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EFiled:Feb08201310:08AMEST TransactionID49393057 CaseNo.

8292

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

HERBERT SILVERBERG, individually and derivatively on behalf of Florida Gaming Corporation, Plaintiff, v. W. BENNETT COLLETT, W. BENNETT COLLETT, JR., GEORGE W. GALLOWAY, JR., SILVERMARK LLC, and FREEDOM HOLDING, INC., Defendants, and FLORIDA GAMING CORPORATION, Nominal Defendant. C.A._____________________

SHAREHOLDER DERIVATIVE COMPLAINT Plaintiff, by his attorneys, alleges on information and belief, except for those allegations pertaining to himself, which are alleged on knowledge, as follows: INTRODUCTION 1. This is a shareholder derivative action brought on behalf of Nominal Defendant

Florida Gaming Corporation (Florida Gaming or the Company) for a series of self-dealing transactions culminating with a proposed sale (the Proposed Sale), by Florida Gaming of its only operating asset and wholly-owned subsidiary Florida Gaming Centers, Inc. (Centers) to Silvermark LLC (Silvermark).

2.

Defendant W. Bennett Collett (Collett Senior), an octogenarian, and his son, W.

Bennett Collett, Jr. (Collett Junior and with Collett Senior referred to herein as the Colletts), have run the Company as a private fiefdom, failing to hold shareholder meetings in years and causing Florida Gaming to engage in countless self-dealing transactions with entities owned and controlled by the Colletts. The latest of these transactions involves the sale of Centers, the only operating entity within the Company, in a flawed process that results in valuable separate payments for the Colletts including change in control payments for Collett Junior and continued payments going forward for both Collett Senior and Collett Junior. 3. Plaintiff brings this action derivatively on behalf of Florida Gaming in order to

obtain appropriate monetary and injunctive relief for the benefit of the Company. In addition, Plaintiff sues individually, pursuant to 8 Del. C. 211(c), to compel Florida Gaming to hold an annual shareholders meeting which the Company has failed to do so since 2008. PARTIES Plaintiff 4. Plaintiff Herbert Silverberg is, and has been at all relevant times, a shareholder of

Florida Gaming. Plaintiff currently owns approximately 4,000 shares of Florida Gaming common stock. Nominal Defendant 5. (a) Nominal Defendant Florida Gaming is a Delaware corporation which

maintains its corporate headquarters at 3500 N.W. 37th Avenue, Miami, Florida 33142. Florida Gaming is the operator of live jai-alai (pronounced high-lie) games in Miami and Fort Pierce. It also began to operate casinos during the past year. The Companys stock previously traded on the NASDAQ stock exchange until it was delisted in 1998 and now trades on the over-the-

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counter bulletin board (OTCBB) stock market. On November 16, 1998, the Company filed a Form 10-QSB with the U.S. Securities and Exchange Commission (SEC) disclosing that the delisting was based on NASDAQs review of Florida Gamings public filings and the Companys responses to NASDAQ staff letters which were critical of the transactions between [Florida Gaming] and its affiliates. (b) Centers is a Florida corporation with an address of 3500 N.W. 37th

Avenue, Miami, Florida 33142. Centers is wholly owned by Florida Gaming and is the Companys only operating asset. The Collett Defendants 6. Collett Senior is the Chairman of Florida Gamings board of directors (the

Board) and was the former Chief Executive Officer (CEO) until his retirement on April 25, 2011. Collett Senior beneficially owns approximately 2,180,203 shares or 44.6% of Florida Gamings common stock. Collett Senior has a varied business background with much of his experience being in financial related businesses, serving as a principle shareholder and director of numerous banking entities. 7. Collett Junior is the CEO, President and a director of both Florida Gaming and

Centers. Collett Junior is the son of Collett Senior and was appointed to the Board in 1994. 8. Defendant George W. Galloway, Jr. (Galloway) has served as a director of

Florida Gaming since 1994 and together with the Colletts is collectively referred to herein as the Director Defendants. 9. Defendant Freedom Holding, Inc. (Freedom Holding) is a Delaware corporation

which maintains its headquarters at 2669 Charleston N. Road, New Albany, Indiana 47150. Freedom Holding through its wholly-owned subsidiary Freedom Financial Corporation

