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): November 26,
1997
FLORIDA GAMING CORPORATION
(Exact name of registrant as specified in charter)
Delaware 0-9099 59-1670533
(State or other (Commission File Number) (IRS Employer
jurisdiction or Identification
incorporation) No.)
3500 N.W. 37th Avenue
Miami, Florida 33142
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (305) 633-6400
(Former name or former address
if changed since last report.)
INFORMATION TO BE INCLUDED IN THE REPORT
Item 2. Acquisition or Disposition of Assets.
As set forth in the Asset Purchase Agreement (the "Asset
Purchase Agreement") dated as of September 24, 1997, attached as
Exhibit 2.1 to this Form 8-K, and the Addendum to the Asset
Purchase Agreement dated as of October 9, 1997 (the "Addendum"),
attached as Exhibit 2.2 to this Form 8-K, the Registrant agreed
to purchase from Interstate Capital Corporation ("Interstate"), a
wholly-owned subsidiary of Freedom Financial Corporation
("Freedom"), certain unimproved properties and a residential real
estate development called Tara Club Estates (collectively, the
"Properties"), all of which are situated in Loganville, Walton
County, Georgia. Attached as Exhibit 2.3 to this Form 8-K is a
Second Addendum to the Asset Purchase Agreement dated as of
October 31, 1997 (the "Second Addendum"), which makes minor
revisions to the Asset Purchase Agreement.
The acquisition of the Properties was consummated on
November 26, 1997. As consideration for the purchase, Registrant
paid Interstate $6,373,265 as follows: (i) Registrant issued to
Interstate 2,084 shares of Series F 8% Convertible Preferred
Stock (the "Series F Preferred Stock") at a stated value of
$1,000 per share (convertible into Registrant's common stock
("Common Stock") on the basis of 296.6689 shares of Registrant's
Common Stock for each $1,000 of stated value of the Series F
Preferred Stock), (ii) Registrant assumed $1,081,102 of first
mortgage promissory notes to certain lenders secured by the
properties purchased, and (iii) Registrant canceled $3,208,163
owed by Freedom to Registrant.
On November 18, 1997, Interstate and the Registrant entered
into a lock-up agreement, a copy of which is included as Exhibit
99.1 to this Form 8-K, under which Interstate agreed to a
restriction on the conversion of the Series F Preferred Stock
until November 10, 1998.
The terms of the transaction were determined through
arm's-length negotiations between a committee of the disinterested
members of the Board of Directors of the Registrant and
Interstate.
The description and terms of the transaction are qualified
in their entirety by the express terms of the Asset Purchase
Agreement, the Addendum, the Second Addendum and the Certificate
of Designations of Series F 8% Cumulative Convertible Preferred
Stock which are filed as Exhibit 2.1, 2.2, 2.3, and 3.1,
respectively, to this Form 8-K.
Item 5. Other Events.
I. On September 12, 1996, the Registrant consummated the
purchase of notes (the "WJA Notes") of WJA Realty Limited
Partnership from the Bank of Oklahoma, National Association
("BOK"). The WJA Notes totaled $20,728,826 (consisting of
$16,887,907 principal and $3,840,919 accrued but unpaid
interest), bearing interest at 9.25% on the principal and unpaid
interest. The Company paid $2,000,000 in cash, issued 703,297
shares of the Registrant's Common Stock to BOK DPC Asset Holding
Corporation, a wholly owned subsidiary of BOK, issued a
promissory note in the original principal amount of $6,000,000
(the "BOK Note") 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 Company 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 Company failed to make payments in the
aggregate amount of $413,629 due under the BOK Note in October
and November 1997. BOK has taken the position that the
applicable rate of interest under the BOK Note increases to the
Applicable Prime Rate, as defined, plus 5 percent, on December
15, 1997. BOK and the Company have agreed that such payments
shall be made from the proceeds of the sale of certain real
estate in Miami, Florida, which sale is scheduled to close in
early January 1998.
II. On December 2, 1997, the Registrant concluded a private
placement of its Series G 5% Convertible Preferred Stock, $.10
par value (the "Series G Preferred Stock"), at a price per share
of $1,000. The Registrant issued the Series G Preferred Stock
for cash consideration. The Registrant issued a total of 3,000
shares of Series G Preferred Stock as follows: 2,575 shares were
issued on November 26, 1997 (the "First Closing"), 200 shares
were issued on November 28, 1997, 25 shares were issued on
December 1, 1997, and 200 shares were issued on December 2, 1997.
The Registrant did not engage an underwriter in connection
with the issuance of the Series G Preferred Stock. The
Registrant is obligated to pay Pacific Continental Securities
Corp. a finder's fee in the amount of 8% of the gross proceeds
plus 150,000 three-year warrants to purchase the Registrant's
Common Stock, with an exercise price per share equal to $4.18125.
The Series G Preferred Stock was issued in accordance with
the provisions of Regulation D under the Securities Act of 1933,
as amended, in a private placement solely to accredited
investors. The Series G Preferred Stock was issued to a total of
seven "accredited investors," as defined in Rule 501 under the
Securities Act of 1933, as amended.
The Series G Preferred Stock provides annual dividends at
the rate of 5% of the shares's Stated Value, payable semi-annually
beginning on June 30, 1998. The Stated Value per share
equals $1,000 (as adjusted for any stock dividends, combination
or split). At the discretion of the Registrant's Board of
Directors, such dividends may be paid in shares of the Series G
Preferred Stock.
Holders of Series G Preferred Stock may convert all or any
of such shares to the Registrant's Common Stock beginning 180
days after the First Closing (the "Voluntary Conversion Date").
If not converted earlier by the holder, the Series G Preferred
Stock shall be converted automatically on September 30, 2002 (the
"Mandatory Conversion Date").
The Registrant is obligated to file a registration statement
(the "Series G Registration Statement") covering the resale of
the shares of Common Stock issuable on conversion of the Series G
Preferred Stock (the "Series G Conversion Shares") and to use its
best efforts to cause the Series G Registration Statement to
become effective. In general, the number of Series G Conversion
Shares issuable on conversion of each share of Series G Preferred
Stock will be equal to the Conversion Price then in effect
divided by the sum of (i) $1,000 per share of Series G Preferred
Stock, and (ii) accrued and unpaid dividends on such shares, if
any. The Conversion Price is defined as the lesser of (A) $4.175
(the "Maximum Conversion Price") or (B) the Average Share Price
immediately preceding the Voluntary Conversion Date or the
Mandatory Conversion Date for such conversion, as applicable.
The term "Average Share Price" shall mean 80% of the average of
the closing bid prices of the Registrant's shares of Common Stock
as quoted on the NASDAQ Small Capital Market ("NASDAQ SMALL CAP")
(or on such other United States stock exchange or public trading
market on which the shares of the Registrant trade if, at the
time of the conversion, they are not trading on the NASDAQ SMALL
CAP), for the five (5) consecutive trading days immediately
preceding the date of, as applicable, the Voluntary Conversion
Date or the Mandatory Conversion Date.
In the event of a Registration Default (as defined below),
then the Registrant shall pay as liquidated damages to each
holder of Series G Preferred Stock an amount equal to 1% of the
liquidation preference of the Series G Preferred Stock for the
first 30 day period after the expiration of 180 days after the
First Closing (or pro rata portion thereof) and 2% of the
liquidation preference of the Series G Preferred Stock for each
30 day period thereafter (or pro rata portion thereof) that there
continues to be a Registration Default, in cash ratably according
to the number of Series G Preferred Stock held by each holder,
immediately payable following the occurrence of such Registration
Default. A "Registration Default" means if (i) the Series G
Registration Statement has not been declared effective within 180
days from the First Closing, (ii) within the first 30 days
following the 180th day after the First Closing, the Registrant
postpones the filing of the Series G Registration Statement or
allows such Series G Registration Statement to fail to be
effective and usable, or elects that such Series G Registration
Statement not be usable for a reasonable period of time, but not
in excess of 90 days, or (iii) the Series G Registration
Statement is filed and declared effective but shall thereafter
cease to be effective (without being succeeded immediately by an
additional registration statement filed and declared effective)
for a period of time exceeding 45 days in the aggregate per year.
Upon liquidation, the holders of Series G Preferred Stock
shall be entitled to be paid $1,000 per share plus accrued and
unpaid dividends before any distribution to holders of Common
Stock.
The Registrant shall have the right in its sole discretion
to redeem in whole or in part the issued and outstanding Series G
Preferred Stock by paying a redemption price in cash equal to the
greater of (i) the sum of 125% of the original purchase price of
each share of Series G Preferred Stock redeemed, plus all
cumulative unpaid dividends, if any, or (ii) the gross proceeds
that the holders of the Series G Preferred Stock would receive if
they converted the shares of Series G Preferred Stock to be
redeemed into Common Stock and immediately thereafter sold the
Common Stock for 125% of the Average Share Price, calculated as
of the date of the Registrant's notice to the holder of its
election to exercise its redemption rights.
In connection with the sale of the Series G Preferred Stock,
the holder of the Registrant's Series E 8% Cumulative Convertible
Preferred Stock (the "Series E Shares") entered into a lock-up
agreement with the Registrant placing a restriction on the
conversion of the Series E Shares until November 10, 1998.
The discussion at this Item 5 is qualified in its entirety
by reference to the Certificate of Designations, Voting Powers,
Preferences, Limitations, Restrictions, and Relative Rights of
Series G 5% Convertible Preferred Stock, the Series G Convertible
Preferred Stock Purchase Agreement, the Registration Rights
Agreement, the Form of Warrant, and the Registration Rights
Agreement, all of which are attached as to this Form 8-K as
exhibits.
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits
(a) The financial statements required by this Item are not
available at the time of this filing; the Registrant
expects to file with the Commission the financial
statements required no later than February 9, 1998.
(b) The pro forma financial information required by this
Item is not available at the time of this filing; the
Registrant expects to file with the Commission the pro
forma financial information required no later than
February 9, 1998.
(c) Exhibits.
Exhibit 2.1 -- Asset Purchase Agreement dated as of
September 24, 1997, among the
Registrant, Freedom Financial
Corporation and Interstate Capital
Corporation (incorporated by reference
to Exhibit 2.1 to Form 8-K dated
September 26, 1997).
Exhibit 2.2 -- Addendum dated as of October 9, 1997, to
Asset Purchase Agreement dated as of
September 24, 1997, among the
Registrant, Freedom Financial
Corporation and Interstate Capital
Corporation (incorporated by reference
to Exhibit 2.2 to Form 8-K dated October
10, 1997).
Exhibit 2.3 -- Second Addendum dated as of October 31,
1997, to Asset Purchase Agreement dated
as of September 24, 1997, among the
Registrant, Freedom Financial
Corporation and Interstate Capital
Corporation.
Exhibit 3.1, 4.1 -- Certificate of Designation of Series F
8% Cumulative Convertible Preferred Stock.
Exhibit 3.2, 4.2 -- Certificate of Designation of Series G
5% Convertible Preferred Stock.
Exhibit 4.3 -- Series G Convertible Preferred Stock
Purchase Agreement with respect to the
Series G Preferred Stock.
Exhibit 4.4 -- Registration Rights Agreement with
respect to the Series G Preferred Stock.
Exhibit 4.5 -- Form of Warrant to purchase common
stock of Registrant.
Exhibit 4.6 -- Registration Rights Agreement with
respect to the Warrant.
Exhibit 99.1 -- Lock-Up Agreement dated November 18,
1997 between Florida Gaming Corporation
and Interstate Capital Corporation.
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: December 11, 1997
SECOND ADDENDUM TO ASSET PURCHASE AGREEMENT
THIS SECOND ADDENDUM TO ASSET PURCHASE AGREEMENT
("Addendum") is made and entered into by and among FLORIDA GAMING
CORPORATION, a Delaware corporation ("Buyer"), FREEDOM FINANCIAL
CORPORATION, an Indiana corporation ("Freedom") and INTERSTATE
CAPITAL CORPORATION, a Kentucky corporation ("Seller").
WITNESSETH:
WHEREAS, Buyer, Seller and Freedom entered into an Asset
Purchase Agreement dated September 24, 1997 and an Addendum
thereto dated October 9, 1997 (collectively the "Agreement")
providing for the sale of Tara Club Estates and certain adjacent
properties; and
WHEREAS, all of the conditions precedent to the closing of
the Agreement have been or will be be satisfied in the immediate
future; and
WHEREAS, Section 9 of the Agreement provides that the
closing shall occur not later than October 15, 1997; and
WHEREAS, Buyer, Seller and Freedom desire to amend Section 9
of the Agreement to extend the closing date.
NOW, THEREFORE, in consideration of the premises and the
mutual promises of the parties hereto, they hereby covenant and
agree as follows:
1. Section 9 of the Agreement is hereby amended to delete
"October 15, 1997" and to insert in lieu thereof "November 30,
1997".
2. The Agreement shall otherwise remain unchanged and in
full force and effect.
IN WITNESS WHEREOF, Florida Gaming Corporation, Freedom
Financial Corporation and Interstate Capital Corporation have
caused this Second Addendum to be signed by their officers
thereunto duly authorized as of the 31st day of October, 1997.
FLORIDA GAMING FREEDOM FINANCIAL
CORPORATION CORPORATION
By:s/Timothy L. Hensley By:s/W. Bennett Collett
Timothy L. Hensley W. Bennett Collett
Executive Vice President Chairman and Chief
Executive Officer
INTERSTATE CAPITAL
CORPORATION
By:s/W. Bennett Collett
W. Bennett Collett
Chairman and Chief
Executive Officer
Certificate of Designations,
Voting Powers, Preferences, Limitations,
Restrictions, and Relative Rights of
Series F 8% Cumulative Convertible
Preferred Stock, $.10 Par Value
____________
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
___________
Florida Gaming Corporation, a Delaware corporation (the
"Corporation"), does hereby certify that the following resolution
has been duly adopted by the Board of Directors of the
Corporation (the "Board"):
RESOLVED, that, pursuant to the authority expressly granted
to and vested in the Board by the provisions of the Certificate
of Incorporation (the "Certificate of Incorporation") of the
Corporation, there hereby is created a series of Preferred Stock,
$.10 par value, which series shall have the following
designations, powers, preferences, rights, qualifications,
limitations and restrictions (in addition to the designations,
powers, preferences, rights, qualifications, limitations and
restrictions set forth in the Certificate of Incorporation which
are applicable to the Preferred Stock).
1. Designation; Number of Shares.
The designation of said series of Preferred Stock shall
be Series F 8% Cumulative Convertible Preferred Stock (the
"Series F Preferred Stock"). The number of shares of Series F
Preferred Stock shall be 2,500. Each share of Series F Preferred
Stock shall have a stated value equal to $1,000 (as adjusted for
any stock dividends, combinations or splits with respect to such
shares) (the "Stated Value"). The Series F Preferred Stock shall
be equal in rank to the Class A Convertible Preferred Stock,
Series B Convertible Preferred Stock, Series C 8% Cumulative
Convertible Preferred Stock ("Series C Preferred Stock"), Series
D 8% Cumulative Convertible Preferred Stock ("Series D Preferred
Stock") and Series E 8% Cumulative Convertible Preferred Stock
("Series E Preferred Stock") with respect to payment of dividends
and the distribution of assets upon liquidation of the
Corporation.
2. Dividends.
(a) The holders of outstanding shares of Series F
Preferred Stock shall be entitled to receive preferential divi-
dends in cash, out of any funds of the Corporation legally
available at the time for declaration of dividends, before any
dividend or other distribution will be paid or declared and set
apart for payment on any shares of any Common Stock or other
class of stock junior to the Series F Preferred Stock (the Common
Stock and such junior stock being hereinafter collectively the
"Junior Stock") at the rate of 8% per annum on the Stated Value
per share, payable quarterly on the last day of a fiscal quarter
when, as and if declared commencing December 31, 1997; provided,
however, that dividend payments may be made, in the sole
discretion of the Board of Directors of the Corporation in
additional fully paid and nonassessable shares of Series F
Preferred Stock at a rate of one share of Series F Preferred
Stock for each $1,000 of such dividend not paid in cash and the
issuance of such additional shares shall constitute full payment
of such dividend.
(b) The dividends on the Series F Preferred Stock at
the rates provided above shall be cumulative whether or not
earned, so that if at any time full cumulative dividends at the
rate aforesaid on all shares of the Series F Preferred Stock then
outstanding from the date from and after which dividends thereon
are cumulative to the end of the quarterly dividend period next
preceding such time shall not have been paid or declared and set
apart for payment, or if the full dividend on all such outstand-
ing Series F Preferred Stock for the then current dividend period
shall not have been paid or declared and set apart for payment,
the amount of the deficiency shall be paid or declared and set
apart for payment (but without interest thereon) before any sum
shall be set apart for or applied by the Corporation or a subsid-
iary of the Corporation to the purchase, redemption or other
acquisition of the Series F Preferred Stock or any shares of any
other class of stock ranking on a parity with the Series F
Preferred Stock ("Parity Stock") and before any dividend or other
distribution shall be paid or declared and set apart for payment
on any Junior Stock and before any sum shall be set aside for or
applied to the purchase, redemption or other acquisition of
Junior Stock.
(c) Dividends on all shares of the Series F Preferred
Stock shall begin to accrue and be cumulative from and after the
date of issuance thereof. A dividend period shall be deemed to
commence on the day following a quarterly dividend payment date
herein specified and to end on the next succeeding quarterly
dividend payment date herein specified.
3. Liquidation Rights.
(a) Upon the dissolution, liquidation or winding-up of
the Corporation, whether voluntary or involuntary, the holders of
the Series F Preferred Stock shall be entitled to receive, before
any payment or distribution shall be made on the Junior Stock,
out of the assets of the Corporation available for distribution
to stockholders, the Stated Value per share of Series F Preferred
Stock and all accrued and unpaid dividends to and including the
date of payment thereof. Upon the payment in full of all amounts
due to holders of the Series F Preferred Stock, the holders of
the Common Stock of the Corporation and any other class of Junior
Stock shall receive all remaining assets of the Corporation
legally available for distribution. If the assets of the
Corporation available for distribution to the holders of the
Series F Preferred Stock shall be insufficient to permit payment
in full of the amounts payable as aforesaid to the holders of
Series F Preferred Stock upon such liquidation, dissolution or
winding-up, whether voluntary or involuntary, then all such
assets of the Corporation shall be distributed, to the exclusion
of the holders of shares of Junior Stock, ratably among the
holders of the Series F Preferred Stock and any other stock of
equal ranking.
(b) Neither the purchase by the Corporation of shares
of any class of stock, nor the merger or consolidation of the
Corporation with or into any other corporation or corporations,
nor the sale or transfer by the Corporation of all or any part of
its assets, shall be deemed to be a liquidation, dissolution or
winding-up of the Corporation for the purposes of this paragraph
3. Holders of the Series F Preferred Stock shall not be
entitled, upon the liquidation, dissolution or winding-up of the
Corporation, to receive any amounts with respect to such stock
other than the amounts referred to in this paragraph 3.
4. Conversion into Common Stock.
Shares of Series F Preferred Stock shall have the
following conversion rights and obligations:
(a) Subject to the further provisions of this
paragraph 4, each holder of shares of Series F Preferred Stock
shall have the right, at any time and from time to time, to
convert some or all such shares into fully paid and non-assessable
shares of Common Stock of the Corporation (as defined
in subparagraph 4(h) below) determined in accordance with
paragraph 4(b) below.
(b) Each share of Series F Preferred Stock shall be
converted into 296.6689 shares of Common Stock (the "Conversion
Stock"). The number of shares of Conversion Stock into which
each share of Series F Preferred Stock shall be converted shall
be proportionately adjusted for any increase or decrease in the
number of shares of Common Stock or Series F Preferred Stock, as
the case may be, outstanding arising from any division or
consolidation of shares, stock dividend, reverse stock split, or
other similar increase or decrease in the number of shares of
Common Stock or Series F Preferred Stock, as the case may be,
outstanding without receipt of consideration by the Corporation.
Upon conversion of the Series F Preferred Stock, the Corporation
shall pay, out of funds legally available therefor, to the person
entitled thereto an amount equal to all accrued but unpaid
dividends through, but not including, the date on which the
conversion privilege has been exercised in respect of the shares
of Series F Preferred Stock surrendered for conversion.
(c) The holder of any certificate for shares of Series
F Preferred Stock desiring to convert any of such shares shall
surrender such certificate, at the principal office of any
transfer agent for said stock (the "Transfer Agent"), with a
written notice (the "Notice of Conversion") of such election to
convert such shares into Common Stock duly filled out and
executed, and if necessary under the circumstances of such
conversion, with such certificate properly endorsed for, or
accompanied by duly executed instruments of, transfer (and such
other transfer papers as said Transfer Agent may reasonably
require). The holder of the shares so surrendered for conversion
shall be entitled to receive within three (3) business days of
the Notice of Conversion (except as otherwise provided herein) a
certificate or certificates, which shall be expressed to be fully
paid and non-assessable, for the number of shares of Common Stock
to which such stockholder shall be entitled upon such conversion,
registered in the name of such holder or in such other name or
names as such stockholder in writing may specify. In the case of
any Series F Preferred Stock which is converted in part only, the
holder of shares of Series F Preferred Stock shall upon delivery
of the certificate or certificates representing Common Stock also
receive a new share certificate representing the unconverted
portion of the shares of Series F Preferred Stock. Nothing
herein shall be construed to give any holder of shares of Series
F Preferred Stock surrendering the same for conversion the right
to receive any additional shares of Common Stock or other
property which results from an adjustment in conversion rights
under the provisions of subparagraph (f) of this paragraph 4
until holders of Common Stock are entitled to receive the shares
or other property giving rise to the adjustment.
In the case of the exercise of the conversion rights
set forth in paragraph 4(a), the conversion privilege shall be
deemed to have been exercised, and the shares of Common Stock
issuable upon such conversion shall be deemed to have been
issued, upon the date of receipt by such Transfer Agent for
conversion of the certificate for such shares of Series F
Preferred Stock. The person or entity entitled to receive Common
Stock issuable upon such conversion shall on the date such
conversion privilege is deemed to have been exercised and
thereafter be treated for all purposes as the record holder of
such Common Stock and shall on the same date cease to be treated
for any purpose as the record holder of such shares of Series F
Preferred Stock so converted.
Notwithstanding the foregoing, if the stock transfer
books are closed on the date such shares are received by the
Transfer Agent, the conversion privilege shall be deemed to have
been exercised, and the person or entity shall be treated as a
record holder of shares of Common Stock, on the next succeeding
date on which the transfer books are open, but the effective
conversion price shall be that in effect on the date such
conversion privilege was exercised. The Corporation shall not be
required to deliver certificates for shares of its Common Stock
or new certificates for unconverted shares of its Series F
Preferred Stock while the stock transfer books for such
respective classes of stock are duly closed for any purpose; but
the right of surrendering shares of Series F Preferred Stock for
conversion shall not be suspended during any period that the
stock transfer books of either of such classes of stock are
closed.
Upon the conversion of any shares of Series F Preferred
Stock, no adjustment or payment shall be made with respect to
such converted shares on account of any dividend thereafter on
shares of such stock or on account of any dividend on the Common
Stock, except that the holder of such converted shares shall be
entitled to be paid any dividends declared on shares of Common
Stock after conversion thereof.
If the Corporation shall at any time be liquidated,
dissolved or wound-up, the conversion privilege shall terminate
at the close of business on the last business day next preceding
the effective date of such liquidation, dissolution or winding-up.
The Corporation shall not be required, in connection
with any conversion of Series F Preferred Stock, to issue a
fraction of a share of its Common Stock nor to deliver any stock
certificate representing a fraction thereof, but in lieu thereof
the Corporation may make a cash payment equal to such fraction
multiplied by the fair market value of one share of its Common
Stock on the date the conversion privilege shall be deemed to
have been exercised.
