GWG HOLDINGS, INC. AND SUBSIDIARIES PRO FORMA WITH BENEFICIENT
INVESTMENT
PRO FORMA STATEMENT
OF OPERATIONS
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Year
Ended December 31, 2017
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Consolidated
GWG Holdings, Inc.
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Equity
Investment in Beneficient
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Effects
of Transaction
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Reciprocal
Interest Eliminations Beneficient
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Pro Forma
Consolidated GWG Holdings, Inc.
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REVENUE
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Gain on life
insurance policies, net
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$
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62,114,403
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$
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62,114,403
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Equity income from Beneficient
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-
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8,131,666
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(a)
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2,252,456
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(d)
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10,384,122
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MCA income
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554,341
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554,341
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Interest income – Commercial
Loan
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-
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5,099,505
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(b)
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(2,549,753
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)(c)
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2,549,753
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Interest
and other income
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1,465,174
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1,465,174
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TOTAL
REVENUE
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64,133,918
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8,131,666
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5,099,505
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(297,297
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)
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77,067,792
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EXPENSES
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Interest expense
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54,419,444
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10,080,872
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(e)
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64,500,316
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Employee compensation and
benefits
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14,869,749
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14,869,749
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Legal and professional fees
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5,095,643
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5,095,643
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Provision for MCA advances
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1,308,000
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1,308,000
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Other
expenses
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11,170,676
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11,170,676
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TOTAL
EXPENSES
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86,863,512
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-
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10,080,872
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-
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96,944,384
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INCOME
(LOSS) BEFORE INCOME TAXES
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(22,729,594
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)
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8,131,666
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(4,981,367
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)
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(297,297
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)
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(19,876,591
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)
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INCOME
TAX EXPENSE (BENEFIT)
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(2,097,371
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)
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3,290,885
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()f
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(2,015,959
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)(f)
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(120,316
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)(f)
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(942,761
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)
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NET INCOME (LOSS)
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(20,632,223
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)
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4,840,781
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(2,965,408
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)
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(176,981
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)
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(18,933,830
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)
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Preferred
stock dividends
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12,702,341
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12,702,341
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NET
LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS
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$
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(33,334,564
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)
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$
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4,840,781
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|
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$
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(2,965,408
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)
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$
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(176,981
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)
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|
$
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(31,636,171
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)
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NET LOSS PER SHARE
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Basic
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$
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(5.72
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)
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$
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(0.70
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)
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Diluted
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$
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(5.72
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)
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$
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(0.70
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)
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WEIGHTED AVERAGE SHARES
OUTSTANDING
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Basic
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5,826,033
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39,194,092
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(g)
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|
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45,020,125
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Diluted
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5,826,033
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39,194,092
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(g)
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45,020,125
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Notes:
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(a )
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Reflects approximately
88% (GWG initial Common ownership) of net income available to common equity holders
prior to addressing any reciprocal interest eliminations. For the period from inception
(September 1, 2017) to December 31, 2017, assuming the Commercial Loan became effective
as of September 1, 2017, Beneficient had revenues and gross profit of $28,160,134 and
income from continuing operations and partnership net income of $15,929,239.
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(b)
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Gross
interest income on $300M Commercial Loan with Beneficient at 5.0% for the period 9-1-17
through 12-31-17
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(c )
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Interest income on Commercial
Loan to Beneficient remaining unpaid at the period end; reflecting the 50% of interest
that is accrued and is payable at maturity. The elimination of intra-entity profits (i.e. remaining on the
balance sheet) is in accordance with ASC 323-10.
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$
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5,099,505
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|
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Gross Interest Income (for
GWG) / Expense (for Beneficient) on Commercial Loan for the period 9-1-17 through 12-31-17
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50.00
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%
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Portion
of Interest not settled and paid monthly (i.e. payment deferred until maturity)
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$
|
2,549,753
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|
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Annual
Interest Income (for GWG) (Expense for Beneficient) on Commercial Loan to be eliminated as a Reciprocal Interest
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(d )
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Reflects GWG's
approximate ownership share of the Beneficient interest expense eliminated for the purpose
of recording GWG's Equity Method investment in Beneficient. The interest expense (i.e.
the amount directly within Beneficient's statement of operations offsetting GWG's interest
income on the Commercial Loan to Beneficient remaining unpaid at the period end) is eliminated
prior to calculating the final amount attributable to common equity holders - having
the effect of increasing this amount. GWG's recognizes its portion according to its common
ownership percentage.
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$
|
2,549,753
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|
|
Interest Expense (on
Beneficient's Statement of Operations) on Commercial Loan eliminated as a Reciprocal Interest
|
|
|
0.00
|
%
|
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Less: Portion of Interest Expense
Elimination available for Preferred (i.e. Non-Participating Convertible Equity Holders)
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|
$
|
2,549,753
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|
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Adjustment of Net Income
available to Common Equity Holders resulting from elimination of Reciprocal Interest for the period September 1, 2017
through December 31, 2017
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88.34
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%
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|
GWG share of Common Equity
as of Transaction Date
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$
|
2,252,456
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|
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Reciprocal
Interest elimination impact on Equity Income recognized on GWG's Equity Method Investment in Beneficient
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(e)
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Interest expense
on $403M L Bonds issued to Seller Trusts in connection with GWG's investment in Beneficient for the period September 1, 2017
through December 31, 2017.
The L Bonds issued are at 7.5%.
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(f)
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Equity
investment and effects of the transaction reflected at GWG's gross tax rate for
2017 of 40.47%. For clarity of presentation, GWG did not attempt to reflect the potential
pro forma impact of unwinding a portion of actual valuation allowance taken in 2017.
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(g)
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Additional
shares of GWG issued in connection with the Beneficient transaction.
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Annex
D
DESCRIPTION
OF THE L BONDS
General
The
L Bonds are secured obligations of GWG Holdings. The L Bonds will be issued under the amended and restated indenture between us
and Bank of Utah as the indenture trustee, dated October 23, 2017, which amends and restates the original indenture dated October
19, 2011 and as may be amended or supplemented from time to time (referred to herein as the “indenture”). The terms
and conditions of the L Bonds include those stated in the indenture and those made part of the indenture by reference to the Trust
Indenture Act of 1939. The following is a summary of the material provisions of the indenture. For a complete understanding of
the L Bonds, you should review the definitive terms and conditions contained in the indenture, which include definitions of certain
terms used below. A copy of the indenture has been filed with the SEC as an exhibit to the registration statement of which this
prospectus is a part, and is available from us at no charge upon request.
The
following is a summary of the material terms associated with the L Bonds:
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●
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The
L Bonds are general secured obligations of GWG Holdings. The obligations are secured
by a grant of a security interest in all of the assets of GWG Holdings, which assets
will serve as collateral for our obligations under the L Bonds. This grant of a security
interest is effected pursuant to a pledge and security agreement attached to the indenture.
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●
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The
L Bonds are fully and unconditionally guaranteed by our wholly owned direct subsidiary,
GWG Life, but otherwise are not guaranteed by any other person or entity. The guarantee
is backed by a grant of a security interest in all of the assets of GWG Life, which assets
will serve as additional collateral for our obligations under the L Bonds. Chief among
these assets is GWG Life’s ownership interest in DLP IV. This guarantee is effected
pursuant to provisions contained in the indenture.
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●
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The
L Bonds are also secured by a pledge of the equity ownership interests in GWG Holdings
beneficially owned by its principal stockholders — Jon R. Sabes and Steven F. Sabes
— which pledge is effected pursuant to a pledge and security agreement attached
to the indenture.
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●
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Through
DLP IV, we are party to a $300 million senior secured term loan with LNV/CLMG. The amount
outstanding under this facility was $222.5 million at December 31, 2017. The L Bonds
will also be junior to any other senior lending facility we may later obtain.
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●
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The
L Bonds are not savings accounts, certificates of deposit (CDs) or other forms of “deposits,”
and are not insured by the FDIC or any other governmental agency.
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●
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The
L Bonds are not directly secured by any life insurance assets not owned by GWG Life.
Substantially all of our life insurance assets are held by DLP IV. Although GWG Life’s
equity ownership interest in DLP IV is an asset in which GWG Life has, pursuant to its
guarantee, granted a security interest to serve as collateral for obligations under the
L Bonds, the payment on such equity interest will be subordinate to the interests of
creditors of DLP IV, including our senior creditor LNV/CLMG.
|
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●
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The
L Bonds do not have the benefit of a “sinking fund” for the retirement of
principal.
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|
●
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The
L Bonds are not convertible into our capital stock or other securities.
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|
●
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We
have the option to call and redeem the entire outstanding principal balance and accrued
but unpaid interest of any L Bonds at any time and without premium or penalty. If we
elect to call and redeem your L Bonds, those redeemed L Bonds will cease to accrue interest
after the redemption date under the terms and subject to the conditions of the indenture.
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|
●
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Except
in limited circumstances (death, bankruptcy or total permanent disability), L Bond holders
will have no right to require us to redeem any L Bond prior to its maturity date. Any
early redemption will be for the total outstanding principal balance and accrued but
unpaid interest. If we in our sole discretion nonetheless elect to accommodate a redemption
request, we will redeem the entire (but not less than the entire) outstanding principal
balance and accrued but unpaid interest of the L Bonds and may impose a redemption fee
of 6% against the outstanding principal balance of the L Bond redeemed. This fee will
be subtracted from the amount paid to you.
|
The
L Bonds will be represented by “Units,” with each whole Unit representing $1,000 in principal amount (USD) of L Bonds.
Accordingly, L Bond Units will be sold at 100% of their principal face amount. Throughout this prospectus, we refer to L Bond
Units simply as “L Bonds.” The minimum investment amount in the L Bonds will be 25 Units, or $25,000. Above that minimum
amount, L Bonds may be purchased in whole Units. Subject to the minimum investment amount, you may select the principal amount
and term of the L Bonds (ranging from two to seven years) you would like to purchase when you subscribe. The interest rate of
your L Bonds will remain fixed until maturity. Depending on our capital requirements, we may not, however, always offer L Bonds
with the particular terms you seek. See “Description of the L Bonds — Interest Rate and Maturity” below.
Upon
acceptance of your subscription, we will create an account in a book-entry registration and transfer system for you, and credit
the principal amount of your subscription to your account. We will also send you a purchase confirmation that will indicate our
acceptance of your subscription. If your subscription is rejected, all funds deposited will be promptly returned to you without
any interest. See “— Registration and Exchange” below. Alternatively, you may subscribe for L Bonds as a direct
participant with Depository Trust Company (DTC settlement). See “Plan of Distribution — Settlement Procedures”
for more information.
Investors
whose subscriptions for L Bonds have been accepted and anyone who subsequently acquires L Bonds in a qualified transfer are referred
to as “holders” or “registered holders” in this prospectus. We may modify or supplement the terms of the
L Bonds described in this prospectus from time to time in a supplement to the indenture and a supplement to this prospectus. Except
as set forth under “— Amendment, Supplement and Waiver” below, any modification or amendment will not affect
L Bonds outstanding at the time of such modification or amendment.
The
L Bonds are transferable pursuant to the terms of the indenture. The L Bonds may be transferred or exchanged for other L Bonds
of the same series and class of a like aggregate principal amount (i.e., the same number of Units) subject to limitations contained
in the indenture. We will not charge a fee for any registration, transfer or exchange of L Bonds. However, we may require the
holder to pay any tax, assessment fee, or other governmental charge required in connection with any registration, transfer or
exchange of L Bonds. The registered holder of any L Bonds will be treated as the owner of such L Bond Units for all purposes.
Denomination
You
may purchase L Bonds in the minimum amount of 25 Units, representing a minimum principal amount of $25,000, and in any whole Unit
amounts in excess thereof. You will determine the exact number of L Bond Units you purchase when you subscribe. You may not cumulate
multiple purchases L Bond Units in amounts less than 25 Units to satisfy the 25 Unit minimum requirement. In our discretion, however,
we may waive the 25 Unit minimum purchase requirement for any investor.
Term
We
may offer L Bonds with the following terms to maturity: two years, three years, five years, and seven years.
You
will select the term of the L Bonds you purchase when you subscribe. You may purchase multiple L Bonds with different terms by
filling in investment amounts for more than one term on your Subscription Agreement. Nevertheless, during this offering we may
not always offer L Bonds with each of the maturity terms outlined above.
The
actual maturity date will be on the last day of the month in which the L Bond matures (i.e., the month in which the L Bond’s
term ends). For example, if you select a two-year term and your L Bond becomes effective on January 1, 2018, then the actual maturity
date will be January 31, 2020. After actual maturity, we will pay all outstanding principal and accrued but unpaid interest on
the L Bond no later than the fifth day of the calendar month next following its maturity (or the first business day following
the fifth day of such month). So, in the case of an L Bond with a maturity date of January 31, 2020, actual payment will be made
on or prior to February 5, 2020 (unless such date is not a business day, in which case actual payment will be made on the next
business day). The L Bonds do not earn interest after the maturity date or any date set for prepayment.
Should
the original L Bond holder (x) no longer be the holder of the L Bond or (y) be unavailable, or a change in payee be necessary,
such as in the case of a surviving estate, we may require a copy of the executed assignment to any transferee, or an order from
a court or probate commission, as the case may be, in order that we know the principal is returned to the rightful party.
Interest
Rate
The
rate of interest we will offer to pay on L Bonds at any particular time will vary based upon market conditions, and will be determined
by the term to maturity of the L Bonds, our capital requirements and other factors described below. The interest rate on particular
L Bonds will be determined at the time of subscription or renewal and then remain fixed for the original or renewal term of the
L Bond. We will establish and may change the interest rates payable for L Bonds of various terms and at various investment levels
in an interest rate supplement to this prospectus.
We
may offer L Bonds that earn incrementally higher interest rates when, at the time they are purchased or renewed, the aggregate
principal amount of the L Bond portfolio of the holder increases. If applicable, the interest rates payable at each level of investment
will be set forth in an interest rate supplement to this prospectus. We may change the interest rate for any or all maturities
to reflect market conditions at any time by supplementing this prospectus. If we change the interest rates, the interest rate
on L Bonds issued before the date of the change will not be affected.
Payments
on the L Bonds; Paying Agent and Registrar
Investors
will have the opportunity to select whether interest on their L Bonds will be paid monthly or annually. For investors using direct
settlement with the Company, this selection opportunity will be presented in the Subscription Agreement.
Interest
will accrue on the L Bonds at the stated rate from and including the effective date of the L Bond until maturity. The effective
date of an L Bond will be as follows:
|
●
|
If
you purchase an L Bond through DTC settlement, the effective date of your L Bond purchase
will be the date your subscription is accepted by the Company.
|
|
●
|
If
you purchase an L Bond through direct settlement with the Company, the effective date
of your L Bond purchase will be the following, as applicable: (i) in cases where you
pay for your bond via wire transfer directly to us, the first business day of the next
calendar month after which we receive the wire; (ii) in cases where you pay for your
bond by bank draft directly to us, the first business day of the next calendar month
after which we receive the draft; or (iii) in cases where you pay for your bond by personal
check, the first business day of the calendar month that is at least five full business
days after which we receive the check. In all cases involving direct settlement with
the Company, we must also have received and accepted your completed and executed Subscription
Agreement.
|
Interest
payments on L Bonds will be paid on the 15
th
day immediately following the last day of the applicable interest payment
period. Interest will be paid without any compounding. The first payment of interest will include interest for the partial period
in which the purchase occurred. The indenture provides that all interest will be calculated based on a year with twelve 30-day
months.
If
you purchase your L Bond Units through direct settlement, we will pay the principal of, and interest on, L Bonds by direct deposit
to the account you specify in your Subscription Agreement. We will not accept subscriptions from investors who are not willing
to receive their interest payments via direct deposit. If the foregoing payment method is not available, principal and interest
payments on the L Bonds will be payable at our principal executive office or at such other place as we may designate for payment
purposes. If you purchase your L Bond Units through DTC settlement, our payments of principal and interest will be paid to the
depositary (DTC) and then be credited to your brokerage or custodial account through the DTC procedures followed by your brokerage
firm or custodian. For more information, please see “Registration and Exchange — Global Certificates Deposited with
DTC” below.
We
will withhold 28% of any interest payable to any investor who has not provided us with a social security number, employer identification
number, or other satisfactory equivalent in the Subscription Agreement (or another document) or where the IRS has notified us
that backup withholding is otherwise required. Please see “Material Federal Income Tax Considerations — Backup Withholding
and Information Reporting.”
Registration
and Exchange
The
L Bonds that we settle directly will generally be issued in book-entry form, which means that no physical L Bond is created, subject,
however, to limited exceptions described in the indenture. The L Bonds settled through DTC settlement will be represented by global
certificates deposited with the depositary as described below.
Book-Entry
Registration
Evidence
of your ownership will be provided by written confirmation. As described below, holders may, under certain circumstance described
below, opt to receive physical delivery of a certificated security that evidences their L Bonds. Otherwise, the issuance and transfer
of L Bonds will be accomplished exclusively through the crediting and debiting of the appropriate accounts in our book-entry registration
and transfer system.
The
holders of the accounts established upon the purchase or transfer of L Bonds will be deemed to be the owners of the L Bonds under
the indenture. The holder of the L Bonds must rely upon the procedures established by the trustee to exercise any rights of a
holder of L Bonds under the indenture. We will regularly provide the trustee with information regarding the establishment of new
accounts and the transfer of existing accounts.
On
or prior to any interest payment date or upon redemption, we will also provide the trustee with information regarding the total
amount of any principal and interest due to holders of L Bonds. On each interest payment date, we will credit interest due on
each account and direct payments to the holders. We will determine the interest payments to be made to the book-entry accounts
and maintain, supervise and review any records relating to book-entry accounts for the L Bonds.
Book-entry
notations in the accounts evidencing ownership of the L Bonds are exchangeable for certificated L Bonds only: (i) at the request
of the holder, at the end of the Company’s next fiscal quarter; or (ii) after the occurrence of an event of default under
the indenture, if holders of more than 50% of the aggregate outstanding principal amount of the L Bonds advise the trustee in
writing that the continuation of a book-entry system is no longer in the best interests of the holders of L Bonds. In its discretion,
the Company may elect to terminate the book-entry system and replace book-entry notations with physical certificates.
Global
Certificates Deposited with DTC
L
Bonds may be issued in the form fully registered global certificates deposited with, or on behalf of, The Depository Trust Company
(“DTC”), New York, NY, and registered in the name of Cede & Co., as nominee of DTC. Unless and until exchanged,
in whole or in part, for L Bonds in definitive registered form, a global certificate may not be transferred except as a whole
by the depositary to a nominee of such depositary, by a nominee of such depositary to such depositary or another nominee of such
depositary, or by such depositary or any nominee of such depositary to a successor of such depositary or a nominee of such successor.
DTC
is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning
of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of
the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A
of the Exchange Act. DTC was created to hold securities of its participants and to facilitate the clearance and settlement of
securities transactions, such as transfers and pledges, among its participants in such securities through electronic computerized
book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates.
DTC’s participants include securities brokers and dealers (including the managing broker-dealer), banks, trust companies,
clearing corporations and certain other organizations, some of whom own DTC. Access to DTC’s book-entry system is also available
to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly. The rules applicable to DTC and its participants are on file with the SEC.
If
available, purchases of L Bonds within the DTC system must be made by or through direct participants, which will receive a credit
for the L Bonds on DTC’s records. The ownership interest of each beneficial owner of the L Bonds will be recorded on the
direct and indirect participants’ records. Beneficial owners will not receive written confirmation from DTC of their purchases,
but beneficial owners are expected to receive written confirmations providing details of the transactions, as well as periodic
statements of their holdings, from the direct or indirect participants through which the beneficial owners entered into the transaction.
Transfers of ownership interests in the L Bonds are to be accomplished by entries made on the books of participants acting on
behalf of beneficial owners.
To
facilitate subsequent transfers, all L Bonds deposited by participants with DTC will be registered in the name of DTC’s
nominee, Cede & Co. The deposit of L Bonds with DTC and their registration in the name of Cede & Co. will effect no change
in beneficial ownership. DTC will have no knowledge of the actual beneficial owners of the L Bonds. DTC’s records will reflect
only the identity of the direct participants to whose accounts such notes are credited, which may or may not be the beneficial
owners. The participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance
of notices and other communications by DTC to direct participants, by direct participants to indirect participants and by direct
and indirect participants to beneficial owners will be governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
We
will make payments due on the notes to Cede & Co., as nominee of DTC, in immediately available funds. DTC’s practice
is to credit direct participants’ accounts, upon DTC’s receipt of funds and corresponding detailed information, on
the relevant payment date in accordance with their respective holdings shown on DTC’s records. Payments by participants
to beneficial owners will be governed by standing instructions and customary practices, as is the case with securities held for
the account of customers in bearer form or registered in “street name,” and will be the responsibility of such participant
and not our responsibility or that of DTC, subject to any statutory or regulatory requirements as may be in effect from time to
time. Payment to Cede & Co. is our responsibility. Disbursement of such payments to direct participants is the responsibility
of Cede & Co. Thereafter, disbursement of such payments to the beneficial owners is the responsibility of direct and indirect
participants (i.e., brokers, dealers and custodians).
Except
as provided herein, a beneficial owner of an interest in a global certificate will not be entitled to receive physical delivery
of the L Bonds. Accordingly, each beneficial owner must rely on the procedures of DTC to exercise any rights under the L Bonds.
The laws of some jurisdictions require that certain purchasers of securities take physical delivery of securities in definitive
form. Such laws may impair the ability to transfer beneficial interests in a global certificate.
As
long as the depositary, or its nominee, is the registered holder of a global certificate, the depositary or such nominee will
be considered the sole owner and holder of the L Bonds represented thereby for all purposes under the L bonds and the indenture.
Except in the limited circumstances referred to below, owners of beneficial interests in a global certificate will not be entitled
to have such global certificate or any L Bonds represented thereby registered in their names, will not receive or be entitled
to receive physical delivery of certificated L Bonds in exchange for the global certificate and will not be considered to be the
owners or holders of such global certificate or any certificates represented thereby for any purpose under the L Bonds or the
indenture. Accordingly, each person owning a beneficial interest in such global certificate must rely on the procedures of the
depositary and, if such person is not a participant, on the procedures of the participant through which such person owns its interest
to exercise any rights of a holder under the indenture.
If
the depositary for a global certificate representing L Bonds is at any time unwilling or unable to continue as depositary and
a successor depositary is not appointed by us within 90 days, we will issue L Bonds in definitive form in exchange for such global
certificate. In addition, we may at any time and in our sole discretion determine not to have the L Bonds represented by one or
more global certificates and, in such event, we will issue the notes in definitive form in exchange for all of the global certificates
representing the L Bonds. Finally, if an event of default, or an event which with the giving of notice or lapse of time or both
would constitute an event of default, with respect to the L Bonds represented by a global certificate has occurred and is continuing,
then we will issue L Bonds in definitive form in exchange for all of the global certificates representing the notes.
Although
DTC has agreed to the procedures provided above in order to facilitate transfers, it is under no obligation to perform these procedures,
and these procedures may be modified or discontinued at any time.
Limited
Rescission Right
If
you are purchasing L Bonds through direct settlement with the Company and your Subscription Agreement is accepted at a time when
we have determined that a post-effective amendment to the registration statement of which this prospectus is a part must be filed
with the SEC, but such post-effective amendment has not yet been declared effective, we will send to you at your registered address
a notice and a copy of the related prospectus once it has been declared effective. You will thereupon have the right to rescind
your investment upon written request within ten business days from the postmark date of the notice we send to you that the post-effective
amendment has been declared effective (and containing the related prospectus). We will promptly return any funds sent with a Subscription
Agreement that is properly rescinded without penalty, although any interest previously paid on a rescinded L Bond will be deducted
from the funds returned to you upon rescission. A written request for rescission, except in the case of a mailed rescission, must
be postmarked on or before the tenth business day after our notice to you (described above). If you notify us other than by mail,
we must actually receive your rescission request on or before the tenth business day after our notice to you.
We
will not accept purchases of L Bonds through DTC settlement if, as of the end of the monthly closing for DTC settlement, we have
determined that a post-effective amendment to the registration statement of which this prospectus is a part must be filed with
the SEC, but such post-effective amendment has not yet been declared effective. In any such case, settlement of your L Bond purchase
must occur in the following month.
