AMERICAN BINGO & GAMING CORP, PRE 14A, 1999-04-01

AMERICAN BINGO & GAMING CORP
PRE 14A, 1999-04-01
MISCELLANEOUS AMUSEMENT & RECREATION

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SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ________________)

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

American Bingo & Gaming Corp.
---------------------------------
(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of filing fee (Check the appropriate box):
[ X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

<PAGE>
PRELIMINARY DRAFT

AMERICAN BINGO & GAMING CORP.

1440 Charleston Highway
West Columbia, South Carolina 29169

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 27, 1999

To the Stockholders of American Bingo & Gaming Corp.:

The Annual Meeting of Stockholders (the "Meeting") of American Bingo &
Gaming Corp. (the "Company") will be held in the Company's bingo hall located at
1470 Charleston Highway, West Columbia, South Carolina 29169 on the 27TH day of
MAY, 1999, at 10:00 A.M., eastern time, for the following purposes:

1. To consider and act upon the proposed amendments to the Company's
Certificate of Incorporation and the Company's Bylaws to divide the
Company's Board of Directors into two classes;

2. To consider and act upon the proposed amendment to the Company's
Certificate of Incorporation to include provisions that address stockholder
licensing issues;

3. To elect seven members to the Company's Board of Directors;

4. To approve and adopt the Company's Stock Option Plan;

5. To ratify the appointment of King Griffin & Adamson P.C. as the Company's
independent auditors for 1999; and

6. To consider such other matters as may properly come before the Meeting or
any adjournment of the Meeting.

Only holders of record of the Company's Common Stock at the close of
business on April 1, 1999, will be entitled to notice of and to vote at the
Meeting or any adjournment of the Meeting. The stock transfer books will remain
open.

You are cordially invited to attend the Meeting. WHETHER OR NOT YOU PLAN
TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE ACCOMPANYING PROXY AND
RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE TO ASSURE THAT YOUR SHARES ARE
REPRESENTED AT THE MEETING. If you receive more then one proxy card, it is an
indication that your shares are registered in more than one account. Please
complete, date and sign each proxy card you receive. You may revoke your proxy
----
at any time before it is voted.

Enclosed with these proxy materials is a copy of the Company's 1998 Annual
Report which contains its Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1998 (without exhibits).

BY ORDER OF THE BOARD OF DIRECTORS

Andre M. Hilliou
Chairman of the Board, President and
Chief Executive Officer

April 26, 1999

<PAGE>
PRELIMINARY DRAFT

AMERICAN BINGO & GAMING CORP.

1440 Charleston Highway
West Columbia, South Carolina 29169

PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 27, 1999

This Proxy Statement and the accompanying form of proxy are furnished in
connection with the solicitation of proxies for use at the Annual Meeting of
Stockholders (the "Meeting") of American Bingo & Gaming Corp. (the "Company") to
be held on May 27, 1999, at 10:00 a.m., eastern time, and at any adjournment
thereof, for the purposes set forth in this Proxy Statement. The meeting will
be held in the Company's bingo hall located at 1470 Charleston Highway, West
Columbia, South Carolina 29169. THE ACCOMPANYING PROXY IS SOLICITED BY THE
BOARD OF DIRECTORS OF THE COMPANY. The principal executive offices of the
Company are located at 1440 Charleston Highway, West Columbia, South Carolina
29169. This Proxy Statement and the accompanying form of proxy were first
mailed to the stockholders on or about April 26, 1999.

VOTING AND REVOCABILITY OF PROXY APPOINTMENTS

The Company has fixed April 1, 1999, as the record date (the "Record Date")
for determining the stockholders entitled to notice of and to vote at the
Meeting. The Company's only class of stock currently outstanding is its Common
Stock, par value $0.001 per share (the "Common Stock"). At the close of
business on the Record Date, there were outstanding and entitled to vote
9,945,590 shares of Common Stock of the Company, with each share being entitled
to one vote on each matter submitted to the stockholders. There are no
cumulative voting rights. A majority of the outstanding shares of Common Stock
represented at the Meeting, in person or by proxy, will constitute a quorum.

All proxies will be voted in accordance with the instructions contained in
the proxies. If no choice is specified, proxies will be voted in accordance
with the recommendations of the Board as set forth in this Proxy Statement, and
at the proxy holders' discretion on any other matter that may properly come
before the Meeting. Any stockholder may revoke a proxy given pursuant to this
solicitation at any time before it is voted. A stockholder may revoke his or
her proxy by voting in person at the Meeting or submitting to the Company's
Secretary at the Meeting a subsequently dated proxy. In addition, a stockholder
may revoke his or her proxy by notifying the Secretary of the Company either in
writing prior to the Meeting or in person at the Meeting. Revocation is
effective only upon receipt of such notice by the Secretary.

Management of the Company is not aware of any other matter to be presented
for action at the Meeting other than those mentioned in the Notice of Annual
Meeting of Stockholders and referred to in this Proxy Statement. If any other
matters come before the Meeting, it is the intention of the persons named in the
enclosed proxy to vote on such matters in accordance with their judgment.

SOLICITATION

The costs of preparing, assembling and mailing the proxy materials will be
borne by the Company. Certain officers, directors and employees of the Company,
without additional compensation, may use their personal efforts, by telephone or
otherwise, to obtain proxies in addition to this solicitation by mail. The
Company expects to reimburse brokers, banks, custodians and other nominees for
their reasonable out-of-pocket expenses in handling proxy materials for
beneficial owners of the Common Stock. The Company also may retain the services
of Morrow & Co., Inc. to aid in the solicitation of proxies, for which the
Company will pay a fee not to exceed $4,000 plus reimbursement of expenses.

<PAGE>
ELECTION OF DIRECTORS

Article III, Section 2 of the Company's Bylaws provides that the Board of
Directors shall consist of no less than two nor more than seven directors. The
Board of Directors is currently set at seven directors; however, at this time
the Board has six directors and one vacancy. All six of the current members of
the Board have been nominated for election to the Board at the Meeting. In
addition, a new member has been nominated to the Board to fill the existing
vacancy on the Board. If the proposal to amend the Company's Certificate of
Incorporation and Bylaws to provide for two classes of directors is approved by
the stockholders at the Meeting, the seven nominees for the Board of Directors
shall, if elected, be divided into two classes with three of the directors
serving as Class I directors for a one year term to expire at the 2000 Annual
Meeting of Stockholders, and four of the directors serving as Class II directors
for a two year term to expire at the 2001 Annual Meeting of Stockholders. The
directors who shall serve a one year term include George M. Harrison, Jr., Andr
M. Hilliou and Michael W. Mims. The directors who shall serve a two year term
include Kenneth R. Adams, James L. Hall, Grover C. Seaton III and A. Joe Willis.
However, if the proposal to amend the Company's Certificate of Incorporation and
Bylaws to provide for two classes of directors is not approved by the
stockholders at the Meeting, the persons nominated for election at the Meeting
shall, if elected, serve on the Board for a term of one year until the 2000
Annual Meeting of Stockholders and until their respective successors have been
duly elected and have qualified. The officers of the Company are elected
annually by the Board of Directors following the annual meeting of stockholders
and serve for terms of one year and until their successors are duly elected and
qualified.

The directors shall be elected by a plurality of the votes cast at the
Meeting. A "plurality" means that the individuals who receive the largest
number of votes cast are elected as directors up to the maximum number of
directors to be elected at the Meeting. Consequently, any shares not voted
(whether by abstention, broker non-vote or otherwise) will have no impact on the
election of directors. It is the intention of the persons named as proxies in
the accompanying proxy to vote FOR the election of the nominees identified
below. If any nominee is unable or fails to accept nomination or election
(which is not anticipated), the persons named in the proxy as proxies, unless
specifically instructed otherwise in the proxy, will vote for the election of
such other person as the Company's existing Board of Directors may recommend.

The table below sets forth certain information about the nominees,
including the nominee's age, position with the Company and length of time served
as a member of the Board. All of the nominees are currently serving as
directors of the Company except for Kenneth R. Adams.

<TABLE>
<CAPTION>
Name Age Position with the Company Director Since
- ------------------------------ --- ------------------------- --------------
<S> <C> <C> <C>
Kenneth R. Adams 56 None N/A
James L. Hall 58 Director July 1998
Vice Chairman of the Board
George M. Harrison, Jr. 50 and Vice President February 1998
Chairman of the Board,
President and Chief
Andre M. Hilliou 51 Executive Officer April 1998
Michael W. Mims 47 Director October 1997
Grover C. Seaton III 56 Director July 1998
A. Joe Willis 60 Director July 1998
</TABLE>

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF
THE SEVEN NOMINEES NAMED ABOVE.

DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

The following sets forth the name and a brief description of the principal
occupation and business experience for at least the preceding five years for
each of the seven nominees for election to the Board of Directors and the
executive officers of the Company. None of the directors or executive officers
are related.

KENNETH R. ADAMS, 56, has been nominated to join the Board of Directors
upon election by the stockholders at the Meeting. Since 1990, Mr. Adams has
owned and operated a gaming consulting firm, Ken Adams and Associates, which

2
<PAGE>
specializes in information, analysis and strategic planning for Indian tribes,
casino operations and gaming manufacturers. Mr. Adams has also been a partner
in Johnny Nolon's Casino in Cripple Creek, Colorado, since August 1997. Prior
to founding Ken Adams and Associates, Mr. Adams spent over twenty years in the
hotel-casino industry. Mr. Adams is currently the editor and publisher of the
Adams' Report, a monthly newsletter specializing in identifying trends in casino
gaming, regulation and manufacturing. He is also a founder and associate editor
of the Nevada Gaming Almanac, which is published annually. Among the numerous
boards and committees on which Mr. Adams has served or continues to serve are
the Gaming Management Advisory Board, the Nevada Gaming Almanac Board of
Directors, the Gaming Industry Association's Speakers' Bureau, the Reno Downtown
Improvement Association and the Dale Carnegie Scholarship Committee.

JAMES L. HALL, 58, has served as a member of the Board of Directors since
July 1998. Mr. Hall received a Bachelor of Science in Business from Virginia
Tech in 1963. He has also attended executive development classes at The Wharton
School of the University of Pennsylvania and the Darden Graduate School of
Business Administration of the University of Virginia. Mr. Hall worked with
AT&T and Bell Atlantic for 25 years before his retirement in 1992. Before his
retirement, he served as Director of Operations for Western Virginia for Bell
Atlantic. Mr. Hall currently owns and manages Woodsdale Farm in Fincastle,
Virginia. Mr. Hall is a prior Director of the American Red Cross Roanoke
Chapter, Past President of the Cattlemen's Association as well as the President
and Director of the Southwestern Telco Federal Credit Union.

GEORGE M. HARRISON, JR., 50, is currently the Vice Chairman of the Board
and a Vice President of the Company. Mr. Harrison served as the interim
Chairman of the Board from April 10, 1998 until July 30, 1998 and as the interim
Chief Executive Officer of the Company from April 10, 1998 until May 18, 1998.
Mr. Harrison was President of Darlington Music Co., Inc. ("DMC"), a video gaming
route operation in South Carolina which the Company acquired in December 1997.
DMC was founded by Mr. Harrison's father in 1938. Mr. Harrison also worked in
various other capacities at DMC from 1973 to 1997. Mr. Harrison is a former
President of the South Carolina Coin Operators Association. Mr. Harrison has
served as the President of the Darlington Downtown Revitalization Association,
as the Vice Chairman of the Darlington Historic Landmarks Commission, and in
various roles with the Optimist Club of Darlington and the Rotary Club of
Darlington.

ANDRE M. HILLIOU, 51, is currently serving as the Company's Chairman of the
Board, President and Chief Executive Officer. Mr. Hilliou received his
undergraduate degree in Hotel and Restaurant Administration in Quimper, France
in 1968. From 1996 to 1997, Mr. Hilliou served as Chief Executive Officer of
Aristocrat Inc., the world's second largest manufacturer and distributor of slot
machines and gaming systems. From 1987 to 1996, Mr. Hilliou served in various
positions with Showboat Inc., including as Chief Executive Officer of Showboat
Inc.'s Sydney Harbour Casino in Sydney, Australia, and as Senior Vice President
of Operations of Showboat's Casino Hotel in Atlantic City, New Jersey.
Previously, Mr. Hilliou served as a Vice President for the Golden Nugget Casino
Hotel in Atlantic City, New Jersey.

MICHAEL W. MIMS, 47, has served as a member of the Board of Directors of
the Company since October 1997. Mr. Mims received a Bachelor of Arts degree
from Furman University in 1974 and a Juris Doctor from the University of South
Carolina in 1977. Mr. Mims currently operates and shares ownership in Mims &
Dye Enterprises, L.L.C., an operator of video gaming route operations in South
Carolina. Prior to operating Mims & Dye Enterprises, Mr. Mims worked for the
Company as the Vice President of Gaming from September 1997 until November 1998.
Mr. Mims was the founder and sole owner of Gold Strike, Inc., a video gaming
business which the Company acquired in September 1997. During the past fifteen
years, and prior to the sale of Gold Strike, Inc. to the Company, Mr. Mims has
owned and operated various video gaming companies. Mr. Mims has been actively
involved in the video gaming industry in South Carolina for the last fifteen
years and has served as the President of the South Carolina Coin Operators
Association.

GROVER C. SEATON III, 56, has served as a member of the Board of Directors
since July 1998. Mr. Seaton received a Bachelor of Arts from the University of
North Carolina in 1966 and a Master of Arts from the University of South
Carolina in 1969. He received a Juris Doctor from the University of South
Carolina in 1971. He is currently the Senior Partner of Seaton & Manley, P.C.,
a law firm located in Moncks Corner, South Carolina, where he has practiced law
for over twenty-five years. Mr. Seaton is a member of the South Carolina Bar
Association and is admitted to practice before the U.S. District Court, the
Fourth Circuit Court of Appeals and the United States Supreme Court. Mr. Seaton
is a founding member of the National College for DUI Defense at the Harvard Law
School. He is also a founding member of the South Carolina Association of
Criminal Defense Lawyers.

3
<PAGE>
A. JOE WILLIS, 60, has served as a member of the Board of Directors since
July 1998. Dr. Willis received his Doctor of Chiropractic from Palmer College
of Chiropractic in 1960 and his Bachelor of Arts in 1978 from New College of
California. Dr. Willis has been in private practice since 1960. Dr. Willis is
currently the President and part owner of Willis Chiro Med, which owns over
thirty chiropractic clinics in South Carolina, North Carolina and Idaho. He is
a delegate to, and a member of, the American Chiropractic Association, and a
past member of the Board of Directors of the South Carolina Chiropractic
Association. Dr. Willis was the South Carolina Chiropractor of the Year in
1996. Dr. Willis also serves on the Board of Directors of the South Carolina
Policy Council. Dr. Willis is a member of the Board of Directors of the
Darlington Chamber of Commerce and a member of the Board of Trustees of Coker
College. Dr. Willis is also a member of the Rotary Club of Darlington.

RICHARD M. KELLEY, 54, has served as the Chief Financial Officer, Vice
President and Treasurer of the Company since June 1998. He received a Bachelor
of Science in Business and Accounting from California State University,
Northridge in 1971. Mr. Kelley served in various positions with Caesars World,
Inc. from 1976 to 1996, including Vice President/Treasurer of Caesars World,
Inc. from 1991 to 1996. From 1996 to June 1998, Mr. Kelley worked as a
consultant providing various business and financial services on corporate
business matters. Mr. Kelley worked with KPMG Peat Marwick in Los Angeles,
California for five years before joining Caesars World, Inc. Mr. Kelley is a
certified public accountant and is a member of the American Institute of
Certified Public Accountants and the California Society of Certified Public
Accountants. Mr. Kelley is also a member of the Financial Executives Institute
and the National Association of Corporate Treasurers. Mr. Kelley is active in
community affairs and he has served in volunteer capacities with numerous
organizations.

