Credit Events

Borrower default and what a Lender can do about it

There are two conditions presently that are considered as actionable credit events on a Secured Line of Credit:

• Failing to make interest and principal repayments to Credit Lines in whole and on-time

• Breaking a covenant in the loan terms such as Min Collateral Ratio

In the event of either of the above events, the status of the Line of Credit may be changed to 'liquidatable' and 100% of Revenue Tokens can be used henceforth to repay Credit Lines. These two actions are automatically triggered.

After that, recoverable assets will be:

Any remaining funds not drawn down

Equals

The amount deposited by Lenders

+

any accrued interest repaid by the Borrower to Credit Lines but not yet withdrawn by Lenders

-

the amount that a Borrower has drawn down

Funds recoverable from Collateral deposited by the Borrower

In addition, Collateral put up as security for the loan will be liquidated.

Funds recoverable via the Spigot

In addition, if deployed, the Spigot contract will siphon 100% of Revenue Tokens that continue to be available from the Borrower's Revenue Contracts.

If a Borrower is permanently incapable of repaying debt then the status of the Line will be changed to 'insolvent' by the Servicer.

Lenders and Borrowers can of course at any point renegotiate terms.