FGC WARRANT AGREEMENT
EXHIBIT
4.3
THIS
FGC
WARRANT AGREEMENT (this “Agreement”) dated as of October 31, 2005, is made and
entered into by and between FLORIDA GAMING CORPORATION, a Delaware Corporation
(“FGC”), FREEDOM FINANCIAL CORPORATION, an Indiana corporation (“Lender”), XXXXX
X. XXXXXXXX , Trustee of the Xxxxx X. Xxxxxxxx Revocable Trust U/A dated
2-10-86, (“Xxxxxxxx”), and XXXXXXX XXXX XXXXXX, Trustee of the Xxxxxxx Xxxx
Xxxxxx, Xx. Revocable Trust U/A dated 6-25-02, (“Xxxxxx”).
W-I-T-N-E-S-S-E-T-H:
WHEREAS,
Florida Gaming Centers, Inc., a Florida corporation (“Centers”) is a
wholly-owned subsidiary of FGC; and
WHEREAS,
on October 31, 2005 Lender loaned Centers $2,400,000; and
WHEREAS,
on October 24, 2005 Xxxxxxxx loaned Lender $1,300,000 to help fund Lender’s loan
to Centers; and
WHEREAS,
on October 24, 2005 Xxxxxx loaned Lender $300,000 to help fund Lender’s loan to
Centers; and
WHEREAS,
as an inducement to Lender, Xxxxxxxx, and Xxxxxx to make the above described
loans, FGC agreed to issue an aggregate of 60,000 warrants (“FGC Warrants”) to
purchase up to 60,000 shares of FGC’s authorized and unissued $.20 par value
common stock (the “FGC Common Stock”), with the FGC Warrants to be allocated
among Lender, Xxxxxxxx and Xxxxxx based on the amount of monies each of them
contributed to the funding of the $2,400,000 loan by Lender to Centers. (The
FGC
Common Stock underlying the FGC Warrants is sometimes referred to as the “FGC
Warrant Shares”.)
NOW,
THEREFORE, in consideration of the premises and the mutual agreements herein
set
forth, and other good and valuable consideration, the receipt and sufficiency
of
which are hereby acknowledged, the parties hereto agree as follows:
Section
1. Warrant
Certificates. FGC
hereby issues 20,000 FGC Warrants to Lender, 32,500 FGC Warrants to Xxxxxxxx,
and 7,500 FGC Warrants to Xxxxxx. Upon execution of this Agreement, FGC shall
deliver certificates evidencing such FGC Warrants (the “FGC Warrant
Certificates”) to Lender, Xxxxxxxx and Xxxxxx for the number of FGC Warrants set
forth in this Section 1. Such certificates shall be in registered form and
shall
be substantially in the form set forth in Exhibit A attached hereto. The FGC
Warrant Certificates issued to Xxxxxxxx and Xxxxxx shall be dated as of October
24, 2005, and the FGC Warrant Certificate issued to Lender shall be dated as
of
the October 31, 2005.
1
Section
2. Execution
of Warrant Certificates.
FGC
Warrant Certificates shall be signed on behalf of FGC by its Chairman of the
Board and Chief Executive Officer and by its Secretary.
Section
3. Registration.
FGC
shall number and record the FGC Warrant Certificates in a warrant register
as
they are issued (the “FGC Warrant Register”). FGC may deem and treat the
registered holder(s) of the FGC Warrant Certificates (each such registered
holder being hereinafter referred to as the “Holder”), as the absolute owner(s)
thereof (notwithstanding any notation of ownership or other writing thereon
made
by anyone) for all purposes and shall not be affected by any notice to the
contrary. The FGC Warrants shall be registered in the names of the Lender,
Xxxxxxxx and Xxxxxx as provided in Section 1 above.
Section
4. Registration
of Transfers and Exchanges.
FGC
shall from time to time register in the FGC Warrant Register the transfer of
any
outstanding FGC Warrant Certificates upon surrender thereof accompanied by
a
written instrument or instruments of transfer in form reasonably satisfactory
to
FGC, duly executed by the registered Holder thereof or by the duly appointed
legal representative thereof. Upon any such registration of transfer, FGC,
at
its own expense, will issue a new FGC Warrant Certificate or, if requested
by
Holder, FGC Warrant Certificates, of the same type and of a like aggregate
principal amount in exchange therefore to the transferee(s) designated by the
Holder and the surrendered FGC Warrant Certificate shall be canceled by FGC.
