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SUND > SEC Filings for SUND > Form 8-K on 20-Jun-2013All Recent SEC Filings

Show all filings for SUNDANCE STRATEGIES, INC. | Request a Trial to NEW EDGAR Online Pro

Form 8-K for SUNDANCE STRATEGIES, INC.


20-Jun-2013

Entry into a Material Definitive Agreement, Unregistered Sale of Equity


Item 1.01 Entry into Material Definitive Agreement.

Additional NIBs Acquisition

Effective June 7, 2013, the Company entered into an Asset Transfer Agreement (the "ATA") with Del Mar Financial, S.a.r.l. ("DMF"). The terms of the ATA, a copy of which is attached hereto, are summarized below. Please note that though the following summary of the terms of the ATA is believed to be complete in every material respect, it should not be used as a substitute for review of the ATA. See Item 9.01.

Acquisition of Assets:

The ATA involved the current purchase of certain assets (the "Current Assets") and provided for the conversion of the Current Assets into "Qualified NIBS" defined below. The ATA also provides for the purchase of additional assets that will also meet the definition of Qualified NIBs.

Initial Acquisition of Current Assets: The Current Assets included the following:

1.

The Company purchased the net insurance benefits related life insurance policies with an aggregate face amount equal to $284,270,934 (the "NIBs"). The NIBs entitle the Company to all the death benefits payable after repayment of a senior lien and other limited rights and obligations of the life insurance policy owners. The NIBs are currently being converted into Qualified NIBs.

2.

The Company also purchased Class A Notes Issued by Hyperion Life Assets Limited with a Note Balance of $10,000,000 (the "Class A Notes"). Hyperion Life Assets Limited is a private limited company incorporated in Ireland under the Companies Acts 1963-2009 with registered number 506854, having its registered office at Styne House, Upper Hatch Street, Dublin 2, Ireland.

3.

The Company also purchased Class B Notes, also issued by Hyperion Life Assets Limited, with a Note Balance of $954,000 (the "Class B Notes").

4.

Finally, the Company purchased its own promissory note in the amount of $2,999,000 issued to PCH Financial S.a.r.l. in connection with the Company's initial NIBs acquisition on March 11, 2013 (the "SSI

Note").

For additional information on our business model and our initial NIBs acquisition referenced in paragraph 4, see our 8-K Current Report dated March 29, 2013, which was filed with the Securities and Exchange Commission on April


5, 2013, along with our 8-KA of the same date, which was filed with the Securities and Exchange Commission on May 24, 2013. See Item 9.01.

Additional Assets to be Delivered

According to the terms of the ATA, DMF is required to deliver to the Company, "Qualified NIBs" (defined below) related to life insurance policies with an aggregate face amount equal to $400,000,000. To the extent the Current Assets are converted into Qualified NIBs related to less than $400,000,000 of face amount of life insurance policies, DMF is obligated to purchase additional Qualified NIBs until such amount has been delivered to the Company.

Conversion of NIBs into Qualified NIBs

To meet the definition of "Qualified NIBs" for acceptance by the Company, the NIBs must have the following minimum characteristics:

1.

The NIBs are currently subject to indebtedness maturing at various times during the next two years. To qualify, the financing of the premiums must have a term of at least five (5) years.

2.

Each group of NIBs must have at least 10 underlying life insurance policies.

3.

The average age of the insureds underlying the life insurance policies is approximately 81.

4.

Each group of NIBs must have mortality protection insurance coverage ("MPIC").
The MPIC will insure against the risk that the life insurance policies underlying the NIBs do not mature as anticipated in the Company's models and projections, by providing for certain payments to the Company.

Return of Non-Qualifed NIBs Assets

Upon delivery of Qualifed NIBs related to life insurance policies with an aggregate face amount equal to $400,000,000, any Current Assets remaining in excess of the Qualified NIBs will be returned to DMF, including any Class A Notes, Class B Notes and the SSI Note that were acquired from DMF as outlined above under the heading "Initial Acquisition of Current Assets."

Purchase Price

The Purchase Price for the Qualified NIBs shall be $20,000,000. $8,000,000 shall be paid in cash (the "Cash Payment") and $12,000,000 shall be paid in connection with a promissory note (the "Note Payment"), as follows:

1.

