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): July 10, 1997
FLORIDA GAMING CORPORATION
(Exact name of registrant as specified in charter)
Delaware 0-9099 59-1670533
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
1750 South Kings Highway
Fort Pierce, Florida 34945-3099
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (407) 464-7500
Not Applicable
(Former name or former address
if changed since last report.)
INFORMATION TO BE INCLUDED IN THE REPORT
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
Exhibit 3.1, 4.1 -- Form of 5% Cumulative Convertible
Debenture due December 31, 1998 (the "Debenture").
Exhibit 4.2 -- Form of Guaranty with respect to the
Debenture.
Item 9. Sale of Debenture Pursuant to Regulation S.
(a) Securities Sold. On July 10, 1997, the Registrant
issued a $1,200,000.00 5% Cumulative Convertible
Debenture due December 31, 1998.
(b) Underwriters and Other Purchasers. The Registrant did not
engage an underwriter in connection the issuance of the
Debenture. A non-U.S. Person, (as such term is defined
in Regulation S ("Regulation S") under the Securities Act
of 1933, as amended ("Securities Act")), purchased the
Debenture. The purchaser is an "accredited investor" as
defined in Rule 501(a) in Regulation D under the
Securities Act.
(c) Consideration. The Registrant issued the Debenture for
cash consideration. The Registrant is obligated to pay
NWT Interfin, Ltd. a finders fee in the amount of $36,000
plus five-year warrants to purchase 30,000 shares of the
Registrant's common stock ("Common Stock"), with an
exercise price per share equal to $4.125.
(d) Exemption from Registration Claimed. The Debenture was
issued in accordance with the provisions of Regulation S
in an Offshore Transaction to a non-U.S. Person.
(e) Terms of Conversion or Exercise.
The terms of the Debenture provide for interest on the
Debenture at the rate of five percent (5.0%) per year
payable until the Debenture has been converted.
Purchaser, at its option, may convert the Debenture into
Common Stock at $6.00 per share after December 31, 1997.
After December 31, 1997, if during any calendar month
(the "Demand Month") the average Closing Bid Price (as
defined in the Debenture) of the Common Stock for any
five consecutive trading day period is at or below $7.00
per share, purchaser will have the option of demanding
redemption (the "Demand Redemption") on part of the
Debenture. The principal amount of the Debenture that
the purchaser will be entitled to redeem (the "Demand
Redemption Amount") will be a number up to 25% of the
total amount of the Debenture outstanding as of the close
of business on December 31, 1997 (the "Monthly Maximum
Demand Redemption Amount"). Any portion of the Monthly
Maximum Demand Redemption Amount which is not requested
to be redeemed by purchaser in a Demand Month will only
become available for redemption in the fourth month
following that specific Demand Month in which it
initially became available for redemption.
The Registrant's Demand Redemption obligations will be
guaranteed by Freedom Financial Corporation pursuant to
a Guaranty and Stock Pledge Agreement.
At any time on or before December 31, 1997, Registrant
can repay the Debenture plus interest at the rate of 18%
per annum. After December 31, 1997, Registrant can
prepay the Debenture at any time that the Closing Bid
Price per share is less than $7.00 and greater than
$12.00, for 117.5% of par value, plus accrued interest.
The discussion at this Item 701(e) is qualified in its
entirety by reference to the Debenture and the form of
Guaranty attached to this Form 8-K as exhibits.
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: July 10, 1997
FORM OF DEBENTURE
"THE SECURITIES REPRESENTED BY THIS DEBENTURE HAVE NOT
BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION (THE "SEC") UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE
SECURITIES ACT OF ANY STATE UNDER ANY STATES SECURITIES
LAW. THEY HAVE BEEN ISSUED PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER REGULATION S ("REGULATION S")
PROMULGATED UNDER THE SECURITIES ACT. THE SECURITIES MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
UNITED STATES OR TO U.S. PERSON (AS SUCH TERM IS DEFINED
IN REGULATION S) UNLESS THE SECURITIES ARE REGISTERED
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS, OR SUCH OFFERS, SALES AND TRANSFERS ARE MADE
PURSUANT TO AVAILABLE EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS.
THE TRANSFER OF SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION OF THIS DEBENTURE IS LIMITED BY AN OFFSHORE
SECURITIES SUBSCRIPTION AGREEMENT."
5.0% CUMULATIVE CONVERTIBLE DEBENTURE DUE DECEMBER 31, 1998
$1,200,000 DATED JULY
10, 1997
Number_____
FOR VALUE RECEIVED, FLORIDA GAMING CORPORATION, a Delaware
corporation (the "Company"), hereby promises to pay to THE GIFFORD
FUND, LTD. or registered assigns (the "Holder") on December 31,
1998 (the "Maturity Date"), the principal amount of One Million Two
Hundred Thousand Dollars($1,200,000) U.S. (the "Subscription
Proceeds"), and to pay interest on the principal amount hereof, in
such amounts, at such times and on such terms and conditions as are
specified herein.
Article 1. Interest
The Company shall pay interest on the unpaid principal amount
of this Debenture (the "Debenture") at the rate of Five Percent
(5.0%) per year, payable at the time of each conversion until the
principal amount hereof is paid in full or has been converted.
Interest on this Debenture shall accrue from the most recent date
to which interest has been paid or, if no interest has been paid,
from July 10, 1997. Interest shall be computed on the basis of a
360 day year of 12, 30 day months. If the Holder shall convert
this Debenture during any quarter, the Company shall pay to the
Holder, upon conversion, the pro-rata portion of accrued interest
payable through the conversion date.
Article 2. Method of Payment
This Debenture must be surrendered to the Company in order for
the Holder to receive payment of the principal amount hereof. The
Company shall have the option of paying the interest on this
Debenture in United States dollars or in common stock upon
conversion pursuant to Article 3 hereof. The Company may draw a
check for the payment of interest to the order of the Holder of
this Debenture and mail it to the Holder's address as shown on the
Register (as defined in Section 7.2 below). Interest and principal
payments shall be subject to withholding under applicable United
States Federal Internal Revenue Service Regulations.
Article 3. Conversion
Section 3.1. Conversion Privilege
(a) The Holder of this Debenture shall have the right, at its
option, to convert it into shares of common stock, par value $0.10
per share, of the Company ("Common Stock") at any time which is
before the close of business on the Maturity Date, except as set
forth in Section 3.1(c) below. The number of shares of Common
Stock issuable upon the conversion of this Debenture is determined
by dividing the principal amount hereof to be converted plus all
accrued and unpaid interest thereon minus any required withholding
by the conversion price in effect on the conversion date (as
defined in paragraph (b) of this Section 3.1 below) and rounding
the result to the nearest whole share. On conversion, no payment
of or adjustment (other than as provided in the previous sentence)
for accrued and unpaid interest shall be made whether or not such
conversion occurs before, on or after an interest payment date.
