REIMBURSEMENT, MUTUAL RELEASE
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                          AND INDEMNIFICATION AGREEMENT
                          -----------------------------


     This  Reimbursement,  Mutual  Release  and  Indemnification  Agreement (the
"Agreement") is made this 30th day of July, 1998, by and between Randall J. Fein
(hereinafter  "Fein")  and  American  Bingo  & Gaming Corp. (hereinafter "ABG").

     WHEREAS  Fein  is  a  member  of  the  Board  of  Directors  of  ABG;

     WHEREAS  ABG  recently  relocated  its  corporate headquarters from Austin,
Texas  to  West  Columbia,  South  Carolina;

     WHEREAS  Fein's  continued  participation  as  a  member  of  the  Board of
Directors of ABG will require substantial additional travel and time as a result
of  the  relocation  of  ABG;

     WHEREAS  having  discussed  this  concern with management Fein and ABG have
made  a  joint  determination that, subject to certain terms of separation being
agreed  to  between  Fein and ABG it may be in the best interest of Fein and ABG
for  Fein  to  resign from his Board of Directors position and make the position
available  to  a  Board  Member  who  may  more actively participate in ABG; and

     WHEREAS ABG acknowledges with appreciation Fein's service to ABG and agrees
to  accept  Fein's  resignation;

     NOW,  THEREFORE,  in  consideration of the mutual promises contained herein
and  the  terms  set  forth  below,  the  parties  agree  as  follows:

     1.   Resignation.  Fein  hereby  agrees  that,  subject to (i) the Board of
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          Directors of ABG duly authorizing  this Agreement,  (ii) an authorized
          officer of ABG  executing and  delivering  to Fein this  Agreement and
          (iii) ABG  taking  each of the  actions  set forth  herein,  Fein will
          tender  his  resignation  from  all  positions  held  with ABG and its
          subsidiary  companies  (if any)  during  the  Meeting  of the Board of
          Directors  of ABG  scheduled  for July 30, 1998 at the time set on the
          agenda, as approved by Fein.

     2.   Reimbursement.  ABG does hereby agree to reimburse  and pay to Fein as
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          soon as reasonably possible and in no event later than 5 business days
          following  the  date of  this  Agreement  (i)  certain  out of  pocket
          expenses  relating to his  participation on this Board of Directors in
          the  amount  of  $834.30  for  which  he  has   previously   requested
          reimbursement  from ABG, and (ii) his $2,000.00 Board of Directors Fee
          relating to the July 30, 1998 Board of Directors Meeting.

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     3.   Stock  Option.  Fein has been duly issued  options to purchase  27,000
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          shares  of ABG's  Common  Stock,  par  value  $0.001  per  share  (the
          "Option")  pursuant to ABG's 1997 Stock Option Plan (the "Plan").  ABG
          does hereby represent and agree that, it has or will contemporaneously
          with the approval and  execution of this  Agreement (i) cause the Plan
          to be modified to give the Board of Directors of ABG the discretion to
          allow specific options issued under the Plan to be exercisable  sooner
          than 1 year after the date of grant,  (ii) take all actions  necessary
          to accelerate  Fein's right to exercise the Options to a time prior to
          his planned resignation from the Board of Directors and (iii) take all
          actions  necessary to approve and confirm that Fein's Options will not
          expire  due to his  resignation  from the  Board of  Directors  and to
          assure that such Options will otherwise be exercisable by Fein through
          April  20,  2003 in  accordance  with  the  terms  of the Plan and the
          agreement  under  which his Option was  provided.  In the event  that,
          subsequent  to the Board of Directors  approval of this  Agreement and
          the  modifications  to the Plan, it is determined  that the actions of
          the Board of  Directors to modify the Plan in the manner set out above
          required  Shareholder  approval  for any such changes to the Plan by a
          determination of ABG's  Shareholders (as evidenced by the shareholders
          vote to reject  such  changes  to the Plan such that the  Options  are
          deemed not to be  exercisable  by Fein) or otherwise (the date of such
          determination being the "Determination  Date"), ABG shall pay to Fein,
          within 10 business days after the Determination Date that sum which is
          equal to 27,000  multiplied  by the amount by which (i) the highest 30
          day average of the closing Bid and Ask price of ABG's Common Stock for
          the period from the date of this Agreement to the Determination  Date,
          exceeds (ii) $2.70.  The Board of Directors shall use its best efforts
          to avoid a determination that the actions of the Board of Directors to
          modify  the Plan in the  manner  set out  above  required  Shareholder
          approval.

