EFTA00683161.pdf

OLOCKWORK capital fund JULY 2009 HIGHLY CONFIDENTIAL , EFTA00683161 CONFIDENTIAL PRESENTATION GLOCKWORK capital fund This material provided by Clockwork is for informational purposes only. This material is not intended as an offer to sell or the solicitation of an offer or solicitation for the purchase or sale of the Clockwork Enhanced Yield Fund (the "Fund") or any other security. Any such offer or solicitation, if made, would be solely by way of the Fund's confidential Private Placement Memorandum (the "PPM") and only to persons whose eligibility to invest has been determined. The summaries of the strategies and terms of the Fund presented herein are qualified by ref- erence to the Memorandum and are subject to change; these are not final terms. In addition, the Memorandum shall contain important information concerning risks and other material aspects of the Fund and must be read carefully before a decision to invest is made. Although the information presented herein has been obtained from and is based upon sources Clockwork believes to be reliable, no representation or warranty, express or implied, is made as to the accuracy or completeness of that information. Any investment decision to invest in the Fund must be made based on the Fund's PPM, that will contain additional information about the investment objectives, terms and conditions of an investment in to Fund, limited liability company agreement and a subscription agreement and will be subject to the terms and conditions contained in such Fund Memorandum. The views and strategies described herein may not be suitable for all investors. This material is distrib- uted with the understanding that it is not rendering accounting, legal or tax advice. Please consult your legal or tax advisor concerning such matters. By accepting receipt of this presentation, agrees not to duplicate this presentation or furnish this pre- sentation or any copy of this presentation to any person other than such recipient's professional advisers (subject to customary undertakings of confidentiality), and further agrees promptly to dispose of this presentation should the recipient decide not to invest in the Fund. CLOCKWORK CAPITAL FUND HIGHLY CONFIDENTIAL 2 EFTA00683162 TABLE OF CONTENTS OLOCKWORK capital fund OVERVIEW THE FIRM THE INVESTMENT OPPORTUNITY THE INVESTMENT STRATEGY THE INVESTMENT PROCESS COMPETITION RISK MANAGEMENT AND TRANSPARENCY SUMMARY OF INVESTMENT TERMS CLOCKWORK CAPITAL FUND EFTA00683163 OVERVIEW GLOCKWORK capital fund Clockwork Capital Fund LP provides investors with an opportunity to participate in a sophisticated high yield, high quality asset class with stable returns. The fund's strategy is to make investments in prepayment advances on funded settlements. The initial focus will be on settlements typically involving plaintiffs who have reached financial settle- ment agreements on legal action related to labor, employment, accident, malpractice and tort. The fund is managed by Clockwork Capital Advisors, LLC. Clockwork Capital has substantial experience and resources and has developed formal relationships with other Tier 1 third party providers to access proprietary deal flow and enhance the risk management and oversight of the program. The fund will target investor returns of 13.8%-18% supported by contractual rights to cash flow from confidential cash settlements that are escrowed and dispersed by the plaintiff's attorney's escrow bank and monitored by Tier 1 agents and auditors, with additional over- sight by an independent 3rd party auditor. Over time, the fund will offer investors the opportunity to enhance their investment in the underlying assets through the use of leverage. CLOCKWORK CAPITAL FUND HIGHLY CONFIDENTIAL 4 EFTA00683164 ABOUT CLOCKWORK GLOCKWORK capital fund Clockwork Capital Fund, LP is managed by Clockwork Capital Advisors LLC, which is led by a team representing over 150 years of experience in investment management, risk management, fixed income, structured finance and private wealth. Clockwork Capital Advisors is skilled at identifying unique investment asset catego- ries and creating the institutional-grade infrastructure necessary to attract sophisti- cated private capital. Clockwork Capital Advisors accomplishes this through a systematic approach to as- sessing, structuring, executing and overseeing the creation of effective