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As filed with the Securities and Exchange Commission on September 17, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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EVEREST REINSURANCE HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
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Delaware 22-3263609
(State of incorporation) (I.R.S. Employer Identification No.)
477 Martinsville Road Janet J. Burak, Esq.
P.O. Box 830 477 Martinsville Road
Liberty Corner, New Jersey 07938 P.O. Box 830
(908) 604-3000 Liberty Corner, New Jersey 07938
(Address, including zip code, and (908) 604-3000
telephone number,including area (Name, address, including zip code,
code, of Registrant's principal and telephone number, including area
executive offices) code, of agent for service)
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EVEREST RE CAPITAL TRUST
(Exact name of registrant as specified in its certificate of trust)
Delaware Applied for
(State of incorporation) (I.R.S. Employer Identification No.)
c/o Everest Reinsurance Holdings, Janet J. Burak, Esq.
Inc. 477 Martinsville Road
477 Martinsville Road P.O. Box 830
P.O. Box 830 Liberty Corner, New Jersey 07938
Liberty Corner, New Jersey 07938 (908) 604-3000
(908) 604-3000 (Name, address, including zip code,
(Address, including zip code, and and telephone number, including area
telephone number,including area code, code, of agent for service)
of registrant's principal executive
offices)
Copies to:
Richard Warren Shepro, Esq. Janet J. Burak, Esq.
Carol S. Rivers, Esq. Everest Reinsurance Holdings, Inc.
Mayer, Brown & Platt 477 Martinsville Road
190 South LaSalle Street P.O. Box 830
Chicago, Illinois 60603-3441 Liberty Corner, New Jersey 07938
(312) 782-0600 (904) 604-3000
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Approximate date of commencement of the proposed sale to the public: From
time to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Title of Each Class of Securities Amount to be Proposed Maximum Amount of
to be Registered(1) Registered(1) Aggregate Offering Price(2) Registration Fee
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<S> <C> <C> <C>
Everest Reinsurance Holdings, Inc. Senior Notes.
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Everest Reinsurance Holdings, Inc.
JuniorSubordinated Notes....................
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Everest Re Capital Trust Preferred
Securities...................................
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Everest Reinsurance Holdings, Inc. Guarantee of
Everest Re Capital
Trust Preferred Securities(3)...............
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Total........................................ $450,000,000 $450,000,000 $125,100
</TABLE>
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(1) An indeterminate principal amount or number of senior notes and junior
subordinated notes of Everest Reinsurance Holdings, Inc. and an
indeterminate number of preferred securities of Everest Re Capital Trust
as may from time to time be issued at indeterminate prices, with an
aggregate offering price not to exceed $450,000,000. Junior subordinated
notes may be issued and sold to Everest Re Capital Trust in which event
the junior subordinated notes may later be distributed to the holders of
preferred securities.
(2) Estimated solely for the purpose of calculating the registration fee,
which is calculated in accordance with Rule 457(o) of the rules and
regulations under the Securities Act of 1933. Rule 457(o) permits the
registration fee to be calculated on the basis of the maximum offering
price of all of the securities listed and, therefore, the table does not
specify by each class information as to the amount to be registered, the
proposed maximum offering price per unit or the proposed maximum aggregate
offering price.
(3) Includes the rights of holders of the preferred securities under the
guarantee of preferred securities and the obligations of Everest
Reinsurance Holdings, Inc. under the trust agreement of Everest Re Capital
Trust, the indenture for the junior subordinated notes and any related
supplemental indenture and the expense agreement, all of which are
described in this Registration Statement. No separate consideration will
be received for any of such guarantee or obligations.
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The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Securities and Exchange
Commission, acting pursuant to said Section 8(a), may determine.
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this preliminary prospectus is not complete and may be +
+changed. These securities may not be sold until the registration statement +
+filed with the Securities and Exchange Commission is effective. This +
+preliminary prospectus is not an offer to sell nor does it seek an offer to +
+buy these securities in any jurisdiction where the offer or sale is not +
+permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion. Dated September 17, 1999.
PROSPECTUS
$450,000,000
EVEREST REINSURANCE HOLDINGS, INC.
Senior Notes, Junior Subordinated Notes and Guarantee
EVEREST RE CAPITAL TRUST
Preferred Securities Guaranteed by
Everest Reinsurance Holdings, Inc.
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We may offer and sell the securities from time to time in one or more
offerings. This prospectus provides you with a general description of the
securities we may offer.
Each time we sell securities we will provide a supplement to this prospectus
that contains specific information about the offering and the terms of the
securities. The supplement may also add, update or change information contained
in this prospectus. You should carefully read this prospectus and any
supplement before you invest in any of our securities.
Everest Reinsurance Holdings, Inc. may offer and sell the following
securities:
. senior notes
. junior subordinated notes
. guarantee of preferred securities
Everest Re Capital Trust may offer and sell preferred securities guaranteed
by Everest Holdings.
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If we decide to list any of these securities on a national securities
exchange upon issuance, the supplements to this prospectus will identify the
exchange and state when we expect trading to begin.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
We may offer these securities through underwriters or agents or directly to
institutional investors. The supplements to this prospectus will provide the
specific terms of the plan of distribution.
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Prospectus dated , 1999
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TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
ABOUT THIS PROSPECTUS..................................................... 1
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS...................... 1
WHERE YOU CAN FIND MORE INFORMATION....................................... 2
EVEREST HOLDINGS.......................................................... 3
THE PROPOSED RESTRUCTURING................................................ 4
THE TRUST................................................................. 7
USE OF PROCEEDS........................................................... 8
RATIO OF EARNINGS TO FIXED CHARGES........................................ 8
ACCOUNTING TREATMENT...................................................... 8
DESCRIPTION OF THE SENIOR NOTES........................................... 9
DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES.............................. 17
DESCRIPTION OF THE PREFERRED SECURITIES................................... 26
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE......................... 32
DESCRIPTION OF THE EXPENSE AGREEMENT...................................... 34
RELATIONSHIP AMONG THE PREFERRED SECURITIES, PREFERRED SECURITIES
GUARANTEE AND JUNIOR SUBORDINATED NOTES HELD BY THE TRUST................ 34
PLAN OF DISTRIBUTION...................................................... 35
EXPERTS................................................................... 36
VALIDITY OF THE SECURITIES................................................ 36
</TABLE>
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ABOUT THIS PROSPECTUS
This prospectus is part of a "shelf" registration statement that we filed
with the United States Securities and Exchange Commission, or the "SEC". By
using a shelf registration statement, we may sell up to $450,000,000 offering
price of any combination of the securities described in this prospectus from
time to time and in one or more offerings. This prospectus only provides you
with a general description of the securities that we may offer. Each time we
sell securities, we will provide a supplement to this prospectus that contains
specific information about the terms of the securities. The supplement may also
add, update or change information contained in this prospectus. Before
purchasing any securities, you should carefully read both this prospectus and
any supplement, together with the additional information described under the
heading "Where You Can Find More Information".
This prospectus does not contain separate financial statements for Everest
Re Capital Trust (the "Trust"). Everest Reinsurance Holdings, Inc. ("Everest
Holdings") files consolidated financial information with the SEC that includes
the Trust. The Trust does not have any independent function other than to issue
securities and to purchase junior subordinated notes from Everest Holdings. We
do not believe that additional financial information regarding the Trust would
be useful to you.
You should rely only on the information contained or incorporated by
reference in this prospectus and in any supplement. We 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 will
not make 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 and any supplement to this prospectus is accurate as of the
dates on their covers. Our business, financial condition, results of operations
and prospects may have changed since that date.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, any accompanying prospectus supplement and the information
incorporated by reference in them may contain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 (the "Securities Act")
and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). We
intend these forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements in these sections. In some cases, you
can identify these statements by our use of forward-looking words such as
"may", "will", "should", "anticipate", "estimate", "expect", "plan", "believe",
"predict", "potential" or "intend". You should be aware that these statements
and any other forward-looking statements in these documents only reflect our
expectations and are not guarantees of performance. These statements involve
risks, uncertainties and assumptions. Actual events or results may differ
materially from our expectations. Important factors that could cause our actual
results to be materially different from our expectations include those
discussed in any of these documents under the caption "Risk Factors". We
undertake no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or otherwise.
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WHERE YOU CAN FIND MORE INFORMATION
Available Information
This prospectus is part of a registration statement that we filed with the
SEC. The registration statement, including the attached exhibits, contains
additional relevant information about Everest Holdings. The rules and
regulations of the SEC allow us to omit some of the information included in the
registration statement from this prospectus. In addition, Everest Holdings
files reports, proxy statements and other information with the SEC under the
Exchange Act. You can read and copy any of this information at the following
locations of the SEC:
Public Reference Room New York Regional Office Chicago Regional Office
450 Fifth Street, N.W. 7 World Trade Center Citicorp Center
Room 1024 Suite 1300 500 West Madison Street
Washington, D.C. 20549 New York, New York 10048 Suite 1400
Chicago, Illinois
60661-2551
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates. You may obtain information on the operation of
the SEC's Public Reference Room in Washington, D.C. by calling the SEC at 1-
800-SEC-0330.
The SEC also maintains an Internet web site that contains reports, proxy
statements and other information about issuers, like Everest Holdings, that
file electronically with the SEC. The address of that site is
http://www.sec.gov. The SEC file number for documents filed by Everest Holdings
under the Exchange Act is 1-13816.
Everest Holdings' common stock is listed on the New York Stock Exchange
(NYSE: RE). You can inspect reports, proxy statements and other information
concerning Everest Holdings at the offices of the New York Stock Exchange at 20
Broad Street, New York, New York 10005.
Incorporation by Reference
The rules of the SEC allow us to "incorporate by reference" information into
this prospectus. This means that we can disclose important information to you
by referring you to another document filed separately with the SEC. The
information incorporated by reference is deemed to be part of this prospectus,
except for any such information that is superseded by information included
directly in this prospectus or in any prospectus supplement, and later
information that we file with the SEC will automatically update and supersede
that information. This prospectus incorporates by reference the documents set
forth below that we have previously filed or will file with the SEC. These
documents contain important information about Everest Holdings.
. Annual Report on Form 10-K of Everest Holdings for the year ended
December 31, 1998;
. Quarterly Reports on Form 10-Q of Everest Holdings for quarters ended
March 31, 1999 and June 30, 1999; and
. All additional documents that we file with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act between the date of this
prospectus and the termination of the offering of securities described in
any prospectus supplement.
Upon request, Everest Holdings will provide without charge to each person to
whom a copy of this prospectus has been delivered a copy of any and all of
these filings. You may request a copy of these filings by writing or
telephoning us at:
Everest Reinsurance Holdings, Inc.
477 Martinsville Road
P.O. Box 830
Liberty Corner, New Jersey 07938-0830
Attention: Janet J. Burak
Telephone: (908) 604-3000
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EVEREST HOLDINGS
Business Operations
Everest Holdings was established in 1993 in Delaware to serve as the parent
holding company of Everest Reinsurance Company ("Everest Re"), a property and
casualty reinsurer formed in 1973. Until October 6, 1995, Everest Holdings was
an indirect, wholly-owned subsidiary of The Prudential Insurance Company of
America ("The Prudential"). On October 6, 1995, The Prudential sold its entire
interest in Everest Holdings' shares of common stock in an initial public
offering.
Everest Holdings, through Everest Re, underwrites property and casualty
reinsurance on a treaty and facultative basis for insurance and reinsurance
companies in the United States and selected international markets. Everest Re
writes reinsurance both through brokers and directly with ceding insurance
companies, giving it the flexibility to pursue business regardless of the
ceding company's preferred reinsurance purchasing method. Everest Re and its
subsidiaries also write primary insurance. Based on industry data at December
31, 1998 published by the Reinsurance Association of America, Everest Re is the
sixth largest reinsurance company in the United States, ranked by statutory
surplus.
Following is a summary of Everest Holdings' and Everest Re's operating
subsidiaries:
. Everest National Insurance Company, an Arizona insurance company, is
licensed in 42 states and the District of Columbia and writes primary
insurance on an admitted basis.
. Everest Insurance Company of Canada is licensed in all Canadian provinces
and territories and is federally licensed to write primary insurance
under the Insurance Companies Act of Canada.
. Everest Indemnity Insurance Company ("Everest Indemnity"), a Delaware
insurance company formed in 1997, engages in the excess and surplus lines
insurance business in the United States. Everest Indemnity is licensed in
Delaware and is eligible to write business in 39 states, the District of
Columbia and the Commonwealth of Puerto Rico on a non-admitted basis.
. Mt. McKinley Managers, L.L.C. ("Mt. McKinley"), a New Jersey limited
liability company, is licensed in New Jersey as an insurance producer,
including surplus lines authority. After a 1998 acquisition of the assets
of insurance agency operations in Alabama and Georgia, the continuing
insurance agency operations are now carried on by subsidiaries of Mt.
McKinley. These subsidiaries are WorkCare Southeast, Inc., an Alabama
insurance agency, and WorkCare Southeast of Georgia, Inc., a Georgia
insurance agency.
. Everest Re Holdings, Ltd., a Bermuda company formed in 1998, owns Everest
Re Ltd., a United Kingdom company that is in the process of being
dissolved, as its reinsurance operations have been converted into branch
operations of Everest Re.
Our products include a full range of property and casualty coverages,
including marine, aviation, surety, errors and omissions, directors' and
officers', medical malpractice, other specialty liability lines, accident and
health, workers compensation, non-standard auto and loss portfolios. Our
distribution channels include both the direct and broker reinsurance markets,
international and domestic markets, reinsurance, both treaty and facultative,
and insurance, both admitted and non-admitted.
Our business strategies include effective management of the underwriting
cycle, management of catastrophe exposures and retrocessional costs and expense
control. Our underwriting strategies seek to capitalize on our staff's
expertise and our flexibility to offer multiple products through multiple
production sources in a cost efficient manner. Efforts to control expenses and
to operate in a cost efficient manner are a continuing focus for us.
Our underwriting strategy emphasizes underwriting profitability rather than
premium volume, the writing of specialized risks and integration of
underwriting expertise across all underwriting units. Key elements of this
strategy are prudent risk selection, appropriate pricing through strict
underwriting discipline and adjustment of
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our business mix to respond to changing market conditions. We focus on
reinsuring companies that effectively manage the underwriting cycle through
proper analysis and pricing of underlying risks and whose underwriting
guidelines and performance are compatible with our objectives.
Our underwriting strategy also emphasizes flexibility and responsiveness to
changing market conditions, such as increased demand or favorable pricing
trends. We believe that our existing strengths, including our broad
underwriting expertise, international presence, diverse distribution
capabilities and substantial capital, facilitate adjustments to our mix of
business geographically, by line of business and by type of coverage. We
believe that this allows us to capitalize on those market opportunities that
provide the greatest potential for underwriting profitability. Our primary
insurance infrastructure further facilitates this strategy by permitting us to
develop business that requires us to issue primary insurance policies. We
carefully monitor our mix of business to avoid inappropriate concentrations of
geographic or other risk.
Our underwriting guidelines seek to limit the accumulation of known risks in
exposed areas, to require that business which is exposed to catastrophe losses
be written with appropriate geographic spread and to maintain a cost-effective
retrocession program. Our underwriting guidelines also seek to better reflect
the relationship between premiums and risk assumed while maintaining our
probable maximum loss at appropriate levels.
Our principal executive offices are located at 477 Martinsville Road, P.O.
Box 830, Liberty Corner, New Jersey 07938-0830, and our telephone number is
(908) 604-3000.
THE PROPOSED RESTRUCTURING
On September 16, 1999, the board of directors of Everest Holdings approved a
plan under which Everest Holdings and its subsidiaries would be restructured as
follows:
. Everest Reinsurance Group, Ltd., a company organized in Bermuda and with
its principal office in Barbados ("Everest Group"), will become the new
publicly-owned parent corporation of Everest Holdings
. Everest Holdings, as a subsidiary of Everest Group, will continue to act
as the holding company for the subsidiaries of Everest Holdings in the
United States and Canada.
