at the time of the exchange, upon declaration by the board of directors of Delphi. Section 6.6 No Conversion Rights. The holders of the Series A Preferred Stock shall not have any rights to convert such shares into shares of any other class or series of stock or into any other securities of, or any other interest in, the Corporation. Section 6.7 No Sinking Fund. No sinking fund shall be established for the retirement or redemption of the Series A Preferred Stock. Section 6.8 No Other Rights. The Series A Preferred Stock shall not have any designations, preferences, or relative, participating, optional, or other special rights, except as set forth in the charter of the Corporation or as otherwise required by law. Section 6.9 Compliance with Applicable Law. Authorization by the Board of Directors and declaration and payment by the Corporation of dividends to holders of the Series A Preferred Stock and repurchase, redemption, or other acquisition by the Corporation of the Series A Preferred Stock shall be subject in all respects to any and all restrictions and limitations placed on dividends, redemptions, or other distributions by the Corporation under laws, regulations, and regulatory conditions or limitations applicable to or regarding the Corporation from time to time. 14 Section 6.10 Authorization and Issuance of Additional Shares. The Series A Preferred Stock shall be subject to the authorization and issuance of Senior Stock to the extent not expressly prohibited by the charter of the Corporation. Section 6.11 Legend. Each certificate for the Series A Preferred Stock, or statement of information required under the Maryland General Corporation Law to be delivered to holders of shares of the Series A Preferred Stock issued without certificates, shall bear substantially the following legend in conspicuous type: THE SERIES A PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS OF THE CHARTER OF THE CORPORATION AND A CERTAIN EXCHANGE AGREEMENT, DATED [__________], 2003, REQUIRING THEIR EXCHANGE IN CERTAIN CIRCUMSTANCES INTO SERIES AA PREFERRED STOCK OF DELPHI. THE CORPORATION WILL MAIL TO THE STOCKHOLDER A COPY OF THE CHARTER OF THE CORPORATION AND SUCH AGREEMENT, WITHOUT CHARGE, WITHIN FIVE DAYS AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR. ARTICLE VII RESTRICTIONS ON TRANSFER AND OWNERSHIP OF CAPITAL STOCK Section 7.1 Definitions. The following terms have the following meanings: (a) "CHARITABLE BENEFICIARY" means, with respect to any Trust, one or more organizations described in each of Section 170(b)(1)(A) and Section 170(c) of the Code that are named by the Corporation as the beneficiary or beneficiaries of such Trust, in accordance with the provisions of Section 7.16 hereof. (b) "CONSTRUCTIVE OWNERSHIP" means ownership of Capital Stock by a Person who (i) either would own such shares directly or would have beneficial ownership under a nominee or custodial arrangement (in either case without taking into account the application of Section 544 of the Code, as modified by Section 856(h)(1)(B)) or (ii) would be treated as the indirect or constructive owner of such shares through the application of Section 856(h)(3)(A)(i) of the Code or Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code. The terms "Constructive Owner", "Constructively Own", and "Constructively Owned" have correlative meanings. (c) "INDIVIDUAL" means any natural person and any entity that is included in the definition of individual in Section 542(a)(2) of the Code, but does not include a pension trust described in Section 401(a) of the Code which qualifies for look-through treatment under Section 856(h)(3)(A)(i) of the Code. (d) "INITIAL DATE" means the earliest date upon which the Preferred Stock of the Corporation is beneficially owned by at least 100 Persons (determined under the principles of Section 856(a)(5) of the Code). (e) "MARKET PRICE" on a particular date means, with respect to any class or series of outstanding shares of Preferred Stock, the last sale price for such Preferred Stock or, in case no such sale takes place on such day, the average of the closing bid and asked prices for such Preferred Stock, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed 15 or admitted to trading on the principal national securities exchange on which such Preferred Stock is listed or admitted to trading or, if such Preferred Stock is not listed or admitted to trading on any national securities exchange, the last quoted price or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the National Association of Securities Dealers, Inc. Automated Quotation System or, if such system is no longer in use, the principal other automated quotation system that may then be in use or, if such Preferred Stock is not quoted by any such organization, the average of the closing bid and asked prices as furnished by a professional market maker making a market in such Preferred Stock selected by the Board of Directors of the Corporation or, in the event that no trading price is available for such Preferred Stock, the fair market value of the Preferred Stock, as determined in good faith by the Board of Directors of the Corporation. (f) "OWNERSHIP LIMIT" means not more than 5% of the aggregate liquidation value of the issued and outstanding Preferred Stock of the Corporation. The aggregate liquidation value of the issued and outstanding Preferred Stock shall be determined by the Board of Directors of the Corporation in good faith, which determination shall be conclusive for all purposes hereof. The Board of Directors also may determine that compliance with any restriction or limitation on stock ownership and transfers set forth in this Article VII is no longer required for REIT qualification and, therefore, may waive compliance with such restriction or limitation in whole or in part or determine that, based upon then current law, such restriction or limitation may be modified. (g) "PROHIBITED OWNER" means, with respect to any purported Transfer, any Person who, but for the provisions of Section 7.2, would own or Constructively Own Preferred Stock in violation of this Article VII and, if appropriate in the context, shall also mean any Person who would have been the record owner of the shares that the Prohibited Owner would have so owned. (h) "RESTRICTION TERMINATION DATE" means the first day after the Initial Date on which the Corporation determines pursuant to Section 10.4 that it is no longer in the best interests of the Corporation to attempt to, or continue to, qualify as a REIT. (i) "TRANSFER" means any issuance, sale, transfer, gift, assignment, devise, or other disposition, as well as any other event that causes any Person to acquire Constructive Ownership of any Preferred Stock or the right to vote or receive dividends on Preferred Stock, or any agreement to take any such actions or cause any such events, including (i) the granting or exercise of any option (or any disposition of any option), (ii) any disposition of any securities or rights convertible into or exchangeable for Preferred Stock or any interest in Preferred Stock or any exercise of any such conversion or exchange right, (iii) transfers of interests in other entities that result in changes in Constructive Ownership of Preferred Stock, and (iv) the transfer of any Preferred Stock pursuant to a waiver of the Ownership Limit under Section 7.8; in each case, whether voluntary or involuntary, whether Constructively Owned and whether by operation of law or otherwise. (j) "TRUST" means any trust described in Section 7.10. (k) "TRUSTEE" means any Person, who shall not be an Affiliate of the Corporation or any Prohibited Owner, designated by the Corporation to act as trustee of any Trust, or any successor trustee thereof. Section 7.2 Ownership Limitations. During the period commencing on the Initial Date and ending on the Restriction Termination Date: 16 (a) Basic Restrictions. i. No Individual shall Constructively Own Preferred Stock in excess of the Ownership Limit. In determining the Preferred Stock Constructively Owned by any Individual, the Preferred Stock Constructively Owned solely as a result of such Individual's status as a direct or indirect stockholder of Delphi shall not be considered. Delphi shall not be subject to the Ownership Limit restriction set forth in this Section 7.2(a)(i). ii. Notwithstanding any other provisions contained herein, any Transfer of Preferred Stock that, if effective, would result in Preferred Stock being beneficially owned by less than 100 Persons (determined under the principles of Section 856(a)(5) of the Code) shall be void ab initio, and the intended transferee shall acquire no rights in such Preferred Stock. (b) Transfers in Trust. If any proposed Transfer of Preferred Stock, if effective, would result in any Person Constructively Owning shares of Preferred Stock in violation of Section 7.2(a)(i) hereof, then: i. that number of shares of Preferred Stock the Constructive Ownership of which otherwise would cause such Individual to violate Section 7.2(a)(i) (rounded up to the nearest whole share) shall be automatically transferred to a Trust for the benefit of a Charitable Beneficiary, as described in Section 7.10 hereof, effective as of the close of business on the Business Day prior to the date of such Transfer, and such Individual shall acquire no rights in such shares; or ii. if the transfer to the Trust described in clause (i) above would not be effective for any reason to prevent the violation of Section 7.2(a)(i), then the Transfer of that number of shares of Preferred Stock that otherwise would cause any Individual to violate Section 7.2(a)(i) shall be void ab initio, and the intended transferee shall acquire no rights in such Preferred Stock. Section 7.3 Remedies for Breach. If the Board of Directors of the Corporation or any duly authorized committee thereof shall at any time determine in good faith that a Transfer or other event has taken place that results in a violation of Section 7.2(a) hereof or that an Individual intends to acquire or has attempted to acquire Constructive Ownership of any Preferred Stock in violation of Section 7.2(a) (whether or not such violation is intended), the Board of Directors or a committee thereof shall take such action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, without limitation, causing the Corporation to redeem shares, refusing to give effect to such Transfer on the books of the Corporation or instituting proceedings to enjoin such Transfer or other event; provided, however, that any Transfers or attempted Transfers or other events in violation of Section 7.2(a) shall, where applicable, automatically result in the transfer to the Trust described above and shall, where applicable, be void ab initio, as provided above, irrespective of any action (or non-action) by the Board of Directors or a committee thereof. Section 7.4 Notice of Restricted Transfer. Any Person who acquires or attempts or intends to acquire Constructive Ownership of shares of Preferred Stock that will or may violate Section 7.2(a) or any Person who would have owned Preferred Stock that resulted in a transfer to the Trust pursuant to the provisions of Section 7.2(b) shall immediately give written notice to the Corporation of such event, or in the case of such a proposed or attempted transaction, give at least 15 days' prior written notice, and shall provide to the Corporation such other information as the Corporation may request in order to determine the effect, if any, of such Transfer on the Corporation's status as a REIT. Section 7.5 Owners Required to Provide Information. During the period commencing on the Initial Date and ending on the Restriction Termination Date: 17 (a) Each Person who is a Constructive Owner of at least one-half of one percent (or such higher percentage as permitted by the Code or the Treasury Regulations promulgated thereunder if it is established that the number of holders of record is greater than 200) of the outstanding shares of Preferred Stock, within 30 days of June 30 and December 31 of each year, shall give written notice to the Corporation stating the name and address of such owner, the number of shares of Preferred Stock Constructively Owned by such owner, and a description of the manner in which such shares are held. Each such owner shall provide to the Corporation such additional information as the Corporation may request in order to determine the effect, if any, of such Constructive Ownership on the Corporation's status as a REIT and to ensure compliance with the Ownership Limit. (b) Each Person who is a Constructive Owner of any shares of Capital Stock, and each Person (including the stockholder of record) who is holding Capital Stock for a Constructive Owner, shall provide to the Corporation such information as the Corporation may request from time to time, in good faith, in order to determine the Corporation's status as a REIT and to comply with requirements of any taxing authority or governmental authority or to determine such compliance. Section 7.6 Remedies not Limited. Subject to Section 10.1, nothing contained in this Article VII shall limit the authority of the Board of Directors of the Corporation to take such other action as it deems necessary or advisable to protect the Corporation and the interests of its stockholders in preserving the Corporation's status as a REIT. Section 7.7 Ambiguity. In the case of any ambiguity in the application of any of the provisions of this Article VII, the Board of Directors of the Corporation shall have the power to determine the application of the provisions of Article VII with respect to any situation based on the facts known to it. In the event this Article VII requires an action by the Board of Directors and the charter of the Corporation fails to provide specific guidance with respect to such action, the Board of Directors shall have the power to determine the action to be taken so long as such action is not contrary to the provisions of Sections 7.1 through 7.16. Section 7.8 Exceptions. (a) Subject to Section 7.8(b) hereof, upon the receipt of a ruling from the Internal Revenue Service, or an opinion of counsel, in either case in form and substance satisfactory to the Board of Directors, in its sole discretion, as it may deem necessary or advisable in order to determine or ensure that an exemption from the Ownership Limit or an increase in the Ownership Limit will not jeopardize the Corporation's status as a REIT, the Board of Directors, in its sole discretion, may exempt a Person from the Ownership Limit and may increase an Ownership Limit for such Person. Notwithstanding the receipt of any ruling or opinion, the Board of Directors may impose such conditions or restrictions as it deems appropriate in connection with granting such exemption or increase. (b) An underwriter which participates in a public offering or a private placement of Preferred Stock (or securities convertible into or exchangeable for Preferred Stock) may own or Constructively Own shares of Preferred Stock (or securities convertible into or exchangeable for Preferred Stock) in excess of the Ownership Limit, but only to the extent necessary to facilitate such public offering or private placement. Section 7.9 Legend. Each certificate for Preferred Stock, or statement of information required under the Maryland General Corporation Law to be delivered to holders of shares of Preferred Stock issued without certificates, shall bear substantially the following legend: 18 The shares represented by this certificate are subject to restrictions on Constructive Ownership and Transfer for the purpose of the Corporation's maintenance of its status as a REIT under the Code. If any of the restrictions on transfer or ownership are violated, the shares of Preferred Stock represented hereby may be automatically transferred to a Trust for the benefit of one or more Charitable Beneficiaries. In addition, upon the occurrence of certain events, attempted Transfers in violation of the restrictions described above may be deemed to be void ab initio. All capitalized terms used in this legend have the meanings defined in the charter of the Corporation, as the same may be amended from time to time, a copy of which, including the restrictions on transfer and ownership, will be furnished to each holder of shares of Preferred Stock of the Corporation on request and without charge. Instead of the foregoing legend, the certificate for Preferred Stock may state that the Corporation will furnish a full statement of certain restrictions on transferability of such Preferred Stock to stockholders on request and without charge. Section 7.10 Ownership in Trust. Upon any attempted Transfer or other event that would result in a transfer of Preferred Stock to a Trust pursuant to this Article VII, such Preferred Stock shall be deemed to have been transferred to the Trustee as trustee of such Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the Business Day prior to the purported Transfer or other event that results in the transfer to the Trust. The Trustee shall be appointed by the Corporation and shall be a Person unaffiliated with the Corporation and any Prohibited Owner. Each Charitable Beneficiary shall be designated by the Corporation as provided in Section 7.16. Section 7.11 Status of Shares Held by the Trustee. Preferred Stock held by the Trustee shall be issued and outstanding Preferred Stock of the Corporation. The Prohibited Owner shall have no rights in the shares held by the Trustee. The Prohibited Owner shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends and shall not possess any rights to vote or other rights attributable to the shares held in the Trust. Section 7.12 Dividend and Voting Rights. The Trustee shall have all voting rights and rights to dividends or other distributions with respect to Preferred Stock held in the Trust, which rights shall be exercised for the exclusive benefit of the Charitable Beneficiary. Any dividend or other distribution paid prior to the discovery by the Corporation that the shares of Preferred Stock have been transferred to the Trustee shall be paid by the recipient of such dividend or distribution to the Corporation upon demand, and the Corporation shall pay such dividend or distribution to the Trustee. Any unpaid dividend with respect to the Prohibited Owner shall be rescinded as void. Any dividend or distribution so paid to the Trustee shall be held in trust for the Charitable Beneficiary. The Prohibited Owner shall have no voting rights with respect to shares held in the Trust and, subject to applicable law, effective as of the date that the shares of Preferred Stock have been transferred to the Trustee, the Trustee shall have the authority (at the Trustee's sole discretion) (i) to rescind as void any vote cast by a Prohibited Owner prior to the discovery by the Corporation that the Preferred Stock have been transferred to the Trustee, and (ii) to recast such vote in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary; provided, however, that if the Corporation has already taken irreversible corporate action, then the Trustee shall not have the authority to rescind and recast such vote. Notwithstanding the provisions of this Article VII, until the Corporation has received notification that shares of Preferred Stock have been transferred into the Trust, the Corporation shall be entitled to rely on its share transfer and other stockholder records for purposes of preparing lists of stockholders entitled to vote at meetings, determining the validity and authority of proxies and otherwise conducting votes of stockholders. 19 Section 7.13 Liquidation Rights. The amount payable on the Prohibited Owner's ratable share of the Preferred Stock held in the Trust in the event of any voluntary or involuntary liquidation, dissolution or winding-up of affairs of the Corporation, out of the assets of the Corporation legally available for distribution to stockholders under applicable law, or the proceeds thereof, shall be limited to the price paid by the Prohibited Owner for the stock held in the Trust, or if no value was given, the price per share equal to the Market Price of such Preferred Stock on the day of the event causing such Preferred Stock to be held in the Trust. Section 7.14 Sale of Shares by Trustee. Within 20 days after receiving notice from the Corporation that shares of Preferred Stock have been transferred to the Trust, the Trustee of the Trust shall sell the shares held in the Trust to a Person, designated by the Trustee, whose ownership of the shares will not violate the ownership limitations set forth in this Article VII. Upon such sale, the interest of the Charitable Beneficiary in the shares sold shall terminate and the Trustee shall distribute the net proceeds of the sale to the Prohibited Owner and to the Charitable Beneficiary as provided in this Section 7.14. The Prohibited Owner shall receive the lesser of (i) the price paid by the Prohibited Owner for the shares or, if the Prohibited Owner did not give value for the shares in connection with the event causing the shares to be held in the Trust (e.g., in the case of a gift, devise, or other such transaction), the Market Price of the shares on the day of the event causing the shares to be held in the Trust, and (ii) the price per share received by the Trustee from the sale or other disposition of the shares held in the Trust. Any net sales proceeds in excess of the amount payable to the Prohibited Owner shall be immediately paid to the Charitable Beneficiary. If, prior to the discovery by the Corporation that shares of Preferred Stock have been transferred to the Trustee, such shares are sold by a Prohibited Owner, then such shares shall be deemed to have been sold on behalf of the Trust and, to the extent that the Prohibited Owner received an amount for such shares that exceeds the amount that such Prohibited Owner was entitled to receive pursuant to this Section 7.14, such Prohibited Owner shall pay such excess amount to the Trustee upon demand. Section 7.15 Purchase Right in Preferred Stock Transferred to the Trustee. Shares of Preferred Stock transferred to the Trustee shall be deemed to have been offered for sale to the Corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift), and (ii) the Market Price on the date the Corporation, or its designee, accepts such offer. The Corporation shall have the right to accept such offer until the Trustee has sold the shares held in the Trust pursuant to Section 7.14. Upon such a sale to the Corporation, the interest of the Charitable Beneficiary in the shares sold shall terminate and the Trustee shall distribute the net proceeds of the sale to the Prohibited Owner. Section 7.16 Designation of Charitable Beneficiaries. By written notice to the Trustee, the Corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary or Beneficiaries of the interest in the Trust such that (i) the shares of Preferred Stock held in the Trust would not violate the restrictions set forth in this Article VII in the hands of such Charitable Beneficiary or Beneficiaries, and (ii) each such organization must be described in Section 501(c)(3) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055, and 2522 of the Code. Section 7.17 Settlement of Transactions. Nothing in this Article VII shall preclude the settlement of any transaction entered into through the facilities of any national securities exchange or automated inter-dealer quotation system. The fact that the settlement of any transaction is so permitted shall not negate the effect of any other provision of this Article VII and any transferee in such a transaction shall be subject to all of the provisions and limitations set forth in this Article VII. 20 Section 7.18 Enforcement. The Corporation is specifically authorized to seek equitable relief, including injunctive relief, to enforce the provisions of this Article VII. Section 7.19 Non-Waiver. No delay or failure on the part of the Corporation or the Board of Directors in exercising any right hereunder shall operate as a waiver of any right of the Corporation or the Board of Directors, as the case may be, except to the extent specifically waived in writing. ARTICLE VIII REPURCHASE OF SHARES; PREEMPTIVE RIGHTS; EXTRAORDINARY ACTIONS; CUMULATIVE VOTING Section 8.1 Right to Repurchase Shares. In addition to the specific rights to redeem certain classes of shares upon the happening of certain events or under certain circumstances, as may otherwise be provided in the charter of the Corporation, the Corporation, through its Board of Directors, shall have the right and power to repurchase any of its outstanding shares of stock at such times, for such considerations and upon such terms and conditions as may be agreed upon between the Corporation and the selling stockholder or stockholders. Section 8.2 No Preemptive or Appraisal Rights. Unless authorized by the Board of Directors, no holders of shares of stock of the Corporation shall have any pre-emptive right to subscribe for or to purchase any shares of stock of the Corporation of any class. No holder of shares of Capital Stock shall be entitled to exercise the rights of an objecting stockholder under Subtitle 2 of Title 3 of the Maryland General Corporation Law. Section 8.3 Extraordinary Actions. Notwithstanding any provision of law now or hereafter in force requiring or permitting any action to be taken or approved by the affirmative vote of the holders of shares entitled to cast a greater number of votes, any such action shall be effective and valid if declared advisable by the Board of Directors and taken or approved by the affirmative vote of holders of shares entitled to cast a majority of all the votes entitled to be cast on the matter. Section 8.4 No Cumulative Voting. Notwithstanding any provision of law now or hereafter in effect, no stockholder shall have the right to vote cumulatively in the election of directors. Without limiting the generality of the immediately preceding sentence, no stockholder shall have the right at any time in the election of directors either to give one candidate as many votes as the number of directors to be elected multiplied by the number of his or her votes, or to distribute his or her votes on the same principle among two or more candidates. ARTICLE IX REIT QUALIFICATION; REPORTING COMPANY STATUS Section 9.1 REIT Qualification. (a) The Board of Directors shall use commercially reasonable efforts to take such actions as are necessary or appropriate to qualify and preserve the status of the Corporation as a real estate investment trust ("REIT") for purposes of the federal income tax laws. 21 (b) The Board of Directors shall use commercially reasonable efforts to take such actions as are necessary or appropriate to prevent classification of the Corporation as a "pension-held REIT" under the Code. (c) The Board of Directors shall use commercially reasonable efforts to take such actions as are necessary or appropriate to qualify and preserve the status of the Corporation as a "domestically controlled REIT" under the Code. (d) Subject to approval by the Independent Directors pursuant to Section 10.4 hereof, if the Board of Directors determines that it is no longer in the best interests of the Corporation to continue to be qualified as a REIT, the Board of Directors may revoke or otherwise terminate the Corporation's REIT election pursuant to Section 856(g) of the Code. Section 9.2 Reporting Company Status. At all times that any shares of Series A Preferred Stock are outstanding and are held by any Person other than Delphi or its Affiliates, the Corporation shall maintain its status as a reporting company under the Securities Exchange Act of 1934. ARTICLE X DIRECTORS Section 10.1 Number of Directors; Independent Directors. The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. The number of directors of the Corporation shall be four, which number may be increased or decreased pursuant to the charter and the bylaws of the Corporation, provided, however such number shall always be at least one. The previous sentence notwithstanding, at all times after the Closing Time (as such term is defined in the Purchase Agreement) and so long as any shares of Series A Preferred Stock are outstanding, the Board of Directors of the Corporation shall consist of at least seven persons, at least three of whom shall be "INDEPENDENT DIRECTORS," which means that such persons are not a director (with the exception of serving as an Independent Director of the Corporation), officer or employee of the Corporation, Delphi or any of their Affiliates. For purposes of this Article X, any Preferred Directors elected pursuant to Section 6.3(b) hereof, shall be deemed to be additional Independent Directors. Section 10.2 Names of Directors. The names of the directors who shall serve until the next annual meeting of stockholders and until their successors are duly elected and qualified are: John G. Blahnik Karen L. Healy Atul Pasricha John D. Sheehan Section 10.3 Standard of Review by Independent Directors. The Independent Directors shall consider the interests of the holders of both the Common Stock and all classes of Preferred Stock, specifically to include the holders of the Series A Preferred Stock, in determining whether any proposed action requiring the approval of the Board of Directors or of the Independent Directors is in the best interests of the Corporation. In considering the interests of the holders of the Preferred Stock, including the holders of the Series A Preferred Stock, the Independent Directors owe the same duties which the Independent Directors owe to the holders of the Common Stock. Section 10.4 Certain Actions Requiring Majority Approval of the Independent Directors. At all times that any shares of Series A Preferred Stock are outstanding, none of the following actions 22 may be taken by the Corporation without the prior election of, and approval of a majority of, the Independent Directors: (a) the issuance of any additional shares of stock of the Corporation, other than the Series B Preferred Stock, up to 36,000,000 shares of Common Stock or up to 40,000,000 shares of Series A Preferred Stock, in each case inclusive of the shares already outstanding or being issued in connection with the offering contemplated by the Purchase Agreement; (b) the termination or modification of, or the election not to renew, the Management Agreement, or the subcontracting of any duties under these agreements to third parties unaffiliated with Delphi; (c) a change in the Corporation's policy, once adopted, of limiting authorized investments which are not mortgages or other liens on and interests in real estate to no more than 20% of the value of the total assets of the Corporation or a change in the Corporation's investment policy that would be inconsistent with its exemption under the Investment Company Act; (d) any consolidation, conversion, merger, or share exchange (other than pursuant to Section 6.5) that is not tax-free to holders of the Series A Preferred Stock unless such transaction is required to be approved by a two-thirds vote of the holders of the Series A Preferred Stock; (e) the determination to revoke the Corporation's status as a REIT or any amendment to the REIT-related transfer restrictions on any shares of the capital stock of the Corporation; (f) the modification of the general distribution policy or the authorization or declaration of any distribution in respect of Common Stock for any year if, after taking into account any such proposed distribution, total distributions on the Capital Stock of the Corporation would exceed an amount equal to the sum of 105% of the Corporation's taxable income, excluding capital gains, for such year plus the Corporation's net capital gains for that year; (g) the redemption of any Common Stock of the Corporation; or (h) the amendment, alteration or repeal or other change of Article VII - "RESTRICTIONS ON TRANSFER AND OWNERSHIP OF CAPITAL STOCK." Section 10.5 Certain Actions Requiring Unanimous Approval of the Independent Directors. At all times that any shares of Series A Preferred Stock are outstanding, the prior election of, and unanimous approval of, the Independent Directors is required to authorize the incurrence of Indebtedness other than Permitted Indebtedness; provided, however, that such approved Indebtedness, together with Permitted Indebtedness, may not, in the aggregate, exceed 20% of the Corporation's stockholder's equity as determined in accordance with generally accepted accounting principles in the United States. ARTICLE XI LIABILITY; INDEMNIFICATION AND ADVANCE OF EXPENSES Section 11.1 Indemnification and Advance of Expenses. The Corporation shall, to the maximum extent permitted by Maryland law in effect from time to time, indemnify, and pay or reimburse reasonable expenses in advance of final disposition of a proceeding to (a) any individual who is a present or former director or officer of the Corporation or (b) any individual who, while a director of the 23 Corporation and at the request of the Corporation, serves or has served as a director, officer, partner or trustee of another corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or any other enterprise from and against any claim or liability to which such individual may become subject or which such individual may incur by reason of his status as a present or former director or officer of the Corporation. The Corporation shall have the power, with the approval of the Board of Directors, to provide such indemnification and advancement of expenses to a Person who served a predecessor of the Corporation in any of the capacities described in (a) or (b) above and to any employee or agent of the Corporation or a predecessor of the Corporation. Section 11.2 Limitation of Liability. To the maximum extent that Maryland law in effect from time to time permits limitation of the liability of directors and officers, no director or officer of the Corporation shall be liable to the Corporation or its stockholders for money damages. Neither the amendment nor repeal of this Article, nor the adoption or amendment of any other provision of the charter or bylaws inconsistent with this Article, shall apply to or affect in any respect the applicability of the preceding sentence with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption. ARTICLE XII AMENDMENTS Subject to the express limitations set forth in Sections 6.3(c) and Article X hereof, the Corporation reserves the right from time to time to make any amendment to its charter, now or hereafter authorized by law, including any amendment altering the terms or contract rights, as expressly set forth in the charter of the Corporation, of any outstanding shares of the Corporation. All rights and powers conferred by the charter of the Corporation on stockholders, directors, and officers of the Corporation are granted subject to this reservation. THIRD: The amendment to and restatement of the charter as hereinabove set forth have been duly advised by the Board of Directors and approved by the stockholders of the Corporation as required by law. FOURTH: The current address of the principal office of the Corporation in the State of Maryland is as set forth in Article III of the foregoing amendment and restatement of the charter. FIFTH: The name and address of the Corporation's current resident agent in the State of Maryland is as set forth in Article III of the foregoing amendment and restatement of the charter. SIXTH: The number of directors of the Corporation and the names of those currently in office are as set forth in Article X of the foregoing amendment and restatement of the charter. SEVENTH: The total number of shares of stock which the Corporation had authority to issue immediately prior to this amendment and restatement was 100 shares, $0.01 par value per share, all of one class. The aggregate par value of all shares of stock having par value was $1.00. EIGHTH: The total number of shares of stock which the Corporation has authority to issue pursuant to the foregoing amendment and restatement of the charter is 76,000,125 shares of stock, consisting of 36,000,000 shares of Common Stock, $0.01 par value per share, 40,000,000 shares of Series A Preferred Stock, $0.10 par value per share and 125 shares of Series B Preferred Stock, par value $0.10 per share. The aggregate par value of all authorized shares of stock having par value is $4,360,012.50. 24 NINTH: The undersigned Chairman of the Board acknowledges these Articles of Amendment and Restatement to be the corporate act of the Corporation and as to all matters or facts required to be verified under oath, the undersigned Chairman of the Board acknowledges that, to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury. 25 IN WITNESS WHEREOF, the Corporation has caused these Articles of Amendment and Restatement to be signed in its name and on its behalf by its Chairman of the Board and attested to by its Secretary on this ____ day of _____, 2003. ATTEST: DELPHI PROPERTIES, INC. By: (SEAL) - ----------------------------- ---------------------------- Diane Kaye John Blahnik Secretary Chairman of the Board EX-3.4 7 k75733exv3w4.txt FORM OF AMENDED AND RESTATED BY-LAWS EXHIBIT 3.4 to S-11 =============================================================== AMENDED AND RESTATED BYLAWS OF DELPHI PROPERTIES, INC. (Incorporated under the Laws of the State of Maryland) As of [_________ ___, 2003] =============================================================== TABLE OF CONTENTS

i ARTICLE IV OFFICERS Section 4.1 Officers....................................................................................13 Section 4.2 Election and Term of Office.................................................................13 Section 4.3 Chairman of the Board; Chief Executive Officer; Vice Chairmen of the Board..................13 Section 4.4 President...................................................................................14 Section 4.5 Vice Presidents.............................................................................14 Section 4.6 Treasurer; Assistant Treasurers.............................................................14 Section 4.7 General Counsel; Assistant General Counsel..................................................15 Section 4.8 Secretary; Assistant Secretaries............................................................15 Section 4.9 Agents......................................................................................16 Section 4.10 Removal....................................................................................16 Section 4.11 Vacancies..................................................................................16 ARTICLE V INDEMNIFICATION AND ADVANCE OF EXPENSES ARTICLE VI STOCK CERTIFICATES AND TRANSFERS Section 6.1 Stock Certificates..........................................................................17 Section 6.2 Lost, Stolen or Destroyed Certificates......................................................17 Section 6.3 Reliance....................................................................................17 ARTICLE VII CONTRACTS, PROXIES, ETC. Section 7.1 Contracts...................................................................................18 Section 7.2 Checks and Drafts...........................................................................18 Section 7.3 Deposits....................................................................................18 Section 7.4 Proxies.....................................................................................18 ARTICLE VIII MISCELLANEOUS PROVISIONS Section 8.1 Fiscal Year.................................................................................19 Section 8.2 Distributions...............................................................................19 Section 8.3 Contingencies...............................................................................19 Section 8.4 Seal; Affixing Seal.........................................................................19 Section 8.5 Waiver of Notice............................................................................19 Section 8.6 Annual Audit................................................................................20 Section 8.7 Resignations................................................................................20

