<PAGE>
As filed with the Securities and Exchange Commission on December 22, 1999
Registration No. 333-87363
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Amendment No. 2
to
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. [_]
<PAGE>
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. Junior
Subordinated 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(4)
</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.
(4) Previously paid.
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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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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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 December 22, 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 that 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. 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
Everest Re Capital Trust may offer and sell preferred securities guaranteed
by Everest Holdings.
-----------
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 , 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ABOUT THIS PROSPECTUS..................................................... 1
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS...................... 1
WHERE YOU CAN FIND MORE INFORMATION....................................... 2
EVEREST HOLDINGS.......................................................... 3
RECENT DEVELOPMENTS....................................................... 5
THE PROPOSED RESTRUCTURING................................................ 5
THE TRUST................................................................. 8
USE OF PROCEEDS........................................................... 9
RATIO OF EARNINGS TO FIXED CHARGES........................................ 9
ACCOUNTING TREATMENT...................................................... 9
DESCRIPTION OF THE SENIOR NOTES........................................... 10
DESCRIPTION OF THE JUNIOR SUBORDINATED NOTES.............................. 19
DESCRIPTION OF THE PREFERRED SECURITIES................................... 29
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE......................... 36
DESCRIPTION OF THE EXPENSE AGREEMENT...................................... 38
RELATIONSHIP AMONG THE PREFERRED SECURITIES, PREFERRED SECURITIES
GUARANTEE AND JUNIOR SUBORDINATED NOTES HELD BY THE TRUST................ 38
PLAN OF DISTRIBUTION...................................................... 39
EXPERTS................................................................... 40
VALIDITY OF THE SECURITIES................................................ 40
</TABLE>
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a "shelf" registration statement that we filed
with 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. 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".
Everest Re Capital Trust, referred to in this prospectus as the trust, has
no independent function other than to issue securities and to purchase junior
subordinated notes from Everest Reinsurance Holdings, Inc., referred to in this
prospectus as Everest Holdings. This prospectus does not contain separate
financial statements for the trust. Everest Holdings files consolidated
financial information with the SEC that includes the trust. This prospectus
also does not contain separate additional information about the trust because
it is a wholly owned subsidiary of Everest Holdings and the trust is issuing
non-convertible, investment grade securities, which are fully and
unconditionally guaranteed by Everest Holdings. We do not believe that
additional financial or other 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. "Incorporate by reference"
means that we can disclose important information to you by referring you to
another document filed separately with the SEC. 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 prospectus supplement and the information incorporated
by reference in them may contain forward-looking statements within the meaning
of the federal securities laws. Everest Holdings intends 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". The safe harbor provisions
for forward-looking statements only apply to companies who have previously
offered securities to the public. Because the trust's offer of the preferred
securities constitutes its initial public offering of securities, the safe
harbor provisions of the federal securities laws do not apply to it. We
undertake no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or otherwise.
1
<PAGE>
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 and the trust. 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 and
its stock symbol is "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. The information incorporated by reference is deemed to be part
of this prospectus, except for any 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, June 30, 1999 and September 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
2
<PAGE>
EVEREST HOLDINGS
Business Operations
Everest Holdings was established in 1993 in Delaware to serve as the parent
holding company of Everest Reinsurance Company, referred to in this prospectus
as 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. 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. Reinsurance
is a form of insurance purchased by an insurance company to indemnify it for
all or part of the loss that it may sustain under insurance contracts that it
has written. Insurance companies purchasing reinsurance are often referred to
as ceding companies or reinsureds. Underwriting reinsurance on a treaty basis
means that Everest Re reinsures one or more insurance companies pursuant to an
agreement called a treaty, which sets forth the terms and conditions of the
reinsurance. Treaties generally automatically reinsure a specific line or class
of business. Underwriting reinsurance on a facultative basis means that Everest
Re reinsures one specific policy as opposed to the reinsurance of a specific
line or class of business.
Everest Re writes reinsurance both through brokers and directly with ceding
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 property and casualty insurance. Primary
insurance is purchased by insureds to pay amounts to them for economic losses
sustained from unexpected events. 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.
Statutory surplus is the amount by which the assets of an insurer exceed the
insurer's liabilities, including the amounts required by law to be established
as reserves for the insurer's insurance obligations.
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 is authorized to
write primary insurance in the states in which it is licensed to write
insurance, often called writing insurance on an admitted basis.
. Everest Insurance Company of Canada, a Canadian insurance company, 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, a Delaware insurance company,
engages in the excess and surplus lines insurance business in the United
States. Excess and surplus lines insurance is specialty property and
liability coverage that an insurer not licensed to write insurance in a
particular state is permitted to provide when the specific specialty
coverage is unavailable from admitted insurers. This is often called
writing insurance on a non-admitted basis. 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., a New Jersey limited liability company, is
licensed in New Jersey as an insurance producer, which is any
intermediary, such as an agency or broker, which acts as the conduit
between an insurance company and an insured. Mt. McKinley holds licenses
to allow it to act in New Jersey as an insurance producer in connection
with policies written on both an admitted and a surplus lines basis.
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.
3
<PAGE>
. 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 because its reinsurance operations have been converted into
branch operations of Everest Re. Everest Ltd. also holds approximately
$100 million of investments.
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, which refers to the tendency of insurance premiums, profits and the
demand for and availability of coverage to rise and fall over time. We also
seek to manage catastrophe exposures and control expenses and retrocessional
costs, which are incurred when reinsurers purchase reinsurance. Our
underwriting strategies seek to capitalize on our staff's expertise and our
flexibility to offer multiple products by underwriting reinsurance through
brokers and directly with ceding companies and by writing primary insurance on
an admitted and non-admitted basis 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 the 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 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 that 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.
4
<PAGE>
RECENT DEVELOPMENTS
On December 21, 1999, Everest Holdings entered into a three year senior
revolving credit facility with a syndicate of lenders, which replaces its $75
million facility. First Union National Bank is the administrative agent for the
credit facility. The credit facility provides for borrowings of up to $150
million and bears interest at either the higher of the prime rate established
by First Union National Bank from time to time or the federal funds rate plus
0.5% per annum. Alternatively, Everest Holdings may elect to have the
borrowings bear interest at an adjusted London InterBank Offered Rate plus a
margin. The amount of the margin and fees payable for the credit facility
depend upon the senior unsecured debt rating or, if that is not available, the
financial strength rating of Everest Re. The credit facility requires Everest
Holdings to maintain specified debt to capital and interest coverage ratios and
to maintain statutory surplus of its major operating subsidiary at $850 million
plus 25% of future aggregate net income and 25% of future aggregate capital
contributions. If the restructuring is completed, the new parent company of
Everest Holdings must guarantee the obligations of Everest Holdings under the
credit facility.
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 Re Group, Ltd., a company organized in Bermuda and with its
principal office in Barbados, referred to in this prospectus as 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.,
referred to in this prospectus as 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 executive offices in
Barbados.
. Everest Group has organized a Delaware subsidiary, Everest Re Merger
Corporation, referred to in this prospectus as 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.
In connection with the restructuring, Everest Group also intends to form a
new Delaware subsidiary, Everest Global Services, Inc., to perform
administrative and back office functions for Everest Group and its insurance
subsidiaries.
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 offerings of the securities described in this prospectus are not
contingent on the restructuring being approved or completed. We intend to offer
securities when market conditions are favorable.
5
<PAGE>
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:
[ORGANIZATION CHART APPEARS HERE]
6
<PAGE>
[AFTER THE RESTRUCTURING CHART]
7
<PAGE>
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 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 to the public preferred securities, representing undivided
beneficial interests in the assets of the trust;
. issue and sell to Everest Holdings common securities, representing
undivided beneficial interests in the assets of the trust;
. 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.
