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AMENDMENT NO.3 TO FORBEARANCE AGREEMENT
This Amendment No. 3 (the "Third Amendment") dated as of March
1,
2005 to Forbearance Agreement (the "Forbearance Agreement")
dated as of November
27, 2002 by and between Gilman + Ciocia, Inc., a Delaware
corporation, located
at 11 Raymond Avenue, Poughkeepsie, New York 12603 (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., elO4O.com,
in G + C Schlager & Associates Inc., G + C Mortgage Line
Inc. (the "Corporate
Guarantors"), Thomas Povinelli, James Ciocia and Michael Ryan
(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
190 River Road,
Summit, New Jersey 07901 (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
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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 Thomas
Povinelli) entered into an Amendment to Forbearance Agreement,
dated as of June
18, 2003 (the "First Amendment") which inter alia, extended the
maturity date to
July 1, 2004 (the "First Extended Maturity Date");
WHEREAS, the Borrower informed the Bank that it would be unable
to
repay the Loan on the First Extended Maturity Date as set forth
in the First
Amendment and requested the Bank further forbear and extend the
time of payment
for the Loan and as a result Borrower, Prime and the Guarantors
(with the
exception of Thomas Povinelli) entered into an Amendment No. 2
to Forbearance
Agreement, dated as of March 4, 2004 (the "Second Amendment")
which inter alia,
extended the maturity date to July 1, 2005 (the "Second Extended
Maturity
Date");
WHEREAS, the Borrower informed the Bank it would be unable to
repay
the Loan on the Second Extended Maturity Date and 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 March 10,
2008 (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 Bank has informed the Borrower that it will not
be
required to make the principal payments on the Loan due March
10, 2005 under the
Second Amendment, though interest will continue to accrue on the
Loan and is be
paid on the next installment of principal due on April 10, 2005
under this Third
Amendment;
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 Thomas
Povinelli
will not sign this Third 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 $1,109,893.75. and under the
Term Loan Note in
the principal amount of $1,273,501.20., both of which are due
and payable
without offset, claim, defense, counterclaim or right of
recoupment.
Section 2. Article Amendments.
(a) Article II, B of the Forbearance Agreement, as amended by
the First
Amendment and Second 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, accrued interest monthly as set forth below on
2
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the 10th day of each month beginning on April 10, 2005
and continuing on the 10th day of each month thereafter
until March 10, 2008 (the "Extended Maturity Date"),
plus principal payments in reduction of the Revolving
Credit Note, in the principal amount of $30,830.39. on
the 10th day of each month beginning April 10, 2005 and
on the 10th day of each month thereafter until the
Extended Maturity Date and the remaining principa
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