SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 12, 1996
FLORIDA GAMING CORPORATION
(Exact name of registrant as specified in charter)
Delaware 0-9099 59-1670533
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
1750 South Kings Highway
Fort Pierce, Florida 34945-3099
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (407) 464-7500
Not Applicable
(Former name or former address,
if changed since last report.)
INFORMATION TO BE INCLUDED IN THE REPORT
Item 2. Acquistion or Disposition of Assets.
On September 12, 1996, the Registrant consummated the purchase
of notes (the "WJA Notes") of WJA Realty Limited Partnership
("World Jai-Alai") from the Bank of Oklahoma, National Association
("BOK"). The WJA Notes total $20,728,826 (consisting of
$16,887,907 principal and $3,840,919 accrued but unpaid interest),
currently bearing interest at 9.25% on the principal and unpaid
interest. The Registrant paid $2,000,000 in cash, issued 703,297
shares of the Registrant's Common Stock (to be delivered to a
subsidiary of BOK following approval from the State of Florida
Department of Business and Professional Regulation), issued a
promissory note in the original principal amount of $6,000,000 to
BOK bearing interest at New York Prime Rate, and issued a
$1,000,000 original principal amount non-interest bearing
promissory note to BOK in payment of a contingent liability
relating to certain collections by the Registrant in excess of
$12,000,000 on account of the WJA Notes. The terms of the
transaction were determined based on arm's length negotiations.
The WJA Notes are secured by real estate and improvements
consisting of three Jai-Alai pari-mutuel wagering facilities
located at Miami, Tampa and Ocala, Florida.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(a) Financial statements of business acquired.
Not applicable.
(b) Pro Forma Financial Information.
Florida Gaming Corporation Pro Forma Consolidated Balance
Sheets as of June 30, 1996, with accompanying notes
(unaudited).
Florida Gaming Corporation Pro Forma Consolidated Statements
of Operations for the six months ended June 30, 1996,
with accompanying notes (unaudited).
Florida Gaming Corporation Pro Forma Consolidated Statements
of Operations for the year ended December 31, 1995, with
accompanying notes (unaudited).
FLORIDA GAMING CORPORATION
INTRODUCTORY HEAD NOTE
TO PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
In May 1996, the Florida state Legislature approved House Bill
#337 which authorized card rooms at all licensed Pari-Mutuels.
The card rooms will be administered by the State of Florida,
Department of Business and Professional Regulation, and are
subject to approval by the county commission where the pari-mutuel
facility is located.
On July 3, 1996 Florida Gaming Corporation ("the Company"),
signed an agreement to purchase notes of WJA Realty Limited
Partnership ("World Jai-Alai"), (the" WJA Notes") with balances
aggregating about $20,000,000 from the Bank of Oklahoma, N.A.
("BOK"). World Jai-Alai owns and operates pari-mutuels
facilities in Dade and Hillsborough Counties, Florida, which
collateralize these notes. The purchase agreement called for an
$8,000,000 cash payment, the issuance of 615,385 common shares
and a contingent liability in the form of a $1,000,000 non-interest
bearing note. The purchase was conditioned upon the local approval
of card rooms in Dade and Hillsborough Counties, Florida. Dade County
approved card rooms on September 10th via a County Ordinance.
On September 12, 1996, the Company completed the purchase of the
WJA Notes on a basis modified from the original agreement. As
consideration for the WJA Notes the Company paid $2,000,000 in cash,
issued 703,297 shares of its common stock (to be delivered once BOK
receives approval from the Department of Business and Professional
Regulation), gave BOK a $6,000,000 promissory note bearing interest
at New York Prime Rate, and also is committed to the $1,000,000 contingent
liability as discussed above. The $6,000,000 note is secured by the WJA
Notes and the underlying collateral. The WJA Notes originally totaled
$17,500,000. The current principal balance is $16,887,907 with $3,840,919
in accrued but unpaid interest, both bearing interest at 9.25%.
The following proforma financial statements reflect this
transaction as applied to the historical data for each period
presented and they should be read in conjunction with:
The Company's audited consolidated financial statements and
related notes as of December 31, 1995 included in the annual
report on Form 10-KSB as filed with the Securities and Exchange
Commission.
The Company's unaudited consolidated financial statements and
related notes as of June 30, 1996 included in its quarterly
report on Form 10-QSB as filed with the Securities and Exchange
Commission.
The notes to the proforma consolidated financial statements,
included in this Form 8-K.
<TABLE>
FLORIDA GAMING CORPORATION
PRO FORMA CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 (Unaudited)
<CAPTION>
Historical Adjusting Adjusting Proforma
FGC/
6/30/96 Entries Entries WJA NOTE
<S> <C> <C> <C> <C>
ASSETS
Current Assets Note 4
Cash $3,364,773 $2,000,000 $1,364,773
Notes and Receivables 1,008,565 1,008,565
Inventories 32,616 32,616
Prepaid Expense & Other 39,303 39,303
Total Current Assets $4,445,257 $2,445,257
Investments/Gaming Venture 344,000 Note 3 344,000
Investment WJA Note $13,747,255 13,747,255
Total Investments $ 344,000 $14,091,255
Land $2,744,716 $2,744,716
Buildings/Improvements 1,937,418 1,937,418
Furn./Fix./Equip. 668,985 668,985
Construction WIP -
Subtotal $5,351,119 $5,351,119
Less Accum. Depreciation (432,694) (432,694)
$4,918,425 $4,918,425
Other Assets $20,148 $20,148
Subtotal $20,148 $20,148
TOTAL ASSETS $9,727,830 $21,475,085
LIABILTIES
AND
CAPITAL
Current Liabilities
Accounts Payable $117,591 $117,591
Accrued Expenses $245,661 245,661
Short Term/Current
Portion L.T. Debt $136,420 136,420
-
Total Current Liabilities $499,672 $499,672
Long Term Liabilities
Long Term Debt $1,697,856 $1,697,856
New Long Term Debt Note 5 > $6,000,000 $6,000,000
Non-Interest Bearing Note Note 6 > 1,000,000 1,000,000
Total Long Term Debt $1,697,856 $7,000,000 $8,697,856
Stockholders Equity
Class A Preferred, Convertible 3,473 3,473
Class B Preferred, Convertible 323 323
Common Stock 338,040 Note 7 > 70,330 408,370
Capital in Excess of Par 29,394,045 Note 7 > 4,676,925 34,070,970
Retained Earnings/Accum.