(b) The conversion price and procedures are set forth in
Section 3.2.
(c) Less than all of the principal amount of this Debenture
may be converted into Common Stock if the portion converted is
$5,000 or a whole multiple of $5,000 and the provisions of this
Article 3 that apply to the conversion of all of the Debenture
shall also apply to the conversion of a portion of it. All accrued
and unpaid interest on this Debenture shall be added to the amount
converted if less than all of the principal amount of this
Debenture is converted and shall be deemed to be paid and
discharged thereby. This Debenture may not be converted, whether
in whole or in part, except in accordance with Section 3.2.
(d) In the event all or any portion of this Debenture remains
outstanding on December 31, 1998, the Company will repay the
remaining outstanding amount.
Section 3.2. Conversion Procedure.
a. Holder, at its option, may convert the Debentures into
Common Stock of the Company at $6.00 per share after December 31,
1997. Such conversion shall be effectuated by sending a facsimile
and an original of the signed Notice of Conversion ("Notice of
Conversion") to the Company at the address set forth therein or such
address as the Company may later designate in writing to Holder and
a facsimile and original of the signed Purchaser Representation
Letter, see Exhibits A and B attached hereto, which evidences
Holder's intention to convert the Debentures or a specified portion
thereof, and accompanied by proper assignment, if applicable. No
fractional shares or scrip representing fractions of shares will be
issued on conversion, but the number of shares issuable shall be
rounded down or up, as the case may be, to the nearest whole share.
The date on which Notice of Conversion is effective (the "Conversion
Date") shall be deemed to be the date on which the Holder has
delivered to the Company the original Debentures, a facsimile or
original of the signed Notice of Conversion and a facsimile or
original of the signed Purchaser Representation Letter, as long as
the originals and all other documents (in proper form) required to
issue and deliver Common Stock in accordance with Holder's
instruction are received within 3 business days thereafter (the
"Original Documents"). If the Original Documents are not received by
the Company within three business days from the Conversion Date, then
the Conversion Date shall be the date on which the Original Documents
are actually received by the Company. If after 10 business days
after the Conversion Date the Company has failed to honor a
Conversion Notice for any reason, then in such event, Holder shall
have the right to demand and receive from the Company the balance of
Subscription Proceeds paid, based on the number of Debentures left
unconverted, plus accrued interest as well as a premium equal to
17.5% of the amount of Debenture submitted for conversion.
b. Within five (5) business days after receipt of the Original
Documents, the Company shall issue and deposit in overnight mail to
Holder or per Holder's written instructions, a certificate, without
restrictive legend or stop transfer instructions (except in the
event of a change in Regulation S under the Securities Act
("Regulation S") in which case Purchaser shall have the rights set
forth in Article 8), for the number of shares of Common Stock
issuable upon the conversion. It shall be the Company's
responsibility to take all necessary actions and to bear all such
costs to issue the Common Stock as provided herein, including the
delivery of an opinion letter to the transfer agent, if so
required. The person in whose name the certificate of Common Stock
is to be registered shall be treated as a shareholder of record on
and after the Conversion Date. No payment or adjustment shall be
made for accrued and unpaid dividends until the Debentures are
converted. Upon surrender of any Debentures that are to be
converted in part, the Company shall issue to the Holder new
Debentures equal to the number of unconverted Debentures, if so
requested by Holder. In the event the Company does not make
delivery of the Common Stock, as instructed by Holder, within 5
business days after the receipt of the Original Documents, then in
such event the Company shall pay to Holder an amount, in cash in
accordance with the following schedule, wherein "No. Business Days
Late" is defined as the number of business days beyond the 5
business days delivery period.
Late Payment for Each
$10,000 of Subscription
No. Business Days Late Proceeds Being Converted
1 $100
2 $200
3 $300
4 $400
5 $500
6 $600
7 $700
8 $800
9 $900
10 $1,000
>10 $1,000 + $200 for each
Business Day Late Beyond 10 Days
To the extent that the failure of the Company to issue the
Common Stock pursuant to this Section 3.2(b) is due to the
unavailability of authorized but unissued shares of Common Stock,
the provisions of this Section 3.2(b) shall not apply but instead
the provisions of Section 3.2(c) shall apply.
The Company shall pay any payments incurred under this Section
3.2(b) in immediately available funds within three (3) business
days from the date of issuance of the applicable Common Stock.
Nothing herein shall limit a Holder's right to pursue actual
damages for the Company's failure to issue and deliver Common
Stock to the Holder within 6 business days after the receipt of the
Original Documents.
c. If, at any time Holder submits a Notice of Conversion and
the Company does not have sufficient authorized but unissued shares
of Common Stock available to effect, in full, a conversion of the
Debentures (a "Conversion Default", the date of such default being
referred to herein as the "Conversion Default Date"), the Company
shall issue to the Holder all of the shares of Common Stock which
are available, and the Notice of Conversion as to any Debentures
requested to be converted but not converted (the "Unconverted
Debentures") shall become null and void. The Company shall provide
notice of such Conversion Default ("Notice of Conversion Default")
to all existing Holders of outstanding Debentures, by facsimile,
within one (1) business day of such default (with the original
delivered by overnight or two day courier). No Holder may submit a
Notice of Conversion after receipt of a Notice of Conversion
Default until the date additional shares of Common Stock are
authorized by the Company.
The Company agrees to pay to all Holders of outstanding
Debentures payments for a Conversion Default ("Conversion Default
Payments") in the amount of (N/365) x (.20) x the initial
Subscription Proceeds of the outstanding Debentures held by each
Holder where N = the number of days from the Conversion Default
Date to the date (the "Authorization Date") that the Company
authorizes a sufficient number of shares of Common Stock to effect
conversion of all remaining Debentures. The Company shall send
notice ("Authorization Notice") to each Holder of outstanding
Debentures that additional shares of Common Stock have been
authorized, the authorization date of the additional shares of
Common Stock and the amount of Holder's accrued Conversion Default
Payments. The accrued Conversion Default Payment shall be paid in
cash or shall be convertible into Common Stock at the Conversion
Rate, at the Company's option. No interest shall be paid on
conversion Default Payments.
