SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
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[ ] Preliminary Information Statement
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by Rule 14c-5(d)(2))
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ALPHA HOSPITALITY CORPORATION
(Name of Registrant As Specified In Charter)
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[_] $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14c-5(g).
[_] Fee computed on table below per Exchange Act Rules 14c-5(g)
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PRELIMINARY COPY
ALPHA HOSPITALITY CORPORATION
707 Skokie Boulevard
Suite 600
Northbrook, IL 60062
INFORMATION STATEMENT AND NOTICE
OF ACTION TAKEN WITHOUT A MEETING OF STOCKHOLDERS
This Information Statement and Notice of Action Taken
Without a Meeting of Stockholders is being mailed on or about
February 10, 2003 to the stockholders of record of Alpha
Hospitality Corporation ("Alpha") at the close of business on
January 31, 2003 to provide information with respect an action
taken by written consent of the holders of a majority of the
outstanding shares of Alpha's common stock, $0.01 par value per
share ("Common Stock").
As set forth in greater detail herein, the written consent
approves (i) the transfer of the voting power of 2,326,857 shares
of Common Stock from The Bryanston Group, Inc. and its
affiliates, Alpha's largest stockholder (together, "Bryanston"),
to Robert A. Berman, Alpha's Chairman of the Board and Chief
Executive Officer and (ii) the granting by Bryanston to Alpha of
a three year option to reacquire up to 2,326,857 shares of Common
Stock at a price of $2.12 per share (appropriately adjusted for
any subsequent stock split, dividend, combination, or other
recapitalization) (together, the "Recapitalization").
Consummation of the Recapitalization will result in a change in
voting control and substantially change the ownership and capital
structure of Alpha.
You are being provided with this Information Statement
pursuant to Section 14(c) of the Securities Exchange Act of 1934,
as amended, and Regulation 14C and Schedule 14C thereunder. The
Recapitalization will not be consummated or become effective
until at least 20 days after the mailing of this Information
Statement.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO
SEND US A PROXY.
BACKGROUND FOR ACTIONS TAKEN
The following is a summary of the reasons for the
Recapitalization and its material terms. This discussion of the
Recapitalization is qualified in its entirety by reference to the
full text of the Recapitalization Agreement between Alpha and
Bryanston, a copy of which is attached hereto as Exhibit A.
In October 1995, Catskill Development, LLC ("Catskill"), a
New York limited liability company, was formed to pursue the
development of a raceway property in Monticello, New York (the
"Raceway"). Alpha Monticello, Inc., a wholly owned subsidiary of
Alpha, a Voting Member of Catskill. Catskill's business plan
envisioned the development of a Native American casino and three
distinct lines of business: a) casino activities; b) real estate
related activities; and c) gaming operations related to
Monticello Raceway (the "Raceway"), including pari-mutuel and
potential future video lottery terminals ("VLTs"). Catskill's
plan is to enter into a contract with a federally recognized
Native American Tribe to sell to it a parcel of land on the
Raceway site and
to work with such tribe to secure the necessary
state and federal approvals for the construction and operation of
a casino. On June 3, 1996, Catskill acquired the Raceway and its
surrounding properties for $10,000,000, and then set aside 29.31
acres of surrounding property for the development of a Native
American casino.
Alpha, by holding an interest in Catskill, is subject to
regulation by various governmental agencies that regulate and
license gaming activities. As part of such regulation, Alpha and
its affiliates are generally required to be licensed or otherwise
approved in each jurisdiction in which they operate, and are in
turn subject to a determination of suitability with respect to
their officers, directors and significant investors. For example,
the New York Racing & Wagering Board upon a determination that it
is inconsistent with the public interest, convenience or
necessity or with the best interests of racing generally that any
person continue to be a stockholder (of record or beneficially)
in any entity that is licensed to engage in racing activities or
that owns 25% or more of such licensed entity, may direct such
stockholder to dispose of its interest in such entity. In the
event that an officer, director, investor or creditor of a
regulated entity or an affiliated entity were found to be
unsuitable, the entity's license or other approval to conduct
gaming activities could be revoked or conditioned upon, as the
case may be, such officer or director resigning, the divestiture
or termination of such investor's interests or the satisfaction
of such creditor's indebtedness.
