The Loan

Loan procedures overview and commercial related terms:

• Analysis

  – The European Partner (“EP”) would evaluate Company’s business plan and cash flow forecast.
  
  

• Security

  - Company should provide a security of an investment grade rated bank. Security should be in the form of an irrevocable, transferable, dividable bank guarantee, a standby letter of credit (SBLC) or a cash deposit. In case the loan amount or any part hereof is used to purchase specific assets, these assets cannot be used as collateral to any third party as long as the loan is not fully repaid.
  
  

• Leverage

  – A leverage factor of 3 to 5 times the value of the security can be obtained.
  
  

• The highlights of the loan are as follows

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  • The Loan Amount – will be in the range of €10M to €400M
    
    
  • Loans Period - The payment schedule may be over a period of up to 15 years subject to the company’s cash flow forecast.
    
    
  • Timeframe - Further drawdowns would be available in successive periods of 30 days. Exact draw down schedule would be included in the Loan Agreement.
    
    
  • Number of Drawdown - In case of a 3 time leverage on the collateral the total loan would be provided in 3 draw downs. In case of a 5 times leverage, the total loan would be provided in 5 - 7 draw downs.
    
    
  • Security Term – Minimal security period is 3 years. The term of security may be an extended clause to section 4g mentioned below.
    
    
  • A Grace Period – A grace period of up to 24 months could be provided. During the grace period the company is not obliged to pay neither interest nor principal. For the avoidance of doubt, interest will accrue on the unpaid balance as defined in the Loan Agreement. The grace period has an effect on the term during which the security must be in effect as detailed below:
    
    
    • In case the company does not require a grace period, or requires up to 12 months grace period, the security should be valid for a period of 3 years.
      
      
    • In case the company requires a grace period of 12 - 24 months, the security must be valid for a period of 4 years.
      
      
  • Interest Rate - the annual interest is expected be up to 6% (six percent). The exact annual interest rate would be defined in the Loan Agreement. The interest rate would not be changed during the whole loan period.
    
    
  • i. Accelerate repayment - It is possible to shorten the loan period and accelerate the repayment without any penalty / additional fees.
    
    

• Process of issuing the security (in this example SBLC)

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  • The company’s bank (should be an investment grade rated bank) issues a Pre-Advised SBLC of the adequate value to the loan provider. The security should be addressed to one of the banks used by the loan provider (Credit Suisse, HSBC and Barclays). Clarification - A “Pre-Advise” is similar to a Letter of Intent from the bank according to which, the Company’s bank is prepared to issue the SBLC conditional upon the occurrence of section 5b below.
    
    
  • The bank of the loan provider will then issue within 2 bank days a letter of guarantee to the Company’s bank stating that the SBLC received will be returned to the Company at the end of the collateral term as determined in the loan agreement.
    
    
  • The company’s bank issues the SBLC for a period of 3 or 4 years (according to sections 4 f-g above).
    
    
  • The same approval of the loan provider’s bank as detailed in section b. above can be applied in case of a wire transfer of cash or bank guarantee.
    
    
  • In case of a transaction in which the security exceeds the amount of 10 million Euros, it is possible that the company shall open a new bank account in Credit Suisse, Switzerland and transfer the security to its own new bank account and freeze the amount in this account for the collateral term. Such a process saves costs related to issuance of SBLC/Bank Guarantee.
    
    

• Loan Related Costs

  - the costs involved in obtaining the loan (in addition to the loan interest) are as follows:
  
  
  • A one-time processing fee of 1% of the loan amount, to be paid to the front office representative of the loan provider
    
    
  • A one-time success fee of the loan amount, to be paid to EP according to the commission table detailed section d below:
    
    
  • The above costs shall be deducted by the loan provider from the first drawdown.
    
    
  • Commission breakdown:
    
    
    1. 6% for of any amount up to 10M€
       
       
    2. 5% for the part of any amount between 10M€ and 20M€
       
       
    3. 4% for the part of any amount between 20M€ and 30M€
       
       
    4. 3% for the part of any amount between 30M€ and 50M€
       
       
    5. 2% for the part of any amount above 50M€
       
       i.e.: in case of a 40 Million Euro loan, the commission is 1.8 Million Euro.

• Procedures Regarding the Loan Application

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  • The company shall provide EP with a mandate to obtain the loan by signing an engagement letter.
    
    
  • The company shall provide EP with adequate information including a business plan, a cash flow forecast and additional due diligence information as requested.
    
    
  • Following the approval of the loan amount and conditions by the loan provider, the Loan Agreement draft shall be provided to the company within 2 weeks.
    
    

• The Loan's Main Advantages

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  • Relatively low interest and related costs.
    
    
  • A fixed annual rate for the entire loan period.
    
    
  • Leverage of 3 to 5 can be obtained on the bank instrument security.
    
    
  • Validity period of the security is significantly shorter than the loan period.
    
    
  • A relatively short timeframe from application to actual money drawdown.
    
    
  • Flexible repayment schemes.
    
    
  • Grace period option is available.
    
    
  • Loan related costs are success-based and paid out of the loan amount.