PROMISSORY NOTE ("Note")

 

PROMISSORY NOTE ("Note")

THE UNDERSIGNED ("Maker") promises to pay to the order of James W. Stuckert ("Payee"), whose mailing address is 500 West Jefferson Street, Louisville, Kentucky 40202, the principal sum of ONE MILLION DOLLARS ($1,000,000.00), with interest on the unpaid principal calculated at the following rate and payable in the following manner:

 

 

(a)

The interest rate shall be equal to the "Prime Rate" plus three (3) percentage points. The term "Prime Rate" shall mean the annual rate of interest as published in the Wall Street Journal on the date hereof. Notwithstanding anything herein to the contrary, the interest rate applied to this Note shall at no time exceed the maximum rate permitted by applicable law, whether now or hereafter in effect.

 

(b)

The entire unpaid principal balance of this Note, together with accrued interest, shall be due and payable on or before September 30, 2008 (the "Maturity Date"), unless the Maturity Date is amended as provided below.

 

Warrant. As additional inducement to Payee to provide to Maker the loan referenced herein, simultaneously with the execution and delivery of this Note Maker shall execute and deliver to Payee a warrant to acquire up to Twenty Thousand (20,000) shares of its common stock upon the terms and conditions contained in, and substantially in the form of, the form of Warrant attached hereto as Exhibit A.

 

Amendment of Maturity Date. If on or before the date ten (10) days before the scheduled Maturity Date, Maker executes and delivers to Payee a warrant to purchase up to Ten Thousand (10,000) shares of its common stock substantially in the form of Exhibit A hereto, the Maturity Date shall be amended to become December 31, 2008. That amended date shall become the “Maturity Date” for all purposes under this Note.

 

Interest Basis. Interest shall be calculated on the basis of a three hundred sixty (360) day year for actual days elapsed.

 

Prepayment. The Maker shall have the privilege of prepaying this Note in part or in full at any time.

 

Mandatory Repayment. In the event Maker receives proceeds, through settlement or otherwise, derived from its status as plaintiff in FGC v. Affiliated FM Insurance Company, Case No. 07-20897-CIV-UNGARO, filed in the United States District Court for the Southern District of Florida, within ten (10) days following receipt of such proceeds Maker shall pay to Payee the outstanding principal balance of this Note plus all accrued but unpaid interest thereon.

 

Application of Payments. All payments made on the indebtedness evidenced by this Note shall be applied first to payment of accrued interest, and then to payments of principal.

 

Place and Manner of Payment. All payments of interest and principal are payable in lawful money of the United States of America in cash or immediately available funds, at the Payee's office at which the payment is made, or at such other place as the Payee may designate in writing. At its option, the Payee may elect to give the Maker credit for any payment made by check or other instrument in accordance with the Payee's availability schedule in effect from time to time for such items and instruments, which the Payee will make available to the Maker on request.

 

Event of Default. Maker shall be in default in this Note upon Maker's failure to make any payment of any sum due hereunder on or before the date fifteen (15) days following the Maturity Date without further notice or demand.

 

 

Remedies after Default. At the option of Payee, all or any part of the principal and accrued interest on the Note, and all other obligations of the Maker to the Payee shall become immediately due and payable without additional notice or demand, upon the occurrence of an Event of Default or at any time thereafter. Payee may exercise all rights and remedies provided by law, equity, or this Note. All rights and remedies are cumulative and concurrent and may be pursued singularly, successively or together, at the sole discretion of Payee, and may be exercised as often as occasion therefore shall arise. Such remedies are not exclusive, and Payee is entitled to all remedies provided at law or equity, whether or not expressly set forth therein. No act, or omission or commission or waiver of Payee, including specifically any failure to exercise any right, remedy or recourse, shall be effective unless set forth in a written document executed by Payee and then only to the extent specifically recited therein. A waiver or release with reference to one event shall not be construed as continuing, as a bar to, or as a waiver or release of, any subsequent right, remedy or recourse as to any subsequent event, nor shall any single or partial exercise thereof preclude any other or further exercise or the exercise of any other right, remedy or recourse. No notice to or demand on any party liable for the payment of this Note in any case shall entitle any such party to any other or further notice or demand in the same, similar or other circumstances.