approaches to fund management, solutions development as well as financial and risk management. Clockwork Capital Advisors combines deep financial services expertise, a unique network of family office relationships and best of breed professional partnerships, including accounting, audit, legal, custodial and administration professionals. CLOCKWORK CAPITAL FUND HIGHLY CONFIDENTIAL 5 EFTA00683165 THE INVESTMENT OPPORTUNITY GLOCKWORK capital fund Hundreds of claims and lawsuits are filed annually in matters related to sexual harass- ment, wrongful termination and discrimination. One of our industry partners executed on over $750 million of these such funded settlements in 2008. The defendants tend to be highly sensitive to publicity surrounding these claims and, as a result, private settlements are negotiated outside of the courtroom intended to maintain privacy for the parties involved. Confidentiality is a core element of the settlements between plaintiffs and the defendants. Many defendants mandate that settlements be paid over a period of time - 10to 24 months — so that emotions stabilize, perhaps lessening the potential for plaintiff lapses under confidentiality agreements. Clockwork Capital has current commitment of $75 million to $100 million of confi- dential settlements per month from initial strategic originator, and has identified five other opportunities that would ehance source of return. Average settelment initially sourced by Clockwork Capital is $4 million. CLOCKWORK CAPITAL FUND HIGHLY CONFIDENTIAL 6 EFTA00683166 THE INVESTMENT OPPORTUNITY GLOCKWORK capital fund Many defendants would prefer to receive a simple cash settlement... Why? Given the emotional trauma often associated with these proceedings and pressing financial needs, many plaintiffs desire to put this experience be- hind them as soon as possible. Often, plaintiffs are economically challenged as a result of the litigation and are in need of liquidity. Clockwork solves the need of the plaintiff by purchasing the rights to the confidential settlement cash flows, thus providing the plaintiff with immediate liquidity. CLOCKWORK CAPITAL FUND HIGHLY CONFIDENTIAL 7 EFTA00683167 THE INVESTMENT OPPORTUNITY GLOCKWORK capital fund Confidential settlement opportunities are introduced to Clockwork through proprietary relationships with leading firms who specialize in this area. Clockwork purchases the rights to the settlement cash flows Cash flows are deposited in a custodial account with a control agreement, for the benefit of the plaintiff. Buyout price will be at a material discount from the face value of the settlement Plantiff and Clockwork enter into another confidentiality agreement further protecting parties from a breach of confidentiality. Clockwork collects the settlement cash flows from the IOTA trust account (or similar trust structure) and distributes income to investors and re-investing when appropriate. CLOCKWORK CAPITAL FUND HIGHLY CONFIDENTIAL 8 EFTA00683168 RETURN GENERATION PROCESS CLOCKWORK capital fund Settlement contracts are sourced by Clock- work through pro- prietary network of individuals and firms globally Clockwork analyzes deal flow and selects those contracts which meet risk and return objectives Clockwork purchases con- tracts and enters into confidentiality agreements Returns cash flow to Investor through quarterly interest payments Clockwork collects settle- ment cash flows HIGHLY CONFIDENTIAL 9 CLOCKWORK CAPITAL FUND EFTA00683169 CASH FLOW PROCESS GLOCKWORK capital fund Defendant and Plaintiff settle Defendant's lawyer wires full settlement to Plaintiff's law- yer's IOTA Trust account Plaintiff's At- torney col- lects Legal Representa- tion Fee Plaintiff's lawyer negotiates between Funder & Plaintiff* Funder wires purchase amount to Lawyer IOTA Trusi account Plaintiff's lawyer wires Funder I Money to Plaintiff Third party verifies that Plaintiff L received money Monthly payments I are made by Plaintiff's legal counsel from IOTA Trust account to Fund account Third Party verifier confirms IOTA Trust account monies are in account *Plaintiff's lawyer will not get compensated for negotiating with the fund Full principal re-payment is received Interest is paid to Investors quarterly Principal is re-invested into new settlements CLOCKWORK CAPITAL FUND HIGHLY CONFIDENTIAL 10 EFTA00683170 THE INVESTMENT PROCESS GLOCKWORK capital