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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
XXXXXXX X. XXXX
THE SOLE SHAREHOLDER OF
GOLD STRIKE, INC.
AS THE "SHAREHOLDER"
DATED: AUGUST 13, 1997
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SCHEDULES
SCHEDULE
1.4 Locations of Business
1.11 Contracts
1.16 Leases
1.21 Permits
1.24 Real Property
4.1 Corporate Records
4.5 Permits and Approvals
4.6 Consents
4.7 Financial Statements
4.8 List of Material Changes
4.9 Undisclosed Liabilities
4.10 List of Property
4.13 Litigation
4.14 Compliance with Law
4.17 Employees
4.18 Insurance
4.20 Liens
4.22 Banks
4.23 Quarterly Reports of Gaming Operations
4.24 Real Property Restrictions
5.4 Ownership and Management of Exempted Entities
6.4A Litigation
6.4B Consents
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EXHIBITS
EXHIBIT
1.6 Form of the Buyer's and Sub's Closing Certificate
1.10 Form of the Company's and the Shareholder's Closing Certificate
2.9 Form of Voting Agreement
8.3 Form of Employment Agreement of Xxxxxxx Xxxx
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made as
of the 13th day of August, 1997, by and among American Bingo and Gaming Corp., a
corporation organized and existing under the laws of the State of Delaware (the
"Buyer"), Gold Strike Acquisition Corporation, a corporation organized and
existing under the laws of the State of South Carolina (the "Sub"), Gold Strike,
Inc., a corporation organized and existing under the laws of the State of South
Carolina (the "Company"), and Xxxxxxx X. Xxxx, the sole shareholder of the
Company (the "Shareholder").
RECITALS
WHEREAS, the Shareholder currently operates a video poker business as a
sole proprietor but is in the process of transferring all of the assets and
liabilities related to the business to the Company as soon as the Company's two
year residency requirement applicable to owners and operators of video poker
machines is satisfied on August 24, 1997, which residency requirement is imposed
by Section 12-21-2804(D) of the South Carolina Code; and
WHEREAS, the Shareholder owns all of the issued and outstanding shares
of capital stock of the Company (all of such issued and outstanding shares of
capital stock being referred to herein as the "Shares"); and
WHEREAS, the Boards of Directors of each of the Company, the Buyer and
the Sub have determined that a business combination between the parties is in
the best interests of their respective companies and stockholders and
accordingly have agreed to effect the Merger (hereinafter defined) upon the
terms and conditions set forth herein; and
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WHEREAS, it is intended that for federal income tax purposes the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the recitals and of the mutual
covenants, conditions and agreements set forth herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto DO HEREBY AGREE as follows:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms shall have the
meanings ascribed to them below:
1.1 ABG Common Stock "ABG Common Stock" shall have the meaning
ascribed to it in Section 2.7.
1.2 Agreement. "Agreement" shall mean this Agreement and Plan of
Reorganization, together with the Exhibits and Schedules incorporated herein by
reference, as the same may be amended from time to time in accordance with the
terms hereof.
1.3 Assets. "Assets" shall mean all of the equipment, machinery,
real property, fixtures, leasehold interests, inventory, prepaid expenses, all
of the Company's rights under the Contracts and Leases, and all other tangible
and intangible assets of every kind which are currently owned by the Shareholder
for use in the Business, and will be owned by the Company as of Closing Date.
1.4 Business. "Business" shall mean the operations of the Company
as of the date of Closing, which shall include the ownership and operation of
all of Shareholder's video poker games
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at various locations in Aiken, Beaufort, Edgefield and Richland Counties in
South Carolina, which locations are identified on Schedule 1.4 hereto.
1.5 Buyer. "Buyer" shall mean American Bingo & Gaming Corp., a
corporation organized and existing under the laws of the State of Delaware.
1.6 Buyer's and Sub's Closing Certificate. "Buyer's and Sub's
Closing Certificate" shall mean the certificate of Buyer and the Sub in the form
of Exhibit 1.6 hereto.
1.7 Closing. "Closing" shall mean the conference held at 10:00
am., local time, on the Closing Date, at Buyer's offices, or such other time and
place as the parties hereto may mutually agree. All transactions occurring at
the Closing shall be deemed to have occurred simultaneously, and no one
transaction shall be deemed to be complete until all transactions required to
be completed at the Closing are completed.
1.8 Closing Date. "Closing Date" shall mean August 25, 1997, or
such other date as the parties hereto may mutually agree, on which date the
Articles of Merger shall be filed with the South Carolina Secretary of State and
become effective.
1.9 Code. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
1.10 Company's and Shareholder's Closing Certificate. "Company's
and Shareholder's Closing Certificate" shall mean the certificate of the Company
and the Shareholder in the form of Exhibit 1.10 hereto.
1.11 Contracts. "Contracts" shall mean all contracts, agreements,
mortgages, trust deeds, indentures, notes, licenses, franchises, obligations or
other commitments, arrangements and understandings with a term of more than one
year or for an amount exceeding $1,000 to which the
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Company is a party or by which it is bound or to which the Shareholder is a
party in connection with the Business, as described in Schedule 1.11 hereto.
1.12 Fixtures and Equipment. "Fixtures and Equipment" shall mean
any and all of the furniture, fixtures, furnishings, leasehold improvements,
supplies, vehicles, parts, tools, machinery, equipment and other items of
tangible personal property which will be owned or leased by the Company as of
the Closing Date.
1.13 Indemnified Party. "Indemnified Party" shall have the meaning
ascribed to it in Section 10.2 hereof
1.14 Indemnifying Party. "Indemnifying Party" shall have the
meaning ascribed to it in Section 10.2 hereof
1.15 Law. "Law" shall mean any federal, state, local or other law
or governmental agency requirement of any kind, and the rules, regulations,
ordinances, permits, licenses and orders promulgated thereunder.
1.16 Leases. "Leases" shall mean all leases of real and personal
property to which the Company is a party or to which the Shareholder is a party
in connection with the Business, as described in Schedule 1.16.
1.17 Lien. "Lien" shall mean any mortgage, pledge, lien, security
interest, claim, encumbrance, charge, option, equity, right, proxy, voting or
other agreement which in any way limits or restricts any right of ownership of
the Assets.
1.18 "Merger" shall have the meaning ascribed to it in Section 2.1
hereof.
1.19 Merger Consideration. "Merger Consideration" shall have the
meaning ascribed to it in Section 2.7 hereof.
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1.20 NASDAQ. "NASDAQ" shall mean the Nation Association of
Securities Dealers Automated Quotation Stock Market.
1.21 Permits. "Permits" shall mean all licenses, permits and other
governmental authorizations and pending applications therefore necessary for the
Company to conduct the Business, as described on Schedule 1.21 hereto.
1.22 Person. "Person" shall mean any government, natural person,
corporation, partnership or other legal entity.
1.23 Proprietorship. "Proprietorship" shall mean the Shareholder's
sole proprietorship as of the date of this Agreement through which Shareholder
owns the Assets, and the Permits, and operates the Business, all of which will
be transferred by Shareholder to the Company prior to Closing.
1.24 Real Property. "Real Property" shall mean all real property
owned or leased by the Company as of the Closing Date, including all appurtenant
rights, claims and interests therein, as described on Schedule 1.24 hereto.
1.25 Registered Shares. "Registered Shares" shall have the
meaning ascribed to it in Section 6.7 hereof.
1.26 Registration Statement. "Registration Statement" shall have
the meaning ascribed to it in Section 6.7 hereof.
