Illustrative sizing · $5mm of growth capital · taxable class

Lifecycle: Closing → Term → Prepayment → Maturity

Four stages, each with fixed mechanics. Nothing in the structure depends on negotiation after closing.

1 · At closing — funds flow

Investor

Advances $35.31mm against one unit — the Note with its right to require prepayment in kind and the 20% Warrant.

79.00¢

Dealer — STRIPS for the Vehicle's account

$27,891,439

UST STRIPS bought at 79.00¢, face $35.31mm, pledged 1:1 for the investors and maturing 45 to 90 days after the Note. Held in a securities account at the Custodian and never lent or rehypothecated.

7.08¢

Growth capital — tranche 1 to the Project

$2,500,000

Released at closing. The only proceeds that reach the Project at closing.

7.08¢

Growth capital — tranche 2 to the milestone escrow at the Custodian

$2,500,000

Released by the Administrator on the milestone test date, against the KPIs agreed at closing.

5.28¢

Coupon reserve escrow at the Custodian

$1,859,180

Funds all five stated coupons; held at the Custodian, outside the Project, and paid out by the Administrator.

0.28¢

Structuring Company — diligence, independent Warrant appraisal and technology, flat, per Project

$100,000

Paid once at closing for transaction diligence, the independent Warrant appraisal, and the technology platform; does not scale with the raise.

0.85¢

The Vehicle — $50,000 once + $50,000/yr escrowed, flat per Vehicle

$300,000

The Vehicle costs $50,000 at closing and $50,000 a year, escrowed for the term. It covers Bermuda government fees, the registered office and resident representative, corporate secretarial work, two professional independent directors, the purpose trustee, economic substance and anti-money-laundering filings, and accounting. It is a cost, not a margin: an orphan vehicle that cannot pay its directors or its trustee stops being independently governed, and the whole structure depends on it remaining so for the full term.

0.01¢

Retained by the Vehicle

$5,000

The Vehicle's own benefit from the transaction, so its directors can conclude it enters the transaction for value.

0.42¢

Administrator and Custodian — $25,000 once + $25,000/yr, escrowed for the term

$150,000

One combined role — escrow agent, collateral agent, milestone testing and delivery on demand. Paid a one-time amount plus an annual amount set by the growth capital, never a percentage of face, and holds no interest in the Vehicle.

Use of proceeds at $5mm of growth capital sizing — cents per dollar lent and dollar amounts.
Application	Cents / $1.00	Amount
Where the money goes
UST STRIPS securing the prepayment right	79.00¢	$27,891,439
Growth capital - tranche 1, at closing	7.08¢	$2,500,000
Growth capital - tranche 2, milestone escrow	7.08¢	$2,500,000
Coupon reserve - investor tax-matching escrow	5.28¢	$1,859,180
Service fees, all flat or capped
Structuring Company - diligence, independent Warrant appraisal and technology, flat, per Project	0.28¢	$100,000
The Vehicle - $50,000 once + $50,000/yr escrowed	0.85¢	$300,000
Retained by the Vehicle - its own benefit from the transaction	0.01¢	$5,000
Administrator and Custodian - $25,000 once + $25,000/yr escrowed	0.42¢	$150,000
Subtotal	1.57¢	$555,000
Total	100.00¢	$35,305,619

Use of proceeds at $5mm of growth capital sizing — cents per dollar lent and dollar amounts.

Illustrative example only; all figures are hypothetical. Not an offer, a solicitation, or tax, legal, or investment advice.

Components are rounded to the cent. Subtotals and the total are rounded from the exact amounts, so a column of rounded components may appear to differ from its subtotal by 0.01.

Service fees total 1.57 cents of every $100 and fall as the transaction grows — 0.36 cents at the $50mm of growth capital sizing — because every one of them is flat or capped. The Structuring Company's participation is not in this column: it is the Project's cost of capital, set out separately, and it is paid only if the Project repays.

No fee in the structure is a percentage of face. None of them scales with the size of the Note.
No adviser fee is paid out of the raise; where a placement agent is engaged, its fee is paid at closing out of the proceeds.
The Dealer is paid only through its execution of the STRIPS purchase.

No portion of the other $30.31mm is ever paid to, held by, or property of the Project — nothing outside the $5.00mm advance for a trustee to avoid.

1b · The milestone gate

Tranche 2 is released by the Administrator on the milestone test date against KPIs agreed at closing. The test date is agreed at closing between the investor and the Project.

Decision

KPIs met at the test date?

Tested once, on the test date agreed at closing between the investor and the Project.

