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 Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx,
Incorporated, Chesterfield, Missouri ("Xxxxxxx Xxxxx"), 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 Xxxxxxx Xxxxx 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
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated.
TO: Xxxxxxx Lynch, Pierce, Xxxxxx &
Xxxxx 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 Xxxxxxx Lynch, Pierce, Xxxxxx
& Xxxxx Incorporated ("Xxxxxxx Xxxxx") 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 Xxxxxxx Xxxxx 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 Xxxxxxx Xxxxx 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 Xxxxxxx Xxxxx, 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 Xxxxxxx Xxxxx 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 Xxxxxxx Xxxxx
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 Xxxxxxx
Xxxxx 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 Xxxxxxx Xxxxx; 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 Xxxxxxx Xxxxx 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 Xxxxxxx Xxxxx greater than or in
addition to the customary and usual obligations and duties of
Xxxxxxx Xxxxx to Assignor except and to the extent that Xxxxxxx
Xxxxx shall henceforth accept instructions in connection with the
Cash Account as provided in this agreement.
Assignor hereby agrees to indemnify and hold harmless Xxxxxxx
Xxxxx, 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 Xxxxxxx Xxxxx
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 Xxxxxxx Xxxxx and in no way
is this agreement intended to abridge any rights that Xxxxxxx Xxxxx
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:
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx 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
Xxxxxxx Xxxxx).
Quantity Description
300,000 Shares of Common Stock of Florida Gaming Corporation
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