<PAGE>
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Florida Gaming Corporation
- - -------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Florida Gaming Corporation
- - -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- - -------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- - -------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
- - -------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- - -------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- - -------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- - -------------------------------------------------------------------------------
(3) Filing party:
- - -------------------------------------------------------------------------------
(4) Date filed:
- - -------------------------------------------------------------------------------
- - ------------------------
(1) Set forth the amount on which the fioing fee is calculated and state how it
was determined.
<PAGE>
FLORIDA GAMING CORPORATION
June 2, 1995
Dear Florida Gaming Stockholder:
You are cordially invited to attend the 1995 Annual Meeting of Stockholders
of Florida Gaming Corporation which will be held on Friday, July 7, 1995, at
Fort Pierce Jai-Alai, 1750 South Kings Highway, Fort Pierce, Florida, at 11:00
a.m., local time. We hope you will be able to attend.
The enclosed meeting notice and proxy statement contain details concerning
the business to come before the Meeting. You will note that the Board of
Directors of the Corporation recommends a vote:
* "FOR" election of six directors to serve until the 1996 Annual Meeting
of Stockholders;
* "FOR" approval of the 1994 Nonqualified Stock Option Plan;
* "FOR" approval of the 1995 Chief Executive Officer Stock Option Grant.
Please sign and return your proxy card in the enclosed envelope at your
earliest convenience to assure that your shares will be represented and voted at
the Meeting even if you cannot attend.
Also included in these materials is the Corporation's 1994 Annual Report to
Stockholders. As you will see, the past year has been an active one for the
Company as we entered the expanding gaming industry.
As we look forward to developing the many exciting opportunities that lie
ahead, I want to extend my thanks to our management team and to our employees
for their significant contributions. I also want to express my appreciation to
you, our stockholders, for your continued confidence and support.
W. B. Collett
Chairman of the Board and
Chief Executive Officer
<PAGE>
FLORIDA GAMING CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Holders of Common Stock of Florida Gaming Corporation:
The 1995 Annual Meeting (the "Meeting") of Stockholders of Florida Gaming
Corporation (the "Company"), a Delaware corporation, will be held at Fort Pierce
Jai-Alai, 1750 South Kings Highway, Fort Pierce, Florida, on Friday, July 7,
1995 at 11:00 a.m., local time, for the following purposes:
1. To elect six directors to serve until the 1995 Annual Meeting of
Stockholders;
2. To approve the 1994 Nonqualified Stock Option Plan pursuant to
which options for up to 5% of the Company's shares of Common Stock
outstanding may be granted to certain key employees;
3. To approve the 1995 Chief Executive Officer Stock Option Grant
pursuant to which options for 300,000 shares of Common Stock have been
granted to the Company's Chief Executive Officer; and
4. To transact such other business as may properly come before the
Meeting, and any adjournments thereof.
Stockholders of record at the close of business on May 26, 1995, are
entitled to notice of and to vote at the Meeting, and any adjournments thereof.
A list of stockholders of the Company as of the close of business on May
26, 1995, will be available for inspection during normal business hours from
June 25 through July 6, 1995, at Fort Pierce Jai-Alai, 1750 South Kings Highway,
Fort Pierce, Florida.
By Order of the Board of Directors
June 2, 1995 W. B. Collett, Jr.
Executive Vice President and
Secretary
EACH STOCKHOLDER IS URGED TO EXECUTE AND RETURN THE ENCLOSED PROXY
PROMPTLY. IF A STOCKHOLDER DECIDES TO ATTEND THE MEETING, HE OR SHE MAY, IF SO
DESIRED, REVOKE THE PROXY AND VOTE THE SHARES IN PERSON.
<PAGE>
FLORIDA GAMING CORPORATION
1750 SOUTH KINGS HIGHWAY
FORT PIERCE, FLORIDA 34945-3094
(407) 464-7500
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement is furnished to the holders of common stock (the
"Common Stock") of Florida Gaming Corporation (the "Corporation") in connection
with the solicitation of proxies on behalf of the Board of Directors of the
Corporation to be voted at the 1995 Annual Meeting of Stockholders of the
Corporation to be held at Fort Pierce Jai-Alai, 1750 South Kings Highway, Fort
Pierce, Florida, on Friday, July 7, 1995, at 11:00 a.m., local time, and at any
adjournments thereof (the "Annual Meeting").
All proxies delivered pursuant to this solicitation are revocable at any
time at the option of the persons executing them by giving written notice to the
Secretary of the Corporation, by delivering a later proxy, or by voting in
person at the Annual Meeting.
The approximate date on which this Proxy Statement and form of proxy are
first being sent or given to stockholders is June 2, 1995.
At the Annual Meeting, stockholders will be asked to vote on the following:
(1) the election of nominees to the Board of Directors, (2) the approval of the
1994 Nonqualified Stock Option Plan, and (3) the approval of the 1995 Chief
Executive Officer Stock Option Grant.
All properly executed proxies delivered pursuant to this solicitation and
not revoked will be voted at the Annual Meeting in accordance with the
directions given. Regarding the election of directors to serve until the 1996
Annual Meeting of Stockholders, in voting by proxy, stockholders may vote in
favor of all nominees or withhold their votes as to all nominees or withhold
their votes as to specific nominees. If no specific instructions are given with
respect to voting for the nominees to the Board of Directors, the shares
represented by a properly signed and dated proxy will be voted "FOR" the
election of all nominees. Regarding the proposals to approve the 1994
Nonqualified Stock Option Plan and the 1995 Chief Executive Officer Stock Option
Grant, stockholders may vote in favor of, against or abstain from voting on each
proposal. Stockholders should specify their choice on the enclosed form of
proxy. If no specific instructions are given with respect to the approval of
the 1994 Nonqualified Stock Option Plan and the 1995 Chief Executive Officer
Stock Option Grant, the shares represented by a properly signed and dated proxy
will be voted "FOR" the proposals.
Regarding the election of directors, the six nominees receiving the most
votes cast in their favor at the Annual Meeting will be elected as directors.
The approval of the 1994 Nonqualified Stock Option Plan and the 1995 Chief
Executive Officer Stock Option Grant will require the affirmative vote by
holders of the majority of shares of Common Stock of the Corporation voting in
person or by proxy at the Annual Meeting.
Only holders of record of shares of Common Stock of the Corporation at the
close of business on May 26, 1995, (the "Record Date") are entitled to vote at
the Annual Meeting or adjournments thereof. Each holder of record on the Record
Date is entitled to one vote on all matters considered for each share of Common
Stock of the Corporation so held. On the Record Date, there were 3,119,246
shares of Common Stock of the Corporation issued and outstanding. A majority of
the outstanding shares will constitute a quorum at the Annual Meeting.
Abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum for the transaction of business. With regard to
the election of directors, abstentions and broker non-votes are not counted for
purposes of
<PAGE>
determining whether a nominee has been elected. With regard to the approval the
1994 Nonqualified Stock Option Plan and the 1995 Chief Executive Officer Stock
Option Grant, abstentions are counted in tabulations of the votes cast on the
proposal and will have the same effect as a vote against the proposal, whereas
broker non-votes are not counted for purposes of determining whether a proposal
has been approved.
ELECTION OF DIRECTORS
BOARD OF DIRECTORS
The Board of Directors of the Corporation, pursuant to the By-Laws of the
Corporation, has set the number of directors of the Corporation at six. All
directors hold office until the next annual meeting of stockholders following
their election and until their successors are elected and qualified.
The Board of Directors has nominated W. Bennett Collett, Gary E. Bowman, W.
Bennett Collett, Jr., George W. Galloway, Jr., Roland M. Howell, and Robert L.
Hurd for election at the Annual Meeting. All nominees for election to the Board
of Directors are currently serving as directors of the Corporation.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning the Company's
executive officers and directors as of the Record Date:
<TABLE>
<CAPTION>
Director or Exe-
cutive Officer
Name Age Position With The Company Since
- - ---- --- ------------------------- ----------------
<S> <C> <C> <C>
W. Bennett Collett 62 Chief Executive Officer 1993
and Chairman
Robert L. Hurd 55 President and Director 1993
W. Bennett Collett, 39 Executive Vice President, 1993
Jr. Secretary and Director
Timothy L. Hensley 39 Executive Vice President, 1993
Treasurer and Chief
Financial Officer
Ronald P. Perella 50 Vice President 1992
Gary E. Bowman 43 Director 1994
George W.
Galloway, Jr. 61 Director 1994
Roland M. Howell 79 Director 1995
</TABLE>
W. BENNETT COLLETT has served as Chairman of the Board, Chief Executive
Officer and a director of Freedom Financial Corporation ("Freedom") since its
formation in 1985. In addition to its interest
-2-
<PAGE>
in the Company, Freedom's interests include: (i) Interstate Capital Corporation,
a wholly owned subsidiary developing a residential real estate development in
Loganville, Georgia, (ii) Postal Sales Corporation, a wholly owned subsidiary
providing artwork, printing, and descriptive marketing materials, primarily to
J.C. Penney and J.C. Penney vendors, and (iii) General Stone Corporation, a
wholly owned subsidiary with a stone sales office in Tennessee. Mr. Collett
serves as chief executive officer of each of Freedom's subsidiaries. Freedom
was a bank holding company until January 1988, at which point it sold its
banking subsidiaries. Mr. Collett has served as President and as a director of
Freedom Holding, Inc. ("Holding") since its formation in December 1992.