fund PRE INVESTMENT INVESTMENT SOURCE DEALS PRIMARY DUE SECONDARY DUE PORTFOLIO DILIGENCE DILIGENCE SELECTION 1000+ Deal Universe 500+ Deal 200 Deal Short-list 100+ Contract Opportunites Portfolio Sourcing team has deep experience in the asset class Identify opportunities through vast, on- the-ground network Multiple contacts in settlement and claim industry to source and vet deals Initial screening Quantitative screen -prior and existing records -return and risk as- sessment Qualitative screen —reference checks and use of informal network Investment Commit- tee Review Contract Analyses Contract construction draft Escrow verification Individual structured settlements selected Create diversified portfolio of struc- tured settlements POST INVESTMENT PORTFOLIO MONITORING Full Transparency Bank oversight Return analysis and reporting Cash flow analysis CLOCKWORK CAPITAL FUND HIGHLY CONFIDENTIAL 11 EFTA00683171 ORGANIZATIONAL STRUCTURE CLOCKWORK capital fund INVESTMENT COMMITTEE Jim Parrish Jacqueline Maduneme Independent 3rd Party SETTLEMENT SOURCING AND IDENTIFICATION Tier 1 Firms with Expertise AJ Discala -Proprietary Networks -Introductions -Local Law Firms -Word of Mouth Legend: Committee CLOCKWORK CAPITAL FUND SETTLEMENT SELECTION/ PORTFOLIO CONSTRUCTION/ MONITORING Jacqueline Maduneme -Investment Analysis -Documentation Analysis -Background checks -Build portfolio of settlement contracts Functions RISK MANAGEMENT & OPERATIONS/ STRUCTURING Jim Parrish Michael Christ -Flow of Funds analysis -Risk Management -Transparency -Legal Analysis -Compliance Tasks r Toby Moskovits Edward Wahrsager INVESTOR RELATIONS C -Investor inquiries and reporting HIGHLY CONFIDENTIAL 12 EFTA00683172 FUND/GENERAL PARTNER STRUCTURE CLOCKWORK capital fund Clockwork Capital Advisors, LP GENERAL PARTNER Delaware Clockwork Capital Fund, LP i Delaware Clockwork Capital Fund (Off-Shore Company) Cayman Islands Clockwork Capital Advisors, LLC (Manag Company) DELAWARE CLOCKWORK CAPITAL FUND HIGHLY CONFIDENTIAL 13 EFTA00683173 COMPETITION GLOCKWORK capital fund There is little public information available to quantify the size or key players in the confidential settlements market. For example, in the sexual harassment and discrimi- nation space, thousands of settlements have been reached but information about these settlements is difficult to access given the highly confidential nature of the settlements. Clockwork believes the market is predominantly comprised of small-medium sized operators. Firms known to participate in the personal injury, workers compensation and liability space include Oasis Legal Finance, Magnolia Legal, Lawcash, Peachtree Pre-Settlement funding, and J.G. Wentworth CLOCKWORK CAPITAL FUND HIGHLY CONFIDENTIAL 14 EFTA00683174 RISK MANAGEMENT CLOCKWORK capital fund The fund will incur no indebtedness or leverage in relation to the purchase of settle- ments or for general business purposes. However, Clockwork may develop a lever- aged vehicle for investors at a later date based on client demand. Limited Partners shall have transparency into the Funds activities. Limited Partners shall have on-line access to banking records for the fund's deposit account and all system records related to the purchased settlements. Limited Partners will also be able to verify purchase settlement trust accounts and deposits thereto by Defendants through an independent 3rd party. The fund management team includes professionals with a long history of developing and implementing risk management systems in complex asset management environ- ments. CLOCKWORK CAPITAL FUND HIGHLY CONFIDENTIAL 15 EFTA00683175 SUMMARY OF INVESTMENT TERMS GLOCKWORK capital fund FUND NAME: CLOCKWORK CAPITAL FUND, LP Description The Fund provides investors with an opportunity to participate in a high yield, high quality in- vestment strategy with stable returns. The strategy makes investments in confidential settle- ments and other private contracts typically backed by over-collateralized assets Target Size US $1.5 billion Min Investment US $1million Liquidity Limited Partners are committed to a minimum "lock-up" of 12 months from the first capital contribution. Thereafter, 90 days following presentation of notice to withdraw, subject to a 10% holdback until annual audit concluded. Fees Management fees: 1.5% Incentive fees: 15% Expenses Legal and accounting expenses capped at 35bps Investment