COMMONWEALTH OF MASSACHUSETTS SUFFOLK, SS. RBS CITIZENS, N.A., Plaintiff SUPERIOR COURT CIVIL ACTION NO.

12 2154
CURT SCHILLING, Defendant V. MORGAN STANLEY SMITH BARNEY, LLC, Reach and Apply Defendant V. MORGAN STANLEYSMITH BARNEY, LLC, Trustee Process Defendant

RECEWD JUN 07 2012

SUP LR R.) MI C

CO PLAINT EMS F 0 ' INJUNCTIVE RELIEF

INTRODUCTION
The Plaintiff, RBS Citizens, N.A. (the "Bank"), brings this verified complaint to enforce the terms and conditions of a certain absolute and unconditional Guaranty (the "Guaranty"), executed and delivered by the Defendant, Curt Schilling ("Schilling") in favor of the Bank. As security for the judgment that the Bank expects to obtain, the Bank seeks injunctive relief to establish equitable liens upon certain assets of Schilling, in the hands of the Reach and Apply Defendant, Morgan Stanley Smith Barney, LLC ("Morgan Stanley") pursuant to Mass. Gen. L. ch. 214, 3(6), to prevent the liquidation of those assets pending a final judgment on the merits of this action. Additionally, the Bank seeks an ex parte Trustee Process attachment on

Schilling's accounts held for his benefit by the Trustee Process Defendant, Morgan Stanley, to the extent that such accounts are properly subject to Trustee Process as opposed to a Reach and Apply claim depending upon the nature of said accounts.

PARTIES
1. The Plaintiff, RBS Citizens, N.A. (the "Plaintiff' or the "Bank") is a national

banking association organized under the laws of the United States with a principal place of business located at 28 State Street, Boston, Suffolk County, Massachusetts. 2. The Defendant, Curt Schilling is an individual with a last and usual place of

residence at 7 Woodridge Road, Medfield, Massachusetts ("Schilling"). 3. The Reach and Apply Defendant, Morgan Stanley Smith Barney, LLC, is a

limited liability company with a place of business situated at 1 Exchange Place # 39, Boston ("Morgan Stanley"). 4. The Trustee Process Defendant, Morgan Stanley Smith Barney, LLC is a limited

liability company with a place of business situated at 1 Exchange Place # 39, Boston ("Morgan Stanley").

FACTS The Letter of Credit Agreement

5. On or about October 29, 2010, 38 Studios LLC ("38 Studios") executed and

delivered to the Bank that certain Application and Agreement for Standby Letter of Credit (the "Application"), as modified by that certain Addendum to Application and Agreement for Standby Letter of Credit dated November 2, 2010 (the "Addendum") (the Application and Addendum collectively, together with all other documents, instruments, and agreements related thereto or executed in connection therewith, comprise the "Letter of Credit Agreement"). A true and accurate copy of the Application is annexed hereto and incorporated herein by reference as

Exhibit 1. A true and accurate copy of the Addendum is annexed hereto and incorporated herein by reference as Exhibit 2. 6. On November 3, 2010, in connection with the Letter of Credit Agreement, the

Bank provided 38 Studios with that certain Irrevocable Transferable Standby Letter of Credit Number S907781 (the "Letter of Credit") for the benefit of Empire LaSalle, LLC (the "Beneficiary") in a sum not to exceed $2,060,241.00 available by draft at sight in favor of the Beneficiary. A true and accurate copy of the Letter of Credit is annexed hereto and incorporated herein by reference as Exhibit 3. 7. The Letter of Credit is effective by its terms, and pursuant to automatic extension

clauses contained therein, until June 15, 2017 and was at all times pertinent hereto in full force and effect. 8. On or about May 21, 2012, the Beneficiary made a draw on the Letter of Credit in

the amount of $371,484.40 (the "May 2012 Draw"). 9. The May 2012 Draw was honored and funded by the Bank on May 21, 2012, in

accordance with the terms of the Letter of Credit. 10. Pursuant to Section 2.01(a) of the Addendum, 38 Studios became obligated to pay

to the Bank an amount identical to the amount of the May 2012 Draw on the date the May 2012 Draw was honored. 11. 12. 38 Studios failed to pay the Bank the amount owing pursuant to Section 2.01(a). Pursuant to Section 8.01(b) of the Addendum, the failure to pay the May 2012