Renewal
or Repayment on Maturity
At
least 30 days prior to the maturity of your L Bond, we will provide you with a notice indicating that your L Bond is about to
mature and whether we will allow automatic renewal of your L Bond. If we allow you to renew your L Bond, we will also provide
to you the then-current form of prospectus, which may include an interest rate or prospectus supplement and any other updates
to the information contained in this prospectus. The prospectus, or the interest rate or prospectus supplement, will set forth
the interest rates then in effect. The notice will recommend that you review the then-current prospectus, including any interest
rate or prospectus supplement, prior to exercising one of the below options. If we do not provide you a new prospectus because
the prospectus has not changed since the delivery of this prospectus in connection with your original investment or any prior
renewal, we will nonetheless send you a new copy of the prospectus upon your request. Unless the election period is extended as
described below, you will have until 15 days prior to the maturity date to exercise one of the following options:
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You
can do nothing, in which case (subject to applicable law) your L Bond will automatically
renew for a new term equal to the original term but at the interest rate in effect at
the time of renewal. Interest on renewed L Bonds will be paid on the same schedule (i.e.,
monthly or annually) as the original L Bond. If applicable, a new certificate will be
issued.
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You
can elect repayment of your L Bond, in which case the principal amount will be repaid
in full along with any accrued but unpaid interest. If you choose this option, your L
Bond will not earn interest on or after the maturity date.
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You
can elect repayment of your L Bond and use all or part of the proceeds to purchase a
new L Bond with a different term or principal amount. To exercise this option, you will
need to complete a new Subscription Agreement for the new L Bond and mail it along with
your request, or else work with your broker if you wish to purchase your new L Bond through
DTC settlement. Any proceeds from the old L Bond that are not applied to the new L Bond
will be sent to you.
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The
foregoing options will be available to holders unless and until terminated under the indenture. Interest will accrue from the
first day of each renewed term. Each renewed L Bond will retain all its original provisions, including provisions relating to
payment, except that the interest rate payable during any renewal term will be the interest rate that is being offered at that
time to other holders with similar aggregate L Bond portfolios for L Bonds of the same term as set forth in the interest rate
supplement delivered with the maturity notice. If similar L Bonds are not then being offered, the (i) interest rate upon renewal
will be the rate specified by us on or before the maturity date, or the rate of the existing L Bond if no such rate is specified,
and (ii) the maturity will, if L Bonds of the same maturity are being offered at the time of renewal, be the same or, if not,
the next earliest maturity.
If
we notify the holder of our intention to repay an L Bond at maturity, or if the holder timely requests repayment, we will pay
the principal and all accrued but unpaid interest on the L Bond on or prior to the fifth day of the calendar month after the maturity
date (or the first business day following the fifth day of such month). Thus, in the case of an L Bond with a maturity date of
January 31, 2020, actual payment will be made on or prior to February 5, 2020 (unless such date is not a business day, in which
case actual payment will be made on the next business day). No interest will accrue after the maturity date. You should be aware
that because payment is made by ACH transfer, funds may not be received in the holder’s account for two to three business
days.
We
will be required from time to time to file post-effective amendments to the registration statement of which this prospectus is
a part to update the information it contains. If you would otherwise be entitled to renew your L Bonds upon their stated maturity
at a time when we have determined that a post-effective amendment must be filed with the SEC, but such post-effective amendment
has not yet been declared effective, then the period during which you can elect renewal (or repayment) will be automatically extended
until ten days following the postmark date of our notice to you that the post-effective amendment has been declared effective,
which notice shall contain a copy of the related prospectus. All other provisions relating to the renewal or redemption of L Bonds
upon their stated maturity described above shall remain unchanged.
For
any L Bonds offered hereby that mature on or after the three-year anniversary of the date on which the registration statement
of which this prospectus is a part shall have been declared effective, we expect that the renewal of such L Bonds may require
us to file a new registration statement. In such a case, the new registration statement must be declared effective before we can
renew your L Bond. In this event, if the new registration statement has not yet been filed or become effective, we will extend
your election period until ten days following the date of our notice to you that the new registration statement has become effective,
which notice will include a new prospectus.
Call
and Redemption Prior to Stated Maturity
We
may call and redeem, in whole or in part, principal amount and accrued but unpaid interest on any L Bonds prior to their stated
maturity only as set forth in the indenture and described below. The holder has no right to put or otherwise require us to redeem
any L Bond prior to its maturity date (as originally stated or as it may be extended), except as indicated in the indenture and
described below.
Our
Voluntary Redemption
We
have the right to redeem any L Bond, in whole or in part, at any time prior to its stated maturity upon at least 30 days written
notice to the holder of the L Bond. The holder of the L Bond being redeemed will be paid a redemption price equal to the outstanding
principal amount thereof plus accrued but unpaid interest up to but not including the date of redemption without any penalty or
premium. We may use any criteria we choose to determine which L Bonds we will redeem if we choose to do so. We are not required
to redeem L Bonds on a pro rata basis.
Holder’s
Put Election Upon Death, Bankruptcy or Total Permanent Disability
L
Bonds may be redeemed prior to maturity at the election of a holder who is a natural person (including L Bonds held in an individual
retirement account and the holders of a beneficial interest in a global certificate held by a depositary or its nominee), by giving
us written notice within 45 days following the holder’s total permanent disability or bankruptcy, as established to our
satisfaction, or at the election of the holder’s estate, by giving written notice within 45 days following the death of
the holder. Subject to the limitations described below, we will redeem the L Bonds not later than the 15
th
day of the
month next following the month in which we establish to our satisfaction the holder’s death, bankruptcy or total permanent
disability. In the event that the 15
th
day of the month next following the month in which we so establish such facts
is not a business day, we will redeem the L Bonds on the next business day. The redemption price, in the event of such a death,
bankruptcy or total permanent disability, will be the entire principal amount of the L Bonds, plus accrued but unpaid interest
thereon up to and through the last day of the calendar month preceding the redemption date. The indenture defines “total
permanent disability” as the determination by a physician, approved by us, that a holder of an L Bond who is a natural person,
and who was gainfully employed at the time of issuance of the L Bond (or its renewal date), is unable to work on a full-time basis
during a period of 24 consecutive months.
If
spouses are joint registered holders of an L Bond, the right to elect to have us redeem L Bonds will apply when either registered
holder dies, files bankruptcy or suffers a total permanent disability. If the L Bond is held jointly by two or more persons who
are not legally married, none of these persons will have the right to request that we redeem the L Bonds unless all joint holders
have died, filed bankruptcy or suffered a total permanent disability. If the L Bond is held by a trust, partnership, corporation
or other similar entity, the right to request redemption upon death or total permanent disability does not apply.
Redemption
at Request of Holder
We
have no obligation to redeem any L Bonds other than upon maturity, or upon the death, bankruptcy or total permanent disability
of a natural person holder. Nevertheless, at our sole discretion we may agree from time to time, at the written request of a holder
(including the holder of a beneficial interest in a global certificate held by a depositary or its nominee), to redeem an L Bond,
subject, however, to a redemption fee of 6.0% of the principal amount of such L Bond. If we so redeem any L Bond prior to maturity,
we will redeem the entire principal amount of such L Bond together with accrued but unpaid interest thereon, The redemption fee
will be subtracted from the amount paid to you.
Transfers
The
L Bonds will be transferable in accordance with the indenture. For L Bonds that are issued solely in book-entry form, transfers
will be effective only upon the delivery to us of an executed assignment or other conveyance instrument in customary form. For
L Bonds that are represented by a global certificate held by a depositary or its nominee, transfers of beneficial interests in
such certificate must be effected in accordance with the procedures and rules of the depositary.
Upon
transfer of an L Bond, we will provide the new holder of the L Bond with a purchase confirmation that will evidence the transfer
of the account on our records. If applicable (e.g., if transferred to a custodial account), a new certificate will be issued.
No written confirmations will be provided with respect to transfers of beneficial interests in a global certificate held by a
depositary or its nominee.
Quarterly
Statements
We
will provide holders of the L Bonds with quarterly statements, which will indicate, among other things, the account balance at
the end of the quarter, interest credited, redemptions made, if any, and the interest rate paid during the quarter. These statements
will be sent electronically on or prior to the 10
th
business day after the end of each calendar quarter. If a holder
is unwilling or unable to receive quarterly statements electronically, we will mail the statements to the address of record on
or prior to the 10
th
business day after the end of each calendar quarter. In such a case, we may charge such holders
a reasonable fee to cover our expenses incurred in mailing the statements.
Ranking
The
L Bonds will constitute secured debt of GWG Holdings. The payment of principal and interest on the L Bonds will be:
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pari
passu with respect to payment and collateral securing all L Bonds previously issued by
GWG Holdings, Inc., of which approximately $461.4 million in principal amount is outstanding
as of December 31, 2017 (see the caption “— Collateral Security” below);
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structurally
and contractually junior to the present and future obligations owed by our subsidiary
DLP IV under our senior credit facility with LNV/CLMG, and structurally or contractually
junior to any future obligations that DLP IV or other primary obligors or guarantors
may have under future senior secured borrowing facilities; and
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structurally
junior to the present and future claims of creditors of our subsidiaries, other than
GWG Life, including trade creditors.
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The
indenture will permit us to issue other forms of debt, including secured and senior debt, in the future.
“Pari
passu” means that claims for payment and entitlement to security among the holders of L Bonds, including the holders of
previously issued L Bonds, and the holders of any later-created class of “pari passu debt,” will be treated equally
and without preference. Although we have no present intention of causing GWG Life to issue additional secured debt in the future,
any such debt issued on a pari passu basis in the future (including renewals of outstanding L Bonds or other renewable pari passu
debt) would also be treated equally and without preference in respect of all outstanding L Bonds. Thus, in the event of any default
on the L Bonds (or any other debt securities of ours that are pari passu with the L Bonds) resulting in claims for payment or
claims on collateral security, the holders of the L Bonds and all such other debt securities pari passu with the L Bonds would
share in payment or collateral in proportion to the amount of principal and interest owed on each such debt instrument.
Guarantee
by GWG Life Subsidiary
The
payment of principal and interest on the L Bonds, including previously issued L Bonds, is fully and unconditionally guaranteed
by GWG Life. There were approximately $461.4 million in principal amount of previously issued L Bonds outstanding as of December
31, 2017.
Collateral
Security
The
L Bonds are secured by the assets of GWG Holdings, Inc. We will grant a security interest in all of the assets of GWG Holdings
to the indenture trustee for the benefit of the L Bond holders. The assets of GWG Holdings consist, and are expected to consist,
primarily of (i) any cash proceeds received from its subsidiaries as distributions derived from life insurance assets of subsidiaries,
(ii) all other cash and investments held in various accounts, (iii) the equity ownership interests in subsidiaries of GWG Holdings,
including the equity ownership interest in GWG Life, together with (iv) all proceeds from the foregoing. This collateral security
granted by us is referred to as the “GWG Holdings Assets Collateral.”
As
indicated above, our direct and wholly owned subsidiary, GWG Life, will fully and unconditionally guarantee our obligations under
the L Bonds. This guarantee will be supported by GWG Life’s grant of a security interest in all of its assets. The assets
of GWG Life consist, and are expected to consist, primarily of (i) certain life insurance assets, (ii) any cash proceeds received
from life insurance assets owned by GWG Life or received from DLP IV, as distributions derived from life insurance policies owned
by that subsidiary, (iii) all other cash and investments held by GWG Life in its various accounts, (iv) GWG Life’s equity
ownership interest in its direct subsidiaries, including DLP IV, together with (v) all proceeds from the foregoing. The collateral
security granted by GWG Life pursuant to its guarantee of our obligations under the L Bonds is referred to as the “GWG Life
Assets Collateral.”
In
addition, Messrs. Jon R. Sabes and Steven F. Sabes, our principal stockholders beneficially holding approximately 72% of the outstanding
shares of our common stock, have pledged all of the shares they beneficially own in GWG Holdings to further secure our obligations
under the L Bonds. This collateral security granted by Messrs. Jon R. Sabes and Steven F. Sabes is referred to as the “GWG
Holdings Equity Collateral.”
Together,
the GWG Holdings Assets Collateral, GWG Life Assets Collateral and GWG Holdings Equity Collateral comprise all of the collateral
security for our obligations under the L Bonds. To the extent that we subsequently establish one or more wholly owned subsidiaries
of GWG Holdings or GWG Life, the L Bonds will have a security interest in the equity ownership interests of those subsidiaries
if and to the extent owned by GWG Holdings or GWG Life.
The
guarantee by GWG Life is contained in the indenture, and the grant of security interests in the GWG Holdings Assets Collateral,
GWG Life Assets Collateral and GWG Holdings Equity Collateral is effected through a “Pledge and Security Agreement”
that is an exhibit to the indenture and has been amended in connection with this offering of L Bonds. Neither the indenture nor
the Pledge and Security Agreement contain any provision preventing a pledging party from disposing of any collateral in the ordinary
course of business. In this regard, the Pledge and Security Agreement permits the disposition of GWG Holdings Equity Collateral
to the extent the number of shares continuing to constitute such collateral represents at least 10% of the number of shares beneficially
held by each individual grantor as of the date of the Pledge and Security Agreement.
Substantially
all of our life insurance assets are held in our subsidiaries. The L Bonds will not be directly secured by any security interest
in the assets of those subsidiaries, including DLP IV. Instead, the L Bonds will be secured by a pledge of the equity ownership
interests in those subsidiaries, including DLP IV, owned by GWG Life by virtue of the guarantee provisions in the indenture and
the Pledge and Security Agreement referenced above. An equity ownership interest is, by its very nature, subordinate to the interests
of creditors.
Therefore, although investors in the L Bonds will have a security interest in the ownership of DLP IV (and other
direct subsidiaries of GWG Life) any claim they may have to the assets owned by such entity will be subordinate to the interests
of creditors of that entity, including LNV/CLMG, which is the lender to DLP IV under our senior credit facility, and all other
creditors of DLP IV, including trade creditors. In addition, there is the risk that the collateral security granted for our obligations
under the L Bonds may be insufficient to repay the L Bonds upon an event of default. See “Risk Factors,” page 19
(“The collateral granted as security...”)
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Subordination;
Other Indebtedness
Our
obligations under the L Bonds will be subordinate to all our senior debt. For this purpose, “our senior debt” presently
includes all indebtedness owed or that may in the future become owing under our senior credit facility with LNV/CLMG. As of December
31, 2017, DLP IV had approximately $222.5 million of debt outstanding under the credit facility with LNV/CLMG. In addition, as
of December 31, 2017, we had approximately $461.4 million in principal amount of debt outstanding under previously issued L Bonds.
The
maximum amount of debt, including the L Bonds, we may issue is limited by the indenture. In particular, the indenture prohibits
us from issuing debt in an amount such that our “debt coverage ratio” would exceed 90%. The indenture defines the
debt coverage ratio as a percentage calculated by the ratio of (A) obligations owing by us and our subsidiaries on all outstanding
debt for borrowed money (including the L Bonds), over (B) the net present asset value of all life insurance assets we own, directly
or indirectly, plus any cash held in our accounts. For this purpose, the net present asset value of our life insurance assets
is equal to the present value of the cash flows derived from the face value of policy benefit assets we own, discounted at a rate
equal to the weighted average cost of capital for all our indebtedness for the prior month.
We
are required to notify the indenture trustee in the event that we violate this restrictive covenant. An “event of default”
will exist under the indenture if a violation of this covenant persists for a period of 30 calendar days after our initial notice
to the trustee. The L Bonds are guaranteed by GWG Life but otherwise are not guaranteed by any of our subsidiaries, affiliates
or control persons. Neither indenture nor the Pledge and Security Agreement prevent holders of debt issued by our subsidiaries
from disposing of, or exercising any other rights with respect to, any or all of the collateral securing that debt. Accordingly,
in the event of a liquidation or dissolution of one of our subsidiaries (other than GWG Life), creditors of that subsidiary that
are senior in rank will be paid in full, or provision for such payment will be made, from the assets of that subsidiary prior
to distributing any remaining assets to us as an equity owner of that subsidiary.
The
indenture also contains specific subordination provisions, benefitting lenders under any senior credit facility, restricting the
right of L Bond holders to enforce certain of their rights in certain circumstances, including:
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a
prohibition on challenging any enforcement action taken by a senior lender or interfering
with any legal action or suits undertaken by our senior lenders against us and our affiliates;
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a
180-day standstill period during which there may not be brought any action against us
or our affiliates to enforce rights respecting collateral unless our senior credit facilities
have been repaid in full, which period may be extended if the senior lender takes action
during such standstill period; and
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a
prohibition on filing a bankruptcy or insolvency case against us or our affiliates for
at least one year plus one day after the senior credit facility lenders have been paid
in full.
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We
will not make any payment, direct or indirect (whether for interest, principal, as a result of any redemption or repayment at
maturity, on default, or otherwise), on the L Bonds and any other indebtedness, and neither the holders of the L Bonds nor the
trustee will have the right, directly or indirectly, to sue to enforce the indenture or the L Bonds, if a default or event of
default under any senior credit facility has occurred and is continuing, or if any default or event of default under any senior
credit facility would result from such payment, in each case unless and until:
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the
default and event of default has been cured or waived or has ceased to exist; or
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in
the case of a non-payment default that permits a senior lender to declare as due and
payable all amounts owing under a senior credit facility (but where that senior lender
has not yet so declared amounts as being due and payable), the end of the period commencing
on the date the trustee receives written notice of default from the senior lender and
ending on the earliest of (1) our discharge of the default (or other cure), (2) the trustee’s
receipt of a valid waiver of default from the senior lender, or (3) a written notice
from the senior lender terminating the payment prohibition.
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During
any payment prohibition period, neither the holders of the L Bonds nor the trustee will have the right, directly or indirectly,
to sue to enforce the indenture or the L Bonds. Other provisions of the indenture do permit the trustee to take action to enforce
the payment rights of L Bond holders after 179 days have passed since the trustee’s receipt of notice of default from a
senior lender, but in such case any funds paid as a result of any such suit or enforcement action shall be applied toward the
senior credit facility until the facility is indefeasibly paid in full before being applied to the L Bonds. The indenture contains
provisions whereby each investor in the L Bonds consents to the subordination provisions contained in the indenture and related
agreements governing collateral security.
If
the 180-day standstill period noted above or any other limitation on the rights of the trustee or L Bond holders to assert their
rights to payment of principal or interest under the indenture or L Bonds is ultimately determined to conflict with provisions
of the Trust Indenture Act of 1939 (most notably sections 316(b) and 317(a) of that Act), then the trustee, as well as any holder
who shall not have earlier consented to such subordination provisions, shall (notwithstanding such provision contained in the
indenture) be authorized to institute a lawsuit for the enforcement of any payment of principal or interest after their respective
due dates.
No
Sinking Fund
The
L Bonds are not associated with any sinking fund. A sinking fund is generally any account to which contributions will be made,
from which payments of principal or interest owed on the L Bonds will be made. See “Risk Factors,” page 19.
Restrictive
Covenants
The
indenture contains covenants that restrict us from certain actions as described below. In particular, the indenture provides that:
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we
will not declare or pay any dividends or other payments of cash or other property solely
in respect of our capital stock to our stockholders (other than a dividend paid in shares
of our capital stock on a pro rata basis to all our stockholders) unless no default and
no event of default with respect to the L Bonds exists or would exist immediately following
the declaration or payment of the dividend or other payment;
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to
the extent legally permissible, we will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or the performance of the indenture;
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our
Board of Directors will not adopt a plan of liquidation that provides for, contemplates
or the effectuation of which is preceded by (a) the sale, lease, conveyance or other
disposition of all or substantially all of our assets, otherwise than (i) substantially
as an entirety, or (ii) in a qualified sales and financing transaction, and (b) the distribution
of all or substantially all of the proceeds of such sale, lease, conveyance or other
disposition and of our remaining assets to the holders of our capital stock, unless,
prior to making any liquidating distribution pursuant to such plan, we make provision
for the satisfaction of our obligations under the renewable unsecured subordinated notes;
and
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our
debt coverage ratio may not exceed 90%.
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The
indenture defines the debt coverage ratio as a percentage calculated by the ratio of (A) obligations owing on all outstanding
debt for borrowed money (including the L Bonds), over (B) the net present asset value of all life insurance assets we own, plus
any cash held in our accounts, plus, without duplication, the value of all other assets of the Company as reflected on our most
recently available balance sheet prepared in accordance with GAAP. For this purpose, the net present asset value of our life insurance
assets is equal to the present value of the face value of policy benefit assets we own, discounted at a rate equal to the weighted-average
cost of capital for all our indebtedness for the prior month.
Importantly,
we are not restricted from entering into “qualified sale and financing transactions” as defined — in the indenture,
or incurring additional indebtedness, including additional senior debt.
Consolidation,
Mergers or Sales
The
indenture generally permits a consolidation or merger between us and another entity. It also permits the sale or transfer by us
of all or substantially all of our property and assets. These transactions are permitted if:
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the
resulting or acquiring entity, if other than us, is a United States corporation, limited
liability company or limited partnership and assumes all of our responsibilities and
liabilities under the indenture, including the payment of all amounts due on the notes
and performance of the covenants in the indenture; and
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immediately
after the transaction, and after giving effect to the transaction, no event of default
shall exist under the indenture.
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If
we consolidate or merge with or into any other entity or sell or lease all or substantially all of our assets, according to the
terms and conditions of the indenture, the resulting or acquiring entity will be substituted for us in the indenture with the
same effect as if it had been an original party to the indenture. As a result, the successor entity may exercise our rights and
powers under the indenture in our name, and we (as an entity) will be released from all our liabilities and obligations under
the indenture and under the L Bonds. Nevertheless, no such transaction will by itself eliminate or modify the collateral that
we have provided as security for our obligations under the indenture.
Events
of Default and Remedies
The
indenture provides that each of the following constitutes an event of default:
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the
failure to pay interest or principal on any L Bond for a period of 30 days after it becomes
due and payable;
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●
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a
failure to observe or perform any material covenant, condition or agreement in the indenture,
but only after notice of failure from the indenture trustee and such failure is not cured
within 60 days;
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●
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our
debt coverage ratio exceeds 90% for a period of 30 consecutive calendar days, but only
after notice of such breach from the indenture trustee and such breach is not cured within
60 days;
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●
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certain
events of bankruptcy, insolvency or reorganization with respect to us; or
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●
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the
cessation of our business.
|
In
addition, a default under the indenture will create a default under our senior credit facility.
Through
DLP IV, we are party to a senior credit facility with LNV Corporation (referred to in this prospectus as LNV), as the lender.
The facility is governed by a Loan and Security Agreement, and CLMG Corp (referred to in this prospectus as CLMG) acts as the
administrative agent for the lender under the Loan and Security Agreement.
Effective
September 27, 2017, DLP IV entered into an Amended and Restated Loan and Security Agreement with LNV Corporation, as lender, and
CLMG Corp., as the administrative agent on behalf of the lenders under the agreement. The Loan and Security Agreement makes available
a total of up to $300,000,000 in credit to DLP IV with a maturity date of September 27, 2029. Additional advances are available
under the Amended and Restated Loan Agreement at the LIBOR rate as defined in the Amended and Restated Loan Agreement. Advances
are available as the result of additional borrowing base capacity, created as the premiums and servicing costs of pledged life
insurance policies become due. Interest will accrue on amounts borrowed under the Amended and Restated Loan Agreement at an annual
interest rate, determined as of each date of borrowing or quarterly if there is no borrowing, equal to (A) the greater of 12-month
LIBOR or the federal funds rate (as defined in the agreement) plus one-half of one percent per annum, plus (B) 7.50% per annum.
The effective rate at December 31, 2017 was 9.31%. Interest payments are made on a quarterly basis. As of December 31, 2017, approximately
$222.5 million was outstanding under the line of credit. We may use proceeds of the line of credit to repay short-term debt and
acquire additional life insurance assets.
Under
the Loan and Security Agreement, DLP IV has granted the administrative agent, for the benefit of the lenders under the agreement,
a security interest in all of its assets. As with prior collateral arrangements relating to the senior secured debt of GWG Holdings
and its subsidiaries (on a consolidated basis), GWG Holdings’ equity ownership in DLP IV will serve as collateral for the
obligations of GWG Holdings under its L Bonds (although the life insurance assets owned by DLP IV will not themselves serve directly
as collateral for those obligations).