ii ARTICLE IX AMENDMENTS ARTICLE X INVESTMENT POLICY ARTICLE XI VALUATION OF ASSETS iii AMENDED AND RESTATED BYLAWS OF DELPHI PROPERTIES, INC. (As of [___________ ___, 2003]) (Incorporated under the Laws of the State of Maryland) ARTICLE I Offices And Records; Certain Definitions Section 1.1 Maryland Office. The principal office of the Corporation in the State of Maryland shall be located at such place as the Board of Directors may designate. Section 1.2 Other Offices. The Corporation may have such other offices, either within or without the State of Maryland, as the business of the Corporation may from time to time require and as may be authorized by the Board of Directors or the officers. Section 1.3 Books and Records. The books and records of the Corporation may be kept outside the State of Maryland at such place or places as may from time to time be designated by the Board of Directors or officers. Section 1.4 Certain Definitions. Except where otherwise explicitly provided, all references herein to the "Articles of Incorporation" shall mean the articles of incorporation of the Corporation as from time to time amended or restated and in effect (including any articles supplementary ("Articles Supplementary") filed under section 2-208 (or any successor provision) of the Maryland General Corporation Law, as amended and in effect from time to time (the "MGCL")). In the event of any amendment of these Bylaws that does not involve a complete restatement thereof, any reference herein to "the Bylaws" or "these Bylaws" or "herein", or "hereof" or a like reference shall refer to these Bylaws as so amended. ARTICLE II Action By Stockholders Section 2.1 Annual Meetings. The Annual Meeting of Stockholders of the Corporation for the election of directors and to act on such other matters as may properly be brought before the meeting shall be held on a date and at the time set by the Board of Directors during the month of May in each year. Section 2.2 Special Meetings. Special meetings of stockholders of the Corporation of any class or series for any purpose or purposes may be called by the President or the Board of Directors pursuant to a resolution stating the purpose or purposes thereof approved by a majority of the Board of Directors. A special meeting of stockholders shall also be called by the Secretary of the Corporation upon the written request of stockholders entitled to cast not less than a majority of all the votes entitled to be cast at such meeting. Section 2.3 Place of Meetings. The Board of Directors shall designate the place of meeting for any annual meeting or for any special meeting of the stockholders. If no designation is so made, the place of meeting shall be the principal office of the Corporation. Section 2.4 Notice of Meetings. Not less than ten nor more than 90 days before each meeting of stockholders, the Secretary shall give to each stockholder entitled to vote at such meeting and to each stockholder not entitled to vote who is entitled to notice of the meeting written or printed notice stating the time and place of the meeting and, in the case of a special meeting or as otherwise may be required by any statute, the purpose for which the meeting is called, either by mail, by presenting it to such stockholder personally, by leaving it at the stockholder's residence or usual place of business or by any other means permitted by Maryland law. If mailed, such notice shall be deemed to be given when deposited in the United States mail addressed to the stockholder at the stockholder's address as it appears on the records of the Corporation, with postage thereon prepaid. Any business of the Corporation may be transacted at an annual meeting of stockholders without being specifically designated in the notice, except such business as is required by any statute to be stated in such notice. No business shall be transacted at a special meeting of stockholders except as specifically designated in the notice. Section 2.5 Quorum and Adjournment. At any meeting of stockholders, the presence in person or by proxy of stockholders entitled to cast a majority of all the votes entitled to be cast at such meeting shall constitute a quorum, except that, when specified business is to be voted on by one or more classes or series of stock voting as a class, unless otherwise provided by the Articles of Incorporation, stockholders entitled to cast a majority of all the votes entitled to be cast by the holders of such classes or series of stock shall constitute a quorum for the transaction of such business. This section shall not affect any requirement under any statute or the Articles of Incorporation for the vote necessary for the adoption of any measure. If a quorum shall not be present at any meeting of the stockholders, the Chairman of the meeting or the stockholders entitled to vote at such meeting, present in person or by proxy, shall have the power to adjourn the meeting from time to time to a date not more than 120 days after the original record date without notice other than announcement at the meeting. At such adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally notified. The stockholders present at a duly called meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum, provided that the vote required for the taking of any particular stockholder action shall nonetheless continue to be required for such action. 2 Section 2.6 Proxies. A stockholder may cast the votes entitled to be cast by the shares of stock owned of record by the stockholder in person or by proxy executed by the stockholder or by the stockholder's duly authorized agent in any manner permitted by law. Such proxy or evidence of authorization of such proxy shall be filed with the Secretary of the Corporation before or at the meeting. No proxy shall be valid more than eleven months after its date unless otherwise provided in the proxy. Section 2.7 Notice of Stockholder Nominations and Other Proposed Stockholder Action. (a) Annual Meetings of Stockholders. (1) Nominations of persons for election as directors and the proposal of matters to be considered and voted on by the stockholders at an Annual Meeting of Stockholders made be made only (i) pursuant to the Corporation's notice of meeting, (ii) by or at the direction of the Board of Directors, or (iii) by any stockholder of the Corporation who was a stockholder of record both at the time of giving the notice required by this Section and at the time of the Annual Meeting of Stockholders and who shall be entitled to vote at the meeting (or a duly authorized proxy therefor) and who complies with the notice procedures set forth in this Section. (2) For nominations or other proposals to be properly brought before an Annual Meeting of Stockholders by a stockholder pursuant to paragraph (a)(1) of this Section, the stockholder must have given timely notice thereof (including the information required hereby) in writing to the Secretary of the Corporation and any such proposal must otherwise be a proper matter for stockholder action. To be timely, a stockholder's notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 90th calendar day nor earlier than the close of business on the 120th calendar day prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event -------- ------- that the date of the annual meeting is more than 30 calendar days before or more than 60 calendar days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 120th calendar day prior to such annual meeting and not later than the close of business on the later of the 90th calendar day prior to such annual meeting or the 10th calendar day following the calendar day on which public announcement of the date of such meeting is first made by the Corporation. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a stockholder's notice of a nomination or proposed action as described above. Such stockholder's notice shall set forth: (a) as to each person whom the stockholder proposes to nominate for election or reelection as a director, all information relating to such person that is required to be disclosed in solicitations of proxies 3 for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules thereunder (or any successor provision of law), including such person's written consent to being named as a nominee and to serving as a director if elected; (b) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and of any of such stockholder's affiliates (as defined below) and of any person who is the beneficial owner (as defined below), if any, of such stock; and (c) as to the stockholder giving the notice and each beneficial owner, if any, of such stock, the name and address of such stockholder, as they appear on the Corporation's stock ownership records, and the name and address of each beneficial owner of such stock and the class and number of shares of capital stock the Corporation which are owned of record or beneficially by each such person. (3) Notwithstanding anything in the second sentence of paragraph (a)(2) of this Section to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation at an annual meeting of stockholders is increased and there is no public announcement by the Corporation specifying the increased size of the Board of Directors at least 100 calendar days prior to the first anniversary of the preceding year's annual meeting, a stockholder's notice required by this Section shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not later than the close of business on the 10th calendar day following the day on which such public announcement is first made by the Corporation. (b) Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation's notice of meeting under Section 2.4 of these Bylaws. Nominations of persons for election to the Board of Directors at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation's notice of meeting may be made only (i) pursuant to the Corporation's notice of meeting, (ii) by or at the direction of the Board of Directors or (iii) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is a stockholder of record both at the time of giving the notice required by this Section and at the time of the meeting and who shall be entitled to vote at the meeting (or a duly authorized proxy therefor) and who complies with the notice procedures set forth in this Section. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, for nominations to be properly brought before the special 4 meeting by a stockholder pursuant to this paragraph, the stockholder must give notice thereof containing the information required in the case of a nomination to be made by a stockholder at an annual meeting of stockholders by paragraph (a)(2) of this Section to the Secretary of the Corporation at the principal executive offices of the Corporation not earlier than the close of business on the 120th calendar day prior to such special meeting and not later than the close of business on the later of the 90th calendar day prior to such special meeting or the 10th calendar day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall the public announcement of an adjournment of a special meeting commence a new time period for the giving of a stockholder's notice of a nomination as described above. (c) General. (1) Only such persons who are nominated in accordance with the procedures set forth in this Section shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section. Except as otherwise provided by law, the Articles of Incorporation or these Bylaws, the Chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section and, if any proposed nomination or business is not in compliance with this Section, to declare that such defective proposal or nomination shall be disregarded. (2) For purposes of this Section, "affiliate" in respect of a person shall mean another person who controls, is controlled by or is under common control with such person and the term "beneficially owns" (and variations thereof) shall have the same meaning as when used in Section 13(d) of the Exchange Act and Regulation 13D-G thereunder (or any successor provision of law). For purposes of this Section, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act. (3) Notwithstanding the foregoing provisions of this Section, (A) a stockholder shall also be required to comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section and nothing contained herein shall constitute a waiver by the Corporation or any stockholder of compliance therewith and (B) nothing in this Section shall be deemed to affect any rights (i) of stockholders to request inclusion of proposals in the 5 Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act (or any successor provision of law) or (ii) of the holders of any series of preferred stock to elect directors in accordance with the terms of such preferred stock in the Articles of Incorporation. (4) Notwithstanding the foregoing provisions of this Section, any common stockholder who, together with its affiliates, owns shares of common stock entitled to exercise a majority of the voting power which holders of all outstanding shares of stock are entitled to exercise in the election of directors ("Voting Stock") may nominate one or more individuals for election as directors by giving to the Secretary of the Corporation in writing notice only of the name and business or residence address of its nominee or nominees, including each such individual's written consent to being named as a nominee and to serving as a director if elected, not later than five days before the day on which the meeting for the election of directors is scheduled to be held. Section 2.8 Organization and Conduct; Inspectors. Every meeting of stockholders shall be conducted by an individual appointed by the Board of Directors to be Chairman of the meeting or, in the absence of such appointment, by the Chairman of the Board or, in the case of a vacancy in the office or absence of the Chairman of the Board, by one of the following officers present at the meeting: the Vice Chairman of the Board, if there be one, the President, the Vice Presidents in their order of rank and seniority, or, in the absence of such officers, a Chairman chosen by the stockholders by the vote of a majority of the votes cast by stockholders present in person or by proxy. The Secretary, or, in the Secretary's absence, an Assistant Secretary, or in the absence of both the Secretary and Assistant Secretaries, a person appointed by the Board of Directors or, in the absence of such appointment, a person appointed by the Chairman of the meeting shall act as secretary. In the event that the Secretary presides at a meeting of the stockholders, an Assistant Secretary, or in the absence of Assistant Secretaries, an individual appointed by the Board of Directors or the Chairman of the meeting, shall record the minutes of the meeting. The order of business and all other matters of procedure at any meeting of stockholders shall be determined by the Chairman of the meeting. The Chairman of the meeting may prescribe such rules, regulations and procedures and take such action as, in the discretion of such Chairman, are appropriate for the proper conduct of the meeting, including, without limitation, (a) restricting admission to the time set for the commencement of the meeting; (b) limiting attendance at the meeting to stockholders of record of the Corporation, their duly authorized proxies and other such individuals as the Chairman of the meeting may determine; (c) limiting participation at the meeting on any matter to stockholders of record of the Corporation entitled to vote on such matter, their duly authorized proxies and other such individuals as the Chairman of the meeting may determine; (d) limiting the time allotted to questions or comments by participants; (e) maintaining order and security at the meeting; (f) removing any stockholder or any other individual who refuses to comply with meeting procedures, rules or guidelines as set forth by the Chairman of the meeting; and (g) recessing or adjourning the meeting to a later date and time and place announced at the meeting. Unless otherwise determined by the Chairman of the meeting, meetings of 6 stockholders shall not be required to be held in accordance with the rules of parliamentary procedure. Election of directors at all meetings of the stockholders at which directors are to be elected shall be by ballot only if required by the Chairman of the meeting. The Board of Directors by resolution may, but need not, appoint, or may authorize an officer of the Corporation to appoint, one or more inspectors of election with respect to all votes at any annual or special meeting of stockholders, which inspector or inspectors may include individuals who serve the Corporation in other capacities, including, without limitation, as officers, employees, agents or representatives. One or more persons may be designated as alternate inspector(s) to replace any inspector who fails to act. If no inspector or alternate has been appointed to act or is able to act at a meeting of stockholders, the Chairman of the meeting may, but need not, appoint one or more inspectors to act at the meeting. Each inspector, before discharging such person's duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of such person's ability. The inspector(s) shall collect any ballots and tabulate all votes and make a report thereon and shall have the other duties prescribed by law. Section 2.9 Vote Required for Stockholder Action. Subject to the rights (if any) of the holders of any series of preferred stock to elect directors from time to time as provided by the Articles of Incorporation, a plurality of all the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to elect a director. Each share may be voted for as many individuals as there are directors to be elected and for whose election the share is entitled to be voted. A majority of the votes cast at a meeting of stockholders duly called and at which a quorum is present shall be sufficient to approve any other matter which may properly come before the meeting, unless more than a majority of the votes cast is required by statute or by the Articles of Incorporation. Unless otherwise provided in the Articles of Incorporation, each outstanding share, regardless of class, shall be entitled to one vote on such matter submitted to a vote at a meeting of stockholders. Section 2.10 Control Share Acquisition Act Notwithstanding any other provision of the Articles of Incorporation or these Bylaws, Title 3, Subtitle 7 of the MGCL (or any successor statute) shall not apply to any acquisition by any person of shares of stock of the Corporation. This section may be repealed, in whole or in part, at any time, whether before or after an acquisition of control shares and, upon such repeal, may, to the extent provided by any successor bylaw, apply to any prior or subsequent control share acquisition. ARTICLE III Board of Directors Section 3.1 General Powers. The business and affairs of the Corporation shall be managed under the direction of the Board of Directors. In addition to the powers and authorities by these Bylaws expressly conferred upon them, the Board of Directors 7 may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Articles of Incorporation or by these Bylaws required to be exercised or done by the stockholders. Section 3.2 Number and Tenures of Directors. Except as otherwise fixed by or pursuant to provisions of the Articles of Incorporation relating to the rights of the holders of any class of preferred stock or series thereof with respect to the election of additional directors under specified circumstances, a majority of the Board of Directors may establish, increase or decrease the number of directors, provided that (a) the number thereof shall not be less than one, nor more than 15 and (b) no reduction in the number of directors shall reduce the term of office of any director then in office. Section 3.3 Annual and Regular Meetings. The Board of Directors may, by resolution, provide the time and place for the holding of regular meetings without other notice than such resolution. Section 3.4 Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, any Vice Chairman of the Board (if any), the President or any three directors then in office. The person or persons authorized to call a special meeting of the Board of Directors may fix the place, date and time of the meeting. Upon request by the person or persons authorized to call a special meeting, the Secretary shall give any requisite notice for the meeting. Section 3.5 Notice of Meetings. Notice of any special meeting of directors shall be given to each director in a writing addressed to such person's business address or principal residence (as the Secretary has most recently been advised of) and sent by hand delivery, first-class or overnight mail or courier service, electronic mail, telegram or facsimile transmission, or given to the director orally. If mailed by first-class mail, such notice shall be deemed adequately delivered when deposited in the United States mails so addressed, with postage thereon prepaid, at least 5 calendar days before such meeting. If by telegram, overnight mail or courier service, such notice shall be deemed adequately delivered when the telegram is delivered to the telegraph company or the notice is delivered to the overnight mail or courier service company at least 24 hours before such meeting. If by electronic mail or facsimile transmission, such notice shall be deemed adequately delivered when the notice is transmitted at least 12 hours before such meeting. If given orally (by telephone or in person) or by hand delivery, the notice shall be given at least 12 hours prior to the time set for the meeting. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice of such meeting. A meeting may be held at any time without notice if all the directors then in office are present or if all directors then in office waive in writing notice of the meeting either before or after such meeting. Section 3.6 Action by Written Consent In Lieu of a Meeting. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board of Directors or committee, as the case may be, consent thereto in writing, and the writing or 8 writings are filed with the minutes of proceedings of the Board of Directors or committee. Section 3.7 Telephonic Participation in Meetings. Members of the Board of Directors or any committee thereof may participate in a meeting of the Board of Directors or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting; provided, however, that provision of such means for telephonic participation shall be in the discretion of the Board of Directors. Section 3.8 Quorum; Vote Required for Action. Subject to Section 3.9 of these Bylaws, a quorum for the transaction of business by the Board of Directors at a meeting thereof shall be a majority of the Board of Directors, but, if at any meeting of the Board of Directors there shall be less than a quorum present, a majority of the directors present may adjourn the meeting from time to time without notice to all the directors not present of the time and place of the adjourned meeting; provided, however, that no adjourned meeting shall continue past the date for which the next notice of meeting is given or the next regular meeting is scheduled. Except as otherwise provided in the Articles of Incorporation or these Bylaws (including, without limitation, Section 3.10 of these Bylaws), the affirmative vote of the majority of the directors present at a meeting at which a quorum is present when the meeting is convened shall be the act of the Board of Directors. The directors present at a duly convened meeting may continue to transact business until adjournment, notwithstanding the withdrawal from the meeting of enough directors to leave less than a quorum, provided that the votes required for the taking of any particular action shall nonetheless continue to be required for such action to be taken. Section 3.9 Vacancies. Except as otherwise provided for or fixed by or pursuant to provisions of the Articles of Incorporation relating to the rights of the holders of any class or preferred stock or series thereof with respect to the election of additional directors under specified circumstances, newly created directorships resulting from any increase in the number of directors and any vacancies on the Board of Directors resulting for any reason shall be filled by the affirmative vote of a majority of the remaining directors then in office, even if less than a quorum of the Board of Directors remains. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. Section 3.10 Board Approval Policies. The Board of Directors by resolution adopted by the affirmative vote of a majority of the Board of Directors shall establish such policies for the Corporation with respect to the categories of matters which shall require the approval of the Board of Directors or a committee thereof prior to the Corporation taking action to put such a matter into effect, as the Board of Directors shall from time to time consider appropriate for the exercise of effective oversight of the Corporation's business and affairs by the Board of Directors. 9 Section 3.11 Committees of the Board of Directors. (a) Designation of Committees. The Board of Directors may by resolution designate one or more committees in addition to the standing committees of the Board of Directors hereinafter provided for, consisting of one or more directors of the Corporation, which, to the extent authorized in any resolution of the Board of Directors or these Bylaws and permissible under the laws of the State of Maryland and the Articles of Incorporation, shall have and may exercise any or all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation. The Board of Directors by resolution shall have power at any time to fill vacancies in, to change the membership of or to dissolve any such committee. Any committee of the Board of Directors may authorize the seal of the Corporation to be affixed to any papers which may require it pertaining to matters within the committee's authority. (b) Alternate Members of Committee. The Board of Directors may designate one or more directors as alternate members of any committee (by the same vote required to elect a regular member of the committee), who may replace any absent or disqualified member at any meeting of the committee. The presence of such an alternate at a meeting of the committee shall count towards the quorum for such meeting and the vote or consent of such an alternate shall have the same force and effect as that of a regular member of the committee. (c) Committee Procedures; Quorum; Vote Required For Action. A majority of any committee may determine its procedures for the conduct of business and fix the time and place of its meetings, unless the Board of Directors shall by resolution otherwise provide. Notice of such meetings shall be given to each member of the committee in the same manner as provided for meetings of the Board of Directors by Section 3.5 of these Bylaws. Each committee shall keep written minutes of its proceedings and shall report such proceedings to the Board of Directors when required. Except as otherwise provided by resolution of the Board of Directors, a quorum for the transaction of business by a committee at a meeting thereof shall be a majority of the members and the affirmative vote of a majority of the members present at a meeting at which a quorum is present shall be the act of the committee. (d) Committees of the Corporation. Nothing herein shall be deemed to prevent the Board of Directors from appointing one or more committees consisting in whole or in part of one or more officers, employees or persons who are not directors of the Corporation to conduct any part of the business or affairs of the Corporation; provided, however, that no such committee shall have or may exercise any authority of the Board of Directors. (e) Standing Committee. The Audit Committee shall be a standing committee of the Board of Directors. The members and chairmen of each standing committee of the Board of Directors shall be elected annually by the 10 Board of Directors at its first meeting after each Annual Meeting of Stockholders or at any other time as the Board of Directors shall determine, but each such committee shall have at least three members. No officer or employee of the Corporation or any subsidiary of the Corporation shall be a member of the Audit Committee. (f) Audit Committee. The Audit Committee shall have responsibility, and may exercise such powers and authority as may be necessary, to select, and to establish the scope of, and oversee the annual audit to be conducted by, the independent auditors for the Corporation and its consolidated subsidiaries, such selection for the ensuing calendar year to be made annually in advance of the annual meeting of stockholders. Such selection may be submitted to the stockholders for ratification or rejection at such meeting. The Audit Committee shall have such other responsibilities, and such powers and authority, as are normally incident to the functions of an audit committee or as may be determined by the Board of Directors. The members of the Audit Committee shall not be eligible to participate in any incentive compensation plan for employees of the Corporation or any of its subsidiaries. Section 3.12 Minutes of the Board of Directors and Certain Other Records. The Board of Directors shall cause to be kept a record containing the minutes of the proceedings of the meetings of the Board of Directors and its committees, and of any actions thereof not taken at a meeting, and of the meetings of the stockholders and of any actions thereof not taken at a meeting, and appropriate stock transfer books and registers and such other books of records and accounts as may be necessary for the proper conduct of the business of the Corporation. Section 3.13 Compensation. Directors shall not receive any stated salary for their services as directors but, by resolution of the Board of Directors, may receive compensation per year and/or per meeting and/or per visit to real property or other facilities owned or leased by the Corporation and for any service or activity they performed or engaged in as directors. Directors may be reimbursed for expenses of attendance, if any, at each annual, regular or special meeting of the Board of Directors or of any committee thereof and for their expenses, if any, in connection with each property visit and any other service or activity they performed or engaged in as directors; but nothing herein contained shall be construed to preclude any directors from serving the Corporation in any other capacity and receiving compensation therefor. Section 3.14 Loss of Deposits. No director shall be liable for any loss which may occur by reason of the failure of the bank, trust company, savings and loan association, or other institution with whom moneys or stock have been deposited. Section 3.15 Surety Bonds. Unless required by law, no director shall be obligated to give any bond or surety or other security for the performance of any of his or her duties. 11 Section 3.16 Certain Rights of Directors, Officers, Employees and Agents. The directors shall have no responsibility to devote their full time to the affairs of the Corporation. Any director or officer, employee or agent of the Corporation, in his or her personal capacity or in a capacity as an affiliate, employee, or agent of any other person, or otherwise, may have business interests and engage in business activities similar to or in addition to or in competition with those of or relating to the Corporation. ARTICLE IV Officers Section 4.1 Officers. The Board of Directors shall elect, as officers of the Corporation, a Chairman of the Board, a President, a Treasurer, a General Counsel, a Secretary, and such other officers (including, without limitation, one or more Vice Chairmen, a Controller, and such Vice Presidents, Senior Vice Presidents and Executive Vice Presidents) as the Board of Directors from time to time shall determine to be appropriate for the conduct of the governance and affairs of the Corporation. The Chairman of the Board shall be chosen from among the directors. All officers elected by the Board of Directors shall each have such powers and duties as are provided by these Bylaws and determined by the Board of Directors or a committee thereof and, subject thereto, as customarily pertain to their respective offices. The Board of Directors or any committee thereof may from time to time also elect, or the Chairman of the Board, as chief executive officer of the Corporation, or the President may appoint, such subordinate officers (including one or more Assistant Vice Presidents, Assistant General Counsel, Assistant Controllers, Assistant Secretaries and Assistant Treasurers), as the Board of Directors or such officer shall determine to be appropriate for the conduct of the business and affairs of the Corporation, provided that the Board of Directors shall be notified of the appointment by the Chairman of the Board or President of any such subordinate officer. Such subordinate officers shall have such duties and shall hold their offices for such terms as shall be prescribed by the Board of Directors or a committee thereof or, if appointed thereby, by the Chairman of the Board or President, as the case may be. Two or more offices may be held by one individual. The Board of Directors shall designate, from among the officers, a chief financial officer and a chief accounting officer. Section 4.2 Election and Term of Office. The elected officers of the Corporation shall be elected annually by the Board of Directors at the regular meeting of the Board of Directors held after the annual meeting of the stockholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as convenient. Each officer shall hold office until such person's successor shall have been duly elected and shall have qualified or until such person's death or incapacity or until he shall resign or be removed pursuant to Section 4.10 of these Bylaws. Section 4.3 Chairman of the Board; Chief Executive Officer; Vice Chairmen of the Board. The Chairman of the Board shall (if present) preside at all meetings of the stockholders and of the Board of Directors. The Chairman of the Board shall be the chief executive officer of the Corporation. As the Corporation's chief executive, the Chairman of the Board shall be responsible for the general supervision of 12 the management and the policies and affairs of the Corporation and shall perform the duties, and have the powers and authority, customarily incidental to such office and all such other duties, powers and authority as are determined by the Board of Directors. As chief executive of the Corporation, he or she shall be responsible to keep the Board of Directors reasonably informed about the business and affairs of the Corporation, and shall see that all orders and resolutions of the Board of Directors and of any committee thereof are carried into effect. The Chairman of the Board may also serve as President, if so elected by the Board of Directors. The directors also may elect one or more Vice-Chairmen to act in the place of the Chairman upon his or her absence or inability to act and to have such other responsibilities, and powers and authority, as may be determined by the Board of Directors. Section 4.4 President. The President shall act in a general executive capacity and shall assist the Chairman of the Board in the general supervision of the management and the policies and affairs of the Corporation and shall supervise the day-to-day operations of the Corporation. The President, if he or she is also a director, shall, in the absence of or because of the inability to act of the Chairman of the Board, perform all duties of the Chairman of the Board and preside at all meetings of stockholders and of the Board of Directors. Section 4.5 Vice Presidents. The Board of Directors may elect such Executive Vice Presidents, Senior Vice Presidents and Vice Presidents, with such powers, authority and duties, as the Board of Directors shall determine to be appropriate for the conduct of the business and affairs of the Corporation. The Vice Presidents shall have such power and duties and shall be subject to such directions, as may be provided from time to time by the Board of Directors, any committee thereof, the Chairman of the Board or the President. Assistant Vice Presidents shall have such of the powers, authority and duties of the Vice Presidents they assist as may be assigned by the Board of Directors, a committee thereof, the Chairman of the Board as chief executive officer, the President or such Vice President and during the absence or the disability of such Vice President, may exercise such of his or her powers and authority and perform such of his or her duties as may be appropriate to the conduct of the business and affairs of the Corporation. Section 4.6 Treasurer; Assistant Treasurers. The Treasurer shall exercise general supervision over the receipt, custody and disbursement of the funds, including cash-equivalent securities, of the Corporation. The Treasurer shall cause the funds of the Corporation to be deposited in such banks, other depository institutions and brokerage firms as may be authorized by the Board of Directors or designated in such manner as may be provided by resolution of the Board of Directors. The Treasurer shall have such further powers and duties, and shall be subject to such directions, as may be provided from time to time by the Board of Directors, any committee thereof, the Chairman of the Board or the President. Assistant Treasurers shall have such of the powers, authority and duties of the Treasurer as may be assigned by the Board of Directors, a committee thereof, the Chairman of the Board as chief executive officer, the President or the Treasurer and, during the absence or the disability of the Treasurer, may exercise such of 13 his or her powers and authority and perform such of his or her duties as may be appropriate for the conduct of the business and affairs of the Corporation. Section 4.7 General Counsel; Assistant General Counsel. The General Counsel shall be the chief legal officer of the Corporation, shall exercise general supervision of the Corporation's legal affairs and may represent, or designate counsel to represent, the Corporation before any court, regulatory or investigative body or arbitral or other tribunal. The General Counsel shall have such other powers and duties, and shall be subject to such directions, as may be provided from time to time by the Board of Directors, any committee thereof, the Chairman of the Board or the President. Assistant General Counsels shall have such of the powers, authority and duties of the General Counsel as may be assigned by the Board of Directors, a committee thereof, the Chairman of the Board as chief executive officer, the President or the General Counsel and, during the absence or disability of the General Counsel, may exercise such of his or her powers and authority and perform such of his or her duties as may be appropriate for the conduct of the business and affairs of the Corporation. Section 4.8 Secretary; Assistant Secretaries. The Secretary shall keep or cause to be kept minutes of all meetings of the Board of Directors, the committees of the Board of Directors and the stockholders; shall see that all notices of meetings thereof or actions taken thereby are duly given in accordance with the provisions of these Bylaws and as required by law; shall be custodian of the seal of the Corporation and may cause it to be affixed to all stock certificates of the Corporation (unless the seal of the Corporation on such certificates shall be a facsimile, as hereinafter provided) and to all other documents to be executed on behalf of the Corporation under its seal; shall certify or attest to actions of the Board of Directors, the committees thereof, or the stockholders or officers of the Corporation and shall see that all such certificates and other documents required by law to be kept and filed are properly kept and filed; and, in general, shall perform all the duties customarily incident to the office of Secretary of a Corporation. The Secretary shall have such other powers and duties, and shall be subject to such directions, as may be provided from time to time by the Board of Directors, any committee thereof, the Chairman of the Board as chief executive officer, the President or, as to legal matters, the General Counsel. Assistant Secretaries shall have such of the powers, authority and the duties of the Secretary as may be assigned by the Board of Directors, any committee thereof, the Chairman of the Board as chief executive officer, the President or the Secretary and during the absence or disability of the Secretary, may exercise such of his or her powers and authority and perform such of his or her duties as may be appropriate for the conduct of the business and affairs of the Corporation. Section 4.9 Agents. The Board of Directors, a committee thereof and each officer of the Corporation may appoint such agents to perform any of its responsibilities and to exercise any of its powers as may be permitted by law. Section 4.10 Removal. Any officer or agent of the Corporation may be removed, with or without cause, by the Board of Directors if in its judgment the best interests of the Corporation would be served thereby. No officer shall have any rights against the Corporation for compensation by virtue of such election beyond the date of 14 the election of such person's successor, such person's death, such person's resignation or such person's removal, whichever event shall first occur, except as otherwise provided in an employment or other contract or under an employee benefit plan. Section 4.11 Vacancies. A newly created office and any vacancy in any elected office arising for any reason may be filled by the Board of Directors or a committee thereof. Any vacancy in a subordinate office appointed by the Chairman of the Board or the President arising for any reason may be filled by the Chairman of the Board or the President. ARTICLE V Indemnification and Advance of Expenses To the maximum extent permitted by Maryland law in effect from time to time, the Corporation shall indemnify and, without requiring a preliminary determination of the ultimate entitlement to indemnification, shall pay or reimburse reasonable expenses in advance of final disposition of a proceeding to (a) any individual who is a present or former director or officer of the Corporation and who is made a party to the proceeding by reason of his or her service in that capacity or (b) any individual who, while a director of the Corporation and at the request of the Corporation, serves or has served as a director, officer, partner or trustee of such corporation, real estate investment trust, partnership, joint venture, trust, employee benefit plan or other enterprise and who is made a party to the proceeding by reason of his or her service in that capacity. The Corporation may, with the approval of its Board of Directors, provide such indemnification and advance for expenses to a person who served a predecessor of the Corporation in any of the capacities described in (a) or (b) above and to any employee or agent of the Corporation or a predecessor of the Corporation. Neither the amendment nor repeal of this Article, nor the adoption or amendment of any other provision of the Bylaws or the Articles of Incorporation inconsistent with this Article, shall apply to or affect in any respect the applicability of the preceding paragraph with respect to any act or failure to act which occurred prior to such amendment, repeal or adoption. ARTICLE VI Stock Certificates and Transfers Section 6.1 Stock Certificates. The interest of each stockholder of the Corporation shall be represented by certificates for shares of stock containing the information required by the MGCL and in such form as the Board of Directors or appropriate officers of the Corporation may from time to time prescribe in accordance with the MGCL, the Articles of Incorporation and these Bylaws, provided that the Board of Directors may provide by resolution that some or all of any or all classes or series of stock of the Corporation shall be uncertificated. Any such resolution, however, shall not apply to shares represented by a certificate until such certificate is surrendered to the 15 Corporation. In the event that the Corporation issues shares of stock without certificates, the Corporation shall provide to record holders of such shares a written statement of the information required by the MGCL to be included on stock certificates. The shares of the stock of the Corporation shall be transferred on the books of the Corporation by the holder thereof in person or by such person's attorney, upon surrender for cancellation of certificates for at least the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof of the authenticity of such signature as the Corporation or its agents may reasonably require. The certificates of stock shall be signed, countersigned and registered in such manner as required by the MGCL and as the Board of Directors may by resolution prescribe. Section 6.2 Lost, Stolen or Destroyed Certificates. No certificate for shares of stock in the Corporation shall be issued in place of any certificate alleged to have been lost, destroyed or stolen, except on production of such evidence of such loss, destruction or theft and on delivery to the Corporation of a bond or indemnity in such amount (if any), upon such terms and secured by such surety, as the Board of Directors or an appropriate officer may in its, his or her discretion require. Section 6.3 Reliance. The Corporation shall be entitled to treat the holder of record of any share of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Maryland. Notwithstanding the foregoing, transfers of shares of any class of stock will be subject in all respects to the Articles of Incorporation and all of the terms and conditions contained therein. ARTICLE VII Contracts, Proxies, Etc. Section 7.1 Contracts. Except as otherwise explicitly prohibited or required by law, the Articles of Incorporation or these Bylaws, any contract or other instrument may be executed and delivered in the name and on the behalf of the Corporation, and under its corporate seal, by such officer or officers, or such employee or employees or other agent or agents, of the Corporation as by or pursuant to these Bylaws may be authorized to act on the subject matter thereof, (and within any such limits as may have been established by the Board of Directors) without further specific direction thereunto from the Board of Directors. Section 7.2 Checks and Drafts. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or agent of the Corporation in such manner as shall from time to time be determined by the Board of Directors. 