AMENDMENT NO.2 TO FORBEARANCE AGREEMENT
This Amendment No. 2 (the "Second Amendment") dated as of March 4,
2004 to Forbearance Agreement (the "Forbearance Agreement") dated as of June
November 27, 2002 by and between Xxxxxx + Xxxxxx, Inc., a Delaware corporation,
located at 00 Xxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxx Xxxx 00000 (the "Borrower"),
North Ridge Securities Corp. ("North Ridge"), Prime Capital Services, Inc.
("Prime"), the following guarantors: Prime Financial Services, Inc., North Shore
Capital Management Corp. ("North Shore"), Asset & Financial Planning, Ltd.,
x0000.xxx, Inc, G + C Schlager & Associates Inc., G + C Mortgage Line Inc. (the
"Corporate Guarantors"), Xxxxxx Xxxxxxxxx, Xxxxx Xxxxxx and Xxxxxxx Xxxx (the
"Individual Guarantors" and collectively, with the Corporate Guarantors, the
"Guarantors" and individually, a "Guarantor") and Wachovia Bank, National
Association, formerly known as First Union National Bank, having an office at
000 Xxxxx Xxxx, Xxxxxx, Xxx Xxxxxx 00000 (the "Bank").
W I T N E S S E T H:
WHEREAS, the Bank, the Borrower, North Ridge, Prime and the
Guarantors entered into a certain Revolving Credit and Term Loan Agreement dated
as of December 27, 2001 ("Loan Agreement"), pursuant to which the Bank made
available certain credit facilities described therein (the Loan Agreement,
together with all of the security agreements, assignments and any other
documents given by the Borrower, Prime and/or Guarantors in favor of the Bank,
hereinafter the "Loan Documents");
WHEREAS, the Bank extended a credit facility to the Borrower for
working capital pursuant to a Revolving Credit Note dated as of December 27,
2001 in the original principal amount of $2,000,000. (the "Revolving Credit
Note");
WHEREAS, the Bank extended a term credit facility to the Borrower
pursuant to a Term Loan Note dated as of December 27, 2001 in the original
principal sum of $5,000,000. (the "Term Loan Note" and together with the
Revolving Credit Note, the "Loan");
WHEREAS, the Borrower was in default of certain financial covenants
described in that certain Notice of Default and Demand for Payment dated
September 19, 2002 from counsel to the Bank to Borrower, Prime and Guarantors;
WHEREAS, as a result of such default, the obligations under the Loan
were due and payable;
WHEREAS, Borrower and Guarantors were unable to repay the Loan which
was due and payable and requested the Bank forbear from enforcing its rights
under the Loan Documents;
WHEREAS, the Bank agreed to so forbear and as a result Borrower,
Prime and the Guarantors entered into the Forbearance Agreement;
WHEREAS, the Borrower informed the Bank that it would be unable to
repay the Loan on the Maturity Date as set forth in the Forbearance Agreement
and requested the Bank
further forbear and extend the time of payment for the Loan and as a result
Borrower, Prime, North Ridge and the Guarantors (with the exception of Xxxxxx
Xxxxxxxxx) entered into an Amendment to Forbearance Agreement, dated as of June
18, 2003 (the "First Amendment");
WHEREAS, by letter dated February 4, 2004, the Bank, inter alia,
consented to the sale of stock owned by Borrower of North Shore and North Ridge
to Xxxxxx X. Xxxx and Xxxxxx Xxxxxxx;
WHEREAS, the Borrower has requested the Bank to further forbear from
enforcing its rights under the Loan Documents and to further extend the time of
payment for the Loan to and including July 1, 2005 (the "Extended Maturity
Date") and the Bank has agreed to so forbear, absent its demand, under the terms
and conditions set forth herein;
WHEREAS, the Borrower has advised the Bank that it will comply with
a repayment schedule to repay the Bank as set forth herein;
WHEREAS, the Borrower has informed the Bank that Xxxxxx Xxxxxxxxx
will not sign this Second Amendment.
NOW, THEREFORE, in consideration of the premises and in order to
induce the Bank to continue the existing loan facility and extend payment of the
Loan, the Borrower and undersigned Guarantors hereby agree with the Bank as
follows:
Section 1. Confirmation of Amount Due. The Borrower, and the
undersigned Guarantors represent and warrant that as of the date hereof they are
legally, validly and enforceably indebted to the Bank under the Revolving Credit
Note in the principal amount of $1,500,000. and under the Term Loan Note in the
principal amount of $2,280,269.53., both of which are due and payable without
offset, claim, defense, counterclaim or right of recoupment.
Section 2. Article Amendments.
(a) Article II, B(i) of the Forbearance Agreement, as amended by the First
Amendment, shall be deleted in its entirety and replaced with the following:
"B. Repayment of Loan. The Borrower shall make payments to the Bank:
(i) with respect to the Revolving Credit Note, absent demand,
interest monthly as set forth below on the 10th day of each
month until the Extended Maturity Date, plus principal
payments in reduction of the Revolving Credit Note, in the
principal amount of $31,250. on the 10th day of each month
until the Extended Maturity Date and the remaining principal
balance and any accrued interest on the Extended Maturity
Date; and"
(b) Article II, C of the Forbearance Agreement is deleted in its entirety
and replaced with the following:
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"C. Interest. The Loans shall continue to bear interest at the LIBOR Market
Index Rate plus the Applicable Margin. For purposes of this Agreement, the term
Applicable Margin is hereafter increased one and one-quarter percent (1.25%) so
that the LMI Spread and the Eurodollar Spread is increased from 2.75% to 4.00%.
Interest shall be charged on the Revolving Credit Note and on the Term Loan
Note, from the date of this Agreement, at the new rate."
(c) Article V, Section H of the Forbearance Agreement is deleted in its
entirety and replaced with the following:
"H. The Borrower shall deliver to the Bank, (i) within forty-five (45) days of
the end of Borrower's fiscal year end, a budget showing annual totals of revenue
and expenses broken down by category on a monthly basis and (ii) the monthly
focus reports within five (5) days of its submission to the NASD."
(d) Article V, Section M of the Forbearance Agreement is deleted in its
entirety.
(e) Article V of the Forbearance Agreement is amended to add the following
Section R:
"R. The Borrower shall deliver to the Bank no later than the 30th calendar day
after each quarter, a written report (a "Litigation Report"), which shall
include, as of the last Business Day of the preceding quarter, the following in
form reasonably satisfactory to the Bank:
(i) a detailed description of all lawsuits and arbitrations filed
against the Borrower, Prime and the Corporate Guarantors
during the preceding quarter, including the amounts demanded
in such lawsuits and/or arbitrations;
(ii) a detailed schedule as of the last day of each quarter of all
amounts added to the Borrower's litigation accrual during each
such quarter for lawsuits and/or arbitrations; and
(iii) an annual forecast, on a rolling forward basis, of the
Borrower's cash flow projections."
(f) Article V of the Forbearance Agreement is amended to add the following
Section S:
"S. Section 5.03 (a) and (b) of the Loan Agreement are deleted in their entirety
and replaced with the following:
(a) As soon as available and in any event not later than the earlier
of (x) the date required to be filed with the SEC, or (y) 90 days after the end
of each fiscal year, a copy of the 10-K report of the Borrower and the Corporate
Guarantors for each fiscal year, including a consolidated and consolidating
balance sheet of the Borrower and its Subsidiaries (including Prime) as of the
end of such fiscal year and a consolidated and consolidating income statement
and statement of cash flow of the Borrower and its Subsidiaries (including
Prime) for such year, together with all supporting schedules and statements
prepared in reasonable detail audited and certified by independent certified
public accountants of recognized standing and acceptable to
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the Bank (the "Auditor"), and prepared in each case in accordance with Generally
Accepted Accounting Principles. The Bank agrees that the audit contemplated by
this paragraph will be on a consolidated and not on a stand-alone basis, except
with respect to Prime (which shall be audited on a stand-alone basis);
(b) As soon as available and in any event not later than the earlier
of (x) the date required to be filed with the SEC, or (y) 45 days after the end
of each fiscal quarter, a copy of the l0-Q report of the Borrower, each
Broker/Dealer and each Corporate Guarantor, a consolidated and consolidating
balance sheet of the Borrower and its Subsidiaries (including Prime) as of the
end of such quarter and a consolidated and consolidating income statement and
statement of cash flow of the Borrower and its Subsidiaries (including Prime)
for such quarter and the portion of the fiscal year through such date, together
with all supporting schedules, setting forth in each case in comparative form
the figures for the corresponding period or periods of the previous fiscal year,
which statement shall be prepared in such detail all compiled by the Chief
Financial Officer of the Borrower, the Broker/Dealers and the Corporate
Guarantors or by the Auditor and certified by the Chief Financial Officer, and
prepared in accordance with Generally Accepted Accounting Principles; provided,
however, that the accuracy of such statements with respect to the fourth fiscal
quarter of any fiscal year will be subject to the effect of any subsequent audit
and related year end adjustments;"
Section 3. Conditions Precedent to This Second Amendment. The
effectiveness of this Second Amendment shall be expressly subject to receipt by
the Bank of the following items:
(a) a fully executed Second Amendment;
(b) a resolution of Borrower authorizing this Second Amendment,
satisfactory in form and substance to the Bank;
(c) payment of all fees and expenses of counsel to the Bank incurred since
the execution of the Forbearance Agreement, including without limitation the
fees and expenses incurred in connection with the negotiation and preparation of
this Second Amendment; and
(d) such other agreements and instruments as the Bank reasonably deems
necessary to carry out the terms and provisions of this Second Amendment.