Nothing herein shall limit the Holder's right to pursue actual
damages for the Company's failure to maintain a sufficient number
of authorized shares of Common Stock.
d. Nothing contained in this Subscription Agreement shall be
deemed to establish or require the payment of interest to the
Holder at a rate in excess of the maximum rate permitted by
governing law. In the event that the rate of interest required to
be paid exceeds the maximum rate permitted by governing law, the
rate of interest required to be paid thereunder shall be
automatically reduced to the maximum rate permitted under the
governing law and such excess shall be returned with reasonable
promptness by the Holder to the Company.
e. Demand Redemption. After December 31, 1997, if
during any calendar month (the "Demand Month") the average Closing
Bid Price of the Company's Common Stock for any five consecutive
trading day period is at or below $7.00 per share, then in such
event Holder (the "Demanding Holder") shall have the option of
demanding redemption (the "Demand Redemption") on part of the
Debenture. The "Closing Bid Price" shall mean the closing bid
price of the Company's Common Stock as reported by NASDAQ (or, if
not quoted by NASDAQ, as reported by such other exchange or market
where traded). The principal amount of the Debenture that the
Demanding Holder will be entitled to redeem (the "Demand Redemption
Amount") will be a number up to 25% of the total amount of the
Debenture outstanding as of the close of business on December 31,
1997 (the Monthly Maximum Demand Redemption Amount"). Any portion
of the Monthly Maximum Demand Redemption Amount which is not
requested to be redeemed by a Demanding Holder (or otherwise
satisfied through conversion or receipt of proceeds from the
Grantor) in a Demand Month will only become available for
redemption in the fourth month following that specific Demand Month
in which it initially became available for redemption. Demanding
Holder can make a Demand Redemption Notice by sending a facsimile
to the Company at the address set forth herein or such address as
the Company may later designate in writing to Purchaser in writing.
The date on which the facsimile is sent by the Demanding Holder
shall be deemed the Demand Date so long as the Demanding Holder has
delivered the original Demand Redemption Notice to the Company
within three (3) business days thereafter. The Company will pay
the Demanding Holder 117.5% of the amount of the Demand Redemption
plus any accumulated interest due on the Demand Redemption Amount
within five (5) business days of the Demand Date.
f. Guarantor. The Company's obligations in Section 3.2(e)
are subject to a guarantee ("Guaranty") (See Exhibit C attached
hereto and made a part hereof) from Freedom Financial Corporation
("Guarantor") in favor of Holder. The Guaranty shall only come
into effect if the Company fails to pay the Demand Redemption
Amount within five (5) business days after the Demand Date.
g. Prepayment. At any time on or before to December 31,
1997, the Company can prepay the Debenture plus interest at the
rate of 18% per annum (which interest shall include the 5% interest
stated in Article 1). After December 31, 1997, Seller can prepay
the Debenture, at any time that the Closing Bid Price per share is
less than $7.00 and greater than $12.00, for 117.5% of par value,
plus accrued interest, after giving Holder 10 days advance written
notice via facsimile. Redemption shall be effected (the "Effective
Date") by the Seller delivering the funds to cover the redemption
to the Holder at the address in the Subscription Agreement, at
which time all liability under the Debentures shall be discharged
and the Debentures shall be deemed canceled. As soon as possible
after the Effective Date Holder shall deliver the Debentures to the
Company.
Section 3.3. Fractional Shares. The Company shall not issue
a fractional share of Common Stock upon the conversion of this
Debenture . Instead, the Company shall round up or down, as the
case may be, to the nearest whole share.
Section 3.4. Taxes on Conversion. The Company shall pay any
documentary, stamp or similar issue or transfer tax due on the
issue of shares of Common Stock upon the conversion of this
Debenture. However, the Holder shall pay any such tax which is due
because the shares are issued in a name other than its name.
Section 3.5. Company to Reserve Stock. The Company shall
reserve out of its authorized but unissued Common Stock or Common
Stock held in treasury enough shares of Common Stock to permit the
conversion of this Debenture. All shares of Common Stock which may
be issued upon the conversion hereof shall upon issuance be validly
issued, fully paid and nonassessable and free from all taxes,
liens and charges with respect to the issuance thereof.
Section 3.6. Restrictions on Transfer. This Debenture and
the Common Stock issuable upon the conversion hereof have not been
registered under the Securities Act and have been sold pursuant to
Regulation S. The Debenture may not be transferred or resold in
the United States, or to a U.S. Person, or to or for the account or
benefit of a U.S. Person for a period of forty (40) days from the
date hereof and thereafter this Debenture and the Common Stock
issuable upon the conversion thereof may only be offered or sold
pursuant to registration under or an exemption from the Securities
Act.
Section 3.7. Mergers, Etc. If the Company merges or
consolidates with another corporation or sells or transfers all or
substantially all of its assets to another person and the holders
of the Common Stock are entitled to receive stock, securities or
property in respect of or in exchange for Common Stock, then as a
condition of such merger, consolidation, sale or transfer, the
Company and any such successor, purchaser, Holder or transferee
shall amend this Debenture to provide that it may thereafter be
converted on the terms and subject to the conditions set forth
above into the kind and amount of stock, securities or property
receivable upon such merger, consolidation, sale or transfer by a
holder of the number of shares of Common Stock into which this
Debenture might have been converted immediately before such merger,
consolidation, sale or transfer, subject to adjustments which shall
be as nearly equivalent as may be practicable to adjustments
provided for in this Article 3.
Article 4. Mergers
The Company shall not consolidate or merge into, or transfer
all or substantially all of its assets to, any person, unless such
person assumes the obligations of the Company under this Debenture
and immediately after such transaction no Event of Default (as
defined in Section 6.1) exists. Any reference herein to the
Company shall refer to such surviving or transferee corporation and
the obligations of the Company shall terminate upon such
assumption.
Article 5. Reports
The Company will mail to the Holder hereof at its address as
shown on the Register a copy of any annual, quarterly or current
report that it files with the Securities and Exchange Commission
("SEC") promptly after the filing thereof and a copy of any annual,
quarterly or other report or proxy statement that it gives to its
shareholders generally at the time such report or statement is sent
to shareholders.
Article 6. Defaults and Remedies
Section 6.1. Events of Default. An "Event of Default" occurs
if (a) the Company does not make the payment of the principal of
this Debenture when the same becomes due and payable at maturity,
upon redemption or otherwise; (b) the Company does not make a
payment, other than a payment of principal, for a period of 5
business days after it becomes due and payable under the
Debentures, (c) the Company fails to comply with any of its other
agreements in this Debenture and such failure continues for the
period and after the notice specified below, (d) the Company
pursuant to or within the meaning of any Bankruptcy Law (as
hereinafter defined): (i) commences a voluntary case; (ii)
consents to the entry of an order for relief against it in an
involuntary case; (iii) consents to the appointment of a Custodian
(as hereinafter defined) of it or for all or substantially all of
its property, (iv) makes a general assignment for the benefit of
its creditors or (v) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that: (A) is for relief
against the Company in an involuntary case; (B) appoints a
Custodian of the Company or for all or substantially all of its
property or (C) orders the liquidation of the Company, and the
order or decree remains unstayed and in effect for 60 days; (e) the
Company shall have its Common Stock delisted from an exchange or
over-the-counter market and the Company has exhausted all of its
appeals with respect to such delisting. As used in this Section
6.1, the term "Bankruptcy Law" means Title 11 of the United States
Code or any similar federal or state law for the relief of debtors.
