SUBSCRIPTION AGREEMENT
DATED AS OF JULY 31, 1997
BY AND BETWEEN
AMERICAN BINGO & GAMING CORP.
AND
PLAZACORP INVESTMENTS LIMITED
____________________
SERIES A CONVERTIBLE PREFERRED STOCK
____________________
SUBSCRIPTION AGREEMENT
SERIES A CONVERTIBLE PREFERRED STOCK
AMERICAN BINGO & GAMING CORP.
PAGE
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1. AGREEMENT TO SUBSCRIBE 1
(a) Subscription 1
(b) Form of Payment 1
(c) Method of Payment 2
2. BUYER REPRESENTATIONS, WARRANTIES, ETC. 2
(a) Purchase for Investment 2
(b) Accredited Investor 2
(c) Reoffers and Resales 2
(d) Company Reliance 2
(e) Information Provided 3
(f) Absence of Approvals 3
(g) Subscription Agreement 3
3. COMPANY REPRESENTATIONS, WARRANTIES, ETC. 3
(a) Organization and Authority 3
(b) Capitalization 3
(c) Concerning the Shares and the Common Stock 4
(d) Subscription Agreement 4
(e) Non-contravention 4
(f) Approvals 5
(g) Information Provided 5
(h) Absence of Certain Changes 5
(i) Absence of Certain Proceedings 5
(j) Properties 6
(k) Labor Relations 6
(l) SEC Filings 6
(m) Absence of Brokers, Finders, Etc. 6
4. Certain Covenants and Acknowledgments 6
(a) Transfer Restrictions 6
(b) Restrictive Legend 7
(c) Registration Rights Agreement 7
(d) Form D 7
(e) Authorization for Trading 8
(f) Use of Proceeds 8
(g) Blue Sky Laws 8
(h) Certain Expenses 8
(i) Certain Issuances of Securities 8
(j) Certain Trading Restrictions 9
(k) Best Efforts 9
5. TRANSFER AGENT INSTRUCTIONS 9
(a) Transfer Agent Instructions 9
(b) Conversion Procedure 10
6. CLOSING DATE. 10
7. CONDITIONS TO THE COMPANY'S OBLIGATION
TO SELL AND ISSUE 10
8. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE. 11
9. MISCELLANEOUS. 11
SCHEDULES
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Schedule 3(c) NASD Items
Schedule 3(g) Blue Sky Clearances
Schedule 3(j) Property
ANNEXES
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Annex I Certificate of Designations
Annex II Warrant
Annex III Registration Rights Agreement
Annex IV Joint Escrow Instructions
Annex V Transfer Agent Instructions
Annex VI Notice of Conversion
Annex VII Opinion (Closing)
SUBSCRIPTION AGREEMENT
THIS SUBSCRIPTION AGREEMENT, dated as of July 30, 1997, by and
-
between AMERICAN BINGO & GAMING CORP. a Delaware corporation, with
headquarters located at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(the "Company"), and PLAZACORP INVESTMENTS LIMITED, a corporation organized
under the laws of Ontario, Canada (the "Buyer").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Buyer wishes to purchase, upon the terms and subject to
the conditions of this Agreement, shares of convertible preferred stock of the
Company which will be convertible into shares of Common Stock, $.001 par value
(the "Common Stock"), of the Company and in connection therewith the Company
is to issue to the Buyer a warrant to purchase shares of Common Stock as
provided in this Agreement; and
WHEREAS, the Company and the Buyer are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by Rule 506 of Regulation D as promulgated by the Securities and Exchange
Commission (the "SEC") under the Securities Act of 1933, as amended (the "1933
Act");
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
.c.1. AGREEMENT TO SUBSCRIBE; PURCHASE PRICE.
.c.(A) SUBSCRIPTION;. The Buyer hereby agrees to purchase from
the Company the number of shares (the "Initial Preferred Shares") of Series A
Convertible Preferred Stock, $.01 par value (the "Preferred Stock"), of the
Company set forth on the signature page of this Agreement, having the terms
and conditions as set forth in the form of Certificate of Designations of the
Series A Convertible Preferred Stock attached hereto as ANNEX I (the
"Certificate of Designations") at the price per share and for the aggregate
purchase price set forth on the signature page of this Agreement. The
purchase price for the Initial Preferred Shares shall be payable in United
States Dollars. In connection with the purchase of the Initial Preferred
Shares by the Buyer, the Company shall issue to the Buyer at the closing on
the Closing Date (as defined herein) a warrant in the form attached hereto as
ANNEX II (the "Warrant") to purchase 133,000 shares of Common Stock (subject
to adjustment as provided in the Warrant). The additional shares of Preferred
Stock issuable pursuant to Section 2(c) of the Registration Rights Agreement,
the form of which is attached hereto as ANNEX III (the "Registration Rights
Agreement"), are referred to herein as the "Additional Preferred Shares". The
Initial Preferred Shares and the Additional Preferred Shares are referred to
herein collectively as the "Preferred Shares." The shares of Common Stock
issuable upon conversion of the Preferred Shares are referred to herein as the
"Conversion Shares." The shares of Common Stock issuable pursuant to Section
5 of the Certificate of Designations as a dividend on the Preferred Shares are
referred to herein as the "Dividend Shares". The shares of Common Stock
issuable upon conversion of the Warrant are referred to herein as the "Warrant
Shares." The Common Shares, the Dividend Shares and the Warrant Shares are
referred to herein collectively as the "Common Shares". The Common Shares and
the Preferred Shares are referred to herein collectively as the "Shares." The
Shares and the Warrant are referred to herein collectively as the
"Securities."