Section 4. Representations True; No Default. The Borrower, Prime and
the undersigned Guarantors hereby represent and warrant that:
(a) Except as otherwise expressly disclosed to the Bank in writing by the
Borrower, any and all of the representations and warranties contained in the
Forbearance Agreement or any of the other Loan Documents are true and correct in
all material respects on and as of the date hereof as though made on and as of
such date.
(b) Except as otherwise expressly disclosed to the Bank in writing by the
Borrower, no event has occurred and is continuing which constitutes a Default or
an Event of Default under the Forbearance Agreement or under any of the other
Loan Documents or which upon the giving of notice or the lapse of time or both
would constitute such Default or Event of Default.
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(c) No material adverse change has occurred in the Borrower's financial
status since the execution of the Forbearance Agreement;
(d) There is no pending or threatened action or proceeding affecting the
Borrower before any court, governmental agency or arbiter, which may materially
affect the financial condition or operations or prospects of the Borrower or
which purports to affect the legality, validity or enforceability of this Second
Amendment, or the Forbearance Agreement, as amended by the First Amendment and
this Second Amendment, or the Loan, except as described in Schedule I hereto.
(e) No UCC liens have been filed against the Borrower or Prime since the
execution of the First Amendment except as described in Schedule 2 hereto.
(f) No judgments have been entered against either the Borrower or Prime
except as described in Schedule 3 hereto.
Section 5. Ratification. Except as expressly amended hereby, the
Forbearance Agreement, First Amendment and the other Loan Documents shall remain
in full force and effect. The Forbearance Agreement and First Amendment, as
hereby amended, and all rights and powers created thereby or thereunder and
under the other Loan Documents are in all respects ratified and confirmed and
remain in full force and effect. Borrower, Prime and the undersigned Guarantors
hereby acknowledge and affirm: (i) the continuing validity of the Forbearance
Agreement and First Amendment; (ii) all of the terms, conditions and obligations
contained in the Forbearance Agreement and First Amendment are and shall remain
in full force and effect, except as hereby amended; (iii) that the Forbearance
Agreement is a legal, valid and binding obligation of Borrower, Prime and
Guarantors, and the obligations and liabilities thereunder shall not be
diminished by the execution of this Second Amendment or by any of the terms,
provisions or conditions of this Second Amendment; (iv) all appropriate
corporate authorizations have been obtained for this execution of this Second
Amendment; and (v) that this Second Amendment is executed by Borrower as an
inducement to the Bank to enter into this Second Amendment, and with the
knowledge that the Bank shall rely on the statements made herein when executing
this Second Amendment. The failure of Xxxxxx Xxxxxxxxx to execute this Second
Amendment shall not, and is not intended to, in any way whatsoever release or
discharge Xxxxxx Xxxxxxxxx from his obligations and liabilities to the Bank
pursuant to that certain Joint and Several Guaranty of Payment dated as of
December 27, 2001.
Section 6. Definitions and References. Capitalized terms not
otherwise defined in this Second Amendment and used herein and which are defined
in the Loan Agreement or in the other Loan Documents shall have the meanings
herein as therein ascribed to them. The term "Agreement" as used in the other
Loan Documents or any other instrument, document or writing furnished to the
Bank by Borrower shall mean the Loan Agreement as hereby amended.
Section 7. Expenses; Additional Information. The Borrower shall pay
to the Bank all reasonable and actual expenses incurred by the Bank since the
execution of the Forbearance Agreement and in connection with the preparation,
negotiation and execution of this Second Amendment and authorizes the Bank to
deduct such expenses from its account at the Bank.
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Section 8. Notices. All Notices and other communications provided
for hereunder shall be delivered in accordance with the terms of the Forbearance
Agreement.
Section 9. Successors and Assigns. This Second Amendment shall be
binding upon and inure to the benefit of the Bank and the Borrowers, Prime or
Guarantors and their respective successors and assigns, except that the
Borrowers, Prime and Guarantors may not assign or transfer any of its rights
under the Loan Documents, Forbearance Agreement, or this Second Amendment,
without the prior written consent of the Bank.
(REMAINDER OF PAGE INTENTIONALY LEFT BLANK)
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Section 10. Miscellaneous. This Second Amendment (a) shall be
binding upon and inure to the benefit of Borrower and the Bank and their
respective successors, assigns, receivers and trustees (provided, however, that
Borrower shall not assign its rights and obligations hereunder without the prior
written consent of die Bank); (b) can be modified or amended only by a writing
signed by each party; (c) shall be governed by and construed in accordance with
the laws of the State of New York and the United States of America; (d) may be
executed in several counterparts, and by the parties hereto on separate
counterparts, and each counterpart, when so executed and delivered, shall
constitute an original agreement, and all such separate counterparts shall
constitute but one and the same agreement; and (e) together with the Forbearance
Agreement, First Amendment and Loan Documents, embodies the entire agreement and
understanding between the parties with respect to the subject matter hereof and
supersedes all prior agreements, consents and understandings relating to such
subject matter. The headings herein shall be accorded no significance in
interpreting this Second Amendment. Borrower, Prime and Guarantors hereby
acknowledge and agree that the Bank has not made any representations to induce
them to enter into this Second Amendment except as expressly set forth herein
and even if any such representations other than those expressly set forth herein
were made they were not relied on in entering into this Second Amendment
IN WITNESS WHEREOF, the undersigned, if a corporation, has caused
this Agreement to be executed by its respective officer thereunto duly
authorized, as of the date first above written.
Xxxxxx + Xxxxxx, Inc., as Borrower
By: /s/ Xxxxxxx Xxxx
------------------------------
Xxxxxxx Xxxx
President
Wachovia Bank, National Association,
f/k/a First Union National Bank, as Bank
By
-------------------------------
Xxxxxx X. Xxxxxx
Vice President
AGREED AND ACCEPTED:
/s/ Xxxxxxx Xxxx
------------------------------------------
Xxxxxxx Xxxx, Individual Guarantor
/s/ Xxxxx Xxxxxx
------------------------------------------
Xxxxx Xxxxxx, Individual Guarantor
Prime Capital Services, Inc.
By: /s/ Xxxxxxx Xxxx
----------------------------------
Xxxxxxx Xxxx
President
Prime Financial Services, Inc.
By: /s/ Xxxxxxx Xxxx
----------------------------------
Xxxxxxx Xxxx
President
Asset & Financial Planning, Ltd.
By: /s/ Xxxxxxx Xxxx
----------------------------------
Xxxxxxx Xxxx
President
x0000.xxx, Inc.
By: /s/ Xxxxxxx Xxxx
----------------------------------
Xxxxxxx Xxxx
President
G + C Schlager & Associates Inc.,
By: /s/ Xxxxxxx Xxxx
----------------------------------
Xxxxxxx Xxxx
President
G + C Mortgage Line Inc.
By: /s/ Xxxxxxx Xxxx
----------------------------------
Xxxxxxx Xxxx
President
Section 10. Miscellaneous. This Second Amendment (a) shall be
binding upon and inure to the benefit of Borrower and the Bank and their
respective successors, assigns, receivers and trustees (provided, however, that
Borrower shall not assign its rights and obligations hereunder without the prior
written consent of the Bank); (b) can be modified or amended only by a writing
signed by each party; (c) shall be governed by and construed in accordance with
the laws of the State of New York and the United States of America; (d) may be
executed in several counterparts, and by the parties hereto on separate
counterparts, and each counterpart, when so executed and delivered, shall
constitute an original agreement, and all such separate counterparts shall
constitute but one and the same agreement; and (e) together with the Forbearance
Agreement, First Amendment and Loan Documents, embodies the entire agreement and
understanding between the parties with respect to the subject matter hereof and
supersedes all prior agreements, consents and understandings relating to such
subject matter. The headings herein shall be accorded no significance in
interpreting this Second Amendment. Borrower, Prime and Guarantors hereby
acknowledge and agree that the Bank has not made any representations to induce
them to enter into this Second Amendment except as expressly set forth herein
and even if any such representations other than those expressly set forth herein
were made they were not relied on in entering into this Second Amendment.
IN WITNESS WHEREOF, the undersigned, if a corporation, has caused
this Agreement to be executed by its respective officer thereunto duly
authorized, as of the date first above written.