. Everest Group will also be the holding corporation for a new Bermuda-
based reinsurance subsidiary, Everest Reinsurance (Bermuda) Ltd.
("Everest Bermuda").
The restructuring will be accomplished in the following steps:
. Everest Holdings has organized a subsidiary, Everest Group, under the
laws of Bermuda and established its principal office in Barbados.
. Everest Group has organized a Delaware subsidiary, Everest Merger
Corporation ("Everest Merger").
. Everest Merger will be merged into Everest Holdings, with Everest
Holdings as the surviving corporation. When the merger is completed,
Everest Holdings will become a subsidiary of Everest Group and each
outstanding share of common stock of Everest Holdings will be converted
into one common share of Everest Group.
. After the merger is completed, Everest Group will capitalize Everest
Bermuda, its Bermuda-based reinsurance subsidiary.
We intend to call a special meeting of our stockholders to consider and vote
on the proposed restructuring. If our stockholders approve the proposed
restructuring at the special meeting, we anticipate that the proposed
restructuring will be completed immediately thereafter.
The present corporate structure of Everest Holdings and its subsidiaries and
the corporate structure that would result from the proposed restructuring can
be illustrated as follows:
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[ORGANIZATION CHART APPEARS HERE]
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[AFTER THE RESTRUCTURING CHART]
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THE TRUST
Everest Holdings created the Trust as a statutory Delaware business trust
pursuant to a trust agreement. Everest Holdings will enter into an amended and
restated trust agreement (the "Trust Agreement") for the Trust, which will
state the terms and conditions for the Trust to issue and sell its preferred
securities and common securities.
The Trust exists solely to:
. issue and sell its preferred securities (representing undivided
beneficial interests in the assets of the Trust) to the public;
. issue and sell its common securities (representing undivided beneficial
interests in the assets of the Trust) to us;
. use the proceeds from the sale of its preferred and common securities to
purchase a series of our junior subordinated notes;
. distribute the cash payments it receives from the junior subordinated
notes it owns to the holders of the preferred and common securities; and
. engage in other activities that are necessary or incidental to these
purposes.
We will purchase all of the common securities of the Trust. The common
securities will represent an aggregate liquidation amount equal to at least 3%
of the Trust's total capitalization. The preferred securities will represent
the remaining 97% of the Trust's total capitalization. The common securities
will have terms substantially identical to, and will rank equal in priority of
payment with, the preferred securities. However, if we default on the related
junior subordinated notes, then cash distributions and liquidation, redemption
and other amounts payable on the common securities will be subordinate in
priority of payment to such amounts payable on the preferred securities.
The preferred securities will be guaranteed by us as described later in this
prospectus.
We have appointed five trustees to conduct the Trust's business and affairs:
. The Chase Manhattan Bank ("property trustee");
. Chase Manhattan Bank Delaware ("Delaware trustee"); and
. Three Everest Holdings officers ("regular trustees").
Except under certain limited circumstances, only we can remove or replace
the trustees. In addition, we can increase or decrease the number of trustees.
We will pay all fees and expenses related to the Trust and the offering of
the preferred securities and will pay all ongoing costs and expenses of the
Trust, except the Trust's obligations under the preferred and common
securities.
The Trust will not have separate financial statements. The statements would
not be material to holders of the preferred securities because the Trust will
not have any independent operations and exists solely for the reasons
summarized above.
The principal offices of the Trust will be located at 477 Martinsville Road,
P.O. Box 830, Liberty Corner, New Jersey 09738-0830, and the telephone number
of the Trust will be (908) 604-3000.
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USE OF PROCEEDS
Unless stated otherwise in the applicable prospectus supplement, the net
proceeds from the sale of the securities offered by this prospectus will be:
. distributed by us to Everest Group and then used by Everest Group to
capitalize Everest Bermuda and for general corporate purposes; and
. used by the Trust to purchase our junior subordinated notes.
RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth the ratio of our earnings to fixed charges
for each of the periods indicated:
<TABLE>
<CAPTION>
Period Ended Year Ended December 31,
June 30, --------------------------
1999 1999 1998 1997 1996 1995
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<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges...... 108.1 121.2 127.9 82.0 (1) (1)
</TABLE>
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(1) Principally as a result of non-recurring charges, Everest Holdings' had a
deficiency of earnings in 1995 and 1994 of $26,568,000 and $11,982,000,
respectively, to cover fixed charges.
ACCOUNTING TREATMENT
The Trust will be treated as a subsidiary of Everest Holdings for financial
reporting purposes. Accordingly, the Trust's financial statements will be
included in the consolidated financial statements of Everest Holdings. The
preferred securities will be presented as a separate line item in the
consolidated statements of financial condition of Everest Holdings under the
caption "Company Obligated Mandatorily Redeemable Preferred Securities of
Subsidiary Trust Holding Solely Junior Subordinated Notes of the Company" and
appropriate disclosures about the preferred securities will be included in the
notes to the consolidated financial statements. For financial reporting
purposes, Everest Holdings will record distributions payable on the preferred
securities as a component of interest expense in the consolidated statements
of operations of Everest Holdings.
In its future financial reports, Everest Holdings will: (1) present the
preferred securities on its consolidated statements of financial condition as
a separate line item entitled "Company Obligated Mandatorily Redeemable
Preferred Securities of Subsidiary Trust Holding Solely Junior Subordinated
Notes of the Company" and (2) include in a footnote to the financial
statements disclosure that the sole assets of the Trust are the junior
subordinated notes specifying the principal amount, interest rate and maturity
date of the junior subordinated notes held.
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DESCRIPTION OF THE SENIOR NOTES
A description of the terms of the senior notes is set forth below. This
description does not purport to be complete and is subject to, and is qualified
in its entirety by reference to, the senior indenture (the "base senior
indenture"), dated as of , 1999, between Everest Holdings and The Chase
Manhattan Bank, as trustee (the "senior indenture trustee"), as supplemented
from time to time (the "senior indenture").
We may issue series of senior notes from time to time by entering into
supplemental indentures with the senior indenture trustee or pursuant to
resolutions of our board of directors or a duly authorized committee thereof.
We have filed the base senior indenture and the form of supplemental
indenture as exhibits to the registration statement of which this prospectus is
a part. The senior indenture will be qualified under the Trust Indenture Act of
1939 (the "Trust Indenture Act"). The terms of each series of senior notes will
include those stated in the senior indenture for that series and those made a
part of the senior indenture by reference to the Trust Indenture Act.
General
We will issue senior notes under the senior indenture as one or more series
of unsecured senior debt securities. The senior notes will rank equal in
priority with all of our other unsecured and unsubordinated debt.
The base senior indenture does not limit the aggregate principal amount of
senior notes that we may issue. The senior notes of a series need not be issued
at the same time, bear interest at the same rate or mature on the same date.
We conduct our business through subsidiaries. Accordingly, our ability to
meet our obligations under the senior notes will be dependent on the earnings
and cash flows of our subsidiaries and the ability of our subsidiaries to pay
dividends or to advance or repay funds to us. In addition, our rights and the
rights or our creditors to participate in the assets of any subsidiary upon the
subsidiary's liquidation or recapitalization will be subject to the prior
claims of the subsidiary's creditors.
The prospectus supplement and the supplemental indenture for a particular
series of senior notes will set forth the following terms of that series:
. the title of the series;
. any limit on the aggregate principal amount of the senior notes of the
series;
. the date or dates on which the principal of any of the senior notes will
be payable or the method for determining such date or dates;
. whether we may shorten or extend the date on which the principal of any
senior notes of the series is payable;
. the rate or rates at which any of the senior notes will bear interest, if
any, or the method for determining such rate or rates, and the date or
dates from which any such interest will accrue;
. the interest payment dates on which any such interest will be payable and
the regular record date, if any, for any such interest payable on any
interest payment date;
. whether we may extend the interest payment periods and, if so, the terms
of any such extension;
. the place or places where principal and any premium and interest on any
of the senior notes will be payable, if other than the principal
corporate trust office of the senior indenture trustee;
. our obligation, if any, to redeem or purchase any of the senior notes
pursuant to any sinking fund, purchase fund or analogous provision or at
the option of the holder and the terms and conditions on which any of the
senior notes may be redeemed or purchased pursuant to such obligation;
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. the terms and conditions, if any, on which we may at our option redeem
any of the senior notes;
. whether any of the terms of the senior indenture described below under
"--Defeasance and Covenant Defeasance" will apply to any of the senior
notes;
. the currency, currencies or currency units in which principal and any
premium and interest on any of the senior notes will be payable, if other
than U.S. dollars, and the manner of determining the equivalent of those
amounts in U.S. dollars for any purpose;
. the portion of the principal amount of any of the senior notes that will
be payable upon declaration of acceleration of maturity, if other than
the entire principal amount;
. whether any of the senior notes will be issuable as global securities
and, if so, the depositary and any provisions for the transfer or
exchange of any such global securities, if different from those described
below under "--Global Securities";
. any addition to, deletion from or change in events of default or
covenants with respect to any of the senior notes;
. any index or formula for determining the amount of principal or any
premium or interest on any of the senior notes and the manner of
determining any such amounts;
. if the principal amount payable on the maturity date of any of the senior
notes will not be determinable on any one or more dates prior to the
maturity date, the amount which will be deemed to be such principal
amount as of any such date for any purpose, including the principal
amount which will be due and payable upon any maturity other than the
maturity date (or the manner of determining any such amount); and
. any other terms of the senior notes.
Unless the applicable prospectus supplement states otherwise, we will issue
the senior notes only in fully registered form, without coupons, and there will
be no service charge for any registration of transfer or exchange of the senior
notes. We may, however, require payment to cover any tax or other governmental
charge payable in connection with such registration of transfer or exchange.
We may offer and sell senior notes at a substantial discount below their
principal amount. The applicable prospectus supplement will describe the
special United States federal income tax and other considerations, if any,
applicable to such senior notes. In addition, the applicable prospectus
supplement may describe certain special United States federal income tax or
other considerations, if any, applicable to any senior notes that are
denominated in a currency or currency unit other than U.S. dollars.
The senior indenture does not contain provisions that afford any holders of
senior notes protection in the event of a highly leveraged transaction
involving Everest Holdings.
Global Securities
Some or all of the senior notes of a series may be represented in whole or
in part by one or more global securities deposited with or on behalf of one or
more depositaries.
The applicable prospectus supplement will describe the terms of any
depositary arrangement. We anticipate that the following provisions will apply
to all depositary arrangements for senior notes represented by global
securities.
Unless the applicable prospectus supplement states otherwise, senior notes
that are to be represented by a global security deposited with or on behalf of
a depositary will be represented by a global security registered in the name of
that depositary or its nominee. Upon the issuance of a global security in
registered form, the depositary for such global security will credit, on its
book-entry registration and transfer system, the respective principal amounts
of the senior notes represented by such global security to the accounts of
institutions that
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have accounts with such depositary or its nominee ("participants"). The
accounts to be credited will be designated by the underwriters or agents of
such senior notes or by Everest Holdings, if such senior notes are offered and
sold directly by Everest Holdings. Ownership of beneficial interests in such
global securities will be limited to participants or persons that may hold
interests through participants. Ownership of beneficial interests by
participants in such global securities will be shown on, and the transfer of
any such ownership interest will be effected only through, records maintained
by the depositary or its nominee for such global security. Ownership of
beneficial interests in global securities by persons that hold through
participants will be effected only through records maintained by such
participants. The laws of some jurisdictions require that certain purchasers of
securities take physical delivery of such securities in definitive form. Such
limits and such laws may impair the ability to transfer beneficial interests in
a global security.
So long as the depositary for a global security, or its nominee, is the
registered owner of such global security, such depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the senior
notes represented by such global security for all purposes under the senior
indenture. Except as set forth below, owners of beneficial interests in the
global security will not be entitled to have the senior notes represented by
such global security registered in their names, will not receive or be entitled
to receive physical delivery of the senior notes in definitive form and will
not be considered the owners or holders thereof under the senior indenture.
Payment of principal of and any premium and interest on senior notes
registered in the name of or held by a depositary or its nominee will be made
in immediately available funds to the depositary or its nominee, as the case
may be, as the registered owner or the holder of the global security
representing such senior notes. None of Everest Holdings, the senior indenture
trustee, any paying agent or the registrar and transfer agent for such senior
notes will have any responsibility or liability for any aspect of the records
relating to, or payments made on account of, beneficial ownership interests in
a global security for such senior notes or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
We expect that a depositary for senior notes of a series, upon receipt of
any payment of principal or any premium or interest in respect of a global
security, will immediately credit participants' accounts with payment in
amounts proportionate to their respective beneficial interests in the principal
amount of such global security as shown on the records of such depositary. We
also expect that payments by participants to owners of beneficial interests in
such global security held through such participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in "street name", and
will be the responsibility of such participants.
A global security may not be transferred in whole or in part except by the
depositary for such global security to a nominee of such depositary or by a
nominee of such depositary to such depositary or another nominee of such
depositary or by such depositary or any such nominee to a successor depositary
or a nominee of such successor depositary. If a depositary for senior notes of
a series is at any time unwilling or unable to continue as depositary and a
successor depositary is not appointed by us within 90 days or if at any time
the depositary ceases to be a clearing agency registered under the Exchange Act
when the depositary is required to be registered to act as such depositary and
no successor is appointed by us within 90 days, then we will issue senior notes
in definitive registered form in exchange for the global security or global
securities representing such senior notes. In addition, we may at any time
determine not to have any senior notes represented by one or more global
securities and, in such event, will issue senior notes in definitive registered
form in exchange for the global securities representing such senior notes. In
any such instance, an owner of a beneficial interest in a global security will
be entitled to physical delivery in definitive form of the senior notes
represented by such global security equal in principal amount to such
beneficial interest and to have such senior notes registered in its name.
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Events of Default
The following will be events of default under the senior indenture with
respect to senior notes of any series (unless not applicable to the particular
series or unless modified or deleted in a supplemental indenture as stated in
the applicable prospectus supplement):
. we fail to pay principal of or any premium on any senior note of that
series on its due date;
. we fail to pay any interest on any senior note of that series within 30
days from its due date; provided, however, that the date on which such
payment is due will be the date on which we are required to make payment
following any deferral of interest payments by us under the terms of such
senior notes;
. we fail to make any sinking fund payment on its due date;
. we fail to perform any of our covenants in the senior indenture
(excluding a covenant not applicable to the affected series) for 60 days
after the senior indenture trustee or the holders of at least 33% in
principal amount of the outstanding senior notes of that series give us
written notice of the default and require that we remedy the breach
(unless the 60-day period is extended by either the senior indenture
trustee or the senior indenture trustee and the holders of at least the
same principal amount of the outstanding senior notes of that series that
had given notice of the default); the senior indenture trustee, or the
senior indenture trustee and such holders, as the case may be, will be
deemed to have agreed to such an extension if we have initiated and are
diligently pursuing corrective action;
. we default under any (i) debt for any money borrowed (including any other
series of debt securities), (ii) mortgage, indenture or other instrument
under which there may be issued or may be secured or evidenced any
indebtedness for money borrowed or (iii) guarantee of payment for money
borrowed and such default shall result in such indebtedness becoming due
prior to its stated maturity; provided, however, a default shall exist
under this clause only if the aggregate principal amount outstanding
under all such indebtedness that has become due prior to its stated
maturity exceeds $25,000,000 and the acceleration of such indebtedness
has not been rescinded or annulled within 10 days after written notice as
provided in the senior indenture;
. we file for bankruptcy or other events of bankruptcy, insolvency or
reorganization occur; or
. any other event of default specified in the applicable prospectus
supplement occurs.