Holding's sole business currently is to hold shares of Freedom. Mr. Collett has
been involved in the management of banking and financial service companies for
over 25 years, having been a principal of ten commercial banks. For 14 years,
Mr. Collett was a principal shareholder and chief executive officer of various
banks and finance companies in Alabama, Arkansas, Georgia, and Missouri ranging
in asset size from $1,000,000 to $250,000,000.
ROBERT L. HURD has served as President and a director of Freedom since July
1991. In January 1995, Mr. Hurd became the President and Chief Executive
Officer of General Healthcare Corporation, a company engaged in the laundry and
distribution of cloth diapers and medical garments. Since March 1992, he has
served as President and Chief Executive Officer of International Barrier
Corporation, a company formerly engaged in the manufacture of metal highway
barriers and currently the holder of several highway barrier patents. From 1987
until 1991, Mr. Hurd was President and Chairman of Pacific Press & Shear, Inc.,
a hydraulic press and shear manufacturer.
W. BENNETT COLLETT, JR. served as President of Freedom from 1988 to 1989;
since August 1989, Mr. Collett has served Freedom as Executive Vice President.
He has been a director of Freedom since its formation in 1985. He presently
serves as Secretary and Treasurer of Holding, President and a director of
General Stone Corporation, and Secretary of Postal Sales Corporation. Mr.
Collett serves as the full-time general manager of the Jai-Alai and Inter-Track
Wagering ("ITW") operation in Fort Pierce, Florida. Mr. Collett was appointed
to the Company's Board of Directors on August 9, 1994.
TIMOTHY L. HENSLEY has served Freedom since its formation in 1985 in
various capacities, including as President, Executive Vice President and
Treasurer and a director; he has served as Executive Vice President since 1988.
He presently serves as Executive Vice President, Secretary and Treasurer of
General Stone Corporation, and Treasurer of Postal Sales Corporation.
RONALD P. PERELLA has served as a Vice President of the Company since April
28, 1995. Mr. Perella served as a director of the Company from September 1992
to April 1995. On December 1, 1994, Mr. Perella became the Fronton's Assistant
General Manager. From October 1992 through November 1994, Mr. Perella served as
a consultant to the Company to assist in identifying and reviewing businesses
for possible business combinations with the Company. Mr. Perella is the
President and Chief Executive Officer of Perella, Inc., a general construction
contractor founded by Mr. Perella in 1979 and located in Pittsburgh,
Pennsylvania; the corporation is currently inactive. From 1981 to 1990, Mr.
Perella was employed by Brown & Stephens Corporation, a general contracting
firm, and served in various capacities including Vice President of Sales
Management, Chief Financial Officer and Superintendent.
GARY E. BOWMAN was appointed to the Board of Directors effective August 24,
1994. Since 1990, Mr. Bowman has served as Vice President and loan officer in
Louisville, Kentucky for PNC Bank. Although the Company does not currently have
a banking relationship with PNC Bank, PNC Bank has from time to time made loans
to Freedom and its affiliates. From 1981 to 1990, Mr. Bowman served as Vice
President and loan officer in Louisville, Kentucky, for Liberty National Bank
and Trust Company.
-3-
<PAGE>
GEORGE W. GALLOWAY, JR. was appointed to the Board of Directors effective
August 24, 1994. Since 1958, Mr. Galloway has been a self-employed physician
and most recently has served as the medical director of the emergency room at
Kennestone Hospital in Marietta, Georgia.
ROLAND M. HOWELL was appointed to the Board of Directors effective April
28, 1995. Mr. Howell served in hotel management for over thirty years, and was
an owner and operator of hotels in Florida for approximately twenty years before
his retirement in 1969. He is currently a private investor, with investments
primarily in municipal bonds, stocks, and real estate.
The Company's Board of Directors had eight meetings during 1994. The Board
of Directors has no standing audit, nominating and compensation committees.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10 percent of
the Company's common stock, to file with the Securities and Exchange Commission
(the "SEC") initial reports of ownership and reports of changes in ownership of
common stock. Officers, directors and greater than 10 percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
To The Company's knowledge, based solely on a review of the copies of such
reports and certain representations furnished to the Company, during the fiscal
year ended December 31, 1994, all Section 16(a) filing requirements applicable
to its officers, directors and greater than ten percent beneficial owners were
satisfied except that George W. Galloway, Jr. filed his initial report of
ownership (at a time when he did not own any shares of the Company's common
stock) following his election as a director three days after the due date.
PRIOR CIVIL AND ADMINISTRATIVE PROCEEDINGS
On February 28, 1990, Freedom filed a registration statement with the
Securities and Exchange Commission (Commission File No. 33-33625) (the "Freedom
Registration Statement") to register shares of its Common Stock, Class A
Preference. On March 5, 1990, Freedom filed an application with the New Jersey
Bureau of Securities pursuant to the New Jersey state securities laws to
register certain of the shares to be offered. The New Jersey Bureau of
Securities indicated that the Freedom Registration Statement may have been
materially deficient because certain civil and administrative proceedings
involving Mr. Collett including an injunction prohibiting future violations of
federal securities laws were not disclosed. Without admitting or denying the
materiality of the omitted information, which information had been omitted
following consultation with legal counsel, on June 11, 1990, Freedom requested
withdrawal of the application for registration of securities in New Jersey. On
August 23, 1990, the State of New Jersey Bureau of Securities issued a Consent
Order IN THE MATTER OF: FREEDOM FINANCIAL CORPORATION (SR-5587). On November 5,
1990, the Securities and Exchange Commission issued an order consenting to the
withdrawal of the Freedom Registration Statement. The New Jersey Consent Order
granted the request for withdrawal of the application for registration and
denied the effectiveness of certain exemptions of the New Jersey state
securities laws for secondary trading in Freedom's securities. In addition,
Freedom agreed that it would not sell, give or otherwise distribute its
securities in or from New Jersey without first notifying and receiving written
authority to do so from the New Jersey Bureau of Securities.
The rules and regulations promulgated by the SEC pursuant to the Securities
Act of 1933 and the Securities Exchange Act of 1934 generally require that
proceedings involving management similar to the
-4-
<PAGE>
injunction be disclosed only for events occurring during the past five years.
The Company has included the information above solely for informational purposes
concerning the Company's management team. These matters have not adversely
affected the ability of the Company to obtain any required gaming licenses, nor
did they in the past adversely affect the ability of Freedom to obtain state or
federal approvals required to operate as a bank holding company.
EXECUTIVE COMPENSATION
The following table sets forth all cash compensation paid by the Company
for the fiscal years ended December 31, 1994 and 1993 to W. Bennett Collett, the
Company's chief executive officer on December 31, 1994. As set forth in the
table, Mr. Collett has received no cash compensation from the Company since he
began service as an executive officer on March 31, 1993. The Company had no
executive officer as to whom the total cash and cash-equivalent remuneration
from the Company exceeded $100,000 during fiscal 1994.
SUMMARY COMPENSATION TABLE
--------------------------
<TABLE>
<CAPTION>
Annual Long Term
Compens. Compens.
-------- --------
Name and Principal Fiscal Options/ All Other
Position Year Salary SARS (#) COMPENSATION
- - ------------------ ----- ------ -------- -------------
<S> <C> <C> <C> <C>
W. Bennett Collett 1994 $ - 0 - 25,000 $ - 0 -
Chairman of the Board 1993 $ - 0 - - 0 - $ - 0 -
and Chief Executive
Officer
</TABLE>
<TABLE>
<CAPTION>
STOCK OPTION GRANTS
OPTION GRANTS IN FISCAL 1994
Number of
Securities % of Total
Underlying Options Granted
Options to Employees Exercise
Name Granted in 1994 Price ($/SH) Expiration
----- ---------------- -------------- ------------ Date
-------------
<S> <C> <C> <C> <C>
W. Bennett Collett 25,000(1) 10% $5.75 10/1/99(2)
___________________________
<FN>
(1) Options granted on August 9, 1994; became exercisable on October 1, 1994.
</TABLE>
On April 21, 1994, the Company adopted the 1994 Nonqualified Stock Option
Plan pursuant to which options up to an amount equal to 5% of the Company's
issued and outstanding shares of Common Stock can be issued to the Company's
non-director employees. On April 21, 1994, subject to shareholder approval,
options for 50,000 shares of Common Stock were granted to W. Bennett Collett,
Jr., and options for 25,000 shares were granted to Timothy L. Hensley, each with
an exercise price per share of $7.50. See "Approval of 1994 Nonqualified Stock
Option Plan" elsewhere herein.