Manager Clockwork Capital Advisors LLC Counsel for Fund Schulte Roth & Zabel, LLP/Wachtell, Lipton, Rosen & Katz / Cravath, Swain & Moore, LLP/ White and Case, LLP Auditor Deloitte & Touche, LLP Accounting Eisner, LLP CLOCKWORK CAPITAL FUND HIGHLY CONFIDENTIAL 16 EFTA00683176 BIOGRAPHIES GLOCKWORK capital fund AJ DISCALA Mr. Discala is a Partner of Clockwork Capital. Advisors, LLC. Prior to forming Clockwork, Mr. Discala was President and Founder of the CalibraX, LLC, a boutique merchant bank providing a broad range of professional advisory services to clients seeking liquidity or growth capital. Prior to CalibraX, Mr. Discala was an investor and merchant banker in New York, Chicago and Los Angeles for more than 15 years, with a particular emphasis in sourcing opportunistic ventures. Mr. Discala began his career in finance with TJM institutional Services as an institutional bond broker in Chicago. During his career, Mr. Discala served as Managing Partner and Co-Founder of Calico Capital Group, LLC, a New York and Los Angeles based merchant banking and financial consulting firm focusing on the unique needs of emerging growth companies and identifying opportunities in the small cap and middle market sectors. With a hands on and comprehensive approach to advising clients on both the sell-side and buy-side, Mr. Discala has executed over 80 transactions ranging in size from $2 million to more than $200million. In 2008, Mr. Discala advised on over $350 million in secured debt, equity and mezzanine financing transactions across a broad spectrum of industries. In his personal time Mr. Discala is an active contributor to many charitable organizations and serves on the Board of Directors of "Do Something", a site dedicated for teenagers who want to make a difference. Mr. Discala was also the principal architect of uBid's Celebrity Auction for Hurricane Katrina Relief. Mr. Discala attended Northeastern University. He resides in both Juno Beach, Florida and New York City. CLOCKWORK CAPITAL FUND HIGHLY CONFIDENTIAL 17 EFTA00683177 BIOGRAPHIES CLOCKWORK capital fund JIM PARRISH Mr. Parrish is a Partner of Clockwork Capital Advisors, LLC. Mr. Parrish has more than 20 years of experience in financial services and risk management. Most recently he was a partner with a bou- tique merchant bank where he was involved in numerous debt and private equity transactions. He also served as co-portfolio manager of an early stage private equity firm that is invested in health care, financial, energy, software, technology and food companies. Mr. Parrish's extensive background in finance and investment analysis began at Salomon Brothers, then he spent 14 years with Moody's Investors Service where he was an analyst and senior executive managing operations with over $80 million in revenues. At Moody's he led hundreds of committees that assigned ratings on over one trillion dollars of debt securities issued by corporations, financial institutions and structured finance entities. Mr. Parrish also led the firm's global risk management business. Mr. Parrish earned his BA in English at Shepherd College and an MBA in Finance from The George Washington University. He also holds certificates in French from the University of Bourgogne and in Mergers & Acquisitions from UCLA. CLOCKWORK CAPITAL FUND HIGHLY CONFIDENTIAL 18 EFTA00683178 BIOGRAPHIES GLOCKWORK capital fund MICHAEL CHRIST Mr. Christ is a Senior Managing Director of Guggenheim Partners. He currently serves as CIO for Asset Consulting Group, a Guggenheim subsidiary, and previously served as Chief Investment Offi- cer of Guggenheim Wealth Management, and is responsible for both the quantitative and qualitative sides of portfolio strategy, asset allocation, insurance modeling, tax optimization and risk analysis. Mr. Christ has performed extensive research in alternative investments and has broad experience in modeling, designing and implementing traditional, and non-tradition portfolios. Prior to working with Guggenheim, Mr. Christ worked with Asset Consulting Group, beginning in 1991 as an em- ployee and then as an owner and partner. Asset Consulting Group has over 75 clients with over $40 billion in assets under advisory. In 2001, ACG merged into Guggenheim Capital. As CIO, Mr. Christ oversees all research efforts and coordinates all research related activities. Mr. Christ is a member of the