If an event of default with respect to senior notes of a series occurs and
is continuing, then the senior indenture trustee or the holders of not less
than 33% in principal amount of the outstanding senior notes of that series
may, by notice to us (and to the senior indenture trustee if given by holders),
declare to be immediately due and payable all unpaid principal and accrued
interest on all senior notes of that series. At any time after a declaration of
acceleration has been made with respect to the senior notes of a series, the
holders of a majority in principal amount of the outstanding senior notes may
rescind any declaration of acceleration with respect to the senior notes and
its consequences:
. if the rescission would not conflict with any judgment or decree;
. if all existing events of default with respect to the senior notes have
been cured or waived except non-payment of principal or interest on the
senior notes that has become due solely because of the acceleration; and
. to the extent that payment of such interest is lawful, interest upon
overdue interest at the rate or rates prescribed therefor in the notes
has been paid.
Subject to provisions for indemnification and to certain other rights of the
senior indenture trustee, the holders of a majority in principal amount of the
outstanding senior notes of any series have the right to direct the time,
method and place of conducting any proceedings for any remedy available to the
senior indenture trustee or to direct the exercise of any trust or power
conferred on the senior indenture trustee with respect to the senior notes of
that series.
No holder of a senior note of any series will have any right to institute a
proceeding with respect to the senior indenture for the appointment of a
receiver or for any remedy under the senior indenture unless:
. that holder has previously given the senior indenture trustee written
notice that an event of default with respect to the senior notes of that
series has occurred and is continuing;
. the holders of a majority in principal amount of the outstanding senior
notes of that series have made written request to institute the
proceeding;
. such holder or holders have offered reasonable indemnity to the senior
indenture trustee;
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. the senior indenture trustee has failed to institute the proceeding for
60 days after receipt of the notice and offer of indemnity; and
. the senior indenture trustee has not received from the holders of a
majority in principal amount of the outstanding senior notes of that
series a direction inconsistent with the written request.
Notwithstanding the foregoing, the holder of any senior note will have an
absolute and unconditional right to receive payment of the principal of and any
premium and, subject to certain limitations, interest on that senior note on
its maturity date (or, in the case of redemption, the date of redemption) and
to institute suit for the enforcement of any such payment.
Notice of Default
If any event which is, or after notice or lapse of time or both would
become, an event of default occurs with respect to senior notes of any series
and it is known to the senior indenture trustee, the senior indenture trustee
shall mail to holders of senior notes of that series a notice of default within
90 days after it occurs unless such default shall have been cured or waived;
provided, however, that except in the case of a default in the payment of the
principal of or any premium, or interest on, any senior note of any series or
in the making of any sinking fund payment payable with respect to senior notes
of any series, the senior indenture trustee may withhold the notice if and so
long as the board of directors, the executive committee or a trust committee of
directors or responsible officers of the senior indenture trustee in good faith
determines that withholding the notice is in the interests of holders of senior
notes of that series; and provided, further, that in the case of any default
for failure by Everest Holdings to comply with or perform any of its
agreements, covenants or warranties in the senior notes and under the senior
indenture with respect to senior notes of any series, no notice to holders of
such senior notes shall be given until at least 30 days after the occurrence
thereof.
We are required to furnish annually to the senior indenture trustee an
officers' certificate to the effect that, to the best knowledge of the officers
providing the certificate, we are not in default under the senior indenture or,
if there has been a default, specifying the default and its status.
Consolidation, Merger, Conveyance or Transfer
The senior indenture provides that we may consolidate or merge with or into
another corporation or other entity of a sort specified in the senior
indenture, or convey or transfer our properties and assets as an entirety or
substantially as an entirety to any such entity; provided, however, that:
. the successor, if any, is an entity organized and existing under the laws
of the United States of America or any State of the United States or the
District of Columbia and assumes by supplemental indenture our
obligations under the senior indenture and the senior notes issued
thereunder;
. immediately after giving effect to the transaction, no event or default,
or event which after notice or lapse of time or both would become an
event of default, will have occurred and be continuing; and
. we deliver an officers' certificate and an opinion of counsel to the
senior indenture trustee stating that all conditions precedent in the
senior indenture relating to the consolidation, merger, conveyance or
transfer have been complied with.
Upon the assumption by the successor of our obligations under the senior
indenture and the senior notes issued thereunder and the satisfaction of any
other conditions precedent provided for in the senior indenture, the successor
will succeed to and be substituted for Everest Holdings under the senior
indenture, and we will be relieved of our obligations under the senior
indenture and the senior notes.
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Registration and Transfer
If senior notes of a series are to be redeemed, we will not be required to:
. issue, register the transfer of, or exchange any senior notes of that
series during the 15 days immediately preceding the date notice is mailed
identifying the senior notes that are called for redemption; or
. register the transfer of or exchange any senior note selected for
redemption, in whole or in part, except the unredeemed portion of a
senior note being redeemed in part.
Denominations
Senior notes will be issuable in denominations of $1,000 and any integral
multiples of $1,000, without coupons, unless the applicable prospectus
supplement states otherwise.
Payment and Paying Agent
Principal of senior notes will be paid only against surrender of the senior
notes to the paying agent. Unless the applicable prospectus supplement states
otherwise, interest on senior notes will be payable, subject to surrender if
applicable, at the office of the paying agent or, at our option, (1) by wire
transfer to an account at a banking institution in the United States that the
person entitled to the interest designates in writing to the senior indenture
trustee at least 16 days prior to the date of payment or (2) by check mailed to
the address of the person entitled to the interest as such address appears in
the security register for such senior notes.
Unless the applicable prospectus supplement states otherwise, the senior
indenture trustee will act as paying agent for the senior notes, and the
principal corporate trust office of the senior indenture trustee will serve as
the office through which the paying agent acts. We may designate additional
paying agents, rescind the designation of any paying agents or approve a change
in the office through which any paying agent acts.
All moneys that we have paid to a paying agent for payment of principal of
or interest on senior notes that remain unclaimed at the end of two years after
such principal or interest has become due and payable will be repaid to us at
our request. Holders will thereafter look only to us for such payments.
Modification of the Senior Indenture
Everest Holdings and the senior indenture trustee may, with certain
exceptions, amend or modify the senior indenture with the consent of the
holders of a majority in aggregate principal amount of the outstanding senior
notes of all series of senior notes affected by the amendment or modification
(voting as one class). No amendment or modification may, however, without the
consent of the holder of each outstanding senior note affected thereby:
. change the stated maturity of the principal of, or any installment of
principal of or interest on, any senior note;
. reduce the principal amount of, the rate of interest on, or any premium
payable upon the redemption of, any senior note;
. reduce the amount of principal of any senior note due and payable upon
acceleration of the maturity thereof;
. change the place of payment or currency of payment of principal of, or
any premium or interest on, any senior note;
. impair the right to institute suit for the enforcement of any such
payment on any senior note on or after the stated maturity or date of
redemption; or
. reduce the percentage in principal amount of senior notes of any series,
the consent of whose holders is required to amend or modify the senior
indenture, to waive compliance with certain provisions of the senior
indenture or to waive certain defaults.
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In addition, Everest Holdings and the senior indenture trustee may, without
the consent of any holders of senior notes, execute supplemental indentures to:
. create new series of senior notes;
. cure any ambiguity, defect or inconsistency in the senior indenture; and
. make other changes that do not adversely affect the interests of the
holders of senior notes in any material respect;
as well as for various other purposes.
Waiver of Covenants
The holders of a majority in aggregate principal amount of the outstanding
senior notes of any series may waive, for that series, our compliance with some
restrictive covenants of the senior indenture. The holders of a majority in
aggregate principal amount of the outstanding senior notes of all series under
the senior indenture with respect to which a default has occurred and is
continuing (voting as one class) may waive that default for all such series,
other than a default in the payment of principal of, or any premium or interest
on, any senior note of such series or a default with respect to a covenant or
provision that cannot be amended or modified without the consent of the holder
of each outstanding senior note affected.
Defeasance and Covenant Defeasance
The senior indenture provides, unless the terms of the particular series of
senior notes provides otherwise, that we may, upon satisfying several
conditions, cause ourselves to be:
. discharged from our obligations, with certain exceptions, with respect to
any series of senior notes, which we refer to as "defeasance"; and
. released from our obligations under specified covenants with respect to
any series of senior notes, which we refer to as "covenant defeasance".
In connection with any defeasance or covenant defeasance, we must
irrevocably deposit with the senior indenture trustee, in trust, money and/or
government obligations which, through the scheduled payment of principal and
interest on those obligations, would provide sufficient moneys to pay the
principal of and any premium and interest on the senior notes on the maturity
dates or upon redemption.
The senior indenture permits defeasance with respect to any senior notes of
a series even if a prior covenant defeasance has occurred with respect to
senior notes of that series. Following a defeasance, payment of the senior
notes defeased may not be accelerated because of an event of default. Following
a covenant defeasance, payment of senior notes may not be accelerated by
reference to the covenants affected by the covenant defeasance. However, if
such an acceleration were to occur, the realizable value at the acceleration
date of the money and government obligations in the defeasance trust could be
less than the principal and interest then due on such senior notes, since the
required deposit in the defeasance trust would be based upon scheduled cash
flows rather than market value, which would vary depending upon interest rates
and other factors.
As a condition to defeasance or covenant defeasance, we must deliver to the
senior indenture trustee an opinion of counsel to the effect that the holders
of the senior notes will not recognize income, gain or loss for United States
Federal income tax purposes as a result of such defeasance or covenant
defeasance and will be subject to United States Federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such defeasance or covenant defeasance had not occurred. Such opinion, in
the case of a defeasance, must refer to and be based upon a ruling of the
Internal Revenue Service or a change in applicable federal income tax law
occurring after the date of the senior indenture.
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Information Concerning the Senior Indenture Trustee
In the case an event of default shall occur and be continuing, the senior
indenture trustee shall exercise such of its rights and powers under the senior
indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
his own affairs. Before proceeding to exercise any right or power under the
senior indenture at the direction of such holders, the senior indenture trustee
will be entitled to receive from such holders security or indemnity
satisfactory to it against the costs, expenses and liabilities which might be
incurred by it in complying with any such direction.
The Chase Manhattan Bank, which is the senior indenture trustee, also serves
as the subordinated note trustee under the subordinated indenture described
below and as property trustee and guarantee trustee with respect to the
preferred securities issued by the Trust. Everest Holdings and certain of its
affiliates maintain deposit accounts and banking relationships with The Chase
Manhattan Bank.
Governing Law
The senior indenture and the senior notes will be governed by the laws of
the State of New York, without regard to the conflict of law provisions
thereof.
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DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES
A description of the terms of the junior subordinated notes is set forth
below. This description does not purport to be complete and is subject to, and
is qualified in its entirety by reference to, the subordinated indenture, dated
as of , 1999 (the "base subordinated indenture"), between Everest
Holdings and The Chase Manhattan Bank, as trustee (the "subordinated indenture
trustee"), as supplemented from time to time (the "subordinated indenture").
We may issue series of junior subordinated notes from time to time by
entering into supplemental indentures with the subordinated indenture trustee
or pursuant to resolutions of our board of directors or a duly authorized
committee thereof.
We have filed the base subordinated indenture and the form of supplemental
indenture as exhibits to the registration statement of which this prospectus is
a part. The subordinated indenture will be qualified under the Trust Indenture
Act. The terms of each series of junior subordinated notes will include those
stated in the subordinated indenture for that series and those made a part of
the subordinated indenture by reference to the Trust Indenture Act.
General
We will issue junior subordinated notes under the subordinated indenture as
one or more series of unsecured subordinated debt securities.
The base subordinated indenture does not limit the aggregate principal
amount of junior subordinated notes that we may issue. The junior subordinated
notes of a series need not be issued at the same time, bear interest at the
same rate or mature on the same date.
We conduct our business through subsidiaries. Accordingly, our ability to
meet our obligations under the junior subordinated notes will be dependent on
the earnings and cash flows of our subsidiaries and the ability of our
subsidiaries to pay dividends or to advance or repay funds to us. In addition,
our rights and the rights or our creditors to participate in the assets of any
subsidiary upon the subsidiary's liquidation or recapitalization will be
subject to the prior claims of the subsidiary's creditors.
The prospectus supplement and the supplemental indenture for a particular
series of junior subordinated notes will set forth the following terms of that
series:
. the title of the series;
. any limit on the aggregate principal amount of the junior subordinated
notes of the series;
. the date or dates on which the principal of the junior subordinated notes
will be payable or the method for determining such date or dates;
. whether we may shorten or extend the date on which the principal of any
junior subordinated notes of the series is payable;
. the rate or rates at which the junior subordinated notes will bear
interest, if any, or the method for determining the rate or rates, and
the date or dates from which any such interest will accrue;
. the interest payment dates on which any such interest will be payable and
the regular record date, if any, for any interest payable on any interest
payment date;
. whether we may extend the interest payment periods and, if so, the terms
of any such extension;
. the place or places where principal and any premium and interest on the
junior subordinated notes will be payable, if other than the principal
corporate trust office of the subordinated indenture trustee;
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. our obligation, if any, to redeem or purchase the junior subordinated
notes pursuant to any sinking fund, purchase fund or analogous provision
or at the option of the holder and the terms and conditions on which the
junior subordinated notes may be redeemed or purchased pursuant to such
obligation;
. the terms and conditions, if any, on which we may at our option redeem
the junior subordinated notes;
. whether any of the terms of the subordinated indenture described below
under "--Defeasance and Covenant Defeasance" will not apply to the junior
subordinated notes;
. the currency, currencies or currency units in which principal and any
premium and interest on the junior subordinated notes will be payable, if
other than U.S. dollars, and the manner of determining the equivalent of
those amounts in U.S. dollars for any purpose;
. the portion of the principal amount of the junior subordinated notes that
will be payable upon declaration of acceleration of maturity, if other
than the entire principal amount;
. whether any of the junior subordinated notes will be issuable as global
securities and, if so, the depositary and any provisions for the transfer
or exchange of the global securities, if different from those described
below under "--Global Securities";
. any addition to, deletion from or change in events of default or
covenants with respect to the junior subordinated notes;
. any index or formula for determining the amount of principal or any
premium or interest on the junior subordinated notes and the manner of
determining those amounts;
. if the principal amount payable on the maturity date of the junior
subordinated notes will not be determinable on any one or more dates
prior to the maturity date, the amount which will be deemed to be the
principal amount as of any such date for any purpose, including the
principal amount which will be due and payable upon any maturity other
than the maturity date (or the manner of determining any such amount);
and
. any other terms of the junior subordinated notes.
Unless the applicable prospectus supplement states otherwise, the junior
subordinated notes will be issued only in fully registered form, without
coupons, and there will be no service charge for any registration of transfer
or exchange of the junior subordinated notes. We may, however, require payment
to cover any tax or other governmental charge payable in connection with such
registration of transfer or exchange.
The interest rate and interest and other payment dates of each series of
junior subordinated notes issued to the Trust will correspond to those of the
preferred securities of the Trust.
The subordinated indenture does not contain provisions that afford holders
of junior subordinated notes protection in the event of a highly leveraged
transaction involving Everest Holdings.
Subordination
Each series of junior subordinated notes will be subordinate and junior in
right of payment, to the extent set forth in the subordinated indenture, to all
of our senior indebtedness. If we make any payments or distributions of assets
to creditors upon any dissolution, winding-up, liquidation or reorganization,
whether in bankruptcy, insolvency or other proceedings, then the holders of all
senior indebtedness will be entitled to receive payment of all amounts due or
to become due upon all senior indebtedness before the holders of any series of
junior subordinated notes. If an event of default (beyond any grace period) has
occurred and is continuing with respect to the payment of principal, interest
or any other monetary amounts due and payable on any senior indebtedness or the
maturity of any senior indebtedness has been accelerated because of an event of
default with respect to such senior indebtedness, then the holders of such
senior indebtedness will be entitled to receive payment of all amounts due on
such senior indebtedness before the holders of any series of junior
subordinated notes.