     4.   Post Resignation  Remarks.  ABG acknowledges with appreciation  Fein's
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          service to ABG and agrees that, except as may otherwise be required by
          law,  ABG  shall  not  and  shall  advise  and  direct  its  officers,
          directors, employees and agents within its control not to make, repeat
          or publish any  remark,  comment or other  statement  in an attempt to
          defame,  disparage  or  detract  from  Fein's  character,  reputation,
          professional standing or business.

     5.   Fein  Global  Release.  ABG,  on behalf of itself and on behalf of its
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          officers,  directors,  agents,  shareholders,  principals  and  owners
          thereof hereby releases Fein from any and all past,  present or future
          claims,  demands,   actions,  causes  of  actions,  costs,  judgments,
          expenses,  attorney's fees, damages and all liabilities  whatsoever at
          law or in equity,  whether known or unknown, that they may have, claim
          to have,  or have ever had,  against  Fein,  arising  from any and all
          causes of action, whether intentional,  wanton,  reckless,  malicious,
          negligent,  grossly negligent, or inadvertent, in contract or in tort,
          including   any   claims   relating   to   any   employment   matters,
          misrepresentations,   disclosures  and/or  failures  to  disclose,  in
          connection  with all matters,  and  including but not limited to those
          relating to Fein's  involvement  on the Board of  Directors of ABG. In
          this  regard,  the  parties to this  Agreement  intend for the release
          provided by this Agreement to cause,  to the fullest extent  permitted
          by  law  and  at  equity,   the  complete  and  final   discharge  and
          extinguishing of all claims and causes of action against Fein, whether
          known or unknown, involving the parties hereto, for all time up to and
          including the date of this Agreement. ABG agrees to indemnify and hold
          Fein harmless from and against any and all costs, judgments, expenses,
          attorney's fees, damages or liabilities whatsoever relating to any and
          all claims that may be brought  against Fein in connection with ABG or
          his  position  as a member  of the  Board of  Directors  of ABG to the
          fullest  extent  authorized by Delaware law as provided in paragraph 7
          of the  Certificate of  Incorporation  of ABG, as amended  October 17,
          1994, against any and all claims,  suits, demands brought against Fein
          by reason of the fact that he served as a director of ABG.

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     6.   ABG Release.  Except as expressly set out herein, Fein hereby releases
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          ABG from any and all past, present or future claims, demands, actions,
          causes  of  actions,  costs,  judgments,  expenses,  attorney's  fees,
          damages and all  liabilities  whatsoever at law or in equity,  whether
          known or unknown,  that he may have,  claim to have, or have ever had,
          against  ABG  arising  from  any and all  causes  of  action,  whether
          intentional,   wanton,   reckless,   malicious,   negligent,   grossly
          negligent,  or  inadvertent,  in  contract or in tort,  including  any
          claims  relating  to  any  employment   matters,   misrepresentations,
          disclosures  and/or  failures  to  disclose,  in  connection  with all
          matters  including  but not limited to those  matters  relating to his
          Options,  or in connection  with his position as a member of the Board
          of Directors of ABG. The above  notwithstanding this release shall not
          release ABG from (A) any of its obligations set out in this Agreement,
          or (B) any release, defense, indemnity, right of contribution or other
          recovery owed by ABG to Fein for any claims, demands,  actions, causes
          of actions,  costs, judgments,  expenses,  attorney's fees, damages or
          liabilities whatsoever at law or in equity to the extent this release,
          defense,  indemnity,  right of  contribution  or other  recovery would
          otherwise  have been  provided  to Fein  pursuant  to the terms of the
          current  Certificate of  Incorporation  of ABG, the current By-Laws of
          ABG, any other  corporate  documentation  or  Agreements  of ABG or as
          otherwise provided by law or in equity. In addition, to the extent any
          insurance  product  would  provided  Fein  any  protection,   release,
          defense,  indemnity,  right of contribution or other recovery relating
          to a claim,  including  but not limited to  Director's  and  Officer's
          Insurance,  this  release  shall not act to  release  Fein's  claim or
          rights  to claim  to the  extent  it would  limit  his  rights  to the
          protections  other wise provided under those insurance  products,  nor
          shall it be  construed  to in a manner  which  in any way  reduces  or
          eliminates  coverage otherwise  available to him under those insurance
          products.

