BANK INSTRUMENTS LEASE / FUNDING PROGRAM

PROCEDURE


STAGE -1 PREPARATION

a)The Applicant submits a signed Application and Memorandum of Understanding to the Provider.
b)A 1-2 Pg. summary is attached to the signed Application, outlining all of the critical parameters and Funding requirements of their Project / Transaction in a condensed format.
c)The Applicant must issue two (2) Corporate Promissory Notes (PN) (as per Draft PN format attached).
The First Corporate Promissory Note issued by the Applicant must be equal to the face amount of the leased Instrument and must be post-dated 350 days later. This will secure the RETURN of the instrument 15 days prior to its maturity to the Provider’s issuing Bank;
The Second Corporate Promissory Note issued by the Applicant must be equal to the gross amount of the Loan that they require and must be post-dated for 365 days later. This will secure the REPAYMENT of the Loan to the Provider 365 days later; Both Draft PN’s are submitted with the application.
The Applicant must Pre-arrange for their designated Bank to AVAL/ Endorse BOTH of the referenced Promissory Notes.
d)Upon the Provider approving the Draft P. Notes, a Lease/ Funding agreement package is then formulated which will incorporate the P notes in order to substantiate the requirements of the referenced transaction. This Package will consist of a Lease agreement, a Letter of indemnity, a Specimen of the Leased instrument to be delivered, specimen of both P. Notes, a Loan Term sheet / Loan Contract and an Escrow agreement.
e)Upon acceptance of the Lease / Loan agreement Package, the Applicant executes all of the documents of the said agreement package and returns it to the provider, within the allotted Time provided in the agreement. (see article #15 of the Lease agreement)
f)In order to activate the Lease Loan transaction, the Applicant transfers the required Security Deposit to the designated third party neutral Escrow, as per Escrow agreement, which allows the Provider to move forward, block the required Funds with their Bank in order to facilitate the respective transaction.
g)The Provider, with consent of the applicant, contacts the Applicant’s bank in order to qualify the Transaction and receive confirmation of the forthcoming Bank AVAL on the P. Notes from the Applicants Bank, which will allow the Provider to arrange delivery of the leased Instrument and which will facilitate the provision of the Loan proceeds.


STAGE -2 DELIVERY

a)Upon the Provider receiving the formal undertaking from the Applicant’s Bank confirming their AVAL of the Promissory Notes, the Provider will arrange for their issuing Bank to contact the Applicants designated Bank in order to qualify the transaction on a Bank to Bank basis and provide a formal delivery confirmation. (see article #10 of the lease agreement)
b)The delivery of the confirmation to AVAL the referenced Promissory Notes via SWIFT, activates (within 5 days) the delivery of the instrument via SWIFT MT-760 to the Applicant’s Bank.
c)The MT760 delivery is effected in accordance to the lease agreement, after which the Applicant’s bank verifies and authenticates the Bank Instrument at their counters and advises the Applicant accordingly.
d)The receiving Bank delivers the original Hard Copies of the Promissory Notes, as arranged with the issuing bank.
e)Within a 10-day period after the delivery of the Instrument via MT-760, the Provider activates the Loan and wires the loan proceeds to Applicants Designated bank in accordance to the terms of the Loan Agreement. The Loan is secured by the PN issued by the Applicant and AVAL provided by Applicants Bank.
f)In accordance to the Loan agreement, the Provider will deduct the Leasing Fee, the cost and annual Interest of the Loan from the Loan proceeds at source, upon disbursement of the Loan, thereby eliminating all carrying costs for the year.
g)The Security deposit is returned by the Escrow Agent to the Applicant after all Payments have been remitted to the Provider in accordance to terms of the Lease, Loan and the Escrow agreement.
h) At this point in the transaction, the Applicant now has the net funds required in order to realize his respective transaction and or initiate the development of their project
i) It should be noted that the option to Renew the one-year (1) loan may be inserted in the Agreement, upon request, for up to five (5) subsequent years, subject only to a continued repayment guarantee from the client’s bank.
j)Should the lease be renewed, the obligation to return the instrument at the end of the agreed maturity, free & Clear, remains in legal force throughout the term of the initial and extended transaction and that obligation shall survive all renewals & extensions.

STAGE 3 BANKING RATIONALE

1. This Program was specifically designed to use Promissory Notes (PN) to secure the obligations within the transaction due to the Financial nature of such an Instrument.
a)The PN is issued by the Applicant NOT the Bank
b)The Applicant arranges for his PN to be AVALED by his Bank which effectively is a third party endorsement by the Bank
c)Upon delivery of the Lease and the provision of the Loan, the Applicants bank now has custody, care and control of BOTH the instrument as well as the CASH proceeds of the Loan.
d)This will allow the Bank to place BOTH ASSETS on their reserves and enter them onto their Books, thereby enhancing the reserves of the Bank significantly.
e)The Applicant pledges and or assigns 100% of the leased Instrument and control of the Loan proceeds to his bank, in return for their Bank responsible Aval /endorsement of the PN.
f)Providing the bank with control over the Assets further reduces the Bank risk and presents the required comfort level & incentive to guarantee the Applicants Loan, while concurrently utilizing the Assets as a financial vehicle to assist in managing their risk.
g)The Bank has unfettered use of the Bank instrument as well as the Cash proceeds of the Loan, which will allow them to generate new internal income streams, thereby further off setting any potential costs incurred through their involvement in the transaction.
h)The project is developed and the equity is maximized concurrently, without any financial imposition on the Bank’s reserves through the exclusive use of the Loan proceeds from an outside third party.
i)The Applicant’s Bank uses these third party Funds to assist in establishing their future exit strategy at the end of the Project and subsequently creates a viable means by which to make the transition into institutional Funding.
j)From the onset of the transaction the Applicant has committed to give his Bank the exclusive for the TAKE OUT position in exchange for supporting the Applicants Project as a result once there is sufficient Equity in the Project, the Applicants bank will then place a TAKE OUT Mortgage / charge on the Project and this will facilitate the Applicant and his Bank in the repayment of the Loan to the Provider.
k)At the end of the Term of the Lease and the Provider’s bank will offer to surrender the endorsed Promissory Note 350 days later in exchange for the return of the leased instrument.
l)At the end of the term of the Loan the Provider and their bank will offer to surrender the endorsed Promissory Note 365 days later in exchange for the full repayment of the loan.
m)In the event that the leased instrument is kept, or in the event that there i9s default on the Loan, the Provider will exercise his right to negotiate settlement against the promissory Note as his recourse for the return of the instrument and his remedy for the repayment of the Loan
n) It should be understood that the Lease “and / or” the Loan (either one or both) can be extended / renewed for another year subject to Applicants Bank confirmation for payment of the related Costs of renewal. Such confirmation must be provided on a bank-to-bank basis no later than 30 days prior to the maturity of the respective term of the Loan or the lease.

FOR FURTHER DETAILS, PLEASE CONTACT SYED JAMALUDDIN (GERMANY) ON CELL +49-1747061641 OR SEND EMAIL TO : argointernationalusa@googlemail.com