Investors — Option 2

If both (a) Option 1 is approved and (b) the investors in a particular policy whose investments represent at least 40% of the face value of the policy have expressed an interest in Option 2, then those investors will be deemed to have elected Option 2 and agreed to self-finance their share of the policy’s premiums as described below. At maturity of the policy(ies), an Option 2 investor will receive at most only the investor’s original percentage interest in such Matured Policy (as defined above) times the face value of the Matured Policy.

Under Option 2, you will be obligated to (i) reimburse the Funder for all premiums and related expenses it has paid on your behalf after September 1, 2007, and (ii) pay your share of all future premiums and expenses required to maintain the policy in force until maturity. Your share of those premiums and related expenses will be based on your Original Percentage Interest. An Administrative Agent, Lifetrade Management Company, N.V., will administer Option 1 and Option 2. The Original Percentage Interest is equal to the investor’s initial principal investment divided by the total initial principal investment in that Policy.

Option 2 requires you to maintain from your own sources of funds a premium and administrative expense reserve set by the Administrative Agent. This reserve initially will include the amount required to reimburse the Funder. A non-binding initial Option 2 reserve estimate for your policies is enclosed with our letter to you.

Due to privacy law restrictions you cannot pay the premium directly to the insurance company; and the Administrative Agent must perform this function. We are working out the specific details with the Administrative Agent, but if you elect Option 2, you are agreeing to sign an administration agreement with the Administrative Agent that includes a provision holding us harmless.

Because there are multiple investors in every policy, Option 2 is only feasible if Option 1 is approved and the investors whose investments represent at least 40% of the face value of a policy elect Option 2 by signing and returning a joinder agreement after checking the Option 2 election box.

When the proceeds of a Matured Policy become payable on the insured’s death, the proceeds will be distributed under Option 2 as follows, please note that this waterfall example includes references to Option 1 investors because Matured Policies may include a combination of Option 1 and Option 2 investors – the Option 2 distribution takes this contingency into account:

	first, to the Funder and the Policyowners (ourselves) to reimburse these persons for their reasonable costs incurred in connection with the Transaction; the unreimbursed Transaction costs accrued at the time a policy matures will be divided among all of the policies, including the Matured Policy, based on their respective face amounts;
	second, to the Funder’s affiliate Lifetrade Management Company, N.V., and any other Administrative Agent(s) approved by the Funder an amount equal to all accrued fees due and owing to such Administrative Agents and to the Funder an amount equal to all such amounts previously paid by the Funder to such Administrative Agents in respect of the Matured Policy at such time;
	third, to the Funder and any other indemnified party affiliated with the Funder the amount, if any, of all accrued and unpaid fees, reimbursements and indemnities owing to the Funder and such other indemnified parties under the Transaction Documents, e.g., fees and expenses related to the Matured Policy, and a portion of the indirect overhead expenses related to administration of these proposed agreements; the indirect, unreimbursed costs accrued at the time a policy matures will be divided among all of the then in-force policies, including the Matured Policy, based on their respective face values;
	fourth, to each Option 2 investor in such Matured Policy in an amount not to exceed the Option 2 investor’s original percentage interest in such Matured Policy (as defined above) times the face value of the Matured Policy;
	fifth, to the Option 1 investors who (while acting in an Option 2 investor capacity) made subsequent investments in the Matured Policy based on the Option 1 investor’s subsequent investment in the Matured Policy divided by the total subsequent investments in the Matured Policy by all Option 1 investors, but not to exceed such investor’s subsequent investments in that Matured Policy;
	sixth, to each Option 1 investor in the Matured Policy an amount based on the investor’s Residual Percentage Interest but not to exceed such investor’s initial principal investment in that Matured Policy; the Residual Percentage Interest is equal to the investor’s original percentage interest divided the sum of the original percentage interest for all Option 1 investors in the Matured Policy, and
	seventh, the remainder of the proceeds on such Matured Policy, if any, to the Funder.
Each distribution in the waterfall is made only after giving effect to the distributions under the proceeding paragraphs..

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Depending on when the policy matures you may not receive sufficient proceeds to fully recover your investment in the policy. If you elect Option 2 and then default on your premium payment obligation, Option 1 will be implemented for you after such default. Also, if a defaulting Option 2 investor causes the policy to fall below the 40% of face value threshold for Option 2 treatment, then all other Option 2 investors in that policy will be converted to Option 1 investors.

If you are interested in Option 2, please let us know by checking the Option 2 election box on the joinder agreement, signing the joinder agreement and returning them to us as soon as possible. If Option 2 is elected, we will send you an Option 2 cost projection and instructions on how to implement Option 2.

Instructions

YOU MUST MAKE AN OPTION ELECTION NO LATER THAN JULY 31, 2008 (THE “OPTION ELECTION DEADLINE”).

If a policy matures before the Option Election Deadline, you will receive your allocable share of the death benefit net of the sum of your pro rata share of the amount of premium payments that the Funder has advanced since September 1, 2007, and related Funder and Policyowner expenses.

To elect Option 2, you must check the Option 2 election box on the joinder agreement, and sign and return the joinder agreement to us by the Option Election Deadline; however, please keep in mind that this will count as a vote in favor of Option 1 and does not guarantee your participation in Option 2 as explained above.

Please mail your executed joinder agreement and related forms to us a P.O. Box 33253, Washington, DC, 20033-0253. We must receive your joinder agreement no later than July 31, 2008, in order for your joinder agreement to count toward the Option 1 approval threshold of 60% of all investors. If you wish to send us your executed joinder agreement by courier service, such as Federal Express or UPS, please address the envelope to 2100 M St., NW, Suite 170-345, Washington, DC, 20037-1233.

If you or your advisors have any questions, please write to us at the letterhead address or email us at questions@privatesectorfix.info.