Yes — continue

Tranche 2 is released by the Administrator to the Project: $2,500,000.
The warrant stands at the full 20% of the fully diluted capitalization.
The structure runs unchanged to maturity.

No — stop option

A 50% exercise of the prepayment right under the ordinary pro-rata rules.
Half the STRIPS are delivered by the collateral agent.
The escrowed tranche 2 is returned in full: $2,500,000.
Half the unused coupon reserve is released.
The Warrant and both participations are reduced by half.
The other half of the position runs to maturity, still secured 1:1 by the STRIPS left in the account.

2 · During the term — the prepayment right

Exercising the prepayment right

The investor serves notice, for the whole or any part of the principal.
The collateral agent delivers the claimed STRIPS from the securities account at the Custodian.
The delivered face satisfies that principal amount of the Note at full maturity value.
Coupons cease pro tanto, and the matching unused reserve is released to the investor.
The Structuring Company's participation reduces pro rata.

The coupon

$371,836/yr paid by the Administrator from the escrow at the Custodian to the investor — matching the tax on the discount over the term, not year by year. The Project pays nothing during the term; the reserve was funded at closing.

The STRIPS sit with the Custodian and mature 45 to 90 days after the Note matures.
The coupon exists only to fund the holder's tax on the accruing discount. It is not a return.
The Project's cost of capital is fixed at 10% a year after tax and does not move with the price of the collateral, because the participations are denominated in dollars rather than as percentages of face. The gross participation of $8,863,987 on $5,000,000 advanced is 12.13% a year before tax. The Project's interest deduction on the Note, net of the income it recognizes on its own participation above basis, is $3,863,987 — so it is out of pocket by $8,052,550 after tax, which is 10% a year.
The Structuring Company's participation is 1.7728x the growth capital — $8,863,987 at this sizing. The Investor holds no participation in the Vehicle.

The Warrant and an early exit

The Warrant is 20% at a nominal strike, with no anti-dilution protection, exercisable in whole or in part from issue until 90 days after maturity, by cash or net exercise, at the Investor's election.
On a change of control — a sale, a merger, a sale of substantially all assets or a public offering — the Warrant accelerates in full immediately prior to a sale, merger or public offering; otherwise assumed by the acquirer or cashed out at the deal price, on 20 business days' written notice.
Exercising the Success Put does not affect the Warrant. An early repayment does not extinguish it.
The Vehicle is a Bermuda orphan SPV; its shares are held by a professional trustee under a Bermuda purpose trust. No one in the transaction owns it — not the Project, not the Investor, not the Structuring Company.

3 · At maturity — two paths

Does the Project repay the $35.31mm bullet?

Repayment in full

Principal $35.31mm repaid or refinanced in full.
All five coupons received: $1,859,180 in total.
The 20% warrant is exercised and participates in the exit, diluted by any later rounds.
Participations vest and are distributed when the collateral matures 45 to 90 days later — Structuring Company $8,863,987 · Project $26,441,632. The Project's amount is determinate: the matured face less the Structuring Company's requirement. The Structuring Company takes whatever the Vehicle actually has, so any tax inside the Vehicle is absorbed by the sponsor and none of it reaches the Project.

Returns shown describe the investment unit itself and are before anything an investor pays an adviser of its own choosing, which is the investor's own arrangement outside the structure.

Maturity default / FAIL

The investor exercises the prepayment right in full.
The STRIPS satisfy the Note: $35.31mm at par.
All five coupons received and consumed by the term's tax.
The 20% warrant is retained in full as a residual option carried at $0.
MOIC 1.00x after-tax (1.05x gross) · both participations extinguished.

Returns shown describe the investment unit itself and are before anything an investor pays an adviser of its own choosing, which is the investor's own arrangement outside the structure.

On any repayment in full before maturity, the participations vest rather than wait for year five.

Every path ends at ≥ face — the only variable is the warrant.

The prepayment right is exercisable at any time and delivered STRIPS satisfy the Note at full maturity value; the STRIPS themselves accrete 79.00 → 100 and reach par 45 to 90 days after the Note matures.

Success put

If the Project's enterprise value reaches 20x the note face at any time before maturity, the investor may require repayment at par plus accrued interest, at the investor's option and not automatically. The Note is repaid and the participations vest; the Warrant is unaffected — it survives in full and remains immediately exercisable, and a change of control accelerates it.

Returns shown describe the investment unit itself and are before anything an investor pays an adviser of its own choosing, which is the investor's own arrangement outside the structure.

4 · Settlement

The Note and the participations settle gross, on different dates, between different parties, with no right of set-off.