- 5 -
<PAGE>
On August 9, 1994, the Company adopted a Directors' Stock Option Plan
pursuant to which each existing director of the Company was granted an option to
purchase 25,000 shares of Common Stock, and each future director of the Company
will be granted an option to purchase 25,000 shares of Common Stock as of the
effective date of the director's election. All options granted pursuant to this
plan vest, and shall be exercisable, one year after the effective date of the
director's election or on October 1, 1994, which ever occurs later. Options are
to be granted at an exercise price per share equal to the market value per share
of the Common Stock on the date of grant. Pursuant to the plan, on August 9,
1994, each of W. Bennett Collett, W. Bennett Collett, Jr., Robert L. Hurd and
Ronald P. Perella were granted an option to purchase 25,000 shares of Common
Stock at an exercise price of $5.75 per share. Pursuant to the plan, on August
24, 1994, each of Gary E. Bowman and George W. Galloway, Jr. were granted an
option to purchase 25,000 shares of Common Stock at an exercise price of $5.50
per share. The options granted to Messrs. Collett, Hurd and Perella became
exercisable October 1, 1994, the options granted to Mr. Collett, Jr., will be
exercisable August 9, 1995, and the options granted to Messrs. Bowman and
Galloway will be exercisable August 24, 1995. Pursuant to the plan, on April
28, 1995, the Company granted Roland M. Howell an option to purchase 25,000
shares of Common Stock at an exercise price of $5.125 per share, exercisable
April 28, 1996.
On November 7, 1994, the Board of Directors granted Mr. Hensley an option
to purchase 25,000 shares of Common Stock at an exercise price of $5.50 per
share, exercisable on November 7, 1995.
On April 28, 1995, the Board of Directors granted Mr. Perella an option to
purchase 19,000 shares of Common Stock at an exercise price of $5.188 per share,
exercisable on October 28, 1995.
On May 8, 1995, the Board of Directors awarded W. Bennett Collett the 1995
Chief Executive Officer Stock Option Grant. See "Approval of 1995 Chief
Executive Officer Stock Option Grant" elsewhere herein.
AGGREGATED OPTION EXERCISES IN FISCAL 1994 AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Options at Fiscal Year End Fiscal Yr. End ($)(1)
(#)
<S> <C> <C> <C> <C>
Name Shares Acquired Value Exercisable/ Exercisable/
---- on Exercise (#) Realized ($) Unexercisable Unexercisable
--------------- ------------ ------------- -------------
W. Bennett - 0 - - 0 - 25,000/-0- N/A
Collett
- - --------------------
<FN>
(1) Based on a per share closing price of $2.25 at December 31, 1994.
</TABLE>
DIRECTOR COMPENSATION
The Company currently pays its non-management directors, Gary E. Bowman,
George W. Galloway, Jr., and Roland M. Howell a $500 monthly fee. W. Bennett
Collett, W. Bennett Collett, Jr., and Robert L. Hurd, receive no directors fees.
Ronald P. Perella served as a director from September 1992 to April 1995. Mr.
Perella became Assistant General Manager of the Fronton on December 1, 1994.
Until that appointment, Mr. Perella received a monthly director fee of $1,000.
During 1994, Mr. Perella also received a total of $34,416.67 for his services as
a consultant to the Company to assist in identifying and reviewing businesses
for possible business combinations with the Company.
- 6 -
<PAGE>
On August 9, 1994, the Company adopted a Directors' Stock Option Plan
pursuant to which each current and future director of the Company will receive
an option to purchase 25,000 shares of Common Stock. See "Stock Option Grants."
INDEMNIFICATION
Under Section 145 of the Delaware General Corporation Law ("DGCL"), the
Company has the power to indemnify directors and officers under certain
prescribed circumstances and subject to certain limitations against certain
costs and expenses, including attorney's fees, actually and reasonably incurred
in connection with any action, suit or proceeding, whether civil, criminal,
administrative, or investigative, to which any of them is a party by reason of
his being a director or officer of the Company if it is determined that he acted
in accordance with the applicable standard of conduct set forth in such
statutory provisions. The Company's Bylaws provide that the Company shall
indemnify each person who may be indemnified pursuant to Section 145, as amended
from time to time (or any successor provision thereto), to the fullest extent
permitted by Section 145. Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain relationships among the Company, its management and affiliates,
including Freedom, create various potential and actual conflicts of interest.
In situations where there will be an ongoing relationship with related parties,
including the purchase of services or products or the making of loans, it is the
Company's policy that all such material affiliated transactions and loans will
be made or entered into on terms that are no less favorable to the Company than
those that can be obtained from unaffiliated third parties. It is the Company's
policy that a majority of the independent and disinterested directors will be
required to approve continuation or initiation of such a relationship and will
periodically review such transactions to assure that they meet the
aforementioned standard.
In connection with the exercise of certain options by Kiran Gandhi, a
former director of the Company, during fiscal year 1986, a two-year promissory
note bearing a variable rate of interest adjusted semi-annually was delivered to
the Company. The note was collateralized by Common Stock. On December 28,
1990, the Company and Mr. Gandhi agreed to a settlement pursuant to which Mr.
Gandhi returned 94,999 shares of Common Stock to the Company, paid $20,000 cash
and agreed to provide monthly consulting services to the Company. Mr. Gandhi
also agreed to pay the Company an additional $80,000, with interest at 10% per
annum and payable in 133 monthly installments of $1,000; in February 1992, the
Company agreed to reduce the interest rate of the note to the prime rate (6.5%),
with the remaining balance to be paid in 97 monthly installments. Furthermore,
the settlement provided that the Company would consider the note as paid in full
if Mr. Gandhi were not reelected as, or removed as, a director of the Company.
In connection with the settlement, the Company wrote off the $190,040 balance of
the note. In connection with the Equity Infusion described below and Mr.
Gandhi's resignation as a director, the remaining balance of the note of $66,866
was forgiven. The above transactions between the Company and Mr. Gandhi were
not on terms at least as favorable to the Company as those that might have been
obtained on arm's length negotiations with unaffiliated third parties.
Kiran Gandhi and Ronald P. Perella served as consultants to the Company to
assist the Company in identifying and reviewing businesses to merge with or be
acquired by the Company. Mr. Gandhi
- 7 -
<PAGE>
received a total of $10,000 for his services during the year ended December 31,
1993. Mr. Perella received a total of $34,416.67 for his services during the
year ended December 31, 1994 and $35,000 during the year ended December 31,
1993.
Freedom and Holding may each be deemed to be a "parent" of the Company as
such term is defined in the rules promulgated under the Exchange Act. For
information with respect to the ownership of stock in Freedom and Holding, see
"Security Ownership of Certain Beneficial Owners and Management" elsewhere
herein.
Pursuant to a Stock Purchase Agreement, on March 31, 1993, the Company sold
603,000 shares of Common Stock to Freedom for total cash consideration of
$874,350 ($1.45 per share) (the "Equity Infusion"). In addition, the Company
granted Freedom options to purchase an additional 1,750,000 shares of Common
Stock at an exercise price of $1.45 per share, exercisable at any time before
the fifth anniversary of the closing. The Stock Purchase Agreement provided
that if the Common Stock was delisted from the Nasdaq SmallCap Market pursuant
to a proceeding commenced before 181 days after March 31, 1993 (regardless of
whether the Common Stock was subsequently relisted), (i) the effective per share
purchase price would be adjusted to $1.25, the purchase price would remain at
$874,350 and the number of shares sold to Freedom would be increased to 699,480
shares, and (ii) the per share price pursuant to the options granted to Freedom
would be adjusted to $1.25 and the number of shares which would be available to
be purchased pursuant to the option would be increased to 2,030,000.
By letter dated April 7, 1993, the Company received notice that, following
review of the Company's submissions concerning the Equity Infusion, the Nasdaq
Stock Market would delist the Common Stock effective April 8, 1993. As a result
of the delisting of the Common Stock and pursuant to the Stock Purchase
Agreement, the Company issued an additional 96,480 shares of Common Stock to
Freedom and the exercise price per share of the options was reduced to $1.25 per
share and the number of shares subject to the options increased to 2,030,000.
The Common Stock was later relisted following appeal and review by the Nasdaq
Qualifications Committee.
On August 26, 1994, and October 4, 1994, Freedom exercised its option in
part to purchase 400,000 shares and 300,000 shares of Common Stock,
respectively. Freedom retains an option to purchase 1,130,000 shares at an
exercise price of $1.25 per share.
In connection with this Stock Purchase Agreement, the Company terminated
its sole employee as of March 31, 1993. As part of the Stock Purchase
Agreement, the Company paid the former employee a $125,000 severance payment.
In connection with the sale of the Company's previously majority-owned
subsidiary, Sports-Tech International, Inc., in July 1991 to Sports-Tech, Inc.
("Sports-Tech") for $40,000 cash, the Company sold to Sports-Tech a three-year
Warrant to purchase up to 400,000 shares of the Company's Common Stock at an
aggregate purchase price of $1,000,000. As a result of the Equity Infusion by
Freedom, the shares issuable under this Warrant increased to 651,752 shares. On
July 28, 1994, Sports-Tech exercised the Warrant and purchased the 651,752
shares at a per share exercise price of approximately $1.534. Pursuant to the
request by Sports-Tech in accordance with the Warrant, the Company filed a
registration statement with the Securities and Exchange Commission with respect
to the resale of these shares. On March 9, 1995, Sports-Tech informed the
Company that it had sold all 651,752 shares.
- 8 -
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information as of the Record Date
concerning each stockholder known to the Company to own beneficially more than
five percent of the outstanding Common Stock of the Company, and information
regarding beneficial ownership of Common Stock and the Class B Common Stock of
Freedom and the Common Stock of Holding by each director and executive officer,
and all directors and executive officers as a group. Of the 1,349,480 shares of
the Company's Common Stock currently held of record by Freedom, 1,099,480 shares
have been pledged by Freedom to a bank to secure a $1,250,000 line of credit.
