-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GLR5xk/CZwrUWvtmyp/kFwbETXVgD3o1Yg8dAtMUmyTj2HxhElHUczrf9Xd4lkeS giFZ0BacVbXWdGnqLBL4ag== 0000950144-99-004858.txt : 19990426 0000950144-99-004858.hdr.sgml : 19990426 ACCESSION NUMBER: 0000950144-99-004858 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 19990423 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN BINGO & GAMING CORP CENTRAL INDEX KEY: 0000931683 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 742723809 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-56185 FILM NUMBER: 99599722 BUSINESS ADDRESS: STREET 1: 1440 CHARLESTON HIGHWAY STREET 2: STE 1200 CITY: WEST COLUMBIA STATE: SC ZIP: 29169 BUSINESS PHONE: 8037967875 MAIL ADDRESS: STREET 1: 1440 CHARLESTON HIGHWAY STREET 2: STE 1200 CITY: W COLUMBIA STATE: SC ZIP: 29169 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MIMS MICHAEL W CENTRAL INDEX KEY: 0001084993 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: SC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 257 AMENITY RD CITY: CHAPIN STATE: SC ZIP: 29036 BUSINESS PHONE: 8037326282 MAIL ADDRESS: STREET 1: 257 AMENITY RD CITY: CHAPIN STATE: SC ZIP: 29036 SC 13D 1 AMERICAN BINGO/MICHAEL W MIMS 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (Amendment No. ) American Bingo & Gaming Corp. ---------------------------------------- (Name of Issuer) Common Stock, $.001 Par Value Per Share ---------------------------------------- (Title of Class of Securities) 024596108 ---------------------------------------- (CUSIP Number) Michael W. Mims 257 Amenity Road Chapin, South Carolina 29036 (803) 732-6282 ---------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) August 25, 1997 ---------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D and is filing this schedule because of ss.ss. 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box [ ]. Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). 2 CUSIP NO. 024596108 - -------------------------------------------------------------------------------- 1. Names of Reporting Persons Michael W. Mims I.R.S. Identification Nos. of Above Persons (entities only) N/A - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (See Instructions) (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- 3. SEC Use Only - -------------------------------------------------------------------------------- 4. Source of Funds (See Instructions) OO - -------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization United States - -------------------------------------------------------------------------------- Number of Shares (7) Sole Voting Power 705,680 Shares Beneficially ----------------------------------------------------- Owned by (8) Shared Voting Power -0- Each Reporting ----------------------------------------------------- Person With (9) Sole Dispositive Power 705,680 ----------------------------------------------------- (10) Shared Dispositive Power -0- - -------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 705,680 - -------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) [ ] - -------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 7.44% - -------------------------------------------------------------------------------- 14. Type of Reporting Person (See Instructions) IN - -------------------------------------------------------------------------------- 2 3 Item 1. Security and Issuer. The issuer (the "Issuer") of securities to which this Statement relates is American Bingo & Gaming Corp., a Delaware corporation having its principal executive offices located at 1440 Charleston Highway, West Columbia, South Carolina 29169, and the title of such securities is common stock, par value $.001 per share (the "Common Stock"). Item 2. Identity and Background. This Statement is being filed by Michael W. Mims. Mr. Mims' principal employment is as President of Mims & Dye Enterprises, LLC, a South Carolina limited liability company ("M&D") having its principal executive offices located at 1338 Main Street, Suite 1200, Columbia, South Carolina 29201. The principal business of M&D is the operation of video game rooms. Mr. Mims is a citizen of the United States of America, and his residence address is 257 Amenity Road, Chapin, South Carolina 29036. During the last five years, Mr. Mims has not been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or been subject to a judgment, decree or final order of a judicial or administrative body enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Item 3. Source and Amount of Funds or Other Consideration Pursuant to the terms of that certain Agreement and Plan of Reorganization, dated August 13, 1997, which is attached hereto as Exhibit 1 (the "Merger Agreement"), by and among the Issuer, Gold Strike Acquisition Corporation ("Merger Sub"), Gold Strike, Inc. ("Gold Strike") and Mr. Mims, Merger Sub merged with and into Gold Strike, with Gold Strike being the surviving corporation as a wholly-owned subsidiary of the Issuer. As a result of the merger, Mr. Mims, the sole shareholder of Gold Strike, received 827,680 shares of Common Stock. On December 19, 1997, the Issuer awarded Mr. Mims 3,000 shares of Common Stock. On January 15, 1998, Mr. Mims sold 100,000 shares of his Common Stock in market transactions and gave 20,000 shares of his Common Stock to Wayne Glover and 5,000 shares of his Common Stock to Joseph Ferira. Item 4. Purpose of Transaction. Mr. Mims acquired 827,680 shares of Common Stock as a result 3 4 of the merger described in Item 3. Pursuant to Registration No. 333-36107, 100,000 of the 827,680 shares were registered under the Securities Act of 1933 (the "Securities Act"), and such registered shares were sold as noted in Item 3. The remaining shares were not registered under the Securities Act or any state securities law and may not be sold, assigned or otherwise transferred unless duly registered thereunder or in transactions exempt from the registration requirements thereof. Mr. Mims has certain piggy-back registration rights with respect to such remaining shares pursuant to the Merger Agreement. See Article XII of the Merger Agreement which is incorporated herein by this reference. Depending upon market conditions and various other factors that Mr. Mims may deem material, Mr. Mims may in the future purchase additional shares of Common Stock. Depending upon the same factors, Mr. Mims may decide to sell part or all of his remaining shares of Common Stock. However, in the Merger Agreement, Mr. Mims agreed generally not to sell (i) any of his unregistered shares of Common Stock during the first 12 months after the closing of the transactions contemplated by the Merger Agreement, (ii) no more than 1/3 of such shares during the period between the first anniversary and the second anniversary of the closing date, (iii) no more than 1/3 of such shares during the period between the second anniversary and the third anniversary of the closing date and (iv) no more than 1/3 of such shares during the period between the third anniversary and the fourth anniversary of the closing date. See Section 6.10 of the Merger Agreement which is incorporated herein by this reference. Mr. Mims has no current intention to purchase or sell any shares of Common Stock. On December 19, 1997, the Issuer awarded Mr. Mims 3,000 shares of Common Stock. On January 15, 1998, Mr. Mims gave 20,000 shares to Wayne Glover and 5,000 shares to Joseph Ferira. Each of these transactions was exempt from the registration requirements of the Securities Act. Pursuant to the terms of a Master Coin Machine Agreement, dated November 9, 1998 (the "Coin Machine Agreement"), among the Issuer, Gold Strike, M&D and Mr. Mims and Danny C. Dye, the Issuer agreed to outsource the operation of its non-route gaming operations at eight video game machine centers to M&D for a term of three years. Under the Coin Machine Agreement, the Issuer agreed to provide video gaming machines ("Machines") to be used at such centers in exchange for a fixed percent of the total gross revenues earned from the Machines. In addition, at seven of the eight centers, the Issuer and M&D entered into a lease or sublease pursuant to which the Issuer leased or subleased, respectively, 4 5 the premises and certain personal property relating to each center. The Issuer retains ownership of the underlying Machines and all personal property leased or subleased to M&D. In connection with the Coin Machine Agreement, the Issuer loaned to M&D $80,000 to be repaid in full within six months of the date of the Coin Machine Agreement with accrued interest at prime interest rate plus 2% per annum. The loan was guaranteed personally by Mr. Mims and Mr. Dye, jointly and severally. Pursuant to the Coin Machine Agreement, Mr. Mims delivered 80,000 shares of Common Stock to an escrow agent to be held in escrow in accordance with the Coin Machine Agreement as security to Gold Strike and the Issuer for any liabilities of M&D for which a third party could reasonably be expected to seek to recover from Gold Strike or the Issuer and as a means to compensate Gold Strike and the Issuer in the event there is a deficiency or penalty relating to any Machine supplied to M&D pursuant to the Coin Machine Agreement issued by any regulatory or enforcement authority as a result of the action or failure to act of M&D, which deficiency or penalty could reasonably be expected to, or actually does, result in a fine or penalty, the revocation or termination of the license for such Machine or the seizure of such Machine. Mr. Mims is currently a member of the Board of Directors of the Issuer. Other than as indicated above, Mr. Mims does not have any present plans or proposals which relate to or would result in any of the following: (i) the acquisition by any person of additional securities of the Issuer or the disposition of securities of the Issuer; (ii) an extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Issuer or any of its subsidiaries; (iii) a sale or transfer of a material amount of assets of the Issuer or any of its subsidiaries; (iv) any change in the present Board of Directors or management of the Issuer, including any plans or proposals to change the number or term of directors or to fill any existing vacancies on the Issuer's Board of Directors, other than plans or proposals of the present Board of Directors; (v) any material change in the present capitalization or dividend policy of the Issuer; (vi) any other material change in the Issuer's business or corporate structure; (vii) changes in the Issuer's charter or bylaws or other actions which may impede the acquisition of control of the Issuer by any person; (viii) causing a class of securities of the Issuer to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; (ix) a class of equity securities of the Issuer becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934; or (x) any action similar to 5 6 those enumerated above. ITEM 5. Interest in Securities of the Issuer. The following table presents the number of shares of Common Stock and the percentage of the class beneficially owned by Mr. Mims.
Percentage Sole Voting and Shared Voting and Total of Class Dispositive Power Dispositive Power ------- ---------- ----------------- ----------------- 705,680 7.44% 705,680 None
ITEM 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. Except as described in Item 4, there are presently no contracts, arrangements, understandings or relationships between Mr. Mims and any person with respect to any securities of the Issuer other than those disclosed in this Statement. ITEM 7. Material to be Filed as Exhibits. 1. Agreement and Plan of Reorganization dated August 13, 1997, by and among American Bingo & Gaming Corp., Gold Strike Acquisition Corporation, Gold Strike, Inc. and Michael W. Mims. 2. Master Coin Machine Agreement, dated November 9, 1998, by and among American Bingo & Gaming Corp., Gold Strike, Inc., Mims & Dye Enterprises, LLC and Michael W. Mims and Danny C. Dye. After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct. Dated: April 22, 1999 /s/ Michael W. Mims ------------------------------------ Michael W. Mims 6 EX-99.1 2 AGREEMENT AND PLAN OF REORGANIZATION 1 AGREEMENT AND PLAN OF REORGANIZATION BY AND AMONG AMERICAN BINGO & GAMING CORP. AS THE "BUYER" AND GOLD STRIKE ACQUISITION CORPORATION AS THE "SUB" AND GOLD STRIKE, INC. AS THE "COMPANY" AND MICHAEL W. MIMS THE SOLE SHAREHOLDER OF GOLD STRIKE, INC. AS THE "SHAREHOLDER" DATED: AUGUST 13, 1997 2 SCHEDULES SCHEDULE 1.4 Locations of Business 1.11 Contracts 1.16 Leases 1.21 Permits 1.24 Real Property 4.1 Corporate Records 4.5 Permits and Approvals 4.6 Consents 4.7 Financial Statements 4.8 List of Material Changes 4.9 Undisclosed Liabilities 4.10 List of Property 4.13 Litigation 4.14 Compliance with Law 4.17 Employees 4.18 Insurance 4.20 Liens 4.22 Banks 4.23 Quarterly Reports of Gaming Operations 4.24 Real Property Restrictions 5.4 Ownership and Management of Exempted Entities 6.4A Litigation 6.4B Consents i 3 EXHIBITS EXHIBIT 1.6 Form of the Buyer's and Sub's Closing Certificate 1.10 Form of the Company's and the Shareholder's Closing Certificate 2.9 Form of Voting Agreement 8.3 Form of Employment Agreement of Michael Mims ii 4 AGREEMENT AND PLAN OF REORGANIZATION THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as of the 13th day of August, 1997, by and among American Bingo and Gaming Corp., a corporation organized and existing under the laws of the State of Delaware (the "Buyer"), Gold Strike Acquisition Corporation, a corporation organized and existing under the laws of the State of South Carolina (the "Sub"), Gold Strike, Inc., a corporation organized and existing under the laws of the State of South Carolina (the "Company"), and Michael W. Mims, the sole shareholder of the Company (the "Shareholder"). RECITALS WHEREAS, the Shareholder currently operates a video poker business as a sole proprietor but is in the process of transferring all of the assets and liabilities related to the business to the Company as soon as the Company's two year residency requirement applicable to owners and operators of video poker machines is satisfied on August 24, 1997, which residency requirement is imposed by Section 12-21-2804(D) of the South Carolina Code; and WHEREAS, the Shareholder owns all of the issued and outstanding shares of capital stock of the Company (all of such issued and outstanding shares of capital stock being referred to herein as the "Shares"); and WHEREAS, the Boards of Directors of each of the Company, the Buyer and the Sub have determined that a business combination between the parties is in the best interests of their respective companies and stockholders and accordingly have agreed to effect the Merger (hereinafter defined) upon the terms and conditions set forth herein; and 5 WHEREAS, it is intended that for federal income tax purposes the Merger shall qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); NOW, THEREFORE, in consideration of the recitals and of the mutual covenants, conditions and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto DO HEREBY AGREE as follows: ARTICLE I DEFINITIONS When used in this Agreement, the following terms shall have the meanings ascribed to them below: 1.1 ABG Common Stock "ABG Common Stock" shall have the meaning ascribed to it in Section 2.7. 1.2 Agreement. "Agreement" shall mean this Agreement and Plan of Reorganization, together with the Exhibits and Schedules incorporated herein by reference, as the same may be amended from time to time in accordance with the terms hereof. 1.3 Assets. "Assets" shall mean all of the equipment, machinery, real property, fixtures, leasehold interests, inventory, prepaid expenses, all of the Company's rights under the Contracts and Leases, and all other tangible and intangible assets of every kind which are currently owned by the Shareholder for use in the Business, and will be owned by the Company as of Closing Date. 1.4 Business. "Business" shall mean the operations of the Company as of the date of Closing, which shall include the ownership and operation of all of Shareholder's video poker games 2 6 at various locations in Aiken, Beaufort, Edgefield and Richland Counties in South Carolina, which locations are identified on Schedule 1.4 hereto. 1.5 Buyer. "Buyer" shall mean American Bingo & Gaming Corp., a corporation organized and existing under the laws of the State of Delaware. 1.6 Buyer's and Sub's Closing Certificate. "Buyer's and Sub's Closing Certificate" shall mean the certificate of Buyer and the Sub in the form of Exhibit 1.6 hereto. 1.7 Closing. "Closing" shall mean the conference held at 10:00 am., local time, on the Closing Date, at Buyer's offices, or such other time and place as the parties hereto may mutually agree. All transactions occurring at the Closing shall be deemed to have occurred simultaneously, and no one transaction shall be deemed to be complete until all transactions required to be completed at the Closing are completed. 