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
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
THE SOLE SHAREHOLDER OF
GOLD STRIKE, INC.
AS THE "SHAREHOLDER"
DATED: AUGUST 13, 1997
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SCHEDULES
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SCHEDULE
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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
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EXHIBITS
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EXHIBIT
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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 ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇
AGREEMENT AND PLAN OF REORGANIZATION
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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
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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 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, the sole shareholder of the
Company (the "Shareholder").
RECITALS
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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
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
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DEFINITIONS
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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
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it in Section 2.7.
1.2 Agreement. "Agreement" shall mean this Agreement and Plan of
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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
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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
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date of Closing, which shall include the ownership and operation of all of
Shareholder's video poker games 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
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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
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Certificate" shall mean the certificate of Buyer and the Sub in the form of
Exhibit 1.6 hereto.
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1.7 Closing. "Closing" shall mean the conference held at 10:00 am., local
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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
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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.
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1.10 Company's and Shareholder's Closing Certificate. "Company's and
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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,
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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 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
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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
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to it in Section 10.2 hereof.
1.14 Indemnifying Party. "Indemnifying Party" shall have the meaning
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ascribed to it in Section 10.2 hereof.
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1.15 Law. "Law" shall mean any federal, state, local or other law or
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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
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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,
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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. "Merger" shall have the meaning ascribed to it in Section 2.1
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hereof.
1.19 Merger Consideration. "Merger Consideration" shall have the meaning
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ascribed to it in Section 2.7 hereof.
1.20 NASDAQ. "NASDAQ" shall mean the Nation Association of Securities
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Dealers Automated Quotation Stock Market.
1.21 Permits. "Permits" shall mean all licenses, permits and other
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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,
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corporation, partnership or other legal entity.
1.23 Proprietorship. "Proprietorship" shall mean the Shareholder's sole
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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
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leased by the Company as of the Closing Date, including all appurtenant rights,
claims and interests therein, as described on Schedule 1.24 hereto.
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1.25 Registered Shares. "Registered Shares" shall have the meaning ascribed
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to it in Section 6.7 hereof.
1.26 Registration Statement. "Registration Statement" shall have the
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meaning ascribed to it in Section 6.7 hereof.
1.27 SEC. "SEC" shall mean the United States Securities and Exchange
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Commission.
1.28 Shareholder. "Shareholder" shall mean ▇▇▇▇▇▇▇ ▇. ▇▇▇▇.
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1.29 Shares. "Shares" shall have the meaning set forth in Section 4.2.
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1.30 Surviving Corporation. "Surviving Corporation" shall have the meaning
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ascribed to it in Section 2.1 hereof.
1.31. Unregistered Shares. "Unregistered Shares" shall have the meaning
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ascribed to it in Section 6.10 hereof.
ARTICLE II
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THE MERGER
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2.1 Merger of Sub into the Company. On the Closing Date, the Sub shall be
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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
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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.
2.2 Merger Certificates. If all conditions to the Merger set forth herein
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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
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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
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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
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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
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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.
2.7 Conversion of the Shares. The manner of converting the Shares in the
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Merger shall be as follows:
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(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
share of validly issued, fully paid and nonassessable share of common stock of
the Surviving Corporation.
2.8 Exchange of Certificates Representing the Shares.
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(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 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
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Closing and the shares of Common Stock of Buyer held by ▇▇▇▇ ▇▇▇▇▇▇, 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 ▇▇▇▇ ▇▇▇▇▇▇.
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2.10 Absence of Schedules. The parties hereto recognize and agree that the
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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
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FEASIBILITY PERIOD, ACCESS AND INDEMNITY
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3.1 Feasibility Period. From the date of execution of this Agreement by
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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
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.
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3.2 Access and Indemnity. Buyer and Buyer's agents shall have the right of
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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
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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
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REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
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AND THE COMPANY
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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 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
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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.
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4.2 Capitalization; Ownership. The total authorized capital stock of the
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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 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
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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
be filed with the South Carolina Secretary of State in connection with the
merger contemplated by this Agreement.
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4.4 No Conflict or Violation. Neither the execution and delivery of this
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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 Approvals. Except as set forth in Schedule 4.5 hereto, no
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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.
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4.6 Consents. Except as set forth on Schedule 4.6, no consent of any party
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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
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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
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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.
(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.
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(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.
(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.
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(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
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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:
(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
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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,
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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
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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
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Leases. The Leases constitute valid and legally binding obligations of the
Company and are enforceable in 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.
15
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 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
16
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), 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)
17
violated any provision of the Foreign Corrupt Practices Act of 1977; (iii)
established or maintained any unlawful or unrecorded 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.
ARTICLE V
---------
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
-------------------------------------------------
18
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 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.
19
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:
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
20
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 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.
21
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 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
22
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 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
23
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) 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.
ARTICLE VII
-----------
CERTAIN MATTERS PENDING THE CLOSING
-----------------------------------
24
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 (j) not borrow or agree to
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.
25
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.
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.
26
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.
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.
27
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 evidencing the Shares, duly
endorsed in blank for transfer or accompanied by duly executed stock powers; and
(c) 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.
28
9.3 Employment Agreement. The Buyer shall have executed the Shareholder's
---------------------
employment agreement in substantially the form set forth in Exhibit 8.3.
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.
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)
29
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
attorneys' 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, 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
30
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:
-----------------------
(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.
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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
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 ▇▇▇▇ Amusement Company Partnership, ▇▇▇▇ 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.
32
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
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
33
borne by the 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 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.
34
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 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.
35
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: ▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Scarborough, L.L.P.
Third Floor, ▇▇▇▇▇▇ Building
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇. ▇. ▇▇▇ ▇▇▇▇▇ (29211)
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to the Company Post-Closing: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
If to the Shareholder: ▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇▇, L.L.P.
Third Floor, ▇▇▇▇▇▇ Building
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇. ▇. ▇▇▇ ▇▇▇▇▇ (29211)
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to the Buyer or to Sub: American Bingo & Gaming Corp.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
36
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.
13.14 Confidentiality. 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.
37
IN WITNESS WHEREOF, each corporate party has caused this Agreement to be duly
executed in its name by its duly 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/ ▇▇▇▇ ▇▇▇▇▇▇
-----------------
▇▇▇▇ ▇▇▇▇▇▇, President
SHAREHOLDER
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
GOLD STRIKE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, President
GOLD STRIKE ACQUISITION CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇, as of 8/25/97
-----------------------------------
Its: ▇▇▇▇ ▇▇▇▇▇▇, President
------------------------
38