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Jay M. Spillane (pro hac vice admission pending) SPILLANE WEINGARTEN, LLP 1100 Glendon Ave., Suite 1200 Los Angeles. CA 90024 tel. (310) 229-9300 fax (310) 229-9380 - andStephen Z. Starr Vildan E. Starr STARR & STARR, PLLC 260 Madison Ave., 17th Floor New York, New York 10016 tel. (212) 867-8165 fax (212) 867-8139 Attorneys for Plaintiff Gerova Financial Group, Ltd. UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK GEROVA FINANCIAL GROUP, LTD., a Bermuda company, Plaintiff, -againstREYNDERS, GRA Y HOLDINGS LLC, a Delaware limited liability company, Defendant. Case No.:

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COMPLAINT
[JURY TRIAL DEMANDED]

Plaintiff Gerova Financial Group, Ltd., a Bermuda company ("Gerova"), alleges:

JURISDICTION AND VENUE

1.

Jurisdiction is proper in this court under 28 U.S.C. 1332(a)(2), as the matter in

controversy exceeds $75,000, and the action is between a citizen of a state and a citizen or subject of a foreign state.

2.

Venue is proper in this Court under 28 U.S.C. 1391(a) and (c), in that Defendant

Reynders, Gray Holdings, LLC ("Reynders, Gray") resides in this judicial district and a

substantial part of the events or omissions giving rise to the claims asserted herein occurred in this judicial district.

PARTIES

3.

Gerova is a Bermuda company with offices at Cumberland House, 5th floor, 1

Victoria Street, Hamilton, HM 11, Bermuda.

4.

On information and belief, Reynders, Gray is a Delaware corporation with offices

at 520 Madison Avenue, 4th floor, New York, NY 10022. On information and belief, Reynders, Gray owns 100% of the member interests in non-party Ticonderoga Securities LLC ("Ticonderoga") .

THE LOAN

5.

Gerova, Reynders, Gray and other non-parties, including Ticonderoga, entered

into that certain agreement dated as of October 29, 2010 (the"Agreement"). A true and correct copy of the Agreement is attached hereto as Exhibit A. In the Agreement and related documents, Reynders, Gray is incorrectly referred to as "Reynders Grey Holdings, LLC."

6.

The Agreement essentially provides for an option to engage in a series of

transactions, which if conducted would result in a new entity, Gerova-Ticonderoga Holdings Corp., owning 100% of the member interests in Ticonderoga.

7.

In connection with the Agreement, Gerova loaned $5,000,000 to Reynders, Gray

(the "Loan"). To evidence its promise to repay the Loan, Reynders, Gray executed and delivered that certain Secured Promissory Note dated as of October 29,2010 in the principal sum of $5,000,000 (the "Note"). A true and correct copy of the Note is attached hereto as Exhibit B.

8.

Reynders, Gray secured its promise to repay the Loan by executing and delivering

that certain Securities Pledge Agreement dated as of October 29, 2010 (the "Pledge"). A true and correct copy of the Pledge is attached hereto as Exhibit C.

9.

The Note and the Pledge each reference the Agreement, referred to therein as the

"Loan and Option Agreement. "

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10.

The Agreement recites that if the option referenced in the Agreement is not

exercised by January 31,2011, the Agreement may be terminated on notice. Agreement 11' 4.2(c).

11.

On February 16,2011 Ticonderoga and Reynders, Gray delivered a purported

notice of termination of the Agreement. A true and correct copy of correspondence dated as of February 16, 2011 is attached hereto as Exhibit D. Under 1f 4.2(c) of the Agreement, such notice accelerates the Loan, such that it became due in full on the effective date of the termination. Despite demand therefor, Reynders, Gray has failed and refused to repay the Loan, or any part of it. Reynders, Gray has wrongfully repudiated its obligation to repay the Loan by advancing the specious theory in the February 16, 2011 letter that it may not only cancel the Agreement but keep the Loan without repayment.

FIRST CLAIM FOR RELIEF

Breach of Contract - Against Reynders. Gray

12. 13.

Gerova re-alleges paragraphs 1 through 11 as if stated herein. Gerova and Reynders, Gray entered into written contracts, namely, the

Agreement, the Note and the Pledge. Pursuant to these contracts, Gerova loaned $5,000,000 to Reynders, Gray. In these contracts Reynders, Gray promised to repay the Loan.

14.
payable.

As a result of the purported termination, the Loan has matured and is due and

15.

Gerova has performed all of its duties under these contracts, except as excused by

Reynders, Gray's purported termination notice and material breaches.

16.

Reynders, Gray has breached these contracts. Reynders, Gray has not repaid the

Loan, nor any portion of it. Reynders, Gray has repudiated its obligation to repay the Loan.

17.

As an actual and foreseeable result of Reynders, Gray's breaches, Gerova has

been damaged in a sum to be proven at trial, in no event less than $5,000,000, plus all applicable interest. Additionally, Gerova is entitled to an award of its reasonable attorneys' fees and costs.

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WHEREFORE, Gerova respectfully seeks judgment on the claims for relief set forth
herein, as follows: A. Actual damages in a sum to be proven at trial, in no event less than $5,000,000,

plus all applicable interest, attorneys' fees and costs. B. Injunctions, attachments, orders in aid of collection and other provisional

remedies as appropriate. C. Dated: Any additional relief as warranted by the facts and the law. New York, New York June 27, 2011 STARR & STARR, PLLC

Vildan E. Starr 260 Madison Avenue, 17th Fl. New York, New York 10016 tel. (212) 867-8165 fax (212) 867-8139 - and-

B~~

Jay M. Spillane (pro hac vice admission pending) SPILLANE WEINGARTEN, LLP 1100 Glendon Ave., Suite 1200 Los Angeles, CA 90024 tel. (310) 229-9300 fax (310) 229-9380 Attorneys for Plaintiff Gerova Financial Group, Ltd.

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