Xxxxxx + Xxxxxx, Inc., as Borrower
By:
------------------------------
Xxxxxxx Xxxx
President
Wachovia Bank, National Association,
f/k/a First Union National Bank, as Bank
By /s/ Xxxxxx X. Xxxxxx
-------------------------------
Xxxxxx X. Xxxxxx
Vice President
AGREED AND ACCEPTED:
------------------------------------------
Xxxxxxx Xxxx, Individual Guarantor
------------------------------------------
Xxxxx Xxxxxx, Individual Guarantor
COUNTY OF DUTCHESS,
STATE OF NEW YORK.
On the 11th day of March in the year 2004 before me, the
undersigned, a Notary Public in and for said State, personally appeared Xxxxxxx
Xxxx, personally known to me or proved to me on the basis of satisfactory
evidence to be the individual whose name is subscribed to the within instrument
and acknowledged to me that he executed the same in capacity and that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.
/s/ Xxx X. Xxxxxxxxxxx
------------------------------------
Notary Public
COUNTY OF __________,
STATE OF NEW YORK.
On the __ day of March in the year 2004 before me, the undersigned,
a Notary Public in and for said State, personally appeared Xxxxx Xxxxxx,
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.
------------------------------------
Notary Public
COUNTY OF HIILLSBOROUGH
STATE OF FLORIDA
On the 11th day of March in the year 2004 before me, the undersigned, a Notary
Public in and for said State, personally appeared Xxxxx Xxxxxx, personally known
to me or proved to me on the basis of satisfactory evidence to be the individual
whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in his capacity, and that by his signature on the instrument,
the individual, or the person upon behalf of which the individual acted,
executed the instrument.
/s/ Xxxxx X. Xxxxxxxxxxx
------------------------------------
Notary Public
Schedule 1
Schedule Litigation (to be attached by Borrower)
[XXXXXX+CIOCIA LOGO]
TAX & FINANCIAL PLANNING
Xxx X. Xxxxxxxxxxx
Vice President & General Counsel
00 Xxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxx Xxxx 00000
Phone: (000) 000.0000 Fax: (000) 000.0000
E-Mail: xxx.xxxxxxxxxxx@xxxxxx.xxx
Memorandum
TO: Xxxxxx Xxxxxx, Xxxxxxx Xxxxxx, Esq. and Xxxxx Xxxx, Esq.
FROM: Xxx Xxxxxxxxxxx, Esq.
DATE: March 16, 2004
RE: Pending Litigation
--------------------------------------------------------------------------------
The following is a summary of litigation currently pending against Xxxxxx
+ Ciocia, Inc. ("G+C") and Prime Capital Services, Inc. ("Prime") on March 16,
2004 and pending during the fiscal year commencing on July 1, 2003.
CASES DISPOSED OF BY SETTLEMENT, DISMISSAL OR JUDGMENT
1. Title of Claim: Xxxxxxxx x. Xxxxxx + Xxxxxx, Inc.
Date Claim Alleged: February 6, 2002
Claimant's Attorney: Xxxxxxx, White
G+C Attorney: Xxxxxxxxxxx, Xxxxxx
Forum: Arizona State Court
Case Number: CV 2002-090298
Alleged Damages: $243,000.00
Potential Exposure: $243,000.00
Anticipated Outcome: Trial
E&O Coverage: None
Actual Damages: Not yet determined.
Status/Comments: Lawsuit for purportedly introducing plaintiffs to
an independent insurance representative not
employed by G+C who allegedly defrauded the
plaintiffs. The case was scheduled for trial on
September 24, 2003. The case settled on 9/9/03
for $48,000 payable over 8 months.
March 11,2004
2. Title of Claim: Xxxxxxx Xxxxxx v. Xxxxxxxxx Xxxxxxxx, Mutual,
Inc., Mutual Financial, Inc., Prime Capital
Services, Inc., et. al.
Date Claim Alleged: August 24, 2001
Claimant's Attorney: Xxxx Xxxxxx
G+C Attorney: Xxxxxx, Xxxxx
Forum: NASD Arbitration
Case Number: 01-03998
Alleged Damages: $499,000
Anticipated Outcome: Settlement covered by E&O in the range of $25,000
E&O Coverage: Yes
Actual Damages: $125,000
Status/Comments: Claimant filed a Statement of Claim with the NASD
commencing arbitration against Xxxxxxxxx
Xxxxxxxx, Mutual, Inc., Mutual Financial, Inc.
and Prime Capital Services, Inc. The claim
contains various sales practice violations. The
case was heard by arbitrators at the NASD on
5/7/03. On 7/25/03, the arbitrators rendered a
decision awarding claimant $77,000 in
compensatory damages and $77,000 in punitive
damages. E&O will cover the compensatory damages.
Prime is responsible for 20% ($15,400) of the
punitive damages. Mutual, Inc. is responsible to
pay the balance of the punitive damages.
3. Title of Claim: Xxxx Xxxxxxx v. Xxxxxxxxx Xxxxxxxx, Mutual, Inc.,
Mutual Financial, Inc., Prime Capital Services,
Inc., et. al.
Date Claim Alleged: July 2, 2002
Claimant's Attorney: Xxxx Xxxxx
G+C Attorney: Xxxxxx, Xxxxx
Forum: NASD Arbitration
Case Number: 02-03456
Alleged Damages: $1,000,000
Anticipated Outcome: Settlement which may be covered by E&O
E&O Coverage: Yes
Actual Damages: Not yet determined.
Status/Comments: Claimant filed a Statement of Claim with the NASD
commencing arbitration against v. Xxxxxxxxx
Xxxxxxxx, Mutual, Inc., Mutual Financial, Inc.,
Prime Capital Services, Inc. The claim contains
various sales practice violations. The case was
settled in mediation on 7/23/03 for $175,000. E&O
insurance will cover 2/3rds of the settlement.
Prime's share of the settlement not covered by
E&O is 20% and Mutual, Inc. will pay the balance.
4. Title of Claim: Xxxxx Xxxxxxxxxx v. Xxxxxx Xxxxxx, Prime Capital
Services, Inc., et. al.
Date Claim Alleged: February 13, 2002
Claimant's Attorney: Xxxxxx Xxxxxxx
G+C Attorney: Xxxxxx, Xxxxx
Forum: NASD Arbitration
Case Number: 01-06941
Alleged Damages: $497,000
Anticipated Outcome: Settlement covered by E&O
E&O Coverage: Yes
2
March 11, 2004
Actual Damages: Not yet determined.
Status/Comments: Claimant filed a Statement of Claim with the NASD
commencing an arbitration alleging breach of
contract, fraud, negligence and violations of
State and Federal Regulations. This matter was
settled for $195,000 on 10/27/03. Prime's share
of the settlement was $25,000.
5. Title of Claim: Xxxxx X. Xxxxxxxx v. Xxxx xxxxx, Prime Capital
Services Inc., et. al.
Date Claim Alleged: January 22, 2002
Claimant's Attorney: Xxxx Xxxxxx
G+C Attorney: Xxxxxx, Xxxxx
Forum: NASD Arbitration
Case Number: 01-06865
Alleged Damages: $115,000
Anticipated Outcome: Settlement covered by E&O
E&O Coverage: Yes
Actual Damages: Not yet determined.
Status/Comments: Claimant filed a Statement of Claim with the NASD
commencing an arbitration alleging unauthorized
trading, suitability, excessive trading and
failure to supervise. Parties agreed to
mediation. Settled in mediation 10/7/03 for
$35,000.
6. Title of Claim: Xxxxx Xxxxx x. Xxxxxx + Xxxxxx, Inc.
Date Claim Alleged: May, 2002
Claimant's Attorney: Xxxxxx Xxxxx
G+C Attorney: Xxxxxx, Xxxxx
Forum: Florida Supreme Court
Case Number:
Alleged Damages: Unspecified
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: Nominal
Status/Comments: Xx. Xxxxx filed a complaint with the EEOC
claiming racial discrimination. The EEOC
dismissed the complaint finding no evidence of
discrimination. The case settled on 9/8/03 with
the Xxxxxx Xxxxx case for a total of $46,875
payable over 7 months.
7. Title of Claim: Xxxx Xxxxxxxx x. Xxxxxx + Xxxxxx, Inc.
Date Claim Alleged: April 26, 2002
Claimant's Attorney: Xxxxxx X. Xxxxx
G+C Attorney: Xxxxxx, Xxxxx
Forum: Florida Supreme Court
Case Number: 6:02-CV-501-ORL19506
Alleged Damages: Unspecified
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: None
Status/Comments: Xx. Xxxxxxxx filed a complaint with the EEOC
claiming racial discrimination. The EEOC
dismissed the complaint finding no evidence of
discrimination. The case settled on 9/8/03 with
the Xxxx Xxxxxxxx case for a total of $140,625
payable over 7 months.
8. Title of Claim: Meiselman, Denlea, Packman & Xxxxx P.C. x. Xxxxxx
+ Ciocia, Inc.