16 Section 7.3 Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Board of Directors may designate. Section 7.4 Proxies. Unless otherwise provided by resolution adopted by the Board of Directors, the Chairman of the Board as chief executive officer, the President or any Vice President may from time to time act or appoint an attorney or attorneys or agent or agents of the Corporation to act, in the name and on behalf of the Corporation, to cast any votes which the Corporation may be entitled to cast as the holder of stock or other securities in any other corporation or other company, at meetings of the holders of the stock or other securities of such other company, or to consent in writing, in the name of the Corporation as such holder, to any action by such other company or to waiver of any notice, or to exercise or waive any right appurtenant to such stock or other securities and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent or waiver or exercising or waiving any such right, and may execute or cause to be executed, in the name and on behalf of the Corporation and under its corporate seal or otherwise, all such written proxies or other instruments as he may deem appropriate for the conduct of the business and affairs of the Corporation. ARTICLE VIII Miscellaneous Provisions Section 8.1 Fiscal Year. The fiscal year of the Corporation shall begin on the first day of January and end on the last day of December of each year. Section 8.2 Distributions. Dividends and other distributions upon the stock of the Corporation may be authorized by the Board of Directors, subject to the provisions of law and the Articles of Incorporation. Dividends and other distributions may be paid in cash, property or stock of the Corporation, subject to the provisions of law and the Articles of Incorporation. Section 8.3 Contingencies. Before payment of any dividends or other distributions, there may be set aside out of any assets of the Corporation available for dividends or other distributions such sum or sums as the Board of Directors may from time to time, in its absolute discretion, think proper as a reserve fund for contingencies, for equalizing dividends or other distributions, for repairing or maintaining any property of the Corporation or for such other purpose as the Board of Directors shall determine to be in the best interest of the Corporation, and the Board of Directors may modify or abolish any such reserve. Section 8.4 Seal; Affixing Seal. The corporate seal shall have inscribed thereon the words Corporate Seal, the year of incorporation and the words "Incorporated Maryland". The Board of Directors may authorize one or more duplicate seals and provide for the custody thereof. 17 Whenever the Corporation is permitted or required to affix its seal to a document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to place the word "(SEAL)" adjacent to the signature of the person authorized to execute the document on behalf of the Corporation. Section 8.5 Waiver of Notice. Whenever any notice is required to be given to any stockholder or director of the Corporation under the provisions of the MGCL, the Articles of Incorporation or these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. Neither the business to be transacted at, nor the purpose of, any annual or special meeting of the stockholders or the Board of Directors or committee thereof need be specified in any waiver of notice of such meeting. Section 8.6 Annual Audit. The accounts, books and records of the Corporation and its consolidated subsidiaries shall be audited upon the conclusion of each fiscal year by a firm of independent certified public accountants selected by the Audit Committee of the Board of Directors, and it shall be the duty of the Board of Directors to cause such audit to be done annually. Section 8.7 Resignations. Any director or any officer, whether elected or appointed, may resign at any time by giving written notice of such resignation to the Chairman of the Board, the President, or the Secretary, and such resignation shall be deemed to be effective as of the close of business on the date said notice is received by the Chairman of the Board, the President, or the Secretary, or at such later time as is specified therein. No acceptance or other formal action shall be required of the Board of Directors, the stockholders or any officers to make any such resignation effective. ARTICLE IX Amendments The Board of Directors shall have the exclusive power to adopt, alter or repeal any provision of these Bylaws and to make new Bylaws. ARTICLE X Investment Policy Subject to the provisions of the Articles of Incorporation, the Board of Directors may from time to time adopt, amend, revise or terminate any policy or policies with respect to investments by the Corporation, as it shall deem appropriate in its sole discretion. 18 ARTICLE XI Valuation of Assets The Board of Directors may authorize any entity or person to value the assets of the Corporation, and may, in its discretion, establish procedures for the valuation of such assets, including, without limitation, the real estate and mortgage assets of the Corporation. 19 EX-3.5 8 k75733exv3w5.txt ARTICLES OF OF ORGANIZATION EXHIBIT 3.5 to S-11 DELPHI PROPERTIES HOLDINGS, LLC ARTICLES OF ORGANIZATION THIS IS TO CERTIFY THAT: FIRST: The undersigned, being authorized to execute and file these Articles of Organization, hereby forms a limited liability company pursuant to the laws of the State of Maryland. SECOND: The name of the limited liability company (the "Company") is: Delphi Properties Holdings, LLC THIRD: The Company is formed to engage in any lawful business, except the business of acting as an insurer. FOURTH: The address of the Company's principal office in the State of Maryland is c/o The Corporation Trust Incorporated, 300 East Lombard Street, Baltimore, Maryland 21202. The name and address of the resident agent of the Company is The Corporation Trust Incorporated, 300 East Lombard Street, Baltimore, Maryland 21202. The resident agent is a Maryland corporation. FIFTH: Pursuant to Section 4A-401(a)(3) of the Maryland Limited Liability Company Act, no member of the Company shall be an agent of the Company solely by virtue of being a member, and no member shall have authority to act for the Company solely by virtue of being a member. IN WITNESS WHEREOF, I have signed these Articles of Organization and acknowledge them to be my act on this 24th day of March, 2003. /s/ John G. Blahnik ------------------------------- John G. Blahnik Authorized Person EX-3.6 9 k75733exv3w6.txt OPERATING AGREEMENT OF DELPHI PROPERTIES HOLDINGS EXHIBIT 3.6 to S-11 DELPHI PROPERTIES HOLDINGS, LLC OPERATING AGREEMENT THIS OPERATING AGREEMENT (this "Agreement") is made and entered into as of this 28th day of March, 2003, by and between DELPHI PROPERTIES, INC., a Maryland corporation (the "REIT"), and DELPHI CORPORATION, a Delaware corporation ("Delphi"). The REIT and Delphi and any persons or entities becoming parties to this Agreement subsequent to the date hereof are hereinafter sometimes referred to individually as a "Member" and collectively as the "Members". EXPLANATORY STATEMENT The parties hereto, desiring to form a limited liability company pursuant to the provisions of the Maryland Limited Liability Company Act ("Act") and to regulate the affairs of such limited liability company and the relations of its members pursuant to Section 4A-402 of the Act, do hereby constitute themselves a Maryland limited liability company known as Delphi Properties Holdings, LLC for the purposes and on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the mutual promises of the parties, and of good and valuable consideration, the receipt and sufficiency of which hereby is acknowledged, it is mutually agreed by and between the parties as follows: 1. Formation and Name. The parties to this Agreement agree to form a limited liability company under the name "Delphi Properties Holdings, LLC" (the "Company"), pursuant to the provisions of the Act and this Agreement. John G. Blahnik (the "Authorized Person") formed the Company on March 25, 2003 (the "Formation Date") by executing and filing Articles of Organization in the form attached hereto as Exhibit A with the State Department of Assessments and Taxation of Maryland (the "SDAT") and such filing by the Authorized Person is hereby authorized, approved, ratified and confirmed by the Members. 2. Principal Office and Resident Agent. The principal office of the Company in the State of Maryland shall be located at The Corporation Trust Incorporated, 300 East Lombard Street, Baltimore, Maryland 21202. The name and address of the resident agent of the Company is The Corporation Trust Incorporated, 300 East Lombard Street, Baltimore, Maryland 21202. The resident agent is a Maryland corporation. 3. Purposes. 3.1 Purposes of Formation. The purposes for which the Company is formed are (a) to purchase, develop, invest in, own, lease or otherwise acquire, operate, manage, sell, transfer, mortgage or otherwise dispose of property, including, without limitation, mortgage notes and mortgage liens issued by Delphi and contributed to the Company by the REIT, and to perform any and all activities necessary and proper in connection therewith and convenient or incidental thereto and (b) to engage in and perform any activities or functions which may lawfully be performed by a limited liability company formed pursuant to the Act. 3.2 No Limitation on General Powers. The foregoing enumerated purposes and objects shall in no way limit or restrict by reference to, or inference from, the terms of any other clause of this Agreement, and each shall be regarded as independent; and they are intended to be and shall be construed as powers as well as purposes and objects of the Company and shall be in addition to and not in limitation of the general powers of limited liability companies formed under the laws of the State of Maryland. 4. Term. The Company was formed on the Formation Date and shall continue in existence until its existence is terminated pursuant to Section 8.4 and Section 14 hereof. 5. Members and Percentage Interest. The names, addresses and designations of the Members of the Company are as set forth in Exhibit B which is attached hereto and made a part of this Agreement. The REIT shall initially have and own a one hundred percent (100%) interest ("Interest" or "Percentage of Interest") in the Company and Delphi shall initially have and own a zero percent (0%) Interest in the Company. Following the consummation of the transfer of Interest referred to in Section 6.1 hereof, each Member shall have and own a Percentage of Interest in the Company as set forth opposite each Member's name and under the heading "Percentage of Interest" on Exhibit B. New Members may be admitted to the Company upon the consent of the Member(s) holding at least a majority of the Interests in the Company and on such terms and conditions as shall be consented to by the Member(s) holding a majority of the Interests in the Company prior to the admission of any new Member. 6. Capital and Loans. 6.1 Initial Capital Contribution; Transfer of Interest to Delphi. The REIT hereby agrees to make an initial capital contribution of mortgage notes issued by Delphi to the Company as set forth opposite the REIT's name and under the heading "Capital Contribution" on Exhibit B hereto. Such initial capital contribution shall be made by the REIT as soon as practicable after the closing of the initial public offering of Series A Preferred Stock of the REIT (the "Public Offering"). Immediately following the initial capital contribution by the REIT, for the consideration contemplated in that certain Contribution and Loan Agreement, by and between Delphi and the REIT, the REIT will transfer an Interest to Delphi such that the resulting Percentage of Interest for each Member will equal the Percentage of Interest shown on Exhibit B. 6.2 Additional Contributions and Loans. The Members have not agreed to make any additional capital contributions to the Company. However, the Members may make additional contributions and loans to the Company at such time or times, and upon such terms and conditions, as the Member(s) holding at least a majority of the Interests of the Company may determine. 7. Capital Accounts. An individual Capital Account shall be maintained for each Member. Each Member's Capital Account shall be maintained as provided in Section 8 of this Agreement. No Member shall be paid interest on any Capital Contribution, and except as otherwise provided in this Agreement, no Member shall have the right to withdraw or receive any return of its Capital Contribution. Under circumstances requiring a return of any Capital Contribution, no Member shall have the right to receive property other than cash. Increases or decreases to a Member's Capital Account shall not affect a Member's Percentage of Interest. 2 8. Profits, Losses and Distributions. 8.1 Defined Terms. For purposes of this Agreement, the following terms shall have the meaning specified unless the context otherwise requires: "Adjusted Capital Contributions" means, for each Member, such Member's Capital Contributions to the Company, reduced by the amount of cash and the fair market value of any other asset distributed to such Member pursuant to Section 8.3.(c) and Section 8.4 hereof. Such reduction, however, shall not result in the Adjusted Capital Contribution of any Member being below zero. "Available Cash" means, with respect to any taxable year of the Company, at the time of determination, the Company's cash reduced by such amounts as the Members shall deem reasonably necessary to meet reasonably anticipated expenditures or liabilities of the Company, including, but not limited to, debts to Members who are creditors of the Company. Available Cash shall not include proceeds from Capital Transactions. "Capital Account" means, as to any Member, the Capital Contribution actually made by that Member, plus all Profit allocated to that Member, and minus the sum of (i) all Losses allocated to that Member, (ii) the amount of cash and the fair market value of any other asset distributed to that Member (net of liabilities, assumed or taken subject to by such Member), and (iii) such Member's distributive share of all other expenditures of the Company not deductible in computing its taxable income and not properly chargeable as additions to the basis of the Company property. Each Member's Capital Account shall be determined and maintained in accordance with the Treasury Regulations adopted under Section 704(b) of the Code. Any questions concerning a Member's Capital Account shall be resolved by applying principles consistent with this Agreement and the Treasury Regulations adopted under Section 704 of the Code in order to ensure that all allocations to the Members will have substantial economic effect or will otherwise be respected for federal income tax purposes. "Capital Contribution" means the total amount of cash and the fair market value (net of liabilities assumed or taken subject to by the Company) of any other assets contributed (or deemed contributed) to the Company by a Member. "Capital Proceeds" means the gross receipts received by the Company from a Capital Transaction. "Capital Transaction" means the sale, exchange, financing, refinancing, condemnation, casualty or other disposition of all, or substantially all of the assets of the Company. "Code" means the Internal Revenue Code of 1986, as amended or any corresponding Section of any succeeding law. "Minimum Gain" has the meaning set forth in Treasury Regulations Section 1.704-2(d). Minimum Gain shall be computed separately for each Member, applying principles consistent with both the foregoing definition and the Treasury Regulations promulgated under Section 704 of the Code. 3 "Negative Capital Account" means a Capital Account with a balance less than zero. "Positive Capital Account" means a Capital Account with a balance equal to or greater than zero. "Profit and Loss" means for each fiscal year or other period, the amount equal to the Company's taxable income or loss for such year or period, determined in accordance with Code Section 703(a) (for this purpose, all items of income, gain, loss, or deduction required to be stated separately pursuant to Code Sections 703(a)(1) shall be included in taxable income or loss). "Restoration Amount" means with respect to each Member (a) the Member's share of Minimum Gain, and (b) any amount which the Member is unconditionally required under this Agreement or by law to contribute to the Company to restore its Negative Capital Account balance. 8.2 Allocation of Profit or Loss from Operations and Distributions of Available Cash. (a) Available Cash. For any taxable year of the Company, Available Cash shall be distributed to the Members in proportion to their respective Percentages of Interest or in such other proportion pursuant to the consent of the Member(s) holding a majority of the Interests, it being expressly understood and agreed that Available Cash may be distributed disproportionate to the Members' respective Percentages of Interests if so determined in accordance with the provisions of this Section. (b) Taxable Income or Taxable Loss. For any taxable year of the Company, Profit or Loss (other than Profit or Loss resulting from a Capital Transaction, which Profit or Loss shall be allocated in accordance with the provisions of Sections 8.3(a) and 8.3(b)) shall be allocated to the Members in proportion to their respective Percentages of Interest. (c) Special Allocations. Notwithstanding any other provision to the contrary in this Agreement the following provisions shall apply: (1) Contributed Property and Book-Ups. In accordance with Code Section 704(c) and the Regulations thereunder, as well as Regulation Section 1.704-1(b)(2)(iv)(d)(3), income, gain, loss and deduction with respect to any property contributed (or deemed contributed) to the Company shall, solely for tax purposes, be allocated among the Members so as to take account of any variation between the adjusted basis of the property to the Company for federal income tax purposes and its fair market value at the date of contribution (or deemed contribution). If the adjusted book value of any Company asset is adjusted as provided herein, subsequent allocations of income, gain, loss and deduction with respect to the asset shall take account of any variation between the adjusted basis of the asset for federal income tax purposes and its adjusted book value in the manner required under Code Section 704(c) and the Regulations thereunder. 4 (2) Qualified Income Offset. No Member shall be allocated Losses or deductions if such allocation causes a Member's Negative Capital Account to increase in excess of the Member's Restoration Amount. If a Member receives (1) an allocation of Loss or deduction (or item thereof) or (2) any Company distribution, which causes such Member to have a Negative Capital Account in excess of its Restoration Amount or increase a Member's Negative Capital Account at the end of any Company taxable year in excess of its Restoration Amount, then all items of income and gain of the Company (consisting of a pro rata portion of each item of Company income, including gross income and gain) for such taxable year shall be allocated to such Member, before any other allocation is made of Company items for such taxable year, in the amount and in proportions required to eliminate such excess as quickly as possible. This Section 8.2(c)(2) is intended to comply with, and shall be interpreted consistently with, the "qualified income offset" provisions of the Treasury Regulations promulgated under Section 704(b) of the Code. (3) Minimum Gain Chargeback. If there is a net decrease in the Minimum Gain during any taxable year and if any Member has a Negative Capital Account as of the last day of such taxable year which exceeds its Restoration Amount as of such last day, then all items of gross income and gain of the Company for such taxable year (and, if necessary, for subsequent taxable years) shall be allocated to such Member in the amount and in the proportions required to eliminate such excess as quickly as possible. This Section 8.2(c)(3) is intended to comply with, and shall be interpreted consistently with, the "minimum gain chargeback" provisions of the Treasury Regulations promulgated under Section 704(b) of the Code. 8.3 Allocation of Profit or Loss from a Capital Transaction and Distribution of Capital Proceeds. (a) Taxable Income. Profit from a Capital Transaction shall be allocated as follows: (1) If one or more Members has a Negative Capital Account, Profit from a Capital Transaction shall be allocated first to those Members, in proportion to their Negative Capital Accounts, until all Negative Capital Accounts have been increased to zero; then (2) Any remaining Profit not allocated pursuant to Section 8.3(a)(1) shall be allocated to the extent necessary so that the Capital Account balances of the Members are equal to the amounts distributable to them pursuant to Section 8.3(c). (b) Taxable Loss. Loss from a Capital Transaction shall be allocated as follows: (1) If one or more Members has a Positive Capital Account, Loss from a Capital Transaction shall be allocated first to those Members, in proportion to their Positive Capital Accounts, until all Positive Capital Accounts have been reduced to zero; then (2) Any remaining Loss not allocated to reduce Positive Capital Accounts to zero pursuant to Section 8.3(b)(1) shall be allocated to the Members in proportion to their respective Percentages of Interest. 5 (c) Capital Proceeds. Distributions of net Capital Proceeds (after repayment of all debts and liabilities of the Company, including loans from Members, and the establishment of any reserves that the Members deem necessary) shall be made in the following order of priorities: (1) First, to each Member, pro rata in proportion to each Member's Adjusted Capital Contributions, an amount of cash equal to the amount of that Member's respective Adjusted Capital Contributions; then (2) If one or more Members has a Positive Capital Account before any further allocation of profit pursuant to Section 8.3(a)(2), to those Members, in proportion to and to the extent of their respective Positive Capital Account balances; and then (3) The balance to the Members in proportion to their respective Percentages of Interest. 8.4 Liquidation or Dissolution. In the event the Company is liquidated or dissolved, the assets of the Company shall be distributed, after taking into account the allocations of Profit or Loss pursuant to Sections 8.2 or 8.3, if any, and distributions of cash or property pursuant to Section 8.2 or 8.3, if any, to the Members to the extent of and in proportion to the balances in their respective Positive Capital Accounts. 8.5 General. (a) The timing and amount of all distributions shall be as determined by the Members. (b) If any assets of the Company are distributed to the Members in kind, those assets shall be valued on the basis of their fair market value, and any Member entitled to any interest in those assets shall receive that interest as a tenant-in-common with all other Members so entitled. The fair market value of the assets distributed in kind shall be determined by an independent appraiser selected by the Members. Based upon the fair market value, the Profit or Loss for each unsold asset shall be determined as if that asset had been sold at its fair market value, and the Profit or Loss shall be allocated as provided in Section 8.3 and shall be properly credited or charged to the Capital Accounts of the Members prior to the dissolution of the assets in liquidation pursuant to Section 8.4. (c) For each taxable year, all Profit and Loss of the Company shall be allocated at and as of that taxable year. The allocations of Profit and Loss shall be made within seventy-five (75) days after the end of such taxable year. (d) Except as otherwise provided in this Section 8.5(d), all Profit and Loss shall be allocated, and all distributions of cash shall be distributed, as the case may be, to the persons shown on the records of the Company to have been Members as of the last day of the taxable year for which that allocation or distribution is to be made. Unless the Members agree to separate the Company's fiscal year into segments, if the Company admits a new member to the Company or if a Member sells, exchanges or otherwise disposes of all or any portion of its Interest to any person who, during that taxable year, is admitted as an additional or substitute 6 member, the Profit and Loss shall be allocated between the transferror and the transferee on the basis of the number of days of the taxable year in which each was a member; provided, however, that in the event of a Capital Transaction or any other extraordinary non-recurring items of the Company, Profit, Loss and distributions shall be allocated to the Persons shown on the records of the Company as of the date of such event. (e) The methods set forth above by which Profit, Loss, and distributions are allocated, apportioned, and paid are hereby expressly consented to by each Member as an express condition to becoming a Member. Upon the advice of the outside accountants or of legal counsel to the Company, this Section 8 may be amended to comply with the Code and the regulations promulgated under Section 704 of the Code; provided, however, that no such amendment shall become effective without the consent of those Members who would be materially or adversely affected thereby. 9. Management. 9.1 Right to Manage. The Members, acting by consent or approval of the Members holding at least a majority of the Interests in the Company, shall have the exclusive right to manage the business of the Company and to perform any and all activities in connection therewith. No Member shall be an agent of the Company solely by virtue of being a member, and no member shall have authority to act for or bind the Company solely by virtue of being a Member. Subject to Section 10 hereof, the Members, by consent or approval of the Members holding at least a majority of the Interests in the Company, may generally or specifically authorize and direct one or more persons (who may be a Member) to act for and bind the Company and to execute documents, instruments and agreements on behalf of the Company. The Members have initially authorized and directed the REIT to act for and bind the Company and to execute documents, instruments and agreements on behalf of the Company, except as otherwise provided in Section 9.2. Without limiting the generality of the foregoing sentence, the REIT is hereby authorized and directed to act for and bind the Company in connection with the Public Offering and, in the sole discretion of the REIT, to (a) execute all documents, instruments and agreements on behalf of the Company necessary or desirable in connection with the Public Offering and (b) make any necessary or desirable filings with the United States Securities and Exchange Commission or any other government instrumentality in connection with the Public Offering. 9.2 Tax Matters Member. Delphi shall be the tax matters partner of the Company within the meaning of the Code and shall exercise all rights, obligations and duties of a tax matters partner under the Code, subject to the Members' right to manage the business of the Company and to give further direction to the tax matters partner under Section 9.1 hereof. The Members, acting by consent or approval of the Members holding at least a majority of the Interests in the Company, may designate any other Member as a substitute or alternative tax matters partner and, in such event, shall deliver written notice of such designation to all Members. 9.3 Books, Records and Reports. The REIT shall have physical possession of the books and records of the Company, and the REIT shall give such notices and reports to the Members as may, from time to time, be required or deemed advisable. 7 9.4 Meeting. Meetings of the Company shall be held on not less than twenty-four (24) hours' notice or on such shorter notice as may be mutually agreeable to the Members, on the call of any Member. Notice of the time and place of each meeting shall be given in writing to each Member by the Member calling the meeting. Attendance of Members holding at least a majority of the Interests in the Company shall constitute a quorum for the transaction of business. 10. Restrictions on Members. 10.1 Restrictions in General. No Member, without the prior unanimous written consent of the Members, shall: (a) Sell, assign, transfer, mortgage or pledge its, her or its Interest in the Company, except for the transfer by the REIT to Delphi described in Section 6.1 above; (b) Assign, transfer, pledge, compromise, or release any claim of the Company except for full payment, or arbitrate or consent to the arbitration of any disputes or controversies involving the Company; (c) Use the name, credit or property of the Company for any purpose other than a proper Company purpose; (d) Admit a new Member to the Company; (e) Cause the merger of the Company with or into any other business entity; or (f) Do any act in conflict with the Company business or which would make it impossible to carry on that business. 10.2 Restrictions on Business Activities of Members. Each Member shall be free to engage in such business activities as such Member may desire on such Member's own behalf or on behalf of any other person or entity, including business activities which may be in competition with the business activities of the Company; and neither the Company nor any other Member shall have any right to participate in or receive a share of the profits of any such business activities of such Member. 11. Substitute Members. No Member has the right to grant the right to become a substitute Member to an assignee of any part of its Interest, except with the prior unanimous written consent of the Members. 12. Withdrawal. No Member may voluntarily withdraw from the Company except as provided in Section 13 of this Agreement. 13. Dissolution; Right to Continue. 13.1 Voluntary Withdrawal. No Member shall have the right to withdraw from and thereby dissolve the Company, except upon the prior unanimous written consent of the 8 Members. Notice of a Member's intention to withdraw from the Company pursuant to this Section 13.1 must be given in writing to the other Member(s) at least ten (10) days prior to the proposed effective date of such withdraw. 13.2 Continuation. Upon the withdraw of a Member in accordance with this Section 13, or the occurrence of any event which causes dissolution of the Company under Section 4A-902 of the Act, the remaining Member(s) shall have the right to continue the Company. 14. Liquidation and Termination. In the event the Company is dissolved, the Members shall promptly file with the SDAT, pursuant to Section 4A-910 of the Act, Articles of Cancellation, and shall commence the winding up of the affairs of the Company by discharging all debts and liabilities of the Company and by distributing all assets in accordance with Section 8.4. 15. Books and Records. Adequate accounting records of all Company business shall be kept and these shall be open to inspection by any of the Members at all reasonable times. The Company shall maintain its accounting records and shall report for income tax purposes on the accrual method of accounting. Within seventy-five (75) days after the end of each taxable year and at the expense of the Company, the Members shall cause to be prepared a complete accounting of the affairs of the Company, together with whatever appropriate information is required by each Member for the purpose of preparing such Member's income tax return for that year, which accounting and information shall be furnished to each Member. 16. Bank Accounts. All funds of the Company shall be deposited in Company checking or other bank accounts, subject to such authorized signatures as the Members may determine. 17. Miscellaneous. 17.1 Liability of the Members. No Member shall be liable, responsible or accountable in damages or otherwise to any other Member or to the Company for any act or omission performed or omitted by him except for acts of gross negligence or intentional wrongdoing. 17.2 Indemnification. The Members shall be indemnified by the Company for any act or omission performed or omitted by them for which they are not liable pursuant to Section 17.1 above. 17.3 Waiver of Partition. The Members hereby waive any right of partition or any right to take any other action that otherwise might be available to them for the purpose of severing their relationship with the Company or their interest in the assets held by the Company from the interest of the other Members. 17.4 Binding Provisions. The covenants and agreements contained in this Agreement shall be binding upon the representatives, successors and assigns of the respective parties to this Agreement. 9 17.5 Severability of Provisions. Each provision of this Agreement shall be considered separable and if for any reason any provision or provisions hereof are determined to be invalid and contrary to any existing or future law, such invalidity shall not impair the operation of or affect those portions of this Agreement that are valid. 17.6 Entire Agreement; Amendment. This Agreement constitutes the entire understanding and agreement among the parties with respect to the subject matter of this Agreement, and supersedes all prior and contemporaneous agreements and understandings, inducements, or conditions, express or implied, oral or written, except as contained in this Agreement. This Agreement may not be amended or modified except with the written consent of all Members. 17.7 Notices. All notices, demands, requests, consents, or approvals required under this Agreement to be in writing shall be deemed to have been properly given if and when mailed by first class certified mail, return receipt requested, postage prepaid, to the respective address of the Member shown on Exhibit B hereto, or at such other address as a Member shall have furnished to the other Member(s) in writing. 17.8 Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Maryland. 17.9 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which when taken together, constitute one and the same instrument, binding on the Members. The signature of any party to any counterpart shall be deemed a signature to, and may be appended to, any other counterpart. [SIGNATURE PAGE FOLLOWS] 10 IN WITNESS WHEREOF, the Members have executed this Agreement under seal as of the day and year first above written. DELPHI PROPERTIES, INC. _______________________________(SEAL) NAME: John Blahnik TITLE: Chief Executive Officer and President DELPHI CORPORATION _______________________________(SEAL) NAME: John Blahnik TITLE: Treasurer 11 EXHIBIT A ARTICLES OF ORGANIZATION OF DELPHI PROPERTIES HOLDINGS, LLC EXHIBIT B MEMBERS OF DELPHI PROPERTIES HOLDINGS, LLC (Capital Contribution and Percentage of Interest upon closing of Public Offering and transfer of Interest referred to in the Operating Agreement)
Member Name Capital Percentage of and Address Contribution Interest - ------------------ ------------ --------------- Delphi Properties, Inc. The Mortgage Notes listed 99.0% 5725 Delphi Drive on Schedule B-1 attached Troy, Michigan 48098 hereto Delphi Corporation 1.0% 5725 Delphi Drive Troy, Michigan 48098
EX-4.1 10 k75733exv4w1.txt PREFERRED STOCK CERTIFICATE OF DESIGNATIONS EXHIBIT 4.1 to S-3 DELPHI CORPORATION CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF NON-CUMULATIVE PREFERRED STOCK, SERIES AA Delphi Corporation, a corporation organized under the laws of the State of Delaware (the "Corporation"), pursuant to Section 151 of the Delaware General Corporation Law, DOES HEREBY CERTIFY: FIRST, that the Corporation is duly incorporated and is in good standing under the laws of the State of Delaware; and SECOND, the Board of Directors of the Corporation duly adopted, at a meeting of the Board of Directors of the Corporation held on March 26, 2003, the following resolutions: "RESOLVED, that the creation and authorization of 40,000,000 shares of the Corporation's Series AA Preferred Stock, on terms set forth in the Certificate of Designations relating to the Series AA Preferred Stock (the "Certificate of Designations") and substantially in the form of the draft circulated to the Board of Directors of the Corporation is hereby authorized and approved and the Designated Officers are hereby authorized and directed to file or cause to be filed with the Secretary of State of the State of Delaware the Certificate of Designations, and all documents necessary, advisable or appropriate to create and give continuing effect to the Series AA Preferred Stock, and that up to 20,000,000 shares of the Series AA Preferred Stock are hereby reserved for issuance in connection with the Offering, with the final amount to be identical to the number of shares of REIT Preferred Stock issued in the Offering, as determined by the office of the REIT, and the Designated Officers, or any of them, are authorized and empowered, on behalf of the Corporation and in its name, to execute and deliver, or cause to be executed, and delivered, the Series AA Preferred Stock with respect to the Offering for issuance upon the occurrence of an automatic exchange event resulting in an exchange of REIT Preferred Stock for Series AA Preferred Stock, on a share-for-share basis". 1. Dividends. (a) The dividend rate for the Series AA Preferred Stock, when and as authorized by the Corporation's board of directors out of the Corporation's legally available assets, shall be [ ]% per annum of the liquidation preference, which is $25 per share. If authorized and declared, dividends on the Series AA Preferred Stock shall be payable quarterly in arrears on [ ], [ ], [ ] and [ ] of each year, or, if any such day is not a business day, on the next business day, commencing on the date that the Series AA preferred stock is exchanged for shares of Non-Cumulative Perpetual Preferred Securities, Series A, of Delphi Properties, Inc. (each such quarter, a "Dividend Period"), and shall be payable to holders of record as they appear on the Corporation's stock register on the relevant record dates, which shall be on the first day of each month in which a dividend payment date falls. Dividends payable on the Series AA Preferred Stock shall be computed on the basis of a 360-day year consisting of twelve 30-day months. Holders of the Series AA Preferred Stock that is received in exchange for shares of Non-Cumulative Perpetual Preferred Securities, Series A, of Delphi Properties, Inc. (the "REIT Preferred Stock") shall be entitled to receive dividends on the Series AA Preferred Stock that are equivalent to dividends that were authorized, declared and unpaid in respect of the REIT Preferred Stock at the time of the exchange, upon declaration by the Corporation's Board of Directors. (b) Dividends shall be non-cumulative. If the Corporation's Board of Directors does not authorize a dividend on the Series AA Preferred Stock or authorizes less than a full dividend in respect of any Dividend Period, the holders of the Series AA Preferred Stock shall have no right to receive any dividend or a full dividend, as the case may be, for that Dividend Period, and the Corporation shall have no obligation to pay a dividend or to pay full dividends with respect to the Series AA Preferred Stock for that Dividend Period, whether or not dividends are declared and paid for any future dividend period with respect to the Series AA Preferred Stock or the common stock, par value $0.01 per share, of the Corporation (the "Common Stock"). No interest shall be payable in respect of any dividend not declared or paid for any Dividend Period. If full dividends on the Series AA Preferred Stock for any Dividend Period shall not have been declared and paid, or declared and a sum sufficient for the payment thereof shall not have been set apart for such payments: (i) no dividends shall be declared or paid or set aside for payment and no other distribution shall be declared or made or set aside for payment upon the Common Stock or any other of the Corporation's capital stock ranking junior to the Series AA Preferred Stock as to dividends or amounts upon liquidation for that Dividend Period, except by conversion into, or exchange for, other shares of the Corporation's capital stock ranking junior to the Series AA Preferred Stock as to dividends and amounts upon liquidation nor shall any monies be paid or made available for a sinking fund for redemption of any such stock; and (ii) no Common Stock or any other of the Corporation's capital stock ranking junior to the Series AA Preferred Stock as to dividends or amounts upon liquidation shall be redeemed, purchased or otherwise acquired for any consideration. (c) If dividends are not paid in full on, or a sum sufficient for such full payment is not set apart for, the Series AA Preferred Stock and any other parity stock, all dividends declared upon the Series AA Preferred Stock and any other parity stock shall be declared pro rata. 2. Liquidation Preference. (a) In the event of the voluntary or involuntary liquidation, dissolution, or winding up of the affairs of the Corporation, the holders of Series AA Preferred Stock at the time outstanding shall be entitled to receive liquidating distributions of $25 per share, plus in each case, the quarterly declared but unpaid dividend to the date of liquidation, out of the assets of the Corporation legally available for distribution to the Corporation's shareholders, before any distribution of assets is made to holders of the Common Stock or any of the Corporation's securities ranking junior to the Series AA Preferred Stock, and subject to the rights of the holders of any class or series of securities of the Corporation ranking senior to or at parity with the Series AA Preferred Stock upon liquidation and the rights of the Corporation's creditors. After payment of the full amount of the liquidating distributions to which they are entitled, the holders of the Series AA Preferred Stock shall have no right or claim to any of the Corporation's remaining assets. In the event that, upon any liquidation, dissolution, or winding up, the Corporation's available assets are insufficient to pay the amount of the liquidation distributions on all outstanding Series AA Preferred Stock and the corresponding amounts payable on any other securities of equal ranking, then the holders of the Series AA Preferred Stock and any other securities of equal ranking shall share ratably in any such distribution of assets in proportion to the full liquidating distributions to which they would otherwise be respectively entitled. (b) For the purposes of this section, the Corporation's consolidation or merger with or into any other entity, the consolidation or merger of any other entity with or into the Corporation, or the sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the Corporation's property, assets or business, shall not be deemed to constitute the liquidation, dissolution or winding up of the Corporation. 3. Voting Rights. The Series AA Preferred Stock shall have no voting rights, except as expressly required by law. 4. Redemption. (a) The Series AA Preferred Stock shall not be redeemable by the Corporation prior to [ ], 2008. Subject to the conditions described in (b) below, the Series AA Preferred Stock shall be redeemable at the option of the Corporation, in whole or in part, at any time or from time to time, out of funds legally available 2 therefor, on and after [ ], 2008 at a redemption price, payable in cash, of $[25] per share of Series AA Preferred Stock, plus in each case an amount equal to declared but unpaid dividends, if any, to the date of redemption. If fewer than all of the shares of Series AA Preferred Stock are to be redeemed, the shares to be redeemed shall be selected by lot or pro rata or in some other equitable manner determined by the Corporation's Board of Directors, in its sole discretion. (b) In the event that full dividends on the Series AA preferred stock and any other series of stock ranking, as to dividends, on a parity with the Series AA preferred stock have not been paid or declared and set apart for payment in respect of the immediately preceding Dividend Period, the Series AA preferred stock may not be redeemed in part and the Corporation may not purchase or acquire shares of Series AA preferred stock or such other stock otherwise than pursuant to a purchase or exchange offer made on the same terms to all holders of shares of Series AA preferred stock and such other stock. (c) Not more than 60 days and not less than 30 days prior to the date established for such redemption by the Corporation's Board of Directors (the "Redemption Date"), notice of the proposed redemption shall be mailed to the holders of record of the Series AA Preferred Stock to be redeemed, such notice to be addressed to each such stockholder at his last known address shown on the records of the Corporation, and the time of mailing such notice shall be deemed to be the time of the giving thereof. On or after the Redemption Date, the Series AA Preferred Stock called for redemption shall automatically, and without further action on the part of the holder thereof, be deemed to have been redeemed and the former holder thereof shall thereupon only be entitled to receive payment of the Redemption Price. If such notice of redemption shall have been given as aforesaid, and if on or before the Redemption Date the funds necessary for the redemption shall have been set aside so as to be available therefore, then all rights with respect to the Series AA Preferred Stock so called for redemption shall forthwith after such Redemption Date cease, except the right of the holders to receive the Redemption Price, without interest. If such notice of redemption of all or any part of the Series AA Preferred Stock shall have been mailed as aforesaid and the Corporation shall thereafter deposit money for the payment of the Redemption Price pursuant thereto with any bank or trust Corporation (the "Depositary Corporation") selected by the Corporation's Board of Directors for that purpose, to be applied to such redemption, then from and after the making of such deposit, such Series AA Preferred Stock shall not be deemed to be outstanding for any purpose, and the rights of the holders thereof shall be limited to the rights to receive payment of the Redemption Price, without interest but including any declared, but unpaid dividends to the Redemption Date, from the Depositary Corporation, if applicable, upon endorsement, if required, and surrender of the certificates therefore. The Corporation shall be entitled to receive, from time to time, from the Depositary Corporation, the interest, if any, allowed on such moneys deposited with it, and the holders of any Series AA Preferred Stock so redeemed shall have no claim to any such interest. Any moneys so deposited and remaining unclaimed at the end of three years from the Redemption Date shall, if thereafter requested by resolution of the Corporation's Board of Directors, be repaid to the Corporation, and in the event of such repayment to the Corporation, such holders of record of the Series AA Preferred Stock so redeemed which shall not have made claim against such moneys prior to such repayment to the Corporation shall be deemed to be unsecured creditors of the Corporation for an amount equivalent to the amount deposited as stated above for the redemption of the Series AA Preferred Stock and so repaid to the Corporation, but shall in no event be entitled to any interest. (d) Subject to the provisions hereof, the Corporation's Board of Directors shall have the authority to prescribe from time to time the manner in which the Series AA Preferred Stock shall be redeemed. 3 5. Conversion. The holders of the Series AA Preferred Stock shall not have any rights to convert such shares into shares of any other class of capital stock of the Corporation. 6. Rank; Additional Stock. Notwithstanding anything set forth in the Certificate of Incorporation of the Corporation or this Certificate of Designations, Preferences and Rights to the contrary, the Board of Directors, without the vote of the holders of the Series AA Preferred Stock, may authorize and issue additional shares of Common Stock and/or other series of preferred stock of the Corporation ranking, as to dividends and upon liquidation, junior to, senior to or at parity with the Series AA Preferred Stock. 7. Transfer Restrictions. The Series AA Preferred Stock is transferable by any holder thereof, subject to applicable securities laws. 8. Repurchase. Nothing contained herein shall limit the right of the Corporation to purchase and sell Series AA Preferred Stock from time to time to such extent, in such manner, and upon such terms as the Board of Directors may determine; provided however, that the Corporation shall not use any of its funds for any such purchase when there are reasonable grounds to believe that the Corporation is, or by such purchase would be, rendered insolvent. 