 

Waiver and Consent. By the making or guaranty of this Note:

 

(a)  Maker and Guarantor waives demand, presentment, protest, notice of protest, notice of dishonor, suit against any party and all of the requirements necessary to hold any maker, cosigner, endorser, surety or guarantor liable;

 

(b)  The Guarantor consents to any renewals or extensions of time for payment on this Note;

 

(c)  Maker and the Guarantor consent to Payee's release of, agreement not sue, suspension of the right to enforce this instrument against and discharge or compromise of any obligation of any co-signer, endorser, surety or guarantor, all without notice to or further reservations of rights against any of such parties, and all without in any way affecting or releasing the liability of any of such parties;

 

(d)  The Guarantor consents to any modification of the terms of this Note agreed to in writing by Maker and Payee;

 

(e)  Maker and the Guarantor consent to any and all sales, repurchases, participations and sub-participations of this Note to or by any person or entity in any amounts and waive notice of such sales, repurchases, participations and sub-participations of this Note; and

 

(f)  Maker and the Guarantor consent to Payee's right of set-off as well as any participant's or sub-participant's right of set-off.

 

Usury Limitation. The parties agree and intend to comply with the applicable usury law, and notwithstanding anything contained herein or other document related to the loan evidenced by this Note, the effective rate of interest to be paid on this Note (including all costs, charges and fees which are characterized as interest under applicable law) shall not exceed the maximum contract rate of interest permitted under applicable law, as it exists from time to time. Payee agrees not to knowingly collect or charge interest (whether denominated as fees, interest or other charges) which will render the interest rate hereunder usurious, and if any payment of interest or fees by Maker to Payee would render this Note usurious, Maker agrees to give Payee written notice of such fact with or in advance of such payment. If Payee should receive any payment which constitutes interest under applicable law in excess of the maximum lawful contract rate permitted under applicable law (whether denominated as interest, fees or other charges), the amount of interest received in excess of the maximum lawful rate shall automatically be applied to reduce the principal balance, regardless of how such sum is characterized or recorded by the parties.

 

 

Disclaimer of Relationship. The Maker and the Guarantor to this obligation acknowledge that:

 

(a)  The relationship between the Payee, Maker and the Guarantor is one of creditor and debtor and not one of partner or joint venturer;

 

(b)  The Maker and the Guarantor have not relied on any representation of the Payee regarding the merits of the use of proceeds of the loan.

 

Choice of Law. This Note shall be governed by the Laws of the State of Delaware (without regard to its choice of law rules) and the United States of America, whichever the context may require or permit.

 

Severability. If any provision of this Note shall be held unenforceable or void, then such provision shall be deemed severable from the remaining provisions and shall in no way affect the enforceability of the remaining provisions nor the validity of this Note.

 

Captions and Pronouns. The captions and headings of the various sections of this Note are for convenience only, and are not to be construed as confining or limiting in any way the scope or intent of the provisions hereof. Whenever the context requires or permits, the singular shall include the plural, the plural shall include the singular, and the masculine, feminine and neuter shall be freely interchangeable.

 

Time of the Essence. Time is of the essence with respect to each provision in this Note where a time or date for performance is stated. All time periods or dates for performance stated in this Note are material provisions of this Note.

 

Waiver of Trial by Jury. The Maker hereby, and the Payee by its acceptance of this Note, knowingly, voluntarily and intentionally waive the right either may have to a trial by jury in respect to any litigation arising out of, under, or in connection with this Note and other agreements executed or contemplated to be executed in connection herewith, or arising out of, under, or in connection with any course of conduct, course of dealing, statements (whether verbal or written) or action of either party, whether in connection with the making of the loan, collection of the loan, or otherwise. This provision is a material inducement for the Payee making the loan evidenced by this Note.

 

IN WITNESS WHEREOF, Maker has executed and delivered this instrument as of the day and year first above written.

FLORIDA GAMING CORPORATION, a Delaware corporation
By:	/s/W.Bennett Collett
	W. Bennett Collett
	Chairman and CEO

 

 

The undersigned W. Bennett Collett hereby personally guaranties the full and prompt payment of all amounts due hereunder by Maker to Payee.

