SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: December 11, 2002
ALPHA HOSPITALITY CORPORATION
(Exact Name of Registrant as Specified in Charter)
Delaware 1-12522 13-3714474
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
707 Skokie Boulevard, Suite 600, Northbrook, Illinois 60062
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (847) 418-3804
ITEM 5. OTHER EVENTS
Alpha Hospitality Corporation (the "Company") announced
today that it has entered into several agreements that will allow
it to change the capital structure and ownership of the Company
and that it has acquired from its current major shareholder,
Bryanston Group, Inc. ("Bryanston"), a Georgia corporation, the
voting membership and other assets owned by Bryanston in Catskill
Development, LLC ("Catskill") . The Company's principal assets
currently consist of ownership interests in Catskill, which owns
a raceway in Monticello, New York and related development rights.
The Company has entered into an agreement with Societe
Generale (the "Bank") as holder of the Company's Series B
Preferred Stock and a Note due July 2003, which had an
outstanding balance of approximately $2,400,000. The agreement
provides for the cancellation of such Preferred Stock and Note
instruments and the issuance of a new Note under a restructuring
agreement. The new Note calls for a specific amortization
schedule through June 2003 with optional prepayment provisions
providing for various discounts based on payment dates. This
new Note, in the principal amount of $1,600,000 is a first
priority senior obligation of the Company.
The Company also announced an agreement with Bryanston and
certain other affiliates regarding certain obligations due from
and claims against the Company. The Company was indebted to
Bryanston in the amount of $1,570,126. The Company also owed
Stanley Tollman ("Tollman") $1,528,167 and Monty Hundley
("Hundley") $266,667 in deferred compensation. The parties have
agreed to release the Company from all claims in exchange for
distribution to them of equity in the Company in the form of
shares in a special class of the Company's preferred stock having
a total aggregate liquidation amount of $3,364,960. This special
class of preferred stock is non-voting and non-convertible, has
no fixed date of redemption or liquidation, and provides for
cumulative dividends at 8% per annum. Dividends to holders of
the Company's common stock and other uses of the Company's net
cash flow are subject to priorities for the benefit of the
preferred stock. The preferred shares are subject to redemption
at the option of the Company at any time at a price equal to
their liquidation value plus accrued dividends to the date of
redemption.
Included in the agreement with Bryanston is the acquisition
of Bryanston's interests in Catskill Development, LLC, including
its voting membership interest and preferred capital account.
Bryanston has agreed to transfer such interests and release the
Company from all claims in exchange for additional shares of the
special preferred stock in the liquidation amount of $13,942,000.
The agreement also grants the Company the option at any time,
without notice, to purchase or redeem all or any portion of (i)
the preferred stock issued to Bryanston, Tollman and Hundley as
described above, at a price equal to the liquidation value, plus
accrued dividends to the date of redemption and (ii) subject to
shareholder approval, Bryanston's common stock at a price of
$2.12 per share. This agreement covers all the newly issued
preferred stock and all 2,326,857 shares of common stock
currently owned by Bryanston. In lieu of any such purchase or
redemption in cash, the Company has the right to purchase or
redeem the common shares and preferred shares as a whole or part
at any time, upon the delivery of a promissory note to each
party
in an amount equal to the aggregate par amount of the common
stock and preferred stock owned by such party, plus in the case
of the Preferred Shares, interest accrued to the date of
redemption. Such Promissory Note is to be unsecured, bear
interest at the rate of 7% per annum, and is payable in fixed
installments commencing on January 15, 2004 through maturity on
January 15, 2006. Each such Promissory Note is to be subordinate
to the Bank Note and will be callable by the Company at any time,
without notice, at par plus accrued interest. The Company has
also entered into a similar agreement to redeem 66,000 shares of
the Company's common stock from Beatrice Tollman at a price of
$2.12 per share. Bryanston and Beatrice Tollman have also granted
a three year, irrevocable proxy to vote all of the common shares
subject to the agreement, with full powers of substitution and
revocation, to Robert Berman, the Company's Chief Executive
Officer.
Item 7. Financial Statements and Exhibits
(i) Exhibits
99.1 Recapitalization Agreement by and between Alpha Hospitality
Corporation, Alpha Monticello, Inc., Bryanston Group, Inc.,
Stanley Tollman, Beatrice Tollman and Monty Hundley and
attachments; and
99.2 Restructuring Agreement between Alpha Hospitality
Corporation and Societe Generale and it attachments including 16%
Note due June 30, 2003.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
Dated: December 11, 2002 ALPHA HOSPITALITY CORPORATION
(Registrant)
By: /s/ Scott A. Kaniewski
Scott A. Kaniewski
Chief Financial Officer
EXHIBIT 99.1
RECAPITALIZATION AGREEMENT
THIS RECAPITALIZATION AGREEMENT is made and entered into this
10th day of December, 2002, by and between ALPHA HOSPITALITY
CORPORATION, a Delaware corporation (the "Company"), ALPHA
MONTICELLO, INC., a Delaware corporation and a wholly owned
subsidiary of the Company ("Alpha"), BRYANSTON GROUP, INC., a
Georgia corporation ("BG"), STANLEY TOLLMAN, BEATRICE TOLLMAN and
MONTY HUNDLEY (together with BG, Stanley Tollman and Beatrice
Tollman, the "Stockholders").
RECITALS
WHEREAS, BG is the owner of 2,326,857 shares of common stock,
$.01 par value per share (the "Common Stock") and Beatrice
Tollman is the owner of 66,000 shares of Common Stock (the
"Stockholder Shares");
WHEREAS, BG is the holder of a note issued to it by the Company
with an unpaid balance of $1,570,126 (the "BG Note") and the
Company is indebted to each of Stanley Tollman and Monty Hundley
for $1,528,167 and $266,667, respectively, for unpaid
compensation (together with the BG Note, the "Stockholder Debt");
WHEREAS, BG is the holder of a membership interest in Catskill
Development L.L.C., a New York limited liability company
("Catskill Development");
WHEREAS, the Company desires to reconstitute its capital
structure through (i) the issuance of a newly created series of
redeemable preferred stock in full satisfaction of the
Stockholder Debt, (ii) being granted the option to repurchase the
Stockholder Shares and (iii) acquiring, in exchange for
additional such preferred stock, BG's ownership interests in
Catskill Development, in each case subject to the terms and
conditions set forth herein ((i), (ii) and (iii) above are
referred to collectively herein as the "Recapitalization"); and
WHEREAS, the Stockholders desire (i) to receive the newly created
series of preferred stock in exchange for the Stockholder Debt
and the interests in Catskill Development, and (ii) the
opportunity to receive a redemption price for the Stockholder
Shares that currently represents a significant premium on the
Common Stock's most recent closing bid price.
NOW, THEREFORE, in consideration of the premises and mutual
agreements herein contained, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:
recapitalization
Closing. The Closing under this Agreement (the "Closing")
shall be held simultaneously with the execution of this
Agreement. Such date on which the Closing is to be held
is herein referred to as the "Closing Date." The Closing
shall be held at the offices of Olshan Grundman Frome
Rosenzweig & Wolosky LLP, 505 Park Avenue, New York, New
York 10022, at 10:00 A.M. on such date, or at such other
time and place as the Company, Alpha and the Stockholders
may agree upon in writing.
Creation of Preferred Stock. A Certificate of Designation,
setting forth the designation, preferences and other rights and
qualifications of a new series of preferred designated Series E
Preferred Stock (the "Preferred Stock"), in the form attached
hereto as Exhibit A, has been filed with the Secretary of State
of the State of Delaware and the Company has authorized the
issuance and sale of up to 1,730,697 shares of such Preferred
Stock.
Purchase of Membership Interests and Amendment of Catskill
Operating Agreement. BG hereby irrevocably sells, assigns and
transfers all of its rights, title and interests in and to
Catskill Development, including its Voting Membership and
Preferred Capital Account and any other interests which it may
have in and to the business and properties of Catskill
Development (the "Catskill Interest"), to the Company in exchange
for 1,394,200 shares of the Preferred Stock (representing a
purchase price of $13,942,000 (the "Catskill Price"). BG agrees
to take such further actions and execute and deliver such
documents as may be necessary or reasonable to further effectuate
and secure such sale, assignment and transfer to the Company and
to comply with any regulatory or other government requirements in
connection therewith.
Societe General Restructuring. The Company has restructured its
indebtedness to Societe Generale by issuing Societe Generale a
new promissory note in the principal amount of $1,600,000.
Debt Restructuring. Subject to the terms and conditions of this
Agreement, at the Closing, the Company shall restructure its
indebtedness to certain of the Stockholders by issuing to each of
them that number of shares of Preferred Stock set forth opposite
such Stockholder's name on Schedule 1.5, which is attached hereto
and made a part hereof, in exchange for forgiveness of the
Stockholder Debt. At the Closing, the Company shall deliver to
each such Stockholder a certificate or certificates, registered
in such Stockholder's name as is set forth on Schedule 1.5,
representing the number of shares of Preferred Stock being
acquired hereunder, against cancellation of their respective
obligations. The Stockholders shall acknowledge such cancellation
by delivery, as the case may be, by BG of the BG Note and/or by
Stanley Tollman and/or Monty Hundley of a letter in the form
attached hereto as Exhibit B evidencing forgiveness of the
Stockholder Debt.
Common Stock Repurchase Right.
