FORM OF DEBT CONVERSION AGREEMENT
This Debt Conversion Agreement made as of this 20th day of August, 2007
between Gilman + Ciocia, Inc., a Delaware corporation (the "Company"), and the
parties who have executed this agreement (individually a "Creditor" and
collectively the "Creditors").
WHEREAS, the Company and the Creditors are parties to a stock purchase
agreement dated August 20, 2007 (the "Purchase Agreement") whereby the Creditors
will purchase shares of common stock of the Company upon the terms and
conditions set forth therein; and
WHEREAS, a condition to the closing of the transactions contemplated by
the Purchase Agreement is the execution and delivery by each purchaser a party
thereto of an investor qualification statement (each an "Investor Qualification
Statement"); and
WHEREAS, the Company is obligated to each Creditor in the principal amount
plus accrued interest as set forth on the signature page hereto (the
"Obligation"); and
WHEREAS, the Creditors are, severally, willing to release the Company from
its obligation to pay the Obligations upon the terms and conditions set forth
herein.
NOW THEREFORE, in consideration of the terms, conditions and agreements
contained in this Agreement, the parties agree as follows:
1. ISSUANCE OF SHARES.
(a) As payment for the Creditor's purchase of the number of shares
of the Company's common stock ("Shares") set forth on the signature page, the
Company agrees to accept cancellation of the Obligations in full satisfaction of
the Company's obligation to repay the Obligations. The Company and the Creditor
acknowledge and agree that the number of Shares was calculated by dividing the
Obligations by $0.10 per Share. The Company agrees to issue and deliver the
Shares to Creditor as provided in the Purchase Agreement. The Creditors agree to
accept the Shares as cancellation of the Obligations in full satisfaction of the
Company's obligation to repay the Obligations.
(b) The obligations of each Creditor under this Agreement are
several and not joint with the obligations of any other Creditor, and no
Creditor shall be responsible in any way for the performance of the obligations
of any other Creditor under this Agreement. Nothing contained herein, and no
action taken by any Creditor pursuant thereto, shall be deemed to constitute the
Creditors as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Creditors are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by this Agreement. Each Creditor shall be entitled to independently
protect and enforce its rights, including without limitation the rights arising
out of this Agreement, and it shall not be necessary for any other Creditor to
be joined as an additional party in any proceeding for such purpose. Each
Creditor represented that it has had the opportunity to consult with its own
separate legal counsel and other advisors in their review and negotiation of
this Agreement.
2. CREDITOR'S REPRESENTATIONS AND WARRANTIES.
In addition to the representations and warranties set forth in each
Creditor's Investor Qualification Statement, each Creditor hereby acknowledges,
represents and warrants to, and agrees with, the Company (severally and not
jointly) as follows:
(a) The Creditor has not transferred or assigned an interest in the
Obligations to any third party.
(b) The Creditor has full power and authority to execute and deliver
this Agreement and the Investor Qualification Questionnaire and to perform the
obligations of the Creditor hereunder and thereunder; and each such agreement is
a legally binding obligation of the Creditor in accordance with its terms.
(c) The execution and delivery by the Creditor of, and the
performance by the Creditor of its obligations under this Agreement in
accordance with the terms of this Agreement will not contravene any provision of
applicable law, or the charter documents of the Creditor if applicable, or any
agreement or other instrument binding upon the Creditor, or any judgment, order
or decree of any governmental body, agency or court having jurisdiction over the
Creditor, and no consent, approval, authorization or order of, or qualification
with, any governmental body or agency is required for the performance by the
Creditor of its obligations under this Agreement in accordance with the terms of
this Agreement.
The foregoing representations, warranties and agreements shall survive the
delivery of the Shares under this Agreement.
3. COMPANY REPRESENTATIONS AND WARRANTIES.
The Company hereby acknowledges, represents and warrants to, and agrees
with the Creditor as follows:
(a) The Company has been duly organized, is validly existing and is
in good standing under the laws of the State of Delaware. The Company has full
corporate power and authority to enter into this Agreement and this Agreement
has been duly and validly authorized, executed and delivered by the Company and
is a valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, except as such enforcement may be limited
by the United States Bankruptcy Code and laws effecting creditors rights,
generally.