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The term "senior indebtedness" is defined in the subordinated indenture to
mean, with respect to any series of junior subordinated notes, the principal
of, and any premium and interest on and any other payment in respect of,
indebtedness due pursuant to any of the following, whether outstanding at the
date of execution of the subordinated indenture or thereafter incurred, created
or assumed:
. all indebtedness of Everest Holdings evidenced by notes, debentures,
bonds or other securities sold by us for money or other obligations for
money borrowed;
. all indebtedness of others of the kinds described in the preceding clause
assumed by or guaranteed in any manner by us or in effect guaranteed by
us through an agreement to purchase, contingent or otherwise; and
. all renewals, extensions or refundings of indebtedness of the kinds
described in either of the preceding clauses;
unless, in the case of any particular indebtedness, renewal, extension or
refunding, the instrument creating or evidencing the same or the assumption or
guarantee of the same by its terms provides that such indebtedness, renewal,
extension or refunding is not superior in right of payment to or is equal in
right of payment with such junior subordinated notes. Such senior indebtedness
will continue to be senior indebtedness and be entitled to the benefits of the
subordination provisions in the subordinated indenture irrespective of any
amendment, modification or waiver of any term of such senior indebtedness.
The base subordinated indenture does not limit the amount of senior
indebtedness that we may issue.
Global Securities
Some or all of the junior subordinated notes of a series may be represented
in whole or in part by one or more global securities deposited with or on
behalf of one or more depositaries.
The applicable prospectus supplement will describe the terms of any
depositary arrangement. We anticipate that the following provisions will apply
to all depositary arrangements for junior subordinated notes represented by
global securities.
Unless the applicable prospectus supplement states otherwise, junior
subordinated notes that are to be represented by a global security deposited
with or on behalf of a depositary will be represented by a global security
registered in the name of that depositary or its nominee. Upon the issuance of
a global security in registered form, the depositary for such global security
will credit, on its book-entry registration and transfer system, the respective
principal amount of the junior subordinated notes represented by such global
security to the accounts of institutions that have accounts with such
depositary or its nominee ("participants"). The accounts to be credited will be
designated by the underwriters or agents of such junior subordinated notes or
by Everest Holdings, if such junior subordinated notes are offered and sold
directly by Everest Holdings. Ownership of beneficial interests in such global
securities will be limited to participants or persons that may hold interests
through participants. Ownership of beneficial interests by participants in such
global securities will be shown on, and the transfer of any such ownership
interest will be effected only through, records maintained by the depositary or
its nominee for such global security. Ownership of beneficial interests in
global securities by persons that hold through participants will be effected
only through records maintained by such participants. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a global security.
So long as the depositary for a global security, or its nominee, is the
registered owner of such global security, such depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the junior
subordinated notes represented by such global security for all purposes under
the subordinated indenture. Except as set forth below, owners of beneficial
interests in the global security will not be entitled to
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have the junior subordinated notes represented by such global security
registered in their names, will not receive or be entitled to receive physical
delivery of the junior subordinated notes in definitive form and will not be
considered the owners or holders thereof under the subordinated indenture.
Payment of principal of and any premium and interest on junior subordinated
notes registered in the name of or held by a depositary or its nominee will be
made in immediately available funds to the depositary or its nominee, as the
case may be, as the registered owner or the holder of the global security
representing such junior subordinated notes. None of Everest Holdings, the
subordinated indenture trustee, any paying agent or the registrar and transfer
agent for such junior subordinated notes will have any responsibility or
liability for any aspect of the records relating to, or payments made on
account of, beneficial ownership interests in a global security for such junior
subordinated notes or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
We expect that a depositary for junior subordinated notes of a series, upon
receipt of any payment of principal or any premium or interest in respect of a
global security, will credit immediately participants' accounts with payment in
amounts proportionate to their respective beneficial interests in the principal
amount of such global security as shown on the records of such depositary. We
also expect that payments by participants to owners of beneficial interests in
such global security held through such participants will be governed by
standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in "street name", and
will be the responsibility of such participants.
A global security may not be transferred in whole or in part except by the
depositary for such global security to a nominee of such depositary or by a
nominee of such depositary to such depositary or another nominee of such
depositary or by such depositary or any such nominee to a successor depositary
or a nominee of such successor depositary. If a depositary for junior
subordinated notes of a series is at any time unwilling or unable to continue
as depositary and a successor depositary is not appointed by us within 90 days
or if at any time the depositary ceases to be a clearing agency registered
under the Exchange Act when the depositary is required to be registered to act
as such depositary and no successor is appointed by us within 90 days, then we
will issue junior subordinated notes in definitive registered form in exchange
for the global security or global securities representing such junior
subordinated notes. In addition, we may at any time determine not to have any
junior subordinated notes represented by one or more global securities and, in
such event, will issue junior subordinated notes in definitive registered form
in exchange for the global securities representing such junior subordinated
notes. In any such instance, an owner of a beneficial interest in a global
security will be entitled to physical delivery in definitive form of junior
subordinated notes represented by such global security equal in principal
amount to such beneficial interest and to have such junior subordinated notes
registered in its name.
Events of Default
The following will be events of default under the junior subordinated
indenture with respect to each series of junior subordinated notes (unless not
applicable to the particular series or unless deleted or modified in a
supplemental indenture as stated in the applicable prospectus supplement):
. we fail to pay principal of or any premium on any junior subordinated
note of that series on its due date;
. we fail to pay any interest on any junior subordinated note of that
series within 30 days from its due date; provided, however, that the date
on which such payment is due will be the date on which we are required to
make payment following any deferral of interest payments by us under the
terms of such junior subordinated notes;
. we fail to perform any of our covenants in the subordinated indenture
(excluding a covenant not applicable to the affected series) for 60 days
after the subordinated indenture trustee or the holders of at least 33%
in principal amount of the outstanding junior subordinated notes of that
series give us written notice of the default and require that we remedy
the breach (unless the 60-day period is extended by
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either the subordinated indenture trustee or the subordinated indenture
trustee and the holders of at least the same principal amount of junior
subordinated notes of that series that had given notice of default); the
subordinated indenture trustee, or the subordinated indenture trustee and
such holders, as the case may be, will be deemed to have agreed to such an
extension if we have initiated and are diligently pursuing corrective
action;
. we file for bankruptcy or other events of bankruptcy, insolvency or
reorganization occur; and
. any other event of default specified in the applicable prospectus
supplement occurs.
If an event of default with respect to junior subordinated notes of a series
occurs and is continuing, then the subordinated indenture trustee or the
holders of not less than 33% in principal amount of the outstanding junior
subordinated notes of that series may, by notice to us (and to the subordinated
indenture trustee if given by holders), declare to be immediately due and
payable the principal amount of all junior subordinated notes of that series.
At any time after a declaration of acceleration has been made with respect to
the junior subordinated notes of a series, the holders of a majority in
principal amount of the outstanding junior subordinated notes may rescind any
declaration of acceleration with respect to the junior subordinated notes and
its consequences:
. if the rescission would not conflict with any judgment or decree;
. if all existing events of default with respect to the junior subordinated
notes have been cured or waived except non-payment of principal or
interest on the junior subordinated notes that has become due solely
because of the acceleration; and
. to the extent that payment of such interest is lawful, interest upon
overdue interest at the rate or rates prescribed therefore in the notes
has been paid.
Subject to provisions for indemnification and to certain other rights of the
subordinated indenture trustee, the holders of a majority in principal amount
of the outstanding junior subordinated notes of any series have the right to
direct the time, method and place of conducting any proceedings for any remedy
available to the subordinated indenture trustee or to direct the exercise of
any trust or power conferred on the subordinated indenture trustee with respect
to the junior subordinated notes of that series.
No holder of a junior subordinated note of any series will have any right to
institute a proceeding with respect to the subordinated indenture or for any
remedy under the subordinated indenture unless:
. that holder has previously given the subordinated indenture trustee
written notice that an event of default with respect to the junior
subordinated notes of that series has occurred and is continuing;
. the holders of a majority in principal amount of the outstanding junior
subordinated notes of that series have made written request to institute
the proceeding;
. such holder or holders have offered reasonable indemnity to the
subordinated indenture trustee;
. the subordinated indenture trustee has failed to institute the proceeding
for 60 days after receipt of the notice and offer of indemnity; and
. the subordinated indenture trustee has not received from the holders of a
majority in principal amount of the outstanding junior subordinated notes
of that series a direction inconsistent with the written request.
Notwithstanding the foregoing, the holder of any junior subordinated note
will have an absolute and unconditional right to receive payment of the
principal of and any premium and, subject to certain limitations, interest on
that junior subordinated note on its maturity date (or, in the case of
redemption, the date of redemption) and to institute suit for the enforcement
of any such payment.
Notice of Default
If any event which is, or after notice or lapse of time or both would
become, an event of default occurs with respect to junior subordinated notes of
any series and it is known to the subordinated indenture trustee, the
subordinated indenture trustee shall mail to holders of junior subordinated
notes of that series a notice of
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default within 90 days after it occurs unless such default shall have been
cured or waived; provided, however, that except in the case of a default in the
payment of the principal of or any premium, or interest on, any junior
subordinated note of any series or in the making of any sinking fund payment
payable with respect to junior subordinated notes of any series, the
subordinated indenture trustee may withhold the notice if and so long as the
board of directors, the executive committee or a trust committee of directors
or responsible officers of the subordinated indenture trustee in good faith
determines that withholding the notice is in the interests of holders of junior
subordinated notes of that series; and provided, further, that in the case of
any default for failure by Everest Holdings to comply with or perform any of
its agreements, covenants or warranties in the junior subordinated notes and
under the subordinated indenture with respect to junior subordinated notes of
any series, no notice to holders of such junior subordinated notes shall be
given until at least 30 days after the occurrence thereof.
We are required to furnish annually to the subordinated indenture trustee an
officers' certificate to the effect that, to the best knowledge of the officers
providing the certificate, we are not in default under the subordinated
indenture or, if there has been a default, specifying the default and its
status.
Consolidation, Merger, Conveyance or Transfer
The subordinated indenture provides that we may consolidate or merge with or
into another corporation or other entity of a sort specified in the
subordinated indenture, or convey or transfer our properties and assets as an
entirety or substantially as an entirety to any such entity; provided, however,
that
. the successor, if any, is an entity organized and existing under the laws
of the United States of America or any State of the United States or the
District of Columbia and assumes by supplemental indenture our
obligations under the subordinated indenture and the junior subordinated
notes issued thereunder;
. immediately after giving effect to the transaction, no event of default,
or event which after notice or lapse of time or both would become an
event of default, will have occurred and be continuing; and
. we deliver an officers' certificate and an opinion of counsel to the
subordinated indenture trustee stating that all conditions precedent in
the subordinated indenture relating to the consolidation, merger,
conveyance or transfer have been complied with.
Upon the assumption by the successor of our obligations under the
subordinated indenture and the junior subordinated notes issued thereunder and
the satisfaction of any other conditions precedent provided for in the
subordinated indenture, the successor will succeed to and be substituted for
Everest Holdings under the subordinated indenture, and we will be relieved of
our obligations under the subordinated indenture and the junior subordinated
notes.
Registration and Transfer
If junior subordinated notes of a series are to be redeemed, we will not be
required to:
. issue, register the transfer of, or exchange any junior subordinated
notes of that series during the 15 days immediately preceding the date
notice is mailed identifying the junior subordinated notes that are
called for redemption; or
. register the transfer of or exchange any junior subordinated note
selected for redemption, in whole or in part, except the unredeemed
portion of any junior subordinated note being redeemed in part.
Denominations
Junior subordinated notes will be issuable in denominations of $1,000 and
any integral multiples of $1,000, without coupons, unless the applicable
prospectus supplement states otherwise.
Payment and Paying Agent
Principal of junior subordinated notes will be paid only against surrender
of the junior subordinated notes to the paying agent. Unless the applicable
prospectus supplement states otherwise, interest on junior
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subordinated notes will be payable, subject to surrender if applicable, at the
office of the paying agent or, at our option, (1) by wire transfer to an
account at a banking institution in the United States that the person entitled
to the interest designates in writing to the subordinated indenture trustee at
least 16 days prior to the date of payment or (2) by check mailed to the
address of the person entitled to the interest as such address appears in the
security register for such junior subordinated notes.
Unless the applicable prospectus supplement states otherwise, the
subordinated indenture trustee will act as paying agent for the junior
subordinated notes, and the principal corporate trust office of the
subordinated indenture trustee will serve as the office through which the
paying agent acts. We may designate additional paying agents, rescind the
designation of any paying agents or approve a change in the office through
which any paying agent acts.
All moneys that we have paid to a paying agent for payment of principal of
or interest on junior subordinated notes that remain unclaimed at the end of
two years after such principal or interest has become due and payable will be
repaid to us at our request. Holders will thereafter look only to us for such
payments.
Modification of the Subordinated Indenture
Everest Holdings and the subordinated indenture trustee may, with certain
exceptions, amend or modify the subordinated indenture with the consent of the
holders of a majority in aggregate principal amount of the outstanding junior
subordinated notes of all series of junior subordinated notes affected by the
amendment or modification (voting as one class). No amendment or modification
may, however, without the consent of the holder of each outstanding junior
subordinated note affected thereby:
. change the stated maturity of the principal of, or any installment of
principal of or interest on, any junior subordinated note;
. reduce the principal amount of, the rate of interest on, or any premium
payable upon the redemption of, any junior subordinated note;
. reduce the amount of principal of any junior subordinated note due and
payable upon acceleration of the maturity thereof;
. change the place of payment or currency of payment of principal of, or
any premium or interest on, any junior subordinated note;
. impair the right to institute suit for the enforcement of any such
payment on any junior subordinated note on or after the stated maturity
or date of redemption; or
. reduce the percentage in principal amount of junior subordinated notes of
any series, the consent of whose holders is required to amend or modify
the subordinated indenture, to waive compliance with certain provisions
of the subordinated indenture or to waive certain defaults.
In addition, Everest Holdings and the subordinated indenture trustee may
execute supplemental indentures to:
. create new series of junior subordinated notes;
. cure any ambiguity, defect or inconsistency in the subordinated
indenture; and
. make other changes that do not adversely affect the interests of the
holders of junior subordinated notes in any material respect;
as well as for various other purposes.
Waiver of Covenants
The holders of a majority in aggregate principal amount of the outstanding
junior subordinated notes of any series may waive, for that series, our
compliance with some restrictive covenants of the subordinated indenture. The
holders of a majority in aggregate principal amount of the outstanding junior
subordinated notes
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of all series under the subordinated indenture with respect to which a default
has occurred and is continuing (voting as one class) may waive that default for
all such series, other than a default in the payment of principal of, or any
premium or interest on, any junior subordinated note of such series or a
default with respect to a covenant or provision under the subordinated
indenture that cannot be amended or modified without the consent of the holder
of each outstanding junior subordinated note affected.
The subordinated indenture may not be amended to alter the subordination of
any junior subordinated notes without the written consent of each holder of
senior indebtedness then outstanding that would be adversely affected by such
alteration.
Defeasance and Covenant Defeasance
The subordinated indenture provides, unless the terms of the particular
series of junior subordinated notes provides otherwise, that we may cause
ourselves to be:
. discharged from our obligations, with certain exceptions, with respect to
any series of junior subordinated notes, which we refer to as
"defeasance"; and
. released from our obligations under certain covenants with respect to any
series of junior subordinated notes, which we refer to as "covenant
defeasance".
In connection with any defeasance or covenant defeasance, we must
irrevocably deposit with the subordinated indenture trustee, in trust, money
and/or government obligations which, through the scheduled payment of principal
and interest on those obligations, would provide sufficient moneys to pay the
principal of and any premium and interest on the junior subordinated notes on
the maturity dates or upon redemption.