Everest Holdings 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 approximately 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. Payment will be
made on both the common securities and the preferred securities when payments
of interest are made on the junior subordinated notes, upon redemption of the
junior subordinated notes or in some circumstances upon liquidation of the
trust. However, if we default on the payments on the related junior
subordinated notes, then cash distributions and redemption, liquidation and
other amounts payable on the common securities will be subordinate in priority
of payment to the amounts payable on the preferred securities.
The preferred securities will be guaranteed by Everest Holdings as described
later in this prospectus.
We have appointed five trustees to conduct the trust's business and affairs:
. The Chase Manhattan Bank, which will act as the property trustee;
. Chase Manhattan Bank Delaware, which will act as the Delaware trustee;
and
. Three Everest Holdings officers, who will act as the regular 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.
8
<PAGE>
USE OF PROCEEDS
We may sell all or a portion of the $450 million of securities described in
this prospectus. Unless stated otherwise in the applicable prospectus
supplement, the net proceeds from the sale of the securities offered by the
trust will be used by the trust to purchase a series of our junior
subordinated notes.
Unless stated otherwise in the applicable prospectus supplement, if
securities are issued under this prospectus prior to the restructuring or if
the restructuring is not completed, Everest Holdings will use the net proceeds
to repurchase shares of Everest Holdings over time and for acquisitions
consistent with our business strategy, the payment of shareholder dividends
and general corporate purposes.
Unless stated otherwise in the applicable prospectus supplement, if the
restructuring is completed, substantially all of the remaining net proceeds
will be distributed by us to Everest Group and Everest Group will use the net
proceeds for the following purposes:
. approximately $250 million will be used to capitalize Everest Bermuda;
. any remaining proceeds may be used to repurchase shares of Everest Group
over time and for acquisitions consistent with our business strategy,
additional capitalization of Everest Bermuda, the payment of shareholder
dividends and general corporate purposes.
We do not anticipate needing to raise additional proceeds for the
capitalization of Everest Bermuda or the repurchase of shares.
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,
September 30, --------------------------
1999 1998 1997 1996 1995 1994
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<S> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges..... 89.6 121.2 127.9 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
The senior notes will be issued pursuant to a senior indenture, dated as of
, 2000, as supplemented from time to time, between us and The Chase
Manhattan Bank, as the senior indenture trustee. We have filed the base senior
indenture as an exhibit to the registration statement of which this prospectus
is a part. You also may request a copy of the senior indenture from the senior
indenture trustee at its corporate trust office in Edison, New Jersey. The
senior indenture will be qualified under the Trust Indenture Act of 1939. The
terms of each series of senior notes will include those stated in the senior
indenture for that series and those made part of the senior indenture by
reference to the Trust Indenture Act. This section summarizes all of the
material provisions of the senior notes and the senior indenture. You should
refer to these documents for more detailed information.
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 of our
board. Any supplemental indenture or resolutions of either our board of
directors or a duly authorized committee of the board will be executed at the
time we issue any senior notes and will be filed with the SEC on Form 8-K or by
a post-effective amendment to the registration statement of which this
prospectus is a part.
General
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.
We will issue senior notes under the senior indenture as one or more series
of unsecured senior debt securities. The senior notes are unsecured and
subordinated in right of payment to all of our existing and future secured
indebtedness and will rank equal in priority with all of our other unsecured
and unsubordinated indebtedness. As of September 30, 1999, we had no secured
indebtedness outstanding and approximately $35 million of senior indebtedness
outstanding, which ranks equal in priority with the senior notes. The senior
notes also will be effectively subordinated to any indebtedness and other
liabilities of our subsidiaries. As of September 30, 1999, our subsidiaries had
approximately $ 4.4 billion of indebtedness and other liabilities, including
insurance reserves. We anticipate that from time to time we will incur
additional indebtedness. We will disclose any material changes in these amounts
that may occur in any applicable prospectus supplement.
The prospectus supplement and the supplemental indenture or resolutions 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 of
the series will be payable or the method for determining the date or
dates;
. whether we may shorten or extend the date on which the principal of any
senior notes of the series is payable and, if so, the terms and
conditions of any extension;
. the rate or rates at which any of the senior notes of the series will
bear interest, if any, or the method for determining the rate or rates,
and the date or dates from which any interest will accrue;
. the interest payment dates on which any 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 extension;
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. the place or places where principal and any premium and interest on any
of the senior notes of the series will be payable, if other than the
principal corporate trust office of the senior indenture trustee;
. our obligation, if any, to redeem or purchase the senior notes of the
series pursuant to any sinking fund, amortization or analogous provision
and the terms and conditions on which any of the senior notes may be
redeemed or purchased pursuant to any obligation;
. the terms and conditions, if any, on which the senior notes of the series
may be redeemed at our option or at the option of the holder;
. any index or formula for determining the amount of principal or any
premium or interest on any of the senior notes of the series and the
manner of determining those amounts;
. the currency, currencies or currency units in which principal and any
premium and interest on any of the senior notes of the series 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;
. if the principal of or any premium or interest on the senior notes of the
series is payable, at our option or the option of the holder of the
senior notes, in one or more currencies or currency units other than
those in which the senior notes are stated to be payable, the currency,
currencies or currency units in which the principal and any premium and
interest on the senior notes may be payable and the terms and conditions
of the option;
. the portion of the principal amount of any of the senior notes of the
series that will be payable upon declaration of acceleration of maturity,
if other than the entire principal amount;
. whether any of the terms of the senior indenture described below under
"--Defeasance and Covenant Defeasance" will apply to any of the senior
notes of the series;
. whether any of the senior notes of the series 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 of the series and any
change in the right of the senior indenture trustee or the holders of the
senior notes to accelerate the maturity of the senior notes;
. if the principal amount payable on the maturity date of any of the senior
notes of the series 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 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 that amount; and
. any other terms of the senior notes of the series.
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 the registration of transfer or exchange.
We may offer and sell the senior notes at a substantial discount below their
principal amount and the senior indenture does not provide any limit on the
amount by which we may discount the senior notes. The applicable prospectus
supplement will describe the special United States federal income tax and other
considerations, if any, applicable to the discounted 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 notes are unsecured and subordinated in right of payment to all
of our existing and future secured indebtedness. As a result, in the event of
our bankruptcy, liquidation or reorganization or upon
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acceleration of the senior notes due to an event of default, our assets will be
available to pay our obligations on the senior notes only after all secured
indebtedness has been paid in full in cash or other payment satisfactory to the
holders of the secured indebtedness has been made. There may not be sufficient
assets remaining to pay amounts due on any or all of the senior notes then
outstanding. The senior notes are also effectively subordinated to the
indebtedness and other liabilities of our subsidiaries. The senior indenture
does not prohibit or limit the incurrence of secured or senior indebtedness or
the incurrence of other indebtedness and liabilities by us or our subsidiaries.
The incurrence of additional senior indebtedness and other liabilities by us or
our subsidiaries could adversely affect our ability to pay the obligations on
the senior notes.
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 any senior notes represented by global
securities.
Unless the applicable prospectus supplement states otherwise, senior notes
represented by a global security deposited with or on behalf of a depositary
will be registered in the name of that depositary or its nominee. Upon the
issuance of a global security in registered form, the depositary for the global
security will credit, on its book-entry registration and transfer system, the
respective principal amounts of the senior notes represented by the global
security to the accounts of institutions that have accounts with the depositary
or its nominee. These institutions are generally brokers, dealers, banks and
other financial institutions and are often referred to as participants. The
accounts to be credited will be designated by the underwriters or agents of the
senior notes or by Everest Holdings, if the senior notes are offered and sold
directly by Everest Holdings. Ownership of beneficial interests in the global
securities will be limited to participants or persons that may hold interests
through participants. Any person who holds a brokerage account with a
participant may purchase the senior notes through the participant. Ownership of
beneficial interests by participants in the global securities will be shown on,
and the transfer of any ownership interest will be effected only through,
records maintained by the depositary or its nominee for the global security.