Date Claim Alleged: November 4, 2002
Claimant's Attorney: Pro se
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March 11, 2004
G+C Attorney: Xxxxxx, Xxxxx
Forum: Westchester Supreme Court
Case Number: 02-19231
Alleged Damages: $204,853
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: $204,853
Status/Comments: This matter was settled for $200,000 payable over
13 months commencing in November, 2003. The
amount billed by Xxxxxxxxx was approximately
$240,000. We tried to settle the matter in
October, 2002 for $180,000 to $200,000 payable
over 9 months. By litigating, we were able to
delay making payments for over a year and
extended the payout until 2005.
9. Title of Claim: Ove & Xxxxxxx Xxxxxx ttee Xxxxxx Family Trust v.
Xxxxxxxx Xxxxx and PCS.
Date Claim Alleged: October 11, 2002
Claimant's Attorney: Xxxx Xxxxx
G+C Attorney: Xxxxxx, Xxxxx
Forum: NASD Arbitration
Case Number: 02-05495
Alleged Damages: $79,000
Anticipated Outcome: Settlement
E&O Coverage: Prime and G+C believe that this matter is covered
by E&O. However, the carrier is denying coverage.
We may have to commence a lawsuit against the
carrier to force coverage.
Actual Damages: Being computed
Status/Comments: Discovery has been completed. Hearing dates have
been set for 11/4/03 -- 11/6/03. Settled in
mediation on 10/30/03 for $22,000.
10. Title of Claim: Pricewaterhouse x. Xxxxxx + Xxxxxx, Inc.
Date Claim Alleged: May 13, 2003
Claimant's Attorney: Xxxxxx, Xxxxxxx
G+C Attorney: Xxx X. Xxxxxxxxxxx
Forum: New York County Supreme Court
Case Number: 601 51103
Alleged Damages: $127,889
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: $127,889
Status/Comments: Pricewaterhouse was hired by former management to
supervise the operations of Prime Capital
Services when Xxxxxxx Xxxx and Xxxxxx Xxxxxxx
were terminated in the summer of 2002. Current
management believes that Pricewaterhouse's work
does not justify their fee. We settled the claim
for $72,000 payable over 8 months commencing on
September 15, 2003.
11. Title of Claim: Bristol Investment Group, Inc. x. Xxxxxx +
Ciocia, Inc.
Date Claim Alleged: April 24, 2003
Claimant's Attorney: Xxxxxx Xxxxxxx
G+C Attorney: Xxx X. Xxxxxxxxxxx
Forum: New York City Civil Court
Case Number: 022085 CV2003
4
March 11, 2004
Alleged Damages: $30,000
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: $30,000
Status/Comments: This is a lawsuit by the company which did the
Fairness Opinion for Xxxxxxxx Xxxxx financing. We
paid $60,000 of the $90,000 fee and are
negotiating settlement of the $30,000 balance.
The plaintiff made a motion to transfer the case
to N.Y.S. Supreme Court and for Summary Judgment.
We contested the motion but the Court granted
Summary Judgment to Bristol. We settled this
case for $35,000 on December 22, 2003.
12. Title of Claim: Xxxxxx Xxxxxxxxx vs. Prime Capital Services,
Inc., Oldham Resources and Xxxx Xxxxxxxx
Date Claim Alleged: June 19 2003
Claimant's Attorney: Pro Se
G+C Attorney: Xxxxxx Xxxxx
Forum: NASD
Case Number: 03-03394
Alleged Damages: $6,000
Anticipated Outcome: Settlement
E&O Coverage: Yes
Actual Damages: Being determined
Status/Comments: Simplified Arbitration Claim. Answer and
supporting documents filed. On November 3, 2003,
the panel dismissed the claim in its entirety.
13. Title of Claim: Davidson v. G+C
Date Claim Alleged: Originally brought in 1999, dismissed, and then
restored in September, 2002. We became aware of
the restoration and the true facts of the case at
the end of July, 2003.
Claimant's Attorney: Xxxx Xxxxxx, Esq.
G+C Attorney: Xxx X. Xxxxxxxxxxx with New Jersey Counsel,
Volvano, Xxxx & Xxxxxx
Forum: New Jersey Workers Compensation Court
Case Number: 99-026508
Alleged Damages: $500,000
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: $500,000
Status/Comments: This case was settled after it was restored by
the Workers Compensation Court and the claim was
researched. The case was settled on September
3, 2003 for $120,000 over 5 months.
14. Title of Claim: Educational Credit Management Corp. x. Xxxxxx +
Ciocia, Inc.
Date Claim Alleged: August 4, 2003
Claimant's Attorney: Xxxx Xxxxx, Esq.
G+C Attorney: Xxx X. Xxxxxxxxxxx
Forum: U.S. District Court, Southern District of New
York
Case Number: 03 Civ. 6038 (WHP)
Alleged Damages: Not specified
Anticipated Outcome: Dismissal
E&O Coverage: None
Actual Damages: Unknown
Status/Comments: This lawsuit was commenced because of GC's
alleged failure to a garnishment from the wages
of a former employee. The employee did
5
March 11, 2004
not work for GC at the time GC received the
garnishment notices. The plaintiff withdrew its
claims against GC on November 4, 2003 and the
matter was discontinued.
15. Title of Claim: Citicorp Vendor Finance, Inc. x. Xxxxxx + Xxxxxx,
Inc.
Date Claim Alleged: August 11, 2003
Claimant's Attorney: Xxxxx X. Xxxxxx, Esq., Xxxxxx & Xxxxxxx, P.C.
G+C Attorney: Xxx X. Xxxxxxxxxxx
Forum: Supreme Court, County of New York
Case Number: 602535/03
Alleged Damages: Approx. $70,000
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: Approx. $70,000
Status/Comments: This is a lawsuit concerning Xxxxxx photocopy
machines in the White Plains office purchased by
Pinnacle. According to the equipment subleased
with Pinnacle, GC was still liable on the lease
for these machines. This lawsuit was settled on
December 19, 2003 for $54,270.50 over time.
16. Title of Claim: Xxxxxx Corporate Center, LLC x. Xxxxxx + Xxxxxx,
Inc.
Date Claim Alleged: September 17, 2003
Claimant's Attorney: Xxxxxxx X. Xxxxxx, Esq.
G+C Attorney: Xxx X. Xxxxxxxxxxx
Forum: City Court of White Plains, County of Westchester
Case Number:
Alleged Damages: $66,684.82
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: $66,684.82
Status/Comments: This matter was settled for $66,684.82 on October
10, 2003. This eviction was for the White Plains
office purchased by Pinnacle. Pinnacle is
responsible for and will pay the settlement.
17. Title of Claim: Xxxx Xxxxx & Xxxx Xxxxxx Living Trust v. Prime
Capital Services, Inc., Gllman + Ciocia, Inc. and
Xxxxxxx Xxxxxx
Date Claim Alleged: February 18, 2003
Claimant's Attorney: Xxxxxx Xxxxxxxxxxx
G+C Attorney: Xxxxxx Xxxxx
Forum: NASD Mediation
Case Number: 03-04073
Alleged Damages: Not specified
Anticipated Outcome: Settlement
E&O Coverage: Yes
Actual Damages: $2,200
Status/Comments: Case settled on November 3, 2003 for $2,200.
18. Title of Claim: ADD Realty Corp. x. Xxxxxx + Ciocia, Inc.
Date Claim Alleged: October 1, 2003
Claimant's Attorney: Xxxxxx Xxxxx, Esq.
G+C Attorney: Xxxxxx Xxxxxxxxxx Xxxxxxx & Xxxx, LLP
Forum: Saratoga Springs City Court
Case Number:
Alleged Damages: $10,644.53
6
March 11, 2004
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: $10,644.53
Status/Comments: The $10,644.53 represented back rent owed by G+C.
The case was settled in November, 2003 for
$10,644.53.
19. Title of Claim: Linx Communications, Corp. x. Xxxxxx + Ciocia,
Inc. and Linx Communications v. Prime Financial
Services, Inc.
Date Claim Alleged: March 29, 2003
Claimant's Attorney: Xxxxxx Xxxxxx
G+C Attorney: Xxxxxx Xxxxx
Forum: Suffolk County District Court
Case Number: SMC -- 3991-03
Alleged Damages: $14,616 and $4,166.77
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: $14,616
Status/Comments: These are two lawsuits by an advertising company
for service rendered to previous management. Both
cases were settled for a total of $8,000 in
January, 2004.
20. Title of Claim: Xxxx Xxxxx, Executor of the Estate of Xxxxxxx
Xxxxx, deceased x. Xxxxxx + Xxxxxx, Inc.
Date Claim Alleged: October 27, 2003
Claimant's Attorney: Xxxxxx Xxxxx, Esq.
G+C Attorney: Xxxxxx Xxxxx
Forum: Court of Common Pleas, Cuyahoga County, OH
Case Number: 493030
Alleged Damages: $9,000
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: $9,000
Status/Comments: Settled for $9,000 in January, 2004.
