File No. 33-64236
As filed with the Securities and Exchange Commission on August 20, 1999
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT
on
FORM S-3
to
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ALPHA HOSPITALITY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-3714474
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
12 East 49th Street
New York, New York 10017
(212) 750-3500
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
ROBERT STEENHUISEN
Chief Accounting Officer
12 East 49th Street
New York, New York 10017
(212) 750-3500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
HERBERT F. KOZLOV, ESQ.
PARKER DURYEE ROSOFF & HAFT, P.C.
529 Fifth Avenue
New York, New York 10017
(212) 599-0500
Approximate date of proposed sale to the public: From time to time after
the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
<PAGE>
If any of the securities being registered on this Form are to be
offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to
Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462
(c) under the Securities Act, check the following box and list the Securities
Act registration
statement number of the earlier effective registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
<PAGE>
Cross-Reference Sheet
Item Caption Location in Prospectus
1. Forepart of the Registration Outside Front Cover Page
Statement and Outside Front
Cover Page of Prospectus
2. Inside Front and Outside Table of Contents; Outside
Back Cover Pages of Back Cover Page
Prospectus
3. Summary Information, Risk Front Cover Page; Risk Factors
Factors and Ratio of
Earnings to Fixed Charges
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price *
6. Dilution *
7. Selling Security Holders *
8. Plan of Distribution Plan of Distribution
9. Description of Securities to
be Registered Documents Incorporated by
Reference
10. Interest of Named Experts
and Counsel Legal Matters; Experts
11. Material Changes Recent Developments
12. Incorporation of Certain
Information by Reference Documents Incorporated by
Reference; Additional
Information about Alpha
13. Disclosure of Commission *
Position on Indemnification
for Securities Act Liabilities
________________
* Not Applicable
<PAGE>
PROSPECTUS
862,500 Shares
ALPHA HOSPITALITY CORPORATION
Common Stock, par value $.01 per share
This prospectus relates to 862,500 shares of the common stock, par value
$.01 per share, of Alpha Hospitality Corporation ("Alpha"). These shares may
be issued upon the exercise of 862,500 redeemable Common Stock Purchase
Warrants. Because Alpha
has other types of warrants, the warrants discussed in this prospectus will be
referred to as "IPO Warrants." The IPO Warrants were offered and sold, at $.10
per warrant, as part of Alpha's initial public offering in November 1993.
Under the original terms of the IPO Warrants, a holder was entitled, with
respect to each IPO Warrant it holds, to purchase one share of Alpha's common
stock per IPO Warrant, at an exercise price of $12.00 until November 4, 1998.
However, in September 1998, by resolution of the Board of Directors of Alpha,
the terms of the IPO Warrants were amended to change the exercise price and
extend the expiration date as follows:
Exercise Price Dates when Exercisable
Original Terms: $12.00 per share Until November 4, 1998
Amended Terms: $4.00 per share Until December 31, 2000
$6.00 per share From January 1, 2001
until December 31, 2001
Upon thirty (30) days prior written notice to the holders, Alpha may redeem
any or all of the IPO Warrants at a price of $.10 per IPO Warrant. Alpha may
only do this if the average closing bid price of a share of the common stock for
a period of twenty (20) consecutive trading days, ending on the third day prior
to the date of notice, is at least one hundred fifty percent (150%) of the
exercise price in effect at that time.
These securities involve a high degree of risk. See "Risk Factors."
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
Alpha's common stock is listed for trading on The NASDAQ SmallCap Market
under the symbol "ALHY" and on the Boston Stock Exchange under the symbol
"ALH." On August 17,1999, the closing bid price of Alpha's common stock, as
reported by The NASDAQ SmallCap Market, was $3.281 per share. The IPO Warrants
are currently traded in the over-the-counter market on the NASD's electronic
bulletin boards. On August 17, 1999, the closing bid price of the IPO Warrants
was $1.375 per IPO Warrant.
Alpha's executive offices are located at: 12 East 49th Street,
New York, New York 10017.
Its telephone number is 212-750-3500.
The date of this prospectus is August 20, 1999.
<PGAE>
No dealer, salesperson or
other person has been authorized to give any
information or to make any representations not contained in this prospectus or
incorporated by reference to this prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by Alpha. This prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, the
securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such jurisdiction. The delivery
of this prospectus at any time
does not imply that the information contained herein is correct as of any time
subsequent to its date.
TABLE OF CONTENTS
RISK FACTORS . . . . . . . . . . . . . . . . . 3
Future sales of shares could potentially
dilute your interest in Alpha's
common stock . . . . . . . . . . . . 3
The market price of Alpha's common stock
can be highly volatile . . . . . . 3
Alpha cannot assure that there will be
a public market in the future for its
securities . . . . . . . . . . . . . 3
Alpha has no ongoing operations . . . . . 3
Alpha has no operating history with
respect to new ventures. . . . . . . 4
Alpha has a history of losses . . . . . . 4
Alpha's operations have been subject to
seasonal fluctuations . . . . . . . .4
Alpha has outstanding indebtedness. . . . 4
Alpha's liability insurance possibly may
be insufficient . .. . . . . . . . . 5
Alpha may compete in a highly competitive
industry . . . . . . . . . . . . . . 5
Alpha's proposed operations are subject
to government regulation . . . . . .5
The loss of a gaming license would
adversely affect Alpha's operations .6
This prospectus contains forward-looking
statements . . .. . . . . . . . . . .6
RECENT DEVELOPMENTS. . . . . . . . . . . . . . 6
Casino and gaming development activities. 6
Legal proceedings . . . . . . . . . . . . 8
PLAN OF DISTRIBUTION . . . . . . . . . . . . . 8
LEGAL MATTERS. . . . . . . . . . . . . . . . . 9
EXPERTS. . . . . . . . . . . . . . . . . . . . 9
ADDITIONAL INFORMATION ABOUT ALPHA . . . . . . 9
DOCUMENTS INCORPORATED BY REFERENCE. . . . . .10
<PAGE>
RISK FACTORS
Before you decide to invest in Alpha's common stock being offered by
this prospectus, you should be aware that there are various risks, including
those described below. You should carefully consider these risks as well as the
more detailed information contained in this prospectus and in the documents
incorporated in this prospectus by reference, before making your decision.
Future sales of shares could potentially dilute your interest in Alpha's common
stock
As of August 17, 1999, Alpha had 16,788,228 shares of common stock
outstanding. An additional 862,500 shares will be issued if holders of the IPO
Warrants choose to exercise those IPO Warrants. Similarly, holders of preferred
stock, other warrants and various stock options may from time to time exercise
or convert their securities into common stock. As noted below, Stanley Tollman,
Alpha's chairman and chief executive officer, has been granted the right,
subject to shareholder approval, to convert up to $2,000,000 of deferred salary
into Alpha's common stock at $2.00 per share. If holders of these other
securities exercise or convert them into shares of common
stock or Mr. Tollman converts his deferred salary into shares of common stock
and then the holders and/or Mr. Tollman sell those shares into the public
market, the sales may reduce the prevailing market price for Alpha's common
stock. As a result, Alpha may find it more difficult in the future to raise
capital by selling equity securities.
The market price of Alpha's common stock can be highly volatile
The average daily trading volume of Alpha's common stock has generally
been light. The market price has been highly volatile and may not be indicative
of the market price in a more liquid market. Therefore, the low volume may have
had a significant effect on the historical market price of the stock. The
market price of the stock could also be subject to significant fluctuations in
response to a number of factors, not all of which
may relate directly to Alpha's performance. Some of these factors are: the
depth and liquidity of the market for the stock; public announcements by Alpha,
its clients and competitors; investors' perception of Alpha; rumors; and general
economic and other conditions.
Alpha cannot assure that there will be a public market in the future for its
securities
Alpha cannot assure that its common stock will continue to be quoted on the
NASDAQ SmallCap Market or listed on the Boston Stock Exchange. Even if these
quotations or listings continue, Alpha cannot assure there will be a significant
public market. Among other requirements for continued listing on the NASDAQ
SmallCap Market, a company must have at least $2,000,000 in net tangible assets,
and the listed security must have a minimum bid price of $1.00 per share. The
Boston Stock Exchange's maintenance criteria require a company to have total
assets of at least $1,000,000 and total stockholders' equity of at least
$500,000. At June 30, 1999, Alpha had total assets of $9,120,000 and
stockholders' equity of approximately $3,840,000.
In the event Alpha's common stock were delisted from the NASDAQ SmallCap
Market, trading, if any, would be conducted on the Boston Stock Exchange and in
the over-the-counter market on the NASD's electronic bulletin board. As a
result, an investor may find it more difficult to dispose of or obtain accurate
quotations for the price of Alpha's securities. In addition, Alpha's common
stock would be subject to Rules 15g-1 and 15g-6 promulgated under the Securities
Exchange Act of 1934. These rules impose additional sales practice requirements
on broker-dealers who sell securities
covered by these rules to a buyer who is not an established customer or an
accredited investor. In general, an accredited investor is a person with assets
in excess of $1,000,000 or annual income exceeding $200,000 individually or
$300,000 together with his or her spouse. Among other special requirements, the
broker-dealer must make a special suitability determination for the purchaser
and have received the purchaser's prior written consent to the transaction.
Consequently, these rules may discourage broker-dealers from effecting
transactions in Alpha's common stock or affect their ability
to sell Alpha's securities. As a result, purchasers and current holders of
Alpha's securities could find it more difficult to sell their securities and
there may be an adverse effect on the market value of those securities.
<PAGE>
Alpha has no ongoing operations
Alpha currently has no operating business to generate income. Alpha's
ongoing ability to meet its general and administrative obligations will depend
on its ability to do one or more of the following things:
Achieve profits from the prospective gaming operations in New York;
Achieve profits from operations of any other future business
opportunities;
Combine with an entity having sufficient cash flow to meet Alpha's
obligations; or
Obtain additional funds through financing activities.
Alpha cannot give any assurance that it will be able to generate enough
funds through any of these activities to meet its general and administrative
obligations.
Alpha has no operating history with respect to new ventures
Except to the extent that Alpha develops new gaming opportunities or
realizes the prospective gaming opportunities in New York and Florida, it is
anticipated that Alpha will change the basic nature of its past business. Alpha
has no operating history with respect to any new gaming opportunity it may
pursue. For example, Alpha has no operating experience in the geographic areas
where the prospective gaming opportunities
in New York and Florida are being contemplated. Similarly, Alpha has no
operating experience in any new line of business in which it may engage.
Management currently intends to concentrate its investigation of potential
business acquisitions in areas, such as hotel and related hospitality ventures,
in which Alpha's affiliates and/or members of management have prior experience.
However, Alpha can give no assurance that it will
be able to locate and consummate a transaction with any business in these areas.
Alpha also cannot assure you that its activities in any new line of business
will be profitable.
As of the date of this prospectus, Alpha has not entered into any arrangement to
participate in any business ventures or purchase any assets, property or
business, other than as previously disclosed or discussed elsewhere in this
prospectus.
Alpha has a history of losses
Since its inception, Alpha has suffered significant losses from operations.
Alpha had net losses of approximately $13,399,000 in the fiscal year ended
December 31, 1998, and $22,815,000 in the fiscal year ended December 31, 1996.
In the fiscal year ended December 31, 1997, Alpha's net income of $2,835,000
included a gain of $4,609,000 from the extinguishment of debt; without this
extraordinary item, Alpha would have had a net loss of approximately $1,774,000.
For the six months ended June 30, 1999, Alpha
had a net loss of approximately $1,323,000. As of December 31, 1998, Alpha had
an accumulated deficit of approximately $70,230,000. If Alpha is not able to
derive income from operations, or otherwise raise additional capital, there is
uncertainty as to whether it will be able to continue as a going concern.
Alpha's operations have been subject to seasonal fluctuations
The results of Alpha's former casino operations were seasonal, with the
greatest activity occurring during the months of May through September. This
resulted in decreased operating profits for the calendar quarters ending in
December and March as compared to the calendar quarters ending in June and
September. The seasonal nature of casino operations increased the risk that
natural disasters or the loss of the casinos for
any other reason from May through September would have a material, adverse
effect on Alpha's financial condition and results of operations. In the event
that Alpha should again be involved in the gaming industry, Alpha's business
could again be subject to similar fluctuations and risks.
<PAGE>
Alpha has outstanding indebtedness
Alpha's outstanding indebtedness consists of a note payable to an
affiliate, Bryanston Group, Inc. The current balance of this note is
approximately $2,000,000. No default or acceleration has occurred on this loan.
Alpha cannot give any assurance that
a default will not be declared in the future. Declaration of a default could
have an adverse affect on Alpha's financial condition, business and/or
operations.
Alpha's chairman and chief executive, Stanley Tollman, has agreed to defer
receiving his salary. Although the salary accumulates without interest, the
total amount owed to Mr. Tollman on August 19, 1999 is approximately $1,445,000.
Subject to shareholder approval, the board of directors has granted Mr. Tollman
the right to convert up to $2,000,000 of this accumulated salary into shares of
Alpha's common stock, at a price of $2.00 per share.
Alpha's liability insurance possibly may be insufficient
Alpha maintains and intends to maintain general liability insurance in
amounts which management believes will be sufficient to cover casualty risks
associated with the operation of its business. These risks include fire,
property damage, personal injury,
liquor liability, etc. At present, Alpha is a defendant in one proceeding based
upon the theory of "liquor liability" for the service of alcohol to a customer.
Alpha believes that its exposure in this proceeding is adequately covered by the
levels of insurance currently maintained. However, Alpha cannot assure that its
existing insurance will be adequate to over any liabilities.
Alpha may compete in a highly competitive industry
Alpha's current operations include: development of potential new gaming
operations in New York, Mississippi and Florida; the potential acquisitions of
truck stop and gaming operations; and the acquisition or development of other
business operations.
These industries are highly competitive. Many of the potential competitors in
these industries have significantly greater financial and other resources than
Alpha and more experience in that particular industry. It is likely that this
intense competition may limit the profitability of Alpha's operations or even
render them unprofitable.
Alpha's proposed operations are subject to government regulation
General: The ownership and operation of Alpha's properties have been
subject to regulation by federal, state and local governmental authorities.
This includes regulation relating to environmental protection. Alpha has not
been the subject of any complaints or other formal or informal proceedings
alleging any violations of government regulations. However, Alpha cannot
provide assurance that it can comply with or will be able to continue to comply
with current or future governmental regulations everywhere it conducts or will
conduct business operations. Alpha may have
to incur substantial costs or interrupt its operations to comply with
regulations. Presentor future federal, state or local regulations may restrict
Alpha's present and possible
future activities. If Alpha is unable to comply with these or similar
requirements, it could
be subject to sanctions. Any sanctions could have a materially adverse effect
upon Alpha's business.
New York: Alpha, through a subsidiary, has an interest in a joint venture
that intends to manage a proposed casino in Sullivan County, New York. This
casino, if built, would be located on land that will effectively be owned by the
St. Regis Mohawk Tribe. As a result, the Federal Indian Gaming Law applies to
Alpha for this proposed project.
This law provides a comprehensive, detailed scheme for the control of gaming
operations. The law also specifies how licenses for gaming are to be issued,
both to gaming facilities and to persons involved in gaming-related activities.
Each of the supervising governmental agencies is authorized to promulgate rules
and regulations applicable to the administration of gaming-related laws. The
State of New York regulates Indian gaming casinos through the New York State
Racing and Wagering Board.
Additionally, in connection with these potential operations in New York State,
Alpha has filed documentation with the National Indian Gaming Commission.
<PAGE>
Mississippi: Alpha no longer holds a casino operating license in
Mississippi. However, Alpha has retained its finding of suitability to comply
with the Mississippi Gaming Commission's requirements. Therefore, it remains
subject to the rules and regulations of the Mississippi Gaming Commission.
Alpha recently acquired a 93% interest in Casino Ventures, LLC, which will
operate the vessel formerly known as Bayou Caddy's Jubilation Casino. Alpha
also owns a 25% partnership interest in Greenville
Casino Partners, L.P., even though it no longer carries this investment on its
financial statements.
The loss of a gaming license would adversely affect Alpha's operations
The gaming industry is highly regulated by each of the states in which
gaming is legal. The regulations vary from state to state. Generally the
applicable governing body in each state must find suitable or approve the
operator and many of the key people employed by or associated with the operator.
If any person, now or in the future, fails to be approved for a license
or fails to remain qualified to hold a license, Alpha would have to disassociate
itself from that person or it could lose its license. The governing body almost
always has broad discretion in granting, renewing and revoking licenses. Any
loss or suspension of any license would have a materially adverse effect on
Alpha's gaming operations that require
a license. These regulations requiring governmental approval of substantial
shareholders, directors, officers and key personnel might discourage, delay or
prevent a change in control of Alpha.
Alpha's success is dependent upon the services of key officers
Alpha's success is largely dependent upon the personal efforts of
Stanley S. Tollman, its president and chief executive officer. Alpha does not
maintain and does not intend to obtain a key employee life insurance policy on
the life of Mr. Tollman.
Although Mr. Tollman is only required to devote approximately 20% of his
business time to the operations of Alpha, the loss of his services would have a
materially adverse effect on Alpha's business and prospects.
This prospectus contains forward-looking statements
Certain statements contained in this prospectus and the documents
incorporated by reference are based on current expectations. Such statements
are forward looking statements that involve a number of risks and uncertainties.
Factors that could cause
actual results to differ materially include the following: (i) general economic
conditions, (ii) competitive market influences and (iii) inability to obtain
additional financing for proposed developments and acquisitions.
RECENT DEVELOPMENTS
Casino and gaming development activities
New York
On December 1, 1995, one of Alpha's subsidiaries entered into a memorandum
of understanding with Catskill Development, L.L.C., to develop and manage a
proposed casino adjacent to the Monticello Raceway in Sullivan County, New York
(approximately 90 miles from New York City). Bryanston Group, Inc., an
affiliate of Alpha that is 50% owned by the spouse of Alpha's chairman,
president and chief executive officer, owns 25% of Catskill Development. The
memorandum of understanding provides for the establishment of Mohawk Management,
LLC, a New York limited liability company, to
be owned equally by Catskill Development and Alpha's subsidiary. Mohawk
Management was formed in January 1996. The memorandum of understanding
anticipated that Mohawk Management would enter into an agreement to manage a
proposed casino on land to be held in trust for the St. Regis Mohawk Indian
Tribe. The memorandum of understanding also sets forth in general terms the
respective obligations of Catskill Development and Alpha's subsidiary to fund
and manage Mohawk Management. Catskill
<PAGE>
Development and Alpha committed to enter
into a definitive agreement on the terms established in the memorandum.
Mohawk Management has executed a management contract with the St. Regis
Mohawk Indian Tribe for the management of the proposed casino. Subject to
obtaining the requisite approvals, it is anticipated that Mohawk Management will
develop and manage the casino and that Alpha's subsidiary, Alpha Monticello,
Inc., will be responsible for the day-to-day operations. The casino project is
subject to approval by the U.S. Department of the Interior and its Bureau of
Indian Affairs, the National Indian Gaming Commission and the Governor of the
State of New York. As of the date of this prospectus, all such approvals have
still not been obtained.
Since Mohawk Management did not obtain all of the governmental approvals
necessary for the construction and operation of the proposed casino by December
31, 1998, the memorandum of understanding terminated by its express terms. The
management contract does not have the same termination provision. Alpha
Monticello and Catskill Development disagree how the expiration of the
memorandum of understanding affects the continued existence and ownership
structure of Mohawk Management and the disposition of the management contract.
On December 28, 1998,
Alpha Monticello filed for arbitration to resolve their disagreement.
Alpha Monticello is seeking a determination from the arbitrator that:
(i) the termination of the memorandum of understanding merely means
that the funding obligations of Alpha Monticello and Catskill
Development have expired;
(ii) Mohawk Management remains a viable entity ; and
(iii) both Alpha Monticello and Catskill Development are each to
continue to be 50% owners.
Alpha Monticello and Catskill Development are currently discussing a possible
settlement of these disputes. At the request of all parties, the American
Arbitration Association has agreed to stay further proceedings in the
arbitration until September 24, 1999. If Alpha
Monticello and Catskill Development do not reach a settlement and the arbitrator
decides in favor of Catskill Development, there could be a material, adverse
effect on Alpha's ownership rights in the proposed Monticello casino.