Subject to the terms and conditions of this Agreement, each of
the Stockholders hereby grants a three (3) year option in favor
of the Company (the "Common Purchase Option") to reacquire, at
any time, or from time to time, and without prior notice, up to
that number of shares of Common Stock (appropriately adjusted for
any subsequent stock split, dividend, combination, or other
recapitalization) (the "Common Option Shares") and at the
purchase price (appropriately adjusted for any subsequent stock
split, dividend, combination, or other recapitalization) (the
"Common Repurchase Price") set forth opposite such Stockholder's
name on Schedule 1.6, attached hereto and made a part hereof;
provided, however, that the Common Purchase Option shall not
become effective until the Company receives stockholder approval
of this Agreement. The Common Purchase Option shall be exercised
by delivery to the Stockholder of a written notice signed by an
officer or director of the Company. The Company shall pay for the
Common Option Shares it has elected to repurchase by cash or, in
its sole discretion, delivery to the
Stockholder of a promissory
note, in the form attached hereto as Exhibit C (a "Note"), in the
principal amount of the aggregate Common Repurchase Price for the
number of shares of Common Stock being repurchased. Payment of
the Common Repurchase Price shall be completed within five
business days after notice of the exercise of the Common Purchase
Option has been delivered to the Stockholder. Upon receipt of the
Common Repurchase Price, whether in the form of cash or a Note,
then, notwithstanding that any certificates for the shares of
Common Option Shares so called for repurchase shall not have been
surrendered for cancellation, the shares represented thereby
shall no longer be deemed outstanding, and all rights with
respect to such Common Option Shares shall immediately cease and
terminate.
All certificates representing any Common Option Shares subject
to the provisions of this Agreement shall be delivered to the
Company's transfer agent upon closing so that a legend
referencing the restrictions imposed by this Agreement can be
placed on such certificates.
Irrevocable Proxy. For three (3) years commencing on the date
hereof, each of the Stockholders holding Common Option Shares
irrevocably constitutes and appoints Robert Berman, the Company's
Chief Executive Officer, or, in the event that Mr. Berman shall
become incapacitated or deceased, Scott Kaniewski (the
"Designee"), whether or not the Common Option Shares have been
transferred into the name of the Designee or his nominee, as such
Stockholder's proxy with full power, in the same manner, to the
same extent and with the same effect as if such Stockholder were
to do the same, in the sole discretion of the Designee, to vote
such Common Option Shares, giving such Designee full power of
substitution and revocation (the "Proxy"). The Proxy is coupled
with an interest sufficient in law to support an irrevocable
power and shall be irrevocable and shall survive the death,
incapacity, dissolution or liquidation, as the case may be, of
any Stockholder. Each Stockholder hereby revokes any proxy or
proxies heretofore given to any person or persons and agrees not
to give any other proxies in derogation hereof until such time as
this Agreement is no longer in full force and effect.
Preferred Stock Repurchase Right.
Subject to the terms and conditions of this Agreement, each of
the Stockholders hereby grants an option in favor of the Company
(the "Preferred Purchase Option") to reacquire, at any time, or
from time to time, and without prior notice, up to that number of
shares of Preferred Stock (appropriately adjusted for any
subsequent stock split, dividend, combination, or other
recapitalization) (the "Preferred Option Shares") being issued to
him/her/it pursuant to Section 1.3 and/or 1.5 above, for the
purchase price of $10.00 per share (the "Preferred Repurchase
Price") plus accrued dividends. The Preferred Purchase Option
shall be exercised by delivery to the Stockholder of a written
notice signed by an officer or director of the Company. The
Company shall pay for the Preferred Option Shares it has elected
to repurchase by cash or, in its sole discretion, delivery to the
Stockholder of a Note, in the principal amount of the aggregate
Preferred Repurchase Price for the number of shares of Preferred
Stock being repurchased. Payment of the Preferred Repurchase
Price shall be completed within five business days after notice
of the exercise of the Preferred Purchase Option has been
delivered to the Stockholder. Upon receipt of the Preferred
Repurchase Price, then, notwithstanding that any certificates for
the shares of Preferred Stock so called for repurchase shall not
have been surrendered for cancellation, the shares represented
thereby shall no longer be deemed outstanding, and all rights
with respect to such Preferred Stock shall immediately cease and
terminate. The Stockholders acknowledge that each Note delivered
pursuant to this Section 1.8(a) shall be subordinate to the
Societe Generale promissory note described in Section 1.4 and
that no payments shall be made on any such Note until the Societe
Generale promissory note shall have been fully paid and
discharged.
All certificates representing any Preferred Option Shares
subject to the provisions of this Agreement shall bear a legend
referencing the restrictions imposed by this Agreement.
Distributions. Notwithstanding the foregoing, the Company
shall apply any funds of the Company to be used for repurchases
under Sections 1.5 and 1.8 toward the repurchase of the Common
Option Shares, pro rata, and then to the repurchase of the
Preferred Option Shares, pro rata. In addition, the Company
agrees that so long as any of the Preferred Option Shares remain
outstanding, no dividends shall be paid and no distributions
shall be made from the Net Available Cash Flow of the Company for
any purpose other than purchase of the Common Option Shares or
the retirement of the Preferred Shares. For purposes of this
Agreement, "Net Available Cash Flow" shall mean the net amounts
received by the Company in connection with any sale of the
Company's business assets after the date hereof, or the issuance
of any stock or debt by the Company, or the net amount resulting
from any business operation(s) conducted by the Company, but
shall not include (i) any amount used or set aside to retire the
outstanding promissory note issued by the Company to Societe
Generale or (ii) such additional amount, not to exceed $1,000,000
in any calendar year, that the Company shall apply or set aside
to apply to the payment of reasonable operating expenses of the
Company.
MUTUAL RELEASES
Release of the Company by the Stockholders. For and in
consideration of the promises, agreements and releases
provided herein, each of the Stockholders hereby releases
and discharges the Company, and any of its managers,
directors, officers, partners, agents, attorneys,
assureds, employees, past and present, heirs, executors,
administrators, successors and assigns from any and all
actions, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises,
variances, trespasses, damages, judgments, extents,
executions, claims and demands whatsoever, in law,
admiralty or equity, which against the Company and its
principals, managers, directors, officers, partners,
agents, attorneys, assureds, employees, past and present,
heirs, executors, administrators, successors and assigns
such Stockholder ever had, now has, or hereafter can,
shall or may have upon or by reason of any matter, cause
or thing whatsoever from the beginning of the world to
the date of this Agreement. However, nothing contained
herein (or in Section 2.2) shall in any way affect the
right of the Stockholders to enforce their rights and
remedies under this Agreement.
Release of Company Affiliates by the Stockholders. The Company
agrees to use its best reasonable efforts to obtain releases for
the Stockholders from its affiliates in the form of the release
contained in Section 2.3. As to each affiliate from which the
Company has obtained such
a release for the benefit of the
Stockholders, Stockholders hereby agree to release and discharge
such affiliate, and any of their managers, directors, officers,
partners, agents, attorneys, assureds, employees, past and
present, heirs, executors, administrators, successors and assigns
from any and all actions, suits, debts, dues, sums of money,
accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, variances,
trespasses, damages, judgments, extents, executions, claims and
demands whatsoever, in law, admiralty or equity, which against
the Company and its principals, managers, directors, officers,
partners, agents, attorneys, assureds, employees, past and
present, heirs, executors, administrators, successors and assigns
such Stockholder ever had, now has, or hereafter can, shall or
may have upon or by reason of any matter, cause or thing
whatsoever from the beginning of the world to the date of this
Agreement. For purposes of this Article II, the term "affiliates"
means, without limitation, Catskill Development, Watertone
Holdings, LP, a Delaware limited partnership, BKB, LLC, a New
York limited liability company, Americas Tower Partners, a New
York general partnership, Monticello Realty L.L.C., a Delaware
limited liability company, Alpha Monticello, Inc., a Delaware
corporation, Clifford A. Ehrlich, a resident of Sullivan County,
New York, Shamrock Strategies, Inc., a Delaware corporation, and
Fox Hollow Lane, LLC, a New York limited liability company.
Release of the Stockholders by the Company. For and in
consideration of the promises, agreements and releases provided
herein, the Company and its managers, directors, and officers
hereby release and discharge the Stockholders and their agents,
attorneys, assureds, past and present, heirs, executors,
administrators, successors and assigns from any and all actions,
suits, debts, dues, sums of money, accounts, reckonings, bonds,
bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments,
extents, executions, claims and demands whatsoever, in law,
admiralty or equity, which against the Stockholders, their
agents, attorneys, assureds, past and present, heirs, executors,
administrators, successors and assigns the Company ever had, now
has or hereafter can, shall or may have upon or by reason of any
matter, cause or thing whatsoever from the beginning of the world
to the date of this Agreement. However, nothing contained herein
shall in any way affect the right of the Company to enforce its
rights and remedies under this Agreement.
STOCKHOLDERS Representations and Warranties
Each of the Stockholders hereby represents and warrants to the
Company as follows:
Organization; No Conflicts. To the extent indicated on the
signature pages hereto, such Stockholder is either (i) a
corporation duly organized and validly existing under the laws of
its state of incorporation or (ii) an individual. Such
Stockholder represents that it was not organized for the purpose
of making an investment in the Company. None of the execution and
delivery of this Agreement by such Stockholder, the consummation
by such Stockholder of the transactions contemplated hereby or
compliance by such Stockholder with any of the provisions hereof
shall violate any order, writ, injunction, decree, judgment,
statute, rule or regulation applicable to such Stockholder or any
of his/her/its properties or assets, in each such case except to
the extent that
any conflict, breach, default or violation would
not interfere with the ability of such Stockholder to perform the
obligations hereunder.