Investment Committee, which establishes the framework for the firm's investment philosophy and oversees the internal processes used to ultimately make investment rec- ommendations. Mr. Christ received degrees in Engineering Management and Applied Mathematics from Southern Methodist University and is a member of the St. Louis Society of Financial Analysts and is a holder of the Chartered Financial Analyst designation. CLOCKWORK CAPITAL FUND HIGHLY CONFIDENTIAL 19 EFTA00683179 BIOGRAPHIES GLOCKWORK capital fund JACQUELINE MADUNEME Ms. Maduneme has over 15 years of experience in international and domestic tax law, investment management and risk management. She was former Head of Client Risk Management at Citigroup Capital Markets and Alternative Investments businesses, where she was responsible for the devel- opment of client risk management infrastructure, risk monitoring and reporting, and tracking legal and regulatory developments. Prior to joining Citigroup, Ms. Maduneme was associated with the law firm of Cadwalader, Wicker- sham & Taft and PricewaterhouseCoopers, where she spent 9 years as a tax attorney specialized in domestic and international mergers and acquisitions, and tax planning and structuring for multina- tional clients. Her diversified professional career also includes serving as the Head of Internal Audit with the Teachers' Retirement System of Louisiana, where she was responsible for enterprise-wide risk management, including investment risk management. Ms. Maduneme received a B.A. in Accounting from Southern University, a J.D. from Loyola Univer- sity School of Law, and an LL.M. in International Tax from New York University School of Law. She is also a Chartered Financial Analyst, a Certified Public Accountant, and a Chartered Alternative Investments Analyst, and is licensed to practice law in the State of New York. CLOCKWORK CAPITAL FUND HIGHLY CONFIDENTIAL 20 EFTA00683180 BIOGRAPHIES GLOCKWORK capital fund TOBY MOSKOVITS Ms. Moskovits has spent over 10 years advising companies across a range of industries and stages. She is the Senior Managing Partner of Heritage Equity Partners, and has served as Managing Direc- tor of private equity and venture capital investment activity at Cammeby's Capital Group, a private family-owned firm, where she invested in companies across a diverse range of industries. In addition to traditional private equity investments, Ms. Moskovits developed a merchant bank- ing practice, generating proprietary deal flow via a network of virtual "entrepreneurs in residence" across a range of industries. She is also the founder of Gotham Angels, a New York based Angel In- vestment group focused on providing angel investors with opportunities to invest in mature growth and middle market private equity. From 1998-2002, Ms. Moskovits lived in Israel during which time she worked at Israel Seed Partners, a $250 million fund based in Jerusalem, in addition to holding roles in a number of technology companies. During her tenure at Israel Seed Partners, the fund invested in Cyota (sold to RSA) and Dealtime (IPO: Shopping.com, subsequently sold to Ebay). Ms. Moskovits holds seats on the board of directors of Melior Discovery, Blink Twice and Vumber. She earned her B.Sc. from Touro College and an MBA from Bar Ilan University, both awarded summa cum laude. CLOCKWORK CAPITAL FUND HIGHLY CONFIDENTIAL 21 EFTA00683181 BIOGRAPHIES GLOCKWORK capital fund EDWARD WAHRSAGER Mr. Wahrsager has over 15 years of experience in the investment banking and private equity indus- tries, with a long history working with family offices spanning the globe. He has led the sourcing, structuring, financing and management of portfolios of private and public companies in a range of industries for these families, working on these family led transactions throughout the entire evolu- tion of the deal. Areas of focus include financial services, insurance, media and telecom. Over the course the past fifteen years Mr. Wahrsager has established a world-class network of international high-net worth investors. Mr. Wahrsager is also a founder of Gotham Angels, a New York based Angel Investment group fo- cused on providing angel investors with opportunities to invest in mature growth and middle market private equity. He received his MBA from NYU Stern School of Business in 1997. CLOCKWORK CAPITAL FUND HIGHLY CONFIDENTIAL 22 EFTA00683182