The term "Custodian" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law. A default
under clause (c) above is not an Event of Default until the holders
of at least 25% of the aggregate principal amount of the Debentures
outstanding notify the Company of such default and the Company does
not cure it within five (5) days after the receipt of such notice,
which must specify the default, demand that it be remedied and
state that it is a "Notice of Default".
Section 6.2. Acceleration. If an Event of Default occurs and
is continuing, the Holder hereof by notice to the Company, may
declare the principal of and accrued interest on this Debenture to
be due and payable. Upon such declaration, the principal and
interest hereof shall be due and payable immediately.
Article 7. Registered Debentures
Section 7.1. Series. This Debenture is one of a numbered
series of Debentures having an aggregate principal amount of not
more than $1,200,000 which are identical except as to the principal
amount and date of issuance thereof and as to any restriction on
the transfer thereof in order to comply with the Securities Act of
1933 and the regulations of the Securities and Exchange Commission
promulgated thereunder. Such Debentures are referred to herein
collectively as the "Debentures". The Debentures shall be issued
in whole multiples of $5,000.
Section 7.2. Record Ownership. The Company, or its attorney,
shall maintain a register of the holders of the Debentures (the
"Register") showing their names and addresses and the serial
numbers and principal amounts of Debentures issued to or
transferred of record by them from time to time. The Register may
be maintained in electronic, magnetic or other computerized form.
The Company may treat the person named as the Holder of this
Debenture in the Register as the sole owner of this Debenture.
The Holder of this Debenture is the person exclusively entitled to
receive payments of interest on this Debenture, receive
notifications with respect to this Debenture, convert it into
Common Stock and otherwise exercise all of the rights and powers as
the absolute owner hereof.
Section 7.3. Registration of Transfer. Transfers of this
Debenture may be registered on the books of the Company maintained
for such purpose pursuant to Section 7.2 above (i.e., the
Register). Transfers shall be registered when this Debenture is
presented to the Company with a request to register the transfer
hereof and the Debenture is duly endorsed by the appropriate
person, reasonable assurances are given that the endorsements are
genuine and effective, and the Company has received evidence
satisfactory to it that such transfer is rightful and in compliance
with all applicable laws, including tax laws and state and federal
securities laws. When this Debenture is presented for transfer and
duly transferred hereunder, it shall be canceled and a new
Debenture showing the name of the transferee as the record holder
thereof shall be issued in lieu hereof. When this Debenture is
presented to the Company with a reasonable request to exchange it
for an equal principal amount of Debentures of other denominations,
the Company shall make such exchange and shall cancel this
Debenture and issue in lieu thereof Debentures having a
total principal amount equal to this
Debenture in the denominations requested by the Holder. The
Company may charge a reasonable fee for any registration of
transfer or exchange other than one occasioned by a notice of
redemption or the conversion hereof. No transfer of this Debenture
shall be made to any U.S. person as that term is defined in
Regulation S.
Section 7.4. Worn or Lost Debentures. If this Debenture
becomes worn, defaced or mutilated but is still substantially
intact and recognizable, the Company or its agent may issue a new
Debenture in lieu hereof upon its surrender. Where the Holder of
this Debenture claims that the Debenture has been lost, destroyed
or wrongfully taken, the Company shall issue a new Debenture in
place of the original Debenture if the Holder so requests by
written notice to the Company actually received by the Company
before it is notified that the Debenture has been acquired by a
bona fide Holder and the Holder has delivered to the Company an
indemnity bond in such amount and issued by such surety as the
Company deems satisfactory together with an affidavit of the Holder
setting forth the facts concerning such loss, destruction or
wrongful taking and such other information in such form with such
proof or verification as the Company may request.
Article 8. Change in Regulation S
a. If, during the twenty-four month period following the
issuance of the Debentures, there is any change in Regulation S
that would restrict Holder's ability to resell Common Stock issued
upon the conversion of Debentures ("Registrable Securities") into
the United States public securities markets after the Restricted
Period, Holder shall have the right to request that Company
register their Registrable Securities under the Securities Act upon
the terms and conditions set forth in this Article 8. All expenses
incurred in connection with any registration or compliance pursuant
to this Debenture, including without limitation, all registration
and filing fees, printing expenses, fees and disbursement of
counsel for the Company, and expenses of any special audits
incidental to or required by such registration, shall be borne by
the Company; provided, however, that the Company shall not be
required to pay fees of legal counsel of the Holder, or
underwriters' fees, discounts, or commissions relating to the
Registrable Securities. The Holder shall provide the Company all
information the Company may reasonably request in connection with
any registration pursuant to this Article 8.
b. Upon the written demand of holders of 20% of the
Registrable Securities then outstanding or subject to issuance upon
the conversion of then outstanding Debentures, the Company shall
prepare and file a registration statement under the Securities Act
covering the Registrable Securities for which registration is
requested by any of the Holders ("Demand Registration"), and use
its best efforts to cause such Registration Statement to become
effective not later than 120 days after the date such demand is
delivered to the Company. Promptly upon receipt of the written
demand for registration, the Company shall notify all remaining
Holders, who shall notify the Company by fax or otherwise in
writing, not later than 10 days after the date notice is first sent
by the Company, of any Registrable Securities such Holders wish to
include in the registration. The Company shall not be obligated to
effect more than one registration pursuant to this Article 8(b).
c. If the Holders initiating the registration request
hereunder ("Initiating Holder") intend to distribute the
Registrable Securities covered by their request by means of an
underwriting, the Initiating Holders shall so advise the Company as
a part of their request made pursuant to this Article 8 and the
Company shall include such information in the written notice
referred to in section 8(a). In such event, the right of any
Holder to include his Registrable Securities in such registration
shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable
Securities in the underwriting. All Holders proposing to
distribute their securities through such underwriting shall,
together with the Company enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for
such underwriting by a majority in interest of the Initiating
Holders, and reasonably acceptable to the Company; provided that no
Holder shall be required to make any representations other than
with respect to its ownership of Registered Securities and its
intended method of distribution.