.c.(B) FORM OF PAYMENT;. The Buyer shall pay the purchase price
for the Initial Preferred Shares by delivering good funds in United States
Dollars to the escrow agent (the "Escrow Agent") identified in the Joint
Escrow Instructions attached hereto as ANNEX IV (the "Joint Escrow
Instructions"). Such delivery of funds shall be made against delivery by the
Company of the certificates for the Initial Preferred Shares and the Warrant
registered in the name of the Buyer. Promptly following payment by the Buyer
to the Escrow Agent of the purchase price of the Initial Preferred Shares, but
in any event prior to the Closing Date, the Company shall deliver certificates
for the Initial Preferred Shares and the Warrant, registered in the name of
the Buyer, to the Escrow Agent. The certificates for the Initial Preferred
Shares and the Warrant shall be delivered by the Company to the Escrow Agent
on a delivery against payment basis at the closing. By signing this
Agreement, the Buyer and the Company each agrees to all of the terms and
conditions of, and becomes a party to, the Joint Escrow Instructions, all of
the provisions of which are incorporated herein by this reference as if set
forth in full. As used in this Agreement, the term "Business Day"means any
day other than a Saturday, Sunday or other day on which commercial banks in
The City of New York are authorized or required by law to remain closed.
.c.(C) METHOD OF PAYMENT;. Payment of the purchase price for
the Preferred Shares shall be made by wire transfer of funds to:
Citibank, N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ABA#▇▇▇▇▇▇▇▇▇
For credit to A/C#37179446
For credit to the account of ▇▇▇▇▇ ▇. ▇▇▇▇▇ Attorney Escrow Account
Reference: Plaza/American Bingo
Not later than 4:00 p.m., New York City time, on the date which is two
Business Days after the Company shall have accepted this Agreement and
returned a signed counterpart of this Agreement to the Buyer or its legal
counsel, the Buyer shall deposit with the Escrow Agent the aggregate purchase
price for the Initial Preferred Shares.
.c.2. BUYER REPRESENTATIONS, WARRANTIES, ETC.
The Buyer represents and warrants to, and covenants and agrees with,
the Company as follows:
.c.(A) PURCHASE FOR INVESTMENT;. The Buyer is purchasing the
Preferred Shares and acquiring the Warrant for its own account for investment
only and not with a view towards the public sale or distribution thereof;
.c.(B) ACCREDITED INVESTOR;. The Buyer is an "accredited
investor" as that term is defined in Rule 501 of the General Rules and
Regulations under the 1933 Act by reason of Rule 501(a)(3);
.c.(C) REOFFERS AND RESALES;. All subsequent offers and sales
of the Shares by the Buyer shall be made pursuant to registration of the
Shares being offered and sold under the 1933 Act or pursuant to an exemption
from registration;
.c.(D) COMPANY RELIANCE;. The Buyer understands that the
Initial Preferred Shares are being offered and sold, the Warrant is being
issued, and the Common Shares and the Additional Preferred Shares are being
offered, to it in reliance on specific exemptions from the registration
requirements of United States federal and state securities laws and that the
Company is relying upon the truth and accuracy of, and the Buyer's compliance
with, the representations, warranties, agreements, acknowledgments and
understandings of the Buyer set forth herein in order to determine the
availability of such exemptions and the eligibility of the Buyer to acquire
the Initial Preferred Shares and the Warrant and to receive an offer of the
Common Shares and the Additional Preferred Shares;
.c.(E) INFORMATION PROVIDED;. The Buyer and its advisors, if
any, have been furnished with all materials relating to the business, finances
and operations of the Company and materials relating to the offer and sale of
the Initial Preferred Shares and the issuance of the Warrant and the offer of
the Common Shares and the Additional Preferred Shares which have been
requested by the Buyer; the Buyer and its advisors, if any, have been afforded
the opportunity to ask questions of the Company and have received complete and
satisfactory answers to any such inquiries; without limiting the generality of
the foregoing, the Buyer has had the opportunity to obtain and to review the
Company's (1) Annual Report on Form 10-KSB for the fiscal year ended December
31, 1996 (the "1996 10-K"), (2) Quarterly Report on Form 10-QSB for the fiscal
quarter ended March 31, 1997 (the "March 31 10-Q), (3) Current Report on Form
8-K dated March 18, 1997 and (4) proxy statement for the Company's 1996 Annual
Meeting, in each case as filed with the SEC (collectively, the "SEC Reports")
and a draft of the Quarterly Report on Form 10-QSB for the fiscal quarter
ended June 30, 1997; and the Buyer understands that its investment in the
Shares involves a high degree of risk;
.c.(F) ABSENCE OF APPROVALS;. The Buyer understands that no
United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Shares;
and
.c.(G) SUBSCRIPTION AGREEMENT;. This Agreement has been duly
and validly authorized, executed and delivered on behalf of the Buyer and is a
valid and binding agreement of the Buyer enforceable in accordance with its
terms, subject as to enforceability to general principles of equity and to
bankruptcy, insolvency, moratorium and other similar laws affecting the
enforcement of creditors' rights generally.
.c.3. COMPANY REPRESENTATIONS, WARRANTIES, ETC.
