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It’s the economy “S” (“Sir”) “Patent Pending” January 6, 2010 revised Confidential.

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Presentation on theme: "It’s the economy “S” (“Sir”) “Patent Pending” January 6, 2010 revised Confidential."— Presentation transcript:

1 It’s the economy “S” (“Sir”) “Patent Pending” January 6, 2010 revised Confidential

2 State of the Union Jobs-Jobs-Jobs  Unemployment @ 9.8% and likely to stay at that level for some time (20M +++)  New Jobs moving overseas  Federal Deficit’s increasing  Government bail-outs costing taxpayers billions  Bank failures/VC firms capital frozen  Healthcare costly and future uncertain  Capital for start-ups and expansion capital unavailable or too costly to enable effective businesses to utilize

3 Private Market Solution 1. Monetization financing  Private investors provide funding 2. Government guarantee (Replaces privately arranged guarantee)  Potential link to job creation and taxes  Potential to establish government bond to certify guarantee (For government entities with credit issues) 3. Alternative investment in the form of an insurance wrap and or other investment option to protect government guarantee in the event of business failure.

4 Monetization Financing Step One  Competitive institutional pricing reflective of credit quality (currently offered @ 8-9%)  Option to add escalator for extended loans (libor +)  All lender costs included in fixed price quote  Private placement with off balance sheet structures available  Creative repayment options  Repayment terms syncopated with a project’s economics  Single payment 3-5 year repayment available

5 Monetization Financing  No requirement to issue equity or deal with Venture Capital firms  100% term debt financing available  Terms can permit collateral to be used for Tax-Exempt IRB or bank loans on Equipment and Real Estate + 100 % of costs and payment reserves  No credit committee review and no road show  No financial maintenance covenants  No post funding reporting requirements

6 Monetization Financing  Path to funding  Conference call to discuss details of project with principals involved  Completion of project data sheet and subsequent due diligence  Proof of support  Face to face between lender and IGIG  Closing date scheduled

7 Irrevocable Guarantee  Corporate Investment Grade Guarantor  Must be Moody’s or S&P rated  BBB 1 or better  Regardless of rating must be acceptable to investor  Must cover principal and interest for full term of loan  Irrevocable Letter of Credit  Issued or confirmed by an American “Money Center” Bank (Chase, Wells Fargo, Bank of America, etc.) acceptable to investor  Letter of credit based on assets controlled by the bank or guarantee of investor  Generated on behalf of a patron with sufficient assets in his account to cover the full amount of the loan payment (principal and interest)

8 Irrevocable Guarantee  Guaranteed Contract for Goods, Resources or Services  A signed, “Take or Pay” contract must be in place with an Investment Grade source, Irrevocably Guaranteeing the minimum “Pay” portion.  The minimum “Pay” portion of the contract obligates the receiver of the goods, resources or services to irrevocably pay the full contracted amount, regardless of whether or not they receive the contracted goods, resources or services  Payments are usually made directly to a lockbox  Surety Bond from a Bond Rated Entity (Guaranteed by an insurance company)  Must be issued by an United States registered Insurance Company, Moody’s AA rated.  Guarantees repayment of the full principal and interest at the maturity date of the loan  Insurance company takes security interest in assets of borrower

9 Loan Request Facts  Total Project cost (in US Dollars)$_____________  Total (US Dollars to be financed $_____________  A preliminary Use of Funds spreadsheet with a loan disbursement schedule, listing the suggested amount (s) and date (s) for the loan proceeds to be funded  Legal name of IGIG (Investment Grade Irrevocable Guarantor) & relationship to project (customer, sponsor, insurance, bonding company, etc.)  Length (years) of IGIG guarantee  Legal name of Project, and the name, title and mailing address to whom we should address the term sheet.  Brief bios of Principal owners/operators; why do they think they will be successful? Will they qualify for a Performance Bond by an insurance company?  Two or three page Executive Summary describing the project. Why will it be successful?  Your preferred repayment schedule, at 10% interest, amortized within the time of the IGIG guarantee. We can accept up to three years of skipped payments for construction and start-up projects.  Please provide the name, title Fed Ex address, phone, email and web page for: The person we should contact with our questions? The person to whom we should address the Term Sheet?