Enforceability. The execution, delivery and performance of
this Agreement by such Stockholder and the consummation by such
Stockholder of the transactions contemplated hereby are within
the powers of such Stockholder and have been duly authorized by
all necessary individual or corporate action, as appropriate, on
the part of such Stockholder. This Agreement has been duly
executed and delivered by such Stockholder and constitutes a
legal, valid and binding obligation of the Stockholder
enforceable against such Stockholder in accordance with its
terms, subject to (i) applicable bankruptcy, insolvency,
reorganization and moratorium laws, (ii) other laws of general
application affecting the enforcement of creditors' rights
generally and general principles of equity, (iii) the discretion
of the court before which any proceeding therefor may be brought
and (iv) as rights to indemnity may be limited by federal or
state securities laws or by public policy.
Approvals and Consents. No action, approval, consent or
authorization, including, but not limited to, any action,
approval, consent or authorization by any governmental or quasi-
governmental agency, commission, board, bureau, or
instrumentality is necessary or required as to such Stockholder
in order to constitute this Agreement as a valid, binding and
enforceable obligation of such Stockholder in accordance with its
terms.
Common Stock. Each Stockholder is the record and beneficial
owner of all shares of Common Stock set forth opposite such
Stockholder's name on Schedule 1.6, free and clear of any
restrictions on transfer, taxes, liens, options, warrants,
purchase rights, contracts, commitments, equities, claims, and
demands. Such Stockholder is not a party to any option, warrant,
purchase right, or other contract or commitment that could
require such Stockholder to sell, transfer, or otherwise dispose
of its Common Stock (other than this Agreement). Moreover, such
Stockholder is not a party to any voting trust, proxy, or other
agreement or understanding with respect to its Common Stock.
Investment Representations.
Such Stockholder is acquiring the Preferred Stock set forth
opposite his/her/its name on Schedule 1.5 solely for his/her/its
own account as an investment and not with a view to any
distribution or resale thereof within the meanings of such terms
under the Securities Act of 1933, as amended (the "Securities
Act").
Such Stockholder has such knowledge, experience and
skill in business and financial matters that such Stockholder is
capable of evaluating the merits and risks of an investment in
the Preferred Stock.
Such Stockholder (i) has received all information that
he/she/it deems reasonably necessary to make an informed
investment decision with respect to an investment in the
Preferred Stock; (ii) has had the opportunity to make such
investigation as he/she/it desires regarding the Company and an
investment therein and (iii) has had the opportunity to ask
questions of representatives of the Company concerning the
Company.
Such Stockholders understands that he/she/it must bear
the economic risk of an investment in the Company for an
uncertain period of time because (i) the Preferred Stock has not
been registered under the Securities Act and applicable state
securities laws and (ii) the Preferred Stock may not be sold,
transferred or otherwise disposed of without registration under
the Securities Act or an exemption therefrom, and that in the
absence of an effective registration statement covering the
Preferred Stock or an available exemption from registration under
the Securities Act, the Preferred Stock must be held
indefinitely. In particular, such Stockholder is aware that the
Preferred Stock may not be sold pursuant to Rule 144 promulgated
under the Securities Act unless all of the conditions of that
Rule are met. In this connection, such Stockholder represents
that he/she/it understands that under Rule 144, the Preferred
Stock must be held for at least one year after purchase thereof
from the Company prior to resale (two years in the absence of
public current information about the Company) and that, under
certain circumstances, the conditions for use of Rule 144 include
the availability of public current information about the Company,
that sales be effected through a "broker's transaction" or in
transactions with a "market maker," and that the number of shares
being sold not exceed specified limitations. Such public current
information about the Company for purposes of Rule 144 is
presently not available, and may not be publicly available in the
future.
Such Stockholder understands that, in addition the
legends described above in Article I, the certificates evidencing
the Preferred Stock may bear one or all of the following legends:
"The shares represented by this certificate have
not been registered under the United States Securities Act of
1933. They may not be sold, offered for sale, pledged,
hypothecated or otherwise transferred in the absence of a
registration statement in effect with respect to such shares
under such Act or an opinion of counsel or other evidence
satisfactory to Sporting Magic, Inc. and its counsel that such
registration is not required."
(i) Any legend required by any other jurisdiction.
Broker's Fees. Neither such Stockholder nor
any of its stockholders, directors, officers, employees or
agents, if any, has retained, employed or used any broker or
finder in connection with the transactions provided for herein or
in connection with the negotiation thereof.
ADDITIONAL REPRESENTATIONS AND WARRANTIES
In addition to those representations made by BG in Article III,
BG further represents and warrant to the Company as follows:
Catskill Interest. BG is the record and beneficial owner of
the Catskill Interest, free and clear of any restrictions on
transfer, taxes, liens, options, warrants, purchase rights,
contracts, commitments, equities, claims, and demands. BG is not
a party to any option, warrant, purchase right, or other contract
or commitment that could require it to sell, transfer, or
otherwise dispose of its Catskill Interest (other than this
Agreement). Moreover, BG is not a party to any voting trust,
proxy, or other agreement or understanding with respect to its
Catskill Interest.
COMPANy Representations and Warranties
Organization; No Conflicts. The Company is duly
organized, validly existing and in good standing in its
jurisdiction of organization and has all of the requisite
power and authority to enter into this Agreement and to
assume and perform its obligations hereunder. None of the
execution and delivery of this Agreement by the Company,
the consummation by the Company of the transactions
contemplated hereby or compliance by the Company with any
of the provisions hereof shall violate any order, writ,
injunction, decree, judgment, statute, rule or regulation
applicable to the Company or any of its properties or
assets, in each such case except to the extent that any
conflict, breach, default or violation would not
interfere with the ability of the Company to perform the
obligations hereunder.
Power, Authorization and Validity. The Company has the right,
power, legal capacity and authority: (a) to carry on its business
as now conducted and as proposed to be conducted and (b) subject
to stockholder approval of this Agreement, to enter into and
perform all of its obligations under this Agreement and all other
agreements to which the Company is or will be a party that are
required to be executed pursuant to this Agreement (collectively
with this Agreement, the "Company Merger Agreements"). The Common
Option Shares subject to the Proxy represent a sufficient number
of shares to approve and adopt this Agreement.
Catskill Interest. The Company is authorized to receive the
Catskill Interest and exercise all of the rights of BG thereunder
in accordance with the terms and conditions of the First Amended
and Restated Operating Agreement between the members of Catskill
Development, dated January 1, 1999.
General Provisions
Entire Agreement; Amendment and Waiver. This Agreement
constitutes the entire agreement between the parties with
respect to the subject matter contained herein and
supersedes all prior oral or written agreements, if any,
between the parties with respect to such subject matter.
Any amendments hereto or modifications hereof must be
made in writing and executed by each of the parties
hereto.
Binding Effect; Assignment. This Agreement and the various
rights and obligations arising hereunder shall inure to the
benefit of and be binding upon the parties and their respective
successors and assigns. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be transferred
or assigned (by operation of law or otherwise) by any of the
parties hereto. Any transfer or assignment of any of the rights,
interests or obligations hereunder in violation of the terms
hereof shall be void and of no force or effect.
Governing Law; Venue, Jurisdiction. This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of New York without giving effect to conflict of laws
principles. Each party hereto hereby irrevocably submits to the
exclusive personal and subject matter jurisdiction of the United
State District Court for the Southern District of New York and
the Supreme Court of the State of New York located in the borough
of Manhattan over any suit action or proceeding arising out of or
relating to this Agreement. Each party hereby irrevocably waives
to the fullest extent permitted by law, (a) any objection that
they may now or hereafter have to the venue of such suit, action
or proceeding brought in any such court; and (b) any claim that
any such suit, action or proceeding has been brought in an
inconvenient forum. Final judgement in any suit, action or
proceeding brought in any such court shall be conclusive and
binding upon each party duly served with process therein and may
be enforced in the courts of the jurisdiction of which either
party or any of their property is subject, by a suit upon such
judgement.
Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by virtue of
any rule of law, or public policy, all other conditions and
provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the
maximum extent possible.
Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all
of which taken together shall constitute one and the same
instrument.
[Signature Page Follows]
[COUNTERPART SIGNATURE PAGE TO RECAPITALIZATION AGREEMENT BETWEEN
ALPHA HOSPITALITY CORPORATION, ALPHA MONTICELLO, INC., BRYANSTON
GROUP, INC., STANLEY TOLLMAN, BEATRICE TOLLMAN AND MONTY HUNDLEY
DATED DECEMBER 10, 2002]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be made and executed on the date first above written.
THE COMPANY:
ALPHA HOSPITALITY CORPORATION
By:
______________________________
Name:
Title:
ALPHA
ALPHA MONTICELLO, INC.
By:
______________________________
Name:
Title:
THE STOCKHOLDERS:
BRYANSTON GROUP, INC.