/s/ W. Bennett Collett

W. Bennett Collett

 

 

 

 

This certifies that James W. Stuckert (the “Holder”), for value received, is entitled to purchase, subject to the terms and conditions of this warrant (this “Warrant”), from Florida Gaming Corporation, a Delaware corporation (the “Company”), having its principal place of business at 3500 N.W. 37^th Avenue, Miami, Florida 33142, an aggregate of Twenty Thousand (20,000) shares (the “Warrant Shares”) of the Company’s common stock, par value $0.20 per share (together with any common stock into which such common stock may be converted in connection with any merger or consolidation of the Company, the “Common Stock”), at a price per share of $12.50 (the “Exercise Price”).

 

This Warrant shall be exercisable, in whole or in part, at any time or from time to time from and after June 26, 2008 (the “Initial Exercise Date”) up to and including 5:00 p.m. (Eastern Time) on June 26, 2013 (such date being referred to herein as the “Expiration Date”), upon surrender to the Company at its principal office (or at such other location as the Company may advise the Holder in writing) of this Warrant properly endorsed with (i) the Exercise Form attached hereto duly completed and executed and (ii) payment pursuant to Section 2 of the aggregate Exercise Price for the number of Warrant Shares for which this Warrant is being exercised determined in accordance with the provisions hereof. The Exercise Price and the number of Warrant Shares purchasable hereunder are subject to further adjustment as provided in Section 4 of this Warrant.

 

 

Exercise; Issuance of Certificates; Acknowledgement. This Warrant is exercisable at the option of the Holder of record hereof, at any time or from time to time on or after the Initial Exercise Date up to the Expiration Date, for all or any part of the Warrant Shares (but not for a fraction of a Warrant Share) which may be purchased hereunder. The Company agrees that the shares of Common Stock purchased under this Warrant shall be and are deemed to be issued to the Holder hereof as the record owner of such shares as of the close of business on the date on which this Warrant shall have been surrendered, properly endorsed, the completed, executed Exercise Form delivered and payment made for such shares. Certificates for the shares of the Common Stock so purchased, together with any other securities or property to which the Holder hereof is entitled upon such exercise, shall be delivered to the Holder hereof by the Company at the Company’s expense within a reasonable time after the rights represented by this Warrant have been so exercised. Each certificate so delivered shall be in such denominations of the Warrant Shares as may be requested by the Holder hereof and shall be registered in the name of such Holder. In case of a purchase of less than all the Warrant Shares, the Company shall execute and deliver to Holder within a reasonable time an Acknowledgement in the form attached hereto indicating the number of Warrant Shares which remain subject to this Warrant, if any.

 

Payment for Shares. The aggregate purchase price for Warrant Shares being purchased hereunder must be paid by check or wire transfer of immediately available funds to an account designated in writing by the Company to the Holder.

 

Shares to be Fully Paid; Reservation of Shares. The Company covenants and agrees that all shares of Common Stock which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable and free from all preemptive rights of any shareholder and free and clear of all taxes, liens and charges with respect to the issue thereof. The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved, for the purpose of issue or transfer upon exercise of the rights evidenced by this Warrant, a sufficient number of shares of authorized but unissued shares of Common Stock, or other securities and property, when and as required to provide for the exercise of the rights represented by this Warrant in full.

 

Adjustment of Exercise Price and Number of Shares. The number of shares of Common Stock issuable upon the exercise of this Warrant and the Exercise Price hereunder shall be subject to adjustment from time to time upon the happening of certain events, as follows:

 

Dividends or Distributions of Common Stock. If the Company shall at any time or from time to time after the date hereof make or issue, or fix a record date for the determination of stockholders entitled to receive, a dividend or other distribution on the Common Stock payable in additional shares of Common Stock, then and in each such event the Exercise Price hereunder then in effect shall be decreased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Exercise Price hereunder then in effect by a fraction: (a) the numerator of which shall be the total number of shares of Common Stock (assuming the conversion or exercise of all outstanding securities of the Company that are convertible into or exercisable for the purchase of Common Stock, including the exercise of all options and warrants to purchase Common Stock or securities that are convertible into or exercisable for the purchase of Common Stock) issued and outstanding immediately prior to the time of issuance or the close of business on such record date; and (b) the denominator of which shall be the total number of shares of Common Stock (assuming the conversion or exercise of all outstanding securities of the Company that are convertible into or exercisable for the purchase of Common Stock, including the exercise of all options and warrants to purchase Common Stock or securities that are convertible into or exercisable for the purchase of Common Stock) issued and outstanding immediately after the time of issuance or the close of business on such record date.