The
Amended and Restated Loan Agreement does not require DLP IV to maintain a reserve account for future premiums.
In
addition, the Loan and Security Agreement contains certain customary negative covenants restricting the ability of the borrower
to directly or indirectly engage in a merger or exchange transaction, sell substantially all of its assets, or permit the amendment
of the contracts governing the outstanding debt securities of GWG Holdings and its subsidiaries, without the prior consent of
the lender.
The
Loan and Security Agreement contains customary events of default (e.g., payment defaults, covenant defaults, cross-defaults, defaults
arising by virtue of a change in control, and defaults arising from breaches of representations and warranties), as well as defaults
for amendments to the organizational documents of the borrower, defaults from pledged policies falling out of good standing, the
occurrence of an event that could terminate the arrangement by which GWG Life services the pledged life insurance policies, and
the entry of a judgment against the borrower in an amount exceeding $50,000 without payment or discharge, or a stay of execution
obtained, within 30 days thereafter.
The
indenture requires that we give immediate notice to the indenture trustee upon the occurrence of an event of default under the
indenture, unless it has been cured or waived. The indenture trustee may then provide notice to the L Bond holders or withhold
the notice if the indenture trustee determines in good faith that withholding the notice is in your best interest, unless the
default is a failure to pay principal or interest on any L Bond.
If
an event of default occurs, the indenture trustee or the holders of at least 25% in principal amount of the outstanding L Bonds,
may by written notice to us declare the unpaid principal and all accrued but unpaid interest on the L Bonds to be immediately
due and payable. Notwithstanding the foregoing, the indenture limits the ability of the L Bond holders to enforce certain rights
under the indenture in certain circumstances. These limitations are required subordination provisions under our senior credit
facility and are summarized above under “— Subordination; Other Indebtedness.” The Pledge and Security Agreement
permits the trustee to exercise on behalf of the holders of L Bonds all rights and remedies as are available to a secured creditor
under applicable law, subject to any limitations therein or in the indenture. In this regard, the trustee is not authorized under
the Pledge and Security Agreement to distribute in kind any collateral in its possession to the holders of L Bonds.
Amendment,
Supplement and Waiver
Except
as provided in this prospectus or the indenture, the terms of the indenture or the L Bonds then outstanding may be amended, supplemented
or waived with the consent of the holders of at least a majority in principal amount of the L Bonds then outstanding (which consent
will be presumed if a holder does not object within 30 days of a request for consent), and any existing default or compliance
with any provision of the indenture or the L Bonds may be waived with the affirmative consent of the holders of a majority in
principal amount of the then outstanding L Bonds.
Notwithstanding
the foregoing, an amendment or waiver will not be effective with respect to the L Bonds held by a holder who him, her or itself
has not consented if such amendment or waiver:
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●
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reduces
the principal of, or changes the fixed maturity of, any L Bond;
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reduces
the rate of or changes the time for payment of interest, including default interest,
on any L Bond;
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●
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waives
a default or event of default in the payment of principal or interest on the L Bonds,
except for a rescission or withdrawal of acceleration of the L Bonds made by the holders
of at least a majority in aggregate principal amount of the then-outstanding L Bonds
and a waiver of the payment default that resulted from such acceleration;
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makes
any change in the provisions of the indenture relating to waivers of past defaults or
the rights of holders of L Bonds to receive payments of principal of or interest on the
L Bonds; or
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●
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makes
any change to the subordination provisions of the indenture that has a material adverse
effect on holders of L Bonds.
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Notwithstanding
the foregoing, the following kinds of amendments or supplements to the indenture may be effected by us and the trustee without
any consent of any holder of the L Bonds:
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to
cure any ambiguity, defect or inconsistency;
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to
provide for assumption of our obligations to holders of the L Bonds in the case of a
merger, consolidation or sale of all or substantially all of our assets;
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to
provide for additional uncertificated or certificated L Bonds;
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to
make any change that does not materially and adversely affect the legal rights under
the indenture of any holder of L Bonds, including but not limited to an increase in the
aggregate dollar amount of L Bonds which may be outstanding under the indenture and limited
in amount thereunder;
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to
modify or eliminate our policy regarding redemptions elected by a holder of L Bonds prior
to maturity, including our obligation to redeem L Bonds upon the death, bankruptcy or
total permanent disability of any holder of the L Bonds, but only so long as such modifications
do not materially and adversely affect any then-existing obligations under pending repurchase
commitments for L Bonds;
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to
comply with requirements of the SEC in order to effect or maintain the qualification
of the indenture under the Trust Indenture Act of 1939, or to comply with other applicable
federal or state laws or regulations;
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to
comply with the rules or policies of a depositary of the L Bonds; or
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in
connection with an amendment, extension, replacement, renewal or substitution of any
senior debt, to amend the subordination provisions of the indenture to conform to the
reasonable requirements of the holder or holders of such senior debt.
|
Rights
of L Bond Holders
As
an L Bond holder, you have limited rights to vote on our actions as set forth in the indenture. In general, you will have the
right to vote on whether or not to approve some amendments to the indenture. For a description of these rights, see “—
Amendment, Supplement and Waiver” above. You will also have the right to direct some actions that the trustee takes if there
is an event of default with respect to the L Bonds. For a description of these rights, see above under the caption “—
Events of Default.” For a complete description of your rights as an L Bond holder, we encourage you to read a copy of the
indenture, which is filed as an exhibit to the registration statement of which this prospectus is a part. We will also provide
you with a copy of the indenture upon your request.
The
trustee and the L Bond holders will have the right to direct the time, method and place of conducting any proceeding for some
of the remedies available, except as otherwise provided in the indenture. The trustee may require reasonable indemnity, satisfactory
to the trustee, from L Bond holders before acting at their direction. You will not have any right to pursue any remedy with respect
to the indenture or the L Bonds unless you satisfy the conditions contained in the indenture.
The
Indenture Trustee
General
Bank
of Utah has agreed to be the trustee under the indenture. The indenture contains certain limitations on the rights of the trustee,
should it become one of our creditors, to obtain payment of claims in certain cases, or to realize on certain property received
in respect of any claim as security or otherwise. The trustee will be permitted to engage in other transactions with us.
Subject
to certain exceptions, the holders of a majority in principal amount of the then-outstanding L Bonds will have the right to direct
the time, method and place of conducting any proceeding for exercising any remedy available to the trustee. The indenture provides
that if an event of default specified in the indenture shall occur and not be cured, the trustee will be required, in the exercise
of its power, to use the degree of care of a reasonable person in the conduct of his own affairs. Subject to such provisions,
the trustee will be under no obligation to exercise any of its rights or powers under the indenture at the request of any holder
of L Bonds, unless the holder shall have offered to the trustee security and indemnity satisfactory to it against any loss, liability
or expense.
Resignation
or Removal of the Trustee
The
trustee may resign at any time, or may be removed by the holders of a majority of the aggregate principal amount of the outstanding
L Bonds. In addition, we may remove the trustee for certain failures in its duties, including the insolvency of the trustee or
the trustee’s ineligibility to serve as trustee under the Trust Indenture Act of 1939. However, no resignation or removal
of the trustee may become effective until a successor trustee has accepted the appointment as provided in the indenture.
Reports
to Trustee
We
will provide the trustee with (i) a calculation date report by the 15
th
day of each month containing a calculation
of the debt coverage ratio that includes a summary of all cash, life insurance policy investments serving as collateral, as well
as our total outstanding indebtedness including outstanding principal balances, interest credited and paid, transfers made, any
redemption or repayment and interest rate paid; (ii) copies of our audited annual financials, no earlier than when the same become
a matter of public record; and (iii) any additional information reasonably requested by the trustee.
Certain
Charges
We
and our servicing agents, if any, may assess service charges for changing the registration of any L Bond to reflect a change in
name of the holder, multiple changes in interest payment dates or transfers (whether by operation of law or otherwise) of an L
Bond by the holder to another person. The indenture permits us to set off, against amounts otherwise payable to you under the
L Bonds, the amount of these charges.
Variations
in Terms and Conditions
We
may from time to time vary the terms and conditions of the L Bonds offered, including but not limited to minimum initial principal
investment amount requirements, maximum aggregate principal amount limits, interest rates, minimum denominations, service and
other fees and charges, and redemption provisions. Terms and conditions may be varied by state, locality, principal amount, type
of investor (for example, new or current investor) or as otherwise permitted under the indenture governing the securities offered
by this prospectus. No change in terms, however, will apply to any L Bonds already issued and outstanding at the time of such
change.
Satisfaction
and Discharge of Indenture
The
indenture shall cease to be of further effect upon the payment in full of all of the outstanding L Bonds and the delivery of an
officer’s certificate to the trustee stating that we do not intend to issue additional L Bonds under the indenture or, with
certain limitations, upon deposit with the trustee of funds sufficient for the payment in full of all of the outstanding L Bonds.
Reports
We
will publish annual reports containing financial statements and quarterly reports containing financial information for the first
three quarters of each fiscal year. We will send copies of these reports, at no charge, to any holder of L Bonds who sends us
a written request.
Annex
E
AMENDED
AND RESTATED
MASTER
EXCHANGE AGREEMENT
by
and among
GWG
HOLDINGS, INC.,
GWG
LIFE, LLC,
THE
BENEFICIENT COMPANY GROUP, L.P.,
MHT
FINANCIAL SPV, LLC,
and
EACH
SELLER EXCHANGE TRUST LISTED IN SCHEDULE I HERETO
TABLE
OF CONTENTS
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Page
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ARTICLE
I
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CERTAIN
DEFINITIONS
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Section
1.1
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Definitions.
|
2
|
Section
1.2
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Construction
|
5
|
|
|
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ARTICLE
II
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EXCHANGES;
CLOSING
|
|
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Section
2.1
|
The
Sale and Exchange
|
5
|
Section
2.2
|
Subscription
for GWG Common Stock and L Bond
|
6
|
Section
2.3
|
Commercial
Loan.
|
6
|
Section
2.4
|
Closing;
Closing Deliverables
|
6
|
|
|
|
ARTICLE
III
|
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
|
|
|
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Section
3.1
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Organization
|
8
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Section
3.2
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Due
Authorization
|
8
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Section
3.3
|
No
Conflict.
|
8
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Section
3.4
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Governmental
Authorities; Consents
|
9
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Section
3.5
|
Litigation
|
9
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Section
3.6
|
Capitalization
|
9
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Section
3.7
|
Partnership
Taxation
|
10
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Section
3.8
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Investment
Company Act
|
10
|
Section
3.9
|
Future
Listing
|
10
|
Section
3.10
|
Financial
Statements
|
10
|
Section
3.11
|
Absence
of Undisclosed Liabilities
|
1
1
|
Section
3.12
|
Material
Changes
|
11
|
Section
3.13
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Compliance
|
11
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Section
3.14
|
Title
to Assets
|
11
|
Section
3.15
|
Tax
Matters
|
12
|
Section
3.16
|
Brokers’
Fees
|
12
|
Section
3.17
|
Disclosure
Documents; Acknowledgment
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12
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Section
3.18
|
Full
Disclosure
|
12
|
|
|
|
ARTICLE
IV
|
REPRESENTATIONS
AND WARRANTIES OF THE SELLER TRUSTS AND MHT SPV
|
|
|
|
Section
4.1
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Organization
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12
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Section
4.2
|
Due
Authorization
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13
|
Section
4.3
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No
Conflict.
|
13
|
Section
4.4
|
Governmental
Authorities; Consents
|
13
|
Section
4.5
|
Title
to MLP Units
|
14
|
Section
4.6
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Litigation
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14
|
Section
4.7
|
Receipt
of All Necessary Information
|
14
|
Section
4.8
|
Accredited
Investor
|
14
|
Section
4.9
|
Legends
|
14
|
Section
4.10
|
Brokers’
Fees
|
14
|
|
|
|
ARTICLE
V
|
REPRESENTATIONS
AND WARRANTIES
OF GWG AND GWG LIFE
|
|
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|
Section
5.1
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Corporate
Organization
|
15
|
Section
5.2
|
Due
Authorization
|
15
|
Section
5.3
|
No
Conflict.
|
16
|
Section
5.4
|
Compliance
|
16
|
Section
5.5
|
Governmental
Authorities; Consents
|
16
|
Section
5.6
|
GWG
Reports; Financial Statements and Sarbanes-Oxley Act
|
17
|
Section
5.7
|
Tax
Matters
|
18
|
Section
5.8
|
Capitalization
|
19
|
Section
5.9
|
Litigation
|
20
|
Section
5.10
|
Title
to Assets
|
20
|
Section
5.11
|
Investment
Company Act
|
20
|
Section
5.12
|
Purchase
Entirely for Own Account
|
20
|
Section
5.13
|
Receipt
of Information
|
20
|
Section
5.14
|
Accredited
Investor
|
21
|
Section
5.15
|
Restricted
Security
|
21
|
Section
5.16
|
No
Public Market
|
21
|
Section
5.17
|
Legends
|
21
|
Section
5.18
|
Private
Placement Memorandum
|
21
|
Section
5.19
|
Brokers’
Fees
|
22
|
Section
5.20
|
Full
Disclosure
|
22
|
|
|
|
ARTICLE
VI
|
COVENANTS
OF THE COMPANY
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|
|
|
Section
6.1
|
Conduct
of Business
|
22
|
Section
6.2
|
Listing
|
23
|
Section
6.3
|
Company
Restrictions
|
23
|
Section
6.4
|
Informational
Rights
|
24
|
Section
6.5
|
Investment
Company Act; Master Limited Partnership Status
|
24
|
|
|
|
ARTICLE
VII
|
COVENANTS
OF GWG
|
|
|
|
Section
7.1
|
Conduct
of Business
|
24
|
Section
7.2
|
No
Liens or Security Interests
|
25
|
Section
7.3
|
Preparation
of SEC Documents
|
25
|
Section
7.4
|
GWG
Stockholders’ Meeting
|
26
|
Section
7.5
|
NASDAQ
Listing of Additional Shares
|
27
|
Section
7.6
|
Resale
Registration
|
27
|
Section
7.7
|
No
Solicitation
|
27
|
|
|
|
ARTICLE
VIII
|
JOINT
COVENANTS
|
|
|
|
Section
8.1
|
Consents
and Approvals
|
28
|
Section
8.2
|
Governance
Matters
|
29
|
Section
8.3
|
Publicity
|
30
|
Section
8.4
|
Make-Whole
|
31
|
Section
8.5
|
Strategic
Initiative
|
31
|
Section
8.6
|
Orderly
Marketing Arrangements
|
31
|
Section
8.7
|
Further
Assurances.
|
32
|
Section
8.8
|
Transfer
Taxes
|
3
2
|
Section
8.9
|
MHT
SPV Lock-Up
|
32
|
|
|
|
ARTICLE
IX
|
CONDITIONS
TO OBLIGATIONS
|
|
|
|
Section
9.1
|
Conditions
to the Obligations of Each Party
|
32
|
Section
9.2
|
Conditions
to the Obligation of GWG and GWG Life
|
33
|
Section
9.3
|
Conditions
to the Obligations of Company, the Seller Trusts and MHT SPV
|
35
|
|
|
|
ARTICLE
X
|
TERMINATION;
EFFECTIVENESS
|
|
|
|
Section
10.1
|
Term;
Termination
|
37
|
Section
10.2
|
Notice
of Termination
|
38
|
Section
10.3
|
Effect
of Termination
|
38
|
Section
10.4
|
Termination
Fee
|
38
|
|
|
|
ARTICLE
XI
|
MISCELLANEOUS
|
|
|
|
Section
11.1
|
Waiver
|
38
|
Section
11.2
|
Notices
|
39
|
Section
11.3
|
Assignment
|
40
|
Section
11.4
|
Rights
of Third Parties
|
40
|
Section
11.5
|
Expenses
|
40
|
Section
11.6
|
Governing
Law
|
40
|
Section
11.7
|
Captions;
Counterparts.
|
40
|
Section
11.8
|
Schedules
and Exhibits
|
40
|
Section
11.9
|
Entire
Agreement
|
40
|
Section
11.10
|
Amendments
|
40
|
Section
11.11
|
Severability
|
41
|
Section
11.12
|
Jurisdiction;
WAIVER OF TRIAL BY JURY
|
41
|
Section
11.13
|
Specific
Performance
|
41
|
Section
11.14
|
Survival
of Representations and Warranties
|
41
|
Section
11.15
|
[Reserved].
|
41
|
Section
11.16
|
Seller
Trusts and Trust Advisors
|
42
|
Section
11.17
|
[Reserved]
|
4
2
|
|
|
|
Signature
Page
|
|
SCHEDULE
Schedule
I – List of Seller Exchange Trusts
EXHIBITS
Exhibit
A – Principal Terms of GWG L Bonds
Exhibit
B – Principal Terms of Commercial Loan Agreement
Exhibit
C – Form of Assignment and Assumption of MLP Units
AMENDED
AND RESTATED
MASTER
EXCHANGE AGREEMENT
This
Amended and Restated Master Exchange Agreement (this “
Agreement”
), effective as of January 12, 2018, amends
and restates in its entirety that certain Master Exchange Agreement dated as of January 12, 2018, by and among GWG HOLDINGS, INC.,
a Delaware corporation (“
GWG
”), GWG LIFE, LLC, a Delaware limited liability company and wholly owned Subsidiary
of GWG (“
GWG LIFE
”), THE BENEFICIENT COMPANY GROUP, L.P., a Delaware limited partnership (the “
Company
”),
MHT FINANCIAL SPV, LLC, a Delaware limited liability company and wholly owned subsidiary of MHT Financial, L.L.C. (“
MHT
SPV
”), and each of the EXCHANGE TRUSTS set out on
Schedule I
(together with such additional Exchange Trusts that
become a party hereto by joinder prior to the Closing, each a “
Seller Trust
” and collectively the “
Seller
Trusts
”), and as agreed to and accepted by Murray T. Holland and Jeffrey S. Hinkle as trust advisors to the Seller Trusts
(the “
Trust Advisors
”).
WHEREAS,
on December 23, 2017, GWG and GWG Life submitted an irrevocable bid for the transactions contemplated herein, which was accepted
by the Company, MHT SPV and the Seller Trusts, and agreed to and accepted by the Trust Advisors, on January 12, 2018;
WHEREAS,
the Parties now wish to amend and restate this Agreement in its entirety to correct certain provisions contained herein;
WHEREAS,
the Seller Trusts are the owners of certain common units of partnership interests of the Company (the “
MLP Units
”)
held, collectively, by the Seller Trusts, which amount may be adjusted prior to the Closing (as defined herein);
WHEREAS,
upon the terms and subject to the conditions of this Agreement, (a) GWG desires to acquire the MLP Units owned by the Seller Trusts
at a price of $10.00 per unit in exchange for (i) up to 29.1 million shares of common stock, par value $0.001 of GWG (the “
GWG
Common Stock
”) (subject to adjustment as set forth in
Section 8.4
hereof), the resale of which shall be registered
with the Securities and Exchange Commission (the “
SEC
”) and, subject to issuance, approved for listing on The
NASDAQ Capital Market (“
NASDAQ
”) (the “
Stock Consideration
”), (ii) L Bonds issued by GWG
(the “
GWG L Bonds
”) in an aggregate principal amount of up to $360 million (the “
Debt Consideration
”),
and (iii) $150 million in cash (the “
Cash Payment
”), and (b) the Seller Trusts desire to exchange the MLP Units,
on a pro rata basis, for such GWG Common Stock, GWG L Bonds, and cash (the Cash Payment, the Debt Consideration and the Cash Payment,
collectively, the “
Consideration
”);
WHEREAS,
in consideration of the foregoing, and upon the terms and subject to the conditions of this Agreement, MHT SPV will subscribe
for GWG Common Stock and GWG L Bonds in the denominations determined in accordance with
Section 2.2
below for an aggregate
purchase price of $150 million in cash, subject to acceptance by GWG in its sole discretion and
WHEREAS,
the Company shall enter into a commercial loan agreement with GWG Life (the “
Loan Agreement
”), the proceeds
of which the Company shall use in furtherance of the expansion of its business;
NOW,
THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth
in this Agreement, and intending to be legally bound hereby, the parties hereby agree as follows:
ARTICLE
I
CERTAIN
DEFINITIONS
Section
1.1
Definitions
. As used this Agreement, the following terms shall have the following meanings:
“
Action
”
means any litigation, claim, action, suit, case, dispute, assessment, summon, court notification, inspection, infraction notice,
investigation, or judicial, administrative, arbitration or other proceeding of any nature, including, but not limited to, civil,
tax, labor, social security, environmental, whether at law or in equity, in each case that is by or before any Governmental Authority.
“
Affiliate
”
means, with respect to any specified Person, any Person that, directly or indirectly, controls, is controlled by, or is under
common control with, such specified Person, through one or more intermediaries or otherwise.
“
Amended
& Restated Limited Partnership Agreement
” means the Amended & Restated Limited Partnership Agreement of the
Company, dated as of September 1, 2017.
“
Business
Day
” means a day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized
or required by Law to close.
“
Confidentiality
Agreement
” means that certain letter agreement, dated as of October 4, 2017, by and between GWG and the Company.
“
Contracts
”
means any legally binding contracts, agreements, subcontracts, leases, and purchase orders, whether written or oral.
“
Exchange
Act
” means the Securities Exchange Act of 1934, as amended.
“
GAAP
”
means the United States generally accepted accounting principles, consistently applied.
“
Governmental
Authority
” means any federal, state, provincial, municipal, local or foreign government, governmental authority, regulatory
or administrative agency, governmental commission, department, board, bureau, agency or instrumentality, court or tribunal, or
any arbitral tribunal.
“
Governmental
Order
” means any order, judgment, injunction, decree, writ, stipulation, compliance agreement, settlement agreement,
decision, determination or award, in each case, entered by or with any Governmental Authority or arbitrator.
“
GWG
Board
” means the board of directors of GWG.
“
GWG
Stockholder
” means a holder of shares of GWG Common Stock.
“
HSR
Act
” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
“
Internal
Revenue Code
” means the Internal Revenue Code of 1986, as amended, including and future provisions of succeeding law.
“
Investment
Company Act
” means the Investment Company Act of 1940, as amended.
“
Law
”
means any statute, law, ordinance, rule, regulation or Governmental Order, in each case, of any Governmental Authority.
“
Liabilities
”
means any and all debts, liabilities and obligations, whether accrued or fixed, absolute or contingent, known or unknown, matured
or unmatured or determined or determinable, including those arising under any Law (including any environmental law), Action or
Governmental Order and those arising under any Contract, agreement, arrangement, commitment or undertaking.
“
Lien
”
means any mortgage, deed of trust, pledge, hypothecation, encumbrance, security interest or other lien of any kind.
“
Material
Adverse Effect
” means, with respect to a party (including, as appropriate, its Subsidiaries), any event, change, effect
or development that, individually or in the aggregate, (i) has or would reasonably be expected to have a material and adverse
effect on the condition (financial or otherwise), results of operations, business or prospects of such party and its Subsidiaries,
taken as a whole, or (ii) materially impairs the ability of a party to perform its obligations under this Agreement or otherwise
materially impede or delay the consummation of the transactions contemplated by this Agreement; provided, however, that in the
case of clause (i) only, a “Material Adverse Effect” shall not be deemed to include events, changes, effects or developments
resulting from or arising out of any of the following, either alone or in combination, and none of the following, either alone
or in combination, shall be deemed to constitute or contribute to a Material Adverse Effect, or otherwise be taken into account
in determining whether a Material Adverse Effect has occurred or would be reasonably expected to occur: (A) changes after the
date of this Agreement in GAAP or regulatory accounting requirements or principles (so long as such party and its Subsidiaries
are not materially disproportionately affected thereby); (B) changes after the date of this Agreement in Laws of general applicability
to financial institutions (so long as such party and its Subsidiaries are not materially disproportionately affected thereby);
(C) changes after the date of this Agreement in global, national or regional political conditions or general economic or market
conditions, including changes in prevailing interest rates, credit availability and liquidity, currency exchange rates and price
levels or trading volumes in U.S. or foreign securities markets (so long as such party and its Subsidiaries are not materially
disproportionately affected thereby); (D) a decline in the trading price of a party’s common equity securities or a failure,
in and of itself, to meet earnings projections, but not, in either case, including any underlying causes thereof; (E) the impact
of the public disclosure, pendency or performance of this Agreement or the transactions contemplated hereby including the impact
of the transactions contemplated by this Agreement on relationships with clients, customers and employees; and (F) any natural
disaster, outbreak or escalation of hostilities, declared or undeclared acts or war or terrorism, or any escalation or worsening
thereof, whether or not occurring or commenced before or after the date of this Agreement.