FGC
Warrant Certificates may be exchanged at the option of the Holder thereof when
surrendered to FGC at its office for another FGC Warrant Certificate or other
FGC Warrant Certificates of like tenor and representing in the aggregate a
like
number of FGC Warrants. All FGC Warrant Certificates issued upon any exchange
or
transfer, upon issuance, will be legal and valid obligations of FGC, entitled
to
the same benefits as the FGC Warrant Certificate surrendered for transfer or
exchange. FGC Warrant Certificates surrendered for exchange shall be canceled
by
FGC.
Section
5. FGC
Warrants; Exercise of FGC Warrants.
(A)
Subject to the terms of this Agreement, the Holder shall have the right until
October 31, 2008, to receive from FGC the number of fully paid and nonassesable
FGC Warrant Shares which the Holder may at any time be entitled to receive
upon
exercise of such FGC Warrants and the payment of the Exercise Price for such
FGC
Warrants. The price at which each FGC Warrant shall be exercisable (the
“Exercise Price”) shall be $13.00 per FGC Warrant Share.
(B)
An
FGC Warrant may be exercised by (i) surrender to FGC at its office designated
for such purpose (the address of which is set forth in Section 12 hereof) of
the
FGC Warrant Certificate or FGC Warrant Certificates to be exercised, with the
form of the election to purchase attached thereto duly filled in and signed,
and
(ii) the payment or delivery to FGC of the Exercise Price for the number of
FGC
Warrants being exercised. Payment of the aggregate Exercise Price may, at the
Holder’s option, be paid (x) by delivery of immediately available funds, (y) by
the Holder’s instruction to deduct from the number of FGC Warrant Shares
issuable to the Holder on account of such exercise such FGC Warrant Shares
or
fractional FGC Warrant Shares having an aggregate Current Market Value (as
hereinafter defined) equal to the aggregate Exercise Price for the number of
FGC
Warrant Shares being exercised, or (z) by the Holder’s delivery to FGC for
redemption or cancellation of other securities of FGC or fractional portions
thereof accompanied by appropriate assignments having an aggregate Current
Market Value equal to the Exercise Price for the number of FGC Warrants being
exercised.
2
(C)
Upon
surrender of FGC Warrants and payment of the Exercise Price as described above,
FGC shall issue and cause to be delivered with all reasonable dispatch to or
upon the written order of the Holder and in such name or names as the Holder
may
designate a certificate or certificates for the number of FGC Warrant Shares
issuable upon exercise of such FGC Warrants. Such certificate or certificates
shall be deemed to have been issued and the person so named therein shall be
deemed to have become a holder of record of such FGC Warrant Shares as of the
date of the surrender of such FGC Warrants and the payment of the Exercise
Price, irrespective of the date of delivery of such certificate or certificates
for the FGC Warrant Shares.
(D)
Each
FGC Warrant shall be exercisable, at the election of the Holder thereof, either
in full or from time to time in part and, in the event that an FGC Warrant
Certificate is exercised in respect of fewer than all of the FGC Warrants
evidenced thereby, a new FGC Warrant Certificate evidencing the remaining FGC
Warrant or FGC Warrants will be issued and delivered pursuant to the provisions
of this Section and of Section 2 hereof. All FGC Warrant Certificates
surrendered upon exercise of FGC Warrants shall be canceled by FGC. FGC shall
keep copies of this Agreement and notices given or received hereunder available
for inspection by a Holder during normal business hours at its
office.
(E)
Notwithstanding any provision in this Agreement to the contrary, Lender,
Xxxxxxxx, and Xxxxxx acknowledge that Florida law prohibits any person form
acquiring a five percent (5%) or greater equity interest in a pari-mutuel
operator and exercising control with respect to such interest until such person
has received approval of the Florida Department of Business and Professional
Regulation, Division of Pari-Mutuel Wagering. Therefore, Lender, Xxxxxxxx and
Xxxxxx acknowledge that the acquisition of five percent (5%) or more of FGC’s
Common Stock upon exercise of the FGC Warrants requires such approval before
FGC
is required to issue any shares of FGC Common Stock in excess of such percentage
to Lender, Stuckert, Howell, or another Holder of the FGC Warrants.