1.27 SEC. "SEC" shall mean the United States Securities and
Exchange Commission.
1.28 Shareholder. "Shareholder" shall mean Xxxxxxx X. Xxxx.
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 ascribed to it in Section 2.1 hereof.
1.31. Unregistered Shares. "Unregistered Shares" shall have the
meaning ascribed to it in Section 6.10 hereof
ARTICLE II
THE MERGER
2.1 Merger of Sub into the Company. On the Closing Date, the Sub
shall be merged with and into the Company in accordance with this Agreement and
the separate corporate existence of the Sub shall thereupon cease (the
"Merger"). The Merger shall be based on the respective representations,
warranties and agreements of the parties hereto, and shall be subject to the
terms and conditions herein stated. The Merger is intended to be a "tax-free
reorganization" pursuant to Section 368(a)(2)(E) of the Code and the parties
hereto shall not report the transaction in a manner inconsistent therewith or
otherwise take any action that would prevent the Merger from qualifying as such,
provided, however, that the actual tax effect of the transactions contemplated
by this Agreement is not a condition precedent to the closing of the
transactions contemplated hereby and no party hereto makes or has made any
representation, warranty or covenant to any other party hereto as to such
qualification. The Company shall be the surviving corporation in the Merger (in
such capacity, hereinafter referred to as the "Surviving Corporation") and shall
continue to be governed by the laws of the State of South Carolina and the
separate corporate existence of Surviving Corporation with all its rights,
privileges, powers, immunities, purposes and franchises shall continue
unaffected by the Merger, except as set forth herein. The Merger shall have the
effects specified in the South Carolina Business Corporation Act of 1988, as
amended.
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2.2 Merger Certificates. If all conditions to the Merger set forth
herein have been fulfilled or waived in accordance herewith and this Agreement
shall not have been terminated pursuant to the terms hereof, the parties hereto
shall cause to be properly executed and filed with the South Carolina Secretary
of State on the Closing Date Articles of Merger meeting the requirements of the
South Carolina Business Corporation Act of 1988, as amended. The Merger shall
become effective on the Closing Date upon filing of the Articles of Merger with
the South Carolina Secretary of State.
2.3 Articles of Incorporation of Surviving Corporation. At the
Closing Date, the Articles of Incorporation of the Company shall be the Articles
of Incorporation of the Surviving Corporation.
2.4 Bylaws of the Surviving Corporation. The Bylaws of the Sub on
the Closing Date shall be the Bylaws of the Surviving Corporation, unless and
until duly amended in accordance with their terms.
2.5 Directors of the Surviving Corporation. The persons who are
directors of the Sub immediately prior to the Closing Date shall, from and after
the Closing Date, be the directors of the Surviving Corporation until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's Articles of Incorporation and Bylaws.
2.6 Officers of the Surviving Corporation. The persons who are
officers of the Sub immediately prior to the Closing Date shall from and after
the Closing Date, be the officers of the Surviving Corporation and shall hold
their same respective office(s) until their earlier death, resignation or
removal.
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2.7 Conversion of the Shares. The manner of converting the Shares
in the Merger shall be as follows:
(a) As a result of the Merger and without any action on
the part of the holder thereof, the Shares shall cease to be outstanding and
shall be cancelled and retired and shall cease to exist, and the Shareholder
shall thereafter cease to have any rights with respect to the Shares, except the
right to receive eight hundred twenty-seven thousand, six hundred eighty
(827,680) shares of Buyer's common stock (the "ABG Common Stock") (the "Merger
Consideration").
(b) On the Closing Date, each share of the Sub's common
stock issued and outstanding as of the Closing Date shall be surrendered in
exchange for a share of validly issued, fully paid and nonassessable share of
common stock of the Surviving Corporation.
2.8 Exchange of Certificates Representing the Shares.
(a) On the Closing Date, (i) the Shareholder, as the
holder of all outstanding certificates representing the Shares, shall, upon
surrender of such certificates, be entitled to receive the Merger Consideration
and (ii) until the certificates representing the Shares have been surrendered by
the Shareholder and replaced by certificates representing the Surviving
Corporation common stock, the certificates for the Shares shall, for all
purposes, be deemed to evidence ownership of the Surviving Corporation common
stock.
(b) The Shareholder shall deliver to the Sub on the
Closing Date the certificates representing the Shares owned by him, duly
endorsed in blank by the Shareholder, or accompanied by blank stock powers, and
with all necessary transfer tax and other revenue stamps (if any), acquired at
the Shareholder's expense. The Shareholder agrees to cure any deficiencies with
respect to the endorsement of the certificates or other documents of conveyance
with respect to the Shares or with
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respect to the stock powers accompanying the Shares. Simultaneous with such
delivery on the Closing Date, the Shareholder shall receive in exchange therefor
a certificate or certificates representing the ABG Common Stock.
2.9 Voting Agreement. The ABG Common Stock owned by the
Shareholder after Closing and the shares of Common Stock of Buyer held by Xxxx
Xxxxxx, 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 Xxxx Xxxxxx.
2.10 Absence of Schedules. The parties hereto recognize and agree
that the Schedules to this Agreement were not available as of the date of
execution of this Agreement. Accordingly, the parties hereto hereby waive any
breach of any representation, warranty, condition or provision of this Agreement
which may technically be deemed to exist due to the failure of any party hereto
to properly disclose any information which otherwise would have, or should have,
been disclosed on a Schedule attached to this Agreement on the date it is
signed. The parties hereto agree that all such Schedules shall be prepared only
as of the Closing Date and that accordingly any such representation, warranty,
condition or provision of this Agreement which is impacted by the absence of
such Schedule shall be deemed to speak, and shall be relevant, only as of the
Closing Date and thereafter.
ARTICLE III
FEASIBILITY PERIOD, ACCESS AND INDEMNITY
3.1 Feasibility Period. From the date of execution of this
Agreement by Buyer and the Shareholder until the earlier of the Closing or
twenty (20) days hereafter (the "Feasibility Period"), Buyer shall have the
right of review, investigation and inspection of the Assets and the Business to
determine whether or not Buyer desires to proceed with the Closing. During the
Feasibility Period
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the Buyer may conduct inspections and economic and feasibility studies of the
Assets and the Business to determine that they are suitable, in Buyer's sole
opinion, for Buyer's purposes and conduct all such inspections and studies as
Buyer deems reasonable of the Assets and the Business. Seller agrees to
cooperate fully with Buyer's efforts and shall execute such forms and requests
as may be required to obtain the information deemed necessary by Buyer. No
study, investigation or inspection by Buyer or Buyer's representatives shall be
deemed to have in any way diminished or waived the representations, warranties
or covenants of Seller set forth in this Agreement.
3.2 Access and Indemnity. Buyer and Buyer's agents shall have the
right of access to the Business, Assets and Real Estate during the Feasibility
Period for the purpose of conducting such studies, investigations and
inspections. Buyer shall repair any damage or injury to property resulting from
Buyer's investigation and inspections. Buyer shall indemnify and hold harmless
Seller on account of any claims, causes of action, damages, costs and expenses
(including attorney's fees) arising out of or relating to the acts of Buyer, its
agents and employees under the provisions of this Section. This indemnity shall
survive the termination of this Contract.