 

 

Dividends or Distributions of Other Securities. If the Company shall at any time or from time to time after the date hereof make or issue, or fix a record date for the determination of stockholders entitled to receive, a dividend or other distribution on the Common Stock payable in securities of the Company other than Common Stock and other than as otherwise adjusted in this Section 4, then and in each such event the Holder shall be entitled to receive upon the exercise of this Warrant, in addition to the number of shares of Common Stock receivable thereupon, the kind and amount of such other securities receivable upon such dividend or distribution, to which a holder of the number of shares of Common Stock (or any shares of stock or other securities which may be) issuable upon the exercise of this Warrant would have received if this Warrant had been exercised immediately prior to such dividend or distribution, all subject to further adjustment as provided herein.

 

Stock Splits or Combinations. If the Company shall at any time subdivide the outstanding shares of Common Stock, or if the Company shall at any time combine the outstanding shares of Common Stock then the exercise price hereunder immediately shall be decreased proportionally (in the case of a subdivision) or increased proportionally (in the case of a combination). Any such adjustment shall become effective at the close of business on the date the subdivision or combination becomes effective.

 

Reclassification or Reorganization. If the Common Stock issuable upon the exercise of this Warrant shall be changed into the same or different number of shares of any class or classes of stock, whether by capital reorganization, reclassification or otherwise (other than a subdivision or combination of shares or stock dividend provided for in Section 4.1, 4.2 or 4.3 above, or a reorganization, merger, consolidation or sale of assets provided for in Section 4.5 below), then and in each such event the Holder shall be entitled to receive upon the exercise of this Warrant the kind and amount of shares of stock and other securities and property receivable upon such reorganization, reclassification or other change, to which a holder of the number of shares of Common Stock (or any shares of stock or other securities which may be) issuable upon the exercise of this Warrant would have received if this Warrant had been exercised immediately prior to such reorganization, reclassification or other change, all subject to further adjustment as provided herein.

 

Merger, Consolidation or Sale of Assets. If at any time or from time to time there shall be a capital reorganization of the Common Stock (other than a subdivision, combination, reclassification or exchange of shares provided for elsewhere in this Section 4) or a merger or consolidation of the Company with or into another corporation, or the sale of all or substantially all of the Company’s assets and properties to any other person or entity, then as a part of such reorganization, merger, consolidation or sale, provision shall be made so that the Holder shall thereafter be entitled to receive upon the exercise of this Warrant, the number of shares of stock or other securities or property of the Company, or of the successor corporation resulting from such reorganization, merger, consolidation or sale, to which a holder of the number of shares of Common Stock (or any shares of stock or other securities which may be) issuable upon the exercise of this Warrant would have received if this Warrant had been exercised immediately prior to such reorganization, merger, consolidation or sale.

 

Notice of Adjustment and Record Dates. The Company shall promptly notify the Holder in writing of each adjustment or readjustment of the exercise price hereunder and the number of shares of Common Stock issuable upon the exercise of this Warrant. Such notice shall state the adjustment or readjustment and show in reasonable detail the facts on which that adjustment or readjustment is based. In the event of any taking by the Company of a record of the holders of Common Stock for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, the Company shall notify the Holder in writing of such record date at least ten (10) days prior to the date specified therein.

 

Rights of Holder. This Warrant does not entitle the Holder to any voting rights or any other rights as a stockholder of the Company prior to the date of exercise hereof.

 

 

No Impairment. Except and to the extent as waived or consented to by the Holder, the Company will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in the taking of all such action as may be necessary or appropriate in order to protect the exercise rights of the Holder against impairment.

 

Transfer; Assignment. Neither this Warrant nor any legal, economic or beneficial interest in this Warrant shall be transferred by way of sale, exchange, conversion, assignment, pledge, gift or other disposition or transfer (all of which acts shall be deemed included in the term “transfer” as used in this Agreement) by the Holder to any person or entity. Any attempt by the Holder to transfer this Warrant, any rights, interests or obligations hereunder in violation of this Section 7 shall be null and void. Subject to the preceding sentences, this Warrant shall be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns.