1.8 Closing Date. "Closing Date" shall mean August 25, 1997, or such other date as the parties hereto may mutually agree, on which date the Articles of Merger shall be filed with the South Carolina Secretary of State and become effective. 1.9 Code. "Code" shall mean the Internal Revenue Code of 1986, as amended. 1.10 Company's and Shareholder's Closing Certificate. "Company's and Shareholder's Closing Certificate" shall mean the certificate of the Company and the Shareholder in the form of Exhibit 1.10 hereto. 1.11 Contracts. "Contracts" shall mean all contracts, agreements, mortgages, trust deeds, indentures, notes, licenses, franchises, obligations or other commitments, arrangements and understandings with a term of more than one year or for an amount exceeding $1,000 to which the 3 7 Company is a party or by which it is bound or to which the Shareholder is a party in connection with the Business, as described in Schedule 1.11 hereto. 1.12 Fixtures and Equipment. "Fixtures and Equipment" shall mean any and all of the furniture, fixtures, furnishings, leasehold improvements, supplies, vehicles, parts, tools, machinery, equipment and other items of tangible personal property which will be owned or leased by the Company as of the Closing Date. 1.13 Indemnified Party. "Indemnified Party" shall have the meaning ascribed to it in Section 10.2 hereof 1.14 Indemnifying Party. "Indemnifying Party" shall have the meaning ascribed to it in Section 10.2 hereof 1.15 Law. "Law" shall mean any federal, state, local or other law or governmental agency requirement of any kind, and the rules, regulations, ordinances, permits, licenses and orders promulgated thereunder. 1.16 Leases. "Leases" shall mean all leases of real and personal property to which the Company is a party or to which the Shareholder is a party in connection with the Business, as described in Schedule 1.16. 1.17 Lien. "Lien" shall mean any mortgage, pledge, lien, security interest, claim, encumbrance, charge, option, equity, right, proxy, voting or other agreement which in any way limits or restricts any right of ownership of the Assets. 1.18 "Merger" shall have the meaning ascribed to it in Section 2.1 hereof. 1.19 Merger Consideration. "Merger Consideration" shall have the meaning ascribed to it in Section 2.7 hereof. 4 8 1.20 NASDAQ. "NASDAQ" shall mean the Nation Association of Securities Dealers Automated Quotation Stock Market. 1.21 Permits. "Permits" shall mean all licenses, permits and other governmental authorizations and pending applications therefore necessary for the Company to conduct the Business, as described on Schedule 1.21 hereto. 1.22 Person. "Person" shall mean any government, natural person, corporation, partnership or other legal entity. 1.23 Proprietorship. "Proprietorship" shall mean the Shareholder's sole proprietorship as of the date of this Agreement through which Shareholder owns the Assets, and the Permits, and operates the Business, all of which will be transferred by Shareholder to the Company prior to Closing. 1.24 Real Property. "Real Property" shall mean all real property owned or leased by the Company as of the Closing Date, including all appurtenant rights, claims and interests therein, as described on Schedule 1.24 hereto. 1.25 Registered Shares. "Registered Shares" shall have the meaning ascribed to it in Section 6.7 hereof. 1.26 Registration Statement. "Registration Statement" shall have the meaning ascribed to it in Section 6.7 hereof. 1.27 SEC. "SEC" shall mean the United States Securities and Exchange Commission. 1.28 Shareholder. "Shareholder" shall mean Michael W. Mims. 1.29 Shares. "Shares" shall have the meaning set forth in Section 4.2. 5 9 1.30 Surviving Corporation. "Surviving Corporation" shall have the meaning ascribed to it in Section 2.1 hereof. 1.31. Unregistered Shares. "Unregistered Shares" shall have the meaning ascribed to it in Section 6.10 hereof ARTICLE II THE MERGER 2.1 Merger of Sub into the Company. On the Closing Date, the Sub shall be merged with and into the Company in accordance with this Agreement and the separate corporate existence of the Sub shall thereupon cease (the "Merger"). The Merger shall be based on the respective representations, warranties and agreements of the parties hereto, and shall be subject to the terms and conditions herein stated. The Merger is intended to be a "tax-free reorganization" pursuant to Section 368(a)(2)(E) of the Code and the parties hereto shall not report the transaction in a manner inconsistent therewith or otherwise take any action that would prevent the Merger from qualifying as such, provided, however, that the actual tax effect of the transactions contemplated by this Agreement is not a condition precedent to the closing of the transactions contemplated hereby and no party hereto makes or has made any representation, warranty or covenant to any other party hereto as to such qualification. The Company shall be the surviving corporation in the Merger (in such capacity, hereinafter referred to as the "Surviving Corporation") and shall continue to be governed by the laws of the State of South Carolina and the separate corporate existence of Surviving Corporation with all its rights, privileges, powers, immunities, purposes and franchises shall continue unaffected by the Merger, except as set forth herein. The Merger shall have the effects specified in the South Carolina Business Corporation Act of 1988, as amended. 6 10 2.2 Merger Certificates. If all conditions to the Merger set forth herein have been fulfilled or waived in accordance herewith and this Agreement shall not have been terminated pursuant to the terms hereof, the parties hereto shall cause to be properly executed and filed with the South Carolina Secretary of State on the Closing Date Articles of Merger meeting the requirements of the South Carolina Business Corporation Act of 1988, as amended. The Merger shall become effective on the Closing Date upon filing of the Articles of Merger with the South Carolina Secretary of State. 2.3 Articles of Incorporation of Surviving Corporation. At the Closing Date, the Articles of Incorporation of the Company shall be the Articles of Incorporation of the Surviving Corporation. 2.4 Bylaws of the Surviving Corporation. The Bylaws of the Sub on the Closing Date shall be the Bylaws of the Surviving Corporation, unless and until duly amended in accordance with their terms. 2.5 Directors of the Surviving Corporation. The persons who are directors of the Sub immediately prior to the Closing Date shall, from and after the Closing Date, be the directors of the Surviving Corporation until their successors have been duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Surviving Corporation's Articles of Incorporation and Bylaws. 2.6 Officers of the Surviving Corporation. The persons who are officers of the Sub immediately prior to the Closing Date shall from and after the Closing Date, be the officers of the Surviving Corporation and shall hold their same respective office(s) until their earlier death, resignation or removal. 7 11 2.7 Conversion of the Shares. The manner of converting the Shares in the Merger shall be as follows: (a) As a result of the Merger and without any action on the part of the holder thereof, the Shares shall cease to be outstanding and shall be cancelled and retired and shall cease to exist, and the Shareholder shall thereafter cease to have any rights with respect to the Shares, except the right to receive eight hundred twenty-seven thousand, six hundred eighty (827,680) shares of Buyer's common stock (the "ABG Common Stock") (the "Merger Consideration"). (b) On the Closing Date, each share of the Sub's common stock issued and outstanding as of the Closing Date shall be surrendered in exchange for a share of validly issued, fully paid and nonassessable share of common stock of the Surviving Corporation. 2.8 Exchange of Certificates Representing the Shares. (a) On the Closing Date, (i) the Shareholder, as the holder of all outstanding certificates representing the Shares, shall, upon surrender of such certificates, be entitled to receive the Merger Consideration and (ii) until the certificates representing the Shares have been surrendered by the Shareholder and replaced by certificates representing the Surviving Corporation common stock, the certificates for the Shares shall, for all purposes, be deemed to evidence ownership of the Surviving Corporation common stock. (b) The Shareholder shall deliver to the Sub on the Closing Date the certificates representing the Shares owned by him, duly endorsed in blank by the Shareholder, or accompanied by blank stock powers, and with all necessary transfer tax and other revenue stamps (if any), acquired at the Shareholder's expense. The Shareholder agrees to cure any deficiencies with respect to the endorsement of the certificates or other documents of conveyance with respect to the Shares or with 8 12 respect to the stock powers accompanying the Shares. Simultaneous with such delivery on the Closing Date, the Shareholder shall receive in exchange therefor a certificate or certificates representing the ABG Common Stock. 2.9 Voting Agreement. The ABG Common Stock owned by the Shareholder after Closing and the shares of Common Stock of Buyer held by Greg Wilson, President and Chief Executive Officer of Buyer, shall be subject to the terms of the Voting Agreement, in the form of Exhibit 2.9 hereto, by and between the Shareholder and Greg Wilson. 2.10 Absence of Schedules. The parties hereto recognize and agree that the Schedules to this Agreement were not available as of the date of execution of this Agreement. Accordingly, the parties hereto hereby waive any breach of any representation, warranty, condition or provision of this Agreement which may technically be deemed to exist due to the failure of any party hereto to properly disclose any information which otherwise would have, or should have, been disclosed on a Schedule attached to this Agreement on the date it is signed. The parties hereto agree that all such Schedules shall be prepared only as of the Closing Date and that accordingly any such representation, warranty, condition or provision of this Agreement which is impacted by the absence of such Schedule shall be deemed to speak, and shall be relevant, only as of the Closing Date and thereafter. ARTICLE III FEASIBILITY PERIOD, ACCESS AND INDEMNITY 3.1 Feasibility Period. From the date of execution of this Agreement by Buyer and the Shareholder until the earlier of the Closing or twenty (20) days hereafter (the "Feasibility Period"), Buyer shall have the right of review, investigation and inspection of the Assets and the Business to determine whether or not Buyer desires to proceed with the Closing. During the Feasibility Period 9 13 the Buyer may conduct inspections and economic and feasibility studies of the Assets and the Business to determine that they are suitable, in Buyer's sole opinion, for Buyer's purposes and conduct all such inspections and studies as Buyer deems reasonable of the Assets and the Business. Seller agrees to cooperate fully with Buyer's efforts and shall execute such forms and requests as may be required to obtain the information deemed necessary by Buyer. No study, investigation or inspection by Buyer or Buyer's representatives shall be deemed to have in any way diminished or waived the representations, warranties or covenants of Seller set forth in this Agreement. 3.2 Access and Indemnity. Buyer and Buyer's agents shall have the right of access to the Business, Assets and Real Estate during the Feasibility Period for the purpose of conducting such studies, investigations and inspections. Buyer shall repair any damage or injury to property resulting from Buyer's investigation and inspections. Buyer shall indemnify and hold harmless Seller on account of any claims, causes of action, damages, costs and expenses (including attorney's fees) arising out of or relating to the acts of Buyer, its agents and employees under the provisions of this Section. This indemnity shall survive the termination of this Contract. 3.3 Termination of Contract. If Buyer determines, in Buyer's sole judgment and discretion, that the Assets are not suitable for Buyer's intended purposes, Buyer shall give Seller written notice of such fact on or before the end of the Feasibility Period. Upon receipt of such written notice, both parties shall be released from all further obligations under this Contract. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER AND THE COMPANY The Shareholder and the Company make the following representations and warranties to the Buyer. The Buyer has inspected the Assets and performed all necessary due diligence and is acquiring 10 14 the Company as a result of such inspection and due diligence and not in reliance upon any representation or warranty with respect thereto made by the Shareholder other than those specifically set forth in this Agreement. 4.1 Organization of the Company. The Company is a corporation duly organized and validly existing and in good standing under the laws of the State of South Carolina. The Company has the requisite corporate power and authority to enter into this Agreement and to perform its obligations hereunder. The Company has the requisite corporate power and authority to carry on the Business and to own, operate and hold under lease or otherwise the Assets. Schedule 4.1 shall consist of true, complete and correct copies of the Company's Articles of Incorporation, Bylaws and all amendments thereto, as presently in effect, all corporate minutes of board of directors and shareholder meetings and actions by written consent by them since the incorporation of the Company, and the stock ledger and minute book of the Company. 4.2 Capitalization; Ownership. The total authorized capital stock of the Company consists of 100,000 shares of common stock, no par value. As of the date hereof 100 shares of common stock are issued and outstanding (the "Shares"), all of which shares are owned by the Shareholder. The Shares constitute all the issued and outstanding shares of capital stock of the Company. The Shareholder has good and marketable title to the Shares, free and clear of all Liens. The Shares have been validly authorized and issued and are fully paid and non-assessable. Neither the Company nor the Shareholder has received any notice of any adverse claim to the ownership of the Shares. There is no security, option, warrant, right (preemptive or otherwise), call, subscription, agreement, conversion or exchange, commitment or understanding of any nature whatsoever, fixed or contingent, that directly or indirectly (a) calls for the issuance, sale, pledge or other disposition of 11 15 any shares of capital stock of the Company, or (b) obligates the Company to grant, offer or enter into any of the foregoing or (c) relates to the voting or control of such capital stock, securities or rights. Upon receipt by the Shareholder of the Merger Consideration, the Buyer will own one hundred percent (100%) of the issued and outstanding shares of the Company free and clear of all Liens. 4.3 Authorization; Enforceability. The Shareholder and the Company have the requisite individual and corporate power and authority to execute, deliver and perform this Agreement and each of the documents, instruments and agreements contemplated hereby to which either of them is or will be a party, and to perform their obligations hereunder or thereunder. The execution, delivery and performance of this Agreement and each of the other documents, instruments and agreements contemplated hereby and the consummation of the transactions contemplated hereby and thereby have been duly authorized and approved by all necessary corporate action on the part of the Company, and no further approvals on the part of the Company are required. This Agreement has been, and the other documents and instruments required hereby to which the Company will be a party will be, duly executed and delivered by the Company, and when duly executed and delivered by the other parties hereto and thereto (assuming such documents and instruments will be valid and binding obligations of such other parties), will be the valid and binding obligations of the Company, and will be enforceable against the Shareholder and the Company in accordance with their respective terms, subject to the effect of bankruptcy, insolvency, moratorium, or other similar laws affecting the enforcement of creditors' rights generally, and except as the availability of equitable remedies may be limited by general principles of equity. No consent, authorization, approval, order, license, certificate, or permit of or from, or declaration or filing with any federal, state, local or other governmental authority or any court or other tribunal is required by the Shareholder and/or the Company for the execution, delivery and/or performance of this Agreement, other than Articles of Merger which must 12 16 be filed with the South Carolina Secretary of State in connection with the merger contemplated by this Agreement. 