The subordinated indenture permits defeasance with respect to any junior
subordinated notes of a series even if a prior covenant defeasance has occurred
with respect to junior subordinated notes of that series. Following a
defeasance, payment of the junior subordinated notes defeased may not be
accelerated because of an event of default. Following a covenant defeasance,
payment of the junior subordinated notes defeased may not be accelerated by
reference to the covenants affected by the covenant defeasance. However, if
such an acceleration were to occur, the realizable value at the acceleration
date of the money and government obligations in the defeasance trust could be
less than the principal and interest then due on such junior subordinated notes
since the required deposit in the defeasance trust would be based upon
scheduled cash flows rather than market value, which would vary depending upon
interest rates and other factors.
As a condition to defeasance or covenant defeasance, we must deliver to the
subordinated indenture trustee an opinion of counsel to the effect that the
holders of the junior subordinated notes will not recognize income, gain or
loss for United States Federal income tax purposes as a result of such
defeasance or covenant defeasance and will be subject to United States Federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such defeasance or covenant defeasance had not
occurred. Such opinion, in the case of a defeasance, must refer to and be based
upon a ruling of the Internal Revenue Service or a change in applicable federal
income tax law occurring after the date of the subordinated indenture.
Information Concerning the Subordinated Indenture Trustee
In the case an event of default shall occur and be continuing, the
subordinated indenture trustee shall exercise such of its rights and powers
under the subordinated indenture and use the same degree of care and skill in
their exercise as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs. Before proceeding to exercise
any right or power under the subordinated indenture at the direction of such
holders, the subordinated indenture trustee will be entitled to receive from
such holders security or indemnity satisfactory to it against the costs,
expenses and liabilities which might be incurred by it in complying with any
such direction.
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The Chase Manhattan Bank, which is the subordinated indenture trustee, also
serves as the senior indenture trustee and as property trustee and guarantee
trustee with respect to the preferred securities issued by the Trust. Everest
Holdings and certain of its affiliates maintain deposit accounts and banking
relationships with The Chase Manhattan Bank.
Governing Law
The subordinated indenture and the junior subordinated notes will be
governed by the laws of the State of New York, without regard to the conflict
of laws provisions thereof.
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DESCRIPTION OF THE PREFERRED SECURITIES
A description of the terms of the preferred securities is set forth below.
This description does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the Trust Agreement.
The Trust Agreement authorizes the regular trustees to issue on behalf of
the Trust one series of preferred securities that have the terms described in a
prospectus supplement. The proceeds from the sale of the Trust's preferred and
common securities will be used by the Trust to purchase a series of our junior
subordinated notes. The junior subordinated notes will be held in trust by the
property trustee for the benefit of the holders of the preferred and common
securities.
We have filed a form of the Trust Agreement as an exhibit to the
registration statement of which this prospectus is a part. The Trust Agreement
will be qualified as an indenture under the Trust Indenture Act. The terms of
the preferred securities will include those stated in the Trust Agreement and
those made part of the Trust Agreement by reference to the Trust Indenture Act.
General
The preferred securities will have the terms, including those regarding
distributions, redemption, voting, liquidation rights and the other preferred,
deferred or other special rights or other restrictions, as described in the
Trust Agreement or made part of the Trust Agreement by the Trust Indenture Act
or the Delaware Business Trust Act. The terms of the preferred securities will
mirror the terms of the junior subordinated notes held by the Trust.
The assets of the Trust available for distribution to the holders of its
preferred securities will be limited to payments from us under the series of
junior subordinated notes held by the Trust. If we fail to make a payment on
the junior subordinated notes, the Trust will not have sufficient funds to make
related payments, including distributions, on its preferred securities.
Under the preferred securities guarantee, we will agree to make payments of
distributions and payments on redemption or liquidation with respect to the
Trust's preferred securities, but only to the extent the Trust has funds
available to make those payments and has not made the payments. See
"Description of the Preferred Securities Guarantee".
The preferred securities guarantee, when taken together with our obligations
under the junior subordinated notes, the subordinated indenture, the Trust
Agreement and the expense agreement described below, will provide a full and
unconditional guarantee by us of amounts due on the preferred securities issued
by the Trust.
The prospectus supplement relating to the preferred securities of the Trust
will describe the specific terms of the preferred securities, including:
. the name of the preferred securities;
. the dollar amount and number of securities issued;
. the annual distribution rate, or method of determining the rate, of
distributions on the preferred securities, and date or dates from which
any such distributions will accrue;
. the payment date and the record date used to determine the holders who
are to receive distributions;
. the right, if any, to defer distributions on the preferred securities
upon extension of the interest payment periods of the related junior
subordinated notes;
. our obligation, if any, to redeem or purchase the preferred securities
and the terms and conditions on which the preferred securities may be
redeemed or purchased pursuant to such obligation;
. the terms and conditions, if any, on which we may at our option redeem
the preferred securities;
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. the terms and conditions, if any, upon which the applicable series of
junior subordinated notes may be distributed to holders of the preferred
securities;
. the voting rights, if any, of holders of the preferred securities;
. whether the preferred securities are to be issued in book-entry form and
represented by one or more global certificates and, if so, the depository
for the global certificates and the specific terms of the depositary
arrangements; and
. any other relevant rights, preferences, privileges, limitations or
restrictions of the preferred securities.
The prospectus supplement will describe various United States federal income
tax considerations applicable to the purchase, holding and disposition of the
series of preferred securities covered by the prospectus supplement.
Liquidation Distribution Upon Dissolution
Unless otherwise specified in an applicable prospectus supplement, the Trust
Agreement states that the Trust will be dissolved:
. on the expiration of the term of the Trust;
. upon our bankruptcy, dissolution or liquidation;
. upon our direction to the property trustee to dissolve the Trust and
distribute the related junior subordinated notes directly to the holders
of the preferred and common securities of the Trust;
. upon the redemption of all of the common and preferred securities of the
Trust in connection with the redemption of all of the related junior
subordinated notes; or
. upon entry of a court order for the dissolution of the Trust.
Unless otherwise specified in an applicable prospectus supplement, in the
event of a dissolution as described above (other than in connection with
redemption), after the Trust satisfies all liabilities to its creditors as
provided by applicable law, each holder of the preferred or common securities
will be entitled to receive:
. the junior subordinated notes in an aggregate principal amount equal to
the aggregate liquidation amount of the preferred or common securities
held by the holder; or
. if such a distribution of the junior subordinated notes is determined by
the property trustee not to be practical, cash equal to the aggregate
liquidation amount of the preferred or common securities held by the
holder, plus accumulated and unpaid distributions to the date of payment.
If the Trust cannot pay the full amount due on its preferred and common
securities because insufficient assets are available for payment, then the
amounts payable by the Trust on its preferred and common securities will be
paid on a pro rata basis. However, if an event of default under the
subordinated indenture has occurred and is continuing, the total amounts due on
the preferred securities will be paid before any distribution on the common
securities.
Events of Default
The following will be events of default under the Trust Agreement:
. an event of default under the subordinated indenture occurs with respect
to any series of related junior subordinated notes; or
. any other event of default specified in the prospectus supplement occurs.
If an event of default with respect to a series of related junior
subordinated notes occurs and is continuing under the subordinated indenture,
and the subordinated indenture trustee or the holders of not less than 33% in
principal amount of the related junior subordinated notes outstanding fail to
declare the principal amount of all
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of such junior subordinated notes to be immediately due and payable, the
holders of at least 33% in aggregate liquidation amount of the outstanding
preferred securities will have the right to declare such principal amount
immediately due and payable by providing notice to us and the subordinated
indenture trustee.
A holder of preferred securities may institute a legal proceeding directly
against us, without first instituting a legal proceeding against the property
trustee or any other person or entity, for enforcement of payment to such
holder of principal, any premium or interest on the junior subordinated notes
of the related series having a principal amount equal to the aggregate
liquidation amount of the preferred securities of such holder if we fail to pay
principal, any premium or interest on such series of junior subordinated notes
when payable.
Everest Holdings and the regular trustees are required to furnish annually
to the property trustee for the Trust certificates to the effect that, to the
best knowledge of the individuals providing the certificates, Everest Holdings
and the Trust are not in default under the Trust Agreement, or if there has
been a default, specifying the default and its status.
Consolidation, Merger or Amalgamation of the Trust
The Trust may not consolidate or merge with or into, or be replaced by or
convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to any entity ("merger event"), except as
described below. The Trust may, with the consent of the holders of at least a
majority in aggregate liquidation amount of the outstanding preferred
securities, consolidate or merge with or into, or be replaced by or convey,
transfer or lease its properties and assets as an entirety or substantially as
an entirety to any such entity, if:
. the successor entity either:
. expressly assumes all of the obligations of the Trust relating to its
preferred securities; or
. substitutes for the Trust's preferred securities other securities
having substantially the same terms as the preferred securities
("successor securities"), so long as the successor securities rank the
same as the preferred securities for distributions and payments upon
liquidation, redemption and otherwise;
. we expressly appoint a trustee of the successor entity who has the same
powers and duties as the property trustee of the Trust;
. the preferred securities are listed or traded, or any successor
securities will be listed upon notice of issuance, on the same national
securities exchange or other organization on which the preferred
securities are then listed or traded;
. the merger event does not cause the preferred securities or any successor
securities to be downgraded by any national rating agency;
. the merger event does not adversely affect the rights, preferences and
privileges of the holders of the preferred securities or any successor
securities in any material respect;
. the successor entity has a purpose substantially identical to that of the
Trust;
. prior to the merger event, we have received an opinion of counsel from a
nationally recognized law firm stating that:
. the merger event does not adversely affect the rights, preferences and
privileges of the holders of the Trust's preferred securities or any
successor securities in any material respect; and
. following the merger event, neither the Trust nor the successor entity
will be required to register as an investment company under the
Investment Company Act of 1940, as amended (the "Investment Company
Act"); and
. we own all of the common securities of the successor entity and guarantee
the obligations of the successor entity under the successor securities at
least to the extent provided under the preferred securities guarantee.
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In addition, unless all of the holders of the preferred securities approve
otherwise, the Trust may not consolidate, amalgamate, merge with or into, or be
replaced by or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any other entity or permit any
other entity to consolidate, amalgamate, merge with or into, or replace it, if
the transaction would cause the Trust or the successor entity to be classified
other than as a grantor trust for United States federal income tax purposes or
would cause each holder of the preferred securities not to be treated as owning
an undivided interest in the related junior subordinated notes.
Voting Rights
Unless otherwise specified in the prospectus supplement, the holders of
preferred securities will have no voting rights except as discussed below and
under "--Consolidation, Merger or Amalgamation of the Trust", "--Amendment of
Trust Agreement" and "Description of the Preferred Securities Guarantee--
Amendments and Assignment", and as otherwise required by law and the Trust
Agreement.
If any proposed amendment to the Trust Agreement provides for, or the
regular trustees of the Trust otherwise propose to effect:
. any action that would adversely affect the powers, preferences or special
rights of the preferred securities in any material respect, whether by
way of amendment to the Trust Agreement or otherwise; or
. the dissolution, winding-up or termination of the Trust other than
pursuant to the terms of the Trust Agreement,
then the holders of the preferred securities as a class will be entitled to
vote on the amendment or proposal. In that case, the amendment or proposal will
be effective only if approved by the holders of at least a majority in
aggregate liquidation amount of the preferred securities.
Without obtaining the prior approval of the holders of a majority in
aggregate liquidation amount of the preferred securities of the Trust, the
trustees of the Trust may not:
. direct the time, method and place of conducting any proceeding for any
remedy available to the subordinated indenture trustee for the junior
subordinated notes held by the Trust or direct the exercise of any trust
or power conferred on the property trustee with respect to such
securities;
. waive any default that is waivable under the subordinated indenture with
respect to any related junior subordinated notes;
. cancel an acceleration of the principal of any related junior
subordinated notes; or
. consent to any amendment, modification or termination of the subordinated
indenture or any related junior subordinated notes where such consent is
required.
However, if a consent under the subordinated indenture requires the consent of
each affected holder of junior subordinated notes, then the property trustee
must obtain the prior consent of each holder of preferred securities. In
addition, before taking any of the foregoing actions, the property trustee
shall obtain an opinion of counsel experienced in such matters to the effect
that, as a result of such actions, the Trust will not be classified as other
than a grantor trust for United States federal income tax purposes, the junior
subordinated notes will not be treated as other than indebtedness of the
Company for United States federal income tax purposes and the Trust will not be
required to register as an "investment company" under the Investment Company
Act.
The property trustee will notify all preferred securities holders of the
Trust of any notice of default received from the subordinated indenture trustee
with respect to the junior subordinated notes held by the Trust.
Any required approval of holders of securities may be given at a meeting of
holders of securities convened for such purpose or pursuant to written consent.
The property trustee will cause a notice of any meeting at which holders of
securities are entitled to vote, or of any matter upon which action by written
consent of such holders is to be taken, to be given to each holder of record of
securities in the manner set forth in the Trust Agreement.
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No vote or consent of the holders of securities will be required for the
Trust to redeem and cancel the securities in accordance with the Trust
Agreement.
Notwithstanding that holders of securities are entitled to vote or consent
under any of the circumstances described above, any of the securities that are
owned by Everest Holdings, the trustees appointed by Everest Holdings or any
affiliate of Everest Holdings or any such trustees, shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
Amendment of Trust Agreement
The Trust Agreement may be amended from time to time by Everest Holdings and
the property trustee and the regular trustees of the Trust, without the consent
of the holders of preferred securities of the Trust, to:
. cure any ambiguity, correct or supplement any provision which may be
inconsistent with any other provision, or make provisions not
inconsistent with any other provisions with respect to matters or
questions arising under the Trust Agreement, in each case to the extent
that the amendment does not adversely affect the interests of any holder
of preferred securities in any material respect; or
. modify, eliminate or add to any provisions to the extent necessary to
ensure that the Trust will not be classified as other than a grantor
trust for United States Federal income tax purposes or to ensure that the
Trust will not be required to register as an "investment company" under
the Investment Company Act.
Other amendments to the Trust Agreement of the Trust may be made by Everest
Holdings and the trustees of the Trust upon approval of the holders of a
majority in aggregate liquidation amount of the outstanding preferred
securities and receipt by the trustees of an opinion of counsel to the effect
that such amendment will not affect the Trust's status as a grantor trust for
United States federal income tax purposes or the Trust's exemption from the
Investment Company Act.
Notwithstanding the foregoing, without the consent of each affected holder
of common or preferred securities of the Trust, the Trust Agreement may not be
amended to:
. change the amount or timing of any distribution on the common or
preferred securities of the Trust or otherwise adversely affect the
amount of any distribution required to be made in respect of such
securities as of a specified date; or
. restrict the right of a holder of any such securities to institute suit
for the enforcement of any such payment on or after such date.
In addition, no amendment may be made to a Trust Agreement if the amendment
would:
. cause the Trust to be characterized as other than a grantor trust for
United States federal income tax purposes;
. cause the Trust to be deemed to be an "investment company" which is
required to be registered under the Investment Company Act; or
. impose any additional obligation on Everest Holdings, the property
trustee or the Delaware trustee without its consent.
Removal and Replacement of Trustees
The holder of the Trust's common securities may remove or replace any of the
regular trustees and, unless an event of default has occurred and is continuing
under the subordinated indenture, the property and Delaware trustees of the
Trust. If such an event of default has occurred and is continuing, only the
holders of the Trust's preferred securities may remove or replace the property
and Delaware trustees. The resignation or removal of any trustee will be
effective only on the acceptance of appointment by the successor trustee in
accordance with the provisions of the Trust Agreement.