3.3 Termination of Contract. If Buyer determines, in Buyer's sole
judgment and discretion, that the Assets are not suitable for Buyer's intended
purposes, Buyer shall give Seller written notice of such fact on or before the
end of the Feasibility Period. Upon receipt of such written notice, both parties
shall be released from all further obligations under this Contract.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
AND THE COMPANY
The Shareholder and the Company make the following representations and
warranties to the Buyer. The Buyer has inspected the Assets and performed all
necessary due diligence and is acquiring
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the Company as a result of such inspection and due diligence and not in reliance
upon any representation or warranty with respect thereto made by the Shareholder
other than those specifically set forth in this Agreement.
4.1 Organization of the Company. The Company is a corporation duly
organized and validly existing and in good standing under the laws of the State
of South Carolina. The Company has the requisite corporate power and authority
to enter into this Agreement and to perform its obligations hereunder. The
Company has the requisite corporate power and authority to carry on the Business
and to own, operate and hold under lease or otherwise the Assets. Schedule 4.1
shall consist of true, complete and correct copies of the Company's Articles of
Incorporation, Bylaws and all amendments thereto, as presently in effect, all
corporate minutes of board of directors and shareholder meetings and actions by
written consent by them since the incorporation of the Company, and the stock
ledger and minute book of the Company.
4.2 Capitalization; Ownership. The total authorized capital stock
of the Company consists of 100,000 shares of common stock, no par value. As of
the date hereof 100 shares of common stock are issued and outstanding (the
"Shares"), all of which shares are owned by the Shareholder. The Shares
constitute all the issued and outstanding shares of capital stock of the
Company. The Shareholder has good and marketable title to the Shares, free and
clear of all Liens. The Shares have been validly authorized and issued and are
fully paid and non-assessable. Neither the Company nor the Shareholder has
received any notice of any adverse claim to the ownership of the Shares. There
is no security, option, warrant, right (preemptive or otherwise), call,
subscription, agreement, conversion or exchange, commitment or understanding of
any nature whatsoever, fixed or contingent, that directly or indirectly (a)
calls for the issuance, sale, pledge or other disposition of
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any shares of capital stock of the Company, or (b) obligates the Company to
grant, offer or enter into any of the foregoing or (c) relates to the voting or
control of such capital stock, securities or rights. Upon receipt by the
Shareholder of the Merger Consideration, the Buyer will own one hundred percent
(100%) of the issued and outstanding shares of the Company free and clear of
all Liens.
4.3 Authorization; Enforceability. The Shareholder and the Company
have the requisite individual and corporate power and authority to execute,
deliver and perform this Agreement and each of the documents, instruments and
agreements contemplated hereby to which either of them is or will be a party,
and to perform their obligations hereunder or thereunder. The execution,
delivery and performance of this Agreement and each of the other documents,
instruments and agreements contemplated hereby and the consummation of the
transactions contemplated hereby and thereby have been duly authorized and
approved by all necessary corporate action on the part of the Company, and no
further approvals on the part of the Company are required. This Agreement has
been, and the other documents and instruments required hereby to which the
Company will be a party will be, duly executed and delivered by the Company, and
when duly executed and delivered by the other parties hereto and thereto
(assuming such documents and instruments will be valid and binding obligations
of such other parties), will be the valid and binding obligations of the
Company, and will be enforceable against the Shareholder and the Company in
accordance with their respective terms, subject to the effect of bankruptcy,
insolvency, moratorium, or other similar laws affecting the enforcement of
creditors' rights generally, and except as the availability of equitable
remedies may be limited by general principles of equity. No consent,
authorization, approval, order, license, certificate, or permit of or from, or
declaration or filing with any federal, state, local or other governmental
authority or any court or other tribunal is required by the Shareholder and/or
the Company for the execution, delivery and/or performance of this Agreement,
other than Articles of Merger which must
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be filed with the South Carolina Secretary of State in connection with the
merger contemplated by this Agreement.
4.4 No Conflict or Violation. Neither the execution and delivery
of this Agreement and each of the documents, instruments and agreements
contemplated hereby by the Company and the Shareholder nor the consummation of
the transactions contemplated hereby and thereby will result in (a) a violation
of, or a conflict with any provision of the Articles of Incorporation or Bylaws
of the Company, (b) a violation by the Company of any judgment, order or decree
binding on the Company, (c) to the best of the Shareholder's and the Company's
knowledge, a violation by the Company of any Law or the occurrence of any event
which with notice, lapse of time, or both, would result in the violation of any
Law, judgment, order or decree binding on the Company, or (d) a breach of,
default under, or conflict with, any material term or provision of, or
permission to modify, terminate, or accelerate, any Contract, Lease or other
agreement or instrument, or obligation thereunder, applicable to the Company,
the Business or any of the Assets, or an event which with notice, lapse of time,
or both, would result in any such breach, default, or conflict.
4.5 Permits and Approval. Except as set forth in Schedule 4.5
hereto, no Permit from or notice to, or filing, registration or qualification
with, any governmental, administrative or judicial authority is necessary to
enter into this Agreement, any instrument, document or other agreement
contemplated hereby, and to carry out the transactions contemplated hereby and
thereby; provided, however, neither the Company nor the Shareholder makes any
representation or warranty as to any requirement of the Buyer with respect to
any of the matters discussed in this Section 4.5.
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4.6 Consents. Except as set forth on Schedule 4.6, no consent of
any party to any Contract, Lease, or other agreement or instrument applicable to
the Company, the Business or any of the Assets, is required for the execution,
delivery and/or performance of this Agreement.
4.7 Financial Condition. Schedule 4.7 shall consist of true and
complete copies of (i) the compiled balance sheets of the Proprietorship as of
December 31, 1996, and June 30, 1997, and the related compiled statement of
income and cash flows of the Proprietorship for the year ended December 31,
1996, and the six months ended June 30, 1997, accompanied by the compilation
report thereon of the accountants (collectively the "Financial Statements"). The
Financial Statements (i) were prepared in accordance with the books of account
and other financial records of the Proprietorship by accountants retained by
Shareholder, (ii) present fairly the financial condition, results of operations
and cash flows of the Proprietorship as of the dates thereof and for the periods
covered thereby, (iii) have been prepared in accordance with general accepted
accounting principles ("GAAP") applied on a basis consistent with the past
practices of the Proprietorship, and (iv) include all adjustments (consisting
only of normal recurring accruals) that are necessary for a fair presentation of
the financial conditions of the Proprietorship, and the results of operations
and cash flows of the Proprietorship as of the dates thereof or for the periods
covered thereby.
4.8 Lack of Material Changes. Except as set forth in Schedule 4.8,
since July 1, 1997:
(a) There has not been any change having a material
adverse effect on the Business operations, properties (including any intangible
properties), condition (financial or otherwise), assets, liabilities, results of
operations or prospects of the Business or the Proprietorship.
(b) The operations and business of the Proprietorship
have been conducted in all respects only in the ordinary course.
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(c) The Shareholder and/or the Proprietorship and/or the
Company has not mortgaged, pledged or subjected to lien or other encumbrance any
of the Assets.
(d) Neither the Proprietorship nor the Company has
suffered an extraordinary loss (whether or not covered by insurance) or waived
any right of substantial value.
(e) Neither the Proprietorship nor the Company has sold
or transferred any of its assets having a book value in the aggregate of $5,000
or more or canceled any debts or claims, except in each case, in the ordinary
course of business, and except for the transfer of the Assets from the
Proprietorship to the Company.
(f) The Company has not issued any common stock,
preferred stock, capital stock, bonds, warrants, options, rights or any other
form of corporate securities, other than the original issuance of 100 shares of
common stock of the Shareholder.
