EXHIBIT 10.5
AMENDMENT NO. 4 TO FORBEARANCE AGREEMENT
This Amendment No. 4 (the "Fourth Amendment") dated as of April
1,
2006 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., e1040.com,
inc, 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 further forbear and extend the time of
payment for the
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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 as set forth in the
Second
Amendment and 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 "Third Extended Maturity
Date") and the
Bank agreed to so forbear, absent its demand, under the terms and
conditions set
forth in that certain Amendment No. 3 to Forbearance Agreement,
dated as of
March 1, 2005 (the "Third Amendment") by and between Borrower,
Prime and certain
Guarantors (with the exception of Thomas Povinelli);
WHEREAS, the Borrower has (i) informed the Bank that it is unable
to
make the payments required (a) under the Third Amendment and has
requested the
Bank to forbear from enforcing its rights under the Loan Documents
and modify
the monthly payment amount due on the Loan and further extend the
Third Extended
Maturity Date of the Loan to and including October 10, 2008 (the
"Extended
Maturity Date") and (b) in that certain consent letter issued by
the Bank to the
Borrower dated as of August 5, 2005 (the "Consent Letter") and (ii)
requested
that the Bank release its interest in the $862,000 Promissory Note
made by
Daniel R. Levy to Borrower dated January 29, 2004 (the "Note"),
which Note is
collaterally assigned to the Bank;
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 Bank has agreed to so forbear, absent its demand,
under
the terms and conditions set forth in this Fourth Amendment;
WHEREAS, the Borrower has informed the Bank that Thomas
Povinelli
will not sign this Fourth 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 April 11,
2006 they are
legally, validly and enforceably indebted to the Bank under the
Revolving Credit
Note in the principal amount of $739,929.07 and under the Term Loan
Note in the
principal amount of $849,084.00, both of which are due and payable
without
offset, claim, defense, counterclaim or right of recoupment.
2
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Section 2. Article Amendments.
(a)
Article II, B of the Forbearance Agreement, as amended by the
First
Amendment, Second Amendment and Third 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
the 10th day of each month beginning on April 10, 2006
and continuing on the 10th day of each month thereafter
until October 10, 2008 (the "Extended Maturity Date"),
plus principal payments in reduction of the Revolving
Credit Note, in the principal amount of $25,000. on the
10th day of each month beginning April 10, 2006 and on
the 10th day of each month thereafter until the Extended
Maturity Date and the remaining principal balance and
any accrued interest on the Extended Maturity Date; and
(ii) with respect to
the Term Loan Note, absent demand,
accrued interest monthly as set forth below on the 10th
day of each month beginning on April 10, 2006 and
continuing on the 10th day of each month ther