Up Front Payment. An initial payment was made to PCH Financial S.a.r.l. ("PCH") for the benefit of DMF in the amount of $5,000,000 on June 7, 2013. This payment was used to repay certain indebtedness of DMF to PCH. With this payment, PCH released its lien against the DMF assets to allow for the conversion of such assets into Qualified NIBs for the Company's benefit under the ATA. In connection with this payment, PCH also delivered certain of its assets to DMF to be used in the creation of Qualified NIBs by DMF according to the terms of a Loan Repayment & Asset Transfer Agreement between DMF and PCH (the "PCH Agreement"). The Company was named as a third party beneficiary to this agreement.

2.

Expense Payment. Additional payments will be advanced to cover certain approved expenses of DMF, as described in the ATA.

3.

Final PCH Payment. A final payment of $1,000,000 under the ATA will be made to PCH to fully repay any outstanding obligations of DMF under the PCH Agreement, upon the earlier of (i) 120 days following the Effective Date of June 6, 2013, and (ii) the receipt by the Company of confirmation that at least two of the NIBs have been converted into Qualified NIBs.


4.

Payment to DMF. As Qualified NIBs are delivered to the Company, the following payments shall be made to DMF:

a.

The balance of any Cash Payment due (after reduction for the payments described in paragraphs 1-3 above of this heading) shall be paid, pro rata, based on the Qualified NIBs being delivered until Qualified NIBs associated with life insurance policies of at least $400,000,000 of face amount have been delivered; and

b.

DMF shall receive (A) a secured promissory note in the amount of 3% of the face amount of the life insurance policies underlying the Qualified NIBs delivered to the Company in the form attached to the ATA as Exhibit E (the "Promissory Note") and (B) a pledge agreement in the form attached to the ATA as Exhibit F (the "Pledge Agreement"), in which we pledge to DMF the Qualified NIBs as collateral to secure the Buyer's obligations under the Promissory Note. The Buyer shall . . .



Item 3.02 Unregistered Sales of Equity Securities

We privately sold 1,464,000 shares of our common stock that comprise "restricted securities" under Rule 144 of the Securities and Exchange Commission between May 31, 2013, and June 13, 2013, at $5.00 per share for aggregate gross proceeds of $7,320,000. Introduction fees of $560,000 were paid to two parties that introduced three of the subscribers who purchased 1,400,000 of these shares for gross proceeds of $7,000,000; and two year warrants to purchase 70,000 shares of our common stock at a price of $5.00 per shares were also issued to one of these parties. These shares were sold to persons who were "accredited investors" as defined in Rule 501 of Regulation D of the Securities and Exchange Commission, under Rule 506 thereof, and the offer and sale of these shares were exempt from the registration provisions of the Securities Act of 1933, as amended (the "Securities Act"), by reason thereof. State laws requiring the registration of the offer and sale of securities under Rule 506 are preempted by Section 18 of the Securities Act, though notices that were required to be filed by the Company were filed in the states of Arizona, California and Utah.



Item 9.01 Financial Statements and Exhibits.

(a)

Financial statements of businesses acquired.

(b)

Proforma financial information.

(c)

Exhibits.

Exhibit No.

Exhibit Description

10.1

Del Mar Financial, S.a.r.l. Asset Transfer Agreement

Exhibit A-1 (Schedule of NIBs)

Exhibit A-2 (Schedule of Salt Creek Bonds)

Exhibit B (Life Insurance Policies)

Exhibit C (Wire Instructions [to be provided])

Exhibit D (Expenses)

Exhibit E (Form of Promissory Note)

Exhibit F (Form of Pledge Agreement)

Exhibit G (DMF Pledged Assets and Sub Debt)

Exhibit H (DMF Pledge Agreement)

Exhibit I (Company Pledge Agreement)

Exhibit J (DMF Assignment Agreement)

Exhibit K (Form of PCH Bill of Sale and Assignment)

Exhibit L (DMF Transfer Agreement to Company

10.2

Europa Structuring and Consulting Agreement

For additional information on our business model and our initial NIBs acquisition referenced in paragraph 4, see our 8-K Current Report dated March 29, 2013, which was filed with the Securities and Exchange Commission on April 5, 2013, along with our 8-KA of the same date, which was filed with the Securities and Exchange Commission on May 24, 2013.

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