“
Organizational
Documents
” means: (i) in the case of a Person that is a corporation or a company, its articles or certificate of incorporation
and its by-laws, memorandum of association, articles of association, regulations or similar governing instruments required by
the laws of its jurisdiction of formation or organization; (ii) in the case of a Person that is a partnership, its articles or
certificate of partnership, formation or association, and its partnership agreement (in each case, limited, limited liability,
general or otherwise); (iii) in the case of a Person that is a limited liability company, its articles or certificate of formation
or organization, and its limited liability company agreement or operating agreement; and (iv) in the case of a Person that is
none of a corporation, partnership (limited, limited liability, general or otherwise), limited liability company or natural person,
its governing instruments as required or contemplated by the laws of its jurisdiction of organization.
“
Person
”
means any individual, firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint
venture, joint stock company, governmental agency or instrumentality or other entity of any kind.
“
Representative
”
means, as to any Person, any of the officers, directors, managers, employees, counsel, accountants, financial advisors, and consultants
of such Person.
“
Securities
Act
” means the Securities Act of 1933, as amended.
“
Subsidiary
”
means, with respect to a Person, any corporation or other organization (including a limited liability company or a partnership),
whether incorporated or unincorporated, of which such Person directly or indirectly owns or controls a majority of the securities
or other interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization, or any organization of which such Person or any of its
Subsidiaries is, directly or indirectly, a general partner or managing member.
“
Tax
”
means any federal, state, provincial, territorial, local, foreign and other net income tax, alternative or add-on minimum tax,
franchise tax, gross income, adjusted gross income or gross receipts tax, employment related tax (including employee withholding
or employer payroll tax, FICA, or FUTA) ad valorem, transfer, franchise, license, excise, severance, stamp, occupation, premium,
personal property, real property, capital stock, profits, disability, registration, value added, customs duties, escheat, and
sales or use tax, or other tax, governmental fee or other like assessment or similar government charges in the nature of a tax,
together with any interest, penalty, addition to tax or additional amount imposed with respect thereto by a Governmental Authority,
whether as a primary obligor or as a result of being a transferee or successor of another Person or a member of an affiliated,
consolidated, unitary, combined or other group or pursuant to Law, Contract or otherwise.
“
Tax
Return
” means any return, report, statement, refund, claim, declaration, information return, statement, estimate or
other document filed or required to be filed with respect to Taxes, including any schedule or attachment thereto and including
an amendments thereof.
“
Transaction
Agreements
” shall mean this Agreement, the Orderly Marketing Agreement, the Shareholders’ Agreement, the Registration
Rights Agreement, and the Voting Agreement, as each such term is defined herein.
Section
1.2
Construction
.
(a)
Unless the context of this Agreement otherwise requires, (i) words of any gender include each other gender, (ii) words using the
singular or plural number also include the plural or singular number, respectively, (iii) the terms “hereof,” “herein,”
“hereby,” “hereto” and derivative or similar words refer to this entire Agreement, (iv) the terms “Article,”
“Section,” “Schedule” and “Exhibit” refer to the specified Article, Section, Schedule or Exhibit
of or to this Agreement, (v) the word “including” means “including without limitation,” (vi) the word
“or” shall be disjunctive but not exclusive, (vii) references to agreements and other documents shall be deemed to
include all subsequent amendments and other modifications thereto and (viii) references to statutes shall include all regulations
promulgated thereunder and references to statutes or regulations shall be construed as including all statutory and regulatory
provisions consolidating, amending or replacing the statute or regulation.
(b)
Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified.
If any action is to be taken or given on or by a particular calendar day, and such calendar day is not a Business Day, then such
action may be deferred until the next Business Day.
(c)
All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP.
ARTICLE
II
EXCHANGES;
CLOSING
Section
2.1
The Sale and Exchange
.
(a)
Upon the terms and subject to the conditions of this Agreement, at the Closing, each Seller Trust shall sell, assign, transfer
and deliver to GWG, and GWG shall purchase and acquire from each Seller Trust, (i) those MLP Units set forth next to each Seller
Trust’s name on
Schedule I
, free and clear of all Liens (other than Liens arising under the Securities Act and applicable
state securities laws), at a price of $10.00 per MLP Unit (the “
MLP Unit Exchange Price
”) in exchange for aggregate
Consideration to be delivered in the form of (i) the Stock Consideration, free and clear of all Liens, (ii) the Cash Payment and
(iii) the Debt Consideration containing the terms set forth in
Exhibit A
hereto, free and clear of all Liens, each in such
amount as is set forth next to such Seller Trust’s name on
Schedule I
.
(b)
At the Closing, in consideration for the transfer of the MLP Units to GWG, GWG shall make the Cash Payment and issue the Stock
Consideration and the Debt Consideration to each Seller Trust pro rata as set forth next to such Seller Trust’s name on
Schedule I
. The Stock Consideration and the Debt Consideration shall be issued in such amounts and proportions as GWG,
the Company and the Trust Advisors on behalf of the Seller Trusts shall determine not less than five (5) Business Days prior to
the Closing; provided, however, that in no event shall the aggregate amount of GWG Common Stock issued as Stock Consideration
exceed 29.1 million shares at a price per share of $10.00 and the aggregate principal amount of GWG L Bonds issued as Debt Consideration
exceed $360 million; and provided, further, that in no event shall the aggregate Consideration received by the Seller Trusts be
less than $550 million nor greater than $800 million.
Section
2.2
Subscription for GWG Common Stock and L Bond
. Upon the terms and subject to the conditions of this Agreement, at the
Closing, MHT SPV shall purchase from GWG, subject to GWG’s acceptance in its sole discretion of MHT SPV’s subscription,
for an aggregate purchase price of $150 million, shares of GWG Common Stock at a price of $10.00 per share and GWG L Bonds (at
100% of the face amount thereof), in a proportion such that the total amount of GWG L Bonds issued by GWG under this Agreement
is equal to the total amount of GWG Common Stock issued by GWG under this Agreement. Specifically, subject to GWG’s acceptance
as set forth above, MHT SPV shall acquire, for an aggregate purchase price of $150 million, (i) GWG Common Stock in an amount
equal to 50% of the Consideration minus the Stock Consideration, and (ii) GWG L Bonds in an amount equal to 50% of the Consideration
minus the Debt Consideration.
Section
2.3
Commercial Loan
. At the Closing (as defined in
Section 2.4(a)
below), the Company shall enter into the Loan
Agreement with GWG Life in a principal amount of $275 million, which may be increased prior to Closing up to $400 million, and
containing the principal terms as set forth in
Exhibit B
hereto.
Section
2.4
Closing; Closing Deliverables
.
(a)
Upon the terms and subject to the conditions of this Agreement, the closing (the “
Closing
”) of the transaction
contemplated by this Agreement will take place at 10:00 a.m., New York time, on the date that is the second Business Day after
the satisfaction or waiver of the conditions (other than those conditions that by their nature are to be satisfied at the Closing,
but subject to the satisfaction or waiver of those conditions) set forth in Article IX, at the offices of Greenberg Traurig, LLP,
200 Park Avenue, New York, New York 10166, or such other time, date or place as the parties shall agree to in writing (the date
on which the Closing occurs, the “
Closing Date
”).
(b)
At the Closing:
(i)
Each Seller Trust shall deliver to GWG a duly executed Assignment and Assumption of MLP Units substantially in the form attached
hereto as
Exhibit C
evidencing the transfer of such Seller Trust’s MLP Units to GWG, free and clear of all Liens
(other than Liens arising under the Securities Act and applicable state securities laws);
(ii)
GWG shall deliver to each Seller Trust, pro rata, (A) a duly executed stock certificate, registered in the name of such Seller
Trust and dated the Closing Date, evidencing the pro rata Stock Consideration issuable thereto, free and clear of all Liens (other
than Liens arising under the Securities Act and applicable state securities laws), (B) a duly executed certificate, registered
in the name of such Seller Trust, evidencing the pro rata Debt Consideration issuable thereto, and (C) the Cash Payment payable
pro rata to such Seller Trust by wire transfer of immediately available funds to an account identified by such Seller Trust not
less than two Business Days prior to Closing, each in the amounts set forth on
Schedule I
hereto;
(iii)
GWG shall record in its books and records the ownership of the Stock Consideration and the Debt Consideration in such name or
names as shall be designated by the Trust Advisors on behalf of the Seller Trusts not less than two (2) Business Days prior to
Closing;
(iv)
Subject to GWG’s acceptance, MHT SPV shall deliver $150 million by wire transfer of immediately available funds to an account
identified by GWG not less than two Business Days prior to Closing as payment in full for such number of shares of GWG Common
Stock and such principal amount of GWG L Bonds as shall be determined in accordance with
Section 2.2
above;
(v)
GWG shall (A) deliver to MHT SPV a duly executed stock certificate, registered in the name of MHT SPV and dated the Closing Date,
evidencing shares of GWG Common Stock, free and clear of all Liens (other than Liens arising under the Securities Act and applicable
state securities laws), and (B) record in its books and records the ownership of GWG L Bonds by MHT SPV in an amount determined
in accordance with
Section 2.2
above;
(vi)
GWG Life shall deliver the proceeds of the loan to the Company in accordance with the Loan Agreement; and
(vii)
The appropriate parties shall deliver the items required to be delivered pursuant to Article IX.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Except
as set forth in the Schedules to this Agreement (each of which qualifies (i) the correspondingly numbered representation, warranty
or covenant if specified therein and (ii) such other representations, warranties or covenants where its relevance as an exception
to (or disclosure for purposes of) such other representation, warranty or covenant is readily apparent on its face and shall not
be deemed to expand in any way the scope or effect of any such representations, warranties or covenants or to create any of the
same), the Company represents and warrants to GWG and GWG Life, as of the date hereof and the Closing, as follows:
Section
3.1
Organization
. The Company and each of its Subsidiaries has been duly organized and is validly existing and in good
standing under the Laws of State of Delaware and has the requisite partnership or corporate power and authority to own, lease
and operate its assets and properties and to conduct its business as it is now being conducted. The copies of the Organizational
Documents of the Company and each Subsidiary previously made available by the Company to GWG are true, correct and complete and
are in full force and effect.
Section
3.2
Due Authorization
.
(a)
The Company has all requisite partnership power and authority to execute, deliver and perform its obligations under this Agreement
and each of the other Transaction Agreements to which it is a party, and (subject to the approvals described in
Section 3.4
)
to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and
each of the other Transaction Agreements to which it is a party and the consummation of the transactions contemplated hereby and
thereby have been duly and validly authorized and approved by the general partner of the Company and no other proceeding on the
part of the Company is necessary to authorize such agreements or the Company’s performance thereunder. This Agreement has
been duly and validly executed and delivered by the Company, and each of the other Transaction Agreements to which it is a party,
when executed and delivered, will be duly and validly executed and delivered by the Company; and, assuming due authorization and
execution by each other party hereto and thereto, each of this Agreement and the other Transaction Agreements to which it is a
party constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its
terms, subject (i) to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting
creditors’ rights generally, (ii) as to enforceability, to general principles of equity, and (iii) to applicable requirements
of the HSR Act, and any other Laws designed or intended to prohibit, restrict or regulate antitrust, monopolization, restraint
of trade or competition.
(b)
The Loan Agreement has been duly and validly authorized and approved by the general partner of the Company and, when executed
and delivered as contemplated therein, will have been duly and validly executed and delivered by it, and assuming the due authorization,
execution and delivery thereof by GWG Life, will constitute a legal, valid and binding obligation of the Company, enforceable
against it in accordance with its terms, subject (i) to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar Laws affecting creditors’ rights generally and (ii) as to enforceability, to general principles of
equity
Section
3.3
No Conflict
. Subject to the receipt of the consents, approvals, authorizations and other requirements set forth in
Section 3.4
, the execution, delivery and performance of this Agreement by the Company and the consummation of the transactions
contemplated hereby do not and will not (a) conflict with or violate any provision of, or result in any breach of the Organizational
Documents of the Company or any of its Subsidiaries, (b) conflict with or result in any violation of any provision of any Law,
permit or Governmental Order applicable to the Company or any of its Subsidiaries, or any of their respective properties or assets,
(c) violate, conflict with, result in a breach of any provision of or the loss of any benefit under, constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a default) under, or result in the termination or acceleration
of, or a right of termination, cancellation, modification, acceleration or amendment under, accelerate the performance required
by, or result in the acceleration or trigger of any payment, posting of collateral (or right to require the posting of collateral),
time of payment, vesting or increase in the amount of any compensation or benefit payable pursuant to, any of the terms, conditions
or provisions of any Contract of the Company or its Subsidiaries or (d) result in the creation of any Lien upon any of the properties,
equity interests or assets of the Company or any of its Subsidiaries, except (in the case of clauses (b), (c), or (d) above) for
such violations, conflicts, breaches or defaults which would not, individually or in the aggregate have a Material Adverse Effect
on the Company and its Subsidiaries as a whole.
Section
3.4
Governmental Authorities; Consents
. No consent, approval or authorization of, or designation, declaration or filing
with, any Governmental Authority or notice, approval, consent waiver or authorization from any third party is required on the
part of the Company with respect to the Company’s execution, delivery or performance of its obligations under this Agreement
or the consummation of the transactions contemplated hereby, except for waiting period requirements of the HSR Act and any consent,
approvals, authorizations, designations, declarations, waivers or filings, the absence of which would not have a Material Adverse
Effect on the Company and its Subsidiaries as a whole.
Section
3.5
Litigation
. There are no pending, or to the knowledge of the Company, threatened, Actions against the Company or otherwise
affecting the Company or its assets or its partnership interests.
Section
3.6
Capitalization
.
(a)
The partnership interests/units authorized for issuance by the Company are an unlimited number of common units under the Amended
& Restated Limited Partnership Agreement, of which 48,924,321 common units are outstanding. All of such common units (i) have
been duly authorized and validly issued and are fully paid and non- assessable, (ii) were issued in compliance in all material
respects with applicable Law and (iii) were not issued in breach or violation of any preemptive rights or any Contract. Beneficient
Company Holdings, L.P. (“
Company Holdings
”) is a wholly owned subsidiary of the Company, and all of its classes
of the partnership interests/units (i) have been duly authorized and validly issued and are fully paid and non-assessable, (ii)
were issued in compliance in all material respects with applicable Law and (iii) were not issued in breach or violation of any
preemptive rights or any Contract.
(b)
Except for additional Seller Trusts that may become party hereto prior to the Closing, no Person has any right of first refusal,
preemptive right, right of participation, or any similar right to participate in the transactions contemplated by this Agreement.
Except as set forth on
Schedule 3.6(b)
, there are no outstanding options, warrants, script rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or
exchangeable for, or giving any Person any right to subscribe for or acquire, any equity or equity-linked interests of the Company
or any Subsidiary of the Company, nor are there any Contracts by which the Company or any Subsidiary of the Company is or may
become bound to issue additional equity or equity-linked interests.
(c)
Other than as contemplated in this Agreement, the sale and transfer of the MLP Units to GWG (or any of its Affiliates) will not
obligate the Company or any Subsidiary of the Company to issue any equity or equity-linked interests to any Person and will not
result in a right of any holder of Company equity or equity-linked interests to adjust the exercise, conversion, exchange or reset
price under such equity or equity-linked interests. Other than the Amended & Restated Limited Partnership Agreement, there
are no partnership agreements, voting agreements or other similar agreements with respect to the Company’s partnership interests
to which the Company is a party.
(d)
Except as contemplated by the terms of this Agreement or otherwise as set forth on
Schedule 3.6(d)
, there are no agreements
or other obligations (contingent or otherwise) which may require the Company or any Subsidiary to repurchase or otherwise acquire
any equity interests, securities or other obligations.
(e)
Except as detailed on
Schedule 3.6(e)
, the Company does not own, directly or indirectly, and is not a party to a Contract
to acquire, any securities of any entity or association.
Section
3.7
Partnership Taxation
. The Company currently is subject to taxation as a partnership for federal income-tax purposes.
Immediately after the Closing, the Company will continue to be taxed as a partnership for federal income-tax purposes. After giving
effect to the registration of Company’s Common Units (as defined in the Amended & Restated Limited Partnership Agreement)
under the Exchange Act and the Listing (as defined below, the Company expects to continue to be taxed as a partnership for federal
income-tax purposes, provided that there is no change in the current rules regarding the treatment of publicly-traded partnerships,
within the meaning of Section 7704(b) of the Internal Revenue Code of 1986.
Section
3.8
Investment Company Act
. The Company is not, and immediately after the Closing will not be, (i) registered, or required
to be registered as, as an investment company under the Investment Company Act or (ii) directly or indirectly “controlled”
by a Person registered, or required to be registered as, as an investment company under the Investment Company Act, in each case
within the meaning of the Investment Company Act.
Section
3.9
Future Listing
. The Company has no knowledge of facts that are likely to have the effect of preventing or materially
delaying the registration of Common Units (as defined in the Amended & Restated Limited Partnership Agreement) in the Company
under the Exchange Act, or the listing of such Common Units on a nationally recognized stock exchange.
Section
3.10
Financial Statements
. Each of (i) the pro forma condensed financial statements of the Company, included in the
electronic date room, as of and for the 12-month period ended December 31, 2016, (ii) the pro forma condensed balance sheet as
of September 1, 2017 included in the Company’s Business Plan, dated September 2017 and included in the electronic data room
(the “
Business Plan
”), and (iii) the financial projections for the 12 months ended December 31, 2017 and prepared
as of September 1, 2017, included in the Business Plan (the “
Financial Statements
”), furnished to GWG have
been prepared in accordance with GAAP, except as may be otherwise specified in such Financial Statements or the notes thereto,
and such Financial Statements fairly present in all material respects the pro forma and projected financial position of the Company
and its consolidated Subsidiaries, as the case may be, as of and for the dates thereof and the periods then ended.
Section
3.11
Absence of Undisclosed Liabilities
. Neither the Company nor any Subsidiary has any material Liabilities which are
not reflected on the Financial Statements other than (i) material Liabilities that have arisen since the date of such financial
statements in the ordinary course of business consistent with past practice, including offers of employment, issuance of securities
in connection with management incentive plans, non-competition arrangements, and restrictive covenants in employment agreements,
(ii) agreements with additional sellers as contemplated herein, (iii) agreements included in the electronic data room made available
to GWG and GWG Life, (iv) fees and expenses of financial, accounting and legal advisors, including legal fees and expenses, incurred
in connection with the transactions contemplated by this Agreement, and (v) agreements otherwise described in the Private Placement
Memorandum, dated September 20, 2017 and provided to each of GWG and GWG Life in connection with the transactions contemplated
hereunder, none of which is a Liability resulting from or arising out of any breach of contract, breach of warranty, tort, infringement,
misappropriation, or violation of Law.
Section
3.12
Material Changes
. Other than the transactions contemplated by this Agreement, since the date of the Financial Statements,
there has been no event, occurrence or development that has not been disclosed in the Private Placement Memorandum, dated September
20, 2017 and/or the electronic data room that has had or that could reasonably be expected to result in a Material Adverse Effect.
Section
3.13
Compliance
. Neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event has occurred
that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary
under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation
of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any
of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any
court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental
authority, including without limitation all foreign, federal, state and local laws applicable to its business except in each case
as could not have a Material Adverse Effect.
Section
3.14
Title to Assets
. The Company and the Subsidiaries each have (i) good and marketable title in fee simple to all real
property owned by them that is material to the business of the Company and its Subsidiaries and (ii) good and marketable title
in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free
and clear of all Liens.
Section
3.15
Tax Matters
. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect, the Company and each Subsidiary has filed all necessary federal, state and foreign income
and franchise tax returns (including informational returns) and has paid or accrued all taxes shown as due thereon, and the Company
has no knowledge of a tax deficiency which has been asserted or threatened against the Company or any Subsidiary.
Section
3.16
Brokers’ Fees
. Other than Credit Suisse Securities (USA) LLC and Castle Hill Capital Partners, Inc., no broker,
finder, investment banker or other Person is entitled to any brokerage fee, finders’ fee or other commission in connection
with the transactions contemplated by this Agreement based upon arrangements made by the Company or any of its Affiliates.
Section
3.17
Disclosure Documents; Acknowledgment
. All written disclosure documentation furnished by or on behalf of the Company
to GWG in the electronic data room in connection with the transactions contemplated by this Agreement is materially accurate and
does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not misleading. The Company acknowledges and agrees that
GWG and GWG Life have not made and are not making any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Article V.
Section
3.18
Full Disclosure
. The representations and warranties of the Company contained in this Agreement (and in any schedule,
exhibit, certificate or other instrument to be delivered under this Agreement) are true and correct in all material respects,
and such representations and warranties do not omit any material fact necessary to make the statements contained therein, in light
of the circumstances under which they were made, not misleading. There is no fact of which the Company has knowledge and that
has not been disclosed to GWG pursuant to this Agreement, which has had or which could reasonably be expected to have a Material
Adverse Effect on the Company, or to materially and adversely affect the ability of the Company to consummate in a timely manner
the transactions contemplated hereby.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE SELLER TRUSTS AND MHT SPV
Each
of the Seller Trusts and MHT SPV hereby severally and not jointly represent and warrant to GWG, GWG Life and the Company, as of
the date hereof and the Closing, as follows:
Section
4.1
Organization
. Each has been duly organized and is validly existing and in good standing under the Laws of the jurisdiction
of its organization, and has the requisite power and authority under its Organizational Documents to hold its assets and perform
the transactions contemplated by this Agreement.
Section
4.2
Due Authorization
. Each has all requisite organizational power and authority to execute, deliver and perform its obligations
under this Agreement and each of the other Transaction Agreements to which it is a party, and (subject to the approvals described
in
Section 4.4
) to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance
of this Agreement and each of the other Transaction Agreements to which it is a party and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized and approved by the requisite trust advisor or managing
member, as the case may be, and no other proceeding is necessary to authorize such agreements or the performance by each thereunder.
This Agreement has been duly and validly executed and delivered by each and, when each of the other Transaction Agreements to
which it is a party has been executed and delivered by it will be duly and validly executed and delivered by each; and assuming
due authorization and execution by each other party hereto and thereto, each of this Agreement and the other Transaction Agreements
to which it is a party constitutes a legal, valid and binding obligation of each, enforceable against each in accordance with
its terms, subject (i) to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws
affecting creditors’ rights generally, (ii) as to enforceability, to general principles of equity, and (iii) to applicable
requirements of the HSR Act, and any other Laws designed or intended to prohibit, restrict or regulate antitrust, monopolization,
restraint of trade or competition.
Section
4.3
No Conflict
. Subject to the receipt of the consents, approvals, authorizations and other requirements set forth in
Section 4.4
, the execution, delivery and performance of this Agreement by such entity and the consummation of the transactions
contemplated hereby do not and will not (a) conflict with or violate any provision of, or result in the breach of its respective
Organizational Documents, (b) conflict with or result in any violation of any provision of any Law, permit or Governmental Order
applicable to such entity, or any of their respective properties or assets, (c) violate, conflict with, result in a breach of
any provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the termination or acceleration of, or a right of termination, cancellation, modification,
acceleration or amendment under, accelerate the performance required by, or result in the acceleration or trigger of any payment,
posting of collateral (or right to require the posting of collateral), time of payment, vesting or increase in the amount of any
compensation or benefit payable pursuant to, any of the terms, conditions or provisions of any of any material Contract to which
such entity is a party, or (d) result in the creation of any Lien upon any of the properties, equity interests or assets such
entity, except (in the case of clauses (b), (c), or (d) above) for such violations, conflicts, breaches or defaults which would
not, individually or in the aggregate have a Material Adverse Effect on such entity.
Section
4.4
Governmental Authorities; Consents
. No consent, approval or authorization of, or designation, declaration or filing
with, any Governmental Authority or notice, approval, consent waiver or authorization from any third party is required on the
part of such entity with respect to its execution, delivery or performance of its obligations under this Agreement or the consummation
of the transactions contemplated hereby, except for any consents, approvals, authorizations, designations, declarations, waivers
or filings, the absence of which would not have a Material Adverse Effect thereon.
