Document:

exv10w12

Exhibit 10.12

EXECUTION COPY

SETTLEMENT AGREEMENT

     THIS SETTLEMENT AGREEMENT (the “Agreement”) is made as of the 19th day of May, 2009, by and
among Sovereign Life Financing, LLC, a Delaware limited liability company (“Sovereign”), Imperial
Premium Finance, LLC, a Florida limited liability company (“IPF”) (IPF and Sovereign are
collectively referred to hereinafter as the “Sovereign Entities”) and Acorn Capital Group, LLC, a
Delaware limited liability company (“Acorn”).

BACKGROUND FACTS

     A. Acorn, Sovereign and IPF were parties to a Credit Agreement dated as of April 4, 2007, as
amended (the “Credit Agreement”).

     B. Sovereign and IPF filed a complaint against Acorn on December 3, 2008 in the Supreme Court
of the State of New York, County of New York (the “Lawsuit”), asserting, among other things, a
claim for breach of the Credit Agreement.

     C. On the terms and subject to the conditions of this Agreement, Sovereign, IPF and Acorn have
agreed to settle and resolve all claims, differences and controversies between them as of the date
of this Agreement, including but not limited to all causes of action asserted or that could have
been asserted in the Lawsuit.

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

	 	1.	 	Background Facts. Each of the Parties to this Agreement
acknowledges and stipulates that all of the foregoing recitations in the Background
Facts are true, accurate and correct.
	 
	 	2.	 	Termination of Credit Agreement; Acknowledgement of Obligations;
Releases; Cash Collateral.

               2.1. Termination of Credit Agreement and Other Documents. The parties hereto
acknowledge that the Credit Agreement and all other prior agreements between Acorn and either of
the Sovereign Entities, including but not limited to those documents listed in Exhibit A, are
hereby terminated.

               2.2. Acknowledgement of Debt and Security Interests.

                    (i) Simultaneously with the execution of this Agreement, Sovereign will issue new notes in the
form and subject to the provisions and terms set out on Exhibit B hereto (collectively, the
“Notes”). Each Note issued hereunder will be for loans previously made by Acorn to pay premiums due
on a particular Eligible Policy (as defined below). Such Notes shall be effective as of May 19,
2009. The Notes shall bear simple interest at 14.5% per annum.
The principal amount of each Note, together with its maturity date and related Eligible Policy
is listed in Exhibit C. Each holder of any Note shall be hereinafter referred to as a “Noteholder”.

                    (ii) The Sovereign Entities acknowledge and confirm that the Sovereign Entities’ respective
obligations with respect to the Notes will be secured by properly perfected

 

 

security interests in (i) the Underlying ILIT Loan Document (as defined below), as described
in each particular Note, and (ii) the Sovereign Entities’ rights in and to the applicable universal
life insurance policy relating to such ILIT Loan Document, as also described in each particular
Note. For purposes of this Agreement, the universal life insurance policies listed on Exhibit C
shall be hereinafter referred to collectively as the “Eligible Policies.” Eligible Policies with
the Underlying ILIT Loan Documents and, in each case, proceeds thereof, shall be collectively
referred to as the “Loan/Policy Collateral.” Any life insurance policies that have lapsed or do
lapse due to Acorn’s failure to fund additional premiums for such policies are expressly excluded
from the definition of Eligible Policies, and the Sovereign Entities shall have no obligations of
any kind to Acorn or the Noteholder in connection with such lapsed policies. “Underlying ILIT Loan
Documents” means (i) each promissory note issued or assigned to either of the Sovereign Entities in
connection with a premium finance loan made by either Sovereign Entity to a borrower to permit such
borrower to pay insurance premiums and related expenses on any of the Eligible Policies (each, an
“ILIT Note”) and (ii) each loan application, loan agreement, security agreement, policy guaranty,
collateral assignment and each other agreement, instrument or document executed or delivered to the
Sovereign Entities in connection with an MIT Note, as each may be amended, supplemented or
otherwise modified from time to time and all other loan documents and loan files of the Sovereign
Entities directly related to the Loan/Policy Collateral.

                    (iii) To give effect to the security interests referred to in clause (b), each Note will
contain a grant of a security interest to U.S. Bank, as collateral agent (together with its
successors and assigns, the “Secured Party”) in the applicable Eligible Policy to be listed in each
Note and to the related Underlying ILIT Loan Documents (collectively, the “Security Documents”).

               2.3. Releases; Release of Certain Collateral. In accordance with the Release. In
accordance with the Release attached as Exhibit D, Sovereign, IPF and their respective affiliates,
principals, officers and directors, are hereby fully released from any and all obligations with
Acorn other than the obligations arising under this Agreement, the Notes and the Security
Documents. Similarly, in accordance with the Release attached as Exhibit E, Acorn, its affiliates,
principals, officers and directors, are also hereby released from any and all obligations with
Sovereign or IPF, other than the obligations arising under this Agreement, the Notes and the
Security Documents. Simultaneously with or prior to the execution of this Agreement, Sovereign
shall execute and file a UCC-3 financing statement pursuant to which the UCC-1 #200705243115 filed
with the Florida Secured Transaction Registry is assigned to the Secured Party as the new “secured
party” thereunder, and Acorn shall cause the Secured Party within one (1) business day after the
execution of this Agreement to amend such filing to reflect that its security interest is only in
the Loan/Policy Collateral, as specified in each Note. Within one (1) business day of the
execution this Agreement, Acorn shall also cause the Secured Party to amend any existing UCC
or similar filings to reflect that its security interest is only in the Loan/Policy Collateral, as
specified in each Note, including, without limitation, the filing of a UCC-3 with the Secretary of
the State of Delaware to amend UCC-1 #20071309201 to reflect that its security interest is only in
the Loan/Policy Collateral, as specified in each Note. Upon repayment in full of each Note, or upon
satisfaction or cancellation of any Note pursuant to Section 6 of this Agreement, Acorn and/or the
Noteholder shall execute or cause to be executed such documents as may be reasonably necessary to
release and discharge the security interest, liens or encumbrances granted under such Note,
including without limitation, the filing of a Uniform Commercial Code termination statement.

 

 

               2.4. Cash Collateral. The parties shall promptly cause all amounts deposited into the
Cash Collateral Account (as defined in the Credit Agreement) to be released from the Cash
Collateral Account and paid as follows: (i) $702,813 to Acorn; and (ii) the balance, which shall
not be less than $1,531,639, to Sovereign. Following the release of all amounts deposited in the
Cash Collateral Account, the parties shad take all such action as is necessary to terminate the
Cash Collateral Account and the Master Account Agreement, dated April 4, 2007, between Sovereign
Bank and Acorn. Unless the parties hereto agree otherwise in writing, this Agreement, the Releases
issued by the Sovereign Entities and by Acorn, and the Notes shall become null and void if
Sovereign does not receive the amounts due to Sovereign under this Section within ten (10) business
days after the execution of this Agreement.

	 	3.	 	Diligence and Reporting.

               3.1. Updated Information. As soon as commercially reasonable after, and by no later
than thirty (30) days following the execution of this Agreement, Sovereign will provide Acorn two
updated Life Expectancy Reports and an updated Illustration for each of the life insurance policies
listed in Exhibit C. One Life Expectancy Report shall be from AVS and the other shall be from 21st
Holdings, LLC d/b/a 21st Services. However, Sovereign will not have an obligation to provide Acorn
updated Illustrations or Life Expectancy Reports in those cases where it cannot obtain the
Illustrations or reports for reasons beyond Sovereign’s reasonable control (for example, when the
insurance companies will not provide the Illustrations or when Sovereign cannot obtain the medical
records necessary for an LE provider to issue an LE report).

               3.2. Reimbursement of Expenses. Acorn will reimburse Sovereign half of the expense
incurred by Sovereign to obtain and provide to Acorn the Life Expectancy Reports and updated
Illustrations. Acorn will pay Sovereign its share of said expense within 15 days of having received
an invoice from Sovereign (together with backup documentation evidencing the expenses).

               3.3. Financial Statements. Sovereign shall deliver to Acorn (a) by June 30, 2009, a
consolidated statement of financial position as of May 31, 2009; and (b) within forty-five (45)
days of the end of a fiscal quarter or within sixty (60) days of the end of a fiscal year,
Sovereign’s quarterly financial statements, which statements shall include a consolidated statement
of financial position as of the end of the relevant fiscal quarter and a statement of operations
and a statement of cash flows.

               3.4. Monthly Reports. On or before the fifth (5th) day of each month after the
execution of this Agreement, Sovereign will provide Acorn a report that will include the following:
(a) a list of all of the life insurance policies listed in Exhibit C that Sovereign in good faith
expects to be in grace period during the month that the report is being issued and the following
month; (b) Sovereign’s good faith estimate of the premiums that need to be paid to the insurers in
order to keep each of the life insurance policies on the list in force; and (c) Sovereign’s good
faith estimate of the dates that each of the premiums due must be received by the insurers in order
to keep each of the policies on the list in force. Sovereign will attach to each report the grace
period notices that Sovereign has received for each of the policies mentioned in each report.
Sovereign may supplement any monthly report at any time.

 

 

               3.5. Disposition Events. Sovereign hereby represents and warrants that no Disposition
Event (as defined in the Notes) has occurred with respect to any Eligible Policy or Underlying ILIT
Loan Documents except as set forth on Exhibit H hereto.

	 	4.	 	Funding of Eligible Policies.

               4.1. Notification by Acorn. Within ten (10) business days following its receipt from
Sovereign of a completed Funding Notice (the “Notification Deadline”) in the form attached as
Exhibit F, Acorn shall inform Sovereign, in writing, if it will fund the premiums that must be paid
to the insurer for the Eligible Policy mentioned in the Funding Notice. However, Acorn shall have
no such obligation unless (i) Sovereign complied with Section 3.1 and (ii) the “Projected Policy
Lapse Date” mentioned on the. Funding Notice for the Eligible Policy is at least ten (10) or more
days after the Notification Deadline.

               4.2. Policies Excepted from Section 4.1. For each Eligible Policy listed in Exhibit G,
Acorn shall provide Sovereign written notice of its intention to fund (or not to fund) by the
deadlines mentioned in Exhibit G.

               4.3. Use of Funding Notice. Acorn shall use the Funding Notice that it receives from
Sovereign to provide notice to Sovereign if it will fund (or not fund) the premiums due on an
Eligible Policy as required from Acorn by Sections 4.1 and 4.2. Acorn shall fill out Part II of the
Funding Notice before returning the document to Sovereign.

               4.4. Supplemental Funding. When Acorn elects to fund the payment of premiums in
accordance with a Funding Notice, 100% of the required funding shall be contributed by Acorn
for the exclusive use to pay such premiums (the “Supplemental Funding”). Supplemental Funding
shall be repaid as set forth below and shall bear simple interest at 14.5% per annum. Acorn shall
make an election to provide Supplemental Funding by sending to Sovereign timely written response to
a Funding Notice in accordance with Sections 4.1, 4.2 and 4.3. All amounts advanced by Acorn to
fund a Supplemental Funding shall be due and payable by Sovereign on the earlier of (i) the date
that is thirteen (13) months following the date on which the Supplemental Funding is advanced or
(ii) the occurrence of an event of default under any other Note issued by Sovereign with respect to
the related Eligible Policy. Each Supplemental Funding shall be subject to a new Note to be issued
by Sovereign in the form set forth on Exhibit B. Each such Note issued will make reference to the
Eligible Policy for which the Supplemental Funding is provided.