21. Title of Claim: Xxxxxxx XxXxxxxxxx vs Prime Capital Services,
Inc.
Date Claim Alleged: April 30, 2003
Claimant's Attorney: Pro Se
G+C Attorney: Xxxxxx, Xxxxx
Forum: NASD
Case Number: 03-00880
Alleged Damages: $40,408
Anticipated Outcome: Dismissal
E&O Coverage: Yes
Actual Damages: Being computed
Status/Comments: Answer has been filed. Hearing dates were
scheduled for 12/9 and 12/10 2003. The hearing
was held on 2/2 and an award of $2,565.00 was
given to the claimant after the hearing.
7
March 11,2004
PENDING CASES
1. Title of Claim: Xxxxxxxx Xxxx v. Xxxxxxxx Xxxxx, Prime Capital
Services, Inc., Inline Financial, Inc., et. al.
Date Claim Alleged: July 8, 2002
Claimant's Attorney: Pro Se
G+C Attorney: Xxxxxx, Xxxxx
Forum: NASD Arbitration
Case Number: 02-664
Alleged Damages: $41,912.88
Anticipated Outcome: Settlement covered by E&O
E&O Coverage: Yes
Actual Damages: Not yet determined.
Status/Comments: Claimant filed a Statement of Claim with the NASD
commencing an arbitration alleging miscellaneous
sales practice violations. A mediation was held
5/13/03 but was unsuccessful. The NASD will soon
set a hearing date. Client has obtained counsel
and indicated will be filing an amended statement
of claim. No amended statement of claim has been
filed. Client is still pro se. The hearing
officers granted claimant's request for a 3 month
stay of the case for medical reasons. This case
is still pending.
2. Title of Claim: Gastroenterology Medical Group v. Prime Capital
Services, Inc.
Date Claim Alleged: February 13, 2002
Claimant's Attorney: Xxxxxxx Xxxxxxx
G+C Attorney: Xxxxxx, Xxxxx
Forum: NASD Mediation
Case Number: None
Alleged Damages: $90,000
Anticipated Outcome: Settlement covered by E&O
E&O Coverage: Yes
Actual Damages: To be determined.
Status/Comments: At the first mediation session, the demand was
$90,000 and Prime's offer was $15,000. After the
mediation, the attorney for the claimant stated
to our outside counsel that the claimant would
settle in the range of $15,000. Our outside
counsel is now negotiating a final settlement.
3. Title of Claim: Estate of Xxxxxx x. Xxxxxx + Xxxxxx, Inc.
Date Claim Alleged: _____________
Claimant's Attorney: Xxxx Xxxxxx
G+C Attorney: Xxxxxx, Xxxxx
Forum: Appellate Division
Case Number: _____________
Alleged Damages: $150,000
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: $50,000
Status/Comments: Xxxxxx was terminated for breach of his
employment agreement. G+C commenced an
arbitration to collect damages for his breach.
Xxxxxx claimed wrongful termination. He died
three months later. GC believes that the
estate's damages are limited to three months of
wages. The case was tried before the AAA in
April, 2003 and a decision was rendered
8
March 11,2004
awarding the claimant $148,738 plus interest and
legal fees to be deferred. GC is contesting the
decision in NYS Supreme Court. The NYS Supreme
Court upheld the $148,738 award. GC has filed an
appeal with the Appelate Division and has filed a
Surety Bond to stay the enforcement of the
judgment.
4. Title of Claim: Xxxxxxx Xxxxxxxx x. Xxxxxx + Xxxxxx, Inc.
Date Claim Alleged: March 18, 2003
Claimant's Attorney: Xxxxxxx & Xxxxxxxxxx
G+C Attorney: Xxxxxx, Xxxxx
Forum: New York County Supreme Court
Case Number: 00-000-000
Alleged Damages: $100,000
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: None
Status/Comments: Xxxx Xxxxxxxx alleges that G+C owes him
unspecified damages for unpaid salary and bonus.
We believe that Xx. Xxxxxxxx is not due any
amount and that we have a viable counterclaim
against him for damages. The case is now in
discovery.
5. Title of Claim: Xxxxxxx Xxxxx v. Gilinan + Ciocia, Inc.
Date Claim Alleged: January 23, 2003
Claimant's Attorney: Menon & Posner
G+C Attorney: Xxxxxx, Xxxxx
Forum: New York County Supreme Court
Case Number: 000-000-00
Alleged Damages: $1,000,000
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: None
Status/Comments: Xxxxxxx Xxxxx alleges that G+C owes him profits
and expenses from a joint office in Bronx, NY.
His complaint alleges the ludicrous amount of one
million dollars in damages. We believe that we do
not owe Xx. Xxxxx any damages and that the
lawsuit was brought to harass G+C. The case is
now in discovery.
6. Title of Claim: Nador Associates, Inc. x. Xxxxxx + Ciocia, Inc.
Date Claim Alleged: February 5, 2003
Claimant's Attorney: Xxxxxx & Xxxxxxx
G+C Attorney: Xxx X. Xxxxxxxxxxx
Forum: Nassau County Supreme Court
Case Number: 03-002215
Alleged Damages: $17,250
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: $17,250
Status/Comments: This is a lawsuit by a landlord in Long Island
concerning G+C's office in Franklin Square. The
complaint alleges damages of $17,520. I answered
the complaint and denied liability. We expect
this matter to be settled. The case is now in
discovery.
7. Title of Claim: Xxxxxxxx v. Gllman + Ciocia, Inc.
Date Claim Alleged: December 16, 2002
9
March 11,2004
Claimant's Attorney: Xxxxxx & Xxxxxx
G+C Attorney: Xxx X. Xxxxxxxxxxx
Forum: Saratoga Civil Court
Case Number: 0000-000000-00
Alleged Damages: $9,750
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: $9,750
Status/Comments: This is a lawsuit by a former G+C employee
claiming $9,750 owed as a bonus. I answered the
complaint and denied liability. We expect this
matter to be settled.
8. Title of Claim: FOA Tampa, LLC v. Oilman + Ciocia, Inc.
Date Claim Alleged: February 14, 2003
Claimant's Attorney: Xxxxxxx Xxxxx
G+C Attorney: Xxx X. Xxxxxxxxxxx
Forum: Supreme Court, Dutchess County
Case Number: 2003-4526
Alleged Damages: $79,000
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: $29,000
Status/Comments: This is a lawsuit by a landlord in Tampa, Florida
concerning a G+C office in St. Petersburg,
Florida. We vacated this office and I am
negotiating to pay the outstanding rent. We
expect this matter to be settled.
9. Title of Claim: Xxxxxxxxxx Xxxxxxx v. Xxxx Xxxxxx, PCS and New
Time Securities
Date Claim Alleged: November 18, 2002
Claimant's Attorney: Xxxxx Xxx Xxxxxx
G+C Attorney: Xxxxxx, Xxxxx
Forum: NASD Arbitration
Case Number: 02-05789
Alleged Damages: $82,828
Anticipated Outcome: Settlement
E&O Coverage: Yes
Actual Damages: Being computed
Status/Comments: This case is in the discovery phase. Hearing
dates scheduled 11/7/03. The panel granted
claimant's request to postpone hearing. No new
dates have been set. Anticpated for the spring
of 2004. A nominal settlement is expected prior
to heating.
10. Title of Claim: Xxxxx Xxxxxx v. PCS, Xxxxxx Xxxxxxxxxx and Xxxx
Xxxxx
Date Claim Alleged: February 6, 2003
Claimant's Attorney: Xxxx Xxxxxxxxxxx
G+C Attorney: Xxxxxx, Xxxxx
Forum: NASD Arbitration
Case Number: 03-00540
Alleged Damages: $584,200
Anticipated Outcome: Settlement
E&O Coverage: Yes
Actual Damages: Being computed
Status/Comments: Discovery has been completed. Hearing dates were
set for 11/7/03; 11/10/03; 11/14/03 and 11/17/03.
Panel granted request to postpone
10
March 11, 2004
hearing due to claimant's failure to participate
in discovery request. No new bearing dates have
been set.
11. Title of Claim: Levenherz x. Xxxxxxxxx, Prime Capital Services,
Inc., Xxxxxx + Xxxxxx, Inc.
Date Claim Alleged: March 3, 2003
Claimant's Attorney: Xxxxxxx Xxxxxxxx
G+C Attorney: Xxxxxx, Xxxxx
Forum: Westchester County Supreme Court
Case Number: 3194-03
Alleged Damages: $6,000,000
Anticipated Outcome: Dismissal
E&O Coverage: Yes
Actual Damages: None
Status/Comments: This is a frivolous lawsuit. The NASD has
completely investigated the allegations of the
Plaintiff and found them to be groundless.
Awaiting heating dates.
12. Title of Claim: Xxxxxxx Xxxxx for the Estate of Xxxxx Xxxxxxxxxx
vs Prime Capital Services, Inc.
