Common use of Conditions for Advance Clause in Contracts

Conditions for Advance. The following conditions, assurances and agreements are made by ESA and acknowledged by DMF, as the Seller under the DMF Agreement, and ▇▇▇▇▇, as the Consultant under the ESA Agreement: a. The ESA Parties agree that all of the distributions set forth on Schedule A shall count toward the Cash Payment under the DMF Agreement and the fees under the ESA Agreement, not to exceed the Total Up Front Cost, for the delivery of Qualified NIBs related to $400,000,000.00 of face amount of life insurance policies. b. The ESA Parties confirm that the Proposed Sale does not and will not interfere with the obligations of any of the ESA Parties under the DMF Agreement or the ESA Agreement and that the ESA Parties, including ▇▇▇▇▇, as the consultant under the ESA Agreement, are fully committed to the creation of Qualified NIBs related to $400,000,000.00 of face amount of life insurance policies for SSI on an exclusive basis. ▇▇▇▇▇ confirms that he is the consultant performing the services under the ESA Agreement and is covered by the exclusivity provisions thereof, and he will use his best commercial efforts to assist DMF in its delivery of the Qualified NIBs. c. The payment of the Advance shall be credited against the Total Up Front Cost and shall not cause the total of the Cash Payment and the fees under the ESA Agreement to exceed $12,000,000.00 for the delivery of Qualified NIBs related to $400,000,000.00 of face amount of life insurance policies, and to the extent that it does, for any reason whatsoever, such excess amount shall become a liability of DMF, due on demand. d. In order to qualify the NIBs related to assets currently held by SSI as Qualified NIBs, DMF shall (i) provide letters from the senior lender stating that any four year loans will be converted into five year loans, without any additional fees, except for the increase in the origination fees based on the new loan term, as soon as such conversions are allowed without violating large exposure directive restrictions of the senior lender, (ii) adjust the Note to achieve a projected internal rate of return for the related NIBs to at least 23% per financed portfolio, and alter the Note to be nonrecourse, secured only by assets described in the Pledge Agreement, and change the maturity date for the Note to be paid as follows: 50% of Realized Death Benefits (defined below) shall be distributed to DMF and 50% of Realized Death Benefit shall be distributed to SSI until the Note is paid in full, and (iii) take whatever other steps are necessary to ensure the NIBs meet the definition of Qualified NIBs under the DMF Agreement. For purposes of this paragraph, Realized Death Benefits shall mean cash received from the NIBs issuer reduced by any amounts required to be used to pay down debt or expenses associated with such NIBs or other NIBs held by SSI. SSI shall be granted set off rights, permitting SSI to set off amounts owed to DMF under the Note against any amounts owed to SSI for any excess costs, origination fees and expenses or Liquidated Damages under the DMF Agreement, as amended below. e. DMF, with the assistance of ESA and ▇▇▇▇▇, shall provide SSI with a comprehensive plan and budget for the creation of Qualified NIBs related to $400,000,000.00 of face amount of life insurance policies no later than November 1, 2013. The comprehensive plan and budget shall include proposed policies, expenses, cash requirements, projected internal rates of return, timelines, preliminary bank approval and other information reasonably requested by SSI. To the extent that the comprehensive plan and budget require reasonable extensions of time to meet the obligations of the DMF Agreement, SSI may grant such reasonable extensions, not beyond April 1, 2014. SSI shall be fully advised by DMF of each step in such comprehensive plan and during the process of completing each such step. SSI and its representatives shall be allowed to review and provide input during such process. SSI shall have fourteen (14) days to review any NIBs delivered to SSI, prior to its acceptance or rejection of such NIBs or the payment of any fees associated with the delivery and acceptance of such NIBs as Qualified NIBs, including any payment described in Section 1, above. f. The ESA Parties agree and confirm that, except for the payments described in Section 1, above, that no additional payments from SSI will be required until DMF has delivered $400,000,000.00 of Qualified NIBs, which have been accepted by SSI, in its sole discretion, according to the DMF Agreement. SSI may or may not, in its sole discretion, provide warehouse financing or advance expenses to assist DMF in the creation of Qualified NIBs after a detailed review of the comprehensive plan, process and budget described above. Any additional expenses or disbursements will be paid out only at SSI’s sole and complete discretion and any such payments shall be credited against the Total Up Front Cost, at SSI’s sole discretion, or shall become a liability to DMF, due on demand, or shall, at SSI’s sole discretion, reduce the Note to the satisfaction of SSI. g. SSI agrees that the Note and Pledge Agreement to be issued by SSI on delivery and acceptance of Qualified NIBs shall be cross-collateralized by 50% of all the Qualified NIBs delivered by DMF under the DMF Agreement. Neither DMF, ESA nor ▇▇▇▇▇ shall assign, pledge or otherwise transfer or hypothecate any interest in the Note, the Pledge Agreement, the DMF Agreement or the ESA Agreement, without the prior written consent of SSI. SSI shall not assign, pledge or otherwise transfer or hypothecate the collateral without either paying off the Note, prior to or in connection therewith, or obtaining DMF’s prior written consent, which consent shall not be unreasonably withheld.