	 	5.	 	Disposition of Eligible Notes and/or Eligible Policies. 

               5.1. Lack of Timely Notification or Supplemental Funding. If: (i) Sovereign does not
receive from Acorn a written response to a Funding Notice by the Notification Deadline for an
Eligible Policy; (ii) Acorn responds to a Funding Notice by advising Sovereign that it will not
fund the premiums for an Eligible Policy as required by the Funding Notice or (iii) Acorn does not
fund premiums for an Eligible Policy as required by a Funding Notice, then the Sovereign Entities
and Acorn agree to the following:

               (a) As soon as commercially reasonable, Sovereign will inform Acorn if it believes that it can
sell to another party (i) its ILIT Note or Note, in either case that is related to such Eligible
Policy (each, an “Eligible Note”) or (ii) such Eligible Policy. If Sovereign finds a purchaser for
a particular Eligible Note or such Eligible Policy relating thereto, Sovereign will

 

 

disclose to Acorn the following (collectively referred to as the “Note Sale Information”): (i)
the purchase price that Sovereign is being offered for the Eligible Note or the Eligible Policy
relating thereto; (ii) the fees, if any, that Sovereign and/or any of its affiliates will collect
from the transaction; and (iii) the amounts that will be remitted by Sovereign to Acorn or the
Noteholder in connection with the sale of the Eligible Note or the Eligible Policy relating thereto
(the “Payment Amount”). Sovereign will also certify to Acorn that the purchaser is not affiliated
to Sovereign, if that is the case.

               (b) Where the Payment Amount fully satisfies the current amount due for the particular Note
issued hereunder in connection with such Eligible Policy, Acorn shall provide written consent to
Sovereign for the sale within five (5) business days of receiving the Note Sale Information and in
no event shall Acorn withhold consent. Where the Payment Amount is less than the then current
amount due for the. particular Note, within five (5) business days of receiving the Note Sale
Information, Acorn shall inform Sovereign in writing if it will consent to the proposed sale. In
the event that Acorn consents, the sale will take place and Sovereign will remit to Acorn or the
Noteholder the Payment Amount within two (2) business days after the closing. If a proposed sale
does not go forward after Acorn’s consent, then the provisions of Section 5.1(c) shall apply.

               (c) In the event that Sovereign does not find a purchaser for a particular Eligible Note or
the Eligible Policy relating thereto or Acorn does not timely consent to a sale proposed by
Sovereign under Section 5.1(b), Acorn will:

                    (i) Arrange for the sale of the Eligible Note to a third party of Acorn’s choice. If Acorn
identifies a buyer for the Eligible Note or Eligible Policy relating thereto, then Sovereign will
take such actions as are reasonably necessary to help consummate such sale and promptly remit (or
cause to remit) to Acorn or the Noteholder the lesser of (i) the then current amount due under the
Note issued hereunder with respect to such Eligible Note or Eligible Policy or (ii) the sale
proceeds received therefor; or

                    (ii) Offer the insured(s) or policy owners of the related Eligible Policy the option of
continuing to pay the premiums thereon (and thus avoid the lapsing of the policy) in exchange for a
release issued by both the owner of the policy and the insured(s) in a form approved by Acorn and
the Sovereign Entities, which approval will not be unreasonably withheld or delayed.

     Acorn shall inform Sovereign in writing which of the two options mentioned in this Section
5.1(c) Acorn elects to pursue no later than five (5) business days before an Eligible Policy is
scheduled to lapse. Should Acorn elect option (ii), Sovereign will use its best efforts to assist
Acorn in obtaining necessary releases.

               5.2. Where Supplemental Funding Has Been Provided. Where Acorn has provided
Supplemental Funding in accordance with Section 4.4 above, Acorn and Sovereign shall regularly
confer in good faith to determine the most effective means by which to realize value from an
Eligible Note or the Eligible Policy relating thereto. In addition:

               (a) Sovereign shall transmit to Acorn all offers received with respect to an Eligible Note or
the Eligible Policy relating thereto within two (2) business days after such offers are received.
In the event that Acorn directs Sovereign to accept an offer to purchase an Eligible

 

 

Policy or Eligible Note, Sovereign shall promptly consummate such sale, at which time the proceeds
agreed to between Sovereign and Acorn shall be distributed to Acorn or the Noteholder.

               (b) Sovereign shall notify Acorn within two (2) business days after Sovereign is informed of
the death of any insured under an Eligible Policy. The amount owed under a Note issued hereunder
related to such Eligible Policy shall be paid to Acorn or the Noteholder within two (2) business
days of Sovereign’s receipt of any proceeds on account of the death of the insured under such
Eligible Policy.

	 	6.	 	Cancellation of Notes and Acorn’s Duty to Return or Cause the
Return of the Notes to Sovereign.

               6.1. When Sovereign pays, or causes someone to pay, Acorn or the Noteholder the amounts due
under a Note issued by Sovereign under this Agreement, said Note shall be returned to Sovereign at
the time that the Note is paid and the Note shall automatically be deemed satisfied, canceled, null
and void.

               6.2. When Acorn consents to the sale of an Eligible Policy or an Eligible Note for less than
the amount owed under the related Note issued hereunder, whether in accordance with Section 5.1(b),
5.1(c)(i) or otherwise, such Note shall be returned to Sovereign at the time that Acorn or the
Noteholder is paid the amount consented to and said Note shall automatically be deemed satisfied,
canceled, null and void.

               6.3. When Acorn receives an executed copy of the releases mentioned in Section 5.1(c)(ii), all
Notes issued by Sovereign under this Agreement that refer to the Eligible Policy mentioned in the
release shall automatically be deemed satisfied, canceled, null and void. Sovereign shall be
returned the Note or Notes within five (5) business days of having requested its return from Acorn
or the Noteholder.

               6.4. When (i) an Eligible Policy lapses because Acorn has not complied with this Agreement;
(ii) Acorn has failed to provide timely notice under Section 5.1(c); or (iii) Acorn has elected to
exercise the right that it has under this Agreement not to further fund an Eligible Policy, all
Notes issued by Sovereign under this Agreement that refer to the Eligible Policy shall
automatically be deemed satisfied, canceled, null and void. Sovereign shall be returned the Note or
Notes within five (5) business days of having requested its return from Acorn.

               6.5. When Sovereign pays, or causes someone to pay , Acorn or the Noteholder the amounts due
in accordance with Section 5.2(a), the Notes sold (or the Notes that mentioned the Eligible Policy
sold) shall be returned to Sovereign at the time that Acorn or the Noteholder is paid and said Note
shall automatically be deemed satisfied, canceled, null and void.

               6.6. Upon the occurrence of any of the events described in Sections 6.1, 6.2., 6.3, 6.4 or 6.5
above, NFF Partners LLC, a Delaware limited liability company (“NFF”) hereby agrees to assign all
of its rights to the Eligible Policy, relating to the Notes being satisfied canceled, null and
void, to Sovereign or to any other entity designated by Sovereign pursuant to written notice sent
by Sovereign to NFF to the following address: Two Greenwich Office Park, Greenwich, CT 06831,
Attention: Mark Sullivan and Attention: Bob Bucci.

	 	7.	 	Dismissal of Complaint.

 

 

     Promptly after counsel of record for the Sovereign Entities receive from Acorn or its counsel
a copy of this Agreement, duly executed and delivered by Acorn, bearing its authorized
representative’s signature, and the amount of the Cash Collateral due to Sovereign under Section
2.4 is paid, Sovereign and IPF through their counsel shall move the Court in which the Lawsuit is
pending to dismiss the Complaint with prejudice, and without the imposition of attorneys’ fees or
costs.

	 	8.	 	Mutual Representations.

               8.1. Acorn represent and warrants to Sovereign that no rights or obligations under any of the
previous agreements between or among Acorn and any of the Sovereign Entities (including, but not
limited to, the Credit Agreement) have been assigned by Acorn except to entities for whom Acorn is
authorized to act hereunder. Acorn further represents that all assignees of Acorn have reviewed
this Agreement and understand that the Sovereign Entities’ duties and obligations with Acorn and
Acorn’s assignees are limited to the duties and obligations contained in this Agreement and the
Notes.

               8.2. Sovereign represent and warrants to Acorn that no rights or obligations under any of the
previous agreements between or among Acorn and any of the Sovereign Entities (including, but not
limited to, the Credit Agreement) have been assigned by Sovereign.

	 	9.	 	Miscellaneous Provisions.

               9.1. Notices. Any notice or other communication required or permitted pursuant to this
Agreement shall be deemed given (i) when personally delivered, (ii) on the earlier of actual
receipt thereof or five (5) days following posting thereof by certified mail, postage prepaid,
return receipt requested, (iii) upon actual receipt thereof when sent by a recognized overnight
delivery service, or (iv) upon actual receipt thereof when sent by facsimile. In each case the
notice must be addressed to the applicable party at its address set forth below or at such other
address as has been furnished in writing by such party to the other by like notice:

	 	 	 

	If to Sovereign:

	 	Sovereign Life Financing, LLC
	 

	 	701 Park of Commerce Boulevard, Suite 301
	 

	 	Boca Raton, FL 33487
	 

	 	Attention: Mr. Jonathan Neuman
	 

	 	Telephone: 561-995-4202
	 

	 	Facsimile. 561-995-4203
	 
	 	 
	 

	 	with copy to:
	 
	 	 
	 

	 	Jesus E. Cuza
	 

	 	Greenberg Traurig, PA
	 

	 	401 East Las Olas Blvd.
	 

	 	Suite 2000
	 

	 	Fort Lauderdale, FL 33301
	 

	 	Telephone: 954-768-8241
	 

	 	Facsimile. 954-765-1477

If to IPF:

 

 

	 	 	 

	 

	 	Imperial Finance, LLC
	 

	 	701 Park of Commerce Boulevard, Suite 301
	 

	 	Boca Raton, FL 33487
	 

	 	Attention: Mr. Jonathan Neuman
	 

	 	Telephone: 561-995-4202
	 

	 	Facsimile: 561-995-4203
	 
	 	 
	 

	 	with copy to:
	 
	 	 
	 

	 	Jesus E. Cuza
	 

	 	Greenberg Traurig, PA
	 

	 	401 East Las Olas Blvd.
	 

	 	Suite 2000
	 

	 	Fort Lauderdale, FL 33301
	 

	 	Telephone: 954-768-8241
	 

	 	Facsimile. 954-765-1477
	 
	 	 
	If to Acorn:
	 	 
	 

	 	Acorn Capital Group, LLC
	 

	 	Two Greenwich Office Park
	 

	 	Greenwich, CT 06831
	 

	 	Attention: Mark Sullivan
	 

	 	Telephone: (203) 661-0049
	 

	 	Facsimile: (203) 861-4250
	 
	 	 
	 

	 	U.S. Bank National Association, as Collateral Agent
	 

	 	60 Livingston Avenue
	 

	 	EP-MN-WS3D
	 

	 	St. Paul, Minnesota 55107
	 

	 	Attention: Structured Finance — Stewardship
	 

	 	Facsimile: (866) 831-7910
	 

	 	Confirmation: (651) 495 -  3855
	 
	 	 
	 

	 	with a copy to:
	 
	 	 
	 

	 	Acorn Capital Group, LLC
	 

	 	Two Greenwich Office Park
	 

	 	Greenwich, CT 06831
	 

	 	Attention: Mark Sullivan
	 

	 	Telephone: (203) 661-0049
	 

	 	Facsimile: (203) 861-4250

               9.2. Legal Fees, Additional Documentation and Further Actions. The parties shall bear
their own legal fees and costs, including, without limitation, attorney’s fees and expenses, in
connection with the Lawsuit and this Agreement. Each party agrees to execute and deliver any
supplementary documents and instruments and to take any other actions that are required to
implement, effectuate and give full force and effect to this Agreement.