Deficit (22,205,579) (22,205,579)
Total Equity $7,530,302 $12,277,557
TOTAL LIABILITIES
& CAPITAL $9,727,830 $13,747,255 $13,747,255 $21,475,085
</TABLE>
<TABLE>
FLORIDA GAMING CORPORATION
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
<CAPTION>
Historical Adj. Dr Adj. Cr Proforma
<S> <C> <C> <C> <C>
PARI-MUTUEL HANDLE:
Jai-Alai-------------- $3,665,582 $ 3,665,582
ITW------------------- 11,493,570 11,493,570
$15,159,152 $0 $0 $15,159,152
REVENUE:
Pari-Mutuel
Net Jai Alai----------- $807,804 $807,804
Net InterTrack
Wagering------------- 1,140,602 1,140,602
$1,948,406 $0 $0 $1,948,406
Other
Net Admissions--------- $77,334 Note 1 $77,334
Food, Beverage,
& Other ----------- 496,565 496,565
Interest on WJA Notes $958,708 958,708
$573,899 $0 $958,708 $1,532,607
Total Revenues--------- $2,522,305 $0 $958,708 $3,481,013
EXPENSES:
Operating Expenses------$2,057,608 $2,057,608
General & Administrative- 913,911 913,911
Depreciation------------- 97,200 Note 2 97,200
Interest----------------- 81,749 $247,500 329,249
Total $3,150,468 $247,500 $0 $3,397,968
NET OPERATING INCOME ($628,163) ($247,500) $958,708 $83,045
OTHER INCOME (EXPENSE)
Interest and Dividends--- 104,905 104,905
Realized Gain on Sec.---- 0 0
104,905 104,905
TAXES $0 $0
NET INCOME ($523,258) ($247,500) $958,708 $187,950
Income (loss) ($.016) $0.06
per common share fully diluted $0.03
</TABLE>
<TABLE>
FLORIDA GAMING CORPORATION
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995 (UNAUDITED)
<CAPTION>
Historical Adj. Dr Adj. Cr Proforma
<S> <C> <C> <C> <C>
PARI-MUTUEL HANDLE:
Jai-Alai-------------- $4,792,351 $4,792,351
ITW------------------- 20,372,323 20,372,323
$25,164,674 $0 $0 $25,164,674
REVENUE:
Pari-Mutuel
Net Jai Alai------- $1,091,069 $1,091,069
Net InterTrack
Wagering---------- 2,047,335 2,047,335
$3,138,404 $0 $0 $3,138,404
Other
Net Admissions-------- $151,438 Note 1 $151,438
Food, Beverage,
& Other---------- 796,184 796,184
Interest on WJA Notes $1,917,416 1,917,416
$947,622 $0 $1,917,416 $2,865,038
Total Revenues--------- $4,086,026 $0 $1,917,416 $6,003,442
EXPENSES:
Operating Expenses----- $2,873,849 $2,873,849
General &
Administrative-------- 1,594,856 1,594,856
Depreciation----------- 194,682 Note 2 194,682
Interest--------------- 167,206 $495,000 662,206
Total $4,830,593 $495,000 $0 $5,325,593
NET OPER. INCOME (LOSS) ($744,567) ($495,000) $1,917,416 $677,849
OTHER INCOME (EXPENSE)
Interest and Dividends-- 77,673 77,673
Realized Gain on Sec.--- 195,939 195,939
273,612 273,612
TAXES $0 $0
NET INCOME ($470,955) ($495,000) $1,917,416 $873,788
Income (loss) per
common share ($0.15) $0.28
fully diluted $0.15
</TABLE>
FLORIDA GAMING CORPORATION
NOTES TO PROFORMA CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
Note A - The accompanying proforma balance sheets and
statements of operations combine the historical balance
sheets of the Company as of June 30, 1996 with adjustments
to give proforma effect to the transaction as described in
the introductory head note. The historical statements of
operations for the period ended December 31, 1995 and June
30, 1996, respectively, have also been adjusted to this
extent.
Note B - Proforma income per share has been computed based
on the weighted average number of common shares outstanding
for each period, 3,261,083 and 3,120,674,for the periods
ended June 30, 1996, and December 31, 1995, respectively.
Fully diluted income per share included 2,400,589 and
2,336,065 in shares issueable under certain options and
convertible preferred stocks as of June 30, 1996, and
December 31, 1995, respectively.
Note C - The following adjustments have been made to give
proforma effect to the transaction described in the
introductory head note:
Note 1 - Represents interest income on the WJA Notes
computed at 9.25% on the principal and unpaid interest.
Note 2 - Represents interest expense on the $6,000,000 of
the purchase price of the WJA Notes financed by the Bank of
Oklahoma bearing interest at 8.25%.
