PREMIER HedgeLoan®

A Premier HedgeLoan® is is a limited recourse, feature-rich loan made possible when an eligible portfolio with optionable securities is available for use as collateral, and an option is purchased and structured into the loan to help reduce lender risk. It is the premium HedgeLender loan product among the stay-in-your-name/account loan services that make up the Premier program.

Key Features
With Premier HedgeLoan® shares remain in borrower's name, title, and account as with all Premier loan programs. Top tier U.S.-brokerage management with established equity fund support. Collateral receives a simple lien to secure the loan. Quick closing. Prepayment any time, no penalty. Up to 95% loan-to-value available. Full voting rights remain with borrower while shares secure loan. Swap one set of securities for another even while they are collateralizing the loan (requires lender's consent). Additional loan cash possible if portfolio rises in value during the loan term.

Underwriting Requirements
Accepted: Publicly traded stocks, municipal/state/federal securities, exchange-traded funds, and all forms of mutual funds. $100K minimum portfolio size. Best LTV for portfolio's over $2M in initial value. CMO's and other mortgage-based securities acceptable if bundled with equivalent amount of quality securities.

Average Daily Volume
Healthy market for the securities; good volume of trading. (Use the average four-week volume figure as a guide.)

No Red Tape
Minimal paperwork, no FICO scores. Clients simply expected to have assets sufficient to service the loan.

Note: Borrowers must be willing to produce evidence of assets sufficient to service loan payments for document filing and regulatory purposes. However, these documents are not used to determine characteristics of the loan offer but are instead used to comply with regulatory requirement designed to ensure evidence of borrower's ability to service their quarterly loan interest payments.

Features / Benefits:

Institutional Security
Never moved, sold, or modified. Well-known, top-tier national brokerage/bank. SIPC-member coverage identical to any standard brokerage account. Option hedge purchased by institution at borrower's direction and structured into the loan for additional security (via AAA-rated Options Clearing Corporation.)*

Interest Rates
Interest rates based on monthly LIBOR + 4%. (As of this writing, rate comes to approximately 4.3%). .

Maximum Loan-to-Value
Up to 85% of current market value of the securities pledged. Up to 95% for Treasury bills and selected other securities.

Non-Callable Feature Standard
Premier HedgeLoan® cannot by definition be called (i.e., lender require client to come up with additional stock/cash for any reason, regardless of drops in prices, making them a fully "no-margin-call" loan. (Note: A callable variant is also available that may permit higher LTV in some cases in exchange. Inquire for more.

Available to Financial Institutions
We've added our knowledge of client requirements to the resources of a large equity fund and expertise of a leading U.S. bank/brokerage to make this form of lending possible for a wide range of securities owners. Existing financial services may thus add Premier securities loan services to their current services to enhance their clients' choices. Inquire for more information.

Payoff Anytime, Without Penalty
Pay off your loan if you decide you want to unfreeze the stocks for your own use - anytime you like, without restriction. If prices go up and your stocks are worth a lot more, for example, you may seek to unfreeze and sell them. With any Premier loan, you can do so. You can pay the loan off with cash directly, or ask lender to sell enough shares to pay off the remainder of the loan. Liens are removed immediately upon repayment.

A Limited Recourse Loan If You Must Default
With a Premier HedgeLoan®, if should you find that you have no choice but to default, you can do so without fear of attachment of any other assets (e.g., lien on house, other bank accounts) or any negative effect on your credit rating. The option purchased and structured into your loan makes this possible. Surrendering your shares will constitute in effect the fulfillment of your loan obligation, no matter how low the value of the stock portfolio.

An "Equity Line of Credit" Feature Standard
Not enough control? Premier loans, including Premier HedgeLoan, feature a line-of-credit provision that will allow you to modify your loan mid-stream to take more cash out if the portfolio. This is available when and if your shares have moved up in value consistently over time, much like a home equity line of credit. (Please note that additional loan cash credit is not automatic, but is rather at lender's discretion. Eligible portfolios should maintain a higher value over a reasonable period of time prior to consideration).

All the Growth in Portfolio to the Borrower
No asterisks, no fine print. Every last penny of value in your securities portfolio belongs to you in our standard model Premier HedgeLoan®. There is no lender participation or claim to any of the upside growth in your stocks if they appreciate in value over time. (Note, however, that a "lender participation" variant of Premier is also available for those who may seek a higher loan-to-value in some cases. Please inquire for more information.)

Dividends to Interest, or Dividends to You?
They're your securities and it's your loan. You decide. Your dividends can go to you, or you can ask to have them credited against the interest owed on the loan. The choice is yours.

Fast Funding
Within 72 hours of signing loan documents is normal, though actual time may be slightly less or slightly more depending on the particulars of each client. Funds are deposited directly into your checking account.

No Up-front Costs
Fees are deducted from loan proceeds, so there are no true out-of-pocket costs until your first quarterly interest payment is due after three months. No advance processing fees, etc.

Regular Account Statements
You'll get monthly/quarterly brokerage statements just like you do right now, all direct from the institution holding your portfolio.

Multiple Exit Choices
Ask lender to sell enough of the stock to pay off the loan. Or modify the loan while getting cash out under the line-of-credit provision. Or pay off the principal out-of-pocket with your own cash in the normal loan payoff fashion. If you cannot handle the interest payments for any reason and must declare default, you can exercise your limited-recourse exit rights with no further claim on any assets or negative credit reporting upon surrender of collateral. You can also consider a simple rollover ‒ renewing your loan on the same or better terms.

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