 

 

               9.3. Merger. This Agreement embodies and sets forth the complete and definitive
agreement of the parties hereto with respect to settlement of the Lawsuit and any other agreements
to date as between them, and supersedes and displaces any prior or contemporaneous agreement,
contract, arrangement or understanding between them. The Parties agree that there have been no
representations or inducements for this settlement other than those specified in this Agreement.
This Agreement may not be changed, altered, or modified except by a writing signed by all of the
Parties. Under no circumstances may this Agreement be orally modified.

               9.4. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York. In the event of any litigation regarding enforcement of
this Agreement, the Parties consent to jurisdiction and agree that such action may be brought only
in a state or federal court in New York, New York or in Broward County or Palm Beach County,
Florida. All Parties expressly waive any rights to a jury trial. In any lawsuit, the prevailing
party shall be entitled to attorneys’ fees and costs.

               9.5. Time of Essence. For purposes of this Agreement, time is of the essence.

               9.6. Authorization. Each person signing this Agreement represents that they have the
full authority to execute it on behalf of the Parties for whom they are signing.

               9.7. Binding Effect and No Assignment. This Agreement is binding upon, and inures to
the benefit of, all Parties and on each of their respective predecessors, successors, and assigns.
Neither party to this Agreement shall assign this Agreement or any right or obligations under this
Agreement without (a) providing prior written notice to the other party of its intent to assign and
(b) obtaining the prior written consent of the other party, which consent shall not be unreasonably
withheld. However, no prior written consent to assign shall be required for Acorn to assign this
Agreement and/or its rights or obligations hereunder to any person or entity approved in writing by
all of the Noteholders.

               9.8. Headings. Any headings of the sections, paragraphs and subparagraphs of this
Agreement are for the convenience of reference only, are not to be considered a part hereof, and
shall not limit or otherwise affect any of the terms hereof.

               9.9. Waiver. No waiver of any provision of, or of any right or remedy under, this
Agreement shall be binding or effective unless expressly made in a writing signed and delivered by
the party against which it operates, and no waiver of any given provision, right, or remedy shall
operate or be construed as a continuing waiver or as a waiver of any other provision, right or
remedy, unless expressly so stated in such a writing.

               9.10. Counterparts. This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original and all of which together shall comprise a single legal
instrument. Either party may enter into and become bound by this Agreement by executing and
delivering any such counterpart.

               9.11. Sales of Eligible Policies. The parties understand that Acorn and the Sovereign
Entities’ right to sell an Eligible Policy applies only to Eligible Policies that may from time to
time be owned by the Sovereign Entities. Generally, Eligible Policies are not owned by the
Sovereign Entities.

 

 

[signature page follows]

 

 

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement under seal, as of
the day and year first above written.

	 	 	 	 	 
	 	SOVEREIGN LIFE FINANCING, LLC

 	 
	 	By:  	/s/ Jonathan Neuman 	 
	 	 	Name:  	Jonathan Neuman 	 
	 	 	Title:  	President 	 
	 
	 	IMPERIAL PREMIUM FINANCE, LLC

 	 
	 	By:  	/s/ Jonathan Neuman 	 
	 	 	Name:  	Jonathan Neuman 	 
	 	 	Title:  	President 	 
	 
	 	ACORN CAPITAL GROUP, LLC

 	 
	 	By:  	/s/ Paul Seidenwar 	 
	 	 	Name:  	Paul Seidenwar 	 
	 	 	Title:  	President 	 
	 

With the sole purpose of legally binding NFF Partners, LLC, a Delaware limited liability company,
to the provisions of Section 6.6 and Section 9.2 of this Settlement Agreement

	 	 	 	 	 
	 	NFF PARTNERS, LLC

 	 
	 	By:  	/s/ Mark Sullivan 	 
	 	 	Name:  	Mark Sullivan 	 
	 	 	Title:  	Authorized Signatory 	 

 

 

	 	 	 	 	 

EXHIBIT A

LIST OF AGREEMENTS BETWEEN PARTIES

EXPRESSLY TERMINATED UNDER SETTLEMENT AGREEMENT

Credit Agreement dated April 4, 2007 between Acorn, Sovereign and IPF (and any amendments thereto)

Letter Agreement dated April 4, 2007 between Sovereign and Acorn

Notes (or the applicable portion thereof) issued under the Credit Agreement to fund premium
payments for insurance policies that have lapsed prior to April 30, 2009.

Security Agreement dated April 4, 2007 between Sovereign and Imperial

Security Agreement dated April 4, 2007 between Sovereign and Acorn

Parent Pledge Agreement dated April 4, 2007 between IPF and Acorn

Master Account (Control) Agreement dated April 4, 2007 between Sovereign Life, Sovereign Bank and
Acorn (to be subsequently terminated in accordance with Section 2.4 of the Settlement Agreement)

Guaranty dated November 16, 2007 between Imperial Holdings, LLC and Acorn

Validity Guaranty dated April 4, 2007 between Jonathan Neuman and Acorn

Validity Guaranty dated April 9, 2007 between Antony Mitchell and Acorn

 

 

EXHIBIT B

SECURED REGISTERED PROMISSORY NOTE

	 	 	 

	“Effective Date”:
	 	[Month, Day, Year]
	“Insurance Policy”:
	 	[Insurance Company and Policy No.]
	“Insured”:
	 	[Insured named in Insurance Policy]
	“Initial Principal Amount”:
	 	XXXX
	“Interest Rate”:
	 	14.5%
	“Borrower”:
	 	Sovereign Life Financing, LLC
	“Lender”:
	 	[Name of Applicable Noteholder]

     FOR VALUE RECEIVED, the Borrower promises to pay to the Lender, at such place as the Lender
from time to time may designate in writing, the Initial Principal Amount together with interest,
from the Effective Date, at the Interest Rate and in the manner set forth below.

     1. Definitions. The following terms have the meanings set forth below:

          (a) “Borrower” has the meaning set forth in the heading of this Note.

          (b) “Collateral” has the meaning set forth in Section 9(a) herein.

          (c) “Disposition Event” has the meaning set forth in Section 7 herein.

          (d) “Effective Date” has the meaning set forth in the heading of this Note.

          (e) “Event of Default” has the meaning set forth in Section 11 herein.

          (f) “Governmental Authority” shall mean the government of the United States of America or of
any political subdivision thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity exercising executive,
legislative, judicial, taxing, regulatory or administrative powers or functions.

          (g) “Grantors” has the meaning set forth in Section 9(a) herein.

          (h) “Imperial” means Imperial Premium Finance LLC, a Florida limited liability company.

          (i) “Initial Principal Amount” has the meaning set forth in the heading of this Note.

          (j) “Insurance Policy” has the meaning set forth in the heading of this Note.

          (k) “Interest Rate” has the meaning set forth in the heading of this Note.

          (1) “Lender” has the meaning set forth in the heading of this Note.

 

 

          (m) “Lien” means any security interest, mortgage, deed of trust, pledge, lien, charge,
encumbrance, title retention agreement or analogous instrument or device, including the interest of
each lessor under any capitalized lease and the interest of any bondsman under any payment or
performance bond, in, of or on any assets or properties of a Person, whether now owned or hereafter
acquired and whether arising by agreement or operation of law.

          (n) “Maturity Date” has the meaning set forth in Section 3 herein.

          (o) “Maximum Permissible Rate” has the meaning set forth in Section 14 herein.

          (p) “Permitted Encumbrances” means, collectively, the lien created pursuant hereto and liens
imposed by law for taxes that are not yet due or are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves in conformity with U.S. generally accepted
accounting principles have been taken.

          (q) “Person” shall mean any individual, partnership, corporation, limited liability company,
unincorporated organization or association, trust or other entity.

          (r) “Post-Default Rate” has the meaning set forth in Section 4 herein.

          (s) “Proceeds” has the meaning given that term in the UCC.

          (t) “Register” has the meaning set forth in Section 15 herein.

          (u) “Secured Obligations” has the meaning set forth in Section 9(b) herein.

          (v) “Settlement Agreement” has the meaning set forth in Section 13 herein.

          (w) “Supplemental Funding” has the meaning set forth in Section 4.4 of the Settlement
Agreement.

          (x) “UCC” means Uniform Commercial Code as in effect from time to time in the State of New
York; provided, however, if by mandatory provisions of law, the perfection or the effect of
perfection or non-perfection of the security interest granted hereunder in the Collateral is
governed by the Uniform Commercial Code of a jurisdiction other than New York, “UCC” means the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of provisions hereof
relating to such perfection or effect of perfection or non-perfection.

          (y) “Underlying ILIT Loan Documents” means (i) each promissory note issued or assigned to
Borrower or Imperial in connection with a premium finance loan made by Borrower or Imperial to a
borrower to permit such borrower to pay insurance premiums and related expenses on the Insurance
Policy (each, an “ILIT Note”) and (ii) each loan application, loan agreement, policy guaranty,
collateral assignment, security agreement and each other
agreement, instrument or document executed or delivered in connection with an ILIT Note as each may
be amended, supplemented or otherwise modified from time to time and all other loan documents and
loan files of the Grantors directly related to the Collateral.

 

 

     2. Payments and Computations. Interest on the Initial Principal Amount of this
Note shall be computed on the basis of a 360-day year and 30-day month, as the case may be, and
actual days elapsed (including the first day but excluding the date of payment) occurring in the
period for which payable. Interest shall only accrue on the Initial Principal Amount outstanding
from time to time, as such Initial Principal Amount may be adjusted to reflect prepayments made in
accordance herein. Whenever any payment under this Note would be due on a weekend day or federal
holiday, such due date shall be extended to the next succeeding day that is not a weekend day or
federal holiday, and any such extension of such due date shall in such case be included in the
computation of payment of interest or any fees, as the case may be.

     3. Repayment of Note and Automatic Cancellation.

          (a) Borrower hereby promises to repay Lender on May 31, 2010, or in the case of Supplemental
Funding: the earlier of (i) the date that is thirteen (13) months following the Effective Date or
(ii) the occurrence of an event of default under any other promissory note issued by Borrower with
respect to the Insurance Policy (the “Maturity Date”) the Initial Principal Amount with interest
accrued thereon at the Interest Rate. Borrower also promises to pay Lender on the Maturity Date an
additional interest amount of $ ___.

          (b) The Lender acknowledges and agrees that this Note is a Note issued pursuant to the
Settlement Agreement and that the Note is subject to the cancellation provisions contained in
Section 6 of the Settlement Agreement. The Lender acknowledges and agrees that this Note will be
automatically satisfied, cancelled and will be null and void upon the occurrence of any event
described in Sections 6.1, 6.2, 6.3, 6.4 or 6.5 of the Settlement Agreement. Sections 6.1, 6.2,
6.3, 6.4 and 6.5 of the Settlement Agreement are hereby incorporated by reference.

     4. Interest. Accrued interest on this Note shall be payable on the date of payment or
prepayment of principal amounts owed under this Note. Notwithstanding the foregoing, Borrower
hereby promises to pay Lender interest at the rate of 15% (the “Post-Default Rate”) on any amount
outstanding hereunder if an Event of Default has occurred and has continued for a period in excess
of fifteen (15) days after Borrower has received written notice from the Lender of the occurrence
of an Event of Default. If applicable, the Post-Default Rate will be paid for the period commencing
on the date the Event of Default occurred and ending on the date the Event of Default has been
cured.