Draw constitutes an Event of Default under the Letter of Credit Agreement. 13. On May 22, 2012, in accordance with Section 2.01 of the Addendum, the Bank

made demand upon 38 Studios for payment in full of the May 2012 Draw and all related fees,

costs expenses, interest and costs of collection (including attorneys' fees and expenses). A true and accurate copy of said demand is annexed hereto and incorporated herein by reference as

Exhibit 4.
14. Despite demand, 38 Studios has failed and refused and continues to fail and refuse

to satisfy its obligations due and owing to the Bank. 38 Studios also just filed for Bankruptcy Court protection in Delaware. 15. Upon default and pursuant to the terms of the Letter of Credit Agreement, 38

Studios' obligations under the Letter of Credit Agreement and any and all other indebtedness of 38 Studios to the Bank became immediately due and payable, both as to principal and interest in the full amount of the Bank's liability under the Letter of Credit. 16. Accordingly, 38 Studios is indebted to the Bank in the principal amount of

$2,060,241.00, plus interest, costs and fees, costs and costs of collection, accrued and hereafter accruing, including, without limitation, attorneys' fees and expenses of the Bank.

The Commercial Card Program Agreement

17. On or about November 11, 2010, 38 Studios and 38 Studios Baltimore and the

Bank entered into that certain Commercial Card Program Agreement (the "Credit Card Agreement"), pursuant to which 38 Studios and 38 Studios Baltimore established a credit card account (the "Account") with the Bank. A true and accurate copy of the Credit Card Agreement is annexed hereto and incorporated herein by reference as Exhibit 5. 18. Under the Credit Card Agreement, 38 Studios and 38 Studios Baltimore had

access to a credit line in the maximum principal amount of $350,000.00. 19. Pursuant to Section 7, an Event of Default occurs under the Credit Card

Agreement upon certain defined events, including, but not limited to, the following: a default

occurs under the terms of any other obligations of 38 Studios or 38 Studios Baltimore to the Bank; or a significant change occurs in the ownership or organization structure, or in the type of volume of business of 38 Studios or 38 Studios Baltimore. 20. Accordingly, 38 Studios and 38 Studios Baltimore are jointly and severally

indebted to the Bank for the total amount due and owing under the Credit Card Agreement, which as of June 7, 2012, totals $373,596.33, plus thereafter accruing interest and late fees, costs and costs of collection, including, without limitation, attorneys' fees and expenses.

The Guaranty
21. On October 26, 2011, in consideration of the Bank's willingness to extend credit

to 38 Studios, LLC, and to induce the Bank to extend credit, Schilling executed and delivered to the Bank that certain Guaranty (the "Guaranty") pursuant to which Schilling absolutely and unconditionally guaranteed to the Bank the payment and performance of all indebtedness, obligations and liabilities of 38 Studios to the Bank, then existing or thereafter arising. A true and accurate copy of the Guaranty is annexed hereto and incorporated herein by reference as Exhibit 6. 22. As set forth above, 38 Studios defaulted on its obligations to the Bank under the

Letter of Credit Agreement and the Credit Card Agreement, and is indebted to the Bank for all amounts due and owing pursuant thereto, and all other indebtedness owed by 38 Studios to the Bank. 23. The Guaranty provides, among other things, that in the event of 38 Studios'

default, the obligations under the Guaranty shall become immediately due and payable to the Bank, and Schilling shall pay the entire amount of the indebtedness to the Bank.

24.

Schilling has failed and refused, and continues to fail and refuse, to satisfy the

outstanding indebtedness.

COUNT I (v. Schilling to Enforce the Guaranty)

25. The Bank repeats, re-alleges and re-avers the allegations contained in Paragraphs

1 through 24 above as if expressly re-written as set forth herein. 26. On October 26, 2011, in consideration of the Bank's willingness to extend credit

to 38 Studios, and to induce the Bank to extend credit, Schilling executed and delivered to the Bank the Guaranty pursuant to which Schilling absolutely and unconditionally guaranteed to the Bank the payment and performance of all indebtedness, obligations and liabilities of 38 Studios to the Bank, then existing or thereafter arising. See Exhibit 5. 27. As set forth above, the 38 Studios defaulted on its obligations to the Bank under