In April 2002, each of Monty Hundley, Stanley Tollman and
Brett Tollman was indicted by a federal grand jury on various
counts of tax fraud and bank fraud. As each of these individuals
is an affiliate of Bryanston, Bryanston's continued status as a
stockholder of Alpha and a member of Catskill, places Catskill's
current gaming licenses in jeopardy and could undermine its
ability to obtain new licenses and find a suitable Native
American partner with which to develop a casino. As a result of
these factors, on December 10, 2002, pursuant to the
Recapitalization Agreement, the Company also (i) issued an
aggregate 336,496 shares of its Series E Preferred Stock, $.01
par value having a total liquidation amount of $3,364,960 to each
of Bryanston in full satisfaction of an outstanding note in the
amount of $1,528,167, Stanley Tollman ("Tollman") in full
satisfaction of $1,528,167 of deferred compensation and Monty
Hundley ("Hundley") in full satisfaction of $266,667 of deferred
compensation, (ii) received a three year option to redeem all or
any portion of (a) the Series E Preferred Stock issued to
Bryanston, Tollman and Hundley, as described above, at its
liquidation value plus all accrued and unpaid dividends and (b)
subject to stockholder approval, Bryanston's 2,326,857 and
Beatrice Tollman's 66,000 shares of Company common stock at a
price of $2.12 per share (price per share based on an arm's
length negotiation) , in either case, payable in cash or by
delivery of a promissory note for the aggregate purchase price of
the stock being redeemed, or a total of $4,932,937. Such
promissory note is to be unsecured, bear interest at the rate of
7% per annum, and be payable in fixed installments over a three
year period. Each such promissory note is to be subordinate to a
bank note and may be prepaid by the Company at any time, without
notice. Nevertheless, during the three year redemption period,
each of Bryanston and Beatrice Tollman have granted Robert
Berman, the Company's Chief Executive Officer, an irrevocable
proxy to vote their shares of common stock, with full powers of
substitution and revocation. However, pursuant to the terms of
this agreement, the Option and the Proxy (collectively, the
"Recapitalization") shall not become effective until stockholder
approval for such transactions has been obtained. The written
consent only approves (i) the transfer of the voting power of
2,326,857 shares of Common Stock from Bryanston to Robert A.
Berman and (ii) the granting by Bryanston to Alpha of a three
year option to reacquire up to 2,326,857 shares of Common Stock
at a price of $2.12 per share (appropriately adjusted for any
subsequent stock split, dividend, combination or other
recapitalization).
In addition to ensuring compliance with all gaming
regulations, the Company carried out the Recapitalization in
order to maintain its NASDAQ listing. On November 19, 2003 the
Company received a letter from NASDAQ stating it had fallen below
the minimum stockholders' equity requirement of $2,500,000 as of
the Company's fiscal quarter ended September 30, 2002. As a
result of the Recapitalization, the Company issued $17,306,960 of
Series E Preferred Stock, which increased the Company's
stockholders' equity to in excess of $6,000,000. On January 10,
2003, the Company received an extension from NASDAQ until January
17, 2003 to file with the SEC a public document demonstrating
compliance with the minimum stockholder equity requirement. On
January 16, 2003, the Company filed a Current Report on Form 8-K
demonstrating compliance. On January 17, 2003, the Company
received a letter from NASDAQ stating that based on the 8-K
filing, it had determined the Company complies with the minimum
stockholders' equity requirements and the matter had been closed.
Further, on January 14, 2003 the Company received an
additional letter from NASDAQ stating that it had failed to
conduct its 2002 annual meeting within the prescribed period of
time. Accordingly, NASDAQ has notified the Company that its
securities are subject to delisting from the SmallCap Market.
The Company has request and received an oral hearing to be
conducted on February 27, 2003 for continued listing. Pending
this hearing, the delisting has been stayed.
STOCKHOLDER APPROVAL AND CHANGE OF CONTROL
Alpha has received the written consent of a majority of its
stockholders approving the Recapitalization in lieu of a special
stockholders meeting. The individuals signing such consent
represent, under Delaware law, a sufficient number of shares to
take the action without notice or a meeting of the stockholders.
On or after the twentieth day following the mailing of this
report to stockholders, this consent will become effective to
approve the Recapitalization. Under Delaware law, there is no
procedure whereby a stockholder not a party to the written
consent may vote against the Recapitalization.
The transfer by Bryanston of its voting power to Alpha's
Chief Executive Officer pursuant to the Proxy will result in a
change in control of Alpha. Moreover, in the event that Alpha
exercises the Option, a further change in control will occur
under which no individual stockholder or group of stockholders
would be left with a controlling interest in Alpha. No assurance
can be given that such Option exercise or change in control will
occur.
RIGHTS OF DISSENTING STOCKHOLDERS
Alpha stockholders are not entitled to any appraisal or
similar rights and under Delaware law in connection with the
approval and ratification of the Recapitalization.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of the record date, Alpha's authorized capitalization
consisted of 75,000,000 shares of Common Stock and 5,000,000
shares of preferred stock. As of the record date, there were
4,971,183 shares of common stock outstanding, all of which were
fully paid, non-assessable and 44,258 shares of Series B entitled
to vote, all of which were fully paid, non-assessable and
entitled to vote and 1,730,696 shares of Series E preferred stock
outstanding, all of which were
fully paid, non-assessable but not
entitled to vote, except as may be required by law. Each share of
Common Stock entitles its holder to one vote on each matter
submitted to stockholders for a vote.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding
the beneficial ownership of Alpha's shares of Common Stock as of
January 31, 2003 by all those known by Alpha to be beneficial
owners of more than 5% of its Common Stock, each director, each
executive officer and all directors and executive officers of
Alpha as a group. Unless otherwise noted in the footnotes to the
table, the persons named in the table have sole voting and
investment power with respect to all shares of common stock
indicated as being beneficially owned by them. Unless otherwise
indicated, the address of each stockholder, director and
executive officer listed below is c/o Alpha Hospitality
Corporation, 707 Skokie Boulevard, Suite 600, Northbrook,
Illinois 60062.
