Please provide examples of how the Option 1 waterfall would operate.

Option 1 mentions that at the maturity of a policy, the Investor "will receive at most only the" originally invested amount. This implies that I could receive less if the accrued costs and premiums exceed the difference between the original invested amount and the full proceeds upon Maturity. Is that correct?

What does the following mean: “you will be required to grant to the Funder a contingent right to receive a residual amount of the death benefit payable?”

Please provide examples of how the Option 1 waterfall would operate.

For example, assume that the face value of the Matured Policy is $100,000, and the investor's principal investment was $70,000. If the reimbursable expenses on the Matured Policy are $10,000 (and the amount of expenses will vary with the Maturity Date), then the waterfall distribution would operate as follows:

• The expenses totaling $10,000 would be reimbursed

• The investors would receive a return of their principal investment totaling $70,000, and

• The Funder would receive the $20,000 balance.

For purposes of these examples, the term “reimbursable expenses” include the fees of the Administrative Agent Lifetrade Management Co., N.V., and our and the Funder's allocable expenses. The Administrative Agent is an affiliate of the Funder with whom the Funder contracts to pay the premiums on the policy, periodically check on whether the policy has matured, and interact with the insurance company. The Administrative Agent files the insurance claim when the policy matures, collects the proceeds, and pays them out in accordance with the waterfall distribution.

If the reimbursable expenses are $30,000, then the waterfall distribution would be as follows:

• The expenses totaling $30,000 would be reimbursed, and

• The investors would receive a return of their principal investment totaling $70,000, and

• The Funder would receive no return on its premium payments

If the reimbursable expenses were $35,000, then the waterfall distribution would be as follows:

• The expenses totaling $35,000 would be reimbursed,

• The investors would receive $65,000 toward their total principal investment of $70,000,

• The Funder would receive no return on its premium payments.

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Option 1 mentions that at the maturity of a policy, the Investor "will receive at most only the" originally invested amount. This implies that I could receive less if the accrued costs and premiums exceed the difference between the original invested amount and the full proceeds upon Maturity. Is that correct?

Yes, that is correct. The Funder is not guaranteeing a minimum return to the investors or itself. However, the Funder will not receive a profit on a matured policy unless you and your fellow investors recoup the amount of your original investment.

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What does the following mean: “you will be required to grant to the Funder a contingent right to receive a residual amount of the death benefit payable?”

This is simply a legal description of the transaction, noting that the lender may receive amounts of death benefits (after payment of the waterfall elements, including the investor's original invested amount), if any, left after the waterfall payments.

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