(F)
The
FGC Warrants and all rights of a Holder shall expire on October 31, 2008, and
shall be wholly null and void to the extent an FGC Warrant is not exercised
before October 31, 2008.
(G)
“Current Market Value” means, at any time, with respect to securities that are
publicly traded:
(i)
The
average or the daily closing prices of such security for thirty (30) consecutive
trading days ending three (3) trading days before such date (adjusted for any
stock dividend, split, combination or reclassification that took effect during
such thirty (30) trading day period).
3
(ii)
The
closing price for each day shall be the last reported sale price or, in case
no
such reported sale takes place on such day, the average of the last closing
bid
and asked prices, in either case on the principal national securities exchange
on which such security is listed or admitted to trading, or if not listed or
admitted to trading on any national securities exchange, the closing sale price
for such day reported by:
| · |
NASDAQ,
if such security is traded over-the-counter and quoted in the National
Market System, or
|
| · |
If
such security is so traded, but not quoted, the average of the closing
bid
and asked prices of such security reported by NASDAQ, including the
OTC
Bulletin Board, or any comparable system,
or
|
| · |
If
such security is not listed on NADAQ, or any comparable system, the
average of the closing bid and asked prices as furnished by two (2)
members of the National Association of Securities Dealers, Inc., selected
from time to time by the Holder for that
purpose.
|
(iii)
If
such security is not traded in such manner that the quotations referred to
above
are available for the period required hereunder, Current Market Value shall
be
deemed to be the fair market value of such security (without applying any
discounts for lack of liquidity or minority interests), each as reasonably
determined in good faith by the Board of Directors of FGC, taking into account
all information that should reasonably by taken into account in valuing FGC
as a
going concern, divided by the number of FGC Common Share Equivalents (as defined
below) then outstanding.
(iv)
If
Holders of a majority of the then outstanding FGC Warrants dispute the value
determination by FGC’s Board of Directors, the value determination shall be made
by a regional or national independent appraiser or investment bank (collectively
the “Appraiser”) mutually agreed upon by such Holders and FGC. The fees of such
Appraiser shall be paid (x) by the Holders of the FGC Warrants in the event
that
the Appraiser’s determination of Current Market Value is less than ninety
percent (90%) of the Current Market Value determined by FGC’s Board of
Directors, (y) paid one-half by FGC and one-half by the Holders of the FGC
Warrants in the event the Appraiser’s determination of the Current Market Value
is between ninety percent (90%) and one hundred ten percent (110%) of the
Current Market Value determined by FGC’s Board of Directors, and (z) paid by FGC
in the event that the Current Market Value determined by the Appraiser is in
excess of one hundred ten percent (110%) of the Current Market Value determined
by FGC’s Board of Directors. FGC shall give each Holder written notice of each
determination of Current Market Value by FGC’s Board of Directors (and the
market basis for such determination) or by such appraisal process.
(v)
For
purposes of this Agreement, “FGC Common Share Equivalents” means, at any time,
the number of shares of FGC Common Stock that are outstanding, plus the maximum
number of shares of FGC Common Stock issuable upon the exercise or conversion
of
all outstanding warrants, options and convertible securities of FGC from time
to
time, without regard to whether such exercise of conversion is then
available.
4
Section
6. Payment
of Taxes.
FGC
will pay all documentary stamp taxes and other governmental charges in
connection with the issuance, sale, delivery or transfer of the FGC Warrants
hereunder, as well as all such taxes attributable to the FGC Warrant Shares
upon
exercise of the FGC Warrants and payment of the Exercise Price.
Section
7. Replacement
of Securities.
Upon
receipt of evidence satisfactory to FGC of the loss, theft, destruction or
mutilation of any FGC Warrant Certificate and provision of reasonable
indemnification , FGC, at its expense, will issue and deliver to the Holder
a
new FGC Warrant Certificate of like tenor, in lieu of such lost, stolen,
destroyed or mutilated FGC Warrant Certificate. Any new FGC Warrant Certificate
so issued shall be in substantially the form of the FGC Warrant Certificate
which it replaces.