Note 3- The basis of Florida Gaming s investment in the WJA
Notes. This was calculated as follows:
$2,000,000 Cash
6,000,000 Note to the Bank of Oklahoma
1,000,000 Contingent non-interest bearing
note to the Bank of Oklahoma
4,747,255 The approximated Fair value of
the 703,297 shares issued to BOK*
$13,747,255
* The stock was valued at $6.75
per share which was the closing price as of the closing
date. In the months preceding the transaction the stock had
traded considerably higher ($9 to $10 range during July).
For the ten day period prior to closing the average of the
high and low was $5.6875. During the several days following
the transaction the stock has traded in the $7.25 to $7.75
range. Management feels that the $6.75 accurately reflects
the value of the stock issued in the transaction, particularly
since the Company has filed a Registration Statement on Form S-3
to register these shares for resale. The recorded value of the
notes was determined using the values of the consideration paid.
Note - 4 - The cash portion of the transaction.
Note - 5 - The $6,000,000 principal amount Note to the Bank of Oklahoma
bearing interest at New York Prime Rate.
Note - 6 - The contingent liability issued to BOK in the
form of a non-interest bearing promissory note to be paid
when cash-flow from the WJA Notes exceeds certain levels in
excess of $12,000,000 (see Purchase Agreement and Amendment
included in exhibits.)
Note - 7 - Represents the par value ($70,330) at $0.10 per
share. Value in excess of par value was credited as such.
Note D - No Federal Income Tax was accrued for these
periods due to the Company's available Net Operating Loss
carry-forwards.
(c) Exhibits.
Exhibit 10.1 -- Amendment to Loan Sale Agreement
dated September 12, 1996, among the Registrant,
Bank of Oklahoma, National Association, and BOK DPC
Asset Holding Corporation.
Exhibit 10.2 -- Pledge Agreement dated September
12, 1996, between the Registrant and Bank of
Oklahoma, National Association.
Exhibit 10.3 -- Secured Note dated September 12,
1996, in the initial principal amount of
$6,000,000 payable by Registrant to the order of
Bank of Oklahoma, National Association.
Exhibit 10.4 -- Promissory Note dated September 12,
1996, in the initial principal amount of $1,000,000
payable by Registrant to the order of Bank of Oklahoma,
National Association.
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.
FLORIDA GAMING CORPORATION
By /s/ Timothy L. Hensley
Timothy L. Hensley
Executive Vice President,
Treasurer
and Chief Financial Officer
Date: September 27, 1996
AMENDMENT TO LOAN SALE AGREEMENT
This Amendment To Loan Sale Agreement (the "Amendment") is
made this 12th day of September, 1996 between:
(i) Florida Gaming Corporation ("FGC");
(ii) Bank of Oklahoma, National Association ("BOK");
and,
(iii) BOK DPC Asset Holding Corporation, an Oklahoma
Corporation ("DPC").
In consideration of the mutual promises and covenants
hereinafter set forth (the adequacy of which FGC, BOK and DPC
hereby expressly acknowledge), and intending to be legally bound
hereby, FGC, BOK, and DPC agree as follows:
(1) Purpose of this Amendment. FGC, BOK and DPC have heretofore
entered into that certain Agreement dated July 3, 1996 respecting
the sale by BOK to FGC of the WJA Notes as defined therein (the
"Agreement"). The capitalized terms used in this Amendment shall
have the meaning ascribed to them in the Agreement. FGC, BOK, and
DPC desire to amend the Agreement. This Amendment sets forth the
agreement of FGC, BOK and DPC respecting the terms and conditions
of the Agreement which shall be amended.
(2) Amendment of Paragraph 10(c) of Agreement. Existing Paragraph 10(c)
of the Agreement shall be deleted in its entirety and the following
substituted therefor:
"This subparagraph (c) has been intentionally
omitted."
(3) Amendment of Paragraph 2(a) of Agreement. Existing Paragraph
2(a) of the Agreement shall be deleted in its entirely and the following
substituted therefor:
"(a) The purchase price ("Purchase Price") shall be:
(i) Two Million United States Dollars (the
"Cash Consideration"); and,
(ii) Six Hundred Fifteen Thousand Three Hundred and
Eighty-five (615,385) shares, subject to
adjustment as hereafter provided, of $0.10 par
value common stock of FGC (the "FGC Common
Stock" or the "Stock Consideration").
(iii) A non-interest bearing promissory note (the
"FGC Note") in the principal amount of One
Million United States Dollars ($1,000,000)
which note shall be in the form and content of
Exhibit C attached hereto.
(iv) A secured interest bearing promissory
note (the "Secured Note") in the
principal amount of Six Million United
States Dollars ($6,000,000) which note
shall be in the form and content of
Exhibit D attached hereto."
(4) Amendment of Paragraph 2(e) of Agreement. The existing
paragraph 2(e) of the Agreement shall be deleted and the
following new Paragraph 2(e) shall be substituted therefor:
"(e) The Stock Consideration shall be paid not later
than the third business day following the
Closing, subject to the entry of a consent order
by the Division of Pari-mutuel Wagering with the
Florida Department of Business and Professional
Regulation (the "Division"), by the delivery, in
escrow to the escrow agent (as hereafter
defined, the Escrow Agent), of usual and
customary certificates in good form acceptable
to counsel for BOK (provided such acceptance
shall not be unreasonably withheld or delayed)
representing the Stock Consideration duly
registered in the name of DPC. The escrow agent
shall be BancOklahoma Trust Company. The Escrow
Agent shall hold the Stock Consideration in
trust pursuant to the terms of the consent order
entered by the Division. In the event the
Division does not approve the acquisition on or
before January 1, 1999, the Escrow Agent shall
return the Stock Consideration to FGC."
