As filed with the Securities and Exchange Commission on September 24, 2002
Registration No. 333-97367
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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 RE GROUP, LTD.
(Exact name of registrant as specified in its charter)
Bermuda 98-0365432
(State or other jurisdiction of incorporation) (I.R.S. Employer Identification No.)
c/o ABG Financial & Management Services Inc. Stephen L. Limauro
Parker House Everest Global Services, Inc.
Wildey Business Park, Wildey Road 477 Martinsville Road
St. Michael, Barbados P.O. Box 830
(246) 228-7398 Liberty Corner, New Jersey 07938-0830
(Address, including zip code, and telephone number, (908) 604-3000
including area code, of Registrant's principal executive offices) (Name, address, including zip code, and telephone number,
including area code, of agent for service)
EVEREST REINSURANCE HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-3263609
(State or other jurisdiction of incorporation) (I.R.S. Employer Identification No.)
477 Martinsville Road Stephen L. Limauro
P.O. Box 830 477 Martinsville Road
Liberty Corner, New Jersey 07938-0830 P.O. Box 830
(908) 604-3000 Liberty Corner, New Jersey 07938-0830
(Address, including zip code, and telephone number, (908) 604-3000
including area code, of Registrant's principal executive offices) (Name, address, including zip code, and telephone number,
including area code, of agent for service)
EVEREST RE CAPITAL TRUST
(Exact name of registrant as specified in its charter)
Delaware 04-6985684
(State or other jurisdiction of incorporation) (I.R.S. Employer Identification No.)
c/o Everest Reinsurance Holdings, Inc. Stephen L. Limauro
477 Martinsville Road 477 Martinsville Road
P.O. Box 830 P.O. Box 830
Liberty Corner, New Jersey 07938-0830 Liberty Corner, New Jersey 07938-0830
(908) 604-3000 (908) 604-3000
(Address, including zip code, and telephone number, (Name, address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices) including area code, of agent for service)]
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Copies to:
Richard Warren Shepro, Joseph A. Gervasi
Esq. Everest Reinsurance
Carol S. Rivers, Esq. Holdings, Inc.
Mayer, Brown & Platt 477 Martinsville Road
190 South LaSalle Street P.O. Box 830
Chicago, Illinois Liberty Corner, New
60603-3441 Jersey 07938-0830
(312) 782-0600 (908) 604-3000
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Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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Proposed maximum
Amount to be aggregate offering Amount of
Title of Each Class of Securities to be Registered (1) Registered (1)(2) price (2)(3) registration fee
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Everest Group Common Shares (4)................................
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Everest Group Preferred Shares (5).............................
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Everest Group Debt Securities..................................
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Everest Holdings Debt Securities...............................
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Everest Group Warrants.........................................
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Everest Holdings Warrants......................................
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Share Purchase Contracts.......................................
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Share Purchase Units (6).......................................
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Everest Re Capital Trust Preferred Securities..................
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Guarantee of Everest Holdings Debt Securities (7)..............
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Guarantees of Preferred Securities of Everest Capital Trust (7)
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Total.......................................................... $475,000,000 $475,000,000 $43,700(8)
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(1) These offered securities may be sold separately, together or as units with
other offered securities.
(2) An indeterminate number or amount of common shares, preferred shares, debt
securities, warrants, share purchase contracts and share purchase units of
Everest Re Group, debt securities of Everest Holdings and preferred
securities of Everest Capital Trust as may from time to time be issued at
indeterminate prices, in U.S. Dollars. In no event will the aggregate
maximum offering price of all securities issued by Everest Re Group and
Everest Reinsurance Holdings pursuant to this Registration Statement exceed
$475,000,000, or if any debt securities are issued with original issue
discount, such greater amount as shall result in an aggregate offering
price of $475,000,000.
(3) 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 the
securities listed. The table does not specify by each class information as
to the amount to be registered, proposed maximum offering price per unit or
proposed maximum aggregate offering price. Unless otherwise indicated in an
amendment to this filing, no separate consideration will be received for
common shares, preferred shares or debt securities that are issued by
Everest Re Group or Everest Holdings upon conversion, exchange or exercise
of debt securities, preferred shares, warrants, share purchase contracts or
share purchase units registered under this registration statement.
(4) Also includes such presently indeterminate number of common shares as may
be issued by Everest Re Group (a) upon conversion of or exchange for any
debt securities or preferred shares that provide for conversion or exchange
into common shares, (b) upon exercise of warrants to purchase common shares
or (c) pursuant to share purchase contracts.
(5) Also includes such presently indeterminate number of preferred shares as
may be issued by Everest Re Group (a) upon conversion of or exchange for
any debt securities that provide for conversion or exchange into preferred
shares, (b) upon exercise of warrants to purchase preferred shares or (c)
pursuant to share purchase contracts.
(6) Each share purchase unit consists of (a) a share purchase contract under
which the holder, upon settlement, will purchase an indeterminate number of
common shares or preferred shares and (b) a beneficial interest in debt
securities, preferred securities or debt obligations of third parties
purchased with the proceeds from the sale of the share purchase units. Each
beneficial interest will be pledged to secure the obligation of the holder
to purchase the common shares or preferred shares. No separate
consideration will be received for the share purchase contract or the
related beneficial interests.
(7) The guarantees include the rights of holders of the preferred securities
under the guarantees of Everest Group and Everest Holdings, the debt
securities guarantee of Everest Group, the obligations of Everest Holdings
under a junior subordinated indenture, any supplemental indentures thereto,
under the trust agreement, as amended, and under the expense agreement to
be responsible for specified costs, expenses, debt and liabilities of
Everest Capital Trust, all as described in this Registration Statement. No
separate consideration will be received for any of these guarantees.
(8) Previously paid.
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The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED SEPTEMBER 24, 2002.
PRELIMINARY PROSPECTUS
$475,000,000
EVEREST RE GROUP, LTD.
Common Shares, Preferred Shares, Debt Securities,
Warrants to Purchase Common or Preferred Shares or Debt Securities,
Share Purchase Contracts and Share Purchase Units
EVEREST REINSURANCE HOLDINGS, INC.
Debt Securities
EVEREST RE CAPITAL TRUST
Preferred Securities
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We may offer and sell from time to time securities in one or more offerings
up to a total dollar amount of $475,000,000. This prospectus provides you with
a general description of the securities we may offer.
Everest Group may offer and sell the following securities:
. common shares;
. preferred shares;
. senior or subordinated debt securities, which may be convertible into
our common or preferred shares;
. warrants to purchase common shares, preferred shares or debt
securities; and
. share purchase contracts and share purchase units.
Everest Holdings may offer and sell senior or subordinated debt securities,
which may be convertible into Everest Group common or preferred shares and
which may be guaranteed by Everest Group.
Everest Capital Trust may offer and sell preferred securities, which will be
guaranteed by Everest Holdings and which may be guaranteed by Everest Group.
Each time that securities are sold using this prospectus, we will provide a
supplement to this prospectus that contains specific information about the
offering. The supplement may also add, update or change information contained
in this prospectus. You should read this prospectus and any supplement
carefully before you invest.
The securities will be offered through underwriters, dealers or agents or
directly to investors. The supplements to this prospectus will provide the
specific terms of the plan of distribution.
The securities offered by this prospectus involve a high degree of risk. See
"Risk Factors" beginning on page 3 for a discussion of certain factors that you
should consider before buying the securities.
Everest Group's common shares are listed on the New York Stock Exchange
under the ticker symbol "RE." The closing price of the common shares, as
reported on the New York Stock Exchange Composite Tape on September 23, 2002,
was $55.35 per share. If we decide to list any other of these securities on a
national securities exchange upon issuance, the applicable prospectus
supplement to this prospectus will identify the exchange and the date when we
expect trading to begin.
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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.
The date of this prospectus is September , 2002.
About This Prospectus...................................................................................... i
Cautionary Note Regarding Forward-Looking Statements....................................................... 1
Everest Re Group, Ltd...................................................................................... 1
Everest Reinsurance Holdings, Inc.......................................................................... 2
Everest Re Capital Trust................................................................................... 2
Risk Factors............................................................................................... 3
Use of Proceeds............................................................................................ 10
Ratio of Earnings to Fixed Charges......................................................................... 10
Accounting Treatment....................................................................................... 10
Description of our Capital Stock........................................................................... 10
Description of the Debt Securities......................................................................... 14
Description of the Warrants................................................................................ 26
Description of the Share Purchase Contracts and the Share Purchase Units................................... 28
Description of the Trust Preferred Securities.............................................................. 28
Description of the Trust Preferred Securities Guarantees................................................... 35
Relationship of the Trust Preferred Securities, the Preferred Securities Guarantees and the Debt Securities
Held by Everest Capital Trust............................................................................ 38
Plan of Distribution....................................................................................... 38
Experts.................................................................................................... 40
Legal Matters.............................................................................................. 40
Enforcement of Civil Liabilities........................................................................... 41
Where You Can Find More Information........................................................................ 41
ABOUT THIS PROSPECTUS
You should rely only on the information contained or incorporated by
reference in this prospectus. "Incorporated 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 are not making, nor
will we make, an offer to sell 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 current only as of the
dates on their covers. Our business, financial condition, results of operations
and prospects may have changed since that date.
Unless the context otherwise requires, references in this prospectus to
"we," "us" and "our" refer to Everest Re Group, Ltd. and its subsidiaries,
collectively. References to "Everest Group" refer to Everest Re Group, Ltd.
References to "Everest Holdings" refer to Everest Reinsurance Holdings, Inc.,
our Delaware holding company subsidiary. References to "Everest Capital Trust"
refer to Everest Re Capital Trust, a Delaware statutory business trust.
References to "Everest Bermuda" refer to Everest Reinsurance (Bermuda), Ltd.,
our Bermuda insurance subsidiary. References to the "common shares" refer to
Everest Group's common shares, par value $.01 per share. References to "$" are
to United States currency, and the terms "United States" and "U.S." mean the
United States of America, its states, its territories, its possessions and all
areas subject to its jurisdiction.
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MADE HEREBY MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE
SECURITIES, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING
TRANSACTIONS IN THE SECURITIES AND THE IMPOSITION OF A PENALTY BID, IN
CONNECTION WITH THE OFFERING MADE HEREBY.
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the information incorporated by reference in this
prospectus may contain forward-looking statements within the meaning of the
U.S. federal securities laws. We intend these forward-looking statements to be
covered by the safe harbor provisions for forward-looking statements in the
federal securities laws. 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" and "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." These uncertainties and other
factors include, but are not limited to, the occurrence of catastrophic events
or other insured or reinsured events with a frequency or severity exceeding our
estimates; changes in demand for and pricing of our reinsurance and insurance
products; changes in the value of our investment portfolio due to market
fluctuations and economic conditions; the impact of the September 11th attacks
on the insurance and reinsurance industry and on the economy in general; and
legal, regulatory and legislative developments. We undertake no obligation to
update or revise publicly any forward-looking statements, whether as a result
of new information, future events or otherwise.
EVEREST RE GROUP, LTD.
Our principal business, conducted through our operating subsidiaries, is the
underwriting of reinsurance and insurance in the United States, Bermuda and
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 it has written. Insurance companies
purchasing reinsurance are often referred to as ceding companies or reinsureds.
We underwrite reinsurance both through brokers and directly with ceding
companies, giving us the flexibility to pursue business regardless of the
ceding company's preferred reinsurance purchasing method. All of our insurance
company subsidiaries, except Mt. McKinley Insurance Company, are rated A+
("Superior") by A.M. Best Company, an independent insurance industry rating
organization that rates insurance companies on factors of concern to
policyholders.
The address of our principal executive offices is c/o ABG Financial &
Management Services Inc., Parker House, Wildey Business Park, Wildey Road, St.
Michael, Barbados, and our telephone number is (246) 228-7398.
Our significant operating subsidiaries are:
. Everest Reinsurance Company, a Delaware insurance company, referred to
in this prospectus as Everest Re, underwrites property and casualty
reinsurance for insurance and reinsurance companies in the United States
and international markets.
. Everest Reinsurance (Bermuda), Ltd., a Bermuda insurance company, writes
property and casualty business and life and annuity business from its
offices in Bermuda.
. Everest National Insurance Company, an Arizona insurance company, writes
property and casualty insurance in the United States.
. 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 licensed insurers.
1
. Mt. McKinley Insurance Company, formerly known as Gibraltar Casualty
Company, a Delaware insurance company, engaged in the excess and surplus
lines insurance business in the United States from 1978 to 1985. In
1985, it ceased writing new and renewal insurance, and now its ongoing
operations relate to servicing claims arising from its previously
written business.
. Everest Security Insurance Company, a Georgia insurance company, writes
property and casualty insurance in Georgia.
EVEREST REINSURANCE HOLDINGS, INC.
Everest Holdings was established in 1993 in Delaware to serve as the parent
holding company of Everest Re. Until October 6, 1995, Everest Holdings was an
indirect, wholly-owned subsidiary of The Prudential Insurance Company of
America, referred to in this prospectus as The Prudential. On October 6, 1995,
The Prudential sold its entire interest in Everest Holdings' shares of common
stock in an initial public offering. Effective February 24, 2000, Everest
Holdings completed a restructuring whereby Everest Holdings became the
wholly-owned subsidiary of Everest Group, and each outstanding share of common
stock of Everest Holdings automatically converted into one common share of
Everest Group. Everest Holdings continues to act as the holding company for the
subsidiaries of Everest Group in the United States and Canada.
Everest Holdings' principal executive offices are located at 477
Martinsville Road, P.O. Box 830, Liberty Corner, New Jersey 07938-0830, and its
telephone number is (908) 604-3000.
EVEREST RE CAPITAL TRUST
Everest Holdings created Everest Capital Trust as a statutory Delaware
business trust pursuant to a trust agreement. Everest Holdings will enter into
an amended and restated trust agreement, referred to in this prospectus as the
trust agreement, for Everest Capital Trust, which will state the terms and
conditions for Everest Capital Trust to issue and sell its preferred securities
and common securities.
Everest Capital Trust exists solely to:
. issue and sell its preferred securities, representing undivided
beneficial interests in the assets of Everest Capital Trust, to the
public;
. issue and sell its common securities, representing undivided beneficial
interests in the assets of Everest Capital Trust, to Everest Holdings;
. use the proceeds from the sale of its preferred and common securities to
purchase a series of Everest Holdings' junior subordinated debt
securities;
. 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 Everest
Capital Trust. The common securities will represent an aggregate liquidation
amount equal to at least 3% of Everest Capital Trust's total capitalization.
The preferred securities will represent the remaining 97% of Everest Capital
Trust's total capitalization. The common securities will have terms
substantially identical to, and will rank equal in priority of payment with,
the preferred securities. However, if Everest Holdings defaults on the related
junior subordinated debt securities, then cash distributions and liquidation,
redemption and other amounts payable on the common securities will be
subordinate in priority of payment to these amounts payable on the preferred
securities.
2
The preferred securities will be guaranteed by Everest Holdings and may be
guaranteed by us as described later in this prospectus.
Everest Holdings has appointed five trustees to conduct Everest Capital
Trust's business and affairs:
. JPMorgan Chase Bank, as property trustee;
. Chase Manhattan Bank USA, National Association, as Delaware trustee; and
. Three officers of Everest Holdings, as regular trustees.
Except under specified limited circumstances, only Everest Holdings can
remove or replace the trustees. In addition, Everest Holdings can increase or
decrease the number of trustees.
Everest Holdings will pay all fees and expenses related to Everest Capital
Trust and the offering of the preferred securities and will pay all ongoing
costs and expenses of Everest Capital Trust, except Everest Capital Trust's
obligations under the preferred and common securities.