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(Freedom Financial), whose sole business is to hold shares of Florida Gaming securities, owns 1,325,869 shares of Florida Gaming stock and 706,000 options to purchase shares of the Companys common stock. Defendant Collet Senior owns 87.95% of Freedom Holdings equity and Collett Junior owns 9.21%. Freedom Holding also owns 1,000 shares of the Companys Series F Convertible Preferred stock with a purported liquidation value of $1,481,703 as of December 31, 2012. Silvermark 10. Defendant Silvermark is a Delaware limited liability company with an address of

430 Park Avenue, 5th Floor, New York, New York 10022. Silvermark is affiliated with Silver Entertainment, a privately-owned company, which operates four-star hotels and resorts as well as the Veneto Hotel and Casino located in Panama City. SUBSTANTIVE ALLEGATIONS Collett Seniors History 15. Collett Senior has a varied background in businesses involving mining, insurance

and finance. A November 27, 1979, SEC litigation release announced that Collett Senior settled claims that he had stripped companies he ran of valuable assets and stated that: The complaint alleges that publicly held companies, namely Pilgrim, Atia National Investments, and Tidewater were acquired and thereafter caused to transfer valuable assets for inadequate consideration; that the various publicly held defendant corporations were caused to enter into agreements and transactions contrary to their interests of their public shareholders; and that the transfers, transactions and agreements were not disclosed to shareholders, the Commission or the investing public. The individual defendants are also alleged to have sustained the operation of insolvent upper tier companies, through a complex series of intercompany transactions in which cash of the acquired

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companies was exchanged for mortgages, coal leases and other property of dubious value. [Emphasis added.] 16. As a result of a consent decree Collett Senior entered into with the SEC in 1979,

Judge Orinda Evans of the United States District Court for the Northern District of Georgia entered an Order permanently enjoining Collett Senior from violating the federal securities laws. 17. In 1979, the Indiana Department of Insurance forced Pilgrim Life Insurance, a

company run by Collett Senior, into liquidation. In 1981, the Department sued Collett Senior for allegedly stripping the insurance company of its assets. 18. In 1990, a proposed public offering of Freedom Financial stock was scrapped by

state regulators in New Jersey, Indiana and Kentucky because of Collett Seniors troubled past and the failure to disclose that Collett Senior had been involved in at least six prior legal actions. An article published by The Miami Herald on July 27, 1998 titled Florida gaming Looks For New Deal to Avert Trouble quoted Mark Maddox, Indianas State Securities Commissioner at the time, as reportedly stating that: [Collett Senior] had a history of bad relations with people who have invested in his entities. Theres just been a long history of disgruntled investors in this persons companies. 19. Notwithstanding Collett Seniors failed attempt to bring Freedom Financial

public, he soon found a backdoor to the public equity markets through Freedom Financials acquisition of Lexicon Corporation (Lexicon) in 1993. Lexicon, a failed technology company with no real business prospects, had nothing to offer Freedom Financial aside from its listing on the NASDAQ stock exchange. Following the consummation of Freedom Financials purchase of 699,480 shares of common stock from Lexicon, the Companys present management assumed control of Lexicon in early 1994.

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The Company 20. In February 1994, Lexicon acquired its first jai-alai facility in Ft. Pierce Florida.

Jai-alai is a sport originating in the Basque regions of Spain and France involving a ball bounced at high speeds off a walled in space. In March 1994, Lexicon changed its name to Florida Gaming Corporation. 21. In 2007, Florida enacted a new gambling statute increasing the maximum poker

wager from $2 to $5 and allowing the game of dominoes to be played at existing gambling facilities. In April 2008, Florida Gaming opened a card room at its Ft. Pierce facility. 22. On January 29, 2008, residents of Miami-Dade County passed a referendum