     7.   Additional  Information.  ABG,  after due inquiry of its officers,  or
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          employees,  thereof hereby  confirms that it is unaware of any claims,
          demands,  actions,  causes of  actions,  costs,  judgments,  expenses,
          attorney's fees,  damages and all liabilities  whatsoever at law or in
          equity,  whether known or unknown, that ABG or any of its officers, or
          employees, may have, claim to have, or have ever had, against Fein.

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     8.   Future Agreement.  This Agreement comprises the entire agreement, oral
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          and written, between and among the released parties with regard to the
          subject matter of the Agreement.  This Agreement may not be amended in
          any respect except by writing,  duly executed by the released  parties
          and/or the authorized representatives of the released parties.

     9.   Severability. If any provision of this Agreement or any portion of any
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          provision of this  Agreement  is at any time deemed or declared  void,
          voidable  or  unenforceable,  then such  provision  or portion of such
          provision is severable  from the  remainder of the  Agreement  and the
          remainder of this Agreement shall be fully enforced.

     10.  Ownership  of  Claim.  Each  party to this  Agreement  represents  and
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          warrants  that the party is the sole and lawful  owner of all  claims,
          matters,  and causes of action released by the party as set out above,
          that  the  party  has  not  assigned  or  transferred  to any  person,
          corporation or entity any such claims, matters or causes of action and
          that each party executing this Agreement  represents and warrants that
          such party has full and  complete  authority to bind such party to the
          Agreement as represented by such party's signature.

     11.  Further  Assurances.  The  parties  shall  from time to time  promptly
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          execute and deliver such further instruments,  documents or papers and
          perform all acts necessary or proper to carry out and effect the terms
          and provisions of this Agreement.

     12.  Authority. The persons signing this Agreement on behalf of the parties
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          warrant  and  represent  that they  have all  necessary  authority  to
          execute this Agreement and are duly and legally  empowered to do so on
          behalf of the parties.

     13.  Counterparts and Fax Signature Pages. It is understood and agreed that
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          this  Agreement  may be executed in duplicate  counterpart  originals,
          each of which shall be deemed an original for all purposes. Signatures
          need not be in original  and a facsimile  and/or copy bearing a copied
          or facsimile  signature shall suffice as a binding  signature for this
          Agreement.

     14.  Gender.  Words of any gender used in this Agreement  shall be held and
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          construed  to  include  any other  gender,  and words in the  singular
          number  shall  be held to  include  the  plural,  unless  the  context
          otherwise requires.

     15.  Supersedes  Prior  Agreements.  It is understood  and agreed that this
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          Agreement  contains  the entire  agreement  between  the  parties  and
          supersedes  any  and  all  prior   agreements  and   arrangements   or
          understandings  between  the parties  relating  to the subject  matter
          hereof.  No oral  understanding,  statements,  promises or inducements
          contrary to the terms of this Agreement  exist.  This Agreement cannot
          be changed or terminated orally.

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<PAGE>
WITNESSES:


/s/  Terri  Blaine               /s/  Randall  J.  Fein
------------------               ----------------------
                                      Randall  J.  Fein


WITNESSES:                       AMERICAN  BINGO  AND  GAMING  CORP.


/s/  Daniel  J.  Fritze          /s/  Andre  M.  Hilliou
-----------------------          ----------------------------
                                 By:  Andre Hilliou, President and CEO

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