Information is provided with respect to the ownership of stock in Freedom and
Holding because Freedom and Holding may each be deemed to be a "parent" of the
Company as such term is defined in the rules promulgated under the Securities
Exchange Act of 1934. Holding's sole business currently is to hold shares of
Freedom.
<TABLE>
<CAPTION>
THE COMPANY FREEDOM HOLDING
----------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Percent
Directors and Number of of Number of Percent of Number of Percent of
Executive Officers Shares(1) Class(2) Shares(1) Class(3) Shares(1) Class(4)
------------------ --------- -------- --------- -------- ---------- --------
W. B. Collett . . . . . . . 2,704,480(5) 60.4% 1,000,372(6) 84.2% 407(7) 81.4%
Robert L. Hurd . . . . . . 26,000(8) * 108,639 9.1% --- ---
W. B. Collett, Jr.. . . . . --- --- 40,000(9) 3.3% 88 17.6%
Timothy L. Hensley. . . . . --- --- 40,000(9) 3.3% 5 1.0%
Gary E. Bowman. . . . . . . 500 * --- --- --- ---
George W. Galloway, Jr. . . --- --- --- --- --- ---
Roland M. Howell. . . . . . 300,000(10) 9.6% --- --- --- ---
All current directors and
officers as a group (8
persons). . . . . . . . . . 3,162,830(11) 69.8% 1,189,011(12) 93.7% 500(7) 100%
5% BENEFICIAL OWNERS
Freedom Financial
Corporation(13) . . . . . . 2,679,480(14) 60.2% N/A N/A N/A N/A
WJA Realty Limited
Partnership . . . . . . . . 200,000(15) 6.4% N/A N/A N/A N/A
P.O. Box 1439
Tulsa, Oklahoma
74101
Roland M. and Dorothy V.
Howell . . . . . . . . . . 300,000(10) 9.6% N/A N/A N/A N/A
Plaza Venetia; Suite 22A-B
555 N.E. 15th Street
Miami, Florida 33132
Casino America, Inc.. . . . 300,000(16) 9.6% N/A N/A N/A N/A
711 Washington Loop
Biloxi, Mississippi 39530
<FN>
- - ------------------------------
* Represents less than 1% of class.
(1) Based upon information furnished to the Company by the named person, and
information contained in filings with the Securities and Exchange
Commission (the "Commission"). Under the rules of the Commission, a
person is deemed to beneficially own shares over which the
- 9 -
<PAGE>
person has or shares voting or investment power or which the person has
the right to acquire beneficial ownership within 60 days. Unless
otherwise indicated, the named persons have sole voting and investment
power with respect to shares shown by them.
(2) Based on 3,119,246 shares outstanding as of the Record Date. Shares of
Common Stock subject to options exercisable within 60 days are deemed
outstanding for computing the percentage of class of the person holding
such options but are not deemed outstanding for computing the percentage
of class for any other person.
(3) Based on 1,188,613 shares outstanding as of the Record Date. Class B
Common Stock is the only class of Freedom's capital stock issued and
outstanding. Shares of Freedom common stock subject to exercisable
options or options exercisable within 60 days are deemed outstanding for
computing the percentage of class of the person holding such options but
are not deemed outstanding for computing the percentage of class for any
other person.
(4) Based on 500 shares outstanding as of the Record Date.
(5) Includes 2,679,480 shares beneficially owned by Freedom, including
1,330,000 shares which Freedom currently has the right to acquire. See
Note 13. Mr. Collett may be deemed to beneficially own the shares held by
Freedom, although he disclaims beneficial ownership of such shares.
Includes 25,000 shares that Mr. Collett may purchase pursuant to
exercisable options.
(6) Includes 1,000,372 shares owned by Holding. Mr. Collett may be deemed to
beneficially own the shares held by Holding, although he disclaims
beneficial ownership of such shares.
(7) Includes 77 shares owned by Mr. Collett's former spouse for which he has
sole voting power, but no power of disposition.
(8) Includes 1,000 shares owned by the Hurd Family Partnership, L.P., of which
Mr. Hurd is general partner. Includes 25,000 shares that Mr. Hurd may
purchase pursuant to exercisable options.
(9) Includes 40,000 shares that may be purchased pursuant to exercisable
options under Freedom's stock option plan.
(10) Of the 300,000 shares, Mr. and Mrs. Howell own 155,000 shares as joint
tenants and share voting and investment power, and Mrs. Howell owns
145,000 shares individually and retains sole voting and investment power
with respect to these shares. Mr. Howell disclaims beneficial ownership
with respect to the shares held by his wife.
(11) Includes 1,415,000 shares which may be acquired by all directors and
officers as a group pursuant to exercisable options, including options for
1,330,000 shares owned by Freedom. See Note 5.
(12) Includes 80,000 shares which may be acquired upon the exercise of stock
options by all directors and officers as a group.
- 10 -
<PAGE>
(13) The address of Freedom Financial Corporation is 2669 Charlestown Road, New
Albany, Indiana 47150. The business address of W. B. Collett is 1750
South Kings Highway, Fort Pierce, Florida 34945-3099. The address of
Freedom Holding, Inc. is P.O. Box 216, Floyds Knobs, Indiana 47119.
(14) Includes 1,330,000 shares which Freedom currently has the right to
acquire. Of the remaining 1,349,480 shares, 1,099,480 shares have been
pledged by Freedom to a bank to secure a $1,250,000 line of credit. See
also Note 17.
(15) Roger M. Wheeler, Jr. and E.H.P. Corporation (wholly owned by Pamela W.
Norberg) are the general partners of WJA Realty Limited Partnership. As
the general partners, each may be deemed to share with the other voting
and dispositive power with respect to the shares.
(16) Casino America, Inc. owns 22,500 shares of Freedom's 7% Series AA
Mandatorily Redeemable Preferred Stock (the "Freedom Preferred Stock").
Until October 4, 1999, the Freedom Preferred Stock is convertible into
150,000 shares of the Company's Common Stock owned by Freedom if at the
time of conversion Florida law permits casino style gaming at the Fronton
and 300,000 shares if at the time of conversion Florida law does not
permit casino style gaming at the Fronton.
</TABLE>
APPROVAL OF 1994 NONQUALIFIED STOCK OPTION PLAN
Subject to stockholder approval, on April 21, 1994, the Board of Directors
established the 1994 Nonqualified Stock Option Plan (the "1994 Plan"). Appendix
A is the full text of the 1994 Plan. The summary description below is qualified
in its entirety by reference to Appendix A for the complete terms of the 1994
Plan.
PURPOSE
The Company adopted the 1994 Plan for certain key Company employees to,
among other things, (a) increase the profitability and growth of the Company;
(b) provide competitive executive compensation while obtaining the benefits of
tax deferral; (c) attract and retain exceptional personnel and encourage
excellence in the performance of individual responsibilities; and (d) motivate
key employees to contribute to the Company's success.
ADMINISTRATION
The 1994 Plan will be administered by a Committee of disinterested
directors (as defined by Rule 16b-3 of the Securities Exchange Act of 1934, as
amended) appointed by the Board or, if the Board does not appoint a Committee,
all of the disinterested directors on the Board will carry out the Committee's
duties under the 1994 Plan.
Subject to the express terms and conditions of the 1994 Plan, the
Committee will have full power to construe and interpret the 1994 Plan, to
prescribe, amend and rescind rules and regulations relating to it, and to make
all other determinations necessary or advisable for its administration. Such
determination will be final and binding on all persons having any interest in
the 1994 Plan.
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<PAGE>
PARTICIPATION
The Committee will designate key employees (the "Participants") of the
Company who have substantial responsibility in management or are otherwise
responsible for the Company's financial success as Participants in the 1994 Plan
from time to time, provided that no person who was a member of the Board on
April 21, 1994 (the date of Board adoption of the 1994 Plan) will be eligible to
receive grants under the 1994 Plan. Once designated as Participants, those
employees will be awarded stock options (the "Options") by the Committee, based
on their contribution to the Company as determined in the discretion of the
Committee. Directors who are not otherwise employees of the Company may not be
awarded Options under the 1994 Plan.
The specific benefits that may be received by a particular person under
the 1994 Plan are not determinable. On April 21, 1994, subject to stockholder
approval, options for 50,000 shares of Common Stock were granted to W. Bennett
Collett, Jr., and options for 25,000 shares of Common Stock were granted to
Timothy L. Hensley, each with a exercise price of $7.50 per share. No other
grants have been made under the 1994 Plan. As of May 23, 1995, the closing bid
quotation on the NASDAQ SmallCap Market was $5.50 per share.
SHARES AVAILABLE FOR ISSUANCE
Options may be granted under the 1994 Plan by the Company from time to
time to purchase shares of authorized but unissued Common Stock, provided that
the number of shares that may be granted to any Participant under the 1994 Plan
will be reasonable in relation to the purpose of the 1994 Plan and the needs of
the Company. The aggregate number of shares of Common Stock that may be issued
under the Plan will not exceed 5% of the shares of Common Stock outstanding from
time to time, and shall be increased automatically upon increases in the number
of shares outstanding. Shares of Common Stock that, by reason of the
expiration of an Option or otherwise, are no longer subject to purchase pursuant
to an unexercised Option granted under the 1994 Plan, may be re-optioned under
the 1994 Plan.