The Company represents and warrants to, and covenants and agrees
with, the Buyer that:
.c.(A) ORGANIZATION AND AUTHORITY;. The Company and each of its
subsidiaries listed in Exhibit 21.1 to the 1996 10-K (the "Subsidiaries") is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and has all requisite corporate power and
authority to (i) own, lease and operate its properties and to carry on its
business as now being conducted, and (ii) to execute, deliver and perform its
obligations under this Agreement, the Certificate of Designations, the
Warrant, the Registration Rights Agreement, the Transfer Agent Agreement, the
form of which is attached hereto as ANNEX IV (the "Transfer Agent
Instructions"), and the other agreements to be executed and delivered by the
Company in connection herewith, and to consummate the transactions
contemplated hereby and thereby. The Company and each of its Subsidiaries is
duly qualified to do business as a foreign corporation and is in good standing
in all jurisdictions wherein such qualification is necessary and where failure
so to qualify could have a material adverse effect on the business,
properties, operations, condition (financial or other), results of operations
or prospects of the Company and its Subsidiaries, taken as a whole. The
Company has no equity investment in any person other than the Subsidiaries.
.c.(B) CAPITALIZATION;. The authorized capital stock of the
Company currently consists of (a) 20,000,000 shares of Common Stock of which
4,345,919 shares were outstanding as of July 11, 1997, all of which are fully
paid and nonassessable; and (b) 1,000,000 shares of Preferred Stock, $.001 par
value, none of which are outstanding, and 3,000 shares of which will be
designated as Series A Convertible Preferred Stock, 2,000 of which will be
issued pursuant to this Agreement; and on the Closing Date there will be no
material increase from July 11, 1997 in the number of shares of Common Stock
outstanding. As of July 11, 1997, the Company had outstanding 1,155,000
options and 3,067,500 warrants entitling the holders to purchase an aggregate
of 4,222,500 shares of Common Stock. Other than as set forth in the preceding
sentence, the Company does not have outstanding any material amount of
securities (or obligations to issue any such securities) convertible into,
exchangeable for or otherwise entitling the holders thereof to acquire shares
of Common Stock. The outstanding shares of Common Stock and outstanding
options, warrants and other securities to purchase Common Stock have been duly
authorized and validly issued. None of such outstanding shares of Common
Stock, options, warrants and other securities has been issued in violation of
the preemptive rights of any securityholder of the Company. The offers and
sales of the outstanding shares of Common Stock and options, warrants and
other rights to acquire Common Stock were at all relevant times either
registered under the 1933 Act and applicable state securities laws or exempt
from such requirements. No holder of any of the Company's securities has any
rights, "demand,""piggy-back" or otherwise, to have such securities registered
by reason of the intention to file, filing or effectiveness of the
Registration Statement (as defined in the Registration Rights Agreement).
.c.(C) CONCERNING THE SHARES AND THE COMMON STOCK;. The Shares
have been duly authorized. The Initial Preferred Shares, when issued and paid
for in accordance with this Agreement, the Additional Preferred Shares, when
issued in accordance with the Registration Rights Agreement, and the Common
Shares, when issued upon conversion of the Preferred Shares, in payment of
dividends on the Preferred Shares or upon exercise of the Warrant, as the case
may be, will be duly and validly issued, fully paid and non-assessable and
will not subject the holder thereof to personal liability by reason of being
such holder. There are no preemptive or similar rights of any stockholder of
the Company or any other person to acquire any of the Shares. The Common
Stock is listed for trading on the Nasdaq SmallCap Market ("Nasdaq") and (1)
the Company and the Common Stock meet the criteria for continued listing and
trading on Nasdaq; (2) except as listed on Schedule 3(c), the Company has not
been notified since January 1, 1995 by Nasdaq of any failure or potential
failure to meet the criteria for continued listing and trading on Nasdaq and
(3) no suspension of trading in the Common Stock is in effect. The Company
knows of no reason that the Common Shares will not be eligible for listing on
Nasdaq.
.c.(D) SUBSCRIPTION AGREEMENT; CERTIFICATE OF DESIGNATIONS;;
REGISTRATION RIGHTS AGREEMENT; WARRANT; TRANSFER AGENT INSTRUCTIONS. This
Agreement, the Certificate of Designations, the Registration Rights Agreement,
the Warrant and the Transfer Agent Instructions have been duly and validly
authorized by the Company, this Agreement has been duly executed and delivered
on behalf of the Company and this Agreement is, and the Registration Rights
Agreement, the Warrant and the Transfer Agent Instructions, when executed and
delivered by the Company, will be, valid and binding obligations of the
Company enforceable in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium and other similar laws affecting the enforcement of creditors'
rights generally and limits upon rights to indemnity.
.c.(E) NON-CONTRAVENTION;. The execution and delivery of this
Agreement by the Company and the other documents contemplated by this
Agreement and the consummation by the Company of the issuance of the Initial
Preferred Shares and the Warrant as contemplated by this Agreement, the
issuance of the Additional Preferred Shares as contemplated by the
Registration Rights Agreement and the other transactions contemplated by this
Agreement, the Registration Rights Agreement, the terms of the Preferred
Stock, the Warrant and the Transfer Agent Instructions do not and will not
with or without the giving of notice or the lapse of time, or both, (i) result
in any violation of any term of the Certificate of Incorporation or By-laws of
the Company or any of its Subsidiaries, (ii) conflict with or result in a
breach by the Company or any of its Subsidiaries of any of the terms or
provisions of, or constitute a default under, or result in the modification
of, or result in the creation or imposition of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the Company or
any of its Subsidiaries pursuant to, any indenture, mortgage, deed of trust or
other agreement or instrument to which the Company or any of its Subsidiaries
is a party or by which the Company or any of its Subsidiaries or any of their
respective properties or assets is bound or affected or (iii) violate or
contravene any applicable law, rule or regulation or any applicable decree,
judgment or order of any court, United States federal or state regulatory
body, administrative agency or other governmental body having jurisdiction
over the Company or any of its Subsidiaries or any of their respective
properties or assets or (iv) have any material adverse effect on any permit,
certification, registration, approval, consent, license or franchise necessary
for the Company or any of its Subsidiaries to own or lease and operate any of
their respective properties or to conduct any of their respective businesses
or the ability of the Company or any of the Subsidiaries to make use thereof.