9. Form. The Series AA Preferred Stock shall be issued and sold in uncertificated form. IN WITNESS WHEREOF, Delphi Corporation has caused this certificate to be signed by[ ], its [ ], and attested by [ ], its [ ], this [ ] day of [ ], 2003. DELPHI CORPORATION By: ----------------------------------- Name: Title: ATTEST: By: ----------------------------------- Name: Title: 4 EX-5.1 11 k75733exv5w1.txt OPINION OF SHERMAN & STERLING EXHIBIT 5.1 Form of Opinion [Letterhead of Shearman & Sterling] [ ], 2003 Board of Directors Delphi Corporation 5725 Delphi Drive Troy, Michigan 48098 Delphi Corporation We have acted as counsel for Delphi Corporation ("Delphi") in connection with the preparation of a registration statement on Form S-3 and Form S-11 (the "Registration Statement") being filed with the Securities and Exchange Commission relating to the registration under the Securities Act of 1933 of 13,800,000 shares of Delphi Property Inc.'s (the "REIT") [ ]% Non-cumulative Exchangeable Perpetual Series A Preferred Securities, liquidation preference $25 per share, par value $0.10 per share (the "Series A Preferred Stock") and 13,800,000 shares of Delphi's [ ]% Series AA Preferred Stock, par value $0.10 per share (the "Series AA Preferred Stock"). The Series A Preferred Stock will be automatically exchanged into Series AA Preferred Stock on a share-for-share basis upon the occurrence of an exchange event pursuant to the terms of an Exchange Agreement among the REIT, Delphi Properties Holdings, LLC and Delphi, dated [ ], 2003, as further described in the Registration Statement. In our capacity as counsel to Delphi, we have examined (i) the Registration Statement; (ii) the Exchange Agreement; (iii) the Certificate of Designations in respect of the Series AA Preferred Stock; and (iv) the originals, or copies identified to our satisfaction, of such corporate records of Delphi, and other persons, and such other documents, agreements and instruments as we have deemed necessary as the basis for the opinion hereinafter expressed. In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, conformed or photostatic copies and the authenticity of the originals of such latter documents. As to any facts material to the opinion expressed herein which were not independently established or verified, we have relied upon oral or written statements and representations of officers and other representatives of Delphi and others. Our opinion set forth below is limited to the General Corporation Law of the State of Delaware and the federal laws of the United States and we do not express any opinion herein concerning any other laws. Based upon the foregoing, and having regard for such legal considerations as we have deemed relevant, we are of the opinion that the Series AA Preferred Stock has been duly authorized and, if, as and when exchanged for Series A Preferred Stock in accordance with the Registration Statement and the related prospectus and the terms of the Exchange Agreement, will have been legally issued, and be fully paid and non-assessable shares of Delphi. We hereby consent to the use of this opinion letter as an exhibit to the Registration Statement and to the use of our name under "Legal Matters" in the prospectus included as part of the Registration Statement. Yours truly, 2 EXHIBIT 5.1 to S-11 [LETTERHEAD OF BALLARD SPAHR ANDREWS & INGERSOLL, LLP] DRAFT - SUBJECT TO REVIEW AND CHANGE FILE NUMBER 081933 _______ __, 2003 Delphi Properties, Inc. 5725 Delphi Drive Troy, Michigan 48098 Re: Registration Statement on Form S-11 Ladies and Gentlemen: We have served as Maryland counsel to Delphi Properties, Inc., a Maryland corporation (the "Company"), in connection with certain matters of Maryland law arising out of the registration of up to 13,800,000 shares (the "Shares") of Series A non-cumulative preferred stock, $.10 par value per share, of the Company (the "Series A Preferred Stock"), to be issued by the Company in an underwritten public offering, covered by the above-referenced Registration Statement, and all amendments thereto (the "Registration Statement"), to be filed by the Company with the United States Securities and Exchange Commission (the "Commission") under the Securities Act of 1933, as amended (the "1933 Act"). Unless otherwise defined herein, capitalized terms used herein shall have the meanings assigned to them in the Registration Statement. In connection with our representation of the Company, and as a basis for the opinion hereinafter set forth, we have examined originals, or copies certified or otherwise identified to our satisfaction, of the following documents (hereinafter collectively referred to as the "Documents"): 1. The Registration Statement, substantially in the form in which it was transmitted to the Commission for filing pursuant to the 1933 Act; 2. The charter of the Company, as amended and restated (the "Charter"), certified as of a recent date by the State Department of Assessments and Taxation of Maryland (the "SDAT"); 3. The Bylaws of the Company, as amended and restated, certified as of the date hereof by an officer of the Company; Delphi Properties, Inc. ________ ______,2003 Page 2 4. A certificate of the SDAT as to the good standing of the Company, dated as of a recent date; 5. Resolutions adopted by the Board of Directors of the Company (a) authorizing the filing of the Registration Statement and (b) authorizing the sale and issuance of the Shares (the "Resolutions"), certified as of the date hereof by an officer of the Company; 6. A certificate executed by an officer of the Company, dated as of the date hereof; and 7. Such other documents and matters as we have deemed necessary or appropriate to express the opinion set forth below, subject to the assumptions, limitations and qualifications stated herein. In expressing the opinion set forth below, we have assumed the following: 1. Each individual executing any of the Documents, whether on behalf of such individual or any other person, is legally competent to do so. 2. Each individual executing any of the Documents on behalf of a party (other than the Company) is duly authorized to do so. 3. Each of the parties (other than the Company) executing any of the Documents has duly and validly executed and delivered each of the Documents to which such party is a signatory, and such party's obligations set forth therein are legal, valid and binding and are enforceable in accordance with all stated terms. 4. All Documents submitted to us as originals are authentic. The form and content of all Documents submitted to us as unexecuted drafts do not differ in any respect relevant to this opinion from the form and content of such Documents as executed and delivered. All Documents submitted to us as certified or photostatic copies conform to the original documents. All signatures on all such Documents are genuine. All public records reviewed or relied upon by us or on our behalf are true and complete. All representations, warranties, statements and information contained in the Documents are true and complete. There has been no oral or written modification of or amendment to any of the Documents, and there has been no waiver of any provision of any of the Documents, by action or omission of the parties or otherwise. 5. The Shares will not be issued or transferred in violation of any restriction or limitation contained in the Charter. Based upon the foregoing, and subject to the assumptions, limitations and qualifications stated herein, it is our opinion that: Delphi Properties, Inc. ________ ______,2003 Page 3 1. The Company is a corporation duly incorporated and existing under and by virtue of the laws of the State of Maryland and is in good standing with the SDAT. 2. The issuance of the Shares has been duly authorized and, when and to the extent issued in accordance with the Resolutions and in the manner described in the Registration Statement, the Shares will be (assuming that, upon issuance, the total number of shares of Series A Preferred Stock issued and outstanding will not exceed the total number of shares of Series A Preferred Stock that the Company is then authorized to issue under the Charter) validly issued, fully paid and nonassessable. The foregoing opinion is limited to the substantive laws of the State of Maryland, and we do not express any opinion herein concerning any other law. We express no opinion as to the applicability or effect of any federal or state securities laws, including the securities laws of the State of Maryland, or as to federal or state laws regarding fraudulent transfers. To the extent that any matter as to which our opinion is expressed herein would be governed by any jurisdiction other than the State of Maryland, we do not express any opinion on such matter. The opinion expressed herein is limited to the matters specifically set forth herein and no other opinion shall be inferred beyond the matters expressly stated. We assume no obligation to supplement this opinion if any applicable law changes after the date hereof or if we become aware of any fact that might change the opinion expressed herein after the date hereof. This opinion is being furnished to you solely for submission to the Commission as an exhibit to the Registration Statement and, accordingly, may not be relied upon by, quoted in any manner to, or delivered to any other person or entity without, in each instance, our prior written consent. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of the name of our firm therein in the section entitled "Legal Matters" in the Registration Statement. In giving this consent, we do not admit that we are within the category of persons whose consent is required by Section 7 of the 1933 Act. Very truly yours, EX-8.1 12 k75733exv8w1.txt FORM OF OPINION OS SHEARMAN & STERLING EXHIBIT 8.1 to S-11 [Letterhead of Shearman & Sterling] [ ], 2003 Delphi Corporation Delphi Properties, Inc. 5725 Delphi Drive Troy, Michigan 48098 Delphi Properties, Inc. Ladies and Gentlemen: We have acted as federal income tax counsel to Delphi Corporation, a Delaware corporation ("Delphi"), and Delphi Properties, Inc., a Maryland corporation (the "Company" and, together with Delphi, the "Co-Issuers"), in connection with the issuance by the Co-Issuers of up to 13,800,000 shares of Company Series A preferred stock, which are automatically exchangeable into Delphi Series AA preferred stock upon the occurrence of certain events. In that capacity, you have requested our opinion regarding the ability of the Company to elect to be treated for United States federal income tax purposes as a real estate investment trust (a "REIT"), within the meaning of section 856(a) of the Internal Revenue Code of 1986, as amended (the "Code"). In rendering this opinion, we have relied upon statements contained in letters to us from Delphi and the Company, each dated [____], 2003 and delivered in connection with this opinion (the "Representation Letters"). We have assumed, without independent verification or inquiry, that the statements made in the Representation Letters are true and correct and that the Representation Letters have been executed by an appropriate and authorized officer of Delphi and the Company, respectively. In connection with this opinion, we have reviewed copies of the registration statement on Form S-3 (Registration No. 333-[____]), Form S-11 (Registration No. 333[___]) and Form S-11 (Registration No.333-[____]) filed by the Co-Issuers under the Securities Act of 1933, as amended, with the Securities and Exchange Commission on [_____], 2003 and copies of the related prospectuses (the final prospectus dated [____], 2003, in the form in which it was Delphi Corporation Delphi Properties, Inc. Page 2 [___], 2003 filed pursuant to Rule 424(b) under the Securities Act, including the documents incorporated by reference therein, being hereinafter referred to as the "Prospectus") and have reviewed and relied upon originals or copies of such other agreements and documents as we deemed necessary or appropriate for purposes of the opinions rendered herein. In performing such review we have assumed the genuineness of all signatures on all documents reviewed by us, the legal capacity of all natural persons, the authenticity of all documents submitted to us as originals, the conformity to the original documents of all documents submitted to us as copies and the authenticity of the originals of such latter documents. In making our examination of any documents executed, or to be executed, by the parties indicated therein, we have also assumed, without independent verification or inquiry, that each party has, or will have, the power, corporate or other, to enter into and perform all obligations thereunder, and have assumed the due authorization by all requisite action, corporate or other, and execution and delivery by each party indicated in the documents and that such documents constitute, or will constitute, valid and binding obligations of each party, and that the transactions contemplated by such documents will be consummated in accordance with the terms thereof. Based on the foregoing and in reliance thereon, and subject to the qualifications, exceptions and limitations contained herein, we are of the opinion that, commencing with its taxable year ending on December 31, 2003, the Company will be owned and organized in conformity with the requirements for qualification and taxation as a REIT under the Code, and its proposed method of operation will enable it to meet the requirements for qualification and taxation as a REIT under the Code. Qualification of the Company as a REIT will depend upon the satisfaction by the Company, through actual operating results, distribution levels, diversity of stock ownership and otherwise, of the applicable asset composition, source of income, shareholder diversification, distribution, recordkeeping and other requirements of the Code necessary for a corporation to qualify as a REIT. No assurance can be given that the actual results of the Company's operations for any taxable year will satisfy all such requirements. We do not undertake to monitor whether the Company actually will satisfy the various qualification tests, and we express no opinion as to whether the Company actually will satisfy these various qualification tests. We confirm that the statements contained in the Prospectus under the captions "Summary - The Offering - Tax Consequences" and "Federal Income Tax Considerations," insofar as such statements constitute a summary of the legal matters referred to therein, have been reviewed by us and are correct in all material respects. This opinion is based on the Code, existing and proposed Treasury regulations promulgated thereunder, judicial authorities and current administrative rulings, and such other laws and authorities as we have deemed relevant and necessary, all of which are subject to change, possibly with retroactive effect, and differing interpretation. There can be no assurance, moreover, that the opinion expressed herein will be accepted by the Internal Revenue Service or, if challenged, by a court of law. A change in the authorities or the accuracy or completeness of Delphi Corporation Delphi Properties, Inc. Page 3 [___], 2003 any of the information, documents, certificates, records, statements, representations, covenants, or assumptions on which this opinion is based could adversely affect the conclusions set forth herein. This opinion is expressed as of the date hereof, and we undertake no obligation to supplement or revise our opinion to reflect any changes in applicable law (including changes that have retroactive effect) or in any information, document, certificate, record, statement, representation, covenant, or assumption relied upon herein that becomes incorrect or untrue. We have not considered and do not express any opinion other than that expressly set forth above. Nor have we addressed the consequences, if any, under the laws of any state, locality or foreign jurisdiction. We hereby consent to the use of this letter as an exhibit to the Registration Statement and to the use of our name under the heading "Federal Income Tax Considerations" in the Prospectus. In giving this consent, we do not thereby admit that we are included in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations promulgated thereunder. Very truly yours, EX-10.1 13 k75733exv10w1.txt EXCHANGE AGREEMENT BET DELPHI CORP & DELPHI PROP EXHIBIT 10.1 to S-11 and S-3 SERIES A PREFERRED STOCK EXCHANGE AGREEMENT THIS EXCHANGE AGREEMENT (this "Agreement") is entered into as of [ ], 2003, between DELPHI PROPERTIES, INC., a Maryland corporation (the "Issuer") and DELPHI CORPORATION, a Delaware corporation ("Delphi"). RECITALS A. The Issuer intends to sell to the public up to 12,000,000 shares of the Issuer's Series A non-cumulative exchangeable perpetual preferred stock, $25.00 liquidation preference per share (the "Series A preferred stock"). B. The Series A preferred stock will be automatically exchangeable into a like number of Series AA non-cumulative preferred stock of Delphi, $25.00 liquidation preference per share (the "Exchange Stock"), under certain circumstances described below. C. The parties hereto desire to ensure that, in the event of the occurrence of circumstances requiring the automatic exchange of Series A preferred stock into Exchange Stock, holders of Series A preferred stock will be deemed to have tendered their shares of Series A preferred stock to Delphi, and Delphi will be deemed to have exchanged Exchange Stock for Series A preferred stock on a share-for-share basis. AGREEMENT NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby expressly acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows: 1. Exchange of the Series A Preferred Stock. If at any time after the issuance and sale of the Series A preferred stock: (i) the Issuer fails to declare dividends on the Series A preferred stock for any two quarterly dividend periods within a rolling 60-month period; (ii) the 7.75% mortgage notes due 2033, issued by Delphi to the Issuer, dated [ ], 2003 (the "Mortgage Notes") mature or are prepaid or the Issuer transfers (other than to Delphi Properties Holdings, LLC) or liquidates any assets with respect to which Delphi is the primary obligor or guarantor, and Delphi fails to refinance such matured or prepaid Mortgage Notes or to contribute or sell to the Issuer, within 90 days. (a) other mortgage notes; (b) residential mortgage loans or commercial mortgage loans, including participation interests in residential or commercial mortgage loans; (c) mortgage-backed securities eligible to be held by real estate investment trusts ("REITs"), as defined in the U.S. Internal Revenue Code; (d) cash, cash items (which includes receivables) and government securities, or (e) other real estate assets; that will, in the judgment of the Issuer's Board of Directors, yield investment income substantially similar to the matured or prepaid Mortgage Notes or the transferred or liquidated assets, as applicable, such that in all cases the Issuer's aggregate investment income is expected, in the judgment of the Issuer's Board of Directors, to be sufficient to pay full dividends on the Series A preferred stock, plus reasonably anticipated expenses; (iv) there is an event of default in respect of any of the Mortgage Notes, as defined in the applicable Mortgage Note; (v) Delphi fails to remain at all times the primary obligor or guarantor in respect of investments accounting for at least two-thirds of the Issuer's investment income; (vi) Delphi fails to maintain its long-term senior unsecured debt ratings at or above "Ba2" from Moody's Investors Service Inc. (or any successor thereto) and "BB" from Standard & Poor's Ratings Services (or any successor thereto); (vii) there is an acceleration of any debt of Delphi in a principal amount in excess of $50 million; (viii) (A) Delphi's board of directors passes a resolution authorizing Delphi to (I) commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consents to the entry of an order for relief in an involuntary case under any such law, (II) consent to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of Delphi for all or substantially all of the property and assets of Delphi or (III) effect any general assignment for the benefit of creditors; or (B) (I) Delphi ceases to pay its debts generally as such debts become due; or (II) a custodian, other than a trustee, receiver, or agent appointed or authorized to take charge of less than substantially all of the property of Delphi for the purpose of enforcing a lien against such property, shall be appointed or take possession of all or substantially all of the property and assets of Delphi. For the purposes of this subsection, all terms used herein but not otherwise defined in this Agreement shall have the meaning given to them in Title 11 of the United States Code; 2 (ix) the Issuer receives an opinion of counsel, rendered by a law firm experienced in such matters, in form and substance satisfactory to the Issuer, which states that there is more than an insubstantial risk that the Issuer is or will be considered an "investment company" that is required to be registered under the Investment Company Act of 1940, as amended (the "Investment Company Act"), as a result of the occurrence of a change in law or regulation or a written change in interpretation or application of law or regulation by any legislative body, court, governmental agency, or regulatory authority; or the Issuer is required by official order or directive to be registered under the Investment Company Act; or (x) the Issuer fails to qualify, or to remain qualified, as a REIT, whether because of a failure to distribute annually 90% of the Issuer's REIT taxable income; the nature of the Issuer's assets; the Issuer's manner of operation, organization, capital structure or equity ownership; or other factor; provided, however, that the automatic exchange in this event will occur as of the date the Internal Revenue Service officially determines that the Issuer will no longer qualify as a REIT or upon the receipt by the Issuer of an opinion of counsel, rendered by a law firm experienced in such matters, in form and substance satisfactory to the Issuer, that the Issuer will no longer qualify as a REIT and the Issuer does not exercise its right to redeem the Series A preferred stock; then (i) any holder or holders of the Series A preferred stock shall immediately, in accordance with procedures set forth in the Articles of Incorporation of the Issuer, as amended, the Certificate of Designations of Delphi relating to the Exchange Stock, and this Agreement, be deemed to have delivered such holder's or holders' Series A preferred stock to Delphi in exchange (the "Exchange") for Exchange Stock, on a one share for one share basis; (ii) the Exchange Stock shall be deemed to have been, and shall be, unconditionally issued and delivered to the holder or holders of the Series A preferred stock; (iii) holders of Series A preferred stock that is exchanged for the Exchange Stock will be entitled to receive dividends on the Exchange Stock received that are equivalent to the dividends that, at the time of the Exchange, were declared and unpaid on the Series A preferred stock, upon declaration by Delphi's board of directors; and (iv) upon the occurrence of the Exchange, all of the Series A preferred stock shall be cancelled and shall cease to be outstanding without any further action by the Issuer or the holders thereof, all rights of holders of Series A preferred stock as the Issuer's stockholders shall cease, and such persons shall be, for all purposes, solely holders of Exchange Stock. Unless and until certificates representing Exchange Stock are delivered or in the event such replacement certificates are not delivered, any certificates previously representing the Series A preferred stock shall be deemed for all purposes to represent Exchange Stock. 2. Permitted Assignment. (i) In the event Delphi effects, or is the subject of, a merger, consolidation, statutory share exchange, sale of assets or other form of business combination, (a) in which Delphi is not the surviving, resulting or receiving corporation thereof 3 or (b) if Delphi is the surviving or resulting corporation, shares representing a majority of Delphi's total voting power are either converted or exchanged into securities of another person or into cash or other property (any such transaction in either (a) or (b) being a "Business Combination"), then, at the election of the Board of Directors of Delphi prior to the effectiveness of such Business Combination, Delphi may assign, effective upon the consummation of such Business Combination, all of its obligations and rights under this Agreement to a Successor Entity (as defined below) that has Substitute Preferred Stock (as defined below) and, as a result of such assignment, all references to Delphi and Exchange Stock herein shall become and be deemed to be references to such Successor Entity and to such Substitute Preferred Stock, respectively. "Successor Entity" means a corporation designated by the Board of Directors of Delphi (a) that is the surviving, resulting or receiving corporation, as applicable, in any Business Combination, (b) the securities of which are received in a Business Combination by some or all holders of Delphi voting shares or (c) that the Board of Directors of Delphi determines to be an acquiror of Delphi in a Business Combination. "Substitute Preferred Stock" means a class or series of equity securities of a Successor Entity having the preferences, limitations and relative rights in its articles or certificate of incorporation or other constituent documents that are substantially similar to those set forth in the Certificate of Designations establishing the Exchange Stock. (ii) This Section 2 shall apply to any subsequent Business Combination mutatis mutandis. 3. Cancellation. The Issuer acknowledges and accepts hereby that upon the occurrence of the Exchange, the Series A preferred stock will be cancelled and no longer outstanding. 4. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original as against any party whose signature appears thereon and all of which together shall constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all of the parties reflected hereon as signatories. 4 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth above. DELPHI CORPORATION By: __________________________ Name: Title: DELPHI PROPERTIES, INC. By: __________________________ Name: Title: EX-10.2 14 k75733exv10w2.txt FORM OF LOAN AND CONTRIBUTION AGREEMENT EXHIBIT 10.2 to S-11 ================================================================================ CONTRIBUTION AND LOAN AGREEMENT dated as of ___________, 2003 by and between DELPHI CORPORATION as Borrower and DELPHI PROPERTIES, INC. as Lender Stock Issuance: Up to 12,420,000 shares Membership Interest Purchase: 1% of Delphi Properties Holdings, LLC Maximum Loan Amount: $1,000,000,000.00 ================================================================================ TABLE OF CONTENTS
Page ---- ARTICLE I PARTICULAR TERMS, DEFINITIONS AND RULES OF CONSTRUCTION.................................................1 SECTION 1.01. Definitions................................................................................1 SECTION 1.02. Rules of Construction......................................................................5 ARTICLE II CONTRIBUTION AND LOAN..................................................................................6 SECTION 2.01. The Contribution...........................................................................6 SECTION 2.02. The Loan, Generally........................................................................6 SECTION 2.03. Purpose....................................................................................6 SECTION 2.04. Procedure for Advance......................................................................6 SECTION 2.05. Notes......................................................................................7 SECTION 2.06. Payments and Distributions.................................................................7 SECTION 2.07. Interest...................................................................................7 SECTION 2.08. Voluntary Prepayments......................................................................7 ARTICLE III YIELD MAINTENANCE ETC.................................................................................8 SECTION 3.01. Additional Costs and Other Effects of Regulatory Changes; Taxes............................8 ARTICLE IV CONDITIONS PRECEDENT...................................................................................8 SECTION 4.01. Conditions Precedent to the Stock Issuance and the Initial Advance.........................8 SECTION 4.02. Conditions Precedent to Future Advances...................................................10 ARTICLE V REPRESENTATIONS AND WARRANTIES.........................................................................11 SECTION 5.01. Due Formation, Power and Authority........................................................11 SECTION 5.02. Legally Enforceable Agreements............................................................11 SECTION 5.03. Financial Statements......................................................................11 SECTION 5.04. Compliance With Laws......................................................................11 SECTION 5.05. Litigation................................................................................12 SECTION 5.06. No Conflicts or Defaults..................................................................12
(i)
Page ---- SECTION 5.07. Solvency..................................................................................12 SECTION 5.08. Governmental Regulation...................................................................12 SECTION 5.09. Insurance.................................................................................12 SECTION 5.10. No Event of Default.......................................................................12 SECTION 5.11. Separate Tax and Zoning Lot...............................................................12 SECTION 5.12. Creation of Liens.........................................................................13 SECTION 5.13. Appraisals................................................................................13 SECTION 5.14. Loan to Value Ratio.......................................................................13 ARTICLE VI COVENANTS OF BORROWER.................................................................................13 SECTION 6.01. Compliance with Laws; Payment of Taxes....................................................13 SECTION 6.02. Maintenance of Existence..................................................................13 SECTION 6.03. Continuing Accuracy of Representations and Warranties.....................................13 SECTION 6.04. Covenants, Restrictions and Easements.....................................................14 SECTION 6.05. Inspection and Cooperation................................................................14 SECTION 6.06. Payment of Costs..........................................................................14 SECTION 6.07. Brokers...................................................................................14 SECTION 6.08. Insurance.................................................................................14 SECTION 6.09. Condemnation Awards and Insurance Proceeds................................................14 SECTION 6.10. Filing and Recording of Documents.........................................................15 SECTION 6.11. Premises Documents........................................................................15 SECTION 6.12. Reporting Requirements....................................................................16 SECTION 6.13. Secondary Financing.......................................................................16 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES.......................................................................16 SECTION 7.01. Events of Default.........................................................................16 SECTION 7.02. Remedies of Lender........................................................................18 SECTION 7.03. Remedies Cumulative.......................................................................19
(ii)
Page ---- SECTION 7.04. Lender's Rights Concerning Application of Amounts Collected...............................19 ARTICLE VIII GENERAL CONDITIONS AND PROVISIONS...................................................................19 SECTION 8.01. Documentation, Etc. Satisfactory..........................................................19 SECTION 8.02. Notices...................................................................................19 SECTION 8.03. Amendments and Waivers....................................................................20 SECTION 8.04. Successors and Assigns....................................................................20 SECTION 8.05. Severability..............................................................................20 SECTION 8.06. Non-Waiver; Remedies Cumulative...........................................................20 SECTION 8.07. Certain Waivers...........................................................................20 SECTION 8.08. Expenses..................................................................................21 SECTION 8.09. General Indemnification...................................................................21 SECTION 8.10. Environmental Indemnification.............................................................22 SECTION 8.11. Partial Release of Mortgaged Property.....................................................23 SECTION 8.12. Counterparts..............................................................................23 SECTION 8.13. Governing Law; Jurisdiction...............................................................23 SECTION 8.14. Integration...............................................................................24 SECTION 8.15. Gross-Up for Taxes........................................................................24 SECTION 8.16. Assignment of Mortgages and Notes.........................................................24
SCHEDULES IA Contributed Notes IB Membership Interest Purchase Notes II Initial Advance Notes III Future Advance Notes EXHIBITS A Form of Mortgage Note B Form of Mortgage (iii) CONTRIBUTION AND LOAN AGREEMENT (this "Agreement") dated as of ________________, 2003 by and between DELPHI CORPORATION, a Delaware corporation ("Borrower"), and DELPHI PROPERTIES, INC., a Maryland corporation ("Lender"). WHEREAS, Borrower has agreed to issue one or more Notes (as defined below) as identified on the attached SCHEDULE IA to Lender in exchange for up to 12,420,000 shares of the common stock of Lender (the "Stock Issuance"); WHEREAS, Borrower has agreed to issue one or more Notes as identified on the attached SCHEDULE IB to Lender in exchange for a one percent (1%) membership interest (the "Membership Interest Purchase") in Delphi Properties Holdings, LLC ("Holdings") ; WHEREAS, Borrower shall issue the Notes identified on the attached SCHEDULE II to Lender to evidence the initial loan made pursuant to the terms of this Agreement in the principal amount of [$_______________] (the "Initial Loan Amount"); WHEREAS, Borrower has agreed to issue additional Notes identified on the attached SCHEDULE III (as such schedule may be amended or modified from time to time) to Lender to evidence Future Advances (as defined below) made pursuant to the terms of this Agreement; WHEREAS, the maximum principal amount that may at any time be advanced under, and evidenced by the Notes issued pursuant to, this Agreement is $1,000,000,000.00 (the "Maximum Loan Amount"); and WHEREAS, Borrower desires that Lender consummate the Stock Issuance, the Membership Interest Purchase and the Loan (as defined below; the Loan, the Membership Interest Purchase and the Stock Issuance are referred to herein collectively as the "Transactions"), and Lender is prepared to enter the Transactions on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the mutual promises and agreements herein contained, Borrower and Lender hereby agree as follows: ARTICLE I PARTICULAR TERMS, DEFINITIONS AND RULES OF CONSTRUCTION SECTION 1.01. Definitions. The following terms, as used herein, shall have the following meanings: "Additional Costs" -- Any costs, losses or expenses actually incurred by Lender which it reasonably determines are attributable to its entering into or maintaining the Transactions or any reduction in any amount receivable by any Lender under the Transaction Documents or the Notes. "Affiliate" -- As to any Person, any other Person that, directly or indirectly, controls, is controlled by or is under common control with such Person or is a director or officer of such Person. For purposes of this definition, the term "control" (including the terms "controlling", "controlled by" and "under common control with") of a Person means the direct or indirect possession of the power to vote 5% or more of the equity interests of such Person or to direct or cause the direction of the management and policies of such Person, whether through the ownership of equity interests, by contract or otherwise. "Appraisals" -- Has the meaning specified in Section 4.01(e)(3). "Bankruptcy Code" -- Chapter 11 of the U.S. Bankruptcy Code (11 U.S.C.ss.ss. 101 et seq.) "Business Day" -- Any day on which commercial banks are not authorized or required to close in New York City or Troy, Michigan. "Code" -- The Internal Revenue Code of 1986. "Dollars" and "$" -- Lawful money of the United States. "Employee Benefit Plan" -- Any employee benefit or other plan established or maintained, or to which contributions have been made, by Borrower or any Mortgagor. "Environmental Action" -- Any action, suit, demand, demand letter, claim, notice of non-compliance or violation, notice of liability or potential liability, investigation, proceeding, consent order or consent agreement relating in any way to any Environmental Law, any Environmental Permit or Hazardous Material or arising from alleged injury or threat to health, safety or the environment, including, without limitation, (a) by any governmental or regulatory authority for enforcement, cleanup, removal, response, remedial or other actions or damages and (b) by any governmental or regulatory authority or third party for damages, contribution, indemnification, cost recovery, compensation or injunctive relief. "Environmental Law" -- Any federal, state, local or foreign statute, law, ordinance, rule, regulation, code, order, writ, judgment, injunction, decree or judicial or agency interpretation, policy or guidance relating to pollution or protection of the environment, health, safety or natural resources, including, without limitation, those relating to the use, handling, transportation, treatment, storage, disposal, release or discharge of Hazardous Materials. "Environmental Permit" -- Any permit, approval, identification number, license or other authorization required under any Environmental Law. "ERISA" -- The Employee Retirement Income Security Act of 1974, including the rules and regulations promulgated thereunder. "ERISA Affiliate" -- Any corporation which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Code) as Borrower and/or any Mortgagor, or any trade or business which is under common control (within the meaning of Section 414(c) of the Code) with Borrower and/or any Mortgagor, or, solely for purposes of Section 412 of the Code, any organization which is required to be treated as a single employer with Borrower and/or any Mortgagor under Section 414(m) or 414(o) of the Code. "Event of Default" -- Has the meaning specified in Section 7.01. "Excess Proceeds" - Has the meaning specified in Section 6.09(b). "Financial Statements" -- Statements of the assets, liabilities (direct or contingent), income, expenses and cash flow of Borrower and Mortgagors, prepared on a consolidated basis in accordance with generally accepted accounting principles in the United States as in effect from time to time and consistently applied. The accounting method used in the preparation of financial statements submitted to Lender prior to the date hereof is hereby deemed acceptable. "Future Advance" -- Has the meaning specified in Section 2.04(b). 2 "Governmental Authorities" -- The United States, and, as to each of the Premises, the respective state in which such Premises are located and any political subdivision, agency, department, commission, board, bureau or instrumentality of any of them, including any local authorities, which exercises jurisdiction over Borrower, each Mortgagor, any of the Premises or any of the Improvements. "Greater Loan to Value Ratio" has the meaning specified in Section 6.09(a). "Hazardous Materials" -- (a) Petroleum or petroleum products, by-products or breakdown products, radioactive materials, asbestos-containing materials, polychlorinated biphenyls and radon gas and (b) any other chemicals, materials or substances designated, classified or regulated as hazardous or toxic or as a pollutant or contaminant under any Environmental Law. "Holdings" -- Has the meaning specified in the recitals. "Improvements" -- Has the meaning given to such term in the Mortgages. "Indemnified Party" -- Has the meaning specified in Section 8.10. "Initial Advance" -- Has the meaning specified in Section 2.04. "Initial Loan Amount" - Has the meaning specified in the recitals. "Interest Rate" -- A rate of 7.75% per annum. "Law" -- Any federal, state or local law, statute, rule, regulation, ordinance, order, decree, directive, requirement, code, notice of violation or rule of common law, now or hereafter in effect, and in each case as amended, and any judicial or administrative interpretation thereof by a Governmental Authority, including any judicial or administrative order, determination, consent decree or judgment. "Lender's Counsel" - Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022, or such other Person as is designated by Lender. "Lender's Office" -- Lender's Office as set forth on its signature page of this Agreement, or such other address in the United States as Lender may designate by notice to Borrower. "Lien" -- Any lien, security interest or other charge or encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property. "Loan" -- The loan, in an aggregate principal amount equal to the Initial Loan Amount plus the principal amount of any Future Advances, to be made pursuant to this Agreement. "Loan to Value Ratio" -- The ratio of the then outstanding principal balance of the Note or Notes secured by the applicable Mortgage (as indicated on SCHEDULES I, II and III) to the fair market value of the applicable Mortgaged Property based on an appraisal of such Mortgaged Property, in form and substance reasonably satisfactory to Lender. As used herein, "fair market value" shall mean the most probable price the applicable Mortgaged Property should bring in a competitive and open market under all conditions requisite to a fair sale. "Losses" -- has the meaning specified in Section 8.09(a). 