Everest Capital Trust does not have separate financial statements. The
statements would not be material to holders of the preferred securities because
Everest Capital Trust will not have any independent operations and exists
solely for the reasons summarized above. Everest Holdings files consolidated
financial information regarding Everest Capital Trust.
Everest Capital Trust's principal executive offices are located at 477
Martinsville Road, P.O. Box 830, Liberty Corner, New Jersey 07938-0830, and its
telephone number is (908) 604-3000.
RISK FACTORS
You should carefully consider the following risk factors regarding us and
our securities, in addition to the other information provided in this
prospectus, before you purchase any securities. The risks and uncertainties
described below are not the only ones we face. There may be additional risks
and uncertainties. If any of the following risks actually occur, our business,
financial condition or results of operations could be materially and adversely
affected and the trading price of our securities could decline significantly.
Our results may fluctuate as a result of factors generally affecting the
insurance and reinsurance industry.
The results of companies in the insurance and reinsurance industry
historically have been subject to significant fluctuations and uncertainties.
Factors that affect the industry in general could also cause our results to
fluctuate. The industry's profitability can be affected significantly by:
. fluctuations in interest rates, inflationary pressures and other changes
in the investment environment, which affect returns on invested capital
and may impact the ultimate payout of loss amounts;
. rising levels of actual costs that are not known by companies at the
time they price their products;
. volatile and unpredictable developments, including weather-related and
other natural catastrophes;
. events like the September 11, 2001 attacks, which affect the insurance
and reinsurance markets generally;
. changes in reserves resulting from different types of claims that may
arise and the development of judicial interpretations relating to the
scope of insurers' liability; and
. the overall level of economic activity and the competitive environment
in the industry.
3
If our loss reserves are inadequate to meet our actual losses, our net income
would be reduced or we could incur a loss.
We are required to maintain reserves to cover our estimated ultimate
liability of losses and loss adjustment expenses for both reported and
unreported claims incurred. These reserves are only estimates of what we think
the settlement and administration of claims will cost based on facts and
circumstances known to us. Because of the uncertainties that surround
estimating loss reserves and loss adjustment expenses, we cannot be certain
that ultimate losses will not exceed these estimates of losses and loss
adjustment reserves. If our reserves are insufficient to cover our actual
losses and loss adjustment expenses, we would have to augment our reserves and
incur a charge to our earnings. These charges could be material. The difficulty
in estimating our reserves is increased because our loss reserves include
reserves for potential asbestos and environmental liabilities. Asbestos and
environmental liabilities are especially hard to estimate for many reasons,
including the long waiting periods between exposure and manifestation of any
bodily injury or property damage, difficulty in identifying the source of the
asbestos or environmental contamination, long reporting delays and difficulty
in properly allocating liability for the asbestos or environmental damage.
Our inability to assess underwriting risk accurately could reduce our net
income.
Our success depends on our ability to assess accurately the risks associated
with the businesses on which the risk is retained. If we fail to assess
accurately the risks we retain, we may fail to establish appropriate premium
rates and our reserves may be inadequate to cover our losses, which could
reduce our net income.
Decreases in rates for property and casualty reinsurance and insurance could
reduce our net income.
We write primarily property and casualty reinsurance and insurance. The
property and casualty industry historically has been highly cyclical. Rates for
property and casualty reinsurance and insurance are influenced primarily by
factors that are outside of our control. Any significant decrease in the rates
for property and casualty insurance or reinsurance could reduce our net income.
If rating agencies downgrade their ratings of our insurance company
subsidiaries, our future prospects for growth and profitability could be
significantly and adversely affected.
Our insurance company subsidiaries, other than Mt. McKinley Insurance
Company, currently hold an "A+ ("Superior")" financial strength rating from
A.M. Best Company, an "AA- ("Very Strong")" financial strength rating from
Standard & Poor's Ratings Services and an "Aa3 ("Excellent")" financial
strength rating from Moody's Investors Service, Inc. Financial strength ratings
are used by insurers and reinsurance and insurance intermediaries as an
important means of assessing the financial strength and quality of reinsurers.
In addition, the rating of a company purchasing reinsurance may be adversely
affected by an unfavorable rating or the lack of a rating of its reinsurer. A
downgrade or withdrawal of any of these ratings might adversely affect our
ability to market our insurance products and would have a significant and
adverse effect on our future prospects for growth and profitability.
Our reinsurers may not satisfy their obligations to us.
We are subject to credit risk with respect to our reinsurers because the
transfer of risk to a reinsurer does not relieve us of our liability to the
insured. In addition, reinsurers may be unwilling to pay us even though they
are able to do so. The failure of one or more of our reinsurers to honor their
obligations to us or to delay payment would impact our cash flow and reduce our
net income and could cause us to incur a significant loss.
If we are unable to purchase reinsurance and transfer risk to reinsurers, our
net income could be reduced or we could incur a loss.
We attempt to limit our risk of loss by purchasing reinsurance to transfer a
portion of the risks we assume. The availability and cost of reinsurance is
subject to market conditions, which are outside of our control. As a
4
result, we may not be able to successfully purchase reinsurance and transfer
risk through reinsurance arrangements. A lack of available reinsurance might
adversely affect the marketing of our programs and/or force us to retain all or
a part of the risk that cannot be reinsured. If we were required to retain
these risks and ultimately pay claims with respect to these risks, our net
income could be reduced or we could incur a loss.
Our industry is highly competitive and we may not be able to compete
successfully in the future.
Our industry is highly competitive and experiences significant price
competition. We compete in the United States and international markets with
domestic and international insurance companies. Some of these competitors have
greater financial resources than we do, have been operating for longer than we
have and have established long-term and continuing business relationships
throughout the industry, which can be a significant competitive advantage. In
addition, we expect to face further competition in the future. We may not be
able to compete successfully in the future.
We are dependent on our key personnel.
Our success depends on our ability to retain the services of our existing
key executive officers and to attract and retain additional qualified personnel
in the future. The loss of the services of any of our key executive officers or
the inability to hire and retain other highly qualified personnel in the future
could adversely affect our ability to conduct our business. Under Bermuda law,
non-Bermudians, other than spouses of Bermudians, are not permitted to engage
in any gainful occupation in Bermuda without a work permit issued by the
Bermuda government. A work permit is only granted or extended if the employer
can show that, after proper public advertisement, no Bermudian or spouse of a
Bermudian is available who meets the minimum standards for the position. The
Bermuda government recently announced a new policy that places a six-year term
limit on individuals with work permits, subject to specified exemptions for
persons deemed to be key employees. These restrictions make it difficult to
hire and retain highly qualified personnel in Bermuda. If work permits are not
obtained or renewed for our key employees in Bermuda, we could lose their
services, which could adversely affect our ability to conduct our business.
The value of our investment portfolio and the investment income we receive from
that portfolio could decline as a result of market fluctuations, economic
conditions and other factors.
A significant portion of our investment portfolio consists of fixed income
securities and a smaller portion consists of equity securities. Both the fair
market value of these assets and the investment income from these assets
fluctuate depending on general economic and market conditions and the
performance of the individual investments that comprise the portfolio. For
example, the fair market value of our fixed income securities generally
increases or decreases in an inverse relationship with fluctuations in interest
rates. The fair market value of our fixed income securities also can decrease
as a result of many factors, including a downturn in the business cycle, as
well as adverse business or financial disclosures by issuers of fixed income
securities, that cause the credit quality of those securities to deteriorate.
The net investment income that we realize from future investments in fixed
income securities will generally increase or decrease with interest rates.
Interest rate fluctuations also can cause net investment income from
investments that carry prepayment risk, such as mortgage-backed and other
asset-backed securities, to differ from the income anticipated from those
securities at the time we bought them. In addition, if issuers of individual
investments are unable to meet their obligations, investment income will be
reduced and realized capital losses may arise. Because all of our securities
are classified as available for sale, changes in the market value of our
securities are reflected in our financial statements. Similar treatment is not
available for liabilities. As a result, a decline in the value of the
securities in our portfolio could reduce our net income or cause us to incur a
loss.
5
Insurance laws and regulations restrict our ability to operate.
We are subject to extensive regulation under U.S. state and foreign
insurance laws. These laws limit the amount of dividends that can be paid to us
by our operating subsidiaries, impose restrictions on the amount and type of
investments that they can hold, prescribe solvency standards that must be met
and maintained by them and require them to maintain reserves. These laws also
require disclosure of material intercompany transactions and require prior
approval of "extraordinary" transactions. These "extraordinary" transactions
include declaring dividends from operating subsidiaries that exceed statutory
thresholds. These laws also generally require approval of changes of control.
Our failure to comply with these laws could subject us to fines and penalties
and restrict us from conducting business. The application of these laws could
affect our liquidity and ability to pay dividends or interest and other
payments on our securities, as applicable, and could restrict our ability to
expand our business operations through acquisitions involving our insurance
subsidiaries.
Failure to comply with insurance laws and regulations could have a material
adverse effect on our business.
We cannot assure you that we have or can maintain all required licenses and
approvals or that our business fully complies with the wide variety of
applicable laws and regulations or the relevant authority's interpretation of
the laws and regulations. In addition, some regulatory authorities have
relatively broad discretion to grant, renew or revoke licenses and approvals.
If we do not have the requisite licenses and approvals or do not comply with
applicable regulatory requirements, the insurance regulatory authorities could
preclude or temporarily suspend us from carrying on some or all of our
activities or monetarily penalize us. These types of actions could have a
material adverse effect on our business.
Our holding company structure could prevent us from paying dividends, interest
or other payments on our securities.
Everest Group and Everest Holdings are holding companies, each of whose most
significant assets consist of the stock of its operating subsidiaries. As a
result, each of Everest Group's and Everest Holdings' ability to pay dividends,
interest or other payments on its securities in the future will depend on the
earnings and cash flows of the operating subsidiaries and the ability of the
subsidiaries to pay dividends or to advance or repay funds to it. This ability
is subject to general economic, financial, competitive, regulatory and other
factors beyond our control. Payment of dividends and advances and repayments
from some of the operating subsidiaries are regulated by U.S. state and foreign
insurance laws and regulatory restrictions, including minimum solvency and
liquidity thresholds. Accordingly, the operating subsidiaries may not be able
to pay dividends or advance or repay funds to us in the future, which could
prevent us from paying dividends, interest or other payments on our securities.
We may experience exchange losses if we do not manage our foreign currency
exposure properly.
Our functional currency is the United States dollar. However, we write a
portion of our business and receive a portion of our premiums in currencies
other than United States dollars. We also maintain a portion of our investment
portfolio in investments denominated in currencies other than United States
dollars. Consequently, we may experience exchange losses if our foreign
currency exposure is not properly managed or otherwise hedged. If we seek to
hedge our foreign currency exposure by using forward foreign currency exchange
contracts or currency swaps, we will be subject to the risk that the counter
parties to those arrangements will fail to perform, or that those arrangements
will not precisely offset our exposure.
If U.S. tax law changes, our net income may be reduced.
In the last few years, some members of Congress have expressed concern about
U.S. corporations that move their place of incorporation to low-tax
jurisdictions. Also, some members of Congress have expressed concern over a
competitive advantage that foreign-controlled insurers and reinsurers may have
over U.S.-controlled insurers and reinsurers due to the purchase of reinsurance
by U.S. insurers from affiliates
6
operating in some foreign jurisdictions, including Bermuda. Legislation has
recently been proposed in Congress that would increase the U.S. tax burden on
so-called "inverting" companies and increase the U.S. tax burden on
related-party reinsurance transactions. We do not know whether this legislation
or any similar legislation will ever be enacted into law. If it were enacted,
the U.S. tax burden on our Bermuda operations, or on some business ceded from
our licensed U.S. insurance subsidiaries to some offshore reinsurers, could be
increased. This could reduce our net income.
Everest Group and/or Everest Bermuda may be subject to U.S. corporate income
tax, which would reduce our net income.
The income of Everest Bermuda is a significant portion of our worldwide
income from operations. We have established guidelines for the conduct of our
Bermuda operations that are designed to minimize the risk that Everest Bermuda
would be treated as engaged in the conduct of a trade or business in the United
States. Based on its compliance with those guidelines, we believe that Everest
Bermuda should not be required to pay U.S. corporate income tax, other than
withholding tax on U.S. source dividend income. However, if the IRS
successfully contended that Everest Bermuda was engaged in a trade or business
in the United States, Everest Bermuda would be required to pay U.S. corporate
income tax on any income that is subject to the taxing jurisdiction of the
United States, and possibly the U.S. branch profits tax. Even if the IRS
successfully contended that Everest Bermuda was engaged in a U.S. trade or
business, the U.S.-Bermuda tax treaty would preclude the IRS from taxing
Everest Bermuda's income except to the extent that its income were attributable
to a permanent establishment maintained by that subsidiary. We do not believe
that Everest Bermuda has a permanent establishment in the United States or any
material income attributable to a permanent establishment in the United States.
If the IRS successfully contended that Everest Bermuda did have income
attributable to a permanent establishment in the United States, it would be
subject to U.S. tax on that income.
We conduct our Barbados operations in a manner designed to minimize our U.S.
tax exposure. Based on our compliance with guidelines designed to ensure that
we generate only immaterial amounts, if any, of income that is subject to the
taxing jurisdiction of the United States, we believe that we should be required
to pay only immaterial amounts, if any, of U.S. corporate income tax, other
than withholding tax on U.S. source dividend income. However, if the IRS
successfully contended that we had material amounts of income that is subject
to the taxing jurisdiction of the United States, we would be required to pay
U.S. corporate income tax on that income, and possibly the U.S. branch profits
tax. Even if the IRS successfully contended that we had material amounts of
income that is subject to the taxing jurisdiction of the United States, the
U.S.-Barbados tax treaty would preclude the IRS from taxing our income, except
to the extent that our income was attributable to a permanent establishment
maintained by us in the United States. We do not believe that we have material
amounts of income attributable to a permanent establishment in the United
States. If the IRS successfully contended, however, that we did have income
attributable to a permanent establishment in the United States, we would be
subject to U.S. tax on that income.
If Everest Bermuda became subject to U.S. income tax on its income or if we
became subject to U.S. income tax on more than immaterial amounts of income,
our income could also be subject to the U.S. branch profits tax. In that event,
Everest Group and Everest Bermuda would be subject to taxation at a higher
combined effective rate than if they were organized as U.S. corporations. The
combined effect of the 35% U.S. corporate income tax rate and the 30% branch
profits tax rate is a net tax rate of 54.5%. The imposition of these taxes
would reduce our net income.
The Organization for Economic Cooperation and Development and the European
Union are considering measures that might increase Everest Group's taxes and
reduce our net income.
A number of multinational organizations, including the Organization for
Economic Cooperation and Development, also referred to in this prospectus as
the OECD, the European Union, the Financial Action Task Force and the Financial
Stability Forum, also referred to in this prospectus as FSF, have all recently
identified some countries as not participating in adequate information
exchange, engaging in harmful tax practices or not maintaining adequate
controls to prevent corruption, such as money laundering activities.
Recommendations to
7
limit these harmful practices are under consideration by these organizations,
and a recent report published on November 27, 2001 by the OECD at the behest of
FSF titled "Behind the Corporate Veil: Using Corporate Entities for Illicit
Purposes," contains an extensive discussion of specific recommendations. The
OECD has threatened non-member jurisdictions that do not agree to cooperate
with the OECD with punitive sanctions by OECD member countries, though specific
sanctions have yet to be adopted by OECD member countries. It is as yet unclear
as to what these sanctions will be, who will adopt them and when or if they
will be imposed. On April 18, 2002, the OECD published a list of "uncooperative
tax havens," which are those jurisdictions from whom the OECD has not received
commitments to the OECD's principles of regulatory and tax transparency and
effective exchange of information. The governments of both Bermuda and Barbados
have made these commitments. As a result, neither Bermuda nor Barbados was
listed as an uncooperative tax haven.