d. The Company is not obligated to effect a demand
Registration under this Article 8 if in the written opinion of
counsel to the Company reasonably acceptable to the person or
persons from whom written request for registration has been
received (and satisfactory to the Company's transfer agent to
permit the transfer) that registration under the Securities Act is
not required for the immediate public transfer of all Registrable
Securities pursuant to Rule 144 or other applicable provisions.
e. If the Company is not eligible to effect a registration
at the time of a Demand Registration under the terms of section
8(b) of this Debenture, then the Company shall pay to all Holders
of outstanding Debentures requesting inclusion in the registration
damages equal to N/365 x 0.20 x the initial Subscription Proceeds
of the outstanding Debentures held by Holder where N = the number
of days beyond 120 that the Registration Statement first becomes
effective. If, on January 1, 1998 (the "Conversion Eligibility
Date), the Common Stock is not listed on OTC-Bulletin Board, NASDAQ
Small Cap, the National Market System or National Stock Exchange,
then the Company shall pay to all Holders of outstanding Debentures
that are eligible for immediate conversion damages equal to (N/365)
x (0.20) x the outstanding Debentures held by Holder where N = the
number of days beyond the Conversion Eligibility Date until such
listing is complete.
f. If the Company has to file a registration statement,
pursuant to any of the provisions of this Article 8, then the
Company shall upon said filing use its best efforts to promptly
respond to any SEC comments. Upon satisfaction of all SEC
requirements the Company will act to have the registration
statement declared effective within 15 business days after the date
upon which the SEC has no further comments. In the event the
Company does not have the registration statement declared effective
within 15 days of the date after the SEC has no further comments
(other than at the direction of one or more Holders), then in such
event the Company shall pay cash liquidated damages to the Holder
in an amount equal to 2% of the Subscription Proceeds of the then
outstanding shares of Common Stock per 30 day period until the
registration statement is declared effective.
g. The Company shall use its best efforts to effect such
Registration permitting the sale of such Registrable Shares in
accordance with the intended method or methods of distribution
thereof, and pursuant thereto, the Company shall as expeditiously
as possible:
(1) prepare and file with the SEC a Registration
Statement relating to the applicable Registration on any
appropriate form under the Securities Act, which form shall be
available for the sale of the Registrable Shares in accordance with
the intended method or methods of distribution thereof and use it
best efforts to cause such Registration Statement to become
effective and keep such Registration Statement effective in
accordance with section 8(g)(2) below,
(2) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement as may be
necessary to keep the Registration effective until all such
Registrable Shares are sold; 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 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 as set forth in such Registration Statement or supplement
to the prospectus; provided, however that the Company may, from
time to time, request that the holders of the Registrable Shares
immediately discontinue the disposition of the Registrable Shares
if the Company determines, in the good faith exercise of its
reasonable business judgment, that the offering and disposition of
the Registrable Shares could materially interfere with bona fide
financing, acquisition or other material business plans of the
Company or would require disclosure of non-public information, the
premature disclosure of which could materially and adversely affect
the Company (it being acknowledged that the Company is not required
to disclose in such request any such transaction, plan or non-public
information), so long as the Company promptly after the disclosure of
such transaction, plan or non-public information complies with this
section 8(g)(2);
(3) notify the undersigned and the underwriter, if any,
promptly, and (if requested by any such person) confirm such advice
in writing, (A) when the prospectus or any prospectus supplement or
post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment thereto,
when the same has become effective, (B) of any request by the SEC
for amendments or supplements to the Registration Statement or the
prospectus or for additional information, (C) of the issuance by
the SEC of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceeding for that
purpose, (D) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable
Shares for sale in any jurisdiction or the initiation of any
proceedings for such purpose and (E) subject to the proviso below,
of the happening of any event as a result of which the prospectus
included in such Registration Statement, as then in effect,
included an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances
then existing and, subject to section 8(g)(2) above, at the request
of any such person, prepare and furnish to such person a reasonable
number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to
the purchasers of such shares, such prospectus shall not include an
untrue statement of a material fact required to be stated therein
or necessary to make the statements therein not misleading in light
of the circumstances then existing; provided, however, the Company
need not disclose the event if it otherwise has not disclosed such
event to the public.
h. Notwithstanding the provisions of this section 8(h) to the
contrary, the Company:
(1) may require the undersigned to furnish to the
Company such information regarding the distribution of such
securities as the Company may from time to time reasonably request
in writing, and the Company may limit such registration rights to
situations where a proposed distribution of Registrable Shares is
to be effected forthwith upon the effectiveness of the Registration
Statement; and
(2) may require the undersigned to covenant that the
undersigned has not taken, and will not take, directly or
indirectly, any action designed, or which might reasonably be
expected, to cause or result in, under the Exchange Act or
otherwise, or which has caused or resulted in stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of the Registrable Shares; and
Furthermore, the Holder agrees by acquisition of such
Registrable Shares that, upon receipt of the request referred to in
the proviso of section 8(g)(2) or of any notice from the Company of
the happening of any event of the kind described in section 8(h)
hereof (other than as provided in section 8(g)(3)(A) hereof), the
undersigned shall forthwith discontinue disposition of Registrable
Shares until it is advised in writing by the Company that the use
of the prospectus may be resumed, and has received copies of any
additional or supplemental documents or filings that are
incorporated by reference in the prospectus, and, if so directed by
the Company, the undersigned shall deliver to the Company (at the
Company's expense) all copies other than permanent file copies then
in the undersigned's possession, of the prospectus covering such
Registrable Shares current prior to the time of receipt of such
notice.
Article 9. Notices
Any notice which is required or convenient under the terms of
this Debenture shall be duly given if it is in writing and
delivered in person or mailed by first class mail, postage prepaid
and directed to the Holder of the Debenture at its address as it
appears on the Register or if to the Company to its principal
executive offices. The time when such notice is sent shall be the
time of the giving of the notice.
Article 10. Time
Where this Debenture authorizes or requires the payment of
money or the performance of a condition or obligation on a Saturday
or Sunday or a public holiday, or authorizes or requires the
payment of money or the performance of a condition or obligation
within, before or after a period of time computed from a certain
date, and such period of time ends on a Saturday or a Sunday or a
public holiday, such payment may be made or condition or obligation
performed on the next succeeding business day, and if the period
ends at a specified hour, such payment may be made or condition
performed, at or before the same hour of such next succeeding
business day, with the same force and effect as if made or
performed in accordance with the terms of this Debenture. Where
time is extended by virtue of the provisions of this Article 10,
such extended time shall not be included in the computation of
interest. A "business day" shall mean a day on which the banks in
Delaware are not required or allowed to be closed.