MARIE T. PIERSON, 47, has served as the Vice President of Administration
and Acquisitions and Secretary of the Company since September 1998. Mrs.
Pierson received a Bachelor of Arts in Business and Accounting in 1989 from
Richard Stockton University. Prior to joining the Company, Mrs. Pierson worked
with Aristocrat, Inc. as Vice President of Planning, Administration and Support
Services from September 1996 until September 1998. From 1989 to September 1996,
Mrs. Pierson served in various positions with Showboat Inc., including as the
Vice President of Property/Hotel Operations for Showboat Inc.'s Sydney Harbour
Casino in Sydney, Australia, and as the Director of Hotel Operations of
Showboat's Casino Hotel in Atlantic City, New Jersey.

NANCY J. POLLICK, 52, has served as the Vice President of Operations of the
Company since November 1998. Mrs. Pollick received a Bachelor of Science in
Hotel Administration from Cornell University in 1983. Prior to joining the
Company, she worked from 1994 to 1998 as the Vice President of Hotel Operations
at Showboat's Casino Hotel in Atlantic City, New Jersey. From 1988 to 1994,
Mrs. Pollick was the Director of Food and Beverage and Vice President of Food
and Beverage for Showboat Inc.

COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS

SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION

The following table sets forth for the fiscal years ended December 31,
1996, 1997 and 1998, the cash compensation paid or accrued by the Company, as
well as certain other compensation paid or accrued for those years, for services
in all capacities to each person who served as the chief executive officer of
the Company at any time during 1998 and each executive officer of the Company
who earned total annual compensation, including salary and bonus, for the fiscal
year ended December 31, 1998, in excess of $100,000.

4
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
--------------------- -------
Other Securities
Name and Compen- Underlying
Principal Position Year Salary Bonus sation Options
- ------------------------ ------- ----------- -------- --------- -------
<S> <C> <C> <C> <C> <C>
1998 $ 142,851 $ -- $ -- 300,000
Andre M. Hilliou (1) -
Chairman of the Board, 1997 $ -- $ -- $ -- --
President and Chief
Executive Officer 1996 $ -- $ -- $ -- --

George M. Harrison, Jr.
(2) - Vice Chairman of 1998 $ 127,816 $ -- $9,563(3) --
the Board and Vice
President, and Former 1997 $ 4,000 $ -- $ -- --
Interim Chief Executive
Officer 1996 $ -- $ -- $ -- --

1998 $ 73,027 $100,000 $ -- 100,000
Richard M. Kelley (4) -
Chief Financial Officer, 1997 $ -- $ -- $ -- --
Vice President and
Treasurer 1996 $ -- $ -- $ -- --

1998 $ 159,368 $ -- $ -- --

1997 $ 83,328 $ 2,813 $ -- --
Michael W. Mims (5) -
Former Vice President 1996 $ -- $ -- $ -- --

1998 $ 116,667 $ -- $ -- --

John T. Orton (6) - 1997 $ 77,500 $ 7,500 $ -- 75,000
Former Chief Financial
Officer 1996 $ 70,000 $ 7,172 $ -- 50,000

L. Gregory Wilson (7) - 1998 $ 90,625 $ -- $ -- --
Former Chairman of the
Board, Former President 1997 $ 225,000 $ 20,797 $ -- --
and Former Chief
Executive Officer 1996 $ 185,417 $ 8,606 $ -- 300,000
<FN>
(1) Mr. Hilliou began working with the Company on May 18, 1998, as the
President and Chief Executive Officer of the Company. On July 30, 1998, he was
elected as the Chairman of the Board.
(2) Mr. Harrison began working with the Company in December 1997
following the acquisition by the Company of Darlington Music Co., Inc., of which
Mr. Harrison was the President and one-third owner. Mr. Harrison served as the
interim Chairman of the Board from April 10, 1998 until July 30, 1998, and as
the interim Chief Executive Officer of the Company from April 10, 1998 until May
18, 1998.
(3) This represents contributions under the profit sharing plan for
Darlington Music Co., Inc.
(4) Mr. Kelley began working with the Company on June 29, 1998, as the
Vice President and Chief Financial Officer of the Company. On July 30, 1998, he
was elected as the Treasurer of the Company.
(5) Mr. Mims began working with the Company in September 1997 following
the acquisition by the Company of Gold Strike, Inc., of which Mr. Mims was the
President and sole owner. Mr. Mims served as a Vice President of the Company
until his resignation on November 9, 1998, at which time his employment
agreement with the Company was terminated.
(6) Mr. Orton served as the Chief Financial Officer of the Company
until June 1998. From June 1998 through the first quarter of 1999, Mr. Orton
worked for the Company on a part-time basis.
(7) Mr. Wilson served as the Chairman of the Board and Chief Executive
Officer of the Company until his resignation on April 10, 1998. After April 10,
1998, Mr. Wilson continued to serve as a Vice President of the Company until
July 24, 1998, at which time his employment agreement with the Company was
terminated.
</TABLE>

5
<PAGE>
STOCK OPTIONS

The following table sets forth the options granted during the fiscal year
ended December 31, 1998, to the executive officers listed in the Summary
Compensation Table.

<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
-----------------
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees in Price Expiration
Name Granted Fiscal Year ($/share) Date
- -------------------- ----------- ------------- ---------- ----------
<S> <C> <C> <C> <C>
Andre M. Hilliou 300,000 (1) 75% $ 3.75 4/30/06
Richard M. Kelley 100,000 (2) 25% $ 2.78 6/28/05
- ---------------------
<FN>
(1) These options have the following vesting schedule: 75,000 on
February 26, 1999, 25,000 on April 30, 1999, 25,000 on July 31, 1999, 25,000 on
October 31, 1999, 25,000 on January 31, 2000, 25,000 on April 30, 2000, 25,000
on July 31, 2000, 25,000 on October 31, 2000, 25,000 on January 31, 2001, and
25,000 on April 30, 2001.
(2) These options have the following vesting schedule: 25,000 on
February 26, 1999, 12,500 on March 28, 1999, 12,500 on June 28, 1999, 12,500 on
September 28, 1999, 12,500 on December 28, 1999, 12,500 on March 28, 2000, and
12,500 on June 28, 2000.
</TABLE>

OPTION EXERCISES AND HOLDINGS

The following table sets forth information with respect to the executive
officers listed in the Summary Compensation Table concerning the exercise of
options during the last fiscal year and unexercised options held as of the end
of the fiscal year.

<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

Number of
Securities
Underlying Value of Unexercised
Unexercised In-the-Money
Options at Options at
Fiscal Year End Fiscal Year End(1)
Shares Acquired Exercisable/ Exercisable/
Name on Exercise Value Realized Unexercisable Unexercisable
- -------------------- --------------- ---------------------- ------------- -------------
<S> <C> <C> <C> <C>
Andre M. Hilliou -- -- -0- /300,000 -0- / -0-
Richard M. Kelley -- -- - 0- /100,000 -0- / -0-
John T. Orton 33,733 $ 149,172 124,600 / -0- -0- / -0-
<FN>
(1) Based on the closing bid price for the Company's Common Stock on December 31,
1998 of $1.531 per share, all of the options held by Mr. Hilliou, Mr. Kelley and Mr. Orton
are out-of-the-money.
</TABLE>

COMPENSATION OF DIRECTORS

During the second half of 1998, non-employee directors of the Company
(James L. Hall, Grover C. Seaton and A. Joe Willis) received a fee of $1,000 for
their services on the Board, plus a fee of $500 for each committee meeting
attended. In addition, any of these non-employee directors who served as a
chairman of a committee during the second half of 1998 received a fee of $5,000.

6
<PAGE>
During the first half of 1998, the non-employee directors (Jeffrey L. Gilbert,
Randall J. Fein and G. George Fox) received a fee of $2,000 per month for their
services on the Board and no separate compensation for service on committees.
In April 1998, Jeffrey L. Gilbert, Randall J. Fein and G. George Fox were each
granted options for 27,000 shares of the Company's Common Stock for their
service on the Board. In addition, in February of 1998 Kraege Polan was awarded
an option grant for 50,000 shares of the Company's Common Stock for his service
on the Board. The Company also reimburses the directors for travel expenses
incurred in connection with attending meetings of the Board and committees.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS

On April 30, 1998, the Company entered into a three-year employment
agreement with Andre M. Hilliou pursuant to which he agreed to serve as the
President and Chief Executive Officer of the Company for an annual gross salary
of $225,000. The agreement also provides for annual performance bonuses of up
to $50,000. This agreement contains a change in control provision which
provides that if a change in control occurs, as defined in the agreement, Mr.
Hilliou may at any time during the following twelve-month period exercise his
right to terminate the agreement and receive the full economic value of his
salary and other benefits to which he is entitled under the agreement for a
period of twelve months. In addition, upon terminating the agreement due to a
change in control, up to 50,000 of his unvested options shall immediately vest.
Mr. Hilliou is also entitled to these severance benefits and severance vesting
rights in the event his employment is terminated by the Company without "cause"
(as that term is defined in the agreement) or by Mr. Hilliou for "good reason"
(as that term is defined in the agreement). The agreement also contains certain
restrictions on Mr. Hilliou's ability to compete with the Company following
termination of his employment and it contains certain confidentiality and other
standard provisions.

On June 19, 1998, the Company entered into a two-year employment agreement
with Richard M. Kelley, which agreement was later amended on October 23, 1998.
Pursuant to this agreement, Mr. Kelley agreed to serve as the Vice President and
Chief Financial Officer of the Company for an annual gross salary of $140,000.
The agreement also provides for annual discretionary bonuses of up to $50,000.
This agreement provides that in the event Mr. Kelley's employment is terminated
by the Company without "cause" (as that term is defined in the agreement) or by
Mr. Kelley, Mr. Kelley shall receive the full economic value of his salary and
other benefits to which he is entitled under the agreement for the greater of
twelve months or the remaining term of the agreement. The agreement also
contains certain restrictions on Mr. Kelley's ability to compete with the
Company following termination of his employment and it contains certain
confidentiality and other standard provisions.

On July 27, 1998, the Company amended its employment agreement with George
M. Harrison, Jr. dated December 18, 1997. As amended, the agreement provides
that during the term of the agreement Mr. Harrison shall receive an annual gross
salary of $125,000. The agreement is for a three-year period which expires
December 18, 2000. The agreement also provides for an annual performance bonus
to be paid to Mr. Harrison in the discretion of the Board of Directors. The
agreement also contains certain restrictions on Mr. Harrison's ability to
compete with the Company following the termination of his employment and it
contains certain confidentiality and other standard provisions.

COMPLIANCE WITH BENEFICIAL OWNERSHIP REPORTING RULES

Section 16(a) of the Securities Exchange Act of 1934 requires (i) the
Company's directors and executive officers and (ii) persons who own more than
10% of a registered class of the Company's equity securities to file with the
Securities and Exchange Commission (the "SEC"), within certain specified time
periods, reports of ownership and changes in ownership. Such officers,
directors and stockholders are required by SEC regulations to furnish the
Company with copies of all such reports that they file.

To the Company's knowledge, based solely upon a review of copies of such
reports furnished to the Company and representations by certain officers and
directors that no other reports were required with respect to the year ended
December 31, 1998, all persons subject to the reporting requirements of Section
16(a) filed the required reports on a timely basis with respect to 1998 except
for Len A. Bussey who filed one report late regarding six transactions, J.
Richard Henry who filed one report late regarding four transactions, John T.
Orton who filed one report late regarding five transactions, L. Gregory Wilson
who filed two reports late regarding seven transactions, Michael W. Mims who
filed two reports late regarding two transactions, and Andre M. Hilliou who
filed one report late regarding one transaction.

7
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the number and percentage of outstanding
shares of the Company's Common Stock beneficially owned as of March 19, 1999 by
(a) each executive officer of the Company, including each of the executive
officers listed in the Summary Compensation Table above, (b) each director and
each nominee for director of the Company, (c) all of the executive officers and
directors of the Company as a group, and (d) each person or entity known to the
Company to own more than five percent of the outstanding Common Stock.

<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED(1) CLASS(2)
------------------------ --------------------- ----------
<S> <C> <C>
James L. Hall(3) 0 *
George M. Harrison, Jr.(3) 457,833(7) 4.60%
Andre M. Hilliou (3) 125,000(8) 1.24%
Michael W. Mims(3) 705,680 7.10%
Grover C. Seaton III(3) 0 *
A. Joe Willis(3) 9,000 *
Kenneth R. Adams(4) 0 *
Richard M. Kelley(3) 37,500(9) *
Marie T. Pierson(3) 7,500(10) *
Nancy J. Pollick(3) 25,000(11) *
John T. Orton(5) 134,600(12) 1.34%
L. Gregory Wilson(6) 1,056,728(13) 10.63%
Sally Stewart Wilson(6) 1,056,728(14) 10.63%
Executive officers and directors of
the Company as a group (9 persons) 1,367,513(15) 13.52%
<FN>

(1) Information relating to beneficial ownership of the Common Stock is based upon
"beneficial ownership" concepts set forth in rules of the SEC under Section 13(d) of the
Securities Exchange Act of 1934. Under these rules a person is deemed to be a "beneficial
owner" of a security if that person has or shares "voting power," which includes the power to
vote or direct the voting of such security, or "investment power," which includes the power
to dispose or to direct the disposition of such security. A person is also deemed to be a
beneficial owner of any security of which that person has the right to acquire beneficial
ownership within 60 days. Under the rules, more than one person may be deemed to be a
beneficial owner of the same securities, and a person may be deemed to be a beneficial owner
of securities as to which he has no beneficial interest. For instance, beneficial ownership
includes spouses, minor children and other relatives residing in the same household, and
trusts, partnerships, corporations or deferred compensation plans which are affiliated with
the principal.
(2) Percentage is determined on the basis of 9,945,590 shares of Common Stock issued and
outstanding plus shares subject to options or warrants held by the named individual for whom
the percentage is calculated which are exercisable within the next 60 days as if outstanding,
but treating shares subject to warrants or options held by others as not outstanding. An
asterisk (*) indicates less than 1% ownership.
(3) Address is 1440 Charleston Highway, West Columbia, South Carolina 29169.
(4) Address is 210 Marsh Avenue, Reno, Nevada 89509.
(5) Address is 7203 Guava Cove, Austin, Texas 78750.
(6) Address is 1617 Watchhill Road, Austin, Texas 78703.
(7) Includes 5,000 shares owned by Mr. Harrison's wife in which he shares voting and
investing power.
(8) Includes 100,000 shares Mr. Hilliou has the right to acquire within 60 days pursuant
to the exercise of options.