Florida
On May 7, 1999, Miami-Dade County approved an exclusive 5-year lease with
one of Alpha's subsidiaries, Alpha Florida. Under this lease, Alpha Florida may
dock and operate a day-cruise vessel out of the county's Haulover Beach Park and
Marina adjacent to Bal Harbour, Florida. The county may renew the lease for two
periods of five years each. Alpha Florida has agreed to pay the county a
minimum monthly base rent, a per-passenger fee and a percentage of retail
merchandise sold in the facility. The lease commences upon the inaugural cruise.
Mississippi
On July 8, 1999, Alpha entered into an agreement with Casino Ventures,
LLC. Alpha contributed its dormant vessel, Bayou Caddy's Jubilation Casino.
In return, Alpha received $150,000 in cash, a $1,350,000 promissory note and a
93% membership interest in Casino Ventures. This membership interest is subject
to reduction to 15% if certain events occur. Subject to obtaining the necessary
financing, Alpha anticipates that
the vessel will be refurbished and operated as a casino at Mhoon Landing in
Tunica, Mississippi. Alpha expects Casino Ventures to commence operations in
Tunica late in 1999 or early 2000. Alpha is not required to make any further
capital contributions to Casino Ventures. Alpha cannot provide any assurance
that Casino Ventures will succeed
or be able to pay its debt to Alpha under the promissory note. Alpha also
cannot provide any assurance that it will realize any value from its membership
interest in Casino Ventures.
<PAGE>
Legal proceedings
In January 1996, Alpha Gulf Coast, Inc., a subsidiary of Alpha, was
named as a defendant in 5 related actions brought in the Circuit Court of Hinds
County, Mississippi. These cases are based on the theory of "liquor liability"
for serving alcohol to a customer. According to the plaintiffs, on January 16,
1995, a vehicle driven by one
of the plaintiffs collided with a vehicle driven by a person the plaintiffs
claim was served alcoholic beverages by Alpha Gulf. Plaintiffs seek a total of
$17.1 million for their personal injuries and a total of $37.5 million as
punitive damages. The cases have been
consolidated for discovery purposes, although only one case has been set for
trial. The scheduled trial date is March 13, 2000 in Jackson, Mississippi.
If Alpha Gulf's motion
to transfer the case to another court is successful, the trial date will be
changed.The ultimate outcome of this litigation cannot presently be determined.
Alpha is involved in a dispute with Greenville Casino Partners, L.P.
regarding an agreement dated December 17, 1997 under which Greenville Casino
Partners bought the Bayou Caddy's Jubilee Casino from a subsidiary of Alpha.
Alpha claims that Greenville Casino Partners is liable for certain liabilities
and accounts payable. Greenville Casino Partners' claims that Alpha breached
some of its warranties, failed to continue operating the casino in the normal
course of business through the date of sale
and also failed to pay certain accounts. Management is pursuing vigorously
Alpha's own claims and contesting Greenville Casino Partners' claims. An
arbitration hearing was held on March 15-17, 1999, and each side has been asked
to submit supplemental information. Alpha currently expects to be ready to
submit this information on or about October 1, 1999. If the submission is made
by then, the arbitrator's ruling is expected
before December 31, 1999. Alpha and its counsel believe that, based on
information presently available, the arbitrator will find that the total of
Alpha's claims exceed the total of Greenville Casino Partners' claims so that
the net result will be in Alpha's favor.
USE OF PROCEEDS
If all of the IPO Warrants are exercised at $4.00 per share, Alpha will
receive net proceeds of $3,450,000. If all of the IPO Warrants are exercised
at $6.00 per share, Alpha will receive net proceeds of $5,175,000. Any
proceeds from the exercise of the IPO Warrants will be used for general
corporate purposes, including working capital.
PLAN OF DISTRIBUTION
As of August 17, 1999, there were 862,500 IPO Warrants outstanding. Each
IPO Warrant entitles the registered holder to purchase one share of Alpha's
common stock at a price of
$4.00 through December 31, 2000; and
$6.00 from January 1, 2000 through December 31, 2001,
subject to adjustment in some circumstances. Until the IPO Warrants are
exercised, Holders of IPO Warrants do not have the rights or privileges of
holders of Alpha's common stock.
Alpha may redeem the IPO Warrants at a price of $.10 per IPO Warrant.
Alpha can only do this if the average closing bid quotation of Alpha's common
stock on the twenty trading days ending no later than the third day prior to the
giving of the notice of redemption has been at least 150% percent of the IPO
Warrant's exercise price. The holders of IPO Warrants have the right to
exercise their IPO Warrants until the close of
business on the date fixed for redemption.
The IPO Warrants were issued in registered form under a warrant agreement
by and among Alpha, Continental Stock Transfer & Trust Company, as warrant
agent, and Alpha's underwriters. The warrant agreement has been filed with the
Securities and Exchange Commission as an exhibit to the registration statement
relating to
<PAGE>
this prospectus. The following is just a summary. You should read
the warrant agreement for a complete description of its terms and conditions.
The exercise price of the IPO Warrants is subject to adjustment in some
circumstances. For example, there will be an adjustment for stock dividends,
subdivisions or combinations of the common stock.
To exercise your IPO Warrants, you must, on or before the expiration date:
Surrender your warrant certificate at the offices of the warrant
agent;
Complete and sign the exercise form on the reverse side of the warrant
certificate as indicated; and
Enclose a certified check payable to Alpha for the full payment of the
exercise price times the number of IPO Warrants you are exercising.
You may only exercise your IPO Warrants if, at the time you elect to
exercise, this prospectus is current according to the federal securities laws or
if the shares are exempt under the securities laws of your state. In the
warrant agreement, Alpha agreed to use its best efforts to maintain a current
prospectus until the IPO Warrants expire. While it is Alpha's intention to do
so, it cannot assure that it will be able to do so.
You are not entitled to receive any fractional shares when you exercise
your IPO Warrants. However, if you exercise all of the IPO Warrants for which
you are the owner of record, Alpha will pay you an amount in cash based on the
market value of Alpha's common stock instead of any fractional share.
LEGAL MATTERS
Certain legal matters in connection with the shares of common stock being
offered hereby will be passed upon for Alpha by Parker Duryee Rosoff & Haft,
P.C., New York, New York 10017. Herbert F. Kozlov, a director of Alpha, is a
member of that law firm.
EXPERTS
The financial statements, included in Alpha's annual report on Form 10-K
for the year ended December 31, 1998, incorporated herein by reference, have
been audited by Rothstein, Kass & Company, P.C., independent certified public
accountants, as indicated in their report. The financial statements are
incorporated into this prospectus by
reference in reliance upon the report of the firm given their authority as
experts in accounting and auditing.
ADDITIONAL INFORMATION ABOUT ALPHA
Alpha files annual, quarterly and special reports, proxy statements
and other information with the Securities and Exchange Commission ("SEC"). You
may read and copy any of the information on file with the SEC and the SEC's
public reference rooms in Washington, D.C., New York, New York, and Chicago,
Illinois. Copies of the filed documents can be obtained by mail from the Public
Reference Section of the SEC at Room 1024, 450 Fifth Street, N.W. Washington,
D.C. 20549, at prescribed rates. You
may call the SEC, at 1-800-SEC-0330, for further information on the public
reference rooms. Filed documents are also available to the public at the SEC's
website at http://www.sec.gov.
Alpha has filed with the SEC a Registration Statement on Form S-3 with
respect to the common stock that may be issued upon exercise of your IPO
Warrants. This prospectus does not contain all the information set forth in
that registration statement, certain parts of which are not included in
accordance with the rules and regulations of
<PAGE>
the SEC. Copies of that registration statement can be obtained from the Public
Reference Section of the SEC at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows a company to "incorporate by reference" information it files
with them, which means that Alpha can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that Alpha files later
with the SEC will automatically update and supersede this information. Alpha
incorporates by reference the documents listed below and any future filings made
with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934, until all of the shares offered are sold.
(a) Alpha's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998;
(b) Alpha's Quarterly Reports on Form 10-Q for the fiscal quarters ended
March 31, 1999 and June 30, 1999; and
(c) Alpha's Registration Statement on Form S-1, as filed with the SEC on
August 8, 1996 (with respect to the description of the common stock).
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained herein
or in any other subsequently filed document that also is or is deemed to be
incorporated by reference herein modifies or supersedes that statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus.
You can request, and Alpha will send to you, without charge, copies of
documents that are incorporated by reference in this prospectus but that are not
delivered to you (other than exhibits to such documents that are not
specifically incorporated by reference). You may request these copies by
writing or telephoning Alpha at: Alpha Hospitality Corporation, 12 East 49th
Street, New York, New York 10017, attention: Thomas W. Aro, telephone number
(212) 750-3500.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth Alpha's estimates of the expenses to be
incurred by it in connection with the common stock being offered hereby:
SEC Registration Fee ...................................$ --
Printing registration statement and other documents..... --
Legal fees and expenses.................................. 20,000*
Accounting fees and expenses............................ --
Miscellaneous expenses................................... 4,000*
Total: $24,000
*Estimated
Item 15. Indemnification of Directors and Officers.
The Delaware General Corporation Law permits Delaware corporations to
eliminate or limit the personal liability of a director to the corporation for
monetary damages arising from certain breaches of fiduciary duties as a
director. Alpha's Certificate of Incorporation includes such a provision
eliminating the personal liability of directors to Alpha and its stockholders
for monetary damages for breach of fiduciary
duty as a director except (i) any breach of a director's duty of loyalty to
Alpha or its stockholders; (ii) for acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law; (iii) for any
transaction from which the director derived an improper personal benefit; or
(iv) for unlawful payments of dividends
or unlawful stock repurchases or redemptions as provided in Section 174 of the
Delaware General Corporation Law. Directors are also not insulated from
liability for claims arising under the federal securities laws. The foregoing
provisions of Alpha's Certificate of incorporation may reduce the likelihood of
derivative litigation against directors for breaches of their fiduciary duties,
even though such an action, if successful, might otherwise have benefitted Alpha
and its stockholders.
Alpha's Certificate of Incorporation also provides that Alpha shall indemnify
its directors, officers and agents to the fullest extent permitted by the
Delaware General Corporation Law. Alpha has directors' and officers' liability
insurance, and it may also enter into indemnity agreements with its directors
and officers for the indemnification of and advancing of expenses to these
persons to the fullest extent permitted by law.
Item 16. Exhibits and Financial Statement Schedules.
Exhibit
Number Description of Exhibits
4(a) Form of Common Stock Certificate of Alpha*
4(b) Form of IPO Warrant Certificate*
4(c) Certificate of Designation**
4(d) Form of Warrant Agreement among Alpha, the Transfer Agent and
the underwriters***
5 Opinion of Parker Duryee Rosoff & Haft, P.C.
23(a) Consent of Rothstein, Kass & Company, P.C.
23(b) Consent of Parker Duryee Rosoff & Haft, P.C. (included in Exhibit
5 hereof)
24 Power of Attorney (included in the signature page of Part II of
this Registration Statement)
99(a) Asset Purchase Agreement between Jubilation Lakeshore, Inc. and
Casino Ventures, LLC
<PAGE>
99(b) Operating Agreement of Casino Ventures, LLC
99(c) Form of Promissory Note by Casino Ventures, LLC to Jubilation
Lakeshore, Inc.
99(d) Bill of Sale of Bayou Caddy's Jubilation Casino from Jubilation
Lakeshore, Inc. to Casino Ventures, LLC
99(e) Supplemental Bill of Sale of Bayou Caddy's Jubilation Casino
from Jubilation Lakeshore, Inc. to Casino Ventures, LLC
_______________________
* Incorporated by reference; filed with Alpha's Registration Statement filed
on Form SB-2 (File No. 33-64236) with the SEC on June 10, 1993 and as
amended on September 30, 1993, October 25, 1993, November 2, 1993
and November 5, 1993.
** Incorporated by reference; filed with Alpha's Annual Report on Form
10-K filed on March 31, 1999.
*** Incorporated by reference; filed as Exhibit 10.10 to Alpha s Registration
Statement on Form SB-2, as amended (referred to above).
Item 17. Undertakings.
The undersigned company hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, as amended (the "Securities Act"), each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of Alpha's annual report pursuant to Section 13(a) or 15(d)
of the Securities Exchange Act of 1934, as amended, that is incorporated by
reference in the Registration Statement, shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(5) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of Alpha
pursuant to Item 15 of Part II of the Registration Statement, or otherwise,
Alpha has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by Alpha
of expenses incurred or paid by a director, officer or controlling person of
Alpha in the successful defense of any action suitor proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, Alpha will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of
filing on Form S-3 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York, on August 20, 1999.
ALPHA HOSPITALITY CORPORATION
By: /s/ Stanley S. Tollman
Stanley S. Tollman, Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Robert Steenhuisen his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and the documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated.
Signature Title Date
/s/ Stanley S. Tollman
Stanley S. Tollman Chairman of the Board and Chief
Executive Officer (Principal Executive
Officer) August 20, 1999
/s/ Thomas W. Aro
Thomas W. Aro Vice President, Secretary and Director August 20, 1999
/s/ Robert Steenhuisen
Robert Steenhuisen Principal Accounting Officer August 20, 1999
/s/ Brett Tollman
Brett Tollman Vice President and Director August 20, 1999
/s/ Matthew B. Walker
Matthew B. Walker Director August 20, 1999
/s/ Herbert F. Kozlov
Herbert F. Kozlov Director August 20, 1999
/s/ James A. Cutler
James A. Cutler Director August 20, 1999
<PAGE>
Exhibit 5
August 20, 1999
Alpha Hospitality Corporation
12 East 49th Street
New York, New York 10017
Re: Registration Statement on Form S-3 under the Securities Act of
1933
Ladies and Gentlemen:
In our capacity as counsel to Alpha Hospitality Corporation (the
"Company"), a Delaware corporation, we have been asked to render this
opinion in connection with a Registration Statement on Form S-3, being
filed contemporaneously herewith by the Company with the Securities
and Exchange Commission under the Securities Act of 1933, as
amended, covering an aggregate of 862,500 shares (the "Warrant
Shares") of Common Stock, $0.01 par value.
The Warrant Shares are issuable upon the exercise of 862,500
Redeemable Common Stock Purchase Warrants (the "IPO Warrants").
The IPO Warrants were offered and sold as part of the Company's initial
public offering in 1993.
In connection with, and as the basis for, the opinion we render
herein, we have examined the Certificate of Incorporation and the By-Laws of the
Company, both as amended to date, the Registration
Statement, corporate proceedings of the Company relating to the issuance
of the IPO Warrants, the form of the IPO Warrants and such other
instruments and documents as we have deemed relevant under the
circumstances.
In making the aforesaid examinations, we have assumed the
genuineness of all signatures and the conformity to original documents
of all copies furnished us as original or photostatic copies. We have also
assumed that the corporate records furnished to us by the Company
include all corporate proceedings taken by the Company to date in
connection with the IPO Warrants and the proposed issuance of the
Warrant Shares.
<PAGE>
Based upon and subject to the foregoing, we are of the opinion
that:
(1) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware.
(2) The Shares, when duly issued upon the due, timely and
proper exercise of the IPO Warrants, will be duly and validly authorized
and fully paid and non-assessable.
We hereby consent to the use of our opinion as herein set forth as
an exhibit to the Registration Statement and to the use of our name under
the caption "Legal Matters" in the prospectus forming a part of the
Registration Statement.
Very truly yours,
PARKER DURYEE ROSOFF & HAFT, P.C.
By: /s/ Herbert F. Kozlov
A Member of the Firm
<PAGE>
Exhibit 23(a)
Rothstein, Kass & Company, P.C.
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated March 26, 1999, which appears in the
annual report on Form 10-K of Alpha Hospitality Corporation and Subsidiaries for
the year ended December 31, 1998 and to the reference to our firm under the
caption"Experts" in the Prospectus.
/s/Rothstein, Kass & Company, P.C.
Rothstein, Kass & Company, P.C.
Roseland, New Jersey
August 16, 1999
<PAGE>
Exhibit 99(a)
ASSET PURCHASE AGREEMENT
JUBILATION LAKESHORE INC. ("SELLER"), a Mississippi
corporation and wholly-owned subsidiary of Alpha Hospitality
Corporation, and CASINO VENTURES, LLC ("BUYER"), a Mississippi
limited liability company, and ALPHA HOSPITALITY
CORPORATION ("GUARANTOR"), enter into this Asset Purchase
Agreement (the "Agreement") effective as of this 8th day of July, 1999.
W I T N E S S E T H:
1. SUBJECT MATTER. Subject to the terms and
conditions contained herein, SELLER agrees to sell, and BUYER agrees
to buy, the following assets:
the Vessel COTTON CLUB (a/k/a Jubilation Casino)
(Official Number 273756), together with all tackle and
appurtenances, including, without limitation, electronics,
computer equipment and software, security systems,
anchors, generators, electrical systems, air conditioning
equipment, gear, slot machines, furniture and gaming
equipment, presently located on the Vessel (herein
collectively referred to as the "Vessel/Equipment").
The June 18, 1999, option letter from SELLER to BUYER (the "Option
Letter") is hereby amended so as to extend the Option Expiration Date
up to and through the date of this Agreement, and it is agreed that this
Agreement constitutes a "Purchase Agreement" under the Option Letter.
2. CONSIDERATION/ERNEST MONEY. In
consideration of the transfer and conveyance of the Vessel/Equipment to
BUYER as set forth herein and subject to the terms and conditions
hereof, BUYER shall pay and tender to SELLER (a) the amount of ONE
MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS
($1,500,000.00) (the "Cash Purchase Price") plus (b), as more
particularly set forth in the Operating Agreement of BUYER among
SELLER, MRV, L.L.C. ("MRV"), Mid-America Investments, Inc.
("Mid-America") and Riverboat Investments, Inc. ("Riverboat'), a
membership interest in BUYER (the "Membership Interest") of 93%.
The Cash Purchase Price shall be paid at closing by (a) crediting against
the amount thereof the amount of SEVENTY-FIVE THOUSAND AND
NO/100 DOLLARS ($75,000.00) (the "Earnest Money") heretofore paid
as a good faith deposit, (b) the amount of SEVENTY-FIVE
THOUSAND AND NO/100 DOLLARS ($75,000.00) payable in cash or
by certified check; and (c) delivery of BUYER's Promissory Note in the
original principal amount of ONE MILLION THREE HUNDRED
FIFTY THOUSAND AND NO/100 DOLLARS ($1,350,000.00) and
otherwise in form attached hereto as Exhibit A (the "Note").
The Membership Interest shall be evidenced by BUYER's
Operating Agreement, the form of which shall be acceptable to SELLER
and shall have been executed by all members of BUYER on or before the
closing.
In the event the transactions contemplated hereby shall not have
closed on or prior to July
<PAGE>
8, 1999, SELLER shall, upon request therefor
from BUYER, pay and refund to BUYER the Earnest Money and this
Agreement shall terminate.
3. WARRANTY OF TITLE. The Vessel/Equipment will
be sold and transferred free and clear of all debts, claims, liens, and
encumbrances of any kind or nature whatsoever, and SELLER warrants
and will defend that it has a good and merchantable title to the
Vessel/Equipment and the lawful right to sell the same.
4. WARRANTIES OF CONDITION. The
Vessel/Equipment is being sold by SELLER to BUYER "AS IS,
WHERE IS," without any representation or warranty of any kind or
condition whatsoever, excepting only the express representations as to
title and absence of liens and encumbrances set forth in Section 3 above.
BUYER represents and warrants that it has inspected the
Vessel/Equipment and has determined that it is satisfactory in all
respects. Without limiting the generality or effect of the foregoing, ANY
AND ALL WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE ARE EXCLUDED, and BUYER
releases and relieves SELLER from any and all representations and
warranties with respect to the Vessel/Equipment other than the express
representations as to title and absence of liens and encumbrances set forth
in Section 3 above.
5. INSURANCE, RISK OF LOSS AND PLACE OF
DELIVERY. Risk of loss with respect to the Vessel/Equipment shall
pass at the time of closing of the sale and transfer contemplated herein.
Transfer of the Vessel/Equipment shall take place with the
Vessel/Equipment at its current place and location, and SELLER shall
have no duty or obligation to move or deliver the Vessel/Equipment to
any other place or location.
6. DESTRUCTION OF VESSEL/EQUIPMENT PRIOR
TO CLOSING. In the event the Vessel/Equipment is substantially
damaged (i.e., requiring repairs costing in excess of $10,000) or
destroyed prior to the closing of the sale and transfer contemplated
hereby, then and in such event BUYER shall have the right (i) to
terminate this Agreement, in which event BUYER shall have a right to
a full refund of the Earnest Money or (ii) to close upon the purchase of
the Vessel/Equipment in its damaged or destroyed condition and to
payment of any insurance proceeds received by SELLER or an
assignment of SELLER's right to any policy proceeds to the extent the
same is assignable. In the event the Vessel/Equipment is damaged to an
extent requiring repairs of less than $10,000, then BUYER shall close
upon the purchase of the Vessel/Equipment and that portion of the
purchase price payable in cash at closing shall be reduced by the amount
of the lowest firm bid or commitment from a shipyard located nearest to
Tunica, Mississippi, for the repair of the Vessel/Equipment and all
insurance proceeds shall be retained by SELLER.