(d) (i) In case of any consolidation or merger of the
Corporation with or into any other corporation (other than a
merger or consolidation in which the Corporation is the surviving
or continuing corporation and which does not result in any
reclassification, conversion or change of the outstanding shares
of Common Stock), then, unless the right to convert shares of
Series F Preferred Stock shall have terminated, as part of such
consolidation or merger, lawful provision shall be made so that
holders of Series F Preferred Stock shall thereafter have the
right to convert each share of Series F Preferred Stock into the
kind and amount of shares of stock and/or other securities or
property receivable upon such consolidation or merger by a holder
of the number of shares of Common Stock into which such shares of
Series F Preferred Stock might have been converted immediately
before such consolidation or merger. The foregoing provisions of
this paragraph 4(e) shall similarly apply to successive
consolidations and mergers.
(ii) In case of any sale or conveyance to another
person or entity of the property of the Corporation as an
entirety, or substantially as an entirety, in connection with
which shares or other securities or cash or other property shall
be issuable, distributable, payable or deliverable for
outstanding shares of Common Stock, then, unless the right to
convert such shares shall have terminated, lawful provision shall
be made so that the holders of Series F Preferred Stock shall
thereafter have the right to convert each share of the Series F
Preferred Stock into the kind and amount of shares of stock or
other securities or cash or property that shall be issuable,
distributable, payable or deliverable upon such sale or
conveyance with respect to each share of Common Stock immediately
before such conveyance.
(e) Whenever the number of shares to be issued upon
conversion of the Series F Preferred Stock is required to be
adjusted as provided in this paragraph 4, the Corporation shall
forthwith compute the adjusted number of shares to be so issued
and prepare a certificate setting forth such adjusted conversion
amount and the facts upon which such adjustment is based, and
such certificate shall forthwith be filed with the Transfer Agent
for the Series F Preferred Stock and the Common Stock; and the
Corporation shall mail to each holder of record of Series F
Preferred Stock notice of such adjusted conversion price.
(f) In case at any time the Corporation shall propose:
(i) to pay any dividend or distribution payable
in shares upon its Common Stock or make any distribution
(other than cash dividends) to the holders of its Common
Stock, Class A Convertible Preferred Stock, Series B
Convertible Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock or Series E Preferred Stock, other
than in accordance with the terms thereof; or
(ii) to offer for subscription to the holders of
its Common Stock, Class A Convertible Preferred Stock,
Series B Convertible Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, or Series E Preferred
Stock, or other than in accordance with the terms thereof,
any additional shares of any class or any other rights; or
(iii) any capital reorganization or
reclassification of its shares, or the consolidation or
merger of the Corporation with another corporation; or
(iv) the voluntary dissolution, liquidation or
winding-up of the Corporation;
then, and in any one or more of said cases, the Corporation shall
cause at least fifteen (15) days prior notice of the date on
which (A) the books of the Corporation shall close, or a record
be taken for such stock dividend, distribution or subscription
rights, or (B) such capital reorganization, reclassification,
consolidation, merger, dissolution, liquidation or winding-up
shall take place, as the case may be, to be mailed to the
Transfer Agent for the Series F Preferred Stock and for the
Common Stock and to the holders of record of the Series F
Preferred Stock.
(g) So long as any shares of Series F Preferred Stock
shall remain outstanding and the holders thereof shall have the
right to convert the same in accordance with provisions of this
paragraph 4, the Corporation shall at all times reserve from the
authorized and unissued shares of its Common Stock a sufficient
number of shares to provide for such conversions.
(h) The term "Common Stock" as used in this paragraph
4 shall mean Common Stock of the Corporation as such stock is
constituted at the date of issuance thereof or as it may from
time to time be changed, or shares of stock of any class, other
securities and/or property into which the shares of Series F
Preferred Stock shall at any time become convertible pursuant to
the provisions of this paragraph 4.
(i) The Corporation shall pay the amount of any and
all issue taxes which may be imposed in respect of any issue or
delivery of stock upon the conversion of any shares of Series F
Preferred Stock, but all transfer taxes that may be payable in
respect of any change of ownership of Series F Preferred Stock,
or any rights represented thereby, or of stock receivable upon
conversion thereof, shall be paid by the person or persons
surrendering such stock for conversion.
5. Voting Rights.
Except as required by applicable law, shares of Series
F Preferred Stock shall not entitle their holders to any voting
rights, but such holders shall be entitled to a notice of any
stockholders' meeting in accordance with the By-laws of the
Corporation.
6. Status of Converted Stock.
In case any shares of Series F Preferred Stock shall be
converted pursuant to paragraph 4 hereof, or otherwise
repurchased or reacquired, the shares so redeemed, converted or
reacquired shall resume the status of authorized but unissued
shares of Preferred Stock and shall no longer be designated as
Series F Preferred Stock.
IN WITNESS WHEREOF, the Corporation has caused this
Certificate to be duly executed on its behalf by its Executive
Vice President and Chief Financial Officer this 20th day of
October, 1997.
FLORIDA GAMING CORPORATION
By:/s/ Timothy L. Hensley
Executive Vice President,
Treasurer And Chief Financial
Officer
CERTIFICATE OF DESIGNATIONS, VOTING POWERS, PREFERENCES,
LIMITATIONS, RESTRICTIONS, AND RELATIVE RIGHTS
OF
SERIES G 5% CONVERTIBLE PREFERRED STOCK
(Par Value $.10 Per Share)
OF
FLORIDA GAMING CORPORATION
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
Florida Gaming Corporation, a Delaware corporation (the
"Company"), does hereby certify that the following resolution has
been duly adopted by the Board of Directors of the Company (the
"Board"):
RESOLVED, that, pursuant to the authority expressly granted
to and vested in the Board by the provisions of the Certificate
of Incorporation (the "Certificate of Incorporation") of the
Company, there hereby is created a series of Preferred Stock,
$.10 par value, which series shall have the following
designations, powers, preferences, rights, qualifications,
limitations and restrictions (in addition to the designations,
powers, preferences, rights, qualifications, limitations and
restrictions set forth in the Certificate of Incorporation which
are applicable to the Preferred Stock).
1. Designation and Rank. The designation of such series
of the Preferred Stock shall be the Series G 5% Convertible
Preferred Stock, par value $.10 per share (the "Series G
Convertible Preferred Stock"). The maximum number of shares of
Series G Convertible Preferred Stock shall be 5,000 Shares. The
Series G Convertible Preferred Stock shall have a liquidation
preference of $1,000 per share plus accrued and unpaid dividends
thereon. The Series G Convertible Preferred Stock shall rank
prior to the common stock, par value $.10 per share (the "Common
Stock"), and to all other classes and series of equity securities
of the Company now or hereafter authorized, issued or
outstanding, other than the Company's Series A Convertible
Preferred Stock ("Series A"), the Company's Series B Convertible
Preferred Stock ("Series B"), the Company's Series C Convertible
Preferred Stock ("Series C"), the Company's Series D Convertible
Preferred Stock ("Series D"), the Company's Series E Convertible
Preferred Stock ("Series E"), and the Company's Series F
Convertible Preferred Stock ("Series F") (the Common Stock, and
such other classes and series of equity securities other than the
Company's Series A, Series B, Series C, Series D, Series E and
Series F Preferred Stock, collectively may be referred to herein
as the "Junior Stock"). The Series G Convertible Preferred Stock
shall be subordinate to and rank junior to all indebtedness of
the Company now or hereafter outstanding.
2. Payment of Dividends. The holders of outstanding
shares of Series G Convertible Preferred Stock shall be entitled
to receive preferential dividends in cash, out of any funds of
the Company legally available at the time for declaration of
dividends, before any dividend or other distribution will be paid
or declared and set apart for payment on any shares of Junior
Stock, at the rate of 5% per annum, payable semi-annually
beginning on June 30, 1998; provided, however, that dividend
payments may be made in the sole discretion of the Board of
Directors of the Company in additional fully paid and
nonassessable shares of Series G Convertible Preferred Stock at a
rate of $1,000 per share of Series G Convertible Preferred Stock
for each $1,000 of such dividend not paid in cash, and the
issuance of such additional shares shall constitute full payment
of such dividend.
3. Voting Rights.
(a) Class Voting Rights. The Series G Convertible
Preferred Stock shall have the following class voting rights (in
addition to the voting rights set forth in Section 3(b) hereof).
So long as any shares of Series G Convertible Preferred Stock are
issued and outstanding, the Company shall not, without the
affirmative vote or consent of the holders of at least a majority
of the shares of the Series G Convertible Preferred Stock
outstanding at the time, given in person or by proxy, either in
writing or at a meeting, in which the holders of the Series G
Convertible Preferred Stock vote separately as a class: (i)
authorize, create, issue or increase the authorized or issued
amount of any class or series of stock, including but not limited
to the issuance of any more shares of previously authorized
Common or Preferred Stock, ranking prior to or on a parity with
the Series G Convertible Preferred Stock, with respect to payment
of dividends or the distribution of assets on liquidation,
dissolution or winding up, except that no such vote or consent
shall be required with respect to shares of Common Stock or
Preferred Stock issued in payment of dividends on, or upon the
conversion of, Series A, Series B, Series C, Series D, Series E,
Series F and Series G Convertible Preferred Stock and the
issuance of up to 2,084 shares of Series F Preferred Stock to
Interstate Capital Corporation or Freedom Financial Corporation
or an assignee, and except for stock options and warrants granted
by the Company to directors, employees or consultants for
services rendered, and such stock options and warrants
previously authorized by the Company's Board of Directors before
the filing with the Delaware Secretary of State of the
Certificate of Designation with respect to the Series G
Convertible Preferred Stock, to the extent permitted and subject
to the limitations in Section 1 of this Certificate; and provided
further, that the Company may authorize and issue additional
shares of Series G Convertible Preferred Stock on the same terms
and conditions as set forth in this Certificate without the
consent of any holders of the outstanding shares of Series G
Convertible Preferred Stock for the purpose of paying dividends
on the Series G Convertible Preferred Stock, if the Company pays
the dividend in stock rather than in cash; (ii) amend, alter or
repeal the provisions of the Series G Convertible Preferred
Stock, whether by merger, consolidation or otherwise, so as to
affect materially and adversely any right, preference, privilege
or voting power of the Series G Convertible Preferred Stock;
provided, however, that any creation and issuance of other series
of Junior Stock shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers;
(iii) repurchase, or pay cash dividends on, shares of the
Company's Junior Stock; (iv) amend the Articles of Incorporation
or By-Laws of the Company so as to affect materially and
adversely any right, preference, privilege or voting power of the
Series G Convertible Preferred Stock; provided, however, that any
creation and issuance of another series of Junior Stock shall not
be deemed to materially and adversely affect such rights,
preferences privileges or voting powers; (v) except as permitted
herein, effect any distribution with respect to any class of the
Company's capital stock of (A) shares of any class of its capital
stock, (B) rights to purchase any class of its capital stock, or
(C) other securities convertible into any class of its capital
stock; (vi) reclassify the Company's outstanding securities,
(vii) enter into any transaction required to be disclosed under
Item 404 of Regulation S-K in the aggregate amount of more than
$100,000 with any person directly or indirectly controlling the
Company, except for transactions approved by the Company's Board
of Directors prior to the date of the filing of the Series G
Convertible Preferred Stock Certificate of Designation with the
Delaware Secretary of State, or (viii) prior to January 1, 1999,
issue any additional equity securities or securities convertible
into equity securities of the Company, except in payment of
dividends on, or upon the conversion of, Preferred Stock as
excepted from the provisions of Section 3(a)(i) hereof or upon
the exercise of stock options and warrants excepted from those
provisions.
(b) General Voting Rights. Except with respect to
transactions upon which the Series G Convertible Preferred Stock
shall be entitled to vote separately as a class pursuant to
Section 3(a) above and except as otherwise required by Delaware
law, the Series G Convertible Preferred Stock shall have no
voting rights. The Common Stock into which the Series G
Convertible Preferred Stock is convertible shall, upon issuance,
have all of the same voting rights as other issued and
outstanding Common Stock of the Company.
4. Liquidation Preference.
(a) In the event of the liquidation, dissolution or
winding up of the affairs of the Company, whether voluntary or
involuntary, after payment or provision for payment of the debts
and other liabilities of the Company, the holders of shares of
the Series G Convertible Preferred Stock then outstanding shall
be entitled to receive, out of the assets of the Company whether
such assets are capital or surplus of any nature, an amount (the
"Liquidation Preference") per share equal to $1,000 per share of
the Series G Convertible Preferred Stock, through the date of
liquidation, dissolution or winding up, whether or not declared,
and no more, before any payment shall be made or any assets
distributed to the holders of the Common Stock or any other
Junior Stock. If the assets of the Company are not sufficient to
pay in full the Liquidation Preference payable to the holders of
outstanding shares of the Series G Convertible Preferred Stock
and any series of preferred stock or any other class of stock on
a parity, as to rights on liquidation, dissolution or winding up,
with the Series G Convertible Preferred Stock, then all of said
assets will be distributed among the holders of the Series G
Convertible Preferred Stock, and the other classes of stock on a
parity with the Series G Convertible Preferred Stock, ratably in
accordance with the respective amounts that would be payable on
such shares if all amounts payable thereon were paid in full. The
liquidation payment with respect to each outstanding fractional
share of Series G Convertible Preferred Stock shall be equal to a
ratably proportionate amount of the liquidation payment with
respect to each outstanding share of Series G Convertible
Preferred Stock. All payments for which this Section 4(a)
provides shall be in cash, property (valued at its fair market
value as determined by an independent nationally recognized
investment banking firm) or a combination thereof; provided,
however, that no cash shall be paid to holders of Junior Stock
unless each holder of the outstanding shares of Series G
Convertible Preferred Stock has been paid in cash the full amount
of the Liquidation Preference to which such holder is entitled as
provided herein. After payment of the full amount of the
Liquidation Preference to which each holder is entitled, such
holders of shares of Series G Convertible Preferred Stock will
not be entitled to any further participation as such in any
distribution of the assets of the Company.
(b) A consolidation or merger of the Company with or
into any other corporation or corporations, or a purchase or
redemption by the Company of shares of any class of stock, or a
sale of all or substantially all of the assets of the Company, or
the effectuation by the Company of a transaction or series of
transactions in which more than 50% of the voting shares of the
Company is disposed of or conveyed, shall not be deemed to be a
liquidation, dissolution, or winding up within the meaning of
this Section 4.
(c) Written notice of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the
Company, stating a payment date and the place where the
distributable amounts shall be payable, shall be given by mail,
postage prepaid, no less than 45 days prior to the payment date
stated therein, to the holders of record of the Series G
Convertible Preferred Stock at their respective addresses as the
same shall appear on the books of the Company.
5. Conversion. The holder of Series G Convertible
Preferred Stock shall have the following conversion rights (the
"Conversion Rights"):
(a) Right to Convert. At any time or from time to
time following the 180th day following the first date of issuance
of any share of Series G Convertible Preferred Stock (the
"Issuance Date"), the holder of any shares of Series G
Convertible Preferred Stock at his or her option may, subject to
the limitations set forth in Section 5(m) herein, elect (a
"Voluntary Conversion") to convert all or any portion of the
shares of Series G Convertible Preferred Stock held by such
person into a number of fully paid and nonassessable shares of
Common Stock equal to the quotient which results when the
Conversion Price (as defined below) then in effect is divided
into the sum of (i) $1,000 per share of Series G Convertible
Preferred Stock and (ii) accrued and unpaid dividends on such
shares, if any, as of the date of such holder's exercise of
election to convert (the "Voluntary Conversion Date"), in
accordance with the following sentence. Such right shall be
exercised by delivery to the Company of a written or facsimile
notice (the "Conversion Notice") of such holder's election to
convert the Series G Convertible Preferred Stock to be converted
at any time during normal business hours (i.e. 9:00 a.m. to 5:30
p.m. Eastern Standard or Daylight Savings Time, as the case may
be) at the office of the Company. The exercise shall become
effective (the "Exercise Effective Date") on the date the Company
receives the Conversion Notice provided that the Company receives
(x) the certificates evidencing the shares of Series G
Convertible Preferred Stock to be converted, (y) if so required
by the Company, instruments of transfer, in form satisfactory to
the Company, duly executed by the registered holder or by his
duly authorized attorney, and (z) transfer tax stamps or funds
therefore, if required pursuant to Section 5(g) herein
(collectively, the "Supporting Documentation"), within three (3)
business days of the Exercise Effective Date.
(b) Mandatory Conversion.
(i) If a Mandatory Conversion Event (as
hereinafter defined) shall occur, each share of Series G
Convertible Preferred Stock outstanding on the date of such
Mandatory Conversion Event (a "Mandatory Conversion Date") shall,
automatically and without any action on the part of the holder
thereof, convert into a number of fully paid and non-assessable
shares of Common Stock equal to the quotient derived by dividing
the Conversion Price in effect on the Mandatory Conversion Date
into the product of $1,000 multiplied by the total number of
issued and outstanding shares of Series G Convertible Preferred
Stock on the Mandatory Conversion Date.
(ii) As used herein, a "Mandatory Conversion
Event" shall be deemed to have occurred on September 30, 2002,
provided that:
(A) all the shares of Common Stock issuable
upon conversion of shares of Series G Convertible Preferred Stock
shall have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to a registration
statement declared effective under the Securities Act by the
Commission (no later than the Mandatory Conversion Date) and such
registration shall be available for use under the Securities Act
after the Mandatory Conversion Date;
(B) on the Mandatory Conversion Date, all
shares of Common Stock issuable upon the conversion of shares of
Series G Convertible Preferred Stock shall be qualified for
resale by the holders of such shares under all applicable state
securities laws and shall have been listed or approved for
trading on, as applicable, the NASDAQ Small Capital Market or
each securities exchange on which such shares are then traded.
(C) If the conditions set forth in Section
5(b)(ii)(A) and (B) above are not satisfied on September 30,
2002, then the Mandatory Conversion Event shall be deemed to
occur on the first date thereafter that such conditions are
satisfied.
(iii) Upon the occurrence of a Mandatory
Conversion Event, the outstanding shares of Series G Convertible
Preferred Stock shall be converted automatically without any
further action by the holders of such shares and whether or not
the certificates representing such shares are surrendered to the
Company or its transfer agent; provided, however, that the
Company shall not be obligated to issue certificates evidencing
the shares of Common Stock issuable upon conversion of any shares
of Series G Convertible Preferred Stock unless certificates
evidencing such shares of Series G Convertible Preferred Stock
are either delivered to the Company or the holder notifies the
Company that such certificates have been lost, stolen, or
destroyed, and executes an agreement satisfactory to the Company
to indemnify the Company from any loss incurred by it in
connection therewith. Upon the occurrence of the automatic
conversion of the Series G Convertible Preferred Stock, the
holders of the Series G Convertible Preferred Stock shall
surrender the certificates representing such shares at the office
of the Company. Thereupon, there shall be issued and delivered to
such holder, promptly at such office and in his name as shown on
such surrendered certificate or certificates, a certificate or
certificates for the number of shares of Common Stock into which
the shares of Series G Convertible Preferred Stock surrendered
were convertible on the Mandatory Conversion Date.
(c) Conversion Price.
(i) The term "Average Share Price" shall mean 80%
of the average of the closing bid prices of the Company's shares
of Common Stock as quoted on the NASDAQ Small Capital Market
("NASDAQ SMALL CAP") (or on such other United States stock
exchange or public trading market on which the shares of the
Company trade if, at the time of the Conversion, they are not
trading on the NASDAQ SMALL CAP), for the five (5) consecutive
trading days immediately preceding the date of, as applicable,
the Voluntary Conversion Date or the Mandatory Conversion Date,
or for the purposes of Sections 5(d)(vi) and 5(d)(vii) herein,
preceding the date of the issuance of Common Stock, rights,
warrants or options to purchase Common Stock or other securities
of the Company.
(ii) The term "Conversion Price" shall mean, with
respect to any conversion of Series G Convertible Preferred
Stock, the lesser of (A) 105% of the average of the reported
closing bid prices of the Company's Common Stock as quoted on the
NASDAQ SMALL CAP during the fifteen (15) consecutive trading days
immediately preceding the Issuance Date (the "Maximum Conversion
Price") or (B) the Average Share Price immediately preceding the
Voluntary Conversion Date or Mandatory Conversion Date for such
conversion, as applicable.
(iii) Notwithstanding anything else herein to
the contrary, the Conversion Price of the Series G Convertible
Preferred Stock will be adjusted to be the lowest fixed
conversion price (or the formula which provides for a lower
conversion price based upon the fair market value per share of
the Company's Common Stock) of any other convertible securities,
rights, options or warrants issued by the Company during the 12
months immediately following the Issuance Date, except for stock
options and warrants granted by the Company to directors,
employees or consultants for services rendered. For example, if,
after the Issuance Date, the Company issues securities that are
convertible at 70% of the average of the closing bid prices of
the Company's shares of Common Stock, then the Average Share
Price calculation of Section 5(c) shall be reduced from 80% to
70%.
(d) Adjustments of Conversion Price and Mandatory
Conversion Threshold.
(i) Adjustments for Stock Splits and
Combinations. If the Company shall at any time or from time to
time after the Issuance Date, effect a stock split of the
outstanding Common Stock, the applicable Conversion Price and
Maximum Conversion Price in effect immediately prior to the stock
split shall be proportionately decreased. If the Company shall at
any time or from time to time after the Issuance Date, combine
the outstanding shares of Common Stock, the applicable Conversion
Price and Maximum Conversion Price in effect immediately prior to
the combination shall be proportionately increased. Any
adjustments under this Section 5(d)(i) shall be effective at the
close of business on the date the stock split or combination
occurs.
(ii) Adjustments for Certain Dividends and
Distributions. If the Company shall at any time or from time
after the Issuance Date, make or issue or set a record date for
the determination of holders of Common Stock entitled to receive
a dividend or other distribution payable in shares of Common
Stock, then, and in each event, the Maximum Conversion Price in
effect immediately prior to such event shall be decreased as of
the time of such issuance or, in the event such a record date
shall have been fixed, as of the close of business on such record
date, by multiplying, as applicable, the Maximum Conversion Price
then in effect by a fraction;
(A) the numerator of which shall be the
total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of
business on such record date; and
(B) the denominator of which shall be the
total number of shares of Common Stock issued and outstanding
immediately prior to the time of such issuance or the close of
business on such record date plus the number of shares of Common
Stock issuable in payment of such dividend or distribution.
(iii) Adjustment for Other Dividends and
Distributions. If the Company shall at any time or from time to
time after the Issuance Date, make or issue or set a record date
for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in other than
shares of Common Stock, then, and in each event, an appropriate
revision to the Maximum Conversion Price shall be made and
provision shall be made (by adjustments of the Conversion Price
or otherwise) so that the holders of Series G Convertible
Preferred Stock shall receive upon conversions thereof, in
addition to the number of shares of Common Stock receivable
thereon, the number of securities of the Company which they would
have received had their Series G Convertible Preferred Stock been
converted into Common Stock on the date of such event and had
thereafter, during the period from the date of such event to and
including the Conversion Date, retained such securities (together
with any distributions payable thereon during such period),
giving application to all adjustments called for during such
period under this Section 5(d)(iii) with respect to the rights of
the holders of the Series G Convertible Preferred Stock.
(iv) Adjustments for Reclassification, Exchange or
Substitution. If the Common Stock issuable upon conversion of
the Series G Convertible Preferred Stock at any time or from time
to time after the Issuance Date shall be changed into the same or
different number of shares of any class or classes of stock,
whether by reclassification, exchange, substitution or otherwise
(other than by way of a stock split or combination of shares or
stock dividends provided for in Sections 5(d)(i), (ii) and (iii),
or a reorganization, merger, consolidation, or sale of assets
provided for in Section 5(d)(v)), then, and in each event, an
appropriate revision to the Maximum Conversion Price shall by
made and provisions shall be made (by adjustments of the
Conversion Price of otherwise) so that the holder of each share
of Series G Convertible Preferred Stock shall have the right
thereafter to convert such share of Series G Convertible
Preferred Stock into the kind and amount of shares of stock and
other securities receivable upon reclassification, exchange,
substitution or other change, by holders of the number of shares
of Common Stock into which such share of Series G Convertible
Preferred Stock might have been converted immediately prior to
such reclassification, exchange, substitution or other change,
all subject to further adjustment as provided herein.