Title of Class Name and Address No. of Percent
Shares(1) of Class(2)
Common Stock Robert A. Berman (3) 2,878,000 56.81%
$.01 par value Scott A. Kaniewski (4) 124,962 2.47
Thomas W. Aro (5) 46,200 *
Paul deBary (6) 62,103 1.27
Thomas P. Puccio (7) 15,000 *
William W. Hopson (8) 15,000 *
Bryanston Group,
Inc. (9) 2,326,857 46.81
1886 Route 52
Hopewell Junction, N.Y.
All Current Officers
and Directors as a
group without
duplicating shared
beneficial interest
(6 persons)
(3,4,5,6,7,8) 3,141,265 59.81%
* less than 1%
(1) Except as noted below, each person exercises sole
voting and dispositive power with respect to the shares
reflected in the table, except for those shares of common
stock that are issuable upon the exercise of options.
Includes shares of common stock that may be acquired upon
exercise of options or conversion of convertible securities
that are presently exercisable or convertible or become
exercisable or convertible within 60 days.
(2) Each beneficial owner's percentage ownership is
determined by assuming that options, warrants and
convertible securities that are held by such owner (but not
those held by any other owner) and that are exercisable or
convertible within 60 days from the date hereof have been
exercised or converted.
(3) Consists of 390,127 shares owned by Robert A. Berman,
95,016 shares issuable upon the exercise of an option
granted under his employment agreement, 2,326,857 shares
owned by Bryanston and 66,000 shares owned by Beatrice
Tollman (with respect to such shares owned by
Bryanston and
Beatrice Tollman, Robert A. Berman has exclusive voting
rights for a three year period under the Bryanston
Recapitalization Agreement dated December 10, 2002. Robert
A. Berman disclaims beneficial ownership of any of the
shares owned by Bryanston and Beatrice Tollman for any
purpose other than voting. Debbie N. Berman, the wife of
Robert A. Berman has sole power to vote or to direct the
vote and sole power to dispose or to direct the disposition
of 4,090 shares. Robert A. Berman disclaims beneficial
ownership of such shares. Debbie N. Berman and Philip
Berman, the brother of Robert A. Berman are co-trustees for
the Berman Family Trust, which owns 12,272 and shares have
joint power to vote or to direct the vote and joint power to
dispose or to direct the disposition of the shares. Robert
A. Berman disclaims beneficial ownership of such shares.
(4) Consists of 1,440 shares owned by Scott A. Kaniewski,
28,506 shares owned by the Kaniewski Family Limited
Partnership, which he is the general partner and a 1%
limited partner (with respect to which Mr. Kaniewski has
sole voting and disposition rights) and 95,016 shares
issuable upon the exercise of an option granted under his
employment agreement. Scott A. Kaniewski disclaims
beneficial ownership of the 28,221 shares owned by the
Kaniewski Family Limited Partnership for any other purposes
other than voting and dispositive powers. Does not include
34,552 shares owned by the KFP Trust whose sole trustee is
Stacey B. Kaniewski, the wife of Scott A. Kaniewski. Stacey
B. Kaniewski has sole power to vote or direct the vote and
sole power to dispose or direct the disposition of these
shares. Scott A. Kaniewski disclaims beneficial ownership
of the shares owned by the KFP Trust.
(5) Includes 46,000 shares of common stock issuable upon the
exercise of options granted to Thomas W. Aro, all of which
options are currently exercisable.
(6) Includes 47,103 shares owned by Paul deBary and 15,000
shares of common stock issuable upon the exercise of options
granted, all of which options are currently exercisable.
(7) Consists of 15,000 shares of common stock issuable upon
the exercise of options granted to Thomas P. Puccio, all
of which options are currently exercisable.
(8) Consists of 15,000 shares of common stock issuable upon
the exercise of options granted to William W. Hopson, all of
which options are currently exercisable.
(9) Robert A. Berman has exclusive voting rights for
Bryanston shares for a three year period under the Bryanston
Recapitalization Agreement dated December 10, 2002. Robert
A. Berman disclaims beneficial ownership of any of the
Bryanston Shares for any purpose other than voting.
EXHIBIT A
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