3 "Material Adverse Effect" -- Means a material adverse effect on (a) the business, condition (financial or otherwise), operations, performance, properties or prospects of Borrower and its consolidated subsidiaries, taken as a whole, (b) the rights and remedies of Lender under any Transaction Document, (c) the ability of Borrower or Mortgagors to perform their respective obligations under any Transaction Document to which any of them is or is to be a party where such inability to perform would have a material adverse effect upon the aggregate underlying security for the Loan, or (d) any Mortgagor's claim of title to any of the Premises resulting in the loss or forfeiture of title to such Premises. "Maturity Date" -- [______________, 2033]. "Maximum Loan Amount" -- has the meaning specified in the recitals. "Membership Interest Purchase" -- has the meaning specified in the recitals. "Mortgage" -- Any mortgage (or deed of trust), security agreement, assignment of leases and rents and fixture filing made to or for the benefit of Lender, to secure the payment and performance of Borrower's obligations hereunder, under the Notes and otherwise in respect of the Transactions, substantially in the form of EXHIBIT B attached hereto or in such other form as may be mutually agreed upon by Lender and Borrower, each acting in its reasonable discretion, in each case with such changes thereto as may be made based on local laws or customary local mortgage or deed of trust practices. "Mortgaged Property" -- The Premises and other property constituting the "Mortgaged Property", as such term is defined in each Mortgage. "Mortgagor" -- has the meaning ascribed to it in Section 4.01(e)(7). "Multiemployer Plan" -- Any plan defined as such in Section 3(37) of ERISA. "Net Proceeds" -- (i) The net amount of all proceeds of any insurance policies insuring against loss or damage to the Mortgaged Property or (ii) all awards, damages, remunerations, reimbursements, settlements or compensation made by any Governmental Authority pertaining to any condemnation or other taking (or any purchase in lieu thereof) of all or any portion of the Mortgaged Property. "Non-Excluded Taxes" -- Has the meaning specified in Section 8.15. "Note"; "Notes" -- Have the respective meanings specified in Section 2.05. "Partial Release" -- Has the meaning specified in Section 8.11. "Pension Plan" -- Any employee pension benefit plan within the meaning of Section 3(2) of ERISA with respect to which Borrower, any Mortgagor or any ERISA Affiliate at any relevant time has liability or an obligation to contribute. "Permitted Liens" -- (a) Liens for taxes, judgments, assessments and governmental charges or levies not yet due and payable or which are not reasonably likely to result in a Material Adverse Effect; (b) Liens imposed by law, such as materialmen's, mechanics', carriers', workmen's and repairmen's Liens and other similar Liens arising in the ordinary course of business where such liens have not been the subject of a final non-appealable foreclosure action and are not, individually or in the aggregate, reasonably likely to result in a Material Adverse Effect; (c) pledges or deposits to secure 4 obligations under workers' compensation laws or similar legislation or to secure public or statutory obligations; and (d) leases, occupancy agreements, licenses, easements, rights of way and other encumbrances on title to real property that do not render title to the property encumbered thereby unmarketable or materially adversely affect the use of such property for its present or then-existing purposes. "Person" -- An individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture or other entity of whatever nature. "Premises" -- The real property described on Exhibit A to the Mortgages and each located as indicated on SCHEDULES I, II and III hereto, upon all or part of which the Improvements are located. "Premises Document" -- All reciprocal easement or operating agreements, declarations, development agreements, developer's or utility agreements, and any similar such agreements or declarations now or hereafter affecting any of the Premises or any part thereof. "Principal Amount" -- At any time, the aggregate outstanding principal amount of the Notes from time to time outstanding pursuant to the terms of this Agreement. "Regulatory Change" -- With respect to any Lender, any change after the date hereof in federal, state or foreign laws or regulations or the adoption or making after such date of any interpretations, directives or requests applying to a class of banks including such Lender under any federal, state or foreign laws or regulations (whether or not having the force of law) by any court or governmental or monetary authority charged with the interpretation or administration thereof. "Related Mortgagor" -- Any Mortgagor that is included in the Financial Statements of Borrower. All of the initial Mortgagors are Related Mortgagors. "Released Mortgaged Property" -- Has the meaning specified in Section 8.11. "Remedy" -- Has the meaning specified in Section 8.06. "Restoration" -- The repair and restoration of the Mortgaged Property after a casualty occurrence or condemnation. "Stock Issuance" - Has the meaning specified in the recitals. "Transaction Documents" -- This Agreement, the Notes, the Mortgages (and, if required by Lender, Uniform Commercial Code financing statements in respect of the Mortgaged Property and any other collateral given as security for the Transactions), and any other documents which evidence or secure the Transactions. "Transactions" - Has the meaning specified in the recitals. "United States" and "U.S." -- The United States of America. SECTION 1.02. Rules of Construction. Except as expressly provided otherwise, when used in this Agreement (i) "or" is not exclusive, (ii) "hereunder", "herein", "hereof" and the like refer to this Agreement as a whole, (iii) "Article", "Section", "Schedule" and "Exhibit" refer to Articles, Sections, 5 Schedules and Exhibits of this Agreement, (iv) terms defined in the singular shall have a correlative meaning when used in the plural and vice versa, (v) a reference to a Law includes any amendment, modification or supplement to, or replacement of, such Law and (vi) a reference to a document shall mean such document as the same may be amended, modified or supplemented from time to time in accordance with its terms. The cover page and the Exhibits and Schedules annexed hereto are incorporated as a part of this Agreement with the same effect as if set forth in the body hereof. Any table of contents and all captions and headings herein are for convenience only and shall not affect the interpretation or construction hereof. ARTICLE II CONTRIBUTION, MEMBERSHIP INTEREST PURCHASE AND LOAN SECTION 2.01. The Contribution and Membership Interest Purchase. Subject to the terms and conditions of this Agreement, including satisfaction of the conditions of Section 4.01 hereof, Borrower shall (a) issue to Lender the Notes secured by the Mortgages indicated on SCHEDULE IA in exchange for [________] shares of the common stock of Lender and (b) issue to Lender the Notes secured by the Mortgages indicated on SCHEDULE IB in exchange for a one percent (1%) membership interest in Holdings, in each case upon the satisfaction of the conditions of Section 4.01 hereof. SECTION 2.02. The Loan, Generally. Subject to the terms and conditions of this Agreement, Lender agrees to advance the Loan. The Loan shall be advanced in multiple disbursements with the first disbursement being made in a principal amount equal to the Initial Advance upon Borrower's issuance of the Notes secured by the Mortgages indicated on SCHEDULE II and upon the satisfaction of the other conditions set forth in Section 4.01. Subsequent disbursements shall be made upon Borrower's satisfaction of the conditions set forth in Section 4.02. SECTION 2.03. Purpose. Borrower shall use the proceeds of the Loan for general corporate purposes. In no event shall proceeds of the Loan be used for any illegal purpose. SECTION 2.04. Procedure for Advance. (a) The initial advance hereunder shall be [$________________] (the "Initial Advance") and shall be evidenced by the Notes and secured by the Mortgages indicated on SCHEDULE II and shall be made upon the satisfaction of the conditions of Section 4.01 hereof and Lender's receipt of a request for the advance of proceeds of the Loan. (b) Each future advance (each such future advance, a "Future Advance") hereunder shall be evidenced by one or more new Notes and secured by one or more new Mortgages as indicated on SCHEDULE III and shall be made upon the satisfaction of the conditions of Section 4.02 hereof and Lender's receipt of a request for the advance of proceeds of the Loan. SCHEDULE III may be amended or modified from time to time as mutually agreed upon by Lender and Borrower, each acting in its reasonable discretion. (c) On the date set for each such advance, Lender shall, subject to the conditions of this Agreement, make the amount to be advanced by it on such day available in immediately available funds for the account of Borrower by crediting an account of Borrower designated by Borrower in its request for advance. SECTION 2.05. Notes. The Transactions shall be evidenced by Mortgage Notes issued by Borrower in the form of EXHIBIT A, duly completed and executed by Borrower and payable to 6 Lender (such Mortgage Notes, as the same may hereafter be amended, modified, extended, severed, assigned, substituted, renewed or restated from time to time (including, without limitation, any replacement notes issued pursuant to this Section 2.05), each, a "Note" and collectively, the "Notes"). The Notes shall mature, and all outstanding principal and other sums thereunder shall be paid in full, on the Maturity Date, as the same may be accelerated or extended in accordance with the provisions of this Agreement. In case of any loss, theft, destruction or mutilation of any Note, Borrower shall, upon its receipt of an affidavit of an officer of Lender as to such loss, theft, destruction or mutilation and an appropriate indemnification, execute and deliver a replacement Note to Lender in the same principal amount and otherwise of like tenor as the lost, stolen, destroyed or mutilated Note. SECTION 2.06. Payments and Distributions. Borrower shall make each payment under this Agreement and under the Notes on the date when due to Lender at Lender's Office by check or wire transfer. Payments by Borrower hereunder or under the Notes or other Transaction Documents shall be made without setoff or counterclaim. Except to the extent otherwise provided in this Agreement, whenever any payment to be made under this Agreement or under the Notes is due on any day other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of the payment of interest and, if applicable, fees, as the case may be. SECTION 2.07. Interest. Interest shall be computed on an actual/360-day basis (i.e., interest for each day during which any portion of the Principal Amount is bearing interest at a particular interest rate per annum shall be computed at such rate divided by 360). Borrower shall pay to Lender interest on the Principal Amount at the Interest Rate. Such interest on the Principal Amount shall be payable on each [Quarterly Dividend Payment Date] of each year (or, if any such day is not a Business Day, the next succeeding Business Day) until the Notes are repaid in full. SECTION 2.08. Voluntary Prepayments. Borrower may prepay all or any portion of the principal amount of any of the Notes, without premium or penalty; provided, however, that each prepayment under this Section shall include all interest accrued on the amount of principal prepaid through the date of prepayment. If, pursuant to this Section 2.08, Borrower prepays the entire principal amount of any Note together with all interest accrued thereon and all other sums that may be payable in respect thereof, Lender shall, at Borrower's request and at the cost and expense of Borrower, release the Mortgaged Property and related collateral securing such Note (but Lender shall not be obligated to release any Mortgaged Property or other collateral securing any other Note). In such event, Lender shall promptly execute and deliver to Borrower, at Borrower's cost and expense, any documents required by law in order to release the applicable Mortgaged Property and related collateral. ARTICLE III YIELD MAINTENANCE ETC. SECTION 3.01. Additional Costs and Other Effects of Regulatory Changes; Taxes. Borrower shall pay directly to Lender, promptly upon demand, such amounts as are reasonably necessary to compensate Lender for Additional Costs resulting from any Regulatory Change which without duplication (i) subjects Lender to any tax, duty or other charge with respect to the Transactions or the Notes, or changes the basis of taxation of any amounts payable to Lender under the Transactions or the 7 Notes (other than taxes imposed on the overall net income of Lender or of Lender's Office by the jurisdiction in which Lender's Office is located and franchise taxes imposed in lieu thereof), (ii) imposes, modifies or deems applicable any reserve, special deposit or similar requirements relating to any extensions of credit or other assets of, or any deposits with or other liabilities of, Lender, (iii) imposes on Lender any other condition affecting the Transactions or the Notes, or any of such extensions of credit or liabilities or (iv) imposes any capital adequacy requirements on Lender by virtue of the Transactions or the Notes. Lender shall notify Borrower of any event occurring after the date hereof which would entitle it to compensation pursuant to this paragraph as promptly as practicable after it obtains knowledge thereof and determines to request such compensation and, at Borrower's sole cost and expense, shall take such steps as Borrower reasonably requests in order to avoid the imposition of such costs. Determinations by each Lender of the existence or effect of any Regulatory Change on its costs of entering or maintaining the Transactions or amounts receivable by it in respect thereof, and of the additional amounts required to compensate Lender in respect of Additional Costs, shall be conclusive, so long as made on a reasonable basis. ARTICLE IV CONDITIONS PRECEDENT SECTION 4.01. Conditions Precedent to the Stock Issuance, the Membership Interest Purchase and the Initial Advance. Lender shall not be obligated to consummate the Stock Issuance, the Membership Interest Purchase or make the Initial Advance until the following conditions shall have been satisfied: (a) Lender shall have received a request for the advance of proceeds in accordance with Section 2.04 hereof; (b) There shall exist no Event of Default, and no Event of Default would result from the Stock Issuance, the Membership Interest Purchase or the making of the Loan; (c) The representations and warranties made to Lender herein, in the other Transaction Documents and in any other document, certificate or statement executed or delivered to Lender in connection with the Transactions shall be true and correct in all material respects on the date of this Agreement; (d) The Premises shall not have been materially injured or damaged by fire or other casualty after the date of the applicable Appraisal and on or before the date of this Agreement; and (e) Lender shall have received and approved each of the following: (1) Transaction Documents. This Agreement and each of the other Transaction Documents, duly executed by the parties thereto, and, where applicable, duly acknowledged and in proper form for recording or filing, as the case may be, and evidence of the proper submission of all necessary or desirable recordings and filings; (2) Financial Statements. Borrower's most recent Financial Statements; (3) Appraisals. Appraisals of the Premises in form and substance reasonably satisfactory to Lender (the "Appraisals"); 8 (4) Insurance Policies. Originals or copies of all policies or certificates of insurance evidencing the insurance coverages required under Section 6.08 hereof; (5) Title Reports. Title searches or commitments for policies of title insurance prepared by a title company reasonably satisfactory to Lender for each of the Premises in form and substance reasonably satisfactory to Lender; (6) Flood Searches. Flood hazard determinations indicating that none of the Premises are located in an area identified by the Secretary of the United States Department of Housing and Urban Development or by any applicable federal agency as a Flood Hazard Area; (7) Organizational Documents. If Borrower, the mortgagor or grantor under any Mortgage (if different from Borrower (each, a "Mortgagor", and collectively "Mortgagors")) or any general partner or member of any of them is a corporation, current copies of the following documents with respect to each (unless otherwise indicated): (i) a good-standing certificate from the jurisdiction of its incorporation and, as to Borrower or Mortgagor under any Mortgage only, from the jurisdiction in which the applicable Premises are located, (ii) evidence that the consummation of the transactions contemplated hereby and the execution, delivery and performance of the Transaction Documents has been duly authorized, and (iii) a certificate of the corporate secretary as to the incumbency of the officers executing any of the documents required hereby, and, if Borrower, any Mortgagor or any general partner or member of any of them is a partnership, venture, limited liability company or trust: (iv) the entity's organizational agreement and all amendments and attachments thereto, certified by a general partner, venturer, member or trustee to be true and complete, (v) any certificates filed or required to be filed by the entity in the jurisdictions of its formation and where the Premises are located in order for it to do business in those jurisdictions, and (vi) evidence of the authorization of the consummation of the transactions contemplated hereby and the execution, delivery and performance of the Transaction Documents and any other documents to be executed, delivered and performed by said entity (including any substitute or replacement notes to be executed and delivered pursuant to the terms hereof), and including any required consents by partners, venturers, members, trustees or beneficiaries; and (8) Additional Documentation. Such other approvals, opinions or documents as Lender may reasonably request. SECTION 4.02. Conditions Precedent to Future Advances. Lender shall not be obligated to make any Future Advance until the following conditions shall have been satisfied: 9 (a) Lender shall have received a request for the advance of proceeds delivered in accordance with Section 2.04 hereof; (b) All conditions of Section 4.01 shall be satisfied as of the date of such Future Advance with respect to (i) the Premises mortgaged by the applicable Mortgagor to secure such Future Advance as indicated on SCHEDULE III and (ii) the applicable Mortgagor; (c) There shall exist no Event of Default, and no Event of Default would result from the making of the advance; (d) The Premises mortgaged to secure such Future Advance shall not have been materially injured or damaged by fire or other casualty after the date of the applicable Appraisal and on or before the date of the Future Advance; (e) Receipt by Lender of evidence of the submission for recordation of the Mortgages securing the applicable Future Advance as indicated on SCHEDULE III and payment of all applicable recording taxes and fees in connection therewith; (f) No trustee, receiver or liquidator of the Premises mortgaged under the applicable Mortgage to secure such Future Advance or any part thereof, or of the applicable Mortgagor shall have been appointed by order of any court of competent jurisdiction; (g) The Mortgagor executing any Mortgage securing such Future Advance shall not have filed a petition in bankruptcy or for an arrangement or for reorganization pursuant to the Bankruptcy Code or any similar federal or state law relating to bankruptcy, insolvency or other relief for debtors unless such petition shall have been discharged, stayed or dismissed as of the date of such Future Advance; (h) The Mortgagor executing any Mortgage securing such Future Advance shall not (1) by decree of a court of competent jurisdiction, have been adjudicated bankrupt or declared insolvent, (2) have made an assignment for the benefit of creditors which has not been discharged, (3) have admitted in writing its inability to pay its debts generally as they become due, or (4) have consented to the appointment of a receiver or receivers of all or any part of its property; and (i) No creditors of the Mortgagor executing any Mortgage securing such Future Advance shall have filed a petition in bankruptcy against such Mortgagor or for reorganization of such Mortgagor pursuant to the Bankruptcy Code or any similar federal or state law relating to bankruptcy, insolvency or other relief for debtors, unless such petition shall have been discharged, stayed or dismissed as of the date of such Future Advance. ARTICLE V REPRESENTATIONS AND WARRANTIES Borrower represents and warrants to Lender that: SECTION 5.01. Due Formation, Power and Authority. If it, any Mortgagor or any general partner or member of any of them is a corporation, partnership, venture, limited liability company or trust, each such entity is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its formation, is qualified to do business and is in good standing in the jurisdiction in which 10 the Premises are located (if required), and has full power and authority to consummate the transactions contemplated hereby and to execute, deliver and perform this Agreement and any Transaction Document to which it is a party. SECTION 5.02. Legally Enforceable Agreements. Each Transaction Document to which Borrower or any Mortgagor is a party is a legal, valid and binding obligation of such party, enforceable against Borrower or such Mortgagor, as the case may be, in accordance with its terms, except to the extent that such enforcement may be limited by (a) applicable bankruptcy, insolvency and other similar Laws affecting creditors' rights generally, (b) principles of equity or (c) judicial discretion. SECTION 5.03. Financial Statements. Financial Statements have been heretofore delivered to Lender which are true, correct and current in all material respects and which fairly present the respective financial conditions of the subjects thereof as of the respective dates thereof; no material adverse change has occurred in the financial conditions reflected therein between the respective dates thereof and the date of this Agreement and no borrowings (other than the Loan) which might give rise to a Lien or claim against the Mortgaged Property or proceeds of the Loan have been made by Borrower or others between the dates thereof and the date of this Agreement. SECTION 5.04. Compliance With Laws. Borrower and Mortgagors are in compliance with, and the transactions contemplated hereby and the other Transaction Documents do not and will not violate any provision of, or require any filing, registration, consent or approval under, any Law presently in effect having applicability to Borrower or Mortgagors and Borrower has filed or caused to be filed all tax returns (federal, state and local) required to be filed and paid all taxes, assessments and governmental charges due and payable, except where such violation or the failure to make any such filing or registration or to obtain the applicable consent or approval or make payment is not reasonably likely to result in a Material Adverse Effect. SECTION 5.05. Litigation. Except as disclosed in Borrower's periodic filings with the Securities and Exchange Commission, to the best knowledge of Borrower, there are no actions, suits or proceedings pending or, to the actual knowledge of Borrower, threatened against or affecting Borrower, Mortgagors, the Premises, the validity or enforceability of the Mortgages or the priority of the lien thereof at law or in equity, before or by any Governmental Authorities except actions, suits or proceedings which are fully covered by insurance or would, if adversely determined, not likely have a Material Adverse Effect. To Borrower's knowledge, no default exists with respect to any order, writ, injunction, decree or demand of any court or Governmental Authorities where such default is reasonably likely to result in a Material Adverse Effect. SECTION 5.06. No Conflicts or Defaults. The consummation of the transactions contemplated hereby and the performance hereof and of the other Transaction Documents have not resulted and will not result in any breach of, or constitute a default under, any mortgage, deed of trust, lease, bank loan or credit agreement, corporate charter, by-laws, partnership agreement or other instrument to which Borrower or any Mortgagor is a party or by which either of them may be bound. SECTION 5.07. Solvency. Borrower and Mortgagors are, and upon consummation of the transactions contemplated by this Agreement, the other Transaction Documents and any other related documents, will be, solvent. SECTION 5.08. Governmental Regulation. Borrower and Mortgagors are not subject to regulation under the Investment Company Act of 1940 or any Law limiting Borrower's ability to incur indebtedness for money borrowed as contemplated hereby. 11 SECTION 5.09. Insurance. Borrower has or caused to be in force, and has paid or caused to be paid the premiums in respect of, all of the insurance required by this Agreement. SECTION 5.10. No Event of Default. There exists no Event of Default. SECTION 5.11. Separate Tax and Zoning Lot. To Borrower's knowledge, each of the Premises listed on SCHEDULES I, II and III consists of one or more distinct parcels for purposes of zoning and of taxes, assessments and impositions (public or private), and are not otherwise considered as part of a larger single lot for purposes of zoning or of taxes, assessments or impositions (public or private) except where the failure to so consist of one or more distinct parcels would not reasonably be expected to have a Material Adverse Effect. SECTION 5.12. Creation of Liens. Borrower has entered into no contract or arrangement of any kind the performance of which by the other party thereto would give rise to a Lien, other than a Permitted Lien, on the Mortgaged Property prior to the Mortgages. SECTION 5.13. Appraisals. The Premises valued in the Appraisals and indicated on SCHEDULES I, II and III attached hereto are the same Premises whose legal descriptions are attached as Exhibit A to the applicable Mortgages. SECTION 5.14. Loan to Value Ratio. The Loan to Value Ratio for each of the Premises listed on SCHEDULES I, II and III attached hereto shall not materially exceed 1:1 as of the date of the applicable advance of loan proceeds. ARTICLE VI COVENANTS OF BORROWER Borrower covenants and agrees that it will promptly: SECTION 6.01. Compliance with Laws; Payment of Taxes. Comply or cause compliance with all Laws applicable to it, Mortgagors or the Mortgaged Property, or any part thereof, such compliance to include, without limitation, paying before the same becomes delinquent, all taxes, assessments and governmental charges imposed on it, Mortgagors or the Mortgaged Property, or any part thereof, and promptly furnish Lender with any notices from Governmental Authorities and any claims of violation of any Laws, except where the failure to comply is not reasonably likely to result in a Material Adverse Effect. SECTION 6.02. Maintenance of Existence. Preserve and keep in full force and effect its existence, franchises, rights and privileges as a business or stock corporation under the laws of the State of Delaware, and cause each Related Mortgagor to preserve and keep in full force and effect its existence, franchises, rights and privileges as a business or stock corporation, partnership, limited liability company, trust or other entity under the laws of such Related Mortgagor's jurisdiction of formation or existence, except in the event of a merger, consolidation or sale of substantially all of the assets of Borrower or any Related Mortgagor, where the surviving entity or the transferee assumes the obligations of the Borrower or applicable Related Mortgagor under the Transaction Documents to which the applicable Related Mortgagor is a party. SECTION 6.03. Continuing Accuracy of Representations and Warranties. Undertake commercially reasonable efforts in order to cause all of the representations and warranties made to Lender 12 herein and in the other Transaction Documents to remain materially true and correct to the extent reasonably practical as of the date of each Future Advance. SECTION 6.04. Covenants, Restrictions and Easements. Use commercially reasonable efforts to comply or cause each Mortgagor to comply with all restrictions, covenants and easements affecting the Premises or the Improvements and cause the satisfaction of all conditions thereof, except where the failure to comply is not reasonably likely to result in a Material Adverse Effect. SECTION 6.05. Inspection and Cooperation. Permit or cause permission to be granted to Lender and its representatives to enter upon the Premises and inspect the Improvements at reasonable times on reasonable prior notice. SECTION 6.06. Payment of Costs. Pay or cause to be paid all costs and expenses required by this Agreement and the satisfaction of the conditions hereof, including, without limitation: (a) all document and stamp taxes, recording and filing expenses and fees and commissions lawfully due to brokers in connection with the transactions contemplated hereby, and (b) any taxes, insurance premiums, Liens, security interests or other claims or charges against the Premises or Improvements. SECTION 6.07. Brokers. Indemnify Lender against claims of brokers arising by reason of the execution hereof or the consummation of the transactions contemplated hereby. Notwithstanding the foregoing, Lender hereby represents that no broker was engaged by Lender in bringing about the Transactions. SECTION 6.08. Insurance. Provide and maintain or cause to be provided and maintained in full force and effect the following insurance coverages: (a) property "all risk" insurance covering the Mortgaged Property; and (b) such other insurance as may be required by applicable Law (including worker's compensation and employer's liability insurance) or as Lender may reasonably require from time to time. Any policy of property insurance required by clause (a) above shall be in an amount not less than the full replacement cost of the Improvements and any personal property covered by such policy, shall contain a "full replacement cost" endorsement, shall insure against flood loss risk if the Land is located in a Flood Hazard Area, and shall name Lender as an additional insured or mortgagee and as a "loss payee". All insurance policies shall be in form and substance and issued by insurers reasonably satisfactory to Lender, and shall contain such deductibles and such endorsements as Lender may reasonably require. Upon request by Lender from time to time, Borrower shall deliver to Lender certificates of insurance evidencing such insurance coverage. Notwithstanding the foregoing, Borrower shall have the right to enter into a program of self-insurance for the purpose of satisfying Borrower's or any Related Mortgagor's obligations hereunder and under the Mortgagor. SECTION 6.09. Condemnation Awards and Insurance Proceeds. (a) Following a casualty occurrence or condemnation affecting all or any portion of the Mortgaged Property, Net Proceeds shall be payable to Borrower (or the applicable Mortgagor); provided, however, that (i) if Borrower does not diligently prosecute or cause the diligent prosecution of the Restoration or does not apply the entire Net Proceeds to the cost of such Restoration and (ii) the Loan to Value Ratio immediately following the Restoration is materially greater than the greater of (A) the Loan to Value Ratio as of the date immediately preceding the casualty or condemnation or (B) the Loan to Value Ratio as of the date of the Initial Advance or 13 Future Advance evidenced by the Note or Notes secured by such Mortgaged Property (such greater value, the "Greater Loan to Value Ratio"), then the provisions of Sections 6.09(b) and (c) below shall apply. (b) If the entire Net Proceeds are not applied to the cost of the Restoration and the Loan to Value Ratio immediately following the Restoration shall be materially greater than the Greater Loan to Value Ratio, Borrower shall pay or cause to be paid to Lender and Lender shall apply to the principal amount of the Note or Notes secured by such Mortgaged Property that portion of Net Proceeds not applied to the costs of Restoration (the "Excess Proceeds") as is sufficient to cause the Loan to Value Ratio immediately following the Restoration to equal no more than 105% of the Greater Loan to Value Ratio; provided, however, that in no event shall Borrower or the applicable Mortgagor be obligated to pay an amount in excess of the Excess Proceeds pursuant to this Section 6.09(b). Any remaining Net Proceeds shall be retained by Borrower. (c) If Borrower does not intend to undertake the Restoration, Borrower shall pay or cause to be paid to Lender and Lender shall apply to the principal amount of the Note or Notes secured by such Mortgaged Property that portion of the Net Proceeds as is sufficient to cause the Loan to Value Ratio immediately following the casualty occurrence or condemnation to equal no more than 105% of the Greater Loan to Value Ratio. Any remaining Net Proceeds shall be retained by Borrower. SECTION 6.10. Filing and Recording of Documents. Upon the execution and delivery hereof and from time to time thereafter, cause the Mortgages and any security instrument creating or evidencing the lien of the Mortgages upon the Mortgaged Property and each instrument of further assurance to be filed, registered or recorded in such manner and in such places as may be required by any Law in order to publish notice of and fully to protect the lien of the Mortgages upon, and the interest of Lender in, the Mortgaged Property. (a) Pay or cause to be paid all filing, registration or recording fees, and all expenses incident to the execution and acknowledgment of the Mortgages, any security instrument with respect to the Mortgaged Property (including, without limitation, any Uniform Commercial Code financing statements and any filings necessary or desirable from time to time in connection with the continuation or renewal thereof), and any instrument of further assurance, and any expenses (including reasonable attorneys' fees and disbursements) incurred by Lender in connection with the Transactions, and pay all federal, state, county and municipal stamp taxes and other taxes, duties, imposts, assessments and charges arising out of or in connection with the execution and delivery of the Notes, the Mortgages, any security instrument with respect to the Mortgaged Property or any instrument of further assurance. SECTION 6.11. Premises Documents. Use commercially reasonable efforts (as determined by Borrower in good faith) to do all things (and direct each Mortgagor to do all things) necessary to cause the due compliance and faithful performance by the other parties to the Premises Documents with and of all material obligations and agreements by such other parties to be complied with and performed thereunder, except where the failure of such compliance or performance is not reasonably likely to result in a Material Adverse Effect. SECTION 6.12. Reporting Requirements. Furnish to Lender: (1) Annual Financial Statements. As soon as available and in any event within one hundred twenty (120) days after the end of the fiscal year of Borrower, Financial Statements, as of the end of and for such fiscal year, certified by the principal financial or accounting officer of Borrower as being materially true, correct and current in all material respects, in reasonable 14 detail, stating in comparative form the respective figures for the preceding fiscal year and compiled by a firm of certified public accountants reasonably satisfactory to Lender. (2) Notices of Defaults. As soon as possible and in any event within ten (10) days after Borrower or any Mortgagor becomes aware of the occurrence of an Event of Default, a written notice setting forth the details of such Event of Default and the action that has been taken or is proposed to be taken with respect thereto; and (3) General Information. Promptly, such other information respecting the condition or operations, financial or otherwise, of Borrower, Mortgagors or the Premises as Lender may from time to time reasonably request. SECTION 6.13. Secondary Financing. So long as any of the Notes shall remain unpaid or any other amount is owing by Borrower to Lender under any Transaction Document or otherwise in respect of the Transactions, not enter into any junior financing arrangement with any Person with the Mortgaged Property or any portion thereof as collateral therefor, unless (a) such junior financing is expressly subordinated to the Transaction Documents and the Person providing such junior financing enters into an intercreditor agreement in form and substance reasonably satisfactory to Lender and (b) the ratio of (i) the sum of the aggregate outstanding principal balance of the Notes and all junior financing arrangements secured by the Mortgaged Property or any portion thereof to (ii) the aggregate value of the Mortgaged Property based on appraisals of the Mortgaged Property, each in form and substance reasonably satisfactory to Lender, does not exceed one to one. ARTICLE VII EVENTS OF DEFAULT AND REMEDIES SECTION 7.01. Events of Default. The occurrence of any one or more of the following events shall constitute an Event of Default (each, an "Event of Default"): (a) if default shall be made in the payment of any principal, interest, fees or other sums under the Notes, the Mortgages or this Agreement, in any such case, when and as the same shall become due and payable, whether at maturity or by acceleration or as part of any payment or prepayment or otherwise, in each case, as herein or in the Notes or the Mortgages provided, and such default shall have continued for a period of five (5) Business Days following written notice thereof to Borrower by Lender; or (b) if default shall be made in the due observance or performance of any other covenant, condition or agreement in this Agreement, the Notes, the Mortgages or in any other document executed or delivered in connection with the Transactions, and such default shall have continued for a period of one hundred twenty (120) days after notice thereof shall have been given to Borrower by Lender, or, in the case of such other documents, such shorter grace period, if any, as may be provided for therein or, if such default is not reasonably susceptible of cure during such one hundred twenty (120) days or such shorter grace period, so long as Borrower diligently proceeds to cure such default, such longer period as may be reasonably required to cure such default so long as such longer period is not reasonably likely to result in a Material Adverse Effect; or (c) if any representation or warranty made by Borrower herein shall be materially incorrect when made and reasonably likely to result in a Material Adverse Effect, or if any other representation or warranty made to Lender in the Transaction Documents shall be materially 15 incorrect in any material respect when made and reasonably likely to result in a Material Adverse Effect; or (d) if by order of a court of competent jurisdiction, a trustee, receiver or liquidator of Borrower shall be appointed and such order shall not be discharged or dismissed within ninety (90) days after such appointment or, so long as Borrower diligently proceeds to effect such discharge or dismissal, such longer period as may be reasonably required to effect such discharge or dismissal; or (e) if Borrower shall file a petition in bankruptcy or for an arrangement or for reorganization pursuant to the Bankruptcy Code or any similar federal or state law, or if, by decree of a court of competent jurisdiction, Borrower shall be adjudicated bankrupt, or be declared insolvent, or shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due, or shall consent to the appointment of a receiver or receivers of all or any part of its property; or (f) if any of the creditors of Borrower shall file a petition in bankruptcy against Borrower or for reorganization of Borrower pursuant to the Bankruptcy Code or any similar federal or state law, and if such petition shall not be discharged, stayed or dismissed within one hundred twenty (120) days after the date on which such petition was filed or, so long as Borrower diligently proceeds to effect such discharge or dismissal, such longer period as may be reasonably required to effect such discharge or dismissal; or (g) if a final judgment for the payment of money in excess of the greater of (i) ten percent (10%) of the value of a Mortgaged Property or (ii) $1,000,000.00 is filed as a Lien against such Mortgaged Property (or any portion thereof) and Borrower shall not discharge or cause the discharge of, or otherwise provide adequate security (which may include affirmative title insurance coverage issued by a duly licensed insurer selected by Borrower and reasonably satisfactory to Lender) with respect to the final judgment within one hundred twenty (120) days from the entry thereof, or shall not appeal or cause the appeal therefrom or from the order, decree or process upon which or pursuant to which said judgment was granted, based or entered, and secure a stay of execution pending such appeal; or (h) if there shall occur a default which is not cured within the applicable grace period, if any, under any mortgage, deed of trust or other security instrument covering all or part of the Mortgaged Property regardless of whether any such mortgage, deed of trust or other security instrument is prior or subordinate to the Mortgages but only if such default or the consequences thereof are reasonably likely to result in a Material Adverse Effect; it being further agreed by Borrower that an Event of Default hereunder shall constitute an Event of Default under the Mortgages; or (i) if, except as permitted under the Transaction Documents, Borrower or any Mortgagor shall transfer (or suffer or permit the transfer) in any manner, either voluntarily or involuntarily, by operation of law or otherwise, all or any portion of the Mortgaged Property, or any interest or rights therein (including air or development rights) without, in any such case, the prior consent of the Lender (which consent shall not be unreasonably withheld, conditioned or delayed). As used in this clause, "transfer" shall include, without limitation, any sale or conveyance but shall not include leases or other occupancy agreements or licenses, easements or similar encumbrances comprising Permitted Liens. Notwithstanding the foregoing, (A) Borrower or any Mortgagor may transfer a portion (but less than all) of any Mortgaged Property, or any interest or right therein, free and clear of the lien of the related Mortgage pursuant to, and subject to compliance 16 with, Section 8.11 and (B) Borrower or any Mortgagor may transfer all or any portion of a Mortgaged Property, or any interest or right therein, if Borrower prepays the Note or Notes secured by such Mortgaged Property pursuant to Section 2.08; or (j) if Borrower or any Mortgagor shall encumber, or agree to encumber, in any manner, either voluntarily or involuntarily, by operation of law or otherwise, all or any portion of the Mortgaged Property, or any interest or rights therein (including air or development rights) where such encumbrance is reasonably likely to result in a Material Adverse Effect, except for Permitted Liens or as otherwise provided for in the Transaction Documents, without, in any such case, the prior consent of Lender and Borrower or such Mortgagor shall fail to bond over or discharge or otherwise provide adequate assurance to Lender (which may include affirmative title insurance coverage issued by a duly licensed insurer selected by Borrower and reasonably satisfactory to Lender) with respect to the same within one hundred twenty (120) days of receipt of notice thereof or such sooner date if forfeiture is imminent. As used in this clause, "encumber" shall include, without limitation, the placing or permitting the placing of any mortgage, deed of trust, assignment of rents or other security device. Notwithstanding the foregoing, if any Mortgagor encumbers all or any portion of the Mortgaged Property, or any interest or rights therein, such encumbrance shall not constitute an Event of Default if Borrower prepays the principal amount of the Note or Notes secured by such Mortgaged Property in accordance with Section 2.08 and in an amount sufficient to cause the ratio of (A) the outstanding principal amount of such Note or Notes immediately following such prepayment to (B) the fair market value of the applicable Mortgaged Property (taking into account the effect of such encumbrance) to equal no more than 105% of the greater of (Y) the Loan to Value Ratio as of the date immediately prior to such encumbrance or (Z) the Loan to Value Ratio as of the date of the Initial Advance or Future Advance evidenced by the Note or Notes secured by such Mortgaged Property. SECTION 7.02. Remedies of Lender. Upon the occurrence of any Event of Default, Lender may, without notice to or demand upon Borrower, which are expressly waived by Borrower (except for notices or demands otherwise required by applicable Law to the extent not effectively waived by Borrower), exercise any one or more of the following Remedies: (a) Lender, by notice to Borrower, may declare the entire principal of the Notes then outstanding (if not then due and payable), and all accrued and unpaid interest and other sums in respect thereof, to be due and payable immediately, and upon any such declaration the principal of the Notes and said accrued and unpaid interest and other sums shall become and be immediately due and payable, anything herein or in the Notes or the other Transaction Documents to the contrary notwithstanding; (b) Lender may perform any of the Borrower's obligations under the Transaction Documents in such manner as Lender may determine; and (c) Lender may proceed to protect, exercise and enforce any and all other Remedies provided under the Transaction Documents or by applicable Law. SECTION 7.03. Remedies Cumulative. No remedy herein conferred upon or reserved to Lender is intended to be exclusive of any other remedy or remedies, and each and every such remedy shall be cumulative, and shall be in addition to every other remedy given hereunder or now or hereafter existing at law, in equity or by statute. No delay or omission of Lender to exercise any right or power accruing upon any Event of Default shall impair any such right or power, or shall be construed to be a waiver of any such Event of Default or any acquiescence therein; and every power and remedy given hereby to Lender may be exercised from time to time as often as may be deemed expedient by Lender. 