     5. Secured Registered Promissory Note. This Note shall be a secured registered
promissory note in favor of Lender. Upon the issuance of this Note, a notation will be made in the
Register (defined herein). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and Borrower may treat each person whose name is recorded in the
Register as “Lender” hereunder for the purposes of this Note. The Register shall be available for
inspection at any reasonable time and from time to time upon reasonable prior notice. Until Lender
has notified Borrower that a Note has been assigned pursuant to Section 15 and that the assignee’s
name and address and the principal amount of this Note being assigned has been
recorded in the Register, Borrower shall recognize Lender as “Lender” with respect to such Note.
For purposes of this Note any reference to “Lender” shall include any person which may become a
registered holder of the Note. This Note issued hereunder will be a registered instrument and will
be registered as to both principal and interest.

 

 

     6. Authorized Prepayments of Note. Borrower may prepay amounts owed under this Note at
any time. However, prior to any prepayment, Borrower must provide Lender no less than five (5) days
prior written notice of Borrower’s intention to make a prepayment. Mandatory Prepayment. If (a)
the Insurance Policy is sold by Borrower or Imperial (in connection with the exercise of its rights
under any loans made to the owner of the Insurance Policy or with the consent of the owner of the
Insurance Policy), (b) the insured under the Insurance Policy shall die, (c) if the Borrower or
Imperial shall receive any payments from the owner of the Insurance Policy in satisfaction of
obligations incurred under the Underlying ILIT Loan Documents or (d) the Insurance Policy is
successfully contested such that the premiums received by the issuer in connection with the
Insurance Policy are repaid to the owner of the Insurance Policy, Borrower, Imperial or any other
Person under their control (each, a “Disposition Event”), a portion of the proceeds of such
Disposition Event equal to the unpaid principal plus accrued interest shall be applied, first, to
pay all accrued and unpaid interest on this Note and second, to pay all outstanding principal
amounts due on this Note.

     7. Books and Records. Borrower and Imperial will each keep proper books of
record and account in which full, true and correct entries shall be made of all dealings and
transactions in relation to its business and activities as it relates to this Note and the
Collateral.

     8. Collateral and Information Regarding Collateral.

          (a) Each of Borrower and Imperial (each, a “Grantor” and together the
“Grantors”) hereby grants to U.S. Bank, as collateral agent (together with its successors and
assigns, the “Secured Party”), for the benefit of Lender, a first priority security interest in and
right of set-off against, and assigns to Secured Party, for the benefit of Lender, all of such
Grantor’s now existing or hereafter arising rights, title, interest, powers and privileges in and
to the following assets of such Grantor (collectively, the “Collateral”):

               (i) the Grantor’s right and interest in the insurance policy listed in the
heading of this Note (the “Insurance Policy”);

               (ii) the Underlying ILIT Loan Documents relating to the Insurance
Policy; and

               (iii) all Proceeds or products of any and all of the foregoing.

          (b) The Collateral shall secure the full and prompt payment, performance and
discharge when due (whether at stated maturity, by acceleration or otherwise) of all indebtedness
of Borrower arising under or in connection with this Note, whether now or hereafter existing and
whether for principal or interest (including any interest accruing thereon after maturity, or after
the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization
or like proceeding relating to Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) (collectively, the “Secured Obligations”).

     9. Representations, Warranties and Agreements. The Borrower hereby represents,
warrants and agrees as follows:

 

 

          (a) Title. Grantors (i) have good title to each item of Collateral in existence on
the date hereof, free and clear (except with respect to Permitted Encumbrances) of all Liens
except for the Lien in favor of Secured Party, (ii) will have, at the time Grantors acquire any
rights in Collateral hereafter arising, good title to each such item of Collateral free and clear
(except with respect to Permitted Encumbrances) of all Liens except for the Lien in favor of
Secured Party, (iii) will keep all Collateral free and clear (except with respect to Permitted
Encumbrances) of all Liens except for the Lien in favor of Secured Party, and (iv) will defend the
Collateral against all claims or demands of all Persons other than Secured Party. Except as
otherwise specifically set forth in the Settlement Agreement, without the prior written consent of
Secured Party, Grantors will not redeem, sell or otherwise dispose of, or grant any option with
respect to, the Collateral or any interest therein.

          (b) First Priority Security Interest. This Note is effective to create a valid
security interest in the Collateral. Upon the making of the appropriate filings pursuant to the
UCC, Secured Party will have a perfected first priority security interest in the Collateral
described in such filing to the extent perfection of such security interest is governed by Article
9 of the UCC (the “Article 9 Collateral”), securing the payment of the Secured Obligations.

          (c) Chief Executive Office. Each Grantor’s respective chief executive office and
principal place of business is located at the address set forth in Section 9 of the Settlement
Agreement.

          (d) Rights to Payment. To the knowledge of Grantors, each right to payment and each
instrument, document, and other agreement constituting or evidencing Collateral is (or will be when
arising, issued or assigned to Secured Party) the valid, genuine and legally enforceable
obligation, subject to no defense, setoff or counterclaim (other than those arising in the ordinary
course of business), of the account debtor or other obligor named therein or in Grantors’
respective records pertaining thereto as being obligated to pay such obligation. Grantors will
neither agree to any material modification or amendment nor agree to any forbearance, release or
cancellation of any such obligation, except in the ordinary course of business and in accordance
with past practices of Grantors, and will not subordinate any such right to payment to claims of
other creditors of such account debtor or other obligor; provided, that no material modification or
amendment shall be made to any Underlying ILIT Loan Document or Insurance Policy constituting
Collateral, nor shall Grantors agree to any forbearance, release or cancellation of any obligation
related to an Underlying ILIT Loan Document or Insurance Policy constituting Collateral.

          (e) Lender’s Right to Take Action. Each Grantor irrevocably authorizes Secured Party
(or its designee) at any time and from time to time to file in any jurisdiction any financing or
continuation statement and amendment thereto or any registration of charge, or otherwise,
containing any information required under the UCC or the law of any other applicable
jurisdiction (in each case, without the signature of Grantors to the extent permitted by applicable
law), necessary or appropriate in the judgment of Secured Party to perfect or evidence its first
priority security interest in, and Lien on the Collateral. Each Grantor agrees to provide to
Secured Party (or its designee) any and all information required under the UCC or the law of any
other applicable jurisdiction for the effective filing of a financing statement and/or any
amendment thereto or any registration of charge, mortgage or otherwise.

 

 

          (f) Miscellaneous Covenants. The Borrower will or will cause Imperial to:

               (i) furnish to Secured Party prompt written notice of any change (1) in any trade name used to
identify such Grantor in the conduct of its business or in the ownership of its properties, (2) in
the location of such Grantor’s chief executive office, its principal place of business, any office
in which it maintains books or records relating to this Note and the Collateral, (3) in such
Grantor’s identity or corporate structure, (4) in such Grantor’s Federal Taxpayer Identification
Number or (5) in such Grantor’s jurisdiction of organization. Each Grantor agrees not to effect or
permit any change referred to in the preceding sentence unless all filings have been made under the
UCC or otherwise that are required in order for Secured Party to continue at all times following
such change to have a perfected security interest in the Collateral.

               (ii) promptly notify Secured Party if its rights in any Collateral are impaired in any
material respect;

               (iii) at all reasonable times and upon receipt of at least five (5) business days’ prior
notice, permit Secured Party or its representatives to examine or inspect any Collateral, wherever
located, and to examine, inspect and copy Grantors’ books and records pertaining to the Collateral;

               (iv) keep accurate and complete records pertaining to the Collateral;

               (v) if Secured Party at any time so requests, promptly deliver to Lender any instrument or
document constituting Collateral not previously delivered to Secured Party, duly endorsed or
assigned by Grantors;

               (vi) from time to time execute such financing statements and other documents as Lender may
reasonably require in order to perfect the Lien and security interest granted hereunder;

               (vii) if either Grantor obtains any knowledge of any insolvency or bankruptcy proceeding of
any type instituted by or with respect to the issuer of the Insurance Policy, promptly notify
Secured Party of the same;

               (viii) not exercise any right or take any action with respect to the Collateral that would
dilute or adversely affect Secured Party’s rights in the Collateral or impose any restriction upon
the sale, transfer or disposition thereof.

     11. Events of Default. The occurrence of any one or more of the following events
shall constitute an “Event of Default” under this Note, whatever the reason for such event and
whether it shall be voluntary or involuntary, or within or without the control of Borrower, or be
effected by operation of law or pursuant to any judgment or order of any court or any order, rule
or regulation of any governmental or non-governmental body:

          (a) Borrower shall fail to pay when due (whether at maturity, by reason of
notice of prepayment or acceleration or otherwise) the principal of, or interest on, or under this
Note.

 

 

          (b) Borrower shall (i) commence a voluntary case under the Federal bankruptcy laws (as now or
hereafter in effect), (ii) file a petition seeking to take advantage of any other laws, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, winding up or composition or
adjustment of debts, (iii) consent to or fail to contest in a timely and appropriate manner any
petition filed against it in an involuntary case under such bankruptcy laws or other laws, (iv)
apply for, or consent to, or fail to contest in a timely and appropriate manner, the appointment
of, or the taking of possession by, a receiver, custodian, trustee, liquidator or the like of
itself or of a substantial part of its assets, domestic or foreign, (v) admit in writing its
inability to pay, or generally not be paying, its debts (other than those that are the subject of
bona fide disputes) as they become due, (vi) make a general assignment for the benefit of
creditors, or (vii) take any company action for the purpose of effecting any of the foregoing.

          (c) A case or other proceeding shall be commenced against Borrower seeking (i) relief under
the Federal bankruptcy laws (as now or hereafter in effect) or under any other laws, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, winding up or composition or
adjustment of debts, or (ii) the appointment of a trustee, receiver, custodian, liquidator or the
like of Borrower, or of all or any substantial part of the assets, domestic or foreign, of
Borrower, and such case or proceeding shall continue undismissed or unstayed for a period of sixty
(60) days.

          (d) Secured Party shall cease to have a first priority perfected security interest in any
Article 9 Collateral due to any action or inaction of the Grantors.

          (e) Either of the following shall occur with respect to the Insurance Policy: (i) a
determination is made by any Governmental Authority that there is no insurable interest in respect
to the Insurance Policy, or (ii) a change of law shall occur such that an insurable interest with
respect to the Insurance Policy is subject to challenge.

     12. Remedies.

          (a) Upon the occurrence and during the continuation of any Event of Default
hereunder, and after the lapse of a fifteen (15) day cure period set forth in the last sentence of
this paragraph, Secured Party may, at its option, declare all of the Secured Obligations or any of
them, notwithstanding any provisions thereof, immediately due and payable and the same thereupon
shall immediately become due and payable without presentment, demand, protest or further notice of
any kind, all of which are hereby expressly waived by Borrower. Secured Party may thereupon
exercise from time to time any and all rights and remedies of a secured party under the UCC (or any
other laws in effect in any jurisdiction where any rights and remedies may be asserted) and
any and all rights and remedies available to it as a result of this Note including, without
limitation, the right, to the maximum extent permitted by law, to exercise all voting, consensual
and other powers of ownership pertaining to the Collateral (including, without limitation, the
right to sell, transfer, pledge or redeem any and all of the Collateral) as if Secured Party were
the sole and absolute owner thereof (and Grantors agrees to take all such action as may be
appropriate to give effect to such right). In addition, upon the occurrence and continuation of any
Event of Default hereunder and after the lapse of a fifteen (15) day cure period set forth in the
last sentence of this paragraph, Secured Party and/or its representatives shall be permitted to
send and discuss with account debtors and other obligors under the Underlying ILIT Loan Documents
requests for verifications of amounts owed to Grantors thereunder. Notwithstanding the foregoing,
Borrower

 

 

shall have fifteen (15) days to cure any Event of Default that can be cured upon written
notice from Lender.