Everest Group and/or Everest Bermuda may become subject to Bermuda tax, which
would reduce our net income.
Everest Group and Everest Bermuda currently are not subject to income or
capital gains taxes in Bermuda. Both companies have received an assurance from
the Bermuda Minister of Finance under The Exempted Undertakings Tax Protection
Act 1966 of Bermuda to the effect that if any legislation is enacted in Bermuda
that imposes any tax computed on profits or income, or computed on any capital
asset, gain or appreciation, or any tax in the nature of estate duty or
inheritance tax, then that tax will not apply to us or to any of our operations
or our shares, debentures or other obligations until March 28, 2016. This
assurance does not prevent the application of any of those taxes to persons
ordinarily resident in Bermuda and does not prevent the imposition of any tax
payable in accordance with the provisions of The Land Tax Act of 1967 of
Bermuda or otherwise payable in relation to any property leased to Everest
Group. There are currently no procedures for extending these assurances. As a
result, Everest Group and Everest Bermuda could be subject to taxes in Bermuda
after March 28, 2016, which could reduce our net income.
Everest Group may become subject to Barbados tax, which would reduce our net
income.
Everest Group has obtained an international business company license under
the Barbados International Business Companies Act, 1991-24. Based on this
license, Everest Group is entitled to special tax benefits, including a
preferred rate of tax on profits and gains and an exemption from withholding
tax in respect of any dividends, interest, royalties, fees or management fees
deemed to be paid to another international business company or to a person not
resident in Barbados. Everest Group also has obtained from the Ministry of
Economic Development a fifteen year guarantee in accordance with Section 27 of
the International Business Companies Act with regards to its continued
eligibility for this preferred status. This guarantee is applicable until 2014
and is subject to negative resolution, which means that this guarantee can be
revoked at any time. In addition, there are currently no procedures for
extending this guarantee. As a result, Everest Group could be ineligible for
these benefits after that period or earlier if the guarantee is revoked, which
could reduce our net income.
Our net income will be reduced if U.S. excise and withholding taxes are
increased.
Everest Bermuda is subject to an excise tax on reinsurance and insurance
premiums it collects with respect to risks located in the United States. In
addition, Everest Bermuda may be subject to withholding tax on dividend income
from United States sources. These taxes could increase and other taxes could be
imposed in the future on Everest Bermuda's business, which could reduce our net
income.
8
Regulatory challenges in the United States could adversely affect the ability
of Everest Bermuda to conduct business.
Everest Bermuda does not intend to be licensed or admitted as an insurer or
reinsurer in any U.S. jurisdiction. Under current law, Everest Bermuda
generally will be permitted to reinsure U.S. risks from its office in Bermuda
without obtaining those licenses. However, the insurance and reinsurance
regulatory framework has become subject to increased scrutiny. In the past,
there have been congressional and other initiatives in the United States
regarding increased supervision and regulation of the insurance industry,
including proposals to supervise and regulate reinsurers domiciled outside the
United States. If Everest Bermuda were to become subject to any insurance laws
of the United States or any U.S. state at any time in the future, it might be
required to post deposits or maintain minimum surplus levels and might be
prohibited from engaging in lines of business or from writing types of
policies. Complying with those laws could have a material adverse effect on our
ability to conduct business in the Bermuda market.
Everest Bermuda may need to be licensed or admitted in additional jurisdictions
to develop its business.
As Everest Bermuda's business develops, it will monitor the need to obtain
licenses in jurisdictions other than Bermuda in order to comply with applicable
law or to be able to engage in additional insurance-related activities. In
addition, Everest Bermuda may be at a competitive disadvantage in jurisdictions
where it is not licensed or does not enjoy an exemption from licensing relative
to competitors that are so licensed or exempt from licensing. Everest Bermuda
may not be able to obtain any additional licenses that it determines are
necessary or desirable. Furthermore, the process of obtaining those licenses is
often costly and may take a long time.
Everest Bermuda's ability to write reinsurance may be severely limited if it is
unable to arrange for security to back its reinsurance.
Many jurisdictions do not permit insurance companies to take credit for
reinsurance obtained from unlicensed or non-admitted insurers on their
statutory financial statements without appropriate security. Everest Bermuda's
reinsurance clients typically require it to post a letter of credit or enter
into other security arrangements. If Everest Bermuda is unable to obtain or
maintain a letter of credit facility on commercially acceptable terms or is
unable to arrange for other types of security, its ability to operate its
business may be severely limited. If Everest Bermuda defaults on any letter of
credit that it obtains, it may be required to prematurely liquidate a
substantial portion of its investment portfolio and other assets pledged as
collateral.
You may not be able to recover damages from Everest Group, some of its
directors and officers and some experts named in this prospectus if you sue
them.
Everest Group is organized under the laws of Bermuda. Some of its directors
and officers, as well as some of the experts named in this prospectus, may
reside outside the United States. A substantial portion of our and their assets
are or may be located in jurisdictions outside the United States. You may not
be able to effect service of process within the United States on directors and
officers of Everest Group and those experts who reside outside the United
States. You also may not be able to recover against them or Everest Group on
judgments of U.S. courts or to obtain original judgments against them or
Everest Group in Bermuda courts, including judgments predicated upon civil
liability provisions of the U.S. federal securities laws.
9
USE OF PROCEEDS
Unless the applicable prospectus supplement states otherwise, the net
proceeds from the sale of the offered securities will be used for working
capital and other general corporate purposes.
RATIO OF EARNINGS TO FIXED CHARGES
Six Months
Ended June 30, Fiscal Year Ended December 31,
-------------- --------------------------
2002 2001 2001 2000 1999 1998 1997
---- ---- ---- ---- ---- ----- -----
Everest Group... 6.8 6.2 2.9 6.7 73.4 121.2 127.9
Everest Holdings 4.7 4.8 1.6 6.0 73.4 121.2 127.9
ACCOUNTING TREATMENT
Everest Capital Trust will be treated as a subsidiary of Everest Holdings
for financial reporting purposes. Accordingly, Everest Capital 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 financial 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 Everest Capital Trust
are the junior subordinated debt securities specifying the principal amount,
interest rate and maturity date of the junior subordinated debt securities held.
DESCRIPTION OF OUR CAPITAL STOCK
The following is a summary of some of the provisions of the memorandum of
association and bye-laws of Everest Group. Because this summary is not
complete, you should refer to the memorandum of association and bye-laws for
additional information regarding the common shares and preferred shares. Copies
of the memorandum of association and bye-laws are incorporated by reference as
exhibits to the registration statement of which this prospectus is a part.
General
Our authorized share capital consists of 200,000,000 common shares, par
value $.01 per share, of which 50,869,931 were outstanding as of August 30,
2002 and 2,060,874 were subject to stock options outstanding which are, or may
become, exercisable into common shares; and 50,000,000 preferred shares, par
value $.01 per share, none of which are currently outstanding. From time to
time, Everest Group repurchases its common shares either directly or through
its subsidiaries.
10
Common Shares
Our common shares are listed on the New York Stock Exchange under the symbol
"RE." The common shares currently issued and outstanding are fully paid and
nonassessable within the meaning of applicable Bermuda law. Our common shares
offered by a prospectus supplement, upon issuance against full consideration,
will be fully paid and nonassessable within the meaning of applicable Bermuda
law.
Under our bye-laws, the holders of common shares have no redemption,
conversion or sinking fund rights. In the event of our liquidation, dissolution
or winding-up, the holders of common shares are entitled to share equally and
ratably in the assets of Everest Group, if any, remaining after the payment of
all of our debts and liabilities and the liquidation preference of any
outstanding preferred shares. The holders of our common shares will receive
such dividends, if any, as may be declared from time to time by our board of
directors out of funds legally available for the payment of dividends.
The quorum required for a general meeting of shareholders is two or more
persons present in person and representing in person or by proxy more than 50%
of the issued and outstanding common shares. Subject to the voting restrictions
set forth below, holders of common shares are entitled to one vote per share on
all matters submitted to a vote of holders of common shares and do not have any
cumulative voting rights. Most matters to be approved by holders of common
shares require approval by a simple majority of the votes cast at a meeting at
which a quorum is present.
Our board of directors is divided into three classes that are elected for
staggered three-year terms. Shareholders may only remove a director for cause
at a special meeting of shareholders at which the votes of not less than 50% of
the shares entitled to vote are cast in favor of removal. This could make the
removal of the incumbent directors of Everest Group more difficult and delay or
prevent a change of control that a shareholder might consider in his or her
best interest, including a takeover attempt that might result in a premium over
the market price for the shares held by shareholders.
Limitation on Voting Rights. If and for as long as the aggregate number of
controlled shares, as defined below, of any person exceeds 9.9% of the total
voting power of all of the issued and outstanding share capital of Everest
Group, each controlled share, regardless of the identity of the registered
holder, will confer only a fraction of a vote as determined by the following
formula:
(T-C)
--------
(9.1 X C)
Where:
. "T" is the aggregate number of votes conferred by all of the issued and
outstanding share capital prior to the application of the formula with
respect to any particular person, adjusted to take into account any
prior reduction taken with respect to any other person as a result of a
previous application of the formula.
. "C" is the number of controlled shares attributable to the person; and
. "Controlled shares" of any person refers to all shares of the issued and
outstanding share capital owned by that person, whether
. directly,
. with respect to persons who are U.S. persons, by application of the
attribution and constructive ownership rules of sections 958(a) and
958(b) or 544 and 554 of the U.S. Internal Revenue Code of 1986, or
. beneficially within the meaning of Section 13(d)(3) of the U.S.
Securities Exchange Act of 1934.
11
The formula will be applied successively, starting with the person to whom
the largest number of controlled shares is attributable, as many times as may
be necessary to ensure that the aggregate number of controlled shares of any
person does not exceed 9.9% of the total voting power of all of the issued and
outstanding share capital at any time.
The directors retain discretion to make final adjustments to the aggregate
number of votes attaching to the shares of any shareholder that they consider
fair and reasonable in all the circumstances to ensure that the aggregate
number of controlled shares of any person does not exceed 9.9% of the total
voting power of Everest Group.
Restrictions on Transfer. Our bye-laws permit our board of directors to
decline to register any transfer of common shares if it has reason to believe
that the transfer would result in:
. any person that is not an investment company beneficially owning more
than 5.0% of any class of the issued and outstanding share capital of
Everest Group,
. any person holding controlled shares in excess of 9.9% of any class of
the issued and outstanding share capital of Everest Group or
. any adverse tax, regulatory or legal consequences to Everest Group, any
of its subsidiaries or any of its shareholders.
If the directors refuse to register a transfer for any reason, they must
notify the proposed transferor and transferee within 30 days of their refusal.
Our bye-laws also provide that the board of directors may suspend the
registration of transfers at any time and for any periods that it determines,
provided that they may not suspend the registration of transfers for more than
45 days in any period of 365 consecutive days.
We have been advised by Conyers Dill & Pearman, our Bermuda counsel, that
while the precise form of the restrictions on transfer contained in the
bye-laws is untested, as a matter of general principle, restrictions on
transfers are enforceable under Bermuda law and are not uncommon. A proposed
transferee will be permitted to dispose of any common shares purchased that
violate the restrictions and as to the transfer of which registration is
refused. The transferor of those common shares will be deemed to own those
common shares for dividend, voting and reporting purposes until a transfer of
those common shares has been registered on the shareholder register of Everest
Group.
Repurchase Rights. Our bye-laws provide that if the board of directors has
reason to believe that
. any person that is not an investment company beneficially owns more than
5.0% of any class of the issued and outstanding share capital of Everest
Group,
. any person holds controlled shares in excess of 9.9% of any class of the
issued and outstanding share capital of Everest Group or
. share ownership by any person may result in adverse tax, regulatory or
legal consequences to Everest Group, any of its subsidiaries or any
other shareholder,
then Everest Group will have the option, but not the obligation, to redeem or
purchase all or any part of the common shares so held to the extent the board
of directors determines it is necessary or advisable to avoid or cure any
adverse or potential adverse consequences. The price to be paid for any common
shares redeemed or purchased will be the fair market value of those shares,
defined as the average of the high and low sale prices of the common shares on
the New York Stock Exchange for the last 15 trading days immediately preceding
the day on which Everest Group sends a notice of redemption or purchase to the
shareholder.
The limitations on voting, restrictions on transfer and repurchase rights
described above could have the effect of rendering more difficult or
discouraging unsolicited takeover bids from third parties or the removal of
incumbent directors of Everest Group.
12
Information Requirements. Our bye-laws provide that the board of directors
may require any shareholder or proposed transferee of shares to certify or
otherwise provide to the board of directors complete and accurate information
necessary for it to give effect to the limitations on voting, restrictions on
transfer and repurchase rights described above. If any shareholder or proposed
transferee fails to respond to that request in a timely fashion or if the board
of directors has reason to believe that any certification or other information
provided is inaccurate or incomplete, the board of directors may decline to
approve any transfer to which that request relates or may determine to
disregard for all purposes all votes attached to any common shares held by that
shareholder.
Transfer Agent. The transfer agent and registrar for our common shares is
EquiServe Trust Company, N.A.
Preferred Shares
Subject to the Companies Act 1981 of Bermuda, the board of directors may
establish one or more series of preferred shares having the number of shares,
designation, powers, preferences, voting rights, dividend rates, repurchase
provisions and other rights, qualifications, limitations or restrictions that
may be fixed by the board of directors. The issuance of preferred shares could
have the effect of discouraging an attempt to obtain control of Everest Group.
The issuance of preferred shares also could adversely affect the voting power
of the holders of our common shares, deny shareholders the receipt of a premium
on their common shares in the event of a tender or other offer for the common
shares and have a depressive effect on the market price of the common shares.
The preferred shares to be offered by a prospectus supplement, upon issuance
against full consideration, will be fully paid and non-assessable within the
meaning of applicable Bermuda law. The terms of any preferred shares offered by
a prospectus supplement will be filed with the SEC on a Form 8-K or by
post-effective amendment to the registration statement of which this prospectus
is a part.
The applicable prospectus supplement relating to the particular series of
preferred shares will describe the specific terms of that series as fixed by
the board of directors, including:
. the offering price at which Everest Group will issue the preferred
shares;
. the title, designation of number of shares and stated value of the
preferred shares;
. the dividend rate or method of calculation, the payment dates for
dividends and the place or places where the dividends will be paid,
whether dividends will be cumulative or noncumulative and, if
cumulative, the dates from which dividends will begin to cumulate and
any limitations, restrictions or conditions on the payments of dividends;
. any conversion or exchange rights;
. whether the preferred shares will be subject to repurchase and the
repurchase price and other terms and conditions relative to the
repurchase rights;
. any liquidation rights;
. any sinking fund provisions;
. any voting rights; and
. any other rights, preferences, privileges, limitations and restrictions
that are not inconsistent with the terms of Everest Group's memorandum
of association and bye-laws.