allowing Florida Gaming to install up to 2,000 slot machines at its Miami facility. Accordingly, the Company recently added casino gaming to its mix of businesses. The Companys Form 10-K for the fiscal year ended December 31, 2011 filed with the SEC on March 30, 2012 states that: On January 23, 2012, the company opened Casino Miami Jai-Alai in Miami, Florida. Miami Jai-Alai added a 40,000 square foot state of the art casino with 1035 Class III slot machines, an expanded poker room, electronic blackjack, roulette, dominoes, live shows such as concerts and boxing, a new restaurant and three fullservice bars, including one that will feature live music. The Company also operates a fronton in Ft. Pierce, FL and an inactive Jai-Alai pari-mutuel permit for Hillsborough County (Tampa), Florida. The Company's business at this time consists primarily of its operations at the frontons, which include casino gaming, card rooms, live jai-alai performances, inter-track pari-mutuel wagering ("ITW") on jai-alai, horse racing (both thoroughbred and harness) and dog racing, and the sale of food and alcoholic beverages. The Fort Pierce location provides inter-track wagering on interstate simulcasting of horse racing, dog racing, and jai-alai from various tracks and frontons in the United States and within the State of Florida. Jai-alai games are played live and simulcast year round from the Miami facility via satellite to pari-mutuel wagering locations in Florida, Connecticut, Rhode Island, as well as locations in Mexico, Central America, and Austria. Poker and dominoes are played at the Miami Jai-Alai Crystal Card Room and

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poker is played at the Ft. Pierce card room. It recently added poker to its Florida facilities and is one of the largest poker operators in the State of Florida. The Credit Agreement 18. On April 25, 2011, the Company entered into a Credit Agreement (the Credit

Agreement) with a syndicate of unaffiliated third party lenders (the Lenders) to fund the construction of a casino to be operated by Centers. The Credit Agreement provided for an $87,000,000 senior secured term loan (the Term Loan) that was set to mature on April 25, 2016. The Term Loan was issued at a price of 98.0% with interest varying between 15.75% and 16.50%. The net proceeds of the Term Loan were $83,520,000, after deducting fees and discounts to the Lenders related to the transaction. Among other things, collateral for the loan includes all of the Companys unencumbered real estate, receivables, intangible assets, equipment, furniture and fixtures. 19. In connection with the Credit Agreement, the Company also issued the Lenders

warrants, with a $0.01 per share exercise price, to purchase up to 35% of Centers equity. Should Centers be sold, it is required to repurchase the warrants for a purchase price determined by multiplying the net proceeds to the Company from the sale transaction by the base percentage, which is 35% subject to adjustment. 20. On April 25, 2011, as provided for in the Credit Agreement, Collett Senior was

required to retire as CEO of Florida Gaming. On that same day, Freedom Financial and the Company entered into a consulting agreement, providing that Collett Senior would perform consulting services for Florida Gaming with Collett Senior not being required to work for more than 500 hours a year. Collett Senior was to be paid $300,000 per year in exchange for those services, subject to an adjustment up to $450,000 per year if certain earnings figures were

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reached. The contract was for a term ending on December 31, 2017. The Company entered into the consulting agreement despite Collett Senior having no experience in operating gaming facilities and the Company having no other operating assets. That same day, Collett Junior was promoted to CEO of Florida Gaming. 21. Also on April 25, 2011, in connection with the closing of the Credit Agreement,

the Company entered into a Promissory Note at a rate of 6% per annum with Freedom Financial in the amount of $1,905,000 of which $1,755,000 was for purportedly accrued but unpaid consulting fees and $150,000 in accounts receivables from Freedom Financial. As of December 31, 2012, the Company purportedly owed Freedom Financial $2,105,744 on this note. The Company also purportedly owes Freedom Holding an additional $1,850,162 under a promissory note issued by Centers to Freedom Holding on November 1, 2008 for a total of $1,322,573.73 which note was amended on April 25, 2011 to substitute the Company as the borrower. 22. On June 15, 2011, Centers distributed $54,835.61 to the Company (the June 15th

Distribution). The Board then allowed those funds to be loaned to Freedom Holding in order to pay certain interest expenses on Freedom Holdings own debt obligation. The Company received no benefit from the loan transaction and the June 15th Distribution was inconsistent with the terms of the Credit Agreement. The Lenders took issue and obtained payment of a $377,000.00 consent fee (the Consent Fee). The Company Defaults on the Credit Agreement 23. On August 1, 2012, the Company informed the Lenders and ABC Funding, the

Lenders administrator, that it would be unable to timely pay a scheduled principal payment of $2,362,408.45 due on July 31, 2012. On August 9, 2012, ABC Funding delivered an

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acceleration notice under the Credit Agreement citing the failure to remit the principal payment as an event of default among others. 24. On August 24, 2012, the Lenders submitted a summary term sheet describing a

transaction by which they would acquire an 85% interest in Centers in exchange for a release of certain of the Companys obligations under the Credit Agreement. 25. On September 4, 2012, the Lenders sent a draft proposal (the Lenders