4.4 No Conflict or Violation. Neither the execution and delivery of this Agreement and each of the documents, instruments and agreements contemplated hereby by the Company and the Shareholder nor the consummation of the transactions contemplated hereby and thereby will result in (a) a violation of, or a conflict with any provision of the Articles of Incorporation or Bylaws of the Company, (b) a violation by the Company of any judgment, order or decree binding on the Company, (c) to the best of the Shareholder's and the Company's knowledge, a violation by the Company of any Law or the occurrence of any event which with notice, lapse of time, or both, would result in the violation of any Law, judgment, order or decree binding on the Company, or (d) a breach of, default under, or conflict with, any material term or provision of, or permission to modify, terminate, or accelerate, any Contract, Lease or other agreement or instrument, or obligation thereunder, applicable to the Company, the Business or any of the Assets, or an event which with notice, lapse of time, or both, would result in any such breach, default, or conflict. 4.5 Permits and Approval. Except as set forth in Schedule 4.5 hereto, no Permit from or notice to, or filing, registration or qualification with, any governmental, administrative or judicial authority is necessary to enter into this Agreement, any instrument, document or other agreement contemplated hereby, and to carry out the transactions contemplated hereby and thereby; provided, however, neither the Company nor the Shareholder makes any representation or warranty as to any requirement of the Buyer with respect to any of the matters discussed in this Section 4.5. 13 17 4.6 Consents. Except as set forth on Schedule 4.6, no consent of any party to any Contract, Lease, or other agreement or instrument applicable to the Company, the Business or any of the Assets, is required for the execution, delivery and/or performance of this Agreement. 4.7 Financial Condition. Schedule 4.7 shall consist of true and complete copies of (i) the compiled balance sheets of the Proprietorship as of December 31, 1996, and June 30, 1997, and the related compiled statement of income and cash flows of the Proprietorship for the year ended December 31, 1996, and the six months ended June 30, 1997, accompanied by the compilation report thereon of the accountants (collectively the "Financial Statements"). The Financial Statements (i) were prepared in accordance with the books of account and other financial records of the Proprietorship by accountants retained by Shareholder, (ii) present fairly the financial condition, results of operations and cash flows of the Proprietorship as of the dates thereof and for the periods covered thereby, (iii) have been prepared in accordance with general accepted accounting principles ("GAAP") applied on a basis consistent with the past practices of the Proprietorship, and (iv) include all adjustments (consisting only of normal recurring accruals) that are necessary for a fair presentation of the financial conditions of the Proprietorship, and the results of operations and cash flows of the Proprietorship as of the dates thereof or for the periods covered thereby. 4.8 Lack of Material Changes. Except as set forth in Schedule 4.8, since July 1, 1997: (a) There has not been any change having a material adverse effect on the Business operations, properties (including any intangible properties), condition (financial or otherwise), assets, liabilities, results of operations or prospects of the Business or the Proprietorship. (b) The operations and business of the Proprietorship have been conducted in all respects only in the ordinary course. 14 18 (c) The Shareholder and/or the Proprietorship and/or the Company has not mortgaged, pledged or subjected to lien or other encumbrance any of the Assets. (d) Neither the Proprietorship nor the Company has suffered an extraordinary loss (whether or not covered by insurance) or waived any right of substantial value. (e) Neither the Proprietorship nor the Company has sold or transferred any of its assets having a book value in the aggregate of $5,000 or more or canceled any debts or claims, except in each case, in the ordinary course of business, and except for the transfer of the Assets from the Proprietorship to the Company. (f) The Company has not issued any common stock, preferred stock, capital stock, bonds, warrants, options, rights or any other form of corporate securities, other than the original issuance of 100 shares of common stock of the Shareholder. (g) There is no compensation payable or to become payable by the Company to any of its officers, employees or agents, or any known payment or arrangement made to or with any of such persons, except as described in this Agreement. (h) Neither the Proprietorship nor the Company has made any change in the method of accounting or accounting practice or policy used by them, other than changes required by GAAP. (i) Neither the Proprietorship nor the Company has made any material changes in the customary methods of operations of the Business, including practice and policies relating to purchasing, inventory, marketing, selling or pricing. 15 19 (j) Neither the Proprietorship nor the Company has agreed, whether in writing or otherwise, to engage in any of the acts specified in this Section 4.8, except for those contemplated by this Agreement. (k) There is no fact known to the Company and/or Shareholder which will have a material adverse effect or in the future (as far as the Company or Shareholder can foresee) may have a material adverse effect on the financial condition, results of operations, business, properties, assets, liabilities, or future prospects of the Company which has not been disclosed to Buyer in this Agreement; provided, however, that the Company and Shareholder express no opinion as to political or economic matters of general applicability. (l) The assets and operations of the Proprietorship as disclosed and described in and upon the balance sheet and other financial statements described in Section 4.7 will be transferred and assigned by Shareholder to the Company prior to Closing so that there will be no material difference in the assets, liabilities and operations of the Company as of the day of Closing from the assets, liabilities and operations described in and upon said financial statements. 4.9 Absence of Undisclosed Liabilities. Except as set forth on Schedule 4.9, neither the Proprietorship nor the Company has liabilities or obligations of any nature (whether absolute, accrued, contingent, or otherwise) which individually or in the aggregate, are material, including without limitation liabilities for federal, state, local or foreign taxes, liabilities to customers or suppliers, direct or indirect, claims, losses, damages, deficiencies (including deferred income tax and other net tax deficiencies), costs, expenses, obligations, guarantees, or responsibilities, whether accrued, absolute, or contingent, known or unknown, fixed or unfixed, liquidated or unliquidated, secured or unsecured, (hereinafter collectively referred to as "Liabilities") other than the following: 16 20 (a) Liabilities for which full provision and disclosure have been made on the balance sheet of the Proprietorship as of June 30, 1997, and/or (b) Other liabilities arising since June 30, 1997, and prior to the Closing Date which have been incurred in the ordinary course of business and which are not inconsistent with the representations and warranties of the Company and Shareholder contained in this Agreement or any other provisions of this Agreement. 4.10 Title to Assets. At Closing the Company will be the rightful owner of all the Assets, free and clear of any and all Liens. Schedule 4.10 shall consist of a true and complete list of all legal and personal properties and material Assets (including but not limited to machinery, equipment, inventories, and intangibles owned, leased, used in the business and/or licensed by the Shareholder and/or the Company, all of which will be transferred to the Company prior to Closing), together with a list of all personal property attached to, located on or used in connection with the Business and which will not be owned by the Company as of the date of Closing but which the Company will have the right to use under lease, rental or other agreement, accompanied by true and current photocopies of such agreements. The Assets constitute all of such properties and assets which are necessary to conduct the Business. 4.11 Condition of Fixtures and Equipment. The Fixtures and Equipment are in good operating condition and repair, normal wear and tear excepted, and are adequate for the purposes for which they are being utilized, subject to the continuing need for ordinary, routine maintenance and repairs. 4.12 Leases. Schedule 1.16 contains an accurate and complete list of all Leases. The Leases constitute valid and legally binding obligations of the Company and are enforceable in 17 21 accordance with their terms, subject to the effect of bankruptcy, insolvency, moratorium, or other similar laws affecting the enforcement of creditors' rights generally and except as the availability of equitable remedies may be limited by general principles of equity, and none of the Leases will be affected by, or terminate or lapse by reason of, the transactions contemplated by this Agreement. Neither the Shareholder nor the Company is in default, and neither the Company nor the Shareholder has received notice of any asserted default, under any Lease. 4.13 No Litigation. Except as set forth in Schedule 4.13, there is no litigation, arbitration proceeding, governmental investigation, citation or action of any kind pending, proposed or threatened against the Company or the Shareholder relating to this Agreement, the Assets, the Business or the transactions contemplated herein, and there is no writ, injunction, decree, order or judgment outstanding, nor any lawsuit, claim, proceeding, citation, directive, summons or investigation, pending or threatened, relating to the ownership, use or maintenance of the Assets or the operation of the Business by the Company or the Shareholder. 4.14 Compliance with Law. To the best of the Shareholder's and the Company's knowledge, except as specified in Schedule 4.14, the Company's and the Shareholder's conduct of the Business and ownership and/or use of the Assets do not materially violate or conflict with any Law. The Permits described in Schedule 1.21 (i) constitute all permits, licenses and governmental agency authorizations, registrations and approvals required for the Company to own and/or use the Assets and/or to conduct the Business, (ii) are in full force and effect, and (iii) are being complied with in all material respects. 4.15 Taxes. The Shareholder and the Company have filed all required tax returns and reports, including but not limited to state, local and federal income tax returns, payroll tax reports and 18 22 real and personal property tax reports, and have paid all taxes shown thereby to be due and payable. Copies of all such returns and reports for all open tax years have been delivered or made available to the Buyer prior to the date of this Agreement. The Shareholder and the Company have paid (or have made adequate provision for and will timely pay) all taxes (including additions to taxes, penalties and interest), withholdings and other governmental charges the nonpayment of which could materially adversely affect any of the Assets, the use of the Assets, or the conduct of the Business or could cause the Company to incur a material liability. No taxing authority has asserted any claim for the assessment of any such tax liability, withholding or other governmental charges, nor is any governmental entity presently engaged in an audit of the Shareholder's or the Company's tax returns, nor, to the best of the Shareholder's and the Company's knowledge, about to engage in such an audit. 4.16 Contracts. Schedule 1.11 contains a list of all Contracts and a brief description of the subject matter of each such Contract. Neither the Shareholder nor the Company is in material breach or violation of, or in default under, and there is no valid basis for a claim of material breach or violation of, or default under, any such Contract, and no event has occurred which constitutes or, with the lapse of time or the giving of notice or both, would constitute such a material breach or violation or default by the Company, or any other party thereto. No party to any Contract has given notice of its intention to cancel or terminate any such Contract. None of the rights of the Company under the Contracts will be materially impaired by the delivery, execution and performance of this Agreement. 4.17 ERISA Matters and Employees. The Company does not have, nor does it contribute to, any pension, profit sharing, option, other incentive plan, or any other type of employee benefit plan (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974), 19 23 or any obligation to or customary arrangement with employees for bonuses, incentive compensation, or severance pay. Schedule 4.17 hereto contains a list of the Company's employees with current salary (or rate of pay) and other compensation now paid by the Company to each employee, including a description of any increase scheduled to be effective after the date of this Agreement. 4.18 Insurance. Schedule 4.18 hereto contains a complete and correct list of all insurance policies, of any kind, held by the Company. Each such policy is valid and enforceable; all premiums and other payments due from the Company on account of any such policy have been paid and there is no act or failure to act which has or might cause any such policy to be canceled or terminated. 4.19 No Brokers' or Finders' Fees. Neither the Company nor the Shareholder is committed to any liability for any brokers' or finders' fees or any similar fees in connection with the transactions contemplated by this Agreement. Neither the Company nor the Shareholder has had any dealings, negotiations or communications with any broker or other intermediary in connection with the transactions contemplated by this Agreement. 4.20 Liens. Except as set forth on Schedule 4.20, at Closing the Company will have good and marketable title to all of the Assets and the Assets will not be subject to any liens. 4.21 Questionable Payments. Neither the Company, any director, officer, agent, employee, nor other person associated with or acting on behalf of such entities or individuals has, directly or indirectly: (i) used any corporate funds for unlawful contributions, gifts, entertainment, or other unlawful payment to foreign or domestic governmental officials or employees or to foreign or domestic political parties or campaigns from corporate funds; (ii) violated any provision of the Foreign Corrupt Practices Act of 1977; (iii) established or maintained any unlawful or unrecorded 20 24 fund of corporate monies or other assets; (iv) made any false or fictitious entry on the books or records of the Company; (v) made any bribe, rebate, payoff influence payment, kickback, or other unlawful payment; (vi) given any favor or gift which is not deductible for federal income tax purposes; and/or (viii) made any bribe, kickback, or other payment of a similar or comparable nature, whether lawful or not, to any person or entity, private or public, regardless of form, whether in money, property, or services, to obtain favorable treatment in securing business or to obtain special concessions, or to pay for favorable treatment for business secured or for special concessions already obtained. 4.22 Bank Accounts. Schedule 4.22 shall list the names and address of every bank and other financial institution in which the Company maintains an account (whether checking, savings or otherwise), lock box or safe deposit box, and the account numbers and names of persons having signing authority or other access thereof. 4.23 Quarterly Reports. Schedule 4.23 shall consist of copies of the quarterly reports of the gaming operations of the Business for the most recent six month period which have been filed with the South Carolina Department of Revenue. 4.24 Lack of Restrictions. Except as set forth on Schedule 4.24 hereto, no real property owned, leased or used by the Proprietorship or the Company in connection with the Business lies in an area which is, or to the knowledge of the Company or Shareholder, will be, subject to zoning, use or building code restrictions which would prohibit, and the Company and the Shareholder are not aware of any facts relating to the acts of another person or entity or its ownership, leasing, licensing or use of any real or personal property which would prevent, the continued effective ownership, leasing and use of such real property in the Business. 