Bermuda Exchange Control
We have obtained consent for the issue and transfer of our shares to and
between non-residents of Bermuda for exchange control purposes from the Bermuda
Monetary Authority as required by The Exchange Control
13
Act 1972 of Bermuda and related regulations. This consent is subject to the
condition that our common shares be listed on an appointed stock exchange,
which includes the New York Stock Exchange. No further permission from the
Bermuda Monetary Authority will be required to issue our shares or to transfer
our shares between persons regarded as non-resident in Bermuda for exchange
control purposes. The issue and transfer of in excess of 20% of our shares
involving any persons regarded as resident in Bermuda for exchange control
purposes require prior authorization. The Bermuda Monetary Authority also has
designated Everest Group as non-resident for exchange control purposes. This
designation allows Everest Group to transfer funds in and out of Bermuda and to
pay dividends to non-residents of Bermuda who are holders of our shares in
currencies other than the Bermuda Dollar. There are no provisions of Bermuda
law or our memorandum of association or bye-laws which impose any limitation on
the rights of shareholders to hold or vote our shares by reason of their not
being residents of Bermuda.
DESCRIPTION OF THE DEBT SECURITIES
Everest Group or Everest Holdings may elect to offer debt securities. The
following description of debt securities sets forth the material terms and
provisions of the debt securities to which any prospectus supplement may
relate. Everest Group's senior debt securities would be issued under a senior
indenture between Everest Group and JPMorgan Chase Bank, as trustee. Everest
Group's subordinated debt securities would be issued under a subordinated
indenture between Everest Group and JPMorgan Chase Bank, as trustee. The
Everest Group senior indenture and subordinated indenture have been filed as
exhibits to the registration statement of which this prospectus is a part. A
supplemental indenture containing the particular terms of any debt securities
issued by Everest Group will be executed at the time the debt securities are
issued 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.
Everest Holdings' senior debt securities would be issued under a senior
indenture, dated March 14, 2000, between Everest Holdings and The Chase
Manhattan Bank, now known as JPMorgan Chase Bank, as trustee. Everest Holdings'
subordinated debt securities would be issued under a subordinated indenture
between Everest Holdings and JPMorgan Chase Bank, as trustee. The Everest
Holdings senior indenture and subordinated indenture have been filed as
exhibits to the registration statement of which this prospectus is a part. A
supplemental indenture containing the particular terms of any debt securities
issued by Everest Holdings will be executed at the time the debt securities are
issued 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.
Everest Group's senior indenture, Everest Group's subordinated indenture,
Everest Holdings' senior indenture and Everest Holdings' subordinated indenture
are sometimes referred to in this prospectus collectively as the "indentures"
and each, individually, as an "indenture." Everest Group's senior indenture and
Everest Holdings' senior indenture are sometimes referred to in this prospectus
collectively as the "senior indentures" and each, individually, as a "senior
indenture." Everest Group's subordinated indenture and Everest Holdings'
subordinated indenture are sometimes referred to in this prospectus
collectively as the "subordinated indentures" and each, individually, as a
"subordinated indenture." The particular terms of the debt securities offered
by any prospectus supplement, and the extent to which the general provisions
described below may apply to the offered debt securities, will be described in
the applicable prospectus supplement. The indentures will be qualified under
the Trust Indenture Act of 1939. The terms of the debt securities will include
those stated in the indentures and those made part of the indentures by
reference to the Trust Indenture Act.
The following discussion summarizes the material terms and provisions of the
indentures and the related debt securities; however, you should refer to the
forms of the indentures and the debt securities for complete information on
some of the terms and provisions of the indentures, including definitions of
some of the terms used below, and the debt securities. The senior indentures
and subordinated indentures are substantially identical to one another, except
for specific covenants relating to subordination contained in the subordinated
indentures.
14
General
The indentures provide that the issuer may issue the debt securities
thereunder from time to time in one or more series.
Unless otherwise stated in the applicable prospectus supplement, senior debt
securities will be unsecured obligations of the issuer and will rank equally
with all of the issuer's other unsecured and unsubordinated indebtedness. The
senior debt securities will be subordinated in right of payment to all of the
issuer's existing and future secured indebtedness. As a result, in the event of
the issuer's bankruptcy, liquidation or reorganization or upon acceleration of
the senior debt securities due to an event of default, the issuer's assets will
be available to pay its obligations on the senior debt securities 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 debt securities then outstanding. The senior debt securities are also
effectively subordinated to the indebtedness and other liabilities of the
issuer's subsidiaries. The senior indentures do not prohibit or limit the
incurrence of secured or senior indebtedness or the incurrence of other
indebtedness and liabilities by the issuers or their respective subsidiaries.
The incurrence of additional senior indebtedness and other liabilities by the
issuer or its subsidiaries could adversely affect the issuer's ability to pay
the obligations on any senior debt securities.
Unless otherwise stated in the applicable prospectus supplement,
subordinated debt securities will be unsecured obligations of the issuer,
subordinated in right of payment to the prior payment in full of all secured
and senior indebtedness of the issuer, as described below under "Subordination
of Subordinated Debt Securities" and in the applicable prospectus supplement.
As a result, in the event of the issuer's bankruptcy, liquidation or
reorganization or upon acceleration of the subordinated debt securities due to
an event of default, the issuer's assets will be available to pay its
obligations on the subordinated debt securities 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
subordinated debt securities then outstanding. The subordinated debt securities
are also effectively subordinated to the indebtedness and other liabilities of
the issuer's subsidiaries. The subordinated indentures do not prohibit or limit
the incurrence of secured or senior indebtedness or the incurrence of other
indebtedness and liabilities by the issuers or their respective subsidiaries.
The incurrence of additional senior, secured and subordinated indebtedness and
other liabilities by the issuer or its subsidiaries could adversely affect the
issuer's ability to pay the obligations on any subordinated debt securities.
As of June 30, 2002, Everest Group had no secured indebtedness outstanding
and guaranteed approximately $105.0 million of unsecured senior indebtedness of
Everest Holdings, which would rank equal in priority with other senior debt
securities issued by Everest Group. As of June 30, 2002, Everest Group's
subsidiaries had approximately $6.5 billion of indebtedness and other
liabilities, including insurance reserves. As of June 30, 2002, Everest
Holdings had no secured indebtedness outstanding and approximately $553.9
million of unsecured senior indebtedness outstanding, which would rank equal in
priority with other senior debt securities issued by Everest Holdings. As of
June 30, 2002, Everest Holdings' subsidiaries had approximately $5.7 billion of
indebtedness and other liabilities, including insurance reserves.
The rights of our creditors, including the holders of our debt securities
and the holders of Everest Holdings' debt securities who are creditors of
Everest Group by virtue of any guarantee of the debt securities issued by
Everest Holdings, to participate in the distribution of stock owned by us in
some of our subsidiaries, including our insurance subsidiaries, may be subject
to approval by insurance regulatory authorities having jurisdiction over the
subsidiaries. The rights of Everest Holdings' creditors, including the holders
of its debt securities, to participate in the distribution of stock owned by it
in some of its subsidiaries, including its insurance subsidiaries, may also be
subject to approval by insurance regulatory authorities having jurisdiction
over the subsidiaries.
The prospectus supplement relating to the particular debt securities offered
by the prospectus supplement will describe the following terms of the offered
debt securities:
. the title of the debt securities and the series in which the debt
securities will be included;
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. the aggregate principal amount of the debt securities and any limit upon
the principal amount;
. the date or dates, or the method or methods, if any, by which the date
or dates will be determined, on which the principal of the debt
securities will be payable;
. the rate or rates at which the debt securities will bear interest, if
any, which rate may be zero in the case of some debt securities issued
at an issue price representing a discount from the principal amount
payable at maturity, or the method by which the rate or rates will be
determined, including, if applicable, any remarketing option or similar
method, and the date or dates from which interest, if any, will accrue
or the method by which the date or dates will be determined;
. the date or dates on which interest, if any, on the debt securities will
be payable and any regular record dates applicable to the date or dates
on which interest will be so payable;
. any right to extend or defer the interest payment period and the
duration of any extension;
. the portion of the principal amount of the debt securities that will be
payable if the maturity is accelerated, if other than the entire
principal amount;
. if other than as set forth in this prospectus, the place or places where
the principal of, any premium or interest on or any additional amounts
with respect to the debt securities will be payable, and any of the debt
securities that may be surrendered for registration of transfer,
conversion or exchange;
. the issuer's obligation, if any, to redeem or purchase the debt
securities of the series pursuant to any sinking fund, amortization or
analogous provision and the terms and conditions on which the debt
securities may be redeemed or purchased pursuant to any obligation;
. the terms and conditions, if any, on which the debt securities of the
series may be redeemed at the issuer's option or at the option of the
holders;
. any index, formula or other method used to determine the amount of
payments of principal of, any premium or interest on or any additional
amounts with respect to the debt securities;
. whether the debt securities will be convertible into common shares or
preferred shares of Everest Group and/or exchangeable for other
securities of Everest Group or Everest Holdings and, if so, the terms
and conditions upon which the debt securities will be so convertible or
exchangeable;
. whether the debt securities are to be issued in the form of one or more
temporary or permanent global securities and, if so, the identity of the
depositary for the global security or securities;
. whether the debt securities are senior debt securities or subordinated
debt securities and, if subordinated debt securities, the specific
subordination provisions applicable thereto;
. in the case of debt securities issued by Everest Holdings, the
provisions, if any, relating to our guarantee of Everest Holdings' debt
securities;
. any deletions from, modifications of or additions to the events of
default or covenants of the issuer with respect to the debt securities;
and
. any other material terms of the debt securities and any other deletions
from or modifications or additions to the applicable indenture in
respect of the debt securities.
The issuer will have the ability under the indentures to "reopen" a
previously issued series of the debt securities and issue additional debt
securities of that series or establish additional terms of that series. The
issuer is also permitted to issue debt securities with the same terms as
previously issued debt securities.
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The issuer may offer and sell the debt securities at a substantial discount
below their principal amount and the indentures do not provide any limit on the
amount by which the issuer may discount the debt securities. The applicable
prospectus supplement will describe the special United States federal income
tax and other considerations, if any, applicable to the discounted debt
securities. In addition, the applicable prospectus supplement may describe
special United States federal income tax or other considerations, if any,
applicable to any debt securities that are denominated in a currency or
currency unit other than U.S. dollars.
Unless the applicable prospectus supplement states otherwise, the issuer
will only issue the debt securities in fully registered form, without coupons,
in denominations of $1,000 and any integral multiple of $1,000, and there will
be no service charge for any registration of transfer or exchange of the debt
securities. We may, however, require payment to cover any tax or other
governmental charge payable in connection with the registration or transfer.
Unless otherwise provided in the applicable prospectus supplement, interest may
be paid by check mailed to the persons entitled to the interest at their
addresses appearing on the security register or by wire transfer to an account
maintained by the payee with a bank located in the United States and will be
payable on any interest payment date to the persons in whose name the debt
securities are registered at the close of business on the regular record date
with respect to each interest payment date.
Interest on the debt securities in connection with a redemption, whether the
redemption is before or after the regular record date, will be payable to the
persons in whose names the debt securities are registered on the redemption
date, unless the redemption date is on an interest payment date. If the
redemption date is on an interest payment date, interest on the debt securities
will be payable to the persons in whose names the debt securities were
registered on the next preceding regular record date. All paying agents
initially designated by the issuer for the debt securities will be named in the
applicable prospectus supplement. The issuer may, at any time, designate
additional paying agents or rescind the designation of any paying agent or
approve a change in the office through which any paying agent acts, except that
the issuer will be required to maintain a paying agent in each place where the
principal of, any premium or interest on or any additional amounts with respect
to the debt securities are payable.
Unless otherwise provided in the applicable prospectus supplement, the debt
securities may be presented for transfer, duly endorsed or accompanied by a
written instrument of transfer, if so required by the issuer or the security
registrar, or exchanged for other debt securities of the same series,
containing identical terms and provisions, in any authorized denominations, and
of a like aggregate principal amount, at the office or agency maintained by the
issuer for these purposes, which shall initially be the corporate trust office
of the trustee. Any transfer or exchange will be made without service charge,
but the issuer may require payment of a sum sufficient to cover any tax or
other governmental charge and any other expenses then payable. The issuer will
not be required to:
. issue, register the transfer of, or exchange, the debt securities during
a period beginning at the opening of business 15 days before the day of
mailing of a notice of redemption of any debt securities and ending at
the close of business on the day of the mailing;
. register the transfer of or exchange any debt security so selected for
redemption in whole or in part, except the unredeemed portion of any
debt security being redeemed in part; or
. register the transfer of or exchange any debt security which, in
accordance with its terms, has been surrendered for repayment at the
option of the holder, except the portion, if any, of the debt security
not to be so repaid.
We and Everest Holdings have appointed the trustee as security registrar.
Any transfer agent, in addition to the security registrar, initially designated
by either issuer for any debt securities will be named in the applicable
prospectus supplement. The issuer may, at any time, designate additional
transfer agents or rescind the designation of any transfer agent or approve a
change in the office through which any transfer agent acts, except that the
issuer will be required to maintain a transfer agent in each place whether the
principal of, any premium or interest on or any additional amounts with respect
to the debt securities are payable.
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The debt securities may be represented in whole or in part by one or more
global debt securities registered in the name of a depository or its nominee
and, if so represented, interests in the global debt security will be shown on,
and transfers thereof will be effected only through, records maintained by the
designated depositary and its participants as described below. Where the debt
securities of any series are issued in bearer form, the special restrictions
and considerations, including special offering restrictions and special United
States federal income tax considerations, applicable to the debt securities and
to payment on and transfer and exchange of the debt securities will be
described in the applicable prospectus supplement.
Unless otherwise described in the applicable prospectus supplement, the
indentures do not contain any provisions that would limit the issuer's ability
to incur indebtedness or that would afford holders of the debt securities
protection in the event of a sudden and significant decline in the issuer's
credit quality or a takeover, recapitalization or highly leveraged or similar
transaction involving the issuer. Accordingly, the issuer could in the future
enter into transactions that could increase the amount of indebtedness
outstanding at that time or otherwise affect its capital structure or credit
rating. You should refer to the applicable prospectus supplement for
information regarding any deletions from, modifications of or additions to the
events of default described below or covenants contained in the indentures,
including any addition of a covenant or other provisions providing event risk
or similar protection.
Global Securities
The debt securities of a series may be issued in whole or in part in the
form of one or more global debt securities that will be deposited with, or on
behalf of, a depositary identified in the applicable prospectus supplement.
The specific terms of the depositary arrangement with respect to a series of
the debt securities will be described in the applicable prospectus supplement.
We and Everest Holdings anticipate that the following provisions will apply to
all depositary arrangements.
Upon the issuance of a global security, the depositary for the global
security or its nominee will credit, on its book-entry registration and
transfer system, the respective principal amounts of the debt securities
represented by the global security. The accounts will be designated by the
underwriters or agents with respect to the debt securities or by the issuer if
the debt securities are offered and sold directly by the issuer. Ownership of
beneficial interests in a global security will be limited to persons that may
hold interests through participants. Ownership of beneficial interests in the
global security will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the depositary or its nominee,
with respect to interests of participants, and on the records of participants,
with respect to interests of persons other than participants. The laws of some
states require that some purchasers of securities take physical delivery of
securities in definitive form. These limits and laws may impair the ability to
transfer beneficial interests in a global security.
So long as the depositary for a global security, or its nominee, is the
registered owner of the global security, the depositary or nominee, as the case
may be, will be considered the sole owner or holder of the debt securities
represented by the global security for all purposes under the applicable
indenture.
Except as described below, owners of beneficial interests in a global
security will not be entitled to have the debt securities represented by the
global security registered in their names and will not receive or be entitled
to receive physical delivery of the debt securities in definitive form.
Principal of, any premium and interest on, and any additional amounts with
respect to, the debt securities registered in the name of a depositary or its
nominee will be paid to the depositary or its nominee, as the case may be, as
the registered owner of the global security representing the debt securities.