17 Nothing herein or in the Notes or the other Transaction Documents shall affect the obligation of Borrower to pay the principal of, and interest and other sums on, the Notes and the other Transaction Documents in the manner and at the time and place therein respectively expressed. SECTION 7.04. Lender's Rights Concerning Application of Amounts Collected. Notwithstanding anything to the contrary contained herein, upon the occurrence of an Event of Default, Lender may apply, to the extent permitted by law, any amount collected hereunder to principal, interest or any other sum due under the Notes or the other Transaction Documents or otherwise in respect of the Transactions in such order and amounts, and to such obligations, as Lender shall elect in its sole and absolute discretion. ARTICLE VIII GENERAL CONDITIONS AND PROVISIONS SECTION 8.01. Documentation, Etc. Satisfactory. All documentation and proceedings reasonably deemed by Lender's Counsel to be necessary or required in connection herewith and the documents relating hereto shall be subject to the prior approval of Lender's Counsel as to form and substance, such approval not to be unreasonably withheld. In addition, the Persons responsible for the execution and delivery of, and signatories to, all of such documentation, shall be acceptable to and subject to the approval of Lender's Counsel. Lender's Counsel shall receive copies, certified if requested by either of them, of all documents which they may reasonably require in connection with the transactions contemplated hereby. SECTION 8.02. Notices. Except as expressly provided otherwise, all notices, demands, consents, approvals and statements required or permitted hereunder shall be in writing and shall be deemed to have been sufficiently given or served for all purposes when presented personally, three (3) days after mailing by registered or certified mail, postage prepaid, or one (1) day after delivery to a nationally recognized overnight courier service providing evidence of the date of delivery, addressed to a party at its address on the signature page hereof, or at such other address of which a party shall have notified the party giving such notice in writing in accordance with the foregoing requirements. SECTION 8.03. Amendments and Waivers. No amendment or material waiver of any provision of this Agreement or any other Transaction Document, nor consent to any material departure by Borrower or any Mortgagor therefrom, shall in any event be effective unless the same shall be in writing and signed by the party against whom such amendment, waiver or consent is sought to be enforced, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Without limiting the foregoing, acceptance by Lender of any sum required to be paid pursuant hereto or any other Transaction Document, after its due date, or in an amount less than the sum then due, shall not constitute a waiver by Lender of its right to require prompt payment when due of all other such sums or to declare a default or to exercise such other rights provided herein or in the other Transaction Documents for such late or reduced payment. SECTION 8.04. Successors and Assigns. Except as herein provided, this Agreement shall be binding upon and inure to the benefit of Borrower and Lender and their respective heirs, personal representatives, successors and permitted assigns. Notwithstanding the foregoing, Borrower may not assign, transfer or set over to another, in whole or in part, all or any part of its benefits, rights, duties and obligations hereunder, including, but not limited to, performance of and compliance with conditions hereof and the right to receive the proceeds of the Loan. 18 SECTION 8.05. Severability. The provisions hereof are intended to be severable. Any provisions hereof, or the application thereof to any Person or circumstance, which, for any reason, in whole or in part, is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof (or the remaining portions of such provision) or the application thereof to any other Person or circumstance, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision (or portion thereof) or the application thereof to any Person or circumstance in any other jurisdiction. SECTION 8.06. Non-Waiver; Remedies Cumulative. No failure or delay on Lender's part in exercising any right, remedy, power or privilege hereunder or under any of the other Transaction Documents or provided by law (hereinafter in this Section, each a "Remedy") shall operate as a waiver of any such Remedy or shall be deemed to constitute Lender's acquiescence in any default by Borrower or Mortgagors under any of said documents. A waiver by Lender of any Remedy on any one occasion shall not be construed as a bar to any other or future exercise thereof or of any other Remedy. The Remedies are cumulative, may be exercised singly or concurrently and are not exclusive of any other Remedies. SECTION 8.07. Certain Waivers. Borrower hereby irrevocably and unconditionally waives (i) promptness and diligence, (ii) notice of any actions taken by Lender hereunder or under any other Transaction Document or any other agreement or instrument relating hereto or thereto except to the extent otherwise provided herein, (iii) all other notices, demands and protests, and all other formalities of every kind in connection with the enforcement of Borrower's obligations hereunder and under the other Transaction Documents, the omission of or delay in which, but for the provisions of this Section, might constitute grounds for relieving Borrower of any of its obligations hereunder or under the other Transaction Documents, (iv) any requirement that Lender protect, secure, perfect or insure any Lien on any collateral for the Transactions or exhaust any right or take any action against Borrower, Mortgagors or any other Person or against any collateral for the Transactions, (v) any right or claim of right to cause a marshalling of Borrower's assets and (vi) all rights of subrogation or contribution, whether arising by contract or operation of law or otherwise by reason of payment by Borrower pursuant hereto or to any other Transaction Document. EACH OF BORROWER AND LENDER FURTHER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING BROUGHT BY OR ON BEHALF OF THE OTHER WITH RESPECT TO THIS AGREEMENT, THE NOTES OR OTHERWISE IN RESPECT OF THE TRANSACTIONS, ANY AND EVERY RIGHT IT MAY HAVE TO A TRIAL BY JURY. SECTION 8.08. Expenses. Borrower covenants and agrees to pay all reasonable costs, expenses and charges (including, without limitation, all fees and charges of appraisers and the reasonable fees and disbursements of Lender's Counsel) incurred by Lender in connection with (i) the preparation for and consummation of the transactions contemplated hereby or for the performance hereof and of the other Transaction Documents, and for any services which may be required in addition to those normally and reasonably contemplated hereby; and (ii) the enforcement hereof or of any or all of the other Transaction Documents. In connection with the foregoing, Lender agrees, to the extent practicable, to appoint a single counsel, selected by Lender in connection with the enforcement of the Transaction Documents. If Borrower fails to pay promptly any costs, charges or expense required to be paid by it as aforesaid, and Lender pays such costs, charges or expenses, Borrower shall reimburse Lender, as appropriate, on demand for the amounts so paid, together with interest thereon at the Interest Rate. SECTION 8.09. General Indemnification. Borrower agrees to indemnify Lender and its directors, officers, employees and agents from, and hold each of them harmless against: 19 (a) any and all claims, actions, suits, proceedings, costs, expenses, losses, damages and liabilities of any kind, including in tort, penalties and interest (collectively, "Losses") arising out of or by reason of any investigation or litigation or other proceedings (including any threatened investigation or litigation or other proceedings) relating to any actual or proposed use by Borrower of the proceeds of the Loan, including, without limitation, the fees and disbursements of counsel incurred in connection with any such investigation, litigation or other proceedings; (b) any and all Losses arising out of or by reason of any matter relating, directly or indirectly, to the Mortgages or the ownership, condition, development, construction, sale, rental or financing of the Premises or Improvements or any part thereof (but excluding any such losses, liabilities, claims, damages or expenses incurred solely by reason of the gross negligence or willful misconduct of the party to be indemnified); (c) any and all Losses arising due to this Agreement or any documents, financial statements, reports, notices, schedules, certificates, statements or other writings furnished by or on behalf of Borrower or Mortgagors to Lender in connection with the negotiation of this Agreement or the other Transaction Documents or the consummation of the transactions contemplated hereby, or required herein or by the other Transaction Documents to be furnished by or on behalf of Borrower or Mortgagors, containing any untrue or misleading statement of a material fact or omitting a material fact necessary to make the statements herein or therein not misleading; or due to Borrower not disclosing to Lender in writing any fact which materially affects adversely or, so far as Borrower can now foresee, will result in a Material Adverse Effect; (d) any and all Losses due to violations of any requirement of any Governmental Authorities with respect to any of the Mortgaged Property or the Improvements; (e) any and all Losses arising out of any failure of the Premises Documents to be in full force and effect, or any defaults (or events which with notice or the passage of time, or both, would constitute such a default) under any thereof or any failure to satisfy all conditions to the effectiveness and continuing effectiveness thereof required to be satisfied as of the date hereof; (f) any and all Losses arising due to (i) Borrower or any Mortgagor or fiduciary of Borrower or any Mortgagor having engaged in any prohibited transaction (as defined in Section 4975 of the Code or Section 406 of ERISA) which could reasonably be expected to subject Borrower, Mortgagors or any Person whom they have an obligation to indemnify under this Agreement to any tax or penalty imposed under Section 4975 of the Code or Section 502 of ERISA; (ii) Borrower or any Mortgagor or any ERISA Affiliate maintaining, contributing to or having any liability with respect to any plan subject to Title IV of ERISA or Section 412 of the Code, other than any Multiemployer Plan; (iii) Borrower or any Mortgagor or any ERISA Affiliate having incurred or being reasonably expected to incur any withdrawal liability within the meaning of Part I of Subtitle E of Title IV of ERISA to any Multiemployer Plan, or any liability under Title IV of ERISA upon the reorganization or termination of a Multiemployer Plan; (iv) any Employee Benefit Plan, other than any Multiemployer Plan, not being administered in accordance with its terms and in compliance with all applicable Laws, including any reporting requirements; (v) any Pension Plan intending to qualify under Section 401(a) or 401(k) of the Code failing to so qualify other than any Multiemployer Plan; (vi) Borrower or any Mortgagor having any liability for retiree medical or death benefits (contingent or otherwise) other than as required by Section 4980B of the Code; and (vii) any part of the funds being used by Borrower or any Mortgagor in satisfaction of their respective obligations under this Agreement and the other Transaction Documents constituting "plan assets" of any "employee benefit plan" within the meaning of ERISA or of any "plan" within the meaning of Section 4975(e)(1) of the Code, as 20 interpreted by the Internal Revenue Service and the United States Department of Labor in rules, regulations, releases or bulletins or as interpreted under applicable case law. The obligations of Borrower under this Section and under Section 3.01 shall survive the repayment of all amounts due under or in connection with any of the Transaction Documents and the termination of the Loan only for the period ending on the fifth anniversary of such repayment and termination. SECTION 8.10. Environmental Indemnification. Borrower agrees to indemnify, defend and save and hold harmless Lender and its respective officers, directors, employees, agents and advisors (each, an "Indemnified Party") from and against any and all claims, damages, losses, liabilities and expenses (including, without limitation, reasonable fees and expenses of counsel) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including, without limitation, in connection with any investigation, litigation or proceeding or preparation of a defense in connection therewith) the actual or alleged presence of Hazardous Materials on any of the Premises or any Environmental Action relating in any way to any of the Premises, except to the extent such claim, damage, loss, liability or expense results from such Indemnified Party's gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 8.10 applies, such indemnity shall at Lender's election be effective whether or not such investigation, litigation or proceeding is brought by Borrower, its directors, shareholders or creditors or an Indemnified Party, and whether or not any Indemnified Party is otherwise a party thereto. SECTION 8.11. Partial Release of Mortgaged Property. At any time after the date hereof, Lender shall consent to a release from the lien of the applicable Mortgage of a portion but less than all (a "Partial Release") of any individual Mortgaged Property (the "Released Mortgaged Property"), provided that Borrower has satisfied each of the following requirements: (a) No Event of Default shall have occurred and be continuing or shall result therefrom; (b) At least one of the following conditions shall be satisfied: (i) the Loan to Value Ratio immediately following such Partial Release shall not be materially greater than the Loan to Value Ratio immediately prior to such Partial Release, (ii) Borrower shall pay or cause to be paid to Lender and Lender shall apply such amount as is necessary to assure that the Loan to Value Ratio immediately following such Partial Release shall not be materially greater than the Loan to Value Ratio immediately prior to such Partial Release, or (iii) the value of the Released Mortgage Property shall not have been included in the Appraisal of such Mortgaged Property delivered at the time of the Initial Advance or Future Advance secured by such Mortgaged Property; (c) Borrower's capacity to meet its payment obligations with respect to the Note secured by the Mortgaged Property subject to such Partial Release is neither substantially enhanced nor impaired within the meaning of Treasury Regulation ss.1.100-3(e)(4)(iv); and (d) Borrower shall have paid the reasonable costs and expenses of Lender and Lender's counsel incurred in connection with such Partial Release. 21 Upon satisfaction of the foregoing conditions, Lender shall release the Released Mortgaged Property and related collateral. Lender shall promptly execute and deliver to Borrower, at Borrower's sole cost and expense, any additional documents required by law in order to release the Released Mortgaged Property and related collateral. SECTION 8.12. Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any party hereto may execute this Agreement by signing any such counterpart. SECTION 8.13. Governing Law; Jurisdiction. This Agreement and the rights and obligations of the parties hereunder shall in all respects be governed by, and construed and enforced in accordance with, the Laws of the State of New York, including, without limitation, Section 5-1401 of the New York General Obligations Laws (without giving effect to New York's principles of conflicts of law). Borrower and Lender hereby irrevocably submit to the non-exclusive jurisdiction of any New York State or Federal court sitting in The City of New York over any suit, action or proceeding arising out of or relating to this Agreement, and Borrower hereby agrees and consents that, in addition to any methods of service of process provided for under applicable Law, all service of process in any such suit, action or proceeding in any New York State or Federal court sitting in The City of New York (or such other county in New York State) may be made by certified or registered mail, return receipt requested, directed to Borrower at the address indicated on the signature page hereof, and service so made shall be complete five (5) days after the same shall have been so mailed. SECTION 8.14. Integration. The Transaction Documents constitute the entire agreement among Borrower, Mortgagors and Lender relating to the transactions contemplated thereby and supersede any prior oral or written statements or agreements with respect to such transactions. SECTION 8.15. Gross-Up for Taxes. All payments made by Borrower under this Agreement and the Notes shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding income taxes and franchise or other taxes (imposed in lieu of income taxes) imposed on Lender. If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts payable to Lender hereunder or under its Note, the amounts so payable to Lender shall be increased to the extent necessary to yield to Lender (after payment of all Non-Excluded Taxes) interest or any such other amounts payable with respect to the Transactions at the rates or in the amounts specified in this Agreement and the Notes. Whenever any Non-Excluded Taxes are payable by Borrower, as promptly as possible thereafter Borrower shall send to Lender a certified copy of an original official receipt received by Borrower showing payment thereof. If Borrower fails to pay any Non-Excluded Taxes when due to the appropriate taxing authority or fails to remit to Lender the required receipts or other required documentary evidence, Borrower shall indemnify Lender for any incremental taxes, interest or penalties that may become payable by Lender as a result of any such failure. The agreements in this Section shall survive the termination of this Agreement and the payment of the Notes and all other amounts payable hereunder. SECTION 8.16. Assignment of Mortgages and Notes. Subject to the consent of Borrower, Lender may assign or otherwise transfer all or any portion of its rights and obligations under the Notes or the Mortgages to any other Person, and such other Person shall thereupon become vested with all of the rights and benefits in respect thereof granted to Lender under this Agreement. Borrower, at Borrower's cost and expense, shall promptly execute and deliver any and all documents and instruments reasonably requested by Lender to evidence or confirm such assignment. Notwithstanding the foregoing, 22 Borrower hereby consents to the transfer of Lender's rights and obligations under the Notes and Mortgages to Delphi Properties Holdings, LLC. [Balance of Page Intentionally Left Blank] 23 IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the day and year first above written, the execution hereof by Borrower constituting a certification by the party or parties executing on its behalf that the representations and warranties made in Article V are true and correct as of the date hereof and that each of them duly holds and is incumbent in the position indicated under his or her name. DELPHI CORPORATION, a Delaware corporation By: -------------------------------- Name: Title: Address for notices: 5725 Delphi Drive Troy, Michigan 48098 Attention: Alan S. Dawes Telephone: (248) 813-2000 Telecopy: (248) 813-2670 DELPHI PROPERTIES, INC., a Maryland corporation By: -------------------------------- Name: Title: Address for notices: c/o Delphi Corporation 5725 Delphi Drive Troy, Michigan 48098 Attention: John G. Blahnik Telephone: (248) 813-2000 Telecopy: (248) 813-2648 SCHEDULE IA CONTRIBUTED NOTES
NOTE PRINCIPAL AMOUNT PREMISES SECURING NOTE ---- ---------------- ---------------------- Mortgage Note No. [$ ] [Address] ---- ---------------- Mortgage Note No. [$ ] [Address] ---- ----------------
SCHEDULE IB MEMBERSHIP INTEREST PURCHASE NOTES
NOTE PRINCIPAL AMOUNT PREMISES SECURING NOTE ---- ---------------- ---------------------- Mortgage Note No. [$ ] [Address] ---- ---------------- Mortgage Note No. [$ ] [Address] ---- ----------------
SCHEDULE II INITIAL ADVANCE NOTES
NOTE PRINCIPAL AMOUNT PREMISES SECURING NOTE ---- ---------------- ---------------------- Mortgage Note No. [$ ] [Address] ---- ---------------- Mortgage Note No. [$ ] [Address] ---- ----------------
SCHEDULE III FUTURE ADVANCE NOTES
NOTE PRINCIPAL AMOUNT PREMISES SECURING NOTE ---- ---------------- ---------------------- Mortgage Note No. [$ ] [Address] ---- ---------------- Mortgage Note No. [$ ] [Address] ---- ----------------
EXHIBIT A FORM OF MORTGAGE NOTE Mortgage Note No. ____ $____________ New York, New York ____________, 200__ For value received, DELPHI CORPORATION, a Delaware corporation ("Maker"), hereby covenants and promises to pay to the order of DELPHI PROPERTIES, INC., a Maryland corporation or its successors or assigns (collectively, "Lender"), located c/o Delphi Corporation, 5725 Delphi Drive, Troy, Michigan 48098 for the account of Lender, the principal sum of _________________________ Dollars ($____________), in lawful money of the United States and in immediately available funds, in accordance with the terms set forth in the Contribution and Loan Agreement (as defined below). Maker also covenants and promises to pay interest on the unpaid principal balance hereof, for the period such balance is outstanding, in like money, at said office for the account of Lender, at the time and at a rate per annum as provided in the Contribution and Loan Agreement. Any amount or principal hereof which is not paid when due, whether at stated maturity, by acceleration, or otherwise, shall bear interest from the date when due until said principal amount is paid in full, payable on demand, at the Interest Rate. This Note is one of the Notes referred to in the Contribution and Loan Agreement dated as of the date hereof (as the same may be amended or supplemented from time to time, the "Contribution and Loan Agreement") by and between Maker, as Borrower, and Lender. All of the terms, conditions and provisions of the Contribution and Loan Agreement are hereby incorporated by reference. All capitalized terms used herein and not defined herein shall have the meanings given to them in the Contribution and Loan Agreement. This Note is secured by that certain [Mortgage/Deed of Trust, Security Agreement, Assignment of Leases and Rents and Fixture Filing] dated as of even date herewith made by [Name of Mortgagor/Grantor] for the benefit of Lender and covering the premises commonly known as [Address of Mortgaged Property]. Reference to the Mortgage is hereby made for a description of the "Mortgaged Property" encumbered thereby and the rights of Maker, and Lender with respect to such Mortgaged Property. Should the indebtedness represented by this Note or any part thereof be collected at law or in equity, or in bankruptcy, receivership or any other court proceeding (whether at the trial or appellate level), or should this Note be placed in the hands of attorneys for collection upon default, Maker agrees to pay, in addition to the principal, interest and other sums due and payable hereon, all costs of collecting or attempting to collect this Note, including reasonable attorneys' fees and expenses. All parties to this Note, whether principal, surety, guarantor or endorser, hereby waive presentment for payment, demand, protest, notice of protest and notice of dishonor. This Note shall be governed by the Laws of the State of New York, including, without limitation, Section 5-1401 of the New York General Obligations Laws (without giving effect to New York's principles of conflicts of law), provided that, as to the maximum lawful rate of interest which may be charged or collected, if the Laws applicable to Lender permit it to charge or collect a higher rate than the Laws of the State of New York, then such Law applicable to Lender shall apply to Lender under this Note. Anything herein to the contrary notwithstanding, the obligations of Maker under this Note shall be subject to the limitation that payments of interest shall not be required to the extent that receipt of any such payment by Lender would be contrary to provisions of Law applicable to Lender limiting the maximum rate of interest that may be charged or collected by Lender. IN WITNESS WHEREOF, Maker has executed and delivered this Note as of the date first above written. DELPHI CORPORATION By: ------------------------------- Name: Title: EXHIBIT B FORM OF MORTGAGE DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND LEASES AND FIXTURE FILING ([STATE]) BY AND FROM [DELPHI SUBSIDIARY], "GRANTOR" TO [TRUSTEE], "TRUSTEE" FOR THE BENEFIT OF DELPHI PROPERTIES, INC., "BENEFICIARY" DATED AS OF [__________] [__], 2003 LOCATION: [__________] MUNICIPALITY: [__________] COUNTY: [__________] STATE: [__________] THIS INSTRUMENT SECURES MORTGAGE NOTE NO. [___]. THE SECURED PARTY (BENEFICIARY) DESIRES THIS FIXTURE FILING TO BE INDEXED AGAINST THE RECORD OWNER OF THE REAL ESTATE DESCRIBED HEREIN. PREPARED BY, RECORDING REQUESTED BY, AND WHEN RECORDED MAIL TO: SHEARMAN & STERLING 599 LEXINGTON AVENUE NEW YORK, NEW YORK 10022-6069 ATTENTION: MALCOLM M. KRATZER, ESQ. FILE #31135-00012 DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND LEASES AND FIXTURE FILING ([STATE]) THIS DEED OF TRUST, SECURITY AGREEMENT, ASSIGNMENT OF RENTS AND LEASES AND FIXTURE FILING ([STATE]) (this "DEED OF TRUST") is dated as of [_________] [___], 2003 by and from [DELPHI SUBSIDIARY], a [state of organization and entity type] ("GRANTOR"), whose address is [Delphi Subsidiary Address] to [TRUSTEE], a [state of organization and entity type] ("TRUSTEE"), with an address at [Trustee's Address], for the benefit of DELPHI PROPERTIES, INC., a Maryland corporation, having an address at c/o Delphi Corporation, 5725 Delphi Drive, Troy, Michigan 48098 ("BENEFICIARY"). RECITALS WHEREAS, Delphi Corporation ("BORROWER") and Beneficiary have entered into that certain Contribution and Loan Agreement dated as of even date herewith (as the same may be amended, amended and restated, supplemented or otherwise modified from time to time, the "CONTRIBUTION AND LOAN AGREEMENT"); and WHEREAS, pursuant to the Contribution and Loan Agreement, it is a condition precedent to the entering into of the Transactions (as defined therein) by Beneficiary that Grantor shall execute and deliver this Deed of Trust, NOW, THEREFORE, in consideration of the foregoing recitals, which are incorporated into the operative provisions of this Deed of Trust by this reference, and for other good and valuable consideration, the receipt and adequacy of which are hereby conclusively acknowledged, Grantor hereby agrees as follows: ARTICLE 1 DEFINITIONS SECTION 1.1 DEFINITIONS. All capitalized terms used herein without definition shall have the respective meanings ascribed to them in the Contribution and Loan Agreement. As used herein, the following terms shall have the following meanings: (a) "BANKRUPTCY CODE": Title 11 of the United States Code, as amended, or any similar federal or state law for the relief of debtors. (b) "EVENT OF DEFAULT": An Event of Default under and as defined in the Contribution and Loan Agreement. (c) "INDEBTEDNESS": All indebtedness and liabilities of Grantor to Beneficiary now or hereafter existing (1) that is evidenced by the Note, including, without limitation, all principal, interest and other sums and amounts from time to time owing thereunder or evidenced thereby, and (2) that relates in whole or in part to the Mortgaged Property, the Note or Grantor and arises under documents which recite that they are intended to be secured by this Deed of Trust. (d) "MORTGAGED PROPERTY": The fee interest in the real property described in Exhibit A attached hereto and incorporated herein by this reference, together with any greater estate therein as hereafter may be acquired by Grantor (the "LAND"), and all of Grantor's right, title and interest in and to (1) all improvements now owned or hereafter acquired by Grantor, now or at any time situated, placed or constructed upon the Land (the "IMPROVEMENTS"; the Land and Improvements are collectively referred to as the "PREMISES"), (2) all materials, supplies, equipment, apparatus and other items of personal property now owned or hereafter acquired by Grantor and now or hereafter attached to, installed in or used in connection with any of the Improvements or the Land, and water, gas, electrical, telephone, storm and sanitary sewer facilities and all other utilities whether or not situated in easements which constitute fixtures under the laws of the state in which the Land is located (the "FIXTURES"), (3) all leases, licenses, concessions, occupancy agreements or other agreements (written or oral, now or at any time in effect) which grant to any Person a possessory interest in, or the right to use, all or any part of the Mortgaged Property, together with all related security and other deposits (the "LEASES"), (4) all of the rents, revenues, royalties, income, proceeds, profits, security and other types of deposits, and other benefits paid or payable by parties to the Leases for using, leasing, licensing possessing, operating from, residing in, selling or otherwise enjoying the Mortgaged Property (the "RENTS"), (5) all rights, privileges, tenements, hereditaments, rights-of-way, easements, appendages and appurtenances appertaining to the foregoing, (6) all property tax refunds payable with respect to the Mortgaged Property (the "TAX REFUNDS"), (7) all accessions, replacements and substitutions for any of the foregoing and all proceeds thereof (the "PROCEEDS"), (8) all proceeds of insurance covering any of the above property now or hereafter acquired by Grantor (the "INSURANCE"), and (9) all awards, damages, remunerations, reimbursements, settlements or compensation heretofore made or hereafter to be made by any governmental authority pertaining to any condemnation or other taking (or any purchase in lieu thereof) of all or any portion of the Land, Improvements or Fixtures (the "CONDEMNATION AWARDS"). As used in this Deed of Trust, the term "Mortgaged Property" shall mean all or, where the context permits or requires, any portion of the above or any interest therein. (e) "NOTE": Mortgage Note No. [___] dated of even date herewith issued by Borrower to Beneficiary, as the same may be amended, amended and restated, supplemented, extended, replaced or otherwise modified from time to time. (f) "OBLIGATIONS": All of the agreements, covenants, conditions, warranties, representations and other obligations of Borrower under the Contribution and Loan Agreement and the other Transaction Documents to which it is a party that relate in whole or in part to the Note, the Mortgaged Property or Grantor, including, without limitation, the obligation to repay the Indebtedness in accordance with the terms of the Note and the Contribution and Loan Agreement; provided, however, that the Obligations secured hereby shall exclude the obligation to repay the "Indebtedness" under and as defined in any Mortgage Note issued pursuant to the Contribution and Loan Agreement other than the Note. (g) "UCC": The Uniform Commercial Code of [State] or, if the creation, perfection and enforcement of any security interest herein granted is governed by the laws of a state other than [State], then, as to the matter in question, the Uniform Commercial Code in effect in that state. ARTICLE 2 GRANT SECTION 2.1 GRANT. To secure the full and timely payment of the Indebtedness and the full and timely performance of the Obligations, Grantor GRANTS, BARGAINS, ASSIGNS, SELLS, CONVEYS and CONFIRMS, to Trustee the Mortgaged Property, subject, however, to Permitted Liens, TO HAVE AND TO HOLD the Mortgaged Property, IN TRUST, WITH POWER OF SALE, and Grantor does hereby bind itself, its successors and assigns to WARRANT AND FOREVER DEFEND the title to the Mortgaged Property unto Trustee. 2 ARTICLE 3 WARRANTIES, REPRESENTATIONS AND COVENANTS Grantor warrants, represents and covenants to Beneficiary as follows: SECTION 3.1 TITLE TO MORTGAGED PROPERTY AND LIEN OF THIS INSTRUMENT. Grantor owns the Mortgaged Property free and clear of any liens, claims or interests, except the Permitted Liens. This Deed of Trust creates valid, enforceable first priority liens and security interests against the Mortgaged Property. SECTION 3.2 FIRST LIEN STATUS. Grantor shall preserve and protect the first lien and security interest status of this Deed of Trust and the other Transaction Documents, subject to Permitted Liens. If any lien or security interest other than a Permitted Lien is asserted against the Mortgaged Property, Grantor shall promptly, and at its expense, pay the underlying claim in full or take such other action so as to cause it to be released or contest the same in such manner as shall prevent the foreclosure thereof. SECTION 3.3 PAYMENT AND PERFORMANCE. Grantor shall pay the Indebtedness when due under the Contribution and Loan Agreement and the other Transaction Documents and shall perform the Obligations in full when they are required to be performed. SECTION 3.4 REPLACEMENT OF FIXTURES. Grantor shall not, without the prior written consent of Beneficiary (which consent shall not be unreasonably withheld, conditioned or delayed), permit any of the Fixtures owned or leased by Grantor to be removed at any time from the Land or Improvements, unless the removed item is removed temporarily for maintenance and repair or is permitted to be removed by the Contribution and Loan Agreement or the removal will not materially reduce the value of the Mortgaged Property. SECTION 3.5 INSPECTION. Grantor shall permit Beneficiary, and Beneficiary's agents, representatives and employees, upon reasonable prior notice to Grantor, to inspect the Mortgaged Property and all books and records of Grantor located thereon that are related directly to the Mortgaged Property, and to conduct such environmental and engineering studies as Beneficiary may require, provided that such inspections and studies shall not materially interfere with the use and operation of the Mortgaged Property and shall be performed in accordance with such requirements as Grantor shall reasonably impose. SECTION 3.6 OTHER COVENANTS. All of the covenants in the Contribution and Loan Agreement are incorporated herein by reference and, together with covenants in this Article 3, shall be covenants running with the land. SECTION 3.7 INSURANCE; CONDEMNATION AWARDS AND INSURANCE PROCEEDS. (a) Insurance. Grantor shall maintain or cause to be maintained in full force and effect the following insurance coverages: (i) property "all risk" insurance covering the Mortgaged Property; and (ii) such other insurance as may be required by applicable Law (including worker's compensation and employer's liability insurance) or as Beneficiary may reasonably require from time to time. Any policy of property insurance required by clause (i) above shall be in an amount not less than the full replacement cost of the Improvements and any personal property covered by such policy, shall contain a "full replacement cost" endorsement, shall insure against flood loss risk if the Land is located in a Flood Hazard Area, and shall name Beneficiary as an additional insured or mortgagee and as a "loss payee". All insurance policies shall be in form and substance and issued by insurers reasonably satisfactory to 3 Beneficiary, and shall contain such deductibles and such endorsements as Beneficiary may reasonably require. (b) Condemnation Awards. Grantor assigns all Condemnation Awards to Beneficiary, provided that Grantor shall have the right to collect and receive such Condemnation Awards and to give proper receipts and acquittances therefor, subject to the terms of the Contribution and Loan Agreement. (c) Insurance Proceeds. Grantor assigns to Beneficiary all proceeds of any insurance policies insuring against loss or damage to the Mortgaged Property, provided that Grantor shall have the right to settle, adjust and compromise all insurance claims, subject to the terms of the Contribution and Loan Agreement. SECTION 3.8 CREATION OF LIENS. Grantor shall not enter into any contract or arrangement of any kind the performance of which by the other party thereto would give rise to a Lien, other than a Permitted Lien or as otherwise permitted pursuant to the Contribution and Loan Agreement, on the Mortgaged Property. SECTION 3.9 MAINTENANCE OF EXISTENCE. [INSERT IF GRANTOR IS NOT A RELATED MORTGAGOR: Grantor shall preserve and keep in full force and effect its existence, franchises, rights and privileges as a business or stock corporation, partnership, limited liability company, trust or other entity under the laws of Grantor's jurisdiction of formation or organization.] ARTICLE 4 WAIVERS AND ACKNOWLEDGEMENTS; LIMITATION OF LIABILITY SECTION 4.1 GRANTOR OBLIGATIONS ABSOLUTE. Grantor agrees that the Obligations will be performed strictly in accordance with the terms of the Transaction Documents. The obligations of Grantor under or in respect of this Deed of Trust are independent of any other obligations of any other Person under or in respect of the Transaction Documents, and a separate action or actions may be brought and prosecuted against Grantor to enforce this Deed of Trust, irrespective of whether any action is brought against Borrower or any other Person or whether Borrower or any other Person is joined in any such action or actions. The liability of Grantor under this Deed of Trust shall be irrevocable, absolute and unconditional irrespective of, and Grantor hereby irrevocably waives any defenses it may now have or hereafter acquire in any way relating to, any or all of the following: (a) any lack of validity or enforceability of any Transaction Document or any agreement or instrument relating thereto; (b) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations under or in respect of the Transaction Documents or any other amendment or waiver of or any consent to departure from any Transaction Document, including, without limitation, any increase in the Indebtedness resulting from the extension of additional credit to Borrower or any of Borrower's Affiliates or otherwise; (c) any taking, exchange, release or non-perfection of any collateral secured under the Transaction Documents, or any taking, release or amendment or waiver of, or consent to departure from, any other Transaction Document securing any of the Obligations; (d) any manner of application of collateral securing any of the Obligations under the Transaction Documents, or any proceeds of such collateral, to all or any of the Obligations, or any manner 4 of sale or other disposition of any other collateral for all or any obligations of Borrower or its Affiliates under the Transaction Documents or any other assets of Borrower or any of its Affiliates; (e) any change, restructuring or termination of the corporate structure or existence of Borrower or any of its Affiliates; (f) any failure of Trustee or Beneficiary to disclose to Borrower or its Affiliates any information relating to the business, condition (financial or otherwise), operations, performance, properties or prospects of Borrower or its Affiliates now or hereafter known to Trustee or Beneficiary (Grantor waiving any duty on the part of Trustee or Beneficiary to disclose such information); (g) the failure of any other Person to execute or deliver any guaranty, security instrument, or agreement or the release or reduction of liability of any Person or other surety with respect to the Obligations; or (h) any statute of limitations or any existence of or reliance on any representation by Trustee or Beneficiary that might otherwise constitute a defense available to, or a discharge of, Borrower or any of its Affiliates. This Deed of Trust shall continue to be effective or be reinstated, as the case may be, if at any time any payment or performance of any of the Obligations is rescinded or must otherwise be returned by Beneficiary or any other Person upon the insolvency, bankruptcy or reorganization of Borrower or any of its Affiliates or otherwise, all as though such payment had not been made. SECTION 4.2 WAIVERS AND ACKNOWLEDGMENTS. Grantor hereby unconditionally and irrevocably waives promptness, diligence, notice of acceptance, presentment, demand for performance, notice of nonperformance, default, acceleration, protest or dishonor and any other notice with respect to any of the Obligations and this Deed of Trust and any requirement that Beneficiary protect, secure, perfect or insure any Lien or any property subject thereto or exhaust any right or take any action against Borrower or any other Person or any other collateral securing the Obligations or any part thereof. (a) Grantor hereby unconditionally and irrevocably waives any right to revoke this Deed of Trust and acknowledges that this Deed of Trust is continuing in nature and applies to all of the Obligations, whether existing now or in the future. (b) Grantor hereby unconditionally and irrevocably waives (i) any defense arising by reason of any claim or defense based upon an election of remedies by Trustee or Beneficiary that in any manner impairs, reduces, releases or otherwise adversely affects the subrogation, reimbursement, exoneration, contribution or indemnification rights of Grantor or other rights of Grantor to proceed against Borrower or any other Person or any collateral securing any of the Obligations and (ii) any defense based on any right of set-off or counterclaim against or in respect of the Obligations of Grantor hereunder. (c) Grantor acknowledges that Beneficiary may, without notice to or demand upon Grantor and without affecting the liability of Grantor under this Deed of Trust, foreclose under any of the Mortgages (as such term is defined in the Contribution and Loan Agreement) by nonjudicial sale, and Grantor hereby waives any defense to the recovery by Beneficiary against Grantor of any deficiency after such nonjudicial sale and any defense or benefits that may be afforded by applicable law. (d) Grantor hereby unconditionally and irrevocably waives any duty on the part of Trustee or Beneficiary to disclose to Grantor any matter, fact or thing relating to the business, condition 5 (financial or otherwise), operations, performance, properties or prospects of Borrower or any of its Affiliates now or hereafter known by Trustee or Beneficiary. (e) Grantor acknowledges that it will receive substantial direct and indirect benefits from the financing arrangements contemplated by the Transaction Documents and that the waivers set forth in this Section 4.2 are knowingly made in contemplation of such benefits. SECTION 4.3 SUBROGATION. Grantor hereby unconditionally and irrevocably agrees not to exercise any rights that it may now have or hereafter acquire against Borrower that arise from the existence, payment, performance or enforcement of the Obligations under or in respect of this Deed of Trust or any other Transaction Document, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of Beneficiary against the Borrower or any collateral securing any of the Obligations, whether or not such claim, remedy or right arises in equity or under contract, statute or common law, including, without limitation, the right to take or receive from Borrower, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, except at such times as all of the Obligations and all other amounts then due and payable under this Deed of Trust shall have been paid or performed. If (a) Grantor shall make payment to Beneficiary of all or any part of the Obligations, (b) all of the Obligations shall have been indefeasibly paid or performed in full or (c) the Maturity Date shall have occurred, Beneficiary will, at Grantor's request and expense, execute and deliver to Grantor appropriate documents, without recourse and without representation or warranty, necessary to evidence the transfer by subrogation to Grantor of an interest in the Obligations resulting from such payment made by Grantor pursuant to this Deed of Trust. SECTION 4.4 LIMITATION OF LIABILITY. Grantor, and by their acceptance of this Deed of Trust, Trustee and Beneficiary, hereby confirm that it is the intention of all such Persons that this Deed of Trust and the Obligations of Grantor hereunder shall not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar foreign, federal or state law, or any case or proceeding under any such laws, to the extent applicable to this Deed of Trust and the Obligations of Grantor hereunder. To effectuate the foregoing intention, Grantor, Trustee and Beneficiary hereby irrevocably agree that, notwithstanding any provision herein or in the other Transaction Documents to the contrary, the Obligations of Grantor under this Deed of Trust at any time shall be limited to the maximum amount as will result in the Obligations of Grantor under this Deed of Trust not constituting a fraudulent transfer or conveyance. SECTION 4.5 LIMITED RECOURSE. Notwithstanding any provision herein or in any other Transaction Document to the contrary, following the occurrence of an Event of Default, Beneficiary shall look solely to Borrower, the Mortgaged Property and any other security provided under the other Transaction Documents for the repayment of the Obligations and will not enforce a deficiency judgment against Grantor. Nothing contained in this Section 4.5, however, shall modify, diminish or discharge the personal liability of Borrower, and nothing herein shall be deemed to be a waiver of any right which Beneficiary may have under any other provision of the Bankruptcy Code to file a claim for the full amount due to Beneficiary under the Note or to require that the Mortgaged Property shall continue to secure the Obligations. ARTICLE 5 DEFAULT AND FORECLOSURE SECTION 5.1 REMEDIES. Upon the occurrence and during the continuance of an Event of Default, Beneficiary may, at Beneficiary's election and by or through Trustee or otherwise, exercise any or all of the following rights, remedies and recourses: 6 (a) Acceleration. Subject to any provisions of the Transaction Documents providing for the automatic acceleration of the Indebtedness upon the occurrence of certain Events of Default, declare the Indebtedness to be immediately due and payable, without further notice, presentment, protest, notice of intent to accelerate, notice of acceleration, demand or action of any nature whatsoever (each of which hereby is expressly waived by Grantor), whereupon the same shall become immediately due and payable. (b) Entry on Mortgaged Property. Enter the Mortgaged Property and take exclusive possession thereof and of all books, records and accounts relating thereto or located thereon. If Grantor remains in possession of the Mortgaged Property following the occurrence and during the continuance of an Event of Default and without Beneficiary's prior written consent, Beneficiary may invoke any legal remedies to dispossess Grantor. (c) Operation of Mortgaged Property. Hold, lease, develop, manage, operate or otherwise use the Mortgaged Property upon such terms and conditions as Beneficiary may deem reasonable under the circumstances (making such repairs, alterations, additions and improvements and taking other actions, from time to time, as Beneficiary deems necessary or desirable), and apply all Rents and other amounts collected by Trustee or Beneficiary in connection therewith in accordance with the provisions of Section 5.7. (d) Foreclosure and Sale. Institute proceedings for the complete foreclosure of this Deed of Trust by judicial action or by power of sale, in which case the Mortgaged Property may be sold for cash or credit in one or more parcels as Beneficiary may determine. With respect to any notices required or permitted under the UCC, Grantor agrees that ten (10) days' prior written notice shall be deemed commercially reasonable. At any such sale by virtue of any judicial proceedings, power of sale, or any other legal right, remedy or recourse, the title to and right of possession of any such property shall pass to the purchaser thereof, and to the fullest extent permitted by law, Grantor shall be completely and irrevocably divested of all of its right, title, interest, claim, equity, equity of redemption, and demand whatsoever, either at law or in equity, in and to the property sold and such sale shall be a perpetual bar both at law and in equity against Grantor, and against all other Persons claiming or to claim the property sold or any part thereof, by, through or under Grantor. Beneficiary may be a purchaser at such sale and if Beneficiary is the highest bidder, Beneficiary may credit the portion of the purchase price that would be distributed to Beneficiary against the Indebtedness in lieu of paying cash. In the event this Deed of Trust is foreclosed by judicial action, appraisement of the Mortgaged Property is waived. (e) Receiver. Make application to a court of competent jurisdiction for, and obtain from such court as a matter of strict right and without notice to Grantor or regard to the adequacy of the Mortgaged Property for the repayment of the Indebtedness, the appointment of a receiver of the Mortgaged Property, and Grantor irrevocably consents to such appointment. Any such receiver shall have all the usual powers and duties of receivers in similar cases, including the full power to rent, maintain and otherwise operate the Mortgaged Property upon such terms as may be approved by the court, and shall apply such Rents in accordance with the provisions of Section 5.7. (f) Other. Exercise all other rights, remedies and recourses granted under the Transaction Documents or otherwise available at law or in equity. SECTION 5.2 SEPARATE SALES. The Mortgaged Property may be sold in one or more parcels and in such manner and order as Trustee in its sole discretion may elect. The right of sale arising out of any Event of Default shall not be exhausted by any one or more sales. SECTION 5.3 REMEDIES CUMULATIVE, CONCURRENT AND NONEXCLUSIVE. Trustee and Beneficiary shall have all rights, remedies and recourses granted in the Transaction Documents and 7 available at law or equity (including the UCC), which rights (a) shall be cumulated and concurrent, (b) may be pursued separately, successively or concurrently against Grantor or others obligated under the Transaction Documents, or against the Mortgaged Property, or against any one or more of them, at the sole discretion of Trustee or Beneficiary, as the case may be, (c) may be exercised as often as occasion therefor shall arise, and the exercise or failure to exercise any of them shall not be construed as a waiver or release thereof or of any other right, remedy or recourse, and (d) are intended to be, and shall be, nonexclusive. No action by Trustee or Beneficiary in the enforcement of any rights, remedies or recourses under the Transaction Documents or otherwise at law or equity shall be deemed to cure any Event of Default. SECTION 5.4 RELEASE OF AND RESORT TO COLLATERAL. Beneficiary may release, regardless of consideration and without the necessity for any notice to or consent by the holder of any subordinate lien on the Mortgaged Property, any part of the Mortgaged Property without, as to the remainder, in any way impairing, affecting, subordinating or releasing the lien or security interest created in or evidenced by the Transaction Documents or their status as a first and prior lien and security interest in and to the Mortgaged Property. For payment of the Indebtedness, Beneficiary may resort to any other security in such order and manner as Beneficiary may elect. SECTION 5.5 WAIVER OF REDEMPTION, NOTICE AND MARSHALLING OF ASSETS. To the fullest extent permitted by law, Grantor hereby irrevocably and unconditionally waives and releases (a) all benefit that might accrue to Grantor by virtue of any present or future statute of limitations or law or judicial decision exempting the Mortgaged Property from attachment, levy or sale on execution or providing for any stay of execution, exemption from civil process, redemption or extension of time for payment, (b) all notices of any Event of Default or of any election by Trustee or Beneficiary to exercise or the actual exercise of any right, remedy or recourse provided for under the Transaction Documents, and (c) any right to a marshalling of assets or a sale in inverse order of alienation. SECTION 5.6 DISCONTINUANCE OF PROCEEDINGS. If Trustee or Beneficiary shall have proceeded to invoke any right, remedy or recourse permitted under the Transaction Documents and shall thereafter elect to discontinue or abandon it for any reason, Trustee or Beneficiary, as the case may be, shall have the unqualified right to do so and, in such an event, Grantor, Trustee and Beneficiary shall be restored to their former positions with respect to the Indebtedness, the Obligations, the Transaction Documents, the Mortgaged Property and