Proposal) to the Company describing the issuance of warrants to purchase up to 85% of Centers equity, pending their obtaining a Florida gaming license and appointment of a Chief Restructuring Officer (CRO) to operate Centers. Importantly, pursuant to the Lenders Proposal the Company would have been released from any debt obligation under the Credit Agreement and would have retained a 15% interest in Centers and would, therefore, continue to share in any future proceeds generated by Centers. 26. On September 5, 2012, ABC Funding, on behalf of the Lenders, filed suit in

Florida Circuit Court seeking: (i) an award of damages in excess of $84,000,000; (ii) enforcement of the Companys guarantees made in connection with the Credit Agreement; (iii) foreclosure on certain real estate provided as security by the Company under the Credit Agreement; and (iv) the appointment of a receiver to operate Centers pending the litigation. 27. On September 25, 2012, while continuing to negotiate with ABC Funding and the

Lenders and at their insistence, Centers engaged David Jonas to act as Centers CRO with the authority to manage all of Centers daily operations with the sole responsibility for all treasury functions and day-to-day cash flow decisions. 28. CRO. On October 19, 2012, the Company terminated the engagement of Mr. Jonas as

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29.

On November 2, 2012, the Florida Circuit Court entered an emergency order

appointing Mr. Jonas as the temporary receiver of Centers assets effective as of October 25, 2012. The Proposed Transaction 30. On November 26, 2012, the Company announced that it had entered into a Stock

Purchase Agreement, dated as of November 25, 2012 (the SPA or the Agreement) pursuant to which Silvermark will acquire Centers, the Companys only operating asset, for $115 million together with the assumption of some of Centers liabilities, including a $14.4 million mortgage debt owed to Miami-Dade County, for a total transaction value of approximately $129.4 million. The SPA is included as an exhibit to a Form 8-K filed by the Company with the SEC on November 29, 2012 31. The cash purchase price of $115 million is subject to certain adjustments and will

finance the repayment of Centers outstanding debt, including $88.9 million owed to the Lenders and other debt totaling approximately $11.2 million. 32. As a condition to entering into the Proposed Sale, Silvermark required that the

Company would have to successfully repurchase the warrants issued to the Lenders in connection with the Credit Agreement. Based on the repurchase formula provided in the warrant agreement, Florida Gaming has estimated that the net proceeds to the Company will be $12,581,902 and that the base percentage is equal to 35% and has, therefore, valued the cost to repurchase the Centers warrants at $4,403,666, but the Lenders may seek more money for their warrants. 33. Therefore, the Company, at most, will receive net proceeds of $8,178,236. Even

assuming the $129.4 million value placed on Centers by the Proposed Transaction is a fair one,

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the result is substantially worse than even the Lenders first proposal which would have delivered a net value of $19,410,000 to the Company based upon the 15% of Centers which the Lenders were willing to let the Company retain. 34. However, the result is even worse as an escrow fund totaling $7.5 million dollars

will be created by Silvermark and administered by its attorneys to indemnify it against any of the Companys liabilities or claims for indemnification. Should no such liabilities arise, the $7.5 million fund will be paid back to the Company at a rate of $70,000 per month and used to pay for Florida Gamings purported continued operations despite the fact that the Company will no longer possess any operating assets. The Board has approved the Companys entry into a consulting agreement following consummation of the Proposed Sale for up to $25,000 per month. 35. Also, in connection with entering into the SPA, Collett Junior has signed a letter

agreement with Silvermark providing for a three year employment agreement with Centers guaranteeing him an annual base salary of $300,000, plus bonus. Daniel Licciardi (Licciardi), the current Chief Operating Officer of the Company and Centers, will also be given an employment contract by Silvermark in connection with the Proposed Sale. Collett Junior and Licciardi are also set to receive golden parachute payments of $900,000 and $675,000, respectively, should the Proposed Sale be consummated. 36. The SPA provides that a majority vote of the common shareholders is needed for

the approval of the Proposed Sale. Such a vote is practically a foregone conclusion. Collett Senior is the beneficial owner of 44.6% of the Companys stock. In addition, Licciardi owns 1.3% of the Companys stock, and given that he will be granted an employment contract as part