.c.(F) APPROVALS;. No authorization, approval or consent of any
court, governmental body, regulatory agency, self-regulatory organization, or
stock exchange or market or the Stockholders of the Company is required to be
obtained by the Company for (1) the execution, delivery and performance by the
Company of this Agreement, the Registration Rights Agreement (except such
authorization of the SEC as is required with respect to accelerating the
effectiveness of any registration statement filed pursuant thereto), the
Warrant and the Transfer Agent Instructions, (2) the execution, filing and
performance by the Company of the Certificate of Designations, (3) the
issuance and sale of the Initial Preferred Shares and the Warrant as
contemplated by this Agreement, (4) the issuance of the Additional Preferred
Shares as contemplated by the Registration Rights Agreement and (5) the
issuance of Conversion Shares on conversion of the Preferred Shares, the
issuance of Dividend Shares as dividends on the Preferred Shares or the
issuance of Warrant Shares upon exercise of the Warrant, other than (w)
listing of the Common Shares on Nasdaq, (x) registration of the resale of the
Common Shares under the 1933 Act as contemplated by the Registration Rights
Agreement, (y) as may be required under applicable state securities or "blue
sky"laws and (z) filing of one or more Forms D with respect to the Securities
as required under Regulation D.
.c.(G) INFORMATION PROVIDED;. The information provided by or on
behalf of the Company to the Buyer in connection with the transactions
contemplated by the Agreement, including, without limitation, the information
referred to in Section 2(e) of this Agreement, does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they are made, not misleading. The Company has not filed any reports
with the Securities and Exchange Commission under the Securities Exchange Act
of 1934, as amended (the "1934 Act") since December 31, 1996 other than the
1996 10-K and the March 31 10-Q.
.c.(H) ABSENCE OF CERTAIN CHANGES;. Since December 31, 1996,
there has been no material adverse change and no material adverse development
in the business, properties, operations, condition (financial or other),
results of operations or prospects of the Company or any of the Subsidiaries,
except as disclosed in the SEC Reports.
.c.(I) ABSENCE OF CERTAIN PROCEEDINGS;. There is no action,
suit or proceeding, before or by any court, public board or body or
governmental agency pending or, to the knowledge of the Company or any of the
Subsidiaries, threatened against the Company or any of the Subsidiaries and
there is no inquiry or investigation before or by any court, public board or
body or governmental agency pending or, to the knowledge of the Company or any
of the Subsidiaries, threatened against the Company or any of the
Subsidiaries, in any such case wherein an unfavorable decision, ruling or
finding would have a material adverse effect on the business, properties, the,
condition (financial or other), results of operations or prospects of the
Company and the Subsidiaries taken as a whole or the transactions contemplated
by this Agreement or any of the documents contemplated hereby or which would
adversely affect the validity or enforceability of, or the authority or
ability of the Company to perform its obligations under, this Agreement or any
of such other documents; the Company does not have pending before the SEC any
request for confidential treatment of information and to the best of the
Company's knowledge no such request will be made by the Company prior to the
time the Registration Statement relating to the Common Shares which is
contemplated by the Registration Rights Agreement is first ordered effective
by the SEC; and there has not been, and to the best of the Company's knowledge
there is not pending or contemplated, any investigation by the SEC involving
the Company or any current or former director or officer of the Company.
.c.(J) PROPERTIES;. The Company and the Subsidiaries have good
title to all property real and personal (tangible and intangible) and other
assets owned by them, free and clear of all security interests, charges,
mortgages, liens or other encumbrances, except such as are described in the
SEC Reports or such as do not materially interfere with the use of such
property made, or proposed to be made, by the Company or the Subsidiaries.
The leases, licenses or other contracts or instruments under which the Company
and the Subsidiaries lease, hold or are entitled to use any property, real or
personal, are valid, subsisting and enforceable with only such exceptions as
do not materially interfere with the use of such property made, or proposed to
be made, by the Company or its Subsidiaries except as disclosed on Schedule
3(j). Neither the Company nor any of the Subsidiaries has received notice of
any material violation of any applicable law, ordinance, regulation, order or
requirement relating to its owned or leased properties.
.c.(K) LABOR RELATIONS;. No material labor problem exists or,
to the knowledge of the Company, is imminent with respect to any of the
employees of the Company or any of the Subsidiaries.
.c.(L) SEC FILINGS;. The Company has timely filed all required
forms, reports and other documents with the SEC. All of such forms, reports
and other documents complied, when filed, in all material respects, with all
applicable requirements of the 1933 Act and the 1934 Act. The Company meets
the requirements for the use of Form S-3 for the registration of the resale of
the Shares by the Buyer.
.c.(M) ABSENCE OF BROKERS, FINDERS, ETC.; No broker, finder or
similar person is entitled to any commission, fee or other compensation by
reason of the transactions contemplated by this Agreement other than as
disclosed in writing by the Company to the Buyer prior to execution and
delivery of this Agreement by the Buyer, and the Company shall pay, and
indemnify and hold harmless the Buyer from, any claim made against the Buyer
by any person for any such commission, fee or other compensation.
.c.4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS;.