Section
4.5
Title to MLP Units
. The respective Seller Trust owns such of the MLP Units as set forth on
Schedule I
hereto
to be sold to GWG pursuant to this Agreement, and such MLP Units are free and clear of all Liens (other than Liens arising under
the Securities Act and applicable state securities laws).
Section
4.6
Litigation
. There are no pending, or to the knowledge of such entity, threatened, Actions against such entity or otherwise
affecting it or its assets.
Section
4.7
Receipt of All Necessary Information
. Such entity has received all the information it considers necessary or appropriate
for deciding whether to acquire the GWG Common Stock and GWG L Bonds under this Agreement. Such entity further represents that
it has had an opportunity to ask questions and receive answers from GWG regarding the terms and conditions of its acquisition
of the GWG Common Stock and GWG L Bonds and the business, properties, prospects and financial condition of GWG.
Section
4.8
Accredited Investor
. Such entity is (i) an “accredited investor” as defined in Rule 501(a) of Regulation
D promulgated under the Securities Act and (ii) a “qualified purchaser” as defined in Section 2(a)(51) of the Investment
Company Act.
Section
4.9
Legends
. It is understood that the certificate(s) evidencing the GWG Common Stock and the GWG L Bonds issued pursuant
to this Agreement may bear one or all of the following legends:
(a)
“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. IT MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THIS SECURITY UNDER SUCH ACT OR PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT.”
(b)
Any legend required by applicable state “blue sky” securities laws, rules and regulations.
Section
4.10
Brokers’ Fees
. No broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’
fee or other commission in connection with the transactions contemplated by this Agreement based upon arrangements made by such
entity.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES
OF
GWG AND GWG LIFE
Except
as set forth in the Schedules to this Agreement (each of which qualifies (i) the correspondingly numbered representation, warranty
or covenant if specified therein and (ii) such other representations, warranties or covenants where its relevance as an exception
to (or disclosure for purposes of) such other representation, warranty or covenant is readily apparent on its face and shall not
be deemed to expand in any way the scope or effect of any such representations, warranties or covenants or to create any of the
same), GWG and GWG Life hereby jointly and severally represent and warrant to the Company, each Seller Trust and MHT SPV, as of
the date hereof and the Closing, as follows:
Section
5.1
Corporate Organization
. Each of GWG and its Subsidiaries has been duly incorporated and is validly existing as a corporation
in good standing under the Laws of the State of Delaware and has the requisite corporate power and authority to own, lease or
operate its assets and properties and to conduct its business as it is now being conducted. Each of GWG and its Subsidiaries has
not conducted and does not currently conduct any activity in conflict with or in excess of its corporate purpose. The copies of
the Organizational Documents of GWG and its Subsidiaries previously made available to each of the Company, the Seller Trusts and
MHT SPV are true, correct and complete and are in full force and effect. GWG and GWG Life are duly licensed or qualified and in
good standing as a foreign corporation or limited liability company (as applicable) in all jurisdictions in which its ownership
of property or the character of its activities is such as to require it to be so licensed or qualified, except where failure to
be so licensed or qualified would not have a Material Adverse Effect on GWG and its Subsidiaries, as a whole.
Section
5.2
Due Authorization
.
(a)
Each of GWG and GWG Life has all requisite power and authority to execute, deliver and perform this Agreement and each of the
other Transaction Agreements to which it is a party, and (subject to the approvals described in
Section 5.5
and receipt
of the GWG Stockholder Approval) to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance
of this Agreement and each of the other Transaction Agreements to which it is a party and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized and approved by the GWG Board and the managers of GWG Life,
respectively, as the case may be, and, except for the GWG Stockholder Approval and confirmation from such Boards, not to be unreasonably
withheld or delayed, that all conditions to Closing have been reasonably satisfied, no other proceeding on the part of GWG or
GWG Life is necessary to authorize this Agreement and each of the other Transaction Agreements to which it is a party or GWG’s
and GWG Life’s performance hereunder and thereunder. This Agreement has been duly and validly executed and delivered by
each of GWG and GWG Life, respectively, and, each of the other Transaction Agreements to which GWG and GWG Life is a party will
be, as of the Closing, duly and validly executed and delivered by each of them, as the case may be; and assuming due authorization
and execution by the Company, the Seller Trusts and MHT SPV, of this Agreement and each of the other Transaction Agreements to
which it is a party, this Agreement and each of the other Transaction Agreements to which it is a party constitutes a legal, valid
and binding obligation of each of GWG and GWG Life, respectively, enforceable against GWG and GWG Life, as the case may be, in
accordance with its terms, subject (i) to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and similar Laws affecting creditors’ rights generally, (ii) as to enforceability, to general principles of equity, and
(iii) to applicable requirements of the HSR Act, and any other Laws designed or intended to prohibit, restrict or regulate antitrust,
monopolization, restraint of trade or competition.
(b)
The affirmative vote of holders of a majority of the outstanding shares of GWG Common Stock entitled to vote at the GWG Stockholders’
Meeting, assuming a quorum is present, to approve the adoption of this Agreement is the only vote of any of GWG’s capital
stock necessary in connection with the entry into this Agreement by GWG and the consummation of the transactions contemplated
hereby, including the Closing (the “
GWG Stockholder Approval
”).
(c)
The Loan Agreement has been duly and validly authorized and approved by the managers of GWG Life and, when executed and delivered
as contemplated therein, will have been duly and validly executed and delivered by it, and assuming the due authorization, execution
and delivery thereof by the Company, will constitute a legal, valid and binding obligation of GWG Life, enforceable against GWG
Life in accordance with its terms, subject (i) to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and similar Laws affecting creditors’ rights generally and (ii) as to enforceability, to general principles of equity.
Section
5.3
No Conflict
. The execution, delivery and performance of this Agreement by GWG and GWG Life and, upon receipt of the
GWG Stockholder Approval and the final approval of the Closing by the GWG Board, the consummation of the transactions contemplated
hereby do not and will not (a) conflict with or violate any provision of, or result in the breach of the Organizational Documents
of GWG or any of its Subsidiaries, (b) conflict with or result in any violation of any provision of any Law or Governmental Order
applicable to GWG, its Subsidiaries or any of their properties or assets, (c) violate, conflict with, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the termination or acceleration of, or a right of termination, cancellation, modification,
acceleration or amendment under, accelerate the performance required by, or result in the acceleration or trigger of any payment,
posting of collateral (or right to require the posting of collateral), time of payment, vesting or increase in the amount of any
compensation or benefit payable pursuant to, any of the terms, conditions or provisions of any material Contract to which GWG
or any of its Subsidiaries is a party, or (d) result in the creation of any Lien upon any of the properties or assets of GWG or
its Subsidiaries, except (in the case of clauses (b), (c) or (d) above) for such violations, conflicts, breaches or defaults which
would not have a Material Adverse Effect on GWG and its Subsidiaries, as a whole.
Section
5.4
Compliance
. Neither GWG nor any Subsidiary (i) is in default under or in violation of (and no event has occurred that
has not been waived that, with notice or lapse of time or both, would result in a default by GWG or any Subsidiary under), nor
has GWG or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or
governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including
without limitation all foreign, federal, state and local laws applicable to its business except in each case as could not have
a Material Adverse Effect.
Section
5.5
Governmental Authorities; Consents
. No consent, approval or authorization of, or designation, declaration or filing
with, any Governmental Authority or notice, approval, consent waiver or authorization from any third party is required on the
part of GWG or GWG Life with respect to its execution, delivery or performance of its obligations under this Agreement or the
consummation of the transactions contemplated hereby, except for (a) waiting period requirements of the HSR Act, (b) the filing
with the SEC of (i) the preliminary and definitive Proxy Statement relating to the GWG Stockholder Approval, and (ii) such reports
under Section 13(a) or 15(d) of the Exchange Act as may be required in connection with this Agreement and the transactions contemplated
hereby, and (c) the written consent of the senior lender to GWG DLP Funding IV, LLC, a Delaware limited liability company and
Subsidiary of GWG, (d) the filing with NASDAQ and NASDAQ’s approval of (subject to official notice of issuance) a Listing
of Additional Shares application, (e) the approval by the holders of a majority in outstanding principal amount of GWG L Bonds
of an amendment to that certain Amended and Restated Indenture dated effective as of October 23, 2017 (as amended or supplemented
from time to time, the “
GWG Indenture
”), and (e) any consents, approvals, authorizations, designations, declarations,
waivers or filings, the absence of which would not have a Material Adverse Effect on GWG and its Subsidiaries, as a whole.
Section
5.6
GWG Reports; Financial Statements and Sarbanes-Oxley Act
.
(a)
GWG has timely filed all required registration statements, prospectuses, reports, schedules, forms, statements and other documents
required to be filed by it with the SEC since December 31, 2015 (collectively, as they have been amended since the time of their
filing up to the date hereof and including all exhibits and schedules thereto, and other information incorporated therein, the
“
GWG Reports
”). Each of the GWG Reports, as of the respective date of its filing, and as of the date of any
amendment, complied in all material respects with the applicable requirements of the Securities Act, the Exchange Act, the Sarbanes-
Oxley Act and any rules and regulations promulgated thereunder applicable to the GWG Reports. None of the GWG Reports, as of their
respective dates (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing),
contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary
in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The audited
financial statements and unaudited interim financial statements (including, in each case, the notes and schedules thereto) included
in the GWG Reports complied as to form in all material respects with the published rules and regulations of the SEC with respect
thereto, were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated
therein or in the notes thereto and except with respect to unaudited statements as permitted by Form 10-Q of the SEC) and fairly
present (subject, in the case of the unaudited interim financial statements included therein, to normal year-end adjustments the
impact of which is not material and the absence of complete footnotes) in all material respects the financial position of GWG
as of the respective dates thereof and the results of its operations and cash flows for the respective periods then ended. As
of the date hereof, there are no outstanding or unresolved comments in comment letters received from the SEC with respect to the
GWG Reports. The books and records of GWG have been, and are being, maintained in all material respects in accordance with GAAP
and any other applicable legal and accounting requirements.
(b)
GWG has established and maintains disclosure controls and procedures (as defined in Rule 13a-15 under the Exchange Act). Such
disclosure controls and procedures are designed to ensure that material information relating to GWG is made known to GWG’s
principal executive officer and its principal financial officer, particularly during the periods in which the periodic reports
required under the Exchange Act are being prepared. To the knowledge of GWG, such disclosure controls and procedures are effective
in timely alerting GWG’s principal executive officer and principal financial officer to material information required to
be included in GWG’s periodic reports required under the Exchange Act.
(c)
GWG has established and maintained a system of internal controls over financial reporting (as defined in Rule 13a-15 under the
Exchange Act). Such internal controls are sufficient to provide reasonable assurance regarding the reliability of GWG’s
financial reporting and the preparation of GWG’s financial statements for external purposes in accordance with GAAP.
(d)
There are no outstanding loans or other extensions of credit made by GWG to any executive officer (as defined in Rule 3b-7 under
the Exchange Act) or director of GWG. GWG has not taken any action prohibited by Section 402 of the Sarbanes-Oxley Act.
(e)
Since December 31, 2015, GWG has complied in all material respects with the applicable listing and corporate governance rules
and regulations of NASDAQ. The issued and outstanding shares of GWG Common Stock are registered pursuant to Section 12(b) of the
Exchange Act and are listed for trading on NASDAQ. There are no pending or, to the knowledge of GWG, threatened in writing lawsuits,
actions, suits, judgements, claims or other proceedings at law or in equity before any Governmental Authority against GWG by NASDAQ
or the SEC with respect to any intention by such entity to deregister the GWG Common Stock or prohibit or terminate the listing
of GWG Common Stock on NASDAQ. GWG has taken no action that is designed to terminate the registration of GWG Common Stock under
the Exchange Act.
(f)
There are no material Liabilities of GWG that would be required to be reflected on a balance sheet of GWG prepared in accordance
with GAAP, except for Liabilities (a) disclosed, reflected or reserved for in GWG’s consolidated balance sheet as of December
31, 2016 (or the notes thereto) included in the GWG Reports, (b) that have arisen since the date of the most recent balance sheet
included in the GWG Reports in the ordinary course of the financing and operation of the business of GWG or (c) arising under
any Contract, other than as a result of a breach thereof by GWG.
Section
5.7
Tax Matters
. (i) All Tax Returns required to have been filed by or with respect to GWG and its Subsidiaries have been
timely filed (taking into account any extension of time to file granted or obtained); (ii) all Taxes due and payable by GWG and
its Subsidiaries (whether or not shown on any Tax Return) have been paid or will be timely paid (other than those Taxes being
contested in good faith and for which adequate reserves have been established in the GWG Reports); (iii) no deficiency for any
Tax has been asserted, proposed or assessed by a Governmental Authority against GWG and its Subsidiaries that has not been satisfied
by payment, settled or withdrawn or that are being contested in good faith through appropriate proceedings; (iv) no audit or other
Action by any Governmental Authority is pending or threatened in writing; (v) there are no outstanding agreements extending or
waiving the statutory period of limitations applicable to any claim for, or the period for the collection, assessment or reassessment
of, Taxes due from GWG and its Subsidiaries for any taxable period and no request for any such waiver is currently pending; (vi)
neither GWG nor its Subsidiaries are subject to any pending tax collection suit, proceeding or claim that in any way could result
in any liability; (vii) neither GWG nor its Subsidiaries are a party or subject to any material tax deficiency or infraction notice,
proceeding or claim of assessment, collection or debt in arrears regarding any Taxes, either in court or in the administrative
sphere; (viii) neither GWG nor its Subsidiaries are a party to any Tax allocation or sharing agreement; (ix) GWG and its Subsidiaries
have withheld and paid all Taxes required to have been withheld and paid by it in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third party and (x) there are no Tax Liens on any assets of GWG
and its Subsidiaries.
Section
5.8
Capitalization
.
(a)
The classes and series of capital stock authorized for issuance by GWG under its Organizational Documents are as follows: 210
million shares of common stock; 150,000 shares of Redeemable Preferred Stock; 1,000,000 shares of Series 2 Redeemable Preferred;
and 39,750,000 shares of undesignated preferred stock. GWG has the following classes and series of capital stock outstanding:
5,813,555 shares of common stock, 99,841 shares of Redeemable Preferred Stock, and 88,691 shares of Series 2 Redeemable Preferred
Stock, all of which (i) have been duly authorized and validly issued and are fully paid and non-assessable, (x) were issued in
compliance in all material respects with applicable Law and (iii) were not issued in breach or violation of any preemptive rights
or any Contract. GWG Life is a wholly owned subsidiary of GWG. All of the outstanding membership interests in GWG Life are held
by GWG and all such interests (i) have been duly authorized and validly issued and are fully paid and non-assessable, (ii) were
issued in compliance in all material respects with applicable Law and (iii) were not issued in breach or violation of any preemptive
rights or any Contract.
(b)
No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the
transactions contemplated by this Agreement. Except as detailed with specificity on
Schedule 5.8(b)
, there are no outstanding
options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities,
rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or
acquire, any equity or equity-linked interests of GWG or any Subsidiary of GWG, nor are there any Contracts by which GWG or any
Subsidiary of GWG is or may become bound to issue additional equity or equity-linked interests.
(c)
The issuance, sale and transfer of the GWG Common Stock to the Seller Trusts will not obligate GWG or any Subsidiary of GWG to
issue any equity or equity- linked interests to any Person and will not result in a right of any holder of GWG equity or equity-linked
interests to adjust the exercise, conversion, exchange or reset price under such equity or equity-linked interests. Other than
the Organizational Documents, there are no shareholder agreements, voting agreements or other similar agreements with respect
to GWG’s capital stock to which the GWG is a party.
(d)
Except as set forth on
Schedule 5.8(d)
, there are no agreements or other obligations (contingent or otherwise) which may
require GWG or any Subsidiary to repurchase or otherwise acquire any equity interests, securities or other obligations.
(e)
Except as detailed on
Schedule 5.8(e)
, GWG does not own, directly or indirectly, and is not a party to a Contract to acquire,
any securities of any entity or association.
(f)
The shares of GWG Common Stock to be issued to the Seller Trusts, pro rata in accordance with this Agreement, and to MHT SPV pursuant
to this Agreement shall be (i) duly authorized and validly issued and are fully paid and nonassessable, (ii) issued in compliance
with applicable Law, (iii) not issued in breach or violation of any preemptive rights or Contract, (iv) fully vested and not otherwise
subject to a substantial risk of forfeiture and (v) free and clear of all Liens.
(g)
The GWG L Bonds to be issued to the Seller Trusts, pro rata in accordance with this Agreement, and to MHT SPV pursuant to this
Agreement shall (i) be duly authorized and validly issued, (ii) be issued in compliance with the GWG Indenture and applicable
Law, (iii) entitle the registered holders to the rights and entitlements set forth therein
(y)
be issued free and clear of all Liens, and (iv) constitute valid and binding obligations of GWG, enforceable in accordance with
their terms subject (A) to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws
affecting creditors’ rights generally, (B) as to enforceability, to general principles of equity.
Section
5.9
Litigation
. Except as disclosed on
Schedule 5.9
, there are no pending or, to the knowledge of GWG, threatened,
material Actions against GWG or its Subsidiaries or otherwise affecting GWG or its Subsidiaries or their respective assets.
Section
5.10
Title to Assets
. GWG and the Subsidiaries each have (i) good and marketable title in fee simple to all real property
owned by them that is material to the business of GWG and its Subsidiaries and (ii) good and marketable title in all personal
property owned by them that is material to the business of GWG and the Subsidiaries, in each case free and clear of all Liens.
Section
5.11
Investment Company Act
. Neither GWG nor GWG Life is, and immediately after the Closing will not be, (i) registered,
or required to be registered, as an investment company under the Investment Company Act or (ii) directly or indirectly “controlled”
by a Person registered, or required to be registered, as an investment company under the Investment Company Act, in each case
within the meaning of the Investment Company Act.
Section
5.12
Purchase Entirely for Own Account
. The MLP Units will be acquired for investment for GWG’s own account, not
as a nominee or agent, and not with a view to the distribution of any part thereof, and GWG and GWG Life have no present intention
of selling, granting any participation in, or otherwise distributing the same. By executing this Agreement, GWG and GWG Life further
represents that it does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to the MLP Units or any portion thereof.
Section
5.13
Receipt of Information
. Each of GWG and GWG Life believes it has received all the information it considers necessary
or appropriate for deciding whether to purchase the MLP Units and issue the Loan as contemplated herein. Each of GWG and GWG Life
further represents that it has had an opportunity to ask questions and receive answers from the Company regarding the terms and
conditions of its purchase of the MLP Units, and the business, properties, prospects and financial condition of the Company.
Section
5.14
Accredited Investor
. Each of GWG and GWG Life is (i) an “accredited investor” as defined in Rule 501(a)
of Regulation D promulgated under the Securities Act and (ii) a “qualified purchaser” as defined in Section 2(a)(51)
of the Investment Company Act.
Section
5.15
Restricted Security
. Each of GWG and GWG Life understands that the MLP Units will be characterized as a “restricted
security” under the federal securities laws inasmuch as it is being acquired from the Seller Trusts or the Company, as applicable,
in a transaction not involving a public offering and that under such laws and applicable regulations such a security may be resold
without registration under the Securities Act only in certain limited circumstances.
Section
5.16
No Public Market
. Each of GWG and GWG Life understands that no public market now exists for the MLP Units, and that
the Company has made no assurances that a public market will ever exist for the MLP Units.
Section
5.17
Legends
. It is understood that the certificate evidencing the MLP Units may bear one or all of the following legends:
(a)
“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. IT MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THIS SECURITY UNDER SUCH ACT OR PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT.”
(b)
Any legend required by applicable state “blue sky” securities laws, rules and regulations.
Section
5.18
Private Placement Memorandum
. Each of GWG and GWG Life has had an opportunity to carefully review a copy of the Private
Placement Memorandum, dated September 20, 2017. Each of GWG and GWG Life understands and agrees that the Private Placement Memorandum
speaks only as of its date and that the information contained therein may not be correct or complete as of any time subsequent
thereto. Each of GWG and GWG Life has also had an opportunity to discuss the Company’s business, management, financial affairs
and the terms and conditions of the offering of the MLP Units with the Company’s management and has had an opportunity to
review the Company’s materials provided by the Company in an online data room and such other materials or information requested
by GWG. Each of GWG and GWG Life understands that any estimates, forecasts, projections or predictions, or any other information
or materials that have been made available to GWG, GWG Life or any of its Affiliates or its or their respective Representatives,
are not, and shall not be deemed to be, representations and warranties of the Company, the Seller Trusts, MHT SPV or any of their
respective Affiliates or their respective Representatives, unless expressly included in the representations and warranties made
by the Company in Article III or by the Seller Trusts, and each of them, and/or MHT SPV in Article IV. GWG and GWG Life each acknowledges
and agrees that none of the Company, the Seller Trusts, MHT SPV or any of their respective Affiliates or Representatives have
made and are making any representations or warranties with respect to the transactions contemplated hereby other than those specifically
set forth in Articles III and IV, respectively.
Section
5.19
Brokers’ Fees
. No broker, finder, investment banker or other Person is entitled to any brokerage fee, finders’
fee or other commission in connection with the transactions contemplated by this Agreement based upon arrangements made by GWG,
GWG Life or any of their Affiliates.
Section
5.20
Full Disclosure
. The representations and warranties of each of GWG and GWG Life contained in this Agreement (and in
any schedule, exhibit, certificate or other instrument to be delivered under this Agreement) are true and correct in all material
respects, and such representations and warranties do not omit any material fact necessary to make the statements contained therein,
in light of the circumstances under which they were made, not misleading. There is no fact of which GWG, GWG Life or either of
them has knowledge and that has not been disclosed to the Company, the Seller Trusts and MHT SPV pursuant to this Agreement (including
the schedules hereto), which has had or which could reasonably be expected to have a Material Adverse Effect on GWG and/or GWG
Life, or to materially and adversely affect the ability of GWG and/or GWG Life to consummate in a timely manner the transactions
contemplated hereby.
ARTICLE
VI
COVENANTS
OF THE COMPANY
Section
6.1
Conduct of Business
. Except as (i) otherwise expressly permitted or required under or by this Agreement, (ii) set forth
in
Schedule 6.1
, (iii) consented to by GWG in writing (which consent shall not be unreasonably conditioned, withheld or
delayed) or (z) required by any Law, the Company agrees that, from the date of this Agreement until the earlier of the Closing
Date or the termination of this Agreement in accordance with its terms (the “
Interim Period
”), the Company
shall, and shall cause its Subsidiaries to, (x) use its commercially reasonable efforts to conduct its respective business in
the ordinary course in a manner consistent with past practice in all material respects, (y) prepare, in the ordinary course of
business consistent with past practice (except as otherwise required by applicable Law), and timely file all material Tax Returns
(taking into account all valid extensions) required to be filed by it on or before the Closing Date and fully and timely pay all
Taxes due and payable in respect of such Tax Returns that are so filed (other than Taxes being contested in good faith through
appropriate proceedings) and (z) use its respective reasonable best efforts to preserve, in all material respects, consistent
with past practices, its business organizations intact, including the material assets and properties of the business and relations
with customers, suppliers, licensors, licensee and distributors having material commercial or business dealings with the Company
and its Subsidiaries (it being understood that such efforts will not include any requirement or obligation to pay any consideration
not otherwise required to be paid by the terms of an existing Contract or grant any financial accommodation or other benefit not
otherwise required to be made by the terms of an existing Contract). In addition, the Amended & Restated Limited Partnership
Agreement of the Company, dated effective as of September 1, 2017, shall not be amended without the prior written consent of GWG
during the Interim Period.
Section
6.2
Listing
.
(a)
The Company agrees to use its commercial best efforts to pursue and obtain a listing of its Common Units on a nationally recognized
stock exchange (the “Listing”) on or prior to the 40-month anniversary of the Closing Date (the “Listing Date”).