None of the trustee, any paying agent, the security registrar or the issuer
will have any responsibility or liability for any aspect of the records
relating to or payments made on account of beneficial ownership interests of
the global security for the debt securities or for maintaining, supervising or
reviewing any records relating to the beneficial ownership interests.
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We and Everest Holdings expect that the depositary or its nominee, upon
receipt of any payment with respect to the debt securities, will immediately
credit participants' accounts with payments in amounts proportionate to their
respective beneficial interest in the principal amount of the global security
for the debt securities as shown on the records of the depositary or its
nominee. We and Everest Holdings also expect that payments by participants to
owners of beneficial interests in the global security held through its
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 the participants.
The indentures provide that if:
. the depositary for a series of the debt securities notifies the issuer
that it is unwilling or unable to continue as depositary or if the
depositary ceases to be eligible under the applicable indenture and, in
each case, a successor depositary is not appointed by the issuer within
90 days of written notice;
. the issuer determines that the debt securities of a particular series
will no longer be represented by global securities and executes and
delivers to the trustee a company order to this effect; or
. an event of default with respect to a series of the debt securities has
occurred and is continuing,
the global securities will be exchanged for the debt securities of that series
in definitive form of like tenor and of an equal aggregate principal amount in
authorized denominations.
The definitive debt securities will be registered in the name or names as
the depositary shall instruct the trustee. It is expected that these
instructions may be based upon directions received by the depositary from
participants with respect to ownership of beneficial interests in global
securities.
Guarantee of Everest Holdings Debt Securities by Everest Group
If provided for in the applicable prospectus supplement, Everest Group will
fully and unconditionally guarantee all obligations with respect to any series
of debt securities issued by Everest Holdings. Unless provided otherwise in the
applicable prospectus supplement, each Everest Group debt security guarantee
will be unsecured indebtedness of Everest Group and will rank equally with all
of Everest Group's other unsecured indebtedness. Each Everest Group debt
security guarantee may rank equally with or senior or subordinate to Everest
Group's other indebtedness. As a result, in the event of Everest Group's
bankruptcy, liquidation or reorganization or upon acceleration of any series of
debt securities due to an event of default, Everest Group's assets will be
available to pay its obligations on the Everest Group debt security guarantee
only after all secured indebtedness and other indebtedness senior to the
guarantee 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 Everest
Group debt securities guarantees. Each Everest Group debt security guarantee
will also effectively subordinated to the indebtedness and other liabilities of
Everest Group's subsidiaries.
Unless provided otherwise in the applicable prospectus supplement, each
Everest Group debt security guarantee will constitute a guarantee of payment
and not of collection. This means that the holder of the guaranteed security
may sue Everest Group to enforce its rights under the Everest Group debt
security guarantee without first suing any other person or entity.
Payment of Additional Amounts
Unless otherwise provided in the applicable prospectus supplement, Everest
Group will make all payments of principal and premium, if any, interest and any
other amounts on, or in respect of, the debt securities of any series and all
payments under any Everest Group debt security guarantee without withholding or
deduction at source for, or on account of, any present or future taxes, fees,
duties, assessments or governmental charges imposed or levied by or on behalf
of Bermuda or any other jurisdiction in which Everest Group or any successor is
organized or resident for tax purposes or any political subdivision or taxing
authority of Bermuda or any of
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those other jurisdictions. If any withholding or deduction is required by law,
Everest Group will, subject to specified limitations and exceptions described
below or in the applicable prospectus supplement, pay to the holder of any
applicable debt securities any additional amounts as may be necessary so that
every net payment of principal, premium, if any, interest or any other amount
made to the holder after the withholding or deduction will not be less than the
amount provided for in the applicable debt security and indenture to be then
due and payable.
Notwithstanding the foregoing, Everest Group will not be required to pay any
additional amounts under the applicable indenture as a result of:
. the imposition of any tax, fee, duty, assessment or governmental charge
that would not have been imposed but for the fact that the holder or
beneficial owner of the debt security was a resident, domiciliary or
national of, or had other specified connections with, the relevant
taxing jurisdiction or presented the debt security for payment in the
relevant taxing jurisdiction unless it could not have been presented
elsewhere;
. the imposition of any tax, fee, duty, assessment or governmental charge
that would not have been imposed but for the fact that the holder or
beneficial owner of the debt security presented the debt security for
payment more than 30 days after it was due and payable, except to the
extent that the holder would have been entitled to the additional
amounts if it had presented the debt security for payment on any day
within that 30-day period;
. any estate, inheritance, gift, sale, transfer, personal property or
similar tax, fee, duty, assessment or other governmental charge; or
. the imposition of any tax, fee, duty, assessment or governmental charge
that would not have been imposed but for the fact that the holder or
beneficial owner of the debt security failed to comply, within 90 days,
with any reasonable request by Everest Group addressed to the holder or
beneficial owner relating to the provision of information or the making
of a declaration required by the taxing jurisdiction as a precondition
to exemption from all or part of the tax, fee, duty, assessment or
governmental charge.
In addition, Everest Group will not pay additional amounts with respect to
any payment to any holder of a debt security where the beneficial owner of the
debt security is a fiduciary or partnership to the extent that the payment
would be included in the income for tax purposes of a beneficiary with respect
to the fiduciary or a partner of the partnership that would not have been
entitled to additional amounts if it had been the holder of the debt security.
Conversion and Exchange
The terms, if any, on which debt securities of any series are convertible
into or exchangeable for common shares, preferred shares or other securities,
whether or not issued by Everest Group or Everest Holdings, property or cash,
or a combination of any of the foregoing, will be set forth in the applicable
prospectus supplement. These terms may include provisions for conversion on
exchange, either mandatory, at the option of the holder or at the option of the
issuer, in which the securities, property or cash to be received by the holders
of the debt securities would be calculated according to the factors and at the
time as described in the applicable prospectus supplement. Any conversion or
exchange will comply with applicable law and the issuer's organizational
documents.
Consolidation, Amalgamation, Merger and Sale of Assets
Each indenture provides that the issuer may not consolidate or merge with or
into another entity, or convey, transfer or lease the properties and assets
substantially as an entirety to any entity or permit any entity to convey,
transfer or lease its properties and assets substantially as an entirety to the
issuer, unless:
. 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
20
Cayman Islands and expressly assumes by supplemental indenture all of
the issuer's obligations under the indentures and the debt securities;
. immediately after giving effect to the transaction, no event of default,
and no event which after notice or lapse of time or both would become an
event of default, will have happened and be continuing;
. the issuer delivers an officers' certificate and an opinion of counsel
to the indenture trustee, each stating that the transaction complies
with the indenture and the issuer has complied with all conditions
precedent in the indenture relating to the consolidation, merger,
conveyance or transfer.
Upon the assumption by the successor of the issuer's obligations under the
applicable indenture and the related debt securities, the successor will
succeed to and be substituted for the issuer under the applicable indenture,
and the issuer will be relieved of all of its obligations under the applicable
indenture and related debt securities.
Events of Default
Unless the issuer provides otherwise or modifies the events of default in
the applicable prospectus supplement, each of the following events will
constitute an event of default under each indenture with respect to any series
of debt securities issued under the indenture, whatever the reason for the
event of default and whether it will be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court
or any order, rule or regulation of any administrative or governmental body:
. the issuer fails to pay principal of or any premium or additional amount
on any debt securities of that series on its due date;
. the issuer fails to pay any interest on any debt securities 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 the issuer is
required to make payment following any deferral of interest payments by
the issuer under the terms of the debt securities;
. the issuer fails to make any sinking fund payment on its due date;
. the issuer fails to perform any of its covenants in the indenture,
excluding a covenant not applicable to the affected series, for 60 days
after the indenture trustee or the holders of at least 33% in principal
amount of the outstanding debt securities of the series give the issuer
written notice of the default and require that the issuer remedy the
breach. However, the 60-day period may be extended by either the
indenture trustee or the indenture trustee and the holders of at least
the same principal amount of the outstanding debt securities of that
series that had given notice of the default, and the indenture trustee
or the indenture trustee and the holders, as the case may be, will be
deemed to have agreed to an extension, if the issuer has initiated and
is diligently pursuing corrective action;
. the issuer files 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 debt securities of any series
occurs and is continuing, then the indenture trustee or holders of not less
than 33% in principal amount of the outstanding debt securities of that series
may, by written notice to the issuer, and to the indenture trustee if given by
the holders, declare the unpaid principal amount and accrued interest, or a
lesser amount as may be provided for in the debt securities of the series, of
all outstanding debt securities of the series to be due and payable
immediately. At any time after a
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declaration of acceleration has been made, but before a judgment or decree for
payment of money has been obtained by the trustee, and subject to applicable
law and specified other provisions of the applicable indenture, the holders of
a majority in aggregate principal amount of the debt securities of a series
may, under specified circumstances, rescind and annul an acceleration and its
consequences if:
. the issuer deposits with the indenture trustee funds sufficient to pay
all overdue principal of and premium and interest on the debt securities
and other amounts due the debt securities 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 debt securities have
been cured or waived, except non-payment of principal or interest on the
debt securities that has become due solely because of the acceleration.
The holders of a majority in principal amount of the outstanding debt
securities of any series have the right to direct the time, method and place of
conducting any proceedings for any remedy available to the indenture trustee or
to direct the exercise of any trust or power conferred on the indenture trustee
with respect to the debt securities of that series.
No holder of a debt security of any series will have any right to institute
a proceeding with respect to the indenture for the appointment of a receiver or
for any remedy under the indenture unless:
. that holder has previously given the indenture trustee written notice
that an event of default with respect to the debt securities of that
series has occurred and is continuing;
. the holders of a majority in principal amount of the outstanding debt
securities of that series have made written request to institute the
proceeding;
. the holder or holders have offered reasonable indemnity to the indenture
trustee;
. the indenture trustee has failed to institute the proceeding for 60 days
after receipt of the notice and offer of indemnity; and
. the indenture trustee has not received from the holders of a majority in
principal amount of the outstanding debt securities of that series a
direction inconsistent with the written request.
Notwithstanding the foregoing, the holder of any debt security will have an
absolute and unconditional right to receive payment of the principal of and any
premium and interest on that debt security 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
Each indenture provides that, if an event occurs which is or would become an
event of default with respect to any series of the debt securities, and the
indenture trustee knows of the event, the indenture trustee will mail to the
holders of the affected debt securities a notice of the default within 90 days,
unless the default has been cured or waived by the holders of the affected debt
securities. However, except in the case of a default in the payment of any
amounts due on any debt security of a series, the indenture trustee may
withhold notice if and so long as the issuer's board of directors and/or
responsible officers of the indenture trustee determine in good faith that
withholding the notice is in the interest of the holders of the affected debt
securities. In addition, if the issuer defaults on any series of the debt
securities by failing to comply with or perform any of its agreements,
covenants or warranties applicable to those debt securities, no notice will be
given until at least 30 days after the default occurs.
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Under each indenture, the issuer is required to furnish annually to the
indenture trustee an officers' certificate to the effect that, to the best
knowledge of the officers providing the certificate, it is not in default under
the indenture or, if there has been a default, specifying the default and its
status.
Modification
The issuer and the indenture trustee may amend or modify any of the
indentures with the consent of the holders of a majority in aggregate principal
amount of the outstanding debt securities of each series 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 debt securities
affected by the amendments or modifications:
. change the stated maturity of the principal of, or any installment of
principal of or interest on, or any additional amounts with respect to,
any debt security;
. reduce the principal amount of, the rate of interest on, or any
additional amounts with respect to, or any premium payable upon the
redemption of, any debt security;
. reduce the amount of principal of any debt security due and payable upon
acceleration of the maturity of the debt security;
. change the place of payment or currency of payment of principal of or
any premium or interest on, or any additional amounts with respect to,
any debt security;
. impair the right to institute suit for the enforcement of any payment on
any debt security on or after the stated maturity or date of redemption;
or
. reduce the percentage in principal amount of the debt securities of any
series, the consent of whose holders is required to amend or modify the
indenture, to waive compliance with specific provisions of the indenture
or to waive specific defaults.
No supplemental indenture may directly or indirectly modify or eliminate the
subordination provisions of the subordinated indentures in any manner that
might terminate or impair the subordination of the subordinated debt securities
to senior indebtedness without the prior written consent of the holders of the
senior indebtedness.
In addition, the issuer and the indenture trustee may, without the consent
of any of the holders of the debt securities, execute supplemental indentures
to:
. create new series of debt securities;
. provide for the issuer's successor pursuant to a consolidation,
amalgamation, merger or sale of assets;
. provide additional covenants or events of defaults for the benefit of
the holders of the debt securities;
. secure the debt securities;
. provide for a successor trustee with respect to debt securities of all
or any series;
. cure any ambiguity, defect or inconsistency in the indenture; and
. make other changes that do not adversely affect the interests of the
holders of the debt securities in any material respects,
as well as for various other purposes.
Waiver of Covenants and Defaults
The holders of a majority in aggregate principal amount of the outstanding
debt securities of any series may waive, for that series, the issuer's
compliance with any restrictive covenants included in any supplemental
indenture. The holders of a majority in aggregate principal amount of the
outstanding debt securities of any series with respect to which a default has
occurred and is continuing may waive the default for that series, other than a
default in the payment of principal of, or any premium or interest on, any debt
security of that series or a default with respect to a covenant or provisions
that cannot be amended or modified without the consent of the holder of each
outstanding debt security affected.
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Defeasance and Covenant Defeasance
The indentures provide, unless the terms of the particular series of debt
securities provides otherwise, the issuer may cause itself to be:
. discharged from its obligations with respect to any debt securities or
series of debt securities, which we refer to as defeasance; and
. released from its obligations under any restrictive covenants included
in any supplemental indenture with respect to any debt securities or
series of debt securities, which we refer to as covenant defeasance.
The indentures permit defeasance with respect to any debt securities of a
series even if a prior covenant defeasance has occurred with respect to the
debt securities of that series. Following a defeasance, payment of the debt
securities defeased may not be accelerated because of an event of default.
Following a covenant defeasance, payment of the debt securities 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 debt
securities, 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:
. the rights of the holders of the debt securities of any series to
receive from the trust established in connection with the defeasance
payments of the principal of, any premium and interest on, and any
additional amounts with respect to, the debt securities when payments
are due;
. the issuer's obligations regarding the registration, transfer and
exchange of the debt securities of any series;
. the issuer's obligation to maintain an office or agency in each place of
payment; and
. the survival of the indenture trustee's rights, powers, trusts, duties
and immunities under the indenture.
In connection with any defeasance or covenant defeasance, the issuer must
irrevocably deposit with the indenture trustee, in trust, money and/or
government obligations which, through the scheduled payment of principal and
interest on those obligations, would provide sufficient money to pay the
principal of, premium and interest on, and any additional amounts with respect
to, the debt securities on the maturity dates or upon redemption.
In connection with a defeasance or covenant defeasance, the issuer must
deliver to the indenture trustee:
. an opinion of counsel to the effect that the holders of the debt
securities will not recognize income, gain or loss for U.S. federal
income tax purposes as a result of the defeasance or covenant defeasance
and will be subject to U.S. 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
IRS or a change in applicable federal income tax law occurring after the
date of the indenture;
. an officers' certificate confirming that any debt securities then listed
on any securities exchange will not be delisted; and
. an officers' certificate and an opinion of counsel, each stating that
the issuer has complied with all conditions precedent.
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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 indenture
trustee to have a conflicting interest under the Trust Indenture Act;
. 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.