8
<PAGE>
(9) Includes 37,500 shares Mr. Kelley has the right to acquire within 60 days pursuant to
the exercise of options.
(10) Includes 7,500 shares Mrs. Pierson has the right to acquire within 60 days pursuant
to the exercise of options.
(11) Includes 25,000 shares Mrs. Pollick has the right to acquire within 60 days pursuant
to the exercise of options.
(12) Includes 124,600 shares Mr. Orton has the right to acquire within 60 days pursuant
to the exercise of options.
(13) Includes 540,417 shares owned by Mr. Wilson's wife and 100,000 shares held by the
Linda Bussey Irrecoverable Trust of which Mrs. Bussey is the trustee for the benefit of Mr.
Wilson's minor children. Pursuant to the terms of the Settlement Agreement, Compromise of
Claims and Mutual Release entered into by Mr. Wilson and the Company on February 26, 1999,
Mr. Wilson has granted an irrevocable proxy to the Company to vote all of the shares held by
him.
(14) Includes 416,311 shares owned by Mrs. Wilson's husband and 100,000 shares held by
the Linda Bussey Irrecoverable Trust of which Mrs. Bussey is the trustee for the benefit of
Mrs. Wilson's minor children. Pursuant to the terms of the Settlement Agreement, Compromise
of Claims and Mutual Release entered into by Mrs. Wilson and the Company on February 26,
1999, Mrs. Wilson has granted an irrevocable proxy to the Company to vote all of the shares
held by her.
(15) Includes 170,000 total shares the officers and directors have the right to acquire
within 60 days pursuant to the exercise of options.
</TABLE>

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In September 1997, the Company acquired by merger Gold Strike, Inc. from
Michael W. Mims, a director and former officer of the Company. Mr. Mims was the
sole owner of Gold Strike, Inc. and pursuant to the transaction received 827,680
shares of Common Stock of the Company as consideration for the merger. Pursuant
to this acquisition, the Company assumed an operating lease for gaming
properties located in North Augusta, South Carolina. The landlord for this
lease is a partnership in which Michael W. Mims is a 50% general partner. This
lease expires in November 2001 and has certain renewal options. Monthly rental
payments under this lease are $5,270.

In December 1997, the Company acquired by merger Darlington Music Co., Inc.
("DMC"), of which George M. Harrison, Jr., a director and officer of the
Company, was the President and a one-third owner. Pursuant to the transaction,
the Company issued 1,000,000 shares of its Common Stock as consideration for the
merger, with Mr. Harrison receiving 333,333 shares. Mr. Harrison's two brothers
were the other owners of DMC. As part of the acquisition of DMC, the Company
assumed a lease for an office and game machine warehouse facility in Darlington,
South Carolina. Mr. Harrison and his two brothers are the landlords for this
property. This lease has a 15-year term which expires January 15, 2005.
Monthly rental payments for this lease are $3,500.

In connection with the acquisition of DMC, the Company loaned George M.
Harrison, Jr. and both of his brothers $81,999 pursuant to unsecured promissory
notes. These notes accrue interest at 8% per annum and are repaid in three
equal installments of $27,333 due on December 15, 1998, 1999, and 2000.

On June 4, 1998, the Company loaned Michael W. Mims $284,889 pursuant to a
promissory note and security agreement. This note accrues interest at 7% per
annum and is due in full on May 31, 2001. This note is secured by 100,000
shares of the Company's Common Stock.

On November 9, 1998, the Company reorganized its South Carolina video
gaming operations by entering into a three-year agreement with Mims & Dye
Enterprises, L.L.C. ("Mims & Dye") which effectively served to outsource the
operations of the Company's non-route video gaming operations at eight video
gaming machine centers. Mims & Dye is managed by Michael W. Mims, who is also a
50% owner of that entity. Pursuant to the agreement, seven of the eight video
gaming centers were leased or sub-leased by the Company to Mims & Dye. Under
the agreement, the Company retains ownership of the underlining video gaming
machines and all related assets. In connection with the execution of the
agreement, the Company loaned $80,000 to Mims & Dye through two promissory
notes, which notes are due in full with interest at prime plus 2% on May 9,
1999. Mr. Mims provided a personal guaranty on the notes.

9
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

During 1998, the Company had an Audit Committee and a Compensation
Committee, as well as an Acquisition Committee and a Compliance Committee. For
1999, the Company has combined the Audit Committee and the Compensation
Committee into one committee.

In 1998, the Audit Committee was composed of James L. Hall (Chairman),
George M. Harrison, Jr. and A. Joe Willis. The Audit Committee met once in
1998. This committee has the responsibility for reviewing the financial
condition and accounting controls and determining that all audits and
examinations required by law are performed. The committee recommends to the
Board the appointment of the independent auditors for the next fiscal year,
reviews and approves the auditors' audit plans, and reviews with the independent
auditors the results of the audit and management's response thereto.

The Compensation Committee is responsible for establishing all benefit and
compensation plans for the Company. The Compensation Committee met one time in
1998. In 1998 the Compensation Committee was composed of George M. Harrison,
Jr. (Chairman), James L. Hall and Andre M. Hilliou.

The Company did not have a nominating committee in 1998. However, the
Company did appoint a Nominating Committee in February 1999 to be responsible
for nominating individuals for election to the Company's Board of Directors at
the Meeting. This Nominating Committee was composed of James L. Hall
(Chairman), Andre M. Hilliou, Grover C. Seaton III and A. Joe Willis. The
Nominating Committee met one time in 1999 to consider the nominees for the
Meeting. The Board of Directors and the Nominating Committee welcome
recommendations made by stockholders of the Company for individuals to be
included in the slate of nominees for election at the annual meeting of
stockholders. Any recommendations for the 2000 Annual Meeting of Stockholders
should be made in writing addressed to the Company's Board of Directors, 1440
Charleston Highway, West Columbia, South Carolina 29169, and should be made
prior to December 27, 1999.

The Board of Directors of the Company held ten meetings during the year
ended December 31, 1998. All of the directors of the Company attended at least
75% of the aggregate of such board meetings and the meetings of each committee
on which they served.

PROPOSAL TO AMEND CERTIFICATE OF INCORPORATION
AND BYLAWS TO DIVIDE THE DIRECTORS INTO TWO CLASSES

The Board of Directors believes that it would be in the best interest of
the Company to divide the directors into two classes, as nearly equal in number
as possible, so that approximately one-half of the directors will be elected at
each annual meeting of stockholders. The Board believes that by creating two
classes of directors, the Board will have more stability. In addition, having
two classes of directors also serves as a defense mechanism to an unwanted
takeover or change in control. To divide the directors into two classes
requires the adoption by the stockholders of an amendment to the Company's
Certificate of Incorporation. In addition, in order to make the classified
Board effective with and applicable to the election of directors at the Meeting,
the Company's Bylaws must also be amended to include a similar provision. A
copy of the proposed Certificate of Amendment to Certificate of Incorporation is
attached as Exhibit A and a copy of the proposed Amendment to Bylaws is attached
as Exhibit B.

If the proposed amendments to the Company's Certificate of Incorporation
and the Bylaws are adopted by the stockholders, the seven persons who are
nominated for election to the Board of Directors pursuant to this proxy
statement shall, if elected, be divided into two classes with three of the
directors elected to serve as Class I directors and four of the directors
elected to serve as Class II directors. The Class I directors shall include
George M. Harrison, Jr., Andre M. Hilliou and Michael W. Mims, whose terms shall
expire at the 2000 Annual Meeting of Stockholders. The Class II directors shall
include Kenneth R. Adams, James L. Hall, Grover C. Seaton III and A. Joe Willis,
whose terms shall expire at the 2001 Annual Meeting of Stockholders.

The affirmative vote of the majority of the outstanding shares of the
Company's Common Stock entitled to vote is required for the approval of this
Certificate of Amendment to Certificate of Incorporation and the Amendment to
Bylaws. With respect to this vote, abstentions and broker non-votes will have
the effect of a "no" vote.

10
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ADOPTION OF THE
CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORPORATION AND THE
AMENDMENT TO BYLAWS TO DIVIDE THE DIRECTORS INTO TWO CLASSES.

PROPOSAL TO AMEND CERTIFICATE OF INCORPORATION
TO INCLUDE STOCKHOLDER LICENSING PROVISIONS

Gaming operations are subject to extensive federal, state, provincial,
tribal and local laws, regulations and ordinances ("gaming laws") that are
administered by the relevant regulatory agency or agencies in each jurisdiction
(the "gaming authority"). While these gaming laws vary considerably from
jurisdiction to jurisdiction, one general concern of most gaming laws is the
responsibility, financial stability and character of those persons who own,
manage or have a financial interest in gaming operations. In certain
jurisdictions, the gaming authority is given the authority to subject any
stockholder of a company engaged in gaming operations (a "gaming company") to
the licensing requirements of the gaming laws. Generally only stockholders
owning 5% or more of the gaming company are subject to these licensing
requirements unless the gaming authority otherwise requires. In the event a
stockholder is found unsuitable or unqualified by the gaming authority, the
gaming company will be prevented from entering the jurisdiction, or if already
licensed in the jurisdiction it may lose its licenses in the jurisdiction,
unless it either complies with the gaming authority's demands in dealing with
the unsuitable stockholder or already has in place a mechanism to deal with the
unsuitable or unqualified stockholder. Mechanisms to deal with unsuitable or
unqualified stockholders, such as the proposed stockholder licensing provisions,
are commonly included in the Certificate of Incorporation of public gaming
companies.

In the event the gaming company does not already have a mechanism in place
to deal with an unsuitable or unqualified stockholder, the gaming company will
usually be required by the gaming authority to force the stockholder to sell his
or her stock in the gaming company before the gaming company will be permitted
to enter the jurisdiction or, if already licensed in the jurisdiction, before
the gaming company will be allowed to continue operating in the jurisdiction.
If, however, the gaming company already has in place a mechanism requiring such
action with regard to and from the unsuitable stockholder, the gaming company
will usually be allowed to enter the jurisdiction, or maintain its existing
licenses in the jurisdiction, while the mechanism is being utilized to deal with
the unsuitable stockholder.

As a result, the Company proposes to amend its Certificate of Incorporation
to put in place a mechanism to deal with stockholders found to be unsuitable or
unqualified by a gaming authority. A copy of the proposed Certificate of
Amendment to Certificate of Incorporation is attached as Exhibit C. This
amendment will give the Company the flexibility to expand its business into
jurisdictions in which the Company might encounter stockholder suitability
issues during the licensing process, as well as to maintain its licenses and
continue to operate its business in jurisdictions in which stockholder
suitability issues may be raised after licenses have been obtained.
Specifically, for any stockholder who (i) refuses to appear before, submit to
the jurisdiction of, or provide information to a gaming authority, (ii) refuses
to comply with a request or requirement of a gaming authority or (iii) is found
unsuitable or unqualified by a gaming authority, the Company would have the
discretion to require (unless otherwise required by the gaming authority or any
gaming law) such person to dispose of his or her securities of the Company. In
such situation, the stockholder must offer to sell to the Company the securities
of the Company that are beneficially owned by the stockholder at the market
price determined pursuant to the provisions of the amendment to the Certificate
of Incorporation. If the Company elects not to purchase the securities in whole
or in part, the stockholder may then be required to dispose of the securities
within the time period prescribed by the gaming authority. If these provisions
are in place in the Company's Certificate of Incorporation, in the event a
stockholder is found unsuitable, the Company will likely be permitted to enter
the jurisdiction, or maintain its existing licenses in the jurisdiction, while
the mechanism is being utilized to deal with the unsuitable stockholder. As
previously stated, generally only stockholders owning 5% or more of the gaming
company are subject to the licensing requirements unless the gaming authority
otherwise requires.

11
<PAGE>
The Company believes that the stockholder licensing provisions are
necessary if the Company ever expects to expand its business into jurisdictions
such as Colorado, Louisiana, Montana, Nevada, New Jersey or South Dakota. Since
the Company intends to pursue expansion opportunities wherever they may arise,
the Company believes that it is necessary to adopt the stockholder licensing
provisions at this time so that the Company will be in position to seek
licensing in any jurisdiction as soon as expansion opportunities arise. The
Company believes that the absence of such stockholder licensing provisions in
the Company's Certificate of Incorporation may hinder the Company's attempts to
obtain licenses in certain gaming jurisdictions. Accordingly, the Company
recommends that the stockholders adopt the stockholder licensing provisions.

The affirmative vote of the majority of the outstanding shares of the
Company's Common Stock entitled to vote is required for the approval of this
Certificate of Amendment to Certificate of Incorporation. With respect to this
vote, abstentions and broker non-votes will have the effect of a "no" vote.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ADOPTION OF THE
CERTIFICATE OF AMENDMENT TO CERTIFICATE OF INCORPORATION TO INCLUDE
STOCKHOLDER LICENSING PROVISIONS.

PROPOSAL TO APPROVE THE COMPANY'S STOCK OPTION PLAN

GENERAL

The Board of Directors of the Company has established the American Bingo &
Gaming Corp. Stock Option Plan (the "Plan") attached hereto as Exhibit D. The
purpose of the Plan is to advance the interests of the Company, its subsidiaries
and its stockholders by affording certain employees, officers and directors of
the Company and its subsidiaries, as well as key consultants and advisors to the
Company or any subsidiary, an opportunity to acquire or increase their
proprietary interests in the Company. The objective of the issuance of the
stock options, restricted stock and stock appreciation rights ("SARs") under the
Plan is to promote the growth and profitability of the Company and its
subsidiaries because the grantees will be provided with an additional incentive
to achieve the Company's objectives through participation in its success and
growth and by encouraging their continued association with or service to the
Company. The following is a summary of the material features of the Plan, which
is qualified in its entirety by reference to the complete provisions of the
Plan, attached hereto as Exhibit D.

If the Plan is adopted by the stockholders, the Board of Directors intends
to abandon the Company's four existing stock option plans, which include the
1994 Stock Option Plan, the 1995 Employee Stock Option Plan, the 1996 Employee
Stock Option Plan, and the 1997 Stock Option Plan. If the Plan is adopted by
the stockholders, no further options will be granted under any of the four
existing stock option plans and these four stock option plans will only be
maintained to satisfy the outstanding stock options which were granted under
these respective plans. As of March 15, 1999, in the aggregate the four
existing stock option plans had approximately 325,000 shares available for
issuance under these plans which were not subject to outstanding option grants,
plus 1,115,000 shares available for issuance under these plans which were
subject to outstanding option grants.

COMMON STOCK SUBJECT TO THE PLAN

The current maximum number of shares of Common Stock that may be issued
under the Plan is 750,000 shares, subject to adjustment in accordance with
anti-dilution provisions contained in the Plan. All shares of Common Stock
subject to the Plan may be issued in any combination of Incentive Stock Options,
as defined within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended ("ISOs"), non-incentive stock options, restricted stock or
SARs.

TERM OF THE PLAN

The Plan shall become effective on February 26, 1999; provided, however,
that the Plan shall terminate, and all options, restricted stock or SARs
theretofore granted shall become void and may not be exercised, on June 30,
1999, if the stockholders of the Company shall not by that date have approved
the Plan's adoption. No ISO may be granted more than ten years after the
earlier of (i) the effective date of the Plan or (ii) the date the Plan is
approved by the Company's stockholders. The Plan may be abandoned or terminated
at any time by the Company's Board of Directors, except with respect to options,
restricted stock or SARs then outstanding under the Plan.

12
<PAGE>
ELIGIBILITY

The class of persons eligible to participate in the Plan shall consist of
all persons whose participation in the Plan is determined to be in the best
interests of the Company, which shall include, but not be limited to, directors,
officers and employees, including but not limited to executive personnel, of the
Company or any subsidiary, as well as key consultants and advisors to the
Company or any subsidiary.

ADMINISTRATION OF THE PLAN

The Plan shall be administered by a committee consisting of at least two
directors appointed by the Board (the "Committee"); provided, however, that with
respect to any options, restricted stock or SARs granted to an individual who is
subject to the provisions of Section 16 of the Exchange Act, the Committee shall
consist of at least two directors (who need not be members of the Committee with
respect to grants to any other individuals) who are non-employee directors, and
all authority and discretion shall be exercised by such non-employee directors.
The Committee selects the individuals to whom options, restricted stock or SARs
are to be granted, the number of shares to be granted and any other terms and
conditions specified under the Plan, including, but not limited to, the exercise
price, the times at which options or SARs shall become exercisable and the
duration of the exercise periods.