          (b) Without limiting the generality of the foregoing, Secured Party, without demand of
performance or other demand, presentment, protest, advertisement or notice of any kind (except any
notice required by applicable law referred to below) to or upon Grantors or any other Person (all
and each of which demands, defenses, advertisements and notices are hereby waived to the fullest
extent permitted by applicable law), may upon the occurrence and continuation of any Event of
Default hereunder and after the lapse of a fifteen (15) day cure period set forth in Section 12(a)
above, forthwith collect, receive, appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith sell, redeem, lease, assign, give option or options to purchase, or
otherwise dispose of and deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any exchange, broker’s
board or office of Secured Party or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or for future delivery
without assumption of any credit risk. Secured Party shall have the right upon any such public sale
or sales, and, to the extent permitted by applicable law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption
in Grantors, which right or equity is hereby waived or released to the fullest extent permitted by
applicable law. To the fullest extent permitted by applicable law, Grantors waive all claims,
damages and demands they may acquire against Secured Party arising out of the exercise by Secured
Party of any of its rights hereunder. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed reasonable and proper if given at
least ten (10) days before such sale or other disposition.

          (c) The proceeds of any collection, sale, or other realization of all or any part of the
Collateral pursuant hereto shall be applied to the Secured Obligations in such order as Secured
Party may elect.

          (d) For the purpose of carrying out the provisions of this Section 12, and taking any action
and executing any instruments, endorsements or assignments which Lender may deem necessary or
advisable to accomplish the purposes hereof, each Grantor hereby makes, constitutes and appoints
Lender (or its designee) its attorney-in-fact with full power of substitution, to act in its place
and stead, from time to time and at all times, in order to carry out the foregoing. Such
appointment is irrevocable and coupled with an interest.

          (e) The powers conferred on Secured Party hereunder are solely to protect Secured Party’s
interests in the Collateral and shall not impose any duty upon Secured Party to exercise any such
powers. Secured Party shall be accountable only for amounts that it actually receives as a result
of the exercise of such powers, and neither it nor any of its officers, directors, employees or
agents shall be responsible to Grantors for any act or failure to act hereunder. Secured Party’s
duty of care with respect to Collateral in its possession (as imposed by law) shall be deemed
fulfilled if Secured Party exercises reasonable care in physically safekeeping such Collateral or,
in the case of Collateral in the custody or possession of a bailee or other third Person, exercises
reasonable care in the selection of the bailee or other third Person, and Secured Party needs not
otherwise preserve, protect, insure or care for any Collateral. Secured Party shall not be
obligated to preserve any rights Grantors may have against prior parties, to realize on the

 

 

Collateral at all or in any particular manner or order, or to apply any cash proceeds of Collateral
in any particular order of application.

     13. Notices. Any notice or other communication required in connection with this Note
shall be provided in the manner set forth in the Settlement Agreement dated May 19, 2009 (the
“Settlement Agreement”).

     14. Usury. Anything to the contrary notwithstanding, the obligations of Borrower under
this Note shall not exceed the maximum non-usurious interest rate (the “Maximum Permissible Rate”),
if any, that at any time, or from time to time, may be contracted for, taken, reserved, charged, or
received under applicable law. If interest payable under this Note would exceed the Maximum
Permissible Rate, such interest payment shall automatically be reduced under this Note to the
maximum permitted amount, and interest for any subsequent period, to the extent less than the
maximum amount permitted for such period by the Maximum Permissible Rate, shall be increased by the
unpaid amount of such reduction. Any interest actually received for any period in excess of such
maximum allowable amount for such period shall be deemed to have been applied as a prepayment of
this Note.

     15. Assignment. (a) Lender may, upon prior written notice to Borrower of no less than
five (5) business days, assign to any person all or a portion of Lender’s rights and obligations
under this Note; provided that Lender may not assign any of its rights or obligations under this
Note to any person that is engaged in making loans to finance the premiums on insurance policies.
(b) An affiliate of the Lender shall maintain, on behalf of Borrower, a register for the
recordation of the names and addresses of each assignee and the Initial Principal Amount owing to
the Lender and each assignee from time to time (the “Register”). The entries in the Register shall
be conclusive and binding for all purposes, absent manifest error, and Borrower, and the Lender may
treat each person whose name is recorded in the Register as Lender hereunder for the purposes of
this Agreement. The Register shall be available for inspection by Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.

     16. Governing Law. This Note shall be governed by, and construed in accordance with,
the law of the State of New York, without giving effect to its conflict of laws provisions other
than Section 5-1401 of the New York General Obligations Law.

     17. Cancellation and Return of Note to Borrower. Upon the occurrence of any of the
events set forth in Section 6 or Section 2.4 of the Settlement Agreement, this Note shall be
automatically be deemed satisfied, cancelled, null and void. Upon the occurrence of an event set
forth in Section 6 of the Settlement Agreement, Lender (or the holder of this Note) shall return
this Note to Borrower. Upon the cancellation of this Note, Lender shall cause Secured Party to take
all reasonable steps to terminate the security interest and clear any liens on the Insurance
Policy, including, without limitation, the filing of UCC termination statements.

     18. Continuing Security Interest. Except where this Note is cancelled pursuant to
Section 17 above, this Note shall create a continuing security interest in the Collateral and shall
remain in full force and effect until the indefeasable payment in full of the Secured Obligations
and all other amounts payable under this Note. Upon the indefeasable payment in full of the Secured
Obligations and all other amounts payable under this Note, the security interest granted in this
Note shall terminate and all rights to the Collateral shall revert to Grantors. Upon any such

 

 

termination, Lender shall cause the Secured Party to (i) return to Grantors such of the Collateral
as shall not have been sold or otherwise applied pursuant to the terms of this Note, and (ii)
execute and deliver to Grantors such documents as Grantors shall reasonably request to evidence
such termination.

[Signature page on following page]

 

 

WHEREFORE, Borrower and Imperial have voluntarily executed this Note on this day of 2009.

	 	 	 	 	 
	 	SOVEREIGN LIFE FINANCING, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	Jonathan Neuman 	 
	 	 	Title:  	President 	 
	 

	 	 	 	 	 	 	 	 	 

	STATE OF FLORIDA

	 	 	)	 	 	 	 	 
	 

	 	 	)	 	 	SS.	 	 
	COUNTY OF PALM BEACH

	 	 	)	 	 	 	 	COUNTY OF PALM BEACH

     I HEREBY CERTIFY that the foregoing instrument was acknowledged before me this day of                                          2009 by
                                                                                 as
                     of Sovereign Life Financing, LLC. He/she is personally known to me
and/or produced an identification.

	 	 	 	 	 
	 	 

Notary Public

My Commission Expires:

Seal:

 	 
	 	 	 
	 
	 	IMPERIAL PREMIUM FINANCE, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	Jonathan Neuman 	 
	 	 	Title:  	President 	 
	 

	 	 	 	 	 

	STATE OF FLORIDA
	 	)	 	 
	 
	 	)	SS.	 
	COUNTY OF PALM BEACH
	 	)	 	 

     I HEREBY CERTIFY that the foregoing instrument was acknowledged before me this day of                                          2009 by
                                                                                 as
                     of Imperial Premium Finance, LLC. He/she is personally known to me and/or produced an
identification.

	 	 	 	 	 
	 	 

Notary Public

My Commission Expires:

Seal:

 	 
	 	 	 
	 	 	 
	 	 	 

 

 

	 	 	 	 	 

EXHIBIT C

LIST OF ELIGIBLE POLICIES AND AMOUNT FOR NEW NOTE TO BE ISSUED FOR

EACH ELIGIBLE POLICY UPON EXECUTION OF THIS AGREEMENT

[SEE ATTACHED]

 

Interest calculated to 5/14/09 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Interest	 	 	 	 	 	 	 	 	 	 
	Last Name	 	 	 	 	 	 	 	 	 	Interest	 	 	 	 	 	 	Interest	 	 	Subsequent	 	 	Subsequent	 	 	Total	 	 	Total	 	 	Maturity
	[Insureds’ Names Omitted]	 	First Name	 	Total Tranche A	 	 	Tranche A	 	 	Total Tranche B	 	 	Tranche B	 	 	Fundings	 	 	Fundings	 	 	Principal	 	 	Interest	 	 	Date
	 
	 
	 	 	 	 	 	 	282,285.71	 	 	 	40,021.84	 	 	 	—	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	282,285.71	 	 	 	40,021.84	 	 	31-May-10
	 
	 	 	 	 	 	 	137,085.90	 	 	 	39,092.33	 	 	 	—	 	 	 	—	 	 	 	40,653.93	 	 	 	1,663.89	 	 	 	177,739.83	 	 	 	40,756.22	 	 	31-May-10
	 
	 	 	 	 	 	 	—	 	 	 	 	 	 	 	544,959.74	 	 	 	63 218.69	 	 	 	—	 	 	 	 	 	 	 	544,959.74	 	 	 	63,218.69	 	 	31-May-10
	 
	 	 	 	 	 	 	179,046.00	 	 	 	43,990.61	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	 	 	 	 	179,046-00	 	 	 	43,990.61	 	 	31-May-10
	 
	 	 	 	 	 	 	—	 	 	 	—	 	 	 	94,973.68	 	 	 	10,410.18	 	 	 	 	 	 	 	—	 	 	 	94,973.68	 	 	 	10,410.18	 	 	31-May-10
	 
	 	 	 	 	 	 	72,774.49	 	 	 	19,668.32	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	72,774.49	 	 	 	19,668.32	 	 	31-May-10
	 
	 	 	 	 	 	 	82,215.00	 	 	 	20,133.54	 	 	 	—	 	 	 	 	 	 	 	—	 	 	 	 	 	 	 	82,215.00	 	 	 	20,133.54	 	 	31-May-10
	 
	 	 	 	 	 	 	42,245.32	 	 	 	11,658.40	 	 	 	—	 	 	 	—	 	 	 	8,261.95	 	 	 	32629	 	 	 	5,050,727	 	 	 	11,984.69	 	 	31-May-10
	 
	 	 	 	 	 	 	62,158.60	 	 	 	10,865.67	 	 	 	—	 	 	 	—	 	 	 	 	 	 	 	 	 	 	 	82,158.60	 	 	 	10,865.87	 	 	31-May-10
	 
	 	 	 	 	 	 	51,356 97	 	 	 	13,011.15	 	 	 	—	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	51,356.97	 	 	 	13,011.15	 	 	31-May-10
	 
	 	 	 	 	 	 	53,439.75	 	 	 	2,677.84	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	53,439.75	 	 	 	12,677.84	 	 	31-May-10
	 
	 	 	 	 	 	 	213,170.30	 	 	 	53,405.08	 	 	 	—	 	 	 	 	 	 	 	39,147.46	 	 	 	1,757.02	 	 	 	252,317.76	 	 	 	55,162.10	 	 	31-May-10
	 
	 	 	 	 	 	 	76,580.74	 	 	 	21,128.84	 	 	 	—	 	 	 	—	 	 	 	 	 	 	 	 	 	 	 	76,580.74	 	 	 	21,128.84	 	 	31-May-10
	 