Section
8. Reservation
of FGC Warrant Shares.
FGC
will at all times reserve and keep available, free of preemptive rights, the
maximum number of shares of FGC Common Stock which may at any time be
deliverable upon the exercise of outstanding FGC Warrants. FGC covenants that
all FGC Warrant Shares issued upon exercise of the FGC Warrants will, upon
payment of the Exercise Price therefor and the issuance thereof, be validly
authorized and issued, fully paid, nonassesable shares of FGC Common Stock,
free
and clear of all taxes, liens, charges and security interests.
Section
9. Adjustment
of Number of FGC Warrant Shares Issuable.
The
number of FGC Warrant Shares issuable upon the exercise of an FGC Warrant from
time to time is referred to as the FGC Warrant Number. The FGC Warrant Number
shall initially be one (1). The FGC Warrant Number shall be subject to
adjustment from time to time as hereinafter provided.
A.
Adjustment
to the FGC Warrant Number.
The FGC
Warrant Number shall be subject to adjustment from time to time as described
in
Subsections B, C, and D below. If and whenever on and after the date of this
Agreement, FGC issues or sells, or in accordance with Subsection B is deemed
to
have issued or sold, any shares of FGC Common Stock (other than as described
in
Subsection C or D below) for a consideration per share less than the Current
Market Value in effect immediately prior to such issuance of sale, or deemed
issuance or sale, then forthwith upon such issuance of sale or deemed issuance
or sale, the FGC Warrant Number in effect will be adjusted by multiplying the
FGC Warrant Number by a fraction, (x) the numerator of which shall be the total
number of FGC Common Share Equivalents outstanding as determined immediately
after such issuance or sale or deemed issuance of sale (including taking into
account those deemed to have been issued pursuant to Subsection B below in
such
transaction), and (y) the denominator of which shall be an amount equal to
the
sum of (a) the number of FGC Common Share Equivalents outstanding immediately
prior to such issuance or sale or deemed issuance of sale, plus (b) the number
of shares of FGC Common Stock which the aggregate consideration, is any,
received by FGC for such shares would buy at the Current Market Value thereof
as
of the date immediately prior to such issuance or sale or deemed issuance of
sale; provided, however, that the shares of FGC Common Stock issued or sold
or
deemed issued or sold without consideration shall be deemed to have been issued
or sold for $.001 per share.
5
B.Effect
of Certain Events on FGC Warrant Number.
For
purposes of determining the adjusted FGC Warrant Number under Subsection A
above, the following will be applicable:
| 1. |
Issuance
of Rights or Options.
If FGC in any manner grants any right or option to subscribe for or
to
purchase shares of FGC Common Stock (such right or option being herein
called an “Option”) and the price per share for which shares of FGC Common
Stock are issuable upon the exercise of such Option is less than the
Current Market Value per share of FGC Common Stock in effect immediately
prior to the time of the granting of such Option, then the total maximum
number of shares of FGC Common Stock issuable upon the exercise of
such
Option shall be deemed to be outstanding and to have been issued and
sold
by FGC for such share price. For purposes of this paragraph, the “price
per share for which shares of FGC Common Stock are issuable” will be
determined by dividing (i) the total amount, if any, received or
receivable by FGC as consideration for granting such Option, plus the
minimum aggregate amount of additional consideration payable to FGC
upon
exercise of such Option, by (ii) the total maximum number of shares
of FGC
Common Stock issuable upon exercise of such Option. No further adjustment
of the FGC Warrant Number will be made when shares of FGC Common Stock
are
actually issued upon exercise of such
Option.
|
| 2. |
Issuance
of Convertible Securities.