(v) Adjustments for Reorganization, Merger,
Consolidation or Sales of Assets. If at any time or from time to
time after the Issuance Date there shall be a capital
reorganization of the Company (other than by way of a stock split
or combination of shares or stock dividends or distributions
provided for in Section 5(d)(i), (ii) and (iii), or a
reclassification, exchange or substitution of shares provided for
in Section 5(d)(iv)), or a merger or consolidation of the Company
with or into another corporation, or the sale of all or
substantially all of the Company's properties or assets to any
other person, then as a part of such reorganization, merger,
consolidation, or sale, an appropriate revision to the Maximum
Conversion Price shall be made and provision shall be made (by
adjustments of the Conversion Price or otherwise) so that the
holder of each share of Series G Convertible Preferred Stock
shall have the right thereafter to convert such share of Series G
Convertible Preferred Stock into the kind and amount of shares of
stock and other securities or property of the Company or any
successor corporation resulting from such reorganization, merger,
consolidation, or sale, to which a holder of Common Stock
deliverable upon conversion of such shares would have been
entitled upon such reorganization, merger, consolidation, or
sale, to which a holder of Common Stock deliverable upon
conversion of such shares would have been entitled upon such
reorganization, merger, consolidation, or sale. In any such case,
appropriate adjustment shall be made in the application of the
provisions of this Section 5(d)(v) with respect to the rights of
the holders of the Series G Convertible Preferred Stock after the
reorganization, merger, consolidation, or sale to the end that
the provisions of this Section 5(d)(v) (including any adjustment
in the applicable Conversion Ratio then in effect and the number
of shares of stock or other securities deliverable upon
conversion of the Series G Convertible Preferred Stock) shall be
applied after that event in as nearly an equivalent manner as may
be practicable.
(vi) Adjustments for Issuance of Common Stock. If
at any time or from time to time after the Issuance Date, the
Company shall issue or sell any shares of Common Stock for a
consideration less than the product of the Average Share Price
per share of Common Stock multiplied by 1.25 immediately prior to
the time of such issue or sale, then forthwith upon such issue or
sale, the number of shares of Common Stock issuable upon
conversion of the Series G Convertible Preferred Stock in effect
immediately prior to such issue or sale shall be adjusted by
multiplying the number of shares of Common Stock issuable upon
conversion of the Series G Convertible Preferred Stock in effect
immediately prior to the time of such issue or sale by a
fraction:
(A) the numerator of which shall be (i) the
total number of shares of Common Stock issued and outstanding
immediately after such issue or sale, multiplied by (ii) the
product of the Average Share Price per share of Common Stock
multiplied by 1.25 immediately prior to such issue or sale; and
(B) the denominator of which shall be the
sum of (i) the number of shares of Common Stock outstanding
immediately prior to such issue or sale multiplied by the product
of the Average Share Price per share of the Common Stock
multiplied by 1.25 immediately prior to such issue or sale plus
(ii) the consideration received by the Company upon such issue or
sale.
(vii) Other Adjustment Events and Provisions.
For the purposes of this Section 5, following shall also be
applicable.
(A) Issuance of Rights, Warrant or Options.
(i) In case at any time the Company
shall grant, issue or sell (whether directly or by assumption in
a merger or otherwise) any rights or warrants to subscribe for or
to purchase, or any options for the purchase of Common Stock or
any stock or securities convertible into or exchangeable for
Common Stock (such convertible or exchangeable stock or
securities being herein called "Convertible Securities"), whether
or not such rights or warrants or options or the right to convert
or exchange any such Convertible Securities are immediately
exercisable, and the price per share for which Common Stock is
issuable upon the exercise of such rights or warrants or options
or upon conversion or exchange of such Convertible Securities
(determined as provided below) shall be less than the product of
the Average Share Price multiplied by 1.25 as of the date of
granting such rights or warrants or options as the case may be,
then the total maximum number of shares of Common Stock issuable
upon the exercise of such rights (other than rights issued
pursuant to a stockholders rights plan adopted by the Company
pursuant to which the acquisition by any third party of a
specified percentage of shares of Common Stock triggers the
exercisability of such rights to purchase Common Stock, for so
long as no event has occurred triggering such right to exercise)
or warrants or options or upon conversion or exchange of the
total maximum amount of such Convertible Securities issuable upon
the exercise of such rights or warrants or options shall (as of
the date of granting of such rights or warrants or options) be
deemed to be outstanding and to have been issued for such price
per share.
(ii) No further adjustments of the
number of shares of Common Stock issuable upon conversion of the
Series G Convertible Preferred Stock shall be made upon the
actual issue of such Common Stock or of such Convertible
Securities upon exercise of such rights or warrants or options or
upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities.
(B) Issuance of Convertible Securities. In
case the Company shall issue (whether directly or by assumption
in a merger or otherwise) or sell any Convertible Securities,
whether or not the rights to exchange or convert thereunder are
immediately exercisable, and the price per share for which Common
Stock is issuable upon the conversion or exchange of such
Convertible Securities (determined as provided below) shall be
less than the product of the Average Share Price multiplied by
1.25 determined as of the date of such issue or sale of such
Convertible Securities, then the total maximum number of shares
of Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall (as of the date of the issue or sale
of such Convertible Securities) be deemed to be outstanding and
to have been issued for such price per share; provided, however,
that (a) except as provided Section 5(d)(vii)(C), no further
adjustments to the number of shares of Common Stock issuable upon
conversion of the Series G Convertible Preferred Stock shall be
made upon the actual issue of such Common Stock upon conversion
or exchange of such Convertible Securities, and (b) if any such
issue or sale of such Convertible Securities is made upon
exercise of any rights or warrants to subscribe for or to
purchase or any options to purchase any such Convertible
Securities for which adjustments of the number of shares of
Common Stock issuable upon conversion of the Series G Convertible
Preferred Stock have been or are to be made pursuant to Section
5(d)(vii)(A), no further adjustment of the number of shares of
Common Stock issuable upon conversion of the Series G Convertible
Preferred Stock shall be made by reason of such issue or sale.
For the purposes of this Section 5(d)(vii)(B), the price per
share for which Common Stock is issuable upon conversion or
exchange of Convertible Securities shall be determined by
dividing (i) the total amount received or receivable by the
Company as consideration for the issue or sale of such
Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the
conversion or exchange thereof, by (ii) the total maximum number
of shares of Common Stock issuable upon the conversion or
exchange of all such Convertible Securities.
(C) Consideration for Stock. In case any
shares of Common Stock or Convertible Securities, other than the
Series G Convertible Preferred Stock, or any rights or warrants
or options to purchase any such Common Stock or Convertible
Securities shall be issued or sold:
(i) for cash, the consideration
received therefor shall be deemed to be the amount received by
the Company therefor, without deduction therefrom of any expenses
incurred or any underwriting commissions or concessions paid or
allowed by the Company in connection therewith;
(ii) for a consideration other than
cash, the amount of the consideration other than cash received by
the Company shall be deemed to be the fair value of such
consideration as determined by the Board of Directors of the
Company in good faith and in the exercise of reasonable business
judgment, without deduction of any expense incurred or any
underwriting commissions or concessions paid or allowed by the
Company in connection therewith, which determination shall be
sent in writing by the Board of Directors to the registered
holders of Series G Convertible Preferred Stock;
(iii) in connection with any merger
or consolidation in which the Company is the surviving
corporation (other than any consolidation or merger in which the
previously outstanding shares of Common Stock of the Company
shall be changed into or exchanged for the stock or other
securities of another corporation), the amount of consideration
therefor shall be deemed to be the fair value, as determined
reasonably and in good faith by the Board of Directors of the
Company, of such portion of the assets and business of the
nonsurviving corporation as such Board may determine to be
attributable to such shares of Common Stock, Convertible
Securities, rights or warrants or options, as the case may be; or
(iv) in the event of any consolidation
or merger of the Company in which the Company is not the
surviving corporation or in which the previously outstanding
shares of Common Stock of the Company shall be changed into or
exchanged for the stock or other securities of another
corporation or in the event of any sale of all or substantially
all of the assets of the Company for stock or other securities
of any corporation, the Company shall be deemed to have issued a
number of shares of its Common Stock for stock or securities or
other property of the other corporation computed on the basis of
the actual exchange ratio on which the transaction was
predicated, and for a consideration equal to the fair market
value on the date of such transaction of all such stock or
securities or other property of the other corporation. If any
such calculation results in adjustment of the applicable
Conversion Price, Maximum Conversion Price, or the number of
shares of Common Stock issuable upon conversion of the Series G
Convertible Preferred Stock, the determination of the applicable
Conversion Price, Maximum Conversion Price or the number of
shares of Common Stock issuable upon conversion of the Series G
Convertible Preferred Stock immediately prior to such merger,
consolidation or sale, shall be made after giving effect to such
adjustment of the number of shares of Common Stock issuable upon
conversion of the Series G Convertible Preferred Stock.
(D) Record Date. In case the Company shall
take a record of the holders of its Common Stock or any other
Preferred Stock for the purpose of entitling them to subscribe
for or purchase Common Stock or Convertible Securities, then such
record date shall be deemed to be the date of the issue or sale
of the shares of Common Stock deemed to have been issued or sold
upon the date of the granting of such right of subscription or
purchase.
(E) Certain Issues Excepted. Anything
herein to the contrary notwithstanding, the Company shall not be
required to make any adjustment of the number of shares of Common
Stock issuable upon conversion of the Series G Convertible
Preferred Stock upon the grant after the Issuance Date of, or
the exercise after the Issuance Date of, options or warrants, or
rights to purchase restricted stock under director or employee
benefit plans or other written employment, financing, or
consulting agreements or arrangements, in each case currently in
effect or adopted after the Issuance Date or entered into by the
Company after the Issuance Date; provided, however, that any such
issuance or grant shall be for consideration or at the strike
price, respectively, not less than the product of the Average
Share Price multiplied by 1.25 on the date of grant thereof, and
provided, further, that the aggregate number of shares of Common
Stock issuable upon the exercise of such options, warrants or
rights for which no adjustment is required to be made, exclusive
of any options, warrants or rights that have expired, been
canceled or are for other reasons (other than having been
exercised) no longer outstanding, shall not exceed fifteen
percent (15%) of the aggregate sum of (1) the total outstanding
shares of Common Stock at the Issuance Date, (2) the number of
shares issuable in respect of all outstanding options and
warrants as of the Issuance Date, (3) the number of shares of
Common Stock issuable upon conversion of the Series G Convertible
Preferred Stock; and (4) the options or warrants or rights to
purchase restricted stock granted after the Issuance Date under
employee benefit plans or other written employment or consulting
agreements or arrangements. The Company shall not be required to
make any such adjustment upon the issuance of shares or the
granting of any options or warrants or rights referred to in this
Section 5(d)(vii)(E) if and to the extent that the issuance of
the shares covered thereby is excepted by this clause.
(e) No Impairment. The Company shall not, by
amendment of its Certificate of Incorporation or through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith, assist in the
carrying out of all the provisions of this Section 5 and in the
taking of all such action as may be necessary or appropriate in
order to protect the Conversion Rights of the holders of the
Series G Convertible Preferred Stock against impairment.
(f) Certificate as to Adjustments. Upon
occurrence of each adjustment or readjustment of the Conversion
Price, Maximum Conversion Price or number of shares of Common
Stock issuable upon conversion of the Series G Convertible
Preferred Stock pursuant to this Section 5, the Company at its
expense shall promptly compute such adjustment or readjustment in
accordance with the terms hereof and furnish notice to each
holder of such Series G Convertible Preferred Stock, a
certificate setting forth such adjustment and readjustment,
showing in detail the facts upon which such adjustment or
readjustment is based. The Company shall, upon written request of
the holder of such affected Series G Convertible Preferred
Stock, at any time, furnish or cause to be furnished to such
holder a like certificate setting forth such adjustments and
readjustments, the applicable Conversion Price and Maximum
Conversion Price in effect at the time, and the number of shares
of Common Stock and the amount, if any, of other securities or
property which at the time would be received upon the conversion
of a share of such Series G Convertible Preferred Stock.
Notwithstanding the foregoing, the Company shall not be obligated
to deliver a certificate unless such certificate would reflect an
increase or decrease of at least one percent of such adjusted
amount.
(g) Issue Taxes. The Company shall pay any and
all issue and other taxes, excluding federal, state or local
income taxes, that may be payable in respect of any issue or
delivery of shares of Common Stock on conversion of shares of
Series G Convertible Preferred Stock pursuant hereto; provided,
however, that the Company shall not be obligated to pay any
transfer taxes resulting from any transfer requested by any
holder in connection with any such conversion.
(h) Notices. All notices and other
communications hereunder shall be in writing and shall be deemed
given if delivered personally or by facsimile or three business
days following being mailed by certified or registered mail,
postage prepaid, return-receipt requested, addressed to the
holder of record at its address appearing on the books of the
Company.
(i) Fractional Shares. No fractional shares of
Common Stock shall be issued upon conversion of the Series G
Convertible Preferred Stock. In lieu of any fractional shares to
which the holder would otherwise be entitled, the Company shall
round the fraction to the nearest whole number of shares such
that the Company will round up if the fraction is one-half or
more, and round down if the fraction is less than one-half.
(j) Reservation of Common Stock. The Company
shall at all times reserve and keep available, out of its
authorized but unissued shares of Common Stock not previously
reserved, solely for the purpose of effecting the conversion of
the Series G Convertible Preferred Stock, the full number of
shares deliverable upon conversion of all the shares of Series G
Convertible Preferred Stock from time to time outstanding. The
Company shall, from time to time in accordance with the Delaware
General Business Corporations Law, as amended, use its best
efforts to take all necessary measures to increase the authorized
number of shares of Common Stock if at any time the unissued
number of authorized shares shall not be sufficient to permit the
conversion of all of the Series G Convertible Preferred Stock at
the time outstanding. In addition to any other remedies which
the holders of the Series G Convertible Preferred Stock may have
as a result of the breach of Section 5(j) of this Certificate,
upon such a breach, each of said holders may, at their option
exercisable in their sole discretion, individually demand and be
entitled to the immediate redemption of all or any portion of
their shares of Series G Convertible Preferred Stock by the
Company for a redemption price payable immediately in cash equal
to the sum of 125% of the original purchase price of each share
of Series G Convertible Preferred Stock plus all cumulative
unpaid dividends thereon. Said remedy will be cumulative and not
exclusive of any other remedies at law or in equity available to
the holders of the Series G Convertible Preferred Stock.
(k) Retirement of Series G Convertible Preferred
Stock. Conversion of Series G Convertible Preferred Stock shall
be deemed to have been effected on the applicable Voluntary
Conversion Date or Mandatory Conversion Date, and such date is
referred to herein as the "Conversion Date". The converting
holder shall be deemed to have become a stockholder of record of
the Common Stock on the applicable Conversion Date. Upon
conversion of only a portion of the number of shares of Series G
Convertible Preferred Stock represented by a certificate
surrendered for conversion, the Company shall issue and deliver
to such holder at the expense of the Company, a new certificate
covering the number of shares of Series G Convertible Preferred
Stock representing the unconverted portion of the certificate so
surrendered.
(l) Regulatory Compliance. If any shares of
Common Stock to be reserved for the purpose of conversion of
Series G Convertible Preferred Stock require the Company to take
action with respect to the registration or listing with or
approval of any governmental authority, stock exchange or other
regulatory body under any federal or state law or regulation or
otherwise before such shares may be validly issued or delivered
upon conversion, the Company shall, at its sole cost and expense,
in good faith and as expeditiously as possible, endeavor to
secure such registration, listing or approval, as the case may
be. Nothing contained herein shall require the Company to pay
the costs or expenses incurred for the application, if any,
submitted to the Florida Department of Business and Professional
Regulation by the holder of Series G Convertible Preferred Stock
to acquire a 5% or greater equity interest in the Company.
(m) Limitation on Amount of Conversion.
Notwithstanding anything else herein to the contrary, each holder
of the Series G Convertible Preferred Stock may not convert more
than 20% of the original purchase amount of its Series G
Convertible Preferred Stock during any 30 day period commencing
on a date 180 days after the Issuance Date on a cumulative basis
pursuant to a Voluntary Conversion, calculated from the first
month during which a Voluntary Conversion may occur, so that if,
for example, conversions are not made in one 30 day period, then
in the next 30 day period 40% of the original purchase price of
the Series G Convertible Preferred Stock may be converted. This
restriction shall be binding upon any transferee of the Series G
Convertible Preferred Stock from the purchaser of such shares
from the Company. In addition, no holder of the Series G
Convertible Preferred Stock may convert any such shares if
immediately following such conversion the holder will own of
record 5% or more of the Company's shares of common stock issued
and outstanding following such conversion. Furthermore, Florida
law prohibits any person or entity from acquiring a 5% or greater
equity interest in a pari-mutual operator and exercising control
with respect to those shares until such person has received the
approval of the Florida Department of Business and Professional
Regulation, Division of Pari-Mutual Wagering. Therefore, the
acquisition of 5% or more of the Company's Common Stock upon the
conversion of shares of Series G Convertible Preferred Stock
requires such approval before the Company will issue shares of
its Common Stock in excess of said percentage amount to any one
holder of the Series G Convertible Preferred Stock.
(n) Delivery of Certificates. If the Company
does not deliver certificates evidencing the shares of the
Company's Common Stock into which the Series G Convertible
Preferred Stock is convertible within five (5) business days
after the receipt of a the Supporting Documentation, then in
addition to all the remedies which the holders of the Series G
Convertible Preferred Stock may have, the Company shall pay a
late fee in cash to said holder equal to 2% of the Liquidation
Preference per month or pro rata portion thereof that the
delivery of said certificates is late.
6. No Preemptive Rights. Except as provided in Section 5
hereof, no holder of the Series G Convertible Preferred Stock
shall be entitled as of rights to subscribe for, purchase or
receive any part of any new or additional shares of any class,
whether now or hereinafter authorized, or of bonds or debentures,
or other evidences of indebtedness convertible into or
exchangeable for shares of any class, but all such new or
additional shares of any class or bond or debentures, or other
evidences of indebtedness convertible into or exchangeable for
shares may be issued and disposed of by the Board of Directors on
such terms and for such consideration (to the extent permitted by
law), and to such person or persons as the Board of Directors in
their absolute discretion may deem advisable.
7. Redemptions. (a) The Company shall have the right in
its sole discretion to redeem in whole or in part the issued and
outstanding Series G Convertible Preferred Stock by paying a
redemption price in cash equal to the greater of (i) the sum of
125% of the original purchase price of each share of Series G
Convertible Preferred Stock redeemed, plus all cumulative unpaid
dividends thereon, as provided in Section 2 herein, or (ii) the
gross proceeds that the holders of the Series G Convertible
Preferred Stock would receive if they converted the shares of
Series G Convertible Preferred Stock to be redeemed into Common
Stock and immediately thereafter sold the Common Stock for 125%
of the Average Share Price, calculated as of the Redemption
Notice Date (as hereinafter defined).
(b) The date of the Company's notice (the "Redemption
Notice") to the undersigned of its election to exercise its
redemption rights is referred to herein as the "Redemption Notice
Date." The Redemption Notice shall be sent to the undersigned at
the address and/or facsimile number of the undersigned appearing
in the Company's stock transfer ledger. The Redemption Notice
shall indicate whether the Company will redeem all or part of the
undersigned's Series G Preferred Stock and the applicable
redemption price. The Company shall not be entitled to send any
Redemption Notice and begin the redemption procedure unless it
has the full amount of the redemption price in cash, available in
a demand or other immediately available account in a bank or
similar financial institution on the Redemption Notice Date. The
payment of the redemption price by the Company will be made no
later than fifteen (15) business days after the Redemption Notice
Date.
8. Status of Converted Stock. In case any shares of
Series G Convertible Preferred Stock shall be converted pursuant
to Section 5 hereof, or otherwise repurchased or reacquired, the
shares so converted, repurchased or reacquired shall resume the
status of authorized but unissued shares of Preferred Stock and
shall no longer be designated as Series G Convertible Preferred
Stock.
IN WITNESS WHEREOF, the Company has caused this
certificate to be duly executed on its behalf by its Chief
Executive Officer as of November 17, 1997.
Florida Gaming Corporation
By:/s/ W. Bennett Collett
Name: W. Bennett Collett
Title: Chief Executive Officer
SERIES G CONVERTIBLE PREFERRED STOCK PURCHASE
AGREEMENT
Dated as of November __, 1997
between
FLORIDA GAMING CORPORATION
and
THE PURCHASERS LISTED ON EXHIBIT A
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I Purchase and Sale of Preferred Stock
Section 1.1 Purchase and Sale of Stock . . . . . . . . . .1
Section 1.2 The Conversion Shares. . . . . . . . . . . . .1
Section 1.3 Purchase Price and Closing . . . . . . . . . .1
ARTICLE II Representations and Warranties . . . . . . . . . . .2
Section 2.1 Representation and Warranties of the Company .2
Section 2.2 Representations and Warranties of the
Purchasers . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE III Covenants. . . . . . . . . . . . . . . . . . . . . 15
Section 3.1 Securities Compliance. . . . . . . . . . . . 15
Section 3.2 Registration and Listing . . . . . . . . . . 16
Section 3.3 Inspection Rights. . . . . . . . . . . . . . 16
Section 3.4 Compliance with Laws . . . . . . . . . . . . 16
Section 3.5 Keeping of Records and Books of Account. . . 16
Section 3.6 Reporting Requirements . . . . . . . . . . . 16
Section 3.7 Amendments . . . . . . . . . . . . . . . . . 17
Section 3.8 Other Agreements . . . . . . . . . . . . . . 17
Section 3.9 Rule 144A . . . . . . . . . . . . . . . . . . 19
Section 3.10 Regulation S . . . . . . . . . . . . . . . . 19
Section 3.11 Redemption and Lock-Up of Securities . . . . 19
Section 3.12 Delivery of Certificates . . . . . . . . . . 19
ARTICLE IV Conditions. . . . . . . . . . . . . . . . . . . . . 19
Section 4.1 Conditions Precedent to the Obligation of the
Company to Sell the
Shares . . . . . . . . . . . . . . . . . . . 19
(a) Accuracy of the Purchasers' Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(b) Performance by the Purchasers . . . . . . . . . 20
(c) No Injunction . . . . . . . . . . . . . . . . . 20
(d) Minimum Purchase . . . . . . . . . . . . . . . 20
Section 4.2 Conditions Precedent to the Obligation of the
Purchasers to Purchase
the Shares . . . . . . . . . . . . . . . . . 20
(a) Accuracy of the Company's Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(b) Performance by the Company. . . . . . . . . . . 20
(c) Minimum Purchase. . . . . . . . . . . . . . . . 20
(d) No Suspension, Etc. . . . . . . . . . . . . . . 20
(e) No Injunction . . . . . . . . . . . . . . . . . 21
(f) No Proceedings or Litigation. . . . . . . . . . 21
(g) Certificate of Designation of Rights and
Preferences. . . . . . . . . . . . . . . . . . . . . . . . . . 21
(h) Opinion of Counsel, Etc . . . . . . . . . . . . 21
(i) Registration Rights Agreement . . . . . . . . . 21
ARTICLE V Registration Rights . . . . . . . . . . . . . . . . 21
ARTICLE VI Stock Certificate Legend . . . . . . . . . . . . . 22
Section 6.1 Legend . . . . . . . . . . . . . . . . . . . 22
ARTICLE VII Termination. . . . . . . . . . . . . . . . . . . . 23
Section 7.1 Termination by Mutual Consent. . . . . . . . 23
Section 7.2 Other Termination. . . . . . . . . . . . . . 23
Section 7.3 Effect of Termination. . . . . . . . . . . . 23
ARTICLE VIII Indemnification. . . . . . . . . . . . . . . . . 23
Section 8.1 General Indemnity. . . . . . . . . . . . . . 23
Section 8.2 Indemnification Procedure. . . . . . . . . . 23
ARTICLE IX Miscellaneous. . . . . . . . . . . . . . . . . . . 25
Section 9.1 Fees and Expenses. . . . . . . . . . . . . . 25
Section 9.2 Specific Enforcement, Consent to Jurisdiction25
Section 9.3 Entire Agreement; Amendment. . . . . . . . . 25
Section 9.4 Notices. . . . . . . . . . . . . . . . . . . 26
Section 9.5 Waivers. . . . . . . . . . . . . . . . . . . 26
Section 9.6 Headings . . . . . . . . . . . . . . . . . . 27
Section 9.7 Successors and Assigns . . . . . . . . . . . 27
Section 9.8 No Third Party Beneficiaries . . . . . . . . 27
Section 9.9 Governing Law. . . . . . . . . . . . . . . . 27
Section 9.10 Survival . . . . . . . . . . . . . . . . . . 27
Section 9.11 Counterparts . . . . . . . . . . . . . . . . 27
Section 9.12 Publicity. . . . . . . . . . . . . . . . . . 27
Section 9.13 Severability . . . . . . . . . . . . . . . . 27
Section 9.14 Further Assurances . . . . . . . . . . . . . 28
<PAGE>
SERIES G 5% CONVERTIBLE PREFERRED STOCK PURCHASE
AGREEMENT
This SERIES G CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
(the "Agreement") is dated as of November __, 1997 between
Florida Gaming Corporation., a Delaware corporation (the
"Company") and each of the Purchasers of shares of Series G 5%
Convertible Preferred Stock of the Company whose names are set
forth on Exhibit A hereto (individually, a "Purchaser" and
collectively, the "Purchasers").