In the event that either (i) the Company has not filed a registration statement with the SEC in connection with a Listing within
24 months following the Closing or (ii) the Company does not secure a listing of its common units of partnership interests of
the Company on a national stock exchange in the United States within 40 months following the Closing, the Company agrees, for
the benefit of GWG, that, upon and subject to the written election of GWG (the “Election”), the Company shall adopt
a Redemption Strategy (as defined below) and redeem, at the Redemption Price (as defined below), all of the MLP Units then held
by GWG as of the date of such Election. To effect such redemption, if elected by GWG, the Company shall use a percentage of its
Net Distributable Cash (as defined below) each quarter (until all of the MLP Units and NPC-C Unit Accounts subject to redemption
(in accordance with the priority outlined in that certain Private Offering Memorandum, dated December 18, 2017) have been redeemed)
equal to the percentage that the MLP Units held by GWG on the date of the Election bears to the total number of outstanding Common
Units (on an undiluted basis) as of the date of the Election. For purposes of this Section 6.2, “Redemption Price”
shall mean the greater of (i) $11.00 per MLP Unit or (ii) the book value per MLP Unit as of the date of the redemption.
(b)
As used in
Section 6.2(a)
, (i) “
Redemption Strategy
” shall mean a cash flow strategy adopted by the
Company to satisfy the redemption of the GWG MLP Units from the cash derived from the assets held by the Company as of the Closing
or further financing transactions or from additional private equity loans acquired from the proceeds thereof; and (ii) “
Net
Distributable Cash
” shall mean an amount equal to no less than 75% of the Company’s distributable cash flow, calculated
quarterly, derived from cash flows from operations, plus cash inflows from financings less mandatory tax distributions.
(c)
From and after the Closing until the effective date of the Listing, if any, the Company shall not, without the prior written consent
of GWG, issue, and shall procure that none of its Subsidiaries or Affiliates shall issue, any class of securities with rights
of redemption, whether optional or mandatory, ranking senior in priority to the MLP Units acquired by GWG under this Agreement,
unless and until all of the MLP Units acquired by GWG at the Closing are redeemed under this
Section 6.2
(or GWG affirmatively
elects in writing not to so redeem) or are otherwise sold or transferred.
Section
6.3
Company Restrictions
. Until such time as the Loan has been satisfied in full, without the prior written consent of
GWG (which may be granted, withheld or conditioned in GWG’s sole discretion), the Company shall not incur additional indebtedness
for borrowed money (including any guarantees of obligations of other Persons) in excess of 45% of the Company’s NAV, inclusive
of (i) the Company’s bank debt and (ii) outstanding NPC-B Unit Accounts of Beneficient Company Holdings, L.P.; provided
that the bank debt of the Company shall not exceed at any time the lesser of 30% of the Company’s NAV or $200 million.
Section
6.4
Informational Rights
.
(a)
After the execution of this Agreement by GWG and GWG Life and until such time as the Company has obtained the Listing, the Company
will: (a) on no less than five (5) Business Days prior written notice, permit GWG to visit and inspect any of the properties of
the Company, including its books of account and other records (and make copies thereof and take extracts therefrom), and to discuss
its affairs, finances and accounts with the Company’s officers and its independent public accountants, all at such reasonable
times and as often as GWG may reasonably request, provided that such rights of access shall be exercised in a manner that does
not unreasonably interfere with the operations of the Company and its Subsidiaries; and (c) provide on a timely basis to GWG all
financial and tax information GWG reasonably requests in order to comply with its SEC reporting obligations and prepare and file
its Tax Returns. Notwithstanding the foregoing, neither the Company nor its Subsidiaries shall be required to provide access to
any books, Contracts, records and information that (i) is subject to attorney-client privilege to the extent doing so, in the
opinion of the Company’s counsel, would cause such privilege to be waived (in which case, the Company shall work in good
faith to provide an alternative means of providing the requested information) or (iii) is prohibited by applicable Law from being
disclosed.
(b)
From the date of this Agreement’s execution and delivery by GWG through the Closing, each of the Company, the Seller Trusts
and MHT SPV shall afford to GWG and its Representatives reasonable access to the books, records, financial statements, information,
agreements, officers, and other items of the asset, liabilities, and business of the Company and the Seller Trusts, and otherwise
provide such assistance as may be reasonably requested by GWG or its Representatives in order that GWG and its Representatives
may have a full opportunity to make such investigation and evaluation as it shall desire to make of the Company, the Seller Trusts,
MHT SPV, their businesses and the transactions contemplated hereby.
Section
6.5
Investment Company Act; Master Limited Partnership Status.
The Company shall conduct its business in a manner so that
it will: (a) not be required to register as an investment company under the Investment Company Act, and (b) upon and after the
Listing, the Company will qualify for status as a “master limited partnership” under the rules set forth in Section
7704 under the Internal Revenue Code. The Company shall use its commercial best efforts to conduct its business in a manner so
that it will not become subject to taxation as a corporation for federal income tax purposes.
ARTICLE
VII
COVENANTS
OF GWG
Section
7.1
Conduct of Business
. Except as (i) otherwise expressly permitted or required under or by this Agreement, (ii) set forth
in
Schedule 7.1
, (iii) consented to by the Company in writing (which consent shall not be unreasonably conditioned, withheld
or delayed) or (iv) required by any Law, GWG agrees that, during the Interim Period, GWG shall, and shall cause its Subsidiaries
to, (x) use its commercially reasonable efforts to conduct its respective business in the ordinary course in a manner consistent
with past practice in all material respects, (aa) prepare, in the ordinary course of business consistent with past practice (except
as otherwise required by applicable Law), and timely file all material Tax Returns (taking into account all valid extensions)
required to be filed by it on or before the Closing Date and fully and timely pay all Taxes due and payable in respect of such
Tax Returns that are so filed (other than Taxes being contested in good faith through appropriate proceedings) and (z) use its
respective reasonable best efforts to preserve, in all material respects, consistent with past practices, its business organizations
intact, including the material assets and properties of the business and relations with customers, suppliers, licensors, licensee
and distributors having material commercial or business dealings with GWG and its Subsidiaries (it being understood that such
efforts will not include any requirement or obligation to pay any consideration not otherwise required to be paid by the terms
of an existing Contract or grant any financial accommodation or other benefit not otherwise required to be made by the terms of
an existing Contract).
Section
7.2
No Liens or Security Interests
. Each of GWG and GWG Life agree that it will not, prior to later of the termination
of the Orderly Marketing Agreement or the satisfaction in full of the Loan, permit, create, incur, assume or suffer to exist any
lien, security interest, pledge, mortgage, charge, assignment or hypothecation of any of its respective rights and interests in
or over (by way of collateral or otherwise) the MLP Units or the Loan to secure any of its obligations of any nature or kind,
other than with the express prior written consent of each of the Company, the Seller Trusts and MHT SPV; provided, however, that
Liens created or permitted (a) under the GWG Indenture, and (b) under the Amended and Restated Loan and Security Agreement by
and between GWG DLP Funding IV, LLC and CLMG Corp. as administrative agent (as the same may be amended from time to time) (the
“
DLP Funding IV Agreement
”), shall each nonetheless be permitted under this
Section 7.2
; provided further
that no amendment or supplement to the Indenture or to the DLP Funding IV Agreement shall be effected without the prior written
consent of the Seller Trusts, such consent not to be unreasonably withheld or delayed. Notwithstanding any provision in this Agreement
to the contrary, in no event shall GWG or GWG Life issue any debt or encumbrance of any nature or kind senior to the GWG L Bonds
issued under this Agreement unless and until the earlier of (i) the refinancing in full of the aggregate principal amount outstanding
of the GWG L Bonds issued under this Agreement and (ii) the resale of all such GWG L Bonds by each of the Seller Trusts and MHT
SPV.
Section
7.3
Preparation of SEC Documents.
Promptly after the date of this Agreement, (i) GWG shall prepare and file with the SEC
a proxy statement on Schedule 14A under the Exchange Act (as the same is amended or supplemented in both its preliminary and definitive
forms from time to time, the “
Proxy Statement
”), to be sent in its definitive form(s) to the GWG Stockholders
relating to the GWG Stockholder Meeting. GWG shall use its reasonable best efforts to cause the Proxy Statement to comply with
the rules and regulations promulgated by the SEC. As promptly as practicable after the Proxy Statement shall have become finalized
in its definitive form, GWG shall use its reasonable best efforts to cause the Proxy Statement to be mailed to its stockholders.
No filing of, or amendment or supplement to, the Proxy Statement will be made (in each case including documents incorporated by
reference therein) by GWG without providing the Company with a reasonable opportunity to review and comment thereon and each party
shall give reasonable and good faith consideration to any comments made by any other party and their counsel. The Company will
be given a reasonable opportunity to provide comment on or for the response to any SEC comments (to which reasonable and good
faith consideration shall be given), including by participating with GWG or their counsel in any discussions or meetings with
the SEC.
(b)
In furtherance of the foregoing, as promptly as practicable after the date hereof, (i) GWG shall use its reasonable best efforts
to enter into a voting agreement, in form and substance reasonably acceptable to the parties (the “Voting Agreement”),
with Messrs. Jon R. Sabes and Steven F. Sabes. Pursuant to the Voting Agreement, each of Messrs. Jon R. Sabes and Steven F. Sabes
shall (i) agree not to sell, transfer or otherwise dispose of any such shares of GWG capital stock subject thereto prior to earlier
of the adjournment of the GWG Stockholder Meeting (as defined below) or the termination of this Agreement; and (ii) grant to GWG
an irrevocable proxy to vote all of the outstanding share capital owned directly or indirectly by them, respectively, and entitled
to vote at a meeting of GWG’s stockholders to approve the transactions, and each of them, contemplated by this Agreement
and recommended to the stockholders by GWG’s Board of Directors.
(c)
If at any time prior to the Closing any information relating to GWG or any of its respective Affiliates, directors or officers,
should be discovered by GWG which should be set forth in an amendment or supplement to the Proxy Statement, so that either such
document would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they are made, not misleading, GWG shall promptly notify the other parties
hereto and an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and, to the
extent required by Law, disseminated to the GWG stockholders.
(d)
GWG will advise the other parties hereto promptly after it receives any oral or written request by the SEC for amendment of the
Proxy Statement, or comments thereon and responses thereto or requests by the SEC for additional information, and GWG will promptly
provide the other parties with copies of any written communication between it or any of its Representatives, on the one hand,
and the SEC, on the other hand, with respect to the Proxy Statement. GWG shall use its reasonable best efforts, after consultation
with each of the other parties, to resolve all such requests or comments with respect to the Proxy Statement, as applicable, as
promptly as reasonably practicable after receipt thereof. GWG shall notify the other parties hereto promptly of the time when
the Proxy Statement has cleared comments and has been mailed to the GWG stockholders.
(e)
All of the fees, costs and expenses incurred or payable to any other Person (other than legal fees and expenses, which shall be
subject to
Section 11.5
) in connection with the preparation and filing of the Proxy Statement, including all of the fees,
costs and expenses of the financial printer and other Persons for the printing and mailing of the Proxy Statement, as applicable,
shall be paid by GWG.
Section
7.4
GWG Stockholders’ Meeting
. After this Agreement shall have become effective in accordance with
Section 11.17
,
GWG shall duly call, give notice of, convene and hold a meeting of GWG stockholders for the purpose of submitting this Agreement
and the transactions contemplated hereby to the stockholders of GWG for their approval (the “
GWG Stockholders’
Meeting
”). GWG shall use its best efforts to obtain the requisite approval from its stockholders for adoption of this
Agreement and the transactions contemplated hereby, including voting any proxy obtained by it from stockholders (including pursuant
to the Voting Agreement) in favor of such action, and shall take all other action reasonably necessary or advisable to secure
the requisite approvals.
Section
7.5
NASDAQ Listing of Additional Shares
. GWG shall use its reasonable best efforts to cause the GWG Common Stock to be
approved for listing on NASDAQ, subject to official notice of issuance, prior to the Closing Date.
Section
7.6
Resale Registration
. In connection with the Closing, GWG and the Seller Trusts will enter into a registration rights
agreement (the “
Registration Rights Agreement
”) in customary and negotiated form but in any event containing
(a) demand registration rights affording the assigns of the Seller Trusts rights in respect to the resale registration of all
of the shares of GWG Common Shares issued pursuant to this Agreement (subject, however, to limitations set forth in the Orderly
Marketing Agreement entered into pursuant to
Section 8.6
, and subject further to limitations that may be imposed by any
regulatory agency) (the “
Resale Registration
”), and (b) piggyback registration rights affording the assigns
of the Seller Trusts the right to include (subject to customary cutback provisions) any shares of GWG Common Stock not otherwise
included on the Resale Registration. The Seller Trusts and their assigns shall be named express third party beneficiaries of such
registration rights agreement.
Section
7.7
No Solicitation
. From and after the date hereof until the earlier of the Closing and the termination of this Agreement
in accordance with its terms, GWG shall not (and shall cause its Subsidiaries to not), directly or indirectly: (a) solicit, initiate,
encourage, or facilitate the making, submission or announcement of any Acquisition Proposal or Acquisition Inquiry relating to
GWG or any of its Subsidiaries or otherwise solicit, initiate, encourage or facilitate any action that could reasonably be expected
to lead to an Acquisition Proposal or Acquisition Inquiry relating to GWG or any of its Subsidiaries; (b) request or receive any
non- public information from any Person or provide any non-public information to any Person in connection with an Acquisition
Proposal or Acquisition Inquiry relating to GWG or any of its Subsidiaries; (c) engage in discussions or negotiations with any
Person with respect to any Acquisition Proposal relating to GWG or any of its Subsidiaries; (d) approve, endorse or recommend
any Acquisition Proposal or Acquisition Inquiry relating to GWG or any of its Subsidiaries; or (e) enter into any letter of intent
or similar document or any Contract contemplating or providing for any Acquisition Transaction or Acquisition Proposal relating
to GWG or any of its Subsidiaries; provided, that, in the event GWG receives an unsolicited
bona fide
written Acquisition
Inquiry or Acquisition Proposal, GWG, its Subsidiaries and their respective Representatives may take any of the aforementioned
actions if GWG’s Board of Directors concludes in good faith (after consultation with its outside counsel, and with respect
to financial matters, its financial advisors) that failure to take any of the such actions would be inconsistent with its fiduciary
duties under applicable Law. Without limiting the generality of the foregoing, GWG acknowledges and agrees that any action taken
by its Representatives that, if taken by GWG would constitute a breach of this
Section 7.7
, shall be deemed to constitute
a breach of this
Section 7.7
by GWG (whether or not such Representative is purporting to act on behalf of GWG). For purposes
of this
Section 7.7
:
(a)
“Acquisition Inquiry” means an inquiry, indication of interest or request for information that could reasonably be
expected to lead to an Acquisition Proposal.
(b)
“Acquisition Proposal” means any offer, proposal, inquiry or indication of interest relating to any Acquisition Transaction.
(c)
“Acquisition Transaction” means any transaction or series of transactions (other than the transactions contemplated
by this Agreement) with any Person involving: (i) any merger, consolidation, amalgamation, share exchange, business combination,
issuance of securities, acquisition of securities, reorganization, recapitalization, tender offer, exchange offer or other similar
transaction; or (ii) any sale, lease, exchange, transfer, license, acquisition or disposition of any business or businesses or
assets of such Person.
ARTICLE
VIII
JOINT
COVENANTS
Section
8.1
Consents and Approvals
. Upon the terms and subject to the conditions set forth in this Agreement, each of the parties
agrees to use commercially reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done,
and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make
effective, as soon as possible following the date hereof (and in any event on or prior to April 30, 2018), the transactions contemplated
by this Agreement, including using commercially reasonable best efforts to (i) obtain all necessary actions, nonactions, waivers,
consents, approvals and other authorizations from Governmental Authorities prior to the Closing, (ii) avoid an Action or proceeding
by any Governmental Authority, (iii) obtain all necessary consents, approvals or waivers from third parties, (iv) execute and
deliver any additional instruments necessary to consummate the transactions contemplated by this Agreement and (v) refrain from
taking any action that would reasonably be expected to impede, interfere with, prevent or materially delay the consummation of
the transactions contemplated by this Agreement.
(b)
Without limiting the generality of
Section 8.1(a)
, each party hereto agrees to, and shall cause its respective Affiliates
to, make its respective filing, if necessary, pursuant to the HSR Act with respect to the transactions contemplated by this Agreement
and to supply as promptly as practicable to the appropriate Governmental Authorities any additional information and documentary
material that may be requested pursuant to the HSR Act. Each party hereto agrees to, and shall cause its respective Affiliates
to, promptly make any filings or notifications required to be made by it under any other applicable antitrust, competition, or
trade regulation Law and to supply as promptly as practicable to the appropriate Governmental Authorities any additional information
and documentary material that may be requested by such Governmental Authorities pursuant to the applicable antitrust, competition,
or trade regulation Law. The parties shall consult with each other and mutually agree on the timing of any filings pursuant to
the HSR Act.
(c)
Subject to applicable Law, each of the Company, the Trust Advisors with respect to the Seller Trusts, GWG and GWG Life agrees
to (i) cooperate and consult with the other regarding obtaining and making all notifications and filings with Governmental Authorities,
(ii) furnish to the other such information and assistance as the other may reasonably request in connection with its preparation
of any notifications or filings, (iii) keep the others apprised of the status of matters relating to the completion of the transactions
contemplated by this Agreement, including promptly furnishing the other with copies of notices or other communications received
by such party from, or given by such party to, any third party or any Governmental Authority with respect to such transactions,
(iv) permit the other party to review and incorporate the other party’s reasonable comments in any communication to be given
by it to any Governmental Authority with respect to any filings required to be made with, or action or nonactions, waivers, expirations
or terminations of waiting periods, clearances, consents or orders required to be obtained from, such Governmental Authority in
connection with execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement,
and (v) to the extent reasonably practicable, consult with the other in advance of and not participate in any meeting or discussion
relating to the transactions contemplated by this Agreement, either in person or by telephone, with any Governmental Authority
in connection with the proposed transactions unless it gives the other party the opportunity to attend and observe; provided,
however, that in each of clauses (iii) and (iv) above, materials may be redacted (A) to remove references concerning the valuation
of such party and its Affiliates, (B) as necessary to comply with contractual arrangements or applicable Laws and (C) as necessary
to address reasonable attorney-client or other privilege or confidentiality concerns.
Section
8.2
Governance Matters
. Each of the Trust Advisors with respect to the Seller Trusts, MHT SPV and GWG agree to enter into
a shareholders’ agreement (the “
Shareholders’ Agreement
”), subject to and conditioned upon the
Closing of this Agreement, relating to certain matters in connection with such Seller Trusts’ and MHT SPV’s shareholding
in GWG. Such agreement shall remain in effect for Trust Advisors for the benefit of each of the Seller Trusts up until the termination
of the Orderly Marketing Agreement, as contemplated by
Section 8.6
below and for MHT SPV until the termination of the MHT
SPV Lock-up, as contemplated by
Section 8.9
below, and shall contain provisions pursuant to which MHT SPV, the Seller Trusts,
and their respective assignees or transferees will agree as follows:
(a)
that they will vote all voting securities of GWG over which such Persons have voting control with respect to all matters, including
without limitation the election and removal of directors, voted on by the stockholders of GWG (whether at a regular or special
meeting or pursuant to a written consent), solely in proportion with the votes cast by all other holders of voting securities
of GWG on any matter put before them;
(b)
that, until the earlier of (i) one year from the Closing Date and (ii) the termination of the Orderly Marketing Agreement, neither
the Seller Trust nor its assignees and transferees (other than pursuant to a registered public offering) or their respective affiliates
will, without the prior written consent of GWG’s Company’s Board of Directors, directly or indirectly:
(i)
acquire, offer to acquire, or agree to acquire, directly or indirectly, by purchase or otherwise, any securities or direct or
indirect rights to acquire any voting securities of GWG or any of its Subsidiaries other than pursuant to this Agreement;
(ii)
seek or propose to influence or control the management, Board of Directors, or policies of GWG, make or participate, directly
or indirectly, in any “solicitation” of “proxies” (as such terms are used in the rules of the Securities
and Exchange Commission) to vote any voting securities of GWG or any of its Subsidiaries, or seek to advise or influence any other
person with respect to the voting of any voting securities of GWG or any of its Subsidiaries;
(iii)
submit a proposal for or offer of (with or without conditions) any merger, recapitalization, reorganization, business combination,
or other extraordinary transaction involving GWG, any of its subsidiaries, or any of their respective securities or assets or,
except as required by law, make any public announcement with respect to the foregoing;
(iv)
enter into any discussions, negotiations, arrangements, or understandings with any other person with respect to any of the foregoing,
or otherwise form, join, engage in discussions relating to the formation of, or participate in a “group” within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, in connection with any of the foregoing; or
(v)
advise, assist, or encourage any other person in connection with any of the foregoing.
Section
8.3
Publicity
. None of the Company, the Seller Trusts, MHT SPV, GWG, GWG Life or any of their respective Affiliates or
Representatives shall make any public announcement or issue any public communication regarding this Agreement or the transactions
contemplated hereby, or any matter related to the foregoing, without first obtaining the prior consent of GWG or the Company,
as applicable (which consent shall not be unreasonably withheld, conditioned or delayed), except if such announcement or other
communication is required by applicable Law or legal process (including pursuant to the federal securities law or the rules of
any national securities exchange), in which case the Company, the Seller Trusts, MHT SPV, GWG or GWG Life, as applicable, shall
use its commercially reasonable efforts to coordinate such announcement or communication with the other party, prior to announcement
or issuance; provided, however, that, subject to this
Section 8.3
, each party hereto and its Affiliates may make internal
announcements regarding this Agreement and the transactions contemplated hereby to their and their Affiliates’ respective
directors, officers and employees without the consent of any other party hereto and may make public statements regarding this
Agreement and the transactions contemplated hereby containing information or events already publicly known other than as a result
of a breach of this
Section 8.3
; and provided, further, that, subject to this
Section 8.3
, the foregoing shall not
prohibit any party hereto from communicating with third parties to the extent necessary for the purpose of seeking any third-party
consent.
Section
8.4
Make-Whole
.
(a)
Not less than 30 days prior to the Closing, GWG may at its option secure a valuation opinion from a nationally recognized valuation
firm to the effect that the MLP Units will have, as of the Closing Date, a fair value of not less than $10.00 per unit. In the
event such opinion ascribes a fair value of less than $9.00 per unit to the MLP Units, GWG and the Company shall engage a second
nationally recognized valuation firm, as they shall mutually agree, to conduct a final and binding valuation at the cost of the
Company. If, and only in the event that, such final valuation ascribes a value to the MLP Units of less than $9.00 per unit, the
Company undertakes to provide such additional number of MLP Units to GWG at Closing as shall be necessary to provide an aggregate
value to GWG equal to the value of the Consideration. The Company agrees to assist and cooperate with GWG and the valuation firms
in completing such valuations.
(b)
In furtherance of the Company’s undertaking in
Section 8.4(a)
above, the Company agrees to enter into such arrangements
with such of its existing securityholders as it deems necessary and appropriate, in its sole discretion, to preclude any dilution
to its common unitholders (including, as of the Closing, GWG) that otherwise may result from the make-whole obligation in
Section
8.4(a)
.
(c)
In connection therewith, GWG irrevocably covenants and agrees, as of the date of Closing, as the then majority holder of the Company’s
Common Units, to waive any restriction the Company may have under any contractual provision relating to the partnership interests/units
of the Company or its Subsidiaries that would otherwise prevent or limit the conversion of outstanding partnership interests/units,
or any of them, into Common Units to satisfy the Company’s obligations under this
Section 8.4
or any other transaction
or series of transactions arising out of or relating to the transactions contemplated hereunder; provided, however, that this
irrevocable waiver and consent shall apply only to conversions effected in compliance with the Amended & Restated Limited
Partnership Agreement.
Section
8.5
Strategic Initiative
. GWG, GWG Life and the Company undertake to use their reasonable commercial efforts post-Closing
to pursue synergistic opportunities on terms that shall be mutually agreed, including but not limited to: (a) shared originations
programs from respective professional advisory networks; (b) FinTech online portal development and management for originating
life settlement financings direct from clients; (c) the provision of exclusive GWG Life settlement underwriting advisory services
to the Company; (d) coordinated product development for their respective target markets; and (e) such other activities as they
may consider to be in their respective and collective best interests. Notwithstanding the foregoing, none of GWG, GWG Life and
the Company shall be obligated to enter into any of the foregoing activities should it determine, in its sole discretion, that
any such activity is not in its best interests or the best interests of its securityholders.
