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 principal