(5) New Paragraph 2(g). The following new paragraph 2(g) shall
be added:
"(g) The Secured Note shall be secured by a security
interest in the WJA Notes which security
interest shall be in the form and content of
Exhibit E attached hereto (the "Security
Agreement")."
(6) New Paragraph 2(h). The following new paragraph 2(h) shall
be added:
"(h) The Secured Note and the Security Agreement
shall be executed and delivered at the Closing.
At the Closing, FGC shall pay BOK (together with
and in the same manner as the Cash
Consideration) a loan fee of Sixty Thousand
United States Dollars (US$60,000).
(7) Amendment of Paragraph 9(c) of Agreement. Existing
paragraph 9(c) of the Agreement is hereby deleted and
the following new paragraph 9(c) substituted therefor
in its entirety:
"(c) This Paragraph has been intentionally omitted."
(8) New Paragraph 11. Existing Paragraph 11 of the Agreement
shall be deleted in its entirety and the following
substituted therefor:
"The Closing. The closing (the "Closing" of the Purchase
shall take place on the first business day following the
first day on which all conditions precedent to the
obligations of FGC, BOK and DPC shall have been fulfilled or
waived (the "Closing Date"). At the Closing:
(a) BOK shall perform the obligations required of BOK by
the provisions of paragraph 3 above.
(b) FGC shall pay the Purchase Price to BOK and perform the
obligations of FGC required of FGC by the provisions of
paragraph 2 above.
(c) FGC shall deliver a certificate of its Secretary
certifying to the correctness of FGC borrowing
resolutions by which the Board of Directors of
FGC shall have authorized the execution and
delivery of the FGC Note, the Secured Note, and
the Security Agreement.
(9) Enforceability of Agreement. As amended by this Amendment,
the Agreement shall continue to be in full force and effect
in accordance with its terms. The word Agreement as used in
the Agreement shall mean the Agreement as amended by this
Amendment.
(10) Shares of FGC Common Stock. FGC, BOK, and DPC hereby agree
that the Stock Consideration, as adjusted in accordance with
paragraph 2(c), consists of 703,297 shares of FGC Common
Stock.
(11) Date of Closing. FGC, BOK, and DPC hereby agree that the
Closing shall occur on Thursday, September 12, 1996.
(12) Miscellaneous Provisions. The Miscellaneous Provisions of
the Agreement are hereby incorporated herein by this
reference.
Dated and effective the date first set forth above.
"FGC"
FLORIDA GAMING CORPORATION
By /s/ W. B. Collett, Chairman & C.E.O.
"BOK"
BANK OF OKLAHOMA,
NATIONAL ASSOCIATION
By /s/ Paul D. Mesmer,
Senior Vice President
"DPC"
DPC ASSET HOLDING CORPORATION
By /s/ Paul D. Mesmer,
Senior Vice President
PLEDGE AGREEMENT
This Pledge Agreement (this "Agreement") is executed and
delivered this 12th day of September, 1996, by FLORIDA GAMING
CORPORATION, a Florida corporation ("the "Pledgor"), to and with
BANK OF OKLAHOMA, NATIONAL ASSOCIATION (the "Secured Party").
RECITALS:
A. Pledgor is indebted to Secured Party in the aggregate
sum of $6,000,000 as evidenced by that certain Negotiable
Promissory Installment Note executed by Pledgor under even date
herewith, due September 12, 1998 (called the Secured Note and
referred to in this Pledge Agreement as the "Note") .
B. Pursuant to that certain Loan Sale Agreement dated July
3, 1996 as amended by that certain Amendment of Loan Sale Agreement
dated under even date herewith (the "Loan Sale Agreement"), Pledgor
agreed to execute and deliver this Agreement to pledge the Collateral
(referred to in the Loan Sale Agreement and in this Agreement as the
WJA Collateral) to Secured Party as security for the Note.
NOW THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be
legally bound, hereby agree as follows:
I.
Security Interest and Pledge
1.1 Security Interest and Pledge. Subject to the terms of this
Agreement, Pledgor hereby pledges and grants to Secured Party
a first priority security interest and lien in the WJA Notes
and the WJA Collateral as such terms are defined in the Loan
Sale Agreement (such property being hereinafter sometimes
called the "Collateral"). Collateral as used herein includes
all proceeds of Collateral.
1.2 Obligations. The Collateral shall secure the obligations,
liabilities and indebtedness of Pledgor to Secured Party
pursuant to the Note and this Agreement.
1.3 Perfection of Security Interest. Secured Party shall perfect
the security interest hereby granted by keeping possession of
the WJA Notes, the WJA Collateral, and the Assignments (as
such terms are defined in the Loan Sale Agreement).
II.
Representations and Warranties
Pledgor represents and warrants to Secured Party that:
2.1 Title. Pledgor owns, and with respect to Collateral acquired
after the date hereof, Pledgor will own, legally and
beneficially, the collateral free and clear of any lien,
security interest, pledge, claim or other encumbrance or any
right or option on the part of any third person to purchase
or otherwise acquire the Collateral or any part thereof,
except for the security interest granted hereunder.
2.2 Authority. Pledgor has the authority to execute, deliver and
perform this Agreement, and the execution, delivery and
performance of this Agreement by Pledgor do not and will not
conflict with, result in a breach of, or constitute a default
under the provisions of any indenture, mortgage, deed of
trust, security agreement, or other instrument or agreement
or any judgment, decree, order, law, statute, or other
governmental rule or regulation applicable to Pledgor or any
of its property.
III.