Subordination of the Subordinated Debt Securities
Subordinated debt securities issued by an issuer will, to the extent set
forth in the applicable subordinated indenture, be subordinate in right of
payment to the prior payment in full of all senior indebtedness of the issuer,
whether outstanding at the date of the subordinated indenture or incurred after
that date. In the event of:
. any insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the issuer or to its creditors, as
such, or to its assets; or
. any voluntary or involuntary liquidation, dissolution or other winding
up of the issuer, whether or not involving insolvency or bankruptcy; or
. any assignment for the benefit of creditors or any other marshalling of
assets and liabilities of the issuer,
then the holders of senior indebtedness of the issuer will be entitled to
receive payment in full of all amounts due or to become due on or in respect of
all its senior indebtedness, or provision will be made for the payment in cash,
before the holders of the subordinated debt securities of the issuer are
entitled to receive or retain any payment on account of principal of, or any
premium or interest on, or any additional amounts with respect to, the
subordinated debt securities. The holders of senior indebtedness of the issuer
will be entitled to receive, for application to the payment thereof, any
payment or distribution of any kind or character, whether in cash, property or
securities, including any payment or distribution which may be payable or
deliverable by reason of the payment of any other indebtedness of the issuer
being subordinated to the payment of its subordinated debt securities, which
may be payable or deliverable in respect of its subordinated debt securities in
any case, proceeding, dissolution, liquidation or other winding up event.
By reason of subordination, in the event of liquidation or insolvency of the
issuer, holders of senior indebtedness of the issuer and holders of other
obligations of the issuer that are not subordinated to its senior indebtedness
may recover more ratably than the holders of subordinated debt securities of
the issuer. As of June 30, 2002, Everest Group had no secured indebtedness
outstanding and guaranteed approximately $105.0 million of unsecured senior
indebtedness of Everest Holdings, which would rank senior in priority to any
subordinated debt securities issued by Everest Group, and no subordinated
indebtedness outstanding that would rank equal in priority with any
subordinated debt securities issued by Everest Group. As of June 30, 2002,
Everest Holdings had no secured indebtedness outstanding and approximately
$553.9 million of unsecured senior indebtedness outstanding, which would rank
senior in priority to any other subordinated securities issued by Everest
Holdings, and no subordinated indebtedness outstanding that would rank equal in
priority with any subordinated debt securities issued by Everest Holdings.
Subject to the payment in full of all senior indebtedness of the issuer, the
rights of the holders of subordinated debt securities of the issuer will be
subrogated to the rights of the holders of its senior indebtedness
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to receive payments or distributions of cash, property or securities of the
issuer applicable to its senior indebtedness until the principal of, any
premium and interest on, and any additional amounts with respect to, its
subordinated debt securities have been paid in full.
No payment of principal, including redemption and sinking fund payments, of,
or any premium or interest on, or any additional amounts with respect to the
subordinated debt securities of the issuer, or payments to acquire these
securities, other than pursuant to their conversion, may be made:
. if any senior indebtedness of the issuer is not paid when due and any
applicable grace period with respect to the default has ended and the
default has not been cured or waived or ceased to exist, or
. if the maturity of any senior indebtedness of the issuer has been
accelerated because of a default.
The subordinated indentures do not limit or prohibit the issuer from
incurring additional senior indebtedness, which may include indebtedness that
is senior to its subordinated debt securities, but subordinate to the issuer's
other obligations.
The subordinated indentures provide that these subordination provisions,
insofar as they relate to any particular issue of subordinated debt securities
by the issuer, may be changed prior to the issuance. Any change would be
described in the applicable prospectus supplement.
New York Law to Govern
The indentures and the debt securities will be governed by the laws of the
State of New York.
Information Concerning the Trustee
JPMorgan Chase Bank, which is the indenture trustee under all of the
indentures, also serves as property trustee and guarantee trustee with respect
to the preferred securities issued by Everest Capital Trust. Everest Group
and/or Everest Holdings and some of their affiliates maintain banking
relationships with JPMorgan Chase Bank and its affiliates in the ordinary
course of business.
DESCRIPTION OF THE WARRANTS
General
Everest Group may issue warrants to purchase its common shares, preferred
shares, debt securities or any combination of these securities, and Everest
Holdings may issue warrants to purchase its debt securities. These warrants may
be issued independently or together with any underlying securities and may be
attached or separate from the underlying securities. Each series of warrants
will be issued under a separate warrant agreement to be entered into between
Everest Group or Everest Holdings and a warrant agent. The warrant agent will
act solely as agent for the issuer in connection with the warrants of such
series and will not assume any obligation or relationship of agency for or with
holders or beneficial owners of warrants.
The applicable prospectus supplement relating to the warrants will describe
the specific terms of the warrants, including:
. the title of the warrants;
. the total number of warrants;
. the price or prices at which the warrants will be issued;
. the currency or currencies investors may use to pay for the warrants;
. the designation and terms of the underlying securities purchasable upon
exercise of the warrants;
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. the price at which and the currency or currencies, including composite
currencies, in which investors may purchase the underlying securities
purchasable upon exercise of the warrants;
. the date on which the right to exercise the warrants will commence and
the date on which the right will expire;
. whether the warrants will be issued in registered form or bearer form;
. information with respect to book-entry procedures, if any;
. if applicable, the minimum or maximum amount of warrants that may be
exercised at any one time;
. if applicable, the designation and terms of the underlying securities
with which the warrants are issued and the number of warrants issued
with each underlying security;
. the call provisions, if any;
. the antidilution provisions of any share warrants;
. if applicable, a discussion of material United States federal income tax
considerations;
. the identity of the warrant agent;
. the procedures and conditions relating to the exercise of the warrants;
and
. any other terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants.
Warrant certificates will be exchangeable for new warrant certificates of
different denominations, and warrants will be exercisable at the warrant
agent's corporate trust office or any other office indicated in the applicable
prospectus supplement. Prior to the exercise of their warrants, holders of
warrants exercisable for common shares or preferred shares will not have any
rights of holders of the common shares or preferred shares purchasable upon
such exercise and will not be entitled to dividend payments, if any, or voting
rights of the common shares or preferred shares purchasable upon such exercise.
Prior to the exercise of their warrants, holders of warrants exercisable for
debt securities will not have any of the rights of holders of the debt
securities purchasable upon such exercise and will not be entitled to payments
of principal, premium, if any, or interest on the debt securities purchasable
upon such exercise.
Exercise of Warrants
A warrant will entitle the holder to purchase for cash an amount of
securities at an exercise price that will be stated in, or that will be
determinable as described in, the applicable prospectus supplement. Warrants
may be exercised at any time up to the close of business on the expiration date
set forth in the applicable prospectus supplement. After the close of business
on the expiration date, unexercised warrants will become void.
Warrants will be exercisable as set forth in the applicable prospectus
supplement. Upon receipt of payment and the warrant certificate properly
completed and duly executed at the corporate trust office of the warrant agent
or any other office indicated in the prospectus supplement, the issuing company
will, as soon as practicable, forward the securities purchasable upon such
exercise. If less than all of the warrants represented by such warrant
certificate are exercised, a new warrant certificate will be issued for the
remaining warrants.
Enforceability of Rights; Governing Law
The holders of the warrants, without the consent of the warrant agent, may,
on their own behalf and for their own benefit, enforce, and may institute and
maintain any suit, action or proceeding against the issuer to enforce their
rights to exercise and receive the securities purchasable upon exercise of
their warrants. Unless otherwise stated in the prospectus supplement, each
issue of warrants and the applicable warrant agreement will be governed by the
laws of the State of New York.
27
DESCRIPTION OF SHARE PURCHASE CONTRACTS AND SHARE PURCHASE UNITS
Everest Group may issue share purchase contracts, representing contracts
obligating holders to purchase from Everest Group, and obligating Everest Group
to sell to the holders, a specified number of common shares or preferred shares
at a future date or dates. The price per common share or preferred share, as
the case may be, may be fixed at the time the share purchase contracts are
issued or may be determined by reference to a specific formula contained in the
share purchase contracts. The share purchase contracts may be issued separately
or as a part of units consisting of a share purchase contract and Everest
Group's debt securities or debt obligations of third parties, including U.S.
Treasury securities, securing the holders' obligations to purchase the common
shares or preferred shares, as the case may be, under the share purchase
contracts.
Share purchase contracts may require Everest Group to make periodic payments
to the holders of the units or vice versa, and these payments may be unsecured
or prefunded on some basis. The share purchase contracts may require holders to
secure their obligations under the contracts in a specific manner.
The applicable prospectus supplement will describe the terms of any share
purchase contracts or units. The description in the applicable prospectus
supplement will not purport to be complete and will be qualified in its
entirety by reference to:
. the share purchase contracts;
. the collateral arrangements and depositary arrangements, if applicable,
relating to the share purchase contracts or share purchase units; and
if applicable, the prepaid share purchase contracts and the document pursuant
to which the prepaid share purchase contracts will be issued.
DESCRIPTION OF THE TRUST 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 Everest
Holdings and JPMorgan Chase Bank, as the property trustee, Chase Manhattan Bank
USA, National Association, as the Delaware trustee, the three regular trustees
and the holders from time to time of the trust's preferred and common
securities. The original trust agreements and the amended and restated trust
agreement have been filed as exhibits to the registration statement of which
this prospectus is a part. The amended and restated trust agreement will be
qualified under the Trust Indenture Act of 1939. The terms of the preferred
securities will include those stated in the amended and restated trust
agreement and those made part of the amended and restated trust agreement by
reference to the Trust Indenture Act.
General
The trust agreement authorizes the regular trustees to issue on behalf of
Everest Capital Trust one series of preferred securities that have the terms
described in a prospectus supplement. The proceeds from the sale of Everest
Capital Trust's preferred and common securities will be used by the trust to
purchase a series of Everest Holdings' junior subordinated debt securities. The
junior subordinated debt securities 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 debt securities held by Everest Capital Trust. The assets of
Everest Capital Trust available for distribution to the holders of its
preferred securities generally will be limited to payments from Everest
Holdings under the series of junior subordinated debt securities held by
Everest Capital Trust. If Everest Holdings fails to make a payment on the
junior subordinated debt securities, Everest Capital Trust will not have
sufficient funds to make related payments, including distributions, on its
preferred securities.
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Under the preferred securities guarantee, Everest Holdings will agree to
make payments of distributions and payments on redemption or liquidation with
respect to Everest Capital Trust's preferred securities, but only to the extent
the trust has funds available to make those payments and has not made the
payments. Everest Group may also guarantee Everest Holdings' obligations under
the preferred securities guarantees See "Description of the Trust Preferred
Securities Guarantee." The preferred securities guarantee, when taken together
with Everest Holdings' obligations under the junior subordinated debt
securities, the junior subordinated indenture, the trust agreement and the
expense agreement described below, will provide a full and unconditional
guarantee by Everest Holdings of amounts due on the preferred securities issued
by Everest Capital Trust.
The prospectus supplement relating to the preferred securities of Everest
Capital 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 debt securities;
. Everest Capital Trust's 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 to any obligation;
. the terms and conditions, if any, on which the preferred securities may
be redeemed at Everest Capital Trust's option or at the option of the
holders;
. the terms and conditions, if any, upon which the related junior
subordinated debt securities 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 the relevant 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 Everest Capital Trust will be dissolved:
. on the expiration of the term of Everest Capital Trust;
. upon the bankruptcy, dissolution or liquidation of Everest Holdings;
. upon the direction of Everest Holdings to the property trustee to
dissolve Everest Capital Trust, after satisfaction of liability of
Everest Capital Trust as required by applicable law, and distribution of
the related junior subordinated debt securities directly to the holders
of the preferred and common securities of the trust;
29
. upon the redemption of all of the common and preferred securities of
Everest Capital Trust in connection with the redemption of all of the
related junior subordinated debt securities; or
. upon entry of a court order for the dissolution of Everest Capital 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 Everest Capital 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 debt securities 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 debt securities
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 Everest Capital 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 Everest Capital Trust on its preferred and common
securities will be paid on a pro rata basis. However, if an event of default
under the junior subordinated indenture has occurred and is continuing with
respect to any series of related junior subordinated debt securities, 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 junior subordinated indenture occurs with
respect to any series of related junior subordinated debt securities; or
. any other event of default specified in the applicable prospectus
supplement occurs.
For so long as any preferred securities remain outstanding, if an event of
default with respect to a series of related junior subordinated debt securities
occurs and is continuing under the junior subordinated indenture, and the
junior subordinated indenture trustee or the holders of not less than 33% in
principal amount of the related junior subordinated debt securities outstanding
fail to declare the principal amount of all of such junior subordinated debt
securities 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 Everest Holdings, the property trustee and the junior
subordinated indenture trustee.
At any time after a declaration of acceleration has been made with respect
to a series of related junior subordinated debt securities 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
debt securities and its consequences:
. if the issuer of the related junior subordinated debt securities
deposits with the trustee funds sufficient to pay all overdue principal
of and premium and interest on the related junior subordinated debt
securities and other amounts due to the junior subordinated indenture
trustee and the property trustee and any accrued additional interest on
the related junior subordinated debt securities; and
. if all existing events of default with respect to the related junior
subordinated debt securities have been cured or waived except
non-payment of principal on the related junior subordinated debt
securities that has become due solely because of the acceleration.
30
The holders of a majority in liquidation amount of the preferred securities
may waive any past default under the junior subordinated note indenture with
respect to related junior subordinated debt securities, other than a default in
the payment of the principal of, or any premium or interest on, any related
junior subordinated debt securities 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 debt security affected. In
addition, except as otherwise provided in the trust agreement, the holders of
at least a majority in liquidation amount of the preferred securities may waive
a 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.
For so long as any preferred securities remain outstanding and to the
fullest extent permitted by law and subject to the terms of the trust agreement
and indenture, a holder of preferred securities may institute a legal
proceeding directly against the issuer of the related junior subordinated debt
securities, 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 debt
securities of the related series having a principal amount equal to the
aggregate liquidation amount of the preferred securities of the holder if
Everest Holdings fails to pay principal and any premium or interest on the
related series of junior subordinated debt securities 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, it and Everest
Capital 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 Everest Capital Trust
Everest Capital 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 or as
described in "Liquidation Distribution Upon Dissolution." At the request of the
holders of the common securities, Everest Capital 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 Everest Capital Trust
relating to its preferred securities; or
. substitutes for Everest Capital 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;
. Everest Holdings appoints a trustee of the successor entity to hold the
junior subordinated debt securities who has substantially the same
powers and duties as the property trustee of Everest Capital Trust;
. the substitute 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;
31
. 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
Everest Capital Trust; and
. prior to the merger event, Everest Holdings has 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 Everest Capital Trust's preferred
securities or any successor securities in any material respect;
. following the merger event, neither Everest Capital Trust nor the
successor entity will be required to register as an investment
company under the Investment Company Act of 1940; and
. Everest Holdings or its permitted transferee owns all of the common
securities of the successor entity and guarantees 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, Everest Capital 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 Everest Capital 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 or cause the junior subordinated debt securities to
be treated as other than indebtedness of Everest Holdings for United States
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 respects,
whether by way of amendment to the trust agreement or otherwise; or
. the dissolution, winding-up or termination of Everest Capital 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.
So long as any junior subordinated debt securities are held by the property
trustee on behalf of Everest Capital Trust, without obtaining the prior
approval of the holders of a majority in aggregate liquidation amount of the
preferred securities, the trustees of Everest Capital Trust may not:
. direct the time, method and place of conducting any proceeding for any
remedy available to the junior subordinated indenture trustee for any
related junior subordinated debt securities or direct the exercise of
any trust or power conferred on the property trustee with respect to the
junior subordinated debt securities;
. waive any default that is waivable under the junior subordinated
indenture with respect to any related junior subordinated debt
securities;
32
. cancel an acceleration of the principal of any related junior
subordinated debt securities; or
. consent to any amendment, modification or termination of the junior
subordinated indenture or any related junior subordinated debt
securities where consent is required.