(g) There is no compensation payable or to become payable
by the Company to any of its officers, employees or agents, or any known payment
or arrangement made to or with any of such persons, except as described in this
Agreement.
(h) Neither the Proprietorship nor the Company has made
any change in the method of accounting or accounting practice or policy used by
them, other than changes required by GAAP.
(i) Neither the Proprietorship nor the Company has made
any material changes in the customary methods of operations of the Business,
including practice and policies relating to purchasing, inventory, marketing,
selling or pricing.
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(j) Neither the Proprietorship nor the Company has
agreed, whether in writing or otherwise, to engage in any of the acts specified
in this Section 4.8, except for those contemplated by this Agreement.
(k) There is no fact known to the Company and/or
Shareholder which will have a material adverse effect or in the future (as far
as the Company or Shareholder can foresee) may have a material adverse effect on
the financial condition, results of operations, business, properties, assets,
liabilities, or future prospects of the Company which has not been disclosed to
Buyer in this Agreement; provided, however, that the Company and Shareholder
express no opinion as to political or economic matters of general applicability.
(l) The assets and operations of the Proprietorship as
disclosed and described in and upon the balance sheet and other financial
statements described in Section 4.7 will be transferred and assigned by
Shareholder to the Company prior to Closing so that there will be no material
difference in the assets, liabilities and operations of the Company as of the
day of Closing from the assets, liabilities and operations described in and upon
said financial statements.
4.9 Absence of Undisclosed Liabilities. Except as set forth on
Schedule 4.9, neither the Proprietorship nor the Company has liabilities or
obligations of any nature (whether absolute, accrued, contingent, or otherwise)
which individually or in the aggregate, are material, including without
limitation liabilities for federal, state, local or foreign taxes, liabilities
to customers or suppliers, direct or indirect, claims, losses, damages,
deficiencies (including deferred income tax and other net tax deficiencies),
costs, expenses, obligations, guarantees, or responsibilities, whether accrued,
absolute, or contingent, known or unknown, fixed or unfixed, liquidated or
unliquidated, secured or unsecured, (hereinafter collectively referred to as
"Liabilities") other than the following:
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(a) Liabilities for which full provision and disclosure
have been made on the balance sheet of the Proprietorship as of June 30, 1997,
and/or
(b) Other liabilities arising since June 30, 1997, and
prior to the Closing Date which have been incurred in the ordinary course of
business and which are not inconsistent with the representations and warranties
of the Company and Shareholder contained in this Agreement or any other
provisions of this Agreement.
4.10 Title to Assets. At Closing the Company will be the rightful
owner of all the Assets, free and clear of any and all Liens. Schedule 4.10
shall consist of a true and complete list of all legal and personal properties
and material Assets (including but not limited to machinery, equipment,
inventories, and intangibles owned, leased, used in the business and/or licensed
by the Shareholder and/or the Company, all of which will be transferred to the
Company prior to Closing), together with a list of all personal property
attached to, located on or used in connection with the Business and which will
not be owned by the Company as of the date of Closing but which the Company will
have the right to use under lease, rental or other agreement, accompanied by
true and current photocopies of such agreements. The Assets constitute all of
such properties and assets which are necessary to conduct the Business.
4.11 Condition of Fixtures and Equipment. The Fixtures and
Equipment are in good operating condition and repair, normal wear and tear
excepted, and are adequate for the purposes for which they are being utilized,
subject to the continuing need for ordinary, routine maintenance and repairs.
4.12 Leases. Schedule 1.16 contains an accurate and complete list
of all Leases. The Leases constitute valid and legally binding obligations of
the Company and are enforceable in
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accordance with their terms, subject to the effect of bankruptcy, insolvency,
moratorium, or other similar laws affecting the enforcement of creditors' rights
generally and except as the availability of equitable remedies may be limited by
general principles of equity, and none of the Leases will be affected by, or
terminate or lapse by reason of, the transactions contemplated by this
Agreement. Neither the Shareholder nor the Company is in default, and neither
the Company nor the Shareholder has received notice of any asserted default,
under any Lease.
4.13 No Litigation. Except as set forth in Schedule 4.13, there is
no litigation, arbitration proceeding, governmental investigation, citation or
action of any kind pending, proposed or threatened against the Company or the
Shareholder relating to this Agreement, the Assets, the Business or the
transactions contemplated herein, and there is no writ, injunction, decree,
order or judgment outstanding, nor any lawsuit, claim, proceeding, citation,
directive, summons or investigation, pending or threatened, relating to the
ownership, use or maintenance of the Assets or the operation of the Business by
the Company or the Shareholder.
4.14 Compliance with Law. To the best of the Shareholder's and the
Company's knowledge, except as specified in Schedule 4.14, the Company's and the
Shareholder's conduct of the Business and ownership and/or use of the Assets do
not materially violate or conflict with any Law. The Permits described in
Schedule 1.21 (i) constitute all permits, licenses and governmental agency
authorizations, registrations and approvals required for the Company to own
and/or use the Assets and/or to conduct the Business, (ii) are in full force and
effect, and (iii) are being complied with in all material respects.
4.15 Taxes. The Shareholder and the Company have filed all required
tax returns and reports, including but not limited to state, local and federal
income tax returns, payroll tax reports and
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real and personal property tax reports, and have paid all taxes shown thereby to
be due and payable. Copies of all such returns and reports for all open tax
years have been delivered or made available to the Buyer prior to the date of
this Agreement. The Shareholder and the Company have paid (or have made adequate
provision for and will timely pay) all taxes (including additions to taxes,
penalties and interest), withholdings and other governmental charges the
nonpayment of which could materially adversely affect any of the Assets, the use
of the Assets, or the conduct of the Business or could cause the Company to
incur a material liability. No taxing authority has asserted any claim for the
assessment of any such tax liability, withholding or other governmental charges,
nor is any governmental entity presently engaged in an audit of the
Shareholder's or the Company's tax returns, nor, to the best of the
Shareholder's and the Company's knowledge, about to engage in such an audit.
4.16 Contracts. Schedule 1.11 contains a list of all Contracts and
a brief description of the subject matter of each such Contract. Neither the
Shareholder nor the Company is in material breach or violation of, or in default
under, and there is no valid basis for a claim of material breach or violation
of, or default under, any such Contract, and no event has occurred which
constitutes or, with the lapse of time or the giving of notice or both, would
constitute such a material breach or violation or default by the Company, or any
other party thereto. No party to any Contract has given notice of its intention
to cancel or terminate any such Contract. None of the rights of the Company
under the Contracts will be materially impaired by the delivery, execution and
performance of this Agreement.
4.17 ERISA Matters and Employees. The Company does not have, nor
does it contribute to, any pension, profit sharing, option, other incentive
plan, or any other type of employee benefit plan (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974),
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or any obligation to or customary arrangement with employees for bonuses,
incentive compensation, or severance pay. Schedule 4.17 hereto contains a list
of the Company's employees with current salary (or rate of pay) and other
compensation now paid by the Company to each employee, including a description
of any increase scheduled to be effective after the date of this Agreement.
4.18 Insurance. Schedule 4.18 hereto contains a complete and
correct list of all insurance policies, of any kind, held by the Company. Each
such policy is valid and enforceable; all premiums and other payments due from
the Company on account of any such policy have been paid and there is no act or
failure to act which has or might cause any such policy to be canceled or
terminated.