7. CLOSING. The closing shall take place on the last
business day occurring on or before Thursday, July 8, 1999, at the offices
of Vickers, Riis, Murray and Curran, L.L.C. ("Vickers") in Mobile,
Alabama, unless a different date or place for Closing is mutually agreed
upon in writing by the parties hereto. The date of Closing is herein
called the "Closing Date."
<PAGE>
8. CLOSING OBLIGATIONS.
A. At the closing, SELLER shall deliver to Vickers, as the agent
and representative of BUYER, the following documents duly executed
by SELLER and dated on or before the Closing Date:
(i) duplicate originals of a Bill of Sale (U. S. Coast Guard
form and in such other form as BUYER may reasonably request),
conveying the Vessel/Equipment to BUYER free and clear of all liens
and encumbrances but "as is, where is" as to condition (the "Bills of
Sale");
(ii) duplicate originals of a Satisfaction of Mortgage, duly
executed by GUARANTOR, sufficient to satisfy the Preferred Ship
Mortgage held by GUARANTOR on the Vessel/Equipment and releases,
duly executed by GUARANTOR, sufficient to release all security
interests held by GUARANTOR on the Vessel/Equipment;
(iii) the original Certificate of Documentation for the Vessel,
if not lost; and
(iv) a certified copy of resolutions of SELLER authorizing the
transaction, execution and delivery of all documents on SELLER's
behalf.
B. At the closing, BUYER shall do the following:
(i) deliver to SELLER immediately available funds in the
amount of SEVENTY-FIVE THOUSAND AND NO/100 DOLLARS
($75,000.00)
(ii) deliver to SELLER the Note dated as of the Closing Date
and duly executed by BUYER; and
C. Within thirty (30) days after closing, SELLER will deliver
to BUYER a certified copy of resolutions of GUARANTOR authorizing
and ratifying the execution and delivery of this Agreement on behalf of
GUARANTOR.
9. GUARANTY. To induce BUYER to enter into this
Agreement and close the transaction, GUARANTOR guarantees the
punctual performance by SELLER of SELLER's obligations under this
Agreement and the Obligations of SELLER under Sections 8.10 and 8.11
of the Operating Agreement of BUYER, subject to the conditions set
forth therein, to transfer certain membership interests in BUYER to other
members in BUYER. GUARANTOR further agrees to defend,
indemnify and hold BUYER harmless of and from all claims and losses
sustained by BUYER as a consequence of SELLER's failure to transfer
the Vessel/Equipment to BUYER free and clear of all liens and
encumbrances.
10. BINDING EFFECT. This Agreement shall constitute
an agreement binding upon SELLER, BUYER and GUARANTOR and
their respective successors and assigns.
<PAGE>
11. SURVIVAL OF REPRESENTATIONS. The
provisions of this Agreement shall survive the consummation of the
transaction contemplated by this Agreement.
12. OTHER DOCUMENTS. The parties hereto agree that
each will execute and deliver any additional instruments, and take any
additional or confirmatory actions, that may be reasonably necessary or
desirable to effect the consummation of the transactions contemplated by
this Agreement.
13. ARBITRATION.
(a) Any controversy, claim, dispute or disagreement arising
out of, in connection with, or relating to this Agreement or its breach, the
transaction to which this Agreement pertains or an alleged tort relating
in any way to this Agreement or the transaction shall be settled by
binding arbitration in accordance with the Commercial Arbitration Rules
of the American Arbitration Association. The Expedited Procedures of
said rules shall apply in any dispute where the aggregate of all claims and
the aggregate of all counter-claims each is an amount less than $10,000.
Judgment upon any award rendered by the arbitrator in any such
arbitration may be entered in any Court having jurisdiction thereof. Any
demand for arbitration under this Agreement shall be made no later than
the date when any judicial action upon the same matter would be barred
by an applicable statute of limitations. The locale of any such arbitration
proceedings hereunder shall be in the city of Jackson, Mississippi, or
such other location as is mutually acceptable to all parties. All parties to
this Agreement specifically acknowledge and agree that this Agreement
evidences a "transaction involving commerce" under the Federal
Arbitration Act, and each party to this Agreement hereby waives and
relinquishes any right to claim otherwise. Notwithstanding anything
contained in the foregoing to the contrary, SELLER shall not be
obligated to arbitrate any dispute under or with respect to the Note.
(b) Neither anything contained in the preceding paragraph nor
the exercise of any right to arbitrate shall limit the right of any party to:
(1) enforce any preferred mortgage lien in a civil action in rem pursuant
to 46 U.S.C.A. 31325; (2) foreclose against any real or personal property
collateral by the exercise of the power of sale under a deed of trust,
mortgage, security deed, deed to secure debt, pledge or other security
agreement or instrument or under applicable law; (3) exercise any self-help
remedies such as set off or repossession; or (4) obtain provisional
or ancillary remedies such as replevin, injunctive relief, attachment, or
appointment of a receiver from a court having jurisdiction before, during,
or after the pendency of any arbitration proceeding. This arbitration
provision shall not be interpreted to require that any such remedies be
stayed, abated or otherwise suspended pending any arbitration or request
for arbitration. The exercise of a remedy shall not waive the right of
either party to resort to arbitration.
14. NO MODIFICATION. This Agreement sets forth the
entire agreement, understandings, representations and obligations among
the parties respecting the purchase and sale of the Vessel/Equipment, and
supersedes all prior or contemporaneous agreements, written or oral.
This Agreement shall not be modified or amended except by duly
executed written agreement of
<PAGE>
subsequent date, which document shall
expressly state that it is a modification or amendment hereof.
15. NOTICES. Any demand, notice or other
communication required hereunder shall be in writing signed by the party
and sent both by Federal Express or other overnight courier and by
facsimile transmission addressed to the respective party at its respective
address and facsimile number specified below, unless a different written
address is provided, by written notice, by one party to the other party,
viz.:
SELLER: Jubilation Lakeshore Inc.
c/o ALPHA HOSPITALITY CORPORATION
24th Floor
12 East 49th Street
New York, New York 10017
Telephone No.: (212) 750-3500
Facsimile No.: (212) 750-5171
Attention: Thomas W. Aro, President
With Copy To: Edward T. Savage
Parker, Duryee, Rosoff & Haft, P.C.
529 Fifth Avenue
New York, New York 10017
Telephone No.: (212) 599-0500
Facsimile No.:(212) 972-9487
BUYER: CASINO VENTURES, LLC
Belmont Plantation
3498 Highway 1 South
Wayside, Mississippi 38780
Telephone No.: (601) 332-2415
Facsimile No.:(601) 332-2241
Attention: Fernando J. Cuquet,Jr., Manager
With Copy To: Thomas E. Sharp, III
Vickers, Riis, Murray and Curran, L.L.C.
Eighth Floor
Regions Bank Building
106 St. Francis Street
Mobile, Alabama 36602
Telephone No.: (334) 432-9772
Facsimile No.: (334) 432-9781
Any written notice or demand given by any party to the other shall be
deemed given and effective
<PAGE>
on the business day after dispatched and
transmitted in accordance with this paragraph.
16. FACSIMILE COPIES. Copies of this Agreement or any
notice or other document required, contemplated or pertaining to this
Agreement, including the documents to be delivered at the closing, which
have been executed by either party to this Agreement and tendered to the
other party by facsimile transmission along with a representation that the
executed original is being tendered to the recipient, may be deemed by
the party to whom tendered duly executed and delivered originals of such
documents for all purposes. The party so transmitting a document by
facsimile shall promptly thereafter forward to the other party the original
hard copy of such document..
17. CONSTRUCTION. This Agreement shall be governed
by and construed in accordance with the laws of the State of Alabama.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on the dates set forth hereinbelow.
BUYER:
CASINO VENTURES, LLC
Dated: July 8, 1999
By: /s/Matthew B. Walker
Matthew B. Walker
Its General Manager
SELLER:
JUBILATION LAKESHORE INC.
Dated: July 8, 1999
By: /s/ Thomas W. Aro
Thomas W. Aro
Its President
<PAGE>
STATE OF MISSISSIPPI,
COUNTY OF HINDS.
I, the undersigned Notary Public in and for said County in said
State, hereby certify that Matthew B. Walker, whose name as General
Manager of CASINO VENTURES, L.L.C., is signed to the foregoing
instrument and who is known to me, acknowledged before me on this
day that, being informed of the contents of said instrument, he, in such
capacity and with full authority, executed the same voluntarily for and
as the act of said limited liability company.
Given under my hand and seal on this _____ day of July, 1999.
NOTARY PUBLIC
My commission expires:
STATE OF NEW YORK,
COUNTY OF NEW YORK.
I, the undersigned Notary Public in and for said County in said
State, hereby certify that Thomas W. Aro, whose name as President of
JUBILATION LAKESHORE INC., is signed to the foregoing instrument
and who is known to me, acknowledged before me on this day that, being
informed of the contents of said instrument, he, as such officer and with
full authority, executed the same voluntarily for and as the act of said
Corporation.
Given under my hand and seal on this _____ day of July, 1999.
NOTARY PUBLIC
My commission expires:
<PAGE>
EXHIBIT A
to
Asset Purchase Agreement
PROMISSORY NOTE
July 8, 1999 Amount: $1,350,000
FOR VALUE RECEIVED, CASINO VENTURES, LLC
("Maker"), a Mississippi limited liability company, hereby promises to
pay to the order of JUBILATION LAKESHORE INC. ("Payee"), the
principal sum of One Million Three Hundred Fifty Thousand Dollars
($1,350,000), at such place as the holder hereof may designate in writing,
on July 8, 2002, or on the date on which Payee's membership interest in
Maker is acquired pursuant to Section 8.9 of the Operating Agreement
of Maker, whichever shall first occur, with interest until the actual
payment date on the unpaid principal sum charged from the date hereof.
Interest shall be payable quarterly, on the first day of each
calendar quarter commencing September 1, 1999. Interest on the unpaid
principal balance shall be at an initial annual rate (the "Interest Rate")
equal to 8.75% and adjusted to equal 1% plus Prime Rate of interest as
published in The New York Times in its late edition under the heading
"Key Rates" in the "Yesterday" column on the first business day
following the date on which any change in the Prime Rate is reported,
provided that (I) if more than one Prime Rate is published or if a range
of Prime Rates is published, the Prime Rate shall be the average of the
highest and lowest rates so published, (ii) the Interest Rate shall not be
less than the rate referred to in 1274(d) of the Internal Revenue Code of
1986, as the same may be amended from time to time, and (iii) any
adjustment to the Interest Rate shall apply to all interest accruing until
another such adjustment is required.
This Note is the Promissory Note referred to in the Asset
Purchase Agreement (the "Agreement"), dated as of July 8, 1999,
between Maker and Payee. Capitalized terms used in the Agreement and
herein and not otherwise defined in this Note shall have the respective
meanings ascribed to them in the Agreement.
The following terms and provisions are applicable to this Note:
1. Prohibited Activities. Until final and full payment of this
Note, Maker shall not;
(a) make an assignment for the benefit of creditors; or
(b) apply to any tribunal for an appointment of a trustee or
receiver of any substantial portion of its assets, or
commence any proceedings under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of
debts, dissolution or any other insolvency or
liquidation law of any jurisdiction, or in the event
such proceedings
are commenced against it, indicate its approval, consent
or acquiescence
<PAGE>
to the same, or allow any order to be
entered appointing a trustee or receiver or
adjudicating it
bankrupt or insolvent, which order remains in effect for
60 days; or
(c) permit any order to be entered in any proceeding against
it directing its dissolution or split-up and allow
such order
to remain in effect for 60 days; or
(d) merge or consolidate with any corporation or other entity,
sell, lease, transfer or otherwise dispose (except for the
grant to Riverboat Investments, L.L.C., a mortgage and
security interest in Maker's vessel and equipment and of
a deed of trust on Maker's leasehold interest) of all or
any substantial part of its assets or business other
than in the
ordinary course of its business or purchase assets other
than in the ordinary course of business (including the
acquisition of any business or purchase of capital stock);
or
(e) purchase, redeem or cancel any of its membership
interests or other interest in Maker, except for the
membership interest owned by Payee; or
(f) declare a dividend or make any distribution in cash or in
property on or with respect to any membership interest or
other interest in Maker; or
(g) pay, give or lend, directly or indirectly, to any person,
including, but not limited to, any member, manager,
officer, or employee of Maker, any corporate funds to any
one person except for services actually rendered,
consideration given, or as a reimbursement for moneys
actually advanced; or
(h) pay in any fiscal year, directly or indirectly, any salary or
other compensation or provide perquisites or benefits to
any of the members, or persons serving on the board of
managers of Maker; or
(i) amend its Certificate of Formation or, except as
authorized by the Operating Agreement of Maker, revise
the capital of Maker, which amendment, change or
revision might materially affect the rights of Payee; or
(j) take, or allow to be taken, any action in violation of
Section 10.2(e) of the Operating Agreement of Maker; or
(k) default with respect to any obligation owed by Maker
under or with respect to any promissory note or other
agreement entered into between Maker and Riverboat
Investments, L.L.C.
2. Event of Default. Each of the following shall constitute
an Event of Default:
(a) any failure to pay when due any installment of interest or
principal on this Note; or
<PAGE>
(b) the breach or violation of any of the provisions of Section
1 of this Note; or
(c) any breach or default by Maker under or with respect to
that certain letter agreement dated June 18, 1999, between Maker and Payee.
If an Event of Default occurs, then interest shall accrue thereafter
at the Interest Rate plus 4%, and the unpaid principal of this Note and
interest thereon shall forthwith become due and payable without further
written demand.
3. Prepayment This Note may be prepaid in whole or in part
at any time without premium or penalty with interest to the date of
prepayment.
4. Miscellaneous.
(a) Whenever an attorney is used to obtain payment under, or
to otherwise enforce, this Note or to enforce, declare or
adjudicate any rights or obligations under this Note,
whether by suit or by other means whatsoever, the costs
and expenses thereof, including reasonable attorneys' fees
and expenses, shall be payable by Maker.
(b) Any demand, notice or other communication required or
allowed hereunder shall be in writing signed by the party
and sent both by Federal Express or other overnight
courier and by facsimile transmission addressed to the
respective party at its respective address and facsimile
number specified below, unless a different written
address is provided, by written notice, by one party to the
other party, viz.:
HOLDER: Jubilation Lakeshore Inc.
c/o ALPHA HOSPITALITY CORPORATION
24th Floor
12 East 49th Street
New York, New York 10017
Telephone No.: (212) 750-3500
Facsimile No.:(212) 750-5171
Attention: Thomas W. Aro,
President
With Copy To: Herbert F. Kozlov,
Esquire
Parker, Duryee, Rosoff & Haft, P.C.
529 Fifth Avenue
New York, New York 10017
Telephone No.: (212) 599-0500
Facsimile No.:(212) 972-9487
MAKER: CASINO VENTURES, LLC
Belmont Plantation
<PAGE>
3498 Highway 1 South
Wayside, Mississippi 38780
Telephone No.: (601) 332-2415
Facsimile No.:(601) 332-2241
Attention: Fernando J. Cuquet, Jr.,
Manager
With Copy To: Thomas E. Sharp, III
Vickers, Riis, Murray and Curran, L.L.C.
Eighth Floor
Regions Bank Building
106 St. Francis Street
Mobile, Alabama 36602
Telephone No.: (334) 432-9772
Facsimile No.:(334) 432-9781
Any written notice or demand given by any party to the
other shall be conclusively deemed given and effective on
the business day after dispatched and transmitted in
accordance with this paragraph. "Business Day" shall
mean any day other than a Saturday, Sunday or other
legal holiday on which banking institutions in the City
and State of New York are authorized or required to be
closed.
(c) If any payment on this Note becomes due and payable on
any day other than a Business Day, such payment date
shall be extended to the next succeeding Business Day.
(d) This Note (i) may not be changed, waived, discharged or
terminated except by an instrument in writing signed by
the party against whom enforcement of such change,
waiver, discharge or termination is sought, (ii) shall be
binding upon Maker and its successors and assigns, and
(iii) shall inure to the benefit of and be enforceable by
Payee and its successors and assigns.
(e) This Note shall be governed by and construed in
accordance with the internal laws of the State of New
York applicable to contracts executed and to be
performed wholly within such State, without giving effect
to the conflict or choice of laws rules or principles
thereof. Maker agrees that any dispute under or with
respect to this Note shall be decided by a Federal or State
court situated in the County and State of New York and
submits to the exclusive jurisdiction of such court, and
agrees not to raise any objection (on the basis of forum
non conveniens or otherwise) with respect to the
jurisdiction or venue of any such court. Maker hereby
expressly agrees to waive jury trial in any judicial
proceeding under or with respect to this Note or the
enforcement hereof. Maker further agrees that service of
process may be made upon it by, in lieu of any other
method permitted by law, delivery of process by both
first class mail and registered or certified mail, return
receipt requested, at its address set forth above, with a
copy so similarly mailed to its counsel, Vickers, Riis,
Murray and Curran, L.L.C., at its address set forth above.
(f) All parties now and hereafter liable with respect to this
Note, whether as maker, principal, surety, endorser or
otherwise, hereby waive presentment for payment,
demand, notice of nonpayment or dishonor, protest and
notice of protest to Maker or any other Person.
CASINO VENTURES, LLC
By: ___________________________
MATTHEW B. WALKER
General Manager
<PAGE>
Exhibit 99 (b)
OPERATING AGREEMENT
OF
CASINO VENTURES, LLC
THIS OPERATING AGREEMENT (the "Agreement") of
CASINO VENTURES, LLC (the "Company"), a Mississippi limited
liability company, is entered into as of the 8th day of July, 1999, by and
among MRV, L.L.C. ("MRV"), a Mississippi limited liability company,
MID-AMERICA INVESTMENTS, INC. ("Mid-America"), a
Mississippi corporation, JUBILATION LAKESHORE INC.
("Jubilation"), a Mississippi corporation, and RIVERBOAT
INVESTMENTS, L.L.C. ("Riverboat"), an Alabama limited liability
company (MRV, Mid-America, Jubilation and Riverboat each an "Initial
Member" and, collectively, the "Initial Members").
The Initial Members, any permitted successor, assignee or
transferee of any of them, and any other persons or entities who or that
shall in the future execute and deliver this Agreement pursuant to the
provisions hereof shall hereinafter be referred to individually as a
"Member" and collectively as the "Members."
The Members desire hereby to establish the terms of the operation
of the Company in accordance with the provisions of the Mississippi
Limited Liability Company Act (the "Act") and pursuant to the undated
Certificate of Formation of the Company filed with the Secretary of State
of the State of Mississippi on June 9, 1999.
ARTICLE 1
PRINCIPAL PLACE OF BUSINESS
The registered office of the Company (the "Registered Office")
in Mississippi will be located at 3498 Highway 1 South, Wayside,
Mississippi 38780, and the principal business office of the Company (the
"Principal Business Office") will be located at 3498 Highway 1 South,
Wayside, Mississippi 38780, with such other offices and places of
business as may be agreed upon by the Managers (as hereinafter defined)
from time to time. The Registered Agent at the Registered Office shall
be Fernando J. Cuquet or such other person as may be determined from
time to time by the Managers.
ARTICLE 2
PURPOSE OF BUSINESS
The Company will engage in the acquisition, ownership and
operation of a casino vessel (the "Vessel"). Subject to the provisions of
Section 10.2(e)(v) of this Agreement, the Company may also engage in
any other lawful activity for which a limited liability company may be
formed under the
<PAGE>
laws of the State of Mississippi, if approved by both (a)
the Managers and (b) Members holding at least sixty-six percent (66%)
of the Membership Interests of the Company.
ARTICLE 3
ACCOUNTING AND REPORTS FOR THE COMPANY
3.1 Records and Accounting. The books and records of the
Company shall be kept, and the financial position and the results of its
operations recorded, in accordance with the accounting methods selected
by the Managers, from time to time, and if not so selected, the books and
records shall be maintained in accordance with generally accepted
accounting principles consistently applied. The books and records of the
Company shall reflect all the Company's transactions and shall be
appropriate and adequate for the Company's business. The fiscal year of
the Company for financial reporting and for federal income tax purposes
shall be the calendar year.