By:
______________________________
Name:
Title:
______________________________
___
Stanley Tollman
______________________________
___
Beatrice Tollman
______________________________
___
Monty Hundley
EXHIBIT A
CERTIFICATE OF THE DESIGNATIONS, POWERS,
PREFERENCES AND RIGHTS
OF THE
SERIES E PREFERRED STOCK
($.01 par value per share)
of
ALPHA HOSPITALITY CORPORATION
a Delaware Corporation
__________
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
__________
ALPHA HOSPITALITY CORPORATION, a corporation organized and
existing under the General Corporation Law of the State of
Delaware (the "Corporation"),
DOES HEREBY CERTIFY:
FIRST: That, pursuant to authority conferred upon the
Board of Directors of the Corporation (the "Board") by the
Certificate of Incorporation of said Corporation, and pursuant to
the provisions of Section 151 of the Delaware General Corporation
Law, there hereby is created, out of the 5,000,000 shares of
Preferred Stock of the Corporation authorized in Article FOURTH
of the Certificate of Incorporation (the "Preferred Stock"), a
series of the Preferred stock consisting of 1,730,697 shares,
$.01 par value per share, to be designated "Series E Preferred
Stock," and to that end the Board adopted a resolution providing
for the designations, powers, preferences and rights, and the
qualifications, limitations and restrictions, of the Series E
Preferred Stock, which resolution is as follows:
RESOLVED, that the Certificate of the
Designations, Powers, Preferences and Rights of the
Series E Preferred Stock ("Certificate of Designation")
be and is hereby authorized and approved, which
Certificate of Designation shall be filed with the
Delaware Secretary of State in the form as follows:
1. Designations and Amount. One Million Seven Hundred
Thirty Thousand Six Hundred Ninety Seven (1,730,697) shares of
the Preferred Stock of the Corporation, $.01 par value per share,
shall constitute a class of Preferred Stock designated as "Series
E Preferred Stock" (the "Series E Preferred Stock").
2. Dividends.
(a) The holders of shares of Series E Preferred
Stock shall be entitled to receive, when and as declared by the
Board of Directors of the Corporation (the "Board") out of assets
of the Corporation legally available for payment, a cash dividend
at the rate of 8% of the Liquidation Value (or $.80) per annum
per share of Series E Preferred Stock (the "Preferred Dividend"),
payable only as provided in Section 2(b) hereof. The Preferred
Dividend shall accrue and shall be cumulative from the date of
initial issuance of such share of Series E Preferred Stock. The
amount of the Preferred Dividend that shall accrue for the
initial dividend period and for any period shorter than a full
dividend period shall be computed on the basis of a 360-day year
of twelve 30-day months.
(b) The Preferred Dividend shall be payable
(whether or not declared by the Board) upon the effective date of
the earliest of a (i) redemption of the Series E Preferred Stock
in accordance with Section 6 hereof or (ii) Liquidation (as
hereinafter defined).
3. Rights on Liquidation, Dissolution or Winding Up,
Etc. In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation (each, a
"Liquidation"), no distribution shall all be made (1) to the
holders of shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the holders of
the Series E Preferred Stock unless, prior thereto, the holders
of such shares of Series E Preferred Stock shall have received
$10.00 per share (the "Liquidation Value"), plus an amount equal
to all accrued and unpaid dividends and distributions thereon,
whether or not declared, to the date of such payment. For
purposes of this Certificate of Designation, each of (1) the
sale, conveyance, exchange or transfer of all or substantially
all of the property and assets of the Corporation or (2) the
consolidation or merger of the Corporation with or into any other
corporation, in which the stockholders of the Corporation
immediately prior to such event do not own a majority of the
outstanding shares of the surviving corporation shall be deemed
to be a liquidation, dissolution or winding up of the
Corporation.
4. Rank. The Series E Preferred Stock shall rank,
with respect to the payment of dividends and the distribution of
assets, senior to all series of any other class of the
Corporation's Preferred Stock.
5. Voting Rights. The holders of Series E Preferred
Stock shall not be entitled to vote on any matter except as
required by law.
6. Redemption. The Corporation, at the option of the
Board, may redeem the whole or any part of the Series E Preferred
Stock at any time outstanding, at any time or from time to time,
by paying the redemption price of $10.00 per share, plus accrued
dividends, in cash or, in its sole discretion, by delivery of a
Note in the form attached hereto as Exhibit A, for each share of
Series E Preferred Stock so to be redeemed plus dividends accrued
thereon at the date fixed for redemption. In the case of the
redemption of only a part of the Series E Preferred Stock at the
time outstanding, the Corporation shall select by lot or in such
other manner as the Board may determine the shares to be
redeemed. The Board shall have full power and authority, subject
to the limitations and provisions contained herein, to prescribe
the manner in which and the terms and conditions upon which the
Series E Preferred Stock shall be redeemed from time to time. If
the Board has elected to redeem such Series E Preferred Stock by
paying cash and on or before the date fixed by the Board for
redemption the funds necessary for such redemption shall have
been set apart so as to be and continue to be available therefor,
then, notwithstanding that any certificates for the shares of
Series E Preferred Stock so called for redemption shall not have
been surrendered for cancellation, the shares represented thereby
shall no longer be deemed outstanding, the right to receive
dividends thereon shall cease to accrue from and after the date
of redemption so fixed, and all rights with respect to such
shares of Series E Preferred Stock so called for redemption shall
immediately on such redemption date cease and terminate, except
only the right of the holders thereof to receive the redemption
price therefor, but without interest. None of the Series E
Preferred Stock acquired by the Corporation by redemption or
otherwise shall be reissued or disposed of but shall from time to
time be retired in the manner provided by law.
7. No Pre-emptive Rights. No holder of shares of
Series E Preferred Stock will possess any preemptive rights to
subscribe for or acquire any unissued shares of capital stock of
the Corporation (whether now or hereafter authorized) or
securities of the Corporation convertible into or carrying a
right to subscribe to or acquire shares of capital stock of the
Corporation.
IN WITNESS WHEREOF, Alpha Hospitality Corporation has
caused this Certificate of Designation to be executed this 9th
day of December, 2002.
ALPHA HOSPITALITY CORPORATION
By:
Name:
Title:
EXHIBIT B
[Letterhead of Stockholder]
Certificate of Satisfaction
December , 2002
Alpha Hospitality Corporation
707 Skokie Boulevard, Suite 600,
Northbrook, IL 60062
Ladies and Gentlemen:
This will confirm that upon receipt by [Full Name of Stockholder]
("Stockholder") of ___ shares of Series E Preferred Stock of
Alpha Hospitality Corporation ("Alpha"), such receipt shall serve
as full and complete satisfaction of the $[________________] in
indebtedness currently due from Alpha to Stockholder.
STOCKHOLDER
By:___________________________
EXHIBIT C
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR UNDER ANY STATE SECURITIES LAW
AND MAY NOT BE PLEDGED, SOLD, ASSIGNED OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT
THERETO UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW, OR
UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL, SATISFACTORY
TO THE COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
ALPHA HOSPITALITY CORPORATION
Subordinated Promissory Note
_________________, 2003
$______________
Alpha Hospitality Corporation, a Delaware corporation (together
with its successors and assigns, the "Issuer"), for value
received, hereby promises to pay to the order of
__________________________________ (together with its successors,
transferees and assigns, the "Noteholder") the principal sum of
_____________________________ (the "Note Amount"), in the amounts
and on the dates ("Note Amount Repayment Date") set forth below:
Date Amount
(1 Year Anniversary of (13.33% of the Note
Note) Amount)
(18 Month Anniversary of (17.78% of the Note
Note) Amount)
(2 Year Anniversary of (22.22% of the Note
Note) Amount)
(30 Month Anniversary of (26.67% of the Note
Note) Amount)
(3 Year Anniversary of (20.00% of the Note
Note) Amount)
Interest. The Issuer further promises to pay interest on the
unpaid Note Amount from the date hereof until the Note is
paid in full (whether at maturity or prepayment), payable
on each Note Amount Repayment Date, at the simple
interest rate of seven percent (7%) per annum.
Prepayment. The Issuer may at its option, at any time or from
time to time, prepay this Note (and accrued interest), in
whole or in part, without premium or penalty. Any such
optional prepayment shall be applied to reduce the unpaid
Note Amount installments, in direct order of maturity
(such that the Note Amount next due shall be repaid
first).
Issuer Register. The Issuer shall keep a register at its
principal place of business (the "Register") in which it shall
enter the Noteholder's name and address as set forth above. For
the purpose of paying principal and any interest on this Note,
the Issuer shall be entitled to rely on the name and address in
the Register.
Transfer. This Note is neither assignable nor transferable by
the Noteholder without the Issuer's prior written
consent.
No Waiver. No failure by the Noteholder to exercise, and no
delay in exercising, any right hereunder shall operate as
a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other
right. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law.
Acceleration. In case one or more of the following events
("Events of Default") (whatever the reason for such Event
of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or
governmental body) shall have occurred and be continuing:
failure by the Issuer to pay all or any part of the Note
Amount within ten (10) business days after the same shall
become due and payable; or
failure by the Issuer to pay all or any part of the interest on
the Note within ten (10) business days after the same shall
become due and payable; or
the Issuer becomes the subject of any voluntary bankruptcy,
insolvency or similar proceeding, or any involuntary bankruptcy,
insolvency or similar proceeding not stayed or dismissed within
sixty (60) days of filing,
then: (i) except in the case of an Event of Default specified in
Section 6(c) hereof, the Noteholder, by notice in writing to the
Issuer, may declare the aggregate Note Amount to be due and
payable immediately, and upon any such declaration the same shall
become immediately due and payable and (ii) if an Event of
Default specified in Section 6(c) occurs, the Note Amount shall
become and be immediately due and payable without any declaration
or other act on the part of the Noteholder.