Affirmative and Negative Covenants
Pledgor covenants and agrees with Secured Party that until
the Note is paid in full:
3.1 Encumbrances. Pledgor shall not create, permit or suffer to
exist, and shall defend the Collateral against, any lien,
security interest or other encumbrance on the Collateral
arising by, through, or under Pledgor except the pledge and
security interest of Secured Party hereunder, and shall defend
Pledgor's rights in the Collateral and Secured Party's
security interest in the Collateral against the claims of all
persons and entities arising by, through, or under Pledgor.
3.2 Sale of Collateral. Pledgor shall not sell, assign or
otherwise dispose of the Collateral or any part thereof
without the prior written consent of Secured Party; provided,
however:
(a) Pledgor may take all such actions as it deems
reasonably necessary or appropriate to foreclose
the WJA Collateral; and,
(b) Pledgor may by foreclosure or in an agreed
transaction substitute a first mortgage lien on
what is commonly referred to as the Ft. Pierce
fronton for (i) 200,000 shares of FGC Common
Stock and (ii) the FGC $1,000,000 note owed to
WJA Realty, currently held by BOK as part of the
WJA Collateral, subject to approval of the
documentation by counsel to BOK (which shall not
be unreasonably withheld or delayed).
3.3 Proceeds of Collateral. All proceeds of Collateral shall be
received, held, and paid in accordance with the following
provisions:
(a) So long as the Note is not in default, all cash
payments received by the Pledgor or Secured
Party in respect of the WJA Notes shall be for
the account of Pledgor. If such a cash payment
is received by the Secured Party while the Note
is not in default, the Secured Party shall
forthwith pay such cash payment over to the
Pledgor.
(b) So long as the Note is in default, all cash
payments received by the Pledgor or the Secured
Party shall be for the account of the Secured
Party and applied by the Secured Party to
payment of the Note (whether such payment is
less than or more than the amount necessary to
cure the default). If such a cash payment is
received by the Pledgor while the Note is in
default, Pledgor agrees to accept the same as
Secured Party's agent and to hold the same in
trust for Secured Party, and to forthwith pay
the entire amount of such cash payment over to
Secured Party to be applied by Secured Party
against the Note (whether such payment is less
than or more than the amount necessary to cure
the default).
(c) If Pledgor shall receive any payment of money or
property in respect of the sale of any or all of
the WJA Collateral to any person or entity
unaffiliated with Pledgor (whether by
foreclosure or otherwise), Pledgor shall accept
such proceeds as Secured Party's agent and hold
the same in trust for Secured Party to the
extent of the Secured Party's interest therein,
and deliver the same forthwith to Secured Party
in the exact form received with the appropriate
endorsement or assignment of Pledgor, or to
execute such further instruments agreements,
filings, notices as may be required in the
opinion of counsel to Secured Party to evidence
such transfer to Secured Party and Secured Party
shall apply such money and property to payment
of the Note.
(d) If Pledgor or an affiliate of Pledgor shall
acquire ownership of the Collateral (whether by
foreclosure or otherwise), Pledgor shall, or
shall cause such affiliate to, hold the same in
trust for Secured Party, and deliver the same
forthwith to Secured Party in the exact form
received with the appropriate endorsement or
assignment of Pledgor, or execute such further
instruments agreements, filings, notices as may
be required in the opinion of counsel to Secured
Party to evidence the continuation of Secured
Party's security interest and lien in such money
and property, and Secured Party shall hold such
money and property as Collateral for the Note,
subject to the terms hereof.
(e) All sums of money and property paid and received
in respect of the Collateral that are received
by Pledgor shall, until paid or delivered to
Secured Party in accordance with the foregoing
provisions of this paragraph, be held by Pledgor
in trust as additional security for the Note.
IV.
Rights of Secured Party and Pledgor
4.1 Right to Realize Value of WJA Collateral. So long as no
Event of Default shall have occurred and be continuing,
Pledgor shall be entitled to exercise any and all rights of
the Secured Party in and to, or relating or pertaining to,
the WJA Notes and the WJA Collateral or any part thereof.
Secured Party shall execute and deliver to Pledgor such
further instruments, agreements, filings, and notices as may
be reasonably required in the opinion of counsel to Secured
Party to enable Pledgor to realize the value of the WJA
Collateral. The foregoing to the contrary notwithstanding the
Pledgor shall take no action which may adversely affect the
first priority security interest or lien of the Secured Party
in the Collateral and Secured Party shall not be obligated to
deliver any such further instruments, agreements, filings, or
notices if, in the opinion of counsel to Secured Party, the
security interest or lien of Secured Party may be adversely
affected thereby.
4.2 Secured Party's Duty of Care. Other than the exercise of
reasonable care in the physical custody of the Collateral
while held by Secured Party hereunder, Secured Party shall
have no responsibility for or obligation or duty with respect
to all or any part of the Collateral or any matter or
proceeding arising out of or relating thereto.
V.
Default
5.1 Events of Default. Each of the following shall be deemed an
"Event of Default":
(a) Any failure to make payment when due (including
any grace period provided in the Note) of any
amount due under the Note.
(b) Any representation or warranty made by Pledgor
in this Agreement is false in any material
respect on the date when made or deemed to have
been made.
(c) Pledgor shall fail to perform, observe or comply
with any covenant, agreement or term contained
in this Agreement for a period of fifteen (15)
days after Pledgor's receipt of written notice
from Secured Party of non-performance.
(d) Pledgor shall commence a voluntary proceeding
seeking liquidation, reorganization or other
relief with respect to itself or its debts under
any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator,
custodian, or other similar official for it or a
substantial part of its property or shall
consent to any such relief or to the appointment
of or taking possession by any such official in
an involuntary case or other proceeding
commenced against it or shall make a general
assignment for the benefit of creditors or shall
generally fail to pay its debts as they become
due or shall take any action to authorize any of
the foregoing.