Ownership of beneficial interests in global securities by persons that hold
through participants will be effected only through records maintained by the
applicable participant. Some insurance companies and other institutions are
required by law to hold their investment securities in definitive form, so an
investor may not be able to sell its senior notes to those insurance companies
or other institutions.
So long as the depositary for a global security or its nominee is the
registered owner of the global security, the depositary or the nominee, as the
case may be, will be considered the sole owner or holder of the senior notes
represented by the 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 the
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 of the senior notes 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 the senior notes. None of Everest Holdings, the senior indenture
trustee, any paying agent or the registrar and transfer agent for the 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 the senior notes or for maintaining, supervising or
reviewing any records relating to the beneficial ownership interests.
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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 the global security as shown on the records of the depositary. We
also expect that payments by participants to owners of beneficial interests in
the global security held through the 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 each participant.
So long as the depositary for a global security or its nominee is the
registered owner of the global security, the depositary or its nominee, as the
case may be, will be entitled to direct the actions of the senior indenture
trustee upon an event of default. However, we expect that a depositary for the
senior notes of a series, upon receiving notice of an event of default, will
immediately solicit the participants regarding any action to be taken. We also
expect that the participants will act in accordance with standing instructions
and customary practices, as is now the case with securities held for the
accounts of customers registered in "street name", and will, in turn, solicit
the owners of the beneficial interests regarding any action to be taken upon
any event of default.
A global security may not be transferred in whole or in part except by the
depositary for the global security to a nominee of the depositary or by a
nominee of the depositary to the depositary or another nominee of the
depositary or by the depositary or any nominee to a successor depositary or a
nominee of the successor depositary. If a depositary for the 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 the depositary and
no successor is appointed by us within 90 days or if an event of default has
occurred and is continuing, then we will issue the senior notes in definitive
registered form in exchange for the global security or global securities
representing the 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 that
event, will issue senior notes in definitive registered form in exchange for
the global securities representing the senior notes. In any of these instances,
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 the
global security equal in principal amount to its beneficial interest and to
have the senior notes registered in its name.
Events of Default
The following will be events of default under the senior indenture with
respect to the senior notes of any series unless the particular event of
default is not applicable to the particular series or unless the particular
event of default is 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 the
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 the
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.
However, the 60-day period may be 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, and the senior indenture trustee, or the
senior indenture trustee and such holders, as the case may be, will be
deemed to have agreed to an extension if we have initiated and are
diligently pursuing corrective action;
. we default under any (1) debt for any money borrowed, including any other
series of debt securities, (2) mortgage, indenture or other instrument
under which there may be issued or may be secured or
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evidenced any indebtedness for money borrowed or (3) guarantee of payment
for money borrowed, and any default shall result in the 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 of the indebtedness that has become due prior to its
stated maturity exceeds $25,000,000 and the accelerated indebtedness has
not been discharged or the acceleration of the indebtedness has not been
rescinded or annulled within 10 days after the senior indenture trustee or
the holders of at least 33% in principal amount of the senior notes give
us written notice of the default and require that we remedy the breach;
. 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 the 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
the 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 and before a judgment or decree for payment of the money due has been
obtained, 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:
. we deposit with the senior indenture trustee funds sufficient to pay all
overdue principal of and premium and interest on the senior notes and
other amounts due to the senior note trustee and, to the extent that
payment of the interest is lawful, interest on the overdue interest; and
. 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.
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;
. the holder or holders have offered reasonable indemnity to the senior
indenture trustee;
. 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 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 payment.
Notice of Default
If an event occurs which is or would become an event of default with
respect to any series of the senior notes, and the senior indenture trustee
knows of the event, the senior indenture trustee shall mail to the holders of
the affected senior notes a notice of the default within 90 days, unless the
default has been cured or waived by the holders of the affected senior notes.
However, except in the case of a default in the payment of any
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amounts due on senior notes of any series, the senior indenture trustee may
withhold the notice if and so long as the directors and/or responsible officers
of the senior indenture trustee determine in good faith that withholding the
notice is in the interest of the holders of the affected senior notes. In
addition, if Everest Holdings defaults on any series of the senior notes by
failing to comply with or perform any of its agreements, covenants or
warranties applicable to those senior notes, no notice will be given until at
least 30 days after the occurrence of the default.
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 entity, or convey, transfer or lease our properties and assets
substantially as an entirety to any entity or permit an entity to convey,
transfer or lease its properties and assets substantially as an entirety to us;
provided, however, that:
. the successor, if any, is a corporation, partnership or trust organized
and existing under the laws of the United States of America, any State of
the United States, the District of Columbia, Bermuda or the Cayman
Islands and expressly assumes by supplemental indenture all of our
obligations under the senior indenture and the senior notes;
. 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, each stating that the transaction complies with
the senior indenture and 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, the successor will succeed to and be
substituted for Everest Holdings under the senior indenture, and we will be
relieved of all of our obligations under the senior indenture and the senior
notes.
Registration and Transfer
If the 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 for the unredeemed portion of a
senior note being redeemed in part.
Denominations
The 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 the senior notes will be paid only against surrender of the
senior notes as specified in the senior indenture. Unless the applicable
prospectus supplement states otherwise, interest on the senior notes will be
payable, 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 the address appears in the security register for
the senior notes.
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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 the senior notes that remain unclaimed at the end of two years
after the principal or interest has become due and payable will be repaid to us
at our request. Holders will thereafter look only to us for any payments.
Modification of the Senior Indenture
Everest Holdings and the senior indenture trustee may 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 each series of the senior
notes affected by the amendment or modification voting as a class. No amendment
or modification may, however, without the consent of the holder of each
outstanding senior note affected by the amendment or modification:
. 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 of the senior note;
. 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 payment on
any senior note on or after the stated maturity or date of redemption; or
. reduce the percentage in principal amount of the senior notes of any
series, the consent of whose holders is required to amend or modify the
senior indenture, to waive compliance with specific provisions of the
senior indenture or to waive specific defaults.
In addition, Everest Holdings and the senior indenture trustee may, without
the consent of any of the holders of the 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 the senior notes in any material respect;
as well as for various other purposes.
Waiver of Covenants and Defaults
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 any
restrictive covenants described in any prospectus supplement or included in any
supplemental indenture. The holders of a majority in aggregate principal amount
of the outstanding senior notes of any series with respect to which a default
has occurred and is continuing may waive that default for that series, other
than a default in the payment of principal of, or any premium or interest on,
any senior note of that 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.
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Defeasance and Covenant Defeasance
The senior indenture provides, unless the terms of the particular series of
senior notes provides otherwise, that we may cause ourselves to be:
. discharged from our obligations with respect to any senior notes or
series of senior notes, which we refer to as "defeasance"; and
. released from our obligations under any restrictive covenants described
in any prospectus supplement or included in any supplemental indenture
with respect to any senior notes or series of senior notes, which we
refer to as "covenant defeasance".
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 the
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 the senior notes may not be
accelerated by reference to the covenants affected by the covenant defeasance.
However, if 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 the 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.
Upon a defeasance, the following rights and obligations will continue: (1)
the rights of the holders of the senior notes of any series to receive from
the trust established in connection with the defeasance payments of the
principal of and any premium and interest on the senior notes when payments
are due; (2) our obligations regarding the registration, transfer and exchange
of the senior notes of any series; (3) our obligation to maintain an office or
agency in each place of payment; and (4) the survival of the senior indenture
trustee's rights, powers, trusts, duties and immunities under the senior
indenture.
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.
In connection with a 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. This 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;
. an officers' certificate confirming that any senior notes then listed on
any securities exchange will not be delisted; and
. an officers' certificate and an opinion of counsel, each stating that all
conditions precedent have been complied with.
In addition, the following conditions must be true:
. no event will have occurred and be continuing which is or would become an
event of default;
. the defeasance or covenant defeasance will not cause the senior indenture
trustee to have a conflicting interest under the Trust Indenture Act;
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. the defeasance or covenant defeasance will not cause the trust to become
an investment company under the Investment Company Act unless it is
properly registered under that Act or exempt from registration; and
. proper notice of the redemption date, if applicable, will have been
given.