10 Government Guarantee Step Two  Federal, state, local irrevocable guarantee replacing current IGIG guarantees to back total investment = principal, wrap and interest on principal and wrap  Start-up companies generally unable to provide irrevocable guarantee  Potential for Federal Government program to provide open ended guarantee (tarp alternative)  (JDIC) JOBS DEPOSIT INSURANCE CORPORATION  Government tarp funds used to provide insurance for private investment dollars invested in job creation enterprises!  Invest tarp funds in senior life settlements to leverage insurance dollars  Insurance only needs to cover business failures  Focus job creation and tax benefits  City, County, State, Federal  Economic Development Council Pilot

11 Wrap Insurance to Protect Government Guarantee Step Three  Determine total $ (principal and interest minus recoverable $) needed 5-7 years to repay investor in the event of business/venture failure  Purchase Senior Life Settlement or similar alternative investment vehicle to enable repayment of debt only when business fails  JDIC  Lottery  Other  Government lien on Senior Life Settlement until debt retired  Government current budget issues require alternative to putting obligations on taxpayers to repay lender in the event of failure of the financed project

12 Benefits  Capable of funding start-up and expansion capital needs  Provides window 3-5 years interest deferral to allow operation to get established and create financial engine to repay debt  Reduce interest cost based on strength of government guarantee (libor +) for extended credit periods to protect against inflation and potential for increase in interest rates  With business success makes Senior Life Settlement funds available to participants for profit sharing

13 Example (1) For demonstration purposes only not a target for first investment  SOBE $283 million casino cruise ship opportunity  Dade County, Florida and/or Federal Government Guarantee  Senior Life Settlement wrap of $205 million  Payout in seven/fifteen years with successful project  $2 billion minus cost of insurance plus carry costs  ($205 million + 194 = $399m + cost of servicing life settlement policies)  Ladder Senior Life Settlement 5-15 year Life Expectancy to provide early liquidity

14 Finances (1) Project SoBE$283 Senior Life Settlement$205$100 M purchase of life settlement $105 M interest reserve Seven year resultRepay capital & interest @ 10% on $283m loan @ 8% $ 551.5m $485m Repay Senior Life Settlement capital & interest @ 10% on $100m loan @ 8% $205M leveraged $ 399m $351m $2b

15 SoBe (1) 7 years  150 + temporary jobs created  500 + permanent jobs created  Taxes paid annually  Payroll $4m annually  Property taxes $1m annually  Income taxes $50m annually  Job and tax multiplier effect 3x  Senior Life Settlement benefit if not needed for insurance <$ 1.4B  Insurance calculation: Recovery $300M from forced sale of assets, life settlement cover cost of interest on original loan, cost of purchase of life settlement and cost of interest coverage for life settlement.  Senior Life Settlement benefit if needed for insurance: <$900M

16 Example (2) must have Shoes $3 million investment $15 million investment YearNew JobsStores 1345 27311 313220 422835 536757 651380 7701110 YearNew JobsStores 1466 216624 335454 460394 5974154 61467234 72087334

17 Example (3) CMC Country Music Café Nashville Impact  $5.5 million line of credit  $3.6 million purchase Senior Life Settlement  $3.5 million interest for credit line and Senior Life Settlement  100 + jobs  Taxes paid annually  City  State  Federal  Payroll

18 Alternatives  Sell equity year 2-7 to retire debt  Pricing more attractive for private placement after business is operational  Sell equity year 2-7 to own Senior Life Settlement  Pay off obligations from free cash flow  Private fund to own Senior Life Settlement and provide loan protection for fee  Re-insurance to reduce cost of Senior Life Settlement

19 Next Step  Wealth Management: Confirm Senior Life Settlement platform (Completed)  Blue Orbis: Establish Government Guarantee  Ralph LaCivita, Controller, Naples, FL (Completed)  Steve LaCavita, University of Chicago Graduate Business School  White Paper (Meeting scheduled January)  Ed Burke, Sr. Alderman, Chicago (Yet to be scheduled)  Senator  Democrat (TBN)  Republican Governor Sununu  Berkshire Hathaway  President Obama  Blue Orbis: Explore alternative money sources to current source  Demonstration project  Detroit, Chicago or Nashville

20 Covered by Confidentiality Agreement  Don Skelton, Blue Orbis Capital Advisors  Tim Moody, Fortress Family Trust  David Tingley FFS Lending  Steve Braunstein FFS Lending  Corporate Attorney Kevin Carmichael, Salvatori & Wood  Attorney John Artz, Patents, Dickinson Wright  Rusty Whitley, CPA, Wilshire, Whitley & English  Greg Fortune, Prosperitas Group  Rey Pezeshkan, PK Studios  Ralph LaCivita, City of Naples  Governor Sununu, Sununu Enterprises  William Beynon, Capital Wealth  Blaine Ferguson, Capital Wealth  Jigs McHugh, Capital Wealth  David Schwalb, Schwalb Realty  Mark Brodson, Schwalb Realty  Harry Cendrowski, Cendrowski Corporate Advisors  George Raymond, Advisor

21 Recap  Lender program under Monetization finance formula  Government guarantee  Senior Life Settlement Wrap or comparable protection

22 New Contacts  Senator Carl Levin, Michigan (David Tingley)  Chicago-Pilot-Quite Agent (Harry Cendrowski )  Nashville-Pilot (CMC founders)  Detroit-Pilot (George Raymond, Board Member)  Nebraska Governor David Heineman, (David Schwalb)

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