21 25 ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER The Shareholder, with respect to himself and his obligations hereunder, hereby represents and warrants to the Buyer: 5.1 Ownership of Shares; Title. He is the owner of record and beneficially of the Shares he is selling hereunder. He has good and marketable title to such Shares, free and clear of all Liens. He has received no notice of any adverse claim to the ownership of the Shares. There is no security, option, warrant, right, call, subscription, agreement, conversion or exchange, commitment or understanding of any nature whatsoever, fixed or contingent, that directly or indirectly affects the Shares. 5.2 Authorization; Enforceability. He has the power and authority and has full legal capacity and is competent to execute, deliver and perform his obligations under this Agreement and each of the other documents, instruments and agreements contemplated hereby to which he is or will be a party. This Agreement has been, and the other documents and instruments required hereby to which he will be a party will be, duly executed and delivered by him, and when duly executed and delivered by the other parties hereto and thereto (assuming such documents and instruments will be valid and binding obligations of such other parties) will be his valid and binding obligations, enforceable against him in accordance with their respective terms, subject to the effect of bankruptcy, insolvency, moratorium, or other similar laws affecting the enforcement of creditors' rights generally and except as the availability of equitable remedies may be limited by general principles of equity. 5.3 No Conflict or Violation. Neither the execution and delivery of this Agreement by him nor the consummation of the transactions contemplated hereby will result in (a) a violation by 22 26 him of any Law, judgment, order or decree binding upon him or any event which with notice, lapse of time, or both, would result in any such violation, (b) a breach of, default under, or conflict with, any material term or provision of, or permission to modify, terminate or accelerate, any Contract, Lease or other agreement or instrument, or obligation thereunder, to which the Company is a party and which is applicable to him or any of his assets, or an event which with notice, lapse of time, or both, would result in any such breach or default, or (c) the creation of any lien upon, or result in any person obtaining any right to acquire any of his properties, assets or rights. 5.4 Ownership and Management of Exempted Entities. Attached as Schedule 5.4 hereto is a complete and accurate description of the following information with respect to the businesses exempted from Shareholder's non-competition agreement pursuant to Section 11.4 of this Agreement: (i) a complete description of the identities and ownership interests of each equity owner in each such entity (as shareholder, partner, or otherwise), to the best of Shareholder's knowledge; (ii) the identity of each officer, director and other person participating in management of such business, to the best of Shareholder's knowledge; and (iii) a complete description of the Employee's current and past management activities with respect to each such business. Buyer will keep and maintain the confidentiality of the information disclosed on Schedule 5.4 and will not disclose such information to any third party except: (a) if ordered to do so by any court or regulatory authority; or (b) as necessary in litigation for the enforcement or defense of its rights under this Agreement and the other related agreements referred to herein. ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE SUB The Buyer and the Sub hereby represent and warrant to the Shareholder as follows: 23 27 6.1 Organization of Buyer. The Buyer and the Sub are corporations duly organized and validly existing and in good standing under the laws of the State of Delaware and the State of South Carolina, respectively, and have the requisite corporate power and authority to enter into this Agreement and perform their obligations hereunder. 6.2 Authorization; Enforceability. Each of the Buyer and the Sub have the requisite corporate power and authority to execute, deliver and perform this Agreement and each of the documents, instruments and agreements contemplated hereby to which the Buyer and the Sub are or will be a party, and to perform their obligations hereunder or thereunder. The execution, delivery and performance of this Agreement and each of the other documents, instruments and agreements contemplated hereby and the consummation of the transactions contemplated hereby and thereby have been duly authorized and approved by all necessary corporate action on the part of the Buyer and the Sub, and no further approvals on the part of the Buyer and the Sub are required. This Agreement has been, and the other documents and instruments required hereby to which the Buyer and the Sub will be a party will be, duly executed and delivered by the Buyer and the Sub, and when duly executed and delivered by the other parties hereto and thereto (assuming such documents and instruments will be valid and binding obligations of such other parties) will be the valid and binding obligations of the Buyer and the Sub, enforceable against the Buyer and the Sub in accordance with their respective terms, subject to the effect of bankruptcy, insolvency, moratorium, or other similar laws affecting the enforcement of creditors' rights generally and except as the availability of equitable remedies may be limited by general principles of equity. 6.3 No Conflict or Violation. Neither the execution and delivery of this Agreement and each of the documents, instruments and agreements contemplated hereby by the Buyer or the Sub nor 24 28 the consummation of the transactions contemplated hereby and thereby will result in (a) a violation of, or a conflict with, any provision of the Articles of Incorporation or Bylaws of the Buyer or the Sub, (b) a violation by the Buyer or the Sub of any judgment order or decree binding on the Buyer or the Sub, (c) to the best of the Buyer's and the Sub's knowledge, a violation by the Buyer or the Sub of any Law or the occurrence of any event which with notice, lapse of time, or both, would result in the violation of any Law, judgment, order or decree binding on the Buyer or the Sub, or (d) a breach of, default under, or conflict with, any material term or provision of, or permission to modify, terminate, or accelerate, any contract, lease, mortgage, deed of trust, indenture, permit, license, franchise or commitment or other agreement or instrument, or obligation thereunder, applicable to the Buyer or the Sub, the business or any of their assets, or an event which with notice, lapse of time, or both, would result in any such breach, default, or conflict. 6.4 No Litigation or Consents. Except as set forth on Schedule 6.4A, there is no litigation, arbitration proceeding, governmental investigation, citation or action of any kind pending, proposed or threatened against the Buyer or the Sub with respect to any transaction in the Buyer's securities, the transactions contemplated by this Agreement, or the business or assets of the Buyer or the Sub. Except as set forth on Schedule 6.4B, no consent of any other Person and no consent, Permit, approval or authorization of, exemption by, notice or report to, or registration, filing or declaration with, any governmental authority is required by the Buyer or the Sub in connection with the execution, delivery, performance, validity or enforceability of this Agreement and the transactions contemplated herein. 6.5 No Brokers' or Finders' Fees. Neither Buyer nor the Sub is committed to any liability for any brokers' or finders' fees or any similar fees in connection with the transactions 25 29 contemplated by this Agreement. The Buyer and the Sub have not had any dealings, negotiations or communications with any broker or other intermediary in connection with the transactions contemplated by this Agreement. 6.6 ABG Common Stock. The issuance and delivery by the Buyer of shares of the ABG Common Stock in connection with the transactions contemplated by this Agreement will be, as of the Closing Date, duly authorized by all necessary corporate action on the part of the Buyer. The shares of ABG Common Stock to be issued pursuant to this Agreement, when issued in accordance with the terms of this Agreement, will be validly issued, fully paid and nonassessable. 6.7 Registered Stock. One hundred thousand (100,000) shares of the ABG Common Stock (the "Registered Shares") to be issued in connection with the transactions contemplated by this Agreement have been registered with the SEC on a registration statement on Form S-3 (the "Registration Statement"). The Buyer is eligible to use Form S-3, Form S-3 is the proper registration statement to be used for this transaction, and Form S-3 is being used properly in connection with this transaction. The Registration Statement has been declared effective under the Securities Act of 1933, as amended, and is not subject to a stop order or threatened stop order. All necessary qualifications or exemptions under applicable state securities laws related to the issuance of the Registered Shares by Buyer to Shareholder in connection with the transactions contemplated by this Agreement, have been obtained and are in full force and effect. The Registered Shares to be issued pursuant to this Agreement will be freely transferrable under federal securities laws by the Shareholder. 6.8 Compliance with Securities Laws. The Buyer has filed in a timely manner all reports and other documents required to be filed by it with the SEC. All of these reports and 26 30 documents, as of their respective dates, complied in all material respects with all applicable statutes, rules and regulations enforced or promulgated by the SEC. As of their respective dates of filing none of the SEC reports, including, but not limited to, the Annual Report on Form 10-KSB for the fiscal year ended December 31, 1996, contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein not misleading. 6.9 Rule 144. The Buyer recognizes that the Shareholder may be deemed to be an "affiliate" of the Buyer, as that term is defined in Rule 144 of the Securities Act of 1933, and that as an "affiliate" the Shareholder would be subject to restrictions and limitations imposed by Rule 144 in the event the Shareholder decided to sell any of the ABG Common Stock. Furthermore, even if the Shareholder is not deemed to be an "affiliate" of the Buyer under Rule 144, the Buyer recognizes that the Shareholder will be subject to restrictions and limitations imposed by Rule 144 in the event the Shareholder decides to sell any of the Unregistered Shares. Accordingly, Buyer agrees to timely file all reports and other documents required to be filed by it with the SEC and to take such other action as is required from time to time to ensure that the Shareholder is able to sell the shares of ABG Common Stock issued to him in compliance with the provisions of Rule 144 or Rule 145 (as in effect at the time of any proposed sale), if applicable. 6.10 Restrictions on Disposition of Shares. Seven hundred twenty- seven thousand six hundred eighty (727,680) shares of the ABG Common Stock (the "Unregistered Shares") to be issued to the Shareholder in connection with the transactions contemplated by this Agreement, will not have been registered under the Securities Act of 1933, and may be resold by the Shareholder only after registration under the Securities Act of 1933, or under an available exemption, or pursuant to Rule 144. The Shareholder agrees that the Unregistered Shares will not be disposed of except (i) 27 31 pursuant to an effective registration statement under the Securities Act of 1933, or (ii) in any other transaction which is exempt from registration under the Securities Act of 1933 or the rules and regulations of the SEC promulgated thereunder. The Shareholder further agrees (i) that no such sale, conveyance or disposition of the Unregistered Shares shall occur for a period of twelve (12) months after Closing, (ii) that no more than one-third (1/3) of the Unregistered Shares shall be sold during the period between the first anniversary and the second anniversary of Closing, (iii) that no more than one-third (1/3) of the Unregistered Shares shall be sold during the period between the second anniversary and the third anniversary of Closing, and (iv) that no more than one-third (1/3) of the Unregistered Shares shall be sold during the period between the third anniversary and the fourth anniversary of Closing; provided, however, this annual limitation on sales of the Unregistered Shares shall not apply in the event (i) the Buyer is the subject of an acquisition pursuant to any merger, stock exchange, stock purchase, consolidation, tender offer or other type of similar transaction, or (ii) the Buyer extends an offer to its shareholders to repurchase shares of its common stock. In order to effectuate the covenants of this subsection, an appropriate legend will be placed upon each of the certificates of stock at the time of distribution of such Unregistered Shares pursuant to this Agreement and stop transfer instructions shall be placed with the transfer agent for such shares. Such legend shall be removed from the respective certificates as appropriate upon reaching the respective anniversary date which terminates the restriction. 6.11 Evidence of Compliance with Private Offering Exception. The Shareholder will agree to provide such reasonable evidence as counsel for Buyer may request in order to evidence the private offering nature of the distribution of the Unregistered Shares received pursuant to this Agreement. 28 32 ARTICLE VII CERTAIN MATTERS PENDING THE CLOSING The Shareholder, the Company, the Buyer and the Sub each covenants with the others as follows for the period from the date hereof through the Closing Date: 7.1 Maintenance of the Company and the Business Prior to Closing. The Shareholder shall use his best efforts to continue to carry on the Business in the ordinary course and in accordance with past practice, and will not take any action inconsistent therewith or with the consummation of the Closing. Without limiting the generality of the foregoing, the Shareholder shall, absent the written consent of the Buyer, which consent shall not be unreasonably withheld, (a) maintain the Assets in substantially their current state of repair, excepting normal wear and tear; (b) use all reasonable efforts to preserve intact the relationships with all Persons having business dealings with the Shareholder related to the Business; (c) not enter into or agree to enter into any material purchase commitment for Fixtures and Equipment or supplies, except in the ordinary course of business; (d) not authorize, declare, pay or effect any dividend in respect of the Company's capital stock; (e) not enter into or agree to enter into any material contract without amending Schedule 1.11 and providing the Buyer with a copy of the revised Schedule 1.11 within seven days after entering into such a contract; (f) not amend or agree to amend the Company's Articles of Incorporation or Bylaws or merge with or consolidate into any other entity; (g) not sell, pledge or acquire or agree to sell, pledge or acquire any shares of capital stock or other securities of the Company; (h) not grant or enter into any options, warrants, calls or commitments of any kind with respect to the Company's capital stock; (i) not make or agree to make any single capital expenditure or commitment in excess of $20,000 nor aggregate capital expenditure or commitment in excess of $50,000; and 6) not borrow or agree to 29 33 borrow any funds or incur or agree to incur, whether directly or by way of guarantee or otherwise, any indebtedness, obligation or liability or enter into any other material transaction except in the ordinary course of business. 7.2 Cooperation. The Company, the Shareholder, the Buyer and the Sub shall use their best efforts to cause the transactions contemplated by this Agreement to be consummated. The Company and the Shareholder shall use their best efforts to obtain all consents and authorizations of third parties and to make all filings with and give all notices to third parties which may be necessary or reasonably required in order to effect the transactions contemplated hereby. 7.3 Compliance with Law. The Company and the Shareholder shall continue to conduct the Business and to use the Assets in compliance with all applicable Laws, and all orders of any court or of any federal, state, municipal or other governmental department, noncompliance with which could cause a material adverse change in the Assets or the Business. 