	 	 	 	 	 	 	182,050.40	 	 	 	46,121.96	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	182,050.40	 	 	 	46,121.96	 	 	31-May-10
	 
	 	 	 	 	 	 	197,701.70	 	 	 	33 126.02	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	197,701.70	 	 	 	33,126.02	 	 	31-May-10
	 
	 	 	 	 	 	 	97,571.95	 	 	 	16 348.72	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	97,571.95	 	 	 	16,348.72	 	 	31-May-10
	 
	 	 	 	 	 	 	67,050.90	 	 	 	12,63a09	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	 	 	 	 	67,050.90	 	 	 	12,639.09	 	 	31-May-10
	 
	 	 	 	 	 	 	223,706.03	 	 	 	31,536.33	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	223,706.00	 	 	 	31,536.33	 	 	31-May-10
	 
	 	 	 	 	 	 	51,744.70	 	 	 	10,921.01	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	51,744.70	 	 	 	10,921.01	 	 	31-May-10
	 
	 	 	 	 	 	 	79,915.01	 	 	 	18,733.41	 	 	 	—	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	79,915.01	 	 	 	18,733.41	 	 	31-May-10
	 
	 	 	 	 	 	 	53,981.76	 	 	 	12,806.42	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	53,981.76	 	 	 	12,806.42	 	 	31-May-10
	 
	 	 	 	 	 	 	131,604.90	 	 	 	29 631.21	 	 	 	—	 	 	 	 	 	 	 	25,000.69	 	 	 	795.51	 	 	 	156,605.59	 	 	 	30,426.72	 	 	31-May-10
	 
	 	 	 	 	 	 	46,357.08	 	 	 	6,777.79	 	 	 	—	 	 	 	 	 	 	 	 	 	 	 	—	 	 	 	46,357.08	 	 	 	6,777.79	 	 	31-May-10
	 
	 	 	 	 	 	 	100,986.41	 	 	 	27 862.43	 	 	 	—	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	100,936.41	 	 	 	27,862.43	 	 	31-May-10
	 
	 	 	 	 	 	 	369,794.95	 	 	 	84,302.98	 	 	 	—	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	369,794.95	 	 	 	84,302.98	 	 	31-May-10
	 
	 	 	 	 	 	 	369,794.95	 	 	 	84,302.98	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	369,794-5	 	 	 	84,302.98	 	 	31-May-10
	 
	 	 	 	 	 	 	165 255.20	 	 	 	26 025.40	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	16,525,520	 	 	 	26,025.40	 	 	31-May-10
	 
	 	 	 	 	 	 	199,457.65	 	 	 	28 117.99	 	 	 	—	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	199,457,65	 	 	 	28,117.99	 	 	31-May-10
	 
	 	 	 	 	 	 	35,167.72	 	 	 	9,802.03	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	35,167.72	 	 	 	9,802.03	 	 	31-May-10
	 
	 	 	 	 	 	 	342,014.40	 	 	 	94,362.72	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	342,014.40	 	 	 	94,362.72	 	 	31-May-10
	 
	 	 	 	 	 	 	117,374.60	 	 	 	29,738.53	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	117,374.60	 	 	 	29,736.53	 	 	31-May-10
	 
	 	 	 	 	 	 	47,530.42	 	 	 	8,959.48	 	 	 	—	 	 	 	—	 	 	 	 	 	 	 	—	 	 	 	47,530.42	 	 	 	8,959.48	 	 	31-May-10
	 
	 	 	 	 	 	 	148,385.90	 	 	 	30,062.57	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	148,3-.90	 	 	 	30,062.57	 	 	31-May-10

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Interest	 	 	 	 	 	 	 	 	 	 
	Last Name	 	 	 	 	 	 	 	 	 	Interest	 	 	 	 	 	 	Interest	 	 	Subsequent	 	 	Subsequent	 	 	Total	 	 	Total	 	 	Maturity	 
	[Insureds’ Names Omitted]	 	First Name	 	Total Tranche A	 	 	Tranche A	 	 	Total Tranche B	 	 	Tranche B	 	 	Fundings	 	 	Fundings	 	 	Principal	 	 	Interest	 	 	Date	 
	 
	 
	 	 	 	 	 	 	227,008.81	 	 	 	33,190.58	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	227,008.81	 	 	 	33,190.58	 	 	31-May-10
	 
	 	 	 	 	 	 	4,920,720	 	 	 	13,715.14	 	 	 	 	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	4,920,720	 	 	 	13,715.14	 	 	31-May-10
	 
	 	 	 	 	 	 	283,083.50	 	 	 	76,507.25	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	283,083.50	 	 	 	76,507.25	 	 	31-May-10
	 
	 	 	 	 	 	 	182,243.25	 	 	 	41 032.57	 	 	 	—	 	 	 	—	 	 	 	 	 	 	 	 	 	 	 	18,224,325	 	 	 	41 032 57	 	 	31-May-10
	 
	 	 	 	 	 	 	—	 	 	 	—	 	 	 	117,862.88	 	 	 	12,247.92	 	 	 	—	 	 	 	—	 	 	 	117,862.88	 	 	 	12,247.92	 	 	31-May-10
	 
	 	 	 	 	 	 	—	 	 	 	—	 	 	 	358,059.80	 	 	 	37,208.38	 	 	 	—	 	 	 	—	 	 	 	358,059.80	 	 	 	37,208.38	 	 	31-May-10
	 
	 	 	 	 	 	 	41,096.34	 	 	 	11,106.86	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	41,096.34	 	 	 	11,106.86	 	 	31-May-10
	 
	 	 	 	 	 	 	26,094,727	 	 	 	65.374.56	 	 	 	—	 	 	 	 	 	 	 	41,244.27	 	 	 	1,312.37	 	 	 	302,191.64	 	 	 	66,686.93	 	 	31-May-10
	 
	 	 	 	 	 	 	107,818.38	 	 	 	22,755.67	 	 	 	—	 	 	 	—	 	 	 	27,484.28	 	 	 	774.9	 	 	 	135,302.66	 	 	 	23,530.57	 	 	31-May-10
	 
	 	 	 	 	 	 	—	 	 	 	—	 	 	 	281,790.72	 	 	 	30,826.13	 	 	 	—	 	 	 	—	 	 	 	281,790.72	 	 	 	30,826.13	 	 	31-May-10
	 
	 	 	 	 	 	 	108,600.94	 	 	 	15,309.72	 	 	 	—	 	 	 	—	 	 	 	 	 	 	 	—	 	 	 	108,600.94	 	 	 	15,309.72	 	 	31-May-10
	 
	 	 	 	 	 	 	46,306.33	 	 	 	13,205.02	 	 	 	—	 	 	 	—	 	 	 	10,888.09	 	 	 	489.12	 	 	 	57,194.42	 	 	 	13,694.14	 	 	31-May-10
	 
	 	 	 	 	 	 	56,872.48	 	 	 	13,698.37	 	 	 	—	 	 	 	—	 	 	 	 	 	 	 	—	 	 	 	56,872.48	 	 	 	13,688.37	 	 	31-May-10
	 
	 	 	 	 	 	 	101,515.83	 	 	 	15,987.33	 	 	 	—	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	101,515.83	 	 	 	15,987.33	 	 	31-May-10
	 
	 	 	 	 	 	 	147,971.78	 	 	 	42,196.62	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	147,971.78	 	 	 	42,196.62	 	 	31-May-10
	 
	 	 	 	 	 	 	192,768.80	 	 	 	52,098.45	 	 	 	—	 	 	 	—	 	 	 	52,390.09	 	 	 	1,228.77	 	 	 	245,158.89	 	 	 	53,327.22	 	 	31-May-10
	 
	 	 	 	 	 	 	233,551.50	 	 	 	47,316.89	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	233 551.50	 	 	 	47,316.89	 	 	31-May-10
	 
	 	 	 	 	 	 	—	 	 	 	—	 	 	 	341700.14	 	 	 	37156.7	 	 	 	27040.17	 	 	 	522.78	 	 	 	368,740.31	 	 	 	37,679.48	 	 	31-May-10
	 
	 	 	 	 	 	 	—	 	 	 	—	 	 	 	868353.7	 	 	 	129408.82	 	 	 	—	 	 	 	—	 	 	 	868,353.70	 	 	 	129,408.82	 	 	31-May-10
	 
	 	 	 	 	 	 	313,773.04	 	 	 	76,839.53	 	 	 	—	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	313,773.04	 	 	 	76,839.53	 	 	31-May-10
	 
	 	 	 	 	 	 	119,303.10	 	 	 	34,021.27	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	119,303.10	 	 	 	34,021.27	 	 	31-May-10
	 
	 	 	 	 	 	 	133,218.75	 	 	 	22,321.54	 	 	 	—	 	 	 	—	 	 	 	40082.6	 	 	 	1100.91	 	 	 	173,301.35	 	 	 	23,422.45	 	 	31-May-10
	 
	 	 	 	 	 	 	198,067.10	 	 	 	50,738.19	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	198,067.10	 	 	 	50,738.19	 	 	31-May-10
	 
	 	 	 	 	 	 	89,827.50	 	 	 	21,997.76	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	89,827.50	 	 	 	21,997.76	 	 	31-May-10
	 
	 	 	 	 	 	 	144,870.95	 	 	 	41,312.37	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	144,870.95	 	 	 	41,312.37	 	 	31-May-10
	 
	 	 	 	 	 	 	100,992.50	 	 	 	28,799.69	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	 	 	 	 	100,992.50	 	 	 	28,799.69	 	 	31-May-10
	 
	 	 	 	 	 	 	—	 	 	 	—	 	 	 	68454.13	 	 	 	7474.1	 	 	 	—	 	 	 	:	 	 	 	68,454.13	 	 	 	7,474.10	 	 	31-May-10
	 
	 	 	 	 	 	 	79,8-.33	 	 	 	12,567.60	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	79,801.33	 	 	 	12,567.60	 	 	31-May-10
	 
	 	 	 	 	 	 	—	 	 	 	—	 	 	 	945323.29	 	 	 	146971.51	 	 	 	111966.53	 	 	 	3156.83	 	 	 	1,057,289.82	 	 	 	150,128.35	 	 	31-May-10
	 
	 	 	 	 	 	 	—	 	 	 	—	 	 	 	83672.05	 	 	 	12469.46	 	 	 	9195.02	 	 	 	77.77	 	 	 	92,867.07	 	 	 	12,547.23	 	 	31-May-10
	 
	 	 	 	 	 	 	129,026.80	 	 	 	31,597.23	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	 	 	 	 	129,026.80	 	 	 	31,597.23	 	 	31-May-10

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Interest	 	 	 	 	 	 	 	 	 	 
	Last Name	 	 	 	 	 	 	 	 	 	Interest	 	 	 	 	 	 	Interest	 	 	Subsequent	 	 	Subsequent	 	 	Total	 	 	Total	 	 	Maturity
	[Insureds’ Names Omitted]	 	First Name	 	Total Tranche A	 	 	Tranche A	 	 	Total Tranche B	 	 	Tranche B	 	 	Fundings	 	 	Fundings	 	 	Principal	 	 	Interest	 	 	Date
	 
	 
	 	 	 	 	 	 	142,222.82	 	 	 	38,494.98	 	 	 	—	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	142,222.82	 	 	 	38,494.98	 	 	31-May-10
	 
	 	 	 	 	 	 	104,220.20	 	 	 	1,641,323.00	 	 	 	—	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	104,220.20	 	 	 	16,413.23	 	 	31-May-10
	 