No Action. The Issuer shall not by any action, including,
without limitation, amending its certificate of
incorporation through any reorganization,
reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, winding up, issue or sale of
securities or any other voluntary action, avoid or seek
to avoid the observance or performance of any of the
terms of this Note, but will at all times in good faith
assist in the carrying out of all such terms and in the
taking of all such actions as may be reasonably necessary
or appropriate to protect the rights of the Noteholder
against impairment.
Costs; Expenses. Should the Noteholder initiate an action to
enforce the provisions of this Note, then the prevailing
party in such action, as determined by the court, agency,
tribunal or other body with jurisdiction over the action,
shall be reimbursed its reasonable fees and out-of-pocket
expenses of counsel in connection with such action.
Amendment. This Note may only be amended by a written instrument
or instruments executed by both the Issuer and the
Noteholder.
Senior Debt. This Note shall be senior to all existing and future
indebtedness of the Issuer other than indebtedness
created pursuant to that certain promissory note issued
by the Issuer to Societe Generale on December 9, 2002 for
the principal sum of $1,600,000.
Waivers. The Issuer hereby waives any requirements of demand,
presentment for payment, notice of dishonor, notice of
protest and protest.
Governing Law; Forum. This agreement shall be governed by, and
construed and interpreted in accordance with, the laws of
the state of New York without reference to the choice of
laws provisions thereof. Any action, suit or proceeding
initiated by any party hereto against any other party
hereto under or in connection with this Note shall be
brought in any state or federal court in the State of New
York. Each party hereto submits itself to the exclusive
jurisdiction of any such court, waives any claims of
forum non conveniens and agrees that service of process
may be effected on it by the means by which notices are
to be given pursuant to this Note.
Notices. All notices (including other communications required or
permitted) under this Note must be in writing and must be
delivered (a) in person, (b) by registered or certified
mail, postage prepaid, return receipt requested, (c) by a
generally recognized courier or messenger service that
provides written acknowledgment of receipt by the
addressee or (d) by facsimile or other generally accepted
means of electronic transmission with a verification of
delivery. Notices are deemed delivered when actually
delivered to the address for notices. Notices to the
Noteholder must be given to its last known address
appearing on the Register and notices to the Issuer must
be given at its principal place of business. Any party
may furnish, from time to time, other addresses for
notices to it.
IN WITNESS WHEREOF, Issuer has caused this Note to be executed by
its officer thereunto duly authorized as of the date first above
written.
ALPHA HOSPITALITY CORPORATION
By:________________________________
_
Name:
Title:
SCHEDULE 1.5
Debtholder Debt Being Number of Shares of
Forgiven Preferred Stock to be
at Closing Issued at Closing
Bryanston $1,570,126 157,013
Group, Inc.
Stanley Tollman $1,528,167 152,817
Monty Hundley $ 266,667 26,667
SCHEDULE 1.6
Stockholder Common Number of Principal Amount of
Repurchase Common Option Notes to be Issued
Price Shares Upon Exercise of
Option
Bryanston $2.12 2,326,857 $4,932,937
Group, Inc.
Beatrice $2.12 66,000 $139,920
Tollman
Exhibit 99.2
RESTRUCTURING AGREEMENT
This RESTRUCTURING AGREEMENT (the "Restructuring Agreement"),
dated as of December 9, 2002, is between ALPHA HOSPITALITY
CORPORATION, a Delaware corporation (the "Company"), and SOCIETE
GENERALE, a bank organized under the laws of France (the
"Investor").
W I T N E S S E T H :
WHEREAS, (x) on February 8, 2000, the Investor acquired for a
purchase price of $4,000,000, 4,000 shares of the Company's
Series D Preferred Stock having an aggregate face amount of
$4,000,000 and certain warrants to purchase the Company's common
stock and (y) on July 31, 2000, the Investor acquired for a
purchase price of $1,250,000, $1,250,000 aggregate principal
amount of the Company's 4% Convertible Notes Due July 31, 2003
and certain warrants to purchase the Company's common stock;
WHEREAS, as of the date hereof approximately $1,295,000 aggregate
face amount of the Company's Series D Preferred Stock is
outstanding (inclusive of approximately $215,000 of accrued
dividends thereon) (the "Series D Preferred") and approximately
$1,032,000 aggregate principal amount of the Company's 4%
Convertible Notes Due July 31, 2003 is outstanding (inclusive of
approximately $88,000 of accrued interest thereon) (the
"Convertible Notes") and all of the warrants originally issued to
the Investor remain outstanding;
WHEREAS, the Investor has alleged that certain defaults have
occurred with respect to the Company's obligations in respect of
the Series D Preferred and the Convertible Notes;
WHEREAS, certain significant changes have occurred with respect
to the Company's business and operations and representatives of
the Company have advised the Investor that the Company currently
has a need to reduce its total indebtedness in order to meet the
requirements to remain listed on certain securities exchanges and
that a restructuring of the Investor's investment in the Series D
Preferred and the 4% Convertible Notes are critical to achieving
that objective;
WHEREAS, the Company has advised the Investor that it is desirous
of restructuring its investment in the Series D Preferred and the
Convertible Notes in accordance with the terms set forth in this
Restructuring Agreement in exchange for the receipt of the waiver
granted by the Investor set forth herein, the exchange of the
Investor's current holdings of Series D Preferred and the
Convertible Notes for a newly issued note of the Company and
certain cash payments by the Company to the Investor and the
Investor has agreed to accept such offer subject to the terms set
forth in this Restructuring Agreement.
NOW THEREFORE, in consideration of the premises, representations,
warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, intending to be
legally bound hereby, the parties hereto agree as follows:
DEFINITIONS
Certain Definitions. For purposes of this Agreement, the
following terms shall have the following respective
meanings:
"Affiliate" of a Person means another Person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first-
mentioned Person. The term "control" (including the terms
"controlling," "controlled by" and "under common control with")
means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by
contract or otherwise.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however
designated) of corporate stock, including each class of common
stock and preferred stock, of such Person.
"Commission" means the United States Securities and Exchange
Commission.
"Governmental Authority" means any federal or state government or
political subdivision thereof and any agency or other entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Material Adverse Effect" has the meaning set forth in Section
2.01.
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture,
joint stock company, Governmental Authority or other entity of
any kind.
"SEC Reports" means, collectively, the Company's Annual Report on
Form 10-K for the year ended December 31, 2001, the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31,
2002, June 30, 2002 and September 30, 2002 and the Company's
Current Reports on Form 8-K filed with the Commission during the
calendar year 2002.
ISSUANCE OF NOTES; PAYMENT OF CASH;
CANCELLATION OF EXISTING SECURITIES
Agreement to Issue Notes and Make Cash Payment and
Consideration Therefor. On the terms and subject to the
conditions set forth in this Agreement, the Company
hereby agrees to issue to the Investor its 16% Note due
June 30, 2003 in substantially the form set forth as
Exhibit A hereto in the principal amount of $1,600,000
(the "New Note") and to pay the Investor the sum, in
immediately available funds of $50,000 and in
consideration therefor, the Investor hereby agrees to
deliver to the Company for cancellation the Series D
Preferred, and the Convertible Notes and to irrevocably
waive any claims with respect to its holdings of the
Series D Preferred and the Convertible Notes as set forth
herein.
Closing. The closing of the transaction set forth in Section
2.01 (the "Closing") shall be deemed to take place concurrently
with the execution and delivery of this Restructuring Agreement
by the parties hereto. At the Closing, the following closing
transactions shall take place, each of which shall be deemed to
occur simultaneously with the Closing and shall
constitute a
condition to the consummation of the Closing: (i) the Company
shall execute, issue and deliver a certificate evidencing the 16%
Notes Due June 30, 2003 to be issued to the Investor; (ii) the
Company shall deliver to the Investor by wire transfer of
immediately available funds the amount of $50,000, (iii) the
Investor shall deliver to the Company certificates represents the
Series D Preferred Stock and the Convertible Notes for
cancellation; (iv) the Company shall pay the fees and expenses of
Jones, Day, Reavis & Pogue of $10,000 by wire transfer of
immediately available funds and (v) the Company shall deliver to
the Investor a certificate executed by the Chief Executive
Officer and Chief Financial Officer of the Company, signing in
such capacity, dated the date of the Closing, among other
confirmations contained therein, (a) certifying that attached
thereto are true and complete copies of the resolutions duly
adopted by the Board of Directors of the Company authorizing the
execution and the consummation of the transactions contemplated
this Restructuring Agreement, which authorization shall be in
full force and effect on and as of the date of such certificate,
(b) confirming the accuracy of the representations and warranties
of the Company contained in this Restructuring Agreement and (c)
certifying and attesting to the office, incumbency, due authority
and specimen signatures of each Person who executed any document
for or on behalf of the Company. This Agreement shall not be
effective, however, until the Company shall have delivered to the
Investor a copy of the Recapitalization Agreement, executed by
Bryanston Group, Inc. ("Bryanston"), the Company and certain
other parties (the "Recapitalization Agreement"), which agreement
shall provide for the discharge of any existing indebtedness of
Bryanston and such other parties owed by the Company, in form and
substance satisfactory to the Investor and shall be in full force
and effect as of the date of delivery thereof, it being
understood that any obligations under such Recapitalization
Agreement will be subordinate to the New Note and it being
further understood that the representations and warranties of the
Company in this Restructuring Agreement and the New Note shall
give effect to the Recapitalization Agreement.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As a material inducement to the Investor to execute this
Restructuring Agreement and consummate the transactions
contemplated hereby, the Company hereby represents and warrants
to the Investor that on and as of the date hereof:
Organization and Standing. The Company and each of its
subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and
authority, and all authorizations, licenses, permits and
certifications necessary for it to own its material properties
and assets and to carry on its material business as it is now
being conducted (and as, to the extent described therein,
described in the SEC Reports). The Company and each of its
subsidiaries is duly qualified to transact business and is in
good standing in each jurisdiction in which the character of the
properties owned or leased by it or the nature of its businesses
makes such qualification necessary, except where the failure to
so qualify or be in good standing would not have a material
adverse effect on the business, assets, operations, properties,
condition (financial or otherwise) or prospects of the Company
and its subsidiaries, taken as a whole, or any material adverse
effect on the Company's ability to consummate the transactions
contemplated by, and to
execute, deliver and perform its
obligations under, each of the Transaction Documents (a "Material
Adverse Effect").