TERMS OF OPTIONS

The exercise price of each ISO issued under the Plan shall be determined by
the Committee and shall not be less than the fair market value of the Common
Stock as of the date the option is granted; provided, however, that the exercise
price of an ISO granted to any person owning at least 10% of the total combined
voting power of all classes of stock of the Company or any of its parents or
subsidiaries shall not be less than 110% of the fair market value on the date
the option is granted. The exercise price of each non-incentive stock option
shall also be determined by the Committee and shall not be less than 50% of the
fair market value of the Common Stock on the date the option is granted. The
exercise period of each option shall be determined by the Committee; provided,
however, that an ISO shall not be exercisable after the expiration of ten years
from the date of the option grant. In addition, except in the case of death or
disability, no option granted to an individual who is subject to the provisions
of Section 16 of the Exchange Act may be exercisable prior to the expiration of
six months from the date of the option grant.

In the case of ISOs, the fair market value of stock with respect to which
ISOs are exercisable for the first time during any calendar year by any
participant in the Plan may not exceed $100,000, such value being determined at
the time the options are granted, as provided by the terms of Section 422 of the
Internal Revenue Code. To the extent the value of the underlying stock
(determined in accordance with the previous sentence) exceeds $100,000, such
excess options shall be treated as non-incentive stock options.

After an option becomes exercisable, it may be exercised at any time as to
any or all full shares that have become purchasable under the terms of the
option, but at no time may an option be exercised as to less than 100 shares
unless the remaining shares that have become purchasable are less than 100
shares. The exercise price of options granted under the Plan may be made in
whole or in part through the surrender of previously held shares of Common Stock
at the fair market value thereof or through the authorization to withhold shares
of stock otherwise issuable upon exercise of the option.

No option shall be transferable other than by will or the laws of descent
and distribution, or in the case of non-incentive stock options, pursuant to a
Qualified Domestic Relations Order, and no option shall be transferable by an
individual who is subject to the provisions of Section 16 of the Exchange Act
prior to stockholder approval of the Plan. The Committee shall have the power
to specify with respect to each grant of options the effect upon such grantee's
rights of the termination of such grantee's employment or services with the
Company and the Committee may determine at the time of grant that such options
shall become exercisable on an accelerated basis following a change of control
with respect to the Company. Nothing in the Plan shall confer on any person any
right to continue in the employ of the Company or any of its subsidiaries or
shall interfere in any way with the right of the Company or any of its
subsidiaries to terminate such person's employment at any time.

13
<PAGE>
TERMS OF RESTRICTED STOCK

Until any restrictions upon restricted stock awarded to a grantee under the
Plan have lapsed, such shares shall not be transferable other than by will or
the laws of descent and distribution, or pursuant to a Qualified Domestic
Relations Order, nor shall they be delivered to the grantee. The Committee
shall have the power to specify with respect to each award of restricted stock
the effect upon such grantee's rights of the termination of such grantee's
employment with the Company. The Committee may determine at the time of award
that such restricted stock shall become fully vested following a change of
control with respect to the Company.

TERMS OF SARS

The exercise price of each SAR shall be determined by the Committee and
shall not be less than (i) 100% of the fair market value of the Common Stock on
the date the SAR is granted for a SAR issued in tandem with an ISO and (ii) 50%
of the fair market value of the Common Stock on the date the SAR is granted for
other SARs. The exercise period of each SAR shall be determined by the
Committee. The payment to the grantee for exercise of a SAR shall be made in
cash, shares of stock, or a combination of both.

During the period of continuous employment with the Company, its parent or
any subsidiary, a SAR will be terminated only if it has been fully exercised or
it has expired by its terms. Upon termination of employment, the SAR will
terminate upon the earliest of (i) the full exercise of the SAR, (ii) the
expiration of the SAR by its terms, and (iii) not more than three months
following the date of employment termination; provided, however, should
termination of employment (A) result from the death or permanent and total
disability of the grantee, the period referenced in (iii) shall be one year or
(B) be for cause, the SAR will terminate on the date of employment termination.
For purposes of the Plan, a leave of absence approved by the Company shall not
be deemed to be termination of employment unless otherwise provided in the
agreement entered into by the Company and the grantee or by the Company on the
date of the leave of absence. The Committee may determine at the time of grant
that the SAR shall become fully vested following a change of control with
respect to the Company. A grantee of a SAR shall have no rights as a
stockholder with respect to a SAR.

FEDERAL TAX CONSEQUENCES OF OPTIONS

Under current federal income tax laws, options granted under the Plan will
generally have the following consequences. The holder of a non-incentive stock
option recognizes no income for federal income tax purposes upon the grant of
such option, and the Company, therefore, receives no deduction at such time. At
the time of exercise, however, the grantee generally will recognize income,
taxable at ordinary income, to the extent that the fair market value of the
shares received on the exercise date exceeds the non-incentive stock option
exercise price. The Company will be entitled to a corresponding deduction for
federal income tax purposes in the year in which the non-incentive stock option
is exercised so long as either Section 162(m) is inapplicable or its
requirements are met. If the shares are held for at least one year and one day
after exercise, long-term capital gain will be realized upon disposition of such
shares to the extent the amount realized on such disposition exceeds their fair
market value as of the exercise date.

If a grantee is awarded an ISO, no income will be recognized for federal
income tax purposes at the time of grant or exercise, and the Company will
therefore, not receive any corresponding deduction. The excess of fair market
value of the shares of Common Stock received at the date of exercise over the
exercise price will become an item of tax preference for the grantee for
purposes of the grantee's alternative minimum tax in the year of exercise,
however. The grantee will be subject to federal income tax when the grantee
sells the shares acquired upon the exercise of the ISO. If the grantee holds
the shares for more than two years from the date of grant and more than one year
from the date the shares were transferred to that person, any gain will be taxed
as long-term capital gain. The Company will not be entitled to any deduction
for federal income tax purposes as to any amount taxed as long-term capital gain
in connection with the sale of shares acquired upon the exercise of an ISO. The
Company will, however, be entitled to a corresponding deduction for federal
income tax purposes for any amount taxed as ordinary income.

14
<PAGE>
AMENDMENT OF THE PLAN

The Board may at any time terminate the Plan, and may at any time and in
any respect amend the Plan; provided, however, that the Board (unless its
actions are approved or ratified by the stockholders of the Company within
twelve months of the date that the Board amends the Plan) may not amend the Plan
to (i) increase the total number of shares of Common Stock issuable pursuant to
ISOs under the Plan or materially increase the number of shares of Common Stock
subject to the Plan; (ii) change the class of employees eligible to receive ISOs
that may participate in the Plan or materially change the class of persons that
may participate in the Plan; or (iii) otherwise materially increase the benefits
accruing to participants under the Plan. No termination, amendment or
modification of the Plan shall adversely affect options, SARs or restricted
stock then outstanding under the Plan without the consent of the grantee or his
legal representative.

REQUIRED VOTE; RECOMMENDATION

The affirmative vote of the majority of the shares of the Company's Common
Stock present in person or represented by proxy at the Meeting and entitled to
vote is required for the approval of the Plan. With respect to this vote,
abstentions will have the effect of a "no" vote and broker non-votes will have
no effect on the vote.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE
COMPANY'S STOCK OPTION PLAN.

RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS

Subject to ratification by the stockholders, the Board of Directors has
reappointed King Griffin & Adamson P.C. as independent auditors to audit the
financial statements of the Company for the 1999 fiscal year. King Griffin &
Adamson P.C. served as the independent auditors for the Company for the fiscal
years ended December 31, 1997 and 1998.

Weinick, Sanders, Levanthal & Co. LLP was the Company's independent
auditors for fiscal 1996. After approval by the Board, the Company dismissed
Weinick, Sanders, Levanthal & Co. LLP on April 23, 1997. Their independent
auditor's report for 1996 did not contain an adverse opinion or a disclaimer of
opinion and was not qualified or modified as to uncertainty, audit scope or
accounting principles. The Company did not have any disagreements with them on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which if not resolved to their
satisfaction, would have caused them to make reference to such matters in their
report. The firm of King Griffin & Adamson, P.C. was engaged as the Company's
new independent auditors.

A representative of King Griffin & Adamson P.C. is expected to be present
at the Meeting and will have an opportunity to make a statement, if the
representative so desires, and will be available to respond to any appropriate
questions stockholders may have.

The affirmative vote of the majority of the shares of the Company's Common
Stock present in person or represented by proxy at the Meeting and entitled to
vote is required for the ratification of the appointment of King Griffin &
Adamson P.C. as the Company's independent auditors for the 1999 fiscal year.
With respect to this vote, abstentions will have the effect of a "no" vote and
broker non-votes will have no effect on the vote.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION
OF KING GRIFFIN & ADAMSON P.C. AS INDEPENDENT AUDITORS.

STOCKHOLDER PROPOSALS

Notices of stockholder proposals intended to be presented at the Meeting
must have been provided to the Company by no later than March 21, 1999. With
respect to stockholder proposals for which notices were not provided to the
Company by March 21, 1999, the person or persons designated as proxies in
connection with the Company's solicitation of proxies shall have the
discretionary voting authority to vote the shares of the Company's Common Stock
represented by the proxy cards returned to the Company in accordance with their
judgment on such matters when such proposals are presented at the Meeting.

15
<PAGE>
Stockholder proposals intended to be presented at the 2000 Annual Meeting
of Stockholders and included in the Company's Proxy Statement and form of proxy
for that meeting must be received by the Company by no later than December 27,
1999. Any stockholder of the Company who intends to present a proposal at the
2000 Annual Meeting of Stockholders, which proposal is not included in the
Company's Proxy Statement, must deliver notice of such proposal to the Company
by no later than March 12, 2000. If the proposing stockholder fails to deliver
notice of such proposal to the Company by such date, then the person or persons
designated as proxies in connection with the Company's solicitation of proxies
shall have the discretionary voting authority to vote the shares of the
Company's Common Stock represented by the proxy cards returned to the Company in
accordance with their judgment on such matters when such proposals are presented
at the 2000 Annual Meeting. Any such notice of a stockholder proposal must be
made in writing addressed to Secretary, American Bingo & Gaming Corp., 1440
Charleston Highway, West Columbia, South Carolina 29169.

OTHER MATTERS

The Board of Directors knows of no business other than that set forth above
to be transacted at the Meeting, but if other matters requiring a vote of the
stockholders arise, the persons designated as proxies will vote the shares of
Common Stock represented by the proxy cards in accordance with their judgment on
such matters.

BY ORDER OF THE BOARD OF DIRECTORS

Andre M. Hilliou
Chairman of the Board, President and
Chief Executive Officer

West Columbia, South Carolina
April 26, 1999

16
<PAGE>
EXHIBIT A
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
AMERICAN BINGO & GAMING CORP.

American Bingo & Gaming Corp., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY:

FIRST: That at a meeting of the Board of Directors of the Corporation,
resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of the Corporation, declaring said amendment to be
advisable and directing that such proposed amendment be submitted for
consideration by the stockholders of the Corporation at the next annual meeting
of stockholders. The resolution setting forth the proposed amendment is as
follows:

RESOLVED, that the Certificate of Incorporation of this Corporation be
amended by adding a new paragraph 8.c relating to dividing the Board of
Directors into two classes, which shall read as follows:

8.c. The Board of Directors shall be divided, with respect to the terms for
which the directors severally hold office, into two classes, as nearly equal in
number as possible, one class to hold office initially for a term expiring at
the next succeeding annual meeting of stockholders ("Class I") and another class
to hold office initially for a term expiring at the second succeeding annual
meeting of stockholders ("Class II"), with the members of each class to hold
office until their successors are duly elected and qualified. At each annual
meeting of the stockholders of the Corporation, the successors to the class of
directors whose term expires at such meeting shall be elected to hold office
expiring at the annual meeting of stockholders held in the second year following
the year of their election.

SECOND: That thereafter, pursuant to resolution of its Board of Directors,
the proposed amendment was presented to the stockholders of the Corporation at
the 1999 Annual Meeting of Stockholders, which meeting was duly called and held,
upon notice in accordance with Section 222 of the General Corporation Law of the
State of Delaware, at which meeting the necessary number of shares as required
by statute were voted in favor of the amendment.

THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.

IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to Certificate of Incorporation to be signed by Andre M. Hilliou, its
President, and attested to by Marie T. Pierson, its Secretary, as of this
________ day of ____________, 1999.

AMERICAN BINGO & GAMING CORP.

By:________________________________
Andre M. Hilliou
President
ATTEST:

By:__________________________________
Marie T. Pierson
Secretary

<PAGE>
EXHIBIT B
PROPOSED AMENDMENT TO
BYLAWS OF
AMERICAN BINGO & GAMING CORP.

In connection with the proposal to divide the Board of Directors of American
Bingo & Gaming Corp. into two classes, Article III, Section 2 of the Bylaws is
proposed to be amended to read in its entirety as follows:

Section 2. Number; Election. The Board of Directors shall consist
-----------------
of no less than two (2) nor more than seven (7) directors, who need not be
stockholders or residents of the State of Delaware. The Board of Directors
shall be divided, with respect to the terms for which the directors severally
hold office, into two classes, as nearly equal in number as possible, one class
to hold office initially for a term expiring at the next succeeding annual
meeting of stockholders ("Class I") and another class to hold office initially
for a term expiring at the second succeeding annual meeting of stockholders
("Class II"), with the members of each class to hold office until their
successors are duly elected and qualified. At each annual meeting of the
stockholders of the Corporation, the successors to the class of directors whose
term expires at such meeting shall be elected to hold office expiring at the
annual meeting of stockholders held in the second year following the year of
their election, or until their successors are duly elected and qualified.

<PAGE>
EXHIBIT C
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
AMERICAN BINGO & GAMING CORP.

American Bingo & Gaming Corp., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), DOES HEREBY CERTIFY:

RESOLVED, that the Certificate of Incorporation of this Corporation be
amended by adding a new paragraph 13 relating to gaming laws which shall read as
follows:

13.a. If the Corporation becomes, and for as long as it remains, either a
holding company or an intermediary holding company subject to regulation under
any Gaming Laws (as hereinafter defined), all Securities (as hereinafter
defined) of the Corporation shall be held subject to the applicable provisions
of any Gaming Laws. If any person (as hereinafter defined) which beneficially
owns Securities of the Corporation is requested or required pursuant to any
Gaming Law to appear before or submit to the jurisdiction of, or provide
information to, any Gaming Authority and either refuses to do so or otherwise
fails to comply with any request or requirement within a reasonable period of
time, or is determined or shall have been determined by any Gaming Authority not
to be suitable or qualified with respect to the beneficial ownership of
Securities of the Corporation, then, at the election of the Corporation (unless
otherwise required by any Gaming Authority or Gaming Law):

1
<PAGE>
(i) such person owning Securities in the Corporation agrees to sell to the
Corporation, and the Corporation shall have the absolute right in its sole
discretion to repurchase, any or all of the Securities of the Corporation
beneficially owned by the person, at a price determined pursuant to paragraph
13.c hereof; and/or

(ii) such person owning Securities in the Corporation agrees to otherwise
dispose of his or her interest in the Corporation within the time prescribed by
the Gaming Authority and the Corporation shall have no obligation to repurchase
any or all of the Securities of the Corporation beneficially owned by that
person.