Information Concerning the Senior Indenture Trustee
In case an event of default shall occur and be continuing, the senior
indenture trustee shall exercise its rights and powers under the senior
indenture in the same manner and use the same degree of care and skill in its
exercise as a prudent person would exercise or use under the same circumstances
in the conduct of his or her own affairs. Before proceeding to exercise any
right or power under the senior indenture at the direction of the holders, the
senior indenture trustee will be entitled to receive from the holders
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in complying with any direction of the holders.
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 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
The junior subordinated notes will be issued pursuant to a subordinated
indenture, dated as of , 2000, as supplemented from time to time,
between us and The Chase Manhattan Bank, as the subordinated indenture trustee.
We have filed the base subordinated indenture as an exhibit to the registration
statement of which this prospectus is a part. You also may request a copy of
the subordinated indenture from the subordinated indenture trustee at its
corporate trust office in Edison, New Jersey. The subordinated indenture will
be qualified under the Trust Indenture Act of 1939. The terms of each series of
junior subordinated notes will include those stated in the subordinated
indenture and those made part of the subordinated indenture by reference to the
Trust Indenture Act. This section summarizes all of the material provisions of
the junior subordinated notes and the subordinated indenture. You should refer
to these documents for more detailed information.
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 of our board. Any supplemental indenture or resolutions of either our
board of directors or a duly authorized committee of our board will be executed
at the time we issue any junior subordinated notes and will be filed with the
SEC on Form 8-K or by a post-effective amendment to the registration statement
of which this prospectus is a part.
General
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.
We will issue the junior subordinated notes under the subordinated indenture
as one or more series of unsecured junior debt securities. The junior
subordinated notes are unsecured and subordinated in right of payment to all of
our existing and future senior indebtedness and will rank equal in priority
with all of our other unsecured and subordinated indebtedness. As of September
30, 1999, we had no secured indebtedness outstanding and approximately $35
million of senior indebtedness outstanding, which would be senior to the junior
subordinated notes. The junior subordinated notes also will be effectively
subordinated to any indebtedness and other liabilities of our subsidiaries. As
of September 30, 1999, our subsidiaries had approximately $4.4 billion of
indebtedness and other liabilities, including insurance reserves. We anticipate
that from time to time we will incur additional indebtedness, including
indebtedness senior to the junior subordinated notes. We will disclose any
material changes in these amounts that may occur in any applicable prospectus
supplement.
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
of the series will be payable or the method for determining the 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 and, if so, the terms
and conditions of any extension;
. the rate or rates at which the junior subordinated notes of the series
will bear interest, if any, or the method for determining the rate or
rates, and the date or dates from which any interest will accrue;
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. the interest payment dates on which any 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 extension;
. the place or places where principal and any premium and interest on the
junior subordinated notes of the series will be payable, if other than
the principal corporate trust office of the subordinated indenture
trustee;
. our obligation, if any, to redeem or purchase the junior subordinated
notes of the series pursuant to any sinking fund, amortization or
analogous provision and the terms and conditions on which the junior
subordinated notes may be redeemed or purchased pursuant to any
obligation;
. the terms and conditions, if any, on which the junior subordinated notes
of the series may be redeemed at our option or at the option of the
holder;
. any index or formula for determining the amount of principal or any
premium or interest on the junior subordinated notes of the series and
the manner of determining those amounts;
. the currency, currencies or currency units in which principal and any
premium and interest on the junior subordinated notes of the series 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;
. if the principal of or any premium or interest on the junior subordinated
notes of the series is payable, at our option or the option of the holder
of the junior subordinated notes, in one or more currencies or currency
units other than those in which the junior subordinated notes are stated
to be payable, the currency, currencies or currency units in which the
principal and any premium and interest on the junior subordinated notes
may be payable and the terms and conditions of the option;
. the portion of the principal amount of the junior subordinated notes of
the series that will be payable upon declaration of acceleration of
maturity, if other than the entire principal amount;
. whether any of the terms of the subordinated indenture described below
under "--Defeasance and Covenant Defeasance" will not apply to the junior
subordinated notes of the series;
. whether any of the junior subordinated notes of the series 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 of the series and
any change in the right of the subordinated indenture trustee or the
holders of the junior subordinated notes to accelerate the maturity of
the junior subordinated notes;
. if the principal amount payable on the maturity date of the junior
subordinated notes of the series 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 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 that amount; and
. any other terms of the junior subordinated notes of the series.
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 the
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.
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Subordination
The junior subordinated notes are unsecured and subordinated in right of
payment to all of our existing and future secured and senior indebtedness. As a
result, in the event of our bankruptcy, liquidation or reorganization or upon
acceleration of the junior subordinated notes due to an event of default, our
assets will be available to pay our obligations on the junior subordinated
notes only after all secured and senior indebtedness has been paid in full in
cash or other payment satisfactory to the holders of the secured and senior
indebtedness has been made. There may not be sufficient assets remaining to pay
amounts due on any or all of the junior subordinated notes then outstanding.
The junior subordinated notes are also effectively subordinated to the
indebtedness and other liabilities of our subsidiaries. The subordinated
indenture does not prohibit or limit the incurrence of secured or senior
indebtedness or the incurrence of other indebtedness and liabilities by us or
our subsidiaries. The incurrence of additional secured and senior indebtedness
and other liabilities by us or our subsidiaries could adversely affect our
ability to pay the obligations on the junior subordinated notes.
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 incurred after the date of
execution:
. all indebtedness of Everest Holdings for money borrowed or evidenced by
notes, debentures, bonds or other instruments;
. all indebtedness of others of the kinds described in the preceding clause
assumed by or guaranteed in any manner by us; and
. all renewals, extensions or refundings of indebtedness of the kinds
described in either of the preceding clauses;
unless the instrument creating or evidencing the same or pursuant to which the
same is outstanding provides that the indebtedness, renewal, extension or
refunding is not superior in right of payment to or is equal in right of
payment with or subordinated to the junior subordinated notes. Any 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 the senior
indebtedness.
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 any 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 the global security
will credit, on its book-entry registration and transfer system, the respective
principal amount of the junior subordinated notes represented by the global
security to the accounts of institutions that have accounts with the depositary
or its nominee. These institutions are generally brokers, dealers, banks and
other financial institutions, and are referred to as participants. The accounts
to be credited will be designated by the underwriters or agents of the junior
subordinated notes or by Everest Holdings, if the junior subordinated notes are
offered and sold directly by Everest Holdings. Ownership of beneficial
interests in the global securities will be limited to participants or persons
that may hold interests through participants. Any person who holds a brokerage
account with a participant may purchase the junior subordinated notes through
the participant. Ownership of beneficial interests by participants in the
global
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securities will be shown on, and the transfer of any ownership interest will be
effected only through, records maintained by the depositary or its nominee for
the global security. Ownership of beneficial interests in global securities by
persons that hold through participants will be effected only through records
maintained by the applicable participant. Some insurance companies and other
institutions are required by law to hold their investment securities in
definitive form, so an investor may not be able to sell its junior subordinated
notes to those insurance companies or other institutions.
So long as the depositary for a global security or its nominee is the
registered owner of the global security, the depositary or nominee, as the case
may be, will be considered the sole owner or holder of the junior subordinated
notes represented by the 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 have the junior
subordinated notes represented by the 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 of the junior subordinated notes 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 the junior subordinated notes. None of Everest Holdings, the
subordinated indenture trustee, any paying agent or the registrar and transfer
agent for the 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 the junior
subordinated notes or for maintaining, supervising or reviewing any records
relating to the 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 immediately credit participants' accounts with payment in
amounts proportionate to their respective beneficial interests in the principal
amount of the global security as shown on the records of the depositary. We
also expect that payments by participants to owners of beneficial interests in
the global security held through the 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 each participant.