30
<PAGE>
Merger or Consolidation of Trustees
Any entity into which the property trustee or the Delaware trustee may be
merged or converted or with which it may be consolidated, or any entity
resulting from any merger, conversion or consolidation to which such trustee
shall be a party, or any entity succeeding to all or substantially all of the
corporate trust business of such trustee, shall be the successor of such
trustee under the Trust Agreement; provided however, that such entity shall be
otherwise qualified and eligible.
Information Concerning the Property Trustee
For matters relating to compliance with the Trust Indenture Act, the
property trustee of the Trust will have all of the duties and responsibilities
of an indenture trustee under the Trust Indenture Act. The property trustee,
other than during the occurrence and continuance of a default under the Trust
Agreement, undertakes to perform only the duties as are specifically set forth
in the Trust Agreement and, after a default, must use the same degree of care
and skill as a prudent person would exercise or use in the conduct of his or
her own affairs. Subject to this provision, the property trustee is under no
obligation to exercise any of the powers given it by the Trust Agreement at the
request of any holder of preferred securities unless it is offered reasonable
security or indemnity against the costs, expenses and liabilities that it might
incur. If the property trustee is required to decide between alternative
courses of action, construe ambiguous provisions in the Trust Agreement or is
unsure of the application of any provision of the Trust Agreement, and the
matter is not one on which the holders of preferred securities are entitled to
vote, then the property trustee will take such action as it deems advisable and
in the best interests of the holders of the preferred and common securities. In
this event, the property trustee will have no liability except for its own bad
faith, negligence or willful misconduct.
The Chase Manhattan Bank, which is the property trustee for the Trust, also
serves as the senior indenture trustee, the subordinated indenture trustee and
the guarantee trustee under the preferred securities guarantee described below.
Everest Holdings and certain of its affiliates maintain deposit accounts and
banking relationships with The Chase Manhattan Bank.
Miscellaneous
The trustees of the Trust are authorized and directed to conduct the affairs
of and to operate the Trust in such a way that:
. it will be classified as a grantor trust for United States federal income
tax purposes;
. it will not be deemed to be an "investment company" required to be
registered under the Investment Company Act; and
. the junior subordinated notes held by it will be treated as indebtedness
of Everest Holdings for United States federal income tax purposes.
Everest Holdings and the trustees of the Trust are authorized to take any
action (so long as it is consistent with applicable law or the certificate of
trust or Trust Agreement) that Everest Holdings and the trustees of the Trust
determine to be necessary or desirable for such purposes.
Registered holders of preferred securities have no preemptive or similar
rights.
The Trust may not borrow money, issue debt, execute mortgages or pledge any
of its assets.
Governing Law
The Trust Agreement and the preferred securities will be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to the conflict of laws provisions thereof.
31
<PAGE>
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE
A summary of information about the preferred securities guarantee is set
forth below. This description does not purport to be complete and is subject
to, and is qualified in its entirety by reference to, the guarantee agreement
(a "preferred securities guarantee") to be entered into between us and The
Chase Manhattan Bank, as trustee (the "guarantee trustee").
The preferred securities guarantee will be held by the guarantee trustee
for the benefit of the holders of preferred securities of the Trust.
We have filed a form of the preferred securities guarantee as an exhibit to
the registration statement of which this prospectus is a part. The preferred
securities guarantee will be qualified as an indenture under the Trust
Indenture Act. The terms of the preferred securities guarantee will be those
set forth in the guarantee and those made part of that guarantee by the Trust
Indenture Act.
General
We will irrevocably agree, as described in the preferred securities
guarantee, to pay in full, to the holders of the preferred securities, the
preferred securities guarantee payments described below (except to the extent
previously paid), when and as due, regardless of any defense, right of set-off
or counterclaim that the Trust may have or assert. The following payments, to
the extent not paid by the Trust ("preferred securities guarantee payments"),
will be covered by the preferred securities guarantee:
. any accumulated and unpaid distributions required to be paid on the
preferred securities, to the extent that the Trust has funds available to
make the payment;
. the redemption price, to the extent that the Trust has funds available to
make the payment; and
. upon a voluntary or involuntary dissolution, termination, winding-up or
liquidation of the Trust (other than in connection with a distribution of
junior subordinated notes to holders of the preferred securities), the
lesser of:
. the aggregate of the liquidation amounts specified in the prospectus
supplement for each preferred security plus all accumulated and unpaid
distributions on the preferred security to the date of payment, to the
extent the Trust has funds available to make the payment; and
. the amount of assets of the Trust remaining available for distribution
to holders of its preferred securities upon liquidation of the Trust.
Our obligation to make a preferred securities guarantee payment may be
satisfied by directly paying the required amounts to the holders of the
preferred securities or by causing the Trust to pay the amounts to the
holders.
The preferred securities guarantee will be a full and unconditional
guarantee, subject to subordination provisions, of the preferred securities
guarantee payments, but will not apply to the payment of distributions and
other payments on the preferred securities when the Trust does not have
sufficient funds legally and immediately available to make such distributions
or other payments.
Status of the Preferred Securities Guarantee
The preferred securities guarantee will constitute an unsecured obligation
of Everest Holdings and will rank:
. subordinate and junior in right of payment to all of our other
liabilities except those that rank equally or are subordinate by their
terms; and
. equal with any other preferred securities guarantee now or hereafter
issued by Everest Holdings on behalf of the holders of preferred
securities issued by any other trust.
The preferred securities guarantee will constitute a guarantee of payment
and not of collection. This means that the holder of the guaranteed security
may sue us, or seek other remedies, to enforce its rights under the preferred
securities guarantee without first suing any other person or entity.
32
<PAGE>
Amendments and Assignment
No consent of the holder of preferred securities will be required with
respect to any changes to the preferred securities guarantee that do not
adversely affect the rights of holders of preferred securities in any material
respect. Other amendments to the preferred securities guarantee may be made
only with the prior approval of the holders of at least a majority in aggregate
liquidation amount of the preferred securities. All guarantees and agreements
contained in the preferred securities guarantee will be binding on our
successors, assigns, receivers, trustees and representatives and are for the
benefit of the holders of the preferred securities.
Events of Default
An event of default under the preferred securities guarantee occurs if we
fail to make any of our required payments or fail to perform any of our other
obligations (and such failure continues for 30 days) under the preferred
securities guarantee.
The holders of at least a majority in aggregate liquidation amount of the
preferred securities will have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the guarantee trustee
relating to the preferred securities guarantee or to direct the exercise of any
trust or power given to the guarantee trustee under the preferred securities
guarantee.
The holders of a majority in liquidation amount of preferred securities may
waive any past event of default and its consequences.
Information Concerning Guarantee Trustee
The guarantee trustee under the preferred securities guarantee, other than
during the occurrence and continuance of a default under the preferred
securities guarantee, will perform only the duties that are specifically
described in the preferred securities guarantee. After such a default, the
guarantee trustee will exercise the same degree of care and skill as a prudent
person would exercise or use in the conduct of his or her own affairs. Subject
to this provision, a guarantee trustee is under no obligation to exercise any
of its powers as described in the preferred securities guarantee at the request
of any holder of covered preferred securities unless it is offered security and
indemnity satisfactory to it against the costs, expenses and liabilities that
it might incur.
The Chase Manhattan Bank, which is the guarantee trustee, also serves as the
senior indenture trustee, the subordinated indenture trustee and the property
trustee for the Trust. Everest Holdings and certain of its affiliates maintain
deposit accounts and banking relationships with The Chase Manhattan Bank.
Termination of the Preferred Securities Guarantees
The preferred securities guarantee will terminate once the preferred
securities are paid in full or redeemed in full or upon distribution of the
related junior subordinated notes to the holders of the preferred securities in
accordance with the Trust Agreement. The preferred securities guarantee will
continue to be effective or will be reinstated if at any time any holder of
preferred securities must restore payment of any sums paid under the preferred
securities or the preferred securities guarantee.
Governing Law
The preferred securities guarantee will be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflict of laws provisions thereof.
33
<PAGE>
DESCRIPTION OF THE EXPENSE AGREEMENT
We will execute an expense agreement at the same time that the Trust issues
preferred securities. Under the expense agreement, we will irrevocably and
unconditionally guarantee to each creditor of the Trust the full amount of the
Trust's costs, expenses and liabilities, other than the amounts owed to holders
of its preferred and common securities pursuant to the terms of those
securities. Third parties will be entitled to enforce the expense agreement.
Our obligations under the expense agreement will be subordinated in right of
payment to the same extent as the preferred securities guarantee. The expense
agreement will contain provisions regarding amendment, termination, assignment,
succession and governing law similar to those contained in the preferred
securities guarantee.
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
PREFERRED SECURITIES GUARANTEE, EXPENSE AGREEMENT
AND JUNIOR SUBORDINATED NOTES HELD BY THE TRUST
Payments of distributions and redemption and liquidation payments due on the
preferred securities (to the extent the Trust has funds available for the
payments) will be guaranteed by us to the extent described under "Description
of the Preferred Securities Guarantee". No single document executed by us in
connection with the issuance of the preferred securities will provide for its
full, irrevocable and unconditional guarantee of the preferred securities. It
is only the combined operation of our obligations under the preferred
securities guarantee, Trust Agreement, subordinated indenture, junior
subordinated notes and expense agreement that has the effect of providing a
full, irrevocable and unconditional guarantee of the Trust's obligations under
the preferred securities.
As long as we make payments of interest and other payments when due on the
junior subordinated notes held by the Trust, the payments will be sufficient to
cover the payment of distributions and redemption and liquidation payments due
on the preferred securities, primarily because:
. the aggregate principal amount of the junior subordinated notes will be
equal to the sum of the aggregate liquidation amounts of the preferred
and common securities;
. the interest rate and interest and other payment dates on the junior
subordinated notes will match the distribution rate and distribution and
other payment dates for the preferred securities;
. we have agreed to pay for any and all costs, expenses and liabilities of
the Trust except the Trust's obligations under its preferred securities;
and
. the Trust Agreement provides that the Trust will not engage in any
activity that is not consistent with the limited purposes of the Trust.
If and to the extent that we do not make payments on the junior subordinated
notes, the Trust will not have funds available to make payments of
distributions or other amounts due on the preferred securities. In those
circumstances, a holder of preferred securities will not be able to rely upon
the preferred securities guarantee for payment of these amounts. Instead, the
holder may directly sue us or seek other remedies to collect its pro rata share
of payments owed. If a holder sues us to collect payment, then we will assume
the holder's rights as a holder of preferred securities under the Trust
Agreement to the extent we make a payment to the holder in any legal action.
A holder of any preferred security may sue us, or seek other remedies, to
enforce its rights under the preferred securities guarantee without first suing
the guarantee trustee, the Trust or any other person or entity.
34
<PAGE>
PLAN OF DISTRIBUTION
We may sell the senior notes and the junior subordinated notes and the Trust
may sell the preferred securities in one or more of the following ways from
time to time:
. to underwriters for resale to the public or to institutional investors;
. through agents to the public or to institutional investors; or
. directly to institutional investors.
The prospectus supplement for each series of senior notes, junior
subordinated notes or preferred securities will set forth the terms of the
offering of those senior notes, junior subordinated notes or preferred
securities, including the name or names of any underwriters or agents. The
prospectus supplement for each series of senior notes, junior subordinated
notes or preferred securities will also set forth the purchase price of such
senior notes, junior subordinated notes or preferred securities, the proceeds
to us or the Trust from such sale, any underwriting discounts or agency fees
and other items constituting underwriters' or agents' compensation, any initial
public offering price, any discounts or concession allowed or reallowed or paid
to dealers, and any securities exchange on which such senior notes, junior
subordinated notes or preferred securities may be listed.
If underwriters participate in the sale, such senior notes, junior
subordinated notes or preferred securities will be acquired by the underwriters
for their own account and may be resold from time to time in one or more
transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale.
Unless the applicable prospectus supplement states otherwise, the
obligations of the underwriters to purchase any series of senior notes, junior
subordinated notes or preferred securities will be subject to certain
conditions precedent and the underwriters will be obligated to purchase all of
such series of senior notes, junior subordinated notes or preferred securities,
if any are purchased.
Underwriters and agents may be entitled under agreements entered into with
us and/or the Trust to indemnification against certain civil liabilities,
including liabilities under the Securities Act. Underwriters and agents may
engage in transactions with, or perform services for, us in the ordinary course
of business.
Each series of senior notes, junior subordinated notes or preferred
securities will be a new issue of securities and will have no established
trading market. Any underwriters to whom senior notes, junior subordinated
notes or preferred securities are sold for public offering and sale may make a
market in those senior notes, junior subordinated notes or preferred
securities. However, those underwriters will not be obligated to do so and may
discontinue any market making at any time without notice.
The senior notes, junior subordinated notes or preferred securities may or
may not be listed on a national securities exchange.
35
<PAGE>
EXPERTS
The consolidated financial statements of Everest Holdings appearing in
Everest Holdings' Annual Report on Form 10-K for the year ended December 31,
1998 have been audited by PricewaterhouseCoopers LLP, independent accountants,
as set forth in their report included therein and incorporated by reference
herein in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
VALIDITY OF THE SECURITIES
Richards, Layton & Finger, P.A., Wilmington, Delaware, special Delaware
counsel to Everest Holdings and the Trust, will pass upon the validity of the
preferred securities for the Trust. Mayer, Brown & Platt, Chicago, Illinois,
will pass upon the validity of the senior notes and the junior subordinated
notes for Everest Holdings and the preferred securities guarantee for the
Trust.
36
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses of issuance and distribution, other than underwriting
discounts and commissions, to be borne by Everest Holdings are as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............. $125,100
New York Stock Exchange listing fees............................ *
Trustee fees and expenses....................................... *
Printing expenses............................................... *
Legal fees and expenses......................................... *
Accounting fees and expenses.................................... *
Blue Sky fees and expenses...................................... *
Rating Agency fees.............................................. *
Miscellaneous................................................... *
--------
Total......................................................... $ *
========
</TABLE>
- --------
* To be filed by amendment.
Item 15. Indemnification of Officers and Directors.
Under Delaware law, a corporation may indemnify a director or officer who
becomes a party to an action, suit or proceeding because of his position as a
director or officer if (1) the director or officer acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation and (2) if the action or proceeding involves a criminal
offense, the director or officer had no reasonable cause to believe his conduct
was unlawful. Article VII of the certificate of incorporation of Everest
Holdings provides that Everest Holdings shall, to the fullest extent permitted
by Delaware General Corporation Law: (x) indemnify its officers, directors,
employees and agents and (y) advance expenses incurred by its officers,
directors, employees or agents in relation to any action, suit or proceeding.
Article VII of the certificate of incorporation of Everest Holdings further
provides that Everest Holdings may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of Everest
Holdings, or who is or was serving at the request of Everest Holdings as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against any liability asserted against him
and incurred by him arising in such capacity, whether or not Everest Holdings
would be able to indemnify him against such liability under the provisions of
the Delaware General Corporation Law. In addition, Article VII of the
certificate of incorporation of Everest Holdings provides that its directors
shall not be personally liable to Everest Holdings or its stockholders for
monetary damages for breach of fiduciary duty, except for liability (a) for any
breach of the director's duty of loyalty; (b) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law;
(c) under Section 174 of the Delaware General Corporation Law (relating to
dividends and repurchases of stock); and (d) for any transaction from which the
director derived an improper personal benefit.
In addition to reiterating the indemnification provisions of certificate of
incorporation of Everest Holdings, Article VI, Section 11 of the by-laws of
Everest Holdings provides that the indemnification of any director, officer,
employee or agent includes reimbursement of expenses (including attorneys'
fees), judgments, fines and amount paid in settlement actually and reasonably
incurred by him in connection with the defense or settlement of an action, suit
or proceeding. Article VII, Section 11 also provides that advancements of
expenses shall be paid to the director, officer, employee or agent at
reasonable intervals in advance of the final disposition of such action, suit
or proceeding, upon receipt of an undertaking to repay such amounts if it shall
ultimately be determined that such person is not entitled to indemnification.