The operation of this Article 13 shall not be stayed by an appeal from a
determination of any Gaming Authority.

b. If the Corporation intends to repurchase Securities beneficially owned by
any person referred to in paragraph 13.a above, it shall notify the person in
writing of its intention, specifying the Securities to be repurchased, the date,
time and place when the repurchase will be consummated (Repurchase Date), which
date in no event will be earlier than three business days after the date of the
notice, and the price at which the Securities will be repurchased (it being
sufficient for the purposes of this Article 13 for the Corporation to indicate
generally that the price will be determined in accordance with paragraph 13.c
hereof). If the Corporation gives the notice provided for by the preceding
sentence (Repurchase Notice), the Repurchase Notice shall be deemed to
constitute a binding agreement on the part of the Corporation to repurchase, and
on the part of the person notified to sell, the Securities referred to in the
Repurchase Notice in accordance with this Article 13. Following the Repurchase
Date (or an earlier date if required by any Gaming Authority or Gaming Law), no
dividends will be payable on and no voting rights will be available to the
holders of any Securities which are covered by the Repurchase Notice and have
not been duly delivered by the holder for repurchase by the Corporation. If
following the Repurchase Date any Securities, with respect to which a Repurchase
Notice has been given, have not been duly delivered by the holder for repurchase
by the Corporation, the Corporation shall deposit in escrow, or otherwise hold
in trust for the benefit of the holder, an amount equal to the aggregate Market
Price (as hereinafter defined) of the stock to be repurchased. The
establishment of such an account shall in no way alter the amount otherwise
payable to any person pursuant to this Article 13. All interest paid or accrued
with respect to any amount deposited in escrow or otherwise held in trust for
the benefit of the holder shall be the property of the Corporation and the
holder shall have no right or claim thereto.

2
<PAGE>
c. In the event the Corporation issues a Repurchase Notice pursuant to
paragraph 13.b hereof, the price at which the Corporation shall repurchase the
Securities covered by the Repurchase Notice shall be the Market Price on the
date of the Repurchase Notice.

d. For the purposes of this Article 13:

(i) "Affiliate" or "Associate" shall have the respective meanings ascribed
to those terms in Rule 12b-2 of the rules and regulations under the Securities
Exchange Act of 1934.

(ii) "Gaming Authority" means any government, court, or federal, state,
local, international or foreign governmental, administrative or regulatory or
licensing body, agency, authority or official which regulates, has authority
over, or otherwise asserts jurisdiction over gaming activities (or proposed
gaming activities), gaming operations or facilities conducted by the Corporation
or any of its subsidiaries or Affiliates, within any gaming jurisdictions
(domestic and foreign and the political subdivisions thereof), whether now or
hereafter existing.

(iii) "Gaming Law" means any federal, state, local, international or foreign
law, statute, order, ordinance or interpretation pursuant to which any Gaming
Authority possesses or asserts regulatory or licensing authority over gaming
activities, operations or facilities within any gaming jurisdictions (domestic
and foreign and the political subdivisions thereof), including any rules and
regulations promulgated by any Gaming Authority thereunder.

(iv) "Market Price" means the average of the last sale prices of a Security
on the Composite Tape for Nasdaq National Market Stocks for each of the 15
consecutive trading days (Valuation Period) commencing 16 trading days prior to
the date in question; provided that if the Security is not quoted on the
Composite Tape, the average last sale price shall be derived from the average
last sales prices on the Nasdaq National Market Exchange or, if the Security is
not listed on that exchange, on the principal United States securities exchange
registered under the Exchange Act on which the Security is listed or, if the
Security is not listed on any exchange, the average of the closing bid
quotations with respect to such a Security during the Valuation Period on the
Nasdaq National Market or any system then in use or, if no quotations are
available, the fair market value of the Security on the date in question as
determined by the Board of Directors in good faith.

3
<PAGE>
(v) A "person" means any individual, firm, corporation, limited liability
company, trust or other entity.

(vi) A person shall be a "beneficial owner" of any Securities which:

(a) the person, or any of its Affiliates or Associates, beneficially owns,
directly or indirectly; or

(b) the person or any of its Affiliates or Associates has (y) the right to
acquire (whether the right is exercisable immediately or only after the passage
of time), pursuant to any agreement, arrangement or understanding or upon the
exercise of conversion rights, exchange rights, warrants or options, or
otherwise, or (z) the right to vote pursuant to any agreement, arrangement or
understanding; or

(c) are beneficially owned, directly or indirectly, by any other person with
which the person or any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting or
disposing of any Securities.

(vii) "Securities" means any shares of capital stock, bonds, notes,
convertible debentures, warrants or other instruments that represent a share in
the Corporation or a debt owed by the corporation.

e. A majority of the entire Board shall have the power and duty to determine
for the purposes of this Article 13 on the basis of information known to them
after reasonable inquiry, whether paragraph 13.a hereof applies to any person
who beneficially owns Securities of the Corporation so that the Corporation
shall have the right to repurchase shares of Securities held by the person or
require the disposition of the person's interest in the Corporation pursuant to
this Article 13.

4
<PAGE>
SECOND: That thereafter, pursuant to resolution of its Board of Directors,
the proposed amendment was presented to the stockholders of the Corporation at
the 1999 Annual Meeting of Stockholders, which meeting was duly called and held,
upon notice in accordance with Section 222 of the General Corporation Law of the
State of Delaware, at which meeting the necessary number of shares as required
by statute were voted in favor of the amendment.

THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.

AMERICAN BINGO & GAMING CORP.

By:________________________________
Andre M. Hilliou
President
ATTEST:

By:__________________________________
Marie T. Pierson
Secretary

5
<PAGE>
EXHIBIT D

AMERICAN BINGO & GAMING CORP.

STOCK OPTION PLAN

<PAGE>

AMERICAN BINGO & GAMING CORP.
STOCK OPTION PLAN

<TABLE>
<CAPTION>
TABLE OF CONTENTS
-------------------

Page
--------------------------------------
<C> <S> <C>

ARTICLEI 1

ARTICLE II 4
2.1 Name 4
--------------------------------------
2.2 Purpose 4
--------------------------------------
2.3 Effective Date 4
--------------------------------------

ARTICLE III 5

ARTICLE IV 5
4.1 Duties and Powers of the Committee 5
--------------------------------------
4.2 Interpretation; Rules 5
--------------------------------------
4.3 No Liability 5
--------------------------------------
4.4 Majority Rule 5
--------------------------------------
4.5 Company Assistance 6
--------------------------------------

ARTICLE V 6
5.1 Limitations 6
--------------------------------------
5.2 Antidilution 6
--------------------------------------

ARTICLE VI 7
6.1 Types of Options Granted 7
--------------------------------------
6.2 Option Grant and Agreement 7
--------------------------------------
6.3 Optionee Limitations 8
--------------------------------------
6.4 $100,000 Limitation 8
--------------------------------------
6.5 Exercise Price 8
--------------------------------------
6.6 Exercise Period 9
--------------------------------------
6.7 Option Exercise 9
--------------------------------------
6.8 Reload Options 10
--------------------------------------
6.9 Non-Transferability of Option 10
--------------------------------------
6.10 Termination of Employment or Service 10
--------------------------------------
6.11 Employment Rights 11
--------------------------------------
6.12 Certain Successor Options 11
--------------------------------------
6.13 Effect of Change in Control 11
--------------------------------------

ARTICLE VII 11
7.1 Awards of Restricted Stock 11
--------------------------------------
7.2 Non-Transferability 12
--------------------------------------
7.3 Lapse of Restrictions 12
--------------------------------------
7.4 Termination of Employment 12
--------------------------------------
7.5 Treatment of Dividends 12
--------------------------------------
7.6 Delivery of Shares 12
--------------------------------------
7.7 Effect of Change in Control 12
--------------------------------------

ARTICLE VIII 13
8.1 SAR Grants 13
--------------------------------------
8.2 Determination of Price 13
--------------------------------------
8.3 Exercise of a SAR 13
--------------------------------------
8.4 Payment for a SAR 13
--------------------------------------
8.5 Status of a SAR under the Plan 13
--------------------------------------
8.6 Termination of SARs 13
--------------------------------------
8.7 No Shareholder Rights 14
--------------------------------------
8.8 Effect of Change in Control 14
--------------------------------------

ARTICLE IX 14

ARTICLE X 15
10.1 Termination and Amendment 15
--------------------------------------
10.2 Effect on Grantee's Rights 15
--------------------------------------

ARTICLE XI 15

ARTICLE XII 15
12.1 Replacement or Amended Grants 15
--------------------------------------
12.2 Forfeiture for Competition 16
--------------------------------------
12.3 Plan Binding on Successors 16
--------------------------------------
12.4 Singular, Plural; Gender 16
--------------------------------------
12.5 Headings, etc., Not Part of Plan 16
--------------------------------------
12.6 Interpretation 16
--------------------------------------

Exhibit A i

SCHEDULE A v

SCHEDULE B vi
</TABLE>

AMERICAN BINGO & GAMING CORP.
STOCK OPTION PLAN

ARTICLE I
DEFINITIONS

As used herein, the following terms have the following meanings unless the
context clearly indicates to the contrary:

"Award" shall mean a grant of Restricted Stock or an SAR.
-----

"Award Agreement" shall mean an Agreement between the Company and a
----------------
Grantee relating to a grant of Restricted Stock or an SAR.

"Board" shall mean the Board of Directors of the Company.
-----

"Cause" shall mean theft or destruction of property of the Company, a
-----
Parent, or a Subsidiary, disregard of Company rules or policies, or conduct
evincing willful or wanton disregard of the interests of the Company. Such
determination shall be made by the Committee based on information presented by
the Company and the Employee and shall be final and binding on all parties
hereto.

"Change in Control" shall mean the occurrence of any of the following
------------------
events: (i) any individual or entity: (A) directly or indirectly acquiring
beneficial ownership of 35% or more of the Stock of the Company outstanding from
time to time; or (B) making a tender offer for 35% or more of the Stock of the
Company outstanding; or (ii) individuals who constitute a majority of the
Company's Board of Directors on the date of the adoption of this Plan by the
Board of Directors, or individuals elected or nominated directly or indirectly
by at least a majority of such current directors, no longer constitute a
majority of the Company's Board of Directors; or (iii) a merger, consolidation,
asset sale or other transaction involving the sale or other transfer of all or
substantially all of the business or assets of the Company.

"Code" shall mean the United States Internal Revenue Code of 1986,
----
including effective date and transition rules (whether or not codified). Any
reference herein to a specific section of the Code shall be deemed to include a
reference to any corresponding provision of future law.

"Committee" shall mean a committee of at least two Directors appointed
---------
from time to time by the Board, having the duties and authority set forth herein
in addition to any other authority granted by the Board; provided, however, that
with respect to any Options or Awards granted to an individual who is also a
Section 16 Insider, the Committee shall consist of at least two Directors (who
need not be members of the Committee with respect to Options or Awards granted
to any other individuals) who are Non-Employee Directors, and all authority and
discretion shall be exercised by such Non-Employee Directors and references
herein to the "Committee" shall mean such insofar as any actions or
determinations of the Committee shall relate to or affect Options or Awards made
to or held by any Section 16 Insider. At any time that the Board shall not have
appointed a committee as described above, any reference herein to the Committee
shall mean a reference to the Board.

"Company" shall mean American Bingo & Gaming Corp., a Delaware
-------
corporation.

"Director" shall mean a member of the Board and any person who is an
--------
advisory or honorary director of the Company if such person is considered a
director for the purposes of Section 16 of the Exchange Act, as determined by
reference to such Section 16 and to the rules, regulations, judicial decisions,
and interpretative or "no-action" positions with respect thereto of the
Securities and Exchange Commission, as the same may be in effect or set forth
from time to time.

"Employee" shall mean an employee of the Employer.
--------

"Employer" shall mean the corporation that employs a Grantee.
--------

"Exchange Act" shall mean the Securities Exchange Act of 1934. Any
-------------
reference herein to a specific section of the Exchange Act shall be deemed to
include a reference to any corresponding provision of future law.

"Exercise Price" shall mean the price at which an Optionee may
---------------
purchase a share of Stock under a Stock Option Agreement.

"Fair Market Value" on any date shall mean (i) the closing sales price
-----------------
of the Stock, regular way, on such date on the securities exchange having the
greatest volume of trading in the Stock during the thirty-day period preceding
the day the value is to be determined or, if such exchange was not open for
trading on such date, the next preceding date on which it was open; (ii) if the
Stock is not traded on any securities exchange, the average of the closing high
bid and low asked prices of the Stock on the over-the-counter market on the day
such value is to be determined, or in the absence of closing bids on such day,
the closing bids on the next preceding day on which there were bids; or (iii) if
the Stock also is not traded on the over-the-counter market, the fair market
value as determined in good faith by the Board or the Committee based on such
relevant facts as may be available to the Board, which may include, but not be
limited to, opinions of independent experts, the price at which recent sales
have been made, the book value of the Stock, and the Company's current and
future earnings.

"Grantee" shall mean a person who is an Optionee or a person who has
-------
received an Award of Restricted Stock or an SAR.

"Incentive Stock Option" shall mean an option to purchase any stock of
----------------------
the Company, which complies with and is subject to the terms, limitations and
conditions of Section 422 of the Code and any regulations promulgated with
respect thereto.

"Non-Employee Director" shall have the meaning set forth in Rule 16b-3
---------------------
under the Exchange Act, as the same may be in effect from time to time, or in
any successor rule thereto, and shall be determined for all purposes under the
Plan according to interpretative or "no-action" positions with respect thereto
issued by the Securities and Exchange Commission.

"Officer" shall mean a person who constitutes an officer of the
-------
Company for the purposes of Section 16 of the Exchange Act, as determined by
reference to such Section 16 and to the rules, regulations, judicial decisions,
and interpretative or "no-action" positions with respect thereto of the
Securities and Exchange Commission, as the same may be in effect or set forth
from time to time.

"Option" shall mean an option, whether or not an Incentive Stock
------
Option, to purchase Stock granted pursuant to the provisions of Article VI
hereof.

"Optionee" shall mean a person to whom an Option has been granted
--------
hereunder.

"Parent" shall mean any corporation (other than the Employer) in an
------
unbroken chain of corporations ending with the Employer if, at the time of the
grant (or modification) of the Option, each of the corporations other than the
Employer owns stock possessing 50 percent or more of the total combined voting
power of the classes of stock in one of the other corporations in such chain.

"Permanent and Total Disability" shall have the same meaning as given
-------------------------------
to that term by Code Section 22(e)(3) and any regulations or rulings promulgated
thereunder.

"Plan" shall mean the American Bingo & Gaming Corp. Stock Option Plan,
----
the terms of which are set forth herein.

"Purchasable" shall refer to Stock which may be purchased by an
-----------
Optionee under the terms of this Plan on or after a certain date specified in
the applicable Stock Option Agreement.

"Qualified Domestic Relations Order" shall have the meaning set forth
-----------------------------------
in the Code or in the Employee Retirement Income Security Act of 1974, or the
rules and regulations promulgated under the Code or such Act.

"Reload Option" shall have the meaning set forth in Section 6.8
--------------
hereof.

"Restricted Stock" shall mean Stock issued, subject to restrictions,
-----------------
to a Grantee pursuant to Article VII hereof.

"SAR" means a stock appreciation right.
---

"SAR Exercise Price" means the base value established by the Committee
------------------
for a SAR on the date the SAR is granted and which is used in determining the
amount of benefit, if any, paid to a Grantee.

"Section 16 Insider" shall mean any person who is subject to the
--------------------
provisions of Section 16 of the Exchange Act.