So long as the depositary for a global security or its nominee is the
registered owner of the global security, the depositary or its nominee, as the
case may be, will be entitled to direct the actions of the subordinated
indenture trustee upon an event of default. However, we expect that a
depositary for the junior subordinated notes of a series, upon receiving notice
of an event of default, will immediately solicit the participants regarding any
action to be taken. We also expect that the participants will act in accordance
with standing instructions and customary practices, as is now the case with
securities held for the accounts of customers registered in "street name", and
will, in turn, solicit the owners of the beneficial interests regarding any
action to be taken upon any event of default.
A global security may not be transferred in whole or in part except by the
depositary for the global security to a nominee of the depositary or by a
nominee of the depositary to the depositary or another nominee of the
depositary or by the depositary or any nominee to a successor depositary or a
nominee of the successor depositary. If a depositary for the 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 the depositary and no successor is appointed by us within 90 days or an
event of default has occurred and is continuing, then we will issue the junior
subordinated notes in definitive registered form in exchange for the global
security or global securities representing the 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 that event, will
issue junior subordinated notes in definitive registered form in exchange for
the global securities representing the junior subordinated notes. In any of
these instances, an owner of a
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beneficial interest in a global security will be entitled to physical delivery
in definitive form of the junior subordinated notes represented by the global
security equal in principal amount to its beneficial interest and to have the
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 the
particular event of default is not applicable to the particular series of
junior subordinated notes or unless the particular event of default is 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 any 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 the junior subordinated notes;
. we fail to make any sinking fund payment on its due date;
. 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. However, the 60-day period may be extended by 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, and the
subordinated indenture trustee, or the subordinated indenture trustee and
such holders, as the case may be, will be deemed to have agreed to 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 the 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 the 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 and before a judgment or decree for
payment of the money due has been obtained, 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:
. we deposit with the junior indenture trustee funds sufficient to pay all
overdue principal of and premium and interest on the junior subordinated
notes and other amounts due to the subordinated indenture trustee and, to
the extent that payment of the interest is lawful, interest on the
overdue interest; and
. all existing events of default with respect to the junior subordinated
notes have been cured or waived except non-payment of principal on the
junior subordinated notes that has become due solely because of the
acceleration.
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.
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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;
. the 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 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 payment.
Notice of Default
If an event occurs which is or would become an event of default with respect
to any series of the junior subordinated notes, and the subordinated indenture
trustee knows of the event, the subordinated indenture trustee shall mail to
the holders of the affected junior subordinated notes a notice of the default
within 90 days, unless the default has been cured or waived by the holders of
the affected junior subordinated notes. However, except in the case of a
default in the payment of any amounts due on junior subordinated notes of any
series, the subordinated indenture trustee may withhold the notice if and so
long as the directors and/or responsible officers of the subordinated indenture
trustee determine in good faith that withholding the notice is in the interest
of the holders of the affected junior subordinated notes. In addition, if
Everest Holding defaults on any series of the senior notes by failing to comply
with or perform any of its agreements, covenants or warranties applicable to
those junior subordinated notes, no notice will be given until at least 30 days
after the occurrence of the default.
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 entity, or convey, transfer or lease our properties and assets
substantially as an entirety to any entity or permit an entity to convey,
transfer or lease its properties and assets substantially as an entirety to us;
provided, however, that
. the successor, if any, is a corporation, partnership or trust organized
and existing under the laws of the United States of America, any State of
the United States, the District of Columbia, Bermuda or the Cayman
Islands and expressly assumes by supplemental indenture all of our
obligations under the subordinated indenture and the junior subordinated
notes;
. 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, each stating that the transaction
complies with the subordinated indenture and all conditions precedent in
the subordinated indenture relating to the consolidation, merger,
conveyance or transfer have been complied with.
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Upon the assumption by the successor of our obligations under the
subordinated indenture and the junior subordinated notes, the successor will
succeed to and be substituted for Everest Holdings under the subordinated
indenture, and we will be relieved of all of our obligations under the
subordinated indenture and the junior subordinated notes.
Registration and Transfer
If the 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 for the unredeemed
portion of any junior subordinated note being redeemed in part.
Denominations
The 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 the junior subordinated notes will be paid only against
surrender of the junior subordinated notes as specified in the subordinated
indenture. Unless the applicable prospectus supplement states otherwise,
interest on the junior subordinated notes will be payable, 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
the address appears in the security register for the 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 the junior subordinated notes that remain unclaimed at the end
of two years after the principal or interest has become due and payable will be
repaid to us at our request. Holders will thereafter look only to us for any
payments.
Modification of the Subordinated Indenture
Everest Holdings and the subordinated indenture trustee may 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 each
series of the junior subordinated notes affected by the amendment or
modification voting as a class. No amendment or modification may, however,
without the consent of the holder of each outstanding junior subordinated note
affected by the amendment or modification:
. 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;
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. reduce the amount of principal of any junior subordinated note due and
payable upon acceleration of the maturity of the junior subordinated
note;
. 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 payment on
any junior subordinated note on or after the stated maturity or date of
redemption; or
. reduce the percentage in principal amount of the junior subordinated
notes of any series, the consent of whose holders is required to amend or
modify the subordinated indenture, to waive compliance with specific
provisions of the subordinated indenture or to waive specific 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 the junior subordinated notes in any material respect;
as well as for various other purposes.
Waiver of Covenants and Defaults
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 any restrictive covenants described in any prospectus
supplement or included in any supplemental indenture. The holders of a majority
in aggregate principal amount of the outstanding junior subordinated notes of
any series with respect to which a default has occurred and is continuing, may
waive that default for that series, other than a default in the payment of
principal of, or any premium or interest on, any junior subordinated note of
that 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 the
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 respect to any junior subordinated
notes or series of junior subordinated notes, which we refer to as
"defeasance"; and
. released from our obligations under any restrictive covenants described
in any prospectus supplement or included in any supplemental indenture
with respect to any junior subordinated notes or series of junior
subordinated notes, which we refer to as "covenant defeasance".
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 the 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 an
acceleration were to occur, the realizable value at the acceleration date of
the money and government
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obligations in the defeasance trust could be less than the principal and
interest then due on the 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.
Upon a defeasance, the following rights and obligations will continue: (1)
the rights of the holders of the junior subordinated notes of any series to
receive from the trust established in connection with the defeasance payments
of the principal of and any premium and interest on the junior subordinated
notes when payments are due, (2) our obligations regarding the registration,
transfer and exchange of the junior subordinated notes of any series, (3) our
obligation to maintain an office or agency in each place of payment and (4) the
survival of the subordinated indenture trustee's rights, powers, trusts, duties
and immunities under the subordinated indenture.
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.
In connection with a 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 the 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 the defeasance or covenant defeasance had not
occurred. This 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;
. an officers' certificate confirming that any junior subordinated notes
then listed on any securities exchange will not be delisted; and
. an officers' certificate and an opinion of counsel, each stating that all
conditions precedent have been complied with.
In addition, the following conditions must be true:
. no event will have occurred and be continuing which is or would become an
event of default;
. any defeasance or covenant defeasance will not cause the subordinated
indenture trustee to have a conflicting interest under the Trust
Indenture Act;
. any defeasance or covenant defeasance will not cause the trust to become
an investment company under the Investment Company Act unless it is
properly registered under that Act or exempt from registration; and
. proper notice of the redemption date, if applicable, will have been
given.
Information Concerning the Subordinated Indenture Trustee
In case an event of default shall occur and be continuing, the subordinated
indenture trustee shall exercise its rights and powers under the subordinated
indenture in the same manner and use the same degree of care and skill in its
exercise as a prudent person would exercise or use under the same circumstances
in the conduct of his or her own affairs. Before proceeding to exercise any
right or power under the subordinated indenture at the direction of the
holders, the subordinated indenture trustee will be entitled to receive from
the holders reasonable security or indemnity against the costs, expenses and
liabilities that might be incurred by it in complying with any direction of the
holders.