Date Claim Alleged: April 21, 2003
Claimant's Attorney: Xxxxxxx Xxxxxxx, Esq.
G+C Attorney: Xxxxxxx & Xxxxxxxxx
Forum: NASD
Case Number: 03-01475
Alleged Damages: $562,681
Anticipated Outcome: Settlement
E&O Coverage: Yes
Actual Damages: Being computed
Status/Comments: Previous customer complaint. Mediation was
unsuccessful. Client filed for arbitration. An
answer has been filed. We expect to resume
settlement negotiations. Hearing dates have been
scheduled 4/5 -- 4/8 2004.
13. Title of Claim: Xxxxxx & Xxxxx Xxxxxxxxx vs. Prime Capital
Services, Inc.
Date Claim Alleged: March 27, 2003
Claimant's Attorney: Xxxx X. Xxxxx, Esq.
G+C Attorney: Xxxxxx Xxxxx
Forum: NASD
Case Number: 03-01645
Alleged Damages: $113,000
Anticipated Outcome: Settlement
E&O Coverage: Yes
Actual Damages: Being computed
Status/Comments: The case is in discovery phase. Hearing dates
have been scheduled for 7/20 -- 7/22 2004.
14. Title of Claim: Liya Levinskiy vs. Prime Capital Services, Inc,
Financial One
Date Claim Alleged: May 2, 2003
Claimant's Attorney: Xxxxxxx X. Xxxxxxx, Esq.
Forum: NASD
G+C Attorney: Xxxxxx Xxxxx
11
March 11. 2004
Case Number: 02-04126
Alleged Damages: $500,000
Anticipated Outcome: Dismissal
E&O Coverage: Yes
Actual Damages: Being Computed
Status/Comments: Motion to dismiss has been filed. Awaiting panel
decision.
15. Title of Claim: Xxxxxxx Xxxxx vs. Prime Capital Services, Inc.
Xxxxxx + Ciocia, and Xxxxxx Xxxxxxx
Date Claim Alleged: June 17, 2003
Claimant's Attorney: Xxxxxx X. Xxxxxx, Esq.
G+C Attorney: Xxxxxx Xxxxx
Forum: NASD
Case Number: 03-04081
Alleged Damages: $100,000
Anticipated Outcome: Pending
E&O Coverage: Yes
Actual Damages: Being determined
Status/Comments: Answer has been filed. Discovery phase in
progress. No hearing dates have been set.
16. Title of Claim: Xxxxxxx Xxxxx, individually and on behalf of
Edgewood Industries, Inc., and the Xxxxx Block
Irrevocable Trust and as the trustee of the Xxxxx
Block Decedent's Trust vs Prime Capital Services,
Inc.
Date Claim Alleged: June 30, 2003
Claimant's Attorney: Xxxxx X. Link, Esq.
G+C Attorney: Xxxxxx Xxxxx
Forum: NASD
Case Number: 03-04990
Alleged Damages: $600,000
Anticipated Outcome: Pending
E&O Coverage: Yes
Actual Damages: Being determined
Status/Comments: Answer filed. Discovery phase in progress. No
hearing dates have been set.
17. Title of Claim: Xxxxxxxxx v. G+C
Date Claim Alleged: August 3,2003
Claimant's Attorney: Xxxxx Xxxxxx, Esq.
G+C Attorney: Xxxxxx Xxxxx
Forum: Florida Supreme Court
Case Number: 200 30466
Alleged Damages: Not yet determined
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: Not yet determined
Status/Comments: This is a lawsuit by a former G+C employee. G+C
purchased the plaintiff's business in February,
2001. The purchase price was $125,000 of which
$62,500 was paid at the closing. The $62,500 was
payable in 5 annual installments subject to an
annual profit contingency. G+C believes that the
plaintiff did not meet the contingency and
refused to pay the balance. We have made a motion
to dismiss the lawsuit on the ground that the
dispute should be in arbitration. We expect to
settle the claim after discovery.
12
March 11, 2004
18. Title of Claim: Kosseff v. G+C and its Board of Directors
Date Claim Alleged: February 6, 2004
Claimant's Attorney: Xxxxxx Xxxxxx, Esq.
G+C Attorney: Xxxxx Xxxxxxx, Esq.Xxxxx Katzenstein, Furlow, LLP
Forum: Delaware Chancery Court
Case Number: 188-N
Alleged Damages: None Specified
Anticipated Outcome: Dismissal or settlement
E&O Coverage: Yes; $500,000 deductible
Actual Damages: Not yet determined
Status/Comments: This is a lawsuit seeking damages from the
Pinnacle sale by a small G+C shareholder. We
anticipate that the lawsuit will be dismissed or
settled. We are obtaining an estimate from
Delaware counsel as to our litigation and
settlement cost exposure.
19. Title of Claim: USI Insurance Services of Florida, Inc. et al.
vs. Xxxxxx/Xxxxx Investments, Inc. et al.
including Xxxxxx + Ciocia, Inc.
Date Claim Alleged: September 17, 2003
Claimant's Attorney: Xxxxxx X. Xxxx III, Esq.,
G+C Attorney: Xxxxxx Xxxxx
Forum: Circuit Court of the 15th Judicial Circuit in and
for Palm Beach County, State of Florida
Case Number: 2003CA010125XXCDAE
Alleged Damages: Not specified
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: Being Determined
Status/Comments: This lawsuit concerns damages alleged as a result
of the Inline Purchase. GC did not assume
liability of Inline's contract with USI. We are
in the process of answering the complaint and
conducting settlement negotiations.
20. Title of Claim: Estate of Xxxxxx Xxxxxx x. Xxxxxx + Xxxxxx, Inc.
Date Claim Alleged: October 14, 2003
Claimant's Attorney: Xxxx Xxxxxx, Esq.
G+C Attorney: Xxxxxx Xxxxx
Forum: Xxx Xxxx Xxxxx Xxxxxxx Xxxxx, Xxx Xxxx Xxxxxx
Case Number: 603617/03
Alleged Damages: $150,000
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: Being Determined
Status/Comments: This action was just commenced and is related to
the Xxxxxx Arbitration delineated in Number 25.
They claim damages because they could not sell
the GC stock it owned pending removal of Rule 144
restrictions. We anticipate that this matter will
be settled.
21. Title of Claim: Xxxxxxxxx Call vs. Xxxx Xxxxxx, Xxxxxx Xxxxx,
Royal Alliance, Prime Capital Services, Inc.,
Xxxxxxx & Co., XX Xxxxx and Company and First
Montauk Securities Corp.
13
March 11,2004
Date Claim Alleged: September 23, 2003
Claimant's Attorney: Xxxxxx X. Tak
G+C Attorney: Xxxxxx Xxxxx
Forum: NASD
Case Number: 03-03221
Alleged Damages: $450,000
Anticipated Outcome: Settlement
E&O Coverage: Yes. In addition, we have an indemnification by
Pinnacle for this claim.
Actual Damages: Being Determined
Status/Comments: This case is in discovery.
22. Title of Claim: Bin-Lin Associates Ltd Pension Plan vs Prime
Capital, Xxxxxxx X. Xxxx, Xxxxxx Xxxxxxx, Estate
of Xxxxxxx Xxxxxxxx and Xxxxxx Xxxxxxxxxxxx.
Date Claim Alleged: October 6, 2003
Claimant's Attorney: Xxxxx Xxxxxx, Esq.
G+C Attorney: Xxxxxx Xxxxx
Forum: NASD
Case Number: 03-05810
Alleged Damages: $333,000
Anticipated Outcome: Settlement
E&O Coverage: Yes
Actual Damages: Being Determined
Status/Comments: This case is in discovery.
23. Title of Claim: Xxxxxx Pension Consulting x. Xxxxxx + Xxxxxx,
Inc.
Date Claim Alleged: September 25, 2003
Claimant's Attorney: Xxxx Xxxxxxxxx, Esq. -- Relin, Xxxxxxxxx & Xxxxx
LLP
G+C Attorney: Xxx X. Xxxxxxxxxxx, Esq.
Forum: Supreme Court of Dutchess County
Case Number: 11220/03
Alleged Damages: $18,370
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: Being Determined
Status/Comments: We are negotiating a settlement of this matter
prior to answering the Complaint.
24. Title of Claim: ADD Realty Corp. x. Xxxxxx + Xxxxxx, Inc.
Date Claim Alleged: January 22, 2004
Claimant's Attorney: Xxxxxx Xxxxx, Esq.
G+C Attorney: Xxx Xxxxxxxxxxx, Esq.
Forum: NYS Supreme Court, Albany County
Case Number: 291-04
Alleged Damages: $21,226
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: $21,226
Status/Comments: Answer being prepared and filed.
25. Title of Claim: Xxx & Xxxxxxx Xxxxxx vs. PCS, Xxxxxxxx Xxxxxx,
G&C, Royal Alliance, et al.
