2015 ACIC SPRING FORUM COVENANTS 101

2015 ACIC SPRING FORUM
COVENANTS 101
CONFIDENTIAL
April 24, 2015
THE BEST COMPANY EVER LLC
Term Sheet
Issuer:
The Best Company Ever LLC (the "Company")
Purchaser:
Gullible Insurance Companies ("GI")
Principal Amount:
$300,000,000 to be issued pursuant to a Note
Purchase Agreement loosely based on a Model Form
(the "Agreement")
Closing/Funding:
May 7
Ranking:
Expected NAIC 2
Guarantors:
None
Security:
Unsecured
Use of Proceeds:
General corporate purposes
Average Life:
18 years
Maturity:
20 years
Interest Rate:
[To come]
Interest Payments:
Semi-annually in arrears
Optional Prepayment:
The Company may prepay the Notes at any time on
any business day in amounts of at least $1,000,000 at
the higher of par or the present value of the remaining
scheduled payments of principal and interest on the
portion being prepaid (the amount in excess of par is
the "Make-Whole Amount"). The discount rate
used to determine the present value shall be the sum
of 50 bps and the current yield on the U.S. Treasury
Note(s) having a maturity comparable to the
remaining average life of the Notes. Prepayments are
applied [pro rata to remaining maturities] [in the
inverse order of maturities].
Prepayment on Change
of Control:
Upon a Change of Control the note holders shall have
the right to require the Company to prepay the Notes
at par plus accrued interest BUT WITHOUT the
Make-Whole Amount.
Conditions Precedent:
The conditions precedent to funding would be
limited to those contained in Model Form #2.
Affirmative Covenants:
Affirmative covenants will be limited to those
contained in Model Form #2.
Negative Covenants:
Negative covenants will be limited to the following:
(1) Financial covenant
Pick one and only one [and deduct from bid]:
Fixed Charge Coverage [deduct 12 bps]
Interest Coverage [deduct 8 bps]
Debt to EBITDA [deduct 15 bps]
Net Worth [Static v. Increasing] [deduct zero – 5
bps]
Debt to Capitalization [deduct zero bps]
(2) Lien restrictions with exceptions (not to be less
than 28) and to include
(a) liens securing indebtedness in existence at
closing
(b) liens for taxes and assessment not yet due
and payable
(c) liens of carriers, mechanics and
materialmen incurred in the ordinary course
(d) liens in respect of performance and appeal
bonds
(e) liens in respect of workers’ compensation
and unemployment insurance
(f) judgment liens that have been stayed
(g) liens for easements, leases and ordinary
course real estate restrictions
(h) intercompany liens
(i) purchase money liens
. . . [exceptions (j) – (y)]
(z) pre-existing liens on acquired properties or
businesses
(aa) renewals, extensions and refundings of
existing liens, purchase money liens and
liens on acquired property if the principal
amount of the indebtedness secured is not
increased
(bb) a lien basket, tied to a financial test typically
based on a percentage of assets, net tangible
assets, net worth or tangible net worth, with
Anti Cookson protection
(3) Limitation on indebtedness
(4) Priority Debt
(5) Merger, consolidation, sale of substantially all
assets
(6) Sale of assets
(7) Line of Business
(8) Transactions With Affiliates
[All covenants will be calculated without giving effect
to SFAS 159.]
Events of Default:
An Event of Default shall be defined as the occurrence
of any of the following events:
(1) Default in payment of principal or make whole
amount
(2) Default in payment of interest for more than 10
days
(3) Default on covenants with 30 day grace period
(4) Default under another agreement evidencing
indebtedness resulting in the acceleration of
such indebtedness
(5) Bankruptcy
(6) Judgment Default
Representations and
Warranties:
Customary for an agreement of this nature, including
absence of material adverse change
Default Interest:
Greater of 2.00% over Prime Rate or 2.00% over
coupon, payable on past due amounts
Expenses:
The Company shall pay the fees and expenses of pre
selected counsel
Governing Law:
State of New York