7.4 Registration Statement. The Buyer shall take all other required action to ensure that on the Closing Date the Registered Shares issued in connection with the transactions contemplated by this Agreement will be freely transferrable by the Shareholder. 7.5 Listing Application. The Buyer shall prepare and submit to NASDAQ a listing application covering the ABG Common Stock and shall use its best efforts to obtain approval for the listing of the ABG Common Stock upon official notice of issuance. 7.6 Articles of Merger and Plan of Merger. Prior to the Closing Date, the Shareholder and the Buyer shall prepare Articles of Merger and Plan of Merger reflecting the terms of the Merger, which Articles of Merger will be filed with the Secretary of State of South Carolina on the Closing Date to effectuate the Merger. 30 34 ARTICLE VIII CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER AND THE SUB Each and every obligation of the Buyer and the Sub to be performed on the Closing Date shall be subject to the satisfaction prior to or at the Closing of the following express conditions precedent: 8.1 Compliance with Agreement. The Company and the Shareholder shall have performed and complied in all material respects with all of their respective obligations under this Agreement that are to be performed or complied with by them prior to or on the Closing Date. Without limiting the foregoing, by the Closing Date the Shareholder shall have transferred good and marketable title to all the Assets to the Company. 8.2 Proceedings and Instruments Satisfactory. All proceedings, corporate or other, to be taken by the Company and the Shareholder in connection with the transactions contemplated by this Agreement, and all documents incident thereto, shall be reasonably satisfactory in form and substance to the Buyer, the Sub and their counsel, and the Company and the Shareholder shall have made available to the Buyer for examination the originals or true and correct copies of all documents that the Buyer may reasonably request in connection with the transactions contemplated by this Agreement 8.3 Employment Agreement. The Buyer shall have received from the Shareholder an employment agreement in substantially the form set forth in Exhibit 8.3. 8.4 No Adverse Change. There shall have been no material adverse change in the Business, Assets, operations or condition (financial or otherwise) of the Proprietorship or the Company between the date hereof and the Closing Date. 31 35 8.5 No Litigation. No investigation, suit, charge, action or other proceeding shall be threatened or pending before any court or governmental agency that seeks restraint, prohibition, damages or other relief in connection with this Agreement or the consummation of the transactions contemplated hereby, or which seeks to obtain, establish or impose any interest in or lien or encumbrance upon any of the Assets, or which, if successful, would materially impair operation of the Business or the financial condition of the Proprietorship or the Company. 8.6 Representations and Warranties. All Schedules referred to in this Agreement which contain or should contain information concerning the Shareholder or the Company shall have been fully and accurately completed and provided to the Buyer for attachment to this Agreement; and the representations and warranties made by the Company and the Shareholder in this Agreement and the Schedules attached hereto shall be true and correct in all material respects as of the Closing Date with the same force and effect as though such representations and warranties had been made on the Closing Date. 8.7 Consents. Except as set forth in Schedule 4.6, all consents, approvals and waivers from third parties and governmental authorities and other parties necessary (a) to permit the Shareholder to transfer the Shares to the Buyer, free and clear of all Liens; (b) to consummate the transactions contemplated hereby; and (c) to allow the Company to operate the Business after the Closing Date shall have been obtained by the Buyer. 8.8 Deliveries at Closing. The Company and the Shareholder shall have delivered, or cause to be delivered, to the Buyer the following documents, each properly executed and dated as of the Closing Date: (a) the Company's and the Shareholder's Closing Certificate; (b) certificates 32 36 evidencing the Shares, duly endorsed in blank for transfer or accompanied by duly executed stock powers; and (a) such other documents as the Buyer may reasonably request. 8.9 No Termination Under Article III. Buyer shall not have given timely notice of termination of this Agreement pursuant to Article III hereof. ARTICLE IX CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SHAREHOLDER AND THE COMPANY Each and every obligation of the Shareholder and the Company to be performed on the Closing Date shall be subject to the satisfaction prior to or at the Closing of the following express conditions precedent: 9.1 Compliance with Agreement. The Buyer and the Sub shall have performed and complied in all material respects with all of its obligations under this Agreement that are to be performed or complied with by it prior to or on the Closing Date. 9.2 Proceedings and Instruments Satisfactory. All proceedings, corporate or other, to be taken by the Buyer and the Sub in connection with the transactions contemplated by this Agreement, and all documents incident thereto, shall be reasonably satisfactory in form and substance to the Shareholder, the Company and their counsel and the Buyer shall have made available to the Shareholder for examination the originals or true and correct copies of all documents that the Shareholder may reasonably request in connection with the transactions contemplated by this Agreement. 9.3 Employment Agreement. The Buyer shall have executed the Shareholder's employment agreement in substantially the form set forth in Exhibit 8.3. 33 37 9.4 No Adverse Change. There shall have been no material adverse change in the operation or condition (financial or otherwise) of the Buyer or in the value of the ABG Common Stock between the date hereof and the Closing Date. 9.5 No Litigation. No investigation, suit, action or other proceeding shall be threatened or pending before any court or governmental agency that seeks restraint, prohibition, damages or other relief in connection with this Agreement or the consummation of the transactions contemplated hereby. 9.6 Representations and Warranties. All Schedules referred to in this Agreement which contain or should contain information concerning the Buyer or the Sub shall have been fully and accurately completed and provided to the Shareholder and the Company for attachment to this Agreement; and the representations and warranties made by the Buyer and the Sub in this Agreement and the Schedules attached hereto shall be true and correct in all material respects as of the Closing Date with the same force and effect as though such representations and warranties had been made on the Closing Date. 9.7 Consents. All consents, approvals and waivers from governmental authorities and other parties necessary to permit the Shareholder to transfer the Shares to the Buyer as contemplated hereby shall have been obtained by the Buyer. 9.8 Registration Statement. The Registration Statement for the Registered Shares shall be effective and not subject to a stop order or threatened stop order. All necessary qualifications or exemptions under applicable state securities laws shall have been obtained and be in full force and effect. 9.9 Approval for Listing. Buyer shall have filed the necessary documentation to list the ABG Common Stock to be issued pursuant to this Agreement on NASDAQ. 34 38 9.10 Deliveries at Closing. The Buyer shall have delivered to the Shareholder the following documents, each properly executed and dated as of the Closing Date: (a) the Merger Consideration in the form of ABG Common Stock; (b) the Buyer's and Sub's Closing Certificate; (c) certified corporate resolutions of the board of directors of the Buyer and the Sub approving the transactions contemplated by this Agreement; and (d) such other documents as the Shareholder may reasonably request. ARTICLE X SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION 10.1 Survival of Representations and Warranties. All of the representations and warranties contained in this Agreement shall survive the consummation of the transactions contemplated by this Agreement. 10.2 Indemnification (a) The Shareholder hereby agrees to indemnify, defend and hold harmless the Buyer and the Sub from and against any and all damages, losses, expenses, claims or other liabilities, including without limitation reasonable attorney's fees, incurred by the Buyer or the Sub as a result, directly or indirectly, of any breach, violation or nonfulfillment of any covenant, representation, warranty or other provision of this Agreement, or any agreement executed in connection with the transactions contemplated by this Agreement, or any misrepresentation or omission with respect to any covenant, representation, warranty or other provision of this Agreement, on the part of the Shareholder. The Buyer and the Sub hereby agree to indemnify, defend and hold harmless the Shareholder from and against any and all damages, losses, expenses, claims, or other liabilities, including without limitation reasonable attorneys' fees, incurred by the Shareholder as a result, 35 39 directly or indirectly, of any breach, violation or nonfulfillment of any covenant, representation, warranty or other provision of this Agreement, or any agreement executed in connection with the transactions contemplated by this Agreement, or any misrepresentation or omission with respect to any covenant, representation, warranty or other provision of this Agreement, on the part of the Buyer or the Sub. (b) Should any claim be made by a person not a party to this Agreement, with respect to any matter to which the foregoing indemnity relates, the party against whom such claim is asserted (the "Indemnified Party"), within a reasonable period of time, shall give written notice to the other party (the "Indemnifying Party") of any such claim, and the Indemnifying Party shall thereafter defend or settle any such claim, at its sole expense, on its own behalf and with counsel of its own selection. In such defense or settlement of any claims, the Indemnified Party shall cooperate with the Indemnifying Party to the maximum extent reasonably possible. Any payment resulting from such defense or settlement, together with the total expense thereof, shall be binding on the Buyer, the Company and the Shareholder. (c) Notwithstanding the foregoing provisions of this Section 10.2, no party shall be liable to indemnify the other until the total of all indemnifiable losses, liabilities, damages, costs, or expenses for which indemnification would otherwise be required, equals or exceeds $25,000. At such time as the aggregate indemnifiable losses, liabilities, damages, costs and expenses have exceeded this threshold amount, the Indemnifying Party shall pay all such excess amounts as provided herein. ARTICLE XI NON-COMPETITION AGREEMENT 11.1 Shareholder's Covenants. Shareholder covenants and agrees that: 36 40 (a) Shareholder shall not, directly or indirectly, within the Territory during the Restricted Period, promote, operate, manage or conduct any bingo game or related gaming business permitted under the terms and conditions of any bingo license issued by the State of South Carolina or under any other state or federal law or authority, or operate any video game machine or other gaming machine or device (such games and game machines being referred to herein as "Games"). (b) Further, Shareholder shall not, directly or indirectly, within the Territory during the Restricted Period, solicit or sell for, own, or acquire any interest in, either directly or indirectly, any corporation, partnership, limited partnership, or other entity, or become engaged by, act as landlord to, or as agent or consultant for, do business with, manage, operate, control, be employed by, participate in, or be connected, in any manner with, or in any manner assist, any other person, corporation, partnership or other entity engaged in the business of promoting, operating, managing or conducting Games. 11.2 Restricted Period. For the purpose of this Agreement, the "Restricted Period" means the period commencing with the date hereof and continuing until three years thereafter. 11.3 Territory. For purposes of this Agreement the "Territory" shall mean: (i) with regard to any activities described in Section 11.1 above which are conducted under a Class B or Class C bingo license (or equivalent thereof under any future law) issued by the State of South Carolina or under any other state or federal law or authority, the area within a fifty (50) mile radius of any bingo facility then owned by Company, Buyer or any subsidiary of Buyer, and (ii) with regard to any activities described in Section 11.1 above which are conducted under any Class A license (or equivalent thereof under any future law) issued by the State of South Carolina or under any other state or federal law or authority, the area within a one hundred (100) mile radius of any bingo game 37 41 facility then owned by Company, Buyer, or any subsidiary of Buyer; and (iii) with regard to video game facilities, the area within a twenty-five (25) mile radius of any bingo, video poker or video game facility then owned by the Company, Buyer, or any subsidiary of Buyer. 11.4 Exemptions. The provisions of this Article XI shall not apply to businesses operated by Mims Amusement Company Partnership, Mims Amusement Operating Co, Palmetto State Distributing Company, Inc., or Universal Mortgage and Loan Co.; provided that within the twelve (12) month period immediately preceding the date of this Agreement Shareholder has had, and during the Restricted Period shall have, no role, directly or indirectly, in management or operation of any such exempted business, nor shall Shareholder during the Restricted Period receive any payment or distribution of any kind, as compensation or otherwise, from any such business other than dividends upon corporate stock which are strictly proportional to the percentage of stock owned by him, or distributions with respect to his capital accounts in partnerships which are strictly proportional to the percentage of his capital account ownership in any such partnership. 11.5 Enforcement. In the event of a breach by either party of the provisions of this Agreement, the non-breaching party, in addition to any other remedies it may have at law or under this Agreement, shall be entitled to an injunction restraining the breaching party from violating or continuing a violation of the terms of this Article XI. ARTICLE XII REGISTRATION RIGHTS 12.1 Piggyback Registration. If at any time, or from time to time, the Buyer shall determine to register any of its securities under the Securities Act of 1933, either for its own account or the account of a shareholder, pursuant to an underwritten public offering, the Buyer shall (a) promptly give to the Shareholder written notice thereof, and (b) include in such registration and in 38 42 any underwriting involved therein, up to one-third (1/3) of the Unregistered Shares as specified in a written request or requests of the Shareholder made within thirty days after receipt by the Shareholder of such written notice from the Buyer. 12.2 Limitations on Registration. If the underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the underwriter may limit the number of Unregistered Shares to be included in the registration and underwriting; provided, however, that the underwriter may not limit the amount of Unregistered Shares included in such registration and underwriting to less than an amount equal to TEN percent (10%) of the amount of all of the Buyer's securities included within such registration and underwriting. If the Shareholder disapproves of the terms of any such underwriting, he may elect to withdraw therefrom by written notice to the Buyer and the underwriter. 12.3 Delay or Cancellation of Registration. If, at any time after giving the Shareholder written notice of the Buyer's intention to register any of its securities, and prior to the effective date of the registration statement filed in connection with such registration, the Buyer shall determine for any reason not to register or to delay the registration, at its sole election, the Buyer may give written notice of such determination to the Shareholder and thereupon shall be relieved of its obligation to register the Unregistered Shares in connection with such registration (but not from its obligation to pay registration expenses in connection therewith or to register the Unregistered Shares in a subsequent registration). 