14
March 11,2004
Date Claim Alleged: November 7, 2003
Claimant's Attorney: Xxxxxxx X. Xxxxxx & Xxxxx Xxxxx Xxxxxxxx
G+C Attorney: Xxxxxx Xxxxx
Forum: NASD
Case Number: 03-07890
Alleged Damages: $150,000
Anticipated Outcome: Settlement
E&O Coverage: Yes
Actual Damages: Being Determined
Status/Comments: This case is in discovery.
26. Title of Claim: Xxxx Van Name x. Xxxxxx + Ciocia, Inc.
Date Claim Alleged: August 15, 2003
Claimant's Attorney: Nonr
G+C Attorney: Xxx X. Xxxxxxxxxxx
Forum: U.S. Equal Employment Opportunity Commission,
Miami District
Case Number: 15M-A4-00081/ FEPA Case No. 400170
Alleged Damages: None
Anticipated Outcome: Dismissal
E&O Coverage: Being investigated
Actual Damages: None
Status/Comments: This is an age discrimination EEOC complaint
brought against GC by a former employee who was
terminated from our Boynton Beach office on
8/15/03. We believe that the matter is frivolous
and that the EEOC will dismiss the complaint.
27. Title of Claim: Irving and Xxxxxx Xxxxx x. Xxxxxx Resource Group,
Xxxxx Xxxxxx, Mutual Inc., Prime Capital
Services, Inc., Xxxx X. Xxxxxxxxx and Security
Mutual Life Insurance Company of New York.
Date Claim Alleged: December 8, 2003
Claimant's Attorney: Xxxxxxx Xxxxxxxx, Xx., Esq.
G+C Attorney: Xxxxxx Xxxxx
Forum: State of Connecticut Superior Court
Case Number:
Alleged Damages: Not specified
Anticipated Outcome: Settlement
E&O Coverage: Yes
Actual Damages: Not yet determined
Status/Comments: Our attorneys are determining whether to answer
the complaint or make a motion to dismiss and
compel arbitration.
28. Title of Claim: Xxxx Xxx Xxxxx v. Prime Capital Services, Inc.
and Xxxxx Xxxxxxxxx
Date Claim Alleged: March 27, 2003
Claimant's Attorney: None
G+C Attorney: Xxxxxx Xxxxx
Forum: NASD Mediation
Case Number: 03-02310
Alleged Damages: Not specified
Anticipated Outcome: Settlement
E&O Coverage: Yes
15
March 11, 2004
Actual Damages: Not determined
Status/Comments: A mediation was held on July 22, 2003 by
teleconference. The parties were not able to
settle the matter at the mediation. We have not
received a statement of claim from the claimant
which would commence a formal NASD arbitration.
However, the statue of limitations has several
years to run on this matter.
29. Title of Claim: American Business & Professional Program, Inc.,
Xxxx Grad and Xxxx Xxxx v. Xxxxxxx Xxxxxx and
Xxxxx X'Xxxxxx, Mutual Financial Services and
Prime Financial Services, Inc.
Date Claim Alleged: January 14, 2004
Claimant's Attorney: Freidman, Harfenist, Xxxxxx & Xxxxx
G+C Attorney: Xxx Xxxxxxxxxxx, Esq.
Forum: Supreme Court, Nassau County
Case Number:
Alleged Damages: Declaratory judgment against Prime Financial
Services, Inc. concerning the settlement of NASD
arbitrations against Mutual, Inc. and Prime
Capital Services, Inc.
Anticipated Outcome: Settlement
E&O Coverage: None required; no monetary damages sought against
Prime Financial Services, Inc.
Actual Damages: None
Status/Comments: We answered the complaint and the case is now in
discovery.
30. Title of Claim: Akabas & Xxxxx x. Xxxxxx + Xxxxxx
Date Claim Alleged: January 12, 2004
Claimant's Attorney: Pro Se
G+C Attorney: Xxx X. Xxxxxxxxxxx
Forum: Supreme Court, County of New York
Case Number: 03/113294
Alleged Damages: $18,394.71
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: $18,394.71
Status/Comments: GC will either answer the complaint or reach a
settlement with the Plaintiff
31. Title of Claim: Xxxxx X. Xxxxxxxx, Esq. x. Xxxxxx + Xxxxxx
Date Claim Alleged: January 12, 2004
Claimant's Attorney: Pro Se
G+C Attorney: Xxx X. Xxxxxxxxxxx
Forum: Superior Court of New Jersey
Case Number: DL 428-04
Alleged Damages: $13,612.50
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: $13,612.50
Status/Comments: GC will settle this matter and not hire a New
Jersey attorney to answer the complaint.
32. Title of Claim: Xxxxxxx Xxxxxxxxxx Xxxxx v. Prime Capital
Services and Xxxxxxx Ras
Date Claim Alleged: February 9, 2004
16
March 11, 2004
Claimant's Attorney: Xxxx Xxxxx, Esq.
G+C Attorney: Xxxxxx, Xxxxx
Forum: NJ Superior Court
Case Number: DC-2605-04
Alleged Damages: $11,000
Anticipated Outcome: Settlement
E&O Coverage: Yes
Actual Damages: $6,000
Status/Comments: Complaint being answered
33. Title of Claim: Xxxxxxxx Xxxxxxxxx v. Xxxxx Xxxxx and Prime
Capital Services, Inc.
Date Claim Alleged: February 12, 2004
Claimant's Attorney: None
G+C Attorney: Xxxxxx Xxxxx
Forum: NASD Arbitration
Case Number: 04-00695
Alleged Damages: $32,000.00
Anticipated Outcome: Settlement
E&O Coverage: Yes; $50,000 deductible
Actual Damages: Being determined
Status/Comments: Our attorneys are preparing an answer to the
statement of claim.
34. Title of Claim: Xxxxx Xxxxxx Xxxxxxxx & Xxxxxx, LLP x. Xxxxxx &
Ciocia, Inc.
Date Claim Alleged: March 1, 2004
Claimant's Attorney: Xxxxxxxx X. Xxxxx, Esq.
G+C Attorney: Xxx X. Xxxxxxxxxxx
Forum: Civil Court of the City of New York
Case Number:
Alleged Damages: $3,990.00
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: $3,990.00
Status/Comments: We will either answer the complaint or settle the
case.
35. Title of Claim: Cypress Trust Company, Trustee of the Xxxxxx Xxxx
Xxxxxxx Trust v. Suntrust Bank, Inline Financial
Group, Inc., Xxxxxx + Ciocia, Inc., Xxxxxxxx
Xxxxx, Xxxxxxx Xxxxx
Date Claim Alleged: February 17, 2004
Claimant's Attorney: Xxxxx Xxxxxx, Esq.
G+C Attorney: Xxxxxx Xxxxx
Forum: Broward County Florida Circuit Court
Case Number: 0402751
Alleged Damages: Excess of $15,000
Anticipated Outcome: Settlement
E&O Coverage: Yes
Actual Damages: Being determined
Status/Comments: Our attorneys are in the process of answering the
complaint.
Dormant Cases
36. Title of Claim: Xxxxx Xxxxx x. Xxxxxx + Xxxxxx, Inc.
Date Claim Alleged: July, 1995
Claimant's Attorney:
17
March 11, 2004
G+C Attorney: Akabas & Xxxxx
Forum: Florida Federal Court
Case Number:
Alleged Damages:
Anticipated Outcome: Dismissal of claim.
E&O Coverage: None.
Actual Damages: None.
Status/Comments: The plaintiff commenced an action for the
unauthorized use of his name or likeness. The
case has been dormant for several years and
should be dismissed at some time in the future.
37. Title of Claim: Xxxxxxxxx v. Mutual, Inc. and Prime Capital
Services, Inc.
Date Claim Alleged: _____________
Claimant's Attorney: Don Wuilford
G+C Attorney: Xxxxxx, Xxxxx
Forum: Court of Common Pleas of Philadelphia County
Case Number: _____________
Alleged Damages: $50,000
Anticipated Outcome: Indemnity by co-defendant
E&O Coverage: No
Actual Damages: None
Status/Comments: Xx. Xxxxxxxxx is seeking commissions that are
allegedly owed to him under the guise of unpaid
wages. Case is presently in the early stages of
discovery. Prime has an indemnity agreement with
the co-defendant in this matter and, accordingly,
Prime's liability should be nominal.
38. Title of Claim: Yale Daily News Publishing x. Xxxxxx + Ciocia,
Inc.
Date Claim Alleged: December 11, 2002
Claimant's Attorney: Xxxxxxx, Xxxxxxxx
G+C Attorney: Xxx X. Xxxxxxxxxxx
Forum: Connecticut Superior Court
Case Number: 01-0451859-S
Alleged Damages: $100,000
Anticipated Outcome: Settlement
E&O Coverage: None
Actual Damages: $100,000
Status/Comments: This is a lawsuit against Xxxxxx Xxxxx for breach
of contract for services rendered prior to the
acquisition of Grove's business by G+C. The total
damages are not specified. Since the allegations
predate the acquisition of Grove's assets, G+C is
not liable for the damages. G+C is pursuing
Xxxxxx Xxxxx on the indemnification provision in
the Asset Purchase Agreement. The Plaintiff has
suspended GC's answering time pending a
settlement.