The parties hereto agree as follows:
ARTICLE I
Purchase and Sale of Preferred Stock
Section 1.1 Purchase and Sale of Stock. Upon the
following terms and conditions, the Company shall issue and sell
to the Purchasers and each of the Purchasers shall purchase from
the Company, the number of shares of the Company's Series G 5%
Convertible Preferred Stock, par value $.10 per share (the
"Preferred Shares"), at a purchase price of $1,000 per share, set
forth with respect to such Purchaser on Exhibit A hereto. The
designation, rights, preferences and other terms and provisions
of the Series G Convertible Preferred Stock are set forth on
Exhibit B hereto.
Section 1.2 The Conversion Shares. The Company has
authorized and has reserved and covenants to continue to reserve,
free of preemptive rights and other similar contractual rights of
stockholders, a sufficient number of its authorized but unissued
shares of its Common Stock, par value $.10 per share (the "Common
Stock"), to satisfy the rights of conversion of the holders of
the Preferred Shares as of the date of this Agreement. Any
shares of Common Stock issuable upon conversion of the Preferred
Shares (and such shares when issued) are herein referred to as
the "Conversion Shares". The Preferred Shares and the Conversion
Shares are sometimes collectively referred to as the "Shares".
Section 1.3 Purchase Price and Closing. The Company
agrees to issue and sell to the Purchasers and, in consideration
of and in express reliance upon the representations, warranties,
covenants, terms and conditions of this Agreement, the
Purchasers, severally but not jointly, agree to purchase that
number of the Preferred Shares set forth opposite their
respective names on Exhibit A. The aggregate purchase price of
the Preferred Shares being acquired by each Purchaser is set
forth opposite such Purchaser's name on Exhibit A. The closing of
the purchase and sale of the Preferred Shares to be acquired by
the Purchasers from the Company under this Agreement shall take
place at the offices of Mark J. Richardson, 1299 Ocean Avenue,
Suite 900, Santa Monica, California 90401 (the "Closing") at
10:00 a.m. P.D.T. on the later of the following: (i) November
__, 1997, (ii) the date on which the last to be fulfilled or
waived of the conditions set forth in Article IV hereof and
applicable to the Closing shall be fulfilled or waived in
accordance herewith, or (iii) such other time and place or on
such other date as the Purchasers and the Company may agree upon
(the "Closing Date"). On the Closing Date, the Company shall
deliver to each Purchaser certificates for the number and series
of Preferred Shares set forth opposite its name under the heading
"Number of Preferred Shares to be Purchased" on Exhibit A hereto,
registered in such Purchaser's name (or its nominee) against
receipt by the Company of a wire transfer of funds to the account
as shall be designated in writing by the Company, representing
the cash consideration set forth opposite each such Purchaser's
name on Exhibit A. In addition, each party shall deliver all
documents, instruments and writings required to be delivered by
such party pursuant to this Agreement at or prior to the Closing.
There may be multliple Closings, but in no event will any Closing
occur until a minimum of 2,000 Preferred Shares has been
subscribed for by Purchasers.
ARTICLE II
Representations and Warranties
Section 2.1 Representations and Warranties of the
Company. The Company represents and warrants to, and agrees
with, the undersigned as follows:
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware and has all requisite, corporate power and authority
to carry on its business as now conducted and as proposed to be
conducted. The Company is duly qualified to transact business
and is in good standing in the State of Florida and in each other
jurisdiction in which the failure to so qualify would have a
material adverse effect on the business or properties of the
Company and its subsidiaries. The Company is not the subject of
any pending or threatened material investigation or
administrative or legal proceeding by the Internal Revenue
Service, the taxing authorities of any state or local
jurisdiction or the Securities and Exchange Commission (the
"Commission") which have not been disclosed in the reports
referred to in Section 2.1(b) below.
(b) The Company has previously made available to the
undersigned copies of the Company's (i) Annual Reports on Form
10-KSB for the year ended December 31, 1996, (ii) Quarterly
Reports on Form 10-QKSB for the fiscal quarters ended March 3l,
1997, June 30, 1997, and September 30, 1997, and (iii) Current
Reports on Form 8-K dated December 31, 1996, as amended, January
16, 1997, April 4, 1997, May 1, 1997, July 10, 1997, and
September 24, 1997, as amended (the "Periodic Reports") made
pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). All of such Periodic Reports complied as to
form with the provisions of the Securities Act of 1933, as
amended (the "Securities Act") and the Exchange Act and none of
such reports contains any untrue statement of a material fact or
omits to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they
were made, not false or misleading. Since June 30, 1997, there
have been no material adverse changes in the Company's financial
condition or business which have not been disclosed to the
undersigned in writing.
(c) All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement, the
performance of all obligations of the Company hereunder and the
authorization, issuance (or reservation for issuance) and
delivery of the Preferred Shares and the Conversion Shares have
been taken, and this Agreement constitutes a valid and legally
binding obligation of the Company, enforceable in accordance with
its terms, except to the extent adjustments to the conversion
price of the Preferred Shares of Series G 5% Convertible
Preferred Stock and other preferred shares of the Company's
convertible preferred stock (together with the Preferred Shares,
the "Preferred Stock") would result in the issuance of a number
of Preferred Stock or Common Stock in excess of the Company's
authorized number of Preferred Stock or Common Stock.
(d) As of the date of the Memorandum (as defined in
Section 2.2(a)), the Company is authorized to issue (i)
15,000,000 shares of Common Stock, of which 5,586,940 shares are
issued and outstanding on the date hereof; (ii) 500,000 shares of
Convertible Preferred Stock, $.10 par value, of which no shares
are issued or outstanding; (iii) 1,200,000 shares of Series A
Convertible Preferred Stock, $.10 par value, of which 34,435
shares are issued and outstanding; and (iv) 500,000 shares of
Preferred Stock, $.10 par value, of which the following series
are designated: (u) 5,000 shares of Series B Convertible
Preferred Stock, $.10 par value, of which 545 shares are issued
and outstanding; (v) 5,000 shares of Series C Convertible
Preferred Stock, $.10 par value, of which 150 shares are issued
and outstanding; (w) 5,000 shares of Series D Convertible
Preferred Stock, $.10 par value, of which no shares are issued
and outstanding; (x) 2,000 shares of Series E Convertible
Preferred Stock, $.10 par value, of which 2,000 shares are issued
and outstanding; (y) 2,500 shares of Series F Convertible
Preferred Stock, $.10 par value, of which no shares are issued
and outstanding; and (z) 5,000 shares of the Series G Preferred
Stock will be authorized. As of the date of the Memorandum, the
Company has reserved for issuance 6,101,390 shares of Common
Stock pursuant to the exercise of options and the issuance of
Common Stock upon the conversion of the Preferred Shares. Except
for the foregoing and as disclosed in the Memorandum, there are
no other convertible securities, options, warrants,
subscriptions, calls or other rights or agreements, arrangements
or commitments obligating the Company to issue, transfer or sell
any securities of the Company, outstanding or authorized stock
appreciation, phantom stock or other similar rights with respect
to the Company or any commitments to issue any of the same. To
the best of the Company's knowledge, none of such issued and
outstanding Preferred Shares of the Company's capital stock or
options is the subject of any voting trust agreement or other
agreement relating to the voting thereof or restricting in any
way the sale or transfer thereof.
(e) The Preferred Shares, when issued, sold and
delivered in accordance with the terms hereof for the
consideration expressed herein, will be validly issued, fully
paid and nonassessable and, based in part upon the accuracy of
the representations of the undersigned in this Agreement, will be
issued in compliance with all applicable United States federal
and state securities laws. The Conversion Shares when issued in
accordance with the terms of the Certificate of Designations,
Voting Powers, Preferences, Limitations, Restrictions, and
Relative Rights of Series G 5% Convertible Preferred Stock (the
"Certificate of Designation") shall be duly and validly issued
and outstanding, fully paid and nonassessable, and based in part
on the accuracy of the representations and warranties of the
undersigned and any transferee of the Preferred Shares, will be
in compliance with all applicable United States federal and state
securities laws.
(f) Except as limited by the provisions of the Florida
Department of Business and Professional Regulation, Division of
Pari-Mutuel Wagering with respect to the holding of 5% or more of
the Company's Common Stock, the execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby, including the issuance of the Preferred Shares and the
Conversion Shares, do not and will not conflict with or result in
a breach by the Company of any of the terms or provisions of, or
constitute a default under, the Certificate of Incorporation or
By-Laws of the Company, or any indenture, mortgage, deed of trust
or other material instrument to which the Company is a party or
by which it or any of its properties or assets are bound, or any
applicable decree, judgment or order of any court, federal or
state regulatory body, administrative, agency or other
governmental body having jurisdiction over the Company or any of
its properties or assets.
(g) As of the date hereof, the conduct of the business
of the Company complies in all material respects with all
statutes, laws, regulations, ordinances, rules, judgments, orders
or decrees applicable thereto. The Company has not received
notice of any alleged violation of any statute, law, regulation,
ordinance, rule, judgment, order or decree from any governmental
authority. The Company shall comply with all applicable
securities laws with respect to the sale of the Preferred Shares
and the Conversion Shares, including but not limited to the
filing of all reports required to be filed in connection
therewith with the Commission or any stock exchange or the NASDAQ
Stock Market or any other regulatory authority.
(h) Except as disclosed in the Periodic Reports, there
is no action, suit or proceeding before or by any court or
governmental agency or body, domestic or foreign, now pending or,
to the knowledge of the Company, threatened, against or affecting
the Company, or any of its properties, which could reasonably be
expected to result in any material adverse change in the
business, financial condition or results of operations of the
Company, or which could reasonably be expected to materially and
adversely affect the properties or assets of the Company.
(i) There is no fact known to the Company (other than
general economic conditions known to the public generally) that
has not been disclosed in writing to the undersigned that (i)
could reasonably be expected to have a material adverse effect on
the business, financial condition or results of operations of the
Company, or which could reasonably be expected to materially and
adversely affect the properties or assets of the Company or (ii)
could reasonably be expected to materially and adversely affect
the ability of the Company to perform its obligations pursuant to
this Agreement and the issuance of the Preferred Shares and the
Conversion Shares hereunder or pursuant hereto in good faith and
pursuant to appropriate proceedings.
(j) The Company shall, until at least the second
anniversary of the Closing, maintain its corporate existence in
good standing, and shall pay all its taxes when due except for
taxes which the Company disputes.
(k) For so long as any Preferred Shares or Conversion
Shares held by the undersigned remain outstanding:
(i) the Company will reserve from its
authorized but unissued shares of Common Stock a sufficient
number of shares of Common Stock to permit the issuance of all of
the shares of Common Stock upon conversion of the Preferred
Shares; and
(ii) the Company will utilize its reasonable
best efforts, and take all steps within its control necessary, to
maintain the listing of its Common Stock on the NASDAQ Stock
Market or other national securities exchange.
(l) The Company undertakes and agrees to make all
necessary filings in connection with the sale of the Preferred
Shares as required by the laws and regulations of all appropriate
jurisdictions.
(m) The Company shall consult with its legal counsel
regarding its Exchange Act filing requirements including, but not
limited to, the obligation of the Company to file Form 8-K in
connection with the offering of the Preferred Shares, and timely
make any and all necessary filings.
Section 2.2 Representations and Warranties of the
Purchasers. Each of the Purchasers hereby makes the following
representations and warranties to the Company with respect solely
to itself and not with respect to any other Purchaser:
(a) The undersigned, in making the decision to
purchase the Preferred Shares, has relied upon independent
investigations made by him or it and his or its representatives,
if any. The undersigned has relied solely on the information
contained in the Company's offering materials dated November __,
1997 (the "Memorandum") relating to the offering of 3,000
Preferred Shares of Series G 5% Convertible Preferred Stock of
the Company (the "Offering"), receipt of which is hereby
acknowledged; no oral representations have been made or oral
information made available to the undersigned in connection with
the purchase of the Preferred Shares which were in any way
inconsistent with the Memorandum; and the undersigned and/or its
advisors have had a reasonable opportunity to ask questions of
and receive answers from the Company concerning the Preferred
Shares.
(b) The undersigned has been supplied with or has
sufficient access to all information, including financial
statements and other financial information of the Company, and
has been afforded with an opportunity to ask questions of and
receive answers from an officer of the Company concerning
information to which a reasonable investor would attach
significance in making investment decisions, so that as a
reasonable investor the undersigned has been able to make the
undersigned's decision to purchase the Preferred Shares.
(c) The undersigned is not purchasing the Preferred
Shares as a result of or subsequent to any advertisement,
article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television
or radio, or presented at any seminar or meeting, or any
solicitation of a subscription by a person not previously known
to the undersigned in connection with investments in securities
generally.
(d) As applicable, the undersigned has reached the age
of majority in the state in which the undersigned resides, has
adequate means of providing for the undersigned's current
financial needs and contingencies, is able to bear the
substantial economic risks of an investment in the Preferred
Shares and Conversion Shares for an indefinite period of time,
has no need for liquidity in such investment, has made
commitments to investments that are not readily marketable which
are reasonable in relation to the undersigned's net worth and, at
the present time, could afford a complete loss of such
investment.
(e) The undersigned has such knowledge and experience
in financial, tax and business matters so as to enable him to
utilize the information made available to the undersigned in
connection with the offering of the Preferred Shares to evaluate
the merits and risks of an investment in the Preferred Shares and
to make an informed investment decision with respect thereto.
(f) The undersigned acknowledges that the purchase of
the Preferred Shares involve a high degree of risk and further
acknowledges that he or it can bear the economic risk of the
purchase of the Preferred Shares, including the total loss of his
or its investment. The undersigned is not relying on the Company
with respect to the tax and other economic considerations of an
investment in the Preferred Shares, and the undersigned has
relied on the advice of, or has consulted with, only the
undersigned's own advisor(s).
(g) The undersigned has full right and power to
perform pursuant to this Agreement and make an investment in the
Company and, if the undersigned is a corporation, partnership,
trust or other entity, is authorized and otherwise duly qualified
to purchase and hold the Preferred Shares and to enter into this
Agreement.
(h) The undersigned will not sell or otherwise
transfer the Preferred Shares or the shares of Common Stock
issuable upon conversion of the Preferred Shares without
registration under the Securities Act or an exemption therefrom
and fully understands and agrees that the undersigned must bear
the economic risk of the undersigned's purchase for an indefinite
period of time because, among other reasons, the Preferred Shares
and the Conversion Shares have not been registered under the
Securities Act or under the securities laws of certain states
and, therefore, cannot be resold, pledged, assigned or otherwise
disposed of unless the securities are subsequently registered
under the Securities Act and under the applicable securities laws
of such states or unless an exemption from such registration is
available in the opinion of counsel for the holder, which counsel
and opinion are reasonably satisfactory to counsel for the
Company. The undersigned is purchasing the Preferred Shares and
the Conversion Shares for the undersigned's own account, for
investment and not with a view to resale or distribution except
in compliance with the Securities Act. The undersigned is aware
that an exemption from the registration requirements of the
Securities Act pursuant to Rule 144 promulgated thereunder is not
presently available; that, except as contemplated by Article V
hereof, the Company has no obligation to make available an
exemption from the registration requirements pursuant to such
Rule 144 or any successor rule for resale of the Preferred Shares
and the Conversion Shares, and that even if an exemption under
Rule 144 were available, Rule 144 permits only routine sales of
securities in limited amounts in accordance with the terms and
conditions of such Rule 144.
(i) The undersigned agrees to the placement of a
legend on any certificate or other document evidencing the
Preferred Shares or the Conversion Shares stating that they have
not been registered under the Securities Act (and a stop transfer
order may be placed with respect thereto).
(j) Neither the undersigned nor any of his or its
affiliates or agents will, directly or indirectly, maintain any
short position in the Conversion Shares or any other securities
of the Company for so long as any of the Preferred Shares owned
by the undersigned have not been converted into Conversion
Shares; provided, however, that the undersigned may maintain a
short position with respect to the Conversion Shares provided
that such short position is covered by conversion of the
Preferred Shares within five (5) business days.
(k) The undersigned understands and acknowledges that
Florida law prohibits any person or entity from acquiring a 5% or
greater equity interest in a pari-mutuel operator and exercising
control with respect to those Preferred Shares until such person
has received the approval of the Florida Department of Business
and Professional Regulation, Division of Pari-Mutuel Wagering,
and therefore that the acquisition of 5% or more of the Company's
Common Stock upon the conversion of Preferred Shares would
require such approval.
(l) The undersigned understands that the Preferred
Shares are being offered and sold to him or it in reliance on
specific exemptions from the registration requirements of federal
and state securities laws and that the Company is relying upon
the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings of the undersigned
set forth herein in order to determine the applicability of such
exemptions and the suitability of the undersigned to acquire the
Preferred Shares. The representations, warranties and agreements
contained herein are true and correct as of the date hereof and
may be relied upon by the Company, and the undersigned will
notify the Company immediately of any adverse change in any such
representations and warranties which may occur prior to the
acceptance of the subscription and will promptly send the Company
written confirmation thereof. The representations, warranties
and agreements of the undersigned contained herein shall survive
the execution and delivery of this Agreement and the purchase of
the Preferred Shares.
(m) The undersigned is an "accredited investor" as
defined in Regulation D promulgated under the Securities Act.
ARTICLE III
Covenants
The Company covenants with each of the Purchasers as
follows, which covenants are for the benefit of the Purchasers
and their permitted assignees (as defined herein).
Section 3.1 Securities Compliance.
(a) The Company shall notify the Commission and NASD, if
applicable, in accordance with their requirements, of the
transactions contemplated by this Agreement and the Registration
Rights Agreement, and shall take all other necessary action and
proceedings as may be required and permitted by applicable law,
rule and regulation, for the legal and valid issuance of the
Preferred Shares to the Purchasers or subsequent holders.
(b) The Company is relying upon the truth and accuracy of
the representations, warranties, agreements, acknowledgments and
understandings of such Purchasers set forth herein in order to
determine the applicability of such exemptions and the
suitability of such Purchasers to acquire the Preferred Shares.
Section 3.2 Registration and Listing. The Company will
cause its Common Stock to continue to be registered under
Sections 12(b) or 12(g) of the Exchange Act, will comply in all
respects with its reporting and filing obligations under the
Exchange Act, will comply with all requirements related to any
registration statement filed pursuant to this Agreement and will
not take any action or file any document (whether or not
permitted by the Securities Act or the rules promulgated
thereunder) to terminate or suspend such registration or to
terminate or suspend its reporting and filing obligations under
said Acts, except as permitted herein. The Company will take all
action necessary to continue the listing or trading of its Common
Stock on the NASDAQ system, if applicable, and will comply in all
respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the NASD and NASDAQ
system.
Section 3.3 Inspection Rights. The Company shall permit,
during normal business hours and upon reasonable request and
reasonable notice, each Purchaser or any employees, agents or
representatives thereof, so long as such Purchaser shall be
obligated hereunder to purchase the Preferred Shares or shall
beneficially own Preferred Shares or Conversion Shares, which,
in the aggregate, represent more than 2% of the total combined
voting power of all voting securities then outstanding, to
examine and make reasonable copies of and extracts from the
records and books of account of, and visit and inspect the
properties, assets, operations and business of the Company and
any subsidiary, and to discuss the affairs, finances and accounts
of the Company and any subsidiary with any of its officers,
consultants, directors, key employees.
Section 3.4 Compliance with Laws. The Company shall
comply, and cause each subsidiary to comply, with all applicable
laws, rules, regulations and orders, such noncompliance with
which could have a Material Adverse Effect on its business,
assets, operations or condition, financial or otherwise.
Section 3.5 Keeping of Records and Books of Account. The
Company shall keep, and cause each subsidiary to keep, adequate
records and books of account, in which complete entries will be
made in accordance with GAAP consistently applied, reflecting all
financial transactions of the Company and each subsidiary, and in
which, for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad
debts and other purposes in connection with its business shall be
made.
Section 3.6 Reporting Requirements. The Company shall
furnish the following to each Purchaser so long as such
Purchaser shall be obligated hereunder to purchase the Preferred
Shares or shall beneficially own Preferred Shares or Conversion
Shares, which, in the aggregate, represent more than 2% of the
total combined voting power of all voting securities then
outstanding:
(a) Quarterly Reports filed with the Commission on
Form 10-Q as soon as available, and in any event within 45 days
after the end of each of the first three fiscal quarters of the
Company, consolidated balance sheets of the Company and the
subsidiaries as of the end of such period and consolidated
statements of income and statements of cash flows and changes in
stockholders equity of the Company and the subsidiaries for such
period and for the period commencing at the end of the previous
fiscal year and ending with the end of such period, setting forth
in each case in comparative form the corresponding figures for
the corresponding period of the preceding fiscal year;
(b) Annual Reports filed with the Commission on Form
10-K as soon as available, and in any event within 90 days after
the end of each fiscal year of the Company, a copy of the annual
consolidated balance sheet, consolidated statements of income and
statements of cash flows and changes in stockholders equity of
the Company and the subsidiaries for such period and for the
period commencing at the end of the previous fiscal year and
ending with the end of such period, setting forth in each case in
comparative form the corresponding figures for the corresponding
period of the preceding fiscal year. All such consolidated
statements shall be duly certified by the Chief Financial Officer
of the Company and an independent certified public accountant
approved by the Company's Audit Committee.
Section 3.7 Amendments. The Company shall not amend or
waive any provision of the Certificate of Incorporation, Bylaws
of the Company or the Registration Rights Agreements in any way
that would adversely affect the liquidation preferences, dividend
rights, voting rights or redemption rights of the holders of the
Preferred Shares.
Section 3.8 Other Agreements. The Company shall not
enter into any agreement in which the terms of such agreement
would restrict or impair the right to perform of the Company or
any subsidiary under this Agreement, the Registration Rights
Agreement or the Certificate of Incorporation of the Company.
Section 3.9 Rule 144A. The Company covenants and agrees
that if the Company fails to register the Conversion Shares
within 180 days from the Closing Date under the terms and
conditions of the Registration Rights Agreement attached hereto
as Exhibit C, then for so long as any of the Preferred Shares
remain outstanding and continue to be "restricted securities"
within the meaning of Rule 144 under the Securities Act, the
Company shall make available to the Purchasers in connection with
any sale thereof, the information required by Rule 144A(d)(4)
under the Securities Act in order to permit resales of the Shares
pursuant to Rule 144A, if applicable.
Section 3.10 Regulation S. The Company covenants and
agrees that if the Company fails to register the Conversion
Shares within 180 days from the Closing Date under the terms and
conditions of the Registration Rights Agreement attached hereto
as Exhibit C, then for so long as any of the Preferred Shares or
Conversion Shares remain outstanding and continue to be
"restricted securities" within the meaning of Rule 144 under the
Securities Act, the Company shall, in order to permit resales of
the Preferred Shares or Conversion Shares pursuant to Regulation
S under the Securities Act ("Regulation S"), (a) continue to file
all material required to be filed pursuant to Section 13(a) or
15(d) of the Exchange Act, and (b) not knowingly engage in
directed selling efforts in connection with the resale of
securities by any Purchaser under Regulation S.