Securities of the Company. The authorized and outstanding
Capital Stock of the Company is as set forth in the Company's
Quarterly Report on Form 10-Q for the quarter ended September 30,
2002. The New Note has been duly and validly authorized. When
issued against delivery of the consideration therefor as provided
in this Restructuring Agreement, the New Note will be validly
issued and will constitute a valid and enforceable obligation of
the Company, enforceable against the Company in accordance with
its terms (subject to the effects of applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
the enforcement of creditors' rights generally and general
principles of equity). The issuance of the New Note is not
subject to any preemptive rights, rights of first refusal or
other similar limitation. There are no agreements or other
obligations (contingent or otherwise) that may require the
Company to repurchase or otherwise acquire any shares of its
Capital Stock.
Authorization; Enforceability. The Company has the corporate
power and authority to execute, deliver and perform the terms and
provisions of the Restructuring Agreement and the New Note, and
has taken all necessary corporate action to authorize the
execution, delivery and performance by it of the Restructuring
Agreement and the New Note and consummate the transactions
contemplated by each of the Restructuring Agreement and the New
Note. No other corporate proceedings on the part of the Company
are necessary, and no consent of the shareholders of the Company
is required, for the valid execution and delivery by the Company
of the Restructuring Agreement and the New Note and the
performance and consummation by the Company of the transactions
contemplated by each of the Restructuring Agreement and the New
Note. The Company has duly executed the Restructuring Agreement
and the New Note. Assuming the due execution of the
Restructuring Agreement by the Investor, the Restructuring
Agreement constitutes the legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with
each of its respective terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding in
equity or at law).
No Violation; Consents.
(a) The execution, delivery and performance by the Company of
the Restructuring Agreement and the New Note and the consummation
of the transactions contemplated thereby do not and will not (i)
contravene the applicable provisions of any law, statute, rule,
regulation, order, writ, injunction, judgment or decree of any
court or Governmental Authority to or by which the Company or any
of its subsidiaries or any of its respective property or assets
is bound, (ii) violate, result in a breach of or constitute (with
due notice or lapse of time or both) a default or give rise to an
event of acceleration under any contract, lease, loan or credit
agreement, mortgage, security agreement, trust indenture or other
agreement or instrument to which the Company is a party or by
which it or any of its subsidiaries is bound or to which any of
its respective properties or assets is subject, nor result in the
creation or imposition of any lien, security interest, charge or
encumbrance of any kind upon any of the properties, assets or
Capital Stock of the Company or any of its subsidiaries, or (iii)
violate any provision of the organizational and other governing
documents of the Company or any of its subsidiaries.
(b) No consent, approval, authorization or order of, or filing
or registration with, any court or Governmental Authority or
other Person is required to be obtained or made by the Company
for the execution, delivery and performance of this Restructuring
Agreement and the New Note or the consummation by the Company of
any of the transactions contemplated thereby to be performed by
it except for those consents or authorizations previously
obtained and those filings previously made.
Solvency; No Default. (a) The Company is, and upon giving
effect to the transactions contemplated hereby to be performed by
it as of the Closing will be, Solvent (as defined below).
"Solvent" means that, as of the date of determination, (i) the
then fair saleable value of the assets of the Company (on a
consolidated basis) exceeds the then total amount (on a
consolidated basis) of its debts and other liabilities,
(including any guarantees and other contingent, subordinated,
unmatured or unliquidated liabilities whether or not reduced to
judgment, disputed or undisputed, secured or unsecured), (ii) the
Company expects to have sufficient funds and cash flow to pay its
liability on its existing debts as they become absolute and
matured, (iii) final judgments against the Company in pending or
threatened actions for money damages will not be rendered at a
time when, or in an amount such that, the Company will be unable
to satisfy any such judgments promptly in accordance with their
terms (taking into account (a) the maximum reasonable amount of
such judgments in any such actions (other than amounts that would
be remote), (b) the earliest reasonable time at which such
judgments would be rendered and (c) any reasonably expected
insurance recovery with respect thereto), and (iv) the Company
does not have unreasonably small capital with which to engage in
its present business.
(b) The Company is not, and immediately after the consummation
of the transactions contemplated hereby to be performed by the
Company will not be, in default under or in violation of (whether
upon the passage of time, the giving of notice or both) its
organizational and other governing documents, or any provision of
any security issued by the Company, or of any agreement,
instrument or other undertaking to which the Company is a party
or by which it or any of its property or assets is bound, or the
applicable provisions of any law, statute, rule, regulation,
order, writ, injunction, judgment or decree of any court or
Governmental Authority to or by which the Company or any of its
property or assets is bound, which default or violation, either
individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
SEC Reports; Financial Condition; No Adverse Changes. (a)
The audited consolidated financial statements of the Company and
the related notes thereto as at December 31, 2001 reported on by
Friedman, Alpren & Green, LLP, independent accountants, present
fairly the financial condition, results of operations and cash
flows of the Company (on a consolidated basis) at such date and
for the periods set forth therein. The unaudited consolidated
balance sheets, consolidated statements of operations and
consolidated statements of cash flows at and for the period ended
September 30, 2002 (such audited and unaudited consolidated
financial statements, collectively, the "Financial Statements"),
present fairly the financial condition, results of operations and
cash flows of the Company (on a consolidated basis) at such date
and for the periods set forth therein, subject to normal year-end
adjustments with respect to the September 30, 2002 financial
statements. The Financial Statements, including the related
schedules and notes thereto, have been prepared in accordance
with generally accepted accounting principles as set forth in the
opinions and pronouncements of the Accounting Principles Board of
American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board as
in effect on the date of filing of
such documents with the
Commission, applied on a consistent basis (except for changes
concurred in by the Company's independent public accountants)
unless otherwise expressly stated therein. Since September 30,
2002 to and including the date hereof, there has been no sale,
transfer or other disposition by the Company of any material part
of the business, property or securities of the Company and no
purchase or other acquisition of any business, property or
securities by the Company material in relation to the financial
condition of the Company except as set forth in Schedule 3.06(a)
hereof.
(b) Except as are fully reflected or reserved against in the
Financial Statements and the notes thereto, there are no
liabilities or obligations with respect to the Company or any of
its subsidiaries of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether or not due) other
than immaterial ordinary course accruals, except as set forth in
Schedule 3.06(a) hereof.
(c) Since September 30, 2002 there has been no development or
event, nor any prospective development or event known to the
Company or any of its subsidiaries, or any litigation, proceeding
or other action seeking an injunction or other restraining order,
damages or other relief from a court or administrative agency of
competent jurisdiction pending, threatened or, to the knowledge
of the Company, contemplated, or any action of any Governmental
Authority, that has had or could reasonably be expected to have a
Material Adverse Effect except as set forth in Schedule 3.06(a)
hereof.
(d) After giving effect to the transactions contemplated by this
Agreement and the Recapitalization Agreement, the Company will
have no indebtedness other than the New Note. The liabilities of
the Company other than as contemplated by Section 3.06(b) hereof,
has not materially increased from the amounts set forth in the
unaudited financial statements referenced in Section 3.06(a)
hereof.
Subsidiaries. As of the date hereof, the Company has no
subsidiaries other than those listed on Exhibit 21 of the
Company's Annual Report on Form 10-K for the year ended December
31, 2002.
No Litigation. No litigation or claim (including those for
unpaid taxes), or environmental proceeding against the Company or
any of its subsidiaries is pending, threatened or, to the
Company's best knowledge, contemplated that, if determined
adversely, would (after taking into consideration any reasonably
expected insurance recovery with respect thereto), have a
Material Adverse Effect on the Company or relates to or would
otherwise impact the consummation of the transactions
contemplated by this Restructuring Agreement.
Environmental Matters. The Company and each of its
subsidiaries is in compliance in all material respects with all
applicable state and federal environmental laws, and no event or
condition has occurred that may interfere in any material respect
with the compliance by the Company or any of its subsidiaries
with any environmental law or that may give rise to any liability
under any environmental law that, individually or in the
aggregate, would have a Material Adverse Effect.
Insurance. The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility
against such losses and risks and in such amounts as management
of the Company believes to be prudent and customary in the
businesses in which the Company and its subsidiaries are engaged.
The Company has no reason to believe that it and its subsidiaries
will
not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business
without a significant increase in cost.