3.2 Access to Accounting Records. All books and records
of the Company shall be maintained at the Principal Business Office or
at any other office of the Company agreed to by the Managers. Each
Member, and its duly authorized representative, shall have access to all
books and records at the offices of the Company and the right to inspect
and copy them at reasonable times. Notwithstanding the foregoing, each
Member shall have the inspection rights granted by, and the Company
shall maintain at its registered office the records listed in, Section 79-29-107
of the Mississippi Code of 1972, as amended.
3.3 Outside Consultants. Outside accountants, attorneys
and other consultants shall be selected by the Managers pursuant to
Section 10.1(a), but may be replaced or terminated by a vote of Members
holding a majority of the Membership Interests of the Company.
3.4 Reports.
(a) Delivery. The Company shall use its best efforts
to, within ninety (90) days after the end of each calendar year, send to
each person who was a Member at any time during the year then ended
such tax information as shall be necessary for inclusion by such Member
in its federal income tax return of all items attributable to the Company.
(b) Balance Sheet. Within ninety (90) days after the
end of each calendar year, the Company will use its best efforts to send
to each person who was a Member at any time during the year then ended
the balance sheet of the Company as of the end of such year and
statements of operations and changes in Members' capital contributions,
prepared in accordance with the accounting method selected pursuant to
Section 3.1 hereof. The information shall also set forth distributions to
the Members for the period covered thereby and the amount of any
distributions released from reserves established in prior periods.
<PAGE>
3.5 Tax Matters Partner The Members holding a majority
of the Membership Interests shall, from time to time, designate a
Member to be the "tax matters partner" of the Company for purposes of
Subchapter C of Chapter 63 of Subtitle F of the Internal Revenue Code
of 1986, as amended, (IRC 6221-6233). Such "tax matters partner"
shall have the authority to exercise all functions provided for in the
Internal Revenue Code, including (to the extent permitted by the Internal
Revenue Code) the authority to delegate the functions of "tax matters
partner" to any other Member. The "tax matters partner" shall be
reimbursed for all reasonable expenses actually incurred as a result of its
duties as "tax matters partner." The initial "Tax Matters Partner" shall
be MRV, L.L.C.
ARTICLE 4
MEMBERSHIP INTERESTS; CAPITAL CONTRIBUTIONS;
LOANS
4.1 Membership Interests. The interest of each Member
shall be represented by membership interests (the "Membership
Interest"). Each such Member shall contribute certain assets, money,
services or other obligation to contribute cash or property or to perform
services in exchange for their respective initial Membership Interests, the
sufficiency of which contribution the Members do hereby acknowledge.
In return for such contribution, each Initial Member shall initially own
the percentage interest set forth below:
Member Membership Interest
MRV, L.L.C. 1.00%
Mid-America Investments, Inc. 1.00%
Jubilation Lakeshore Inc. 93.00%
Riverboat Investments, L.L.C. 5.00%
4.2 Certificates for Membership Interests. The
Membership Interests shall not be represented by any certificate of
membership or other evidence of membership other than the Certificate
of Formation and this Agreement.
4.3 Capital Contributions. The Initial Members have each
originally contributed capital to form the Company. Each of the Initial
Members hereby agrees that, subject to any required prior written
approval of Jubilation pursuant to Section 10.2(e), it is anticipated and
intended among them that subsequent investors will be allowed to
purchase from the Company Membership Interests or options to acquire
Membership Interests. Notwithstanding the foregoing, it is understood
and agreed by each of the Initial Members that, by virtue of the issuance
of Membership Interests to such subsequent investors, Jubilation's
interest in the Company may not be diluted below a twenty-five percent
(25%) Membership Interest, nor (except as provided in the last paragraph
of this Section 4.3) may the interest of Riverboat in the Company be
diluted below a five percent (5%) Membership Interest. Subject to the
limitations on dilution expressed in the preceding sentence, (i) prior to the
<PAGE>
transfer of the Membership Interest to MRV and to Mid-America as
described in Section 8.10, the interest of MRV and and Mid-America
shall not be diluted below one percent (1%), each, and the issuance by
the Company of Membership Interests to subsequent investors shall
dilute the Membership Interest held by Jubilation and its assignees, only,
and (ii) after the transfer by Jubilation of the Membership Interest
described in and pursuant to Section 8.10, the Membership Interest of
Mid-America and MRV shall not be diluted below five percent (5%),
each, and, subject to such 5% floor, the issuance by the Company of
Membership Interests to subsequent investors shall dilute,
proportionately, the Membership Interests of MRV and Mid-America and
their assignees, only. Subject to Sections 8.6 and 10.2(e) hereof, the
terms upon which the aforementioned additional Membership Interests
may be issued by the Company to subsequent investors and the status of
such subsequent investors as additional Members shall be determined by
the Managers. Subject to Section 10.2(e) hereof, the Members agree to
promptly execute such amendments to this Agreement as the Managers
deem appropriate to reflect the terms upon which such Membership
Interests and options to acquire the same have been or will be issued by
the Company. No additional capital contributions from the Members
shall be required without the unanimous written consent of the Members.
Notwithstanding anything contained herein to the contrary, if, on
or before four (4) months after the date of this Agreement, at least
$650,000 has not been lent or advanced by or on behalf of Riverboat to
the Company, then the Membership Interest of Riverboat shall be
reduced to an amount equal to five per cent (5%) times a fraction, the
numerator of which is the aggregate amount that has been lent and
advanced to the Company by Riverboat and the denominator of which is
six hundred and fifty thousand dollars ($650,000). Subject to the
provisions of Sections 8.10 and 8.11, the Membership Interest of
Jubilation shall be increased by the amount by which Riverboat's
Membership Interest is reduced.
4.4 Capital Accounts. The capital account of each Initial
Member shall be as set forth in Schedule I attached hereto, and the
capital account of each new or subsequent Member shall initially be set
as determined by the Accountants or by unanimous consent of the
Members, and, shall, from time to time, be:
(a) increased by:
(i) any additional capital contributions of
such Member; and
(ii) such Member's share of profits of the
Company, determined pursuant to Article 6, during each fiscal year,
whether or not distributed; and
(iii) the agreed fair market value of any
property (less liabilities assumed by the Company) contributed by such
Member; and
<PAGE>
(b) decreased by:
(i) all distributions to or for the account of
such Member, whether from the capital or income of the Company (other
than payments received by a Member in payment of any loan or for any
services rendered or goods provided); and
(ii) such Member's share of losses of the
Company determined during each fiscal year pursuant to Article 6; and
(iii) the agreed fair market value of any
property (less liabilities assumed by such Member) distributed by the
Company to such Member.
The foregoing provisions are intended to comply with the provisions
contained in Treasury Regulations 1.704-1(b)(2)(iv) under the Internal
Revenue Code of 1986, as amended (the "Internal Revenue Code"), and
capital accounts shall be maintained in accordance with such provisions.
4.5 Withdrawal and Return of Contributions. A Member
does not have the right or power to withdraw from the Company as a
Member, nor is any Member entitled to a return of any part of its capital
contribution or to be paid interest on either its capital account or capital
contribution.
4.6 Effect of Assignment of Membership Interest or
Economic Interest. Any assignment of a Membership Interest or
Economic Interest in compliance with the provisions of this Agreement
shall include an assignment of the capital account attendant to, or
corresponding with, such Membership Interest or Economic Interest and
the right to distributions, and the return of capital, associated with such
Membership Interest or Economic Interest.
ARTICLE 5
DISTRIBUTIONS
Subject to Section 10.2(e) hereof, the Managers may determine
the amount of cash available for distributions and may distribute such
amount thereof as they deem appropriate. Subject to any provision for
non-proportionate distributions to subsequent investors in accordance
with the terms under which Membership Interests or options to acquire
Membership Interests are issued to subsequent investors by the Company
as contemplated by Section 4.3, all distributions shall be made pro rata
to the Members in accordance with their respective Membership
Interests in the Company. Any declared but unpaid distribution will
constitute a liability of the Company to the applicable Member. Subject
to Section 10.2(e) hereof, the Managers may also cause property of the
Company other than cash to be distributed to the Members or Economic
Interest Owners (as hereinafter defined), which distributions must be
made in accordance with their respective Membership Interests in the
Company, and may be made subject to existing liabilities and
obligations. Immediately prior to any such distribution of property other
than cash, the capital accounts of the Members and
<PAGE>
Economic Interest
Owners shall be adjusted as provided in Treasury Regulation
1.704-1(b)(2)(iv)(f). However, no distribution shall be declared and paid that
would violate Section 79-29-605 of the Mississippi Code of 1972, as
amended.
The Company is specifically authorized, at its discretion, to
withhold from distributions to each Member and, if any, Economic
Interest Owners, an amount equal to such Member's and (as applicable)
Economic Interest Owner's pro rata share (in accordance with their
respective Membership Interests or Economic Interests) of five percent
(5%) of the net profits of the Company for each fiscal year and to remit
such withheld amount to the Mississippi State Tax Commission, in
accordance with the provisions of Section 27-7-25 of the Mississippi
Code of 1972, as amended, which shall be deemed to be payments of
estimated Mississippi Income Tax of the Members and (as applicable)
Economic Interest Owners and shall be allocated to each Member's and
(as applicable) Economic Interest Owner's taxpayer account set up and
maintained by the Mississippi State Tax Commission based on the
manner or method such payments would otherwise have been distributed
to the Members and (as applicable) Economic Interest Owners.
ARTICLE 6
PROFIT OR LOSSES
6.1 Allocation. Except as may be required by Section 704(c) of
the Internal Revenue Code and Treasury Regulation 1.704-1(b)(2)(iv)(f),
and subject to any provision for special allocations to subsequent
investors in accordance with the terms under which Membership Interests
or options to acquire Membership Interests are issued to subsequent
investors by the Company as contemplated by Section 4.3 hereof, the net
profits or the net losses (and any separately stated items, including
without limitation, depreciation, amortization and tax credits) of the
Company shall be allocated to the Members and (as applicable)
Economic Interest Owners, pro rata in accordance with their
Membership Interests or Economic Interests.
Subject to any provision for special allocations to
subsequent investors in accordance with the terms under which
Membership Interests or options to acquire Membership interests are
issued to subsequent investors by the Company as contemplated by
Sections 4.3 hereof, all items of income, gain, loss, deduction, and credit
available to any Membership Interest or Economic Interest that may
have been transferred shall be allocated between the transferor and the
transferee based on the portion of the calendar year during which each
was recognized as owning that Membership Interest or Economic
Interest, without regard to the results of Company operations during any
particular portion of that calendar year and without regard to whether
cash distributions were made to the transferor or the transferee during
that calendar year; provided, however, that this allocation must be made
in accordance with a method permissible under Section 706 of the
Internal Revenue Code and the regulations thereunder.
<PAGE>
6.2 Qualified Income Offset and Minimum Gain
Chargeback Provisions
(a) Regulations. The Code and Treasury Regulations
contain certain economic sharing requirements in order for income tax
allocations among the Members, and, if any, Economic Interest Owners
to be respected for tax purposes. In general, such requirements are
designed to eliminate the allocation of tax losses that have no economic
effect to the Members and Economic Interest Owners, if any. In order
to comply with such requirements, this Section 6.2 requires that the
qualified income offset and minimum gain chargeback provisions
provided for in Treas. Reg. Sections 1.704-1 and 1.704-2 be followed, as
presently in effect and as hereinafter amended. Such provisions are not
expected to alter the allocations described in Section 6.1, except in
unusual and unforeseen circumstances.
(b) Special Allowances. If a special allocation of an
item of net profit or net loss is made to a Member or Economic Interest
Owner under this Section 6.2, future allocations of profit and loss shall
be adjusted to take into account such special allocations.
ARTICLE 7
ADMINISTRATIVE PROVISIONS
7.1 Voting. The Company shall hold at least once each
calendar year a meeting of Members; any such meeting may be held by
conference telephone or similar communication equipment as
contemplated by Section 7.5. Each meeting of Members will be upon no
more than sixty (60) and not less than ten (10) days' prior written notice,
and any special meeting shall be in accordance with Section 7.2 hereof.
Any Member may vote at any annual or special meeting either in person
or by proxy. Notice of any meeting may be waived in writing, either
before or after the meeting. The presence of a Member at any annual or
special meeting shall constitute a waiver of notice, unless a Member's
presence at such meeting is solely for the purpose of objecting to the
form of notice or the holding of a meeting without proper notice. Unless
a different vote is specifically required hereunder, any vote of the
Members or any statement (or similar language) that an action shall be
"approved by the Members," shall require the vote of Members holding
at least a majority of the Membership Interests. Any vote of Members
hereunder shall be by Membership Interest and not by heads.
7.2 Special Meetings. A special meeting of the Members
may be called at any time by Members holding at least twenty five
percent (25%) of the Membership Interests of the Company; special
meetings must be called by written notice given at least five (5) business
days in advance of such meeting, and such notice must state the matters
to be presented at such meeting.
7.3 Place of Meetings and Quorum. All meetings shall be
held at the Principal Business Office of the Company, unless the
Members agree otherwise. The conduct of any business
<PAGE>
at a meeting
shall require the presence of at least a majority of the Membership
Interests, by percentages not by head.
7.4 Notices. Any demand, notice or other
communication required hereunder shall be in writing signed by the party
and sent both by Federal Express or other overnight courier and by
facsimile transmission addressed to the respective party at its respective
address and facsimile number specified below, unless a different written
address is provided, by written notice, by one party to the other party,
viz.:
LAKESHORE: JUBILATION LAKESHORE INC.
c/o Alpha Hospitality Corporation
24th Floor
12 East 49th Street
New York, New York 10017
Telephone No.: (212) 750-3500
Facsimile No.: (212) 750-5171
Attention: Thomas W. Aro, President
With Copy To: Herbert F. Kozlov, Esquire
Parker, Duryee, Rosoff & Haft, P.C.
529 Fifth Avenue
New York, New York 10017
Telephone No.: (212) 599-0500
Facsimile No.: (212) 972-9487
MID-AMERICA: MID-AMERICA INVESTMENTS, INC.
Belmont Plantation
3498 Highway 1 South
Wayside, Mississippi 38780
Telephone No.: (601) 332-2415
Facsimile No.: (601) 332-2241
Attention: Fernando J. Cuquet, Jr.,
President
With Copy To: Thomas E. Sharp, III
Vickers, Riis, Murray and Curran, L.L.C.
Eighth Floor
Regions Bank Building
106 St. Francis Street
Mobile, Alabama 36602
Telephone No.: (334) 432-9772
Facsimile No.: (334) 432-9781
MRV: MRV, L.L.C.
<PAGE>
305 State Street
Mobile, Alabama 36603
Telephone No.: (334) 438-3596
Facsimile No.: (334) 438-3597
Attention: Matthew B. Walker,
Manager
With Copy To: Thomas E. Sharp, III
Vickers, Riis, Murray and Curran, L.L.C.
(Address and Telephone/Facsimile
Nos. specified above)
RIVERBOAT: RIVERBOAT INVESTMENTS,
L.L.C.
1558 South Beltline Highway
Mobile, Alabama 36693
Telephone No.: (334) 666-7204,
Ext. 225
Facsimile No.: (334) 661-6209
With Copy To: Thomas E. Sharp, III
Vickers, Riis, Murray and Curran, L.L.C.
(Address and Telephone/Facsimile
Nos. specified above)
Any written notice or demand given by any party to the other shall be
conclusively deemed given and effective on the business day after
dispatched and transmitted in accordance with this paragraph.
7.5 Action by Written Consent or Telephone Conference.
Any action permitted or required by the Act, the Certificate of Formation
or this Agreement to be taken at a meeting of the Members may be taken
without a meeting if a consent in writing, setting forth the action to be
taken, is signed (on a single page or multiple counterparts) by all the
Members. Such consent shall have the same force and effect as a
unanimous vote at a meeting and may be stated as such in any document
or instrument filed with the Secretary of State of Mississippi, and the
execution of such consent shall constitute attendance or presence in
person at a meeting of the Members. Subject to the requirements and
restrictions of the Act, the Certificate of Formation and this Agreement,
Members may participate in and hold a meeting of the Members by
means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each
other, and participating in such meeting shall constitute attendance and
presence in person at such meeting, except where a person participates
in the meeting for the express purpose of objecting to the transaction of
any business on the ground that the meeting is not lawfully called or
convened.
<PAGE>
ARTICLE 8
RIGHTS TO ACQUIRE AND
RESTRICTIONS ON TRANSFERS OF INTERESTS
8.1 General.
(a) Restriction on Sale. Except as otherwise
specifically provided herein, a Member shall not have the right to sell,
assign, pledge, hypothecate, transfer, exchange or otherwise transfer for
consideration, or by gift, bequeath, or otherwise to transfer for no
consideration (whether or not by operation of law, except in the case of
bankruptcy) (collectively, "sell" or "sells"), all or any part of its
Membership Interest or any Economic Interest.
(b) Definitions:
(i) An "Economic Interest" shall mean an
Economic Interest Owner's share of the Company's net profits, net losses
and/or distributions of the Company's assets pursuant to this Agreement
and the Act, but shall not include any right to participate in the
management or affairs of the Company, including the right to vote on,
consent to or otherwise participate in any decision of the Members or,
except as expressly herein provided to the contrary, any right to sell or
purchase, or to participate in the sale or purchase of, any Membership
Interest (or any portion thereof) as contemplated by this Article 8.
(ii) An "Economic Interest Owner" shall mean
the owner of an Economic Interest who is not a Member. All provisions
of this Agreement applicable to Members relative to sharing of profits,
losses, capital accounts and distributions (but not with respect to any
right to participate in the management and affairs of the Company,
including the right to vote on, or consent to or otherwise participate in
any decision of the Members or, except as expressly herein provided to
the contrary, any right to sell or purchase, or to participate in the sale or
purchase of any Membership Interest (or any portion thereof) as
contemplated by this Article 8) shall also apply to Economic Interest
Owners.
8.2 Right of First Refusal.
(a) Third Party Purchaser. If any Member or
Economic Interest Owner desires to sell all or any portion of its
Membership Interest or Economic Interest (the Membership Interest or
Economic Interest, or portion thereof, proposed to be sold being
hereinafter referred to as the "Company Interest") (any such Member or
Economic Interest Owner being hereinafter referred to as an "Offering
Member") to a third party purchaser, such Offering Member shall obtain
from such third party purchaser a bona fide written offer to purchase
such Company Interest, stating the terms and conditions upon which the
purchase is to be made and the consideration offered therefor (the "Third
Party Offer"). Promptly upon receipt of such Third Party Offer and prior
to the acceptance thereof, the Offering Member shall give written notice
thereof to the Company and to each of the Members (exclusive of the
Offering Member). Such notice (the "Offering Notice") shall contain a
<PAGE>
detailed description of the Third Party Offer, including, but not limited
to, the name and address of the offeror and the price at which, and the
terms and conditions upon which, such Third Party Offer was made, and
shall attach a copy of the Third Party Offer. The Offering Notice shall
be deemed to be a firm, non-withdrawable offer by the Offering Member
to sell the Company Interest to the Company and the other Members
(which shall not include any Economic Interest Owner), who shall have
the following option to accept such offer:
(i) The Company shall have the right to elect,
by written notice (a "Company Notice")
given to the Offering Member and to
each of the other Members on or before
the twentieth (20th) day after receipt of
the Offering Notice, to purchase all or a
portion of the Company Interest at the
price, and upon the terms and conditions,
set forth in the Third Party Offer.
(ii) If the Company elects (which election
shall be made upon, but only upon, the
approval of Members holding a majority
of all Membership Interests exclusive of
the Membership Interests held by the
Offering Member or by any Economic
Interest Owner) within such twenty-day
period to purchase all of the Company
Interest, a closing of the purchase by the
Company of all of the Company Interest
shall be held on or before the fortieth
(40th) day after the Company's receipt of
the Offering Notice.
(iii) If, within the twenty-day period set forth
in clause (i) above, the Company does not
elect to so purchase all of the Company
Interest, the other Members shall
thereafter have the right to elect, by
written notice given to the Offering
Member (each an "Acceptance Notice")
on or before the fortieth (40th) day after
receipt of the Offering Notice, to purchase
all or a portion of the Company Interest
that the Company has not elected to
purchase, at the price, and upon the terms
and conditions, set forth in the Third Party
Offer.