(b) Subject to the performance by the Creditor of its obligations
under this Agreement and the accuracy of the representations and warranties of
the Creditor in this Agreement and the Investor Qualification Statement, the
offering and sale of the Shares will be exempt from the registration
requirements of the Securities Act of 1933, as amended.
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(c) The execution and delivery by the Company of, and the
performance by the Company of its obligations under this Agreement in accordance
with the terms of this Agreement will not contravene any provision of applicable
law or the charter documents of the Company or any agreement or other instrument
binding upon the Company, or any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Company, and no consent,
approval, authorization or order of, or qualification with, any governmental
body or agency is required for the performance by the Company of its obligations
under this Agreement in accordance with the terms of this Agreement.
The foregoing representations, warranties and agreements shall survive the
Closing.
4. RELEASE.
Upon the delivery of the Shares, the Creditor releases and forever
discharges the Company of and from all and all manner of actions, suits, debts,
sums of money, contracts, agreements, claims and demands at law or in equity,
that Creditor had, or may have arising from the Obligations.
5. MISCELLANEOUS.
(a) Modification. Neither this Agreement nor any provisions hereof
shall be modified, discharged or terminated except by an instrument in writing
signed by the party against whom any waiver, change, discharge or termination is
sought.
Notices. Unless otherwise provided, any notice, authorization,
request or demand required or permitted to be given under this Agreement shall
be given in writing and shall be deemed effectively given upon personal delivery
to the party to be notified or three (3) days following deposit with the United
States Post Office, by registered or certified mail, postage prepaid, or one
business day after it is sent by an overnight delivery service, or when sent by
facsimile with machine confirmation of delivery addressed as follows:
If to the Creditors to:
The address set forth opposite their name on the signature page hereto.
If to Company:
Gilman + Ciocia, Inc.
11 Raymond Avenue
Poughkeepsie, New York 12603
Attn: Legal Department
Fax: (845) 622-3638
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In either case, with a copy to:
Blank Rome LLP
405 Lexington Avenue, 23rd Floor
New York, New York 10174
Attention: Robert J. Mittman, Esq.
Fax: (212) 885-5001
Any party may change its address for such communications by giving notice
thereof to the other parties in conformity with this Section.
(b) Counterparts. This Agreement may be executed through the use of
separate signature pages or in any number of counterparts, and each of such
counterparts shall, for all purposes, constitute one agreement binding on all
the parties, notwith-standing that all parties are not signatories to the same
counterpart.
(c) Binding Effect. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the parties and
their heirs, executors, administrators, successors, legal representatives and
assigns. If the undersigned is more than one person, the obligation of the
Creditor shall be joint and several, and the agreements, representations,
warranties and acknowledgments herein contained shall be deemed to be made by
and be binding upon each such person and his heirs, executors, administrators
and successors.
(d) Entire Agreement. This instrument contains the entire agreement
of the parties, and there are no representations, covenants or other agreements
except as stated or referred to herein.
(e) Applicable Law. This Agreement shall be governed and construed
under the laws of the State of New York.
(f) Third Party Beneficiaries. Purchasers under the Investor
Purchase Agreement dated as of April 25, 2007 between the Company and the
Purchasers named therein shall be third party beneficiaries of this Agreement.
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IN WITNESS WHEREOF, the Company and Creditors have caused this Agreement
to be executed and delivered by their respective officers, thereunto duly
authorized.
GILMAN + CIOCIA, INC.
By: /s/ Ted H. Finkelstein
Name: Ted H. Finkelstein
Title: Vice President
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
SIGNATURE PAGES FOR CREDITORS FOLLOW.]
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[CREDITOR SIGNATURE PAGES TO GILMAN + CIOCIA, INC.
DEBT CONVERSION AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Debt Conversion
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.
[NAME OF CREDITOR]
Prime Partners II, LLC
By: /s/ Ralph A. Porpora
-------------------------
Name: Ralph A. Porpora
Title: Member and manager
Address for Notice of Creditor: 11 Raymond Avenue, Poughkeepsie, NY 12603
Amount of Obligations:
Principal: $1,542,000
Interest: $[ ]
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Total: $1,542,000
Shares: 15,420,000
Description:
Number Principal Issued Date
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