Article 11. Waivers
The holders of a majority of the aggregate principal amount of
the Debentures outstanding may waive an Event of Default or rescind
the declaration of an Event of Default and its consequences except
for a default in the payment of principal of or interest on any
Debenture.
Article 12. Rules of Construction
In this Debenture, unless the context otherwise requires,
words in the singular number include the plural, and in the plural
include the singular, and words of the masculine gender include the
feminine and the neuter, and when the sense so indicates, words of
the neuter gender may refer to any gender. The numbers and titles
of sections contained in the Debenture are inserted for convenience
of reference only, and they neither form a part of this Debenture
nor are they to be used in the construction or interpretation
hereof. Wherever, in this Debenture, a determination of the
Company is required or allowed, such determination shall be made by
a majority of the Board of Directors of the Company and if it is
made in good faith, it shall be conclusive and binding upon the
Company and the Holder of this Debenture.
Article 13. Governing Law
The validity, terms, performance and enforcement of this
Debenture shall be governed and construed by the provisions hereof
and in accordance with the laws of the State of Delaware applicable
to agreements that are negotiated, executed, delivered and
performed solely in the State of Delaware.
IN WITNESS WHEREOF, the Company has duly executed this
Debenture as of the date first written above.
FLORIDA GAMING CORPORATION
By
Name: W. Bennett Collett
Title: Chairman and CEO
Exhibit A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the
Debentures)
Florida Gaming Corporation
Attention: Mr. Timothy L. Hensley
Miami Jai-Alai
3500 N. W. 37th Avenue
Miami, Florida 33142
The undersigned hereby irrevocably elects, as of
______________, 199_ to convert $ , principal amount of
5% Cumulative Convertible Debentures due December 31, 1998 (the
"Debentures") of Florida Gaming Corporation (the Company")
represented by Debenture No.(s) _______ into shares of Common Stock
of the "Company" according to the conditions set forth in the
Debentures and the Subscription Agreement dated _____________,
199_.
Date of Conversion*______________________________________________
Applicable Conversion Price______________________________________
If shares are to be issued in the name of a person other than
the undersigned, the undersigned will pay all transfer taxes
payable with resp-ect thereto and in delivering herewith such
certificates and furnish stock powers and other transfer documents
as reasonably required by the Transfer Agent with medallion
guarantees. No fee will be charged to the undersigned for any
conversion, except for transfer taxes, if any.
The undersigned represents that: (i) it is familiar with and
understands the terms, conditions and requirements contained in
Regulation S ("Regulation S") promulgated under the Securities Act
of 1933, as amended (the "Act"); (ii) it is not a "U.S. person" or
"distributor" as defined in Regulation S; (iii) it purchased the
Debentures for which conversion is being elected, and is acquiring
the Common Stock referenced herein, for its own account and not for
the account or benefit of any U.S. Person; (iv) it is not and has
not been an executive officer or director of the Company or an
"affiliate" of the Company (as such term is defined in the Act),
nor has any person affiliated with the undersigned had such status
with the Company; (v) neither it nor any of its affiliates or agents
have maintained or will maintain, directly or indirectly, maintain
any short position in Debentures, Common Stock or any other
securities of the Company for as long as any of the Debentures owned
by Holder have not been converted into Common Stock; provided,
however, that the undersigned may maintain a short position with
respect to the Debentures provided that such short position is
covered by conversion of the Debentures within three (3) business
days; (vi) it has no prior understanding with respect to the sale of
the Common Stock to any third party; (vii) it has not engaged in any
"directed selling efforts" (as such term is defined in Regulation S)
with respect to the Debentures or the Common Stock issuable upon
conversion of the Shares; (viii) it purchased the Debentures with
investment intent; and (ix) it received the offer to purchase the
Debentures outside the United States and at the time the Agreement
pursuant to which the Debentures was executed was, and upon execution
of this Notice of Conversion is, outside the United States.
Signature__________________________________________________________
[Name]
Address for delivery of the Common Stock __________________________
___________________________________________________________________
___________________________________________________________________
Phone_________________________ Fax_____________________________
Please call me at ________________ if you need to confirm this
facsimile Notice of Conversion.
EXHIBIT B
PURCHASER REPRESENTATION LETTER
Dear Sirs:
The undersigned__________________, has purchased on
_______________, 1996, ______________ Convertible Debentures of
______________________________ (the "Company") in the amount of
$________________, (the "Debentures").
The undersigned represents and warrants as follows:
(1) The offer to purchase the Debentures was made to it outside of
the United States and the undersigned was, at the time the
Subscription Agreement was executed and delivered, and is now,
outside the United States;
(2) It is not a U.S. Person (as such term is defined in Section
902(a) of Regulation S promulgated under the United States
Securities Act of 1933 (the "Securities Act"); and it has purchased
the Debentures for its own account and not for the account or
benefit of any U.S. person;
(3) All offers and sales by the undersigned of the Debentures
shall be made pursuant to an effective registration statement under
the Securities Act or pursuant to and exemption from, or in a
transaction not subject to the registration requirements of, the
Securities Act;
(4) It is familiar with and understands the terms, conditions and
requirements contained in Regulation S and definitions of U.S.
persons contained in Regulation S;
(5) The undersigned has not engaged in any "directed selling
efforts" (as such term is defined in Regulation S) with respect to
the Debentures or the Common Stock that is issuable upon
conversion; and
(6) The undersigned purchased its Debentures with investment
intent and at the time of the purchase of said Debentures had no
intent to sell, dispose of or otherwise transfer the Debentures.
The purpose for this request is to facilitate the management of the
undersigned's investment accounts.
(7) Neither it nor any of its affiliates or agents will, directly
or indirectly, maintain any short position in the Debentures,
Common Stock or any other securities of the Company for as long as
any of the Debentures owned by Holder have not been converted into
Common Stock; provided, however, that the undersigned may maintain
a short position with respect to the Debentures provided that such
short position is covered by conversion of the Debentures within
three (3) business days.
(8) Limits on Amount of Conversion and Ownership. Other than as
provided in the Subscription Agreement which are not limited by the
following, in no other event shall the Holder be entitled to convert
that amount of Dentures in excess of that amount upon conversion of
which the sum of (1) the number of shares of Common Stock
beneficially owned by the Holder and its affiliates (other than
shares of Common Stock which may be deemed beneficially owned through
the ownership of the unconverted portion of the Debentures), and (2)
the number of shares of Common Stock issuable upon the conversion of
the Debentures with respect to which the determination of this
proviso is being made, would result in beneficial ownership by the
Holder and its affiliates of more than 4.9% of the outstanding shares
of Common Stock of the Company. For purposes of this provision to
the immediately preceding sentence, beneficial ownership shall be
determined in accordance with Section 13 (d) of the Securities
Exchange Act of 1934, as amended, and Regulation 13 D-G thereunder,
except as otherwise provided in clause (1) of such provision.