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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 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
The preferred securities will be issued pursuant to a trust agreement, dated
as of September 17, 1999, as subsequently amended and restated, between us and
The Chase Manhattan Bank, as the property trustee, Chase Manhattan Bank
Delaware, as the Delaware trustee, the three regular trustees and the holders
from time to of the trust's preferred and common securities. We have filed a
copy of the trust agreement and the form of the amended and restated trust
agreement as an exhibit to the registration statement of which this prospectus
is a part. You also may request a copy of the trust agreement from the property
trustee at its corporate trust office in Edison, New Jersey. The trust
agreement will be qualified under the Trust Indenture Act of 1939. 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.
This section summarizes all of the material provisions of the preferred
securities and the trust agreement. You should refer to these documents for
more detailed information. The amended and restated trust agreement will be
executed at the time we issue any preferred securities and will be filed with
the SEC on Form 8-K or by a post-effective amendment to the registration
statement of which this prospectus is a part.
General
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.
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 generally 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 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 any obligation;
. the terms and conditions, if any, on which the preferred securities may
be redeemed at our option or at the option of the holder;
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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 the 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.
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 related 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 any distribution of the related 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 with respect to any
series of related junior subordinated notes, 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 applicable 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, the property trustee and
the subordinated indenture trustee.
At any time after a declaration of acceleration has been made with respect
to a series of related junior subordinated notes and before a judgment or
decree for payment of the money due has been obtained, the holders of a
majority in liquidation amount of the preferred securities may rescind any
declaration of acceleration with respect to the related junior subordinated
notes and its consequences:
. if we deposit with the trustee funds sufficient to pay all overdue
principal of and premium and interest on the related junior subordinated
notes and other amounts due to the subordinated indenture trustee and the
property trustee; and
. if all existing events of default with respect to the related junior
subordinated notes have been cured or waived except non-payment of
principal on the related junior subordinated notes that has become due
solely because of the acceleration.
The holders of a majority in liquidation amount of the preferred securities
may waive any past default under the subordinated note indenture with respect
to related junior subordinated notes, other than a default in the payment of
principal of, or any premium or interest on, any related junior subordinated
note 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
related junior subordinated note affected. In addition, the holders of at least
a majority in liquidation amount of the preferred securities may waive any past
default under the trust agreement.
The holders of a majority in liquidation amount of the preferred securities
shall have the right to direct the time, method and place of conducting any
proceedings for any remedy available to the property trustee or to direct the
exercise of any trust or power conferred on the property trustee under the
trust agreement.
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 the holder
of principal and 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 the holder if we fail to pay principal
and any premium or interest on the related 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 substantially as an
entirety to any entity, except as described below. The trust may, without the
consent of the holders of the outstanding preferred securities, consolidate or
merge with or into, or be replaced by or convey, transfer or lease its
properties and assets substantially as an entirety to a trust organized under
the laws of any State 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, so
long as the substituted successor securities rank the same as the
preferred securities for distributions and payments upon liquidation,
redemption and otherwise;
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. we appoint a trustee of the successor entity who has substantially the
same powers and duties as the property trustee of the trust;
. the preferred securities are listed or traded, or any substituted
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
substituted 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 substituted
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; and
. we or our permitted transferee own all of the common securities of the
successor entity and guarantee the obligations of the successor entity
under the substituted successor securities at least to the extent
provided under the preferred securities guarantee.
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
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 taxable as a corporation or
classified other than as a grantor trust for United States federal income tax
purposes.
Voting Rights
Unless otherwise specified in the prospectus supplement, the holders of the
preferred securities will have no voting rights except as discussed below and
under "--Amendment of Trust Agreement" and "Description of the Preferred
Securities Guarantee--Amendments and Assignment", and as otherwise required by
law.
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, 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 any related
junior subordinated notes or direct the exercise of any trust or power
conferred on the property trustee with respect to the preferred
securities;
. waive any default that is waivable under the subordinated indenture with
respect to any related junior subordinated notes;
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. 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 consent is
required.
However, if a consent under the subordinated indenture requires the consent of
each affected holder of the related junior subordinated notes, then the
property trustee must obtain the prior consent of each holder of the 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 taxable
as a corporation or classified as other than a grantor trust for United States
federal income tax purposes.
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 the holders of the preferred securities may be
given at a meeting of the holders of the preferred securities convened for the
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 to be
given to each holder of record of the preferred securities at the holder's
registered address, or to any other address which has been specified in
writing, at least 15 days and not more than 90 days before the meeting.
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 the holders of the preferred securities are entitled to
vote or consent under any of the circumstances described above, any of the
preferred securities that are owned by Everest Holdings, the trustees of the
trust or any affiliate of Everest Holdings or any trustees of the trust, shall,
for purposes of any vote or consent, be treated as if they were not
outstanding. Preferred securities held by Everest Holdings or any of its
affiliates may be exchanged for related junior subordinated notes at the
election of the holder.
Amendment of the 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 the 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 the 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 taxable as a corporation or classified
as other than a grantor trust for United States federal income tax
purposes, to ensure that the junior subordinated notes held by the trust
are treated as indebtedness 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 the amendment will not cause the trust to be taxable as a corporation or
classified as other than a grantor trust for United States federal income tax
purposes, affect the treatment of the junior subordinated notes held by the
trust as indebtedness for United States federal income tax purposes or affect
the trust's exemption from the Investment Company Act.
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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 the
securities as of a specified date; or
. restrict the right of a holder of any securities to institute suit for
the enforcement of any payment on or after the distribution date.
In addition, no amendment may be made to a trust agreement if the amendment
would:
. cause the trust to be taxable as a corporation or characterized as other
than a grantor trust for United States federal income tax purposes;
. cause the junior subordinated notes held by the trust to not be treated
as indebtedness for United States federal income tax purposes;
. cause the trust to be deemed to be an investment company required to be
registered under the Investment Company Act; or
. impose any additional obligation on Everest Holdings or any trustee of
the trust 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 an event of default has occurred and is continuing under the
subordinated indenture, 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 upon the acceptance of
appointment by the successor trustee in accordance with the provisions of the
trust agreement.
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 the trustee
shall be a party, or any entity succeeding to all or substantially all of the
corporate trust business of the trustee, shall be the successor of the trustee
under the trust agreement; provided, however, that the 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 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 the 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 the 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.
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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 banking relationships
with The Chase Manhattan Bank.
Miscellaneous
The regular 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 not be taxable as a corporation or classified as other than a
grantor trust for United States federal income tax purposes;
. the junior subordinated notes held by it will be treated as indebtedness
of Everest Holdings for United States federal income tax purposes; and
. it will not be deemed to be an investment company required to be
registered under the Investment Company Act.
Everest Holdings and the trustees of the trust are authorized to take any
action, so long as it is consistent with applicable law, the certificate of
trust or trust agreement, that Everest Holdings and the trustees of the trust
determine to be necessary or desirable for the above purposes.
Registered holders of the preferred securities have no preemptive or similar
rights.
The trust may not incur indebtedness or place a lien on 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.
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DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE
The preferred securities guarantee will be issued pursuant to a guarantee
agreement, dated as of , 2000, between us and The Chase Manhattan
Bank, as the guarantee trustee. We have filed a form of the guarantee
agreement as an exhibit to the registration statement of which this prospectus
is a part. You also may request a copy of the guarantee agreement from the
guarantee trustee at its corporate trust office in Edison, New Jersey. The
guarantee agreement will be qualified under the Trust Indenture Act of 1939.
The terms of the preferred securities guarantee will include those stated in
the guarantee agreement and those made part of the guarantee agreement by
reference to the Trust Indenture Act. This section summarizes all of the
material provisions of the preferred securities guarantee. You should refer to
the guarantee agreement for more detailed information. The guarantee agreement
will be executed at the time we issue any preferred securities and will be
filed with the SEC on a Form 8-K or by a post-effective amendment to the
registration statement of which this prospectus is a part.