the Letter of Credit Agreement, and Credit Card Agreement, and is indebted to the Bank for all amounts due and owing pursuant thereto, and all other indebtedness owed by 38 Studios to the Bank. 28. The Guaranty provides, among other things, that in the event of the 38 Studios'

default, the obligations under the Guaranty shall become immediately due and payable to the Bank, and Schilling shall pay the entire amount of the indebtedness to the Bank. 29. Schilling has failed and refused, and continues to fail and refuse, to satisfy the

outstanding indebtedness. 30. Accordingly, Schilling is liable to the Bank in the total amount of $2,394,240.40,

plus thereafter accruing interest and late fees, costs and costs of collection, including, without limitation, attorneys' fees and expenses, under the Letter of Credit Agreement and the Credit Card Agreement, pursuant to his absolute and unconditional Guaranty.

COUNT II (to Reach and Apply the Interests of Schilling in the Reach and Apply Defendant Pursuant to M.G.L. c. 214 3(6))
31. The Bank repeats, re-alleges and re-avers the allegations contained in Paragraphs

1 through 30 above as if expressly re-written as set forth herein. 32. Upon information and belief, Schilling holds a beneficial, ownership, legal and/or

equitable interest in certain financial accounts with Morgan Stanley. 33. The Bank believes and therefore avers that such interests entitle Schilling to

receive money or other consideration from Morgan Stanley, and that these interests are not subject to attachment or levy on execution in any action at law. 34. Accordingly, in satisfaction of the amounts owed by Schilling to the Bank, the

Bank may reach and apply the shares, property, right, title and/or beneficial, ownership, legal and/or equitable interests of Schilling in the financial accounts at Morgan Stanley and the right to receive payments, directly or indirectly, from said accounts.

COUNT III (For Injunctive Relief to Establish Reach and Apply Liens)
35. The Bank repeats, re-alleges and re-avers the allegations contained in Paragraphs

1 through 34 above as if expressly re-written as set forth herein. 36. The Bank possesses a strong likelihood of success on the merits of this action as

Schilling is clearly liable to the Bank under his absolute and unconditional Guaranty. 37. A reach and apply injunction is necessary in order to create equitable liens against

the shares, interests, property, right, title, and/or legal or equitable interests of Schilling in the possession or under the control of Morgan Stanley.

38.

The Bank is unaware of any liability insurance that may be available to the

Defendants to satisfy the judgment which the Bank expects, for good and reasonable cause, to obtain against them in this action. 39. This is a straightforward matter of liability for sums certain owed pursuant to an

absolute and unconditional Guaranty, and therefore the Bank possesses a strong likelihood of success. 40. In the absence of the injunctive relief requested, the Bank is likely to suffer

irreparable injury as the Bank believes that it will otherwise be unable to satisfy its expected judgment, or that the Defendants will transfer, encumber, dissipate, or convey their assets. 41. The corporate Defendant has, upon information and belief, laid off its staff, and

thus the Bank is at risk of being unable to recover from said corporate Defendant, and therefore must look to the Guarantor for payment. 42. The Bank is unaware of any legitimate defenses that the Defendants have or may

have to this action against them. 43. Accordingly, the Bank believes and therefore avers that its request for injunctive

relief to establish reach and apply liens is appropriate to afford it reasonable security pending final judgment on the merits.

COUNT IV (for Trustee Process)

44. The Bank repeats, re-alleges and re-avers the allegations contained in Paragraphs

1 through 43 above as if expressly re-written as set forth herein. 45. Upon information and belief, the Trustee Process Defendant, Morgan Stanley,

possesses goods, effects or credits in its possession or control on behalf of Schilling, in the form of certain financial accounts.

46.

Pursuant to Rule 4.2 of the Massachusetts Rules of Civil Procedure, the Bank

seeks ex parte approval of an attachment by trustee process in the amount of $2,394,240.40, of the goods, effects, and credits of Schilling, in the possession, custody, or control of the Trustee Process Defendant, Morgan Stanley. 47. The Bank believes and therefore avers that there is a reasonable likelihood that it

will recover judgment, including interest, fees, and costs, in an amount equal to or greater than the amount of the attachment requested, as this action constitutes a straightforward claim for liability on a sum certain owed pursuant to an absolute and unconditional Guaranty. 48. The attachment is necessary and reasonable as security for the judgment which,

for good and reasonable cause, the Bank expects to recover in this action. 49. Additionally, the Bank states that if attachment is not granted, there is a

significant risk that the Defendant will remove his money, effects, and credits from the possession, custody, or control of the Trustee Process Defendants to the detriment of the Plaintiff. This risk is inherent by the very nature of financial accounts, which property interests are easily transferrable.