 

Loss, Theft, Destruction or Mutilation of Warrant. If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue and deliver in substitution for and upon cancellation of the mutilated Warrant, or in substitution for the Warrant lost, stolen or destroyed, a new warrant or warrants of like tenor and representing an equivalent right or interest, but only upon, in the case of a lost, stolen or destroyed certificate, receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. If required by the Company, then Holder shall furnish an affidavit or other evidence reasonably satisfactory to the Company of the loss, theft or destruction of such Warrant and an indemnification agreement.

 

Modification and Waiver. Any term of this Warrant may be amended and the observance of any term of this Warrant may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Holder. Any amendment or waiver effected in accordance with this paragraph shall be binding upon the Company and the Holder.

 

Notices. Except as may be otherwise provided herein, all notices, requests, waivers and other communications made pursuant to this Warrant shall be in writing and shall be conclusively deemed to have been duly given (a) when hand delivered to the other party; (b) when sent by facsimile to the number set forth below if sent between 8:00 a.m. and 5:00 p.m. recipient’s local time on a business day, or on the next business day if sent by facsimile to the number set forth below if sent other than between 8:00 a.m. and 5:00 p.m. recipient’s local time on a business day; (c) three business days after deposit in the U.S. mail with first class or certified mail receipt requested postage prepaid and addressed to the other party at the address set forth below; or (d) the next business day after deposit with a national overnight delivery service, postage prepaid, addressed to the parties as set forth below with next business day delivery guaranteed, provided that the sending party receives a confirmation of delivery from the delivery service provider. Each person making a communication hereunder by facsimile shall promptly confirm by telephone to the person to whom such communication was addressed each communication made by it by facsimile pursuant hereto but the absence of such confirmation shall not affect the validity of any such communication. A party may change or supplement the addresses given above, or designate additional addresses, for purposes of this Section 10 by giving the other party written notice of the new address in the manner set forth above. The addresses for the parties are as follows:

 

 

For the Company:

Florida Gaming Corporation

2669 Charlestown Road

New Albany, Indiana 47150

Fax: (812) 945-7717

For the Holder:

James W. Stuckert

The Stuckert Financial Strategies Group

500 West Jefferson Street

Louisville, Kentucky 40202

Saturdays, Sundays, Holidays etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a day, other than a Saturday, Sunday or one on which banks are authorized by law or regulation to be closed in either New York, New York or San Francisco, California (a “Business Day”), then such action may be taken or such right may be exercised on the next succeeding day that is a Business Day.

 

Titles and Subtitles; Governing Law; Venue. The titles and subtitles used in this Warrant are used for convenience only and are not to be considered in construing or interpreting this Agreement. This Warrant is to be construed in accordance with and governed by the internal laws of the State of Delaware without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Delaware to the rights and duties of the Company and the Holder. All disputes and controversies arising out of or in connection with this Warrant shall be resolved exclusively by the state and federal courts located in the State of Delaware, and each of the Company and the Holder hereto agrees to submit to the jurisdiction of said courts and agrees that venue shall lie exclusively with such courts.

 

Specific Performance. The Company agrees that the remedies at law of the Holder of this Warrant in the event of any default or threatened default by the Company in the performance of or compliance with any of the terms of this Warrant are not and will not be adequate and that, to the fullest extent permitted by law, such terms maybe specifically enforced by a decree for the specific performance of any obligation contained herein or by an injunction against a violation of any of the terms hereof or otherwise.

 

IN WITNESS WHEREOF, the Company and the Holder have caused this Warrant to be duly executed as of this 26th day of June, 2008.

 

FLORIDA GAMING CORPORATION
By:	/s/ W. Bennett Collett
Name:	W. Bennett Collett
Title:	Chairman and CEO

 

HOLDER

/s/ James W. Stuckert

James W. Stuckert

 

 

(To be signed only upon exercise of Warrant)

To: __________________________

The undersigned, the holder of a right to purchase shares of Common Stock of FLORIDA GAMING CORPORATION (the “Company”) pursuant to that certain Warrant to Purchase Shares of Florida Gaming Corporation (the “Warrant”), dated as of June 26, 2008, hereby irrevocably elects to exercise the purchase right represented by such Warrant for, and to purchase thereunder, __________________________ (_________) shares of Common Stock of the Company and herewith makes payment of _________________________________ Dollars ($__________) therefor by the following method:

(Check one of the following):

 

The undersigned represents that it is acquiring such securities for its own account for investment and not with a view to or for sale in connection with any distribution thereof.

DATED:
			James W. Stuckert