The guarantee agreement will be held by the guarantee trustee for the
benefit of the holders of preferred securities of the trust.
General
We will irrevocably agree to pay in full, to the holders of the preferred
securities, the guarantee payments described below, except to the extent
previously paid. We will pay the guarantee payments 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,
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
related 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 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 subject to the subordination
provisions described below and 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 the 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 the preferred
securities issued by any other trust.
As of September 30, 1999, we had approximately $35 million of indebtedness
outstanding that will rank senior to the preferred securities guarantee and no
liabilities that rank equally with the preferred securities
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guarantee. The preferred securities guarantee also will be effectively
subordinated to any indebtedness and other liabilities of our subsidiaries. As
of September 30, 1999, our subsidiaries had approximately $4.4 billion of
indebtedness and other liabilities, including insurance reserves. We anticipate
that from time to time we will incur additional indebtedness, including
indebtedness senior to the preferred securities guarantee. We will disclose any
material changes in these amounts that may occur in any applicable prospectus
supplement.
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 to enforce its rights under the preferred securities guarantee
without first suing any other person or entity.
Amendments and Assignment
No consent of the holders of the preferred securities will be required with
respect to any changes to the preferred securities guarantee that do not
adversely affect the rights of the holders of the 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 any 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 preferred securities unless it is offered reasonable security
and indemnity 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
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.
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DESCRIPTION OF THE EXPENSE AGREEMENT
We will execute an expense agreement at the same time that the trust issues
the 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.
The expense agreement, once executed, will be filed with the SEC on Form 8-K or
by a post-effective amendment to the registration statement of which this
prospectus is a part.
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 a
full, irrevocable and unconditional guarantee of the preferred securities. It
is only the combined operation of our obligations under the preferred
securities guarantee, the trust agreement, the subordinated indenture, the
related junior subordinated notes and the 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 inconsistent with the limited purposes of the trust.
If and to the extent that we do not make payments on the junior subordinated
notes held by the trust, 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 the 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 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 to enforce its rights under
the preferred securities guarantee without first suing the guarantee trustee,
the trust or any other person or entity.
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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 the
senior notes, junior subordinated notes or preferred securities, the proceeds
to us or the trust from the sale, any underwriting discounts or agency fees and
other items constituting underwriters' or agents' compensation, the initial
public offering price, any discounts or concession allowed or reallowed or paid
to dealers and the securities exchange, if any, on which the senior notes,
junior subordinated notes or preferred securities may be listed.
If underwriters participate in the sale, the 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 conditions
precedent and the underwriters will be obligated to purchase all of the 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 specific 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 the 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.
39
<PAGE>
EXPERTS
The consolidated financial statements of Everest Holdings incorporated in
this registration statement by reference to Everest Holdings' Annual Report on
Form 10-K for the year ended December 31, 1998 have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of said 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.
40
<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
Trustee fees and expenses....................................... 32,500
Printing expenses............................................... 80,000
Legal fees and expenses......................................... 150,000
Accounting fees and expenses.................................... 75,000
Blue Sky fees and expenses...................................... 10,000
Miscellaneous................................................... 27,400
--------
Total......................................................... $500,000
========
</TABLE>
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 that capacity, whether or not Everest Holdings
would be able to indemnify him against the 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, which relates 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
and judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with the defense or settlement of any 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 any action, suit or
proceeding, upon receipt of an undertaking to repay any amounts advanced by
Everest Holdings if it shall ultimately be determined that the person who was
advanced any amounts is not entitled to indemnification. If an indemnification
claim is not paid in a timely manner to the director, officer, employee or
agent, the 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 Form of Indenture for Senior Notes.
*4.2 Form of Indenture for Junior Subordinated Notes.
*4.3 Form of Senior Note (included in Exhibit 4.1).
*4.4 Form of Junior Subordinated Note (included in Exhibit
4.2).
*4.5 Trust Agreement of the Trust.
*4.6 Form of Amended and Restated Trust Agreement for the
Trust.
*4.7 Form of Preferred Security (included in Exhibit 4.6).
*4.8 Form of Guarantee Agreement.
*4.9 Form of Expense Agreement (included in Exhibit 4.6).
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.
*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 Consent 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 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 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 of The Chase Manhattan Bank, as
Property Trustee (Preferred Securities).
*25.4 Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939 of The Chase Manhattan Bank, as
Guarantee Trustee (Preferred Securities Guarantee).
</TABLE>
- --------
* Previously filed.
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:
(a) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(b) 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 the 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 SEC 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
(c) 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 (a) and (b) 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 SEC 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 post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered in the post-
effective amendment, and the offering of those 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 in this
registration statement, and the offering of those 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 SEC under Section 305(b)(2) of the Securities Act.
(6) To provide to the underwriter at the closing specified in the
underwriting agreements certificates in such denominations and
registered in the names as required by the underwriter to permit prompt
delivery to each purchaser.
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 SEC
this type of indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against these types of 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 any director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether the asserted indemnification
by it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of the 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 amendment to 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 22nd day of December, 1999.
Everest Reinsurance Holdings, Inc.
/s/ Stephen L. Limauro
By: _________________________________
Stephen L. Limauro
Senior Vice President, Chief
Financial Officer, Comptroller and
Treasurer
Pursuant to the requirements of the Securities Act of 1933, this amendment
to registration statement has been signed below by the following persons in the
capacities indicated on the 22nd day of December, 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, Chief Financial
___________________________________________ Officer, Comptroller and Treasurer
Stephen L. Limauro (Principal Financial and Accounting
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>
/s/ Stephen L. Limauro
*By: ________________________________
Stephen L. Limauro
Attorney-in-fact
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 amendment to
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
22nd day of December, 1999.
Everest Re Capital Trust
By: Everest Reinsurance Holdings,
Inc.
as Depositor
/s/ Stephen L. Limauro
By: ________________________________
Stephen L. Limauro
Senior Vice President, Chief
Financial Officer, Comptroller and
Treasurer
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 Form of Indenture for Senior Notes.
*4.2 Form of Indenture for Junior Subordinated Notes.
*4.3 Form of Senior Note (included in Exhibit 4.1).
*4.4 Form of Junior Subordinated Note (included in Exhibit
4.2).
*4.5 Trust Agreement of the Trust.
*4.6 Form of Amended and Restated Trust Agreement for the
Trust.
*4.7 Form of Preferred Security (included in Exhibit 4.6).
*4.8 Form of Guarantee Agreement.
*4.9 Form of Expense Agreement (included in Exhibit 4.6).
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.
*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 Consent 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 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 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 of The Chase Manhattan Bank, as
Property Trustee (Preferred Securities).
*25.4 Statement of Eligibility on Form T-1 under the Trust
Indenture Act of 1939 of The Chase Manhattan Bank, as
Guarantee Trustee (Preferred Securities Guarantee).
</TABLE>
- --------
*Previously filed.
<PAGE>
EXHIBIT 5.1
[Letterhead of Richards, Layton & Finger, P.A.]