.c.(A) TRANSFER RESTRICTIONS;. The Buyer acknowledges that (1)
the Preferred Shares and the Warrant have not been and are not being
registered under the provisions of the 1933 Act and, except as provided in the
Registration Rights Agreement, the Common Shares have not been and are not
being registered under the 1933 Act, and the Securities may not be transferred
unless (A) subsequently registered thereunder or (B) the Buyer shall have
delivered to the Company an opinion of counsel, reasonably satisfactory in
form, scope and substance to the Company, to the effect that the Securities to
be sold or transferred may be sold or transferred pursuant to an exemption
from such registration; (2) any resale of the Securities made in reliance on
Rule 144 promulgated under the 1933 Act may be made only in accordance with
the terms of said Rule and further, if said Rule is not applicable, any such
resale of Securities under circumstances in which the seller, or the person
through whom the sale is made, may be deemed to be an underwriter, as that
term is used in the 1933 Act, may require compliance with some other exemption
under the 1933 Act or the rules and regulations of the SEC thereunder; and (3)
neither the Company nor any other person is under any obligation to register
the Securities (other than pursuant to the Registration Rights Agreement)
under the 1933 Act or to comply with the terms and conditions of any exemption
thereunder (other than pursuant to Section 4(d) hereof and pursuant to the
Registration Rights Agreement).
.c.(B) RESTRICTIVE LEGEND;. (1) The Buyer acknowledges and
agrees that the Preferred Shares shall bear a restrictive legend in
substantially the following form (and a stop-transfer order may be placed
against transfer of the Preferred Shares):
The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended. The securities have been acquired for
investment and may not be sold, transferred or assigned in the absence of an
effective registration statement for the securities under the Securities Act
of 1933, as amended, or an opinion of counsel that registration is not
required under said Act.
(2) The Buyer further acknowledges and agrees that the Warrant
shall bear a restrictive legend in substantially the following form (and a
stop-transfer order may be placed against transfer of the Warrant):
The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended. The securities have been acquired for
investment and may not be resold, transferred or assigned in the absence of an
effective registration statement for the securities under the Securities Act
of 1933, as amended, or an opinion of counsel that registration is not
required under said Act.
(3) The Buyer further acknowledges and agrees that until such
time as the Common Shares have been registered for resale under the 1933 Act
as contemplated by the Registration Agreement, the certificates for the Common
Shares, may bear a restrictive legend in substantially the following form (and
a stop-transfer order may be placed against transfer of the certificates for
the Common Shares):
The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended. The securities have been acquired for
investment and may not be resold, transferred or assigned in the absence of an
effective registration statement for the securities under the Securities Act
of 1933, as amended, or an opinion of counsel that registration is not
required under said Act.
Once the Registration Statement required to be filed by the Company pursuant
to Section 2 of the Registration Rights Agreement has been declared effective,
thereafter (1) upon request of the Buyer the Company will substitute
certificates without restrictive legend for certificates for any Common Shares
issued prior to the date such Registration Statement is declared effective by
the SEC which bear such restrictive legend and remove any stop-transfer
restriction relating thereto promptly, but in no event later than three days
after surrender of such certificates by the Buyer and (2) the Company shall
not place any restrictive legend on certificates for Common Shares issued on
conversion of or payment of dividends on the Preferred Shares or upon exercise
of the Warrant or impose any stop-transfer restriction thereon.
.c.(C) REGISTRATION RIGHTS AGREEMENT;. The parties hereto agree
to enter into the Registration Rights Agreement on or before the Closing Date.
.c.(D) FORM D; BLUE SKY LAWS;. The Company agrees to file a
Form D with respect to the Shares as required under Regulation D and to
provide a copy thereof to the Buyer promptly after such filing. The Buyer
agrees to cooperate with the Company in connection with such filing and, upon
request of the Company, to provide all information relating to the Buyer
reasonably required for such filing.
.c.(E) AUTHORIZATION FOR TRADING; REPORTING STATUS;. On or
before the Closing Date, the Company shall file a notification for listing of
additional shares with the Nasdaq and shall provide evidence of such filing to
the Buyer. So long as the Buyer beneficially owns any of the Preferred
Shares, the Warrant or the Common Shares, the Company shall file all reports
required to be filed with the SEC pursuant to Section 13 or 15(d) of the 1934
Act and the Company shall not terminate its status as an issuer required to
file reports under the 1934 Act even if the 1934 Act or the rules and
regulations thereunder would permit such termination.
.c.(F) USE OF PROCEEDS;. Neither the Company nor any subsidiary
of the Company owns or has any present intention of acquiring any "margin
stock" as defined in Regulation G (12 CFR Part 207) of the Board of Governors
of the Federal Reserve System ("margin stock"). The proceeds of sale of the
Preferred Shares will be used for general working capital purposes and in the
operation of the Company's business. None of such proceeds will be used,
directly or indirectly (1) (other than financing its subsidiaries in the
ordinary course of business) to make any loan to or investment in any other
person or (2) for the purpose, whether immediate, incidental or ultimate, of
purchasing or carrying any margin stock or for the purpose of maintaining,
reducing or retiring any indebtedness which was originally incurred to
purchase or carry any stock that is currently a margin stock or for any other
purpose which might constitute the transactions contemplated by this Agreement
a "purpose credit" within the meaning of such Regulation G. Neither the
Company nor any agent acting on its behalf has taken or will take any action
which might cause this Agreement or the transactions contemplated hereby to
violate Regulation G, Regulation T or any other regulation of the Board of
Governors of the Federal Reserve System or to violate the 1934 Act, in each
case as in effect now or as the same may hereafter be in effect.
