| | This lawsuit alleges fraud and deceit in the Company's sale of credit insurance, refinancing practices and use of arbitration agreements. The plaintiffs seek statutory, compensatory and punitive damages. The case was initially filed on February 21, 2002, but the defendants were not served until the latter part of June 2002. The case was removed to the United States District Court for the Southern District of Mississippi, Jackson Division. The Plaintiffs' Motion to Remand was denied on March 31, 2003. Motions to compel arbitration of the plaintiffs’ claims were filed and granted on August 14, 2003. As a result, 1st Franklin Financial Corporation was dismissed from the action without prejudice. Although arbitration has not been commenced, the Company intends to proceed with arbitration and defend the case vigorou sly. Management believes that it is too early to assess the Company’s potential liability in connection with this action.
Carolyn Robinson, et al. v. 1st Franklin Financial Corporation, et al.: 2:02cv897PG, filed in the Circuit of Panola County, Mississippi, Second Judicial District, and removed to the United States District Court for the Southern District of Mississippi, Hattiesburg Division, where it is currently pending. This lawsuit alleges fraud, deceit and misrepresentation in the Company's sale of credit insurance, refinancing practices and use of arbitration agreements. The plaintiffs seek statutory, compensatory and punitive damages. The case was initially filed on November 13, 2002. All of the plaintiffs have agreed to submit their claims to arbitration and to dismiss, without prejudice, the above-referenced litigation. By agreed order of the parties, the court ordered the action to arbitration on June 30, 2003, and dismissed 1st Franklin Financial Corporation without prejudice. Although arbitration has not been commenced, the Company intends to proceed with arbitration and defend this case vigorously. Management believes that it is too early to assess the Company’s potential liability in connection with this suit.
Dennis and Collie Pearson, et al. v. American General Finance, 1st Franklin Financial Corporation, et al.: 2:03cv043BB, filed in the Circuit Court of Panola County, Mississippi, Second Judicial District, and removed to the Unitied States District Court for the Northern District of Mississippi, Delta Division, where it is currently pending. This lawsuit alleges fraud and deceit in the Company's sale of credit insurance, refinancing practices and use of arbitration agreements. The plaintiffs seek statutory, compensatory and punitive damages. The case was initially filed on January 7, 2003. At the time this case was removed to Federal Court, the Company had not been properly served, and thus, it did not join in the notice of removal. Plaintiffs have filed a motion to remand and remand-related discovery is proceeding. The Company has received notice that the plaintiffs have issued a summons to serve the Company, though service on the Company still has not been perfected. Service was perfected on an employee of the Company who is also a named defendant in the suit. Motions to quash the issuance of the summons on the Company and service on our employee have been filed and are currently pending. Management believes that it is too e arly to assess the Company's potential liability in connection with this suit, and the Company is diligently contesting and defending this case. <PAGE> 3 Dora L. Wright, et al. v. 1st Franklin Financial Corporation, et al., 3:03cv726WS, filed in the Circuit Court of Holmes County, Mississippi, and removed to the United States District Court for the Southern District of Mississippi, Jackson Division. This lawsuit alleges fraud and deceit in the Company's sale of credit insurance, refinancing practices and use of arbitration agreements. The plaintiffs seek statutory, compensatory and punitive damages. The case was initially filed on December 31, 2002, but the defendants were not served until the latter part of April, 2003. The case was removed to the United States District Court for the Southern District of Mississippi, Jackson Division on May 22, 2003. The plaintiffs have filed a motion to remand, and remand-related discovery is on-going. The plaintiffs have agreed to stay consideration of remand until decisions are rendered in the pending independent actions to compel arbitration. An agreed order staying remand was filed October 16, 2003. The Company awaits rulings in the arbitration actions. Management believes that it is too early to assess the Company's potential liability in conne ction with this suit, and the Company is diligently contesting and defending this case.
Nadia D. Barbos, individually and on behalf of all others similarly situated, Plaintiffs v. 1st Franklin Financial Corporation, Defendant, Case No. I031051G in the State Court of Chatham County, State of Georgia. This lawsuit was filed on April 4, 2003, and alleges that a note signed by the named Plaintiff violates Georgia's usury statutes. The lawsuit requests that a class be certified consisting of "[i]ndividuals in Georgia who have been granted short-term loans and who have paid excessive or usurious interest and finance charges in connection therewith." The lawsuit alleges that as a result the Company is liable to Plaintiff and the putative class for counts of conversion, negligenceper se and fraud. The Complaint requests a class award in an unspecified amount. The Company's Motion to Dismiss was filed on May 7, 2003.
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