12.4 Expenses. All expenses incurred in connection with any registration, qualification or compliance pursuant to this Article XII, including without limitation, all registration, filing, and qualification fees, printing expenses, fees and disbursements of counsel for the Buyer, and expenses of any special audits incidental to or required by such registration, shall be borne by the 39 43 Buyer; provided, however, the Buyer shall not be required to pay underwriters' fees, discounts, or commissions relating to the Unregistered Shares. ARTICLE XIII MISCELLANEOUS 13.1 Books and Records. Each party agrees that it will cooperate with and make available to the other parties, during normal business hours, all books, records and information retained and remaining in existence after the Closing Date which are necessary or useful in connection with any tax filing, inquiry, audit, investigation or dispute, any litigation or investigation or any other matter requiring any such books, records or information. The party requesting any such books, records or information shall bear all of the other parties' out-of-pocket costs and expenses reasonably incurred in connection with providing such books, records and information. 13.2 Further Assurances. Both before and after the Closing Date, each party will cooperate in good faith with the other parties and, from time to time as requested by the other party or parties, will take all appropriate action and execute all documents which may be necessary to carry out any of the transactions contemplated hereunder more effectively, all at the expense of the requesting party unless arising out of a default of the cooperating party. 13.3 Entire Agreement; Amendment. This Agreement constitutes the entire agreement among the parties pertaining to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions of the parties, whether oral or written, and there are no warranties, representations or other agreements among the parties in connection with the subject matter hereof, except as specifically set forth herein or therein. No amendment, supplement, modification, waiver or termination of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any of the provisions of 40 44 this Agreement shall be deemed or shall constitute a waiver of any other provision of this Agreement, whether or not similar, nor shall such waiver constitute a continuing waiver unless otherwise expressly provided. 13.4 Expenses. Each party hereto shall bear its own fees and expenses of its counsel, accountants and other experts incident to the negotiation and preparation of this Agreement and consummation of the transactions contemplated hereby. To the extent such fees and expenses are incurred by the Company prior to Closing, such fees and expenses shall be paid by the Company at Closing. 13.5 Termination. If any condition precedent to the Shareholder's obligations hereunder is not satisfied and such condition is not waived by the Shareholder at or prior to the Closing Date, or if any condition precedent to the Buyer's obligations hereunder is not satisfied and such condition is not waived by the Buyer at or prior to the Closing Date, the Shareholder or the Buyer, as the case may be, may terminate this Agreement at their option by notice to the other party or parties, as the case may be. In the event of the termination of this Agreement by any party as above provided, no party shall have any liability hereunder of any nature whatsoever to the other party, other than the liability of each party for its own expenses and liability resulting, arising or accruing from the breach of this Agreement; provided, however, that a party shall not be so relieved of liability to the other party if the failure to satisfy a condition precedent results from the failure of a party to make good faith efforts to satisfy such condition. In the event that a condition precedent to a party's obligations is not satisfied, nothing contained herein shall be deemed to require any party to terminate this Agreement, rather than to waive such condition precedent and proceed with the Closing. 13.6 Governing Law. This Agreement shall be governed by, construed and interpreted 41 45 in accordance with the laws of the State of South Carolina, without reference to the conflicts of laws principles thereof. 13.7 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns or heirs and personal representatives. 13.8 Assignment. This Agreement and each party's respective rights hereunder may not be assigned by any party without the prior written consent of the other parties. 13.9 No Reliance. No third party is entitled to rely on any of the representations, warranties and agreements contained in this Agreement. 13.10 Notices. All communications, notices and disclosures required or permitted by this Agreement shall be in writing, and delivered personally, sent by overnight messenger service, or sent by United States mail, certified or registered, postage prepaid, and addressed as follows, unless and until a party notifies the others in accordance with this Section of a change of address: If to the Company Pre-Closing: 2605 C Seminole Road Columbia, South Carolina 29210 Attn: Michael Mims With a copy to: Nelson Mullins Riley & Scarborough, L.L.P. Third Floor, Keenan Building 1330 Lady Street P.0. Box 11070 (29211) Columbia, South Carolina 29201 Attn: Daniel J. Fritze If to the Company Post-Closing: 515 Congress Avenue, Suite 1200 Austin, Texas 78701 Attn: Greg Wilson
42 46 If to the Shareholder: 2605 C Seminole Road Columbia, South Carolina 29210 Attn: Michael Mims With a copy to: Nelson Mullins Riley & Scarborough, L.L.P. Third Floor, Keenan Building 1330 Lady Street P.0. Box 11070 (29211) Columbia, South Carolina 29201 Attn: Daniel J. Fritze If to the Buyer or to Sub: American Bingo & Gaming Corp. 515 Congress Avenue, Suite 1200 Austin, Texas 78701 Attn: Greg Wilson With a copy to: Wilson & Varner, L.L.P. 301 Congress Avenue, Suite 2025 Austin, Texas 78701 Attn: Rodney Varner
13.11 Counterparts; Headings. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall together constitute but one and the same Agreement. The Table of Contents and Article and Section headings in this Agreement are inserted for convenience of reference only and shall not constitute a part hereof. 13.12 Interpretation. Unless the context requires otherwise, all words used in this Agreement in the singular number shall extend to and include the plural, all words in the plural number shall extend to and include the singular and all words in any gender shall extend to and include all genders. 13.13 Severability. If any provision, clause or part of this Agreement, or the application thereof under certain circumstances, is held invalid, the remainder of this Agreement, or the application of such provision, clause or part under other circumstances, shall not be affected thereby. 43 47 13.14 The parties hereto agree to keep this Agreement confidential, as well as any information or document obtained by either party in connection with this transaction, except to the extent disclosure is required to or by any government agency or regulatory or quasi-regulatory body. 13.15 Joint Draftsmanship. The preparation of this Agreement has been a joint effort of the parties and this Agreement shall not, solely as a matter of judicial construction, be construed more severely against one of the parties than the other. IN, WITNESS WHEREOF, each corporate party has caused this Agreement to be duly executed in its name by its duty authorized officer and each individual party hereto has duly executed this Agreement all as of the day and year first above written, unless otherwise noted below. AMERICAN BINGO & GAMING CORP. By: /s/ Greg Wilson ------------------------------------ Greg Wilson, President SHAREHOLDER /s/ Michael W. Mims --------------------------------------- Michael W. Mims GOLD STRIKE, INC. By: /s/ Michael W. Mims ------------------------------------ Michael W. Mims, President GOLD STRIKE ACQUISITION CORPORATION By: /s/ Greg Wilson as of 8/25/97 ------------------------------------ Its: Greg Wilson, President ----------------------------------- 44 EX-99.2 3 MASTER COING MACHINE AGREEMENT 1 THIS AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT TO THE UNIFORM ARBITRATION ACT, S.C. CODE ANN. ss.15-48-10, ET SEQ. (LAW CO-OP. 1976 AND SUPP. 1997). MASTER COIN MASTER AGREEMENT THIS MASTER COIN MACHINE AGREEMENT (this "Agreement") is made and entered into effective as of the 9th day of November, 1998, by and between Gold Strike, Inc., a South Carolina corporation (the "Company"), American Bingo & Gaming Corp., a Delaware corporation ("ABG"), Mims & Dye Enterprises, LLC, a South Carolina limited liability company (the "Operator"), and Michael W. Mims ("Mims") and Danny C. Dye ("Dye"), individually, as to Sections 9 and 20 only. WHEREAS, the Company and the Operator desire to enter into a contract through which the Company will supply the Operator with video gaming machines ("Machines") to be used at the locations identified on Exhibit A attached hereto (the "Existing Locations") and at additional locations operated by the Operator for which the Company and the Operator shall mutually agree to have the Company supply Machines (the "Future Locations", with the Existing Locations and the Future Locations referred to collectively as the "Locations"); NOW, THEREFORE, in consideration of the premises, the mutual promises and covenants of the parties hereto set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company, ABG and the Operator, intending to be legally bound, agree as follows: 1. Exclusive Right. The Company shall have the exclusive right to place Machines in the Existing Locations, and any Future Locations as the Company and the Operator may mutually agree, during the term of this Agreement and any extension or renewal hereof, at the rates set forth in Section 2 below. During the term of this Agreement and any extensions or renewals thereof, no other person, firm or corporation, including the Operator, shall have the right to operate, install, store, use or exhibit, in any manner, Machines upon any of the Locations at which the Company is supplying Machines. 2. Consideration. The Company shall receive 30% of the total gross revenues after payouts of winnings on all Machines in the Existing Locations, whether such Machines are owned, leased or otherwise maintained in such locations. The Company shall receive 30%, or such different percentage as the Company and the Operator shall mutually agree, of the total gross revenues after payouts of winnings on all Machines in the Future Locations, whether such Machines are owned, leased or otherwise maintained in such locations. The Operator shall be responsible for collecting all revenue generated by the Machines and shall remit to the Company its share of the total gross revenues on each Machine no less frequently than once every week when the Company's representative visits each Location. The Operator shall be responsible for all costs related to the operation of each location. 2 3. Term. The term of this Agreement shall be for three years. At the end of the three-year term, the Company and the Operator may extend this Agreement on terms mutually agreeable to all parties if such parties can reach agreement on the terms of the extension at least ninety days before the end of the three-year term. 4. Machine Licenses. The Company shall be responsible for obtaining all machine licenses necessary to operate the Machines at the Locations. The Operator shall reimburse the Company for 50% of the cost of all machine licenses for all Machines provided to the Operator during the term of this Agreement by paying $20 per week per Machine. This weekly charge for machine licenses shall be paid to the Company on a weekly basis when the Company's representative visits each Location. The weekly charge for the licenses is subject to increase or decrease at any time as the cost of such licenses is adjusted by the applicable state regulatory agency. In the event the Operator and the Company mutually agree for the Company to maintain additional machine licenses for which there are no Machines provided to the Operator under this Agreement, the Operator shall pay to the Company $40 per week for each such license, or such higher amount as shall be calculated based upon the cost of such license when amortized on a weekly basis. This weekly charge for such additional licenses shall be paid to the Company on a weekly basis and the Company's representative shall pick-up the money from the Operator's corporate headquarters every Monday. 5. Machine Payouts. The payouts for all Machines operated pursuant to this Agreement shall be set at no less than 92% and no more than 97%. The Operator shall not set the payouts outside of this range without obtaining the prior written consent of the Company. For these purposes, the payout percentage shall be calculated by dividing the total winnings by the total play revenues. 6. Business of Operator, a. The Operator shall obtain and maintain all necessary business licenses and other licenses required to operate the Locations; provided, however, the Company shall obtain and maintain the necessary machine licenses as set forth in Section 4 above. b. The Operator, ABG and the Company shall maintain proper, timely and accurate books and records of all activities undertaken pursuant to this Agreement as required by law or otherwise. Each party shall provide such information to any other party as requested by such other party in order for such other party to maintain proper, timely and accurate books and records of all activities undertaken pursuant to this Agreement. c. The Operator shall operate its business and each of the Locations, and ABG and the Company shall conduct their respective businesses related to providing Machines hereunder, in compliance with all applicable laws, regulations, rules and ordinances. The Operator shall not permit any violations of any laws, regulations, rules or ordinances to occur on any of the Locations which result from actions of the Operator. In addition, the Operator shall take all actions which are reasonable and 2 3 customary for the Operator's business to prevent any violations of any laws, regulations, rules or ordinances to occur on any of the Locations which result from actions of any third party. d. The Operator acknowledges and agrees that the Locations shall only be used to conduct a video gaming business. The Operator shall not maintain, permit or allow any action, product or service at any of the Locations which would be counter to the positive image of the Company or an impairment to the licensing of any operations of the Company or any subsidiary or affiliate in any jurisdiction or venue. e. The Operator shall notify the Company, and ABG or the Company shall notify the Operator, in writing within 24 hours after obtaining any knowledge that the notifying party is not, or allegedly is not, in compliance with any of the terms of this Section, unless such notice is prohibited by applicable laws or regulations. 7. Machines. All Machines placed at any of the Locations shall remain the sole and exclusive property of the Company and neither the Operator nor any third party shall have any right or claim to any Machine. AR Machines so placed at any Location shall bear the name of the Company and shall state thereon that said Machines are the sole property of the Company. The Operator shall take all actions which are reasonable and customary for the Operator's business in an effort to protect and safeguard the Machines, not only from theft and damage but also from any lien, encumbrance or other attachment. The Operator is also responsible for directing and supervising its employees, agents and other representatives in a way that is reasonable and customary for the Operator's business in an effort to protect the Machines from being cheated, robbed or damaged, and the Operator shall pay the Company for any such loss or damage caused by the Operator's failure to so direct and supervise its employees, agents or other representatives. 8. Repair and Maintenance of Machines. The Operator shall have the full responsibility for taking all action which is reasonable and customary for the Operator's business to maintain and repair the Machines during the term of this Agreement, and shall at all times keep each Machine in good repair and working order; provided, however, the Operator shall not be responsible for repairing or replacing Machines that are damaged or destroyed by fire, flood, vandalism or some other catastrophic event unless the damage or destruction resulted from or involved the negligence or willful, wanton, reckless or intentional conduct of the Operator or an employee, agent or other representative of the Operator. The Company shall be responsible for providing all parts which may be necessary to repair or maintain any Machine, with all used parts returned to the Company; provided, however, the Company shall not be responsible for providing parts due to damage to a Machine that resulted from or involved the negligence or willful, wanton, reckless or intentional conduct of the Operator or an employee, agent or other representative of the Operator. 