.c.(G) BLUE SKY LAWS;. On or before the Closing Date, the
Company shall take such action as shall be necessary to qualify, or to obtain
an exemption for, the Initial Preferred Shares for sale to the Buyer pursuant
to this Agreement, the Additional Preferred Shares for issuance to the Buyer
pursuant to the Registration Rights Agreement, the Warrant for issuance to the
Buyer pursuant to this Agreement and the Common Shares for issuance to the
Buyer on conversion of or dividends on the Preferred Shares or exercise of the
Warrants under such of the securities or "blue sky" laws of jurisdictions as
shall be applicable to the sale of the Initial Preferred Shares pursuant to
this Agreement, issuance of the Additional Preferred Shares pursuant to the
Registration Rights Agreement and the issuance to the Buyer of Common Shares
on conversion of or as dividends on the Preferred Shares of the Warrant
pursuant to this Agreement, and the issuance or upon exercise of the Warrants.
The Company shall furnish copies of all filings, applications, orders and
grants or confirmations of exemptions relating to such securities or "blue
sky" laws on or prior to the Closing Date. The cost of obtaining additional
blue sky clearances in additional states beyond the Company's current blue sky
clearances listed on SCHEDULE 3(G) shall be borne by the holders requesting
-------------
such clearances.
.c.(H) CERTAIN EXPENSES;. Whether or not the closing occurs,
the Company shall pay or reimburse the Buyer for all reasonable expenses
(including, without limitation, legal fees and expenses of counsel to the
Buyer) incurred by the Buyer, not in excess of $10,000, in connection with
this Agreement and the transactions contemplated hereby.
.c.(I) CERTAIN ISSUANCES OF SECURITIES;. (1) If the
transactions contemplated by this Agreement are subject to the rules proposed
to be adopted by Nasdaq which would require stockholder approval of certain
transactions (the "Nasdaq Stockholder Approval Rules"), then unless the
Company obtains Stockholder Approval (as defined in the Certificate of
Designations) or a waiver thereof from Nasdaq, the Company will not issue any
shares of Common Stock or shares of any other series of preferred stock or
other securities convertible into, exchangeable for or otherwise entitling the
holder to acquire shares of Common Stock which would be subject to the Nasdaq
(or any successor or replacement provision thereof) and which would be
integrated with the sale of the Preferred Shares to the Buyer or the issuance
of Common Shares upon conversion thereof Stockholder Approval Rules for
purposes of the Nasdaq Stockholder Approval Rules (or any successor or
replacement provision thereof).
(2) During the period from the date of this Agreement to the date on
which the Registration Statement (as defined in the Registration Rights
Agreement) shall have been effective with the SEC for 60 consecutive days, the
Company shall not offer, sell, contract to sell or issue (or engage any person
to assist the Company in taking any such action) any equity securities or
securities convertible into, exchangeable for or otherwise entitling the
holder to acquire, any Common Stock (collectively, "Equity Securities") at a
price below the market price of the Common Stock without (a) giving the Buyer
the first right to acquire the Equity Securities on the same terms at which
the Equity Securities are to be offered to other investors (and on terms which
permit the Buyer to purchase a pro rata portion of such Equity Securities,
based on the portion of the shares of Preferred Stock purchased by the Buyer
pursuant to this Agreement), and (b) obtaining the consent of the holders of a
majority of the shares of the Preferred Shares which consent will not
unreasonably be withheld; provided, however, that nothing in this Section
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4(i)(2) shall prohibit the Company from issuing securities (x) pursuant to
compensation plans for employees, directors, officers, advisers or consultants
of the Company and in accordance with the terms of such plans as in effect as
of the date of this Agreement, (y) upon exercise of conversion, exchange,
purchase or similar rights issued, granted or given by the Company and
outstanding as of the date of this Agreement or (z) in connection with the
acquisition of all or substantially all the assets or stock of another entity.
.c.(J) CERTAIN TRADING RESTRICTIONS;. The Buyer agrees that
----------------------------
during the period from the Closing Date to the date of conversion in full or
redemption of all Preferred Shares owned by the Buyer, the Buyer shall not
engage in short sales with respect to the Common Stock, provided that the
foregoing shall not be deemed to restrict the Buyer from offering to sell
shares of Common Stock during the two Business Days immediately prior to the
Buyer's delivery of a Notice of Conversion.
.c.(K) BEST EFFORTS;. Each of the parties shall use its best
------------
efforts timely to satisfy each of the conditions to the other party's
obligations to sell and purchase the Preferred Shares set forth in Section 7
or 8, as the case may be, of this Agreement on or before the Closing Date.
.c.5. TRANSFER AGENT INSTRUCTIONS; CONVERSION PROCEDURE.