If FGC issues or sells any security convertible or exchangeable into
shares of FGC Common Stock (“Convertible Security”) and the price per
share for which shares of FGC Common Stock are issuable upon the
conversion or exchange of such Convertible Security is less than the
Current Market Value per share of FGC Common Stock in effect immediately
prior to the time of such issue or sale of such Convertible Security,
then
the maximum number of shares of FGC Common Stock issuable upon the
conversion or exchange of such Convertible Security will be deemed
to be
outstanding and to have been issued and sold by FGC for such price
per
share. For purposes of this paragraph, the “price per share for which
shares of FGC Common Stock are issuable” will be determined by dividing
(i) the total amount, if any, received or receivable by FGC as
consideration for issuing or selling such Convertible Security, plus
the
minimum aggregate amount of additional consideration payable to FGC
upon
the conversion or exchange of such Convertible Security, by (ii) the
total
maximum number of shares of FGC Common Stock issuable upon the conversion
or exchange. No further adjustment of the FGC Warrant Number will be
made
when shares of FGC Common Stock are actually issued upon such conversion
or exchange.
|
6
| 3. |
Changes
in Option Price or Conversion Rate.
If the purchase price provided for in any Options, the additional
consideration, if any, payable upon the conversion or exchange of any
Convertible Security, or the rate at which any Options are exercisable
or
Convertible Securities are convertible or exchangeable for shares of
FGC
Common Stock at any time, including, but not limited to, a change
resulting from any applicable anti-dilution provisions of such securities,
the FGC Warrant Number in effect at the time of the change will be
readjusted to the FGC Warrant Number which would have been at such
time
had the Options or Convertible Securities still outstanding provided
for
such changed purchase price, additional consideration or changed exercise
or conversion rate, as the case may be, at the time initially granted,
issued or sold.
|
| 4. |
Treatment
of Expired Options and Unexercised Convertible Securities.
Upon the expiration of any Option without the exercise thereof or the
termination of any right to convert or exchange any Convertible Security
without the exercise of such right, the FGC Warrant Number then in
effect
hereunder will be adjusted to the FGC Warrant Number that would have
been
in effect at the time of such expiration or termination had such Option
or
Convertible Security, to the extent outstanding immediately prior to
such
expiration or termination, never been
issued.
|
| 5. |
Calculation
of Consideration Received.
If any shares of FGC Common Stock, Options or Convertible Securities
are
issued or sold or deemed to have been issued or sold for cash, the
consideration received therefore will be deemed to be the amount received
by FGC therefor. In case any shares of FGC Common Stock, Options or
Convertible Securities are sold for a consideration other than cash,
the
amount of the consideration the amount of consideration other than
cash
received by FGC will be the fair value of such consideration as of
the
date of receipt determined as set forth below. Any consideration received
shall be net of discounts, commissions, taxes and other expenses allowed,
paid or incurred by FGC for underwriting or otherwise in connection
with
the issuance and sale of such securities. If any shares of FGC Common
Stock, Options or Convertible Securities are issued in connection with
any
merger in which FGC is the surviving entity, the amount of consideration
therefore will be deemed to the fair value of such portion of the net
assets and business of the non-surviving entity as is attributable
to such
shares of FGC Common Stock. Options or Convertible Securities, as the
case
may be. The fair value of any consideration other than cash will be
the
Current Market Value of such consideration; provided, however, that
no
value shall be credited as consideration received for services
rendered.
|
| 6. |
Integrated
Transactions.
In
case any Option is issued in connection with the issuance or sale of
other
securities by FGC, together comprising one integrated transaction in
which
no specific consideration is allocated to such Option by the parties
thereto, the Option shall be deemed to have been issued without
consideration.
|
7
| 7. |
Authorized
But Unissued Shares of FGC Common Stock.
The number of shares of FGC Common Stock outstanding at any given time
does not include shares of FGC Common Stock owned or held by or for
the
account of FGC or any subsidiary, but the disposition of any shares
of FGC
Common Stock so owned or held will be considered the issuance of sale
of
the shares of FGC Common Stock.
|
| 8. |
Record
Date.
If FGC takes a record of the holders of the shares of FGC Common Stock
for
the purpose of entitling them (i) to receive a distribution payable
in
shares of FGC Common Stock, Options or Convertible Securities or (ii)
to
subscribe for or purchase shares of FGC Common Stock, Options or
Convertible Securities, then for purposes of the FGC Warrant such record
date will be deemed to be the date of the issuance or sale of the shares
of FGC Common Stock deemed to have been issued or sold upon declaration
of
such dividend or upon the making of such other distribution or the
date of
the granting of such right of subscription or purchase, as the case
may
be.
|
| 9. |
Certain
Exceptions.
