This Term Sheet is presented by Financely Group LLC ("Financely") for the exclusive purpose of outlining the terms under which Financely offers a Letter of Credit (LC) Discounting Facility.

This document serves as a preliminary framework for discussions and is not a binding commitment. The final agreement is subject to Financely's due diligence, credit committee approval, and the execution of definitive agreements.

Facility Overview:

Financely's LC Discounting Facility is designed to provide immediate liquidity against issued LCs, supporting clients' operational and growth initiatives. Through this facility, clients can leverage their LCs before maturity, enhancing cash flow and financial flexibility.

Procedure and Terms:

• Special Purpose Vehicle (SPV) Creation: Financely will establish an SPV specifically for conducting the LC discounting transaction. This SPV will facilitate the legal and financial structuring of the operation.
• Raising Capital: The SPV, managed by Financely, will raise the necessary funds to loan to the client against the issued LC.
• Loan to Client: The raised capital will be loaned to the client, allowing them to access liquidity immediately.
• Transfer of Rights: The client will transfer the rights to the proceeds of the LC to Financely through the SPV, securing Financely's position and interest in the transaction.
• Reimbursement: Financely will be reimbursed directly from the proceeds of the LC upon its maturity or settlement.

Detailed Terms:

• Minimum LC Face Value: USD 2,000,000.
• Loan-to-Value (LTV): 90%, reflecting the amount Financely will loan against the face value of the LC.
• Interest Rate: The interest rate on the loaned amount will be LIBOR + 4% annually until the LC is reimbursed.
• Origination Fee: The origination fee equivalent to of 2% of the LC amount is charged for the transaction, fully refundable if the deal does not close within 30 days.
• Repayment: The facility is structured to be repaid from the proceeds of the LC, with Financely being reimbursed when the LC is settled.

Security and Collateral Agreement:

The client agrees to pledge the LC as collateral, alongside any additional security required based on due diligence outcomes. This may include corporate guarantees, personal guarantees, or other forms of security deemed acceptable by Financely.

Closing Procedure:

1. Execution of Term Sheet: The client reviews and agrees to the preliminary terms outlined in this document.
2. Due Diligence: Financely conducts a comprehensive review of the client's financial standing, the LC, and any associated risks.
3. Definitive Agreements: Upon successful due diligence, definitive legal agreements are executed, detailing the facility's terms, security arrangements, and the roles and responsibilities of all parties.
4. Funding: The SPV raises the necessary capital and loans it to the client.
5. Transfer of LC Rights: The client formally transfers rights to the LC proceeds to Financely via the SPV.
6. Reimbursement: Financely is reimbursed directly from the LC proceeds upon its execution.

Financial Covenants and Conditions:

The client must adhere to specified financial covenants, including maintaining a minimum DSCR of 1.25x and a current ratio of 1.0x. The client is also restricted from incurring additional indebtedness that could jeopardize the position of Financely without prior consent.

Governing Law:

This Term Sheet and the resulting transactions are governed by the laws of the State of New York, USA, ensuring a clear legal framework for all parties involved.

Acknowledgment:

This extended Term Sheet is intended to facilitate further discussions towards a formal agreement and does not represent a binding offer. The parties acknowledge that proceeding with this Term Sheet signifies their interest in exploring the LC Discounting Facility offered by Financely Group LLC.

For further inquiries or to initiate the application process, clients are encouraged to contact Financely Group LLC directly through our official channels.

This Term Sheet aims to facilitate further discussions and is not a guarantee of funding. The 2% origination fee is fully refundable if the transaction is not completed within 30 days, ensuring a commitment to efficiency and client satisfaction.

If you would like to discount a letter of credit, please get it touch with us.

For more detailed information and to proceed with an application, please request a quote or book a consultation.