	 	 	 	 	 	 	67,253.90	 	 	 	17,228.21	 	 	 	—	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	67,253.90	 	 	 	17,228.21	 	 	31-May-10
	 
	 	 	 	 	 	 	91,969.15	 	 	 	15,409.94	 	 	 	—	 	 	 	—	 	 	 	15200.81	 	 	 	336.74	 	 	 	107,169.96.	 	 	 	15,746.68	 	 	31-May-10
	 
	 	 	 	 	 	 	89,355.53	 	 	 	14,072.25	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	89,355.53	 	 	 	14,072.25	 	 	31-May-10
	 
	 	 	 	 	 	 	189,037.66	 	 	 	31,674.31	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	189,037.66	 	 	 	31,674.31	 	 	31-May-10
	 
	 	 	 	 	 	 	89,827.50	 	 	 	24,277.13	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	 	 	 	 	89,827.50	 	 	 	24,277.13	 	 	31-May-10
	 
	 	 	 	 	 	 	54,975.45	 	 	 	12,687.87	 	 	 	 	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	54,975.45	 	 	 	12,687.87	 	 	31-May-10
	 
	 	 	 	 	 	 	40,251.86	 	 	 	5,706.82	 	 	 	 	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	40,251.86	 	 	 	5,706.82	 	 	31-May-10
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	Total of 73 Policies
	 	 	 	 	 	$	8,496,792.97	 	 	$	1,887,485.64	 	 	$	3,705,150.11	 	 	$	487,391.89	 	 	$	448,555.89	 	 	$	13,542.91	 	 	$	12,650.498.97	 	 	$	2,388,420.44	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 

27

 

EXHIBIT D

GENERAL RELEASE

KNOW ALL PERSONS BY THESE PRESENTS:

     In conjunction with and subject to the terms and conditions of a written Settlement Agreement
of even date herewith (the “Settlement Agreement”), and for good consideration, the receipt and
sufficient of which is hereby acknowledged, Acorn Capital Group, LLC (“Acorn”), on behalf of itself
and its successors and assigns, hereby irrevocably remises, releases, acquits and forever
discharges Sovereign Life Financing, LLC, Imperial Premium Finance, LLC, Imperial Holdings, LLC,
their respective affiliates, principals, officers, directors, successors and assigns including but
not limited to Anthony Mitchell and Jonathan Neuman (personally and as corporate representatives)
(collectively, the “Releasees”), of and from any and all manner of action and actions, cause and
causes of actions, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises, variances, damages,
judgments, executions, claims and demands whatsoever, in law or in equity, which Acorn ever had,
now has, or which any employee, personal representative, successor, agent, heir or assign of Acorn,
hereafter can, shall or may have, against the Releasees, for, upon or by reason of any act,
omission or matter (without exception and whether known or unknown) arising from the beginning of
the world through the date of this General Release including, but not limited to, any matter
relating to any prior agreements between Acorn and any of the Releasees. Notwithstanding the
foregoing, nothing contained in this General Release shall release, discharge, modify or affect any
obligations arising under the Settlement Agreement or the Notes or Security Documents executed and
delivered pursuant thereto or in connection therewith.

WHEREFORE, ACORN HAS VOLUNTARILY EXECUTED THIS AGREEMENT ON THE DATE SHOWN BELOW.

Dated: May 19, 2009

	 	 	 	 	 
	ACORN CAPITAL GROUP, LLC

 	 	 
	By:  	 	 	 
	 	Name:  	Paul Seidenwar 	 	 
	 	Title:  	President 	 	 

28

 

	 	 	 	 	 

EXHIBIT E

GENERAL RELEASE

KNOW ALL PERSONS BY THESE PRESENTS:

     In conjunction with and subject to the terms and conditions of a written Settlement Agreement
of even date herewith (the “Settlement Agreement”), and for good consideration, the receipt and
sufficient of which is hereby acknowledged, Sovereign Life Financing, LLC (“Sovereign”) and
Imperial Premium Finance, LLC (“Imperial”) (the “Releasing Parties”), on behalf of themselves and
their respective successors and assigns, hereby irrevocably remise, release, acquit and forever
discharge Acorn Capital Group, LLC, its affiliates, principals, officers, directors, successors and
assigns (collectively, “Acorn”), of and from any and all manner of action and actions, cause and
causes of actions, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills,
specialties, covenants, contracts, controversies, agreements, promises, variances, damages,
judgments, executions, claims and demands whatsoever, in law or in equity, which the Releasing
Parties ever had, now has, or which any employee, personal representative, successor, agent, heir
or assign of the Releasing Parties, hereafter can, shall or may have, against Acorn, for, upon or
by reason of any act, omission or matter (without exception and whether known or unknown) arising
from the beginning of the world through the date of this General Release including, but not limited
to, any matter relating to any prior agreements between Acorn and any of the Releasing Parties.
Notwithstanding the foregoing, nothing contained in this General Release shall release, discharge,
modify or affect any obligations arising under the Settlement Agreement or the Notes or Security
Documents executed and delivered pursuant thereto or in connection therewith.

WHEREFORE, SOVEREIGN AND IMPERIAL HAVE VOLUNTARILY EXECUTED THIS AGREEMENT ON THE DATE SHOWN BELOW.

Dated: May 19, 2009

	 	 	 	 	 
	SOVEREIGN LIFE FINANCING, LLC

 	 	 
	By:  	 	 	 
	 	Name:  	Jonathan Neuman 	 	 
	 	Title:  	President 	 	 
	 
	IMPERIAL PREMIUM FINANCE, LLC

 	 	 
	By:  	 	 	 
	 	Name:  	Jonathan Neuman 	 	 
	 	Title:  	President 	 	 

29

 

	 	 	 	 	 

EXHIBIT F

FORM OF FUNDING NOTICE

FUNDING NOTICE

PART I: POLICY INFORMATION PROVIDED BY SOVEREIGN

Insured(s):

Insurer:

Policy No.: _____________________

Projected Policy Lapse Date: ____________

Premium Needed to Keep Policy In Force: ____________

Acorn’s 10 Days Notification Deadline Under Agreement: ____________

Date That Funding Notice Is Sent to Acorn by Sovereign: ____________

Method Used to Send to Acorn Funding Notice (check all that apply):

Facsimile ___ Overnight Mail ___ Certified U.S. Mail ___

Date Part II of Funding Notice Must be Completed by Acorn and Received by Sovereign: ___

PART II: ACORN’S INTENTION REGARDING FUTURE PREMIUM

Acorn hereby provides notice to Sovereign that it will ___/ will not ___ (check one) fund
the amount of the premium mentioned above needed to keep the above-referenced policy in force
beyond the projected policy lapse date.

	 	 	 	 	 
	 	 	 
	By:  	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 
	 

Date That Funding Notice Is Returned by Acorn to Sovereign: ____________

Method Used to Return to Sovereign Funding Notice (check all that apply):

Facsimile ___ Overnight Mail ___ Certified U.S. Mail ______

30

 

EXHIBIT G

LIST OF INSURANCE POLICIES WITH SPECIAL NOTIFICATION DEADLINE

[SEE ATTACHED]

31

 

Exhibit G

List of Insurance Policies with Special Notification Deadline

POLICIES

CURRENTLY IN

GRACE

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Acorn’s	 
	 	 	 	 	 	 	 	 	 	 	Policies Currently in	 	 	Polices Currently in	 	 	Notification	 
	First	 	 	Last	 	Policy #	 	 	Grace Date Due	 	 	Grace Amount Due	 	 	Deadline	 
	 	 	 	 	Insureds’ names and policy numbers omitted
	 	 	 	 	 	 	5/20/2009	 	 	$	14,859.79	 	 	 	5/19/2009	 
	 	 	 	 	 
	 	 	 	 	 	 	5/22/2009	 	 	$	6,313.37	 	 	 	5/21/2009	 
	 	 	 	 	 
	 	 	 	 	 	 	5/23/2009	 	 	$	17,481.26	 	 	 	5/21/2009	 
	 	 	 	 	 
	 	 	 	 	 	 	5/25/2009	 	 	$	104,361.92	 	 	 	5/21/2009	 
	 	 	 	 	 
	 	 	 	 	 	 	5/30/2009	 	 	$	23,668.63	 	 	 	5/23/2009	 
	 	 	 	 	 
	 	 	 	 	 	 	5/31/2009	 	 	$	20,462.46	 	 	 	5/23/2009	 
	 	 	 	 	 
	 	 	 	 	 	 	6/6/2009	 	 	$	5,864.26	 	 	 	5/29/2009	 
	 	 	 	 	 
	 	 	 	 	 	 	6/8/2009	 	 	$	111,546.00	 	 	 	6/1/2009	 
	 	 	 	 	 
	 	 	 	 	 	 	6/11/2009	 	 	$	28,826.21	 	 	 	6/4/2009	 
	 	 	 	 	 
	 	 	 	 	 	 	6/14/2009	 	 	$	27,486.12	 	 	 	6/5/2009	 
	 	 	 	 	 
	 	 	 	 	 	 	6/15/2009	 	 	$	32,984.02	 	 	 	6/8/2009	 
	 	 	 	 	 
	 	 	 	 	 	 	6/16/2009	 	 	$	64,328.36	 	 	 	6/9/2009	 
	 	 	 	 	Total of 13 policies
	 	 	 	 	 	 	6/19/2009	 	 	$	24,175.11	 	 	 	6/12/2009	 

Notwithstanding any other provisions of the Settlement Agreement, if Acorn
does not provide notice of its intent to fund an Eligible Policy set forth
in this Exhibit G by the Notification Deadline set forth herein for such
policy, any and every Note issued by Sovereign under the Settlement
Agreement that refers to the Eligible Policy shall automatically be deemed
satisfied, cancelled, null and void. Sovereign shall be returned the Note within
five (5) business days of having requested its return from Acorn.

32

 

EXHIBIT H

DISPOSITION EVENTS

IN ACCORDANCE WITH SECTION 3.5 OF THE SETTLEMENT AGREEMENT, A

DISPOSITION EVENT HAS OCCURRED FOR EACH OF THE FOLLOWING TWO

ELIGIBLE POLICIES:

	 	 	 	 	 	 	 	 	 
	Policy #	 	First Name	 	 	Last Name	 
	 
	 	 	 	 	 	 	 	 

[Policy Numbers and Insureds’ Names omitted]exv10w28

Exhibit 10.28

This Promissory Note consolidates, amends, restates and replaces that certain promissory note
dated May 22, 2009, between Holder and Borrower (defined below) in the amount of seven million six
hundred thirty-five thousand four hundred twenty-five United States dollars (US $7,635,425) and the
accrued but unpaid interest thereon as of August 30, 2009, in
the amount of three hundred forty-five
thousand one hundred sixty-three United States dollars (US $345,163). The original May 22, 2009,
promissory note is affixed hereto as an exhibit and has otherwise been cancelled. Additional
proceeds of this Promissory Note in the amount of nine million six hundred thirty-five thousand six
hundred eighty-three United States dollars (US $9,635,683) were used to reduce the outstanding
principal and interest under that certain consolidated, amended and restated revolving balloon
promissory note dated as of January 1, 2008, in a maximum principal amount of twenty-five million
United States dollars (US $25,000,000) between Borrower and Amalgamated International Holdings,
S.A. Amalgamated International Holdings, S.A., in turn, used the proceeds in the amount of nine
million six hundred thirty-five thousand six hundred eighty-three United States dollars (US
$9,635,683) to repay in full (A) the outstanding principal and interest in the amount of six
million one hundred twenty thousand three forty-one United States dollars (US $6,120,341) under
that certain balloon promissory note dated August 20, 2007, between Jasmund Ltd. and Amalgamated
International Holdings, S,A., in the original principal amount of five million United States
dollars (US $5,000,000), and (B) the outstanding principal and interest in the amount of three
million five hundred fifteen thousand three hundred forty-two United States dollars (US $3,515,342)
under that certain promissory note dated December 12, 2007, between Jasmund Ltd. and Amalgamated
International Holdings, S.A., in the original principal amount of three million United States
dollars (US $3,000,000), both of which having been satisfied in full were then cancelled.