(iv) If Acceptance Notices shall have been
received by the Offering Member from
the other Members within the applicable
specified time period to purchase all of
such Company Interest that the Company
has not elected to purchase as provided
above, a closing of the purchase of the
Company Interest by, if applicable, the
Company and other Members who have
given timely Acceptance Notices shall be
held on or before the sixtieth (60th) day
following the receipt of the Offering
Notice. If the Company and such other
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Members collectively have given a
Company Notice and Acceptance Notices
electing to purchase more than one
hundred percent (100%) of the Company
Interest, then at such closing (1) the
Company shall purchase the full portion
of the Company Interest, if any, it has
elected to purchase, and (2) the remaining
portion of the Company Interest shall be
purchased by the Members having given
Acceptance Notices, with such remaining
portion allocated among them based upon
the ratio that the portion of the Company
Interest elected to be purchased by each
such Member bears to the total portion of
the Company Interest elected to be
purchased by all such Members.
(v) If, within the time periods set forth above
in this Section 8.2, the Offering Member
has not received a Company Notice and/or
Acceptance Notices together reflecting an
election to purchase all of the Company
Interest, then no portion of the Company
Interest may be purchased by the
Company or the other Members, and the
Offering Member may thereafter (subject
to Section 8.8) transfer all of the
Company Interest to the purchaser named
in the Third Party Offer within forty (40)
days after the expiration of the time
period in which a Member could give an
Acceptance Notice; provided, however,
that prior to the consummation of the sale
to such third party (A) such purchaser has
complied with Section 8.2(c) hereof and
(B) the transfer is made at the price, and
in accordance with the terms and
conditions, as set forth in the Offering
Notice, and the Offering Member is able
to certify, and does certify, to the other
parties hereto that the transfer of the
Company Interest was made to such
purchaser at such price and upon such
terms and conditions.
(b) Donees. Any Member (but not an Economic
Interest Owner) may transfer all or any portion of its Membership
Interest (without regard to Sections 8.1 and 8.2(a)) to a donee (a
"donee") provided such complies with Section 8.2(c) and further
provided that such is an Affiliate of such Member. For purposes of this
Agreement, "Affiliate" of any Member shall mean a person or entity that
controls, is controlled by or is under common control with such Member
(for this purpose, a person or entity that has forty percent (40%) or more
equity interest or voting control, directly or indirectly, in another person
or entity shall be conclusively deemed to be in control), any officer,
director, manager or general partner of such Member and any parent,
child or grandchild or spouse of such Member or a trust created for their
benefit.
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(c) Delivery of Agreement. In the event of the
purchase of an Offering Member's Company Interest by a third party
purchaser or the transfer of any Membership Interest to a donee as
contemplated by Section 8.2(b) above, and as a condition to recognizing
the effectiveness and binding nature of any such transfer and substitution
of a new Member, the proposed purchaser or donee (either, a "Proposed
Transferee"), as the case may be, shall be required to execute and deliver
to the Company an assignment and assumption agreement, in such form
and substance as the Company may reasonably request, pursuant to
which such Proposed Transferee will agree to be bound by the terms of
this Agreement (as if may theretofore have been amended, supplemented,
modified or otherwise changed) as a Member and to be (to the extent of
the Membership Interest being acquired) substituted herein in place of
the Member from which such Membership Interest is being acquired, and
the Member transferring such Membership Interest and the Proposed
Transferee shall execute, acknowledge and/or deliver such other
instruments of transfer, assignment and assumption, and such certificates,
representations and documents, and perform such other acts, as the
Company may reasonably request and as may be necessary or appropriate
to:
(i) constitute such Proposed Transferee as a
Member;
(ii) confirm that the Proposed Transferee has
accepted, assumed and agreed to be subject and bound by all of the
terms, obligations and conditions of this Agreement, as the same may
have been further amended (whether such person is to be admitted as a
new Member or will merely be an Economic Interest Owner);
(iii) preserve the Company after the completion
of such sale, transfer, assignment or substitution under the laws of each
jurisdiction in which the Company is formed, qualified, organized or
does business;
(iv) maintain the status of the Company as a
limited liability company under the Act and as a partnership for federal
tax purposes;
(v) assure compliance with any applicable state
and federal laws, including securities laws and regulations; and
(vi) guarantee or execute promissory notes with
respect to obligations of the Company consistent with such obligations
of the remaining Members.
(d) Effective Date. Any sale of a Membership Interest
or admission of a Member in compliance with this Article 8 shall be
deemed effective as of the last day of the calendar month in which the
Proposed Transferee fully complies with Section 8.2(c). All costs
incurred by the Company as a result of any sale or transfer of a
Membership Interest, including the Company's reasonable legal fees,
shall be paid by the Member transferring such Membership Interest.
Each Member and Economic Interest Owner hereby indemnifies the
Company and all other Members against any and all loss, damage or
expense (including, without limitation, tax liabilities or loss of
<PAGE>
tax benefits) arising directly or indirectly as a result of any transfer or
purported transfer in violation of this Article 8 or any other provision of
this Agreement.
8.3 Transferee Not Member in Absence of Consent.
(a) Lack of Consent. Except as herein otherwise
provided, without approval of Members holding a majority of the
Membership Interests (excluding a Member or Economic Interest Owner
who is disposing of its Membership Interest or Economic Interest), the
proposed sale or transfer of any Membership Interest will result in the
transferee or assignee thereof, unless already a Member immediately
prior to the sale or transfer, owning no more than an Economic Interest,
and such transferee or assignee shall have no right to become a Member.
No transfer of Economic Interest or any other transfer that has not been
approved by the requisite consent of the Members shall be effective
unless and until written notice (including the name and address of the
proposed transferee or assignee and the date of such transfer) has been
provided to the Company and the non-transferring Member(s).
Notwithstanding anything contained herein to the contrary, each of the
Members shall be deemed to have approved (i) any transfer of a
Membership Interest to an Affiliate as contemplated by Section 8.2(c)
above and such Affiliate as a Member and (ii) (unless the Company
and/or other Members have given a Company Notice and/or Acceptances
Notices reflecting an election to purchase all of the Company Interest
being offered by an Offering Member as contemplated by Section 8.2(a)
above) any transfer of a Company Interest to a third party purchaser as
contemplated by Section 8.2(a) above.
(b) No Waiver. The failure by any Member to
exercise a right of first refusal shall not (except as herein expressly
provided) be deemed as the consent to admission of the transferee as a
Member, nor shall any such failure be deemed a waiver of any future
right of first refusal to which such Member may become entitled.
8.4 Transfers to Members. Excluding the right of MRV and
Mid-America to each acquire Membership Interests from Jubilation as
provided in Sections 8.10 and 8.11 hereof, a Member may sell or transfer
its interest to another Member (by exercise of a right of first refusal or
otherwise) only after compliance with the applicable provisions of this
Article 8, and upon compliance with such provisions and in such event,
no consent of the remaining Members shall be required to effect such
transfer.
8.5 Exceptions to Transferability Restrictions.
Notwithstanding anything to the contrary in this Article 8 or otherwise
in this Agreement, except for Section 8.6 hereof, a Member shall be
entitled to pledge or hypothecate its Membership Interest: (i) to secure
any loan from the Company to such Member, subject to Section 10.2(e)
and to the approval by Members holding a majority of the Membership
Interests; (ii) to secure any loan from any person to such Member so long
as all of the proceeds from such loan are used to acquire Membership
Interests; or (iii) to secure any guaranty by such Member of any
obligations of the Company. Nothing contained herein shall be deemed
to authorize or permit any Member to breach or violate any promise or
covenant of such Member not to grant any lien on, or to otherwise
encumber, its Membership Interest.
<PAGE>
8.6 Subject to Gaming Act and Regulations.
Notwithstanding anything to the contrary in this Article 8 or otherwise
in this Agreement, all transfers or assignments of any Membership
Interest or Economic Interests shall be subject to the Mississippi Gaming
Control Act and the rules and regulations of the Mississippi Gaming
Commission and all amendments thereto.
8.7. Drag-along and Tag-along Requirements.
(a) Drag-Along. If at any time any Member or Members
holding more than 66.66% of the Membership Interests (such Member
or Members, the "Two-Thirds Majority Members") desire to sell, in a
transaction or series of transactions, all of their Membership Interests to
an unrelated third-party purchaser, and such third-party purchaser
requires, as a condition of such sale, that it acquire all of the Membership
Interests, then the remaining Members (the "Drag-Along Members") and
the Economic Interest Owners shall be required to sell all of their
Membership Interests and Economic Interests to such third-party
purchaser at the same price and on the same terms and conditions as
those offered to the Two-Thirds Majority Members. Any sale of
Membership Interests made pursuant to this Section 8.7(a) shall not be
subject to the provisions of Section 8.2 of this Agreement.
Notwithstanding anything contained herein to the contrary, Jubilation
shall not be bound by the requirements of this Section 8.7(a) unless and
until the Note (as hereinafter defined) has been fully and finally
discharged and satisfied.
(b) Majority Interest Tag-Along. If at any time any Member
or Members holding in excess of 50% of the Membership Interests (such
Member or Members, the "Majority Members") desire to sell, in a
transaction or series of transactions to an unrelated third-party purchaser,
all of their Membership Interests or such portion of their Membership
Interests as would provide such third-party purchaser with an excess of
50% of the Membership Interests, the Majority Members shall not
consummate such purchase and sale transaction unless such third-party
purchaser also offers to purchase all of the Membership Interests owned
by the other Members (but not Economic Interest Owners) who elect, in
writing within 15 days after written notice of such proposed sale, to
participate in such sale (the "Minority Tag-Along Members"), at the
same price and on the same terms and conditions as those offered to the
Majority Members. Any sale of Membership Interests made pursuant to
this Section 8.7(b) shall not be subject to the provisions of Section 8.2(a)
hereof. If the proposed purchaser will not purchase all of the
Membership Interests that the Majority Members and the Minority Tag-Along
Members desire to sell pursuant to this subsection, then the
Membership Interests to be sold to the proposed purchaser shall be
allocated among such Members based upon the ratio that the Membership
Interest that each such Member desires to sell to the proposed purchaser
bears to the total amount of Membership Interests that all of the Members
(including the Majority Members) have requested that the proposed
purchaser purchase.
8.8 Universal Tag-Along. If any Member (a "Selling
Member") proposes to sell any portion of its Membership Interest, such
Selling Member shall give written notice (a "Proposed Sale Notice")
thereof to each of the other Members (but not Economic Interest Owners)
of such intention, which notice shall specify (i) the Membership Interest
the Selling Member proposes to sell (the "Proposed Sale Interest") and
(ii) the terms and conditions upon which the Selling Member proposes
<PAGE>
to sell such Interest (such terms and conditions, collectively, the
"Proposed Sale Terms"). Within twenty (20) days following its receipt
of a Proposed Sale Notice, each other Member desiring to sell any of its
Membership Interest upon the Proposed Sale Terms shall give written
notice (the "Tag Along Notice") to such effect to the Selling Member and
each of the other Members, which notice shall specify the Membership
Interest such other Member proposes to sell upon the Proposed Sale
Terms (any such other Member giving a Tag Along Notice being
hereinafter referred to as a "Tag Along Member" and the Membership
Interest such Member has so given notice of its proposal to sell being
hereinafter referred to as such Member's "Tag Along Membership
Interest"). The Selling Member shall not consummate any sale of any of
its Membership Interest pursuant to or in accordance with any Proposed
Sale Terms unless (1) it shall have given each Tag Along Member at
least ten (10) days prior written notice as to the time and place of the
closing for such sale and (2) at the closing of such sale each Tag Along
Member has an opportunity to sell, upon the Proposed Sale Terms, at
least the Tag Along Fraction of such Member's Tag Along Membership
Interest, where the Tag Along Fraction is a fraction, the numerator of
which is the Membership Interest then being sold by the Selling Member
and the denominator of which is the Membership Interest represented by
the Proposed Sale Membership Interest. Notwithstanding anything
contained herein to the contrary, (I) no Member shall be entitled to give,
with respect to any proposed sale of a Membership Interest, both a notice
to purchase all or a portion of such Membership Interest (as contemplated
by Section 8.2(a) hereof) and a notice to sell, in conjunction with such
proposed sale, any portion of such Member's Membership Interest (as
contemplated by this Section 8.8) and (II) no Tag Along Member shall
be entitled to sell any portion of its Membership Interest if the Selling
Member is selling its Proposed Sale Interest to the Company and/or other
Members pursuant to the exercise of rights of first refusal as
contemplated by Section 8.2(a) hereof.
8.9 Buy-Sell Offer.
(a) Deadlock Notice. If any Member or group of Members,
on account of any deadlock among the Members or for any other
purpose, shall so desire, such Member or Members (the "Proffering
Member," which shall refer to such Members collectively if more than
one Member is so acting) may give a notice (the "Deadlock Notice") to
each of the other Members (each, a "Responding Member") setting forth
(i) the Membership Interest held by the Proffering Member, (ii) price,
specified at a price per one percent (1%) interest of the Membership
Interest (the "Proffered Price"), at which the Proffering Member is
willing to sell ALL of its Membership Interest (such Membership
Interest, the "Proffered Membership Interest") to the Responding
Members, (iii) the address to which any Responding Notice (as
hereinafter defined) is to be sent and (vi) the date for the closing of the
transactions contemplated by this Section 8.9, which date (the "Specified
Closing Date") shall be on a business day not more than sixty (60), and
not less than forty-five (45), days after the date the Deadlock Notice is
given. Such offer shall, subject to the terms and conditions of this
Section 8.9, be irrevocable.
(b) Responding Notice. If any Responding Member shall
desire to purchase all or any portion of the Proffered Membership
Interest at the Proffered Price, then it shall, within twenty (20) days
following receipt of the Deadlock Notice, so specify by written notice (a
"Responding Notice")
<PAGE>
given to the Proffering Member at the address set
forth in the Deadlock Notice and to each of the other Members, which
notice shall specify the portion of the Proffered Membership Interest
such Responding Member desires, and is willing, to purchase at the
Proffered Price. Any Responding Member so giving a timely
Responding Notice is hereinafter referred to as an "Accepting Member."
Any such notice shall, subject to the terms and conditions of this Section
8.9, be irrevocable.
(c) Purchase by the Accepting Members. If the Proffering
Member shall receive Responding Notice(s) from one or more Accepting
Members indicating a desire and willingness thereby to purchase, in the
aggregate, at least 100% of the Proffered Membership Interest, then, on
the Deadlock Closing Date (as hereinafter defined), the Accepting
Members shall purchase from the Proffering Members, and the
Proffering Member shall transfer and sell to the Accepting Members, the
Proffered Membership Interest, such purchase and sale to be made at the
Proffered Price and otherwise in accordance with the terms and
conditions set forth in subsections (e), (f), and (g) below.
(d) Purchase by the Proffering Member. If the Proffering
Member (i) shall not receive any timely Responding Notice from any
Responding Member or (ii) shall receive Responding Notice(s) from one
or more Accepting Members but the Accepting Members shall not have
indicated therein their desire to purchase, in the aggregate, at least 100%
of the Proffered Membership Interest, then, on the Deadlock Closing
Date, the Responding Members shall transfer and sell to the Proffering
Member, and the Proffering Member shall purchase from the Responding
Members, all of the Membership Interests owned or held by the
Responding Members, such purchase and sale to be made at the Proffered
Price and otherwise in accordance with the terms and conditions set forth
in subsections (e), (f) and (g) below. In such event, if the Proffering
Member shall consist of more than one Member, the Membership Interest
owned or held by each Responding Member shall, unless otherwise
agreed to in writing by the Members comprising the Proffering Member,
be allocated among the Members comprising the Proffering Member pro
rata in accordance with their respective percentage Membership
Interests.
(e) Allocation of Purchase by the Accepting Members.
If the Accepting Member(s) shall, in their Responding Notice(s), have
indicated therein their desire to purchase, in the aggregate, Membership
Interests equal to the Proffered Membership Interest, then (unless
otherwise agreed to in writing by the Accepting Members and consented
to by the Proffering Member, such consent not to be unreasonably
withheld or delayed) each Accepting Member shall be obligated to
purchase from the Proffering Member the Membership Interest such
Accepting Member has indicated in its Accepting Notice that it desires
to purchase. If the Accepting Member(s) shall, in their Responding
Notice(s), have indicated therein their desire to purchase, in the
aggregate, Membership Interests greater than the Proffered Membership
Interest, then (unless otherwise agreed to in writing by the Accepting
Members and consented to by the Proffering Member, such consent not
to be unreasonably withheld or delayed) the Proffered Membership
Interest shall be allocated to and among the Accepting Members as
provided hereinafter in this subsection (e) and (unless otherwise agreed
to in writing by the Accepting Members and consented to by the
Proffering Member, such consent not to be unreasonably withheld or
delayed) each Accepting Member shall be obligated to
<PAGE>
purchase the
Membership Interest so allocated. The Proffered Membership Interest
shall be allocated to and among the Accepting Members in accordance
with the following steps:
Step 1 - there shall be allocated to each Accepting Member
the lesser of (A) the Membership Interest it has indicated in its
Responding Notice that it desires to purchase or (B) the Membership
Interest equal to the total Proffered Membership Interest multiplied by a
fraction, the numerator of which is the Membership Interest owned or
held by such Accepting Member and the denominator of which is the
aggregate Membership Interests owned or held by all Accepting
Members (such portion of the Proffered Membership Interest as has not
been allocated pursuant to this Step 1 shall be hereinafter referred to as
the "Step 2 Membership Interest," and any Accepting Members who
have not, pursuant to this Step 1, been allocated a Membership Interest
equal to the Membership Interest it has indicated in its Responding
Notice that it desires to purchase, shall be hereinafter referred to as the
"Step 2 Members");
Step 2 - there shall then be allocated to each Step 2 Member
the lesser (A) of the Membership Interest that, when added to the
Membership Interest allocated to it pursuant to Step 1, equals the
Membership Interest it has indicated in its Responding Notice that it
desires to purchase or (B) the Membership Interest equal to the aggregate
Step 2 Membership Interest multiplied by a fraction, the numerator of
which is the Membership Interests owned or held by such Step 2 Member
and the denominator of which is the aggregate Membership Interest
owned or held by all Step 2 Members (such portion of the Proffered
Membership Interest as has not been allocated pursuant to this Step 2 and
the prior Step shall be hereinafter referred to as the "Step 3 Membership
Interest" and the Step 2 Members who have not, pursuant to this Step 2
and the prior Step, been allocated a Membership Interest equal to the
Membership Interest that it has indicated in its Responding Notice that
it desires to purchase, shall be hereinafter referred to as the "Step 3
Members");
Step 3 - there shall then be allocated to each Step 3 Member
the lesser (A) of the Membership Interest that, when added to the
Membership Interest allocated to it pursuant to all of the prior Steps,
equals the Membership Interest it has indicated in its Responding Notice
that it desires to purchase or (B) the Membership Interest equal to the
Step 3 Membership Interest multiplied by a fraction, the numerator of
which is the Membership Interest owned or held by such Step 3 Member
and the denominator of which is the total Membership Interests owned
or held by all Step 3 Members (such Membership Interests as have not
been allocated pursuant to this Step 3 and all prior Steps shall be
hereinafter referred to as the "Step 4 Membership Interests" (with "Step
# Membership Interests" referring to such Membership Interests as have
not been allocated pursuant to all Steps prior to Step #) and the Step 3
Members who have not, pursuant to this Step 3 and all prior Steps, been
allocated a Membership Interest equal to the total Membership Interest
it has indicated in its Responding Notice that it desires to purchase, shall
be hereinafter referred to as the "Step 4 Members" (with "Step #
Members" referring to such Accepting Members who have not, pursuant
to Step # and all prior Steps, been allocated a of Membership Interests
equal to the total Membership Interests it has indicated in its Responding
Notice that it desires to purchase); and
<PAGE>
Succeeding Steps - Step 3 shall be repeated as many times as
needed, with appropriate adjustment of the language to substitute in place
of "Step 3" "Step #", where # represents the successive number of the
Step.