.c.(A) TRANSFER AGENT INSTRUCTIONS;. Promptly following the
delivery by the Buyer of the aggregate purchase price for the Initial
Preferred Shares in accordance with Section 1(c) hereof, and in any event
prior to the Closing Date, the Company will (1) execute and deliver the
Transfer Agent Instructions substantially in the form attached hereto as ANNEX
V to and thereby irrevocably instruct, American Stock Transfer & Trust
Company, as Transfer Agent and Registrar (the "Transfer Agent"), to issue
certificates for the Common Shares from time to time upon conversion of the
Preferred Shares and exercise of the Warrant in such amounts as specified from
time to time to the Transfer Agent in the Notices of Conversion surrendered in
connection with such conversions and referred to in Section 5(b) of this
Agreement and the Form of Subscription in the form attached to the Warrant and
(2) appoint the Transfer Agent the conversion agent for the Preferred Stock
and the exercise agent for the Warrant. The certificates for the Common
Shares may bear the restrictive legend specified in Section 4(b) of this
Agreement prior to registration of the resale of the Common Shares under the
1933 Act. The certificates for the Common Shares shall be registered in the
name of the Buyer or its nominee and in such denominations to be specified by
the Buyer in connection with each conversion of Preferred Shares or the
exercise of the Warrant. The Company warrants that no instruction other than
(x) such instructions referred to in this Section 5, (y) stop transfer
instructions to give effect to Section 4(a) hereof prior to registration of
the resale of the Common Shares under the 1933 Act and (z) the instructions
required by Section 3(n) of the Registration Rights Agreement will be given by
the Company to the Transfer Agent and that the Common Shares shall otherwise
be freely transferable on the books and records of the Company as and to the
extent provided in this Agreement. Nothing in this Section 5(a) shall limit
in any way the Buyer's obligations and agreement to comply with all applicable
securities laws upon resale of the Shares. If the Buyer provides the Company
with an opinion of counsel reasonably satisfactory in form, scope and
substance to the Company that registration of a resale by the Buyer of any of
the Shares in accordance with clause (1)(B) of Section 4(a) of this Agreement
is not required under the 1933 Act, the Company shall permit the transfer of
such Shares and, in the case of the Common Shares, promptly, but in no event
later than three days after receipt of such opinion, instruct the Company's
transfer agent to issue upon transfer one or more share certificates in such
name and in such denominations as specified by the Buyer. Nothing in this
Section 5(a) shall limit the obligations of the Company under Section 3(n) of
the Registration Rights Agreement.
.c.(B) CONVERSION PROCEDURE;. In connection with the exercise
of conversion rights relating to the Preferred Shares, the Buyer or any
subsequent holder of the Preferred Shares shall complete, sign and furnish to
the Transfer Agent a Notice of Conversion in the form attached hereto as ANNEX
VI, which shall be deemed to satisfy all requirements of the Certificate of
Designations.
.c.6. CLOSING DATE.;
The date and time of the issuance and sale of the Initial Preferred
Shares and the issuance of the Warrant (the "Closing Date") shall be 12:00
noon, New York City time, on the date which is three Business Days after the
date on which the Buyer has deposited the purchase price for the Preferred
Shares with the Escrow Agent in accordance with Section 1(c) hereof, or such
other mutually agreed to time. The closing shall occur on the Closing Date at
the offices of the Escrow Agent.
.c.7. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL AND ISSUE.
The Buyer understands that the Company's obligation to sell the
Initial Preferred Shares and issue the Warrant to the Buyer pursuant to this
Agreement is conditioned upon the satisfaction of the following conditions
precedent on or before the Closing Date (any or all of which may be waived by
the Company in its sole discretion):
(a) The receipt and acceptance by the Company of this Agreement
as evidenced by execution of this Agreement by the Company and delivery of an
executed counterpart of this Agreement to the Buyer or its legal counsel;
(b) Delivery by the Buyer to the Escrow Agent of good funds as
payment in full of an amount equal to the purchase price for the Initial
Preferred Shares in accordance with Section 1(c) hereof; and
(c) The accuracy on the Closing Date of the representations and
warranties of the Buyer contained in this Agreement as if made on the Closing
Date and the performance by the Buyer on or before the Closing Date of all
covenants and agreements of the Buyer required to be performed on or before
the Closing Date.
.c.8. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.;
The Company understands that the Buyer's obligation to purchase the
Initial Preferred Shares and acquire the Warrant on the Closing Date is
conditioned upon the satisfaction of the following conditions precedent on or
before the Closing Date (any or all of which may be waived by the Buyer in its
sole discretion):
(a) Delivery by the Company to the Escrow Agent of the
certificates for the Initial Preferred Shares and the Warrant in accordance
with this Agreement;
(b) The accuracy on the Closing Date of the representations and
warranties of the Company contained in this Agreement as if made on the
Closing Date and the performance by the Company on or before the Closing Date
of all covenants and agreements of the Company required to be performed on or
before the Closing Date and receipt by the Buyer of a certificate, dated the
Closing Date, of the Chief Executive Officer or the Chief Financial Officer of
the Company confirming such matters and such other matters as the Buyer may
reasonably request;
(c) The receipt by the Buyer of confirmation of the filing with
the Secretary of State of the State of Delaware of the Certificate of
Designations;
(d) The receipt by the Buyer of a certificate, dated the Closing
Date, of the Secretary of the Company certifying (1) the Certificate of
Incorporation and By-Laws of the Company as in effect on the Closing Date, (2)
all resolutions of the Board of Directors (and committees thereof) of the
Company relating to this Agreement and the transactions contemplated hereby
and (3) such other matters as reasonably requested by the Buyer; and
(e) Receipt by the Buyer on the Closing Date of an opinion of
counsel for the Company, dated the Closing Date, in form, scope and substance
reasonably satisfactory to the Buyer, to the effect set forth in ANNEX VII
attached hereto.
.c.9. MISCELLANEOUS. ;
(A) GOVERNING LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York.
(B) COUNTERPARTS. This Agreement may be executed in
counterparts and by the parties hereto on separate counterparts, all of which
together shall constitute one and the same instrument. A facsimile
transmission of this Agreement bearing a signature on behalf of a party hereto
shall be legal and binding on such party.
(C) HEADINGS, ETC. The headings, captions and footers of this
Agreement are for convenience of reference and shall not form part of, or
affect the interpretation of, this Agreement.
(D) SEVERABILITY. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this
Agreement in any other jurisdiction.
(E) AMENDMENTS. No amendment, modification, waiver, discharge
or termination of any provision of this Agreement nor consent to any departure
by the Buyer or the Company therefrom shall in any event be effective unless
the same shall be in writing and signed by the party to be charged with
enforcement, and then shall be effective only in the specific instance and for
the purpose for which given. No course of dealing between the parties hereto
shall operate as an amendment of this Agreement.