4.19 No Brokers' or Finders' Fees. Neither the Company nor the
Shareholder is committed to any liability for any brokers' or finders' fees or
any similar fees in connection with the transactions contemplated by this
Agreement. Neither the Company nor the Shareholder has had any dealings,
negotiations or communications with any broker or other intermediary in
connection with the transactions contemplated by this Agreement.
4.20 Liens. Except as set forth on Schedule 4.20, at Closing the
Company will have good and marketable title to all of the Assets and the Assets
will not be subject to any liens.
4.21 Questionable Payments. Neither the Company, any director,
officer, agent, employee, nor other person associated with or acting on behalf
of such entities or individuals has, directly or indirectly: (i) used any
corporate funds for unlawful contributions, gifts, entertainment, or other
unlawful payment to foreign or domestic governmental officials or employees or
to foreign or domestic political parties or campaigns from corporate funds; (ii)
violated any provision of the Foreign Corrupt Practices Act of 1977; (iii)
established or maintained any unlawful or unrecorded
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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.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER
The Shareholder, with respect to himself and his obligations hereunder,
hereby represents and warrants to the Buyer:
5.1 Ownership of Shares; Title. He is the owner of record and
beneficially of the Shares he is selling hereunder. He has good and marketable
title to such Shares, free and clear of all Liens. He has received no notice of
any adverse claim to the ownership of the Shares. There is no security, option,
warrant, right, call, subscription, agreement, conversion or exchange,
commitment or understanding of any nature whatsoever, fixed or contingent, that
directly or indirectly affects the Shares.
5.2 Authorization; Enforceability. He has the power and authority
and has full legal capacity and is competent to execute, deliver and perform his
obligations under this Agreement and each of the other documents, instruments
and agreements contemplated hereby to which he is or will be a party. This
Agreement has been, and the other documents and instruments required hereby to
which he will be a party will be, duly executed and delivered by him, and when
duly executed and delivered by the other parties hereto and thereto (assuming
such documents and instruments will be valid and binding obligations of such
other parties) will be his valid and binding obligations, enforceable against
him in accordance with their respective terms, subject to the effect of
bankruptcy, insolvency, moratorium, or other similar laws affecting the
enforcement of creditors' rights generally and except as the availability of
equitable remedies may be limited by general principles of equity.
5.3 No Conflict or Violation. Neither the execution and delivery
of this Agreement by him nor the consummation of the transactions contemplated
hereby will result in (a) a violation by
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him of any Law, judgment, order or decree binding upon him or any event which
with notice, lapse of time, or both, would result in any such violation, (b) a
breach of, default under, or conflict with, any material term or provision of,
or permission to modify, terminate or accelerate, any Contract, Lease or other
agreement or instrument, or obligation thereunder, to which the Company is a
party and which is applicable to him or any of his assets, or an event which
with notice, lapse of time, or both, would result in any such breach or default,
or (c) the creation of any lien upon, or result in any person obtaining any
right to acquire any of his properties, assets or rights.
5.4 Ownership and Management of Exempted Entities. Attached as
Schedule 5.4 hereto is a complete and accurate description of the following
information with respect to the businesses exempted from Shareholder's
non-competition agreement pursuant to Section 11.4 of this Agreement: (i) a
complete description of the identities and ownership interests of each equity
owner in each such entity (as shareholder, partner, or otherwise), to the best
of Shareholder's knowledge; (ii) the identity of each officer, director and
other person participating in management of such business, to the best of
Shareholder's knowledge; and (iii) a complete description of the Employee's
current and past management activities with respect to each such business. Buyer
will keep and maintain the confidentiality of the information disclosed on
Schedule 5.4 and will not disclose such information to any third party except:
(a) if ordered to do so by any court or regulatory authority; or (b) as
necessary in litigation for the enforcement or defense of its rights under this
Agreement and the other related agreements referred to herein.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER AND THE SUB
The Buyer and the Sub hereby represent and warrant to the Shareholder
as follows:
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6.1 Organization of Buyer. The Buyer and the Sub are corporations
duly organized and validly existing and in good standing under the laws of the
State of Delaware and the State of South Carolina, respectively, and have the
requisite corporate power and authority to enter into this Agreement and perform
their obligations hereunder.
6.2 Authorization; Enforceability. Each of the Buyer and the Sub
have the requisite corporate power and authority to execute, deliver and perform
this Agreement and each of the documents, instruments and agreements
contemplated hereby to which the Buyer and the Sub are or will be a party, and
to perform their obligations hereunder or thereunder. The execution, delivery
and performance of this Agreement and each of the other documents, instruments
and agreements contemplated hereby and the consummation of the transactions
contemplated hereby and thereby have been duly authorized and approved by all
necessary corporate action on the part of the Buyer and the Sub, and no further
approvals on the part of the Buyer and the Sub are required. This Agreement has
been, and the other documents and instruments required hereby to which the Buyer
and the Sub will be a party will be, duly executed and delivered by the Buyer
and the Sub, and when duly executed and delivered by the other parties hereto
and thereto (assuming such documents and instruments will be valid and binding
obligations of such other parties) will be the valid and binding obligations of
the Buyer and the Sub, enforceable against the Buyer and the Sub in accordance
with their respective terms, subject to the effect of bankruptcy, insolvency,
moratorium, or other similar laws affecting the enforcement of creditors' rights
generally and except as the availability of equitable remedies may be limited by
general principles of equity.
6.3 No Conflict or Violation. Neither the execution and delivery
of this Agreement and each of the documents, instruments and agreements
contemplated hereby by the Buyer or the Sub nor
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the consummation of the transactions contemplated hereby and thereby will result
in (a) a violation of, or a conflict with, any provision of the Articles of
Incorporation or Bylaws of the Buyer or the Sub, (b) a violation by the Buyer or
the Sub of any judgment order or decree binding on the Buyer or the Sub, (c) to
the best of the Buyer's and the Sub's knowledge, a violation by the Buyer or the
Sub of any Law or the occurrence of any event which with notice, lapse of time,
or both, would result in the violation of any Law, judgment, order or decree
binding on the Buyer or the Sub, or (d) a breach of, default under, or conflict
with, any material term or provision of, or permission to modify, terminate, or
accelerate, any contract, lease, mortgage, deed of trust, indenture, permit,
license, franchise or commitment or other agreement or instrument, or obligation
thereunder, applicable to the Buyer or the Sub, the business or any of their
assets, or an event which with notice, lapse of time, or both, would result in
any such breach, default, or conflict.
6.4 No Litigation or Consents. Except as set forth on Schedule
6.4A, there is no litigation, arbitration proceeding, governmental
investigation, citation or action of any kind pending, proposed or threatened
against the Buyer or the Sub with respect to any transaction in the Buyer's
securities, the transactions contemplated by this Agreement, or the business or
assets of the Buyer or the Sub. Except as set forth on Schedule 6.4B, no consent
of any other Person and no consent, Permit, approval or authorization of,
exemption by, notice or report to, or registration, filing or declaration with,
any governmental authority is required by the Buyer or the Sub in connection
with the execution, delivery, performance, validity or enforceability of this
Agreement and the transactions contemplated herein.
6.5 No Brokers' or Finders' Fees. Neither Buyer nor the Sub is
committed to any liability for any brokers' or finders' fees or any similar fees
in connection with the transactions
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contemplated by this Agreement. The Buyer and the Sub have not had any dealings,
negotiations or communications with any broker or other intermediary in
connection with the transactions contemplated by this Agreement.