December 22, 1999
Everest Re Capital Trust
477 Martinsville Road
P.O. Box 830
Liberty Corner, New Jersey 07938
Re: Everest Re Capital Trust
------------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for Everest Reinsurance
Holdings, Inc., a Delaware corporation (the "Company"), and Everest Re Capital
Trust, a Delaware business trust (the "Trust"), in connection with the matters
set forth herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated September 17, 1999
(the "Certificate"), as filed in the office of the Secretary of State of the
State of Delaware (the "Secretary of State") on September 17, 1999;
(b) The Trust Agreement of the Trust, dated as of September 17, 1999,
by and among the Company and the trustees of the Trust named therein;
<PAGE>
(c) A form of Amended and Restated Trust Agreement of the Trust,
(including Exhibits A, C and D thereto) (the "Trust Agreement"), among the
Company, the trustees of the Trust named therein, and the holders, from time to
time, of undivided beneficial interests in the assets of the Trust;
(d) Amendment No. 2 to the Registration Statement on Form S-3 (the
"Registration Statement"), including a preliminary prospectus (the
"Prospectus"), relating to the Preferred Securities of the Trust, representing
undivided beneficial interests in the assets of the Trust (each, a "Preferred
Security" and collectively, the "Preferred Securities"), as proposed to be filed
by the Company and the Trust with the Securities and Exchange Commission on or
about December 22, 1999; and
(e) A Certificate of Good Standing for the Trust, dated December 22,
1999, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed in paragraphs (a) through (e) above. In particular, we
have not reviewed any document (other than the documents listed in paragraphs
(a) through (e) above) that is referred to in or incorporated by reference into
the documents reviewed by us. We have assumed that there exists no provision in
any document that we have not reviewed that is inconsistent with the opinions
stated herein. We have conducted no independent factual investigation of our own
but rather have relied solely upon the foregoing documents, the statements and
information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust
Agreement and the Certificate are in full force and effect and have not been
amended, (ii) except to the extent provided in paragraph 1 below, that each of
the parties to the documents examined by us has been duly created, organized or
formed, as the case may be, and is validly existing in good standing under the
laws of the jurisdiction governing its creation, organization or formation,
(iii) the legal capacity of natural persons who are parties to the documents
examined by us, (iv) that each of the parties to the documents examined by us
has the power and authority to execute and deliver, and to perform its
obligations under, such documents, (v) that each of the parties to the documents
examined by us has duly
<PAGE>
Everest Re Capital Trust
December 22, 1999
Page 3
authorized, executed and delivered such documents, (vi) the receipt by each
Person to whom a Preferred Security is to be issued by the Trust (collectively,
the "Preferred Security Holders") of a Preferred Securities Certificate for such
Preferred Security and the payment for the Preferred Security acquired by it, in
accordance with the Trust Agreement and the Registration Statement, (vii) that
the Preferred Securities are issued and sold to the Preferred Security Holders
in accordance with the Trust Agreement and the Registration Statement, and
(viii) that, in the State of Delaware, the Trust (A) has not advertised or
offered, is not advertising or offering, and will not advertise or offer for
sale any securities or (B) has not solicited or received, is not soliciting or
receiving, and will not solicit or receive any funds or subscriptions for any
securities. We have not participated in the preparation of the Registration
Statement and assume no responsibility for its contents.
To the extent that Section 10.5 of the Trust Agreement provides that
the Trust Agreement is governed by laws other than the laws of the State of
Delaware, we express no opinion concerning the effect of Section 10.5 of the
Trust Agreement on the opinions set forth herein.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder that are currently in effect.
Based upon the foregoing, and upon our examination of such questions
of law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Business Trust Act.
2. The Preferred Securities will represent valid and, subject to the
qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the Trust,
will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Trust Agreement.
<PAGE>
Everest Re Capital Trust
December 22, 1999
Page 4
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In addition, we
hereby consent to the use of our name under the heading "Validity of the
Securities" in the Prospectus. In giving the foregoing consents, we do not
thereby admit that we come within the category of Persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the rules
and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Richards, Layton & Finger, P.A.
RICHARDS, LAYTON & FINGER, P.A.
BJK/MKS
<PAGE>
EXHIBIT 5.2
[Letterhead of Mayer, Brown & Platt]
December 22, 1999
Everest Reinsurance Holdings, Inc.
477 Martinsville Road
P.O. Box 830
Liberty Corner, New Jersey 07938
Everest Re Capital Trust
c/o Everest Reinsurance Holdings, Inc.
477 Martinsville Road
P.O. Box 830
Liberty Corner, New Jersey 07938
Re: Everest Reinsurance Holdings, Inc.
Everest Re Capital Trust
Registration Statement on Form S-3
Dear Ladies/Gentlemen:
We have represented Everest Reinsurance Holdings, Inc., a Delaware
corporation ("Everest Holdings"), in connection with the preparation and filing
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act"), of a Registration
Statement on Form S-3 (File No. 333-87363) (the "Registration Statement")
relating to senior notes (the "Senior Notes") and junior subordinated notes (the
"Junior Subordinated Notes") of Everest Holdings. We have also represented
Everest Re Capital Trust, a Delaware business trust (the "Trust"), in connection
with the preparation and filing with the Commission under the Securities Act of
the Registration Statement relating to preferred securities (the "Preferred
Securities") of the Trust, which are guaranteed (the "Guaranty") by Everest
Holdings. The Senior Notes are to be issued under a senior indenture (the
"Senior Indenture") between Everest Holdings and The Chase Manhattan Bank, as
trustee, and the Junior Subordinated Notes are to be issued under a subordinated
indenture (the "Subordinated Indenture") between Everest Holdings and The Chase
Manhattan Bank, as trustee, in each case to be entered into prior to the
issuance of the Senior Notes and the Junior Subordinated Notes. Certain terms
of the Senior Notes and the Junior Subordinated Notes will be established by
supplemental indentures or resolutions of the board of directors of Everest
Holdings.
<PAGE>
Everest Reinsurance Holdings, Inc.
Everest Re Capital Trust
December 22, 1999
Page 2
In rendering the opinions expressed herein, we have examined and relied
upon such documents, corporate records, certificates of public officials and
certificates as to factual matters executed by officers of Everest Holdings as
we have deemed necessary or appropriate. We have assumed the authenticity,
accuracy and completeness of all documents, records and certificates submitted
to us as originals, the conformity to the originals of all documents, records
and certificates submitted to us as copies and the authenticity, accuracy and
completeness of the originals of all documents, records and certificates
submitted to us as copies. We have also assumed the legal capacity and
genuineness of the signatures of persons signing all documents in connection
with which the opinions expressed herein are rendered.
Based upon and subject to the foregoing, we are of the opinion that:
(i) The Senior Notes have been duly authorized for issuance by Everest
Holdings and, when duly executed and delivered and authenticated in
accordance with the Senior Indenture and when payment therefor is
received, will constitute valid and legally binding obligations of
Everest Holdings entitled to the benefits provided by the Senior
Indenture, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the
enforceability of creditors' rights generally and to court decisions
with respect thereto and to general principles of equity (regardless
of whether such enforceability is considered in a proceeding in
equity or at law);
(ii) The Junior Subordinated Notes have been duly authorized for issuance
by Everest Holdings and, when duly executed and delivered and
authenticated in accordance with the Subordinated Indenture and when
payment therefor is received, will constitute valid and legally
binding obligations of Everest Holdings entitled to the benefits
provided by the Junior Subordinated Indenture, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other laws
affecting then enforceability of creditors' rights generally and to
court decisions with respect thereto and to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law); and
(iii) The Guaranty has been duly authorized for issuance by Everest
Holdings and, when duly executed and delivered, and when the
Preferred Securities are duly executed, delivered and payment
therefor is received, will constitute valid and legally binding
obligations of Everest Holdings, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the
enforceability of creditors' rights generally and to court decisions
with respect
<PAGE>
Everest Reinsurance Holdings, Inc.
Everest Re Capital Trust
December 22, 1999
Page 3
thereto and to general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at
law).
We are admitted to practice law in the States of Illinois and New York and
we express no opinions as to matters under or involving any laws other than the
laws of the States of Illinois and New York, the federal laws of the United
States of America and the Delaware General Corporation Law, including the
applicable provisions of the Delaware Constitution and reported judicial
decisions interpreting these laws.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to this firm under the caption "Validity of the
Securities" in the Registration Statement.
Very truly yours,
/s/ Mayer, Brown & Platt
MAYER, BROWN & PLATT
<PAGE>
Exhibit 23.1
Consent of Independent Accountants
----------------------------------
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 No. 333-87363 of Everest Reinsurance Holdings, Inc. 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.
We also consent to the reference to us under the heading "Experts" in such
Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
December 22, 1999
New York, New York