If an indemnification claim is not paid in a timely manner to the director,
officer, employee or agent, such person has the right to bring suit against
Everest Holdings to recover the unpaid amount of the claim.
II-1
<PAGE>
Everest Holdings also maintains insurance on its directors and officers,
which covers liabilities under the federal securities laws, excluding losses
arising from any claim relating to any deliberately dishonest or fraudulent act
or omission, any criminal or malicious act or omission, any willful violation
of law or any accounting for profits for the purchase or sale of securities of
Everest Holdings within the meaning of Section 16(b) of the Exchange Act.
Item 16. Exhibits.
<TABLE>
<C> <S> <C>
*1.1 Form of Underwriting Agreement (Senior Notes).
*1.2 Form of Underwriting Agreement (Preferred Securities).
2.1 Agreement and Plan of Merger among Everest Holdings,
Everest Group and Everest Merger, dated as of September
17, 1999.
3.1 Certificate of Incorporation of Everest Holdings
(incorporated by reference to Exhibit 4.1 to the
Registration Statement on Form S-8 (No. 333-05771)).
3.2 Bylaws (as amended and restated) of Everest Holdings
(incorporated by reference to Exhibit 3.2 to the Annual
Report on Form 10-K for the year ended December 31, 1997).
3.4 Certificate of Trust of the Trust.
*4.1 Indenture for Senior Notes.
*4.2 Indenture for Junior Subordinated Notes.
*4.3 Form of Supplemental Indenture for Senior Notes.
*4.4 Form of Supplemental Indenture for Junior Subordinated
Notes.
*4.5 Form of Senior Note (included in Exhibit 4.1).
*4.6 Form of Junior Subordinated Note (included in Exhibit
4.2).
4.7 Trust Agreement of the Trust.
*4.8 Form of Amended and Restated Trust Agreement for the
Trust.
*4.9 Form of Preferred Security (included in Exhibit 4.8).
*4.10 Form of Guarantee Agreement.
*4.11 Form of Expense Agreement.
*5.1 Opinion of Richards, Layton & Finger, P.A., special
Delaware counsel for Everest Holdings and the Trust.
*5.2 Opinion of Mayer, Brown & Platt, counsel for Everest
Holdings and the Trust.
*8.1 Opinion of Mayer, Brown & Platt relating to certain United
States tax matters.
12.1 Statement regarding the computation of ratio of earnings
to fixed charges.
23.1 Consent of PricewaterhouseCoopers LLP.
*23.2 Consent of Richards, Layton & Finger, P.A., (included in
Exhibit 5.1).
*23.3 Consents of Mayer, Brown & Platt (included in Exhibit
5.2).
24.1 Powers of Attorney (included on page II-4).
*25.1 Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of The Chase Manhattan
Bank, as Trustee under the Indenture (Senior Notes).
*25.2 Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of The Chase Manhattan
Bank, as Trustee under the Indenture (Junior Subordinated
Notes).
*25.3 Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of The Chase Manhattan
Bank, as Property Trustee--The Trust.
*25.6 Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of The Chase Manhattan
Bank, as Guarantee Trustee--The Trust.
</TABLE>
- --------
* To be filed by amendment or incorporated by reference pursuant to
subsequent filings by Everest Holdings.
II-2
<PAGE>
Item 17. Undertakings.
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low
or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
Registration Statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that (i) and (ii) do not apply if the information
required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to
the Securities and Exchange Commission by the registrants pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of post-effective amendment any of
the securities being registered which remain unsold at the termination
of the offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of Everest Holdings' annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(5) To file an application for the purpose of determining the eligibility
of the trustees to act under subsection (a) of Section 310 of the Trust
Indenture Act in accordance with the rules and regulations prescribed
by the Securities and Exchange Commission under Section 305(b)(2) of
the Securities Act.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrants pursuant to the provisions described under Item 15 above, or
otherwise, the registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by a registrant of expenses incurred or paid by a director, officer
or controlling person 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, such registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Everest
Reinsurance Holdings, Inc. certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Liberty Corner, and
State of New Jersey, on the 17th day of September, 1999.
Everest Reinsurance Holdings, Inc.
/s/ Joseph V. Taranto
By___________________________________
Joseph V. Taranto
Chairman and Chief Executive
Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Joseph V.
Taranto, Stephen L. Limauro and Janet J. Burak, or any of them, such person's
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on the 17th day of September, 1999.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Joseph V. Taranto Chairman and Chief Executive Officer and
___________________________________________ Director (Principal Executive Officer)
Joseph V. Taranto
/s/ Stephen L. Limauro Senior Vice President and Comptroller
___________________________________________ (Principal Financial and Accounting
Stephen L. Limauro Officer)
/s/ Martin Abrahams Director
___________________________________________
Martin Abrahams
/s/ Kenneth J. Duffy Director
___________________________________________
Kenneth J. Duffy
/s/ John R. Dunne Director
___________________________________________
John R. Dunne
/s/ Thomas J. Gallagher Director
___________________________________________
Thomas J. Gallagher
/s/ William F. Galtney, Jr. Director
___________________________________________
William F. Galtney, Jr.
</TABLE>
II-4
<PAGE>
SIGNATURES
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 has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Liberty Corner, and State of New Jersey, on the 17th
day of September, 1999.
Everest Re Capital Trust
By: Everest Reinsurance Holdings,
Inc.
as Depositor
/s/ Joseph V. Taranto
By: ________________________________
Joseph V. Taranto
Chairman and Chief Executive
Officer
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S> <C>
*1.1 Form of Underwriting Agreement (Senior Notes).
*1.2 Form of Underwriting Agreement (Preferred Securities).
2.1 Agreement and Plan of Merger among Everest Holdings,
Everest Group and Everest Merger, dated as of September
17, 1999.
3.1 Certificate of Incorporation of Everest Holdings
(incorporated by reference to Exhibit 4.1 to the
Registration Statement on Form S-8 (No. 333-05771)).
3.2 Bylaws (as amended and restated) of Everest Holdings
(incorporated by reference to Exhibit 3.2 to the Annual
Report on Form 10-K for the year ended December 31, 1997).
3.4 Certificate of Trust of the Trust.
*4.1 Indenture for Senior Notes.
*4.2 Indenture for Junior Subordinated Notes.
*4.3 Form of Supplemental Indenture for Senior Notes.
*4.4 Form of Supplemental Indenture for Junior Subordinated
Notes.
*4.5 Form of Senior Note (included in Exhibit 4.1).
*4.6 Form of Junior Subordinated Note (included in Exhibit
4.2).
4.7 Trust Agreement of the Trust.
*4.8 Form of Amended and Restated Trust Agreement for the
Trust.
*4.9 Form of Preferred Security (included in Exhibit 4.8).
*4.10 Form of Guarantee Agreement.
*4.11 Form of Expense Agreement.
*5.1 Opinion of Richards, Layton & Finger, P.A., special
Delaware counsel for Everest Holdings and the Trust.
*5.2 Opinion of Mayer, Brown & Platt, counsel for Everest
Holdings and the Trust.
*8.1 Opinion of Mayer, Brown & Platt relating to certain United
States tax matters.
12.1 Statement regarding the computation of ratio of earnings
to fixed charges.
23.1 Consent of PricewaterhouseCoopers LLP.
*23.2 Consent of Richards, Layton & Finger, P.A. (included in
Exhibit 5.1).
*23.3 Consents of Mayer, Brown & Platt (included in Exhibit
5.2).
24.1 Powers of Attorney (included on page II-4).
*25.1 Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of The Chase Manhattan
Bank, as Trustee under the Indenture (Senior Notes).
*25.2 Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of The Chase Manhattan
Bank, as Trustee under the Indenture (Junior Subordinated
Notes).
*25.3 Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of The Chase Manhattan
Bank, as Property Trustee--The Trust.
*25.6 Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939, as amended, of The Chase Manhattan
Bank, as Guarantee Trustee--The Trust.
</TABLE>
- --------
* To be filed by amendment or incorporated by reference pursuant to
subsequent filings by Everest Holdings.
<PAGE>
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of September 17, 1999 among Everest
Reinsurance Holdings, Inc., a Delaware corporation ("Everest Holdings"),
Everest Reinsurance Group, Ltd., a Bermuda company and wholly-owned subsidiary
of Everest Holdings ("Everest Group"), and Everest Re Merger Corporation, a
Delaware corporation and wholly-owned subsidiary of Everest Group ("Everest
Merger").
WHEREAS, the respective Boards of Directors of Everest Holdings, Everest
Group and Everest Merger deem it advisable and in the best interests of their
respective stockholders to reorganize so that Everest Group becomes the parent
holding company for Everest Holdings;
WHEREAS, the respective Boards of Directors of Everest Holdings, Everest
Group and Everest Merger have approved the merger of Everest Merger with and
into Everest Holdings (the "Merger"), upon the terms and subject to the
conditions set forth in this Agreement, whereby each outstanding share of
common stock, par value $.01 per share, of Everest Holdings ("Everest Holdings
Common Stock") (other than those shares held by Everest Holdings or any direct
or indirect wholly-owned subsidiary of Everest Holdings), will be automatically
converted into one common share, par value $.01 per share, of Everest Group
("Everest Group Common Share"), and each outstanding share of common stock, par
value $.01 per share, of Everest Merger ("Everest Merger Common Stock"), will
be automatically converted into one share of Everest Holdings Common Stock; and
WHEREAS, the Merger requires the approval of Everest Group, as sole
stockholder of Everest Merger, and the approval of the holders of a majority of
the outstanding shares of Everest Holdings Common Stock entitled to vote
thereon at the meeting of holders of Everest Holdings Common Stock to be called
therefor (the "Everest Holdings Stockholder Approval");
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
MERGER
1.01. Merger. Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the General Corporation Law of the State of
Delaware (the "DGCL"), Everest Merger shall be merged with and into Everest
Holdings at the Effective Time (as defined in Section 1.02). Following the
Effective Time, the separate corporate existence of Everest Merger shall cease
and Everest Holdings shall continue as the surviving corporation (the
"Surviving Corporation") and shall succeed to and assume all the rights and
obligations of Everest Merger in accordance with the DGCL.
1.02. Effective Time. Subject to the provisions of this Agreement, as soon
as practicable following the satisfaction or waiver of the conditions set forth
in Section 5.01, the parties shall file a certificate of merger or other
appropriate documents (in any case, the "Certificate of Merger") executed in
accordance with the DGCL and shall make all other filings or recordings
required under the DGCL. The Merger shall become effective at the close of
business on the date that the Certificate of Merger is duly filed with the
Secretary of State of the State of Delaware, or at such later time as Everest
Merger and Everest Holdings shall agree should be specified in the Certificate
of Merger (the time the Merger becomes effective being hereinafter referred to
as the "Effective Time").
1.03. Effects of the Merger. The Merger shall have the effects set forth in
Section 259 of the DGCL.
<PAGE>
ARTICLE II
NAME, CERTIFICATE OF INCORPORATION, BY-LAWS,
DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION
2.01. Name of the Surviving Corporation. The name of the Surviving
Corporation shall be "Everest Reinsurance Holdings, Inc."
2.02. Certificate of Incorporation. The Certificate of Incorporation of
Everest Holdings, as in force and effect immediately prior to the Effective
Time, shall, from and after the Effective Time, be the certificate of
incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law.
2.03. By-Laws. The by-laws of Everest Holdings, as in force and effect
immediately prior to the Effective Time, shall, from and after the Effective
Time, be the by-laws of the Surviving Corporation until thereafter changed or
amended as provided therein or by applicable law.
2.04. Directors. The directors of Everest Holdings in office immediately
prior to the Effective Time shall be the directors of the Surviving Corporation
and shall hold their respective directorships until the election and
qualification of their respective successors or until their tenure is otherwise
terminated in accordance with the certificate of incorporation and by-laws of
the Surviving Corporation, or as otherwise provided by applicable law.
2.05. Officers. The officers of Everest Holdings in office immediately prior
to the Effective Time shall be the officers of the Surviving Corporation and
shall hold their respective directorships until the election and qualification
of their respective successors or until their tenure is otherwise terminated in
accordance with the certificate of incorporation and by-laws of the Surviving
Corporation, or as otherwise provided by applicable law.
ARTICLE III
CONVERSION AND EXCHANGE OF STOCK
3.01. Conversion. At the Effective Time, by virtue of the Merger and without
any action on the part of the holder of any shares:
(a) Conversion of Everest Holdings Common Stock. Each issued and
outstanding share of Everest Holdings Common Stock (other than shares to be
canceled in accordance with Section 3.01(c)) shall be automatically
converted into and shall become one validly issued, fully paid and non-
assessable Everest Group Common Share.
(b) Everest Merger Common Stock. Each issued and outstanding share of
Everest Merger Common Stock shall be converted into and become one fully
paid and nonassessable share of Everest Holdings Common Stock.
(c) Cancellation of Everest Holdings-Owned Stock. Each outstanding
Everest Group Common Share that is owned by Everest Holdings prior to the
Effective Time shall immediately after the Effective Time be repurchased by
Everest Group for $0.01 per share, or $12,000 in the aggregate, and shall
upon such repurchase be canceled and retired and shall cease to be issued.
Each outstanding share of Everest Holdings Common Stock that is owned by
Everest Holdings or by any direct or indirect wholly-owned subsidiary of
Everest Holdings prior to the Effective Time shall automatically be
canceled and retired and shall cease to be issued and no Everest Group
Common Shares or other consideration shall be delivered or deliverable in
exchange for such shares of Everest Holdings Common Stock.
2
<PAGE>
3.02. Exchange of Stock.
(a) Exchange Procedures. Following the Effective Time, each holder of an
outstanding certificate or certificates theretofore representing shares of
Everest Holdings Common Stock may, but shall not be required to, surrender
the same to Everest Group for cancellation or transfer, and each such
holder or transferee will be entitled to receive certificates representing
the same number of Everest Group Common Shares as the shares of Everest
Holdings Common Stock previously represented by the stock certificates
surrendered. If any certificate representing Everest Group Common Shares is
to be issued in a name other than that in which the certificate theretofore
representing Everest Holdings Common Stock surrendered is registered, it
shall be a condition to such issuance that the certificate surrendered
shall be properly endorsed and otherwise in proper form for transfer and
that the person requesting such issuance shall either: (i) pay Everest
Group or its agents any taxes or other governmental charges required by
reason of the issuance of certificates representing Everest Group Common
Shares in a name other than that of the registered holder of the
certificate so surrendered; or (ii) establish to the satisfaction of
Everest Group or its agents that such taxes or governmental charges have
been paid. Until so surrendered or presented for transfer, each outstanding
certificate which, prior to the Effective Time, represented Everest
Holdings Common Stock shall be deemed and treated for all corporate
purposes to represent the ownership of the same number of Everest Group
Common Shares as though such surrender or transfer and exchange had taken
place.
(b) No Further Ownership Rights in Everest Holdings Common Stock. All
Everest Group Common Shares issued upon the surrender for exchange of
certificates in accordance with the terms of this Article III shall be
deemed to have been issued and paid in full satisfaction of all rights
pertaining to the shares of Everest Holdings Common Stock theretofore
represented by such certificates, subject, however, to the Surviving
Corporation's obligation (if any) to pay any dividends or make any other
distributions with a record date prior to the Effective Time which may have
been declared or made by Everest Holdings on such shares of Everest
Holdings Common Stock in accordance with the terms of this Agreement or
prior to the date of this Agreement and which remain unpaid at the
Effective Time. Following the Effective Time, there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Everest Holdings Common Stock that were
outstanding immediately prior to the Effective Time. If, after the
Effective Time, certificates are presented to the Surviving Corporation,
they shall be canceled and exchanged as provided in this Article III,
except as otherwise provided by law.