PRAYERS FOR RELIEF

WHEREFORE, the Plaintiff, RBS Citizens, N.A., respectfully requests that this Court grant the following relief: 1. That the Reach and Apply Defendant, Morgan Stanley, and its respective officers,

directors, shareholders, members, managers, partners, agents, nominees, representatives, servants, employees, and attorneys, be restrained and enjoined from (1) paying money or any other form of consideration to or for the benefit of the Defendant, Curt Schilling, (2) assigning, alienating, selling, transferring, encumbering, concealing or in any other manner, disposing of,

diminishing, or dissipating the value of the equitable, and/or ownership interests of the Defendant, Curt Schilling, in the accounts held by the Reach and Apply Defendant, Morgan Stanley and (3) from transferring any property, legal or beneficial interests or accounts standing in the name of the Defendant, Curt Schilling, on the books and records of the Reach and Apply Defendant, Morgan Stanley, until further order of this Court; 2. That the Defendant, Curt Schilling and his agents, assigns, nominees,

representatives, servants, employees, beneficiaries, attorneys, and all people in active concert or participation with him, be restrained and enjoined from directly or indirectly assigning, alienating, selling, transferring, pledging, encumbering, concealing or in any other manner, disposing of, diminishing, or dissipating the beneficial, equitable, and/or ownership interests of Curt Schilling in the accounts held by the Reach and Apply Defendant, Morgan Stanley, until further order of this Court; 3. of this Court; 4. That this Court find that the assets sought to be reached and applied may be That Prayers 1 and 2 above be entered as preliminary and permanent injunctions

reached and applied to satisfy the obligations of the Defendant, Curt Schilling to the Plaintiff, RBS Citizens, NA.; 5. That this Court approve the Plaintiff's Motion for an Ex Parte Trustee Process

attachment of the goods, effects and credits held for the Defendant, Curt Schilling, by the Trustee Process Defendant, Morgan Stanley in the amount of $2.3 million; 6. That this Court enter Judgment in favor of the Plaintiff, RBS Citizens, N.A., and

against the Defendant, Curt Schilling, in the principal amount of $2,394,240.40, as of June 7,

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2012, plus thereafter accruing interest, late fees, costs, costs of collection, attorneys' fees and expenses pursuant to Count III hereof; and 7. For such other and further relief as this Honorable Court deems just and proper. RBS CITIZENS, N.A., By its Attorneys, RlEMER & RAUNSTEIN LLP

Dated: June

7, 2012

Joseph e, Jr. - BBO No. 550291 Stephen , Jr. - BBO No. 669727 Riemer aunstein LLP Three Center Plaza Boston, Massachusetts 02108 (617) 523-9000 legriemerlaw.com sryan@riemerlaw.corn
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VERIFICATION
I, Brian R. Donovan, Vice President of the Global Restructuring Group of RBS Citizens, N.A., verify that I have read the Verified Complaint and Prayers for Injunctive Relief, and that the facts contained therein are, to the best of my knowledge, information, and belief, true and accurate. Signed this P day of June, 2012, under the pains and penalties of perjury.

nan R. Donovan Vice President Global Restructuring Group RBS Citizens, N.A.

PLAINTIFF'S VERIFIED AD DAMNUM PURSUANT TO MASSACHUSETTS GENERAL LAW, CHAPTER 231, SECTION 13B
I, Brian R. Donovan, Vice President of the Global Restructuring Group of RBS Citizens, N.A. (the "Bank"), having personal knowledge of the facts pertaining to the above-captioned case, and based upon the Bank's books and records kept in the ordinary course of business, state that the total amount due to the Bank jointly and severally from the Defendants,

2 13? t-I 2. 440. 140 , is $

as of June

2012, plus thereafter accruing

interest, late fees, costs, costs of collection, attorneys' fees and expenses. SIGNED UNDER THE PAINS AND PENALTIES OF PERJURY THIS 4- DAY OF JUNE, 2012.

rian R. Donovan Vice President Global Restructuring Group RBS Citizens, N.A.
1442683.1

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