However, if a consent under the junior subordinated indenture requires the
consent of each affected holder of the related junior subordinated debt
securities, 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 must obtain an opinion of counsel
experienced in such matters to the effect that, as a result of such actions,
Everest Capital 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 Everest
Capital Trust of any notice of default received from the junior subordinated
indenture trustee with respect to the junior subordinated debt securities 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 Everest
Capital 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 Everest Capital
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 debt securities 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 Everest Capital 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 Everest Capital Trust will not be taxable as a corporation
or classified as other than a grantor trust for United States federal
income tax purposes at all times that any trust securities are
outstanding, to ensure that the junior subordinated debt securities held
by Everest Capital Trust are treated as indebtedness for United States
federal income tax purposes or to ensure that Everest Capital Trust will
not be required to register as an investment company under the
Investment Company Act, 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.
Other amendments to the trust agreement of Everest Capital Trust may be made
by Everest Holdings and the trustees of Everest Capital 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 Everest Capital Trust to be
taxable as a corporation or classified as other than a
33
grantor trust for United States federal income tax purposes, affect the
treatment of the junior subordinated debt securities held by Everest Capital
Trust as indebtedness for United States federal income tax purposes or affect
the trust's exemption from status as an "investment company" under the
Investment Company Act.
Notwithstanding the foregoing, without the consent of the affected holder of
the common or preferred securities of Everest Capital Trust, the trust
agreement may not be amended to:
. change the amount or timing of any distribution on the common or
preferred securities of Everest Capital 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 Everest Capital Trust to be taxable as a corporation or
characterized as other than a grantor trust for United State's federal
income tax purposes;
. cause the junior subordinated debt securities held by Everest Capital
Trust to not be treated as indebtedness for United States federal income
tax purposes;
. cause Everest Capital 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
Everest Capital Trust without its consent.
Removal and Replacement of Trustees
The holder of Everest Capital 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 junior subordinated indenture, the
property and Delaware trustees of Everest Capital Trust. If an event of default
has occurred and is continuing under the junior subordinated indenture, only
the holders of Everest Capital 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 an event of default under the
trust agreement, undertakes to perform only the duties as are specifically set
forth in the trust agreement and, after an event of 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.
34
JPMorgan Chase Bank, which is the property trustee for Everest Capital
Trust, also serves as the guarantee trustee under the preferred securities
guarantee described below. We, Everest Holdings and certain of our and its
affiliates maintain banking relationships with JPMorgan Chase Bank.
Miscellaneous
The regular trustees of Everest Capital 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 debt securities held by it will be treated as
indebtedness of us or Everest Holdings, as the case may be, 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.
The issuer of the related junior debt securities and the trustees of Everest
Capital Trust are authorized to take any action, so long as it is consistent
with applicable law, the certificate of trust or trust agreement, that the
issuer of the related junior debt securities and the trustees of Everest
Capital Trust determine to be necessary or desirable for the above purposes.
Registered holders of the preferred securities have no preemptive or similar
rights.
Everest Capital 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 the
laws of the State of Delaware.
DESCRIPTION OF THE TRUST PREFERRED SECURITIES GUARANTEES
The preferred securities guarantee will be issued pursuant to a guarantee
agreement between Everest Holdings, as guarantor, and JPMorgan Chase Bank, as
the guarantee trustee. Everest Group may also guarantee Everest Holdings'
obligations under the preferred securities guarantee. The guarantee agreement
has been filed as an exhibit to the registration statement of which this
prospectus is a part. 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.
The guarantee agreement will be held by the guarantee trustee for the
benefit of the holders of preferred securities of Everest Capital Trust.
General
The guarantor 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. The guarantor will pay the guarantee payments when and
as due, regardless of any defense, right of set-off or counterclaim that
Everest Capital Trust may have or assert. The following payments, to the extent
not paid by Everest Capital 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 Everest Capital Trust has funds
available to make the payment;
35
. the redemption price, to the extent that Everest Capital Trust has funds
available to make the payment; and
. upon a voluntary or involuntary dissolution, termination, winding-up or
liquidation of Everest Capital Trust, other than in connection with a
distribution of related junior subordinated debt securities 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 Everest Capital Trust has funds available to
make the payment; and
. the amount of assets of Everest Capital Trust remaining available for
distribution to holders of its preferred securities upon liquidation
of the trust.
The guarantor's 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 Everest Capital 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 Everest Capital 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, as guarantor, and may constitute an unsecured obligation
of Everest Group, as additional guarantor, and will rank:
. subordinate and junior in right of payment to all of the guarantor's
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 the guarantor of the related junior subordinated debt
securities on behalf of the holders of the preferred securities issued
by any other trust.
If Everest Group guarantees the trust preferred securities, Everest Group
will make all payments of principal of and premium, if any, interest and any
additional amounts on, or in respect of, the trust preferred securities without
withholding or deduction at source for, or on account of, any present or future
taxes, fees, duties, assessments or governmental charges of whatever nature
imposed or levied by or on behalf of Bermuda or any other jurisdiction in which
any of its successors under the applicable guarantee may be organized. See also
"Description of the Debt Securities--Payment of Additional Amounts" above.
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 the guarantor 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
the guarantor's successors, assigns, receivers, trustees and representatives
and are for the benefit of the holders of the preferred securities.
36
Events of Default
An event of default under the preferred securities guarantee occurs if the
guarantor fails to make any of its required payments or fails to perform any of
its other obligations, and this 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 an event of default under the
preferred securities guarantee, will perform only the duties that are
specifically described in the preferred securities guarantee. After any event
of 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.
JPMorgan Chase Bank, which is the guarantee trustee, also serves as the
indenture trustee and the property trustee for Everest Capital Trust. We,
Everest Holdings and certain of our affiliates maintain banking relationships
with JPMorgan Chase 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 debt securities 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 the laws of the State
of New York.
Description of the Expense Agreement
Everest Holdings, as guarantor of Everest Capital Trust's preferred
securities, and Everest Group, if it is also a guarantor of the preferred
securities, will execute an expense agreement at the same time that Everest
Capital Trust issues the preferred securities. Under the expense agreement, the
guarantor will irrevocably and unconditionally guarantee to each creditor of
Everest Capital 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 has been filed
as an exhibit to the registration statement of which this prospectus is a part.
The guarantor's 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.
37
RELATIONSHIP OF THE TRUST PREFERRED SECURITIES, THE
PREFERRED SECURITIES GUARANTEE AND THE DEBT
SECURITIES HELD BY EVEREST CAPITAL TRUST
Payments of distributions and redemption and liquidation payments due on the
preferred securities, to the extent Everest Capital Trust has funds available
for the payments, will be guaranteed by the guarantor to the extent described
under "Description of the Preferred Securities Guarantee". No single document
executed by the guarantor 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 the guarantor's
obligations under the preferred securities guarantee, the trust agreement, the
junior subordinated indenture, the related junior subordinated debt securities
and the expense agreement that has the effect of providing a full, irrevocable
and unconditional guarantee of Everest Capital Trust's obligations under the
preferred securities.
As long as the issuer of the junior subordinated debt securities makes
payments of interest and other payments when due on the junior subordinated
debt securities held by Everest Capital 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 debt
securities 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 debt securities will match the distribution rate and
distribution and other payment dates for the preferred securities;
. the guarantor has agreed to pay for any and all costs, expenses and
liabilities of Everest Capital Trust, except the trust's obligations
under its preferred securities; and
. the trust agreement provides that Everest Capital Trust will not engage
in any activity that is inconsistent with its limited purposes.
If and to the extent that Everest Holdings does not make payments on the
junior subordinated debt securities held by Everest Capital 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
the guarantor to collect its pro rata share of payments owed. If a holder sues
the guarantor to collect payment, then the guarantor will assume the holder's
rights as a holder of preferred securities under the trust agreement to the
extent the guarantor makes a payment to the holder in any legal action.
PLAN OF DISTRIBUTION
We may sell our securities in any one or more of the following ways from
time to time:
. to or through underwriters;
. to or through dealers;
. through agents; or
. directly to purchasers, including our affiliates.
The prospectus supplement with respect to any offering of our securities
will set forth the terms of the offering, including:
. the name or names of any underwriters, dealers or agents;
. the purchase price of the securities and the proceeds to us from such
sale;
38
. any underwriting discounts and commissions or agency fees and other
items constituting underwriters' or agents' compensation; and
. any delayed delivery arrangements.
The distribution of the securities may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
If securities are sold by means of an underwritten offering, we will execute
an underwriting agreement with an underwriter or underwriters, and the names of
the specific managing underwriter or underwriters, as well as any other
underwriters, and the terms of the transaction, including commissions,
discounts and any other compensation of the underwriters and dealers, if any,
will be set forth in the prospectus supplement which will be used by the
underwriters to sell the securities. If underwriters are utilized in the sale
of the securities, the 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 fixed public offering
prices or at varying prices determined by the underwriters at the time of sale.
Our securities may be offered to the public either through underwriting
syndicates represented by managing underwriters or directly by the managing
underwriters. If any underwriter or underwriters are utilized in the sale of
the securities, unless otherwise indicated in the prospectus supplement, the
underwriting agreement will provide that the obligations of the underwriters
are subject to conditions precedent and that the underwriters with respect to a
sale of securities will be obligated to purchase all of those securities if
they purchase any of those securities.
We may grant to the underwriters options to purchase additional securities
to cover over-allotments, if any, at the public offering price with additional
underwriting discounts or commissions. If we grant any over-allotment option,
the terms of such over-allotment option will be set forth in the prospectus
supplement relating to those securities.
If a dealer is utilized in the sales of securities in respect of which this
prospectus is delivered, we will sell those securities to the dealer as
principal. The dealer may then resell those securities to the public at varying
prices to be determined by the dealer at the time of resale. Any reselling
dealer may be deemed to be an underwriter, as the term is defined in the
Securities Act of 1933, of the securities so offered and sold. The name of the
dealer and the terms of the transaction will be set forth in the related
prospectus supplement.
Offers to purchase securities may be solicited by agents designated by us
from time to time. Any agent involved in the offer or sale of the securities in
respect of which this prospectus is delivered will be named, and any
commissions payable by us to the agent will be set forth, in the applicable
prospectus supplement. Unless otherwise indicated in the prospectus supplement,
any agent will be acting on a reasonable best efforts basis for the period of
its appointment. Any agent may be deemed to be an underwriter, as that term is
defined in the Securities Act of 1933, of the securities so offered and sold.
Offers to purchase securities may be solicited directly by us and the sale
of those securities may be made by us directly to institutional investors or
others, who may be deemed to be underwriters within the meaning of the
Securities Act of 1933 with respect to any resale of those securities. The
terms of any sales of this type will be described in the related prospectus
supplement.
Underwriters, dealers, agents and remarketing firms may be entitled under
relevant agreements entered into with us to indemnification by us against
certain civil liabilities, including liabilities under the Securities Act of
1933, that may arise from any untrue statement or alleged untrue statement of a
material fact or any omission or alleged omission to state a material fact in
this prospectus, any supplement or amendment hereto, or in the
39
registration statement of which this prospectus forms a part, or to
contribution with respect to payments which the agents, underwriters or dealers
may be required to make.
If so indicated in the prospectus supplement, we will authorize underwriters
or other persons acting as our agents to solicit offers by institutions to
purchase securities from us pursuant to contracts providing for payments and
delivery on a future date. Institutions with which contracts of this type may
be made include commercial and savings banks, insurance companies, pension
funds, investment companies, educational and charitable institutions and
others, but in all cases those institutions must be approved by us. The
obligations of any purchaser under any contract of this type will be subject to
the condition that the purchase of the securities shall not at the time of
delivery be prohibited under the laws of the jurisdiction to which the
purchaser is subject. The underwriters and other persons acting as our agents
will not have any responsibility in respect of the validity or performance of
those contracts.
Disclosure in the prospectus supplement of our use of delayed delivery
contracts will include the commission that underwriters and agents soliciting
purchases of the securities under delayed contracts will be entitled to receive
in addition to the date when we will demand payment and delivery of the
securities under the delayed delivery contracts. These delayed delivery
contracts will be subject only to the conditions that we describe in the
prospectus supplement.
In connection with the offering of securities, persons participating in the
offering, such as any underwriters, may purchase and sell securities in the
open market. These transactions may include over-allotment and stabilizing
transactions and purchases to cover syndicate short positions created in
connection with the offering. Stabilizing transactions consist of bids or
purchases for the purpose of preventing or retarding a decline in the market
price of the securities, and syndicate short positions involve the sale by
underwriters of a greater number of securities than they are required to
purchase from us, Everest Holdings or Everest Capital Trust, as the case may
be, in the offering. Underwriters also may impose a penalty bid, whereby
selling concessions allowed to syndicate members or other broker-dealers in
respect of the securities sold in the offering for their account may be
reclaimed by the syndicate if the securities are repurchased by the syndicate
in stabilizing or covering transactions. These activities may stabilize,
maintain or otherwise affect the market price of the securities, which may be
higher than the price that might prevail in the open market, and these
activities, if commenced, may be discontinued at any time. These transactions
may be effected on the New York Stock Exchange, in the over-the-counter market
or otherwise.
Our common shares are listed on the New York Stock Exchange under the
trading symbol "RE."
Underwriters, dealers, agents and remarketing firms may be customers of,
engage in transactions with, or perform services for, us and our subsidiaries
in the ordinary course of business.
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this prospectus by reference to the Annual Report on Form 10-K
for the year ended December 31, 2001 for each of Everest Group and Everest
Holdings have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
the firm as experts in accounting and auditing.
LEGAL MATTERS
Conyers Dill & Pearman, Hamilton, Bermuda will pass on the validity of
securities issued by Everest Group. Mayer, Brown, Rowe & Maw, Chicago, Illinois
will pass upon the validity of the securities issued by Everest Holdings.
Richards, Layton & Finger, P.A., Wilmington, Delaware will pass upon the
validity of the
40
preferred securities issued by Everest Capital Trust. Additional legal matters
may be passed upon for any underwriters, dealers or agents by counsel that we
will name in the applicable prospectus supplement.
ENFORCEMENT OF CIVIL LIABILITIES
Everest Group is organized under the laws of Bermuda. In addition, some of
our directors and officers, as well as some of the experts named in this
prospectus, reside outside of the United States. A substantial portion of our
and their assets are located outside of the United States. It may be difficult
for you to effect service of process within the United States on Everest Group
and its directors, officers and experts who reside outside the United States or
to enforce in the United States judgments of U.S. courts obtained in actions
against Everest Group or its directors and officers, as well as the experts
named in this prospectus, who reside outside the United States.
We have been advised by our Bermuda counsel, Conyers Dill & Pearman, that a
judgment for the payment of money rendered by a court in the United States
based on civil liability would not be automatically enforceable in Bermuda. We
also have been advised by Conyers Dill & Pearman that a Bermuda court would be
likely to enforce a final and conclusive judgment obtained in a court in the
United States under which a sum of money is payable, other than a sum of money
payable in respect of multiple damages, taxes or other charges of a similar
nature or in respect of a fine or other penalty, provided that:
. the U.S. court had proper jurisdiction over the parties subject to such
judgment,
. the U.S. court did not contravene the rules of natural justice of
Bermuda,
. the judgment of the U.S. court was not obtained by fraud,
. the enforcement of the judgment would not be contrary to the public
policy of Bermuda,
. no new admissible evidence relevant to the action is submitted prior to
the rendering of the judgment by the courts of Bermuda and
. there is due compliance with the correct procedures under the laws of
Bermuda.