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of the SPA and a golden parachute payment of $675,000, he will unquestionably vote in favor of the Proposed Sale, thus providing further assurance that it will likely be approved. 37. In order to further dissuade any potential competing bidder, the SPA contains a

strict No Solicitation provision prohibiting the Director Defendants from soliciting alternative proposals and severely constraining their ability to communicate and negotiate with potential buyers who wish to submit or have submitted unsolicited alternative proposals. Section 4.08(a) of the SPA Agreement states, in relevant part: No Solicitation (a) Subject to Section 4.08(b), from and after the Effective Date hereof and until any termination of this Agreement, none of the Seller Parties nor any Affiliate thereof shall authorize or permit any investment banker, financial advisor, attorney, accountant or other Person retained by or acting on behalf of any of the Seller Parties or any such Affiliate to, nor shall any of the Seller Parties or any Affiliate directly or indirectly, through any officer, director, employee, financial advisor, representative or agent of such party or otherwise (i) solicit, initiate, negotiate, assist, facilitate, or encourage (including by way of furnishing information about or permitting access to the Assets, Real Property and Books and Records) or take any other action to facilitate any inquiries or proposals that constitute, or could reasonably be expected to lead to, a proposal or offer for a merger, consolidation, business combination, sale of substantial assets, sale of shares of capital stock (including, without limitation, by way of a tender or exchange offer), direct or indirect acquisition of the Shares, the Assets or the Business or similar transaction involving Company, the Shares, the Assets or the Business, other than the transactions with Purchaser contemplated by this Agreement (an Acquisition Proposal), (ii) engage in negotiations or discussions with any Person or group of Persons (including, without limitation, Summit or any of the Summit Lenders or any of their respective Affiliates) (a Third Party) concerning, or provide any non-public information to any Person or entity relating to, any Acquisition Proposal, (iii) enter into any merger agreement, letter of intent, agreement in principle, stock purchase agreement, asset purchase agreement, share

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exchange agreement, option agreement or other similar agreement relating to an Acquisition Proposal or enter into any agreement or agreement in principle requiring Seller or Company to abandon, terminate or fail to consummate the transactions contemplated hereby or breach its obligations hereunder, (iv) take any action to make the provisions of any fair price, moratorium, control share acquisition, business combination or other similar anti-takeover statute or regulation, or any restrictive provision of any applicable anti-takeover provision in either Seller Partys articles of incorporation or bylaws, inapplicable to any transactions contemplated by an Acquisition Proposal (and, to the extent permitted thereunder, each Seller Party shall promptly take all steps necessary to terminate any waiver that may have been heretofore granted, to any Person other than Purchaser or any of Purchasers Affiliates, under any such provisions), (v) continue any prior discussions or negotiations with any Third Party concerning any Acquisition Proposal or (vi) resolve or agree to do any of the foregoing. The Seller Parties shall immediately cease and promptly hereafter (but in no event later than twenty-four (24) hours after the date hereof) cause to be terminated any solicitation, discussion or negotiation with any Persons conducted heretofore by any of the Seller Parties, or any of the Seller Parties Representatives with respect to any Acquisition Proposal and shall use its commercially reasonable efforts to cause to be returned or destroyed all confidential information provided by or on behalf of Seller or Company to such Person. 38. Section 4.08(d) of the SPA, however, provides that the Board may terminate the

Proposed Sale if after consulting with its advisors it determines that a superior proposal has been made to the Company which the directors would be required to pursue according to their fiduciary duties owed to the Companys shareholders. 39. In addition to the no solicitation clause, Section 14.03 of the SPA, contains

provisions for payment of a Termination Fee of $4.6 million by the Company to Silvermark if the Director Defendants cause the Company to terminate the SPA pursuant to the lawful exercise of their fiduciary duties.

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40.