Section 3.11 Redemption and Lock Up of Securities. The
Company convents to redeem the $1,200,000 5% Cumulative
Convertible Debenture due December 31, 1998, using a portion of
the net proceeds of the securities sold pursuant to this
Agreement. The Company also covenants to have received a binding
written commitment for (i) the holders of 1,500 shares of the
Company's Series E 8% Cumulative Convertible Preferred Stock (the
"Series E Shares") to a restriction on the conversion of the
Series E Shares for the one (1) year period beginning on November
10, 1997 and ending on November 10, 1998, and (ii) when issued,
the holders of 2,084 shares of the Company's Series F Convertible
Preferred Stock (the "Series F Shares") to a restriction on the
conversion of the Series F Shares for the one (1) year period
beginning on November 10, 1997 and ending on November 10, 1998.
Section 3.12 Delivery of Certificates. If the Company does
not deliver certificates evidencing Conversion Shares within five
(5) days after receipt by the Company of the stock certificates
representing the Preferred Shares to be converted and all other
documentation set forth in Section 5(a) of the Certificate of
Designation from a holder of the Preferred Shares, then in
addition to any other remedies which the holder of the Preferred
Shares may have, the Company shall immediately pay to said holder
a late fee in cash at the rate of 2% of the liquidation
preference of the Preferred Shares per month or pro rata portion
thereof that the delivery of said certificates is late.
ARTICLE IV
Conditions
Section 4.1 Conditions Precedent to the Obligation of the
Company to Sell the Shares. The obligation hereunder of the
Company to issue and sell the Preferred Shares to the Purchasers
is subject to the satisfaction or waiver, at or before the
Closing, of each of the conditions set forth below. These
conditions are for the Company's sole benefit and may be waived
by the Company at any time in its sole discretion.
(a) Accuracy of the Purchasers Representations and
Warranties. The representations and warranties of the Purchasers
shall be true and correct in all material respects as of the date
when made and as of the Closing as though made at that time,
except for representations and warranties that are expressly made
as of a particular date.
(b) Performance by the Purchasers. Each Purchaser shall
have performed, satisfied and complied in all material respects
with all material covenants, agreements and conditions required
by this Agreement to be performed, satisfied or complied with by
such Purchaser at or prior to the Closing.
(c) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted,
entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this
Agreement.
(d) Minimum Purchase. A minimum of 2,000 Preferred Shares
shall have been purchased from the Company, resulting in minimum
gross proceeds of $2,000,000.
Section 4.2 Conditions Precedent to the Obligation of the
Purchasers to Purchase the Shares. The obligation hereunder of
each Purchaser to acquire and pay for the Preferred Shares is
subject to the satisfaction or waiver, at or before the Closing,
of each of the conditions set forth below. These conditions are
for each Purchaser's sole benefit and may be waived by such
Purchaser at any time in its sole discretion.
(a) Accuracy of the Company's Representations and
Warranties. Each of the representations and warranties of the
Company shall be true and correct in all material respects as of
the date when made and as of the Closing as though made at that
time (except for representations and warranties that speak as of
a particular date).
(b) Performance by the Company. The Company shall have
performed, satisfied and complied in all respects with all
covenants, agreements and conditions required by this Agreement
to be performed, satisfied or complied with by the Company at or
prior to the Closing.
(c) Minimum Purchase. Under the terms and conditions of
this Agreement, the Company shall make sales of the Preferred
Shares to the Purchasers resulting in gross proceeds of a minimum
of $2,000,000 to the Company.
(d) No Suspension, Etc. From the date hereof to the
Closing Date, trading in the Company's Common Stock shall not
have been suspended by the Commission or the NASDAQ (except for
any suspension of trading of limited duration agreed to between
the Company, which suspension shall be terminated prior to
Closing), and, at any time prior to the Closing, trading in
securities generally as reported by NASDAQ shall not have been
suspended or limited or minimum prices shall not have been
established on securities whose trades are reported by NASDAQ,
nor shall trading in securities on the New York Stock Exchange
have been suspended nor minimum prices established on the New
York Stock Exchange, nor shall a banking moratorium have been
declared either by the United States or New York State
authorities, nor shall there have occurred any material outbreak
or escalation of hostilities or other national or international
calamity or crisis of such magnitude in its effect on, or any
material adverse change in, any financial market which, in each
case, in the judgment of such Purchaser, makes it impracticable
or inadvisable to purchase the Shares.
(e) No Injunction. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted,
entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction which prohibits the
consummation of any of the transactions contemplated by this
Agreement.
(f) No Proceedings or Litigation. No action, suit or
proceeding before any arbitrator or any governmental authority
shall have been commenced, and no investigation by any
governmental authority shall have been threatened, against the
Company or any subsidiary, or any of the officers, directors or
affiliates of the Company or any subsidiary seeking to restrain,
prevent or change the transactions contemplated by this
Agreement, or seeking damages in connection with such
transactions.
(g) Certificate of Designation of Rights and Preferences.
The Certificate of Designation for the Preferred Shares shall
have been filed with the Secretary of State of Delaware.
(h) Opinion of Counsel, Etc. At the Closing, the
Purchasers shall have received an opinion of counsel to the
Company, dated the date of Closing, in the form of Exhibit D
hereto, and such other certificates and documents as the
Purchasers or its counsel shall reasonably require incident to
the Closing.
(i) Registration Rights Agreement. At the Closing the
Company shall have executed and delivered the Registration Rights
Agreement to each Purchaser.
ARTICLE V
Registration Rights
At the Closing, the Company and Purchasers shall enter into
a Registration Rights Agreement in the form attached hereto as
Exhibit C (the "Registration Rights Agreement").
ARTICLE VI
Stock Certificate Legend
Section 6.1 Legend. Each certificate representing the
Preferred Shares, and, if appropriate, securities issued upon
conversion thereof, shall be stamped or otherwise imprinted with
a legend substantially in the following form (in addition to any
legend required by applicable state securities or "blue sky"
laws):
THESE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE
"SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES
ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR FLORIDA
GAMING CORPORATION SHALL HAVE RECEIVED AN OPINION OF ITS
COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE
SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE
SECURITIES LAWS IS NOT REQUIRED.
The Company agrees to reissue certificates representing the
Preferred Shares without the legend set forth above if at such
time, prior to making any transfer of any Preferred Shares or
Conversion Shares, such holder thereof shall give written notice
to the Company describing the manner and terms of such transfer
and removal as the Company may reasonably request. Such proposed
transfer will not be effected until: (a) the Company has notified
such holder that either (i) in the opinion of Company counsel,
the registration of such Preferred Shares or Conversion Shares
under the Securities Act is not required in connection with such
proposed transfer; or (ii) a registration statement under the
Securities Act covering such proposed disposition has been filed
by the Company with the Commission and has become effective under
the Securities Act; and (b) the Company has notified such holder
that either: (i) in the opinion of Company counsel, the
registration or qualification under the securities or "blue sky"
laws of any state is not required in connection with such
proposed disposition, or (ii) compliance with applicable state
securities or "blue sky" laws has been effected. The Company will
use its best efforts to respond to any such notice from a holder
within ten (10) days. In the case of any proposed transfer under
this Article VI, the Company will use reasonable efforts to
comply with any such applicable state securities or "blue sky"
laws, but shall in no event be required, in connection therewith,
to qualify to do business in any state where it is not then
qualified or to take any action that would subject it to tax or
to the general service of process in any state where it is not
then subject. The restrictions on transfer contained in Article
VI shall be in addition to, and not by way of limitation of, any
other restrictions on transfer contained in any other section of
this Agreement.
ARTICLE VII
Termination
Section 7.1 Termination by Mutual Consent. This
Agreement may be terminated at any time prior to the Closing by
the mutual written consent of the Company and the Purchasers.
Section 7.2 Other Termination. This Agreement may be
terminated by the action of the Board of Directors of the Company
or by any one or more of the Purchasers at any time if the
Closing shall not have been consummated by the Closing Date, as
long as the failure to so consummate is not the fault of the
terminating party.
Section 7.3 Effect of Termination. In the event of
termination by the Company or any one or more of the Purchasers,
written notice thereof shall forthwith be given to the other
party and the transactions contemplated by this Agreement and the
Registration Rights Agreement shall be terminated without further
action by either party. If this Agreement is terminated as
provided in Sections 7.1 or 7.2 herein, this Agreement shall
become void and of no further force and effect, except for
Sections 9.1, 9.2, 9.10 and Article VIII. Nothing in this Section
7.3 shall be deemed to release the Company or any Purchaser from
any liability for any breach under this Agreement or the
Registration Rights Agreement, or to impair the rights of the
Company and the Purchasers to compel specific performance by the
other party of its obligations under this Agreement and the
Registration Rights Agreement.
ARTICLE VIII
Indemnification
Section 8.1 General Indemnity. The Company agrees to
indemnify and hold harmless the Purchasers (and their respective
directors, officers, affiliates, agents, successors and assigns)
from and against any and all losses, liabilities, deficiencies,
costs, damages and expenses (including, without limitation,
reasonable attorney's fees, charges and disbursements) incurred
by the Purchasers as a result of any inaccuracy in or breach of
the representations, warranties or covenants made by the Company
herein. Each Purchaser severally but not jointly agrees to
indemnify and hold harmless the Company and its directors,
officers, affiliates, agents, successors and assigns from and
against any and all losses, liabilities, deficiencies, costs,
damages and expenses (including, without limitation, reasonable
attorneys fees, charges and disbursements) incurred by the
Company as result of any inaccuracy in or breach of the
representations, warranties or covenants made by such Purchaser
herein.
Section 8.2 Indemnification Procedure. Any party
entitled to indemnification under this Article VIII (an
"indemnified party") will give written notice to the indemnifying
party of any matters giving rise to a claim for indemnification;
provided that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall
not relieve the indemnifying party of its obligations under this
Article VIII except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any
action, proceeding or claim is brought against an indemnified
party in respect of which indemnification is sought hereunder,
the indemnifying party shall be entitled to participate in and,
unless in the reasonable judgment of the indemnified party a
conflict of interest between it and the indemnifying party may
exist with respect of such action, proceeding or claim, to assume
the defense thereof with counsel reasonably satisfactory to the
indemnified party. In the event that the indemnifying party
advises an indemnified party that it will contest such a claim
for indemnification hereunder, or fails, within thirty (30) days
of receipt of any indemnification notice to notify, in writing,
such person of its election to defend, settle or compromise, at
its sole cost and expense, any action, proceeding or claim (or
discontinues its defense at any time after it commences such
defense), then the indemnified party may, at its option, defend,
settle or otherwise compromise or pay such action or claim. In
any event, unless and until the indemnifying party elects in
writing to assume and does so assume the defense of any such
claim, proceeding or action, the indemnified party's costs and
expenses arising out of the defense, settlement or compromise of
any such action, claim or proceeding shall be losses subject to
indemnification hereunder. The indemnified party shall cooperate
fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party
all information reasonably available to the indemnified party
which relates to such action or claim. The indemnifying party
shall keep the indemnified party fully apprised at all times as
to the status of the defense or any settlement negotiations with
respect thereto. If the indemnifying party elects to defend any
such action or claim, then the indemnified party shall be
entitled to participate in such defense with counsel of its
choice at its sole cost and expense. The indemnifying party shall
not be liable for any settlement of any action, claim or
proceeding effected without its written condition of its consent.
Notwithstanding anything in this Article VIII to the contrary,
the indemnifying party shall not, without the indemnified party's
prior written consent, settle or compromise any claim or consent
to entry of any judgment in respect thereof which imposes any
future obligation on the indemnified party or which does not
include, as an unconditional term thereof, the giving by the
claimant or the plaintiff to the indemnified party of a release
from all liability in respect of such claim. The indemnification
required by this Article VIII shall be made by periodic payments
of the amount thereof during the course of investigation or
defense, as and when bills are received or expense, loss, damage
or liability is incurred so long as the indemnified party
irrevocably agrees to refund such moneys if it is ultimately
determined by a court of competent jurisdiction that such party
was not entitled to indemnification. The indemnity agreements
contained herein shall be in addition to (a) any cause of action
or similar rights of the indemnified party against the
indemnifying party or others, and (b) any liabilities the
indemnifying party may be subject to pursuant to the law.
ARTICLE IX
Miscellaneous
Section 9.1 Fees and Expenses. Except as otherwise set
forth in this Agreement, the Registration Rights Agreement or the
Certificate of Designation each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts,
if any, and all other expense, incurred by such party incident to
the negotiation, preparation, execution, delivery and performance
of this Agreement. The Company shall pay all stamp or other
similar taxes and duties levied in connection with the issuance
of the Preferred Shares pursuant hereto.
Section 9.2 Specific Enforcement, Consent to
Jurisdiction.
(a) The Company and the Purchasers acknowledge and agree
that irreparable damage would occur in the event that any of the
provisions of this Agreement or the Registration Rights
Agreement were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to
prevent or cure breaches of the provisions of this Agreement or
the Registration Rights Agreement and to enforce specifically
the terms and provisions hereof or thereof, this being in
addition to any other remedy to which any of them may be entitled
by law or equity.
(b) Each of the Company and the Purchasers (i) hereby
irrevocably submits to the jurisdiction of the United States
District Court and other courts of the United States sitting in
New York for the purposes of any suit, action or proceeding
arising out of or relating to this Agreement or the Registration
Rights Agreement and (ii) hereby waives, and agrees not to assert
in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the
suit, action or proceeding is brought in an inconvenient forum or
that the venue of the suit, action or proceeding is improper.
Each of the Company and the Purchasers consents to process being
served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice
thereof. Nothing in this Section shall affect or limit any right
to serve process in any other manner permitted by law.
Section 9.3 Entire Agreement; Amendment. This Agreement
contains the entire understanding of the parties with respect to
the matters covered hereby and, except as specifically set forth
herein or in the Registration Rights Agreement or the Certificate
of Designation neither the Company nor any of the Purchasers
makes any representation, warranty, covenant or undertaking with
respect to such matters. No provision of this Agreement may be
waived or amended other than by a written instrument signed by
the party against whom enforcement of any such amendment or
waiver is sought.
Section 9.4 Notices. Any notice, demand, request, waiver
or other communication required or permitted to be given
hereunder shall be in writing and shall be effective (a) upon
hand delivery by telex (with correct answer back received),
telecopy or facsimile at the address or number designated below
(if delivered on a business day during normal business hours
where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business
day during normal business hours where such notice is to be
received) or (b) on the second business day following the date of
mailing by express courier service, fully prepaid, addressed to
such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall
be:
If to the Company: W. Bennett Collett, Chief Executive
Officer
Florida Gaming Corporation
3500 NW 37th Avenue
Miami, Florida 33142-0000
Telephone Number: (305) 633-6400
If to any Purchasers: At the address of such Purchaser
set forth onExhibit A to this
Agreement, with copies to
Purchaser's counsel as set forth on
Exhibit A or as specified in
writing by such Purchaser
with copies to: James A. Allen, President
Pacific Continental Securities
Corporation
8484 Wilshire Blvd., Suite 744
Beverly Hills, CA 90211
Telephone Number: (213) 653-1212
Fax: (213) 653-1262
with copies to: Mark J. Richardson, Esq.
1299 Ocean Avenue, Suite 900
Santa Monica, California 90401
Telephone Number: (310) 393-9992
Fax: (310) 393-2004
Any party hereto may from time to time change its address
for notices by giving at least ten (10) days written notice of
such changed address to the other party hereto.
Section 9.5 Waivers. No waiver by either party of any
default with respect to any provision, condition or requirement
of this Agreement shall be deemed to be a continuing waiver in
the future or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of any party
to exercise any right hereunder in any manner impair the exercise
of any such right accruing to it thereafter.
Section 9.6 Headings. The article, section and
subsection headings in this Agreement are for convenience only
and shall not constitute a part of this Agreement for any other
purpose and shall not be deemed to limit or affect any of the
provisions hereof.
Section 9.7 Successors and Assigns. This Agreement
shall be binding upon and inure to the benefit of the parties and
their successors and assigns. The parties hereto may not amend
this Agreement or any rights or obligations hereunder without the
prior written consent of the Company and each Purchaser to be
affected by the amendment. After Closing, the assignment by a
party to this Agreement of any rights hereunder shall not affect
the obligations of such party under this Agreement.
Section 9.8 No Third Party Beneficiaries. This Agreement
is intended for the benefit of the parties hereto and their
respective permitted successors and assigns and is not for the
benefit of, nor may any provision hereof be enforced by, any
other person.
Section 9.9 Governing Law. This Agreement shall be
governed by and construed in accordance with the internal laws of
the State of New York, without giving effect to the choice of
law provisions.
Section 9.10 Survival. The representations and warranties
of the Company and the Purchasers contained in Article II shall
survive the execution and delivery hereof and the Closing until
the date two years from the Closing Date, and the agreements and
covenants set forth in Articles I, III, V, VII and VIII of this
Agreement shall survive the execution and delivery hereof and the
Closing until the Purchasers in the aggregate hold less than 2%
of the total combined voting power of all voting securities then
outstanding, provided, that Sections 3.1, 3.2, 3.7, 3.8, 3.9,
3.10, 3.11 and 3.12 shall not expire until the Registration
Statement required by Section 2.2 of the Registration Rights
Agreement is no longer required to be effective under the terms
and conditions of the Registration Rights Agreement.
Section 9.11 Counterparts. This Agreement may be executed
in any number of counterparts, all of which taken together shall
constitute one and the same instrument and shall become effective
when counterparts have been signed by each party and delivered to
the other parties hereto, it being understood that all parties
need not sign the same counterpart. In the event any signature is
delivered by facsimile transmission, the party using such means
of delivery shall cause four additional executed signature pages
to be physically delivered to the other parties within five days
of the execution and delivery hereof.
Section 9.12 Publicity. The Company agrees that it will
not disclose, and will not include in any public announcement,
the name of the Purchasers, unless and until such disclosure is
required by law or applicable regulation, and then only to the
extent of such requirement.
Section 9.13 Severability. The provisions of this
Agreement and the Registration Rights Agreement are severable
and, in the event that any court of competent jurisdiction shall
determine that any one or more of the provisions or part of the
provisions contained in this Agreement or the Registration Rights
Agreement shall, for any reason, be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision or part of
a provision of this Agreement or the Registration Rights
Agreement, and this Agreement or the Registration Rights
Agreement shall be reformed and construed as if such invalid or
illegal or unenforceable provision, or part of such provision,
had never been contained herein, so that such provisions would
be valid, legal and enforceable to the maximum extent possible.
Section 9.14 Further Assurances. From and after the date
of this Agreement, upon the request of any Purchaser or the
Company, each of the Company and the Purchasers shall execute and
deliver such instrument, documents and other writings as may be
reasonably necessary or desirable to confirm and carry out and to
effectuate fully the intent and purposes of this Agreement, the
Preferred Shares, the Conversion Shares, the Certificate of
Designation, and the Registration Rights Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officer as of the date hereof.
Florida Gaming Corporation
By:
Name: W. Bennett Collett
Its: Chief Executive Officer
THE PURCHASERS
By:
Name:
Its:
Address:
Name and address of
Purchaser's counsel:
EXHIBIT A to the
Series G CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
FOR FLORIDA GAMING CORPORATION
Name and Address Number of Preferred Dollar Amount Issuance
of Purchaser Shares Purchased of Investment Date
2,000 $2,000,000 November
__, 1997
REGISTRATION RIGHTS AGREEMENT
dated as of
November 12, 1997
among
FLORIDA GAMING CORPORATION
and
THE PURCHASERS LISTED ON EXHIBIT A HERETO
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . .1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . .1
ARTICLE 2 REGISTRATION RIGHTS. . . . . . . . . . . . . . . . . .3
2.1 Securities Subject to this Agreement . . . . . . . . .3
2.2 Shelf Registration . . . . . . . . . . . . . . . . . .3
2.3 Piggyback Registration . . . . . . . . . . . . . . . .5
2.4 Registration Procedures. . . . . . . . . . . . . . . .6
2.5 Preparation: Reasonable Investigation. . . . . . . . 11
2.6 Certain Rights of Holders. . . . . . . . . . . . . . 11
2.7 Registration Expenses. . . . . . . . . . . . . . . . 11
2.8 Indemnification; Contribution. . . . . . . . . . . . 12
2.9 Participation in Underwritten Registrations. . . . . 15
2.10 Selection of Underwriters. . . . . . . . . . . . . . 15
ARTICLE 3 LIQUIDATED DAMAGES . . . . . . . . . . . . . . . . . 15
ARTICLE 4 RULE 144A. . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 5 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . 16
5.1 Entire Agreement . . . . . . . . . . . . . . . . . . 16
5.2 Successors and Assigns . . . . . . . . . . . . . . . 16
5.3 Notices. . . . . . . . . . . . . . . . . . . . . . . 16
5.4 Headings . . . . . . . . . . . . . . . . . . . . . . 17
5.5 Counterparts . . . . . . . . . . . . . . . . . . . . 17
5.6 Applicable Law . . . . . . . . . . . . . . . . . . . 17
5.7 Specific Enforcement . . . . . . . . . . . . . . . . 17
5.8 Amendment and Waivers. . . . . . . . . . . . . . . . 17
<PAGE>
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is
dated as of November 12, 1997 between Florida Gaming Corporation,
a Delaware corporation (the "Company") and each of the Purchasers
of shares of Series G 5% Convertible Preferred Stock (the "Series
G Convertible Preferred Stock") pursuant to the Stock Purchase
Agreement of even date herewith (the "Stock Purchase Agreement"),
whose names are set forth on Exhibit A hereto (individually, a
"Purchaser" and collectively, the "Purchasers").
RECITALS
WHEREAS, it is a condition precedent to the obligations of
each Purchaser under the Stock Purchase Agreement that the Company
grant registration rights for the Company's Series G Convertible
Preferred Stock, and
WHEREAS, in connection with resales by the Purchasers of the
Company's Common Stock upon or after conversion of the Series G
Convertible Preferred Stock, the Company and the Purchasers now
desire to enter into this Agreement in order to facilitate such
resales.
AGREEMENT
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. The following terms, as used herein, have
the following meanings.
"Board" means the Board of Directors of the Company.
"Business Day" means any day except a Saturday, Sunday
or other day on which banks in Miami, Florida are authorized by
law to close.
"Certificate of Designation" means the certificate of
powers, designations, preferences and relative, participating,
optional or other rights of the Company's Series G Convertible
Preferred Stock and the qualifications, limitations and
restrictions thereof, as amended from time to time.
"Closing Date" shall mean the Closing Date of the Stock
Purchase Agreement.
"Commission" means the Securities and Exchange
Commission.
"Common Stock" means the common stock, par value $.10
per share, of the Company.
"Company" means Florida Gaming Corporation, a Delaware
corporation.
"Company Registration Statement" means the Registration
Statement of the Company relating to the registration for sale of
shares of the Company's Common Stock contemplated by Section 2.3,
including the Prospectus included therein, all amendments and
supplements thereto (including post-effective amendments) and all
exhibits and material incorporated by reference therein.
"Effective Time" means the date of effectiveness of any
Registration Statement.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Holders" has the meaning given to it in Section 2.1(b)
hereof.
"NASD" means the National Association of Securities
Dealers, Inc.
"Person" means an individual, corporation, partnership,
association, trust or other entity or organization, including a
government or political subdivision or an agency or
instrumentality thereof.
"Preferred Stock" means the Series G Convertible
Preferred Stock, par value $.10 per share, of the Company, issued
for any purpose including, but not limited to, in consideration
as the payment of dividends on the Company's Preferred Stock,
Common Stock, or other securities.
"Prospectus" means the prospectus included in any
Registration Statement, as amended or supplemented by any
prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material
incorporated by reference into such Prospectus.
"Registration Statements" means the Company
Registration Statement and the Shelf Registration Statement.