"Stock" shall mean the Common Stock, $.001 par value per share, of the
-----
Company or, in the event that the outstanding shares of Stock are hereafter
changed into or exchanged for shares of a different stock or securities of the
Company or some other entity, such other stock or securities.

"Stock Option Agreement" shall mean an agreement between the Company
------------------------
and an Optionee under which the Optionee may purchase Stock hereunder, a sample
form of which is attached hereto as Exhibit A (which form may be varied by the
Committee in granting an Option).

"Subsidiary" shall mean any corporation (other than the Employer) in
----------
an unbroken chain of corporations beginning with the Employer if, at the time of
the grant (or modification) of the Option, each of the corporations other than
the last corporation in the unbroken chain owns stock possessing 50 percent or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

ARTICLE II
THE PLAN

2.1 Name. This Plan shall be known as the "American Bingo & Gaming
----
Corp. Stock Option Plan."

2.2 Purpose. The purpose of the Plan is to advance the interests of
-------
the Company, its Subsidiaries and its shareholders by affording certain
employees, Officers and Directors of the Company and its Subsidiaries, as well
as key consultants and advisors to the Company or any Subsidiary, an opportunity
to acquire or increase their proprietary interests in the Company. The
objective of the issuance of the Options and Awards is to promote the growth and
profitability of the Company and its Subsidiaries because the Grantees will be
provided with an additional incentive to achieve the Company's objectives
through participation in its success and growth and by encouraging their
continued association with or service to the Company.

2.3 Effective Date. The Plan shall become effective on February 26,
---------------
1999; provided, however, that the Plan shall terminate, and all Options or
Awards theretofore granted or awarded shall become void and may not be
exercised, on June 30, 1999, if the shareholders of the Company shall not by
that date have approved the Plan's adoption.

ARTICLE III
PARTICIPANTS

The class of persons eligible to participate in the Plan shall consist of
all persons whose participation in the Plan the Committee determines to be in
the best interests of the Company which shall include, but not be limited to,
Directors, Officers and employees, including but not limited to executive
personnel, of the Company or any Subsidiary, as well as key consultants and
advisors to the Company or any Subsidiary.

ARTICLE IV
ADMINISTRATION

4.1 Duties and Powers of the Committee. The Plan shall be administered
----------------------------------
by the Committee. The Committee shall select one of its members as its Chairman
and shall hold its meetings at such times and places as it may determine. The
Committee shall keep minutes of its meetings and shall make such rules and
regulations for the conduct of its business as it may deem necessary. The
Committee shall have the power to act by unanimous written consent in lieu of a
meeting, and to meet telephonically. In administering the Plan, the Committee's
actions and determinations shall be binding on all interested parties. The
Committee shall have the power to grant Options or Awards in accordance with the
provisions of the Plan and may grant Options and Awards singly, in combination,
or in tandem. Subject to the provisions of the Plan, the Committee shall have
the discretion and authority to determine those individuals to whom Options or
Awards will be granted and whether such Options shall be accompanied by the
right to receive Reload Options, the number of shares of Stock subject to each
Option or Award, such other matters as are specified herein, and any other terms
and conditions of a Stock Option Agreement or Award Agreement. The Committee
shall also have the discretion and authority to delegate to any Officer its
powers to grant Options or Awards under the Plan to any person who is an
employee of the Company but not an Officer or Director. To the extent not
inconsistent with the provisions of the Plan, the Committee may give a Grantee
an election to surrender an Option or Award in exchange for the grant of a new
Option or Award, and shall have the authority to amend or modify an outstanding
Stock Option Agreement or Award Agreement, or to waive any provision thereof,
provided that the Grantee consents to such action.

4.2 Interpretation; Rules. Subject to the express provisions of the
----------------------
Plan, the Committee also shall have complete authority to interpret the Plan, to
prescribe, amend, and rescind rules and regulations relating to it, to determine
the details and provisions of each Stock Option and Award Agreement, and to make
all other determinations necessary or advisable for the administration of the
Plan, including, without limitation, the amending or altering of the Plan and
any Options or Awards granted hereunder as may be required to comply with or to
conform to any federal, state, or local laws or regulations.

4.3 No Liability. Neither any member of the Board nor any member of
-------------
the Committee shall be liable to any person for any act or determination made in
good faith with respect to the Plan or any Option or Award granted hereunder.

4.4 Majority Rule. A majority of the members of the Committee shall
--------------
constitute a quorum, and any action taken by a majority at a meeting at which a
quorum is present, or any action taken without a meeting evidenced by a writing
executed by all the members of the Committee, shall constitute the action of the
Committee.

4.5 Company Assistance. The Company shall supply full and timely
-------------------
information to the Committee on all matters relating to eligible persons, their
employment, death, retirement, disability, or other termination of employment,
and such other pertinent facts as the Committee may require. The Company shall
furnish the Committee with such clerical and other assistance as is necessary in
the performance of its duties.

ARTICLE V
SHARES OF STOCK SUBJECT TO PLAN

5.1 Limitations. Subject to any antidilution adjustment pursuant to
-----------
the provisions of Section 5.2 hereof, the maximum number of shares of Stock that
may be issued hereunder shall be 750,000. Any or all shares of Stock subject to
the Plan may be issued in any combination of Incentive Stock Options,
non-Incentive Stock Options, Restricted Stock, or SARs, and the amount of Stock
subject to the Plan may be increased from time to time in accordance with
Article X. Shares subject to an Option or issued as an Award may be either
authorized and unissued shares or shares issued and later acquired by the
Company. The shares covered by any unexercised portion of an Option that has
terminated for any reason, or any forfeited portion of an Award, may again be
optioned or awarded under the Plan, and such shares shall not be considered as
having been optioned or issued in computing the number of shares of Stock
remaining available for option or award hereunder.

5.2 Antidilution.
------------

(a) If (x) the outstanding shares of Stock are changed into or
exchanged for a different number or kind of shares or other securities of the
Company by reason of merger, consolidation, reorganization, recapitalization,
reclassification, combination or exchange of shares, or stock split or stock
dividend, (y) any spin-off, spin-out or other distribution of assets materially
affects the price of the Company's stock, or (z) there is any assumption and
conversion to the Plan by the Company of an acquired company's outstanding
option grants, then:

(i) the aggregate number and kind of shares of Stock for which
Options or Awards may be granted hereunder shall be adjusted proportionately by
the Committee; and

(ii) the rights of Optionees under outstanding Options and the
rights of the holders of Awards, shall be adjusted proportionately by the
Committee.

(b) If the Company is subject to a transaction in which it does
not survive, involving merger, consolidation, or acquisition of the stock or
substantially all the assets of the Company or other similar transaction, the
Committee, in its discretion, may:

(i) notwithstanding other provisions hereof, declare that all
Options granted under the Plan shall become exercisable immediately
notwithstanding the provisions of the respective Stock Option or Award
Agreements regarding exercisability, that all such Options and SARs shall
terminate 30 days after the Committee gives written notice of the immediate
right to exercise all such Options and SARs and of the decision to terminate all
Options and SARs not exercised within such 30-day period, and that all
then-remaining restrictions pertaining to Awards under the Plan shall
immediately lapse; and/or

(ii) notify all Grantees that all Options or Awards granted under
the Plan shall be assumed by the successor corporation or substituted on an
equitable basis with options, SARs or restricted stock issued by such successor
corporation.

The Company shall be deemed not to have survived a transaction if pursuant
to such transaction the Company becomes a wholly-owned subsidiary of another
entity.

(c) If the Company is to be liquidated or dissolved in connection
with a reorganization described in Section 5.2(b), the provisions of such
Section shall apply. In all other instances, the adoption of a plan of
dissolution or liquidation of the Company shall, notwithstanding other
provisions hereof, cause all then-remaining restrictions pertaining to Awards
under the Plan to lapse, and shall cause every Option outstanding under the Plan
to terminate to the extent not exercised prior to the adoption of the plan of
dissolution or liquidation by the shareholders, provided that, notwithstanding
other provisions hereof, the Committee may declare all Options and SARs granted
under the Plan to be exercisable at any time on or before the fifth business day
following such adoption notwithstanding the provisions of the respective Stock
Option or Award Agreements regarding exercisability.

(d) The adjustments described in paragraphs (a) through (c) of
this Section 5.2, and the manner of their application, shall be determined
solely by the Committee. The adjustments required under this Article V shall
apply to any successors of the Company and shall be made regardless of the
number or type of successive events requiring such adjustments.

ARTICLE VI
OPTIONS

6.1 Types of Options Granted. The Committee may, under this Plan,
---------------------------
grant either Incentive Stock Options or Options which do not qualify as
Incentive Stock Options. Within the limitations provided in this Plan, both
types of Options may be granted to the same person at the same time, or at
different times, under different terms and conditions, as long as the terms and
conditions of each Option are consistent with the provisions of the Plan.
Without limitation of the foregoing, Options may be granted subject to
conditions based on the financial performance of the Company or any other factor
the Committee deems relevant.

6.2 Option Grant and Agreement. Each Option granted hereunder shall be
--------------------------
evidenced by minutes of a meeting or the written consent of the Committee and by
a written Stock Option Agreement executed by the Company and the Optionee. The
terms of the Option, including the Option's duration, time or times of exercise,
exercise price, whether the Option is intended to be an Incentive Stock Option,
and whether the Option is to be accompanied by the right to receive a Reload
Option, shall be stated in the Stock Option Agreement. No Incentive Stock
Option may be granted more than ten years after the earlier to occur of the
effective date of the Plan or the date the Plan is approved by the Company's
shareholders.

Separate Stock Option Agreements may be used for Options intended to be
Incentive Stock Options and those not so intended, but any failure to use such
separate agreements shall not invalidate, or otherwise adversely affect the
Optionee's interest in, the Options evidenced thereby.

6.3 Optionee Limitations. The Committee shall not grant an Incentive
---------------------
Stock Option to any person who, at the time the Incentive Stock Option is
granted:

(a) is not an employee of the Company or any of its Subsidiaries;
or

(b) owns or is considered to own stock possessing at least 10% of
the total combined voting power of all classes of stock of the Company or any of
its Parent or Subsidiary corporations; provided, however, that this limitation
shall not apply if at the time an Incentive Stock Option is granted the Exercise
Price is at least 110% of the Fair Market Value of the Stock subject to such
Option and such Option by its terms would not be exercisable after five years
from the date on which the Option is granted. For the purpose of this
subsection (b), a person shall be considered to own: (i) the stock owned,
directly or indirectly, by or for his or her brothers and sisters (whether by
whole or half blood), spouse, ancestors and lineal descendants; (ii) the stock
owned, directly or indirectly, by or for a corporation, partnership, estate, or
trust in proportion to such person's stock interest, partnership interest or
beneficial interest therein; and (iii) the stock which such person may purchase
under any outstanding options of the Employer or of any Parent or Subsidiary of
the Employer.

6.4 $100,000 Limitation. Except as provided below, the Committee shall
--------------------
not grant an Incentive Stock Option to, or modify the exercise provisions of
outstanding Incentive Stock Options held by, any person who, at the time the
Incentive Stock Option is granted (or modified), would thereby receive or hold
any Incentive Stock Options of the Employer and any Parent or Subsidiary of the
Employer, such that the aggregate Fair Market Value (determined as of the
respective dates of grant or modification of each option) of the stock with
respect to which such Incentive Stock Options are exercisable for the first time
during any calendar year is in excess of $100,000 (or such other limit as may be
prescribed by the Code from time to time); provided that the foregoing
--------
restriction on modification of outstanding Incentive Stock Options shall not
preclude the Committee from modifying an outstanding Incentive Stock Option if,
as a result of such modification and with the consent of the Optionee, such
Option no longer constitutes an Incentive Stock Option; and provided that, if
the $100,000 limitation (or such other limitation prescribed by the Code)
described in this Section 6.4 is exceeded, the Incentive Stock Option, the
granting or modification of which resulted in the exceeding of such limit, shall
be treated as an Incentive Stock Option up to the limitation and the excess
shall be treated as an Option not qualifying as an Incentive Stock Option.

6.5 Exercise Price. The Exercise Price of the Stock subject to each
---------------
Option shall be determined by the Committee. Subject to the provisions of
Section 6.3(b) hereof, the Exercise Price of an Incentive Stock Option shall not
be less than the Fair Market Value of the Stock as of the date the Option is
granted (or in the case of an Incentive Stock Option that is subsequently
modified, on the date of such modification). The Exercise Price of a
non-Incentive Stock Option shall not be less than 50% of the Fair Market Value
of the Stock on the date the Option is granted.

6.6 Exercise Period. The period for the exercise of each Option
----------------
granted hereunder shall be determined by the Committee, but the Stock Option
Agreement with respect to each Option intended to be an Incentive Stock Option
shall provide that such Option shall not be exercisable after the expiration of
ten years from the date of grant (or modification) of the Option. In addition,
no Option granted to a Section 16 Insider shall be exercisable prior to the
expiration of six months from the date such Option is granted, other than in the
case of the death or disability of the Optionee, and no Option shall be
exercisable prior to shareholder approval of the Plan.

6.7 Option Exercise.
----------------

(a) Unless otherwise provided in the Stock Option Agreement or
Section 6.6 hereof, an Option may be exercised at any time or from time to time
during the term of the Option as to any or all full shares which have become
Purchasable under the provisions of the Option, but not at any time as to less
than 100 shares unless the remaining shares that have become so Purchasable are
less than 100 shares. The Committee shall have the authority to prescribe in
any Stock Option Agreement that the Option may be exercised only in accordance
with a vesting schedule during the term of the Option.

(b) An Option shall be exercised by (i) delivery to the Company at
its principal office a written notice of exercise with respect to a specified
number of shares of Stock and (ii) payment to the Company at that office of the
full amount of the Exercise Price for such number of shares in accordance with
Section 6.7(c). If requested by an Optionee, an Option may be exercised with
the involvement of a stockbroker in accordance with the federal margin rules set
forth in Regulation T (in which case the certificates representing the
underlying shares will be delivered by the Company directly to the stockbroker).

(c) The Exercise Price is to be paid in full in cash upon the
exercise of the Option and the Company shall not be required to deliver
certificates for the shares purchased until such payment has been made;
provided, however, that in lieu of cash, all or any portion of the Exercise
Price may be paid by tendering to the Company shares of Stock duly endorsed for
transfer and owned by the Optionee, or by authorization to the Company to
withhold shares of Stock otherwise issuable upon exercise of the Option, in each
case to be credited against the Exercise Price at the Fair Market Value of such
shares on the date of exercise (however, no fractional shares may be so
transferred, and the Company shall not be obligated to make any cash payments in
consideration of any excess of the aggregate Fair Market Value of shares
transferred over the aggregate Exercise Price); provided further, that the Board
may provide in a Stock Option Agreement (or may otherwise determine in its sole
discretion at the time of exercise) that, in lieu of cash or shares, all or a
portion of the Exercise Price may be paid by the Optionee's execution of a
recourse note equal to the Exercise Price or relevant portion thereof, subject
to compliance with applicable state and federal laws, rules and regulations.

(d) In addition to and at the time of payment of the Exercise
Price, the Optionee shall pay to the Company in cash the full amount of any
federal, state, and local income, employment, or other withholding taxes
applicable to the taxable income of such Optionee resulting from such exercise;
provided, however, that in the discretion of the Committee any Stock Option
Agreement may provide that all or any portion of such tax obligations, together
with additional taxes not exceeding the actual additional taxes to be owed by
the Optionee as a result of such exercise, may, upon the irrevocable election of
the Optionee, be paid by tendering to the Company whole shares of Stock duly
endorsed for transfer and owned by the Optionee, or by authorization to the
Company to withhold shares of Stock otherwise issuable upon exercise of the
Option, in either case in that number of shares having a Fair Market Value on
the date of exercise equal to the amount of such taxes thereby being paid, and
subject to such restrictions as to the approval and timing of any such election
as the Committee may from time to time determine to be necessary or appropriate
to satisfy the conditions of the exemption set forth in Rule 16b-3 under the
Exchange Act, if such rule is applicable.