These provisions, combined with other measures the Company has in place,

effectively preclude any other bidders that might be interested in paying more for its asset from taking their bids directly to the Companys public shareholders and allowing those shareholders to decide for themselves whether they would prefer any offer other than the Proposed Sale. 41. At the same time, Centers is reporting steadily improving results. Thus, for the

first quarter of 2012, the Companys revenue increased from $2.9 million in the first quarter of 2011 to $14.4 million in the first quarter ending March 31, 2012. For the second quarter of 2012, the Company reported that revenue increased from $2.6 million in the second quarter of 2011 to $18.7 million in the second quarter ending June 30, 2012. For the third quarter, the Companys revenue increased from $1.8 million in the third quarter of 2011 to $17.3 million in the third quarter ending September 30, 2012. DERIVATIVE ALLEGATIONS 42. Plaintiff has not made a demand on Florida Gamings Board to institute this

action against the Director Defendants. Such demand would be a futile and useless act because the underlying conduct could not have resulted from a proper exercise of business judgment and each of the Director Defendants has significant potential legal liability for the wrongful conduct at issue in this action. 43. Demand is also excused because Defendants Collett Senior and Collett Junior

effectively control Florida Gaming and the Board through their ownership of Freedom Holding which has a 44.6% interest in Florida Gamings outstanding common stock, Collett Seniors position as Chairman of the Board and Collett Juniors positions as President, CEO and a director of the Company.

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44.

In addition, demand is excused because at the time this action was commenced,

there was not a majority of disinterested and independent directors capable of making an independent and disinterested decision to institute and vigorously prosecute this action. At this time, there are three (3) members of Florida Gamings Board, two (2) of whom are the Collets and are incapable of acting in a disinterested fashion in the event a demand were to be made on the Board: a. Collett Senior is the Chairman of the Board and beneficially owns and/or

controls 44.6% of Florida Gamings common stock. He will reap substantial benefits if the Proposed Sale is completed; and b. Collett Junior, the son of Collett Senior, is the Companys CEO, President

and a director. He stands to benefit if the Proposed Sale is completed as he will have a threeyear contract with the purchaser as part of the SPA. 45. The transactions at issue were not the proper product of business judgment and

constitute a waste of corporate assets. 46. Plaintiff will fairly and adequately represent the interests of Florida Gaming

shareholders in enforcing the rights of the Company in this action. This action is not a collusive one to confer jurisdiction that the Court would otherwise lack. FIRST CAUSE OF ACTION Claims For Breach of Fiduciary Duties Against the Director Defendants 47. 48. Plaintiff repeats and realleges each allegation set forth hereinabove. This claim is brought by Plaintiff derivatively on behalf of Florida Gaming.

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49.

The Director Defendants have violated their fiduciary duties of good faith, fair

dealing, care and loyalty by engaging and acquiescing in the wrongful conduct alleged in this Complaint. 50. The Colletts have caused the Company to engage in numerous self-dealing

transactions which were entered into for their own benefit and to the detriment of the Company and its public shareholders. The Director Defendants have breached their fiduciary duties by participating in and consenting to these self-dealing transactions which have drained the Company of its valuable assets. 51. The Colletts seek to continue to serve their own interests in pursuing the Proposed

Sale to the detriment of the Company and its public shareholders. Indeed, the Director Defendants have breached their fiduciary duties by agreeing to the Proposed Sale in which the Companys only operating asset will be sold, and by rejecting the Lenders Proposal pursuant to which the Company would have retained a 15% interest in Centers going forward. 52. The Proposed Sale is structured to favor the interests of the Colletts who control

the Company and dominate its Board and is the product of a flawed process. The actions of structuring and approving the Proposed Sale could not have been a good faith exercise of prudent business judgment to protect and promote the Companys interests. 53. The Director Defendants have also breached their fiduciary duties in connection

with a Proposed Sale because, among other reasons: (a) (b) sold; they failed to properly value the assets being sold; they failed to take adequate steps to maximize the value of the assets being

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(c)

they have agreed to terms in the SPA and other terms that favor

Silvermark and deter competing bids; (d) they have stated their intention to use the $7.5 million escrow fund to pay

for the Companys continued operations if the Proposed Sale is consummated despite the fact the Company will have no operating assets; (e) they have secured continued employment for Collett Junior and Licciardi

and golden parachute payments of $900,000 and $675,000, respectively, should the Proposed Sale be consummated; and (f) they have submitted to the interests of the Colletts and Silvermark rather

than the interests of Florida Gaming and its public shareholders. 54. Unless enjoined by this Court, the Director Defendants will continue to breach

their fiduciary duties, and may consummate the Proposed Sale, which will irreparably harm the Company. 55. As a direct and proximate result of the Director Defendants breach of their

fiduciary obligations to the Company, Florida Gaming has sustained significant damages. As a result of the misconduct alleged herein, the Director Defendants are liable to the Company. SECOND CAUSE OF ACTION Aiding & Abetting the Breach of Fiduciary Duties Against Defendant Silvermark 56. 57. 58. Plaintiff repeats and realleges each allegation set forth herein. This claim is brought by Plaintiff derivatively on behalf of Florida Gaming. Defendant Silvermark, by reason of its status as a party to the SPA and/or