Dated this ___ day of the month of ___________________, 199__.
By:
_____________________________
Official Signature of Purchaser Title
Assignment of Debenture
The undersigned hereby sell(s) and assign(s) and transfer(s) unto
(name, address and SSN or EIN of assignee)
Dollars ($ )
(principal amount of Debenture, $10,000 or integral multiples of
$10,000)
of principal amount of this Debenture together with all accrued and
unpaid interest hereon.
Date: Signed:
(Signature must conform in all
respects to name of Holder shown
of face of Debenture)
Signature Guaranteed:
EXHIBIT 4.2
GUARANTY AND STOCK PLEDGE AGREEMENT
This is a Guaranty and Stock Pledge Agreement dated as of July
10, 1997, ("Guaranty"), among __________________ ("___________"),
FLORIDA GAMING CORPORATION, a Delaware corporation ("Florida
Gaming"), and FREEDOM FINANCIAL CORPORATION, a Delaware corporation
(the "Guarantor").
Recitals
1. ___________ intends to purchase a $1,200,000 5% Cumulative
Convertible Debenture (the "Debenture") of Florida Gaming,
pursuant to that certain Offshore Securities Subscription Agreement
("Subscription Agreement") dated July 10, 1997. All capitalized
terms not defined herein shall have the meaning set forth in the
Debenture.
2. The Debenture is convertible into shares of common stock of
Florida Gaming (the "Common Stock").
3. Under the terms of Section 3.2(e) of the Debenture,
___________ has certain demand redemption rights ("Demand Rights")
if the Closing Bid Price (as defined in the Debenture) per share of
the Common Stock for a five consecutive day trading period is less
than or equal to $7.00 after December 31, 1997.
4. In accordance with the Debenture and as a condition to
___________ purchasing the Debenture, Guarantor has agreed to enter
into this Guaranty on the terms and conditions as set forth herein
in order to guaranty the Demand Rights.
NOW, THEREFORE, in consideration for ___________ purchasing
the Debenture, and for other good and valuable consideration, the
parties hereby agree as follows:
SECTION 1
Guaranty of Payment and Performance
Guarantor hereby guarantees repayment to ___________ of the
Demand Rights. If Florida Gaming defaults in the satisfaction of
the Demand Rights according to the terms of the Debenture,
Guarantor will pay to ___________ the total amount of Demand Rights
due pursuant to Section 3.2(e) of the Debenture within three (3)
business days after written demand by ___________ to Guarantor
following Florida Gaming's failure to pay such Demand Rights within
five business days of the Demand Date (as defined in the
Debenture).
SECTION TWO
Grant of Security Interest.
(a) As additional security for repayment of the Demand
Rights, Guarantor hereby grants to ___________ a security interest
in and pledges to ___________ all of its right, title and interest
in and to 300,000 shares of Common Stock (the "Pledged Shares").
(b) The Pledged Shares shall be deposited in a Pledged
Collateral Account with Merrill Lynch, Pierce, Fenner & Smith,
Incorporated, Chesterfield, Missouri ("Merrill Lynch"), in
accordance with the terms of that Pledged Collateral Account
Agreement (the "Pledged Collateral Agreement"), attached hereto as
Exhibit A. The Pledged Shares shall be valued at the average
Closing Bid Price of the Company's Common Stock for the five
consecutive trading days before the Demand Date.
SECTION THREE
Payment of Guaranty
(a) Guarantor agrees to satisfy the Demand Rights under this
Guaranty by either delivering to ___________ (i) a cash payment in
the amount of the Demand Rights due (the "Cash Payment"), (ii) that
number of Pledged Shares equal to the Demand Rights due, the value
of the Pledged Shares of which shall be determined in accordance
with Section Two hereof, or (iii) a combination of the Cash Payment
and the Pledged Shares, equal to the Demand Rights due, in such
amounts as determined by the Guarantor.
(b) Guarantor shall also pay to ___________, on demand,
reasonable attorney fees and all costs and other expenses incurred
by ___________ in collecting the Demand Rights from Florida Gaming
or in enforcing this Guaranty against Guarantor.
SECTION FOUR
Default
(a) At the option of ___________, the failure of Guarantor to
pay the Demanding Holder 117.5% of the Demand Redemption Amount ,
plus any accumulated interest due on the principal amount at the
time of the Demand Redemption, within three (3) business days after
written demand to the Guarantor by ___________ as set forth in
Section 1 hereof, shall constitute an Event of Default under this
Guaranty.
(b) Upon an Event of Default under this Guaranty, ___________
may at its option declare the Demand Rights for the applicable
calendar month to be immediately due and payable, and, in addition
to exercising all other rights or remedies, may proceed to exercise
all rights, options and remedies of a secured party upon default as
provided for under the Uniform Commercial Code as then adopted in
the Commonwealth of Kentucky and may instruct Merrill Lynch to
sell, transfer or otherwise distribute that number of Pledged
Shares to satisfy the Demand Rights, in accordance with the Pledged
Collateral Agreement, with such Pledged Shares to be valued as set
forth in Section Two of this Guaranty.
SECTION FIVE
Liability of Guarantor
The maximum amount recoverable from Guarantor under this
Guaranty is limited to One Million Five Hundred Thousand Dollars
($1,500,000.00). Any modification of the Debenture unless made
with Guarantor's written consent, shall exonerate Guarantor from
all liability hereunder.
SECTION SIX
Rights of ___________
If Florida Gaming defaults in the payment of the Demand
Rights, ___________ shall have the right to demand payment of the
Demand Rights from Guarantor. If legal action is taken to enforce
this Guaranty or any provision hereof, such action may be
maintained alone or joined with any action or other proceeding
against Florida Gaming.
SECTION SEVEN
Waiver of Notice
Notice of acceptance of this Guaranty is expressly waived.
SECTION EIGHT
Termination
This Guaranty shall remain in full force and effect until, and shall
terminate (as "terminate" is used in Kentucky Revised Statutes Section
371.065) on the earlier of (a) the day following the date of (1) payment in
full upon maturity of the Maximum Aggregate Liability (as that term is
defined in Kentucky Revised Statutes Section 371.065); or (b) December 31,
1998; provided, however, that termination of this Guaranty on such
termination date shall not affect in any manner the liability of the
Guarantor with respect to (1) the Demand Rights which are created or
incurred prior to such termination date ("Prior Obligations"), or (2)
extension or renewals of, interest accruing on, or fees, costs or expenses
incurred with respect to, such Prior Obligations prior to, on or after such
termination date.