(f) Deadlock Closing Date. At 10:00 a.m. local time on the
Deadlock Closing Date (which shall be the Specified Date unless all of
the parties to the transaction contemplated hereby agree to some other
date, in which case it shall be such other date) at the Company's principal
offices, the Selling Members (as hereinafter defined) shall transfer and
sell to the Purchasing Members (as hereinafter defined), and the
Purchasing Members shall purchase from the Selling Members, all of the
Membership Interests held or owned by the Selling Members. Each
Selling Member hereby grants to the Company and each Purchasing
Member, acting singly, a power of attorney, and appoints the Company
and each Purchasing Member, with full power of substitution, as such
Selling Member's attorney-in-fact, to so execute and deliver such
documents to consummate the sale, such power of attorney being coupled
with an interest and being irrevocable. At the closing of the sale
contemplated hereby, the Purchasing Members shall pay for the
Membership Interest being purchased from any Selling Member by
delivering to such Selling Member a bank, cashier's or certified check for
the Applicable Percentage (as hereinafter defined) of the Purchase Price
(as hereinafter defined) of such Membership Interest and (if the
Applicable Percentage is less than one hundred percent (100%))
delivering to such Selling Member (i) a promissory note, properly
completed and duly executed in the form of Exhibit A attached hereto
and (ii) a pledge agreement, properly completed and duly executed in the
form of Exhibit B attached hereto. Such promissory note shall be in the
stated principal amount of the Remaining Percentage (as hereinafter
defined) of such Purchase Price and shall provide for the repayment of
the principal amount thereof in equal annual installments over the
Applicable Number Of Years (as hereinafter defined).
(g) Definitions. For purposes of the foregoing, (i) "Selling
Members" means, if the transaction has been triggered pursuant to
subsection (c) above, the Proffering Member or, if the transaction has
been triggered pursuant to subsection (d) above, the Responding
Members; (ii) "Purchasing Members" means, if the transaction has been
triggered pursuant to subsection (c) above, the Accepting Members or,
if the transaction has been triggered pursuant to subsection (d) above, the
Proffering Member; (iii) the "Purchase Price" for any Membership
Interest shall mean a dollar amount equal to the product of the
Membership Interest and the Proffered Price; (iv) "Applicable Number
Of Years" shall mean the whole number integer determined by dividing
(a) the aggregate Membership Interest of all Selling Members by (b) ten
percent (10%) and, if such division does not result in a whole number
integer, rounding up to the next whole number integer; (v) "Remaining
Applicable Percentage" means one hundred percent (100%) minus the
Applicable Percentage; and (vi) "Applicable Percentage" means the
following based upon the Applicable Number Of Years:
Applicable Number Of Years Applicable Percentage
1 100%
2 55%
3 35%
4 26%
<PAGE>
5 22%
6 18%
7 14%
8 12%
9 11%
The obligations of the Purchasing Members hereunder shall be joint and
several, and no Purchasing Member shall be released or relieved of its
obligation hereunder on account of any failure or refusal to perform on
the part of any other Purchasing Member (provided that nothing
contained herein shall be deemed to relieve any defaulting or non-performing
Purchasing Member from any damages any other Purchasing
Member may incur as a consequence of any default or non-performance
by such defaulting or non-performing Purchasing Member). Nor shall
any Purchasing Member be released or relieved of any obligation
hereunder to purchase the Membership Interest of any Selling Member
on account of any default or non-performance by any other Selling
Member; nor shall any Selling Member be released or relieved of any
obligation hereunder to sell any of its Membership Interest on account of
any default or non-performance by any other Selling Member. If any
Selling Member shall fail to comply with this Section 8.9, then each
Member shall vote its Membership Interest and otherwise take all actions
reasonably requested by the Purchasing Members to effectuate the
purpose and intent of this Section 8.9, which actions may include,
without limitation, causing the Company to exercise the power of
attorney provided above and to transfer on the books of the Company,
and register in the name of the Purchasing Members, the Membership
Interest owned or held by any Selling Member.
(h) Assumption Agreement. Any sale or transfer contemplated
by this Section 8.9 shall not be subject to Section 8.2(a) or (c), or to
Section 8.3, 8.7 or 8.8 hereof; provided, however, that simultaneously
with its acquisition of the Membership Interest of any Selling Member,
the Purchasing Member shall execute and deliver to the Company an
assignment and assumption agreement, in such form and substance as the
Company may reasonably request, pursuant to which the Purchasing
Member agrees to be bound by the terms of this Agreement (as if may
theretofore have been amended, supplemented, modified or otherwise
changed) as a Member and to be (to the extent of the Membership
Interest being acquired) substituted herein in place of the Selling Member
from which such Membership Interest is being acquired.
8.10 Partial Transfer of Jubilation Membership Interest
Upon Equity Infusion. Subject to Section 8.12 hereof, upon the earlier
of (i) such time as the Company has issued Membership Interests to
subsequent investors in consideration of not less than Two Million
Dollars ($2,000,000) of new equity infusion contributed in cash to the
Company (such infusion of not less than $2,000,000 being herein called
"Equity Infusion") or (ii) the Company's payment, in full, of the Note,
Jubilation shall, within thirty (30) days of the written request from
Mid-America and MRV, transfer to Mid-America and to MRV, each, effective
as of the date of the request, that percentage Membership Interest that is
equal to one half of the amount, if any, by which the Membership
Interest owned by Jubilation immediately prior to such transfer exceeds
twenty-five percent (25%) and no compliance with Section 8.2, 8.3, 8.7
or 8.8 or consent of the Members shall
<PAGE>
be required as a condition of such
transfer; provided, however, that simultaneously with the transfer of such
Membership Interest from Jubilation, each of MRV and Mid-America
shall execute and deliver to the Company an assignment and assumption
agreement, in such form and substance as the Company may reasonably
request, pursuant to which MRV or Mid-America, as applicable, agrees
to be bound by the terms of this Agreement (as it may theretofore have
been amended, supplemented, modified or otherwise changed) as a
Member and to be (to the extent of the Membership Interest being
acquired) substituted herein in place of Jubilation with respect to such
transferred Membership Interest. This obligation on the part of
Jubilation to transfer the percentage Membership Interests as herein
provided shall be binding upon the successors and assigns of Jubilation.
8.11 Partial Transfer of Jubilation Membership Interest
Upon Payment of Note. In addition to the transfer of percentage
Membership Interests provided for in Section 8.10, upon the Company's
payment, in full, of that certain promissory note made by the Company
payable to the order of Jubilation in the aggregate principal amount of
$1,350,000 (the "Note") and delivered in partial consideration for the
transfer of the Vessel COTTON CLUB (a/k/a JUBILATION CASINO),
Jubilation shall, within thirty (30) days of a written request from Mid-America
and MRV, transfer to Mid-America and to MRV, each, effective
as of the date of the request, a five percent (5%) Membership Interest,
and no compliance with Section 8.2, 8.3, 8.7 or 8.8 or consent of the
Members shall be required as a condition of such transfer, provided,
however, that simultaneously with the transfer of such five per cent (5%)
Membership Interest, each, from Jubilation, each of MRV and Mid-America shall
execute and deliver to the Company an assignment and
assumption agreement, in such form and substance as the Company may
reasonably request, pursuant to which MRV or Mid-America, as
applicable, agrees to be bound by the terms of this Agreement (as it may
theretofore have been amended, supplemented, modified or otherwise
changed) as a Member and to be (to the extent of the Membership
Interest being acquired) substituted herein in place of Jubilation with
respect to such transferred Membership Interest. This obligation on the
part of Jubilation to transfer the percentage Membership Interests as
herein provided shall be binding upon the successors and assigns of
Jubilation.
8.12 Bankruptcy of a Member.
(a) Affected Member. Anything in this Agreement
to the contrary notwithstanding, if any Member or Economic Interest
Owner becomes bankrupt, then neither such Member or Economic
Interest Owner (either, an "Affected Member") nor its trustee or receiver
(a "Legal Substitute") shall be entitled thereafter to accept an Offering
Notice or a Deadlock Notice pursuant to any provision of this
Agreement, and such Affected Member's Membership Interest shall be
disregarded for all such purposes hereof; provided, however, that such
Affected Member or its Legal Substitute, in such an event, shall be
bound, with respect to its Membership Interest, to all of the restrictions
and obligations imposed under this Agreement. Notice of bankruptcy of
the Affected Member shall be given promptly after its occurrence (which
in no event shall be more than ten (10) days after any event constituting
a bankruptcy) by the Affected Member or its Legal Substitute to the
Company and the Members. Such notice shall be deemed to be a firm,
non-withdrawable offer
<PAGE>
to sell the Affected Member's Membership
Interest in the manner set forth in Section 8.2(a) hereof (subject,
however, to subsection (b) below), at a purchase price to be determined
in accordance with this Section 8.11(b). Any such offer shall not be
subject to Section 8.8 hereof.
(b) Purchase Price. If at any time an Affected
Member is deemed to have offered to sell its Membership Interest
pursuant to Section 8.12(a) above, as a result of such Affected Member's
bankruptcy, the initial purchase price of such Affected Member's
Membership Interest shall be the product obtained by multiplying such
Affected Member's Membership Interest times the net book value of the
Company as of the last day of the calendar month immediately preceding
the effective date of any subject sale, as determined in accordance with
generally accepted accounting principles applied on a basis consistent
with prior periods by the Accountants.
8.13 Special Jubilation Provisions.
If Jubilation (or its successor or assign) shall become entitled to
accelerate the Note in accordance with its terms or the Company shall
fail to pay the Note in full upon its maturity, then (i) Jubilation (or its
successor or assign), in its sole and absolute discretion, may terminate
any and all restrictions and limitations on transfer set forth in or
contemplated by this Article 8 or elsewhere in this Agreement and may
sell or otherwise dispose of its Membership Interest, or any portion
thereof, free and clear of all such restrictions and limitations and (ii) the
obligation of Jubilation (or its successor or assign) to transfer to Mid-America
and MRV, and the right of each of Mid-America and MRV to
acquire from Jubilation (or its successor or assign), any portion of
Jubilation's Membership Interest, as contemplated by Section 8.10 and/or
8.11, shall terminate and expire.
ARTICLE 9
LIMITED LIABILITY AND INDEMNIFICATION
9.1 Liability to Third Parties. No Member, as such,
shall be liable for the debts, obligations or liabilities of the Company,
including under a judgment or order of a court. The foregoing shall not
be deemed to invalidate or otherwise impair any guarantee or other
commitment of any Member expressly set forth outside this Agreement
with respect to any obligation of the Company (any such guarantee or
other commitment being hereinafter referred to as a "Member
Guaranty").
9.2 Indemnification. The Company shall indemnify
any current or former Member, Manager or Officer of the Company to
the full extent permitted by Section 79-29-110 of the Mississippi Code
of 1972, as amended, including through the purchase of insurance,
against expenses, judgments and other losses arising out of their status as
a Member, Manager or Officer, provided that the Member, Manager or
Officer has met the appropriate standard of conduct as set forth by law,
in the interpretation of the Members. Notwithstanding anything to the
contrary set forth herein, the Company shall not indemnify any Member
for or with respect to any Member Guaranty.
<PAGE>
ARTICLE 10
MANAGEMENT OF COMPANY
10.1 Management by Managers.
(a) Board of Managers. The Members hereby
unanimously agree that except as specifically set forth in this
Agreement, the responsibility for management of the business and
affairs of the Company shall be delegated to a Board of Managers (the
"Board") pursuant to the applicable laws of the State of Mississippi.
(b) Composition of Board. The Board shall
consist of six (6) Managers. Managers shall be elected by the vote or
written consent of the Members and need not be residents of the State of
Mississippi or Members of the Company but shall be U.S. citizens. The
number of Managers may be amended from time to time by the
unanimous vote or written consent of all of the Members.
Notwithstanding the foregoing, Jubilation shall have the right from time
to time to designate three persons to serve on the Board until the Equity
Infusion and to designate two persons to serve on the Board after the
Equity Infusion (provided that, after the Note is repaid in full, the
number of persons Jubilation shall have the right to so designate shall be
reduced by one(1)). Each Member agrees to vote all of its Membership
Interest in favor of such person(s) as Jubilation may designate to serve
on the Board as contemplated above. Upon the cessation for any reason
of Jubilation's right to designate any person to serve on the Board, that
seat/those seats on the Board formerly controlled by Jubilation shall be
filled by election of the Members in accordance with the relevant
provisions of the applicable laws of the State of Mississippi, the
Certificate of Formation and this Agreement.
(c) Resignation. Any Manager may resign at any
time by giving written notice to the Company. The resignation of such
Manager shall take effect upon receipt of such notice or at any later time
specified in such notice. Unless otherwise specified in such notice, the
acceptance of the resignation shall not be necessary to make it effective.
The resignation of a Manager shall not affect Jubilation's right to
designate persons to serve on the Board, as set forth in subsection (b)
above, and in the event the Manager so resigning was a person
designated by Jubilation, such Manager shall be replaced by such other
person as may be designated by Jubilation. A Manager elected to fill a
vacancy shall be elected for the unexpired term of the Manager's
predecessor in office and shall hold office until the expiration of such
term and until the Manager's successor has been elected and qualified. A
Manager elected to fill a position resulting from an increase in the
number of Managers shall hold office until the next annual meeting of
Members and until a successor has been elected and qualified.
(d) Appointment and Authorization of Initial
Board and General Manager. The Initial Members unanimously agree as
follows:
(i) Thomas W. Aro, Stanley Tollman,
Fernando J. Cuquet, Matthew B. Walker,
Reilly Terrell and such additional
individual as may be
<PAGE>
designated in writing
by Jubilation shall serve as the initial
members of the Board;
(ii) Matthew B. Walker shall serve as General
Manager of the Company until his
successor is duly elected and appointed;
(iii) It is in the best interest of the Company to
acquire the Vessel COTTON CLUB
(a/k/a JUBILATION CASINO, Official
Number 273756) together with all tackle
and appurtenances, including, without
limitation, electronics, computer
equipment and software, security
systems, anchors, generators, electrical
systems, air conditioning equipment,
gear, slot machines, furniture and gaming
equipment, presently located on the
Vessel (the "Vessel/Equipment") and to
enter into a lease of real property in
Tunica County, Mississippi, for the
purpose of operating the
Vessel/Equipment as a gaming enterprise
on such leased property (the "Leased
Property"), provided that, as contemplated
by Section 10.2(e), any such lease shall be
subject to approval by Jubilation;
(iv) The Company shall enter into an
agreement with Jubilation and Alpha
Hospitality Corporation ("Alpha") to
acquire the Vessel/Equipment for
$1,500,000.00 and in further
consideration of the execution of this
Operating Agreement and the allocation
of a 93% Membership Interest to
Jubilation, and upon such other terms and
conditions as Matthew B. Walker, as the
General Manager of the Company, shall
deem to be in the best interest of the
Company;
(v) The Company shall enter into a loan
agreement with Riverboat for an extension
of credit in the total principal amount of
up to $650,000 extended in a series of
advances to be evidenced by a promissory
note made by the Company and secured
by a first preferred ship mortgage,
security agreement and financing
statements covering the
Vessel/Equipment, and a deed of trust
covering the Company's leasehold interest
in the Leased Property, the principal of
which shall be due in one year and
interest, at the rate of 8% per annum, shall
be payable monthly, and upon such terms
and conditions as Matthew B. Walker, as
the General Manager of the Company,
shall deem to be in the best interest of the
Company; and
(vi) Matthew B. Walker, as General Manager,
is authorized to execute, on behalf of the
Company, (i) an asset acquisition
agreement between the Company,
Jubilation and Alpha; (ii) a promissory
note, in the original principal amount of
$1,350,000, in favor of Jubilation, (iii)
<PAGE>
a loan agreement with Riverboat; (iv) a
promissory note payable to Riverboat in
the stated original principal amount of
$650,000; (v) a first preferred ship
mortgage, a security agreement and UCC-1's on the Vessel/Equipment
and a deed of
trust on the leasehold interest in the
Leased Property, in favor of Riverboat
securing the note; and (vi) a loan advance
request for an additional advance of
$250,000 under the loan agreement; and
Matthew B. Walker, as General Manager,
is authorized to do such other acts and
things and execute such other documents
as may be reasonably necessary to carry
out the foregoing.
10.2 Meetings and Actions.
(a) Meetings. The Board shall meet at least
once each calendar quarter in person at the principal offices of the
Company or at such other place as may be agreed upon from time to time
by the Board, provided that any meeting called for by this sentence may
be held by telephone conference (or similar communications equipment)
as contemplated by Section 10.2(c) below. Regular meetings of the
Managers shall be held at such times and places as shall be designated
from time to time by resolution of the Managers. Notice of such regular
meetings shall not be required if the date thereof has been set at the prior
meeting of the Board. Special meetings of the Managers may be called
by any Manager on at least 24 hours notice to each other Manager. Such
notice need not state the purpose or purposes of, nor the business to be
transacted at, such meeting, except as may otherwise be required by law
or provided for the Certificate of Formation or this Agreement.
Attendance of a Manager at a meeting shall constitute a waiver of notice
of such meeting, except where a Manager attends a meeting for the
express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
(b) Quorum. Unless otherwise required by law or
provided in the Certificate of Formation or this Agreement, a majority of
the total number of Managers fixed by, or in the manner provided in, the
Certificate of Formation or this Agreement shall constitute a quorum for
the transaction of business of the Managers, and the act of a majority(but
not less than three) of the Managers present at a meeting (excluding any
Manager disqualified to vote on such matter) at which a quorum is
present shall be the act of the Managers.
(c) Action by Written Consent or Telephone
Conference. Any action to be taken by the Board may be taken without
a meeting if consents in writing setting forth the action so taken are
signed (on a single page or in multiple counterparts) by all of the
Managers. Any action permitted or required by the Act, the Certificate
of Formation or this Agreement to be taken at a meeting of the
Managers, or any committee designated by the Managers, may be taken
without a meeting if a consent in writing, setting forth the action to be
taken, is signed by all the Managers or members of such committee, as
the case may be. Such consent shall have the same force and effect as a
unanimous vote at a meeting and may be stated as such in any document
or instrument filed with the Secretary of State of Mississippi, and the
execution of such consent shall constitute attendance or presence in
person at a meeting of the Managers or any such committee, as the case
may be.
<PAGE>
Subject to the requirements and restrictions of the Act, the
Certificate of Formation and this Agreement, Managers or members of
any committee designated by the Managers may participate in and hold
a meeting of the Managers or any committee of Managers, as the case
may be, by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can
hear each other, and participation in such meeting shall constitute
attendance and presence in person at such meeting, except where a
person participates in the meeting for the express purpose of objecting to
the transaction of any business on the ground that the meeting is not
lawfully called or convened.
(d) Voting. Each Manager shall be entitled to
cast one vote with respect to any decision made by the Board, except
with respect to a determination to seek indemnification pursuant to
Section 9.2 hereof, in which event a Manager seeking indemnification
hereunder shall have no vote with respect to his indemnification. Any
action to be taken by the Board shall require at least a majority of (but
not less than three) affirmative votes, except that any determination to
grant indemnification to a Manager pursuant to Section 9.2 hereof shall
only require a majority vote (exclusive of such Manager).
(e) Major Decisions. Notwithstanding the
provisions of Section 10.1(a) and any other provision of this Agreement,
the Company shall not take, the Managers shall not take any action
allowing or permitting the Company to take, and the Members shall vote
their Membership Interests and do all such further acts as may be
necessary to prevent the Company from taking, any of the following
actions without the express written consent of Jubilation:
(i) Amending the Certificate of Formation of
the Company or this Agreement;
(ii) Merging or consolidating the Company
with or into any other limited liability
company, partnership, corporation or
other entity, or acquiring another
business;
(iii) While the Note remains unpaid,
mortgaging, encumbering or otherwise
placing a lien on all or any substantial or
material part of the assets of the
Company, other than a lien, in an amount
not to exceed $675,000, on the Vessel and
Equipment and deed of trust on the
Company's leasehold interest to secure the
obligation to repay $650,000 advanced to
the Company, which lien is to be
evidenced by a first preferred ship
mortgage and a deed of trust with respect
to such leasehold interest, each in form
and substance consented to by Jubilation
(such consent not to be unreasonably
withheld or delayed);
(iv) While the Note remains unpaid, selling,
leasing or otherwise disposing of any
substantial or material part of the assets
of the
<PAGE>
Company or, after the Note is paid
in full, all or substantially all of the
business and assets of the Company;
(v) Changing the nature of the business of
the Company;
(vi) While the Note remains unpaid, issuing
any Membership Interests, or any notes,
bonds, debentures or other securities
convertible into, or any rights, options or
warrants to purchase or acquire, any
Membership Interest or publicly offering
any securities of the Company (all of the
foregoing, collectively "Distribution of
Securities") if such Distribution of
Securities results, or with the passage of
time will result, in any dilution of the
Membership Interest of Jubilation in the
Company, or, after the Note has been
repaid in full, make any Distribution of
Securities that results, or with the passage
of time will result, in any dilution of the
Membership Interest of Jubilation below
fifteen per cent (15%);
(vii) While the Note remains unpaid, declaring
or paying, directly or indirectly, any
dividends or distributions to any
Member;
(viii) Making any expenditures or incurring
any obligations or liabilities on behalf of
the Company (including, without
limitation, guaranteeing the obligations or
liabilities of any third person) or lending
money to any person, company or other
entity if such expenditures, obligations,
liabilities or lending (A) prior to the
repayment in full of the Note exceeds
$50,000 and (B) subsequent to the
repayment in full of the Note, exceeds
$100,000.