We also have been advised by Conyers Dill & Pearman that a Bermuda court may
impose civil liability on Everest Group or its directors or officers in a suit
brought in the Supreme Court of Bermuda against Everest Group or its directors
or officers based on a violation of U.S. federal securities laws, provided that
the facts surrounding the violation would constitute or give rise to a cause of
action under Bermuda law. Some remedies available under the laws of U.S.
jurisdictions, including some remedies available under the U.S. federal
securities laws, may not be allowed in Bermuda courts as contrary to Bermuda
public policy.
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 Group, Everest Holdings and
Everest Capital Trust. The rules and regulations of the SEC allow us to omit
some of the information included in the registration statement from this
prospectus.
Everest Group and Everest Holdings file reports, proxy statements and other
information with the SEC under the Exchange Act. You can read and copy any of
this information in the SEC's Public Reference Room, 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549. 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.
41
The SEC also maintains an Internet web site that contains reports, proxy
statements and other information about issuers, like Everest Group and 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 Group
under the Exchange Act is 1-15731 and the SEC file number for documents filed
by Everest Holdings under the Exchange Act is 1-13816.
Everest Group's common shares are listed on the New York Stock Exchange and
its trading symbol is "RE." You can inspect reports, proxy statements and other
information concerning Everest Group at the offices of the New York Stock
Exchange at 20 Broad Street, New York, New York 10005. For further information
on obtaining copies of Everest Group's public filings at the NYSE, you should
call (212) 656-5060.
Incorporation by Reference
The rules of the SEC allow us to incorporate by reference information into
this prospectus. The information incorporated by reference is considered to be
a part of this prospectus, and information that we file later with the SEC will
automatically update and supersede this information. This prospectus
incorporates by reference the documents listed below:
(a) Everest Group's Annual Report on Form 10-K for the year ended December 31,
2001;
(b) Everest Holdings' Annual Report on Form 10-K for the year ended December
31, 2001;
(c) Everest Group's Quarterly Report on Form 10-Q for the quarter ended March
31, 2002;
(d) Everest Holdings' Quarterly Report on Form 10-Q for the quarter ended March
31, 2002;
(e) Everest Group's Quarterly Report on Form 10-Q for the quarter ended June
30, 2002;
(f) Everest Holding's Quarterly Report on Form 10-Q for the quarter ended June
30, 2002;
(g) Everest Group's Current Report on Form 8-K dated February 19, 2002; and
(h) the description of the common shares included in the Registration Statement
on Form 8-A, dated March 8, 2000, filed under Section 12 of the Exchange
Act.
All documents filed by Everest Group and by Everest Holdings pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
prospectus shall be deemed to be incorporated by reference and to be a part of
this prospectus from the respective dates of filing of those documents.
Upon request, we 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 Global Services, Inc.
477 Martinsville Road
P.O. Box 830
Liberty Corner, New Jersey 07938-0830
Attention: Joseph A. Gervasi
(908) 604-3000
-----------------
For North Carolina residents: The offered securities have not been approved
or disapproved by the Commissioner of Insurance for the State of North
Carolina, nor has the Commissioner of Insurance ruled upon the accuracy or
adequacy of this document. Buyers in North Carolina understand that neither we
nor our subsidiaries are licensed in North Carolina pursuant to chapter 58 of
the North Carolina General Statutes, nor could we or our subsidiaries meet the
basic admissions requirements imposed by such chapter at the present time.
42
Except as expressly provided in an underwriting agreement, no securities may
be offered or sold in Bermuda, although offers may be made from outside
Bermuda, and offers may only be accepted from persons resident in Bermuda, for
Bermuda exchange control purposes, where such offers have been delivered
outside of Bermuda. Persons resident in Bermuda, for Bermuda exchange control
purposes, may require the prior approval of the Bermuda Monetary Authority in
order to acquire any offered securities.
A copy of this prospectus has been delivered to the Registrar of Companies
in Bermuda for filing pursuant to the Companies Act 1981 of Bermuda. However,
neither the Bermuda Monetary Authority nor the Registrar of Companies in
Bermuda accepts any responsibility for the correctness of any of the statements
made or opinions expressed in this prospectus.
43
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses and various fees in connection with the sale and
distribution of the securities being registered, all of which are being borne
by us, are as follows:
Securities and Exchange Commission registration fee $ 43,700
Printing expenses.................................. 50,000
Legal fees and expenses............................ 100,000
Accounting fees and expenses....................... 100,000
Miscellaneous...................................... 6,300
--------
Total....................................... $300,000
========
Item 15. Indemnification of Officers and Directors.
Everest Group
Everest Group is a Bermuda company. Section 98 of the Companies Act 1981 of
Bermuda (the "Act") provides generally that a Bermuda company may indemnify its
directors, officers and auditors against any liability which by virtue of rule
of law or otherwise would be imposed on them, except in cases where such
liability arises from fraud or dishonesty of which such director, officer or
auditor may be guilty in relation to the company. Section 98 further provides
that a Bermuda company may indemnify its directors, officers and auditors
against any liability incurred by them in defending any proceedings, whether
civil or criminal, in which judgment is awarded in their favor or they are
acquitted or in which they are acquitted or granted relief by the Supreme Court
of Bermuda in certain proceedings arising under Section 281 of the Act.
Section 30 of Everest Group's bye-laws provides that: (a) the directors,
officers and employees of Everest Group shall be indemnified out of the funds
of Everest Group from and against (and the agents of Everest Group may be
indemnified from and against) all actions, costs, charges, losses, damages and
expenses which they shall incur by reason of any act done in connection with
their duty as a director, officer, employee or agent of Everest Group; and (b)
expenses will be paid in advance of the final disposition of any action upon
receipt of an undertaking to repay such amounts if it is ultimately determined
that they are not entitled to indemnification.
Section 31 of Everest Group's bye-laws provides that each shareholder agrees
to waive any claim or right of action such shareholder might have against any
director or officer on account of any action taken by such director or officer,
or the failure of such director or officer to take any action in the
performance of his or her duties with or for Everest Group, provided that such
waiver does not extend to any matter in respect of any fraud or dishonesty that
may attach to such director or officer.
Everest Holdings
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
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further provides that Everest Holdings may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
Everest Holdings, or who is or was serving at the request of Everest Holdings
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against any liability asserted
against him and incurred by him arising in such capacity, whether or not
Everest holdings would be able to indemnify him against such liability under
the provisions of the Delaware General Corporation Law. In addition, Article
VII of the certificate of incorporation of Everest Holdings provides that its
directors shall not be personally liable to Everest Holdings or its
stockholders for monetary damages for breach of fiduciary duty, except for
liability (a) for any breach of the director's duty of loyalty; (b) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law; (c) under Section 174 of the Delaware General
Corporation Law (relating to dividends and repurchases of stock); and (d) for
any transaction from which the director derived an improper personal benefit.
In addition to reiterating the indemnification provisions of the certificate
of incorporation of Everest Holdings, Article IX, Section 2 of the by-laws of
Everest Holdings provides that the indemnification of any director, officer,
employee or agent includes reimbursement of expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with the defense or settlement of an action, suit
or proceeding. Article IX, Section 2 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.
Everest Group and Everest Holdings also maintain insurance on their
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 within the meaning of Section 16(b) of the
Exchange Act.
Item 16. Exhibits.
Reference is made to the Exhibit Index included herewith which is
incorporated herein by reference.
Item 17. Undertakings.
Each undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(a) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(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
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(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
registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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 of 1933, each filing of each of Everest Group's and Everest Holdings'
annual reports pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 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 Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against these types of liabilities (other than the payment by the registrants
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 registrants 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 Act and will be governed by the
final adjudication of the issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Everest Re
Group, Ltd. certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, on the 24th day of September, 2002.
EVEREST RE GROUP, LTD.
By: /S/ STEPHEN L. LIMAURO
-----------------------------
Stephen L. Limauro
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons on behalf
of the Registrant and in the capacities indicated on the 24th day of September,
2002.
Signature Title
--------- -----
*/S/ JOSEPH V. TARANTO Chairman and Chief Executive
------------------------------ Officer and
Joseph V. Taranto Director (Principal Executive
Officer and
Authorized U.S.
Representative)
/s/ STEPHEN L. LIMAURO Executive Vice President and
------------------------------ Chief Financial Officer
Stephen L. Limauro (Principal Financial 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 President and Chief Operating
------------------------------ Officer and Director
Thomas J. Gallagher
*/S/ WILLIAM F. GALTNEY, JR. Director
------------------------------
William F. Galtney, Jr.
*/S/ KEITH T. SHOEMAKER Comptroller (Principal
------------------------------ Accounting Officer)
Keith T. Shoemaker
*/S/ STEPHEN L. LIMAURO
------------------------------
Stephen L.
Limauro Attorney-in-Fact
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Everest
Reinsurance Holdings, Inc. certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Liberty Corner, and
State of New Jersey, on the 24th day of September, 2002.
EVEREST REINSURANCE HOLDINGS, INC.
By: /S/ STEPHEN L. LIMAURO
-----------------------------
Stephen L. Limauro
Executive Vice President and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons on behalf
of the Registrant and in the capacities indicated on the 24th day of September,
2002.
Signature Title
--------- -----
*/S/ JOSEPH V. TARANTO Chairman and Chief Executive
----------------------------- Officer and Director
Joseph V. Taranto (Principal Executive Officer
and Authorized U.S.
Representative)
/S/ STEPHEN L. LIMAURO Executive Vice President,
----------------------------- Chief Financial Officer and
Stephen L. Limauro Director (Principal Financial
Officer)
*/S/ THOMAS J. GALLAGHER President and Chief Operating
----------------------------- Officer and Director
Thomas J. Gallagher
*/S/ KEITH T. SHOEMAKER Comptroller (Principal
----------------------------- Accounting Officer)
Keith T. Shoemaker
*/S/ STEPHEN L. LIMAURO
-----------------------------
Stephen L.
Limauro Attorney-in-Fact
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Everest Re
Capital Trust certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Liberty Corner, and State of New Jersey, on the
24th day of September, 2002.
EVEREST RE CAPITAL TRUST
By: Everest Reinsurance Holdings,
Inc., as Depositor
By: /S/ STEPHEN L. LIMAURO
-----------------------------
Stephen L. Limauro
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
*1.1 Underwriting Agreement relating to common shares, preferred shares, debt securities and warrants
issued by Everest Group.
*1.2 Underwriting Agreement relating to debt securities issued by Everest Holdings.
*1.3 Underwriting Agreement relating to preferred securities issued by Everest Capital Trust.
*1.4 Underwriting Agreement relating to share purchase contracts.
*1.5 Underwriting Agreement relating to share purchase units.
2.1 Agreement and Plan of Merger among Everest Reinsurance Holdings, Inc., Everest Re Group, Ltd. and
Everest Re Merger Corporation (incorporated herein by reference to Exhibit 2.1 to the Registration
Statement on Form S-4 (No. 333-87361)).
3.1 Memorandum of Association of Everest Re Group, Ltd. (incorporated herein by reference to Exhibit
3.1 to the Registration Statement on Form S-4 (No. 333-87361)).
3.2 Bye-laws of Everest Re Group, Ltd. (incorporated herein by reference to Exhibit 3.2 to the Annual
Report on Form 10-K for the year ended December 31, 1999).
3.3 Certificate of Incorporation of Everest Reinsurance Holdings, Inc. (incorporated by reference to
Exhibit 4.1 to the Registration Statement on Form S-8 (No. 333-05771)).
3.4 Bye-laws of Everest Reinsurance Holdings, Inc. (incorporated by reference to Exhibit 3.2 to the
Everest Reinsurance Holdings, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31,
2000.
3.5 Certificate of Trust of Everest Re Capital Trust (incorporated herein by reference to Exhibit 3.4 to the
Registration Statement on Form S-3 (No. 333-87363)).
4.1 Specimen Everest Re Group, Ltd. common share certificate (incorporated herein by reference to
Exhibit 41 to the Registration Statement on Form S-4 (No. 333-87361)).
**4.2 Senior Indenture between Everest Group and JPMorgan Chase Bank, as trustee (including form of
senior note).
4.3 Senior Indenture, dated March 14, 2000, between Everest Holdings and The Chase Manhattan Bank
(now known as JPMorgan Chase Bank), as trustee (including form of senior note) (incorporated
herein by reference to Exhibit 4.1 to the Form 8-K filed by Everest Holdings on March 15, 2000).
**4.4 Subordinated Indenture between Everest Group and JPMorgan Chase Bank, as trustee (including form
of junior subordinated note).
**4.5 Subordinated Indenture between Everest Holdings and JPMorgan Chase Bank, as trustee (including
form of junior subordinated note).
*4.6 Warrant Agreement between Everest Group and the Warrant Agent.
*4.7 Warrant Agreement between Everest Holdings and the Warrant Agent.
*4.8 Share Purchase Contract.
4.9 Trust Agreement of Everest Capital Trust (incorporated by reference to Exhibit 4.5 to the Registration
Statement on Form S-3 (No. 333-87363)).
**4.10 Amendment No. 1 to Trust Agreement of Everest Capital Trust.
**4.11 Amended and Restated Trust Agreement of Everest Capital Trust (including form of preferred security
and form of expense agreement).
**4.12 Preferred Securities Guarantee Agreement.
**5.1 Opinion of Mayer, Brown, Rowe & Maw, counsel for Everest Holdings and Everest Capital Trust, as
to the validity of the debt securities and preferred securities guarantee of Everest Holdings.
E-1
**5.2 Opinion of Conyers Dill & Pearman, special Bermuda counsel for Everest Group, as to the validity of
the common shares, preferred shares, debt securities, warrants, share purchase contracts, share
purchase units, debt securities guarantees and preferred securities guarantee of Everest Group.
**5.3 Opinion of Richards, Layton & Finger, P.A., special Delaware counsel for Everest Holdings and
Everest Capital Trust, as to the validity of the preferred securities of Everest Capital Trust.
**12.1 Statement regarding the computation of ratio of earnings to fixed charges for Everest Re Group.
**12.2 Statement regarding the computation of ratio of earnings to fixed charges for Everest Holdings.
23.1 Consent of PricewaterhouseCoopers LLP for Everest Group.
23.2 Consent of PricewaterhouseCoopers LLP for Everest Holdings.
**23.3 Consent of Mayer, Brown, Rowe & Maw (included in Exhibit 5.1).
**23.4 Consent of Conyers Dill & Pearman (included in Exhibit 5.2).
**23.5 Consent of Richards, Layton & Finger, P.A. (included in Exhibit 5.3).
**24.1 Powers of Attorney (included on the signature pages).
**25.1 Statement of Eligibility of JPMorgan Chase Bank on Form T-1, as trustee for Everest Group Debt
Securities, as preferred securities guarantee trustee under the Preferred Securities Guarantee
Agreement of Everest Group for the benefit of the holders of Preferred Securities of Everest
Capital Trust and as trustee with respect to the guarantee of Everest Group of the debt securities of
Everest Holdings.
**25.2 Statement of Eligibility of JPMorgan Chase Bank on Form T-1, as trustee for Everest Holdings Debt
Securities and as preferred securities guarantee trustee under the Preferred Securities Guarantee
Agreement of Everest Holdings for the benefit of the holders of Preferred Securities of Everest
Capital Trust.
**25.3 Statement of Eligibility of JPMorgan Chase Bank on Form T-1, as property trustee for the Amended
and Restated Trust Agreement of Everest Capital Trust.
--------
* To be filed, if necessary, subsequent to the effectiveness of this
registration statement by a post-effective amendment to this registration
statement or incorporated by reference pursuant to a Current Report on Form 8-K
in connection with an offering of securities.
** Previously filed.
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