ADJUSTMENTS
In the event of any merger, reorganization, consolidation,
recapitalization, stock split, stock dividend, combination of shares, rights
offering or other change in the corporate structure of the Company, the number
of shares of Common Stock to which Options may be granted to Participants under
the 1994 Plan, the number of shares of Common Stock for which Options have
already been issued, and the Exercise Price shall be proportionately adjusted
for any increase or decrease in the number of issued shares or division or
consolidation of shares, or the payment of a stock dividend after the effective
date of the 1994 Plan, or other increase or decrease in such shares effected
without receipt of consideration by the Company.
If the Company shall at any time merge or consolidate with or into another
corporation or association, the holder of each Option will thereafter receive,
upon the exercise thereof, the securities or property to which a holder of the
number of shares of Common Stock then deliverable upon the exercise of such
Option would have been entitled upon such merger or consolidation, and the
Company shall take such steps in connection with such merger or consolidation as
may be necessary to assure that the provisions of the 1994 Plan will thereafter
be applicable, as nearly as is reasonably possible, in relation to any
securities or property thereafter deliverable upon the exercise of such Option.
A sale of all or substantially all the assets of the Company for a consideration
(apart from the assumption of obligations)
- 12 -
<PAGE>
consisting primarily of securities shall be deemed a merger or consolidation for
the foregoing purposes and any merger or consolidation shall be deemed a Change
in Control as defined in the 1994 Plan.
GRANTS OF STOCK OPTIONS
The exercise price shall be determined by the Committee as of the date of
grant provided that the price per share shall not be less than an amount
determined as follows as of the grant date:
(i) if the Common Stock is not listed on such date on any national
securities exchange, the last sales price (or, if none on that date, on the most
recent date on which there was a last sales price quotation), as reported by the
National Association of Securities Dealers Automated Quotation System, the
National Quotation Bureau, Incorporated, or other similar service selected by
the Committee;
(ii) if the Common Stock is neither listed on such date on a national
securities exchange nor traded in the over-the- counter market, the fair market
value of a share on such date as determined in good faith by the Committee; or
(iii) if the Common Stock is listed on such date on one or more
national securities exchanges, the last reported sale price of a share on such
date as recorded on the composite tape system or, if such system does not cover
the Common Stock, the last reported sale price of a share on such date on the
principal national securities exchange on which the Common Stock is listed or,
if no sale of Common Stock took place on such date, the last reported sale price
of a share on the most recent day on which a sale of a share took place as
recorded by such system or on such exchange, as the case may be.
Unless sooner exercised or terminated according to the terms of the 1994
Plan, Options granted pursuant to the 1994 Plan will expire on the day ten years
following stockholder approval of the 1994 Plan.
The Committee will determine the rate at which a Participant shall earn
the right to exercise Options. The Committee may award Options that are
immediately exercisable or may award Options a percentage of which become
exercisable after each twelve month anniversary of the Grant Date. The
Participant's unexercised right to purchase shares of Common Stock will cumulate
and carry-over to subsequent twelve month periods.
PAYMENT UPON EXERCISE OF OPTIONS
Payment of the full exercise price for Common Stock will be made (i) in
cash; (ii) by the Participant's election to have the Company retain that number
of shares subject to such Option having an aggregate fair market value (as
determined by the Committee) equal to the aggregate exercise price of the
Option, provided that only Common Stock for which Options were granted more than
six months before the exercise date may be used for such purpose; (iii) by
tender to the Company of shares of Common Stock owned by the Participant equal
in value (as determined by the Committee) to the aggregate exercise price; or
(iv) by any combination thereof. Common Stock will not be issued upon exercise
of the Option unless and until withholding taxes, if any, imposed by any
governmental entity have been satisfied. Payment for any withholding tax due on
exercise of an Option may be made in cash, or, in the Committee's discretion,
the Participant may elect for the Company to reserve an amount of Common Stock
subject to Options equal in value to the tax liability owed, provided that the
written notice of exercise is delivered to the Committee and the exercise price
is paid within the quarterly window
- 13 -
<PAGE>
period beginning two business days after the Company's earnings statement is
released and ending twelve business days thereafter.
ASSIGNMENT
No Option will be assignable or transferable except by will or by the laws
of descent and distribution. During the lifetime of a Participant, an Option is
exercisable only by that Participant. Options cannot be pledged or hypothecated
in any way, and will not be subject to any execution, attachment, or similar
process. Any attempted transfer, assignment, pledge, hypothecation or other
disposition of an Option contrary to the provisions of the Plan, or the levy of
any process upon an Option, will be null, void and without effect.
TERMINATION OF EMPLOYMENT
If a Participant's employment is terminated due to his retirement, death
or disability, the Participant or his personal representative shall have the
right, subject to certain provisions of the 1994 Plan, to exercise his Option at
any time within one year after such termination to the extent he was entitled to
exercise the Option immediately before such termination. Options will expire
unless exercised within such one-year period.
If a Participant's employment is terminated for any reason other than
retirement, death, disability, or for Cause (as defined in the 1994 Plan), the
Participant will have the right, subject to certain provisions of the 1994 Plan,
to exercise his Option with respect to shares that were immediately exercisable
at termination, within three months after such termination. Options will expire
unless exercised within such period.
If a Participant's employment is terminated for Cause before retirement,
death or disability, the Participant forfeits all unexercised Options. A
Participant will not be deemed to be terminated for Cause unless and until the
Board adopts a resolution to that effect.
CHANGE IN CONTROL
Upon a Change in Control (as defined in the 1994 Plan), all Options that
have not already expired pursuant to 1994 Plan, shall be 100% exercisable by the
Participant. In addition, should the Participant's employment be terminated by
the Company without Cause (as defined in the 1994 Plan) within one year
following a Change in Control, or should the Participant voluntarily terminate
employment within three years following a Change in Control due to (i) a
reduction in his compensation or benefits, (ii) a significant reduction in his
position or responsibilities with the Company, or (iii) a relocation of the
Company's principal executive offices such that the Participant must travel more
than 30 additional miles to work, then, notwithstanding Section 5.3 of the 1994
Plan, the Options granted that Participant shall continue to be exercisable for
the entire Option Period.
TERMINATION AND AMENDMENTS
The 1994 Plan will terminate on April 21, 2004. Termination of the 1994
Plan will not alter or impair, without the consent of a Participant, any of the
rights or obligations of the Company or a Participant concerning any Option
previously granted under the Plan or Common Stock subject to the restrictions on
transfer of the 1994 Plan.
- 14 -
<PAGE>
The Board may, from time to time, alter or amend the administrative
provisions of the 1994 Plan. Without a Participant's consent, however, no
amendment, suspension, or termination of the 1994 Plan will alter or impair a
Participant's rights with respect to already granted Options.
FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
The following description of tax consequences is necessarily general in
nature and does not purport to be complete. Moreover, statutory provisions are
subject to change, as are their interpretations, and their application may vary
in individual circumstances. Finally, the consequences under applicable state
and local income tax laws may not be the same as under the federal income tax
laws.
The Plan allows the Committee to grant nonqualified stock options
("NQSO's"). The holder of a NQSO does not recognize taxable income as a result
of the grant of a NQSO. However, upon the exercise of a NQSO (whether the
purchase price is paid in cash or partly or entirely with shares of common stock
already owned by the optionee), an optionee recognizes ordinary income in an
amount equal to the difference between the fair market value of the shares
issued on the date of exercise, and the exercise price. That same amount is
subject to applicable income tax withholding requirements and is generally
deductible for tax purposes by the Company. The tax basis of shares purchased
upon exercise of a NQSO is the fair market value of the shares on the date of
exercise. If shares of Common Stock received upon exercise of a NQSO are held
as a capital asset for more than one year (including the tacking of the holding
period of any surrendered shares onto the holding period of any shares received
in exchange for shares surrendered), any gain or loss recognized upon the sale
of such shares will be taxed as long-term capital gain or loss.
When an officer who is subject to Section 16(b) of the Exchange Act
exercises a NQSO, he will generally be taxed on the exercise date on the
difference between the option exercise price and the then-existing market value
if at least six months has elapsed from the grant of the option. If at least
six months has not elapsed from the grant of the option, the determination of
when the gain for an option exercise becomes taxable is governed by Section 83
of the Code. Section 83 of the Code addresses the taxation of profits that are
"subject to a substantial risk of forfeiture."
APPROVAL
Approval of the 1994 Plan requires the affirmative vote of the holders of
a majority of the outstanding shares of Common Stock.
FOR THE REASONS STATED HEREIN, THE BOARD OF DIRECTORS RECOMMENDS THAT THE
SHAREHOLDERS VOTE FOR APPROVAL OF THE 1994 PLAN.
APPROVAL OF GRANT OF STOCK OPTIONS TO CHIEF EXECUTIVE OFFICER
Subject to stockholder approval, in accordance with an unanimous written
consent dated May 8, 1995, the Board of Directors issued the 1995 Chief
Executive Officer Stock Option Grant (the "CEO Stock Option") to W. Bennett
Collett, the Company's Chairman and Chief Executive Officer, to purchase up to
300,000 shares of Common Stock at an exercise price per share of $5.00. The
Board of Directors noted that Mr. Collett has served as the Company's Chairman
and Chief Executive Officer since March 1993 without cash compensation. The
Board determined that Mr. Collett had expended an extraordinary amount of time
on behalf of the Company and made significant contributions to the success of
the Company. The Board also deemed it to be in the Company's best interest to
grant Mr. Collett the CEO
- 15 -
<PAGE>
Stock Option to partially compensate him for past services and to provide an
incentive for him to continue to contribute to the welfare and success of the
Company. Appendix B is the full text of the CEO Stock Option. The summary
description below is qualified in its entirety by reference to Appendix B for
the complete terms of the CEO Stock Option.