Disclosure. The representations and warranties of the Company
in the Restructuring Agreement and, as of the respective dates of
filing thereof, the statements contained in the SEC Reports do
not contain any untrue statement of a material fact and do not
omit to state any material fact necessary to make the statements
herein or therein not misleading. The SEC Reports contain all
material information concerning the Company required to be set
forth therein, and no event or circumstance has occurred or
exists since September 30, 2002, that would require the Company
to disclose such event or circumstance in order to make the
statements in the SEC Reports not misleading as of the date of
the Closing but that has not been so publicly disclosed except as
set forth in Schedule 3.06(a) hereof. The Company hereby
acknowledges that the Investor is and will be relying on the SEC
Reports and the Company's representations, warranties and
covenants contained herein in making an investment decision with
respect to the matters contemplated by the Restructuring
Agreement and will be relying thereon.
COVENANTS OF THE COMPANY
Restriction on Incurrence of Indebtedness and Other
Limitation.
(a) The Company (or any of its subsidiaries) will not issue or
incur any indebtedness (or guarantee or otherwise become liable,
directly or indirectly, whether contingent or otherwise, for
obligations of any Person) prior to the payment in full of the
New Note, unless such indebtedness is expressly subordinated to
the New Note (pursuant to a subordination agreement executed by
the lender in form and substance satisfactory to the Investor)
and provides that no cash payments of interest or principal may
be made until the New Note is paid in full. The Company (or any
of its subsidiaries) may not issue any other security which
provides for payment by the Company of cash in any form prior to
such time as the New Note is paid in full or otherwise
repurchase, retire, acquire, defease, redeem or otherwise in any
manner directly or indirectly make any cash payments (whether as
interest, dividends, principal or otherwise) in respect of any
security (whether or not outstanding as of the date hereof) until
the New Note is paid in full.
(b) Neither the Company nor any of its subsidiaries will
distribute cash or assets other than in the ordinary course of
business, provided that the Company or any of its subsidiaries
may transfer assets provided that the net cash proceeds received
therefrom are applied to repay the New Note. In addition to the
foregoing, neither the Company nor any of its subsidiaries may
transfer cash or assets to Affiliates other than in connection
with transactions in the ordinary course entered into on an arms-
length basis. Neither the Company nor any of its subsidiaries
will create or permit to exist any liens on any of its or its
subsidiaries' properties which are not in existence as of the
date of this Restructuring Agreement. Neither the Company nor
any of its Significant Subsidiaries (as defined in the New Note)
will consolidate or merge with or into any other Person.
MISCELLANEOUS
Arms Length Negotiation. Each of the Company and the
Investor acknowledge and agree that the terms of this
Restructuring Agreement and the New Note and were
negotiated in good faith and on an arms length basis and
that each party has freely entered into this transaction
based upon its own independent evaluation of the
transaction and has received such financial, legal and
other professional advice as it deems appropriate in
connection with the foregoing. The language used in this
Restructuring Agreement and the New Note will be deemed
to be the language chosen by the parties to express their
mutual intent, and no rules of strict construction will
be applied against any party.
Waiver by Investor and the Company. The Investor agrees that,
upon consummation of the Closing and assuming the accuracy of the
representations and warranties of the Company made in this
Restructuring Agreement, it irrevocably waives any and all
actions, suits, claims and demands whatsoever it had, has or may
ever have against the Company and its officers, directors,
employees and agents in connection with its acquisition,
ownership and disposition of the Series D Preferred and the
Convertible Notes and any and all matters relating to such
securities. The Company agrees that, upon consummation of the
Closing, it irrevocably waives any and all actions, suits, claims
and demands whatsoever it had, has or ever may have against the
Investor and its officers, directors, employees and agents in
connection with its acquisition, ownership and disposition of the
Series D Preferred and the Convertible Notes and any and all
matters relating to such securities.
Press Releases and Disclosure. No party hereto shall issue any
press release or make any other public disclosure related to this
Restructuring Agreement or any of the transactions contemplated
hereby without the prior written approval of the other party
hereto, except as may be necessary or appropriate in the opinion
of the party seeking to make disclosure to comply with the
requirements of applicable law or stock exchange rules. If any
such press release or public disclosure is so required, the party
making such disclosure shall consult with the other party prior
to making such disclosure, and the parties shall use all
reasonable efforts, acting in good faith, to agree upon a text
for such disclosure that is satisfactory to all parties. The
Company has advised the Investor that it intends to file a Form 8-
K with the Commission in substantially the form contained in
Schedule 3.06(a) hereof and to issue a press release announcing
such filing and the Investor consents to the foregoing.
Notices. All notices, demands, requests, consents, approvals
or other communications required or permitted to be given
hereunder or that are given with respect to this Agreement shall
be in writing and shall be personally served or deposited in the
mail, registered or certified, return receipt requested, postage
prepaid or delivered by reputable air courier service with
charges prepaid, or transmitted by hand delivery, telegram, telex
or facsimile, addressed as set forth below, or to such other
address as such party shall have specified most recently by
written notice: (i) if to the Company, to: Alpha Hospitality
Corporation, 707 Skokie Boulevard, Suite 600, Northbrook, IL
60062, Attention: Scott Kaniewski, Facsimile No.: (847) 418-3805,
and (ii) if to the Purchaser: c/o SG Cowen Securities
Corporation, 1221 Avenue of the Americas, New York, New York
10020, Attention: Francois Barthelemy, Facsimile No.: (212) 278-
5466, with
copies (which shall not constitute notice) to: Jones,
Day, Reavis & Pogue, 222 E. 41st St., New York, New York 10017,
Attention: J. Eric Maki, Esq., Facsimile No. (212) 755-7306.
Notice shall be deemed given on the date of service or
transmission if personally served or transmitted by telegram,
telex or facsimile. Notice otherwise sent as provided herein
shall be deemed given on the third business day following the
date mailed or on the next business day following delivery of
such notice to a reputable air courier service.
Entire Agreement. This Agreement (together with the New Note
and all other documents delivered pursuant hereto and thereto)
constitutes the entire agreement of the parties with respect to
the subject matter hereof and supersedes all prior and
contemporaneous agreements, representations, understandings,
negotiations and discussions between the parties, whether oral or
written, with respect to the subject matter hereof.
Amendment and Waiver. This Agreement may not be amended,
modified, supplemented, restated or waived except by a writing
executed by the party against which such amendment, modification
or waiver is sought to been enforced. Waivers may be made in
advance or after the right waived has arisen or the breach or
default waived has occurred. Any waiver may be conditional. No
waiver of any breach of any agreement or provision herein
contained shall be deemed a waiver of any preceding or succeeding
breach thereof nor of any other agreement or provision herein
contained. No waiver or extension of time for performance of any
obligations or acts shall be deemed a waiver or extension of the
time for performance of any other obligations or acts.
Assignment; No Third Party Beneficiaries. The Restructuring
Agreement and the rights, duties and obligations hereunder may
not be assigned or delegated by either the Company, on the one
hand, or the Investor, on the other hand, without the prior
written consent of the other party hereto; provided that the
Investor may assign or delegate its rights, duties and
obligations hereunder to any Affiliate of the Investor. Except
as provided in the preceding sentence, any purported assignment
or delegation of rights, duties or obligations hereunder made
without the prior written consent of the other party hereto shall
be void and of no effect. This Agreement and the provisions
hereof shall be binding upon and shall inure to the benefit of
each of the parties and their respective successors and permitted
assigns. This Agreement is not intended to confer any rights or
benefits on any Persons other than as set forth above.
Severability. This Agreement shall be deemed severable, and
the invalidity or unenforceability of any term or provision
hereof shall not affect the validity or enforceability of this
Agreement or of any other term or provision hereof. Furthermore,
in lieu of any such invalid or unenforceable term or provision,
the parties hereto intend that there shall be added as a part of
this Agreement a provision as similar in terms to such invalid or
unenforceable provision as may be possible and be valid and
enforceable.
Further Assurances. Each party hereto, upon the request of any
other party hereto, shall do all such further acts and execute,
acknowledge and deliver all such further instruments and
documents as may be necessary or desirable to carry out the
transactions contemplated by this Agreement.
Titles and Headings. Titles, captions and headings of the
sections of this Agreement are for convenience of reference only
and shall not affect the construction of any provision of this
Agreement.
GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
INTERPRETED UNDER, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
Jurisdiction;Venue. Each party hereto hereby irrevocably
submits to the exclusive personal and subject matter jurisdiction
of the United States District Court for the Southern District of
New York and the Supreme Court of the State of New York located
in the borough of Manhattan over any suit, action or proceeding
arising out of or relating to this Restructuring Agreement or the
New Note. Each party hereby irrevocably waives to the fullest
extent permitted by law (a) any objection that they may now
hereafter have to the venue of such suit, action or proceeding
brought in any such court and (b) any claim that any such suit,
action or proceeding has been brought in an inconvenient forum.
Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, all of which taken
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by the undersigned, thereunto duly
authorized, as of the date first set forth above.
ALPHA HOSPITALITY CORPORATION
By:
Name:
Title:
SOCIETE GENERALE
By:
Name:
Title: Authorized Signatory
ALPHA HOSPITALITY CORPORATION
16% NOTE DUE JUNE 30, 2003
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "SECURITIES ACT") OR ANY OTHER APPLICABLE SECURITIES
LAWS AND HAS BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH
SECURITIES LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE
MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED OTHER
THAN PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT.