Section
8.6
Orderly Marketing Arrangements
. GWG, the Trust Advisors for the benefit of each of the Seller Trusts agree to negotiate
in good faith the terms of an agreement (the “
Orderly Marketing Agreement
”) with one or more nationally recognized
“bulge bracket” investment banks at the Closing for the orderly marketing and resale of the GWG Common Stock. Under
the Orderly Marketing Agreement, the Trust Advisors with respect to each of the Seller Trusts, severally, covenant and agree with
the Company and GWG that no shares of the GWG Common Stock received pursuant to this Agreement, including shares held by each
such Seller Trusts or the beneficiaries thereof, shall be transferred or sold other than in accordance with such orderly marketing
arrangements, and the Orderly Marketing Agreement will contain provisions conditioning any assignments or distributions to the
Seller Trusts, their beneficiaries, or other assignees, on compliance with the provisions of the Orderly Marketing Agreement until
the termination thereof. GWG covenants and agrees for the benefit the Seller Trusts that it will use its commercially reasonable
effort to secure the assistance of its senior executives to assist the investment bank in marketing and resale activities, including
roadshows, from time to time, as reasonably requested. The Company covenants and agrees for the benefit of GWG that, subject to
applicable Law, it will use its commercially reasonable effort to secure the assistance of its senior executives to assist the
investment bank in marketing and resale activities, including roadshows, from time to time, as reasonably requested by GWG.
Section
8.7
Further Assurances
. Each party shall, on the reasonable request of any other party, execute such further documents,
and perform such further acts, as may be reasonably necessary or appropriate to give full effect to the allocation of rights,
benefits and Liabilities contemplated by this Agreement and the transactions contemplated hereby.
Section
8.8
Transfer Taxes
. Upon the Closing, (a) GWG shall be liable for all transfer, documentary, sales, use, stamp, registration
and other similar Taxes and fees (including any associated penalties and interest) (collectively, “
Transfer Taxes
”)
incurred in connection with or arising out of the issuance of GWG securities pursuant to this Agreement, and (b) the Company shall
be liable for all Transfer Taxes incurred in connection with or arising out of the issuance of Company securities pursuant to
this Agreement. The parties shall reasonably cooperate in the execution and delivery of any and all instruments and certificates
with respect to such Transfer Taxes and file all necessary Tax Returns and other documentation with respect to any such Transfer
Taxes for which they bear responsibility under this Agreement.
Section
8.9
MHT SPV Lock-Up
. MHT SPV agrees that, until the earlier of (a) the Listing of the Company’s MLP Units or (b)
forty (40) months from the date of Closing, it shall not, directly or indirectly, sell, transfer, distribute, pledge, hypothecate
or otherwise dispose of any shares of GWG Common Stock acquired pursuant to
Section 2.2
, without the prior written consent
of GWG.
ARTICLE
IX
CONDITIONS
TO OBLIGATIONS
Section
9.1
Conditions to the Obligations of Each Party
. The obligations of the Company, the Seller Trusts, MHT SPV, GWG and GWG
Life to consummate, or cause to be consummated, the transactions contemplated hereby, are subject to the satisfaction of the following
conditions, any one or more of which may be waived (if legally permitted) in writing by all of such parties:
(a)
There shall not be in force any Governmental Order or Law enjoining or prohibiting the consummation of the other transactions
contemplated hereby.
(b)
The GWG Stockholder Approval shall have been obtained.
(c)
The HSR waiting period (and any extension thereof) shall have expired or been terminated.
(d)
There shall not have been commenced any Action against any of the parties relating to the transactions contemplated hereby.
Section
9.2
Conditions to the Obligation of GWG and GWG Life
. The obligation of GWG and GWG Life to consummate, or cause to be
consummated, the transactions contemplated hereby is subject to the satisfaction of the following additional conditions, any one
or more of which may be waived in writing by GWG (on behalf of both GWG and GWG Life):
(a)
Representations and Warranties
.
(i)
Each of the representations and warranties of (A) the Company contained in the first sentence of
Section 3.1
(Organization),
Section
3.2
(Due Authorization) and
Section 3.16
(Brokers’ Fees), and (B) the Seller Trusts and MHT SPV contained in
Section
4.1
(Organization),
Section 4.2
(Due Authorization) and
Section 4.10
(Brokers’ Fees) (collectively, the
“
Company Specified Representations
”) shall be true and correct (without giving any effect to any limitation
as to “materiality” or “Material Adverse Effect” or any similar limitation set forth therein) in all material
respects as of the Closing Date as though made on the Closing Date (except to the extent such representations and warranties expressly
relate to an earlier date, in which case, they shall be true and correct on and as of such earlier date).
(ii)
The representations and warranties of the Company contained in
Section 3.6
(Capitalization) shall be true and correct as
of the Closing Date as though made on the Closing Date.
(iii)
Each of the representations and warranties of the Company, the Seller Trusts and MHT SPV contained in this Agreement (other than
the Company Specified Representations, and the representations and warranties of the Company contained in
Section 3.6
(Capitalization))
shall be true and correct (without giving any effect to any limitation as to “materiality” or “Material Adverse
Effect” or any similar limitation set forth therein) as of the Closing Date as though made on the Closing Date (except to
the extent such representations and warranties expressly relate to an earlier date, in which case, they shall be true and correct
on and as of such earlier date), except, in either case, where the failure of such representations and warranties to be so true
and correct would not have a Material Adverse Effect on the Company or its Subsidiaries, as a whole.
(b)
The Company, the Seller Trusts and MHT SPV shall have complied, in all material respects, with all covenants required to be performed
by them as of or prior to the Closing.
(c)
GWG shall have obtained the following written consents or approvals for the transactions contemplated hereby: (i) a consent from
the senior lender to GWG DLP Funding IV, LLC; (ii) a consent from the holders of a majority in principal amount of outstanding
GWG L Bonds to effect an amendment to the GWG Indenture for the purpose of amending the manner in which the debt-coverage ratio
contained therein is calculated; (iii) an approval from Bank of Utah, as trustee under the GWG Indenture, for a supplemental indenture
relating to the GWG L Bonds to be issued under this Agreement, and (iv) confirmation from the GWG Board, not to be unreasonably
withheld or delayed, that all conditions to Closing have been reasonably satisfied.
(d)
GWG and the Company shall have entered into a registration rights agreement in customary and negotiated form reasonably acceptable
to the parties, but in any event containing (a) piggyback registration rights affording GWG the right to include the MLP Units
for resale on any initial registration statement that the Company files with the SEC under the Securities Act for an initial offering,
if any, of Company partnership interests/units (subject to customary cutback provisions) (the “
Initial Registration
”),
and (b) demand registration rights with respect to any MLP Units the resale registration of which is not obtained through the
Initial Registration.
(e)
GWG and the Trust Advisors for the benefit of the Seller Trusts (together with one or more investment banks selected by and reasonably
acceptable to the parties thereto) shall have entered into the Orderly Marketing Agreement respecting the resale of GWG Common
Stock in final negotiated form reasonably acceptable to the parties.
(f)
GWG, the Seller Trusts and MHT SPV shall have entered into a Shareholders’ Agreement containing, among others, the terms
set forth in
Section 8.2
.
(g)
The GWG Board shall have received (i) a valuation opinion, in form and substance reasonably acceptable to GWG and rendered by
a nationally recognized valuation firm, to the effect that the MLP Units as of the Closing shall have a fair value of at least
$10.00 per unit, and (ii) a fairness opinion from a nationally recognized valuation firm chosen by GWG to the effect that the
transactions contemplated by this Agreement are fair, from a financial point of view, to GWG and its stockholders.
(h)
GWG shall have received a reasoned legal opinion of Willkie Farr & Gallagher LLP, special counsel to the Company, dated as
of the Closing Date and in form and substance reasonably satisfactory to GWG, to the effect that the Company is not, and as a
result of the consummation of the transaction contemplated by this Agreement will not be, required to register as an investment
company under the Investment Company Act.
(i)
GWG shall have received the written opinion of Mayer Brown LLP, special tax counsel to the Company, dated as of the Closing Date
and in form and substance reasonably satisfactory to GWG, to the effect that the Company will be taxed as a partnership for federal
income-tax purposes after giving effect to the transactions effected at the Closing.
(j)
Each of the Company, the Trust Advisors with respect to the Seller Trusts and MHT SPV shall have delivered to GWG a certificate
signed by a respective officer of such entity (or trustee, as the case may be), dated as of the Closing Date, certifying that
the conditions applicable to it specified in
Section 9.2(a)
and
Section 9.2(b)
have been fulfilled.
(k)
Each of the Company and MHT SPV shall have delivered to GWG a true copy of the resolutions of its respective governing board or
authority, as the case may be, authorizing the execution of this Agreement and the consummation of the transactions contemplated
herein, certified by the respective secretary or similar officer thereof.
Section
9.3
Conditions to the Obligations of Company, the Seller Trusts and MHT SPV
. The obligations of the Company, the Seller
Trusts and MHT SPV to consummate the transactions contemplated hereby are subject to the satisfaction of the following additional
conditions, any one or more of which may be waived in writing by the Company and the Seller Trusts and MHT SPV:
(a)
Representations and Warranties
.
(i)
Each of the representations and warranties of GWG and GWG Life contained in the first and third sentences of
Section 5.1
(Corporate Organization),
Section 5.2
(Due Authorization) and
Section 5.19
(Brokers’ Fees) (the “
GWG
Specified Representations
”) shall be true and correct (without giving any effect to any limitation as to “materiality”
or “Material Adverse Effect” or any similar limitation set forth therein) in all material respects as of the Closing
Date as though made on the Closing Date (except to the extent such representations and warranties expressly relate to an earlier
date, in which case, they shall be true and correct on and as of such earlier date).
(ii)
Each of the representations and warranties of GWG and GWG Life contained in
Section 5.8
(Capitalization) shall be true
and correct.
(iii)
Each of the representations and warranties of GWG and GWG Life contained in this Agreement (other than the GWG Specified Representations,
the representations and warranties of GWG contained in
Section 5.8
(Capitalization)) shall be true and correct (without
giving any effect to any limitation as to “materiality” or “Material Adverse Effect” or any similar limitation
set forth therein) as of the Closing Date as though made on the Closing Date (except to the extent such representations and warranties
expressly relate to an earlier date, in which case, they shall be true and correct on and as of such earlier date), except, in
either case, where the failure of such representations and warranties to be so true and correct would not a Material Adverse Effect
on GWG and its Subsidiaries, as a whole.
(b)
GWG and GWG Life shall have complied, in all material respects, with all covenants required to be performed by them as of or prior
to the Closing.
(c)
GWG and the Seller Trusts shall have entered into the Registration Rights Agreement.
(d)
GWG and the Trust Advisors with respect to the Seller Trusts (together with one or more investment banks selected by and reasonably
acceptable to the parties thereto) shall have entered into the Orderly Marketing Agreement respecting the resale of GWG Common
Stock in final negotiated form reasonably acceptable to the parties.
(e)
GWG, the Trust Advisors with respect to the Seller Trusts and MHT SPV shall have entered into a Shareholders’ Agreement
containing, among others, the terms set forth in
Section 8.2
.
(f)
GWG Life and the Company shall have entered into the Loan Agreement as contemplated by
Section 2.3
.
(g)
GWG shall cause to be delivered to each of the Company, the Seller Trusts and MHT SPV a fully executed and true copy of the Voting
Agreement.
(h)
GWG shall have delivered to each of the Company, the Seller Trusts and MHT SPV a certificate signed by an officer of GWG, dated
as of the Closing Date, certifying that the conditions specified in
Section 9.3(a)
and
Section 9.3(b)
have been
fulfilled.
(i)
GWG shall have delivered to each of the Company, the Seller Trusts and MHT SPV a true copy of the resolutions of the GWG Board
authorizing the execution of this Agreement and the consummation of the transactions contemplated herein, certified by the secretary
or similar officer of GWG.
(j)
GWG Life shall have delivered to each of the Company, the Seller Trusts and MHT SPV a true copy of the resolutions of the board
of managers of GWG Life authorizing the execution of this Agreement and the consummation of the transactions contemplated herein,
certified by the secretary or similar officer of GWG Life.
(k)
The GWG Common Stock issuable as Stock Consideration to the Seller Trusts shall have been approved for listing on NASDAQ, subject
to official notice of issuance.
(l)
GWG shall have executed and delivered to the Company a joinder to the Amended & Restated Limited Partnership Agreement, which
shall continue to be in full force and effect as of the Closing.
(m)
GWG Life shall remain a wholly owned subsidiary of GWG as of
the
Closing Date.
(n)
The Company shall have received a reasoned legal opinion of Mayer Brown LLP, counsel to GWG, dated as of the Closing Date and
in form and substance reasonably satisfactory to the Company, to the effect that, GWG is not, and as a result of the consummation
of the transaction contemplated by this Agreement will not be, required to register as an investment company under the Investment
Company Act.
ARTICLE
X
TERMINATION;
EFFECTIVENESS
Section
10.1
Term; Termination
. This Agreement shall expire upon the later of (i) the completion of the resale of all GWG Common
Stock issued to the Seller Trusts as set forth in
Section 2.1
, consistent with the terms of the Orderly Marketing Agreement,
or (ii) the satisfaction of the Loan executed and delivered concurrently with the consummation of the transactions contemplated
under this Agreement (the “
Term
”). Notwithstanding the foregoing, this Agreement may be terminated and the
transactions contemplated hereby abandoned:
(a)
by written consent of the Company, the Trust Advisors on behalf of the Seller Trusts, MHT SPV and GWG;
(b)
by either the Company, the Trust Advisors on behalf of the Seller Trusts and MHT SPV, or by GWG:
(i)
if any of the conditions set forth in Article IX shall not have been, or if it becomes apparent that any of such conditions will
not be, fulfilled by April 30, 2018; provided that the right to terminate this Agreement pursuant to this
Section 10.1(b)(i)
shall not be available to a party whose failure to perform any of its material obligations under this Agreement has been the
primary cause of, or primarily resulted in, such failure; or
(ii)
if this Agreement shall have failed to receive the GWG Stockholder Approval at the GWG Stockholders’ Meeting and at any
adjournment or postponement thereof;
(c)
by the Trust Advisors on behalf of the Seller Trusts at any time prior to the Closing, so long as the Seller Trusts pay GWG the
Termination Fee set forth in and pursuant to the terms of
Section 10.4
concurrently with or prior to (and as a condition
to) such termination;
(d)
by the Company, the Trust Advisors on behalf of the Seller Trusts and MHT SPV (provided that none of the Company, the Seller Trusts
or MHT SPV is then in breach of any representation, warranty, covenant or other agreement contained in this Agreement that would
cause any of the conditions set forth in
Section 9.2
not to be satisfied), if GWG or GWG Life shall have breached or failed
to perform any of its representations, warranties, covenants or other agreements contained in this Agreement, which breach or
failure to perform (i) would give rise to the failure of a condition set forth in
Section 9.3(a)
or
Section 9.3(b)
and (ii) is incapable of being cured by GWG or GWG Life, as the case may be, or is not cured within 30 days of written notice
thereof to GWG or GWG Life, as the case may be; or
(e)
by GWG (provided that GWG or GWG Life is not then in breach of any representation, warranty, covenant or other agreement contained
in this Agreement that would cause any of the conditions set forth in
Section 9.3
not to be satisfied), if the Company
or the Seller Trusts (or Trust Advisors), as applicable, shall have breached or failed to perform any of its representations,
warranties, covenants or other agreements contained in this Agreement, which breach or failure to perform (i) would give rise
to the failure of a condition set forth in
Section 9.2(a)
or
Section 9.2(b)
and (ii) is incapable of being cured
by the Company, the Seller Trusts or MHT SPV, as applicable, or is not cured within 30 days of written notice thereof to the Company,
the Seller Trusts or MHT SPV, as applicable.
Section
10.2
Notice of Termination
. A terminating party will provide written notice of termination to the other parties specifying
with particularity the reason for such termination (including the provision or provisions of this Agreement pursuant to which
such terminated is to be effected). If more than one provision of
Section 10.1
is available to a terminating party in connection
with a termination, a terminating party may rely on any available provisions in
Section 10.1
for any such termination,
whether or not to the exclusion of other available provisions in
Section 10.1
.
Section
10.3
Effect of Termination
. Except as otherwise set forth in this Section 10.3, in the event of the termination of this
Agreement pursuant to
Section 10.1
, this Agreement shall forthwith become void and have no effect, without any Liability
on the part of any party hereto or its respective Affiliates, officers, directors or stockholders, other than Liability of any
party hereto for any breach of a covenant of this Agreement occurring prior to such termination or, in the event of a Closing,
any breach of a representation or warranty. The provisions of this
Section 10.3
and
Sections 11.2, 11.4, 11.5, 11.6,
11.9, 11.10, 11.12, 11.13, 11.14, 11.15 and 11.16
(collectively, the “
Surviving Provisions
”) and the Confidentiality
Agreement, and any other Section or Article of this Agreement referenced in the Surviving Provisions which are required to survive
in order to give appropriate effect to the Surviving Provisions, shall in each case survive any termination of this Agreement.
Section
10.4
Termination Fee
. If this Agreement is terminated by the Trust Advisors on behalf of the Seller Trusts pursuant to
Section 10.1(c)
, then the Seller Trusts and the Company shall be jointly and severally liable to pay to GWG (by wire transfer
in immediately available funds to one or more accounts designed by GWG in writing), concurrently with, and as a condition to,
such termination, a fee in an amount of $4,000,000 (the “
Termination Fee
”). In the event the Termination Fee
is paid to GWG pursuant to this Section, payment of the Termination Fee shall be the sole and exclusive remedy of GWG and GWG
Life, and any of its former, current or future officers, directors, partners, stockholders, managers, members or Affiliates (the
“
GWG Related Parties
”) against the Company, the Seller Trusts, MHT SPV and their respective Subsidiaries and
any of their respective former, current or future officers, directors, partners, stockholders, managers, members or Affiliates
(collectively, “
Seller Related Parties
”) for any loss suffered as a result of the failure of this Agreement
and the transactions contemplated hereunder to be consummated, and upon payment of such amount none of the Seller Related Parties
shall have any further liability or obligation relating to or arising out of this Agreement or the transactions herein contemplated.
ARTICLE
XI
MISCELLANEOUS
Section
11.1
Waiver
. Any party to this Agreement may, at any time prior to the Closing, by action taken by its general partner,
board of directors, or officers thereunto duly authorized, waive any of the terms or conditions of this Agreement or agree to
an amendment or modification to this Agreement in the manner contemplated by
Section 11.10
and by an agreement in writing
executed in the same manner (but not necessarily by the same Persons) as this Agreement.
Section
11.2
Notices
. All notices and other communications among the parties shall be in writing and shall be deemed to have been
duly given (i) when delivered in person, (ii) when delivered after posting in the United States mail having been sent registered
or certified mail return receipt requested, postage prepaid, (iii) when delivered by FedEx or other nationally recognized overnight
delivery service or (iv) when received by facsimile or email (provided that a copy is subsequently delivered by one of the other
methods permitted in (i) through (iii) of this
Section 11.2
), addressed as follows:
|
(a)
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If
to the Company, to:
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The
Beneficient Company Group, L.P.
325
N. St. Paul Street, Suite 4850
Dallas,
Texas 75201
|
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Attention:
Brad K. Heppner
Email:
bheppner@beneficient.com
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(b)
|
If
to the Seller Trusts to:
|
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Each
of the Seller Trusts set forth on Schedule I hereto
c/o
The Delaware Trust Company, as Trustee
|
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251
Little Falls Drive
Wilmington,
DE 19808
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Attention:
Trust Administration/Alan Halpern
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|
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(c)
|
If
to MHT SPV to:
|
|
|
|
|
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MHT
Financial, L.L.C.
|
|
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2021
McKinney Avenue, Suite 1950
|
|
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Dallas,
TX 75201
|
|
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Attn:
Managing Member
|
|
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E-mail:
mholland@mhtpartners.com
|
|
|
|
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(c)
|
If
to GWG, to:
|
|
|
|
|
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220
S. Sixth Street
Suite
1200
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|
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Minneapolis,
MN 55402
Attention:
Jon R. Sabes
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|
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(d)
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If
to GWG Life, to:
|
|
|
|
|
|
220
S. Sixth Street
Suite
1200
|
|
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Minneapolis,
MN 55402
Attention:
Jon R. Sabes
|
or
to each party at such other address or addresses as such party may from time to time designate in writing.
Section
11.3
Assignment
. No party hereto shall assign this Agreement or any part hereof without the prior written consent of the
other parties. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties hereto and
their respective permitted successors and assigns. Any attempted assignment in violation of the terms of this
Section 11.3
shall be null and void,
ab initio
.
Section
11.4
Rights of Third Parties
. Except as provided in
Sections 11.15 and 11.16
, nothing expressed or implied in this
Agreement is intended or shall be construed to confer upon or give any Person, other than the parties hereto, any right or remedies
under or by reason of this Agreement.
Section
11.5
Expenses
. Except as otherwise provided herein, each party hereto shall bear its own transaction expenses, whether
or not such transactions shall be consummated; provided that the filing fee associated with any HSR filing shall be borne equally
by GWG and the Company.
Section
11.6
Governing Law
. This Agreement, and all claims or causes of action based upon, arising out of, or related to this Agreement
or the transactions contemplated hereby, shall be governed by, and construed in accordance with, the Laws of the State of Delaware,
without giving effect to principles or rules of conflict of laws to the extent such principles or rules would require or permit
the application of Laws of another jurisdiction.
Section
11.7
Captions; Counterparts
. The captions in this Agreement are for convenience only and shall not be considered a part
of or affect the construction or interpretation of any provision of this Agreement. This Agreement may be executed in counterparts
(and delivered by facsimile or electronic transmission), each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.
Section
11.8
Schedules and Exhibits
. The Schedules and Exhibits referenced herein are a part of this Agreement as if fully set
forth herein.
Section
11.9
Entire Agreement
. This Agreement and the Confidentiality Agreement constitute the entire agreement among the parties
relating to the transactions contemplated hereby and supersede any other agreements, whether written or oral, that may have been
made or entered into by or among any of the parties hereto or any of their respective Subsidiaries relating to the transactions
contemplated hereby. No representations, warranties, covenants, understandings, agreements, oral or otherwise, relating to the
transactions contemplated by this Agreement exist between the parties except as expressly set forth in this Agreement and the
Confidentiality Agreement.
Section
11.10
Amendments
. This Agreement may be amended or modified in whole or in part, only by a duly authorized agreement in
writing executed by all of the parties and which makes reference to this Agreement.
Section
11.11
Severability
. If any provision of this Agreement is held invalid or unenforceable by any court of competent jurisdiction,
the other provisions of this Agreement shall remain in full force and effect. The parties further agree that if any provision
contained herein is, to any extent, held invalid or unenforceable in any respect under the Laws governing this Agreement, they
shall take any actions necessary to render the remaining provisions of this Agreement valid and enforceable to the fullest extent
permitted by Law and, to the extent necessary, shall amend or otherwise modify this Agreement to replace any provision contained
herein that is held invalid or unenforceable with a valid and enforceable provision giving effect to the intent of the parties.
Section
11.12
Jurisdiction; WAIVER OF TRIAL BY JURY
. In any Action among the parties arising out of or relating to this Agreement
or any of the transactions contemplated hereby, each of the parties (a) irrevocably and unconditionally consents and submits to
the exclusive jurisdiction and venue of the Court of Chancery of the State of Delaware in and for New Castle County, Delaware;
(b) agrees that it will not attempt to deny or defeat such jurisdiction by motion or other request for leave from such court;
and (c) agrees that it will not bring any such Action in any court other than the Court of Chancery for the State of Delaware
in and for New Castle County, Delaware, or, if (and only if) such court finds it lacks subject matter jurisdiction, the federal
court of the United States of America sitting in Delaware, and appellate courts thereof. Service of process, summons, notice or
document to any party’s address and in the manner set forth in
Section 11.2
shall be effective service of process
for any such Action. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION BASED
UPON, ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section
11.13
Specific Performance
. The parties agree that irreparable damage for which monetary damages, even if available, would
not be an adequate remedy, would occur in the event that the parties do not perform their obligations under the provisions of
this Agreement (including failing to take such actions as are required of them hereunder to consummate this Agreement) in accordance
with its specified terms or otherwise breach such provisions. The parties acknowledge and agree that the parties shall be entitled
to seek an injunction, specific performance, or other equitable relief, to prevent breaches of this Agreement and to seek to enforce
specifically the terms and provisions hereof, without proof of damages, prior to the valid termination of this Agreement in accordance
with
Section 10.1
, this being in addition to any other remedy to which they are entitled under this Agreement.