The CEO Stock Option will terminate unless ratified by the stockholders of
the Company before its exercise. The option is exercisable in whole or in part,
from time to time, on and after November 8, 1995. The option expires on May 8,
2000. The exercise price per share was determined to be the mean of the high
and low market price for which the Common Stock was quoted on the NASDAQ
SmallCap Market on May 8, 1995.
The CEO Stock Option may be exercised in whole or part, from time to time,
by Mr. Collett tendering to the Company the aggregate purchase price of the
shares of Common Stock being purchased. The option is non-transferable except
by operation of law. The number of shares of Common Stock and the purchase
price of such shares will be appropriately adjusted for any increase or decrease
in the number of shares of issued Common Stock resulting from a subdivision or
consolidation of such shares through a reorganization, recapitalization, stock
split-up, stock distribution or combination of shares, or the payment of a
Common Stock dividend or other increase or decrease in the number of shares
effected without receipt of consideration by the Company. Upon the exercise of
the option, the Company will have the right to require Mr. Collett to remit to
the Company an amount sufficient to satisfy all federal, state and local
withholding tax requirements.
Mr. Collett did not recognize taxable income as a result of the grant of
CEO Stock Option. However, upon the exercise of the option, Mr. Collett will
recognize ordinary income in an amount equal to the difference between the fair
market value of the shares issued on the date of exercise, and the exercise
price. That same amount is subject to a applicable income tax withholding
requirements and is generally deductible for tax purposes by the Company. The
tax basis of shares purchased upon exercise of the CEO Stock Option is the fair
market value of the shares on the date of exercise. If shares of Common Stock
received upon exercise of the CEO Stock Option are held as a capital asset for
more than 1 year, any gain or loss recognized upon the sale of such shares will
be taxed as long-term capital gain or loss. The above description of tax
consequences is necessarily general in nature and does not purport to be
complete. Moreover, statutory provisions are subject to change, as are their
interpretations, and their application may vary in individual circumstances.
Finally, the consequences under applicable state and local income tax laws may
not be the same as under the federal income tax laws.
Approval of the CEO Stock Option requires the affirmative vote of the
holders of a majority of the outstanding shares of Common Stock.
FOR THE REASONS STATED HEREIN, THE BOARD OF DIRECTORS RECOMMENDS THAT THE
STOCKHOLDERS VOTE FOR APPROVAL OF THE CEO STOCK OPTION.
INDEPENDENT PUBLIC ACCOUNTANTS
King & Company, PSC, serves as the Company's independent public
accountants and audited the Company's financial statements for the fiscal year
ending December 31, 1994, following the engagement of King & Company, PSC, on
January 9, 1995. It is anticipated that a representative of King & Company,
PSC, will be present at the Annual Meeting, will have an opportunity to make a
statement should he desire to do so, and will be available to respond to
appropriate questions.
- 16 -
<PAGE>
For the past several years, Arthur Andersen & Co. has been engaged by the
Company to audit the Company's financial statements. On January 9, 1995, the
Company dismissed Arthur Andersen & Co. Arthur Andersen & Co's accountant's
reports on the Company's financial statements for the past two years did not
contain an adverse opinion or a disclaimer of opinion and were not qualified as
to uncertainty, audit scope, or accounting principles. The decision to dismiss
Arthur Andersen & Co. and to engage other accountants was approved by the
Company's Board of Directors. During the Company's two most recent fiscal years
and the interim period preceding the dismissal of Arthur Andersen & Co., there
were no disagreements between the Company and Arthur Andersen & Co. on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of Arthur Andersen & Co., would have caused Arthur Andersen & Co.
to make a reference to the subject matter of the disagreement in connection with
its reports.
EXPENSES OF SOLICITATION
All expenses incurred in connection with the solicitation of proxies will
be borne by the Corporation. The Corporation will reimburse brokers,
fiduciaries and custodians for their costs in forwarding proxy materials to
beneficial owners of Common Stock held in their names. Solicitation may be
undertaken by mail, telephone and personal contact by directors, officers and
employees of the Corporation without additional compensation.
STOCKHOLDERS' PROPOSALS FOR 1996 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 1996 Annual
Meeting of Stockholders must be received by the Corporation on or before
February 2, 1996, to be eligible for inclusion in the Corporation's proxy
statement and proxy relating to that meeting.
OTHER INFORMATION
Management does not know of any matters other than those referred to in
the accompanying Notice of Annual Meeting of Stockholders which may properly
come before the meeting. As to any other matter or proposal that may properly
come before the meeting, it is intended that proxies solicited will be voted in
accordance with the discretion of the proxy holders.
The form of proxy and the proxy statement have been approved by the Board
of Directors and are being mailed and delivered to stockholders by its
authority.
A COPY OF THE CORPORATION'S FORM 10-KSB FOR THE YEAR ENDED DECEMBER 31,
1994, WITHOUT EXHIBITS, MAY BE OBTAINED WITHOUT CHARGE BY WRITING TO: TIMOTHY L.
HENSLEY, FLORIDA GAMING CORPORATION, P.O. BOX 3027, LOUISVILLE, KENTUCKY 40201.
- 17 -
<PAGE>
APPENDIX A
NONQUALIFIED STOCK OPTION PLAN
FLORIDA GAMING CORPORATION
Florida Gaming Corporation (the "Company") hereby establishes a
Nonqualified Stock Option Plan (the "Plan"), effective April 21, 1994, for the
benefit of its employees.
PURPOSE
The Company adopts this compensation program for certain key Company
employees to, among other things, (a) increase the profitability and growth of
the Company; (b) provide competitive executive compensation while obtaining the
benefits of tax deferral; (c) attract and retain exceptional personnel and
encourage excellence in the performance of individual responsibilities; and (d)
motivate key employees to contribute to the Company's success.
PLAN TERMS
SECTION 1. -- DEFINITIONS
As used in this Plan, the following terms or phrases shall have the
meanings set forth below:
1. "Board" means the Board of Directors of the Company.
2. "Committee" means the Committee, if any, appointed by the Board
pursuant to Section 2.1.
3. "Disability" means either a physical or mental condition of a
Participant resulting from a bodily injury or disease or mental disorder which
renders a Participant incapable of continuing the further performance of the
Participant's normal employment activities with the Company.
4. "Exercise Price" means the price to be paid for each share of
Option Stock as set by the Committee, provided that the price per share shall
not be less than an amount determined as follows as of the Grant Date:
(i) if the Stock is not listed on such date on any national
securities exchange, the last sales price (or, if none on that date, on the most
recent date on which there was a last sales price quotation), as reported by the
National Association of Securities Dealers Automated Quotation System, the
National Quotation Bureau, Incorporated, or other similar service selected by
the Committee;
(ii) if the Stock is neither listed on such date on a national
securities exchange nor traded in the over-the counter market, the fair market
value of a share on such date as determined in good faith by the Committee; or
(iii) if the Stock is listed on such date on one or more
national securities exchanges, the last reported sale price of a share on such
date as recorded on the composite tape system or, if such system does not cover
the Stock, the last reported sale price of a share on such date on the principal
national securities exchange on which the Stock is listed or, if no sale of
Stock took place on
A-1
<PAGE>
such date, the last reported sale price of a share on the most recent day on
which a sale of a share took place as recorded by such system or on such
exchange, as the case may be.
E. "Grant Date" means the date on which an Option is granted.
F. "Option" means a nonqualified stock option as governed by Section
83 of the Internal Revenue Code of 1986, as amended (the "Code") granted to a
Participant and affording the Participant the right to purchase Option Stock
under a Stock Option Agreement prepared pursuant to this Plan.
G. "Option Period" shall mean the ten-year period beginning on the
later of the Grant Date or the date the Company's shareholders approve this
Plan.
H. "Option Stock" means Stock subject to an Option or Stock issued
upon the exercise of an Option.
I. "Participant" means any key employee of the Company chosen by the
Committee to participate in this Plan in accordance with Section 3.
J. "Plan" means this Nonqualified Stock Option Plan.
K. "Stock" means the shares of the Company's $0.10 par value common
stock authorized pursuant to the Company's Articles of Incorporation.
L. "Stock Option Agreement" means the written agreement between the
Company and a Participant evidencing the grant of an Option.
SECTION II. -- ADMINISTRATION
A. GOVERNANCE. This Plan shall be administered by a Committee of
disinterested directors (as defined by Rule 16b-3 of the Securities Exchange Act
of 1934, as amended) appointed by the Board or, if the Board does not appoint a
Committee, all of the disinterested directors on the Board shall carry out the
Committee's duties under this Agreement. The number of Committee members shall
be determined by the Board. The Board shall add or remove members from the
Committee as the Board sees fit, and vacancies shall be filled by the Board.
The Committee shall select one of its members as the chairperson of the
Committee and shall hold meetings at such times and places as it may determine.