(e) The holder of an Option shall not have any of the rights of a
shareholder with respect to the shares of Stock subject to the Option until such
shares have been issued and transferred to the Optionee upon the exercise of the
Option.

6.8 Reload Options.
---------------

(a) The Committee may specify in a Stock Option Agreement (or may
otherwise determine in its sole discretion) that a Reload Option shall be
granted, without further action of the Committee, (i) to an Optionee who
exercises an Option (including a Reload Option) by surrendering shares of Stock
in payment of amounts specified in Sections 6.7(c) or 6.7(d) hereof, (ii) for
the same number of shares as are surrendered to pay such amounts, (iii) as of
the date of such payment and at an Exercise Price equal to the Fair Market Value
of the Stock on such date, and (iv) otherwise on the same terms and conditions
as the Option whose exercise has occasioned such payment, except as provided
below and subject to such other contingencies, conditions, or other terms as the
Committee shall specify at the time such exercised Option is granted; provided,
that the shares surrendered in payment as provided above must have been held by
the Optionee for at least six months prior to such surrender.

(b) Unless provided otherwise in the Stock Option Agreement, a
Reload Option may not be exercised by an Optionee (i) prior to the end of a
one-year period from the date that the Reload Option is granted, and (ii) unless
the Optionee retains beneficial ownership of the shares of Stock issued to such
Optionee upon exercise of the Option referred to above in Section 6.8(a)(i) for
a period of one year from the date of such exercise.

6.9 Non-Transferability of Option. No Option shall be transferable by
------------------------------
an Optionee other than by will or the laws of descent and distribution or, in
the case of non-Incentive Stock Options, pursuant to a Qualified Domestic
Relations Order, and no Option shall be transferable by an Optionee who is a
Section 16 Insider prior to shareholder approval of the Plan. During the
lifetime of an Optionee, Options shall be exercisable only by such Optionee (or
by such Optionee's guardian or legal representative, should one be appointed).

6.10 Termination of Employment or Service. The Committee shall have
---------------------------------------
the power to specify, with respect to the Options granted to a particular
Optionee, the effect upon such Optionee's right to exercise an Option of
termination of such Optionee's employment or service under various
circumstances, which effect may include immediate or deferred termination of
such Optionee's rights under an Option, or acceleration of the date at which an
Option may be exercised in full; provided, however, that in no event may an
Incentive Stock Option be exercised after the expiration of ten years from the
date of grant thereof.

6.11 Employment Rights. Nothing in the Plan or in any Stock Option
------------------
Agreement shall confer on any person any right to continue in the employ of the
Company or any of its Subsidiaries, or shall interfere in any way with the right
of the Company or any of its Subsidiaries to terminate such person's employment
at any time.

6.12 Certain Successor Options. To the extent not inconsistent with
---------------------------
the terms, limitations and conditions of Code section 422 and any regulations
promulgated with respect thereto, an Option issued in respect of an option held
by an employee to acquire stock of any entity acquired, by merger or otherwise,
by the Company (or any Subsidiary of the Company) may contain terms that differ
from those stated in this Article VI, but solely to the extent necessary to
preserve for any such employee the rights and benefits contained in such
predecessor option, or to satisfy the requirements of Code section 424(a).

6.13 Effect of Change in Control. The Committee may determine, at the
---------------------------
time of granting an Option or thereafter, that such Option shall become
exercisable on an accelerated basis in the event that a Change in Control occurs
with respect to the Company (and the Committee shall have the discretion to
modify the definition of a Change in Control in a particular Option Agreement).
If, at any time, the Committee finds that there is a reasonable possibility
that, within six months or less, a Change in Control will occur with respect to
the Company, then the Committee may determine that all outstanding Options shall
be exercisable on an accelerated basis.

ARTICLE VII
RESTRICTED STOCK

7.1 Awards of Restricted Stock. The Committee may grant Awards of
-----------------------------
Restricted Stock, which shall be governed by an Award Agreement between the
Company and the Grantee. Each Award Agreement shall contain such restrictions,
terms, and conditions as the Committee may, in its discretion, determine, and
may require that an appropriate legend be placed on the certificates evidencing
the subject Restricted Stock.

Shares of Restricted Stock granted pursuant to an Award hereunder shall be
issued in the name of the Grantee as soon as reasonably practicable after the
Award is granted, provided that the Grantee has executed the Award Agreement
governing the Award, the appropriate blank stock powers and, in the discretion
of the Committee, an escrow agreement and any other documents which the
Committee may require as a condition to the issuance of such Shares. If a
Grantee shall fail to execute the foregoing documents within any time period
prescribed by the Committee, the Award shall be void. At the discretion of the
Committee, Shares issued in connection with an Award shall be deposited together
with the stock powers with an escrow agent designated by the Committee. Unless
the Committee determines otherwise and as set forth in the Award Agreement, upon
delivery of the Shares to the escrow agent, the Grantee shall have all of the
rights of a shareholder with respect to such Shares, including the right to vote
the Shares and to receive all dividends or other distributions paid or made with
respect to the Shares.

7.2 Non-Transferability. Until any restrictions upon Restricted Stock
-------------------
awarded to a Grantee shall have lapsed in a manner set forth in Section 7.3,
such shares of Restricted Stock shall not be transferable other than by will or
the laws of descent and distribution, or pursuant to a Qualified Domestic
Relations Order, nor shall they be delivered to the Grantee.

7.3 Lapse of Restrictions. Restrictions upon Restricted Stock awarded
----------------------
hereunder shall lapse at such time or times (but, with respect to any award to a
Grantee who is also a Section 16 Insider, not less than six months after the
date of the Award) and on such terms and conditions as the Committee may, in its
discretion, determine at the time the Award is granted or thereafter.

7.4 Termination of Employment. The Committee shall have the power to
---------------------------
specify, with respect to each Award granted to any particular Grantee, the
effect upon such Grantee's rights with respect to such Restricted Stock of the
termination of such Grantee's employment under various circumstances, which
effect may include immediate or deferred forfeiture of such Restricted Stock or
acceleration of the date at which any then-remaining restrictions shall lapse.

7.5 Treatment of Dividends. At the time an Award of Restricted Stock
------------------------
is made the Committee may, in its discretion, determine that the payment to the
Grantee of any dividends, or a specified portion thereof, declared or paid on
such Restricted Stock shall be (i) deferred until the lapsing of the relevant
restrictions and (ii) held by the Company for the account of the Grantee until
such lapsing. In the event of such deferral, there shall be credited at the end
of each year (or portion thereof) interest on the amount of the account at the
beginning of the year at a rate per annum determined by the Committee. Payment
of deferred dividends, together with interest thereon, shall be made upon the
lapsing of restrictions imposed on such Restricted Stock, and any dividends
deferred (together with any interest thereon) in respect of Restricted Stock
shall be forfeited upon any forfeiture of such Restricted Stock.

7.6 Delivery of Shares. Except as provided otherwise in Article IX
--------------------
below, within a reasonable period of time following the lapse of the
restrictions on shares of Restricted Stock, the Committee shall cause a stock
certificate to be delivered to the Grantee with respect to such shares and such
shares shall be free of all restrictions hereunder.

7.7 Effect of Change in Control. The Committee may determine, at the
-----------------------------
time of granting Restricted Stock or thereafter, that such Restricted Stock
shall become fully vested in the event that a Change in Control occurs with
respect to the Company (and the Committee shall have the discretion to modify
the definition of a Change in Control in a particular Award Agreement). If, at
any time, the Committee finds that there is a reasonable possibility that,
within six months or less, a Change in Control will occur with respect to the
Company, then the Committee may determine that all outstanding Restricted Stock
shall vest on an accelerated basis.

ARTICLE VIII
STOCK APPRECIATION RIGHTS

8.1 SAR Grants. The Committee, in its sole discretion, may grant to
-----------
any Grantee a SAR. The Committee may impose such conditions or restrictions on
the exercise of any SAR as it may deem appropriate, including, without
limitation, restricting the time of exercise of the SAR to specified periods as
may be necessary to satisfy the requirements of Rule 16b-3 of the Exchange Act.

8.2 Determination of Price. The SAR Exercise Price shall be
------------------------
established by the Committee in its sole discretion. The SAR Exercise Price
shall not be less than (i) 100% of the Fair Market Value of the Stock on the
date the SAR is granted for a SAR issued in tandem with an Incentive Stock
Option and (ii) 50% of the Fair Market Value of the Stock on the date the SAR is
granted for other SARs.

8.3 Exercise of a SAR. Upon exercise of a SAR, the Grantee shall be
--------------------
entitled, subject to the terms and conditions of this Plan and the Agreement, to
receive the excess for each share of Stock being exercised under the SAR of (i)
the Fair Market Value of such share of Stock on the date of exercise over (ii)
the SAR Exercise Price for such share of Stock.

8.4 Payment for a SAR. At the sole discretion of the Committee, the
--------------------
payment of such excess shall be made in (i) cash, (ii) shares of Stock, or (iii)
a combination of both. Shares of Stock used for this payment shall be valued at
their Fair Market Value on the date of exercise of the applicable SAR.

8.5 Status of a SAR under the Plan. Shares of Stock subject to an
-----------------------------------
Award of a SAR shall be considered shares of Stock which may be issued under the
Plan for purposes of Section 5.1 hereof, unless the Agreement making the Award
of the SAR provides that the exercise of such SAR results in the termination of
an unexercised Option for the same number of shares of Stock.

8.6 Termination of SARs. A SAR may be terminated as follows:
---------------------

(a) During the period of continuous employment with the Company,
Parent or Subsidiary, a SAR will be terminated only if it has been fully
exercised or it has expired by its terms.

(b) Upon termination of employment, the SAR will terminate upon
the earliest of (i) the full exercise of the SAR, (ii) the expiration of the SAR
by its terms, and (iii) not more than three months following the date of
employment termination; provided, however, should termination of employment (A)
result from the death or Permanent and Total Disability of the Grantee, the
period referenced in clause (iii) hereof shall be one year or (B) be for Cause,
the SAR will terminate on the date of employment termination. For purposes of
the Plan, a leave of absence approved by the Company shall not be deemed to be
termination of employment unless otherwise provided in the Agreement or by the
Company on the date of the leave of absence.

(c) Subject to the terms of the Agreement with the Grantee, if a
Grantee shall die or become subject to a Permanent and Total Disability prior to
the termination of employment with the Company, Parent or Subsidiary and prior
to the termination of a SAR, such SAR may be exercised to the extent that the
Grantee shall have been entitled to exercise it at the time of death or
disability, as the case may be, by the Grantee, the estate of the Grantee or the
person or persons to whom the SAR may have been transferred by will or by the
laws of descent and distribution.

(d) Except as otherwise expressly provided in the Agreement with
the Grantee, in no event will the continuation of the term of a SAR beyond the
date of termination of employment allow the Employee, or his beneficiaries or
heirs, to accrue additional rights under the Plan, have additional SARs
available for exercise, or receive a higher benefit than the benefit payable as
if the SAR had been exercised on the date of employment termination.

8.7 No Shareholder Rights. The Grantee shall have no rights as a
-----------------------
shareholder with respect to a SAR. In addition, no adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or rights except as provided in Section 5.2 hereof.

8.8 Effect of Change in Control. The Committee may determine, at the
-----------------------------
time of granting an SAR or thereafter, that such SAR shall become fully vested
in the event that a Change in Control occurs with respect to the Company (and
the Committee shall have the discretion to modify the definition of a Change in
Control in a particular Award Agreement). If, at any time, the Committee finds
that there is a reasonable possibility that, within six months or less, a Change
in Control will occur with respect to the Company, then the Committee may
determine that all outstanding SARs shall become exercisable on an accelerated
basis.

ARTICLE IX
STOCK CERTIFICATES

The Company shall not be required to issue or deliver any certificate for
shares of Stock purchased upon the exercise of any Option granted hereunder or
any portion thereof, or deliver any certificate for shares of Restricted Stock
granted hereunder, prior to fulfillment of all of the following conditions:

(a) The admission of such shares to listing on all stock exchanges
on which the Stock is then listed;

(b) The completion of any registration or other qualification of
such shares which the Committee shall deem necessary or advisable under any
federal or state law or under the rulings or regulations of the Securities and
Exchange Commission or any other governmental regulatory body;

(c) The obtaining of any approval or other clearance from any
federal or state governmental agency or body which the Committee shall determine
to be necessary or advisable; and

(d) The lapse of such reasonable period of time following the
exercise of the Option as the Board from time to time may establish for reasons
of administrative convenience.

Stock certificates issued and delivered to Grantees shall bear such
restrictive legends as the Company shall deem necessary or advisable pursuant to
applicable federal and state securities laws.

ARTICLE X
TERMINATION AND AMENDMENT

10.1 Termination and Amendment. The Board may at any time terminate
---------------------------
the Plan, and may at any time and from time to time and in any respect amend the
Plan; provided, however, that the Board (unless its actions are approved or
ratified by the shareholders of the Company within twelve months of the date
that the Board amends the Plan) may not amend the Plan to:

(a) Increase the total number of shares of Stock issuable pursuant
to Incentive Stock Options under the Plan or materially increase the number of
shares of Stock subject to the Plan, in each case except as contemplated in
Section 5.2 hereof;

(b) Change the class of employees eligible to receive Incentive
Stock Options that may participate in the Plan or materially change the class of
persons that may participate in the Plan; or

10.2 Effect on Grantee's Rights. No termination, amendment, or
-----------------------------
modification of the Plan shall affect adversely a Grantee's rights under a Stock
Option Agreement or Award Agreement without the consent of the Grantee or his
legal representative.

ARTICLE XI
RELATIONSHIP TO OTHER COMPENSATION PLANS

The adoption of the Plan shall not affect any other stock option,
incentive, or other compensation plans in effect for the Company or any of its
Subsidiaries; nor shall the adoption of the Plan preclude the Company or any of
its Subsidiaries from establishing any other form of incentive or other
compensation plan for employees, Officers or Directors of the Company or any of
its Subsidiaries.

ARTICLE XII
MISCELLANEOUS

12.1 Replacement or Amended Grants. At the sole discretion of the
--------------------------------
Committee, and subject to the terms of the Plan, the Committee may modify
outstanding Options or Awards or accept the surrender of outstanding Options or
Awards and grant new Options or Awards in substitution for them. However no
modification of an Option or Award shall adversely affect a Grantee's rights
under a Stock Option Agreement or Award Agreement without the consent of the
Grantee or his legal representative.

12.2 Forfeiture for Competition. If a Grantee provides services to a
----------------------------
competitor of the Company or any of its Subsidiaries, whether as an employee,
officer, director, independent contractor, consultant, agent, or otherwise, such
services being of a nature that can reasonably be expected to involve the skills
and experience used or developed by the Grantee while an Employee, then that
Grantee's rights under any Options outstanding hereunder shall be forfeited and
terminated, and any shares of Restricted Stock held by such Grantee subject to
remaining restrictions shall be forfeited, subject in each case to a
determination to the contrary by the Committee.

12.3 Plan Binding on Successors. The Plan shall be binding upon the
-----------------------------
successors and assigns of the Company.

12.4 Singular, Plural; Gender. Whenever used herein, nouns in the
--------------------------
singular shall include the plural, and the masculine pronoun shall include the
feminine gender.