6.6 ABG Common Stock. The issuance and delivery by the Buyer of
shares of the ABG Common Stock in connection with the transactions contemplated
by this Agreement will be, as of the Closing Date, duly authorized by all
necessary corporate action on the part of the Buyer. The shares of ABG Common
Stock to be issued pursuant to this Agreement, when issued in accordance with
the terms of this Agreement, will be validly issued, fully paid and
nonassessable.
6.7 Registered Stock. One hundred thousand (100,000) shares of the
ABG Common Stock (the "Registered Shares") to be issued in connection with the
transactions contemplated by this Agreement have been registered with the SEC on
a registration statement on Form S-3 (the "Registration Statement"). The Buyer
is eligible to use Form S-3, Form S-3 is the proper registration statement to be
used for this transaction, and Form S-3 is being used properly in connection
with this transaction. The Registration Statement has been declared effective
under the Securities Act of 1933, as amended, and is not subject to a stop order
or threatened stop order. All necessary qualifications or exemptions under
applicable state securities laws related to the issuance of the Registered
Shares by Buyer to Shareholder in connection with the transactions contemplated
by this Agreement, have been obtained and are in full force and effect. The
Registered Shares to be issued pursuant to this Agreement will be freely
transferrable under federal securities laws by the Shareholder.
6.8 Compliance with Securities Laws. The Buyer has filed in a
timely manner all reports and other documents required to be filed by it with
the SEC. All of these reports and
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documents, as of their respective dates, complied in all material respects with
all applicable statutes, rules and regulations enforced or promulgated by the
SEC. As of their respective dates of filing none of the SEC reports, including,
but not limited to, the Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1996, contained any untrue statement of a material fact or omitted
to state any material fact necessary to make the statements therein not
misleading.
6.9 Rule 144. The Buyer recognizes that the Shareholder may be
deemed to be an "affiliate" of the Buyer, as that term is defined in Rule 144 of
the Securities Act of 1933, and that as an "affiliate" the Shareholder would be
subject to restrictions and limitations imposed by Rule 144 in the event the
Shareholder decided to sell any of the ABG Common Stock. Furthermore, even if
the Shareholder is not deemed to be an "affiliate" of the Buyer under Rule 144,
the Buyer recognizes that the Shareholder will be subject to restrictions and
limitations imposed by Rule 144 in the event the Shareholder decides to sell any
of the Unregistered Shares. Accordingly, Buyer agrees to timely file all reports
and other documents required to be filed by it with the SEC and to take such
other action as is required from time to time to ensure that the Shareholder is
able to sell the shares of ABG Common Stock issued to him in compliance with the
provisions of Rule 144 or Rule 145 (as in effect at the time of any proposed
sale), if applicable.
6.10 Restrictions on Disposition of Shares. Seven hundred twenty-
seven thousand six hundred eighty (727,680) shares of the ABG Common Stock (the
"Unregistered Shares") to be issued to the Shareholder in connection with the
transactions contemplated by this Agreement, will not have been registered under
the Securities Act of 1933, and may be resold by the Shareholder only after
registration under the Securities Act of 1933, or under an available exemption,
or pursuant to Rule 144. The Shareholder agrees that the Unregistered Shares
will not be disposed of except (i)
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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.
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ARTICLE VII
CERTAIN MATTERS PENDING THE CLOSING
The Shareholder, the Company, the Buyer and the Sub each covenants with
the others as follows for the period from the date hereof through the Closing
Date:
7.1 Maintenance of the Company and the Business Prior to Closing.
The Shareholder shall use his best efforts to continue to carry on the Business
in the ordinary course and in accordance with past practice, and will not take
any action inconsistent therewith or with the consummation of the Closing.
Without limiting the generality of the foregoing, the Shareholder shall, absent
the written consent of the Buyer, which consent shall not be unreasonably
withheld, (a) maintain the Assets in substantially their current state of
repair, excepting normal wear and tear; (b) use all reasonable efforts to
preserve intact the relationships with all Persons having business dealings with
the Shareholder related to the Business; (c) not enter into or agree to enter
into any material purchase commitment for Fixtures and Equipment or supplies,
except in the ordinary course of business; (d) not authorize, declare, pay or
effect any dividend in respect of the Company's capital stock; (e) not enter
into or agree to enter into any material contract without amending Schedule 1.11
and providing the Buyer with a copy of the revised Schedule 1.11 within seven
days after entering into such a contract; (f) not amend or agree to amend the
Company's Articles of Incorporation or Bylaws or merge with or consolidate into
any other entity; (g) not sell, pledge or acquire or agree to sell, pledge or
acquire any shares of capital stock or other securities of the Company; (h) not
grant or enter into any options, warrants, calls or commitments of any kind with
respect to the Company's capital stock; (i) not make or agree to make any single
capital expenditure or commitment in excess of $20,000 nor aggregate capital
expenditure or commitment in excess of $50,000; and 6) not borrow or agree to
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borrow any funds or incur or agree to incur, whether directly or by way of
guarantee or otherwise, any indebtedness, obligation or liability or enter into
any other material transaction except in the ordinary course of business.
7.2 Cooperation. The Company, the Shareholder, the Buyer and the
Sub shall use their best efforts to cause the transactions contemplated by this
Agreement to be consummated. The Company and the Shareholder shall use their
best efforts to obtain all consents and authorizations of third parties and to
make all filings with and give all notices to third parties which may be
necessary or reasonably required in order to effect the transactions
contemplated hereby.
7.3 Compliance with Law. The Company and the Shareholder shall
continue to conduct the Business and to use the Assets in compliance with all
applicable Laws, and all orders of any court or of any federal, state, municipal
or other governmental department, noncompliance with which could cause a
material adverse change in the Assets or the Business.
7.4 Registration Statement. The Buyer shall take all other
required action to ensure that on the Closing Date the Registered Shares issued
in connection with the transactions contemplated by this Agreement will be
freely transferrable by the Shareholder.
7.5 Listing Application. The Buyer shall prepare and submit to
NASDAQ a listing application covering the ABG Common Stock and shall use its
best efforts to obtain approval for the listing of the ABG Common Stock upon
official notice of issuance.
7.6 Articles of Merger and Plan of Merger. Prior to the Closing
Date, the Shareholder and the Buyer shall prepare Articles of Merger and Plan
of Merger reflecting the terms of the Merger, which Articles of Merger will be
filed with the Secretary of State of South Carolina on the Closing Date to
effectuate the Merger.
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ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER AND THE SUB
Each and every obligation of the Buyer and the Sub to be performed on
the Closing Date shall be subject to the satisfaction prior to or at the
Closing of the following express conditions precedent:
8.1 Compliance with Agreement. The Company and the Shareholder
shall have performed and complied in all material respects with all of their
respective obligations under this Agreement that are to be performed or
complied with by them prior to or on the Closing Date. Without limiting the
foregoing, by the Closing Date the Shareholder shall have transferred good and
marketable title to all the Assets to the Company.
8.2 Proceedings and Instruments Satisfactory. All proceedings,
corporate or other, to be taken by the Company and the Shareholder in
connection with the transactions contemplated by this Agreement, and all
documents incident thereto, shall be reasonably satisfactory in form and
substance to the Buyer, the Sub and their counsel, and the Company and the
Shareholder shall have made available to the Buyer for examination the
originals or true and correct copies of all documents that the Buyer may
reasonably request in connection with the transactions contemplated by this
Agreement
8.3 Employment Agreement. The Buyer shall have received from the
Shareholder an employment agreement in substantially the form set forth in
Exhibit 8.3.