(e) An involuntary proceeding shall be commenced
against Pledgor seeking liquidation,
reorganization or other relief with respect to
it or its debts under any bankruptcy, insolvency
or other similar law now or hereafter in effect
or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar
official for it or a substantial part of its
property, and such involuntary proceeding shall
remain undismissed and unstayed for a period of
sixty (60) days.
5.2 Rights and Remedies Of Secured Party. Upon the occurrence
and continuance of an Event of Default, Secured Party shall
have the following rights and remedies to the extent consistent
with applicable law:
(a) In addition to all other rights and remedies
granted to Secured Party in this Agreement and
in any other instrument (or agreement securing,
evidencing, or relating to the Note), Secured
Party shall have all of the rights and remedies
of a secured party then existing or existing as
of the date hereof under the Uniform Commercial
Code as adopted by the State of Oklahoma.
Without limiting the generality of the
foregoing, Secured Party may:
(i) Sell or otherwise dispose of the
Collateral, or any part thereof,
in one or more parcels at public
or private sale or sales, at
Secured Party's offices or
elsewhere, for cash, on credit or
for future delivery, and/or
(ii) Bid and become a purchaser at any
sale free of any right or equity
of redemption in Pledgor, which
right or equity is hereby
expressly waived and released by
Pledgor.
Pledgor agrees that Secured Party shall not be
obligated to give more than ten (10) days'
written notice of the time and place of any
public sale or of the time after which any
private sale may take place and that such notice
shall constitute reasonable notice of such
matters. Pledgor shall be liable for all
reasonable attorneys' fees and other expenses
incurred by Secured Party in connection with the
enforcement of Secured Party's rights under this
Agreement. Pledgor shall remain liable for any
deficiency if the proceeds of any sale or
disposition of the Collateral are insufficient
to pay the Notes. Pledgor hereby waives all
rights of marshalling in respect of the
Collateral.
(b) Secured Party may cause any or all of the
Collateral held by it to be transferred into the
name of Secured Party or the name or names of
Secured Party's nominee or nominees.
(c) Secured Party shall he entitled to receive all
cash payments in respect of the WJA Notes.
(d) Secured Party shall have the right, but shall
not be obligated to, exercise or cause to be
exercised all rights and powers of the holder of
the WJA Notes and of the secured party in
respect of the WJA Collateral, and Pledgor shall
deliver to Secured Party, if requested by
Secured Party, such instruments, agreements,
filings, and notices as may be reasonably
required in the opinion of counsel to Secured
Party to enable Secured Party to realize the
value of the WJA Notes and the WJA Collateral.
(e) Pledgor hereby acknowledges and confirms that
Secured Party may be unable to effect a public
sale of any or all of the Collateral by reason
of certain prohibitions contained in the
Securities Act of 1933, as amended, and
applicable state securities laws and may be
compelled to resort to one or more private sales
thereof to a restricted group of purchasers who
will be obligated to agree, among other things,
to acquire any shares of the Collateral for
their own respective accounts for investment and
not with a view to distribution or resale
thereof. Pledgor further acknowledges and
confirms that any such private sale may result
in prices or other terms less favorable to the
seller than if such sale were a public sale and,
notwithstanding such circumstances, agrees that
any such private sale shall be deemed to have
been made in a commercially reasonable manner,
and Secured Party shall be under no obligation
to take any steps in order to permit the
Collateral to be sold at a public sale. Secured
Party shall be under no obligation to delay a
sale of any of the Collateral for any period of
time necessary to permit any issuer thereof to
register such Collateral for public sale under
the Securities Act of 1933, as amended, or under
applicable state securities laws.
(f) On any sale of the Collateral, Secured Party is
hereby authorized to comply with any limitation
or restriction with which compliance is
necessary, in the view of Secured Party's
counsel, in order to avoid any violation of
applicable law or in order to obtain any
required approval of the purchaser or purchasers
by any applicable governmental authority.
5.3 Rights of Pledgor. The Pledgor shall have all of the rights
of a debtor arising under the Uniform Commercial Code as in
effect in the State of Oklahoma as of the date hereof.
VI.
Miscellaneous
6.1 Miscellaneous Provisions. The Miscellaneous Provisions of
the Loan Sale Agreement are hereby by this reference
incorporated herein and made a part hereof.
IN WITNESS WHEREOF, the Pledgor has duly executed this Agreement as
of the date first above written.
"Pledgor"
FLORIDA GAMING CORPORATION
By /s/ W. B. Collett,
Chairman & C.E.O.
"Secured Party"
BANK OF OKLAHOMA,
NATIONAL ASSOCIATION
By /s/ Paul D. Mesmer
Senior Vice President
SECURED NOTE
NEGOTIABLE PROMISSORY INSTALLMENT NOTE
$6,000,000.00 Tulsa, Oklahoma
SEPTEMBER 12, 1996
FOR VALUE RECEIVED, FLORIDA GAMING CORPORATION (the
"Borrower") hereby promises to pay to the order of BANK OF
OKLAHOMA, NATIONAL ASSOCIATION (the "Bank"), at the Bank's
principal offices in Tulsa, Oklahoma, in lawful money of the United
States of America, the principal sum of SIX MILLION and NO/100
DOLLARS ($6,000,000), together with interest thereon from the date
hereof on the unpaid balance of principal from time to time
outstanding, and on any past due interest, at the variable annual
rate of interest hereinafter specified, due and payable as follows:
(i) interest only on the last day of September 1996,
October 1996, November 1996, December 1996,
January 1997, and February 1997;
(ii) principal amount of $83,333.33 plus interest on
the last day of March 1997, April 1997, May
1997, June 1997, July 1997, and August 1997;
(iii) principal amount of $166,666.66 plus interest on
last day of September 1997 and thereafter on the
last day of each month until August 31,1998;
and,
(iv) a final installment in the amount of all
principal then outstanding plus interest on
September 12, 1998 (the "Maturity Date").