12.5 Headings, etc., Not Part of Plan. Headings of Articles and
-------------------------------------
Sections hereof are inserted for convenience and reference; they do not
constitute part of the Plan.

12.6 Interpretation. With respect to Section 16 Insiders, transactions
--------------
under this Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the Exchange Act. To the extent any provision of
the Plan or action by the Plan administrators fails to so comply, it shall be
deemed void to the extent permitted by law and deemed advisable by the Plan
administrators.

* * * *
*

<PAGE>
Exhibit A to American Bingo & Gaming
Corp. Stock Option Plan

AMERICAN BINGO & GAMING CORP.
STOCK OPTION AGREEMENT

THIS STOCK OPTION AGREEMENT (this "Agreement") is entered into as of this
______ day of __________________, ________, by and between American Bingo &
Gaming Corp. (the "Company") and _________________ (the "Optionee").

WHEREAS, on February 26, 1999, the Board of Directors of the Company
adopted a stock option plan known as the "American Bingo & Gaming Corp. Stock
Option Plan" (the "Plan"), and recommended that the Plan be approved by the
Company's shareholders; and

WHEREAS, the Committee has granted the Optionee a stock option to purchase
the number of shares of the Company's common stock as set forth below, and in
consideration of the granting of that stock option the Optionee intends to
remain in [the employ of]/[service to] the Company; and

WHEREAS, the Company and the Optionee desire to enter into a written
agreement with respect to such option in accordance with the Plan.

NOW, THEREFORE, as [an employment incentive]/[a service incentive] and to
encourage stock ownership, and also in consideration of the mutual covenants
contained herein, the parties hereto agree as follows.

1. Incorporation of Plan. This option is granted pursuant to the
-----------------------
provisions of the Plan and the terms and definitions of the Plan are
incorporated herein by reference and made a part hereof. A copy of the Plan has
been delivered to, and receipt is hereby acknowledged by, the Optionee.

2. Grant of Option. Subject to the terms, restrictions, limitations
-----------------
and conditions stated herein, the Company hereby evidences its grant to the
Optionee, not in lieu of salary or other compensation, of the right and option
(the "Option") to purchase all or any part of the number of shares of the
Company's Common Stock, $.001 par value per share (the "Stock"), set forth on
Schedule A attached hereto and incorporated herein by reference. The Option
shall be exercisable in the amounts and at the time specified on Schedule A.
The Option shall expire and shall not be exercisable on the date specified on
Schedule A or on such earlier date as determined pursuant to Section 8, 9, or 10
hereof. Schedule A states whether the Option is intended to be an Incentive
Stock Option.

3. Purchase Price. The price per share to be paid by the Optionee for
---------------
the shares subject to this Option (the "Exercise Price") shall be as specified
on Schedule A, which price shall be an amount not less than the Fair Market
Value of a share of Stock as of the Date of Grant (as defined in Section 11
below) if the Option is an Incentive Stock Option.

4. Exercise Terms. The Optionee must exercise the Option for at least
---------------
the lesser of 100 shares or the number of shares of Purchasable Stock as to
which the Option remains unexercised. In the event this Option is not exercised
with respect to all or any part of the shares subject to this Option prior to
its expiration, the shares with respect to which this Option was not exercised
shall no longer be subject to this Option.

5. Option Non-Transferable. No Option shall be transferable by an
------------------------
Optionee other than by will or the laws of descent and distribution or, in the
case of non-Incentive Stock Options, pursuant to a Qualified Domestic Relations
Order, and no Option shall be transferable by an Optionee who is a Section 16
Insider prior to shareholder approval of the Plan. During the lifetime of an
Optionee, Options shall be exercisable only by such Optionee (or by such
Optionee's guardian or legal representative, should one be appointed).

6. Notice of Exercise of Option. This Option may be exercised by the
------------------------------
Optionee, or by the Optionee's administrators, executors or personal
representatives, by a written notice (in substantially the form of the Notice of
Exercise attached hereto as Schedule B) signed by the Optionee, or by such
administrators, executors or personal representatives, and delivered or mailed
to the Company as specified in Section 13 hereof to the attention of the
President or such other officer as the Company may designate. Any such notice
shall (a) specify the number of shares of Stock which the Optionee or the
Optionee's administrators, executors or personal representatives, as the case
may be, then elects to purchase hereunder, (b) contain such information as may
be reasonably required pursuant to Section 12 hereof, and (c) be accompanied by
(i) a certified or cashier's check payable to the Company in payment of the
total Exercise Price applicable to such shares as provided herein, (ii) shares
of Stock owned by the Optionee and duly endorsed or accompanied by stock
transfer powers having a Fair Market Value equal to the total Exercise Price
applicable to such shares purchased hereunder, or (iii) a certified or cashier's
check accompanied by the number of shares of Stock whose Fair Market Value when
added to the amount of the check equals the total Exercise Price applicable to
such shares purchased hereunder. Upon receipt of any such notice and
accompanying payment, and subject to the terms hereof, the Company agrees to
issue to the Optionee or the Optionee's administrators, executors or personal
representatives, as the case may be, stock certificates for the number of shares
specified in such notice registered in the name of the person exercising this
Option.

7. Adjustment in Option. The number of Shares subject to this Option,
---------------------
the Exercise Price and other matters are subject to adjustment during the term
of this Option in accordance with Section 5.2 of the Plan.

8. Termination of Employment. [Revise if for consulting arrangement.]
---------------------------

(a) Except as otherwise specified in Schedule A hereto, in the
event of the termination of the Optionee's employment with the Company or any of
its Subsidiaries, other than a termination that is either (i) for cause, (ii)
voluntary on the part of the Optionee and without written consent of the
Company, or (iii) for reasons of death or disability or retirement, the Optionee
may exercise this Option at any time within 30 days after such termination to
the extent of the number of shares which were Purchasable hereunder at the date
of such termination.

(b) Except as specified in Schedule A attached hereto, in the
event of a termination of the Optionee's employment that is either (i) for cause
or (ii) voluntary on the part of the Optionee and without the written consent of
the Company, this Option, to the extent not previously exercised, shall
terminate immediately and shall not thereafter be or become exercisable.

(c) Unless and to the extent otherwise provided in Exhibit A
hereto, in the event of the retirement of the Optionee at the normal retirement
date as prescribed from time to time by the Company or any Subsidiary, the
Optionee shall continue to have the right to exercise any Options for shares
which were Purchasable at the date of the Optionee's retirement [provided that,
on the date which is three months after the date of retirement, the Options will
become void and unexercisable unless on the date of retirement the Optionee
enters into a noncompete agreement with American Bingo & Gaming Corp. and
continues to comply with such noncompete agreement]. This Option does not
confer upon the Optionee any right with respect to continuance of employment by
the Company or by any of its Subsidiaries. This Option shall not be affected by
any change of employment so long as the Optionee continues to be an employee of
the Company or one of its Subsidiaries.

9. Disabled Optionee. In the event of termination of
------------------
[employment]/[consulting services] because of the Optionee's becoming a Disabled
-----
Optionee, the Optionee (or his or her personal representative) may exercise this
Option at any time within three months after such termination to the extent of
the number of shares which were Purchasable hereunder at the date of such
termination.

10. Death of Optionee. Except as otherwise set forth in Schedule A
-------------------
with respect to the rights of the Optionee upon termination of
[employment]/[consulting services] under Section 8(a) above, in the event of the
Optionee's death while [employed by]/[serving] the Company or any of its
Subsidiaries or within three months after a termination of such
[employment]/[consulting services](if such termination was neither (i) for cause
nor (ii) voluntary on the part of the Optionee and without the written consent
of the Company), the appropriate persons described in Section 6 hereof or
persons to whom all or a portion of this Option is transferred in accordance
with Section 5 hereof may exercise this Option at any time within a period
ending on the earlier of (a) the last day of the three month period following
the Optionee's death or (b) the expiration date of this Option. If the Optionee
was [an employee of]/[a consultant to] the Company at the time of death, this
Option may be so exercised to the extent of the number of shares that were
Purchasable hereunder at the date of death. If the Optionee's
[employment]/[consulting services] terminated prior to his or her death, this
Option may be exercised only to the extent of the number of shares covered by
this Option which were Purchasable hereunder at the date of such termination.

11. Date of Grant. This Option was granted by the Board of Directors
---------------
of the Company on the date set forth in Schedule A (the "Date of Grant").

12. Compliance with Regulatory Matters. The Optionee acknowledges that
----------------------------------
the issuance of capital stock of the Company is subject to limitations imposed
by federal and state law and the Optionee hereby agrees that the Company shall
not be obligated to issue any shares of Stock upon exercise of this Option that
would cause the Company to violate any law or any rule, regulation, order or
consent decree of any regulatory authority (including without limitation the
Securities and Exchange Commission) having jurisdiction over the affairs of the
Company. The Optionee agrees that he or she will provide the Company with such
information as is reasonably requested by the Company or its counsel to
determine whether the issuance of Stock complies with the provisions described
by this Section 12.

13. Miscellaneous.
-------------

(a) This Agreement shall be binding upon the parties hereto and
their representatives, successors and assigns.

(b) This Agreement is executed and delivered in, and shall be
governed by the laws of, the State of South Carolina.

(c) Any requests or notices to be given hereunder shall be deemed
given, and any elections or exercises to be made or accomplished shall be deemed
made or accomplished, upon actual delivery thereof to the designated recipient,
or three days after deposit thereof in the United States mail, registered,
return receipt requested and postage prepaid, addressed, if to the Optionee, at
the address set forth below and, if to the Company, to the executive offices of
the Company at 1440 Charleston Highway, West Columbia, SC 29169.

(d) This Agreement may not be modified except in writing executed
by each of the parties hereto.

IN WITNESS WHEREOF, this Stock Option Agreement has been executed on
behalf of the Company and the Optionee has executed this Stock Option Agreement,
all as of the day and year first above written.

AMERICAN BINGO & GAMING CORP. OPTIONEE

By: _______________________ Signature: _________________________
Name: _____________________ Name: ______________________________
Title: ____________________ Address: ___________________________

<PAGE>
SCHEDULE A
TO
STOCK OPTION AGREEMENT
BETWEEN
AMERICAN BINGO & GAMING CORP.
AND

Dated:

1. Number of Shares Subject to Option: _____ Shares.
---------------------------------------

2. This Option (Check one) [ ] is [ ] is not an Incentive Stock Option.
------------ -- --------------------------------

3. Option Exercise Price: $ per Share.
-----------------------

4. Date of Grant:
---------------

5. Option Vesting Schedule:
-------------------------

Check one:

( ) Options are exercisable with respect to all shares on or after
the date hereof
( ) Options are exercisable with respect to the number of shares
indicated below on or after the date indicated next to the number of shares:

No. of Shares Vesting Date
--------------- -------------

6. Option Exercise Period:
------------------------

Check One:

( ) All options expire and are void unless exercised on or before
, .
( ) Options expire and are void unless exercised on or before the
date indicated next to the number of shares:

No. of Shares Expiration Date
--------------- ----------------

7. Effect of Termination of Employment of Optionee (if different from that
-------------------------------------------------
set forth in Sections 8 and 10 of the Stock Option Agreement):

<PAGE>
SCHEDULE B

NOTICE OF EXERCISE

The undersigned hereby notifies American Bingo & Gaming Corp. (the
"Company") of this election to exercise the undersigned's stock option to
purchase ___________________ shares of the Company's common stock, $.001 par
value per share (the "Common Stock"), pursuant to the Stock Option Agreement
(the "Agreement") between the undersigned and the Company dated ______________
Accompanying this Notice is (1) a certified or cashier's check in the amount of
$___________ payable to the Company, and/or (2) _______________ shares of the
Company's Common Stock presently owned by the undersigned and duly endorsed or
accompanied by stock transfer powers, having an aggregate Fair Market Value
(as defined in the American Bingo & Gaming Corp. Stock Option Plan) as of
the date hereof of $__________________, such amounts being equal, in the
aggregate, to the purchase price per share set forth in Section 3 of the
Agreement multiplied by the number of shares being purchased hereby (in each
Instance subject to appropriate adjustment pursuant to Section 5.2 of the
Agreement).

IN WITNESS WHEREOF, the undersigned has set his/her hand and seal,
this _____ day of ______________, _______.

OPTIONEE [OR OPTIONEE'S
ADMINISTRATOR,
EXECUTOR OR PERSONAL
REPRESENTATIVE]

Signature:
Name:
Position (if other than Optionee):

<PAGE>
APPENDIX A
----------

PRELIMINARY DRAFT

AMERICAN BINGO & GAMING CORP.

ANNUAL MEETING OF STOCKHOLDERS - MAY 27, 1999

PROXY SOLICITED BY THE BOARD OF DIRECTORS

The undersigned hereby appoints Richard M. Kelley and Nancy J. Pollick, and
either of them, proxies of the undersigned, with full power of substitution, to
vote all Common Shares of American Bingo & Gaming Corp. (the "Company") owned by
the undersigned at the Annual Meeting of Stockholders of American Bingo & Gaming
Corp. to be held on May 27, 1999 and at any adjournments thereof, hereby
revoking any proxy heretofore given, upon the matters and proposals set forth in
the Notice of Annual Meeting and Proxy Statement dated April 26, 1999, copies of
which have been received by the undersigned. The undersigned instructs such
proxy to vote as follows:

(CONTINUED ON REVERSE SIDE)

<PAGE>
PRELIMINARY DRAFT

PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!

ANNUAL MEETING OF STOCKHOLDERS
AMERICAN BINGO & GAMING CORP.

MAY 27, 1999

PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED

/X/ Please mark
votes as
in this example
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
FOR WITHHOLD
3. To elect seven the election of AUTHORITY NOMINEES: 1. To consider and act upon the FOR AGAINST ABSTAIN
members to the all nominees to vote for all Kenneth R. Adams proposed amendments to the / / / / / /
Company's listed at night nominees listed James L. Hall Company's Certificate of
Board of (except as at right George M. Harrison, Jr. Incorporation and the Company's
Directors marked to the Andre' M. Hillou Bylaws to divide the Company's
contrary) Michael W. Mims Board of Directors into two
Grover C. Seaton, III classes
[ ] [ ] A. Joe Willis

2. To consider and act upon the
FOR the election of all nomines listed at right proposed amendment to the
(except authority is withheld with respect to each Company's Certificate of / / / / / /
nominee whose name is lined through) Incorporation to include
provisions that address
stockholder lincensing issues

4. To approve and adopt the
Company's Stock Option Plan; / / / / / /

5. To ratify the appointment of King
Griffin & Adamson P.C. as the
Company's independent auditors / / / / / /
for 1999; and

6. To consider such other matters as
may properly come before the
Meeting or any adjournment of
the Meeting

IF NO DIRECTION TO THE CONTRARY IS GIVEN, THEN THE SHARES REPRESENTED BY THIS PROXY
WILL BE VOTED FOR APPROVAL OF THE FOREGOING PROPOSALS

THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE UNDERSIGNED
SHAREHOLDER

The proxy will use his discretion with respect to any other matters which may properly come before the meeting.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. PLEASE SIGN AND RETURN IN
THE ENCLOSED ENVELOPE. THE GIVING OF A PROXY WILL NOT AFFECT YOUR RIGHT TO VOTE IN
PERSON IF YOU ATTEND THE MEETING.

SIGNATURE(S) Dated ,1999
------------------ ----------------- -----------
IF HELD JOINTLY
Important: (Please date and sign exactly as your name appears herein. For joint accounts, each joint owner should sign.
Executors, administrators, trustees, etc. should also indicate when signing.
</TABLE>