9. Cage Cash. At the time of execution of this Agreement, the Company loaned to the Operator "cage cash" at the Existing Locations which in the aggregate totaled $70,000. The total amount of such "cage cash" loaned to the Operator is evidenced by an unsecured 3 4 promissory note (the "Note") which accrues interest at the prime interest rate (as quoted in the Wall Street Journal) plus 2% per annum. The principal and interest on the Note is due in full six months after the date of this Agreement, without notice. The Note may be prepaid at any time without penalties. The Note is personally guaranteed by Michael W. Mims and Danny C. Dye, jointly and severally. 10. Leases and Subleases. a. Effective as of the date of execution of this Agreement, the Operator subleased from ABG or a subsidiary of ABG those Existing Locations which are leased by ABG or a subsidiary of ABG as noted on Exhibit B attached hereto. The terms and conditions of the subleases are comparable to the terms of the lease agreements for such properties; provided, however, the monthly rents for the subleases are as follows: (i) for the Charleston area locations identified as Gold Strike/Lucky I, Ponderosa and Beacon I, the monthly rent is equal to $100 multiplied by the number of Machines operated at the respective location during the month, but in no event less than the number of Machines operated at the respective location on the date of execution of this Agreement, which monthly rent per Machine shall increase at each anniversary date of the respective sublease by the consumer price index for the applicable region for the prior twelve-month period plus one percent; and (ii) for the Augusta area locations identified as Lucky 4, Double 7/Wild Cherry and Golden Palace, the monthly rent is equal to the monthly rent set forth in the underlying lease agreement for each such location. The Operator hereby agrees that it will not take any action, or fail to take any action, which in any way may jeopardize the effectiveness of any of the leases underlying these subleases. In addition, ABG and the Company each agree that they will take all reasonable efforts to obtain the necessary consents required for these respective locations to be subleased to the Operator under the existing underlying leases, and to maintain and preserve the leases underlying these subleases. Upon termination of the lease underlying a sublease, it is understood that the respective sublease will also terminate and that accordingly this Agreement will terminate with respect to that respective Existing Location. b. Effective as of the date of execution of this Agreement, the Operator leased from ABG or a subsidiary of ABG the Existing Location at 1470 Charleston Highway in West Columbia, South Carolina. The Operator and ABG or its subsidiary, as applicable, entered into a lease agreement for this location. The monthly rent for this lease is equal to $100 multiplied by the number of Machines operated at the location during the month, but in no event less than the number of Machines operated at the location on the date of execution of this Agreement, which monthly rent per Machine shall increase at each anniversary date of the lease by the consumer price index for the applicable region for the prior twelve-month period plus one percent. c. The Operator is also leasing from the Company the furniture, fixtures and equipment, excluding the Machines and the machine licenses (the "Personal Property"), at the respective Locations as of the date of execution of this Agreement. 4 5 For the six locations which are subleased by the Operator, as noted in Section 10.a. above, and the one location which is leased by the Operator, as noted in Section 10.b. above, the Personal Property being leased is listed on an exhibit attached to the respective subleases and lease. For the Southern Sport location in North Augusta, the Personal Property being leased is set forth on Exhibit C attached hereto. The Operator is responsible for all maintenance, service and repairs that are reasonable and customary for the Operator's business to keep the Personal Property in good repair and working order, ordinary wear and tear excepted, during the term of this Agreement, including but not limited to replacing any Personal Property that is destroyed or damaged such that it cannot be repaired. The Operator is also responsible for paying taxes and maintaining insurance on the Personal Property during the term of this Agreement. The Operator acknowledges and agrees that it is receiving the Personal Property "as is" and that the Company and ABG are not providing any representations or warranties regarding the condition of the Personal Property or the performance of such Personal Property during the term of this Agreement. In addition, the parties expressly agree that the Company and ABG will not be liable or responsible for any defects or deficiencies related to the Personal Property. d. The Operator shall reimburse ABG, or its respective subsidiary, for the cost of utilities at each leased and subleased Location, as set forth in each respective sublease agreement and lease agreement. e. All monthly lease and sublease payments by the Operator shall be received by ABG no later than the first day of the respective month without notice. With respect to the Operator's payment of its pro rata share of fire insurance and real estate taxes for certain Locations where applicable, the Company shall provide the Operator with notice of the Operator's pro rata amount of such expenses and the due date for such payment to the Company. f. The lease and all of the subleases shall immediately terminate upon termination of this Agreement. 11. Employee Nonsolicitation. The Operator agrees that during the term of this Agreement and for six months after the termination of this Agreement the Operator and its subsidiaries and affiliates will not, directly or indirectly, without the Company's prior written consent, employ or solicit the employment of any person who is employed by ABG or any subsidiary or affiliate of ABG while such person is employed by ABG and/or its subsidiaries or affiliates, and for a period of six months after such person has terminated employment with, or has been terminated from employment with, ABG and/or any of its subsidiaries or affiliates. 12. Escrow. Upon execution of this Agreement, the shareholders of the Operator provided the Company with shares of ABG common stock equal to $200,000 based on the closing price of the stock on the business day prior to the date of execution of this Agreement, which stock shall be held in escrow during the term of this Agreement. In addition, 2% of the total gross revenues after payouts of winnings on all Machines in the Existing Locations to be 5 6 paid to the Company during the first twelve months of this Agreement shall also be held in escrow during the term of this Agreement. The purpose of this escrow is to provide security to the Company and ABG for any liabilities of the Operator for which a third party could reasonably be expected to seek to recover from ABG or the Company ("Liabilities"), and as a means to compensate the Company and ABG in the event there is a deficiency or penalty relating to any Machine supplied to the Operator pursuant to this Agreement issued by any regulatory or enforcement authority as a result of the action or failure to act of the Operator which deficiency or penalty could reasonably be expected to, or actually does, result in a fine or penalties, the revocation or termination of the license for such Machine, or the seizure of such Machine ("Deficiencies"). The Company or ABG may pay such fines and penalties directly out of the escrowed funds in the event any such fine or penalty of the Operator is not paid timely by the Operator, unless the Operator has diligently protested such fine or penalty in good faith. Upon termination of this Agreement, an audit or review of the Operator shall be performed and an audit or review report (the "Report") issued within sixty days after the date of termination of this Agreement. If, the audit or review reveals that there are no outstanding Liabilities or Deficiencies, the remaining shares of ABG common stock held in escrow shall be returned to the registered owners of such stock and the remaining cash balance held in escrow shall be returned to the Operator not later than the close of business on the fifth business day following the issuance of the Report; provided, however, if ABG's Chief Executive Officer believes such action should be approved by ABG's Board of Directors, the cash and stock shall be returned as soon as ABG's Board can meet or otherwise take action to approve the return of the cash and stock. However, if such audit or review reveals that there are any such Liabilities or Deficiencies, then the Company may continue to hold in escrow an amount of stock and cash sufficient to provide for such Liabilities and Deficiencies. In the event the value of the cash and stock held in escrow exceeds the estimated liability for such Liabilities and Deficiencies, then the Company shall first release stock from escrow and then cash from escrow to reduce the value in escrow to approximate the estimated liability for such Liabilities and Deficiencies. To the extent additional Liabilities or Deficiencies are identified after the completion of the audit or review, sufficient cash and/or stock shall be retained in the escrow to provide for such additional Liabilities and Deficiencies. The escrow shall be decreased from time to time as Liabilities and/or Deficiencies are resolved, but only to the extent that the escrow exceeds the remaining identified Liabilities and Deficiencies. The escrow shall be maintained until such time as all identified Liabilities and Deficiencies are resolved. Regardless of the existence of the escrow, the Operator shall remain liable for all such Liabilities and Deficiencies. 13. Inspection of Records and Locations. The Operator shall make available to the Company, or its designated representatives, all records and information necessary for the Company to audit and confirm the amount of the proceeds paid to the Company pursuant to the terms of this Agreement. In addition, the Company, or its designated representatives, shall have the right to enter any of the Locations at any time to inspect the Machines or read the video game meters. 14. License to Use Trade Name. The Company hereby grants to the Operator a license to use the trade name "Gold Strike" during the term of this Agreement at all of the 6 7 Locations, to the extent the Company has any rights to the use of such trade name. By granting this license, the Company is not providing any sort of assurance or representation that it actually has any right to use such trade name. This license does not grant the Operator any right to use any other corporate name of ABG, the Company or any of their subsidiaries or affiliates and the Operator is expressly prohibited from using the corporate names of ABG or any of its subsidiaries or affiliates or in any way implying that any of such entities are in any way involved in the ownership, management or operation of any of the Locations. 15. Insurance. The Operator shall maintain insurance, as the primary insured party, in connection with the operation of its business at the Locations which is reasonable and customary for such business, including, but not limited to, fire and casualty insurance, commercial property insurance, commercial general liability insurance, and workers' compensation insurance. The Company and ABG shall be additional named insured parties under such insurance policies. 16. Relationship of the Parties. Nothing contained in this Agreement shall be deemed to constitute a relationship of agency, joint venture, partnership or any other relationship between the parties other than that specified. The Operator certifies that it is not a party to, nor does it have a covenant or restriction with, any other party in connection with any coin machine agreement, lease and/or service agreement which may conflict with the Operator's obligations and duties under this Agreement, and the Operator will not enter into any such restrictive agreement without the prior written consent of the Company. 17. Breach by Operator. a. In the event the Operator breaches (i) the exclusivity provision of Section I of this Agreement by placing the Machine of another supplier in any Location in which the Company's Machines are placed pursuant to this Agreement, or (ii) the access to Machines provision of Section 13 of this Agreement by refusing to grant the Company or its employees, agents or other representatives access to any Machine during normal business hours, or (iii) its obligations to pay money to the Company or ABG pursuant to this Agreement by making any such payment more than three days late, then the Company shall provide the Operator with notice of such breach. If there are two or more breaches of the type set forth in (i) above during the term of this Agreement, or eleven or more breaches of the type set forth in (ii) above during any twelve-month period, or five or more breaches of the type set forth in (iii) above during any twelve-month period, then in addition to any other remedy which may exist at law or in equity, the Company and ABG may elect to terminate this Agreement in whole, or partially terminate this Agreement by terminating it only with respect to the Location to which the breach relates, terminate the related subleases and leases and remove the Machines from all of the Locations, or only the Location with respect to which this Agreement is terminated in part, without interference from the Operator and shall be entitled to damages of a sum equal to the cost of the unexpired portion of the license on each such Machine, plus the Company's portion of the average weekly total gross revenue after payouts of winnings for each such Machine multiplied by the number of 7 8 weeks that each such Machine is out of service as a result of such termination, in whole or in part, of this Agreement; provided, however, in the event the Company and ABG elect to terminate this Agreement in whole, such damages shall be limited to the damages related to the Location or Locations at which the breach occurred. The average weekly total gross revenue after payouts of winnings for each Machine shall be calculated based upon the respective Machine's actual activity for the ten week period prior to such breach. The parties acknowledge and agree that a surprise inspection of the Machines at a time other than during normal business hours at which the Company is unable to access the Machines will not be deemed a breach under (ii) above; provided, however, the Operator must take all reasonable efforts to comply with the Company's requests to grant the Company access to the Machines. b. If the Operator breaches any other obligation under this Agreement, the Operator shall have 15 days to cure such breach following written notice of such breach; provided, however, that if the breach cannot be cured with due diligence within such 15-day period but the Operator commences to cure such breach within such period, the time within which to cure the breach shall be extended for such period as may be necessary to complete the curing of the same with all due diligence. If the Operator fails to cure its breach within the cure period, (i) the Company and ABG may take any action at law or in equity as may be necessary or desirable to enforce observance or performance of the obligation of the Operator under this Agreement and (ii) if the breach materially adversely affects the benefits to be received by the Company or ABG under this Agreement, the Company and ABG may terminate this Agreement in whole, or partially terminate this Agreement by terminating it only with respect to the Location to which the breach relates, upon giving written notice of termination to the Operator. 