All payments shall be applied first to accrued but unpaid
interest with the excess, if any, applied in reduction of the
outstanding principal balance hereof.
The rate of interest payable upon the indebtedness evidenced
by this Note shall be a variable annual rate of interest equal from
day to day to the Applicable Prime Rate, as hereinafter defined.
Any change in the Applicable Prime Rate shall be effective with
respect to this Note as of the date upon which any change in such
rate of interest shall occur. Interest shall be computed on the
basis of a year of 360 days per year, but assessed for the actual
number of days lapsed.
For the purposes of this Note, "Applicable Prime Rate" shall
mean the annual rate of interest announced by Chase Manhattan Bank,
National Association, New York, New York ("Chase") from time to
time as its prime or base rate, which shall be the rate used by
Chase as a base or standard for pricing purposes and which shall
not necessarily be its best or lowest rate. Should Chase cease to
announce a prime or base rate, or should it be merged, consolidated,
liquidated or dissolved in such a manner that it loses its separate
corporate or banking identity, then the Applicable Prime Rate shall
be the Prime Rate published by the Wall Street Journal in its "Money
Rates" column or a similar rate if such rate ceases to be published.
Any change in the Applicable Prime Rate shall be effective as of the
date of the change.
After default in the payment of any amount of principal or
interest owing hereunder within fifteen (15) days of the due date
thereof (whether on maturity, acceleration or otherwise) or upon
the occurrence of any Event of Default as described in the Pledge
Agreement between the Borrower and the Bank dated as of even date
herewith ("Pledge Agreement"), the unpaid principal amount hereof
shall bear interest computed at a variable annual rate equal from
day to day to the Applicable Prime Rate plus five (5%) percent, but
in no event at a rate which is greater than the maximum rate which
permitted by law. Upon default in the payment of any amount of
interest payable hereunder, such interest shall, to the full extent
permitted by law, bear interest at the same rate as principal.
This Note is made pursuant to and secured by the Pledge
Agreement. Reference is hereby made to the Pledge Agreement, as
well as any supplemental security agreements, for a description of
the property, assets and interests thereby mortgaged, conveyed,
pledged and/or assigned, as the case may be, the nature and extent
of the security thereunder and the security interests carried
forward or created thereby, and the rights of the Bank (or the
holder of this Note) and the Borrower in respect thereof.
Should the indebtedness represented by this Note be collected
at law or in equity or in bankruptcy, receivership or other court
proceedings or the Note be placed in the hands of attorneys for
collection after default, the Borrower agrees to pay hereunder, in
addition to the principal and interest due and payable hereon,
reasonable attorneys fees, court costs, and other collection expenses
incurred by the holder hereof.
The Borrower hereby waives presentment for payment, demand,
notice of nonpayment, protest and notice of protest with respect to
any payment hereunder and agrees to any substitution or release of
the security or collateral described in the Pledge Agreement and to
the addition or release of any party liable hereunder. No delay on
the part of the holder hereof in exercising any rights hereunder
shall operate as a waiver of such rights.
Upon the occurrence of any default hereunder or pursuant to
the Pledge Agreement, Bank shall have the right, immediately and
without further action by it, to set off against this Note all
money owed by Bank in any capacity to each or any maker or other
person who is or might be liable for payment hereof, whether or not
due, and also to set off against all other liabilities of the maker
to Bank all money owed by Bank in any capacity to the maker; and
Bank shall be deemed to have exercised such right of setoff and to
have made a charge against such money immediately upon the occurrence
of such default even though such charge is made or entered into the
books of Bank subsequently thereto.
This Note and the indebtedness evidenced hereby shall be
construed and enforced in accordance with and governed by the laws
of the State of Oklahoma.
FLORIDA GAMING CORPORATION
By /s/W. B. Collett
W. Bennett Collett,
its Chairman and CEO
DUE: September 12, 1998 "Borrower"
PROMISSORY NOTE
US$1,000,000 Tulsa, Oklahoma
September 12, 1996
FOR VALUE RECEIVED, the undersigned, Florida Gaming
Corporation ("Maker"), promises to pay to the order of Bank of
Oklahoma, National Association ("Payee") at Tulsa, Oklahoma, or at
such other place as may be designated in writing by the holder of
this Note, the principal sum of One Million United States Dollars
(US$1,000,000) without interest.
The Maker of this Note shall have no personal liability to pay
principal due under this Note except to the extent of an undivided
fifty percent (50%)of all collections (as hereafter defined) in
excess of the Twelve Million United States Dollars (US$12,000,000)
in respect of the WJA Notes (as defined in that certain Note
Purchase Agreement between the Maker, Payee, and BOK DPC Asset
Holding Corporation dated July, 3, 1996 ("Note Purchase
Agreement").
Collections as used herein means the total of all (i) all cash
payments received by the Maker in respect of the WJA Notes, (ii)
all proceeds of sale of the WJA Collateral to the extent such WJA
Collateral is sold to any person or entity unaffiliated with the
Maker, and (iii) all net cash flow (as hereafter defined) from the
use of such WJA Collateral to the extent the WJA Collateral is not
sold to a person or entity unaffiliated with the Maker.