Section
11.14
Survival of Representations and Warranties
. All of the representations and warranties in this Agreement or in any
instrument, document or certificate delivered pursuant to this Agreement shall survive the Closing until the later of (i) the
resale of the GWG Common Stock issued as Stock Consideration hereunder as contemplated by the Orderly Marketing Agreement, (ii)
the satisfaction or refinancing of the GWG L Bonds issued as Debt Consideration pursuant to this Agreement, and (iii) the full
satisfaction of all obligations under the Loan.
Section
11.15
[Reserved]
.
Section
11.16
Seller Trusts and Trust Advisors
. It is expressly understood and agreed that (a) this document is executed and delivered
by Delaware Trust Company, not individually or personally, but solely as Trustee, pursuant to direction from the Trust Advisors
and in the exercise of the powers and authority conferred and vested in Delaware Trust Company as Trustee pursuant to the Trust
Agreements of the Seller Trusts (the “
Trust Agreements
”) and the Trustee is governed by and subject to the
Trust Agreements and entitled to the protections, rights and benefits contained therein, (b) each of the representations, undertakings
and agreements herein made on the part of the Seller Trusts and Trust Advisors is made and intended not as personal representations,
undertakings and agreements by Delaware Trust Company but is made and intended for the purpose for binding only the Seller Trusts
and respective trust estates (the “
Seller Trust Assets
”), (c) nothing herein contained shall be construed as
creating any liability on Delaware Trust Company, individually or personally, to perform any covenant either expressed or implied
contained herein, all such liability, if any, being expressly waived by the parties hereto and by any person claiming by, through
or under the parties hereto, and (d) under no circumstances shall Delaware Trust Company be personally liable for the payment
of any indebtedness or expenses of the Seller Trusts or Trust Advisors or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Seller Trusts or Trust Advisors under this Agreement or any other
related documents, and (e) under no circumstances shall the Trust Advisors be personally liable for the payment of any indebtedness
or expenses or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken
under this Agreement, all such recourse being strictly to the Seller Trust Assets.
Section
11.17 [
Reserved
].
[
Signature
page follows
]
IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement on January 18, 2018 with effect as of January 12, 2018.
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GWG HOLDINGS, INC.
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By:
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/s/ Jon Sabes
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Name:
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Jon Sabes
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Title:
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CEO
|
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GWG LIFE, LLC
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By:
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/s/ Jon Sabes
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Name:
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Jon Sabes
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Title:
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CEO
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THE BENEFICIENT COMPANY GROUP, L.P.
|
|
By: Beneficient Management, LLC, its General Partner
|
|
|
|
|
By:
|
/s/ Brad K. Heppner
|
|
Name:
|
Brad K. Heppner
|
|
Title:
|
CEO
|
|
|
|
|
MHT FINANCIAL SPV, LLC
|
|
|
|
|
By:
|
/s/ Murray T. Holland
|
|
Name:
|
Murray T. Holland
|
|
Title:
|
Manager
|
|
|
|
|
THE LT-1 EXCHANGE TRUST
,
|
|
By: DELAWARE TRUST COMPANY, not in its individual
capacity but solely as Trustee
|
|
|
|
|
By:
|
/s/ Alan R. Halpern
|
|
Name:
|
Alan R. Halpern
|
|
Title:
|
Vice President
|
|
THE LT-2 EXCHANGE TRUST
,
|
|
By: DELAWARE TRUST COMPANY, not in its individual
capacity but solely as Trustee
|
|
|
|
|
By:
|
/s/ Alan R. Halpern
|
|
Name:
|
Alan R. Halpern
|
|
Title:
|
Vice President
|
|
|
|
|
THE LT-3 EXCHANGE TRUST
,
|
|
By: DELAWARE TRUST COMPANY, not in its individual
capacity but solely as Trustee
|
|
|
|
|
By:
|
/s/ Alan R. Halpern
|
|
Name:
|
Alan R. Halpern
|
|
Title:
|
Vice President
|
|
|
|
|
THE LT-4 EXCHANGE TRUST
,
|
|
By: DELAWARE TRUST COMPANY, not in its individual
capacity but solely as Trustee
|
|
|
|
|
By:
|
/s/ Alan R. Halpern
|
|
Name:
|
Alan R. Halpern
|
|
Title:
|
vice President
|
|
|
|
|
THE LT-5 EXCHANGE TRUST
,
|
|
By: DELAWARE TRUST COMPANY, not in its individual
capacity but solely as Trustee
|
|
|
|
|
By:
|
/s/ Alan R. Halpern
|
|
Name:
|
Alan R. Halpern
|
|
Title:
|
Vice President
|
|
THE LT-6 EXCHANGE TRUST
,
|
|
By: DELAWARE TRUST COMPANY, not in its individual
capacity but solely as Trustee
|
|
|
|
|
By:
|
/s/ Alan R. Halpern
|
|
Name:
|
Alan R. Halpern
|
|
Title:
|
Vice President
|
|
THE LT-7 EXCHANGE TRUST
,
|
|
By: DELAWARE TRUST COMPANY, not
in its individual capacity but solely as Trustee
|
|
|
|
|
By:
|
/s/ Alan R. Halpern
|
|
Name:
|
Alan R. Halpern
|
|
Title:
|
Vice President
|
|
THE LT-8 EXCHANGE TRUST
,
|
|
By: DELAWARE TRUST COMPANY, not
in its individual capacity but solely as Trustee
|
|
|
|
|
By:
|
/s/ Alan R. Halpern
|
|
Name:
|
Alan R. Halpern
|
|
Title:
|
Vice President
|
ACCEPTED AND AGREED THIS 18th DAY OF JANUARY,
2018:
|
|
MURRAY T. HOLLAND
, as Trust Advisor
|
|
|
/s/ Murray T. Holland
|
|
|
|
JEFFREY S. HINKLE
, as Trust Advisor
|
|
|
|
/s/ Jeffrey S. Hinkle
|
|
SCHEDULE
I
LIST
OF SELLER EXCHANGE TRUSTS
THE
LT-1 EXCHANGE TRUST
THE
LT-2 EXCHANGE TRUST
THE
LT-3 EXCHANGE TRUST
THE
LT-4 EXCHANGE TRUST
THE
LT-5 EXCHANGE TRUST
THE
LT-6 EXCHANGE TRUST
THE
LT-7 EXCHANGE TRUST
THE
LT-8 EXCHANGE TRUST
EXHIBIT
A
TERMS
OF GWG L BONDS
Issuer:
GWG
Initial
Holders: (i) Seller Trusts, pro rata, in accordance with
Section 2.1
; (ii) MHT SPV, in accordance with
Section 2.2
.
Form:
Privately placed, subject to GWG Indenture (and a supplement thereto entered into by and between GWG, GWG Life, and Bank of Utah,
National Association, as trustee thereunder).
Registration
Rights: Resale registration rights to be included.
Principal
Amount: Up to $400,000,000.
Term:
5 years
Interest
Rate: 7.50% per annum.
Settlement
at Maturity: Cash. Issuer shall have option to renew/extend term if Holder does not exercise option to receive principal payment
at maturity.
Seniority:
Secured Debt.
Refinancing:
GWG shall undertake commercially reasonable efforts to refinance its outstanding debt with a more favorable credit facility and/or
institutional note within 12 months following the Closing.
Transferability:
Each of the Seller Trusts may assign/transfer its pro rata distribution of the GWG L Bonds, in whole or in part, to liquidating
trusts formed post-Closing. GWG L Bonds transferred to liquidating trusts may be distributed in liquidation to the trusts’
beneficiaries.
EXHIBIT
B
PRINCIPAL
TERMS OF COMMERCIAL LOAN AGREEMENT
Business
Purposes/Use of Proceeds
: The Company, as Borrower, shall enter into a Loan Agreement with GWG Life, as Lender, providing
for loan proceeds to the Borrower in an agreed amount. The loan proceeds shall be used by the Borrower for working capital and
general corporate purposes in order to execute its business strategy and activities.
1. KEY DEFINITIONS
|
|
|
|
Loan Amount:
|
$[257 million], [amount to be
confirmed up to a maximum of $400 million]
|
|
|
Maturity Date:
|
[●], 2022, being the date
that is 48 calendar months after the date on which this Note has been issued
|
|
|
Listing:
|
The effective date of the listing
of the Borrower’s common units (the “
Units
”) on a U.S. national stock exchange
|
|
|
Qualified Valuation Expert:
|
An accounting, appraisal or investment
banking firm of nationally recognized standing, such as Duff & Phelps, that is, in the reasonable judgment
of the Borrower, qualified to perform the task for which it has been engaged
|
|
|
Alternative Asset Financing Portfolio:
|
[●]
|
|
|
Business Day:
|
Any day other than a Saturday,
Sunday or other day on which commercial banks in New York City are authorized or required by law to close
|
|
|
Event of Default:
|
Defined in Section 6
|
2.
INTEREST
The
Loan shall bear simple interest from the date of execution and delivery, which shall accrue at a rate per annum equal to 5%, one-half
of which will be due and payable monthly in cash, and one-half of which will be due and payable in full on the Maturity Date as
set forth in Section 3 below.
3.
REPAYMENT
(a)
All principal and accrued interest on the Loan shall be due and payable on the Maturity Date, payable, at the option of the Issuer,
in (i) cash or (ii) in Units in an amount determined (A) in the event of a Listing, by the five-day average closing bid price
immediately prior to the Maturity Date or (B) in the event a Listing has not occurred, by the tangible book value of the Units,
as determined by a Qualified Valuation Expert; provided, however, that, in the event of either such (A) or (B), the Lender shall
not be required hereunder to accept Units in settlement of amounts owing under this Note if the acceptance of such Units would,
in the reasonable opinion of the Borrower or GWG, be likely to cause the Borrower or GWG to require to be registered as an investment
company under the Investment Company Act.
(b)
If a payment to be made hereunder shall fall due on a day that is not a Business Day, such payment shall be made on the next succeeding
Business Day without additional interest thereon.
(c)
Notwithstanding anything herein to the contrary, the outstanding principal amount of the Loan, together with all accrued interest
thereon, may be repaid in cash at any time and from time without penalty.
4.
RANKING
The
payment obligations of the Borrower under the Loan shall, at all times while any principal amount of the Loan remains outstanding,
rank junior only to Borrower’s bank debt and the NPC- B Unit Accounts of Beneficient Company Holdings, L.P. in accordance
with the limitations set forth in Section 5 below.
5.
LIMITATION ON INDEBTEDNESS
Until
all amounts outstanding under the Loan shall have been paid in full, the Borrower shall not incur, create or assume any indebtedness
that is senior in right of payment to the payment obligations under the Loan (“
Senior Debt
”);
provided that
the Borrower may incur, create or assume Senior Debt if, after giving effect to the incurrence thereof on a pro forma basis,
the aggregate amount of all outstanding Senior Debt would not exceed 45% of the net asset value (“
NAV
”) (calculated
by the Borrower in accordance with its customary procedures) of the Borrower’s Alternative Asset Financing Portfolio, inclusive
of (i) the Borrower’s bank debt and (ii) outstanding NPC-B Unit Accounts of Beneficient Company Holdings, L.P.; provided
that the bank debt of the Borrower shall not exceed at the time of incurrence the lesser of 30% of the Borrower’s NAV at
the time of borrowing of such bank debt or $200 million. The Borrower shall provide the Lender with monthly month-end calculations,
including supporting data, of what percentage outstanding Senior Debt bears to the net asset value of the Borrower’s Alternative
Asset Financing Portfolio.
6.
EVENTS OF DEFAULT; ACCELERATION
(a)
The occurrence and continuance of any of the following shall constitute an Event of Default hereunder:
(i)
the Borrower fails to pay any principal or interest when due and such failure continues for five (5) days after written notice
to the Borrower;
(ii)
the Borrower fails to observe the covenant contained in Section 5 and such failure continues for twenty (20) days after written
notice to the Borrower;
(iii)
an event has occurred that has had or could reasonably be expected to have a Material Adverse Effect and such Material Adverse
Effect continues and remains uncured for a period of thirty (30) days after written notice to the Borrower. A “Material
Adverse Effect” means, with respect to any event or circumstance, that individually or in the aggregate, has or would reasonably
be expect to have a material and adverse effect on:
(A)
a change in the business, assets, financial condition or operations of the Borrower; or
(B)
the ability of the Borrower to perform its obligations under the Loan Agreement or any material contract to which it is a party;
or
(C)
the status, existence, perfection or priority of the security interest in the Borrower resulting in a breach of Section 4 of this
Loan Agreement; or
(E)
the Borrower is required to register as an investment company under the Investment Company Act of 1940, as amended;
provided,
however, that in the case of clause (A) only, a “Material Adverse Effect” shall not be deemed to include events, changes,
effects or developments resulting from or arising out of any of the following, either alone or in combination, and none of the
following, either alone or in combination, shall be deemed to constitute or contribute to a Material Adverse Effect, or otherwise
be taken into account in determining whether a Material Adverse Effect has occurred or would be reasonably expected to occur:
(1) changes after the date of this Loan Agreement in GAAP or regulatory accounting requirements or principles (so long as the
Borrower and its Subsidiaries are not materially disproportionately affected thereby); (2) changes after the date of this Loan
Agreement in Laws of general applicability to financial institutions (so long as the Borrower and its Subsidiaries are not materially
disproportionately affected thereby); (3) changes after the date of this Loan Agreement in global, national or regional political
conditions or general economic or market conditions, including changes in prevailing interest rates, credit availability and liquidity,
currency exchange rates and price levels or trading volumes in U.S. or foreign securities markets (so long as the Borrower and
its Subsidiaries are not materially disproportionately affected thereby); (D) a decline in the trading price of a the Borrower’s
Units (if listed) or a failure, in and of itself, to meet earnings projections, but not, in either case, including any underlying
causes thereof; (4) the impact of the public disclosure, pendency or performance of this Loan Agreement or the transactions contemplated
hereby including the impact of the Loan on relationships with clients, customers and employees; and (F) any natural disaster,
outbreak or escalation of hostilities, declared or undeclared acts or war or terrorism, or any escalation or worsening thereof,
whether or not occurring or commenced before or after the date of this Loan Agreement.
(iv)
(A) the Borrower commences any case, proceeding or other action (1) under any law relating to bankruptcy, insolvency, reorganization,
or other relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it as bankrupt
or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief
with respect to it or its debts or (2) seeking appointment of a receiver, trustee, custodian, conservator or other similar official
for it or for all or any substantial part of its assets, or the Borrower makes a general assignment for the benefit of its creditors;
(B)
there is commenced against the Borrower any case, proceeding or other action of a nature referred to in Section 6(a)(iv)(A) above
which (1) results in the entry of an order for relief or any such adjudication or appointment or (2) remains undismissed, undischarged
or unbonded for a period of sixty (60) days;
(C)
there is commenced against the Borrower any case, proceeding or other action seeking issuance of a warrant of attachment, execution
or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief
which has not been vacated, discharged, or stayed or bonded pending appeal within sixty (60) days from the entry thereof; or
(D)
the Borrower takes any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts
set forth in Section 6(a)(iv)(A), Section 6(a)(iv)(B) or Section 6(a)(iv)(C) above.
(b)
Upon the occurrence of any Event of Default and at any time thereafter during the continuance of such Event of Default, the Lender
may at its option, by written notice to the Borrower declare the entire principal amount of this Loan, together with all accrued
interest thereon, immediately due and payable;
provided however that
, if an Event of Default described in Section 6(a)(iii)
shall occur, the principal of and accrued interest on the Loan Amount shall become immediately due and payable without any notice,
declaration or other act on the part of the Lender.
7.
NOTICES
(a)
All notices, requests or other communications required or permitted to be delivered hereunder shall be delivered in writing, in
each case to the address specified below or to such other address as such Party may from time to time specify in writing in compliance
with this provision:
(i)
If to the Borrower:
(ii)
If to the Lender:
(b)
Notices if (i) mailed by certified or registered mail or sent by hand or overnight courier service shall be deemed to have been
given when received; (ii) sent by facsimile during the recipient’s normal business hours shall be deemed to have been given
when sent (and if sent after normal business hours shall be deemed to have been given at the opening of the recipient’s
business on the next business day); and (iii) sent by e-mail shall be deemed received upon the sender’s receipt of an acknowledgment
or confirmation from the intended recipient (such as by the “return receipt requested” function, as available, return
e-mail or other electronic confirmation of delivery).
8.
GOVERNING LAW
The
Loan Agreement and any claim, controversy, dispute or cause of action in contract based upon, arising out of or relating to the
Loan Agreement and the transactions contemplated hereby shall be governed by the laws of the State of Delaware.
EXHIBIT
C
FORM
OF ASSIGNMENT AND ASSUMPTION OF MLP UNITS
FIRST AMENDMENT
TO MASTER EXCHANGE AGREEMENT
THIS FIRST AMENDMENT
is dated as of April 30, 2018 (this “
Amendment
”), and amends in part that certain
Master
Exchange Agreement,
as amended and restated on January 18, 2018 with effect as of January 12, 2018 (the “
Agreement
”),
by and among GWG HOLDINGS, INC., a Delaware corporation (“
GWG
”), GWG LIFE, LLC, a Delaware limited liability
company and wholly owned Subsidiary of GWG, THE BENEFICIENT COMPANY GROUP, L.P., a Delaware limited partnership, MHT FINANCIAL
SPV, LLC, a Delaware limited liability company and wholly owned subsidiary of MHT Financial, L.L.C., and each of the EXCHANGE
TRUSTS that is a party to the Agreement (the “
Seller Trusts
”), and as agreed to and accepted by Murray T. Holland
and Jeffrey S. Hinkle as trust advisors to the Seller Trusts. Capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Agreement.
WITNESSETH:
WHEREAS, the parties
have entered into the Agreement; and
WHEREAS, pursuant
to and in accordance with Section 11.10 of the Agreement, the parties wish to amend the Agreement as set forth in this Amendment.
NOW, THEREFORE, in
consideration of the rights and obligations contained herein, and for other good and valuable consideration, the adequacy of which
is hereby acknowledged, the parties agree as follows:
Section 1.
Amendment
to the Agreement
.
(a)
Section
8.1
of the Agreement is hereby amended by deleting the following parenthetical in the sixth line as follows: “(and in
any event on or prior to April 30, 2018
).”
(b)
Section 10.1(b)(i)
of the Agreement
is hereby deleted in its entirety and replaced with the following:
“if
any of the conditions set forth in Article IX shall not have been, or if it becomes apparent that any of such conditions will
not be, fulfilled by June 30, 2018; provided that the right to terminate this Agreement pursuant to this Section
10.1(b)(i)
shall not be available to a party whose failure to perform any of its material obligations under this Agreement has been the
primary cause of, or primarily resulted in, such failure; or”
(c) All other terms and provisions of
the Agreement are hereby ratified in full and incorporated by reference herein.
Section 2.
No
Third Party Beneficiary
. This Amendment shall be binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person, any legal or equitable
right, benefit or remedy of any nature whatsoever, including, without limitation, any rights of employment for any specified period,
under or by reason of this Agreement.
Section 3.
Entire
Agreement
. This Amendment constitutes the entire agreement of the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and undertakings, both written and oral, among the parties with respect to the subject matter
hereof. Except as amended by this Amendment, the Agreement shall continue in full force and effect.
Section 4.
Counterparts
.
This
Amendment
may be executed in counterparts (and delivered by facsimile or electronic
transmission), each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
Section 5.
Governing
Law
. This
Amendment
, and all claims or causes of action based upon, arising out of, or
related to this Amendment or the transactions contemplated hereby, shall be governed by, and construed in accordance with, the
Laws of the State of Delaware, without giving effect to principles or rules of conflict of laws to the extent such principles
or rules would require or permit the application of Laws of another jurisdiction.
[Signature Page Follows]
IN WITNESS WHEREOF
the parties have hereunto caused this Amendment to be duly executed as of the date first set forth above.
|
GWG HOLDINGS, INC.
|
|
|
|
By:
|
/s/ Jon Sabes
|
|
Name:
|
Jon Sabes
|
|
Title:
|
Chief Executive Officer
|
|
GWG LIFE, LLC
|
|
|
|
By:
|
/s/ Jon Sabes
|
|
Name:
|
Jon Sabes
|
|
Title:
|
Chief Executive Officer
|
[Signature Page to Amendment to Master
Exchange Agreement]
IN WITNESS WHEREOF
the parties have hereunto caused this Amendment to be duly executed as of the date first set forth above.
|
THE BENEFICIENT COMPANY GROUP, L.P.
|
|
|
|
By:
|
/s/
Brad Heppner
|
|
Name:
|
Brad Heppner
|
|
Title:
|
Chief Executive Officer
|
|
|
|
MHT FINANCIAL SPV, LLC
|
|
|
|
By:
|
/s/ Murray T. Holland
|
|
Name:
|
Murray T. Holland
|
|
Title:
|
Manager
|
|
|
|
THE LT-1 EXCHANGE TRUST,
|
|
|
|
By: DELAWARE TRUST COMPANY, not in its individual capacity but solely
as Trustee
|
|
|
|
By:
|
/s/ Alan R. Halpern
|
|
Name:
|
Alan R. Halpern
|
|
Title:
|
Vice President
|
|
THE LT-2 EXCHANGE TRUST,
|
|
|
|
By: DELAWARE TRUST COMPANY, not in its individual capacity but solely
as Trustee
|
|
|
|
By:
|
/s/ Alan R. Halpern
|
|
Name:
|
Alan R. Halpern
|
|
Title:
|
Vice President
|
[Signature
Page to Amendment to Master Exchange Agreement]
IN WITNESS WHEREOF
the parties have hereunto caused this Amendment to be duly executed as of the date first set forth above.
|
THE LT-3 EXCHANGE TRUST,
|
|
|
|
By: DELAWARE TRUST COMPANY, not in its individual capacity but solely
as Trustee
|
|
|
|
By:
|
/s/ Alan R. Halpern
|
|
Name:
|
Alan R. Halpern
|
|
Title:
|
Vice President
|
|
THE LT-4 EXCHANGE TRUST,
|
|
|
|
By: DELAWARE TRUST COMPANY, not in its individual capacity but solely
as Trustee
|
|
|
|
By:
|
/s/ Alan R. Halpern
|
|
Name:
|
Alan R. Halpern
|
|
Title:
|
Vice President
|
|
|
|
THE LT-5 EXCHANGE TRUST,
|
|
|
|
By: DELAWARE TRUST COMPANY, not in its individual capacity but solely
as Trustee
|
|
|
|
By:
|
/s/ Alan R. Halpern
|
|
Name:
|
Alan R. Halpern
|
|
Title:
|
Vice President
|
|
THE LT-6 EXCHANGE TRUST,
|
|
|
|
By: DELAWARE TRUST COMPANY, not in its individual capacity but solely
as Trustee
|
|
|
|
By:
|
/s/ Alan R. Halpern
|
|
Name:
|
Alan R. Halpern
|
|
Title:
|
Vice President
|
[Signature
Page to Amendment to Master Exchange Agreement]
IN WITNESS WHEREOF
the parties have hereunto caused this Amendment to be duly executed as of the date first set forth above.
|
THE LT-7 EXCHANGE TRUST,
|
|
|
|
By: DELAWARE TRUST COMPANY, not in its individual capacity but solely
as Trustee
|
|
|
|
By:
|
/s/ Alan R. Halpern
|
|
Name:
|
Alan R. Halpern
|
|
Title:
|
Vice President
|
|
THE LT-8 EXCHANGE TRUST,
|
|
|
|
By: DELAWARE TRUST COMPANY, not in its individual capacity but solely
as Trustee
|
|
|
|
By:
|
/s/ Alan R. Halpern
|
|
Name:
|
Alan R. Halpern
|
|
Title:
|
Vice President
|
|
MURRAY T. HOLLAND, as Trust Advisor
|
|
|
|
/s/ Murray T. Holland
|
|
JEFFREY S. HINKLE, as Trust Advisor
|
|
|
|
/s/ Jeffrey S. Hinkle
|
[Signature
Page to Amendment to Master Exchange Agreement]