IN WITNESS WHEREOF, the parties have executed this Guaranty on
the date and year first above written.
__________________
By:
FLORIDA GAMING CORPORATION
By:
FREEDOM FINANCIAL CORPORATION
By:
EXHIBIT A
PLEDGED COLLATERAL ACCOUNT AGREEMENT
Note: This agreement is subject to the review and acceptance by
Merrill Lynch, Pierce, Fenner & Smith Incorporated.
TO: Merrill Lynch, Pierce, Fenner &
Smith Incorporated Date July 10, 1997
Gentlemen:
Simultaneously with the execution of this agreement, the
undersigned Freedom Financial Corporation (hereinafter "Assignor")
and _________________________________ (hereinafter "Assignee")
entered into an agreement pursuant which a security interest in
certain rights and assets of the Assignor is granted by the
Assignor to the Assignee (the "Assignment"). In connection
therewith, the Assignor hereby instructs you to:
1) establish a cash security account, which is to be know as
the "Freedom Financial Corporation, Pledged Collateral
Account for _______________________", ("Cash Account");
and
2) place the assets listed in Exhibit A attached hereto and
made a part hereof into the Cash Account.
The Assignor and Assignee consent and agree that the only
instructions that shall be given to Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("Merrill Lynch") in regard to or in
connection with the Cash Account shall be given by an Authorized
Officer of Assignee (as such term is hereafter defined), except as
otherwise provided herein.
An Authorized Officer of Assignee may give instructions of any
kind or character in regard to the Cash Account, oral or written,
except that:
1) any instruction to Merrill Lynch to deliver cash and/or
securities, or proceeds from the sale of, or
distributions on, such securities out of the Cash Account
shall be made by a written instrument to such effect
which shall be executed by (a) an Authorized Officer of
Assignee and an Authorized Officer of Assignor or (b) an
Authorized Officer of Assignee who shall certify in
writing that an "Event of Default" exists as of the date
thereof under the Assignment (it being understood and
agreed that Merrill Lynch shall have no duty or
obligation whatsoever of any kind or character to
determine whether or not an Event of Default exists) and
provided further that Assignee hereby agrees to indemnify
and hold harmless Merrill Lynch, its affiliates, officers
and employees from and against any and all claims, causes
of action, liabilities, lawsuits, demands and/or damages,
including, without limitation, any and all court costs
and reasonable attorney's fees, that may result by reason
of Merrill Lynch complying with such instructions; and
2) if an authorized officer of the Assignee certifies in
writing that an Event of Default exists, no transfer in
the Cash Account shall be permitted until Merrill Lynch
has provided five days prior written notice to Assignor
of the instructions from Assignee.
The Authorized Officer of Assignee who shall give oral
instructions hereunder shall confirm the same in writing to Merrill
Lynch within five (5) days after such oral instructions are given.
So long as this agreement remains in effect, Assignee shall be
entitled to receive duplicates of any and all notices and
statements of account that the Assignor of such a Cash Account is
entitled to receive.
For purposes of this agreement, the term "Authorized Office of
Assignor" shall refer in the singular to enter
______________________________ (who is, on the date hereof,
President of the Assignor) or ______________________________ (who
is, on the date hereof, Vice President of Assignor) and the term
"Authorized Officer of Assignee" shall refer in the singular to
either _________________________ (who is, on the date hereof,
President of the Assignee) or _________________________ (who is, on
the date hereof, Vice President of the Assignee), if the Assignor
or Assignee is a natural person then such term shall mean the
Assignor or Assignee respectively and, if more than one natural
person is the Assignor or Assignee, such natural persons may act
severally. In the event that either Assignor or Assignee shall
find it advisable to designate a replacement of either of its
Authorized Officers, written notice of any such replacement shall
be given to Merrill Lynch; provided, however, that such replacement
shall be either the President or then acting chief executive
officer of Assignor or Assignee, as the case may be, or such other
officer of the respective parties hereto as Merrill Lynch may
approve, which approval shall not be unreasonably withheld.
Notwithstanding anything to the contrary contained herein or
in the Assignment, this agreement shall not impose or create any
obligations or duties upon Merrill Lynch greater than or in
addition to the customary and usual obligations and duties of
Merrill Lynch to Assignor except and to the extent that Merrill
Lynch shall henceforth accept instructions in connection with the
Cash Account as provided in this agreement.
Assignor hereby agrees to indemnify and hold harmless Merrill
Lynch, its affiliates, officers and employees from and against any
and all claims, causes of action, liabilities, lawsuits, demands
and/or damages, including, without limitation, any and all court
costs and reasonable attorney's fees, in any way related to or
arising out of or in connection with the Assignment, this agreement
and/or the Cash Account.
This agreement shall be binding upon and inure to the benefit
of the successors and assigns of the respective parties hereto and
shall be construed in accordance with the laws of the State of New
York without regard to its conflict of law principles and the
rights and remedies of the parties shall be determined in
accordance with such laws.
Assignor and Assignee understand and acknowledge that this
agreement in and of itself does not create or perfect the
Assignee's security interest in the rights and assets of the
Assignor.
Assignor and Assignee represent and warrant to Merrill Lynch
that the agreement and arrangement are in compliance with
applicable law, including, without limitation, the federal
securities credit regulations.
The Assignor acknowledges that this agreement supplements the
Assignor's existing agreement(s) with Merrill Lynch and in no way
is this agreement intended to abridge any rights that Merrill Lynch
might otherwise have.
IN WITNESS WHEREOF, Assignor and Assignee have caused this
agreement to be executed by their duly authorized officers all as
of the day first above written.
By____________________________ By____________________________
Title_________________________ Title__________________________
Assignor Assignee
Signature_____________________ Signature_____________________
Date__________________________ Date__________________________
(AFFIX CORPORATE/BANK SEAL)
ATTEST:
By____________________________
Title__________________________
RECEIPT ACKNOWLEDGED:
Merrill Lynch, Pierce, Fenner & Smith Incorporated
By ___________________________ Date_________________________
Resident Vice President
By____________________________ Date__________________________
Regional Administrative Manager
EXHIBIT A
The Assignor has placed the following assets into the "Freedom
Financial Corporation, Pledged Collateral Account for
__________________________", account number _______________
(account number to be assigned when the account is established with
Merrill Lynch).
Quantity Description
300,000 Shares of Common Stock of Florida Gaming Corporation
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