KARL'S FURNITURE IN CONNECTION WITH THIS PROMOTIONAL IDEA. FRIEDMAN DISCUSSED, WITH [CUSTOMER] OF KARL'S FURNITURE, THE USE OF CAT BONDS IN [CUSTOMER'S] BUSINESS. FRIEDMAN STATES THAT [CUSTOMER] WAS ENTHUSIASTIC ABOUT THE CONCEPT. FRIEDMAN GAVE [CUSTOMER] HIS CARD, AND [CUSTOMER] COPIED THE AD FROM THE UPSTATE STORE. [CUSTOMER] ASKED FOR A BOND SO THAT HE COULD SEE WHAT IT LOOKED LIKE. [CUSTOMER] THEN PURCHASED $5,000 FACE BONDS ON OCTOBER 18, 1984, FOR HIS SON. THERE WAS NO FURTHER CONTACT BETWEEN FRIEDMAN AND [CUSTOMER] FOR A NUMBER OF WEEKS, AFTER [CUSTOMER] STATED THAT HE WAS WORKING THE IDEA AROUND WITH HIS ADVERTISING FIRM. FRIEDMAN AND [CUSTOMER] THEN TALKED ON NOVEMBER 28, 1984, AT WHICH TIME [CUSTOMER] SAID THAT HE WOULD PROBABLY USE THE IDEA THE NEXT YEAR. ON DECEMBER 26, 1984, FRIEDMAN ATTEMPTED TO CALL [CUSTOMER] AND TELL HIM THAT D.H. WALLACH WOULD NOT BE ABLE TO SUPPLY THE BONDS AND THAT THE PRICE OF THE BONDS HAD RISEN. [CUSTOMER] WAS OUT OF TOWN, AND FRIEDMAN LEFT A MESSAGE WITH [CUSTOMER'S] SECRETARY, STATING THAT THE MATTER WAS IMPORTANT AND THAT [CUSTOMER] SHOULD CALL HIM AT WORK OR AT HOME. ON DECEMBER 27, 1984, FRIEDMAN TALKED TO [CUSTOMER'S] BROTHER, EXPLAINED THE SITUATION, ASKED THAT [CUSTOMER] BE CONTACTED, AND WAS INFORMED THAT [CUSTOMER] WOULD BE AVAILABLE ON JANUARY 2, 1985. FRIEDMAN CALLED [CUSTOMER] ON JANUARY 2, 1985, AND [CUSTOMER] SAID HE WAS UNABLE TO TALK. FRIEDMAN CALLED HIM AGAIN ON JANUARY 3 AND WAS ABLE TO EXPLAIN THE SITUATION TO HIM. [CUSTOMER] STATED THAT HE HAD CHECKED OUT THE IDEA WITH HIS BROKER AT E.F. HUTTON, AND THAT HE WOULD PURCHASE THE BONDS THERE INSTEAD O*SEE FAQ #1*

$75,000.00

WHILE EMPLOYED AT D.H. WALLACH, INC., FRIEDMAN CLEARED, WITH [BROKER DEALER PRESIDENT], THE PRESIDENT OF THE FIRM, AND [OTHER FIRM EMPLOYEE], THE TREASURER, THE IDEA OF USING ZERO COUPON BONDS FOR GIVEAWAY PROMOTIONS IN FURNITURE STORES. [OTHER FIRM MEMBER], THE TREASURER, AND [OTHER FIRM MEMBER], A PARTNER IN D.H. WALLACH, GAVE HIM THE NAME OF KARL'S FURNITURE IN CONNECTION WITH THIS PROMOTIONAL IDEA. FRIEDMAN DISCUSSED, WITH [CUSTOMER] OF KARL'S FURNITURE, THE USE OF CAT BONDS IN [CUSTOMER'S] BUSINESS. FRIEDMAN STATES THAT [CUSTOMER] WAS ENTHUSIASTIC ABOUT THE CONCEPT. FRIEDMAN GAVE [CUSTOMER] HIS CARD, AND [CUSTOMER] COPIED THE AD FROM THE UPSTATE STORE. [CUSTOMER] ASKED FOR A BOND SO THAT HE COULD SEE WHAT IT LOOKED LIKE. [CUSTOMER] THEN PURCHASED $5,000 FACE BONDS ON OCTOBER 18, 1984, FOR HIS SON. THERE WAS NO FURTHER CONTACT BETWEEN FRIEDMAN AND [CUSTOMER] FOR A NUMBER OF WEEKS, AFTER [CUSTOMER] STATED THAT HE WAS WORKING THE IDEA AROUND WITH HIS ADVERTISING FIRM. FRIEDMAN AND [CUSTOMER] THEN TALKED ON NOVEMBER 28, 1984, AT WHICH TIME [CUSTOMER] SAID THAT HE WOULD PROBABLY USE THE IDEA THE NEXT YEAR. ON DECEMBER 26, 1984, FRIEDMAN ATTEMPTED TO CALL [CUSTOMER] AND TELL HIM THAT D.H. WALLACH WOULD NOT BE ABLE TO SUPPLY THE BONDS AND THAT THE PRICE OF THE BONDS HAD RISEN. [CUSTOMER] WAS OUT OF TOWN, AND FRIEDMAN LEFT A MESSAGE WITH [CUSOMER'S] SECRETARY, STATING THAT THE MATTER WAS IMPORTANT AND THAT [CUSTOMER] SHOULD CALL HIM AT WORK OR AT HOME. ON DECEMBER 27, 1984, FRIEDMAN TALKED TO [CUSTOMER'S] BROTHER, EXPLAINED THE SITUATION, ASKED THAT [CUSTOMER] BE CONTACTED, AND WAS INFORMED THAT [CUSTOMER] WOULD BE AVAILABLE ON JANUARY 2, 1985. FRIEDMAN CALLED [CUSTOMER] ON JANUARY 2, 1985, AND [CUSTOMER] SAID THAT HE WAS UNABLE TO TALK. FRIEDMAN CALLED HIM AGAIN ON JANUARY 3 AND WAS ABLE TO EXPLAIN THE SITUATION TO HIM. [CUSTOMER] STATED THAT HE HAD CHECKED OUT THE IDEA WITH HIS BROKER AT E.F. HUTTON, AND THAT HE WOULD PURCHASE THE BONDS