(F) WAIVERS. Failure of any party to exercise any right or
remedy under this Agreement or otherwise, or delay by a party in exercising
such right or remedy, or any course of dealings between the parties, shall not
operate as a waiver thereof or an amendment hereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other
or further exercise thereof or exercise of any other right or power.
(G) NOTICES. Any notices required or permitted to be given
under the terms of this Agreement shall be sent by mail or delivered
personally (which shall include telephone line facsimile transmission with
answer back confirmation) or by courier and shall be effective five days after
being placed in the mail, if mailed, or upon receipt, if delivered personally
or by courier, in the case of the Company addressed to the Company at its
address shown in the introductory paragraph of this Agreement, Attention:
Chief Executive Officer (telephone line facsimile transmission number (512)
472-4307) or, in the case of the Buyer, at its address shown on the signature
page of this Agreement, or such other address as a party shall have provided
by notice to the other party in accordance with this provision. The Buyer
hereby designates as its address for any notice required or permitted to be
given to the Buyer pursuant to the Certificate of Designations the address
shown on the signature page of this agreement, with a copy to: The Law Offices
of ▇▇▇▇▇ ▇ ▇▇▇▇▇, Penthouse Suite, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ (telephone line facsimile transmission number (▇▇▇) ▇▇▇-▇▇▇▇) until the
Buyer shall designate another address for such purpose.
(H) ASSIGNMENT. Prior to the Closing Date, the Buyer shall have
the right to assign its rights and obligations under this Agreement with
respect to the purchase of all or any portion of the Initial Preferred Shares
and the issuance of the Warrants, provided any such assignee, by written
instrument duly executed by such assignee, assumes all obligations of the
Buyer hereunder with respect to the purchase of the portion of the Preferred
Shares or the Warrant so assigned and makes the same representations and
warranties with respect thereto as the Buyer makes in this Agreement,
whereupon the Buyer shall be relieved of any further obligations,
responsibilities and liabilities with respect to the purchase of all or the
portion of the Preferred Shares the obligation for the purchase of which has
been so assigned. In the case of any such assignment, the Company shall agree
in writing with such assignee to make available to such assignee the benefits
of the Registration Rights Agreement with respect to the Common Shares
issuable on conversion of the Preferred Shares or exercise of the Warrant with
respect to which the purchase under this Agreement has been so assigned. Any
transfer of the Preferred Shares or the Warrant by the Buyer after the Closing
Date shall be made in accordance with Section 4(a).
(I) SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
representations, warranties, covenants and agreements of the Buyer and the
Company contained in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement shall survive the delivery of payment
for the Preferred Shares and shall remain in full force and effect regardless
of any investigation made by or on behalf of them or any person controlling or
advising any of them.
(J) ENTIRE AGREEMENT. This Agreement and its Annexes set forth
the entire agreement between the parties hereto with respect to the subject
matter hereof and supersede all prior agreements and understandings, whether
written or oral, with respect thereto.
(K) TERMINATION. The Buyer shall have the right to terminate
this Agreement by giving notice to the Company at any time at or prior to the
Closing Date if:
63.03.04.01-P --
(1) the Company shall have failed, refused, or been unable at or
prior to the date of such termination of this Agreement to perform any of its
obligations hereunder;
(2) any other condition of the Buyer's obligations hereunder is not
fulfilled; or
(3) the closing shall not have occurred on a Closing Date on or
before August 7, 1997, other than solely by reason of a breach of this
Agreement by the Buyer.
63.03.04.01-P --
Any such termination shall be effective upon the giving of notice thereof by
the Buyer. Upon such termination, the Buyer shall have no further obligation
to the Company hereunder and the Company shall remain liable for any breach of
this Agreement or the other documents contemplated hereby which occurred on or
prior to the date of such termination.
(L) FURTHER ASSURANCES. Each party to this Agreement will
perform any and all acts and execute any and all documents as may be necessary
and proper under the circumstances in order to accomplish the intents and
purposes of this Agreement and to carry out its provisions.
(M) PUBLIC STATEMENTS, PRESS RELEASES, ETC. The Company and the
Buyer shall have the right to approve before issuance any press releases or
any other public statements with respect to the transactions contemplated
hereby; provided, however, that the Company shall be entitled, without the
prior approval of the Buyer, to make any press release or other public
disclosure with respect to such transactions as is required by applicable law
and regulations (although the Buyer shall be consulted by the Company in
connection with any such press release or other public disclosure prior to its
release and shall be provided with a copy thereof).
(N) CONSTRUCTION. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual
intent, and no rules of strict construction will be applied against any party.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
Buyer or one of its officers thereunto duly authorized as of the date set
forth below.
NUMBER OF SHARES:
PRICE PER SHARE: $1,000.00
AGGREGATE PURCHASE PRICE: $
BUYER: PLAZACORP INVESTMENTS LIMITED
SIGNATURE
Title:
Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
COMPANY: AMERICAN GAMING & BINGO CORP.
By:
Title:
Schedule 3(c)
to
Subscription Agreement
On April 30, 1997, Nasdaq notified the Company that the Company had
failed to file certain information regarding the Company's 1997 Stock Option
Plan. The Company filed a Notification folder for Listing of Additional
Shares on June 5, 1997, supplying the supplemental information requested by
Nasdaq.
Schedule 3(j)
to
Subscription Agreement
The Company's leases on one bingo center in Mobile, Alabama and on
in Austin, Texas have expired. The Company is operating those centers on
month-to-month leases while it seeks to negotiate longer term leases. The
current lease payments for those centers are approximately $3,000 per month in
Mobile, Alabama and $7,000 per month in Austin, Texas.