"Restricted Securities" means any Securities until (i)
a registration statement covering such Securities has been
declared effective by the Commission and such Securities have
been disposed of pursuant to such effective registration
statement, (ii) such Securities are sold under circumstances in
which all the applicable conditions of Rule 144 (or any similar
provisions then in force) under the Securities Act are met, or
such Securities may be sold pursuant to Rule 144(k) (or any
similar provision then in force) under the Securities Act, and
are freely tradable after such sale by the transferee, (iii) such
Securities are otherwise transferred, the Company has delivered a
new certificate or other evidence of ownership for such
Securities not bearing a legend restricting further transfer and
such Securities may be resold without registration under the
Securities Act, or (iv) such Securities shall have ceased to be
outstanding.
"Securities" means the Company's Common Stock issuable
upon conversion of the Preferred Stock, and, if the Registration
Statement on Form S-3 is available for such registration, upon
the exercise of the warrants to purchase the Company's Common
Stock issued to the Holders in connection with the issuance of
the Preferred Stock.
"Securities Act" means the Securities Act of 1933, as
amended.
"Shelf Registration Statement" means the registration
statement of the Company relating to the shelf registration for
resale of Restricted Securities contemplated by Section 2.2
herein, including the Prospectus included therein, all amendments
and supplements thereto (including post-effective amendments) and
all exhibits and material incorporated by reference therein.
"Stock Purchase Agreement" has the meaning given to it
in the recitals to this Agreement.
As used in this Agreement, words in the singular
include the plural, and in the plural include the singular.
ARTICLE 2
REGISTRATION RIGHTS
2.1 Securities Subject to this Agreement.
(a) The Securities entitled to the benefits of this
Agreement are the Restricted Securities, but only for so long as
they remain Restricted Securities.
(b) A Person is deemed to be a holder of Restricted
Securities (each, a "Holder") whenever such Person is the
registered holder of such Restricted Securities on the Company's
books and records.
2.2 Shelf Registration.
(a) The Company shall:
(i) as expeditiously as practicable, but no later
than 60 days from the Closing Date, cause to be filed a Shelf
Registration Statement on Form S-3, as available, or such other
available Form, pursuant to Rule 415 under the Securities Act,
which Shelf Registration Statement shall provide for resales of
all Restricted Securities of the Holders who shall have provided
to the Company the information required pursuant to Section
2.2(c) herein; and
(ii) use its reasonable best efforts to cause such
Shelf Registration Statement to be declared effective by the
Commission within 180 days from the Closing Date.
(b) In connection with the Shelf Registration
Statement, the Company shall comply with all the provisions of
Section 2.4 below and shall use its reasonable efforts to effect
such registration to permit the sale of the Restricted Securities
being sold in accordance with the intended method or methods of
distribution thereof (as indicated in the information furnished
to the Company pursuant to Section 2.2.(c)). Subject to Section
2.2(d), the Company shall use its reasonable best efforts to
keep such Shelf Registration Statement continuously effective,
supplemented and amended as required by the provisions of Section
2.2(d) to the extent necessary to ensure that it is available for
resales of Restricted Securities by the Holders of Restricted
Securities, and to ensure that it conforms with the requirements
of this Agreement, the Securities Act and the policies, rules and
regulations of the Commission as announced from time to time, for
a period of five (5) years from the Effective Time or such longer
period as required by Section 2.2(d) or such shorter period that
will terminate when all the Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf
Registration Statement or otherwise cease to be Restricted
Securities. Upon the occurrence of any event that would cause any
Shelf Registration Statement or the Prospectus contained therein
(i) to contain a material misstatement or omission or (ii) not to
be effective and usable for sale or resale of Restricted
Securities during the period required by this Agreement, the
Company shall file promptly an appropriate amendment to such
Shelf Registration Statement or the related Prospectus or any
document incorporated therein by reference, in the case of clause
(i), correcting any such misstatement or omission, and, in the
case of either clause (i) or (ii), use its reasonable efforts to
cause such amendment to be declared effective and such
Registration Statement and the related Prospectus to become
usable for its intended purpose(s) as soon as practicable
thereafter.
(c) No Holder of Restricted Securities may include any
of its Restricted Securities in the Shelf Registration Statement
pursuant to this Agreement unless and until such Holder furnishes
to the Company in writing, within 10 Business Days after receipt
of a written request therefor, such information specified in Item
507 of Regulation S-K under the Securities Act or such other
information as the Company may reasonably request for use in
connection with the Shelf Registration Statement or Prospectus or
preliminary Prospectus included therein and in any application to
the NASD. Each Holder as to which the Shelf Registration
Statement is being effected agrees to furnish promptly to the
Company all information required to be disclosed in order to make
the information previously furnished to the Company by such
Holder not materially misleading.
(d) Notwithstanding anything to the contrary contained
herein, if (x) the Board determines in good faith that the
registration and distribution of Restricted Securities (or the
use of such Shelf Registration Statement or the Prospectus
contained therein) would interfere with any proposed or pending
material corporate transaction involving the Company or any of
its subsidiaries or would require premature disclosure thereof
or would require the Company to disclose information that the
Company has not otherwise made public and that the Company
reasonably determines is in the best interests of the Company not
to disclose at such time, and (y) the Company notifies the
Holders in writing not later than three (3) days following such
determination (such notice a "Blackout Notice"), the Company may
(A) postpone the filing of such Shelf Registration Statement or
(B) allow such Shelf Registration Statement to fail to be
effective and usable or elect that such Shelf Registration
Statement not be usable for a reasonable period of time, but not
in excess of 90 days (a "Blackout Period"); provided, however,
that the aggregate number of days included in all Blackout
Periods shall not exceed 45 during any consecutive 12 months and
shall not exceed 90 during the period specified in Section 2.2(b)
of this Agreement; and provided, further, that the period
referred to in Section 2.2(b) during which the Shelf Registration
Statement is required to be effective and usable shall be
extended by the aggregate number of days during which the Shelf
Registration Statement was not effective or usable pursuant to
the foregoing provisions; and provided further, that the right of
the Company to impose a Blackout Period shall only arise after
the Company has first had the Shelf Registration Statement
declared effective by the Securities and Exchange Commission and
paid any liquidated damages pursuant to Article 3 herein, if
required. In no event shall any Blackout Period affect the
conversion rights set forth in Section 5(m) of the Certificate of
Designation.
2.3 Piggyback Registration.
(a) At any time that the Company proposes to file a
Company Registration Statement, either for its own account or for
the account of a stockholder or stockholders, the Company shall
give the Holders written notice of its intention to do so and of
the intended method of sale (the "Registration Notice") within a
reasonable time prior to the anticipated filing date of the
Company Registration Statement effecting such Company
Registration. Each Holder may request inclusion of any Restricted
Securities in such Company Registration by delivering to the
Company, within twenty (20) days after receipt of the
Registration Notice, a written notice (the "Piggyback Notice")
stating the number of Restricted Securities proposed to be
included and that such shares are to be included in any
underwriting only on the same terms and conditions as the shares
of Common Stock otherwise being sold through underwriters under
such Company Registration Statement. The Company shall use its
best efforts to cause all Restricted Securities specified in the
Piggyback Notice to be included in the Company Registration
Statement and any related offering, all to the extent requisite
to permit the sale by the Holders of such Restricted Securities
in accordance with the method of sale applicable to the other
shares of Common Stock included in such Company Registration
Statement; provided, however, that if, at any time after giving
written notice of its intention to register any securities and
prior to the effective date of the Company Registration Statement
filed in connection with such registration, the Company shall
determine for any reason not to register or to delay registration
of such securities, the Company may, at its election, give
written notice of such determination to each Holder of Restricted
Securities and, thereupon:
(i) in the case of a determination not to
register in a piggyback registration, shall be relieved of its
obligation to register any Restricted Securities in connection
with such registration (but not from its obligation to pay the
expenses of registration in connection therewith), and
(ii) in the case of a delay in registering in a
piggyback registration, shall be permitted to delay registering
any Restricted Securities for the same period as the delay in
registering such other securities.
(b) The Company's obligation to include Restricted
Securities in a Company Registration Statement pursuant to
Section 2.3(a) shall be subject to the following limitations:
(i) The Company shall not be obligated to
include any Restricted Securities in a registration statement
filed on Form S-4, Form S-8 or such other similar successor forms
then in effect under the Securities Act.
(ii) If a Company Registration Statement involves
an underwritten offering and the managing underwriter advises the
Company in writing that, in its opinion, the number of securities
requested to be included in such Company Registration Statement
exceeds the number which can be sold in such offering without
adversely affecting the offering, the Company will include in
such Company Registration Statement the number of such Securities
which the Company is so advised can be sold in such offering
without adversely affecting the offering, determined as follows:
(A) first, the securities proposed by the
Company to be sold for it own account, and
(B) second, any Restricted Securities
requested to be included in such registration and any other
securities of the Company in accordance with the priorities, if
any, then existing among the holders of such securities pro rata
among the holders thereof requesting such registration on the
basis of the number of shares of such securities requested to be
included by such holders.
(iii) The Company shall not be obligated to
include Restricted Securities in more than three Company
Registration Statement(s).
(c) No Holder of Restricted Securities may include any
of its Restricted Securities in the Company Registration
Statement pursuant to this Agreement unless and until such Holder
furnishes to the Company in writing, within 10 Business Days
after receipt of a written request therefor, such information
specified in Item 507 of Regulation S-K under the Securities Act
or such other information as the Company may reasonably request
for use in connection with the Company Registration Statement or
Prospectus or preliminary Prospectus included therein and in any
application to the NASD. Each Holder as to which the Company
Registration Statement is being effected agrees to furnish
promptly to the Company all information required to be disclosed
in order to make all information previously furnished to the
Company by such Holder not materially misleading.
2.4 Registration Procedures. In connection with any
Registration Statement and any Prospectus required by this
Agreement to permit the sale or resale of Restricted Securities,
the Company shall:
(a) prepare and file with the Commission such
amendments and post-effective amendments to such Registration
Statement as may be necessary to keep such Registration Statement
effective (i) if such Registration Statement is a Company
Registration Statement, until the earlier of such time as all of
such securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof
set forth in such Company Registration Statement or (ii) if such
Registration Statement is a Shelf Registration Statement, for the
applicable period set forth in Section 2.2(b) herein; cause the
Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule
424 under the Securities Act, and to comply fully with the
applicable provisions of Rules 424 and 430A, as applicable, under
the Securities Act in a timely manner; and comply with the
provisions of the Securities Act with respect to the disposition
of all securities covered by such Registration Statement during
the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement or the Prospectus;
(b) advise the Holders covered by such Registration
Statement and, if requested by such Persons, to confirm such
advice in writing, (i) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and when
the same has become effective, (ii) of any request by the
Commission for post-effective amendments to such Registration
Statement or post-effective amendments or supplements to the
Prospectus or for additional information relating thereto, (iii)
of the issuance by the Commission of any stop order suspending
the effectiveness of any such Registration Statement under the
Securities Act or of the suspension by any state securities
commission of the qualification of the Restricted Securities for
offering or sale in any jurisdiction, or the initiation of any
proceeding for any of the preceding purposes, and (iv) of the
existence of any fact or the happening of any event that makes
any statement of a material fact made in any such Registration
Statement, the related Prospectus, any amendment or supplement
thereto, or any document incorporated by reference therein
untrue, or that requires the making of any additions to or
changes in any such Registration Statement or the related
Prospectus in order to make the statements therein not
misleading. If at any time the Commission shall issue any stop
order suspending the effectiveness of such Registration
Statement, or any state securities commission or other regulatory
authority shall issue an order suspending the qualification or
exemption from qualification of the Restricted Securities under
state securities or Blue Sky laws, the Company shall use its
reasonable efforts to obtain the withdrawal or lifting of such
order at the earliest possible time;
(c) promptly furnish to each Holder of Restricted
Securities covered by any Registration Statement, and each
underwriter, if any, without charge, at least one conformed copy
of any Registration Statement, as first filed with the Commission
and of each amendment thereto, including all documents
incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference) and such other
documents as such Holder may reasonably request;
(d) deliver to each Holder covered by any Registration
Statement, and each underwriter, if any, without charge, as many
copies of the Prospectus (including each preliminary prospectus)
and any amendment or supplement thereto as such person reasonably
may request.
(e) enter into such customary agreements and take all
such other reasonable action in connection therewith (including
those reasonably requested by the selling Holders or the
underwriter(s), if any) required in order to expedite or
facilitate the disposition of such Restricted Securities pursuant
to such Registration Statement, including, but not limited to,
dispositions pursuant to an underwritten registration, and in
such connection:
(i) make such representations and warranties to
the selling Holders and underwriter(s), if any, in form,
substance and scope as are customarily made by issuers to
underwriters in underwritten offerings (whether or not sales of
securities pursuant to such Registration Statement are to be to
an underwriter(s)) and confirm the same if and when requested;
(ii) obtain opinions of counsel to the Company
(which counsel and opinions, in form and substance, shall be
reasonably satisfactory to the selling Holders and the
underwriter(s), if any, and their respective counsel) addressed
to each selling Holder and underwriter, if any, covering the
matters customarily covered in opinions requested in underwritten
offerings (whether or not sales of securities pursuant to such
Registration Statement are to be made to an underwriter(s)) and
dated the date of effectiveness of any Registration Statement
(and, in the case of any underwritten sale of securities pursuant
to such Registration Statement, each closing date of sales to the
underwriter(s) pursuant thereto);
(iii) use reasonable efforts to obtain comfort
letters dated the date of effectiveness of any Registration
Statement (and, in the case of any underwritten sale of
securities pursuant to such Registration Statement, each closing
date of sales to the underwriter(s) pursuant thereto) from the
independent certified public accountants of the Company addressed
to each selling Holder and underwriter, if any, such letters to
be in customary form and covering matters of the type customarily
covered in comfort letters in connection with underwritten
offerings (whether or not sales of securities pursuant to such
Registration Statement are to be made to an underwriter(s));
(iv) provide for the indemnification provisions
and procedures of Section 2.6 hereof with respect to selling
Holders and the underwriter(s), if any, and;
(v) deliver such documents and certificates as
may be reasonably requested by the selling Holders or the
underwriter(s), if any, and which are customarily delivered in
underwritten offerings (whether or not sales of securities
pursuant to such Registration Statement are to be made to an
underwriter(s)), with such documents and certificates to be dated
the date of effectiveness of any Registration Statement.
The actions required by clauses (i) through (v) above shall
be done at each closing under such underwriting or similar
agreement, as and to the extent required thereunder, and if at
any time the representations and warranties of the Company
contemplated in clause (i) above cease to be true and correct,
the Company shall so advise the underwriter(s), if any, and each
selling Holder promptly, and, if requested by such Person, shall
confirm such advice in writing;
(f) prior to any public offering of Restricted
Securities, cooperate with the selling Holders, the
underwriter(s), if any, and their respective counsel in
connection with the registration and qualification of the
Restricted Securities under the securities or Blue Sky laws of
such U.S. jurisdictions as the selling Holders or underwriter(s),
if any, may reasonably request in writing by the time any
Registration Statement is declared effective by the Commission,
and do any and all other acts or filings necessary or advisable
to enable disposition in such U.S. jurisdictions of the
Restricted Securities covered by any Registration Statement and
to file such consents to service of process or other documents as
may be necessary in order to effect such registration or
qualification; provided, however, that the Company shall not be
required to register or qualify as a foreign corporation in any
jurisdiction where it is not then so qualified or as a dealer in
securities in any jurisdiction where it would not otherwise be
required to register or qualify but for this Section 2.4, or to
take any action that would subject it to the service of process
in suits or to taxation, in any jurisdiction where it is not then
so subject;
(g) in connection with any sale of Restricted
Securities that will result in such securities no longer being
Restricted Securities, cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and
delivery of certificates representing Restricted Securities to be
sold and not bearing any restrictive legends; and enable such
Restricted Securities to be in such denominations and registered
in such names as the Holders or the underwriter(s), if any, may
request at least two (2) Business Days prior to any sale of
Restricted Securities made by such underwriters;
(h) use its reasonable efforts to cause the
disposition of the Restricted Securities covered by any
Registration Statement to be registered with or approved by such
other U.S. governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the
underwriter(s), if any, to consummate the disposition of such
Restricted Securities, subject to the proviso contained in
Section 2.2(f);
(i) if any fact or event contemplated by Section
2.4(b) shall exist or have occurred, prepare a supplement or
post-effective amendment to any Registration Statement or related
Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered
to the purchasers of Restricted Securities, the Prospectus will
not contain an untrue statement of a material fact or omit to
state any material fact necessary to make the statement therein
not misleading;
(j) cooperate and assist in the performance of any due
diligence investigation by any underwriter (including any
"qualified independent underwriter") that is required to be
retained in accordance with the rules and regulations of the
NASD, and use its reasonable efforts to cause any Registration
Statement to become effective and approved by such U.S.
governmental agencies or authorities as may be necessary to
enable the Holders selling Restricted Securities to consummate
the disposition of such Restricted Securities;
(k) otherwise use its reasonable efforts to comply
with all applicable rules and regulations of the Commission, and
make generally available to its security holders with regard to
such Registration Statement, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule
158 (which need not be audited) for the twelve-month period (i)
commencing at the end of any fiscal quarter in which Restricted
Securities are sold to the underwriter in a firm or best efforts
underwritten offering or (ii) if not sold to an underwriter in
such an offering, beginning with the first month of the Company's
first fiscal quarter commencing after the effective date of any
Registration Statement;
(l) request that the Company's transfer agent provide
a CUSIP number for all Restricted Securities not later than the
effective date of any Registration Statement;
(m) use its best efforts to list, not later than the
effective date of such Registration Statement, all Restricted
Securities covered by such Registration Statement on the NASDAQ
Small Capital Market or any other trading market on which any
Common Stock of the Company are then admitted for trading, and
(n) provide promptly to each Holder covered by any
Registration Statement upon request each document filed with the
Commission pursuant to the requirements of Section 12 and Section
14 of the Exchange Act.
Each Holder agrees by acquisition of a Restricted Security
that, upon receipt of any notice from the Company of the
existence of any fact of the kind described in Section 2.4(b)(iv)
or the commencement of a Black-Out Period, such Holder will
forthwith discontinue disposition of Restricted Securities
pursuant to any Registration Statement until such Holder's
receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 2.4(i), or until it is advised in
writing, in accordance with the notice provisions of Section 5.3
herein (the "Advice"), by the Company that the use of the
Prospectus may be resumed, and has received copies of any
additional or supplemental fillings that are incorporated by
reference in the Prospectus. If so directed by the Company, each
Holder will deliver to the Company all copies, other than
permanent file copies, then in such Holder's possession, of the
Prospectus covering such Restricted Securities that was current
at the time of receipt of such notice. In the event the Company
shall give any such notice, the time period regarding the
effectiveness of the Shelf Registration Statement set forth in
Section 2.2(b) shall be extended by the number of days during
the period from and including the date of the giving of such
notice pursuant to Section 2.4(b)(iv) or the commencement of a
Black-Out Period to and including the date when each selling
Holder covered by such Registration Statement shall have received
the copies of the supplemented or amended Prospectus contemplated
by Section 2.4(i) or shall have received (in accordance with the
notice provisions of Section 5.3) the Advice.
2.5 Preparation; Reasonable Investigation. In connection
with preparation and filing of each Registration Statement under
the Securities Act, the Company will give the Holders of
Restricted Securities registered under such Registration
Statement, their underwriter, if any, and their respective
counsel and accountants, the opportunity to participate in the
preparation of such Registration Statement, each prospectus
included therein or filed with the Commission, and each amendment
thereof or supplement thereto, and will give each of them the
financial statements, contracts and other corporate records as
requested, and such opportunities to discuss the business,
finances and accounts of the Company and its subsidiaries with
its officers, directors and the independent public accountants
who have certified its financial statements as shall be
necessary, in the opinion of such Holders and such underwriters '
respective counsel, to conduct a reasonable investigation within
the meaning of the Securities Act. If any such information is
reasonably deemed to be confidential, then the Holders and their
underwriters, if any, shall execute a confidentiality agreement
with the Company in a form reasonably acceptable to the Company.
2.6 Certain Rights of Holders. Unless required by
applicable law, the Company will not file any registration
statement under the Securities Act which refers to any Holder of
Restricted Securities by name or otherwise without the prior
written approval of such Holder, which may not be unreasonably
withheld.
2.7 Registration Expenses.
(a) All expenses incident to the Company's performance
of or compliance with this Agreement will be borne by the
Company, regardless of whether a Registration Statement becomes
effective, including without limitation: (i) all registration and
filing fees and expenses (including filings made with the NASD
and reasonable counsel fees of the Company in connection
therewith); (ii) all reasonable fees and expenses of compliance
with federal securities and state Blue Sky or securities laws in
connection with compliance with state Blue Sky or securities laws
for up to 15 states; (iii) all expenses of printing, messenger
and delivery services and telephone calls; (iv) all fees and
disbursements of counsel for the Company; and (v) all fees and
disbursements of independent certified public accountants of the
Company (including the expenses of any special audit and comfort
letters required by or incident to such performance).
(b) In addition, in connection with the filing of the
Shelf Registration Statement required to be filed by this
Agreement, the Company will reimburse the Holders of the
Restricted Securities being registered pursuant to any Shelf
Registration Statement for the reasonable fees and disbursements
(not to exceed $5,000) of not more than one counsel to review
such Registration Statement.
(c) Notwithstanding the foregoing, the Company will
not be responsible for any underwriting discounts, commissions or
fees attributable to the sale of Restricted Securities or any
legal fees or disbursements (other than any such fees or
disbursements relating to Blue Sky compliance or otherwise as set
for the under Section 2.7(a)) incurred by any underwriter(s) in
any underwritten offering if the underwriter(s) participates in
such underwritten offering at the request of the Holders of
Restricted Securities, or any transfer taxes that may be imposed
in connection with a sale or transfer of Restricted Securities.
(d) The Company shall, in any event, bear its internal
expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or
accounting duties), the expenses of any annual audit and the fees
and expenses of any Person, including special experts, retained
by the Company.
2.8 Indemnification; Contribution.
(a) The Company agrees to indemnify and hold harmless
(i) each Holder covered by any Registration Statement, (ii) each
other Person who participates as an underwriter in the offering
or sale of such securities, (iii) each person, if any, who
controls (within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act) any such Holder or underwriter
(any of the persons referred to in this clause (iii) being
hereinafter referred to as a "controlling person") and (iv) the
respective officers, directors, partners, employees,
representatives and agents of any such Holder or underwriter or
any controlling person (any person referred to in clause (i),
(ii), (iii) or (iv) may hereinafter be referred to as an
"indemnified Person"), to the fullest extent lawful, from and
against any and all losses, claims, damages, liabilities,
judgments or expenses, joint or several (or actions or
proceedings, whether commenced or threatened, in respect thereof)
(collectively, "Claims"), to which such indemnified Person may
become subject under either Section 15 of the Securities Act or
Section 20 of the Exchange Act or otherwise, insofar as such
Claims arise out of or are based upon, or are caused by any
untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement or Prospectus (or any
amendment or supplement thereto), or any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, or a violation by the Company of the Securities Act
or any state securities law, or any rule or regulation
promulgated under the Securities Act or any state securities law,
or any other law applicable to the Company relating to any such
registration or qualification, except insofar as such losses,
claims, damages, liabilities, judgments or expenses of any such
indemnified Person: (x) are caused by any such untrue statement
or omission or alleged untrue statement or omission that is based
upon information relating to such indemnified Person furnished in
writing to the Company by or on behalf of any of such indemnified
Person expressly for use therein; or (y) with respect to the
preliminary Prospectus, result from the fact that such Holder
sold Securities to a person to whom there was not sent or given,
at or prior to the written confirmation of such sale, a copy of
the Prospectus, as amended or supplemented, if the Company shall
have previously furnished copies thereof to such Holder in
accordance with this Agreement and said Prospectus, as amended
or supplemented, would have corrected such untrue statement or
omission. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of any
indemnified Person and shall survive the transfer of such
securities by such Holder.