8.4 No Adverse Change. There shall have been no material adverse
change in the Business, Assets, operations or condition (financial or
otherwise) of the Proprietorship or the Company between the date hereof and the
Closing Date.
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8.5 No Litigation. No investigation, suit, charge, action or other
proceeding shall be threatened or pending before any court or governmental
agency that seeks restraint, prohibition, damages or other relief in
connection with this Agreement or the consummation of the transactions
contemplated hereby, or which seeks to obtain, establish or impose any
interest in or lien or encumbrance upon any of the Assets, or which, if
successful, would materially impair operation of the Business or the financial
condition of the Proprietorship or the Company.
8.6 Representations and Warranties. All Schedules referred to in
this Agreement which contain or should contain information concerning the
Shareholder or the Company shall have been fully and accurately completed and
provided to the Buyer for attachment to this Agreement; and the representations
and warranties made by the Company and the Shareholder in this Agreement and
the Schedules attached hereto shall be true and correct in all material
respects as of the Closing Date with the same force and effect as though such
representations and warranties had been made on the Closing Date.
8.7 Consents. Except as set forth in Schedule 4.6, all consents,
approvals and waivers from third parties and governmental authorities and other
parties necessary (a) to permit the Shareholder to transfer the Shares to the
Buyer, free and clear of all Liens; (b) to consummate the transactions
contemplated hereby; and (c) to allow the Company to operate the Business after
the Closing Date shall have been obtained by the Buyer.
8.8 Deliveries at Closing. The Company and the Shareholder shall
have delivered, or cause to be delivered, to the Buyer the following documents,
each properly executed and dated as of the Closing Date: (a) the Company's and
the Shareholder's Closing Certificate; (b) certificates
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evidencing the Shares, duly endorsed in blank for transfer or accompanied by
duly executed stock powers; and (a) such other documents as the Buyer may
reasonably request.
8.9 No Termination Under Article III. Buyer shall not have given
timely notice of termination of this Agreement pursuant to Article III hereof.
ARTICLE IX
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF THE SHAREHOLDER AND THE COMPANY
Each and every obligation of the Shareholder and the Company to be
performed on the Closing Date shall be subject to the satisfaction prior to or
at the Closing of the following express conditions precedent:
9.1 Compliance with Agreement. The Buyer and the Sub shall have
performed and complied in all material respects with all of its obligations
under this Agreement that are to be performed or complied with by it prior to
or on the Closing Date.
9.2 Proceedings and Instruments Satisfactory. All proceedings,
corporate or other, to be taken by the Buyer and the Sub in connection with the
transactions contemplated by this Agreement, and all documents incident
thereto, shall be reasonably satisfactory in form and substance to the
Shareholder, the Company and their counsel and the Buyer shall have made
available to the Shareholder for examination the originals or true and correct
copies of all documents that the Shareholder may reasonably request in
connection with the transactions contemplated by this Agreement.
9.3 Employment Agreement. The Buyer shall have executed the
Shareholder's employment agreement in substantially the form set forth in
Exhibit 8.3.
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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.
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9.10 Deliveries at Closing. The Buyer shall have delivered to the
Shareholder the following documents, each properly executed and dated as of the
Closing Date: (a) the Merger Consideration in the form of ABG Common Stock; (b)
the Buyer's and Sub's Closing Certificate; (c) certified corporate resolutions
of the board of directors of the Buyer and the Sub approving the transactions
contemplated by this Agreement; and (d) such other documents as the Shareholder
may reasonably request.
ARTICLE X
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
10.1 Survival of Representations and Warranties. All of the
representations and warranties contained in this Agreement shall survive the
consummation of the transactions contemplated by this Agreement.
10.2 Indemnification
(a) The Shareholder hereby agrees to indemnify, defend
and hold harmless the Buyer and the Sub from and against any and all damages,
losses, expenses, claims or other liabilities, including without limitation
reasonable attorney's fees, incurred by the Buyer or the Sub as a result,
directly or indirectly, of any breach, violation or nonfulfillment of any
covenant, representation, warranty or other provision of this Agreement, or any
agreement executed in connection with the transactions contemplated by this
Agreement, or any misrepresentation or omission with respect to any covenant,
representation, warranty or other provision of this Agreement, on the part of
the Shareholder. The Buyer and the Sub hereby agree to indemnify, defend and
hold harmless the Shareholder from and against any and all damages, losses,
expenses, claims, or other liabilities, including without limitation reasonable
attorneys' fees, incurred by the Shareholder as a result,
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directly or indirectly, of any breach, violation or nonfulfillment of any
covenant, representation, warranty or other provision of this Agreement, or any
agreement executed in connection with the transactions contemplated by this
Agreement, or any misrepresentation or omission with respect to any covenant,
representation, warranty or other provision of this Agreement, on the part of
the Buyer or the Sub.
(b) Should any claim be made by a person not a party to
this Agreement, with respect to any matter to which the foregoing indemnity
relates, the party against whom such claim is asserted (the "Indemnified
Party"), within a reasonable period of time, shall give written notice to the
other party (the "Indemnifying Party") of any such claim, and the Indemnifying
Party shall thereafter defend or settle any such claim, at its sole expense, on
its own behalf and with counsel of its own selection. In such defense or
settlement of any claims, the Indemnified Party shall cooperate with the
Indemnifying Party to the maximum extent reasonably possible. Any payment
resulting from such defense or settlement, together with the total expense
thereof, shall be binding on the Buyer, the Company and the Shareholder.
(c) Notwithstanding the foregoing provisions of this
Section 10.2, no party shall be liable to indemnify the other until the total
of all indemnifiable losses, liabilities, damages, costs, or expenses for which
indemnification would otherwise be required, equals or exceeds $25,000. At such
time as the aggregate indemnifiable losses, liabilities, damages, costs and
expenses have exceeded this threshold amount, the Indemnifying Party shall pay
all such excess amounts as provided herein.
ARTICLE XI
NON-COMPETITION AGREEMENT
11.1 Shareholder's Covenants. Shareholder covenants and agrees
that:
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(a) Shareholder shall not, directly or indirectly,
within the Territory during the Restricted Period, promote, operate, manage or
conduct any bingo game or related gaming business permitted under the terms and
conditions of any bingo license issued by the State of South Carolina or under
any other state or federal law or authority, or operate any video game machine
or other gaming machine or device (such games and game machines being referred
to herein as "Games").
(b) Further, Shareholder shall not, directly or
indirectly, within the Territory during the Restricted Period, solicit or sell
for, own, or acquire any interest in, either directly or indirectly, any
corporation, partnership, limited partnership, or other entity, or become
engaged by, act as landlord to, or as agent or consultant for, do business
with, manage, operate, control, be employed by, participate in, or be
connected, in any manner with, or in any manner assist, any other person,
corporation, partnership or other entity engaged in the business of promoting,
operating, managing or conducting Games.
11.2 Restricted Period. For the purpose of this Agreement, the
"Restricted Period" means the period commencing with the date hereof and
continuing until three years thereafter.