(ix) While the Note remains unpaid, releasing
or settling any claim by or against the
Company, which claim alone, or together
with any related claims, shall exceed
$5,000;
(x) Confessing judgment against itself; or
(xi) Entering into any agreement, arrangement
or transaction with any person or entity
that is directly or indirectly affiliated with
(a) any Member, (b) any individual who,
directly or indirectly, owns beneficially or
of record twenty per cent (20%) of more
of the common stock or other equity
interests in any Member or (c) any family
member of any individual identified in the
foregoing clause (b) (for purposes of the
foregoing, (A) family members of any
individual shall include such individual's
spouse, lineal ancestors and descendants,
siblings and brothers-, sisters-, fathers-
and mothers-in-
<PAGE>
law and lineal ancestors
and descendants of such individual's
spouse and any trust or similar
arrangement for the benefit (in whole or
in part) of one or more of the foregoing
and (B) a person shall be deemed
affiliated with another person if such
second-mentioned person is a family
member of such first-mentioned person or
if such first-mentioned person (either
alone or with all of such person's family
members) (i) owns, directly or indirectly,
beneficially or of record at least twenty
per cent (20%) of such second-mentioned
person or (ii) by contract, arrangement or
otherwise is entitled to elect at least one-third of the board of
directors (or similar
managing body) of such second-mentioned person or otherwise
entitled to
direct the management, business or
operations of such second-mentioned
person).
Unless authorized to do so by the Certificate of
Formation, this Agreement or the Managers in writing, no
attorney-in-fact, employee or other agent of the Company shall have any
power or authority to bind the Company in any way, to pledge its credit
or to render it liable pecuniarily for any purpose. No Member shall have
any power or authority to bind the Company unless such Member has
been authorized by the Certificate of Formation, this Agreement or the
Managers to act as an attorney-in-fact or agent of the Company in
accordance with the previous sentence.
(f) Limitation on Payment of Note. Unless
otherwise agreed to in writing by Riverboat, the Company shall not pay
all or any part of the principal balance of the Note until the note made by
the Company payable to the order of Riverboat in the stated original
principal amount of $650,000 has been paid in full, and the Members and
Mangers shall have no authority to do so, and each Member agrees that
such Member will not cause the Company to do so.
10.3 Committees; Delegation of Authority and
Duties.
(a) Actions. In managing the business and
affairs of the Company and exercising its powers, the Managers shall act
(i) collectively through meetings and written consents pursuant to
Sections 10.1 and 10.2 hereof; (ii) through committees pursuant to
Section 10.3(b) hereof; and (iii) through Managers to whom authority
and duties have been delegated pursuant to Section 10.3(c) hereof.
(b) Committees. The Managers may, from
time to time, by resolution, designate one or more committees, each of
which shall be comprised of one or more Managers. Any such
committee, to the extent provided in such resolution or in the Certificate
of Formation or this Agreement, shall have and may exercise all of the
authority of the Managers, subject to the limitations set forth in the Act
and in this Agreement. At every meeting of any such committee, the
presence of a majority of all the members of such committee and the vote
of a majority of all members of such committee present shall be
necessary for the adoption of any resolution by such
<PAGE>
committee. The
Managers may dissolve any committee at any time, unless otherwise
provided in the Certificate of Formation or this Agreement.
(c) Officers. The Managers may, from time
to time, delegate to one or more Managers such authority and duties as
the Managers may deem advisable. In addition, the Managers may
assign titles (including, without limitation, chairman, president, vice
president, secretary, assistant secretary, treasurer and assistant treasurer)
to any such Manager. Unless the Managers decide otherwise, if the title
is one commonly used for officers of a business corporation formed
under the Act, the assignment of such title shall constitute the delegation
to such Manager of the authority and duties that are normally associated
with that office, subject to any specific delegation of authority and duties
made pursuant to the first sentence of this Section 10.3(c). Any number
of titles may be held by the same Manager. Any delegation pursuant to
this Section 10.3(c) may be revoked at any time by the Managers. The
Managers hereby specifically appoint MATTHEW B. WALKER as the
initial General Manager, and as the General Manager, he shall be
authorized to take any and all action allowed by the Managers pursuant
to this Article 10 without further authorization of the Managers or
Members. However, nothing contained herein shall be deemed to permit
any Manager (or any person designated as an officer of the Company) or
any committee of the Board to take, or to authorize the taking, of any
action prohibited pursuant to Section 10.2(e) or 10.2(f) hereof or
otherwise under this Agreement.
(d) Third Party Reliance. Any Person dealing
with the Company, other than a Member, may rely on the authority of
any Manager or officer in taking any action in the name of the Company
without inquiry into the provisions of this Agreement or compliance
herewith, regardless of whether that action actually is taken in
accordance with the provisions of this Agreement; provided, however,
that no Person who is aware of the prohibitions contained in Section
10.2(e) or 10.2(f) hereof shall be entitled to rely upon the authority of
any Manager or officer in taking any action prohibited thereby.
10.4 Compensation. Subject to Section 10.2(e), the
Managers shall receive such reasonable compensation, if any, for their
services as may be designated from time to time by the Members or a
majority of the disinterested Managers. In addition, the Managers shall
be entitled to be reimbursed for out-of-pocket costs and expenses
incurred in the course of their service hereunder, including the portion of
their overhead reasonably allocable to Company activities.
10.5 Affiliated Transactions. Subject to Section
10.2(e) or 10.2(f), no contract or transaction between the Company and
one or more of its Managers, Members or officers, or between the
Company and any other entity that one or more of its Managers,
Members or officers are affiliated with or have a financial interest in,
shall be void or voidable solely for this reason, or solely because the
Manager, Member or officer is present at or participates in the meeting
that authorizes the contract or transaction or solely because his vote is
counted for such purpose, if:
(a) The material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known
to all of the Managers, and the Managers in good
<PAGE>
faith authorize the
contract or transaction by the affirmative vote of a majority of the
disinterested Managers, even though the disinterested Managers be less
than a quorum; or
(b) The material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known
to all of the Members entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by any number of
Members together holding a majority of the Membership Interests; or
(c) The contract or transaction is fair as to the
Company as of the time it is authorized, approved or ratified by the
Managers (exclusive of any interested Manager) or the Members.
ARTICLE 11
DISSOLUTION AND TERMINATION
11.1 Events Causing Dissolution. The Company shall
dissolve and its affairs shall be wound up on the first to occur of the
following:
(a) the written consent of Members holding at
least eighty percent (80%) of the Membership Interests (provided,
however, that, until the Note is repaid in full, the Company shall not be
dissolved or its affairs would up, other than pursuant to clause (b) below,
without the prior written consent of Jubilation, or its successor or assign);
or
(b) entry of a decree of judicial dissolution of
the Company under Section 79-29-802 of the Mississippi Code of 1972,
as amended.
11.2 Liquidation and Termination. On dissolution
of the Company, the Members shall act as liquidator or may appoint a
committee of one or more Members to act as liquidator. The liquidator
shall proceed diligently to wind up the affairs of the Company and make
final distributions as provided herein and in the Act. The costs of
dissolution shall be borne as a Company expense. Until final distribution,
the liquidator shall continue to operate the Company properties with all
of the power and authority of the Members.
11.3 Distributions In-Kind. The Company may
distribute the assets of the Company to the Members and Economic
Interest Owners in-kind.
11.4 Distributions upon Dissolution. Upon
dissolution, the liquidation proceeds shall be distributed in the following
order:
(a) First, to the payment of debts to creditors,
including to Members, Economic Interest Owners and Managers who are
creditors, to the extent permitted by law, in satisfaction of liabilities
(other than liabilities for distributions to Members or Economic Interest
<PAGE>
Owners under Sections 79-29-601 or 79-29-604 of the Mississippi Code
of 1972, as amended) of the Company and for the payment of dissolution
expenses (provided, that no payment shall be made to any Member (other
than Jubilation or its successor or assign as the holder of the Note),
Economic Interest Owner or Manager as a creditor of the Company until
the Note has been repaid in full);
(b) Second, to establish reserves to pay any
contingent or unknown costs that may arise after dissolution.
(c) Third, except as provided in the Certificate
of Formation, to Members or Economic Interest Owners, in satisfaction
of liabilities for distributions under Sections 79-29-601 or 79-29-604 of
the Mississippi Code of 1972, as amended.
(d) Fourth, payment to Members and
Economic Interest Owners of the credit balances in their respective
capital accounts.
(e) Fifth, except as provided in the Certificate
of Formation, to Members and Economic Interest Holders pro rata in
accordance with their respective Membership and Economic Interests.
ARTICLE 12
COVENANT NOT TO COMPETE.
12.1 Non-competition. Each Member and Economic
Interest Owner agrees that, during the period in which it is a Member or
Economic Interest Owner, it shall not engage directly or indirectly, as
principal, agent, stockholder, partner, employee, consultant or otherwise,
in a business that competes with the Company or otherwise compete with
the Company in any business then conducted or under development by
the Company in the geographic area comprised of DeSoto, Tunica and
Coahoma Counties, Mississippi (and the Board shall use its best efforts
to prohibit its officers, employees and agents from so engaging or so
competing), nor shall any Member or Economic Interest Owner be, nor
cause or permit any of its officers, employees or agents to be, directly or
indirectly, a partner, officer, director, stockholder or employee of any
proprietorship, partnership, corporation, limited liability company or any
other entity that so competes with the Company in such geographic area.
Businesses engaged in the ownership, operation or management of truck
stops having gaming facilities shall not be considered competitive with
the business of the Company.
12.2 Non-solicitation. Each Member and Economic
Interest Owner agrees that, for so long as it is a Member or Economic
Interest Owner and for a period of one year thereafter, it shall not directly
or indirectly (i) seek to persuade any director, officer, employee or
consultant of the Company to discontinue that individual's status of
employment by, or affiliation with, the Company, (ii) solicit or hire, or
cause to be solicited or hired, any such officer, employee or consultant
whether on its own behalf or on behalf of any third party; or (iii) solicit
any customer or client of the Company or solicit any business that was
being solicited by the Company or was under
<PAGE>
contract with the Company
during the period in which it was a Member or Economic Interest Owner,
or seek to persuade any person or entity having a business relationship
with the Company to change or terminate such relationship; provided,
however, that Jubilation (and its affiliates and successors and assigns
thereof) shall not be prohibited from soliciting or hiring Matthew Walker
or any person Jubilation (or its successor or assign) may designate as a
member of the Board.
12.3 Investments. Nothing in this Agreement shall
preclude a Member or Economic Interest Owner from investing in
securities of any corporation or other business entity that is engaged in
a business competitive with the Company, if such securities are regularly
traded on a national stock exchange or over-the-counter and if such
purchase shall not result in its holding beneficially, at any time, more
than two percent (2%) of the equity securities of such competitor.
12.4 Application to Equity Holders. The provisions
of Sections 12.1, 12.2 and 12.3 shall likewise apply to each individual
who, directly or indirectly, owns of record or beneficially, majority of
the capital stock or other equity (or similar) interest in any Member or
Economic Interest Owner (any such individual, an "Equity Holder"), as
if such individual were a Member, and each Member and Economic
Interest Owner shall assure that its Equity Holder does not violate any of
such provisions.
12.5 Third Party Beneficiary. The parties hereto
agree and consent that the Company shall be a third party beneficiary of
the agreements and covenants of the parties contained in this Article 12.
ARTICLE 13
GENERAL PROVISIONS
13.1 Choice of Law. The validity of this Agreement
is to be determined under, and the provisions of this Agreement are to be
construed in accordance with, the laws of the State of Mississippi.
13.2 Binding Effect. This Agreement is to be binding
upon, and inure to the benefit of, the successors and permitted assigns of
the Members and Economic Interest Owners.
13.3 Rules of Construction. Wherever applicable, the
pronouns designating the masculine or neuter will equally apply to the
feminine, neuter or masculine genders. Furthermore, wherever
applicable within this Agreement, the singular will include the plural and
vice versa. The term "person" when used herein shall include a natural
person and all forms of entities, including, without limitation, a
corporation, trust, association, partnership, limited partnership,
partnership in commendam, limited liability company or limited liability
partnership. References herein to Members holding a majority (or any
specified percentage) of Membership Interests or to holders of a majority
(or any specified percentage) of Membership Interests (or similar
references) shall refer to Members holding Membership Interests,
determined on a percentage basis, representing a
<PAGE>
majority (or the
specified percentage) of the interests in the Company held by all
Members (as opposed to merely a majority, by number, of Membership
Interests, regardless of the amount of the respective percentage interests
in the Company represented thereby) or to holders holding Membership
Interests, determined on a percentage basis, representing a majority (or
the specified percentage) of the interests in the Company held by all such
holders (as opposed to merely a majority, by number, of Membership
Interests, regardless of the amount of the respective percentage interests
in the Company represented thereby).
13.4 Captions. Article, section and paragraph captions
and headnotes are for reference purposes only and will not be considered
to affect the context of this Agreement.
13.5 Severability. Should any part or provision of this
Agreement be found by a court of competent jurisdiction to be void,
against public policy or otherwise unenforceable, such part or provision
shall be deleted; but this Agreement, and each of the remaining parts or
provisions hereof, shall remain in full force and effect.
13.6 Integration. This Agreement and the Certificate
of Formation embody the entire agreement and understanding among the
Members and supersede all prior agreements and understandings, if any,
among and between the Members relating to the subject matter hereof.
13.7 Counterparts. It is expected and understood that
this Agreement may be executed in several counterparts and that all
counterparts so executed are to constitute one agreement binding all
parties hereto, notwithstanding the fact that all parties are not signatories
to the original or to the same counterpart. Any party hereto may execute
this Agreement by facsimile signature or similar form of communication,
and such signature shall be legal and valid for all purposes. Each party
so executing this Agreement shall promptly sign an original hereof and
deliver the originally signed document to the other Members.
13.8 Attorneys' Fees. In the event of any arbitration,
litigation or formal legal proceeding between the parties to this
Agreement, the Members specifically covenant and agree that the
prevailing party in such proceeding shall be entitled to recover, in
addition to other damages, all reasonable court costs, reasonable expenses
and reasonable attorneys' fees that it may actually incur in enforcing the
terms of this Agreement, and the parties expressly waive any statute, rule
of law or public policy to the contrary and further covenant and agree
that they shall confirm such waiver in writing at the time of
commencement of any such action, proceeding or counterclaim.
13.9 Amendment. This Agreement shall not be
amended, modified, terminated or supplemented except by vote of
Members holding at least a 66% majority of the Membership Interests;
provided, however, that (i) any amendment, modification, termination or
supplement to or of Section 10.1(b) or (c), Section 10.2(d) or (e), Section
11.1 or Section 11.4(a) shall also require the written consent of Jubilation
(or its successor or assign), (ii) no such amendment shall reduce the
percentage interest in the Company represented by any Member's
Membership Interest without the written consent of such Member, (iii)
no provision hereof providing for, or requiring, the unanimous
<PAGE>
consent,
approval or vote of the Members shall be amended except by the written
consent of all of the Members, (iv) any amendment, modification,
termination or supplement to or of Section 8.4, 8.10 and 8.11 shall also
require the written consent of Mid-America and MRV (or their
successors or assigns); and (v) any amendment, modification or
supplement of Section 10.2(f) shall also require the written consent of
Riverboat (or its successor or assign). Notwithstanding anything to the
contrary in this Agreement, this Agreement shall be subject to and shall
be deemed amended by the applicable provisions of the Mississippi
Gaming Control Act and the rules and regulations of the Mississippi
Gaming Commission as amended, specifically including all amendments
after the date of this Agreement.
13.10 No Third Party Rights. Except as specifically
stated herein, this Agreement and the covenants and agreements
contained herein are solely for the benefit of the parties hereto. No other
person shall be entitled to enforce or make any claims under, or have any
right pursuant to, the provisions of this Agreement.
13.11 Remedies.
(a) The parties acknowledge that monetary damages
are inadequate for a breach hereof, and hereby agree that the provisions
of this Agreement shall be enforceable by equitable relief, including
specific performance, and each of the parties hereby waives any defense
to the enforcement of this Agreement through equitable relief. However,
equitable relief shall not be the exclusive remedy for breach of this
Agreement, and the election of specific performance, damages or any
other remedy hereunder shall not preclude the exercise of any other
remedy in conjunction with such relief or from time to time thereafter.
(b) Any controversy, claim, dispute or disagreement
arising out of, in connection with, or relating to this Agreement or its
breach, the transaction to which this Agreement pertains or an alleged
tort relating in any way to this Agreement or the transaction shall be
settled by binding arbitration in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. The
Expedited Procedures of said rules shall apply in any dispute where the
aggregate of all claims and the aggregate of all counter-claims each is an
amount less than $10,000. Judgment upon any award rendered by the
arbitrator in any such arbitration may be entered in any Court having
jurisdiction thereof. Any demand for arbitration under this Agreement
shall be made no later than the date when any judicial action upon the
same matter would be barred by an applicable statute of limitations. The
locale of any such arbitration proceedings hereunder shall be in the city
of Jackson, Mississippi, or such other location as is mutually acceptable
to all parties. All parties to this Agreement specifically acknowledge and
agree that this Agreement evidences a "transaction involving commerce"
under the Federal Arbitration Act, and each party to this Agreement
hereby waives and relinquishes any right to claim otherwise. Nothing
contained herein shall be deemed to subject any dispute or disagreement
under, with respect to or pursuant to the Note referred to herein to
resolution by arbitration or to limit the right of Jubilation (or its
successor or assign) to pursue all rights and remedies under or pursuant
to the Note in judicial proceedings or actions or otherwise.
<PAGE>
(c) Neither anything contained in the preceding
paragraph nor the exercise of any right to arbitrate shall limit the right of
any party to: (1) enforce any preferred mortgage lien in a civil action in
rem pursuant to 46 U.S.C.A. 31325; (2) foreclose against any real or
personal property collateral by the exercise of the power of sale under a
deed of trust, mortgage, pledge, security deed, deed to secure debt, or
other security agreement or instrument or under applicable law; (3)
exercise any self-help remedies such as set off or repossession; or (4)
obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment, or appointment of a receiver from a court having
jurisdiction before, during, or after the pendency of any arbitration
proceedings. This arbitration provision shall not be interpreted to require
that any such remedies be stayed, abated, or otherwise suspended
pending any arbitration or request for arbitration. The exercise of a
remedy shall not waive the right of any party to resort to arbitration.
IN WITNESS WHEREOF, the parties have executed this
Agreement as of the day and year first above written.
MRV L.L.C., Member
By: /s/ Matthew B. Walker
Matthew B. Walker
Manager
Tax Identification Number:
MID-AMERICA
INVESTMENTS, INC.,
Member
By: /s/ Fernando J. Cuquet, Jr.
Fernando J. Cuquet, Jr., President
Tax Identification
Number: 64-0910523
JUBILATION LAKESHORE INC., Member
By: /s/ Thomas W. Aro
Thomas W. Aro, President
Tax Identification Number:
<PAGE>
RIVERBOAT
INVESTMENTS, L.L.C.,
Member
By: /s/ Reilly Terrell
Reilly Terrell
Tax Identification Number:
The undersigned, ALPHA HOSPITALITY CORPORATION, as
the wholly-owning parent of Lakeshore, hereby guarantees the full and
timely performance of Lakeshore's obligations under Sections 8.10 and
8.11 (to the extent applicable) of the foregoing agreement to transfer a
portion of its Membership Interest to MRV and Mid-America.
ALPHA HOSPITALITY
CORPORATION
By: /s/ Thomas W. Aro
Thomas W. Aro
Executive Vice President
<PAGE>
SCHEDULE I
to the Operating Agreement of Casino Ventures, LLC
CAPITAL ACCOUNTS
NAME OF MEMBER CAPITAL ACCOUNT
MRV, L.L.C. $66,666.67
Mid-America
Investments, Inc. $66,666.67
Riverboat Investments,
L.L.C. $333,333.33
Jubilation Lakeshore
Inc. $6,200,000.00
<PAGE>
Exhibit 99(c)
PROMISSORY NOTE
July 8, 1999 Amount: $1,350,000
FOR VALUE RECEIVED, CASINO VENTURES, LLC
("Maker"), a Mississippi limited liability company, hereby promises to
pay to the order of JUBILATION LAKESHORE INC. ("Payee"), the
principal sum of One Million Three Hundred Fifty Thousand Dollars
($1,350,000), at such place as the holder hereof may designate in writing,
on July 8, 2002, or on the date on which Payee's membership interest in
Maker is acquired pursuant to Section 8.9 of the Operating Agreement
of Maker, whichever shall first occur, with interest until the actual
payment date on the unpaid principal sum charged from the date hereof.