In case any action shall be brought or asserted against
any of the indemnified Persons with respect to which indemnity
may be sought against the Company, such indemnified Person shall
promptly notify the Company and the Company shall assume the
defense thereof. Such indemnified Person shall have the right to
employ separate counsel in any such action and to participate in
the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the indemnified Person unless (i) the
employment of such counsel shall have been specifically
authorized in writing by the Company, (ii) the Company shall have
failed to assume the defense and employ counsel or (iii) the
named parties to any such action (including any implied parties)
include both the indemnified Person and the Company and the
indemnified Person shall have been advised in writing by its
counsel that there may be one or more legal defenses available to
it which are different from or additional to those available to
the Company (in which case the Company shall not have the right
to assume the defense of such action on behalf of the indemnified
Person), it being understood, however, that the Company shall
not, in connection with such action or similar or related actions
or proceedings arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (in addition to any
local counsel) at any time for all the indemnified Persons, which
firm shall be (x) designated by such indemnified Persons and (y)
reasonably satisfactory to the Company. The Company shall not be
liable for any settlement of any such action or proceeding
effected without the Company's prior written consent, which
consent shall not be withheld unreasonably, and the Company
agrees to indemnify and hold harmless any indemnified Person from
and against any loss, claim, damage, liability, judgment or
expense by reason of any settlement of any action effected with
the written consent of the Company. The Company shall not,
without the prior written consent of each indemnified Person,
settle or compromise or consent to the entry of judgment on or
otherwise seek to terminate any pending or threatened action,
claim, litigation or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether
or not any indemnified Person is a party thereto), unless such
settlement, compromise, consent or termination includes an
unconditional release of each indemnified Person from all
liability arising out of such action, claim litigation or
proceeding.
(b) Each Holder of Restricted Securities covered by
any Registration Statement agrees, severally and jointly, to
indemnify and hold harmless the Company and its directors,
officers and any person controlling (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange
Act) the Company, and the respective officers, directors,
partners, employees, representatives and agents of each person,
to the same extent as the foregoing indemnity from the Company to
each of the indemnified Persons, but only with respect to actions
based on information relating to such Holder furnished in writing
by or on behalf of such Holder expressly for use in any
Registration Statement or Prospectus. In case any action or
proceeding shall be brought against the Company or its directors
or officers or any such controlling person in respect of which
indemnity may be sought against a Holder of Restricted Securities
covered by any Registration Statement, such Holder shall have the
rights and duties given the Company in Section 2.8(a) (except
that the Holder may but shall not be required to assume the
defense thereof), and the Company or its directors or officers
or such controlling person shall have the rights and duties given
to each Holder by Section 2.8(a).
(c) If the indemnification provided for in this
Section 2.8 is unavailable to an indemnified party under Section
2.7(a) or (b) (other than by reason of exceptions provided in
those Sections) in respect of any losses, claims, damages,
liabilities, judgments or expenses referred to therein, then each
applicable indemnifying party (in the case of the Holders
severally and not jointly), in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims
damages, liabilities, judgments or expenses (i) in such
proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Holder on the
other hand from sale of Restricted Securities or (ii) if such
allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above
but also the relative fault of the Company and such Holder in
connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities, judgments or expenses,
as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and of such Holder
on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or
by such Holder and the parties relative intent, knowledge, access
to information and opportunity to correct or prevent such
statement or omission. The amount paid to a party as a result of
the losses, claims, damages, liabilities judgments and expenses
referred to above shall be deemed to include, subject to the
limitations set forth in the second paragraph of Section 2.8(a),
any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or
claim.
The Company and each Holder of Restricted Securities
covered by any Registration Statement agree that it would not be
just and equitable if contribution pursuant to this Section
2.8(c) were determined by pro rata allocation (even if the
Holders were treated as one entity for such purpose) or by any
other method of allocation which does not take into account the
equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 2.8(c)
no Holder (and none of its related indemnified Persons) shall be
required to contribute, in the aggregate, any amount in excess of
the amount by which the dollar amount of proceeds received by
such Holder upon the sale of the Restricted Securities exceeds
the amount of any damages which such Holder has otherwise been
required to pay by reason of such untrue statement or omission or
alleged omission. No person guilty of fraudulent
misrepresentations (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
The indemnity, and contribution provisions contained in
this Section 2.8 are in addition to any liability which the
indemnifying person may otherwise have to the indemnified persons
referred to above.
2.9 Participation in Underwritten Registrations. No Holder
may participate in any underwritten registration hereunder unless
such Holder (a) agrees to sell such Holder's Restricted
Securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all reasonable
questionnaires, powers of attorney, indemnities, underwriting
agreements, lock-up letters and other documents required under
the terms of such underwriting arrangements.
2.10 Selection of Underwriters. The Holders of Restricted
Securities covered by any Registration Statement who desire to do
so may sell such Restricted Securities in an underwritten
offering. In any such underwritten offering, the investment
banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a
majority of the Restricted Securities included in such offering
if such registration is pursuant to the Shelf Registration
Statement, and by the Company if such registration is pursuant
to a Company Registration Statement; provided, however, that such
investment bankers and managers must be reasonably satisfactory
to the Company or the Holders, respectively. Such investment
bankers and managers are referred to herein as the
"underwriters".
ARTICLE 3
LIQUIDATED DAMAGES
Each of the Company and the Purchasers (on behalf of
themselves and each subsequent Holder of Restricted Securities)
agrees that each Holder of Restricted Securities will suffer
damages if the Shelf Registration Statement covering all
Registrable Securities is not filed with and declared effective
by the Commission and maintained in the manner and within the
time period contemplated by Article 2 hereof, and it would not be
feasible to ascertain the extent of such damages with precision.
Accordingly, if (i) the Shelf Registration Statement is not filed
and declared effective by the Commission on or prior to the date
that is 180 days after the Closing Date, (ii) the Company shall
cause a Blackout Period to occur within the first 30 days
following the 180th day after the Closing Date, or (iii) the
Shelf Registration Statement is filed and declared effective but
shall thereafter cease to be effective (without being succeeded
immediately by an additional Shelf Registration Statement filed
and declared effective) for a period of time which shall exceed
45 days in the aggregate per year (defined as a period of 365
days commencing on the date the Shelf Registration Statement is
declared effective) (each such event referred to in clauses (i)
and (ii) is referred to herein as a "Registration Default"),
then the Company shall pay as Liquidated Damages to each Holder
of Restricted Securities who has complied with such Holder's
obligations hereunder an amount equal to 1% of the liquidation
preference of the Preferred Stock for the first 30 day period
after the expiration of said 180 day period after the Closing
Date (or pro rata portion thereof) and 2% of the liquidation
preference of the Preferred Stock for each 30 day period
thereafter (or pro rata portion thereof) that there continues to
be a Registration Default, in cash ratably according to the
number of Preferred Stock held by each Holder, immediately
payable following the occurrence of such Registration Default.
ARTICLE 4
RULE 144A
The Company hereby agrees with each Holder of Restricted
Securities, for so long as any of the Restricted Securities
remain outstanding and continue to be "restricted securities"
within the meaning of Rule 144 under the Act, and during any
period in which the Company is not subject to Section 13 or 15(d)
of the Exchange Act, to make available to the Holders of
Restricted Securities in connection with any sale thereof, and
to any prospective purchaser of Preferred Stock or Common Stock
from such Holders of Restricted Securities or beneficial owner,
the information required by Rule 144A(d)(4) under the Act in
order to permit resales of such Restricted Securities pursuant to
Rule 144A.
ARTICLE 5
MISCELLANEOUS
5.1 Entire Agreement. This Agreement, together with the
Stock Purchase Agreement and the Certificate of Designation,
constitutes the entire agreement between the parties with respect
to the subject matter hereof and supersedes all prior agreement
and understandings, both oral and written, between the parties
with respect to the subject matter hereof.
5.2 Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of
each of the parties, including without limitation and without the
need for an express assignment, subsequent Holders of Restricted
Securities; provided, however, that this Agreement shall not
inure to the benefit of or be binding upon a successor or assign
of a Holder unless and to the extent such successor or assign
acquired Restricted Securities from such Holder at a time when
such Holder could not transfer such Restricted Securities
pursuant to any Registration Statement or pursuant to Rule 144
under the Securities Act as contemplated by clause (ii) of the
definition of Restricted Securities.
5.3. Notices. All notices and other communications given or
made pursuant hereto or pursuant to any other agreement among the
parties, unless otherwise specified, shall be in writing and
shall be deemed to have been duly given or made if sent by
telecopy (with confirmation in writing), delivered personally or
by overnight courier or sent by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the
telecopy number, if any, or address set forth below or at such
other addresses as shall be furnished by the parties by like
notice. Notices sent by telecopier shall be effective when
receipt is acknowledged, notices delivered personally or by
overnight courier shall be effective upon receipt and notices
sent by registered or certified mail shall be effective three
days after mailing:
if to a Holder: to such Holder at the address set
forth beneath the signature of the
Holder to this Agreement, or if not
so stated, as it appears on the
records of the Preferred Stock
register. In addition, copies of
all such notices or other
communications shall be
concurrently delivered by the
Person giving the same to each
person who has been identified to
the Company by such Holder as a
Person who is to receive copies of
such notice.
if to the Company: Florida Gaming Corporation
3500 NW 37th Avenue
Miami, Florida 33142-0000
Telephone Number: (305) 633-6400
Attention: W. Bennett Collett,
Chief Executive Officer
5.4 Headings The headings contained in this Agreement are
for convenience only and shall not affect the meaning or
interpretation of this Agreement.
5.5 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an
original and all of which together shall be deemed to be one and
the same instrument.
5.6 Applicable Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State
of New York, without giving effect to the choice law provisions.
5.7 Specific Enforcement. Each party hereto acknowledges
that the remedies at law of the other parties for a breach or
threatened breach of this Agreement would be inadequate, and, in
recognition of this fact, any party to this Agreement, without
posting any bond, and in addition to all other remedies which may
be available, shall be entitled to obtain equitable relief in the
form of specific performance, a temporary restraining order, a
temporary to permanent injunction or any other equitable remedy
which may then be available.
5.8 Amendment and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and
waivers or consents to or departures from the provisions hereof
may not be given unless the Company has obtained the written
consent of Holders of a majority of the Restricted Securities.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the day and year first above written.
Florida Gaming Corporation
By:
Name: W. Bennett Collett
Its: Chief Executive Officer
THE PURCHASERS
By:
Name:
Its:
Address:
By:
Name:
Its:
Address:
By:
Name:
Its:
Address:
By:
Name:
Its:
Address:
By:
Name:
Its:
Address:
By:
Name:
Its:
Address:
By:
Name:
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE SECURITIES ACT OR UNLESS AN EXEMPTION
THEREFROM IS AVAILABLE.
WARRANT TO PURCHASE
COMMON STOCK OF FLORIDA GAMING CORPORATION
This certifies that PACIFIC CONTINENTAL SECURITIES CORP.
(the "Holder"), for value received, is entitled to purchase from
FLORIDA GAMING CORPORATION (the "Company") One Hundred Fifty
Thousand (150,000) shares of the Company's Common Stock (the
"Common Stock") for a per share exercise price equal to $4.18125
(the "Per Share Exercise Price"). This right may be exercised at
any time six months from November 19, 1997, up to and including
5:00 p.m. (Miami, Florida time) on the third anniversary of
November 19, 1997 (the "Expiration Date"), upon surrender to the
Company at its principal office (or at such other location as the
Company may advise the Holder in writing) of this warrant,
properly endorsed, with the Subscription Form attached hereto
duly filled in and signed in, if applicable, upon payment in cash
or by check of the aggregate Per Share Exercise Price for the
number of shares for which this warrant is being exercised
determined in accordance with the provisions hereof; provided,
however, that no Holder may exercise this right if immediately
following such exercise the Holder will own of record 5% or more
of the Company's shares of Common Stock issued and outstanding
following such exercise. Furthermore, Florida law prohibits any
person or entity from acquiring a 5% or greater equity interest
in a pari-mutual operator and exercising control with respect to
those shares until such person has received the approval of the
Florida Department of Business and Professional Regulation,
Division of Pari-Mutual Wagering. Therefore, the acquisition of
5% or more of the Company's Common Stock upon the exercise of
this right requires such approval before the Company will issue
shares of its Common Stock in excess of said percentage amount to
any one holder of the Company's Common Stock.
1. ISSUANCE OF CERTIFICATES.
Certificates for the shares of Common Stock acquired upon
exercise of this warrant, together with any other securities or
property to which the Holder is entitled upon such exercise, will
be delivered to the Holder by the Company at the Company's
expense within a reasonable time after this warrant has been so
exercised. If the Company does not deliver certificates for the
shares of Common Stock to be issued upon exercise of this warrant
within five (5) business days after receipt by the Company from
the Holder of (i) this warrant, properly endorsed, (ii) the
Subscription Form duly filled in and signed, and (iii) payment in
check or cash of the aggregate Per Share Exercise Price for the
number of shares for which this warrant is being exercised, then
in addition to any other remedies which the Holder may have, the
Company shall immediately pay to said Holder a late fee in cash
equal to two percent (2%) of the value of the Common Stock to be
issued to Holder, per month or pro rata portion thereof that the
delivery of said certificates is late.
Each stock certificate so delivered will be in such
denominations of Common Stock as may be requested by the Holder
and will be registered in the name of the Holder. In case of a
purchase of less than all the shares that may be purchased under
this warrant, the Company will cancel this warrant and execute
and deliver a new warrant or warrants of like tenor for the
balance of the shares purchasable under this warrant to the
Holder within a reasonable time after surrender of this warrant.
2. SHARES FULLY-PAID, NONASSESSABLE, ETC.
All shares of Common Stock issued upon exercise of this
warrant will, upon issuance, be duly authorized, validly issued,
fully-paid and nonassessable and free from all preemptive rights
of any shareholder and free of all taxes, liens and charges with
respect to the issue thereof. The Company will at all times
reserve and keep available out of its authorized but unissued
shares of Common Stock, solely for the purpose of effecting the
exercise of this warrant, such number of its shares of Common
Stock as from time to time are sufficient to effect the full
exercise of this warrant. If at any time the number of
authorized but unissued shares of Common Stock is not sufficient
to effect the full exercise of this warrant, the Company will use
its best efforts to take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized
but unissued shares of Common Stock to such number of shares as
is sufficient for such purpose. The Company will take all such
action as may be necessary to assure that such securities may be
issued as provided herein without violation of any applicable law
or regulation, or of any requirements of any domestic securities
exchange upon which the Common Stock may be listed; provided,
however, that the Company will not be required to effect a
registration under Federal or state securities laws with respect
to such exercise (except as may be set forth in a separate
written agreement between the Company and the Holder).
3. NET ISSUE EXERCISE.
Notwithstanding any provisions herein to the contrary, if
the fair market value of one share of the Company's Common Stock
is greater than the Per Share Exercise Price (at the date of
calculation as set forth below), in lieu of exercising this
warrant for cash, the Holder may elect to receive shares equal to
the value (as determined below) of this warrant (or the portion
thereof being canceled) by surrender of this warrant at the
principal office of the Company, together with the properly
endorsed Subscription Form and notice of such election, in which
event the Company will issue to the Holder a number of shares of
Common Stock computed using the following formula:
X = Y (A-B)
A
Where X = the number of shares of Common Stock to be
issued to the Holder
Y = the number of shares of Common Stock
purchasable under this warrant or, if only a
portion of this warrant is being exercised,
the portion of this warrant being canceled
(at the date of such calculation)
A = the fair market value of one share of the
Company's Common Stock (at the date of such
calculation)
B = Per Share Exercise Price (as adjusted to the
date of such calculation)
For purposes of the above calculation, fair market value of one
share of Common Stock will be the average of the closing bid
prices of the Company's shares of Common Stock as quoted on the
NASDAQ Small Capital Market ("NASDAQ SMALL CAP") (or on such
other United States stock exchange or public trading market on
which the shares of the Company trade if, at the time of the
election, they are not trading on the NASDAQ SMALL CAP), for the
five (5) consecutive trading days immediately preceding the date
of the date the completed, executed Subscription Form is
received.
4. ADJUSTMENTS.
4.1 Adjustment for Stock Splits and Combinations. If the
Company at any time or from time to time during the term of this
warrant effects a subdivision of the outstanding Common Stock,
the Per Share Exercise Price in effect immediately before that
subdivision will be proportionately decreased. Conversely, if
the Company at any time or from time to time during the term of
this warrant combines the outstanding shares of Common Stock into
a smaller number of shares, the Per Share Exercise Price in
effect immediately before the combination will be proportionately
increased. Any adjustment under this Section 4.1 will become
effective at the close of business on the date the subdivision or
combination becomes effective.
4.2 Adjustment for Common Stock Dividends and
Distributions. If the Company at any time or from time to time
during the term of this warrant makes, or fixes, a record date
for the determination of holders of Common Stock entitled to
receive a dividend or other distribution payable in additional
shares of Common Stock, in each such event the Per Share Exercise
Price that is then in effect will be decreased as of the time of
such issuance or, in the event such record date is fixed, as of
the close of business on such record date, by multiplying the Per
Share Exercise Price then in effect by a fraction (a) the
numerator of which is the total number of shares of Common Stock
issued and outstanding immediately prior to the time of such
issuance on the close of business on such record date, and (b)
the denominator of which is the total number of shares of Common
Stock issued and outstanding immediately prior to the time of
such issuance on the close of business on such record date plus
the number of shares of Common Stock issuable in payment of such
dividend or distribution; provided, however, that if such record
date is fixed and such dividend is not fully paid or if such
distribution is not fully made on the date fixed thereof, the Per
Share Exercise Price will be recomputed accordingly as of the
close of business on such record date and thereafter the Per
Share Exercise Price will be adjusted pursuant to this Section
4.2 to reflect the actual payment of such dividend or
distribution.
4.3 Adjustments for Other Dividends and Distributions. If
the Company at any time or from time to time during the term of
this warrant makes, or fixes a record date for the determination
of holders of Common Stock entitled to receive a dividend or
other distribution payable in securities of the Company other
than shares of Common Stock, in each such event provision will be
made so that the Holder will receive upon exercise of this
warrant, in addition to the number of shares of Common Stock
receivable thereupon, the amount of other securities of the
Company that it would have received had this warrant been
exercised on the date of such event and had it thereafter, during
the period from the date of such event to and including the
exercise date, retained such securities receivable by them as
aforesaid, subject to all other adjustments called for during
such period under this Section 4 with respect to the rights of
the Holder hereunder or with respect to such other securities by
their terms.
4.4 Adjustment for Reclassification, Exchange and
Substitution. If at any time or from time to time during the
term of this warrant the Common Stock issuable upon the exercise
of this warrant is changed into the same or a different number of
shares of any class or classes of stock, whether by
recapitalization, reclassification or otherwise (other than a
recapitalization, subdivision, combination, reclassification or
exchange provided for elsewhere in this Section 4), the Holder
will have the right thereafter to exercise this warrant for the
kind and amount of stock and other securities and property
receivable upon such recapitalization, reclassification or other
change into which the shares of Common Stock issuable upon
exercise of this warrant immediately prior to such
recapitalization, reclassification or change could have been
converted, all subject to further adjustment as provided herein
or with respect to such other securities or property by the terms
thereof.
4.5 Reorganizations. If at any time or from time to time
during the term of this warrant there is a capital reorganization
of the Common Stock (other than a recapitalization, subdivision,
combination, reclassification or exchange provided for elsewhere
in this Section 4), as a part of such capital reorganization,
provision will be made so that the Holder will thereafter be
entitled to receive upon exercise of this warrant the number of
shares of stock or other securities or property of the Company to
which a holder of the number of shares of Common Stock
deliverable upon exercise of this warrant would have been
entitled on such capitalization reorganization, subject to
adjustment in respect of such stock or securities by the terms
thereof.
4.6 Certificate of Adjustment. In each case of an
adjustment or readjustment of the number of shares issuable upon
exercise of this warrant or the Per Share Exercise Price, the
Company, at its expense, will compute such adjustment or
readjustment in accordance with the provisions hereof and prepare
a certificate showing such adjustment or readjustment, and will
mail such certificate, by first class mail, postage prepaid, to
the Holder at the Holder's address as shown in the Company's
books. The certificate will set forth such adjustment or
readjustment, showing in detail the facts upon which such
adjustment or readjustment is based, including a statement of (a)
the Per Share Exercise Price at the time in effect, and (b) the
type and amount, if any, of other property that at the time would
be received upon exercise of this warrant.
4.7 Notices of Record Date. Upon (a) any taking by the
Company of a record of the holders of any class of securities for
the purpose of determining the holders thereof who are entitled
to receive any dividend or other distribution, (b) any capital
reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company, any sale of
all or substantially all of the assets of the Company or any
voluntary or involuntary dissolution, liquidation or winding up
of the Company or (c) a proposed Sale Event, the Company will
mail to the Holder at least twenty (20) days prior to the record
date specified therein a notice specifying (1) the date on which
any such record is to be taken for the purpose of such dividend
or distribution and a description of such dividend or
distribution, (2) the date on which any such reorganization,
reclassification, recapitalization, asset sale, dissolution,
liquidation or winding up is expecting to become effective, and
(3) the date, if any, that is to be fixed as to when the holders
of record of Common Stock (or other securities) will be entitled
to exchange their shares of Common Stock (or other securities)
for securities or other property deliverable upon such
reorganization, reclassification, recapitalization, asset sale,
dissolution, liquidation or winding up.
5. TAXES.
The Company will pay all taxes (other than taxes based upon
income) and other governmental charges that may be imposed with
respect to the issue or delivery of shares of Common Stock upon
exercise of this warrant, excluding any tax or other charge
imposed in connection with any transfer involved in the issue and
delivery of shares of Common Stock in a name other that in which
this warrant was registered.
6. CLOSING OF BOOKS.
The Company will at no time close its transfer books against
the transfer of any warrant or of any shares of Common Stock
issued or issuable upon the exercise of any warrant in any manner
that interferes with the timely exercise of this warrant.
7. NO VOTING OR DIVIDEND RIGHTS; LIMITATION OF LIABILITY.
Nothing contained in this warrant will be construed as
conferring upon the Holder the right to vote or to consent or to
receive notice as a shareholder of the Company or any other
matters or any rights whatsoever as a shareholder of the Company.
No dividends or interest will be payable or accrued in respect of
this warrant or the interest represented hereby or the shares
purchasable hereunder until, and only to the extent that, this
warrant has been exercised.
8. WARRANTS TRANSFERABLE.
Subject to compliance with applicable Federal and state
securities laws and the restrictions imposed by any other written
agreement between the Holder and the Company, this warrant and
all rights hereunder are transferable, in whole or in part,
without charge to the Holder (except for transfer taxes), upon
surrender of this warrant properly endorsed and in compliance
with the provisions of this warrant.
9. MODIFICATION AND WAIVER.
This warrant and any provision hereof may be changed,
waived, discharged or terminated only by an instrument in writing
signed by the party against which enforcement of the same is
sought.
10. NOTICES.
Any notice required by the provisions of this warrant will
be in writing and will be deemed effectively given: (a) upon
personal delivery to the party to be notified; (b) when sent by
confirmed telex or facsimile if sent during normal business hours
of the recipient; if not, then on the next business day; (c) five
(5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid; or (d) one (1) day
after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of
receipt. All notices will be addressed to the Holder at the
address of the Holder appearing on the books of the Company.
11. LOST WARRANTS.
The Company represents and warrants to the Holder that upon
receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction, or mutilation of this warrant and, in
the case of any such loss, theft or destruction, upon receipt of
an indemnity reasonably satisfactory to the Company, or in the
case of any such mutilation upon surrender and cancellation of
such warrant, the Company, at its expense, will make and deliver
a new warrant, of like tenor, in lieu of the lost, stolen,
destroyed or mutilated warrant.
12. FRACTIONAL SHARES.
No fractional shares of Common Stock will be issued upon
exercise of this warrant. If the conversion would result in the
issuance of any fractional share, the Company will, in lieu of
issuing any fractional share, pay cash equal to the product of
such fraction multiplied by the closing bid price of the
Company's Common Stock on the date of conversion.
13. GOVERNING LAW.
This warrant will be construed and enforced in accordance
with, and the rights of the parties will be governed by, the laws
of the State of Delaware without regard to conflict of laws
principles.