U.S. $1,600,000
FOR VALUE RECEIVED, Alpha Hospitality Corporation (the
"Company"), a corporation duly organized and existing under the
laws of the State of Delaware, hereby promises to pay to Societe
Generale, or its registered assigns (the "Holder"), the principal
sum of $1,600,000 pursuant to the amortization schedule set forth
on the reverse hereof, and to pay interest on the unpaid
principal amount of this Note in the manner set forth on the
reverse hereof from the date of execution of this Note set forth
below at the rate of 16% per annum. Reference is hereby made to
the further provisions set forth on the reverse hereof, which
provisions shall for all purposes have the same effect as if set
forth in this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by an officer thereunto duly authorized.
Dated: December , 2002 ALPHA HOSPITALITY
CORPORATION
By: _______________________________
Name:
Title:
- REVERSE OF NOTE -
1. ISSUANCE. This Note is a duly authorized issue of the
Company designated as its 16% Note Due June 30, 2003 in an
original aggregate principal amount of $1,600,000.
2. INTEREST. The Company shall pay interest on the outstanding
principal amount of this Note at the rate of 16% per annum,
computed based on a 360-day year consisting of twelve 30-day
months. Interest on this Note will accrue from the date of this
Note set forth on the front of this Note until the payment in
full of the principal amount hereof has been made in accordance
with the provisions hereof. Interest on this Note shall be
payable in arrears as set forth in Section 3 hereof.
3. PRINCIPAL. (A) The payment of the principal on this
Note shall be due in such amounts and on such payment dates
(each, a "Payment Date") as follows: (i) $400,000 shall be due
and payable on February 28, 2003, (ii) $400,000 shall be due and
payable on March 31, 2003 and (iii) $800,000 shall be due and
payable on June 30, 2003. Accrued interest on the outstanding
principal amount of this Note shall also be due and payable on
each Payment Date. Interest will accrue on overdue payments of
principal and interest at the rate of 16% per annum.
(B) The Company shall at any time have the option
to make a prepayment (a "Prepayment") of all but not less than
all of the principal amount due on any Payment Date (together
with interest accrued to the date of such Prepayment). If the
amount of any Prepayment shall be less than the entire
outstanding principal amount of this Note (plus accrued interest
thereon), such Prepayment shall be applied against the next
scheduled payment or payments due in chronological order. In
addition, in the event of a Prepayment, the Company shall be
entitled to a reduction of the principal amount payable (but not
of the amount of accrued interest relating thereto) as follows:
(x) as to the principal amount due on the February 28, 2003
Payment Date, a reduction of 5% of the principal amount otherwise
payable if such payment is made by January 15, 2003, (y) as to
the principal amount due on the March 31, 2003 Payment Date, a
reduction of 10% of the principal amount otherwise payable if
such payment is made by January 15, 2003 and a reduction of 5% of
the principal amount otherwise payable if such payment is made by
February 28, 2003, and (z) as to the principal amount due on the
June 30, 2003 Payment Date, a reduction of 15% of the principal
amount otherwise payable if such payment is made by February 28,
2003, a reduction of 10% of the principal amount otherwise
payable if such payment is made between March 1, 2003 and March
31, 2003 and a reduction of 5% of the principal amount otherwise
payable if such payment is made between April 1, 2003 and May 31,
2003. In the event of a Prepayment of less than the entire
outstanding principal amount of this Note, accrued interest with
respect to the remaining outstanding principal amount will be
payable on each scheduled Payment Date as completed by Section
3(A) above.
4. RANKING. This Note constitutes senior unsecured
indebtedness of the Company, ranks pari passu in right of payment
with other unsubordinated and unsecured indebtedness of the
Company and ranks senior in right of payment to all subordinated
indebtedness of the Company. As of the date of this Note set
forth on the front of this Note, the Company does not have, and
prior to payment in full of this Note the Company may not incur,
guarantee or otherwise become
liable for, directly or indirectly,
whether contingent or otherwise, indebtedness ranking pari passu
in right of payment with this Note or secured by assets of the
Company or any of its subsidiaries.
5. EVENTS OF DEFAULT.
(a) An "Event of Default" under this Note occurs if:
1. the Company defaults in the payment of the principal of or
interest on this Note when due and any such default continues for
a period of 3 days;
2. the Company fails to comply in any material respect with any
of its agreements in this Note (other than those referred to in
clause (1) above) or the provisions of the Restructuring
Agreement, and such failure continues for 15 days after the
notice specified below (provided that the Company shall be
entitled to such cure period only if it timely delivers to the
Holder such notice specified below);
3. indebtedness of the Company or any subsidiary of the Company
that, as of the date of this Note or at any subsequent time,
constitutes a "significant subsidiary" as defined under
Securities and Exchange Commission Regulation S-X and, as of the
date of this Note or at any subsequent time, taken alone, has a
net worth of at least $500,000 (a "Significant Subsidiary") is
not paid within any applicable grace period after maturity or is
accelerated by the holders thereof because of a default, the
total amount of such indebtedness unpaid or accelerated exceeds
$100,000 and such default continues for 5 days after the notice
specified below;
4. the Company or any Significant Subsidiary pursuant to or
within the meaning of any federal or state bankruptcy, insolvency
or other law for the relief of debtors ("Bankruptcy Law"):
1. commences a voluntary case or proceeding;
2. consents to the entry of an order for relief against it in
an involuntary case or proceeding;
3. consents to the appointment of any receiver, trustee,
assignee, liquidator, custodian or similar official under any
Bankruptcy Law (a "Custodian") of it or for any substantial part
of its property; or
4. makes a general assignment for the benefit of its creditors;
or
5. takes any comparable action under any foreign laws relating
to insolvency;
5. a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any
Significant Subsidiary in an involuntary case or
proceeding;
(B) appoints a Custodian of the Company or any
Significant Subsidiary or for any substantial part of
its property; or
(C) orders the winding up or liquidation of the
Company or any Significant Subsidiary;
or similar relief is granted under any foreign laws and the order
or decree remains unstayed and in effect for 60 days; or
6. any final judgment or decree for the payment of money in
excess of $500,000 (to the extent not covered by insurance) is
rendered against the Company or any Significant Subsidiary and is
not discharged and either (A) an enforcement proceeding has been
commenced by any creditor upon such judgment or decree or (B)
there is a period of 60 days following such judgment during which
such judgment or decree is not discharged, waived or the
execution thereof stayed and, in the case of (B), such default
continues for 5 days after the notice specified below.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary
or involuntary or is effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body.
A default under clause (2), (3) or (6) above is not an Event
of Default until the Holder of this Note notifies the Company of
such default and the Company does not cure such default within
the time specified after receipt of such notice. Such notice
must specify the default, demand that it be remedied and state
that such notice is a "Notice of Default."
The Company shall deliver to the Holder of this Note, within
5 days after the occurrence thereof, written notice of any event
that with the giving of notice, the lapse of time or both would
become an Event of Default under clause (2), (3) or (6) above,
its status and what action the Company is taking or proposes to
take with respect thereto.
(b) If an Event of Default (other than an Event of Default
specified in clause (4) or (5) above) occurs and is continuing,
the Holder of this Note may declare the principal of and accrued
interest on this Note to be immediately due and payable, and upon
such declaration an amount equal to 125%, of the entire
outstanding principal amount of this Note and 100% of such
interest shall be immediately due and payable. If an Event of
Default specified in clause (4) or (5) above occurs, the entire
outstanding principal of and interest on this Note shall ipso
facto become and be immediately due and payable without any
declaration or other act on the part of the Holder of this Note.
6. NO AMENDMENT. No provision of this Note may be amended,
altered or modified without the written agreement of the Holder
and the Company.
7. LOST OR DESTROYED NOTE. If this Note shall be mutilated,
lost, stolen or destroyed, the Company shall execute and deliver,
in exchange and substitution for and upon cancellation of a
mutilated Note, or in lieu of or in substitution for a lost,
stolen or destroyed Note, a new Note for the principal amount of
this Note so mutilated, lost, stolen or destroyed but only upon
receipt of evidence of such loss, theft or destruction of such
Note, and of the ownership thereof, and indemnity, if requested,
all reasonably satisfactory to the Company.
8. GOVERNING LAW. This Note shall be governed by, enforced
under and construed in accordance with the laws of the State of
New York, without giving effect to the principles of conflicts of
laws thereof.
9. NOTICE. Any notice or other communication required or
permitted to be given hereunder shall be given as provided herein
or delivered against receipt if to (i) the Company at 707 Skokie
Boulevard, Suite 600, Northbrook, IL 60062, Facsimile No.:
xxxxxxx, Attention: Scott Kaniewski (or to such other address of
which notice has been given to the Holder in writing), and (ii)
the Holder of this Note, to such Holder at its last address
furnished to the Company in writing. Any notice or other
communication mailed or otherwise delivered shall be deemed given
at the time of receipt thereof.
10. WAIVER.
(a) The Company hereby waives, except as provided herein,
presentment for payment, notice of dishonor, protest and notice
of protest and, in the event of default hereunder, the Company
agrees to pay all costs of collection, including reasonable
attorneys' fees.
(b) Any waiver by the Holder hereof of a breach of any
provision of this Note shall not operate as or be construed to be
a waiver of any other breach of such provision or of any breach
of any other provision of this Note. The failure of the Holder
hereof to insist upon strict adherence to any term of this Note
on one or more occasions shall not be considered a waiver or
deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term of this Note. Any
waiver must be in writing.
UNENFORCEABLE PROVISIONS. If any provision of this Note is
invalid, illegal or unenforceable, the remaining provisions of
this Note shall remain in effect, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.