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Defendants breaches of fiduciary duties. Such breaches of fiduciary duties could not and would not have occurred but for the conduct of Defendant Silvermark, who, therefore, has aided and abetted such breaches in the proposed sale of Florida Gamings asset. 59. As a result of the unlawful actions of Defendant Silvermark, the Company will be

irreparably harmed in that it will not receive fair value for the Companys assets and business. Unless the actions of Defendant Silvermark are enjoined by the Court, it will continue to aid and abet the aforementioned breaches of fiduciary duties. 60. As a direct and proximate result of Defendant Silvermark substantially assisting

the Director Defendants breach of their fiduciary obligations to the Company, Florida Gaming has sustained significant damages. As a result of the misconduct alleged herein, Defendant Silvermark is liable to the Company. THIRD CAUSE OF ACTION Waste of Corporate Assets Against the Director Defendants 61. 62. 63. Plaintiff repeats and realleges each allegation set forth herein. This claim is brought by Plaintiff derivatively on behalf of the Company. As a result of the Director Defendants improper conduct and by failing to

properly consider the interest of the Company and its public shareholders by failing to conduct proper supervision, the Director Defendants have caused Florida Gaming to waste valuable corporate assets by paying the Consent Fee as a result of the Colletts self-dealing and by entering into and consenting to self-dealing transactions with related entities which had the effect of transferring valuable corporate assets out of Florida Gaming without receiving adequate consideration in return.

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64.

As a result of the waste of corporate assets, Florida Gaming has suffered harm

and the Director Defendants are, therefore, liable to the Company. FOURTH CAUSE OF ACTION Failure to Hold Annual Meeting Pursuant to 8 Del. C. 211(c) 65. 66. Plaintiff repeats and realleges each allegation set forth herein. This claim is brought by Plaintiff in his individual capacity as a shareholder of

Florida Gaming. 67. Florida Gaming has failed to hold an annual meeting since 2008. The Schedule

14A filed with the SEC on January 31, 2013 states: We have not held an Annual Meeting of Stockholders since 2008. 68. Plaintiff seeks an Order of the Court, pursuant to 8 Del. C. 211(c) directing the

Company to hold an annual meeting of stockholders as soon as practicable under law. 69. Plaintiff has no adequate remedy at law.

WHEREFORE, Plaintiff demands judgment, as follows: A. Declaring that this action is properly maintainable as a derivative action and

certifying Plaintiff as the Companys representative; B. Enjoining Defendants and all those acting in concert with them from taking any

steps to consummate the Proposed Sale; C. Enjoining Defendants from making any fraudulent transfers of the Companys

assets without receiving fair value, including, but not limited to, the payment of consulting fees to Freedom Financial, Collett Senior or any of his affiliates; D. Directing the Director Defendants to exercise their fiduciary duties to maximize

value to the Company in any proposed sale of the Company or its assets;

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E.

Imposing a constructive trust, in favor of Plaintiff, on behalf of the Company,

upon any benefits improperly received by Defendants as a result of their wrongful conduct; F. Directing Defendants to account to the Company for all damages suffered by it as

a result of Defendants wrongful conduct, as alleged herein; G. H. Directing the Company to hold an annual shareholders meeting; Awarding Plaintiff the costs and disbursements of this action, including

reasonable attorneys and experts fees and costs; and I. Granting such other and further relief as this Court may deem just and proper.

Dated: February 8, 2012 ROSENTHAL, MONHAIT & GODDESS, P.A. By: OF COUNSEL: ABRAHAM, FRUCHTER & TWERSKY, LLP Jeffrey S. Abraham Lawrence D. Levit Philip T. Taylor One Penn Plaza, Suite 2805 New York, N.Y. 10119 (212) 279-5050 /s/ Carmella P. Keener Carmella P. Keener (Del. Bar No. 2810) 919 N. Market Street, Suite 1401 P.O. Box 1070 Wilmington, DE 19899 (302) 656-4433 Attorneys for Plaintiff

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