Anything herein to the contrary notwithstanding, no adjustment will
be
made to the FGC Warrant Number by reason of (i) the issuance of capital
stock or Options or Convertible Securities to financial institutions
or
lessors in connection with commercial credit arrangements, equipment
financings or similar transactions, which issuances are primarily for
other than equity financing purposes, and provided that the aggregate
of
such issuances do not exceed one percent (1%) of the then outstanding
shares of FGC Common Stock (assuming full conversion and exercise of
all
outstanding convertible and exercisable securities), or (ii) the issuance
of shares of FGC Common Stock for which an adjustment to the FGC Warrant
Number is made pursuant to Subsection C
below.
|
C. Subdivision
or Combination of Shares of FGC Common Stock.
If FGC
at any time subdivides (by any split, dividend, recapitalization or otherwise)
its outstanding shares of FGC Common Stock into greater number of shares, the
FGC Warrant Number in effect immediately prior to such subdivision will be
proportionately increased and the number of FGC Common Shares obtainable upon
exercise of the FGC Warrant will be proportionately increased. If FGC at any
time combines (by reverse split or otherwise) its outstanding shares of FGC
Common Stock into a smaller number of shares, the FGC Warrant Number in effect
immediately prior to such combination will be proportionately reduced and the
number of shares of FGC Common Stock obtainable upon exercise of an FGC Warrant
will be proportionately decreased. Any adjustment under this Subsection C shall
be effective as of the close of business on the date the subdivision or
combination becomes effective.
8
D. Adjustments
and Payments for Other Distributions.
In the
event FGC, at any time or from time to time, makes or issues, or fixes a record
date for the determination of holders of shares of FGC Common Stock entitled
to
receive a dividend or other distribution of assets, evidences of indebtedness
or
securities other than shares of FGC Common Stock ( “Special Dividend”), unless
there would otherwise have been an adjustment in the FGC Warrant Number pursuant
to Subsections B or C above, then and in each such event the FGC Warrant Number
then in effect shall be increased, effectively immediately after the record
date
at which the holders of shares of FGC Common Stock are determined for purposes
of such Special Dividend, to a number determined by multiplying the FGC Warrant
Number in effect immediately before such Special Dividend by a fraction, the
numerator of which shall be the Current Market Value per outstanding share
of
FGC Common Stock on such record date and the denominator of which shall be
the
Current Market Value per outstanding shares of FGC Common Stock on such record
date less the them Current Market Value of the assets, evidences of indebtedness
or securities other than share of FGC Common Stock issued or distributed in
such
Special Dividend with respect to one share of FGC Common Stock; provided,
however, if such record date shall have been fixed and such dividend is not
fully paid or if such distribution is not fully made on the date fixed
therefore, the FGC Warrant Number shall be recomputed accordingly as of the
close of business on such record date and thereafter the FGC Warrant Number
shall be adjusted pursuant to his Subsection D as of the time of actual payment
of such dividend or distribution.
E.
Notice
of Adjustments; Roundings.
Whenever the FGC Warrant Number is adjusted, FGC shall provide the notices
required by Section 10 hereof. All calculations under this Agreement shall
be
made to the nearest cent or to the nearest one-hundredth of a share, as the
case
may be.
F.
Reorganizations.