PROMISSORY NOTE

			
	US $17,616,271
	 	Effective as of August 31, 2009

     FOR VALUE RECEIVED, the undersigned, Imperial Holdings, LLC, a
Florida limited liability company (“BORROWER”), promises to pay to the order of the
Branch Office
of SKARBONKA Sp. z o.o., the Luxembourg branch of a company organized in Poland that
has been established under the laws of the Grand Duchy of Luxembourg and registered with the
Luxembourg Trade and Companies Register under registration number B 144670 (hereafter, together
with any holder hereof, called “Holder”), at such place as the Holder may designate in writing to
BORROWER, in lawful money of the United States of America, and in immediately available funds, the
principal sum of SEVENTEEN MILLION SIX HUNDRED SIXTEEN THOUSAND
TWO HUNDRED SEVENTY-ONE
US DOLLARS (US $17,616,271) together with interest on the principal balance from time to
time outstanding hereunder at per annum rate equal to sixteen and one-half percent (16.5%).

     Interest shall accrue daily on the unpaid principal amount of this Promissory Note and will be
calculated on the basis of a 365-day year and the actual number of days elapsed by multiplying the
unpaid principal amount by the interest rate, multiplying the product thereof by the actual number
of days elapsed and dividing the product so obtained by 365. Unless due earlier
pursuant to the terms hereof, the outstanding principal balance hereof and all accrued
interest hereunder shall be payable in full by BORROWER at maturity on August 1, 2011,
provided that unless Holder provides notice on or prior to the third (3rd) business day prior to
August 1, 2011, or any future maturity date that is extended under this provision,

 

 

demanding payment on such date, the maturity date shall be extended automatically for an
additional sixty (60) days.

     In no event shall the amount of interest due or payable under this Promissory Note exceed the
maximum rate of interest allowed by applicable law and, in the event any such payment is
inadvertently paid by BORROWER or inadvertently received by the Holder, then such excess sum shall
be credited as a payment of principal, unless BORROWER shall notify the Holder in writing that
BORROWER elects to have such excess sum returned to it forthwith. It is the express intent of the
parties hereto that BORROWER not pay and the Holder not receive, directly or indirectly, in any
manner whatsoever, interest in excess of that which may be lawfully paid by BORROWER under
applicable law.

     BORROWER, at its option, may prepay the principal and/or interest evidenced by this Promissory
Note, either in whole or in part, at any time without penalty. All interest on the amount so
prepaid shall be due and payable with such prepayment. Any partial prepayment shall be applied
first to accrued interest and next to principal.

     Each of the following events shall constitute an “Event of Default” under this Promissory
Note; (i) failure of BORROWER to pay any principal, interest or other amount due hereunder when
due; (ii) any written representation or warranty made at any time by BORROWER to Holder in this
Promissory Note or in any other document, instrument, contract or agreement now or hereafter
entered into by BORROWER and Holder or executed by BORROWER in favor of Holder shall prove to have
been incorrect or misleading in any material respect when made; (iii) a default, event of default
or event which with the giving of notice or the passage of time or both would constitute a default
or event of default, shall have occurred under any other document, instrument, contract or
agreement now or hereafter entered into by BORROWER and Holder or executed by BORROWER in favor of
the Holder; (iv) a default, event of default or event which with the giving of notice
or the passage of time or both would constitute a default or event of default, shall have occurred
under any document, instrument, contract or agreement now or hereafter entered into that evidences
or secures indebtedness of BORROWER, Monte Carlo Securities, Ltd., CTL Holdings, LLC, or Imperial
Life Financing, LLC, or their respective successors or assigns; (v) a final judgment or order for
the payment of money, or any final order granting equitable relief, shall to entered against
BORROWER and such judgment or order, in the Holder’ s ‘reasonable opinion, has or will have a
materially adverse effect on the financial condition of BORROWER; (vi) BORROWER shall (a) commence
a voluntary case under the Bankruptcy Code of 1978, as amended or other federal bankruptcy law (as
now or hereafter in effect); (b) file a petition seeking to take advantage of any other laws,
domestic or foreign, relating to bankruptcy, insolvency, reorganization, winding up or composition
for adjustment of debts; (c) consent to or fail to contest in a timely and appropriate manner any
petition filed against it in an involuntary case under such bankruptcy laws or other laws; (d)
apply for or consent to, or fail to contest in a timely and appropriate manner, the appointment of,
or the taking of possession by, a receiver, custodian, trustee, or liquidator of itself or of a
substantial part of its property, domestic or foreign; (e) be unable to, or admit in writing its
inability to, pay Its debts as they become due; (f) make a general assignment for the benefit of
creditors; or (g) make a conveyance fraudulent as to creditors under any state or federal law; or
(vii) a case or other proceeding shall be commenced against BORROWER in any court of competent
jurisdiction seeking (a) relief under the Bankruptcy Code of 1978, as amended or other federal
bankruptcy law (as now or hereafter in effect) or under any other laws, domestic or
foreign, relating to bankruptcy, insolvency, reorganization, winding up or adjustment of debts or
(b) the appointment of a trustee, receiver, custodian, liquidator or the like for BORROWER or all
or any substantial part of the assets, domestic or foreign, of BORROWER.

     Upon the occurrence of an Event of Default (other than an Event of Default
described in clause (vi) or (vii) of the definition thereof), any and all of the obligations
hereunder, at the option of Holder, and without demand or notice of any kind, may be immediately
declared and thereupon shall immediately become in default and due and payable, and Holder may
exercise any and all rights and remedies available to it at law, in

2

 

equity or otherwise; provided, however, notwithstanding the foregoing provision or anything
contained in any documents securing the obligations hereunder, BORROWER shall have a period of
thirty (30) days after notice of an Event of Default described in clause (i) (v) of the definition
thereof to cure such Event of Default before the Holder may exercise its remedies with respect to
any of the collateral securing this Promissory Note. Upon the occurrence of an Event of Default
described in clause (vi) or (vii) of the definition thereof, any and all of the obligations
hereunder, without demand or notice of any kind, shall immediately become in default and due and
payable and the Holder may exercise any and all rights and remedies available to it at law, in
equity or otherwise.

     Time is of the essence of this Promissory Note.

     In addition to any rights now or hereafter granted under applicable law and not by way of
limitation of any such rights, BORROWER hereby authorizes the Holder, at any time or from time to
time, without notice to BORROWER or to any other person or entity, any such notice being hereby
expressly waived, to set-off and to appropriate and to apply any and all indebtedness at any time
held or owing by the Holder, to or for the credit or the account of BORROWER, against and on
account of all obligations of BORROWER owing hereunder or otherwise to the Holder, irrespective of
whether or not the Holder shall have declared any or all of such obligations of BORROWER to be due
and payable, and although such obligations shall be contingent or unmatured.

     BORROWER further agrees that, if any payment made by BORROWER or any other person is applied
to this Promissory Note and is at any time annulled, set aside, rescinded, invalidated, declared to
be fraudulent or preferential or otherwise required to be refunded or repaid, or the proceeds of
any property hereafter securing this Promissory Note is required to be returned by Holder to
BORROWER, its estate, trustee, receiver or any other party under any bankruptcy law, state or
federal law, common law or equitable cause, then, to the extent of such payment or repayment,
BORROWER’s liability hereunder (and any lien, security interest or other collateral securing such
liability) shall be and remain in full force and effect, as fully as if such payment had never been
made, or, if prior thereto any such lien, security interest or other collateral hereafter
securing BORROWER’s liability hereunder shall have been released or terminated by virtue of
such cancellation or surrender, this Promissory Note (and such lien, security interest or other
collateral) shall be reinstated in full force and effect, and such prior cancellation or surrender
shall not diminish, release, discharge, impair or otherwise affect the obligations of BORROWER in
respect of the amount of such payment (or any lien, security interest or other collateral securing
such obligation),

     BORROWER irrevocably waives the right to direct the application of any and all payments at any
time hereafter received by Holder from or on behalf of BORROWER and BORROWER irrevocably agrees
that Holder shall have the continuing exclusive right to apply any and all such payments against
the then due and owning obligations of BORROWER as Holder may deem advisable.

     BORROWER promises to pay all costs and expenses of collection of this Promissory Note and to
pay all reasonable attorneys’ fees incurred in such collection, whether or not there is a suit or
action, or in any suit or action to collect this Promissory Note or in any appeal thereof,

     No delay or failure on the part of the Holder in the exercise of any right or remedy shall
operate as a waiver thereof, and no single or partial exercise by the Holder of any right or remedy
shall preclude other or further exercise thereof or the exercise of any other right or remedy.

     All amendments to this Promissory Note, and any waiver or consent of the Holder, must be in
writing and signed by the Holder and BORROWER.

3

 

BORROWER hereby waives presentment, demand, notice of dishonor, protests and all other notices
whatever.

     THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
LUXEMBOURG WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

     This Promissory Note may be sold or assigned by the Holder to any other party without
restriction. The obligations of BORROWER under this Promissory Note may not be assigned by
BORROWER without the prior written consent of the Holder.

     This Promissory Note shall be binding upon the successors and assigns of BORROWER.

     Any notice to be given hereunder shall be in writing, shall be sent to the Holder’s address
as specified in the first paragraph hereof or BORROWER’s addresses set forth below its signature
hereto, as the case may be, and shall be deemed received (i) on the earlier of the date of receipt
or the date three business days after deposit of such notice in the United States
mail, if sent postage prepaid, certified mail, return receipt requested or (ii) when actually
received, if personally delivered.

     If any provision of this Promissory Note is declared invalid, illegal or unenforceable, such
invalidity, illegality or unenforceabilily shall not affect the validity, legality or
enforceability of the remaining provisions of this Promissory Note, which shall remain in full
force and effect,

     This Promissory Note may only be amended by a written instrument executed by all the Parties hereto.

     If no action is taken by the Holder in connection with any defaults or delayed performance
under this Promissory Note, such non-action by the Holder shall not be interpreted as a waiver or
a tacit revocation of the Holder’s rights under the Promissory Note.

4

 

     IN WITNESS WHEREOF, BORROWER and Holder have executed and
delivered this Promissory Note as of the date and year first written above.

	 	 	 	 	 
	 	IMPERIAL HOLDINGS, LLC

 	 
	 	By:  	/s/ Antony Mitchell 	 
	 	 	Name: Anthony Mitchell 	 
	 	 	Title:  	President 	 
	 
	 	Address for Notices:

701 PARK OF COMMERCE BLVD, STE. 301

BOCA RATON PL 33487

 	 
	 	 	 
	 	 	 
	 
	 	BRANCH OFFICE OF SKAARBONKA. SP. Z 0.0.

 	 
	 	By:  	/s/ John Kleynhans 	 
	 	 	Name:  	John Kleynhans 	 
	 	 	Title:  	Permanent Representative 	 
	 
	 	Address for Notices:

58, rue Charles
Martel
 L-2134
Luxembourg

 	 
	 	 	 
	 	 	 
	 	 	 
	 

5

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00177-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00177-of-00352.parquet"}]]