Interest shall be payable quarterly, on the first day of each
calendar quarter commencing September 1, 1999. Interest on the unpaid
principal balance shall be at an initial annual rate (the "Interest Rate")
equal to 8.75% and adjusted to equal 1% plus Prime Rate of interest as
published in The New York Times in its late edition under the heading
"Key Rates" in the "Yesterday" column on the first business day
following the date on which any change in the Prime Rate is reported,
provided that (I) if more than one Prime Rate is published or if a range
of Prime Rates is published, the Prime Rate shall be the average of the
highest and lowest rates so published, (ii) the Interest Rate shall not be
less than the rate referred to in 1274(d) of the Internal Revenue Code of
1986, as the same may be amended from time to time, and (iii) any
adjustment to the Interest Rate shall apply to all interest accruing until
another such adjustment is required.
This Note is the Promissory Note referred to in the Asset
Purchase Agreement (the "Agreement"), dated as of July 8, 1999,
between Maker and Payee. Capitalized terms used in the Agreement and
herein and not otherwise defined in this Note shall have the respective
meanings ascribed to them in the Agreement.
The following terms and provisions are applicable to this
Note:
1. Prohibited Activities. Until final and full payment
of this Note, Maker shall not;
(a) make an assignment for the benefit of creditors; or
(b) apply to any tribunal for an appointment of a
trustee or receiver of any substantial portion of its
assets, or commence any proceedings under any
bankruptcy, reorganization, arrangement,
insolvency, readjustment of debts, dissolution or
any other insolvency or liquidation law of any
jurisdiction, or in the event such proceedings are
commenced against it, indicate its approval,
consent or acquiescence to the same, or allow any
order to be entered appointing a trustee or
receiver or adjudicating it bankrupt or insolvent,
which order remains in effect for 60 days; or
(c) permit any order to be entered in any proceeding
against it directing its dissolution or split-up and
allow such order to remain in effect for 60 days;
or
<PAGE>
(d) merge or consolidate with any corporation or
other entity, sell, lease, transfer or otherwise
dispose (except for the grant to Riverboat
Investments, L.L.C., a mortgage and security
interest in Maker's vessel and equipment and of a
deed of trust on Maker's leasehold interest) of all
or any substantial part of its assets or business
other than in the ordinary course of its business or
purchase assets other than in the ordinary course
of business (including the acquisition of any
business or purchase of capital stock); or
(e) purchase, redeem or cancel any of its membership
interests or other interest in Maker, except for the
membership interest owned by Payee; or
(f) declare a dividend or make any distribution in
cash or in property on or with respect to any
membership interest or other interest in Maker; or
(g) pay, give or lend, directly or indirectly, to any
person, including, but not limited to, any member,
manager, officer, or employee of Maker, any
corporate funds to any one person except for
services actually rendered, consideration given, or
as a reimbursement for moneys actually
advanced; or
(h) pay in any fiscal year, directly or indirectly, any
salary or other compensation or provide
perquisites or benefits to any of the members, or
persons serving on the board of managers of
Maker; or
(i) amend its Certificate of Formation or, except as
authorized by the Operating Agreement of Maker,
revise the capital of Maker, which amendment,
change or revision might materially affect the
rights of Payee; or
(j) take, or allow to be taken, any action in violation
of Section 10.2(e) of the Operating Agreement of
Maker; or
(k) default with respect to any obligation owed by
Maker under or with respect to any promissory
note or other agreement entered into between
Maker and Riverboat Investments, L.L.C.
2. Event of Default. Each of the following shall
constitute an Event of Default:
(a) any failure to pay when due any installment of
interest or principal on this Note; or
(b) the breach or violation of any of the provisions of
Section 1 of this Note; or
(c) any breach or default by Maker under or with
respect to that certain letter agreement dated June
18, 1999, between Maker and Payee.
If an Event of Default occurs, then interest shall accrue
thereafter at the Interest Rate plus 4%, and the unpaid principal of this
Note and interest thereon shall forthwith become due and payable
without further written demand.
3. Prepayment This Note may be prepaid in whole
or in part at any time without premium or penalty with interest to the date
of prepayment.
4. Miscellaneous.
(a) Whenever an attorney is used to obtain payment
under, or to otherwise enforce, this Note or to
enforce, declare or adjudicate any rights or
obligations under this Note, whether by suit or by
other means whatsoever, the costs and expenses
thereof, including reasonable attorneys' fees and
expenses, shall be payable by Maker.
(b) Any demand, notice or other communication
required or allowed hereunder shall be in writing
signed by the party and sent both by Federal
Express or other overnight courier and by
facsimile transmission addressed to the respective
party at its respective address and facsimile
number specified below, unless a different written
address is provided, by written notice, by one
party to the other party, viz.:
HOLDER: Jubilation Lakeshore Inc.
c/o ALPHA HOSPITALITY CORPORATION
24th Floor
12 East 49th Street
New York, New York 10017
Telephone No.: (212) 750-3500
Facsimile No.:(212) 750-5171
Attention: Thomas W. Aro, President
With Copy To: Herbert F. Kozlov, Esquire
Parker, Duryee, Rosoff & Haft, P.C.
529 Fifth Avenue
New York, New York 10017
Telephone No.: (212) 599-0500
Facsimile No.:(212) 972-9487
MAKER: CASINO VENTURES, LLC
Belmont Plantation
3498 Highway 1 South
Wayside, Mississippi 38780
Telephone No.: (601) 332-2415
Facsimile No.:(601) 332-2241
Attention: Fernando J. Cuquet, Jr.,
Manager
<PAGE>
With Copy To: Thomas E. Sharp, III
Vickers, Riis, Murray and Curran, L.L.C.
Eighth Floor
Regions Bank Building
106 St. Francis Street
Mobile, Alabama 36602
Telephone No.: (334) 432-9772
Facsimile No.:(334) 432-9781
Any written notice or demand given by any party
to the other shall be conclusively deemed given
and effective on the business day after dispatched
and transmitted in accordance with this paragraph.
"Business Day" shall mean any day other than a
Saturday, Sunday or other legal holiday on which
banking institutions in the City and State of New
York are authorized or required to be closed.
(c) If any payment on this Note becomes due and
payable on any day other than a Business Day,
such payment date shall be extended to the next
succeeding Business Day.
<PAGE>
(d) This Note (i) may not be changed, waived,
discharged or terminated except by an instrument
in writing signed by the party against whom
enforcement of such change, waiver, discharge or
termination is sought, (ii) shall be binding upon
Maker and its successors and assigns, and (iii)
shall inure to the benefit of and be enforceable by
Payee and its successors and assigns.
(e) This Note shall be governed by and construed in
accordance with the internal laws of the State of
New York applicable to contracts executed and to
be performed wholly within such State, without
giving effect to the conflict or choice of laws
rules or principles thereof. Maker agrees that any
dispute under or with respect to this Note shall be
decided by a Federal or State court situated in the
County and State of New York and submits to the
exclusive jurisdiction of such court, and agrees
not to raise any objection (on the basis of forum
non conveniens or otherwise) with respect to the
jurisdiction or venue of any such court. Maker
hereby expressly agrees to waive jury trial in any
judicial proceeding under or with respect to this
Note or the enforcement hereof. Maker further
agrees that service of process may be made upon
it by, in lieu of any other method permitted by
law, delivery of process by both first class mail
and registered or certified mail, return receipt
requested, at its address set forth above, with a
copy so similarly mailed to its counsel, Vickers,
Riis, Murray and Curran, L.L.C., at its address set
forth above.
<PAGE>
(f) All parties now and hereafter liable with respect
to this Note, whether as maker, principal, surety,
endorser or otherwise, hereby waive presentment
for payment, demand, notice of nonpayment or
dishonor, protest and notice of protest to Maker or
any other Person.
CASINO VENTURES, LLC
By: /s/ Matthew B. Walker
MATTHEW B. WALKER
General Manager
<PAGE>
Exhibit 99 (d)
DEPARTMENT OF
TRANSPORTATION
U.S. COAST GUARD
CG-1340 (REV. 9-92)
BILL OF SALE
THIS SECTION FOR COAST GUARD USE ONLY
1. VESSEL NAME
BAYOU CADDY'S JUBILATION CASINO
(formerly COTTON CLUB)
2. OFFICIAL NUMBER
OR HULL ID NUMBER
273756
3. NAME(S) AND ADDRESS(ES) OF SELLERS
JUBILATION LAKESHORE, INC.
c/o Alpha Hospitality Corporation
24th Floor
12 East 49th Street
New York, NY 10017
3.A. TOTAL INTEREST OWNED (IF LESS THAN 100%)
__________%
RECORDED
BOOK PAGE
PORT (IF NOT FILING PORT)
DOCUMENTATION OFFICER
4. NAME(S) AND ADDRESS(ES) OF BUYER(S) AND INTEREST TRANSFERRED TO EACH
CASINO VENTURES, LLC
3498 Highway 1 South
Post Office Box 2587
Wayside, Mississippi 38780
4.A. TOTAL INTEREST TRANSFERRED (100% UNLESS OTHERWISE SPECIFIED) __________%
4.B. MANNER OF OWNERSHIP UNLESS OTHERWISE STATED HEREIN. THIS BILL OF SALE
CREATES A TENANCY IN COMMON WITH EACH TENANT
OWNING AN EQUAL UNDIVIDED INTEREST. CHECK ONLY ONE OF THE FOLLOWING BLOCKS TO
SHOW ANOTHER FORM OF OWNERSHIP.
JOINT TENANCY WITH RIGHT OF SURVIVORSHIP TENANCY BY THE ENTIRETIES
COMMUNITY PROPERTY
OTHER (DESCRIBE)
5. CONSIDERATION RECEIVED
(ONE DOLLAR AND OTHER VALUABLE CONSIDERATION UNLESS OTHERWISE STATED)
6. I(WE) DO HEREBY SELL TO THE BUYER(S) NAMED ABOVE, THE RIGHT, TITLE AND
INTEREST IDENTIFIED IN BLOCK 4 OF THIS BILL OF SALE IN THE
PROPORTION SPECIFIED HEREIN.
This Vessel, together with electronics, computer equipment, security systems,
generators, air conditioning
equipment, slot machines, gaming equipment and other appurtenances is sold "AS
IS, WHERE IS" as stated on
the reverse side
VESSEL IS SOLD FREE AND CLEAR OF ALL LIENS, MORTGAGES, AND OTHER ENCUMBRANCES OF
ANY KIND AND NATURE, EXCEPT AS STATED ON
THE REVERSE HEREOF. VESSEL IS SOLD TOGETHER WITH AN EQUAL INTEREST IN THE MASTS,
BOWSPRIT, SAILS, BOATS, ANCHORS, CABLES,
TACKLE, FURNITURE AND ALL OTHER NECESSARIES THERETO APPERTAINING AND BELONGING
EXCEPT AS STATED ON THE REVERSE HEREOF.
7. SIGNATURES OF SELLER(S) OR PERSON(S) SIGNING ON
BEHALF OF SELLER(S).
/s/ Thomas W. Aro
8. DATE SIGNED
7/8/99
9. NAME(S) OF PERSON(S) SIGNING ABOVE, AND LEGAL CAPACITY IN WHICH SIGNED (E.G.,
OWNER, AGENT, TRUSTEE, EXECUTOR).
Thomas W. Aro, President
10. ACKNOWLEDGMENT (TO BE COMPLETED BY NOTARY PUBLIC OR OTHER OFFICIAL
AUTHORIZED BY A LAW OF A STATE OF THE UNITED STATES
TO TAKE OATHS).
ON _________________________________________ THE PERSON(S) NAMED IN SECTION
9 STATE: ________________________________________
(DATE)
ABOVE ACKNOWLEDGED EXECUTION OF THE FOREGOING INSTRUMENTCOUNTY ________________
IN THEIR STATED CAPACITY(IES) FOR THE PURPOSE THEREIN CONTAINED.
NOTARY PUBLIC _________________________________________________
MY COMMISSION EXPIRES: ______________________________________
(DATE)
<PAGE>
PREVIOUS EDITION OBSOLETESN 7530-00-F01-1020
REVERSE OF CG-1340 (REV. 9-92)
COMPLETE THIS SECTION ONLY IF VESSEL HAS NEVER BEEN DOCUMENTED AND DOES NOT HAVE
A HULL IDENTIFICATION NUMBER.
VESSEL DATA
A. BUILDER B. BUILDER'S HULL NUMBER
C. FORMER NAME(S) D. FORMER MOTORBOAT NUMBERS
E. FORMER ALIEN REGISTRATIONS
F. DIMENSIONS: L= B= D=
G. PERSON FROM WHOM SELLER OBTAINED VESSEL
SIGNATURE OF SELLER
WARRANTIES/APPURTENANCES/LIMITATIONS/EXCEPTIONS
This sale is made to the buyer(s) in the proportion specified, subject to the
following warranties and conditions: THIS VESSEL IS SOLD "AS IS, WHERE IS,"
WITHOUT ANY WARRANTY AS TO
MERCHANTABILITY, FITNESS FOR ANY PARTICULAR PURPOSE, OR SEAWORTHINESS, OR ANY
OTHER REPRESENTATION OR WARRANTY OF ANY KIND OR NATURE, EXCEPTING ONLY THAT IT
IS FREE AND CLEAR OF ALL LIENS AND ENCUMBRANCES, INCLUDING MARITIME LIENS AND
CLAIMS.
INSTRUCTIONS
1. INDICATE CURRENT DOCUMENTED NAME. (IF VESSEL HAS NEVER BEEN DOCUMENTED SELLER
MUST COMPLETE AND SIGN DATA SECTION ABOVE.)
2. INDICATE OFFICIAL NUMBER AWARDED TO VESSEL OR HULL IDENTIFICATION NUMBER
ASSIGNED BY MANUFACTURER. (IF THE VESSEL HAS NO HULL
IDENTIFICATION NUMBER AND HAS NEVER BEEN DOCUMENTED, SELLER MUST COMPLETE AND
SIGN THE VESSEL DATA SECTION ABOVE.)
3. INSERT NAMES AND ADDRESSES OF ALL PERSONS SELLING VESSEL ALONG WITH TOTAL
INTEREST OWNED BY THOSE PERSONS. IF MORE ROOM IS
NEEDED, AN ATTACHMENT MAY BE MADE SHOWING THE ADDRESSES OF THE SELLERS.
3.A. SELF-EXPLANATORY.
4. INSERT NAMES AND ADDRESSES OF ALL BUYERS, ALONG WITH THE INTEREST TRANSFERRED
TO EACH. IF THERE IS MORE THAN ONE BUYER AND NO
DIVISION OF INTEREST IS SHOWN, THIS BILL OF SALE WILL RESULT IN EACH BUYER
HOLDING AN EQUAL INTEREST. (IF MORE ROOM IS NEEDED, AN ATTACHMENT
MAY BE MADE SHOWING THE ADDRESSES OF THE BUYERS.)
4.A. SELF-EXPLANATORY.
5. OPTIONAL. IF THE AMOUNT PAID FOR THE VESSEL IS INSERTED, IT WILL BE NOTED ON
THE VESSEL'S GENERAL INDEX.
6. SELF-EXPLANATORY. USE "REMARKS" SECTION ABOVE IF VESSEL IS NOT SOLD FREE AND
CLEAR, OR TO LIST VESSEL APPURTENANCES WHICH ARE
NOT SOLD WITH THE VESSEL.
7. SELF-EXPLANATORY.
8. SHOW THE DATE ON WHICH THE INSTRUMENT IS SIGNED.
9. IN ADDITION TO THE PRINTED OR TYPED NAME OF THE SIGNER, SHOW WHETHER THAT
PERSON WAS ACTING AS AN OWNER, AS AN AGENT FOR AN
OWNER, AS TRUSTEE, AS THE PERSONAL REPRESENTATIVE OR EXECUTOR OF AN ESTATE, OR
OTHER CAPACITY WHICH ENTITLED THAT PERSON TO SIGN THE BILL OF SALE.
10. ANY ACKNOWLEDGMENT IN SUBSTANTIAL COMPLIANCE WITH THE LAW OF THE STATE WHERE
TAKEN MAY BE ATTACHED TO THIS INSTRUMENT IN LIEU OF THE PREPRINTED
ACKNOWLEDGMENT.
PRIVACY ACT STATEMENT
IN ACCORDANCE WITH 5 USC 552(A), THE FOLLOWING INFORMATION IS PROVIDED TO YOU
WHEN SUPPLYING PERSONAL INFORMATION TO THE U.S. COAST GUARD:
1. AUTHORITY. SOLICITATION OF THIS INFORMATION IS AUTHORIZED BY 46 USC, CHAPTER
313 AND 46 CFR, PART 67.
2. THE PRINCIPAL PURPOSES FOR WHICH THIS INSTRUMENT IS TO BE USED ARE:
(A) TO PROVIDE A RECORD, AVAILABLE FOR PUBLIC INSPECTION AND COPYING, OF THE
SALE OR OTHER CHANGE IN OWNERSHIP OF A VESSEL WHICH
IS DOCUMENTED, WILL BE DOCUMENTED, OR HAS BEEN DOCUMENTED PURSUANT TO 46 USC,
CHAPTER 121.
(B) PLACEMENT OF THIS INSTRUMENT IN A BOOK FOR EXAMINATION BY GOVERNMENTAL
AUTHORITIES AND MEMBERS OF THE GENERAL PUBLIC.
3. THE ROUTINE USE WHICH MAY BE MADE OF THIS FORM IS VOLUNTARY, HOWEVER, FAILURE
TO PROVIDE THE INFORMATION COULD PRECLUDE FILING
OF A BILL OF SALE AND DOCUMENTATION OF THE VESSEL NAMED HEREIN PURSUANT TO 46
USC, CHAPTER 121. MOREOVER, BILLS OF SALE WHICH ARE NOT
FILED ARE NOT DEEMED TO BE VALID AGAINST ANY PERSON EXCEPT THE GRANTOR OR A
PERSON HAVING ACTUAL KNOWLEDGE OF THE SALE (46 USC 31321(A)).
THE COAST GUARD ESTIMATES THAT THE AVERAGE BURDEN FOR THIS FORM IS 20 MINUTES.
YOU MAY SUBMIT ANY COMMENTS CONCERNING THE
ACCURACY OF THIS BURDEN ESTIMATE OR MAKE SUGGESTIONS FOR REDUCING THE BURDEN TO:
COMMANDANT (G-MV), U.S. COAST GUARD, WASHINGTON, DC
20593-0001 OR OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF INFORMATION AND
REGULATORY AFFAIRS, ATTENTION: DESK OFFICER FOR DOT/USCG, OLD
EXECUTIVE OFFICE BUILDING, WASHINGTON, DC 20503.
<PAGE>
Exhibit 99 (e)
SUPPLEMENTAL BILL OF SALE
For good and valuable consideration, JUBILATION
LAKESHORE, INC., ("Seller") does hereby grant, bargain, sell and
convey unto CASINO VENTURES, LLC, ("Buyer") all of the following
goods and equipment:
1.1 "Vessel" means, collectively, the Vessel
BAYOU CADDY'S JUBILATION CASINO
(formerly COTTON CLUB), Official Number
273756, together with all tackle and
appurtenances, including, without limitation,
electronics, security systems, computer
equipment, anchors, generators, electrical
systems, air conditioning equipment, gear,
furniture and Gaming Equipment now located on
the Vessel, including, without limitation such of
the items, if any, as are described on Exhibit A
attached hereto and are currently located on the
Vessel; and
1.2 "Gaming Equipment" means all slot
machines, tokens, gaming tables and furniture,
gaming devices and related computer equipment,
of Seller which is located on the Vessel.
Seller warrants that the above goods are free of all liens
and encumbrances and that Seller has the right to convey the same to
Buyer. As to condition, the goods are sold "AS IS, WHERE IS" without
any warranties of merchantability or fitness for a particular purpose,
expressed or implied.
Dated this 8th day of July, 1999.
JUBILATION LAKESHORE, INC.
By: /s/ Thomas W. Aro
Thomas W. Aro
President
<PAGE>