In case
of any capital reorganization (other than in the cases referred to in Sections
9(B), (C) or (D) hereof) or the consolidation or merger of FGC with or into
another entity (other than a merger or consolidation in which FGC is the
continuing corporation and does not result in any reclassification of the
outstanding shares of FGC Common Stock into shares of other securities or
property) or the sale of all or substantially all of the property of FGC
(collectively such actions being hereinafter referred to as “Reorganizations”),
there shall thereafter be deliverable upon exercise of any FGC Warrant (in
lieu
of the number of shares of FGC Common Stock theretofore deliverable) the number
of shares or other property to which a holder of the number of shares of FGC
Common Stock would have otherwise been deliverable upon exercise of such FGC
Warrant that the holder would have been entitled to if such FGC Warrant had
been
exercised immediately prior to such Reorganization. In case of any
Reorganization, appropriate adjustment, as reasonably determined in good faith
by FGC and reasonably acceptable to the Holder, shall be made in the application
of the provisions herein set forth with respect to the rights and interests
of
the Holder so that the provisions set forth herein shall thereafter be
applicable, a nearly as possible, in relation to any shares or other property
thereafter deliverable upon exercise of an FGC Warrant. FGC shall not effect
any
such Reorganization unless prior to or simultaneously with the consummation
thereof the successor entity (if other than FGC) resulting from such
reorganization or the entity purchasing or leasing such assets or other
appropriate corporation or entity shall assume, by a supplemental warrant
agreement in form reasonably acceptable to the Holder, the obligation to deliver
to the Holder such securities or assets as, in accordance with the foregoing
provisions, the Holder may be entitled to receive, and all other obligations
under this Agreement.
9
G.
Form
of FGC Warrant Certificates.
Irrespective of any adjustments in the Exercise Price or the number of FGC
Warrant Shares purchasable upon exercise of the FGC Warrants, FGC Warrant
Certificates theretofore or thereafter issued may continue to express the same
price and number as stated in the FGC Warrant Certificates initially issuable
pursuant to this Agreement.
H.
Certain
Events.
If any
event occurs of the type contemplated by the provisions of Section 9 hereof
but
not expressly provided for by such provisions (including, without limitation,
the granting of equity appreciation rights, phantom equity rights or other
rights with equity features), then FGC’s Board of Directors shall make an
appropriate increase in the FGC Warrant Share Number necessary to protect the
rights of the Holders of the FGC Warrants.
I. Protection
of Rights of Holders.
FGC will
not amend its articles of incorporation or bylaws or participate in any
reorganization, transfer of assets, consolidation, merger, dissolution, issuance
or sale of securities or any other voluntary action for the purpose of avoiding
or seeking to avoid the observance or performance if any of the terms of this
Agreement, but will at all times in good faith assist in carrying out all of
the
provisions of this Agreement.
Section
10. Notices
to FGC and FGC Warrant Holders.
A. Upon
any
adjustment made pursuant to Section 9 hereof, FGC shall promptly cause written
notice thereof to be given to the Holders at their addresses appearing on the
FGC Warrant Register. Where appropriate, such notice may be given in
advance.
B.
Any
notices required or permitted to be given hereunder shall be delivered
personally or mailed, by certified or registered mail, return receipt requested,
postage prepaid, or delivered by commercial overnight courier service, charges
prepaid, to the following addresses, or such other addresses as any party hereto
designates by written notice to FGC and to the Holders. Notices delivered
personally shall be deemed to be delivered upon delivery. Notices mailed shall
be deemed to be delivered three days after mailing. Notices delivered by
commercial overnight courier will be deemed to be delivered one business day
after delivery to the courier.
10
If
to
FGC:
Florida
Gaming Corporation
0000
Xxxxxxxxxxx Xxxx, Xxxxx X.
Xxx
Xxxxxx, XX 00000
Attn:
X.
Xxxxxxx Xxxxxxx
with
a
copy to:
Xxxxxxx
X. Xxxxx, Esq.
Xxxxx,
Xxxxxx & Xxxxx, XXXX
0000
Aegon Center
000
Xxxx
Xxxxxx Xxxxxx
Xxxxxxxxxx,
XX 00000
Section
11. Investment
Representations, Legend.
(F)
Lender, Xxxxxxxx and Xxxxxx acknowledge that except has otherwise expressly
provided herein neither the FGC Warrants nor the FGC Warrant Shares have been
or
will be registered under the Securities Act of 1933, as amended (the “Act”), or
the securities laws of any state, and that neither the FGC Warrants nor the
FGC
Warrant Shares can be sold or transferred unless registered under the Act and
any applicable state securities law or an exemption from registration is
available. Lender, Xxxxxxxx and Xxxxxx represent and warrant that the FGC
Warrants, and when acquired, the FGC Warrant Shares are and will be acquired
for
investment and not with a view to resale of distribution, and agree that the
FGC
Warrant Certificates, and when issued, the stock certificates representing
the
FGC Warrant Shares may bear a legend documenting such restrictions in
substantially as follow:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE
SECURITIES LAWS AND NEITHER THE SECURITIES NOT ANY INTEREST THREIN MAY BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION UNDER SUCH ACTS.”