otherwise, and the rights, remedies, recourses and powers of Beneficiary and Trustee shall continue as if the right, remedy or recourse had never been invoked, but no such discontinuance or abandonment shall waive any Event of Default which may then exist or the right of Trustee or Beneficiary thereafter to exercise any right, remedy or recourse under the Transaction Documents for such Event of Default. SECTION 5.7 APPLICATION OF PROCEEDS. The proceeds of any sale of, and the Rents and other amounts generated by the holding, leasing, management, operation or other use of the Mortgaged Property, shall be applied by Beneficiary or Trustee (or the receiver, if one is appointed) in the following order unless otherwise required by applicable law: (a) to the payment of the costs and expenses of taking possession of the Mortgaged Property and of holding, using, leasing, repairing, improving and selling the same, including, without limitation (1) trustee's and receiver's fees and expenses, including the repayment of the amounts evidenced by any receiver's certificates, (2) court costs, (3) attorneys' and accountants' fees and expenses, and (4) costs of advertisement; (b) to the payment of the Indebtedness and performance of the Obligations in such manner and order of preference as Beneficiary in its sole discretion may determine; and 8 (c) the balance, if any, to the Persons legally entitled thereto. SECTION 5.8 OCCUPANCY AFTER FORECLOSURE. Any sale of the Mortgaged Property or any part thereof in accordance with Section 5.1(d) will divest all right, title and interest of Grantor in and to the property sold. Subject to applicable law, any purchaser at a foreclosure sale will receive immediate possession of the property purchased. If Grantor retains possession of such property or any part thereof subsequent to such sale, Grantor will be considered a tenant at sufferance of the purchaser, and will, if Grantor remains in possession after demand to remove, be subject to eviction and removal, forcible or otherwise, with or without process of law. SECTION 5.9 ADDITIONAL ADVANCES AND DISBURSEMENTS; COSTS OF ENFORCEMENT. (a) Upon the occurrence and during the continuance of an Event of Default, Beneficiary shall have the right, but not the obligation, to cure such Event of Default in the name and on behalf of Grantor. All sums advanced and expenses incurred at any time by Beneficiary under this Section 5.9, or otherwise under this Deed of Trust or any of the other Transaction Documents or applicable law, shall bear interest from the date that such sum is advanced or expense incurred, to and including the date of reimbursement, computed at the highest rate at which interest is then computed on any portion of the Indebtedness, and all such sums, together with interest thereon, shall be secured by this Deed of Trust. (b) Grantor shall pay all expenses (including reasonable attorneys' fees and expenses) of or incidental to the perfection and enforcement of this Deed of Trust and the other Transaction Documents, or the enforcement, compromise or settlement of the Indebtedness or any claim under this Deed of Trust and the other Transaction Documents, and for the curing thereof, or for defending or asserting the rights and claims of Beneficiary in respect thereof, by litigation or otherwise. SECTION 5.10 NO BENEFICIARY IN POSSESSION. Neither the enforcement of any of the remedies under this Article 5, the assignment of the Rents and Leases under Article 6, the security interests under Article 7, nor any other remedies afforded to Beneficiary under the Transaction Documents, at law or in equity shall cause Trustee or Beneficiary to be deemed or construed to be a mortgagee in possession of the Mortgaged Property, to obligate Trustee or Beneficiary to lease the Mortgaged Property or attempt to do so, or to take any action, incur any expense, or perform or discharge any obligation, duty or liability whatsoever under any of the Leases or otherwise. ARTICLE 6 ASSIGNMENT OF RENTS AND LEASES SECTION 6.1 ASSIGNMENT. In furtherance of and in addition to the assignment made by Grantor in Section 2.1 of this Deed of Trust, Grantor hereby absolutely and unconditionally assigns, sells, transfers and conveys to Trustee (for the benefit of Beneficiary) and to Beneficiary all of its right, title and interest in and to all Leases, whether now existing or hereafter entered into, and all of its right, title and interest in and to all Rents. This assignment is an absolute assignment and not an assignment for additional security only. So long as no Event of Default shall have occurred and be continuing, Grantor shall have a revocable license from Trustee and Beneficiary to exercise all rights extended to the landlord under the Leases, including the right to receive and collect all Rents and to hold the Rents in trust for use in the payment and performance of the Obligations and to otherwise use the same. The foregoing license is granted subject to the conditional limitation that no Event of Default shall have occurred and be continuing. Upon the occurrence and during the continuance of an Event of Default, whether or not legal proceedings have commenced, and without regard to waste, adequacy of security for the Obligations or solvency of Grantor, the license herein granted shall automatically expire and terminate, without notice to 9 Grantor by Trustee or Beneficiary (any such notice being hereby expressly waived by Grantor to the extent permitted by applicable law). SECTION 6.2 PERFECTION UPON RECORDATION. Grantor acknowledges that Beneficiary and Trustee have taken all actions necessary to obtain, and that upon recordation of this Deed of Trust Beneficiary and Trustee shall have, to the extent permitted under applicable law, a valid and fully perfected, first priority, present assignment of the Rents arising out of the Leases and all security for such Leases. Grantor acknowledges and agrees that upon recordation of this Deed of Trust Trustee's and Beneficiary's interest in the Rents shall be deemed to be fully perfected, "choate" and enforced as to Grantor and to the extent permitted under applicable law, all third parties, including, without limitation, any subsequently appointed trustee in any case under the Bankruptcy Code, without the necessity of commencing a foreclosure action with respect to this Deed of Trust, making formal demand for the Rents, obtaining the appointment of a receiver or taking any other affirmative action. SECTION 6.3 BANKRUPTCY PROVISIONS. Without limitation of the absolute nature of the assignment of the Rents hereunder, Grantor, Trustee and Beneficiary agree that (a) this Deed of Trust shall constitute a "security agreement" for purposes of Section 552(b) of the Bankruptcy Code, (b) the security interest created by this Deed of Trust extends to property of Grantor acquired before the commencement of a case in bankruptcy and to all amounts paid as Rents and (c) such security interest shall extend to all Rents acquired by the estate after the commencement of any case in bankruptcy. SECTION 6.4 NO MERGER OF ESTATES. So long as part of the Indebtedness and the Obligations secured hereby remain unpaid and undischarged, the fee and leasehold estates to the Mortgaged Property shall not merge, but shall remain separate and distinct, notwithstanding the union of such estates either in Grantor, Beneficiary, any tenant or any third party by purchase or otherwise. ARTICLE 7 SECURITY AGREEMENT SECTION 7.1 SECURITY INTEREST. This Deed of Trust constitutes a "security agreement" on personal property within the meaning of the UCC and other applicable law and with respect to the Fixtures, Leases, Rents, Tax Refunds, Proceeds, Insurance and Condemnation Awards. To this end, Grantor grants to Beneficiary a first and prior security interest in the Fixtures, Leases, Rents, Tax Refunds, Proceeds, Insurance and Condemnation Awards to secure the payment of the Indebtedness and performance of the Obligations, and agrees that Beneficiary shall have all the rights and remedies of a secured party under the UCC with respect to such property. Any notice of sale, disposition or other intended action by Beneficiary with respect to the Fixtures, Leases, Rents, Tax Refunds, Proceeds, Insurance and Condemnation Awards sent to Grantor at least ten (10) days prior to any action under the UCC shall constitute reasonable notice to Grantor. SECTION 7.2 FINANCING STATEMENTS. Grantor shall prepare and deliver to Beneficiary such financing statements, and shall execute and deliver to Beneficiary such other documents, instruments and further assurances, in each case in form and substance satisfactory to Beneficiary, as Beneficiary may, from time to time, reasonably consider necessary to create, perfect and preserve Beneficiary's security interest hereunder. Grantor hereby irrevocably authorizes Beneficiary to cause financing statements and any such documents, instruments and assurances to be recorded and filed, at such times and places as may be required or permitted by law to so create, perfect and preserve such security interest. Grantor represents and warrants to Beneficiary that Grantor's jurisdiction of organization is the State of [State of Grantor's organization]. After the date of this Deed of Trust, Grantor shall not change its name, type of organization, organizational identification number (if any), jurisdiction of organization or location without giving at least thirty (30) days' prior written notice to Beneficiary. 10 SECTION 7.3 FIXTURE FILING. This Deed of Trust shall also constitute a "fixture filing" for the purposes of the UCC against all of the Mortgaged Property which is or is to become fixtures. The information provided in this Section 7.3 is provided so that this Deed of Trust shall comply with the requirements of the UCC for a mortgage instrument to be filed as a financing statement. Grantor is the "Debtor" and its name and mailing address are set forth in the preamble of this Deed of Trust immediately preceding Article 1. Beneficiary is the "Secured Party" and its name and mailing address from which information concerning the security interest granted herein may be obtained are also set forth in the preamble of this Deed of Trust immediately preceding Article 1. A statement describing the portion of the Mortgaged Property comprising the fixtures hereby secured is set forth in Section 1.1(d) of this Deed of Trust. Grantor represents and warrants to Beneficiary that Grantor is the record owner of the Mortgaged Property, the employer identification number of Grantor is [_____________] and the organizational identification number of Grantor is [__________]. ARTICLE 8 CONCERNING THE TRUSTEE SECTION 8.1 CERTAIN RIGHTS. With the approval of Beneficiary, Trustee shall have the right to select, employ and consult with counsel. Trustee shall have the right to rely on any instrument, document or signature authorizing or supporting any action taken or proposed to be taken by it hereunder, believed by it in good faith to be genuine. Trustee shall be entitled to reimbursement for actual, reasonable expenses incurred by it in the performance of its duties and to reasonable compensation for Trustee's services hereunder as shall be rendered. Grantor shall, from time to time, pay the compensation due to Trustee hereunder and reimburse Trustee for, and indemnify, defend and save Trustee harmless against, all liability and reasonable expenses which may be incurred by it in the performance of its duties, including those arising from joint, concurrent, or comparative negligence of Trustee; provided, however, that Grantor shall not be liable under such indemnification to the extent such liability or expenses result solely from Trustee's gross negligence or willful misconduct. Grantor's obligations under this Section 8.1 shall not be reduced or impaired by principles of comparative or contributory negligence. SECTION 8.2 RETENTION OF MONEY. All moneys received by Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated in any manner from any other moneys (except to the extent required by law), and Trustee shall be under no liability for interest on any moneys received by Trustee hereunder. SECTION 8.3 SUCCESSOR TRUSTEES. If Trustee or any successor Trustee shall die, resign or become disqualified from acting in the execution of this trust, or Beneficiary shall desire to appoint a substitute Trustee, Beneficiary shall have full power to appoint one or more substitute Trustees and, if preferred, several substitute Trustees in succession who shall succeed to all the estates, rights, powers and duties of Trustee. Such appointment may be executed by any authorized agent of Beneficiary and as so executed, such appointment shall be conclusively presumed to be executed with authority, valid and sufficient, without further proof of any action. SECTION 8.4 PERFECTION OF APPOINTMENT. Should any deed, conveyance or instrument of any nature be required from Grantor by any successor Trustee to more fully and certainly vest in and confirm to such successor Trustee such estates, rights, powers and duties, then, upon request by such Trustee, all such deeds, conveyances and instruments shall be made, executed, acknowledged and delivered and shall be caused to be recorded and/or filed by Grantor. SECTION 8.5 TRUSTEE LIABILITY. In no event or circumstance shall Trustee or any substitute Trustee hereunder be personally liable under or as a result of this Deed of Trust, either as a 11 result of any action by Trustee (or any substitute Trustee) in the exercise of the powers hereby granted or otherwise. ARTICLE 9 MISCELLANEOUS SECTION 9.1 NOTICES. Any notice required or permitted to be given under this Deed of Trust shall be given in accordance with Section 8.02 of the Contribution and Loan Agreement. SECTION 9.2 COVENANTS RUNNING WITH THE LAND. All Obligations contained in this Deed of Trust are intended by Grantor, Beneficiary and Trustee to be, and shall be construed as, covenants running with the Mortgaged Property. As used herein, "Grantor" shall refer to the party named in the first paragraph of this Deed of Trust and to any subsequent owner of all or any portion of the Mortgaged Property. All Persons who may have or acquire an interest in the Mortgaged Property shall be deemed to have notice of, and be bound by, the terms of the Contribution and Loan Agreement and the other Transaction Documents; however, no such party shall be entitled to any rights thereunder without the prior written consent of Beneficiary. SECTION 9.3 ATTORNEY-IN-FACT. Grantor hereby irrevocably appoints Beneficiary as its attorney-in-fact, which agency is coupled with an interest and with full power of substitution, with full authority in the place and stead of Grantor and in the name of Grantor or otherwise (a) to execute and/or record any notices of completion, cessation of labor or any other notices that Beneficiary deems appropriate to protect Beneficiary's interest, if Grantor shall fail to do so within ten (10) days after written request by Beneficiary, (b) upon the issuance of a deed pursuant to the foreclosure of this Deed of Trust or the delivery of a deed in lieu of foreclosure, to execute all instruments of assignment, conveyance or further assurance with respect to the Leases, Rents, Tax Refunds, Proceeds, Insurance and Condemnation Awards in favor of the grantee of any such deed and as may be necessary or desirable for such purpose, (c) to prepare and file or record financing statements and continuation statements, and to prepare, execute and file or record applications for registration and like papers necessary to create, perfect or preserve Beneficiary's security interests and rights in or to any of the Mortgaged Property, and (d) after the occurrence and during the continuance of an Event of Default, to perform any obligation of Grantor hereunder; provided, however, that (1) Beneficiary shall not under any circumstances be obligated to perform any obligation of Grantor; (2) any sums advanced by Beneficiary in such performance shall be added to and included in the Indebtedness and shall bear interest at the highest rate at which interest is then computed on any portion of the Indebtedness; (3) Beneficiary as such attorney-in-fact shall only be accountable for such funds as are actually received by Beneficiary; and (4) Beneficiary shall not be liable to Grantor or any other person or entity for any failure to take any action which it is empowered to take under this Section 9.3. SECTION 9.4 SUCCESSORS AND ASSIGNS. This Deed of Trust shall be binding upon and inure to the benefit of Beneficiary, Trustee and Grantor and their respective successors and assigns. Grantor shall not, without the prior written consent of Beneficiary (which consent shall not be unreasonably withheld, conditioned or delayed), assign any rights, duties or obligations hereunder except to a successor by merger or consolidation which assumes Grantor's obligations hereunder. Subject to the consent of Borrower, Beneficiary may assign or otherwise transfer all or any portion of its rights and obligations under the Note or this Deed of Trust to any other Person, and such other Person shall thereupon become vested with all of the rights and benefits in respect thereof granted to Beneficiary under this Deed of Trust. Notwithstanding the foregoing, Grantor acknowledges that Borrower has consented to the transfer of Beneficiary's rights and obligations under the Note and this Deed of Trust to Delphi Properties Holdings, LLC. 12 SECTION 9.5 NO WAIVER. Any failure by Beneficiary or Trustee to insist upon strict performance of any of the terms, provisions or conditions of the Transaction Documents shall not be deemed to be a waiver of same, and Beneficiary or Trustee shall have the right at any time to insist upon strict performance of all of such terms, provisions and conditions. SECTION 9.6 CONTRIBUTION AND LOAN AGREEMENT. If any conflict or inconsistency exists between this Deed of Trust and the Contribution and Loan Agreement, the Contribution and Loan Agreement shall govern. SECTION 9.7 RELEASE OR RECONVEYANCE. Upon payment in full of the Indebtedness and performance in full of the Obligations or upon a sale or other disposition of the Mortgaged Property permitted by the Contribution and Loan Agreement, Beneficiary, at Grantor's request and expense, shall release the liens and security interests created by this Deed of Trust or reconvey the Mortgaged Property to Grantor. SECTION 9.8 WAIVER OF STAY, MORATORIUM AND SIMILAR RIGHTS. Grantor agrees, to the full extent that it may lawfully do so, that it will not at any time insist upon or plead or in any way take advantage of any stay, marshalling of assets, extension, redemption or moratorium law now or hereafter in force and effect so as to prevent or hinder the enforcement of the provisions of this Deed of Trust or the Indebtedness or Obligations secured hereby, or any agreement between Grantor and Beneficiary or any rights or remedies of Trustee or Beneficiary. SECTION 9.9 APPLICABLE LAW. The provisions of this Deed of Trust regarding the creation, perfection and enforcement of the liens and security interests herein granted shall be governed by and construed under the laws of the state in which the Mortgaged Property is located. All other provisions of this Deed of Trust shall be governed by the laws of the State of New York (including, without limitation, Section 5-1401 of the General Obligations Law of the State of New York). SECTION 9.10 HEADINGS. The Article, Section and Subsection titles hereof are inserted for convenience of reference only and shall in no way alter, modify or define, or be used in construing, the text of such Articles, Sections or Subsections. SECTION 9.11 SEVERABILITY. If any provision of this Deed of Trust shall be held by any court of competent jurisdiction to be unlawful, void or unenforceable for any reason, such provision shall be deemed severable from and shall in no way effect the enforceability and validity of the remaining provisions of this Deed of Trust. SECTION 9.12 GRANTING OF EASEMENTS. Provided that no Event of Default shall have occurred and be continuing or shall result therefrom, Beneficiary hereby consents in each instance to the following actions by Grantor, in the name and stead of Beneficiary and as the true and lawful attorney-in-fact of Beneficiary (which appointment is coupled with an interest) with full power and authority to execute and deliver documents on behalf of Beneficiary for the following purposes, but at Grantor's sole cost and expense: (i) the granting, entering into, amendment and modification, of easements, licenses, rights of way, building and use restrictions and similar agreements affecting the Mortgaged Property; (ii) the release or termination of existing easements, rights of way, building and use restrictions and similar agreements affecting the Mortgaged Property; (iii) the seeking of any zoning variances or modifications to existing zoning; (iv) the application for, and obtaining of, any permits or approvals from any Governmental Authorities which pertain to the Mortgaged Property (and the execution and delivery of any agreements or other instruments which are necessary or desirable in connection therewith); and (v) the dedication or transfer of portions of the Mortgaged Property for road, highway or other public purposes; provided, however, that in each case the easement, building and use restriction, other 13 agreement, amendment, modification, termination, release, application, dedication or transfer shall be on commercially reasonable terms and shall be of such a nature to qualify as a Permitted Lien. Without limiting the effectiveness of the foregoing, and provided that no Event of Default shall have occurred and be continuing or shall result therefrom, Beneficiary shall, upon the request of Grantor, and at Grantor's sole cost and expense, execute and deliver any instruments necessary or appropriate to confirm any such grant, release, dedication, transfer, annexation or amendment. SECTION 9.13 ENTIRE AGREEMENT. This Deed of Trust and the other Transaction Documents embody the entire agreement and understanding between Grantor and Beneficiary relating to the subject matter hereof and thereof and supersede all prior agreements and understandings between such parties relating to the subject matter hereof and thereof. Accordingly, the Transaction Documents may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of the parties. There are no unwritten oral agreements between the parties. ARTICLE 10 LOCAL LAW PROVISIONS [TO COME] [THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK] 14 IN WITNESS WHEREOF, Grantor has on the date set forth in the acknowledgement hereto, effective as of the date first above written, caused this instrument to be duly EXECUTED AND DELIVERED by authority duly given. [GRANTOR], a [State of organization and entity type] By: __________________________ Name: Title: S-1 STATE OF ______________ ) ) ss. COUNTY OF _____________ ) On the ___ day of __________, 2003, before me personally appeared ________________________, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. [SEAL] ___________________________ Notary Public My commission expires: _________________________________________ S-1 EXHIBIT A Legal Description of premises located at [Address of Premises]: [SEE ATTACHED PAGE(S) FOR LEGAL DESCRIPTION] Exh.A-1 EX-10.3 15 k75733exv10w3.txt FORM OF MANAGEMENT AND SERVICING AGREEMENT EXHIBIT 10.3 to S-11 MANAGEMENT AND SERVICING AGREEMENT This MANAGEMENT AND SERVICING AGREEMENT ("Agreement") dated as of [ ], 2003, between DELPHI PROPERTIES, INC., a Maryland corporation (the "REIT"), DELPHI PROPERTIES HOLDINGS, LLC, a Maryland limited liability company ("Holdings", and together with the REIT, the "REIT Entities "), and DELPHI CORPORATION, a Delaware corporation (the "Manager"). W I T N E S S E T H: WHEREAS, the principal business objective of the REIT is to acquire and, through Holdings, hold mortgage assets and other authorized investments that will generate net income for distribution to REIT stockholders and the REIT intends to elect to be treated as a real estate investment trust for federal income tax purposes; and WHEREAS, the REIT Entities desire to have the Manager manage and administer all of their business and affairs and the Manager has the capability to provide the management, administrative and other services provided for herein and is willing to perform and discharge such services for the REIT Entities on the terms and subject to the conditions set forth herein; NOW, THEREFORE, in consideration of the mutual terms and covenants contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows: Section 1. Duties of the Manager. (a) Duties with Respect to the REIT Entities. The Manager agrees to take or cause or arrange for other appropriate persons or entities to take all such actions that it, in the exercise of its good faith judgment, believes is necessary or appropriate for the management or administration of the REIT Entities' business and affairs. Notwithstanding anything to the contrary in this Agreement, the Manager shall not take any action that the REIT Entities direct the Manager not to take. The Manager shall consult with the Board of Directors and the officers of the REIT Entities and shall, at the request of the Board of Directors and/or the officers of the REIT Entities, furnish advice and recommendations with respect to all aspects of the business and affairs of the REIT Entities. Subject to the control and discretion of, and at the request of, the Board of Directors of the REIT (the "Board of Directors"), the Manager shall: (i) administer the day-to-day operations and affairs of the REIT Entities, including, without limitation, the performance or supervision of the functions described in this Section 1; (ii) monitor the credit quality of the assets held by the REIT Entities; (iii) advise the REIT Entities with respect to the acquisition, management, financing and disposition of the REIT Entities' assets; (iv) represent the REIT Entities in their day-to-day dealings with persons with whom the REIT Entities interact, including, without limitation, stockholders of the REIT, the transfer agent of the REIT, consultants, accountants, attorneys, custodians, insurers and banks; (v) establish and provide necessary services for the REIT Entities, including executive, administrative, accounting, stockholder relations, secretarial, record-keeping, copying, telephone, mailing and distribution facilities; (vi) procure necessary insurance coverage for the REIT Entities; (vii) maintain communications and relations with the stockholders of the REIT, including, but not limited to, responding to inquiries, proxy solicitations, providing reports to stockholders and arranging and coordinating all meetings of stockholders; (viii) monitor and supervise the performance of all parties who have contracts to perform services for the REIT Entities, provided that the Manager shall have no duty to assume the obligations or guarantee the performance of such parties under such contracts; (ix) arrange for the execution and delivery of such documents and instruments by the officers of the REIT as may be required in order to perform the functions herein described and to take any other required action contemplated by the terms of this Agreement; (x) consult and work with legal counsel for the REIT in implementing REIT decisions and undertaking measures consistent with all pertinent federal, state and local laws and rules or regulations of governmental or quasi-governmental agencies, including, but not limited to, federal and state securities laws and tax laws, as they relate to the REIT's qualification, and the maintenance of its qualification as a real estate investment trust; (xi) take any action which, in the Manager's judgment or the judgment of the Board of Directors (of which the Manager has received written notice), may be necessary to maintain the qualification of the REIT as a real estate investment trust for U.S. federal income tax purposes, unless otherwise instructed by the Board of Directors, or prevent the violation of any law or regulation of any governmental body or agency having jurisdiction over the REIT or its securities; (xii) take any action which, in the Manager's judgment or the judgment of the Board of Directors (of which the Manager has received written notice), may be necessary to operate the REIT Entities in a manner that will not subject the REIT Entities to regulation under the Investment Company Act of 1940 including, but not limited to monitoring the assets of the REIT Entities to ensure that such entities maintain at least 55% of their respective total assets in qualifying interests under the Investment Company Act of 1940; (xiii) refrain from any action which, in the Manager's reasonable judgment or in the judgment of the Board of Directors (of which the Manager has received written 2 notice), may adversely affect the qualification of the REIT as a real estate investment trust, unless otherwise instructed by the Board of Directors, or which would violate any laws, rule or regulation of any governmental body or agency having jurisdiction over the REIT or its securities, or which would otherwise not be permitted by the Articles of Incorporation, as amended, or By-laws of the REIT; (xiv) consult and work with the accountants and the audit committee for the REIT in connection with the preparation of financial statements, periodic reports, annual reports and tax returns; (xv) prepare and distribute, in consultation with the accountants and audit committee for the REIT, periodic reports and annual reports to stockholders that will contain audited financial statements; and (xvi) furnish reports to the Board of Directors and provide research, economical and statistical data in connection with the REIT Entities' investments; and as reasonably requested by the REIT , make reports to the REIT of its performance of the foregoing services and furnish advice and recommendations with respect to other aspects of the business of the REIT Entities. (b) Duties with Respect to the REIT Entities' Policies. The Manager shall, at all times in connection with the performance and observance of its duties and obligations under this Agreement, refrain from taking any actions that would prevent the REIT Entities from complying with the policies adopted by the Board of Directors, as they may be amended, supplemented or otherwise modified by the Board of Directors at any time or from time to time. Upon its receipt of notice thereof, the Manager shall thereupon comply with such policies as so amended, supplemented or modified. Section 2. Servicing Assets. (a) If the REIT Entities obtain any assets that are not the primary obligations of the Manager (the "Servicing Assets"), the Manager will service the Servicing Assets with the same degree of care as the Manager exercises with respect to similar assets held by it for its own account; provided that the Manager will not be liable for any error of judgment or for any action taken or omitted to be taken by it, except actions taken by reason of the Manager's gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Manager (i) may consult with legal counsel, including counsel for any borrower, lender or guarantor of any Servicing Asset, independent public accountants or experts, and shall not be liable for any action taken in good faith or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts, (ii) makes no warranty or representation and shall not be responsible for any statement, warranty or representation made by any borrower, lender or guarantor in connection with any Servicing Asset or in connection with any document relating to any Servicing Asset or for the financial condition of any borrower, lender or guarantor or for the value of any collateral, (iii) shall not be responsible for the performance or observance by any borrower, lender or guarantor of any of the terms, covenants or conditions of any loan or other document evidencing or relating to any Servicing Asset and shall not have any duty to inspect the property (including the books and records) of any borrower, lender or guarantor, (iv) 3 makes no warranty or representation and shall not be responsible for the due execution, legality, validity, enforceability, genuineness, sufficiency or collectability of any loan or other document evidencing or relating to any Servicing Asset or any collateral for any Servicing Asset, (v) makes no representation or warranty concerning the value or existence of any collateral or the perfection or enforceability of any security interests relating to any Servicing Asset, and (vi) shall incur no liability in respect of any Servicing Asset or under any loan or other document evidencing or relating to any Servicing Asset or in respect of any collateral for any Servicing Asset by acting upon any notice, consent, certificate or other instrument or writing believed by the Manager to be genuine and signed or sent by the proper party. (b) The Manager shall not, without the REIT's prior written consent, agree to the modification or waiver of any of the terms of any loan or other document evidencing or relating to any Servicing Asset, consent to any action or failure to act by any borrower, lender or guarantor, or exercise any rights which the Manager may have in respect of any Servicing Asset or under any loan or other document evidencing or relating to any Servicing Asset or with respect to any collateral for any Servicing Asset, if the exercise of any of such rights would (i) waive any payment default; (ii) forgive any of the principal amount of or reduce the principal amount of, or rate of interest on, any Servicing Asset; (iii) postpone any date fixed for any payment of principal of or interest on any Servicing Asset; (iv) release any guaranty or collateral except as otherwise contemplated in any loan or other document evidencing or relating to any Servicing Asset; (v) extend the maturity date of any Servicing Asset; (vi) increase the lending formulas or advance rates on any Servicing Asset; or (vii) amend or modify the financial covenants contained in the loan or other documents evidencing any Servicing Asset in any way that would make such financial covenants any less restrictive. (c) In the event: (i) any default under a Servicing Asset shall be continuing for more than 30 days, (ii) a Servicing Asset is placed in a non-performing status, or (iii) any other development occurs that adversely affects the value of a Servicing Asset, the Manager shall promptly give the REIT written notice of such event. The Manager shall thereafter take such action as the REIT may deem necessary to protect the interests of both the Manager and the REIT Entities. In the event the Manager shall fail to timely take any such action as directed by the REIT, the REIT may directly take any and all actions it deems necessary to protect its interests in the Servicing Asset. At the REIT's direction, and on behalf of the REIT Entities, the Manager may deal with any of the borrowers or guarantors of the Servicing Asset for the purpose of entering into forbearance agreements, moratoriums, and general work-out plans designed to cure the default and restore the Servicing Asset to good standing; provided, the REIT may, in its discretion, deal directly with any of the borrowers or guarantors in the event it determines that the Manager is not satisfactorily following the REIT's directions and, notwithstanding anything in this Agreement to the contrary, the Manager shall, at all times, only take action or inaction that is consistent with guidelines established by the REIT or otherwise only with the REIT's consent. Section 3. Other Duties of the Manager. (a) The Manager shall segregate and hold all funds collected and received by the REIT Entities under and pursuant to this Agreement separate and apart from any of its own funds and general assets and shall establish and maintain one or more accounts, in the form of time deposit or demand accounts, titled "Delphi Corporation in trust for Delphi Properties, Inc." 4 or "Delphi Corporation in trust for Delphi Holdings, LLC", as applicable (the "REIT Entities' Accounts"). Each REIT Entities' Account shall be established with a depository institution acceptable to the REIT. All funds deposited in the REIT Entities' Accounts shall at times be fully insured to the full extent permitted under applicable law. Funds deposited in the REIT Entities' Accounts may be drawn on by the Manager in accordance with this Section 3. The Manager shall deposit in the REIT Entities' Accounts within one Business Day (as such term is defined in Section 4 hereof) of receipt, and retain therein, all collections received by the REIT Entities under and pursuant to this Agreement as well as any and all other amounts received by the REIT Entities whatsoever. Any interest paid on funds deposited in the REIT Entities' Accounts by the depository institutions in which the REIT Entities' Accounts are established shall accrue to the benefit of the REIT Entities. (b) The Manager is hereby authorized, from time to time, to withdraw funds from the REIT Accounts for the following purposes: (i) to pay itself the Management Fee; (ii) to pay dividends to the holders of the REIT's Common Stock and Series A Preferred Stock, each as defined in the REIT's Articles of Incorporation, as amended; (iii) to pay all of the REIT Entities' accounts payable and other liabilities and obligations incurred by the REIT Entities in the ordinary course of the REIT Entities' business; and (iv) to pay all other amounts directed to be paid by the Board of Directors or the REIT's officers, at the direction of the Board of Directors. Section 4. Management Fee. As compensation for the performance of the Manager's duties and obligations under this Agreement, the Manager shall be entitled to receive a management fee, on an annualized basis, of 0.10% of the average daily outstanding principal balance of the mortgage notes receivable plus any other REIT-qualified assets held by the REIT during each year. Such management fee shall be payable on the [ ] day of each [ ], [ ], [ ] and [ ], commencing on [ ], 2003, or in each case on the first Business Day immediately thereafter if the [ ] day in any month is not a Business Day. As used herein, the term "Business Day" shall mean any day other than a Saturday, a Sunday, or a day on which commercial banks are authorized or obligated by law, regulation or executive order to close in Michigan. Section 5. Independence of the Manager. For all purposes of this Agreement, the Manager shall be an independent contractor and shall not be subject to the supervision of the REIT with respect to the manner in which it accomplishes the performance of its duties and obligations hereunder. Unless expressly authorized by the REIT, the Manager shall have no authority to act for or represent the REIT Entities in any way (other than as permitted hereunder) and shall not otherwise be deemed an agent of the REIT Entities. Section 6. Indemnification by the Manager. The Manager agrees to indemnify, defend and hold harmless the REIT Entities and each of their stockholders, directors, officers, agents and independent contractors, as applicable, for (i) any and all liabilities, losses, damages 5 and expenses that may be incurred in connection with or as a result of any negligent act or omission or willful misconduct by the Manager in connection with any activity undertaken or omitted to be taken by the Manager with respect to this Agreement, (ii) any breach by the Manager of any representation or warranty herein or any failure by the Manager to perform or observe any agreement or covenant herein, and (iii) any third party claims, liabilities, losses, damages or expenses, or actions in respect thereof, arising out of or in connection with this Agreement. The indemnities set forth in the preceding sentence shall survive the resignation or removal of the Manager and the termination of this Agreement and shall include reasonable fees and expenses of counsel and other expenses of litigation. Section 7. Other Activities of the Manager. Nothing herein contained shall prevent the Manager, an affiliate of the Manager or an officer, director, employee or stockholder of the Manager from engaging in any activity, including, without limitation, originating, purchasing and managing real estate mortgage assets, rendering services and investment advice with respect to real estate investment opportunities to any other Person (including other real estate investment trusts) and managing other investments (including the investments of the Manager and its affiliates). Officers, directors, employees, stockholders and agents of the Manager or of any affiliate of the Manager may serve as officers, directors, employees or agents of the REIT Entities, but shall receive no compensation from the REIT Entities for such service. Section 8. Termination. The parties may terminate this Agreement at any time without penalty by mutual agreement in writing. Such written mutual agreement to terminate shall specify the date on which the termination hereof shall be effective. Section 9. Action upon Termination, Resignation or Removal. Promptly upon the termination of this Agreement pursuant to Section 8, the Manager shall: (a) deliver to the REIT all assets and documents of the REIT Entities then in the custody of the Manager; and (b) cooperate with the REIT and take all reasonable steps requested to assist the Board of Directors in making an orderly transfer of the administrative functions of the REIT Entities. The Manager shall be entitled to be paid all fees accruing to it to the date of such termination. Section 10. Amendment. Any term or provision of this Agreement may be amended, waived, discharged or terminated, but only by an instrument in writing signed by the parties hereto. Section 11. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN. Section 12. Headings. The section headings hereof have been inserted for convenience of reference only and shall not be construed to affect the meaning, construction or effect of this Agreement. 6 Section 13. Counterparts. This Agreement may be executed in counterparts, all of which when so executed shall together constitute but one and the same agreement. Section 14. Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. IN WITNESS WHEREOF, the parties have caused this Management Agreement to be duly executed and delivered as of the day and year first above written. DELPHI PROPERTIES, INC. By: ------------------------------------ Name: Title DELPHI PROPERTIES HOLDINGS, LLC By: Delphi Properties, Inc., as Agent By: ------------------------------------ Name: Title DELPHI CORPORATION By: ------------------------------------ Name: Title: 7 EX-12.1 16 k75733exv12w1.txt COMPUTATIONS OF RATIO OF COMBINED FIXED CHARGES EXHIBIT 12.1 to S-3 DELPHI CORPORATION COMPUTATIONS OF RATIO OF COMBINED FIXED CHARGES AND PREFERRED DIVIDENDS TO EARNINGS
YEAR ENDED DECEMBER 31, ------------------------------------------------------- 2002 2001 2000 1999 1998 ---- ---- ---- ---- ---- (DOLLARS IN MILLIONS) Income (loss) before taxes ........................................... $ 531 $ (528) $ 1,667 $ 1,721 $ (266) Earnings of non-consolidated affiliates .............................. (64) (54) (87) (44) (55) Cash dividends received from non-consolidated affiliates ............. 28 21 13 21 1 Portion of rentals deemed to be interest ............................. 57 54 47 44 37 Interest and related charges on debt ................................. 191 222 183 132 277 ------- ------- ------- ------- ------- Earnings available for fixed charges and preferred dividends .. $ 743 $ (285) $ 1,823 $ 1,874 $ (6) ------- ------- ------- ------- ------- Fixed charges: Portion of rentals deemed to be interest ........................... $ 57 $ 54 $ 47 $ 44 $ 37 Interest and related charges on debt ............................... 191 222 183 132 277 ------- ------- ------- ------- ------- Total fixed charges ........................................... $ 248 $ 276 $ 230 $ 176 $ 314 ------- ------- ------- ------- ------- Preferred Dividends: Preferred dividend ................................................. $ -- $ -- $ -- $ -- $ -- Divided by 1 minus the effective tax rate .......................... 65% 70% 64% 63% 35% Preferred dividend requirement ................................ $ -- $ -- $ -- $ -- $ -- Total fixed charges and preferred dividends .......................... $ 248 $ 276 $ 230 $ 176 $ 314 ======= ======= ======= ======= ======= Ratio of earnings to combined fixed charges and preferred dividends .. 3.0 N/A 7.9 10.6 N/A ======= ======= ======= ======= =======
Fixed charges and preferred dividends exceeded earnings by $561 million and $320 million for the years ended December 31, 2001 and 1998, respectively, resulting in a ratio of less than one. EX-23.1 17 k75733exv23w1.txt CONSENT OF DELOITTE & TOUCHE LLP EXHIBIT 23.1 to S-11 and S-3 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Delphi Corporation on the combined Forms S-3/S-11 of our report dated January 16, 2003, appearing in the Annual Report on Form 10-K of Delphi Corporation for the year ended December 31, 2002 and to the reference to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement. /s/ Deloitte & Touche LLP Detroit, Michigan March 27, 2003 EX-23.2 18 k75733exv23w2.txt CONSENT OF DELOITTE AND TOUCHE LLP EXHIBIT 23.2 to S-11 INDEPENDENT AUDITORS' CONSENT We consent to the use in this Registration Statement of Delphi Properties, Inc. on combined Forms S-3/S-11 of our report dated March 26, 2003, appearing in the Prospectus, which is part of this Registration Statement. We also consent to the reference to us under the heading "Experts" in such Prospectus. /s/ Deloitte & Touche LLP Detroit, Michigan March 27, 2003 GRAPHIC 20 k75733k7573301.gif GRAPHIC begin 644 k75733k7573301.gif M1TE&.#EA2`%7`??_`/___SDY.7M[>[V]O5)24@`````````````````````` M```````````````````````````````````````````````````````````` M```````````````````````````````````````````````````````````` M```````````````````````````````````````````````````````````` M```````````````````````````````````````````````````````````` M```````````````````````````````````````````````````````````` M```````````````````````````````````````````````````````````` M```````````````````````````````````````````````````````````` M```````````````````````````````````````````````````````````` M```````````````````````````````````````````````````````````` M```````````````````````````````````````````````````````````` M```````````````````````````````````````````````````````````` M```````````````````````````````````````````````````````````` M```````````````````````````````````````````````````````````` M```````````````````````````````````````````````````````````` M```````````````````````````````````````````````````````````` M```````````````````````````````````````````````````````````` M`````````````````/___R'Y!`$``/\`+`````!(`5/($.*'$FRI,F3*%.J7,FRIB50-FW!03(G2L6[M@`7]?JW4O0:UVR M4:GDRY,N*_>`4XWMS4*]D``BJ+'DT9\6<" MG%,7=7LW-.G7L`F;;JVZ-D_6<6/KWBUX0%W0MH/39!U@`._CO`70%LY\)7'C MR*/O5EX`>//K(ZD7E\X]^6+LX#W6_W7=O7QLWV,UAU]?43MT\_!A:V=/'R)K M\O'SDT9OO;[_@V)MI]^`KU&GWG\(_A,@@0R^-D!Z'ITEX8045FCAA1AFJ.&& M'';H(0$'\K1@@R2*]F!<'=FEXHHLMNCBBS#&*..,,J+6TX@EYCC9B2%BE)N. 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FORM S-3 AND FORM S-11 REGISTRATION STATEMENTS UNDER THE SECURITIES ACT OF 1933 OF DELPHI CORPORATION (Exact name of registrant as specified in its charter)	FORM S-11 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 OF DELPHI PROPERTIES, INC. (Exact name of registrant as specified in its charter)	FORM S-11 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 OF DELPHI PROPERTIES HOLDINGS, LLC (Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)	Maryland (State or other jurisdiction of incorporation or organization)	Maryland (State or other jurisdiction of incorporation or organization)