The Committee may appoint a secretary and, subject to the provisions of the Plan
and to policies determined by the Committee, may make such rules and regulations
for the conduct of its business as it shall deem advisable. Written action of
the Committee may be taken by a majority of its members, and actions so taken
shall be fully effective as if taken by a vote of a majority of the members at a
meeting duly called and held. A majority of Committee members shall constitute
a quorum for purposes of meeting. The act of a majority of the members present
at any meeting for which there is a quorum shall be a valid act of the
Committee.
B. POWER TO INTERPRET PLAN. Subject to the express terms and
conditions of the Plan, the Committee shall have full power to construe and
interpret the Plan, to prescribe, amend and rescind rules and regulations
relating to it, and to make all other determinations necessary or advisable for
its administration. Such determination shall be final and binding on all
persons having any interest in the Plan.
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C. EXCULPATION. No member of the Committee or the Board shall be
liable for actions or determination made in good faith with respect to the Plan,
or for awards under it.
SECTION III. -- PARTICIPATION
The Committee shall designate key employees of the Company who have
substantial responsibility in management or are otherwise responsible for the
Company's financial success as Participants in this Plan from time to time,
provided that no person who is a member of the Board at the Effective Date of
the Plan shall be eligible to receive Options under the Plan. Once designated
as Participants, those employees shall be awarded Stock Options by the
Committee, based on their contribution to the Company as determined in the
discretion of the Committee. Directors who are not otherwise employees of the
Company may not be awarded Options under the Plan.
SECTION IV. -- STOCK SUBJECT TO PLAN
Options may be granted under this Plan by the Company from time to time to
purchase shares of authorized but unissued Stock, provided that the number of
shares that may be granted to any Participant under the Plan shall be reasonable
in relation to the purpose of the Plan and the needs of the Company. The
aggregate number of shares of Stock that may be issued under the Plan shall not
exceed 5% of the shares of Stock outstanding from time to time, and shall be
increased automatically upon increases in the number of shares outstanding.
Option Stock that, by reason of the expiration of an option or otherwise, is no
longer subject to purchase pursuant to an unexercised Option granted under the
Plan, may be re-optioned under the Plan.
SECTION V. -- TERMINATION OF EMPLOYMENT; ADJUSTMENTS; ETC.
A. RETIREMENT, DEATH OR DISABILITY. If a Participant's employment
is terminated due to his retirement, death or Disability, the Participant or his
personal representative shall have the right, subject to Section 6.3, to
exercise his Option at any time within one year after such termination to the
extent he was entitled to exercise the Option immediately prior to such
termination. Options shall expire unless exercised within such one-year period.
The Committee retains the sole right and discretion to determine if termination
is due to retirement or Disability for purposes of this Section.
B. OTHER TERMINATION. If a Participant's employment is terminated
for any reason other than retirement, death, Disability, or for "Cause" as
defined below, the Participant shall have the right, subject to Section 6.3, to
exercise his Option with respect to shares that were immediately exercisable at
termination, within three months after such termination. Options shall expire
unless exercised within such period.
C. TERMINATION FOR CAUSE. In the event a Participant's employment
is terminated for Cause before retirement, death or Disability, the Participant
forfeits all unexercised Options. A Participant shall not be deemed to be
terminated for Cause unless and until the Board adopts a resolution to that
effect. For purposes of this Section,
1. Termination for "Cause" means the termination of a
Participant's employment due to the Board's determination that the Participant:
(1) willfully failed to substantially perform employment
duties; or
(2) willfully and materially injured the Company.
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2. "Willful" means the commission or omission of any act not
in good faith and without reasonable belief that the conduct was in the best
interest of the Company.
D. ADJUSTMENT OF OPTIONS ON RECAPITALIZATION OR REORGANIZATION. In
the event of any merger, reorganization, consolidation, recapitalization, stock
split, stock dividend, combination of shares, rights offering or other change in
the corporate structure of the Company, the number of shares of Stock to which
Options may be granted to Participants under the Plan, the number of shares of
Option Stock, and the Exercise Price shall be proportionately adjusted for any
increase or decrease in the number of issued shares or division or consolidation
of shares, or the payment of a stock dividend after the effective date of this
Plan, or other increase or decrease in such shares effected without receipt of
consideration by the Company.
If the Company shall at any time merge or consolidate with or into another
corporation or association, the holder of each Option will thereafter receive,
upon the exercise thereof, the securities or property to which a holder of the
number of shares of Stock then deliverable upon the exercise of such Option
would have been entitled upon such merger or consolidation, and the Company
shall take such steps in connection with such merger or consolidation as may be
necessary to assure that the provisions of this Plan shall thereafter be
applicable, as nearly as is reasonably possible, in relation to any securities
or property thereafter deliverable upon the exercise of such Option. A sale of
all or substantially all the assets of the Company for a consideration (apart
from the assumption of obligations) consisting primarily of securities shall be
deemed a merger or consolidation for the foregoing purposes and any merger or
consolidation shall be deemed a Change in Control as defined in Section 7.
SECTION VI. -- TERMS AND CONDITIONS
A. OPTIONS. Options shall be nonqualified stock options. Options
granted pursuant to the Plan shall be evidenced by Stock Option Agreements in
such form and subject to such conditions, not inconsistent with the Plan, as the
Committee shall from time to time approve, and shall reflect the provisions of
this Section 6.
B. EXERCISE PRICE. The Exercise Price shall be determined by the
Committee as of the Grant Date in accordance with Section 1.4.
C. TERM. Unless sooner exercised or terminated according to the
terms of this Plan, Options granted pursuant to the Plan shall expire on the
last day of the Option Period.
D. EXERCISE. The Committee shall determine that rate at which a
Participant shall earn the right to exercise Options, which shall be set forth
in the Option Agreement. The Committee may award Options that are immediately
exercisable or may award Options a percentage of which become exercisable after
each twelve month anniversary of the Grant Date. The Participant's unexercised
right to purchase shares of Stock shall cumulate and carry-over to subsequent
twelve month periods.
E. MANNER OF EXERCISE. To the extent that the right to purchase
Option Stock has accrued hereunder, Participants shall exercise Options in
compliance with the following terms.
1. METHOD OF EXERCISE. Participants shall exercise the Option
by written notice, which shall:
(i) State the election to exercise the Option, the number
of whole shares of Option Stock exercised, the
person(s) in whose name(s)
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the stock certificate(s) for such shares of Option
Stock is (are) to be registered, including pertinent
address(es) and Social Security number(s);
(ii) Contain such representations and warranties as may be
required by any applicable law or regulation;
(iii) Be signed by the Participant;
(iv) Be in writing and be delivered in person or by
certified mail to the Committee within the Option
Period.
2. PAYMENT UPON EXERCISE OF OPTION. Payment of the full
Exercise Price for Option Stock shall be made (i) in cash; (ii) by the
Participant's election to have the Company retain that number of shares subject
to such Option having an aggregate fair market value (as determined by the
Committee) equal to the aggregate Exercise Price of the Option, provided that
only Option Stock that was granted more than six months before the exercise date
may be used for such purpose; (iii) by tender to the Company of shares of Stock
owned by the Participant equal in value (as determined by the Committee) to the
aggregate Exercise Price; or (iv) by any combination thereof. Payment or an
election to have Option Stock retained shall be accompanied by a written notice
of exercise as described in Section 6.5(a) above. Stock shall not be issued
upon exercise of the Option unless and until withholding taxes, if any, imposed
by any governmental entity have been satisfied. Payment for any withholding tax
due on exercise of an Option may be made in cash, or, in the Committee's
discretion, the Participant may elect for the Company to reserve an amount of
Option Stock equal in value in the tax liability owed, provided that the written
notice of exercise is delivered to the Committee and the Exercise Price is paid
within the quarterly window period beginning two business days after the
Company's earnings statement is released and ending twelve business days
thereafter.
3. TRANSFER TO PARTICIPANTS. As soon as practicable following
receipt of notice and payment, the Company shall, without transfer or issue tax
to the Participant (or other person entitled to exercise the Option), deliver to
the Participant (or to such other person) at the principal office of the
Company, or such other place as shall be mutually agreed upon, a certificate or
certificates for such shares against full payment of the Exercise Price of each
of such share(s); provided however, that the time of delivery may be postponed
by the Company for such period as may be required for it with reasonable
diligence to comply with any requirements of law. If the Participant (or other
person entitled to exercise the Option) fails to accept delivery of and to pay
for all or any number of shares specified in such notice upon tender thereof,
the right to exercise the Option with respect to such undelivered shares shall
terminate immediately.
4. SECURITIES LAWS. Stock shall not be issued pursuant to the
exercise of an Option, unless issuance and transferability of the Stock shall
comply with all relevant provisions of law, including but not limited to the (i)
limitations, if any, imposed by the State of Florida or other applicable state
securities laws; and (ii) restrictions, if any, imposed by the Securities Act
of 1933, as amended, the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder by the Securities and Exchange
Commission. The Committee, in its sole discretion, shall determine if issuance
of Stock complies with all relevant provisions of law.
F. NONTRANSFERABILITY OF STOCK OPTIONS. No Option shall be
assignable or transferable except by will or by the laws of descent and
distribution. During the lifetime of a Participant, an Option is exercisable
only by that Participant. Options shall not be pledged or hypothecated in any
way, and
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shall not be subject to any execution, attachment, or similar process. Any
attempted transfer, assignment, pledge, hypothecation or other disposition of an
Option contrary to the provisions of the Plan, or the levy of any process upon
an Option, shall be null, void and without effect.