New Cash Flow as used herein means Gross Receipts (as
hereafter defined) less Total Expenses (as hereafter defined). Net
Cash Flow shall be determined quarterly as of the end of each
calendar quarter. Maker shall calculate Net Cash Flow, deliver the
calculation of Net Cash Flow to the holder of this Note, and make
payment of the Net Cash Flow to the holder of this Note in
accordance with such determination within ten business days
following the last calendar day of the calendar quarter in respect
of which the payment is due. In calculating Net Cash Flow in any
quarter any excess of Total Expenses over Gross Receipts as
calculated in a prior quarter shall be carried forward, but shall
not be carried backward.
Gross Receipts means all receipts in respect of the WJA
Collateral determined on a cash basis of accounting and shall
include, but not be limited to, (i) all admission charges, gaming
receipts, and sales of goods or services of whatsoever nature
without limitation at or in respect of the WJA Collateral or any
part thereof, (ii) all rents, rentals and other payments of
whatsoever nature for use of the WJA Collateral or any part
thereof, (iii) all payments received in respect of the lease, sale
or other disposition of whatsoever nature, whether similar or
dissimilar, of the Property or any part thereof or interest
therein, (iv) proceeds of insurance, condemnation awards, damage
awards, or other payments of whatsoever nature in respect of the
WJA Collateral or any part thereof or interest therein, (iv) loan
proceeds of any mortgage placed on the WJA Collateral by the Maker
excluding the Note given by Maker to Payee in the amount of
$6,000,000 dated September 12, 1996, (v) all proceeds of sale of
the WJA Collateral if sold by Maker to a person or entity
unaffiliated with Maker after a period of use by Maker.
Total Expenses means all costs and expenses (whether in
respect of an expensed or capitalized item) incurred after the date
of this Note determined on a cash basis of accounting directly
incurred in owning, developing, operating, leasing, or selling the
WJA Collateral or using the WJA Collateral including (i) real
property, excise, franchise and license taxes, (ii) property,
casualty, liability or other insurance of any nature, (iii)
utilities and maintenance, (iv) costs of construction or other
capital improvements, (v) legal, accounting and other professional
services, and (vi) interest and other financing costs in respect of
any cost or expense otherwise attributable to the WJA Collateral or
any part thereof or interest therein (but only to the extent
incurred in respect of a cost or expense incurred after the date of
this Note and specifically excluding any such interest or financing
cost incurred in connection with the acquisition of the WJA Note
and WJA Collateral by the Maker but specifically including interest
on the Note given by Maker to Payee in the amount of $6,000,000
dated September 12, 1996). The foregoing to the contrary
notwithstanding, no general, overhead, administrative, or like
expense of Maker or federal or state income taxes shall be deducted
as an item of Total Expense.
All payment of principal due under this Note shall be made not
later than the close of business on the tenth business day
following the date of receipt of a Collection by Maker. Maker
shall receive and hold each Collection received by Maker in trust
until the payment of the principal due under this Note in respect
of such Collection is made in good funds to the holder of this
Note.
While any default exists in the making of any of the payments
herein provided to be made the entire unpaid principal balance
hereof shall bear interest from the date of such default until paid
at the rate of eighteen percent (18%) per annum. Upon default in
any payment due hereunder forthwith, without demand, notice of
nonpayment, presentment, protest, notice of dishonor, or notice of
any kind or nature, all of which are expressly waived by the Maker
hereof and all endorsers, sureties, guarantors hereof, and all
other persons who may be come liable for all or part of this
obligation, such payment shall be due and owning.
If and as often as this Note is placed in the hands of an
attorney for collection, for any reason, or if collected by legal
proceedings or through the probate or bankruptcy courts, or other
legal proceedings the Maker hereof agrees to pay to the holder
hereof a reasonable attorney's fee, together with all court costs
and other expenses paid by such holder, which shall be collected as
part of the principal hereof.
The Maker expressly agrees to remain and continue bound for
the payment of this Note notwithstanding the extension or
extensions of the time of, or for the payment of, said Note, and
waives all and every kind of notice of such extension or
extensions, change or changes and agrees that the same may be made
without the joinder of the Maker.
All makers, endorsers, sureties, and guarantors hereof, as
well as all persons to become liable on this Note, hereby jointly
and severally waive demand or presentment for the payment of this
Note, notice of non-payment, protest, notice of protest, suit,
diligence, or any other notice or defense on account of the
extension of time of payment or change in the method of payment of
this Note and do hereby consent to any and all renewals and
extensions of the time of payment hereof.
All payments on this Note shall be timely made in accordance
with the records of the holder of this Note without deduction, off-set,
challenge of the records, or counterclaim. The records of the
holder of this Note shall be prima facie evidence of the amount
owing on this Note, which records may be challenged only in the
event payment has been made in accordance with such records as
required in the immediately preceding sentence.
This Note is to be governed by and construed in accordance
with the laws of the State of Oklahoma. This Note is made and is
performable in Tulsa County, Oklahoma, and the Maker and each
guarantor, endorser, and other party ever liable for the payment of
any sums of money payable on this Note, waive the right to be sued
hereon elsewhere.
This Note may not be terminated orally, but only a discharge
in writing and signed by the party who is the owner and holder of
this Note at the time enforcement of any discharge is sought.
IN WITNESS WHEREOF, the Maker has executed and delivered
this Promissory Note this 12 day of September, 1996 at Tulsa,
Oklahoma.
Florida Gaming Corporation
By /s/ W. B. Collett
its Chairman and CEO
________________________________
(Print Name of Signer)
("Maker")