38-3430473 (I.R.S. Employer Identification No.)	Applied For (I.R.S. Employer Identification No.)	80-0056835 (I.R.S. Employer Identification No.)


5725 Delphi Drive Troy, Michigan 48098 (248) 813-2000 (Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)	5725 Delphi Drive Troy, Michigan 48098 (248) 813-2000 (Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)	5725 Delphi Drive Troy, Michigan 48098 (248) 813-2000 (Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)


Alan S. Dawes Chief Financial Officer and Vice Chairman Delphi Corporation 5725 Delphi Drive Troy, Michigan 48098 (248) 813-2000	John D. Sheehan Chief Financial Officer Delphi Properties, Inc. 5725 Delphi Drive Troy, Michigan 48098 (248) 813-2000	John D. Sheehan Chief Financial Officer Delphi Properties, Inc. 5725 Delphi Drive Troy, Michigan 48098 (248) 813-2000
(Name, address, including zip code, and telephone number, including area code, of agent for service)







Title of securities	Amount being		Proposed maximum		Proposed maximum		Amount of
being registered	registered		offering price per share		aggregate offering price		registration fee


Delphi Properties Series A preferred stock		13,800,000	$	25.00(1)	$	345,000,000	$	27,911

Delphi Series AA preferred stock		13,800,000	$	25.00(1)	$	345,000,000		—(2)


	Per Share		Total

Public offering price		$		$
Underwriting commission		$		$
Proceeds, before expenses, to Delphi Properties		$		$


PROSPECTUS SUMMARY
Delphi Corporation
Delphi Properties Holdings, LLC
The Offering
RISK FACTORS
FORWARD-LOOKING STATEMENTS
USE OF PROCEEDS
CAPITALIZATION
UNAUDITED PRO FORMA FINANCIAL DATA FOR DELPHI PROPERTIES
UNAUDITED PRO FORMA FINANCIAL DATA FOR DELPHI
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OF DELPHI PROPERTIES
FORMATION OF DELPHI PROPERTIES
BUSINESS OF DELPHI PROPERTIES
MANAGEMENT OF DELPHI PROPERTIES
BENEFICIAL OWNERSHIP OF DELPHI PROPERTIES CAPITAL STOCK
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
DESCRIPTION OF DELPHI PROPERTIES CAPITAL STOCK
DESCRIPTION OF DELPHI CAPITAL STOCK
FEDERAL INCOME TAX CONSIDERATIONS
ERISA CONSIDERATIONS
UNDERWRITING
LEGAL MATTERS
EXPERTS
WHERE YOU CAN FIND MORE INFORMATION ABOUT DELPHI PROPERTIES
WHERE YOU CAN FIND MORE INFORMATION ABOUT DELPHI
INDEX TO FINANCIAL STATEMENTS
INDEPENDENT AUDITORS’ REPORT
BALANCE SHEET
NOTES TO BALANCE SHEET
EXHIBIT INDEX
EXHIBIT INDEX
Underwriting Agreement
Articles of Incorporation
Bylaws of Delphi Properties, Inc.
Form of Articles of Amendment and Restatement
Form of Amended and Restated By-Laws
Articles of of Organization
Operating Agreement of Delphi Properties Holdings
Preferred Stock Certificate of Designations
Opinion of Sherman & Sterling
Form of Opinion os Shearman & Sterling
Exchange Agreement bet Delphi Corp & Delphi Prop
Form of Loan and Contribution Agreement
Form of Management and Servicing Agreement
Computations of Ratio of Combined Fixed Charges
Consent of Deloitte & Touche LLP
Consent of Deloitte and Touche LLP


Issuer		Delphi Properties, Inc., a Maryland corporation formed as a wholly owned subsidiary of Delphi.

Securities		12,000,000 shares (13,800,000 shares if the underwriters’ over-allotment option is exercised in full) of our Series A preferred stock, par value $0.10 per share. Our Series A preferred stock is non-cumulative and is automatically exchangeable and redeemable under certain circumstances.

Ranking		Our Series A preferred stock will rank senior to our common stock and any preferred junior stock, equally with any parity stock and junior to all claims of our creditors with respect to payments of distributions or amounts upon our liquidation, dissolution or winding up. Authorized securities that are at parity with our Series A preferred stock (including additional authorized shares of Series A preferred stock) and securities that rank junior to our Series A preferred stock may be issued at any time for the consideration and on such terms and conditions as our board of directors may determine. Parity stock that we propose to issue will not be required to be offered first to holders of our Series A preferred stock.

		We have reserved for issuance up to 125 shares of our Series B preferred stock. The Series B preferred stock, if and when issued, will rank junior to our Series A preferred stock.

Dividends		Dividends on our Series A preferred stock are payable at the rate of % per year of the liquidation preference of $25 per share, if, when, and as authorized by our board of directors and declared by us. If authorized and declared, dividends are payable quarterly in arrears on , , and of each year, or, if any such day is not a business day, on the next business day, commencing on , 2003, and will be computed on the basis of a 360-day year consisting of twelve 30-day months.

		Dividends on our Series A preferred stock are not cumulative and, accordingly, if our board of directors does not authorize a dividend or authorizes less than a full dividend on our Series A preferred stock for a quarterly dividend period, holders of our Series A preferred stock will have no right to receive a dividend or the full dividend, as the case may be, for that period, and we will have no obligation to pay a dividend for that period, regardless of whether or not dividends are authorized and declared and paid for any future period with respect to our Series A preferred stock, our Series B preferred stock or our common stock. Nonetheless, because we must distribute annually at least 90% of our REIT taxable income, as determined before any deduction for dividends paid and excluding any net capital gain, to remain qualified as a REIT, we intend to authorize and distribute dividends on our Series A preferred stock on a quarterly basis. If the full dividend on our Series A preferred stock is not declared and paid for a quarterly dividend period, the payment of dividends on our common stock or other junior stock will be prohibited for that period. If the full dividend is not


Robert Evans III, Esq. Shearman & Sterling 599 Lexington Avenue New York, New York 10022 (212) 848-4000		Logan G. Robinson, Esq. General Counsel and Vice President Delphi Corporation 5725 Delphi Drive Troy, Michigan 48098 (248) 813-2000		Kenneth L. Bachman, Esq. Cleary, Gottlieb, Steen & Hamilton 2000 Pennsylvania Avenue Washington, DC 20006 (202) 974-1500


(1)	Estimated solely for the purpose of calculating the registration fee.
(2)	Pursuant to Rule 457(i), no separate fee for the shares of Delphi Series AA preferred stock into which the shares of Delphi Properties Series A preferred stock may be automatically exchanged is required to be paid.


	Page

Prospectus Summary		1
Risk Factors		13
Forward-Looking Statements		22
Use of Proceeds		22
Capitalization		23
Unaudited Pro Forma Financial Data for Delphi Properties		25
Unaudited Pro Forma Financial Data for Delphi		27
Selected Consolidated Financial Data for Delphi		27
Management’s Discussion and Analysis of Financial Condition of Delphi Properties		30
Formation of Delphi Properties		31
Business of Delphi Properties		32
Management of Delphi Properties		40
Beneficial Ownership of Delphi Properties Capital Stock		43
Certain Relationships and Related Party Transactions		43
Description of Delphi Properties Capital Stock		44
Description of Delphi Capital Stock		58
Federal Income Tax Considerations		65
ERISA Considerations		75
Underwriting		77
Legal Matters		79
Experts		79
Where You Can Find More Information about Delphi Properties		79
Where You Can Find More Information about Delphi		79
Index to Financial Statements		F-1


		• amend or otherwise change our policy regarding the reinvestment of the proceeds of our assets in certain other interest-earning assets;

		• cease to own in excess of a majority interest in Holdings or modify Holdings’ operating agreement such that we no longer determine the timing and amount of distributions;

		• remove “Delphi” from our name, unless Delphi changes its name;

		• issue any additional shares of our common stock to anyone other than Delphi or its controlled affiliates; or

		• commence proceedings for the voluntary liquidation of our business.

		Our charter also requires the prior election of our independent directors, and the approval of a majority of our independent directors to:

		• issue additional stock; provided that we may issue up to a total of 40,000,000 shares of Series A preferred stock, 36,000,000 shares of our common stock and 125 shares of our Series B preferred stock, in each case inclusive of the shares already outstanding or being issued in connection with this offering, without the prior election of, or approval of a majority of, the independent directors;

		• terminate, modify or elect not to renew our management and servicing agreement with Delphi;

		• change our policy of limiting authorized investments which are not REIT-qualified interests or real estate-related assets;

		• effect a consolidation, conversion, merger or share exchange; or

		• revoke our status as a REIT or amend the transfer restrictions related to REIT status on our securities.

Ownership restrictions		Beneficial ownership by any individual of more than 5% of any outstanding series of our preferred stock, including our Series A preferred stock, is restricted to preserve our status as a REIT for federal income tax purposes.

Listing		Application has been made to list our Series A preferred stock on the New York Stock Exchange under the symbol “DPS”.

Use of proceeds		The net proceeds from this offering will be paid to Delphi in exchange for mortgage notes and mortgage liens securing such notes. In addition to the net proceeds, Delphi will receive 10,800,000 shares (12,420,000 shares if the underwriters’ over-allotment option is exercised in full) of our common stock in exchange for mortgage notes and mortgage liens securing such notes. Delphi will use the cash proceeds from the issuance of the mortgage notes to us for general corporate purposes, which may include contributions to its pension plans.


Tax consequences		We will elect to be treated as a REIT for federal income tax purposes. As long as we qualify as a REIT, corporate holders of shares of our Series A preferred stock will not be entitled to a dividends-received deduction for any income from our Series A preferred stock. If shares of our Series A preferred stock were exchanged for shares of Delphi Series AA preferred stock, the exchange would be a taxable exchange to you. In that event, you generally would recognize a gain or loss, as the case may be, measured by the difference between your adjusted tax basis in your shares of our Series A preferred stock and the fair market value of the Delphi Series AA preferred stock received in the exchange. See “Federal Income Tax Considerations”.


	Our Series A preferred stock will rank subordinate to claims of our creditors and equally with any other parity stock we may issue.


	There has never been a market for our Series A preferred stock.


	We may fail to qualify as a REIT, which would permit us to redeem your shares of Series A preferred stock under certain circumstances, or result in the automatic exchange of your shares of Series A preferred stock for shares of Delphi Series AA preferred stock.


	Delphi may incur material losses and costs as a result of product liability and warranty claims that may be brought against it.


	Restrictions in several of Delphi’s labor agreements could limit its ability to pursue restructuring initiatives. Labor strikes, work stoppages or similar difficulties could significantly disrupt its operations.


	Disruptions in the supply of materials can adversely affect Delphi’s profitability.



		March 25, 2003

		Actual(1)		As Adjusted(2)(3)


		(in thousands)
Minority interest in Holdings		$	—	$	3,500
Stockholders’ equity
	Preferred stock, Series A; $0.10 par value per share, $25 liquidation preference		—		288,727
	Common stock, $0.01 par value per share		—		108	(4)
	Additional paid-in capital		—		57,665	(4)
	Notes receivable from issuance of stock		—		(57,773	)(4)

Total stockholders’ equity			—		288,727

Total capitalization		$	—	$	292,227



			December 31, 2002

			Actual			As Adjusted(1)(2)


			(in millions)
Total debt, including short-term			$	2,766		$	2,766
Preferred stock of subsidiary				—			289
Stockholders’ equity
	Preferred stock, Series AA; $0.10 par value, $25 liquidation preference; no shares authorized; no shares issued			—			—
	Common stock, $0.01 par value; 1,350 million shares authorized; 565 million shares issued			6			6
	Additional paid-in capital			2,445			2,445
	Retained earnings			1,530			1,530
	Accumulated other comprehensive loss:
		Minimum pension liability		(2,098	)		(2,098	)
		Accumulated other comprehensive loss		(493	)		(493	)
Treasury stock, at cost				(111	)		(111	)

Total stockholders’ equity				1,279			1,279

Total capitalization			$	4,045		$	4,334



		Year Ended December 31,
		2002 (Unaudited)

				Pro forma as
		Actual(1)		Adjusted(2)(3)


		(in thousands except per
		share or ratio data)
Income Statement Data:
	Interest income	$	—	$	27,125	(4)
	Management fees and other expenses		—		1,140	(5)
	Minority interest in earnings of Holdings		—		271	(6)

	Net income		—		25,714
	Dividends to preferred stockholders		—		25,500	(7)

	Net income available for common stockholders	$	—	$	214

	Earnings per share	$	—	$	0.02	(8)

	Ratio of combined fixed charges and preferred dividends to earnings		—		1.01



			Year Ended December 31,

			2002			2001			2000			1999			1998


			(in millions, except per share amounts)
Statement of Income Data:(1)
	Net sales		$	27,427		$	26,088		$	29,139		$	29,192		$	28,479
	Operating expenses:
		Cost of sales, excluding items listed below		24,014			23,216			24,744			25,035			26,135
		Selling, general and administrative		1,510			1,470			1,715			1,619			1,463
		Depreciation and amortization(2)		988			1,150			936			856			1,102
		Restructuring		225			536			—			—			—
		Acquisition-related in-process research and development		—			—			51			—			—

	Operating income (loss)			690			(284	)		1,693			1,682			(221	)
	Interest expense			(191	)		(222	)		(183	)		(132	)		(277	)
	Other income (expense), net			32			(22	)		157			171			232

	Income (loss) before income taxes			531			(528	)		1,667			1,721			(266	)
	Income tax expense (benefit)			188			(158	)		605			638			(173	)

	Net income (loss)		$	343		$	(370	)	$	1,062		$	1,083		$	(93	)

	Basic earnings (loss) per share		$	0.61		$	(0.66	)	$	1.89		$	1.96		$	(0.20	)

	Diluted earnings (loss) per share		$	0.61		$	(0.66	)	$	1.88		$	1.95		$	(0.20	)

	Cash dividends declared per share(3)		$	0.28		$	0.28		$	0.28		$	0.21		$	N/A

	Ratio of earnings to fixed charges(4)			3.0			N/A			7.9			10.6			N/A

Statement of Cash Flows Data:
	Cash provided by (used in) operating activities(5)		$	2,073		$	1,360		$	268		$	(1,214	)	$	849
	Cash used in investing activities			(981	)		(1,353	)		(2,054	)		(1,055	)		(1,216	)
	Cash (used in) provided by financing activities			(791	)		13			1,094			2,878			384
Other Financial Data:
	EBITDA(6)		$	1,689		$	811		$	2,739		$	2,613		$	1,056
Balance Sheet Data:
	Total assets		$	19,316		$	18,602		$	18,521		$	18,350		$	15,506
	Total debt			2,766			3,353			3,182			1,757			3,500
	Stockholders’ equity			1,279			2,312			3,766			3,200			9


	Number
	of		Total Land Area		Percentage of
State	Properties		(sq. ft.)		Land Area in State

Ohio		7		35,119,900		40.57%
Michigan		4		31,009,711		35.82%
Mississippi		1		7,185,658		8.3%
Indiana		1		9,022,147		10.42%
Texas		1		4,229,807		4.89%

Total		14		86,567,223		100.00%


Name	Age		Position Held

John G. Blahnik		48	Chairman of the Board, Chief Executive Officer and President
Karen L. Healy		48	Director and Chief Operating Officer
Atul Pasricha		45	Director and Treasurer
John D. Sheehan		42	Director and Chief Financial Officer
John P. Arle		55	General Auditor
Logan G. Robinson		53	General Counsel
James P. Whitson		58	Chief Tax Officer


	Number of Shares
	of Common Stock
	Beneficially
Name and Address of Beneficial Owner	Owned		Percentage of Class

Delphi Corporation		100		100%
5725 Delphi Drive Troy, Michigan 48098


	*Advance Notice of Director Nominations and New Business*


	*Anti-takeover Effect of Certain Provisions of Maryland Law and of the Charter and Bylaws*


	*Certain Provisions of Delphi’s Certificate of Incorporation and Bylaws*


	*Proposal to Exclude Certain Dividends from Taxable Income*


		Number of
		Shares
Underwriter
Merrill Lynch, Pierce, Fenner & Smith Incorporated

	Total


	Page

Independent Auditors’ Report		F-2
Balance Sheet as of March 25, 2003		F-3
Notes to Balance Sheet		F-4


ASSETS
Cash			$	100

LIABILITIES AND STOCKHOLDER’S EQUITY
Stockholder’s equity:
	Common stock, $0.01 par value, 100 shares authorized, 100 shares issued		$	1
	Additional paid-in capital			99

		Total stockholder’s equity		100

Total liabilities and stockholder’s equity			$	100


Registration Statement filing fee		$	27,911
Legal fees and expenses			700,000
Blue Sky fees and expenses			5,000
Accounting fees and expenses			100,000
NASD filing fees			30,500
Listing fees and expenses			170,000
Rating agency fees			230,000
Transfer agent and registrar fees			10,000
Printing costs			100,000
Miscellaneous			450,000

	Total	$	1,823,411


	DELPHI PROPERTIES HOLDINGS, LLC
	(By Delphi Properties, Inc., its Agent)


Signature	Title	Date


/s/ JOHN G. BLAHNIK John G. Blahnik	Chairman of the Board, Chief Executive Officer and President of Delphi Properties, Inc. (Principal Executive Officer)	March 28, 2003

/s/ KAREN L. HEALY Karen L. Healy	Director and Chief Operating Officer of Delphi Properties, Inc.	March 28, 2003

/s/ ATUL PASRICHA Atul Pasricha	Director and Treasurer of Delphi Properties, Inc.	March 28, 2003

/s/ JOHN D. SHEEHAN John D. Sheehan	Director and Chief Financial Officer of Delphi Properties, Inc. (Principal Financial and Accounting Officer)	March 28, 2003


Exhibit			Description

	1.1		Form of Underwriting Agreement.
	3.1		Articles of Incorporation of Delphi Properties, Inc.
	3.2		By-Laws of Delphi Properties, Inc.
	3.3		Form of Articles of Amendment and Restatement of Delphi Properties, Inc.
	3.4		Form of Amended and Restated By-Laws of Delphi Properties, Inc.
	3.5		Articles of Organization of Delphi Properties Holdings, LLC.
	3.6		Operating Agreement of Delphi Properties Holdings, LLC, dated March 28, 2003.
	4.1	*	Specimen of certificate representing the Series A preferred stock of Delphi Properties, Inc.
	5.1		Form of opinion of Ballard Spahr Andrews & Ingersoll, LLP, relating to the Series A preferred stock of Delphi Properties, Inc.
	8.1		Form of opinion of Shearman & Sterling relating to certain tax matters.
	10.1		Form of Exchange Agreement between Delphi Corporation and Delphi Properties, Inc.
	10.2		Form of Contribution and Loan Agreement between Delphi Corporation and Delphi Properties, Inc., with Form of Mortgage Note and Mortgage Lien attached thereto.
	10.3		Form of Management and Servicing Agreement between Delphi Properties, Inc., Delphi Properties Holdings, LLC and Delphi Corporation.
	23.1		Consent of Deloitte & Touche LLP.
	23.2		Consent of Deloitte & Touche LLP.
	23.3		Consent of Ballard Spahr Andrews & Ingersoll, LLP (Included in Exhibit 5.1).
	23.4		Consent of Shearman & Sterling (Included in Exhibit 8.1).
	24.1		Power of Attorney (included on signature page to Part II of this registration statement).


Exhibit		Description

	1.1	Form of Underwriting Agreement
	4.1	Form of Preferred Stock Certificate of Designations
	4.2*	Specimen of certificate representing the Series AA preferred stock of Delphi Corporation.
	5.1	Form of opinion of Shearman & Sterling relating to the Series AA preferred stock of Delphi Corporation.
	10.1	Form of Exchange Agreement between Delphi Corporation and Delphi Properties, Inc.
	12.1	Computations of Ratio of Combined Fixed Charges and Preferred Dividends to Earnings.
	23.1	Consent of Deloitte & Touche LLP.
	23.2	Consent of Shearman & Sterling (Included in Exhibit 5.1).
	24.1	Power of Attorney (included on signature page to Part II of this registration statement)