11.3 Territory. For purposes of this Agreement the "Territory"
shall mean: (i) with regard to any activities described in Section 11.1 above
which are conducted under a Class B or Class C bingo license (or equivalent
thereof under any future law) issued by the State of South Carolina or under
any other state or federal law or authority, the area within a fifty (50) mile
radius of any bingo facility then owned by Company, Buyer or any subsidiary of
Buyer, and (ii) with regard to any activities described in Section 11.1 above
which are conducted under any Class A license (or equivalent thereof under any
future law) issued by the State of South Carolina or under any other state or
federal law or authority, the area within a one hundred (100) mile radius of
any bingo game
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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 Xxxx Amusement Company Partnership, Xxxx Amusement
Operating Co, Palmetto State Distributing Company, Inc., or Universal Mortgage
and Loan Co.; provided that within the twelve (12) month period immediately
preceding the date of this Agreement Shareholder has had, and during the
Restricted Period shall have, no role, directly or indirectly, in management or
operation of any such exempted business, nor shall Shareholder during the
Restricted Period receive any payment or distribution of any kind, as
compensation or otherwise, from any such business other than dividends upon
corporate stock which are strictly proportional to the percentage of stock
owned by him, or distributions with respect to his capital accounts in
partnerships which are strictly proportional to the percentage of his capital
account ownership in any such partnership.
11.5 Enforcement. In the event of a breach by either party of the
provisions of this Agreement, the non-breaching party, in addition to any other
remedies it may have at law or under this Agreement, shall be entitled to an
injunction restraining the breaching party from violating or continuing a
violation of the terms of this Article XI.
ARTICLE XII
REGISTRATION RIGHTS
12.1 Piggyback Registration. If at any time, or from time to time,
the Buyer shall determine to register any of its securities under the Securities
Act of 1933, either for its own account or the account of a shareholder,
pursuant to an underwritten public offering, the Buyer shall (a) promptly give
to the Shareholder written notice thereof, and (b) include in such registration
and in
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any underwriting involved therein, up to one-third (1/3) of the Unregistered
Shares as specified in a written request or requests of the Shareholder made
within thirty days after receipt by the Shareholder of such written notice from
the Buyer.
12.2 Limitations on Registration. If the underwriter determines
that marketing factors require a limitation of the number of shares to be
underwritten, the underwriter may limit the number of Unregistered Shares to be
included in the registration and underwriting; provided, however, that the
underwriter may not limit the amount of Unregistered Shares included in such
registration and underwriting to less than an amount equal to TEN percent (10%)
of the amount of all of the Buyer's securities included within such
registration and underwriting. If the Shareholder disapproves of the terms of
any such underwriting, he may elect to withdraw therefrom by written notice to
the Buyer and the underwriter.
12.3 Delay or Cancellation of Registration. If, at any time after
giving the Shareholder written notice of the Buyer's intention to register any
of its securities, and prior to the effective date of the registration
statement filed in connection with such registration, the Buyer shall determine
for any reason not to register or to delay the registration, at its sole
election, the Buyer may give written notice of such determination to the
Shareholder and thereupon shall be relieved of its obligation to register the
Unregistered Shares in connection with such registration (but not from its
obligation to pay registration expenses in connection therewith or to register
the Unregistered Shares in a subsequent registration).
12.4 Expenses. All expenses incurred in connection with any
registration, qualification or compliance pursuant to this Article XII,
including without limitation, all registration, filing, and qualification fees,
printing expenses, fees and disbursements of counsel for the Buyer, and
expenses of any special audits incidental to or required by such registration,
shall be borne by the
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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
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this Agreement shall be deemed or shall constitute a waiver of any other
provision of this Agreement, whether or not similar, nor shall such waiver
constitute a continuing waiver unless otherwise expressly provided.
13.4 Expenses. Each party hereto shall bear its own fees and
expenses of its counsel, accountants and other experts incident to the
negotiation and preparation of this Agreement and consummation of the
transactions contemplated hereby. To the extent such fees and expenses are
incurred by the Company prior to Closing, such fees and expenses shall be paid
by the Company at Closing.
13.5 Termination. If any condition precedent to the Shareholder's
obligations hereunder is not satisfied and such condition is not waived by the
Shareholder at or prior to the Closing Date, or if any condition precedent to
the Buyer's obligations hereunder is not satisfied and such condition is not
waived by the Buyer at or prior to the Closing Date, the Shareholder or the
Buyer, as the case may be, may terminate this Agreement at their option by
notice to the other party or parties, as the case may be. In the event of the
termination of this Agreement by any party as above provided, no party shall
have any liability hereunder of any nature whatsoever to the other party, other
than the liability of each party for its own expenses and liability resulting,
arising or accruing from the breach of this Agreement; provided, however, that
a party shall not be so relieved of liability to the other party if the failure
to satisfy a condition precedent results from the failure of a party to make
good faith efforts to satisfy such condition. In the event that a condition
precedent to a party's obligations is not satisfied, nothing contained herein
shall be deemed to require any party to terminate this Agreement, rather than
to waive such condition precedent and proceed with the Closing.
13.6 Governing Law. This Agreement shall be governed by, construed
and interpreted
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in accordance with the laws of the State of South Carolina, without reference
to the conflicts of laws principles thereof.
13.7 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns or heirs and personal representatives.
13.8 Assignment. This Agreement and each party's respective rights
hereunder may not be assigned by any party without the prior written consent of
the other parties.
13.9 No Reliance. No third party is entitled to rely on any of the
representations, warranties and agreements contained in this Agreement.
13.10 Notices. All communications, notices and disclosures required
or permitted by this Agreement shall be in writing, and delivered personally,
sent by overnight messenger service, or sent by United States mail, certified
or registered, postage prepaid, and addressed as follows, unless and until a
party notifies the others in accordance with this Section of a change of
address:
If to the Company Pre-Closing: 0000 X Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxxx Xxxx
With a copy to: Xxxxxx Xxxxxxx Xxxxx & Scarborough, L.L.P.
Third Floor, Xxxxxx Building
0000 Xxxx Xxxxxx
P.0. Box 11070 (29211)
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
If to the Company Post-Closing: 000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxx
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If to the Shareholder: 0000 X Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxxx Xxxx
With a copy to: Xxxxxx Xxxxxxx Xxxxx & Xxxxxxxxxxx, L.L.P.
Third Floor, Xxxxxx Building
0000 Xxxx Xxxxxx
P.0. Box 11070 (29211)
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
If to the Buyer or to Sub: American Bingo & Gaming Corp.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxx
With a copy to: Xxxxxx & Xxxxxx, L.L.P.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx Xxxxxx
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.
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13.14 The parties hereto agree to keep this Agreement confidential,
as well as any information or document obtained by either party in connection
with this transaction, except to the extent disclosure is required to or by any
government agency or regulatory or quasi-regulatory body.
13.15 Joint Draftsmanship. The preparation of this Agreement has
been a joint effort of the parties and this Agreement shall not, solely as a
matter of judicial construction, be construed more severely against one of the
parties than the other.
IN, WITNESS WHEREOF, each corporate party has caused this Agreement to
be duly executed in its name by its duty authorized officer and each individual
party hereto has duly executed this Agreement all as of the day and year first
above written, unless otherwise noted below.
AMERICAN BINGO & GAMING CORP.
By: /s/ Xxxx Xxxxxx
------------------------------------
Xxxx Xxxxxx, President
SHAREHOLDER
/s/ Xxxxxxx X. Xxxx
---------------------------------------
Xxxxxxx X. Xxxx
GOLD STRIKE, INC.
By: /s/ Xxxxxxx X. Xxxx
------------------------------------
Xxxxxxx X. Xxxx, President
GOLD STRIKE ACQUISITION CORPORATION
By: /s/ Xxxx Xxxxxx as of 8/25/97
------------------------------------
Its: Xxxx Xxxxxx, President
-----------------------------------
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