39. Title of Claim: Unicolor CGI x. Xxxxxx + Xxxxxx, Inc.
Date Claim Alleged: January 27, 2003
Claimant's Attorney: XxXxxxxx, Safrath
G+C Attorney: Xxx X. Xxxxxxxxxxx
Forum: Nassau County Supreme Court
Case Number: 00-000-00
Alleged Damages: $128,000
Anticipated Outcome: Settlement
E&O Coverage: None
18
Schedule 2
UCC Schedule
UCC Lien annexed
UCC FINANCING STATEMENT DELAWARE DEPARTMENT OF STATE
FOLLOW INSTRUCTIONS (front and back) CAREFULLY U.C.C. FILING SECTION
--------------------------------------------------- FILED 11:00 AM 11/10/2003
A. NAME & PHONE OR CONTACT AT FILER(optional) INITIAL FILING NUM: 3301589 1
XXX X. Xxxxx (000) 000-0000 AMENDMENT NUMBER: 0000000
--------------------------------------------------- SRV: 030721850
B. SEND ACKNOWLEDGEMENT TO: (Name and Address)
Starr, Gern, Xxxxxxx & Xxxxx, P.C.
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, XX 00000
THIS ABOVE SPACE IS FOR FILING OFFICE USE ONLY
------------------------------------------------------------------------------------------------------------------------------------
1. DEBTOR'S EXACT FULL LEGAL NAME - Insert only one debtor name (1a or 1b) - do not abbreviate or combine names
------------------------------------------------------------------------------------------------------------------------------------
1a ORGANIZATION'S NAME
Xxxxxx & Xxxxxx, Inc.
OR ---------------------------------------------------------------------------------------------------------------------------------
1b INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
------------------------------------------------------------------------------------------------------------------------------------
1c MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY
00 Xxxxxxx Xxxxxx Xxxxxxxxxxxx XX 00000 XXX
------------------------------------------------------------------------------------------------------------------------------------
1d TAX ID # SSN OR [ILLEGIBLE] ADD'L INFO RE 1e TYPE OF ORGANIZATION 1f JURISDICTION OF ORGANIZATION 1g ORGANIZATION ID #, if any
00-0000000 ORGANIZATION Corporation Delaware Delaware ID # 2349911
DEBTOR |_| NONE
------------------------------------------------------------------------------------------------------------------------------------
2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME Insert only one debtor name (2a or 2b) - do not abbreviate or combine names
2a ORGANIZATION'S NAME
OR ---------------------------------------------------------------------------------------------------------------------------------
2b INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
------------------------------------------------------------------------------------------------------------------------------------
2c MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY
------------------------------------------------------------------------------------------------------------------------------------
2d TAX ID # SSN OR [ILLEGIBLE] ADD'L INFO RE 2e TYPE OF ORGANIZATION 2f JURISDICTION OF ORGANIZATION 2g ORGANIZATION ID #, if any
ORGANIZATION
DEBTOR |_| NONE
------------------------------------------------------------------------------------------------------------------------------------
3. SECURED PARTY'S NAME (or NAME of TOTAL ASSIGNEE or ASSIGNOR S/P)-insert only one secured party name(3a or 3b)
3a ORGANIZATION'S NAME
000 Xxxxxxx Xxxxxxxx Associates, LLC
OR ---------------------------------------------------------------------------------------------------------------------------------
3b INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
------------------------------------------------------------------------------------------------------------------------------------
3c MAILING ADDRESS CITY STATE POSTAL CODE COUNTRY
000 Xxxx Xxxxxx Xxxxxxxx XX 00000 XXX
------------------------------------------------------------------------------------------------------------------------------------
4. This FINANCING STATEMENT covers this following collateral:
All bank accounts and other accounts for case equivalence and all contract rights.
Please refer to Schedule A attached hereto for additional collateral description.
------------------------------------------------------------------------------------------------------------------------------------
5. ALTERNATIVE DESIGNATION (if applicable)|_| LESSEE/LESSOR|_|CONSIGNEE/CONSIGNOR|_|BAILEE/XXXXXX|_|SELLER/BUYER|_|AG.LIEN
|_|NON-UCCFILING
------------------------------------------------------------------------------------------------------------------------------------
6. |_| This FINANCING STATEMENT Is be filed (for recorded)(or record) in the [ILLEGIBLE]
ESTATE RECORDS. Attach Addendum [ILLEGIBLE]
------------------------------------------------------------------------------------------------------------------------------------
7. Check to REQUEST SEARCH REPORT(S) on Debtor(s)
(ADDITIONAL FEE) (optional) |_| all Debtors |_| Debtor 1 |_| Debtor 2
------------------------------------------------------------------------------------------------------------------------------------
8. OPTIONAL FILER REFERENCE DATA
Delaware State
------------------------------------------------------------------------------------------------------------------------------------
FILING OFFICE COPY - NATIONAL UCC FINANCING STATEMENT (FORM UCC1) (REV 07/29/98) [LOGO] [ILLEGIBLE]
SCHEDULE A
TO
UCC-1 FINANCING STATEMENT
DEBTOR: XXXXXX & XXXXXX, INC.
SECURED PARTY: 000 XXXXXXX XXXXXXXX ASSOCIATES, LLC.
The Debtor has granted the Secured Party a security interest in the
following described property (collectively the "Collateral"):
1.1 Accounts Receivable and Other Intangibles. All of the Debtor's
accounts, contract rights, instruments, documents, chattel paper, general
intangibles (including, but not limited to, choses in action, tax refunds, and
insurance proceeds); any other obligations or indebtedness owed to the Debtor
from whatever source arising; all rights of the Debtor to receive any payments
in money or in kind; all guaranties of the foregoing and security therefor; all
the right, title, and interest of the Debtor in and with respect to the goods,
services, or other property that gave rise to or that secure any of the
foregoing and insurance policies and proceeds relating thereto; all rights of
the Debtor as an unpaid seller of goods and services, including, but not limited
to, the rights of stoppage in transit, replevin, reclamation, and resale; and
all of the foregoing, whether or not now owned or hereafter created or acquired.
1.2 Inventory. All goods, merchandise, and other personal property
now owned or hereafter acquired by the Debtor that are held for sale or lease,
or are furnished or to be furnished under any contract of services or are raw
materials, work-in-process, supplies, or materials used or consumed in the
Debtor's business, and all products thereof, and all substitutions,
replacements, additions, or accessions therefor or thereto.
1.3 Machinery, Equipment, Furniture, and Fixtures. All machinery,
equipment, furniture and fixtures now owned or hereafter acquired by the Debtor,
and used or acquired for use in the business of the Debtor, together with all
accessions thereto and all substitutions and replacements thereof and parts
therefor, including, but not limited to, all items listed in the attached
Exhibit A.
1.4 Proceeds. All cash and noncash proceeds of the foregoing,
including, but not limited to, insurance proceeds, cash, checks, monies on
deposit in any bank or banks, and accounts receivable; provided that this
provision shall not be construed as a waiver of any restriction contained in
this Security Agreement against alienating or encumbering the Collateral.
1.5 Documents and Similar Items. All ledger sheets, files, records,
documents, and instruments (including, but not limited to, computer programs,
tapes, disks, diskettes, and related electronic processing software) evidencing
an interest in or relating to the above.
1.6 Bank Accounts. All cash deposited in all bank accounts of the
Debtor.
Schedule 3
Judgment Schedule
Judgment annexed
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF DUTCHESS
---------------------------------------
XXXXX X. XXXXXX,
Plaintiff,
Index No.
DEFAULT JUDGMENT
-against- File No.
2003 37117
XXXXXX + XXXXXX, INC., JUDGMENT Indexed by
Defendant.
---------------------------------------
The Plaintiff, XXXXX X. XXXXXX ("MEIERS") and Defendant, XXXXXX + XXXXXX,
INC. ("G+C") having duly consented to a Judgment in MEIRS favor and against G+C
in the amount of $60,000.00, less any amounts paid hereafter.
IT IS ADJUDGED that the Plaintiff XXXXXX X. XXXXXX does recover from
Defendant Xxxxxx + Ciocia, Inc. the sum of $60,000.00.
Judgment signed this 15th day of Dec., 2003.
[ILLEGIBLE]
----------------------
CLERK
TO: Sparks Xxxxxxx Xxxxxx Xxxxxx & Xxxxxxx, P.C.
X.X. Xxx 0000
Xxxxxxxx Xxxxxxx, XX 00000-0000
Attorneys for Plaintiff
Xxx X. Xxxxxxxxxxx, Esq.
00 Xxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxx Xxxx 00000
(000) 000-0000
Attorney for XXXXXX + CIOCIA, INC.