Section
12. Piggy-Back
Registration Rights.
(a)
If at
any time or from time to time FGC shall determine to register any unissued
or
treasury shares of FGC Common Stock for its own account in a registration
statement filed with the Securities and Exchange Commission (“Registration
Statement”) covering the sale of shares of FGC Common Stock pursuant to an
underwritten public offering, FGC shall: (i) promptly give written notice
thereof to each Holder (which shall include a list of the jurisdictions in
which
FGC intends to attempt to qualify such shares of FGC Common Stock under
applicable blue sky or other state securities laws); and (ii) include in such
registration statement (and any related qualification under blue sky laws or
other compliance) and in any underwriting involved therein, the FGC Warrant
Shares specified in a written request or requests, made within thirty (30)
days
after receipt of such written notice from FGC; provided, however, that the
total
number of a FGC Warrant Shares to be included in each Registration Statement
shall not exceed an amount equal to ten percent (10%) of the shares of FGC
Common Stock being offered by FGC in such Registration Statement.
11
(b)
The
right of a Holder to registration under Subsection 12(a) above is expressly
conditioned upon (i) such FGC Warrant Shares not otherwise being transferable
under the Securities Act of 1933, a amended (the “Act”) without registration,
and (ii) the inclusion of the FGC Warrant Shares in the underwriting and the
Holders entry into an underwriting agreement in customary form with the
underwriter or underwriters selected by FGC.
(c)
The
rights granted to the Holders under Subsection 12(a) above shall terminate
on
October 31, 2008.
Section
13. Successors.
All of
the covenants and provisions of this Agreement by and for the benefit of FGC
and
the Holders shall bind and inure to the benefit of their respective successors
and assigns.
Section
14. Governing
Law.
This
Agreement and each FGC Warrant Certificate issued hereunder shall be deemed
to
be a contract made under the laws of the Commonwealth of Kentucky and for all
purposes shall be construed in accordance with the internal laws of
Kentucky.
Section
15. Counterparts.
This
Agreement may be executed in any number of counterparts and each of which shall
be deemed to be an original copy hereof, but all of which together shall
constitute a single instrument.
Section
16. Waiver.
No
provision of this Agreement may be waived except by an instrument in writing
signed by the party to be bound; provided that any waiver sought from the
Holders of any provision of this Agreement which affects the Holders generally
may be given by Holders of a majority of (i) all of the FGC Warrant Shares
issuable upon exercise of the FGC Warrants , and (ii) all of the shares of
FGC
Common Stock issued upon exercise or in respect of the FGC Warrants then
outstanding and any waiver so given shall operate as a waiver thereof, and
a
waiver of a particular right or remedy on one occasion shall not be deemed
a
waiver of any other right or remedy or a waiver of the same right or remedy
on
any subsequent occasion.
Section
17. Survival.
Notwithstanding anything herein to the contrary, this Agreement and the rights
of a Holder hereunder shall survive the exercise of the Holder’s FGC
Warrants.
[SIGNATURE
PAGE FOLLOWS]
12
EXECUTED
as of October 31, 2005.
FLORIDA
GAMING CORPORATION
By:
s/X.
Xxxxxxx Xxxxxxx
X.
Xxxxxxx Xxxxxxx
Chairman
and CEO
FREEDOM
FINANCIAL CORPORATION
By:s/X.X.
Xxxxxxx, Xx.
X.X.
Xxxxxxx, Xx.
Executive
Vice President
XXXXX
X.
XXXXXXXX REVOCABLE TRUST
By:
s/
Xxxxx X. Xxxxxxxx
Xxxxx
X.
Xxxxxxxx
Trustee
XXXXXXX
XXXX XXXXXX REVOCABLE
TRUST
By:s/Xxxxxxx
X. Xxxxxx
Xxxxxxx
Xxxx Xxxxxx
Trustee
13
