Joseph D. & Elizabeth M. Dunne - Page 7

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               SETTLEMENT DATE IS DATE OF SIGNING MEMORIALIZING                       
               DOCUMENT, ANTICIPATED TO BE COMPLETE NOT LATER THAN                    
               However, contrary to the agreement, Mr. Dunne did not escrow           
          his FRC stock certificates at that time.  The settlement                    
          agreement also provided that all disputes were to be resolved by            
               Soon after they executed the settlement agreement, Mr. Dunne           
          and Mr. Marcus began disputing its provisions.  On October 7,               
          1997, Mr. Dunne, Mr. Marcus, and FRC executed an agreement to               
          arbitrate these disputes.                                                   
          Mr. Dunne’s Relationship With FRC                                           
               FRC paid Mr. Dunne and Mr. Marcus equal dividends each month           
          from January through April of 1997, totaling between $20,000 and            
          $26,000 for each.  FRC paid these dividends so that Mr. Dunne and           
          Mr. Marcus could satisfy their income tax liabilities.                      
               In September of 1997, Mr. Dunne sent several letters and               
          reports regarding FRC to FRC’s bank, listing his titles as                  
          “Director, Officer, Co-Owner of FRC, Int’l.”  An officer of the             
          bank replied with correspondence acknowledging Mr. Dunne’s                  
               On October 6, 1997, the bank’s attorney sent Mr. Dunne a               
          letter stating that the bank was aware of Mr. Dunne’s agreement             
          to sell his interest in FRC and of the dispute between Mr. Dunne            
          and Mr. Marcus.  Because the bank did not know what authority Mr.           

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Last modified: March 27, 2008