SECTION VII. -- CHANGE IN CONTROL
7.1 OPTIONS EXERCISABLE UPON CHANGE IN CONTROL. Notwithstanding
Section 6.4, upon a Change in Control as defined in Section 7.2, all Options
that have not already expired pursuant to Sections 5 or 6.3, shall be 100%
exercisable by the Participant under all Stock Option Agreements. In addition,
should the Participant's employment be terminated by the Company without Cause
(as defined in Section 5.3) within one year following a Change in Control, or
should the Participant voluntarily terminate employment within three years
following a Change in Control due to (i) a reduction in his compensation or
benefits, (ii) a significant reduction in his position or responsibilities with
the Company, or (iii) a relocation of the Company's principal executive offices
such that the Participant must travel more than 30 additional miles to work,
then, notwithstanding Section 5.3, the Options granted that Participant shall
continue to be exercisable for the entire Option Period.
7.2 DEFINITION. "Change of Control" of the Company shall mean a
change in control of a nature that would be required to be reported in response
to Item 6(e) of Schedule 14(A) of Regulation 14(A) promulgated under the
Securities Exchange Act of 1934, as amended ("Exchange Act"); provided that,
without limitation, such a change in control shall be deemed to have occurred
if: (i) any "person" as such term is used in Section 13(d) and 14(d) of the
Exchange Act is or becomes the "beneficial owner" as defined in Rule 13d-3 under
the Exchange Act, directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company's then
outstanding stock if that person does not at the effective date of this Plan
hold stock; (ii) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board of Directors of the Company
cease for any reason to constitute a majority thereof, unless the election, or
the nomination for election by the stockholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period; (iii) the business of the
Company is disposed of by the Company pursuant to a partial or complete
liquidation of the Company, sale of assets of the Company, or otherwise. A
Change in Control shall also be deemed to occur if (i) the Company enters into
an agreement, the consummation of which would result in the occurrence of a
Change in Control, (ii) any person (including the Company) publicly announces an
intention to take or to consider taking actions which if consummated would
constitute a Change in Control, or (iii) the Board adopts a resolution to the
effect that a potential Change in Control for purposes of this Plan has
occurred.
SECTION VIII. -- MISCELLANEOUS PROVISIONS
A. RIGHTS AS A SHAREHOLDER. Participants shall have no rights as
shareholders with respect to any unexercised Options.
B. BINDING EFFECT. The provisions of this Plan shall bind and inure
to the benefit of the Company, the Participants and their successors and
assigns. The successor of the Company, as used herein, includes any corporate
or other business entity resulting from a Change of Control.
C. NOT AN EMPLOYMENT CONTRACT. Establishment of this Plan does not
confer on any Participant the right to be retained in employment or the right
to any specific assets of the Company. Any obligation of the Company is
contractual and is not funded or secured in any way. Participants' rights shall
be no more than those of an unsecured creditor of the Company.
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D. TERMINATION. The Plan shall terminate ten years after its
Effective Date. Termination of the Plan shall not alter or impair, without the
consent of a Participant, any of the rights or obligations of the Company or a
Participant concerning any Option previously granted under the Plan or Option
Stock subject to the restrictions on transfer of this Plan.
E. GOVERNING LAW. This Plan shall be governed by the laws of the
Commonwealth of Kentucky.
F. SEVERABILITY. In the event any provision of this Plan is held
illegal or invalid for any reason, such illegality or invalidity shall not
effect the remaining parts of the Plan. This Plan shall be construed and
enforced as if such illegal or invalid provision was never established as part
of the Plan.
G. CONSTRUCTION. The masculine shall be read in the feminine and
the singular in the plural wherever the context of this Plan shall so require.
H. NOTICES. Any notice or filing required or permitted to be given
to the Committee under the Plan shall be sufficient if in writing or hand-
delivered or sent by registered or certified mail, to the principal office of
the Company.
I. AMENDMENTS. The Board may, from time to time, alter or amend the
administrative provisions of this Plan. Without a Participant's consent,
however, no amendment, suspension, or termination of this Plan shall alter or
impair a Participant's rights with respect to already granted Options.
J. EFFECTIVE DATE. The Plan shall become effective (the "Effective
Date") upon approval of the Plan by the Board, provided that no Options shall
become exercisable until the date the Company's shareholders approve the Plan.
IN WITNESS WHEREOF, the Company hereby adopts the Plan as of this 21st day
of April, 1994.
FLORIDA GAMING CORPORATION
By /s/ W. Bennett Collett
---------------------------------------
Title: Chairman and Chief Executive Officer
------------------------------------
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APPENDIX B
1995 CHIEF EXECUTIVE OFFICER STOCK OPTION GRANT
THIS 1995 CHIEF EXECUTIVE OFFICER STOCK OPTION GRANT is made by FLORIDA
GAMING CORPORATION, a Delaware corporation (the "Company") to W. Bennett Collett
(the "Optionee") to memorialize and evidence the grant, on May 8, 1995, of an
option (the "Option") to purchase 300,000 shares of $.10 par value common stock
of the Company ("Common Stock"), subject to the following terms and conditions:
1. The Option shall terminate unless ratified by the shareholders of the
Company prior to its exercise.
2. The Option shall vest on May 8, 1995 and shall be exercisable in whole or
in part, from time to time, on and after November 8, 1995.
3. The Option shall expire on May 8, 2000.
4. The Purchase Price (herein so called) of each share of Common Stock subject
to the Option shall be $5.00.
5. The Option may be exercised in whole or in part, from time to time, by the
Optionee tendering to the Company the aggregate Purchase Price of the
shares of Common Stock being purchased.
6. The Option shall be non-transferable except by operation of law.
7. The number of shares of Common Stock with respect to which the Option is
granted and the Purchase Price of such shares shall be appropriately
adjusted for any increase or decrease in the number of shares of issued
Common Stock resulting from a subdivision or consolidation of such shares
through a reorganization, recapitalization, stock split-up, stock
distribution or combination of shares, or the payment of a Common Stock
dividend or other increase or decrease in the number of shares effected
without receipt of consideration by the Company.
8. The obligation of the Company to sell and deliver Common Stock pursuant to
the Option shall be subject to all applicable laws, rules and regulations,
including, without limitation, all applicable federal and state securities
laws.
9. Upon the exercise of the Option, the Company shall have the right to
require the Optionee to remit to the Company an amount sufficient to
satisfy all federal, state and local withholding tax requirements.
10. All questions pertaining to the validity, construction and administration
of this Plan shall be governed by the laws of the State of Delaware.
EXECUTED as of May 8, 1995. FLORIDA GAMING CORPORATION
By: /s/ Timothy L. Hensley
---------------------------------------------
Timothy L. Hensley
Executive Vice President, Treasurer and Chief
Financial Officer
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THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FLORIDA GAMING CORPORATION (THE "CORPORATION")
The undersigned hereby appoints Robert L. Hurd and W.B. Collett, Jr., or
either of them (with full power to act alone), as proxies, with the
Corporation's Chief Executive Officer retaining the power of substitution should
either of them be unable to serve, to represent and to vote all of the stock of
the Corporation held of record or which the undersigned is otherwise entitled to
vote, at the close of business on May 26, 1995, at the 1995 Annual Meeting of
Stockholders to be held at Fort Pierce Jai-Alai, 1750 South Kings Highway, Fort
Pierce, Florida, on July 7, 1995, at 11:00 a.m., local time, and at any
adjournments thereof, with all the powers the undersigned would possess if
personally present, as follows:
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<S> <C> <C> <C>
1. ELECTION OF DIRECTORS
/ / FOR all nominees listed below / / WITHHOLD AUTHORITY to
(except as marked to the contrary below) vote for all nominees listed below
</TABLE>
W. Bennett Collett, Gary E. Bowman, W. Bennett Collett, Jr.,
George W. Galloway, Jr., Roland M. Howell, and Robert L. Hurd
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEES,
WRITE THE NOMINEE'S NAME ON THE LINE BELOW)
________________________________________
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<S> <C> <C> <C>
2. PROPOSAL TO APPROVE THE 1994 NONQUALIFIED STOCK OPTION PLAN
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
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<S> <C> <C> <C>
3. PROPOSAL TO APPROVE THE 1995 CHIEF EXECUTIVE OFFICER STOCK OPTION GRANT
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
<TABLE>
<S> <C> <C> <C>
4. In their discretion, the Proxies are authorized to vote upon such other business as may properly come
before the meeting.
</TABLE>
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS AND WILL BE VOTED AS SPECIFIED
AND IN ACCORDANCE WITH THE ACCOMPANYING PROXY STATEMENT. IF NO INSTRUCTION IS
INDICATED, THIS SIGNED AND DATED PROXY WILL BE VOTED "FOR" ALL OF THE NOMINEES
LISTED IN ITEM 1 AND "FOR" ITEMS 2 AND 3.
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<S> <C>
Signature
Additional signature, if held jointly
Dated , 1995
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
PROMPTLY USING THE ENCLOSED ENVELOPE
Please sign exactly as name appears at left. When
shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator,
trustee or guardian, please give full title as
such. If a corporation, please sign in full
corporate name by President or other authorized
officer. If a partnership, please sign in part-
nership name by authorized person.
</TABLE>