ARTICLE IV
EMPLOYEE BENEFIT AND COMPENSATION PLANS
4.01. Plans Assumed by Everest Group. At the Effective Time, Everest Group
shall assume all the rights and obligations of Everest Holdings under the
Annual Incentive Plan, the Executive Performance Annual Incentive Plan, the
1995 Stock Incentive Plan, the 1995 Stock Option Plan for Non-Employee
Directors, the Senior Executive Change of Control Plan and all other plans,
arrangements or agreements pursuant to which options with respect to Everest
Holdings Common Stock have been or may be granted, as each such plan,
arrangement or agreement has been or may be amended prior to the Effective Time
(collectively, the "Plans"). The outstanding options assumed by Everest Group
shall be exercisable upon the same terms and conditions as under the Plans and
the agreements relating thereto immediately prior to the Effective Time, except
that upon the exercise of such options Everest Group Common Shares shall be
issuable in lieu of shares of Everest Holdings Common Stock. The number of
Everest Group Common Shares issuable upon the exercise of an option immediately
after the Effective Time and the option price of each such option shall be the
number of shares and option price in effect immediately prior to the Effective
Time.
4.02. Other Benefit Plans. At the Effective Time, each employee benefit plan
and incentive compensation plan other than the Plans to which Everest Holdings
is then a party shall be assumed by, and continue to be the plan of, the
Surviving Corporation.
3
<PAGE>
ARTICLE V
CONDITIONS PRECEDENT
5.01. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver of the following conditions:
(a) Stockholder Approval. The Everest Holdings Stockholder Approval
shall have been obtained.
(b) Form S-4. The registration statement on Form S-4 filed with the
Securities and Exchange Commission by Everest Group in connection with the
issuance of the Everest Group Common Shares in the Merger shall have become
effective under the Securities Act of 1933, as amended, and shall not be
the subject of any stop order or proceedings seeking a stop order.
(c) NYSE Listing. The Everest Group Common Shares issuable pursuant to
the terms of this Agreement shall have been approved for listing by the New
York Stock Exchange, Inc., subject to official notice of issuance.
(d) Governmental, Regulatory and Other Consents. All filings required to
be made prior to the Effective Time with, and all consents, approvals,
permits and authorizations required to be obtained prior to the Effective
Time from, any court or governmental or regulatory authority or agency,
domestic or foreign, or other person, in connection with the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby will have been made or obtained (as the case may be)
and all applicable waiting periods shall have expired.
(e) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger or any of the other transactions
contemplated hereby shall be in effect.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
6.01. Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether or not the Everest Holdings Stockholder Approval
shall have been obtained, by action of the Board of Directors of Everest
Holdings or of Everest Group.
6.02. Effect of Termination. In the event of termination of this Agreement
as provided in Section 6.01, this Agreement shall forthwith become void and
have no effect, without any liability or obligation on the part of Everest
Holdings, Everest Merger or Everest Group, other than the provisions of this
Article VI and Article VII.
6.03. Amendment. This Agreement may be amended by the parties at any time
before or after the Stockholder Approval shall have been obtained; provided,
however, that after any such approval, there shall be made no amendment that
by law requires further approval by the stockholders of Everest Holdings
without the further approval of such stockholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties.
6.04. Waiver. At any time prior to the Effective Time, the parties may
waive compliance by the other parties with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. The failure of any party to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of such
rights.
4
<PAGE>
6.05. Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 6.01, an amendment of this
Agreement pursuant to Section 6.03 or a waiver pursuant to Section 6.04 shall,
in order to be effective, require in the case of Everest Holdings, Everest
Merger or Everest Group, action by its Board of Directors.
ARTICLE VII
GENERAL PROVISIONS
7.01 Notices. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally, telecopied (which is confirmed) or sent by
overnight courier (providing proof of delivery) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Everest Holdings:
Everest Reinsurance Holdings, Inc.
477 Martinsville Road
P.O. Box 830
Liberty Corner, New Jersey 07938-0830
(b) if to Everest Group:
Everest Reinsurance Group, Ltd.
c/o ABG Financial & Management Services Inc.
Parker House
Wildey Business Park, Wildey Road
St. Michael, Barbados
(c) if to Everest Merger:
Everest Re Merger Corporation
c/o Everest Reinsurance Holdings, Inc.
477 Martinsville Road
P.O. Box 830
Liberty Corner, New Jersey 07938-0830
7.02. Entire Agreement; No Third-Party Beneficiaries. This Agreement
(including the documents and instruments referred to herein) (a) constitutes
the entire agreement, and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter of
this Agreement and (b) except for the provisions of Articles III and IV, are
not intended to confer upon any person other than the parties any rights or
remedies.
7.03. Further Assurances. The parties shall execute and deliver such further
instruments and do such further acts and things as may be required to carry out
the intent and purposes of this Agreement.
7.04. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws
thereof.
5
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed, by their respective officers thereunto duly authorized, all as of the
date first written above.
Everest Reinsurance Holdings, Inc.
/s/ Stephen L. Limauro
By: _________________________________
Stephen L. Limauro
Name: ____________________________
Senior Vice President and
Comptroller
Title: ___________________________
Everest Re Merger Corporation
/s/ Janet J. Burak
By: _________________________________
Janet J. Burak
Name: ____________________________
Senior Vice President and
Secretary
Title: ___________________________
Everest Reinsurance Group, Ltd.
/s/ Janet J. Burak
By: _________________________________
Janet J. Burak
Name: ____________________________
Deputy Chairman
Title: ___________________________
6
<PAGE>
Exhibit 3.4
CERTIFICATE OF TRUST
OF
EVEREST RE CAPITAL TRUST
This Certificate of Trust of Everest Re Capital Trust (the "Trust"), dated
September 17, 1999, is being duly executed and filed by the undersigned, as
trustees, to form a business trust under the Delaware Business Trust Act (12
Del. C. (SS) 3801, et seq.) (the "Act").
1. Name. The name of the business trust formed by this Certificate of
Trust is Everest Re Capital Trust.
2. Delaware Trustee. The name and business address of the trustee of the
Trust with its principal place of business in the State of Delaware are Chase
Manhattan Bank Delaware, 1201 Market Street, Wilmington, Delaware 19801,
Attention: Corporate Trust Administration.
3. Effective Date. This Certificate of Trust shall be effective upon
filing with the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, the undersigned, being the trustees of the Trust, have
executed this Certificate of Trust in accordance with Section 3811(a)(1) of the
Act.
CHASE MANHATTAN BANK DELAWARE, not
in its individual capacity but solely as trustee
By: /s/ Denis Kelly
-----------------------------------------
Name: Denis Kelly
Title: Assistant Vice President
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as trustee
By: /s/ Timothy E. Burke
-----------------------------------------
Name: Timothy E. Burke
Title: Vice President
STEPHEN L. LIMAURO, not in his individual
capacity but solely as trustee of the Trust
/s/ Stephen L. Limauro
----------------------------------------------
<PAGE>
Exhibit 4.7
TRUST AGREEMENT
OF
EVEREST RE CAPITAL TRUST
The TRUST AGREEMENT OF EVEREST RE CAPITAL TRUST is dated as of September
17, 1999 (this "Trust Agreement"), by and among Everest Reinsurance Holdings,
Inc., a Delaware corporation, as depositor (the "Depositor"), and The Chase
Manhattan Bank, a New York banking corporation, as trustee (the "Property
Trustee"), Chase Manhattan Bank Delaware, a Delaware banking corporation, as
trustee (the "Delaware Trustee"), and Stephen L. Limauro, an individual, as
trustee (the "Regular Trustee" and collectively with the Property Trustee and
the Delaware Trustee, the "Trustees"). The Depositor and the Trustees hereby
agree as follows:
1. The trust created hereby shall be known as "Everest Re Capital Trust"
(the "Trust"), in which name the Trustees or the Depositor, to the extent
provided herein, may conduct the business of the Trust, make and execute
contracts, and sue and be sued.
2. The Depositor hereby assigns, transfers, conveys and sets over to the
Trust the sum of $10. Such amount shall constitute the initial trust estate. It
is the intention of the parties hereto that the Trust created hereby constitute
a business trust under Chapter 38 of Title 12 of the Delaware Code, 12 Del. C.
(S) 3801, et seq. (the "Business Trust Act"), and that this document constitute
the governing instrument of the Trust. The Trustees are hereby authorized and
directed to execute and file a certificate of trust with the Secretary of State
of the State of Delaware in such form as the Trustees may approve.
3. The Depositor and the Trustees will enter into an amended and restated
Trust Agreement satisfactory to each such party to provide for the contemplated
operation of the Trust created hereby and the issuance of the preferred
securities and common securities referred to therein. Prior to the execution and
delivery of such amended and restated Trust Agreement, the Trustees shall not
have any duty or obligation hereunder or with respect of the trust estate,
except as otherwise contemplated by this Trust Agreement, required by applicable
law or as may be necessary to obtain prior to such execution and delivery any
licenses, consents or approvals required by applicable law or otherwise.
Notwithstanding the foregoing, the Trustees may take all actions deemed proper
as are necessary to effect the transactions contemplated herein.
4. The Depositor, as depositor of the Trust, is hereby authorized (i) to
prepare and file with the Securities and Exchange Commission (the "Commission")
and to execute, in the case of the 1933 Act Registration Statement and 1934 Act
Registration Statement (as herein defined), on behalf of the Trust, (a) a
Registration Statement (the "1933 Act Registration Statement"), including all
pre-effective and post-effective amendments thereto, relating to the
registration under the Securities Act of 1933, as amended (the "1933 Act"), of
the preferred securities of the Trust, (b) any preliminary prospectus or
prospectus or supplement thereto relating to the preferred securities of the
Trust required to be filed pursuant to the 1933 Act, and (c) a Registration
Statement on Form 8-A or other appropriate form (the "1934 Act Registration
Statement"), including all pre-effective and post-effective amendments thereto,
relating to the registration of the preferred securities of the Trust under the
Securities Exchange Act of 1934, as amended; (ii) if and at such time as
determined by the Depositor, to file with the New York Stock
<PAGE>
Exchange or other exchange, or the National Association of Securities Dealers
("NASD"), and execute on behalf of the Trust a listing application and all other
applications, statements, certificates, agreements and other instruments as
shall be necessary or desirable to cause the preferred securities of the Trust
to be listed on the New York Stock Exchange or such other exchange, or the
NASD's Nasdaq National Market; (iii) to file and execute on behalf of the Trust,
such applications, reports, surety bonds, irrevocable consents, appointments of
attorney for service of process and other papers and documents that shall be
necessary or desirable to register the preferred securities of the Trust under
the securities or "blue sky" laws of such jurisdictions as the Depositor, on
behalf of the Trust, may deem necessary or desirable; (iv) to execute and
deliver letters or documents to, or instruments for filing with, a depository
relating to the preferred securities of the Trust; and (v) to execute, deliver
and perform on behalf of the Trust an underwriting agreement with one or more
underwriters relating to the offering of the preferred securities of the Trust.
In the event that any filing referred to in this Section 4 is required by
the rules and regulations of the Commission, the New York Stock Exchange or
other exchange, NASD, or state securities or "blue sky" laws to be executed on
behalf of the Trust by the Trustees, the Trustees, in their capacity as trustees
of the Trust, are hereby authorized to join in any such filing and to execute on
behalf of the Trust any and all of the foregoing, it being understood that the
Trustees, in their capacity as trustees of the Trust, shall not be required to
join in any such filing or execute on behalf of the Trust any such document
unless required by the rules and regulations of the Commission, the New York
Stock Exchange or other exchange, NASD, or state securities or "blue sky" laws.
5. This Trust Agreement may be executed in one or more counterparts.
6. The number of trustees of the Trust initially shall be three and
thereafter the number of trustees of the Trust shall be such number as shall be
fixed from time to time by a written instrument signed by the Depositor which
may increase or decrease the number of trustees of the Trust; provided, however,
that to the extent required by the Business Trust Act, one trustee of the Trust
shall either be a natural person who is a resident of the State of Delaware or,
if not a natural person, an entity which has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law.
Subject to the foregoing, the Depositor is entitled to appoint or remove without
cause any trustee of the Trust at any time. Any trustee of the Trust may resign
upon thirty days' prior notice to the Depositor.
7. The Depositor hereby agrees to (i) reimburse the Trustees for all
reasonable expenses (including reasonable fees and expenses of counsel and other
experts) and (ii) indemnify, defend and hold harmless the Trustees and any of
the officers, directors, employees and agents of the Trustees (the "Indemnified
Persons") from and against any and all losses, damages, liabilities, claims,
actions, suits, costs, expenses, disbursements (including the reasonable fees
and expenses of counsel), taxes and penalties of any kind and nature whatsoever
(collectively, "Expenses"), to the extent that such Expenses arise out of or are
imposed upon or asserted at any time against such Indemnified Persons with
respect to the performance of this Trust Agreement, the creation, operation or
termination of the Trust or the transactions contemplated hereby; provided,
however, that the Depositor shall not be required to indemnify any Indemnified
Person for any Expenses
any NASD
<PAGE>
which are a result of the willful misconduct, bad faith or gross negligence of
such Indemnified Person.
8. The Trust may be dissolved and terminated before the issuance of the
preferred securities of the Trust at the election of the Depositor.
9. This Trust Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware (without regard to conflict of laws
principles).
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to
be duly executed as of the day and year first above written.
EVEREST REINSURANCE HOLDINGS,
INC., as Depositor
By: /s/ Stephen L. Limauro
---------------------------
Name: Stephen L. Limauro
Title: Senior Vice President
THE CHASE MANHATTAN BANK, as
trustee
By: /s/ Timothy E. Burke
---------------------------
Name: Timothy E. Burke
Title: Vice President
CHASE MANHATTAN BANK
DELAWARE, as trustee
By: /s/ Denis Kelly
---------------------------
Name: Denis Kelly
Title: Assistant Vice President
STEPHEN L. LIMAURO, as trustee
/s/ Stephen L. Limauro
--------------------------------
-3-
<PAGE>
Exhibit 12.1
Everest Reinsurance Holdings, Inc.
Ratio of Earnings to Fixed Charges
(Dollars in thousands)
<TABLE>
<CAPTION>
Period Ended Years Ended December 31,
June 30, 1999 1998 1997 1996 1995 1994
-------------- ------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Earnings: Income/(loss)
before income taxes/(benefits) $ 98,919 $ 212,676 $ 207,300 $ 143,839 $ (26,568) $ (11,982)
Fixed Charges:
Assumed interest component
of rent expense 641 1,769 1,633 1,776 2,443 2,082
Interest expense 283 -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------
Total fixed charges 924 1,769 1,633 1,776 2,443 2,082
---------- ---------- ---------- ---------- ---------- ---------
Earnings plus fixed charges 99,843 214,444 208,933 145,615 (24,125) (9,900)
========== ========== ========== ========== =========== =========
Ratio of earnings to fixed
charges 108.1 to 1 121.2 to 1 129.9 to 1 80.0 to 1 (1) (1)
- -----------
</TABLE>
(1) Principally as a result of non-recurring charges, Everest Holdings had a
deficiency of earnings in 1995 and 1994 of $26,568 and $11,982,
respectively, to cover fixed charges.
<PAGE>
EXHIBIT 23.1
[Letterhead of PricewaterhouseCoopers LLP]
Consent of Independent Accountants
----------------------------------
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated February 17, 1999 except for Note 14,
as to which the date is March 11, 1999 relating to the financial statements and
financial statement schedules, which appears in Everest Reinsurance Holdings,
Inc. Annual Report on Form 10-K for the year ended December 31, 1998. We also
consent to the reference to us under the heading "Experts" in such Registration
Statement.
PricewaterhouseCoopers LLP
September 17, 1999
New York, New York