18. Breach by Company or ABG. If the Company or ABG breaches any obligation under this Agreement, the Company or ABG shall have 15 days to cure such breach following written notice of such breach; provided, however, that if the breach cannot be cured with due diligence within such 15-day period but the Company or ABG commences to cure such breach within such period, the time within which to cure the breach shall be extended for such period as may be necessary to complete the curing of the same with all due diligence. If the Company or ABG fails to cure its breach within the cure period, (i) the Operator may take any action at law or in equity as may be necessary or desirable to enforce observance or performance of the obligation of the Company and ABG under this Agreement and (ii) if the breach materially adversely affects the benefits to be received by the Operator under this Agreement, the Operator may partially terminate this Agreement by terminating it only with respect to the Location to which the breach relates upon giving written notice of termination to the Company and ABG. 19. Indemnification. a. The Operator agrees to indemnify, defend and hold harmless the Company, ABG and all of their subsidiaries, affiliates, agents, employees, assigns and 8 9 other related parties against any and all liabilities, claims, damages, losses, expenses, costs or actions, including but not limited to legal fees and expenses, which are incurred due to the Operator's negligence, action or inaction which results in a violation of any law, regulation, rule or ordinance or which otherwise is detrimental to the Company in connection with this Agreement. The indemnification provided by the Operator pursuant to this provision shall not exceed $300,000, subject to the following two exceptions: (i) there shall be no limitation on the amount of the indemnification provided in the event such liabilities, claims, damages, losses, expenses, costs or actions, including but not limited to legal fees and expenses, are the result of any criminal charge or conviction involving Mims, Dye, or the Operator, or any of its employees, agents or other representatives; and (ii) in the event such liabilities, claims, damages, losses, expenses, costs or actions, including but not limited to legal fees and expenses, are the result of any willful, intentional action by Mims, Dye, or the Operator, or any of its employees, agents or other representatives, the indemnification provided hereunder shall be limited to $500,000 if such willful, intentional action occurred during the first twelve months of this Agreement and $400,000 if such willful, intentional action occurred during the second twelve months of this Agreement. b. The Company and ABG agree to indemnify, defend and hold harmless the Operator and all of its subsidiaries, affiliates, agents, employees, assigns and other related parties against any and all liabilities, claims, damages, losses, expenses, costs or actions, including but not limited to legal fees and expenses, which are incurred due to the Company's or ABG's negligence, action or inaction which results in a violation of any law, regulation, rule or ordinance or which otherwise is detrimental to the Operator in connection with this Agreement. The indemnification provided by the Company and ABG pursuant to this provision in the aggregate shall not exceed $300,000; provided, however, in the event such liabilities, claims, damages, losses, expenses, costs or actions, including but not limited to legal fees and expenses, are the result of any willful, intentional action by the Company or ABG, or any of their employees, agents or other representatives, the indemnification provided hereunder shall be limited to $500,000 if such willful, intentional action occurred during the first twelve months of this Agreement and $400,000 if such willful, intentional action occurred during the second twelve months of this Agreement. c. This Section 19 shall survive the termination of this Agreement. 20. Noncompete. The Operator, and its subsidiaries and affiliates, and Mims and Dye hereby agree to the following noncompete provisions: a. For a period of six months following the execution of this Agreement, such parties shall not engage in the video gaming business as it relates to route operations anywhere within South Carolina. b. For a period of five years following the execution of this Agreement, such parties shall not compete with any gaming route operation of the Company, ABG 9 10 or any of their subsidiaries or affiliates by in any way attempting to place Machines in any route location at which Machines are being provided as of the date of this Agreement by the Company, ABG or any of their subsidiaries or affiliates. c. For a period of five years following the execution of this Agreement, such parties shall not engage in the business of operating, owning, managing, supervising, promoting, providing consulting services to, or otherwise participating in a bingo gaming facility in Alabama, Florida, Georgia, Kentucky, Maryland, Mississippi, Montana, Nevada, New York, South Carolina, or Texas; provided, however, this shall not prohibit the Operator, Mims or Dye from operating a bingo gaming facility pursuant to a "Class C" bingo license, as that term is defined in Section 12-21-4020 of the South Carolina Code, issued by the State of South Carolina, or a comparable bingo license issued by any other jurisdiction. d. With respect to Mims, the provisions of this Section 20 shall not apply to businesses operated by Mims Amusement Company Partnership, Mims Amusement Operating Co., Palmetto State Distributing Company, Inc., or Universal Mortgage and Loan Co. (collectively, the "Mims Businesses"), provided that within the twelve month period immediately preceding the date of this Agreement Mims has had, and during the term of this noncompete Mims shall have, no role, directly or indirectly, in management or operations of any of the Mims Businesses, nor shall Mims receive any payment or distribution of any kind, as compensation or otherwise, from any such business other than dividends upon corporate stock which are strictly proportional to the percentage of stock owned by him, or distributions with respect to his capital accounts in partnerships which are strictly proportional to the percentage of his capital account ownership in any such partnership. However, if, due to the death or legal incapacity of Mims' father and the inability or refusal of Mims' brother to manage any of the Mims Businesses, Mims becomes active in managing one or more of the Mims Businesses, Mims agrees that for a period of five years following the execution of this Agreement the Mims Businesses in which Mims' is active in management will not compete with the Company, ABG or any of their subsidiaries or affiliates by in any way attempting to place Machines in any route location at which Machines are being provided by the Company, ABG or any of their subsidiaries or affiliates, and the Company and ABG agree that for such five-year period the Company, ABG and their subsidiaries and affiliates will not compete with any of the Mims Businesses in which Mims is active in management by in any way attempting to place Machines in any route location at which Machines are being provided by any Mims Businesses in which Mims is active in management. e. The parties hereto expressly agree that the noncompete provisions of this Section 20 shall not apply to businesses operated by Edgefield Plaza Associates ("Edgefield") at the real property located at 1297 Martintown Road in Edgefield County, South Carolina, and in connection herewith Mims, as a general partner of Edgefield, hereby agrees that before Edgefield shall enter into leases for any of the twelve rooms for which Mims has authority and control for leasing at such real 10 11 property, the Company shall have the first option to enter into a coin machine agreement with any such lessee whereby the Company shall supply the lessee with the Machines to be operated on such property, on terms to be agreed by the lessee and the Company. In addition, if Edgefield, or its subsidiaries or affiliates, intends to operate a video gaming business at any of the twelve rooms for which Mims has authority and control for leasing at such real property, the Company shall have the first option to enter into a coin machine agreement with Edgefield whereby the Company shall supply Edgefield with the Machines to be operated on such property, on terms to be agreed by Edgefield and the Company. f. ABG and Mims mutually agree to terminate Section 8 of the Employment Agreement dated September 24, 1997, as amended July 27, 1998, by and between ABG and Mims; provided, however, Section 8.1 of such Employment Agreement, and the other provisions of Section 8 of such Employment Agreement to the extent such other provisions are relevant to Section 8.1, shall survive this termination of Section 8 of the Employment Agreement. The Company, ABG and Mims also mutually agree to terminate Article XI of the Agreement and Plan of Reorganization by and among such parties dated August 13, 1997. g. In the event of a breach by the Operator, or any of its subsidiaries or affiliates, or Mims or Dye of any provision of this Section 20, the Company and ABG shall have, in addition to any other remedies that they may have at law or under this Agreement, the right to a temporary restraining order, temporary injunction and permanent injunction restraining such person or entity from violating or continuing a violation of the terms of this Section. The Operator, Mims and Dye agree that in the event of such a breach, the amount of damages would be difficult or impossible to determine, and as a result, in the event of a breach by them they agree to a bond in the amount to be determined by a court of competent jurisdiction. h. Should any court of competent jurisdiction hold any portion of this Section 20 to be unenforceable in whole or in part, such court shall be authorized and requested to sever the offending provision from this Section, and to reform this Section so as to comply as closely as possible with the intentions of the parties as stated herein, so that it will be enforceable by injunction. i. This Section 20 shall survive the termination of this Agreement. 21. Impacts of Judicial, Legislative or Regulatory Actions. If during the term of this Agreement the South Carolina legislature enacts legislation or the South Carolina Supreme Court definitively (after all applicable appeals) issues a ruling and as a result of such legislation or ruling (a) game rooms of the nature operated by the Operator become illegal, and the Operator cannot reasonably modify its operations to bring its operations into compliance with the legal requirements, thereby resulting in the Operator being forced to discontinue its operations or (b) the primary and substantial portion of the revenue from any Location must come from non-video poker operations thereby making it impossible or unreasonable for the 11 12 Operator to modify its operations to bring its operations into compliance with the legal requirements, then the Operator or ABG and the Company may terminate this Agreement upon notice to the other party. Likewise, if during the twelve-month period preceding each July 1 during the term of this Agreement, beginning July 1, 1999, there is a change in the tax rate on revenues from video gaming operations or other rules or regulations governing video gaming activities that materially impacts the profitability to the Operator or to ABG and the Company of operating their respective businesses pursuant to this Agreement, the party whose profitability is so impacted may terminate this Agreement by giving notice to the other party not later than July 10 of such year, which notice shall include a detailed statement of the reasons and support for such termination. 22. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. 23. Assignment. This Agreement and the rights and duties hereunder are not assignable or transferable by the Operator without the prior written consent of the Company and ABG, which consent will not be granted unless, among other things, such assignee is determined, in the sole discretion of the Company and ABG, to be qualified as to experience and character. This Agreement and the rights and duties hereunder are freely assignable by the Company and ABG. 24. Waiver. Any failure on the part of any party hereto to comply with any of its obligations, agreements or conditions hereunder may be waived by any other party to whom such compliance is owed. No waiver of any provision of this Agreement shall be deemed, or shall constitute, a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver. 25. Entire Agreement. This Agreement constitutes the entire agreement among the parties hereto and supersedes and cancels any prior agreements, representations, warranties, or communications, whether oral or written, among the parties hereto relating to the transactions contemplated hereby or the subject matter herein. Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated, except in writing signed by the party against whom or which the enforcement of such change, waiver, discharge or termination is sought. 26. Severability. In the event that any provision of this Agreement or any word, phrase, clause, sentence or other portion thereof should be held to be unenforceable or invalid for any reason, such provision or portion thereof shall be modified or deleted in such a manner so as to make this Agreement as modified legal and enforceable to the fullest extent permitted under applicable laws. 27. Notices. AR notices, requests, demands and other communications hereunder shall be in writing and shall be delivered by hand with a signed receipt, by registered or certified mail, return receipt requested, postage prepaid, by a recognized overnight courier, or 12 13 by facsimile transmission with the original sent by mail on that same day, addressed as follows: If to the Company or ABG: American Bingo & Gaming Corp. 1440 Charleston Highway West Columbia, SC 29169 Attention: Chief Executive Officer and to: Nelson Mullins Riley & Scarborough, L.L.P. 1330 Lady Street, Third Floor, Keenan Building P.0. Box 11070 (29211) Columbia, SC 29201 Attention: Daniel J. Fritze, Esq. If to the Operator: Mims & Dye Enterprises, LLC 2605-C Seminole Road Columbia, SC 29210 Attention: Mr. Michael W. Mims and to: McNair Law Firm, P.A. P.0. Box 11390 Columbia, SC 29201 Attention: John W. Currie, Esq. If delivered personally, the date on which a notice, request, instruction or document is delivered shall be the date on which such delivery is made and, if delivered by mail, courier or facsimile, the date on which such notice, request, instruction or document is received shall be the date of delivery. Any party hereto may change its address specified for notices herein by designating a new address by notice in writing in accordance with this Section. 28. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of South Carolina, without regard to choice of law principles. 29. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 13 14 30. Arbitration. Except to the extent preempted by the Federal Arbitration Act, 9 U.S.C. ss.1 et seq. (1970), any claim or controversy arising out of, or relating to, any provision of this Agreement or the breach thereof shall, upon written demand of any party, be settled by a panel of three arbitrators in accordance with the Commercial Arbitration Rules then in effect of the American Arbitration Association to the extent consistent with the laws of the State of South Carolina and the Uniform Arbitration Act, S.C. Code ss.15-48-10, et seq., (Law. Co-Op. 1976, as amended). Judgment rendered by the arbitrators may be entered in the appropriate Court in Richland County, South Carolina, having jurisdiction thereof. Arbitration shall be held in the County of Richland, State of South Carolina. IN WITNESS WHEREOF, the parties hereto have caused this Master Coin Machine Agreement to be executed as of the date first above written. GOLD STRIKE, INC. By:/s/ George M. III. Harrison, Jr. ------------------------------- Name: George M. III. Harrison, Jr. ----------------------------- Title: V P ---------------------------- AMERICAN BINGO & GAMING CORP. By:/s/ George M. III. Harrison, Jr. ------------------------------- Name: George M. III. Harrison, Jr. ----------------------------- Title: Vice Chairman ---------------------------- MIMS & DYE ENTERPRISES, LLC By:/s/ Michael W. Mims ------------------------------- Name: Michael W Mims ----------------------------- Title: Member ---------------------------- /s/ Michael W. Mims ---------------------------------- Michael W. Mims As to Sections 9 and 20 Only /s/ Danny C. Dye ---------------------------------- Danny C. Dye As to Sections 9 and 20 Only 14 15 EXHIBIT A EXISTING LOCATIONS Charleston Area: Gold Strike/Lucky I Ponderosa Beacon I North Augusta Area: Double 7/Wild Cherry Golden Palace Lucky 4 Southern Sport Columbia Area: Charleston Highway 16 EXHIBIT B LEASED AND SUBLEASED LOCATIONS Charleston Area: Gold Strike/Lucky I - subleased Ponderosa - subleased Beacon I -subleased North Augusta Area: Double 7/Wild Cherry - subleased Golden Palace - subleased Lucky 4 - subleased Columbia Area: Charleston Highway -leased 17 EXHIBIT C PERSONAL PROPERTY FOR SOUTHERN SPORT LOCATION 5 Bar stools 2 Regular chairs 1 Table 2 Calculators 2 Cameras 1 VCR 1 Monitor 9 Wastebaskets 1 Time clock 1 Coffee pot 1 Microwave -----END PRIVACY-ENHANCED MESSAGE-----