The Company has executed this warrant as of this 19th day of
November, 1997.
FLORIDA GAMING CORPORATION
By:
Name: W. Bennett Collett
Title: Chairman and CEO
PACIFIC CONTINENTAL SECURITIES CORP.
By: _______________________________
Name: _____________________________
Title: ____________________________
<PAGE>
EXHIBIT A TO WARRANT
SUBSCRIPTION FORM
Date: _________________
Florida Gaming Corporation
3500 N.W. 37th Avenue
Miami, Florida 33142
Attn: President
Ladies and Gentlemen:
The undersigned hereby elects to exercise the warrant issued
to it by FLORIDA GAMING CORPORATION (the "Company") dated as of
___________________ and to purchase thereunder _________________
(_________) shares of the Common Stock of the Company at a
purchase price of _________________ ($_________) per Share, for
an aggregate purchase price of _____________________
($___________) (the "Purchase Price").
Pursuant to the terms of the warrant the undersigned has
delivered the Purchase Price herewith in full in cash or by
certified check or wire transfer. The undersigned also makes the
representations set forth on the attached Exhibit B of the
warrant.
Very truly yours,
______________________________
By: __________________________
Title: _______________________
<PAGE>
EXHIBIT B TO WARRANT
INVESTMENT REPRESENTATIONS
THIS AGREEMENT MUST BE COMPLETED, SIGNED AND RETURNED TO FLORIDA
GAMING CORPORATION ALONG WITH THE SUBSCRIPTION FORM BEFORE THE
COMMON STOCK ISSUABLE UPON EXERCISE OF THE WARRANT WILL BE
ISSUED.
_____________________, 199__
Florida Gaming Corporation
3500 N.W. 37th Avenue
Miami, Florida 33142
Attn: President
The undersigned, _________________ ("Purchaser"), intends to
acquire up to ______ shares of the Common Stock (the "Stock") of
FLORIDA GAMING CORPORATION (the "Company") from the Company
pursuant to the exercise of certain warrants to purchase Stock
held by Purchaser. The Stock will be issued to Purchaser in a
transaction not involving a public offering and pursuant to an
exemption from registration under the Securities Act of 1933, as
amended (the "1933 Act"), and applicable state securities laws.
In connection with such purchase and in order to comply with the
exemptions from registration relied upon by the Company,
Purchaser represents, warrants and agrees as follows:
Purchaser is acquiring the Stock for its own account, to
hold for investment, and Purchaser will not make any sale,
transfer or other disposition of the Stock in violation of the
1933 Act or the General Rules and Regulations promulgated
thereunder by the Securities and Exchange Commission (the "SEC")
or in violation of any applicable state securities law.
Purchaser is an "accredited investor" as defined in Rule 501
promulgated under Regulation D.
Purchaser has been informed that under the 1933 Act, the
Stock must be held indefinitely unless it is subsequently
registered under the 1933 Act or unless an exemption from such
registration (such as Rule 144) is available with respect to any
proposed transfer or disposition by Purchaser of the Stock.
Purchaser further agrees that the Company may refuse to permit
Purchaser to sell, transfer or dispose of the Stock (except as
permitted under Rule 144) unless there is in effect a
registration statement under the 1933 Act and any applicable
state securities laws covering such transfer, or unless Purchaser
furnishes an opinion of counsel reasonably satisfactory to
counsel for the Company, to the effect that such registration is
not required.
Purchaser also understands and agrees that there will be
placed on the certificate(s) for the Stock, or any substitution
thereof, legends stating in substance:
"These securities have not been registered
under the Securities Act of 1933, as amended.
They may not be sold, offered for sale,
pledged, or hypothecated in the absence of an
effective registration statement as to the
securities under said act or an opinion
satisfactory to the Company that registration
is not required."
Purchaser has carefully read this letter and has discussed
its requirements and other applicable limitations upon
Purchaser's resale of the Stock with Purchaser's counsel.
Very truly yours,
By: __________________________
Title: _______________________
FLORIDA GAMING CORPORATION
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is
entered into as of November 19, 1997, by and among FLORIDA GAMING
CORPORATION, a Delaware corporation (the "Company"), and PACIFIC
CONTINENTAL SECURITIES CORP. ("Pacific").
RECITALS
WHEREAS, the Company expects to issue to Pacific warrants
(the "Warrants") to purchase up to 150,000 shares of the Common
Stock of the Company in connection with the offering (the
"Offering") by the Company of up to 3,000 shares of Series G 5%
Convertible Preferred Stock of the Company (the "Shares")
convertible into shares of the Company's Common Stock; and
WHEREAS, the Company has agreed to register the Registrable
Shares (as hereinafter defined).
NOW, THEREFORE, in consideration of the mutual premises,
representations, warranties, covenants and conditions set forth
in this Agreement, the Company and Pacific agree as follows:
AGREEMENT:
1. Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering
the Securities Act.
"Common Stock" shall mean the Company's Common Stock, $.10
par value.
"Other Registrable Securities" shall mean those shares of
Common Stock heretofore or hereafter issued pursuant to one or
more agreements granting the purchasers of such securities the
right to have the Company register such securities or include
such securities in any other registration of the Company's equity
securities.
"Registrable Shares" shall mean (i) the shares of Common
Stock issuable upon exercise of the Warrants, and (ii) any shares
of Common Stock of the Company issued or issuable in respect of
the Warrants upon any stock split, stock dividend,
recapitalization or similar event; provided, however, that
Registrable Shares or other securities shall no longer be treated
as Registrable Shares if (A) they have been sold to or through a
broker or dealer or underwriter in a public distribution or a
public securities transaction, (B) they have been sold in a
transaction exempt from the registration and prospectus delivery
requirements of the Securities Act so that all transfer
restrictions and restrictive legends with respect thereto are
removed upon consummation of such sale, or (C) the shares are
available for sale under the Securities Act (including Rule 144
thereunder), in the opinion of counsel to the Company, without
compliance with the registration and prospectus delivery
requirements of the Securities Act so that all transfer
restrictions and restrictive legends with respect thereto may be
removed upon the consummation of such sale.
The terms "register," "registered" and "registration" shall
refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act and
applicable rules and regulations thereunder, and the declaration
or ordering of the effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses incurred by
the Company in compliance with Section 2 hereof, including,
without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for the Company, blue
sky fees and expenses, reasonable fees and disbursements (not to
exceed $5,000) of one counsel for all the selling holders of
Registrable Shares, and the reasonable expenses of any special
audits incident to or required by any such registration (but
excluding the compensation of regular employees of the Company,
which shall be paid in any event by the Company, and excluding
all underwriting discounts and selling commissions applicable to
the sale of the Registrable Shares).
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall
be in effect from time to time.
"Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Shares
and all fees and disbursements of counsel for the selling holders
of Registrable Shares (other than the fees and disbursements of
such counsel included in Registration Expenses).
2. Registration.
(a) Agreement to Register. At any time four months
from the date of this Agreement until the third anniversary of
the date hereof, at the request (the "Registration Request") of
the holders of a majority of the Registrable Shares, the Company
shall prepare and file with the Commission within 60 days of the
Registration Request a registration statement covering the resale
of the Registrable Shares, shall use its best efforts to cause
such registration statement to become effective within 60 days
thereafter and to do all other things necessary to effect such
registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky and other state
securities laws in such jurisdictions as the holders of
Registrable Shares may reasonably request, and appropriate
compliance with applicable regulations issued under the
Securities Act) and as would permit or facilitate the sale and
distribution of all or such portion of such Registrable Shares.
The registration statement filed pursuant to this
Section 2 may, subject to the provision of Section 2(c) below,
include Other Registrable Securities and may include securities
of the Company being sold for the account of the Company.
(b) Penalty for Failure to Register.
(i) If a registration statement is not declared
effective within 180 days from the Registration Request (the "180
Day Period"), then the Company shall pay to holders of
Registrable Shares who have complied with the obligations
hereunder an aggregate amount equal to $5,000 for each 30 day
period after the expiration of the 180 Day Period and through the
270th day from the Registration Request ("270 Day Period") until
the registration statement is declared effective.
(ii) If a registration statement is not declared
effective within the 270 Day Period, then the Company shall pay
to holders of Registrable Shares who have complied with the
obligations hereunder an aggregate amount equal to $10,000 for
each 30 day period after the expiration of the 270 Day Period
until the registration statement is declared effective.
(iii) Any penalty payable to holders of
Registrable Shares under Sections 2(b)(i) or (ii) shall be
allocated pro rata among all the holders of Registrable Shares to
be included in the registration statement.
(c) Notwithstanding anything to the contrary contained
herein, if (x) the Board determines in good faith that the
registration and distribution of Registrable Shares would
interfere with any proposed or pending material corporate
transaction involving the Company or any of its subsidiaries or
would require premature disclosure thereof or would require the
Company to disclose information that the Company has not
otherwise made public and that the Company reasonably determines
is in the best interests of the Company not to disclose at such
time, and (y) the Company notifies the holders of the Registrable
Shares included in the registration statement in writing not
later than three (3) days following such determination (such
notice a "Blackout Notice"), the Company may (A) postpone the
filing of such registration statement or (B) allow such
registration statement to fail to be effective and usable or
elect that such registration statement not be usable for a
reasonable period of time, but not in excess of 90 days (a
"Blackout Period"); provided, however, that the aggregate number
of days included in all Blackout Periods shall not exceed 45
during any consecutive 12 months and shall not exceed 90 during
the period specified in Section 4(a) of this Agreement; and
provided, further, that the period referred to in Section 4(a)
during which the registration statement is required to be
effective and usable shall be extended by the aggregate number of
days during which the registration statement was not effective or
usable pursuant to the foregoing provisions.
(d) Underwriting. If Pacific intends to distribute the
Registrable Shares by means of an underwriting, it shall so
advise the Company and shall select an underwriter reasonably
acceptable to the Company.
(i) If the Company shall request inclusion in any
registration pursuant to Section 2 of shares of Common Stock
being sold for its own account, or if officers or directors of
the Company or holders of Other Registrable Securities, shall
request inclusion in any registration pursuant to Section 2,
Pacific shall offer to include Other Registrable Securities and
the shares of Common Stock of the Company in the underwriting and
may condition such offer on their acceptance of the further
applicable provisions of this Agreement.
(ii) Notwithstanding any other provision of this
Section 2, if the representative of the underwriters advises the
Company in writing that marketing factors require a limitation on
the number of shares to be underwritten, the Company shall so
advise all holders of Registrable Shares and other shareholders
whose securities would otherwise be underwritten pursuant hereto,
and, subject to any agreement between the Company and the holders
of Other Registrable Shares, the number of Registrable Shares and
other securities that may be included in the registration and
underwriting shall be allocated in the following manner: the
securities of the holders of Other Registrable Securities shall
be excluded pro rata, unless another method of determining such
exclusion is specified in the agreements governing the Other
Registrable Securities, according to the relative number of Other
Registrable Securities requested to be included in such
registration and underwriting, from such registration and
underwriting to the extent required by such limitation and, if a
limitation on the number of shares is still required, the number
of shares of Common Stock proposed to be registered by the
Company shall be excluded to the extent required, and, if a
further limitation on the number of shares is still required, the
number of Registrable Shares that may be included in the
registration and underwriting shall be allocated among all
holders of Registrable Shares in proportion, as nearly as
practicable, to the respective amounts of Registrable Shares
which they had requested to be included in such registration at
the time of filing the registration statement. No Registrable
Shares or any other securities excluded from the underwriting by
reason of the underwriter's marketing limitation shall also be
included in such registration.
(iii) If the Company or any holder of Other
Registrable Securities who has requested inclusion in such
registration and underwriting as provided above disapproves of
the terms of the underwriting, such person may elect to withdraw
therefrom by written notice to the Company, the underwriter and
Pacific. The securities so withdrawn shall also be withdrawn
from registration.
3. Expenses of Registration. The Company shall bear all
Registration Expenses incurred in connection with any
registration, qualification or compliance of the Registrable
Shares pursuant to this Agreement. All Selling Expenses shall be
borne by the holders of the securities so registered pro rata on
the basis of the number of their shares so registered.
4. Registration Procedures. Pursuant to this Agreement,
the Company will keep each holder of Registrable Shares advised
in writing as to the initiation of a registration under this
Agreement and as to the completion thereof. At its expense, the
Company will:
(a) Use best efforts to keep such registration
effective for a period ending on May 19, 2001 or until the holder
or holders of Registrable Shares have completed the distribution
described in the registration statement relating thereto or until
the securities registered cease to be Registrable Shares,
whichever first occurs;
(b) Prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as
may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of securities covered by such
registration statement; and
(c) Furnish such number of prospectuses and other
documents incidental thereto, including any amendment of or
supplement to the prospectus, as a holder of Registrable Shares
from time to time may reasonably request.
5. Indemnification.
(a) The Company will indemnify each holder of
Registrable Shares, each of its officers, directors and partners,
and each person controlling such holder of Registrable Shares,
with respect to which registration has been effected pursuant to
this Agreement, and each underwriter, if any, and each person who
controls any underwriter, and their respective counsel against
all claims, losses, damages and liabilities (or actions,
proceedings or settlements in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, or other document
incident to any such registration, or based on any omission (or
alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of the Securities Act
or any rule or regulation thereunder applicable to the Company in
connection with any such registration and will reimburse each
such holder of Registrable Shares, each of its officers,
directors and partners, and each person controlling such holder
of Registrable Shares, each such underwriter and each person who
controls any such underwriter, for any legal and any other
expenses as they are reasonably incurred in connection with
investigating and defending any such claim, loss, damage,
liability or action; provided, however, that the indemnity
contained in this Section 5(a) shall not apply to amounts paid in
settlement of any such claim, loss, damage, liability or expense
that arises out of or is based on any untrue statement or
omission based upon written information furnished to the Company
by such holder of Registrable Shares or underwriter and stated to
be specifically for use therein. The foregoing indemnity
agreement is further subject to the condition that insofar as it
relates to any untrue statement, alleged untrue statement,
omission or alleged omission made in a prospectus, such indemnity
agreement shall not inure to the benefit of the foregoing
indemnified parties if copies of a supplemental prospectus
correcting the misstatement, or alleged misstatement, omission or
alleged omission upon which such loss, liability, claim or damage
is based is timely delivered to such indemnified party and a copy
thereof was not furnished to the person asserting the loss,
liability, claim or damage.
(b) Pacific or any transferee of the Registrable
Shares, severally and not jointly, will indemnify the Company,
each of its directors and officers, each other holder of
Registrable Shares and each person who controls the Company or
holder of Registrable Shares within the meaning of the Securities
Act and the rules and regulations thereunder, and each
underwriter, if any, and each person who controls any
underwriter, and their respective counsel against all claims,
losses, damages and liabilities (or actions, proceedings, or
settlements in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus or other document incident to any
such registration or based upon any omission (or alleged
omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not
misleading, or any violation of the Securities Act or any rule or
regulation thereunder applicable to the Company and will
reimburse the Company, any other holder of Registrable Shares and
their respective directors, officers, partners, persons,
underwriters or control persons for any legal or any other
expense reasonably incurred in connection with investigating or
defending any such claim, loss, damage, liability or action, in
each case to the extent, and only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged
omission) relating to such holder is made in such registration
statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information
furnished to the Company by Pacific and stated to be specifically
for use therein; provided, however, that the obligations of
Pacific shall be limited to an amount equal to the proceeds to
Pacific and provided further that such indemnification
obligations shall not apply if the Company modifies or changes to
a material extent the written information furnished by Pacific.
(c) Each party entitled to indemnification under this
Section 5 (an "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has actual knowledge of any
claim as to which indemnity may be sought and shall permit the
Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim
or any litigation resulting therefrom, shall be approved by the
Indemnified Party (whose approval shall not unreasonably be
withheld or delayed), and the Indemnified Party may participate
in such defense at such Indemnified Party's expense; and provided
further that the failure of any Indemnified Party to give notice
as provided herein shall not relieve the Indemnifying Party of
its obligations under this Agreement. No Indemnifying Party, in
the defense of any such claim or litigation, shall, except with
the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation. Each
Indemnified Party shall furnish such information regarding itself
or the claim in question as an Indemnifying Party may reasonably
request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting
therefrom.
(d) If for any reason the indemnification provided for
in this section is unavailable to an Indemnified Party or is
insufficient to hold it harmless as contemplated by this
Agreement, then the Indemnifying Party shall contribute to the
amount paid or payable by the Indemnified Party as a result of
such loss, claim, damage, liability or action in such proportion
as is appropriate to reflect not only the relative benefits
received by the Indemnified Party and the Indemnifying Party, but
also the relative fault of the Indemnified Party and the
Indemnifying Party, as well as any other relevant equitable
considerations.
6. Information by Holder of Registrable Shares.
Pacific shall furnish to the Company such information
regarding Pacific and the distribution proposed by such Pacific
as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration referred
to in this Agreement.
7. Transfers or Assignments of Registration Rights.
Pacific's rights under this Agreement to cause the Company
to register the Registrable Shares may be transferred or assigned
by Pacific.
8. Miscellaneous.
8.1 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Delaware without giving effect to conflict of laws principles.
8.2 Successors and Assigns. Except as otherwise
provided herein, the provisions hereof shall inure to the benefit
of, and be binding upon, the successors, assigns, heirs,
executors and administrators of the parties hereto.
8.3 Entire Agreement. This Agreement constitutes the
full and entire understanding and agreement among the parties
with regard to the subject matter hereof.
8.4 Notices, etc. All notices and other
communications required or permitted hereunder shall be in
writing and shall be mailed by first-class mail, postage prepaid,
or delivered by hand or by messenger or courier delivery
service, addressed (a) if to Pacific, at such address as Pacific
shall have furnished to the Company in writing, or (b) if to the
Company, at 3500 N.W. 37th Avenue, Miami, Florida 33142-0000, or
at such other address as the Company shall have furnished to
Pacific in writing.
8.5 Delays or Omissions. No delay or omission to
exercise any right, power or remedy accruing to any holder of any
Registrable Shares, upon any breach or default of the Company
under this Agreement, shall impair any such right, power, or
remedy of such holder nor shall it be construed to be a waiver of
any such breach or default, or an acquiescence therein, or of or
in any similar breach or default thereunder occurring; nor shall
any waiver of any single breach or default be deemed a waiver of
any other breach or default thereafter occurring. Any waiver,
permit, consent or approval of any kind or character on the part
of any holder of any breach or default under this Agreement, or
any waiver on the part of any party of any provisions or
conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or
otherwise afforded to any holder, shall be cumulative and not
alternative.
8.6 Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be enforceable
against the parties actually executing such counterparts, and all
of which together shall constitute one instrument.
8.7 Severability. In the case any provision of this
Agreement shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
8.8 Amendments. The provisions of this Agreement may
be amended at any time and from time to time, and particular
provisions of this Agreement may be waived, with and only with an
agreement or consent in writing signed by the Company and by the
owners of all of the Registrable Shares as of the date of such
amendment or waiver.
8.9 Termination of Registration Rights. This
Agreement shall terminate at the earlier of May 19, 2001, and at
such time as there ceases to be any outstanding Registrable
Shares as defined herein, except that the provisions of Section 5
shall survive the termination of this Agreement.
The foregoing Registration Rights Agreement is hereby
executed as of the date first above written.
FLORIDA GAMING CORPORATION
By: _________________________
W. Bennett Collett
Chairman and Chief
Executive Officer
PACIFIC CONTINENTAL SECURITIES
CORP.
By: __________________________
Name: ________________________
Title: _______________________
LOCK-UP AGREEMENT
This Lock-Up Agreement ("Agreement"), dated November 18,
1997, is by and between FLORIDA GAMING CORPORATION, a Delaware
corporation ("Florida Gaming") and INTERSTATE CAPITAL
CORPORATION, a Kentucky corporation ("Interstate").
Recitals
1. Pursuant to the Asset Purchase Agreement dated as of
September 24, 1997, (the "Asset Purchase Agreement") among
Florida Gaming, Freedom Financial Corporation and Interstate, in
exchange for certain unimproved properties and a residential real
estate development called Tara Club Estates, Florida Gaming
agreed to issue to Interstate 2,084 shares (the "Shares") of
Florida Gaming's Series F 8% Cumulative Convertible Preferred
Stock.
2. The Shares will be convertible into common stock of
Florida Gaming ("Common Stock") at any time, and from time to
time, at Interstate's option.
3. Florida Gaming desires to have Interstate agree to a
restriction on the conversion of the Shares beginning on the date
of the issuance of the Shares and ending on November 10, 1998.
NOW, THEREFORE, in consideration of the transactions
contemplated in the Asset Purchase Agreement and for other good
and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
1. Lock-Up. Interstate hereby agrees not to convert any
of the Shares into Common Stock for the period beginning on the
date of the issuance of the Shares and ending on November 10,
1998.
2. Legend on Certificate. Interstate hereby agrees to the
placement by Florida Gaming of the following restrictive legend
on the stock certificate for the Shares:
THE SHARES EVIDENCED BY THIS CERTIFICATE ARE
SUBJECT TO A CERTAIN LOCK-UP AGREEMENT, DATED
NOVEMBER 18, 1997, BY AND BETWEEN THE COMPANY
AND THE HOLDER (THE "AGREEMENT"), THE TERMS
OF WHICH PREVENT THE CONVERSION OF THE SHARES
UNDERLYING THIS CERTIFICATE UNTIL NOVEMBER
10, 1998, SUBJECT TO CERTAIN LIMITATIONS AND
RESTRICTIONS. THE AGREEMENT MAY BE EXAMINED
AT THE OFFICE OF THE COMPANY.
3. Transfer of the Shares. Subject to Section 4(a) below,
the Shares may be transferred by Interstate, provided, however,
that any transferee (a "Transferee") shall be bound by the terms
and conditions of this Agreement and that such Transferee agree
to be so bound in writing before the transfer is effected..
4. Representations and Warranties of Interstate.
Interstate hereby represents and warrants to Florida Gaming as
follows:
(a) Interstate will not transfer any Shares until
Interstate has complied with Section 3 of this Agreement; and
(b) This Agreement constitutes a legal, valid and
binding obligation of Interstate enforceable in accordance with
its terms.
5. Indemnification.
5.1 Interstate shall indemnify, defend and hold
Florida Gaming harmless from and against any and all liabilities,
penalties, fines, forfeitures, demands, claims, suits, causes of
action, costs and expenses which Florida Gaming may suffer,
incur, be responsible for or pay out as a result of injuries to
any person, damage or loss to any property, or any actual or
alleged violation of the statutes, ordinances, orders, rules or
regulations of any governmental entity caused by, directly or
indirectly, or arising solely from or out of (i) Interstate's
breach of this Agreement, or (ii) any breach of Interstate's
representations and warranties.
5.2 All indemnities set forth in this Agreement shall
include reasonable costs and attorneys' fees.
6. Entire Agreement. This Agreement and the Asset
Purchase Agreement, and any properly executed addendum hereto or
thereto, constitute the entire agreement between the parties with
respect to the Shares. This Agreement may not be modified orally
and no claimed modification shall be valid unless in writing and
signed by both parties. In the event of a conflict between the
terms of this Agreement and the Asset Purchase Agreement, the
terms of this Agreement shall prevail.
7. Waiver of Breach. The failure of a party to require
the performance of any term of this Agreement, or the waiver by a
party of any breach of this Agreement, shall not prevent a
subsequent enforcement of such terms nor be deemed a waiver of
any subsequent breach.
8. Successors and Assigns. The rights and obligations of
the parties under this Agreement shall be binding upon and shall
inure to the benefit of the parties, their successors or
permitted assigns.
9. Miscellaneous. This Agreement may be executed in a
number of counterparts and each of such counterparts shall for
all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same
instrument.
10. Governing Law. This Agreement shall be governed by the
laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized
officers as of the date first written above.
FLORIDA GAMING CORPORATION INTERSTATE CAPITAL CORPORATION
By:___________________________ By:___________________________
Name: Timothy L. Hensely Name: W. Bennett Collett
Title: Executive Vice President &
Chief Financial Officer Title:
