ALPHA HOSPITALITY CORP, DEF 14A, 1999-08-25

ALPHA HOSPITALITY CORP
DEF 14A, 1999-08-25
MISCELLANEOUS AMUSEMENT & RECREATION

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SECURITIES AND EXCHANGE COMMISSION

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of
1934

Filed by Registrant [x]
Filed by a Party Other than Registrant [ ]

Check the Appropriate Box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as itted
by Rule 14a-6(e)(2))
[ x ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Exchange Act Rule
14a-11(c) or 14a-12

Alpha Hospitality Corporation
(Name of Registrant as Specified In Its Charter)

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

Payment of Filing Fee (Check the appropriate box):
[ x ] No Fee Required.
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(l) and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate Number of Securities to which transaction
applies:
3) Per unit price or the underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set
forth the amount on which the filing fee is calculated
and state how it is determined):
4) Proposed maximum aggregate value of transaction: $
5) Total fee paid: $
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee
was paid
previously. Identify the previous filing by registration
statement number,
or the Form or Schedule and the date of its filing:
1) Amount Previously Paid: $_______________.
2) Form, Schedule or Registration Statement No.:
______________
3) Filing Party:
4) Date Filed:

Copies of all communications to:

Edward Turney Savage, Esq.
Parker Duryee Rosoff & Haft, P.C.
529 Fifth Avenue
New York, New York 10017

ALPHA HOSPITALITY CORPORATION
12 East 49th Street, 24th floor
New York, New York 10017

NOTICE OF MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 16, 1999

To the Stockholders of Alpha Hospitality Corporation:

Notice is hereby given that a combined Annual and
Special Meeting (the
"Meeting") of Stockholders of Alpha Hospitality Corporation
(the "Company"), a
Delaware corporation, will be held at The Grand Hyatt Hotel,
East 42nd Street
between Park Avenue and Lexington Avenue, New York, New
York, on September
16, 1999, at 11:00 a.m. (local time) for the following purposes:

Proposal 1: To elect six members to the Board of Directors of
the Company;

Proposal 2: To consider and vote on a proposal to amend the
Company's
Certificate of Incorporation to (i) increase the number
of authorized
shares of the Company's Common Stock from
25,000,000 shares to
75,000,000 shares and (ii) to increase the number of
authorized shares
of the Company's "blank check" Preferred Stock from
1,000,000
shares to 5,000,000 shares;

Proposal 3: To consider and vote upon a proposal to adopt the
Company's 1998
Stock Option Plan;

Proposal 4: To consider and vote upon a proposal to amend the
Company's by-laws to permit the granting of compensation to
members of the
Company's Board of Directors (or any committee
thereof) as
determined by the Board of Directors, without separate
stockholder
approval;

Proposal 5: To consider and vote upon a proposal to amend the
Company's
Certificate of Incorporation to enable and authorize the
Board of
Directors to adopt, amend or repeal by-laws of the
Company;

Proposal 6: To consider and vote upon a proposal to allow the
Company's Chief
Executive Officer, subject to certain conditions, to
convert up to
$2,000,000 in accrued but unpaid salary into up to
1,000,000 shares
of the Company's Common Stock at a conversion rate
of $2.00 per
share, which per share price was the current market
price at the time
the Board of Directors adopted this proposal, subject to
stockholder
approval;

Proposal 7: Ratification of Rothstein, Kass & Company, P.C.
as the Company's
independent certified public accountants; and

to transact any such other business as may properly come before
the Meeting or any
postponement or adjournment thereof.

The Board of Directors of the Company has fixed August
6, 1999 as the
record date (the "Record Date") for the determination of
stockholders entitled to
notice of, and to vote at, the Meeting or any postponement or
adjournment thereof.
Accordingly, only stockholders of record at the close of
business on the Record Date
are entitled to notice of, and shall be entitled to vote at, the
Meeting or any
postponement or adjournment thereof.

<PAGE>

ALL STOCKHOLDERS ARE CORDIALLY INVITED
TO ATTEND
THE MEETING. YOUR VOTE IS IMPORTANT. TO
ENSURE YOUR
REPRESENTATION AT THE MEETING, PLEASE
COMPLETE, SIGN AND
PROMPTLY MAIL YOUR PROXY IN THE RETURN
ENVELOPE PROVIDED.
YOUR FAILURE TO EXERCISE YOUR VOTE WILL HAVE
THE EFFECT OF
A VOTE AGAINST THE PROPOSED AMENDMENTS OF
THE CERTIFICATE
OF INCORPORATION. Submitting a proxy will not prevent
you from voting in
person, should you so desire, but will help to secure a quorum
and will avoid added
solicitation costs. You may revoke your proxy at any time
before it is voted at the
Meeting.

By Order of the Board of Directors,

/s/Stanley S. Tollman /s/ Thomas W. Aro
Stanley S. Tollman Thomas W. Aro
Chairman of the Board, President Vice President and
Secretary
and Chief Executive Officer

August 16, 1999

<PAGE>

ALPHA HOSPITALITY CORPORATION
12 EAST 49TH STREET, 24th floor
NEW YORK, NEW YORK 10017
__________________

PROXY STATEMENT
__________________
ANNUAL AND SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD AT 11:00 a.m. AT THE GRAND HYATT
HOTEL
EAST 42nd STREET BETWEEN PARK AVENUE AND
LEXINGTON
AVENUE
NEW YORK, NEW YORK
SEPTEMBER 16, 1999

This Proxy Statement is furnished in connection with the
solicitation by the
Board of Directors of Alpha Hospitality Corporation (the
"Company") for use at a
combined Annual and Special Meeting of Stockholders of the
Company (the
"Meeting") to be held at 11:00 a.m. at the Grand Hyatt Hotel,
East 42nd Street
between Park Avenue and Lexington Avenue, New York, New
York, on September
16, 1999, and at all adjournments and postponements thereof.
This Proxy Statement,
with the accompanying Notice of Meeting and form of proxy,
are first being sent to
the stockholders on or about August 17, 1999.

A proxy card is enclosed. Whether or not you plan to
attend the Meeting
in person, please date, sign and return the enclosed proxy card
as promptly as
possible in the postage prepaid envelope provided to ensure that
your shares will be
voted at the Meeting. Any stockholder who returns a proxy has
the power to revoke
it at any time prior to its effective use by filing an instrument
revoking it, or a duly
executed proxy bearing a later date, with the Secretary of the
Company, or by
attending the Meeting and voting in person. Unless otherwise
instructed, any such
proxy, if not revoked, will be voted at the Meeting "FOR" each
of the proposals set
forth in this Proxy Statement and as recommended by the
Company's Board of
Directors (the "Board"), in its discretion, with regard to all other
matters that may
properly come before the Meeting. The Company does not
currently know of any
such other matters.

At the Record Date, there were outstanding 16,788,228
shares of the
Company's Common Stock, 821,496 shares of the Company's
Series B Preferred
Stock and 135,162 shares of the Company's Series C Preferred
Stock. The presence,
either in person or represented by proxy, of persons entitled to
exercise a majority
of all votes entitled to be exercised by all of the Company's
outstanding capital stock
(i.e., the Common Stock, the Series B Preferred Stock and the
Series C Preferred
Stock) is necessary to constitute a quorum for the transaction of
business at the
Meeting.

Each share of Common Stock issued and outstanding on
the Record Date
is entitled to one vote, each share of Series B Preferred Stock is
entitled to eight (8)
votes, and each share of Series C Preferred Stock is entitled to
twenty-four (24)
votes on any matter presented for consideration and action by
the stockholders at the
Meeting. A quorum being present, a majority of the votes cast
are necessary to pass
each of the proposals to be made at the Meeting other than the
proposals to amend
the Certificate of Incorporation, which requires a majority of all
votes entitled to be
exercised by all of the Company's outstanding capital stock (i.e.,
the Common Stock,
the Series B Preferred Stock and the Series C Preferred Stock),
and other than the
election of directors, who are elected by a plurality of the votes
cast.

The cost of preparing, assembling, printing and mailing
this Proxy
Statement and the accompanying form of proxy, and the cost of
soliciting proxies
relating to the Meeting, will be borne by the Company. The
Company intends to
request banks and brokers to solicit their customers who
beneficially own Common
Stock listed of record in names of nominees and will reimburse
such banks and
brokers for their reasonable out-of-pocket expenses for such
solicitations. To the
extent solicitation of the holders of the Company's outstanding
shares of Preferred
Stock (whether Series B or C) may be deemed necessary, the
Company (through its
directors and officers) anticipates making such solicitation
directly. The solicitation
of proxies by mail may be supplemented by telephone, telegram
and personal
solicitation by officers, directors and other employees of the
Company, but no
additional compensation will be paid to such individuals.

<PAGE>

THE MEETING

Time and Place of Special Meeting

The Meeting is scheduled to be held at 11:00 a.m., local
time, on the 16th
of September, 1999 at The Grand Hyatt Hotel, East 42nd Street
between Park
Avenue and Lexington Avenue, New York, New York.

Purpose of the Meeting

At the Meeting, the Company's stockholders will be asked
(a) to elect six
members to the Board for the ensuing year, (b) to consider and
vote on a proposal
to amend the Company's Certificate of Incorporation to (i)
increase the number of
authorized shares of the Company's Common Stock from
25,000,000 shares to
75,000,000 shares and (ii) increase the number of authorized
shares of the
Company's "blank check" Preferred Stock from 1,000,000
shares to 5,000,000
shares, (c) to consider and vote upon the adoption of the
Company's 1998 Stock
Option Plan, (d) to consider and vote upon a proposal to amend
the Company's by-laws to permit the granting of compensation
to members of the Board (or any
committee thereof) as determined by the Board, without
separate stockholder
approval, (e) to consider and vote upon a proposal to amend the
Company's
Certificate of Incorporation to enable and authorize the Board to
adopt, amend or
repeal by-laws of the Company, (f) to consider and vote upon a
proposal to allow
Stanley S. Tollman (the Company's President, Chief Executive
Officer and
Chairman of the Board), subject to certain conditions, to
convert up to $2,000,000
in accrued but unpaid salary into up to 1,000,000 shares of the
Company's common
stock at a conversion rate of $2.00 per share (such price being
the market price of
a share of Common Stock on the date the Board adopted the
proposal, subject to
stockholders approval), (g) to ratify Rothstein, Kass &
Company, P.C. as the
Company's independent certified public accountants, and (h) to
transact any such
other business as may properly come before the Meeting or any
postponement or
adjournment thereof.

Voting and Solicitation of Proxies

All shares of Common Stock and Series B and Series C
Preferred Stock
represented at the Meeting by properly executed proxies
received prior to the vote
at the Meeting, unless previously revoked (as described
immediately below), will be
voted in accordance with the instructions thereon. Where a
properly signed proxy
is returned and no instructions are given, proxies will be voted
FOR (i) the election
of the nominees named herein as members of the Board, (ii) the
proposed
amendments to the Company's Certificate of Incorporation, (iii)
the adoption of the
Company's 1998 Stock Option Plan, (iv) the proposed
amendment to the
Company's by-laws, (v) the proposal to allow Stanley S.
Tollman, subject to certain
conditions, to convert unpaid salary into shares of Common
Stock, and (vi) the
ratification of Rothstein, Kass & Company, P.C. as the
Company's independent
certified public accountants. No matters other than those
referred to above are
presently scheduled to be considered at the Meeting. A broker
who holds shares in
street name will not be entitled to vote on either of the
proposals to amend the
Certificate of Incorporation without instructions from the
beneficial owner of such
shares. This inability to vote is referred to as a broker non-vote.
Stockholder
abstentions and broker non-votes will be counted for purposes
of determining the
existence of a quorum at the Meeting. However, because, under
the General
Corporation Law of the State of Delaware and the Company's
Certificate of
Incorporation and by-laws, the proposals to amend the
Certificate of Incorporation,
in order to be approved, must be approved by vote of holders of
shares of the capital
stock of the Company entitled to exercise a majority of all of
the votes attendant or
attributable to all of the Company's outstanding Common Stock,
Series B Preferred
Stock and Series C Preferred Stock, abstentions and broker
non-votes will have the
same effect as a vote against such proposals.

Any proxy may be revoked by the person giving it at any
time before it is
voted. A proxy may be revoked by filing with the Secretary of
the Company (12
East 49th Street, 24th floor, New York, New York 10017)
either (i) a written notice
of revocation bearing a date later than the date of such proxy or
(ii) a subsequent
proxy relating to the same shares, or by attending the Meeting
and voting in person
(although attendance at the Meeting will not, in and of itself,
constitute revocation of a proxy).

<PAGE>

Proxies are being solicited by and on behalf of the
Company. The
Company will solicit proxies by mail, and the directors, officers
and employees of
the Company may also solicit proxies by telephone, telegram or
personal interview.
Those persons will receive no additional compensation for these
services but will be
reimbursed for reasonable out-of-pocket expenses. The
Company will bear the costs
of preparing and mailing the proxy materials to stockholders in
connection with the
Meeting. Arrangements will be made to furnish copies of the
proxy materials to
fiduciaries, custodians and brokerage houses for forwarding to
beneficial owners of
shares of Common Stock. Such persons will be paid reasonable
out-of-pocket
expenses.

Shares Entitled to Vote

The close of business on August 6, 1999 has been fixed as
the record date
(the "Record Date") for determining the stockholders entitled to
notice of and to vote
at the Meeting. As of the Record Date, there were 16,788,228
shares of Common
Stock, 821,496 shares of Series B Preferred Stock and 135,162
shares of Series C
Preferred Stock of the Company issued and outstanding and
entitled to vote.

Each share of Common Stock entitles the holder thereof to
one vote, each
share of Series B Preferred Stock entitles the holder thereof to
eight (8) votes, and
each share of Series C Preferred Stock entitles the holder
thereof to twenty-four (24)
votes. Accordingly, a total of 26,604,084 votes may be cast at
the Meeting. The
holders of shares of Common Stock and Preferred Stock
(whether Series B or Series
C) representing a majority of all votes entitled to be cast at the
Meeting, present in
person or represented by proxy at the Meeting, shall constitute a
quorum.
Abstentions and broker non-votes are counted as present in
determining whether the
quorum requirement is satisfied.

Vote Required

A quorum being present at the Meeting, the directors shall
be elected by a
plurality of the votes cast, and ratification or approval of the
1998 Stock Option
Plan, ratification or approval of the proposed amendment of the
Company's by-laws,
ratification or approval of the proposal to allow Mr. Tollman to
convert accrued but
unpaid salary into shares of Common Stock and ratification of
Rothstein, Kass &
Company, P.C. as the Company's independent certified public
accountants shall
require the affirmative vote of a majority of the votes cast. A
majority of all votes
entitled to be exercised by all of the Company's outstanding
capital stock (i.e., the
Common Stock, the Series B Preferred Stock and the Series C
Preferred Stock) will
be necessary for the approval of the proposals to amend the
Certificate of
Incorporation. Abstentions and broker non-votes will be
counted as votes against
such proposal to amend the Certificate of Incorporation. A
broker non-vote occurs
when a nominee holding shares for a beneficial owner does not
vote on a proposal
because the nominee does not have discretionary voting power
and has not received
instructions from the beneficial owner.

The Company's by-laws, as originally drafted, did not
contemplate the
issuance of shares of capital stock that were entitled to other
than one vote per share.
Consequently, upon the issuance of shares of Preferred Stock
(which are entitled to
8 votes per share with respect to the Series B Preferred Stock
and 24 votes per share
with respect to the Series C Preferred Stock), certain provisions
of the Company's
by-laws (e.g., those providing for the establishment of a quorum
and the vote
necessary to approve various actions), which spoke in terms of
holders of a
prescribed number of shares (rather than shares entitled to
exercise a prescribed
number of votes), became no longer appropriate. Consequently,
by written consent
of stockholders entitled to exercise a majority of all votes
attendant or attributable
to all of the Company's outstanding capital stock, those
provisions have been
revised, effective July 21, 1999, to reflect that the determining
factor relates to the
number of votes represented by shares, rather than merely by
the number of shares.
A copy of such written consent is attached hereto as Exhibit A.

<PAGE>

Shares Committed

The Company has been advised by various members of
management and
the Board and others who, in the aggregate, hold or otherwise
have voting power
with respect to 6,246,685 shares of Common Stock
(representing approximately
37% of the shares of Common Stock outstanding) that they
intend to vote such
shares in favor of each of the proposals to be presented for
consideration and
approval at the Meeting, including the election of each of the
candidates nominated
to serve on the Board. The Company has also been advised by
each of Bryanston
Group, Inc. ("Bryanston") and BP Group Inc. ("BP") that it
intends to vote all of its
shares of Preferred Stock in favor of each of such proposals. If
the shares of
Common Stock referred to above are voted, as management has
been advised they
will be, in favor of each of such proposals and if Bryanston
(which, as of the Record
Date, owned of record 777,238 shares of Series B Preferred
Stock (or approximately
94.6% of the outstanding shares of Series B Preferred Stock),
entitling it to exercise
6,217,904 votes, and 135,162 shares of Series C Preferred Stock
(or 100% of the
outstanding shares of Series C Preferred Stock), entitling it to
exercise 3,243,888
votes, and BP (which, as of the Record Date, owned of record
44,258 shares of
Series B Preferred Stock (or approximately 5.4% of the
outstanding shares of Series
B Preferred Stock), entitling it to exercise 354,064 votes, vote
all of their respective
shares of Preferred Stock in favor of each of such proposals,
approximately 60% of
the total votes eligible to be cast at the Meeting will be voted in
favor of each of the
proposals and, as a result, each of such proposals (including the
election of each of
the candidates nominated to serve on the Board) will be
approved notwithstanding
the manner in which votes are cast by holders of any other
shares of the Company's
capital stock.

No Appraisal Rights

Under the General Corporation Law of the State of
Delaware, stockholders
of the Company do not have appraisal rights in connection with
any of the proposals
upon which a vote is scheduled to be taken at the Meeting.

<PAGE>

OWNERSHIP OF SECURITIES
Only stockholders of record at the close of business on
August 6, 1999 (the
"Record Date"), the date fixed by the Board of Directors in
accordance with the
Company's by-laws, are entitled to notice of, and to vote at, the
Meeting. As of such
date, there were issued and outstanding 16,788,228 shares of
Common Stock,
821,496 shares of Series B Preferred Stock and 135,162 shares
of Series C Preferred
Stock. The holders (present in person or represented by proxy at
the Meeting) of
outstanding shares of Common Stock and Preferred Stock,
taken together, entitled
to exercise a majority of votes with respect to all outstanding
shares of capital stock,
is necessary to constitute a quorum for the Meeting.

Each outstanding share of Common Stock is entitled to
one vote on all
matters properly coming before the Meeting. Each share of
Series B Preferred Stock
is entitled to eight (8) votes on all such matters, and each share
of Series C Preferred
Stock is entitled to twenty-four (24) votes on all such matters.

The following table sets forth certain information as of the
Record Date,
with respect to each beneficial owner of five percent (5%) or
more of the outstanding
shares of any class of stock, each officer of the Company, each
director of the
Company, each individual nominated to be elected a director
and all officers and
directors of the Company as a group. Unless otherwise
indicated, the address of
each such person or entity is c/o Alpha Hospitality Corporation,
12 East 49th Street,
24th floor, New York, New York 10017.

Title of Class Name and Address No. of Shares (1) Percent of Class
<S> <C> <C> <C>
Common Stock Stanley S. Tollman (2) 0 0
$.01 par value Beatrice Tollman (2) 1,815,890 10.8
Thomas W. Aro (3) 189,500 1.1
Brett G. Tollman (4) 1,719,875 10.1
James A. Cutler (5)(6) 56,320 .4
Matthew B. Walker (6) 404,237 2.4
Herbert F. Kozlov (6) 0 0
Craig Kendziera (7) 12,300 .07
Robert Steenhuisen (8) 70,000 .4
Bryanston Group, Inc.(9) 8,979,793 38.4

All Officers and Directors
as a group (8 persons)(2, 3-8) 2,462,232 14.3

Series B Bryanston Group, Inc. (9) 777,238 94.6
Preferred Stock BP Group, Ltd. (10) 44,258 5.4
$29.00 liquidation 5111 Isleworth Country Club Dr.
value Windmere, FL 34786

Series C Bryanston Group, Inc. (11) 135,162 100
Preferred Stock
$72.00 liquidation
value
</TABLE>
_________________
(1) Each person exercises sole voting and dispositive power
with respect
to the shares reflected in the table, except for those shares
of Common
Stock that are issuable upon the exercise of options or the
conversion
of Preferred Stock, which shares of Common Stock
cannot be voted
until the options are exercised shares of Common Stock
or such
Preferred Stock is converted by the holders thereof. The
table
includes for each separate beneficial owner,acquired upon
exercise of
options or conversion of convertible securities that are
presently
exercisable or convertible or become exercisable or
convertible within 60 days.

<PAGE>

(2) Stanley S. Tollman, the Chairman of the Board, Chief
Executive
Officer and President of the Company, is the spouse of
Beatrice
Tollman. Stanley S. Tollman disclaims beneficial
ownership of the
shares beneficially owned by Beatrice Tollman. Does not
include
250,000 shares of Common Stock issuable upon the
exercise of
options granted to Mr. Tollman, which grant is subject to
stockholder
approval as part of the 1998 Stock Option Plan. Does not
include the
right of Mr. Tollman to convert, under certain conditions,
up to
$2,000,000 of accrued but unpaid salary into up to
1,000,000 shares
of Common Stock at a conversion rate of $2 per share,
which is
subject to stockholder approval as Proposal 6 hereof.

(3) Includes 160,000 shares of Common Stock issuable upon
the exercise
of options granted to Mr. Aro and 7,500 shares of
Common Stock
issuable upon the exercise of warrants purchased by Mr.
Aro, all of
which options and warrants are currently exercisable.
Excludes
130,000 shares of Common Stock issuable upon the
exercise of
options granted to Mr. Aro, which grant is subject to
stockholder
approval as part of the 1998 Stock Option Plan.

(4) Includes 160,000 shares of Common Stock issuable upon
the exercise
of options granted to Brett G. Tollman, all of which
options are
currently exercisable, and 1,000,000 shares held in the
Tollman
Family Trust, of which Brett G. Tollman is the sole
Trustee. Brett G.
Tollman is the son of Stanley S. Tollman and Beatrice
Tollman. Each
of Brett G. Tollman, Stanley S. Tollman and Beatrice
Tollman
disclaims beneficial ownership of the shares beneficially
owned by
any of the other of them. Excludes 115,000 shares
issuable upon the
exercise of options granted to Mr. Tollman, which grant
is subject to
stockholder approval as part of the 1998 Stock Option
Plan.

(5) Includes 40,000 shares of Common Stock issuable upon
the exercise
of options granted to Mr. Cutler, all of which options are
currently
exercisable. Does not include 4,000 shares owned by Mr.
Cutler's
children, of which shares he disclaims beneficial
ownership.

(6) Does not include shares of Common Stock issuable upon
the exercise
of options granted in 1998 and 1999 to the Company's
non-employee
directors, Messrs. Kozlov, Cutler and Walker, in
consideration for
their rendering of service to the Company. In May 1998
options were
granted to Mr. Kozlov for up to 40,000 shares, to Mr.
Cutler for up to
55,000 shares, and to Mr. Walker for up to 40,000 shares.
In
December 1998 the Board granted options to Mr. Kozlov
for up to
55,000 shares, to Mr. Walker for up to 40,000 shares and
to Mr. Cutler
for up to 55,000 shares. In May 1999 the Board granted
options to
purchase 50,000 shares to each of Messrs. Kozlov, Cutler
and Walker
bringing their respective option totals to 145,000, 160,000
and
130,000. All of the aforementioned options were granted
by the
Board subject to approval by the stockholders of the
Company's
proposed 1998 Stock Option Plan, and will be rescinded
if such Plan
is not so approved.

(7) Includes 12,000 shares of Common Stock issuable upon
the exercise
of options granted to Mr. Kendziera, which are currently
exercisable.
Excludes 58,000 shares which are issuable upon the
exercise of
options granted to Mr. Kendziera, which grant is subject
to
stockholder approval as part of the 1998 Stock Option
Plan.

(8) Includes 70,000 shares of Common Stock issuable upon
the exercise
of options granted to Mr. Steenhuisen, all of which are
immediately
exercisable.

(9) Includes: (i) 2,414,063 shares of Common Stock owned
by Bryanston
Group, Inc. ("Bryanston"); (ii) 6,217,904 shares of
Common Stock
issuable upon conversion of 777,238 shares of Series B
Preferred
Stock owned by Bryanston; and (iii) 347,826 shares of
Common
Stock issuable upon the exercise of options granted to
Bryanston. All
of such options are currently exercisable for, and all of
such shares of
Preferred Stock, are convertible into, shares of Common
Stock.
Excludes 3,243,888 shares of Common Stock, which
would be
issuable upon the conversion of 135,162 shares of Series
C Preferred
Stock owned by Bryanston, since such shares of Series C
Preferred
Stock are not eligible to be converted until after
stockholder approval
of Proposal 2 and the subsequent filing of an appropriate
amendment
to the Company's Certificate of Incorporation. As of
January 31
1999, the Company became obligated to issue to
Bryanston
approximately 1,900,000 and 255,000 additional shares of
Common
Stock, with respect to, and in lieu of, the cash dividend
payable on

<PAGE>

Bryanston's shares of Series B Preferred Stock and Series
C Preferred
Stock, respectively, for the 1998 calendar year. None of
such shares
of Common Stock is included in the table above as they
have not yet
been issued. Bryanston is an affiliate of the Company,
and Beatrice
Tollman, Stanley S. Tollman's spouse, is a 50%
stockholder of
Bryanston. Each of Bryanston and Beatrice Tollman
disclaims
beneficial ownership of the shares beneficially owned by
the other of
them.

(10) Patricia Cohen, who was a Director of the Company
during the period
February 1, 1994 to December 12, 1997, is the sole
stockholder of BP.
As of January 30, 1999, the Company became obligated
to issue to BP
approximately 110,000 additional shares of Common
Stock with
respect to, and in lieu of, the cash dividend payable on
BP's shares of
Series B Preferred Stock for the 1998 calendar year.
None of such
shares of Common Stock is included in the table above as
they have
not yet been issued.

(11) In connection with the retirement of $9,731,664 of debt
of the
Company held by Bryanston, the Company issued to
Bryanston
135,162 shares of Series C Preferred Stock.

The following table sets forth, with respect to each
nominee for Director and with respect to Bryanston, the
number of shares of
Common Stock and Preferred Stock purchased or sold during
the past two years and
the dates such shares were purchased or sold.
<TABLE>
<CAPTION>
Common Stock
Date Shares Purchased Shares Sold
<S> <C> <C> <C>
Thomas W. Aro 6/18/99 10,000
6/22/99 10,000

James A. Cutler: 2/09/99 2,000
2/10/99 8,000
2/11/99 10,000
2/26/99 10,000
5/17/99 10,000
6/25/99 10,000

Bryanston: 5/12/98(1) 730,331
1/05/99(2) 1,518,232

</TABLE>

(1) Comprised of shares of Common Stock issued to
Bryanston in lieu of the
cash dividend payable on and with respect to Bryanston's
shares of Series
B Preferred Stock for 1996.
(2) Comprised of shares of Common Stock issued to
Bryanston in lieu of the
cash dividend payable on and with respect to Bryanston's
shares of Series
B Preferred Stock for 1997.

<PAGE>
<TABLE>
<CAPTION>
Preferred Stock
Date Shares Purchased Shares Sold
<S> <C> <C> <C>
Bryanston 9/30/97(1) 83,333 Series B --
6/30/98(2) 135,162 Series C --
</TABLE>
___________________
(1) In September 1997, Bryanston converted $2 million of
indebtedness owed
to it by the Company into 83,333 shares of Series B
Preferred Stock.
(2) In June 1998, Bryanston converted $9,731,664 of
indebtedness owed to it
by the Company into 135,162 shares of Series C Preferred
Stock.

No other nominee for Director has purchased or sold any
shares of stock
in the Company during the past two years, and except as noted
in the above table,
during the last two years, Bryanston has not purchased or sold
any shares of
Common Stock or Preferred Stock.

<PAGE>

PROPOSAL 1

ELECTION OF DIRECTORS

Six (6) directors are to be elected at the Meeting to serve
(subject to their
respective earlier removal, death or resignation) until the next
annual meeting of
stockholders and until their respective successors are elected
and qualified. Unless
such authority is withheld, proxies will be voted for the
election of the six (6)
persons named below, all of whom are now serving as
directors and each of whom
has been designated as a nominee. If, for any reason not
presently known, any
person is not available to serve as director, another person who
may be nominated
will be voted for in the discretion of the proxies.

<TABLE>
<CAPTION>
Name Age Position With the Company
<S> <C> <C>
Stanley S. Tollman . . . 68 Chairman of the Board, Chief
Executive Officer and President
Thomas W. Aro . . . . . 57 Vice President, Secretary, and
Director
Brett G. Tollman . . 37 Vice President and Director

James A. Cutler . . . . . 47 Director

Matthew B. Walker. . . . . 48 Director

Herbert F. Kozlov. . . . . 46 Director

Stanley S. Tollman has served as Chairman of the Board
of Directors and
Chief or Co-Chief Executive Officer of the Company since its
formation. Since
March 1995, Mr. Tollman has served as President. He served
as Chairman of the
Tollman-Hundley Hotel Group from 1979 to June 1996. He
currently serves as
Chairman of Bryanston Group, Inc. ("Bryanston"), a hotel
management company,
and of Trafalgar Tours International, a tour operator. He has
also served as
Chairman of the Board of Directors of Buckhead America
Corporation, which was
formerly the franchisor of Days Inn Hotels. The business
addresses of Bryanston
and Trafalgar Tours International are, respectively, 1886 Route
52, Hopewell
Junction, New York and 5 Reid Street, Hamilton, Bermuda.

Thomas W. Aro has served as a Director of the Company
since February 1,
1994 and as Executive Vice President of the Company since its
formation. Mr. Aro
also serves as President and Chief Operating Officer of the
Company's subsidiaries
Alpha Gulf Coast, Inc., Alpha Monticello, Inc. and Alpha
Florida Entertainment, Inc.
He has served as Executive Vice President of Bryanston from
1989 through March 1996.

Brett G. Tollman has served as a Vice President of the
Company from its
formation until October 29, 1993, and was re-elected to that
position and was elected
a Director of the Company on February 1, 1994. He served as
Executive Vice
President of the Tollman-Hundley Hotel Group from 1984 to
June 1996. Mr.
Tollman currently serves as President of Tollman-Hundley
Hotel Group. He also
serves as Director and President of Bryanston. Mr. Tollman is
the son of Stanley S.
Tollman, the Chairman of the Board, Chief Executive Officer
and President of the Company.

James A. Cutler is the President and CEO of Truckee
Resorts, Inc., a real
estate development company of which he is a co-founder. He
previously served as
Treasurer and Chief Financial Officer of the Company since its
formation until his
resignation on March 6, 1998. He also served as Secretary of
the Company from
October 29, 1993 to February 1, 1994. Mr. Cutler was elected
a Director of the
Company on June 12, 1995. He served as Senior Vice
President and Treasurer of
the Tollman-Hundley Hotel Group until June 1997.

Matthew B. Walker has served as a Director of the
Company since
December 1995. He is an independent businessman involved
in international
business ventures, including the Brazilian based Walker
Marine Oil Supply
Business, to which he has been a consultant since 1988. Mr.
Walker co-founded the
Splash Casino in Tunica, Mississippi, in February 1993, where
he remained
employed until October 1995. In February 1994, he
co-founded the Cotton Club

<PAGE>

Casino in Greenville, Mississippi, where he remained
employed and was a
stockholder until October 1995. In addition, since 1972, Mr.
Walker has been
involved in numerous real-estate transactions as a consultant
and has managed E.B.
Walker & Son Lumber Company, a family-owned lumber
business in Alabama.

Herbert F. Kozlov has served as a Director of the
Company since his
appointment upon the resignation of Mr. Sanford Freedman in
March 1998. Mr.
Kozlov is a member of the law firm of Parker Duryee Rosoff
& Haft, P.C., where
he has been a partner since 1989. Mr. Kozlov is also a director
of HMG Worldwide
Corporation and Worldwide Entertainment & Sports Corp.
Parker Duryee Rosoff
& Haft provides legal services to the Company and receives
fees for such services
from the Company.

Each Director is elected for a period of one year at the
Company's annual
meeting of stockholders and (subject to earlier removal, death
or resignation) serves
until his/her successor is elected and qualified. Vacancies and
newly created
directorships resulting from any increase in the number of
authorized directors may
be filled by a majority vote of Directors then in office.
Officers are elected by and
serve at the pleasure of the Board.

Committees and Meetings of the Board of Directors

The Board has four committees - the Executive
Committee, the Audit
Committee, the Compensation Committee and the Stock
Option Committee. The
Executive Committee, which is comprised of Stanley S.
Tollman, Thomas W. Aro
and Brett G. Tollman, has the same authority to act as the
Board (with certain
limitations prescribed by the General Corporation Law of the
State of Delaware).
The Audit Committee, which is comprised of Herbert F.
Kozlov, James A. Cutler
and Thomas W. Aro, is responsible for reviewing, with both
the Company's
independent certified public accountants and management, the
Company's
accounting and reporting principles, policies and practices, as
well as the Company's
accounting, financial and operating controls and staff. The
Compensation
Committee, which is comprised of Stanley S. Tollman,
Matthew B. Walker, Thomas
W. Aro and (as of 1999) Herbert F. Kozlov, is responsible for
establishing and
reviewing the appropriate compensation of directors and
officers of the Company
and for reviewing employee compensation plans. The Stock
Option Committee,
which is comprised of Stanley S. Tollman, Matthew B. Walker
and James A. Cutler,
is responsible for considering and making grants and awards
under, and
administering, the Company's 1993 Stock Option Plan and, if
the 1998 Stock Option
Plan is approved by the stockholders, will also be responsible
for considering and
making grants and awards under, and administering, that Plan.

During the 1997 fiscal year, there were no formal
meetings of any of the
Company's committees other than the Executive Committee,
and there was no
unanimous written consent of any of the Company's
committees. During 1997, the
Executive Committee held 3 meetings (at which all three
members of such
Committee were present) and advised the other members of the
Board of the matters
discussed at such meetings. During the 1998 fiscal year, there
was one formal
meeting of each of the Company's committees. During such
fiscal year, there were
also five meetings of the Board, on February 28th, May 12th,
June 4th, September
15th and December 10th, at which all of the Directors were
present, and there were
no unanimous written consents of the Board.

Certain Proceedings Involving Management

Messrs. Stanley S. Tollman and Brett G. Tollman were
limited partners of
six limited partnerships, each of which was the owner of an
individual hotel, that
filed Chapter 11 proceedings in 1991. Mr. Stanley S. Tollman
was the stockholder
of the corporate general partners of the limited partnerships.
Messrs. Stanley S.
Tollman, Brett G. Tollman and James A. Cutler were directors
and/or officers of
such corporate general partners. Faced with the threat of
foreclosure, the six limited
partnerships filed for protection under the Bankruptcy Code.
With regard to five of
the bankruptcy proceedings, the Bankruptcy Court lifted the
bankruptcy stay and
permitted foreclosure sales of the hotels. With regard to the
sixth hotel, a Plan of
Reorganization has been approved by the Bankruptcy Court,
which approval was
appealed by the lender to the U.S. District Court. The U.S.
District Court confirmed
the decision below, and the lender further appealed to the
Court of Appeals for the
Fifth Circuit, which affirmed the decision of the U.S. District
Court. The Plan of Reorganization has been implemented.

<PAGE>

Kissimmee Lodge, Ltd. ("KLL"), a Florida limited
partnership, filed a
Chapter 11 proceeding in the United States Bankruptcy Court
for the Middle District
of Florida in June 1994. The proceeding was filed to prevent
the imminent
foreclosure of the Days Suites hotel owned by KLL. Messrs.
Stanley S. Tollman and
Brett G. Tollman hold limited partnership interests in KLL,
and Mr. Stanley S.
Tollman is a stockholder of the corporate general partner of
KLL. Messrs. Stanley
S. Tollman and James A. Cutler were directors and/or officers
of such corporate
general partner. A Plan of Reorganization for KLL was
confirmed by the
Bankruptcy Court and has been declared effective.

Emeryville Days Limited Partnership ("Emeryville"), a
California limited
partnership, filed a Chapter 11 proceeding in the United States
Bankruptcy Court for
the Eastern District of California in May 1996. The
proceeding was filed to prevent
the imminent foreclosure of the Days Inn hotel owned by
Emeryville. Messrs.
Stanley S. Tollman and Brett G. Tollman hold limited
partnership interests in
Emeryville, and Mr. Stanley S. Tollman is a stockholder of the
corporate general
partner of Emeryville. Messrs. Stanley S. Tollman and James
A. Cutler were
directors and/or officers of such corporate general partner.
Subsequent to the filing
of this proceeding, the subject hotel property was sold, and as a
result, funds became
available to pay all creditors, other than the holder of the
second deed of trust, which
holder agreed to settle its claim for a reduced amount, which
has been paid. As a
consequence of the foregoing, this proceeding was dismissed.

T.H. Orlando, Ltd. ("Orlando") and T.H. Resorts
Associates, Ltd.
("Resorts"), filed a Chapter 11 proceeding in the United States
Bankruptcy Court for
the Middle District of Florida, Orlando Division in February
1997. The proceeding
was filed to prevent the imminent foreclosure of three Days
Inn hotels owned by
Orlando and Resorts. Mr. Stanley S. Tollman holds a limited
partnership interest in
Orlando and Resorts and is a stockholder of the corporate
general partners of
Orlando and Resorts, and Messrs. Stanley S. Tollman, Brett G.
Tollman and James
A. Cutler were directors and/or officers of such corporate
general partners. In
August 1997, Orlando and Resorts agreed to a settlement with
its secured lender
resulting in the sale of the hotel properties and dismissal of that
proceeding.

Certain Business Relationships

The Company recently consummated a transaction in
which it contributed
its dormant Jubilation Casino vessel to Casino Ventures LLC
("Ventures"). Pursuant
to such transaction, that vessel was sold to Ventures in
consideration for (a)
$150,000 cash, (b) Venture's three-year promissory note in the
principal amount of
$1,350,000 and (c) a 93% interest in Ventures (which interest
is subject to reduction
to 35% upon repayment of the aforesaid promissory note and
to a further reduction
to 15% upon the consummation of an infusion of at least $2
million of new equity
capital into Ventures). Mr. Matthew B. Walker (a Director and
candidate to be
elected to the Board) is anticipated to have up to a 40% interest
in Ventures upon the
reduction of the Company's interest as contemplated above.

Stockholder Vote Required. A quorum being present, the
election of the
Directors will require the affirmative vote of the holders,
present in person or
represented by proxy at the Meeting, of shares entitled to cast a
plurality of the votes
cast at the Meeting.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE ELECTION TO THE
BOARD OF DIRECTORS OF THE COMPANY OF EACH
OF THE NOMINEES.

<PAGE>

PROPOSAL 2

AMENDMENT OF THE COMPANY'S CERTIFICATE OF
INCORPORATION TO
INCREASE THE AMOUNT OF AUTHORIZED CAPITAL
STOCK

At the Meeting, stockholders will be asked to approve or
ratify an
amendment to the Company's Certificate of Incorporation (the
"Certificate")
proposed by resolution of the Board which (i) would increase
the number of
authorized shares of Common Stock by fifty (50) million
shares and (ii) would
increase the number of authorized shares of the Company's
"blank check" Preferred
Stock by four (4) million shares.

The Company's authorized capital stock currently consists
of 25,000,000
shares of Common Stock and 1,000,000 shares of "blank
check" Preferred Stock,
of which 821,496 shares have been designated, and issued, as
Series B Preferred
Stock and 135,162 shares have been designated, and issued, as
Series C Preferred
Stock. Pursuant to the Certificate, the Board is empowered to
create and designate
classes of Preferred Stock for issuance, without stockholder
approval. As of June
30, 1998, the Company agreed to newly designate and issue the
Series C Preferred
Stock to Bryanston Group, Inc. ("Bryanston") in consideration
for the forgiveness
by Bryanston of $9,731,664 of the Company's debt which
Bryanston held. The
Certificate of Designation was filed with the Secretary of State
of Delaware on July
24, 1998, establishing the Series C Preferred Stock and setting
forth its rights and
designations.

As of the Record Date, there were issued and outstanding
16,788,228
shares of Common Stock; however, as noted below, the
Company does not have
sufficient shares of Common Stock reserved for issuance to
cover the conversion of
all of its outstanding Preferred Stock and the exercise of all of
its outstanding options
and warrants.

Each share of Series B Preferred Stock is convertible into
8 shares of
Common Stock, making the entire Series B Preferred Stock, as
issued and
outstanding as of the Record Date, convertible into 6,571,968
shares of Common
Stock. Bryanston, as the holder of 777,238 shares of Series B
Preferred Stock, has
agreed not to convert any of those shares into Common Stock
unless and until the
Company has increased its authorized shares of Common
Stock to permit such
exercise. Each share of Series C Preferred Stock is convertible
(subject to the
condition described below) into 24 shares of Common Stock,
making the entire
Series C Preferred Stock, as issued and outstanding as of the
Record Date,
convertible into 3,243,888 shares of Common Stock. The
Series C Preferred Stock
is so convertible, however, only after Proposal 2 as described
herein is approved and
an appropriate amendment of the Certificate is filed with the
Secretary of State of
Delaware. Additionally, there are currently issued and
outstanding options and/or
warrants that, upon exercise, would call for the issuance of an
additional 2,231,500
shares of Common Stock. The Common Stock has no
preemptive or other
subscription rights.

In light of the foregoing, the Company does not have a
sufficient remaining
number of authorized but unissued shares of Common Stock to
fulfill the need for
shares of Common Stock that would arise should all of the
Company's outstanding
shares of Preferred Stock (both Series B and Series C) be
converted and all of the
Company's outstanding options and warrants be exercised.
Additionally, there
remain only 43,342 shares of Preferred Stock that are
authorized but unissued.

The additional shares of Common Stock proposed to be
authorized
pursuant to this Proposal would be available to the Company to
fulfill its obligations
with respect to the conversion of shares of its Preferred Stock
and the exercise of its
options and warrants, as well as provide it with the flexibility
to meet future business
developments and capital requirements, including, without
limitation, financings and
acquisition opportunities and for stock dividends or splits
should the Board decide
that it would be desirable, in light of market conditions then
prevailing and in order
to take advantage of propitious market conditions, to broaden
the public ownership
of, and to enhance the market for, the Common Stock.
Additional shares would also
be available for other purposes, which include employee
benefit programs, at the
discretion of the Board, without the delays and expenses
ordinarily attendant upon
obtaining further stockholder approval.

<PAGE>

To the extent required by Delaware law, stockholder
approval will be
solicited in the event shares of Common Stock are to be issued
in connection with
a merger or acquisition. Stockholder approval will also be
solicited by the Company
in compliance with the Nasdaq SmallCap Market listing
requirements. In general,
the additional authorized shares may be issued by the Board for
such purposes
without stockholder approval. The issuance of such shares
would dilute the voting
power, and, potentially, the liquidation value, of the currently
outstanding shares.

The additional shares of Preferred Stock proposed to be
authorized by the
proposed amendment would also be available to provide the
Board flexibility to
respond to future business developments and capital
requirements. The Board is
authorized to designate and issue the Company's Preferred
Stock in series, and, as
with the Series B and Series C Preferred Stock previously
issued and outstanding,
the shares of each series will have such rights and preferences
as are fixed by the
Board in the resolution or resolutions authorizing that
particular series. These rights
and preferences may include, without limitation, liquidation
preferences, super
voting rights, and preferential dividend rights and terms of
redemption. The
issuance of additional Preferred Stock, in addition to the shares
of Preferred Stock
already issued and outstanding, may therefore further dilute the
voting powers of
holders of Common Stock and, in many cases, the liquidation
value of shares of
Common Stock. In addition, the issuance of new Preferred
Stock may be used as an
anti-takeover device without further action on the part of the
stockholders.

The proposed amendment to the Certificate would amend
Article Fourth
thereof to read in its entirety as follows:

FOURTH: The total number of shares of stock
that the Corporation shall have the authority to issue is
eighty million (80,000,000), consisting of seventy-five
million (75,000,000) shares of Common Stock, each such
share having a par value of $.01, and five million
(5,000,000) shares of Preferred Stock, each such share
having a par value of $.01. The Board of Directors is
expressly authorized to issue Preferred Stock without
stockholder approval, in one or more series, and to fix
for each such series such voting powers, full or limited,
and such designations, preferences and relative,
participating,
optional or special rights and such qualifications,
limitations or restrictions thereof as shall be stated and
expressed in the resolution or resolutions adopted by
the Board of Directors providing for the issue of such
series and as may be permitted by the Delaware General
Corporation Law.

The Board has unanimously approved the foregoing
proposed amendment and unanimously recommends to the stockholders that the
same be approved or ratified by the them.

Stockholder Vote Required. A quorum being present, the
adoption of the
foregoing proposed amendment to the Certificate will require
the affirmative vote
of a majority of all of the aggregate votes entitled to be
exercised with respect to the
outstanding shares of Common Stock and Series B and C
Preferred Stock as of the Record Date.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE PROPOSED
AMENDMENT TO THE CERTIFICATE OF INCORPORATION.

<PAGE>

PROPOSAL 3

ADOPTION OF THE 1998 STOCK OPTION PLAN

On May 12, 1998, the Board, subject to approval or
ratification by the
stockholders of the Company, authorized the 1998 Stock
Option Plan (the "Option
Plan") for the directors, officers and employees of, and other
advisors to, the
Company. The Option Plan contemplates the grant of options
for the issuance of up
to 4,000,000 shares of Common Stock.

Exhibit B to this Proxy Statement contains a copy of the
Option Plan and
a sample option agreement. The following summary of the
principal features of the
Option Plan is qualified in its entirety by reference to Exhibit
B.

The Option Plan will be administered by the Board or a
committee thereof
(the "Committee"). In general, the Committee will select the
persons to whom
options will be granted and will determine, subject to the terms
of the Option Plan,
the number, the exercise period and other provisions of such
options. Any option
granted under the Option Plan will be exercisable in such
installments as may be
provided for in the grant.

Any options granted may be either an incentive stock
option ("ISO") under
the Internal Revenue Code of 1986, as amended (the "Code"),
or an option not
intended to qualify as an ISO ("Non-ISO"). The Committee
may determine the
exercise price, provided that, in the case of ISOs, such price
may not be less than
100% (110% in the case of ISOs granted to holders of 10% or
more of the voting
power of the Company's stock) of the fair market value (as
defined in the Option
Plan) of a share of Common Stock at the date of grant. The
aggregate fair market
value (determined at time of option grant) of stock with respect
to which ISOs
become exercisable for the first time in any year cannot exceed
$100,000.

Options issued under the Option Plan will be
non-transferrable (except by
will or the laws of descent and distribution in the event of
death), shall have a term
of up to ten (10) years and shall vest in accordance with the
terms established for
such options by the Committee. Upon the termination of an
optionee's service as a
director, officer or employee of the Company for reasons other
than retirement,
death or permanent or total disability, the option and optionee's
rights thereunder
will terminate in accordance with the time established for such
termination by the
Committee. In the event an optionee is terminated due to death
or permanent or total
disability, the Option Plan provides a one year period from the
date of termination
for such cause during which an optionee may execute the
options.

The Board adopted the Option Plan in the belief that it is
in the best
interests of the Company to encourage its directors (including
non-employee
directors), officers and key employees, and other key advisors
to the Company, to
have an ownership interest in the Company in order to align
their interests more
closely with those of the other stockholders and that the grant
of options under the
Option Plan can be appropriately employed to attract and retain
qualified persons as
directors, officers and employees of the Company and other
advisories to the
Company.

In May 1998, the Board granted, for fiscal year 1998, to
each of two of its
three non-employee directors, Matthew B. Walker and Herbert
F. Kozlov, an option
to purchase up to 40,000 shares of Common Stock at a per
share purchase price of
$1.06, and granted to the Company's third non-employee
director, James A. Cutler,
an option to purchase up to 55,000 shares of Common Stock at
a per share purchase
price of $1.06. The per share purchase price of these grants
was equal to the market
price of a share of Common Stock on the date such options
were granted. In
addition, in December 1998, the Board granted, for fiscal year
1999, subject to
stockholder approval, options to purchase up to 250,000 shares
of Common Stock
to Stanley S. Tollman at $1.17 per share and options to
purchase up to 55,000 shares
of Common Stock to Mr. Kozlov, up to 40,000 shares of
Common Stock to Mr.
Walker and options to purchase up to 55,000 shares of
Common Stock to Mr. Cutler,
each at a per share price of $1.06. In December 1998, the
Board also issued an
option to purchase 55,000 shares of Common Stock to Thomas
W. Aro, and an
option to purchase 40,000 shares of Common Stock to Brett
Tollman. Mr. Tollman
and Mr. Aro are employee directors of the Company. On May
14, 1999, the Board
authorized the grant of an option to purchase up to 50,000
shares of Common Stock
to Craig Kendziera, the Company's

<PAGE>

Treasurer. In addition, on May 14, 1999 the
Board issued options to purchase up to 239,000 shares of
Common Stock to 25
employees of the Company's affiliates in consideration for
services rendered to, or
on behalf of, the Company. On May 27, 1999, the Committee
granted options to
purchase up to 50,000 shares of Common Stock each to
Messrs. Kozlov, Cutler and
Walker and options to purchase 75,000 shares each to Messrs.
Aro and Brett
Tollman. Each of these options is exercisable at $2.00 per
share, which was the per
share market price of a share of Common Stock as of the date
of the grant of such
options. All of the foregoing grants were made subject to
stockholder approval of
the Option Plan. Adoption of the 1998 Stock Option Plan shall
constitute ratification
of the grant of these options.

No other options have been granted under the Option
Plan, and, provided
that the Option Plan is approved by the stockholders, the award
of options
thereunder will be in the discretion of the Committee, and thus
it is impossible to
accurately determine what, if any, issuances of options will be
made under the
Option Plan in the future.

It is currently the Committee's intention, however, that if
the Option Plan
is approved, to grant annually to each of the Company's
directors an option to
purchase up to 25,000 shares of Common Stock, plus up to an
additional 15,000
shares of Common Stock for each Committee of the Board on
which he or she serves
for such year.

Federal Income Tax Consequences. The following
discussion of the
federal income tax consequences of the Option Plan is intended
to be a summary of
only applicable federal income tax law. State and local tax
consequences may differ.
Because the federal income tax rules governing options are
complex and subject to
frequent change, participants are advised to consult their tax
advisors prior to
exercise of options or dispositions of stock acquired pursuant
to an option exercise.

Options that are granted under the Option Plan and that
are intended to
qualify as ISOs must comply with the requirements of Section
422 of the Code. An
optionee is not taxed upon the grant or exercise of an ISO;
however, the difference
between the fair market value of the shares on the exercise date
will be an item of
adjustment for purposes of the alternative minimum tax. If an
optionee holds the
shares acquired upon the exercise of an ISO for at least two (2)
years following the
date of the grant of the option and at least one year following
the exercise of the
option, the optionee's gain, if any, by a subsequent disposition
of such shares will
be treated as long-term capital gain for federal income tax
purposes. The measure
of the gain is the difference between the proceeds received on
disposition and the
optionee's basis in the shares (which generally would equal the
exercise price). If
the optionee disposes of shares acquired pursuant to exercise of
an ISO before
satisfying the one-and-two year holding periods described
above, the optionee will
recognize both ordinary income and capital gain in the year of
disposition. The
amount of the ordinary income will be the lesser of (i) the
amount realized on
disposition less the optionee's adjusted basis in the shares
(usually the option
exercise price) or (ii) the difference between the fair market
value of the shares on
the exercise date and the option price. The balance of the
consideration received on
such disposition will be long-term capital gain if the shares had
been held for at least
one year following exercise of the incentive stock option. The
Company is not
entitled to an income tax deduction on the grant or the exercise
of an ISO or on the
optionee's disposition of the shares after satisfying the holding
period requirement
described above. If the holding periods are not satisfied, the
Company will be
entitled to an income tax deduction in the year the optionee
disposes of the shares,
in an amount equal to the ordinary income recognized by the
optionee.

In the case of a non-qualified option, an optionee is not
taxed on the grant
of such option. Upon exercise, however, the participant
recognizes ordinary income
equal to the difference between the option price and the fair
market value of the
shares on the date of the exercise. The Company is entitled to
an income tax
deduction in the year of exercise in the amount of the ordinary
income recognized
by the optionee. Any gain on subsequent disposition of the
shares is long-term
capital gain if the shares are held for at least one year
following the exercise. The
Company does not receive an income tax deduction for this
gain.

The Board has unanimously approved the Option Plan
and unanimously recommends to the stockholders that the same be approved and
ratified by them.

<PAGE>

Stockholder Vote Required. Adoption of the Option Plan
requires the
affirmative vote (a quorum being present) of a majority of all
votes cast at the Meeting.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE PROPOSAL TO
APPROVE OR RATIFY THE ADOPTION OF THE 1998
STOCK OPTION PLAN.

<PAGE>

PROPOSAL 4

AMENDMENT OF THE COMPANY'S BY-LAWS TO
PERMIT THE
GRANTING OF
COMPENSATION TO MEMBERS OF THE BOARD OR
ANY
COMMITTEE THEREOF
WITHOUT SEPARATE STOCKHOLDER APPROVAL

At the Meeting, stockholders will be asked to approve or
ratify an
amendment to the Company's by-laws proposed by resolution
of the Board, which
would permit the Board to grant compensation to members of
the Board (or any
committee thereof) without separate approval by the
stockholders.

Section 2.11 of the Company's by-laws as currently in
effect contemplates
obtaining stockholder approval with respect to any salary
payable to any member of
the Board or any committee thereof. More particularly, that
Section provides that
"[n]o director shall receive any stated salary for his services as
a director or as a
member of a committee but shall receive such sum, if any, as
may from time to time
be fixed by the action of holders of record of shares of the
Corporation's capital
stock representing a majority of the total number of votes that
could be exercised
with respect to the election of directors by the holders of all of
the outstanding
capital stock of the Corporation."

It is neither practical nor appropriate, and would be
unnecessarily costly,
to require the obtaining of stockholder approval with respect to
the payment of any
salary or other compensation to any director. The Board
firmly believes that the
Company is best served if the Company can recruit and retain
highly qualified
individuals to serve on the Board and its various committees.
The Board believes
that there is considerable competition for highly qualified
individuals to serve as
advisers on boards of directors, that such individuals provide
significant value in so
serving and frequently demand appropriate compensation for
such services.
Consequently, the Board believes that it would be in the best
interests of the
Company and its stockholders that the Company's by-laws be
amended so as to
permit the award or other grant of compensation to directors
without the need for
obtaining separate stockholder approval. Absent such
amendment, each time the
Board intended to recruit any member or otherwise proposed to
provide
compensation for serving on the Board or any committee
thereof, the Company
could be compelled to incur the substantial expense of
preparing and disseminating
appropriate proxy material. In all likelihood, the mere expense
of doing so would
far exceed the amount of any compensation the Board might be
proposing for
stockholder approval.

In light of the foregoing, the Board proposes that Section
2.11 of the by-laws be amended to read in its entirety as
follows:

Section 2.11. Compensation. Any individual who
serves as
a director shall be entitled to receive such salary and
other
compensation (including stock options pursuant to a
stock option or
similar plan approved by the stockholders of the
Corporation or
otherwise) for his or her services as a director or as a
member of any
committee of the Board of Directors as may, from time
to time, be
determined by the Board of Directors (or any duly
delegated
committee thereof), without any separate consent or
approval by the
stockholders of the Corporation.

Subject to stockholder approval of this Proposal, it is
currently the intention
of the Board to compensate each of its non-employee directors
with an annual
payment of $6,000 for providing services to the Company in
such capacity, as well
as provide an annual grant of stock options, as described under
Proposal 3 above.

The Board has unanimously approved the foregoing
proposed amendment
and unanimously recommends to the stockholders that the
same be approved or
ratified by them.

Stockholder Vote Required. A quorum being present, the
adoption of the
foregoing proposed amendment to the Company's by-laws will
require the
affirmative vote of a majority of the votes cast at the Meeting.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE PROPOSED
AMENDMENT TO THE COMPANY'S BY-LAWS.

<PAGE>

PROPOSAL 5

AMENDMENT OF THE COMPANY'S CERTIFICATE OF
INCORPORATION TO ENABLE
AND AUTHORIZE THE BOARD TO ADOPT, AMEND
AND REPEAL BY-LAWS

In the past it has become necessary and appropriate for
the Company from
time to time to adopt, amend or repeal the Company's by-laws,
and it is anticipated
that it will become necessary and/or appropriate for the
Company to continue to do
so from time to time in the future. However, pursuant to the
provisions of the
Delaware General Corporation Law, it is generally required
that any adoption,
amendment or repeal of a corporation's by-laws be approved
by such corporation's
stockholders unless the right to do so is delegated to such
corporation's board of
directors as provided for in such corporation's certificate of
incorporation. More
particularly, Section 109(a) of the Delaware General
Corporation Law provides, in
pertinent part, that "[a]fter a corporation has received any
payment for any of its
stock, the power to adopt, amend or repeal bylaws shall be in
the stockholders
entitled to vote ; provided, however, any corporation may, in
its certificate of
incorporation, confer the power to adopt, amend or repeal
bylaws upon the
directors."

It has been impractical and expensive in the past, and it is
anticipated that
it will continue to be impractical and expensive in the future,
for the Company to
obtain the necessary approval of the Company's stockholders in
order to adopt,
amend or repeal any of the Company's by-laws. Consequently,
the Board believes
that it is in the best interests of the Company and its
stockholders that the Certificate
be amended to provide, and to delegate, to the Board the right,
power and authority
to adopt, amend or repeal any of the Company's by-laws.
More particularly, it is
proposed that the Certificate be amended by adding as a new
Article Eleventh the
following:

ELEVENTH: The Corporation's Board of Directors
(by a
majority vote thereof) shall have the right, power and
authority to
adopt any new by-law and/or amend or repeal any
then-existing by-law; provided, however, that the Corporation's
Board of Directors
may not amend or repeal any by-law that, by its very
terms, is not
subject to amendment or repeal except by or upon
approval of the
Corporation's stockholders or any class, series or other
group or
portion thereof.

It is to be noted that, in order to protect against even the
theoretical abuse
by the Board of the right proposed to be granted to it to adopt,
amend or repeal the
Company's by-laws, such right would not extend to any by-law
that by its express
terms is not subject to amendment or repeal by the Board.
Consequently, even if the
proposed amendment to the Certificate were to be approved
and become effective,
the Company's stockholders could still override and supersede
any action taken by
the Board with respect to the adoption, amendment or repeal of
any by-law of the
Company.

The Board has unanimously approved the foregoing
proposed amendment
and unanimously recommends to the stockholders that the
same be approved or
ratified by them.

Stockholder Vote Required. A quorum being present, the
adoption of the
foregoing proposed amendment to the Certificate will require
the affirmative vote
of a majority of all of the aggregate votes entitled to be
exercised with respect to the
outstanding shares of Common Stock, Series B and C
Preferred Stock as of the
Record Date.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE PROPOSED
AMENDMENT TO THE CERTIFICATE OF INCORPORATION.

<PAGE>

PROPOSAL 6

PROPOSAL TO PERMIT STANLEY S. TOLLMAN
TO CONVERT ACCRUED AND UNPAID SALARY
INTO SHARES OF COMMON STOCK

At the Meeting, stockholders will be asked to approve or
ratify a proposal
adopted by the Board to allow Stanley S. Tollman, the
Company's Chief Executive
Officer, to convert, subject to certain conditions, up to an
aggregate amount of
$2,000,000 of accrued but unpaid salary into shares of
Common Stock at a
conversion rate of $2.00 per share (which was the fair market
value of a share of
Common Stock on the date the Board adopted its proposal).
Mr. Tollman's right to
convert will depend upon his remaining in the employ of the
Company and his
continuing to defer the payment of the salary due him through
at least January 14,
2000. In the event that, if prior to such date he would
otherwise be entitled to
exercise the conversion right, (i) Mr. Tollman dies, becomes
disabled, or is
involuntarily terminated from his employment by the
Company, (ii) the Company
sells all or substantially all of its business and assets to an
unaffiliated third party,
(iii) there is a merger of the Company with or into another
entity where the Company
is not the surviving entity, or (iv) there is a change in control
of the Company, Mr.
Tollman shall have 20 days from the date of such occurrence to
exercise the
conversion right. Notwithstanding the foregoing, the Board in
its discretion and
without the consent of Mr. Tollman, may, by subsequent
resolution, extend the date
through which Mr. Tollman must continue to defer his salary
in order to be entitled
to the proposed conversion right. Upon Mr. Tollman's exercise
of such right, the
Company shall endeavor to file a registration statement by
which to register the
shares Mr. Tollman receives as a result of the conversion.

At its meeting in May 27, 1999, the Board of Directors
unanimously
adopted the following resolutions:

RESOLVED, that, if Mr. Stanley Tollman shall
continue, until at least the Exercise Date (as defined
below), to
remain an employee of the Corporation and to defer
payment of
the salary payable (whether with respect to the period
prior to this
date or any period after this date through the Exercise
Date) to
him under his employment agreement with the
Corporation, then
he shall have the right to convert up to an aggregate
amount of
$2,000,000 of such deferred salary into shares of the
Corporation's common stock at $2.00 per share, which
right shall
be exercisable by written notice delivered to the
Corporation at
any time or from time to time from the day following the
Exercise
Date until (a) the first year anniversary of the Exercise
Date or (b)
if the Exercise Date has occurred on account of any
Triggering
Event (as defined below), the twentieth (20th) day
following the
Exercise Date, where "Exercise Date" means (subject to
the next
following resolution) January 14, 2000 or, if earlier, the
date of
the occurrence of any Triggering Event, and "Triggering
Event"
means any of (i) Mr. Tollman's death or disability, (ii) the
involuntary termination of his employment by the
Corporation,
(iii) the sale by the Corporation of all or substantially all
of its
business and assets, (iv) the merger of the Corporation
with or
into another entity where the Corporation is not the
surviving
entity or (v) any change in control of the Corporation; and
it is
further

RESOLVED, that the Board, in its discretion, and
without the consent or approval of Mr. Tollman, may, by
any
subsequent resolution adopted by the Board, extend the
date of
the Exercise Date; and it is further

RESOLVED, that, the grant of the foregoing right to
convert shall be subject to ratification or approval by the
stockholders of the Corporation; and it is further

RESOLVED, that, if Mr. Tollman shall exercise the
foregoing right and thereby acquire shares of the
Corporation's
common stock, then the Corporation shall take such
actions as may be necessary to register such shares.

<PAGE>

Such resolutions were adopted by the Board in
recognition of the
considerable sacrifices Mr. Tollman had made for the past five
years in continuing
to serve as Chief Executive Officer of the Company while
continuing to defer
payment of the salary the Company was obligated to pay him
and as an incentive for
Mr. Tollman to continue to defer payment of such salary, as
well as future accruing
salary.

Mr. Tollman entered into his Employment Agreement
with the Company
on June 1, 1993. The original term of such Agreement was for
three years with
provision for automatic 12-month renewals thereof unless
either party advised the
other on 90 days' written notice of his or its intention not to
extend the term of
employment. The Agreement has been renewed through May
31, 2000. Mr.
Tollman has forgone payment of his $250,000 annual salary
under the agreement
since November 1993, without interest, and an aggregate of
approximately
$1,400,000 of deferred salary has accrued thereunder.

The Board believes that it is in the best interests of the
Company and its
stockholders that Mr. Tollman continue to defer payment of
the salary to which he
is entitled under the terms of his Employment Agreement with
the Company. If the
Company were to be required to make full payment of all of
Mr. Tollman's accrued
but unpaid salary, the same would have a material and adverse
effect upon the
Company and its financial condition.

The Board has unanimously approved the foregoing
proposal and
unanimously recommends to the stockholders that the same be
approved or ratified
by them.

Stockholder Vote Required. A quorum being present, the
adoption of the
foregoing proposal will require the affirmative vote of a
majority of the votes cast
at the Meeting.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE PROPOSAL
ALLOWING STANLEY S. TOLLMAN TO CONVERT UP
TO $2,000,000 OF ACCRUED BUT
UNPAID SALARY INTO SHARES OF COMMON STOCK
AT $2.00 PER SHARE.

<PAGE>

PROPOSAL 7

RATIFICATION OF ROTHSTEIN KASS & COMPANY,
P.C.
AS THE COMPANY'S INDEPENDENT CERTIFIED
PUBLIC
ACCOUNTANTS

The Board has unanimously approved and unanimously
recommends that
the stockholders approve the appointment of Rothstein, Kass &
Company, P.C. as
the Company's independent certified public accountants for the
ensuing year. A
member of Rothstein, Kass & Company, P.C. will be available
to answer questions
and will have the opportunity to make a statement if he or she
so desires at the
Meeting.

Stockholder Vote Required. Ratification of the
appointment of Rothstein,
Kass & Company, P.C. as the Company's independent certified
public accountants
requires the affirmative vote of the holders (present in person
or represented by
proxy at the Meeting) of shares entitled to cast a majority of
votes cast at the Meeting
(a quorum being present).

THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR RATIFICATION
OF THE APPOINTMENT OF ROTHSTEIN, KASS &
COMPANY, P.C. AS THE COMPANY'S INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS.

EXECUTIVE COMPENSATION

Executive Officers

The Executive officers of the Company are:

Stanley S. Tollman - Chairman of the Board,
Chief Executive Officer and President
Thomas W. Aro - Vice President and Secretary
Brett G. Tollman - Vice President
Robert Steenhuisen - Chief Accounting Officer
Craig Kendziera - Treasurer

Information regarding the responsibilities, and the terms
of the positions
held by Stanley Tollman, Thomas Aro and Brett Tollman are
set forth on pages 10-11 of this proxy statement in the text of
Proposal 1. Such information for Messrs.
Steenhuisen and Kendziera is as follows:

Robert Steenhuisen has served as Chief Accountant of the
Company since
his appointment on May 12, 1998. He also serves as the Chief
Accountant of the
Tollman-Hundley Hotel Group and a Director, Vice President,
Treasurer and Chief
Accountant of Bryanston.

Craig Kendziera has served as Treasurer of the Company
since his
appointment on May 12, 1998. He also serves as Corporate
Controller of the
Tollman-Hundley Hotel Group and a Director, Vice President,
Secretary and
Corporate Controller of Bryanston.

Summary Compensation Table

The following table sets forth all cash compensation for
services rendered
in all capacities to the Company and its subsidiaries for the
fiscal years ended
December 31, 1998, December 31, 1997 and December 31,
1996 paid to the
Company's Chief Executive Officer, the four other most highly
compensated
executive officers (the "Named Executive Officers") at the end
of the above fiscal
years whose total compensation exceeded $100,000 per annum,
and up to two

<PAGE>

persons whose compensation exceeded $100,000 during the
above fiscal years,
although they were not executive officers at the end of such
years.

</TABLE>
<TABLE>
<CAPTION>

Name and Principal Position Year Salary (1) Bonus Restricted Stock Awards Option/SARS All other Compensation
<S> <C> <C> <C> <C> <C> <C>
Stanley S. Tollman 1998 $250,000 --- --- 250,000 ---
Chairman of the Board 1997 $250,000 --- --- --- ---
of Directors, Chief 1996 $250,000 --- --- --- ---
Executive Officer and
President
Thomas W. Aro 1998 $130,000 --- --- 155,000 ---
Vice President 1997 --- --- --- --- ---
and Secretary 1996 --- --- --- --- ---

</TABLE>
(1) No portions of the cash salaries to which Stanley S.
Tollman was entitled
during the periods indicated have been paid; the expense
and liability have been accrued without interest.

Option/SAR Grants in Last Fiscal Year. During the last
completed fiscal
year, the Company granted options to its executive officers to
purchase 565,000
shares of the Company's Common Stock, including 250,000
shares to Stanley S.
Tollman subject to stockholder approval as part of the 1998
Stock Option Plan,
155,000 to Thomas W. Aro, 55,000 of which are subject to
stockholder approval as
part of the 1998 Stock Option Plan, 140,000 shares to Brett G.
Tollman, 44,000 of
which are subject to stockholder approval as part of the 1998
Stock Option Plan,
12,000 shares issued to Robert Steenhuisen, all of which are
immediately
exercisable, and 8,000 to Craig Kendziera subject to
stockholder approval as part of
the 1998 Stock Option Plan.

Compensation of Directors. Subject to the adoption of
Proposal 3, which
would provide for the adoption of the 1998 Stock Option Plan,
the Board intends
annually to grant to the Company's directors, for their services
to the Company,
stock options under the Option Plan to purchase up to 25,000
shares of Common
Stock and an additional 15,000 shares for each committee on
which such director
serves, each such option to have an exercise price equal to the
then current market
price. Adoption of the 1998 Stock Option Plan shall also be
deemed to ratify the
grant to the directors of the Company options to purchase an
aggregate of up to
680,000 shares of its Common Stock at an exercise price of
$1.063, and an option
to purchase up to 250,000 shares of Common Stock at a price
of $1.17 per share
granted to Stanley S. Tollman, all of which can be exercised
any time up to 2008.
The amount granted represents options to purchase an
aggregate amount of 135,000,
and 795,000 shares per year, respectively, for the 1998 and
1999 years of service.
Additionally, subject to the adoption of Proposal 4 above,
which would result in the
amendment of the Company's by-laws to permit the Board to
grant compensation
to directors without separate stockholder approval, the Board
intends to compensate
its non-employee directors with an annual payment of $6,000
and may grant other
compensation to the Company's directors in the future.

Employment Agreements. The Company and Mr.
Stanley S. Tollman
entered into an Employment Agreement dated June 1, 1993,
whereby Mr. Tollman
agreed to serve as Chairman of the Board and Co-Chief
Executive Officer of the
Company for a term of three (3) years from the date of that
Agreement. Thereafter,
such Agreement is automatically renewable for successive
twelve (12) month
periods, unless either party shall advise the other on ninety (90)
days' written notice
of his or its intention not to extend the term of the
employment. In the event of a
termination of his employment, under the terms of such
Agreement Mr. Tollman is
to be retained for two years to provide consulting services for
$175,000 per year.
Such Agreement has been renewed until May 31, 2000. Mr.
Tollman's Employment
Agreement provides for a salary in the amount of $250,000 per
year, none of which
has been paid under such Agreement since the date thereof.
The unpaid salary
accumulates, and the Company does not pay any interest or
other penalty thereon.
Such Agreement provides for Mr. Tollman to devote no less
than 20% of his
business time to the affairs of the Company and its
subsidiaries. Such Agreement
contains a non-disclosure provision pursuant to which Mr.
Tollman agrees not to use
or disclose any information, knowledge or data relating to or
concerning the
Company's operations, sales, business or affairs

<PAGE>

to any individual or entity, other
than the Company or its designees, except as required in
connection with the
business and affairs of the Company.

BOARD COMPENSATION REPORT

Executive Compensation Policy

Cash Compensation. The Company's executive officers,
other than Stanley
S. Tollman and Thomas W. Aro, are not directly compensated
by the Company
based upon the Compensation Committee's determination that
compensation is not
prudent at this time given the Company's financial position.
When, and if, the
Company's financial position improves, the Compensation
Committee would
establish and review the compensation of executive officers
and employee
compensation plans. However, all of the Company's executive
officers previously
provided management, financial and administrative services,
through the Company's
subsidiary Alpha Hotel, on behalf of Bryanston. Bryanston
directly compensated
the Company's executive officers for such services, and
pursuant to the terms of an
expense reimbursement agreement between the Company and
Bryanston (the
"Expense Reimbursement Agreement"), the Company
reimbursed Bryanston on a
monthly basis for direct payroll. The Compensation
Committee did not determine
the compensation paid by Bryanston to the Company's
executive officers for
providing these services on behalf of Bryanston, as such
compensation was solely
determined by Bryanston. Subsequent to the sale of Alpha
Hotel to Bryanston in
December 1996, Bryanston has continued directly to provide
salaries and benefits
to the Company's executive officers without seeking
reimbursement therefor from
the Company.

Equity Compensation. The grant of stock options to
executive officers
constitutes an important element of long-term compensation
for the executive
officers. The grant of stock options increases management's
equity ownership in the
Company with the goal of ensuring that the interests of
management remain closely
aligned with those of the Company's stockholders. The Board
believes that stock
options in the Company provide a direct link between
executive compensation and
stockholders' value. By attaching vesting requirements, stock
options also create an
incentive for an executive officer to remain with the Company
for the long term.

Chief Executive Officer Compensation. The
compensation of Stanley S.
Tollman, the Chief Executive Officer, is set forth in an
Employment Agreement
between the Company and Mr. Tollman, which provides for a
salary in the amount
of $250,000 per year, none of which has been paid under such
Agreement. The
unpaid salary accumulates, and the Company does not pay any
interest or other
penalty thereon. The terms of the Employment Agreement
were determined based
upon Mr. Tollman's ability to establish and retain a strong
management team and to
develop and implement the Company's business plans. The
Company also
appraised its financial position and reviewed compensation
levels of Chief Executive
Officers at comparable companies within the Company's
industry. In December
1998, the Company granted to Mr. Tollman an option to
purchase up to 250,000
shares of Common Stock, subject to stockholder approval or
ratification.

In June 1999, the Board approved, subject to stockholder
approval or
ratification, the grant of a conditional right to Stanley S.
Tollman to convert up to
$2,000,000 of accrued but unpaid salary into up to 1,000,000
shares of the Common
Stock, par value $ .01. This proposed transaction is the subject
of Proposal 6 at the
Meeting and is more fully described in the text on pages 20-21
of this Proxy Statement.

<PAGE>

MARKET PRICES AND DIVIDENDS

Market Prices

The Company's Common Stock is traded on both the
Automated Quotation
System of the National Association of Securities Dealers, Inc.
("NASDAQ") and on the Boston Stock Exchange under the symbols "ALHY" and
"ALH," respectively.
The Company's Redeemable Common Stock Purchase Warrants (the "Warrants")
are traded on the Boston Stock Exchange under the symbol
"ALHW." The Warrants were delisted from NASDAQ in December 1998.

The following table sets forth the high and low sale prices
for Common Stock and Warrants as reported by NASDAQ except with
regard to the 1999 Quarters prices for the Warrants which reflect such prices as
reported by the Boston Stock Exchange.

<TABLE>
<CAPTION>
Common Stock Warrants
High Low High Low
<S> <C> <C> <C> <C>
1999 Quarters:
Third (through July 23) $ 4.50 3.19 $1.5625 .8750
Second 5.00 1.75 2.0000 1 .0150 1
First 2.75 1.19 --- 2 --- 2

1998 Quarters:
Fourth $ 1.56 .50 --- 2 --- 2
Third 2.06 .50 .1250 .0625
Second 2.50 1.50 .1875 .0625
First 2.00 1.63 .3750 .0625

1997 Quarters:
Fourth $ 4.25 2.00 .5990 .5470
Third 4.00 2.94 .6910 .5990
Second 4.81 2.37 .6920 .6160
First 3.30 1.69 .5630 .4740

</TABLE>

1 As reported by the Boston Stock Exchange
2 Not traded

As of August 11, 1999, 16,788,228 shares of Common
Stock, 821,496
shares of Series B Preferred Stock and 135,162 shares of Series
C Preferred Stock
were issued and outstanding. The outstanding shares of
Common Stock were held
of record by approximately 800 persons, including ownership
by nominees who
may hold for multiple beneficial owners. On August 11, 1999,
the high and low sale
prices for a share of Common Stock were $3.75 and $3.25,
respectively.

Dividends

The Company has not, since its inception, declared or
paid any dividends
on its shares of Common Stock. Under Section 170(a) of the
General Corporation
Law of Delaware (the "GCL"), the Company is, and has been,
proscribed from
declaring or paying any dividends upon any shares of its
capital stock except to the
extent of (1) its surplus (as defined under the GCL) or (2) in
the case of no such
surplus, its net profits for the fiscal year in which the dividend
is declared and/or the
preceding fiscal year. As the Company has no surplus (as defined under the

<PAGE>

GCL) or net profits, the Company is foreclosed from declaring or
paying any dividends
even if it had otherwise been inclined to do so.

The shares of Series B Preferred Stock (which were first
issued in June
1996) and the shares of Series C Preferred Stock (which were
first issued in June
1998) accrue cash dividends at ten (10%) percent per annum,
payable quarterly;
provided that if the cash dividend for a fiscal quarter is not
paid within 30 days of
the end of such quarter, the amount of the dividend shall
increase to thirteen (13%)
percent. In the event the dividend is not paid at the end of the
Company's fiscal year
(December 31), the dividend shall be payable in shares of
Common Stock valued at
the market price. Since shares of Preferred Stock were first
issued by the Company,
the Company (for reasons set forth above) has been precluded
from paying any cash
dividends on the shares of Preferred Stock. Consequently, the
Company issued to
holders of shares of Series B Preferred Stock an aggregate of
approximately
1,600,000 shares of Common Stock as the dividend due
thereon with respect to
1997. It is anticipated that the Company will likewise issue an
additional
approximately 2,000,000 shares of Common Stock with
respect to the dividend
accrued on the outstanding shares of Series B Preferred Stock
and 254,555 shares
of Common Stock with respect to the dividend accrued on the
outstanding shares of
Series C Preferred Stock in 1998.

Corporate Performance Graph. The following graph
shows a comparison
of cumulative total stockholders' returns from December 31,
1994 through
December 31, 1998 for the Company, the Russell 2000 Index
("Russell") and the
Dow Jones Entertainment and Leisure -- Casino Index ("DJ
Casino").

[GRAPH]

The graph assumes the investment of $100 in shares of
Common Stock on
December 31, 1994 and the investment of $100 in Russell and
DJ Casinos on
December 31, 1994, and that all dividends were reinvested.
No dividends have been
declared or paid on the Common Stock.

Section 16(a) Reporting. Under the securities laws of the
United States, the
Company's directors, its executive (and certain other) officers,
and any persons
holding ten percent (10%) or more of the Common Stock must
report on their
ownership of the Common Stock and any changes in that
ownership to the Securities
and Exchange Commission and to the National Association of
Securities Dealers,
Inc. Automated Quotation System. Specific due dates for these
reports have been
established. The Company is not aware of any delinquencies
by any of the
foregoing persons with regard to the timely filing of such
reports for the year ended December 31, 1998.

<PAGE>

AVAILABLE INFORMATION

The Company is subject to the informational requirements
of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and
in accordance
therewith files reports, proxy statements and other information
with the Securities
and Exchange Commission (the "SEC"). Proxy statements,
reports and other
information can be inspected and copied at the public reference
facilities of the SEC
at its principal office at Judiciary Plaza, 450 Fifth Street, N.W.,
Room 1024,
Washington, D.C. 20549, and at its regional offices at
Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661,
and 7 World Trade
Center, 13th Floor, New York, New York 10048. Any
interested party may obtain
copies of such material at prescribed rates from the Public
Reference Section of the
SEC at its principal office at Judiciary Plaza, 450 Fifth Street,
N.W., Room 1024,
Washington, D.C. 20549. The SEC also maintains a web site
at http://www.sec.gov
that contains reports, proxy and information statements and
other information
regarding registrants that file electronically with the SEC.

All documents filed by the Company pursuant to Section
13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Proxy
Statement and prior to the
date of the Meeting shall be deemed to be incorporated by
reference in this Proxy
Statement and to be a part hereof from the respective dates of
filing of such
documents. Any statement contained herein or in a document
incorporated or
deemed to be incorporated by reference herein shall be deemed
to be modified or
superseded for purposes of this Proxy Statement to the extent
that a statement
contained in any subsequently filed document that also is or is
deemed to be
incorporated by reference herein modifies or supersedes such
statement. Any such
statement so modified or superseded shall not be deemed,
except as so modified or
superseded, to constitute a part of this Proxy Statement.

The Company will provide, without charge, to each
stockholder to whom
this Proxy Statement is delivered and who so requests, a copy
of any or all of the
information that has been incorporated by reference in this
Proxy Statement
(exclusive of exhibits to such information unless such exhibits
are specifically
incorporated by reference into such information). Any such
request should be made
orally or in writing to Alpha Hospitality Corporation,
Secretary, 12 East 49th Street,
24th floor, New York, New York 10017, telephone (212)
750-3500. Within one
business day of receipt of such a request, the Company will
provide, by first class
mail or other equally prompt means, a copy of the information
as requested.

STOCKHOLDER PROPOSALS

Stockholders' proposals intended to be presented at the
Company's 2000
Annual Meeting of Stockholders, pursuant to the provision of
Rule 14a-8
promulgated under the Exchange Act, must be received at the
Company's offices not
later than February 14, 2000 for inclusion in the Company's
Proxy Statement and form of proxy relating to that Meeting.

<PAGE>

Exhibit A

ALPHA HOSPITALITY CORPORATION

WRITTEN CONSENT OF STOCKHOLDERS

The undersigned, being the record and beneficial holders of
the number of shares
of capital stock of ALPHA HOSPITALITY CORPORATION
(the "Corporation"),
a Delaware corporation, immediately set forth after his, her or
its signature below,
acting pursuant to and as contemplated by Section 228(a) of
the Delaware General
Corporation Law and Section 1.8 of the Corporation's
By-Laws, hereby consent to
and adopt the following preambles and resolutions and approve
the matters set forth
therein:

WHEREAS, as originally drafted, the By-Laws of the
Corporation contemplated
a vote by stockholders holding only common stock or other
capital stock entitled to
only one vote per share and, accordingly, was written, with
respect to determining
the existence of a quorum and, in some instances regarding the
vote of stockholders,
in terms of shares held by stockholders (rather than in terms of
the votes entitled to
be cast by stockholders);

WHEREAS, the Corporation has issued, in the form of
shares of its Series B
Preferred Stock and Series C Preferred Stock, capital stock that
is entitled to multiple
votes per share;

WHEREAS, as a consequence of the foregoing, the By-Laws
of the Corporation,
as currently drafted, do not provide for an appropriate means
of determining the
presence of a quorum or, in some instances, for determining
whether a matter subject
to stockholder vote or other approval has received an
appropriate vote; and

WHEREAS, it is therefore necessary and appropriate to
amend the Corporation's
By-Laws to provide for an appropriate means of determining
the presence of a
quorum or for determining whether a matter subject to
stockholder vote or other
approval has received an appropriate vote;

NOW THEREFORE, BE, AND IT HEREBY IS,

RESOLVED, that Section 1.2 of the By-Laws be, and it
hereby is, amended to read
in its entirety as follows:

SECTION 1.2. Special Meetings. A special meeting of
stockholders may be
called at any time by the Board of Directors or the Chairman
and shall be called by
any of them or by the Secretary upon the receipt of a written
request to do so that
specifies the matter or matters, appropriate for action at such
meeting, proposed to
be presented and voted on at such meeting and that is signed
by the holders of
record (determined as of the close of business on the business
day next preceding
the date such request is received) of shares of the
Corporation's capital stock
representing a majority of the total number of votes that (as
of the date such
request is received) could be exercised with respect to the
election of directors by
the holders of all of the issued and outstanding capital stock
of the Corporation.
Any such meeting shall be held at such time and at such
place, within or without
the State of Delaware, as shall be determined by the body or
person calling such
meeting and as shall be stated in the notice of such meeting.

; and it is further

RESOLVED, that Section 1.4 of the By-Laws be, and it
hereby is, amended to read
in its entirety as follows:

Section 1.4. Quorum. Except as otherwise required by
Delaware law or the
Certificate of Incorporation, the holders of record (present in
person or represented
by proxy at a meeting) of shares entitled to exercise a
majority of all votes entitled
to be cast by the holders of all of the Corporation's issued
and outstanding capital
stock with respect to any matter to be acted on at the meeting
of stockholders shall
constitute a quorum for the transaction of business at such
meeting, but in the
absence of a quorum the holders of record (present in person
or represented by
proxy at the meeting) may vote to adjourn the meeting from
time to time until a
quorum is obtained. At any such adjourned meeting at which
there is a quorum
present or represented by proxy any business may be
transacted that might have
been transacted at the meeting as originally called.

; and it is further

<PAGE>

RESOLVED, that Section 2.3 of the By-Laws be, and it
hereby is, amended to read
in its entirety as follows:

SECTION 2.3. Removal. Any one or more directors
may be removed with
or without cause by the affirmative vote or written consent of
the holders of record
of shares of the Corporation's capital stock representing a
majority of the total
number of votes that could be exercised with respect to the
election of directors by
the holders of all of the issued and outstanding capital stock
of the Corporation.

; and it is further

RESOLVED, that subsection (d) of Section 5.1 of the
By-Laws be, and it hereby
is, amended to read in its entirety as follows:

(d) Any indemnification under subsection (a) and (b)
of this Section
(unless ordered by a court) shall be made by the Corporation
only as authorized
in the specific case upon a determination that the
indemnification of the director,
officer, employee or agent is proper in the circumstances
because he or she has met
the applicable standard of conduct set forth in subsection (a)
and/or (b), as
applicable, of this Section. Such determination shall be
made (1) by the Board of
Directors by a majority vote of a quorum consisting of
directors who were not
parties to the relevant action, suit or proceeding and were
otherwise disinterested
directors, (2) if no such quorum is obtainable, by majority
vote of all disinterested
directors, (3) by independent counsel in a written opinion or
(4) by the
stockholders.

; and it is further

RESOLVED, this Written Consent may be signed in two or
more counterparts.

Dated: As of July 21, 1999

July 21, 1999 /s/ Beatrice Tollman

BEATRICE TOLLMAN
1,815,890 shares of Common Stock

July 21, 1999 /s/ Brett G. Tollman

BRETT G. TOLLMAN
559,875 shares of Common Stock

July 21, 1999 /s/ Thomas W. Aro

THOMAS W. ARO
22,000 shares of Common Stock

July 21, 1999 /s/ James A. Cutler

JAMES A. CUTLER
16,320 shares of Common Stock

July 21, 1999 /s/ Matthew B. Walker
MATTHEW B. WALKER
404,237 shares of Common Stock

<PAGE>

July 21, 1999 TOLLMAN FAMILY TRUST

By:/s/ Brett G. Tollman
Name: Brett G. Tollman
Title: Trustee
1,000,000 shares of Common Stock

July 21, 1999 BRYANSTON GROUP, INC.

By: /s/ Brett G. Tollman
Name: Brett G. Tollman
Title: President
2,414,063 shares of Common Stock
777,238 shares of Series B Preferred
Stock
135,162 shares of Series C Preferred
Stock

July 21, 1999 BP GROUP, LTD.

By:/s/ Patricia Cohen
Name: Patricia Cohen
Title: Secretary
99,952 shares of Common Stock
44,258 shares of Series B Preferred Stock

<PAGE>

Exhibit B

1998 STOCK OPTION PLAN

ALPHA HOSPITALITY CORPORATION

Alpha Hospitality Corporation, a corporation organized
under the laws of the State
of Delaware, hereby adopts this 1998 Stock Option Plan. The
purpose of this Plan
is to further the growth, development and financial success of
the Company by
providing additional incentives to certain of its key Employees
by assisting them to
become owners of the Company's common stock ("Common
Stock"), par value
$.01 per share, and thus to benefit directly from its growth,
development and
financial success.

ARTICLE I

DEFINITIONS

Whenever the following terms are used in this Plan, they
shall have the respective
meanings specified below unless the context clearly indicates
to the contrary. The
masculine pronoun shall include the feminine and neuter, and
the singular shall
include the plural, where the context so indicates.

Section 1.1 - Board

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

Section 1.2 - Code

"Code" shall mean the Internal Revenue Code of 1986, as
amended.

Section 1.3 - Committee

"Committee" shall mean the Stock Option Committee of the
Board, appointed as
provided in Section 6.1 hereof.

Section 1.4 - Company

"Company" shall mean Alpha Hospitality Corporation, a
Delaware corporation. In
addition, "Company" shall mean any corporation assuming, or
issuing new
employee stock options in substitution for, Options outstanding
under this Plan, in
a transaction to which Section 424(a) of the Code applies.

Section 1.5 - Director

"Director" shall mean a member of the Board.

<PAGE>

Section 1.6 - Employee

"Employee" shall mean any employee (as defined in
accordance with the
regulations and revenue rulings then applicable under Section
3401(c) of the Code)
of the Company, or of any corporation which is then a Parent
Corporation or a
Subsidiary, whether such employee is so employed at the time
this Plan is adopted
or becomes so employed subsequent to the adoption of this
Plan. To the extent not
included in the foregoing, "Employee" shall also mean any
officer, director,
employee or consultant of, or other advisor to, the Company or
any entity that,
directly or indirectly, through one or more intermediaries,
controls, is controlled by,
or is under common control with, the Company, as the
Committee shall from time
to time select in its sole and absolute discretion.

Section 1.7 - Exchange Act

"Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.

Section 1.8 - Incentive Stock Option

"Incentive Stock Option" shall mean an Option that qualifies
under Section 422 of
the Code and that is designated as an Incentive Stock Option
by the Committee.

Section 1.9 - Non-Qualified Option

"Non-Qualified Option" shall mean any Option that is not an
Incentive Stock
Option and that is designated as a Non-Qualified Option by the
Committee.

Section 1.10 - Officer

"Officer" shall mean an officer of the Company, as defined
in Rule 16a-1(f) under
the Exchange Act, as such Rule may be amended in the future.

Section 1.11 - Option

"Option" shall mean an option to purchase shares of
Common Stock, granted under
this Plan. "Options" includes both Incentive Stock Options and
Non-Qualified
Options.

Section 1.12 - Optionee

"Optionee" shall mean an Employee to whom an Option is
granted under this Plan.

Section 1.13 - Parent Corporation

"Parent Corporation" shall mean any corporation in an
unbroken chain of
corporations ending with the Company if each of the
corporations other than the
Company then owns stock possessing 50% or more of the total
combined voting
power of all classes of stock in one of the other corporations in
such chain.

Section 1.14 - Plan

"Plan" shall mean this 1998 Stock Option Plan of Alpha
Hospitality Corporation.

Section 1.15 - Rule 16b-3

"Rule 16b-3" shall mean that certain Rule 16b-3 under the
Exchange Act, as such
Rule may be amended in the future.

Section 1.16 - Secretary

<PAGE>

"Secretary" shall mean the Secretary of the Company.

Section 1.17 - Securities Act

"Securities Act" shall mean the Securities Act of 1933, as
amended.

Section 1.18 - Subsidiary

"Subsidiary" shall mean any corporation in an unbroken
chain of corporations
beginning with the Company if each of the corporations other
than the last
corporation in the unbroken chain then owns stock possessing
50% or more of the
total combined voting power of all classes of stock in one of
the other corporations
in such chain.

Section 1.19 - Termination of Employment

"Termination of Employment" shall mean the time when an
Optionee ceases to be
an Employee for any reason, with or without cause, including,
but not by way of
limitation, by resignation, discharge, death or retirement, but
excluding any
termination where there is a simultaneous reemployment by the
Company, a Parent
Corporation, a Subsidiary or any entity that, directly or
indirectly, through one or
more intermediaries, controls, is controlled by, or is under
common control with, the
Company. The Committee, in its sole and absolute discretion,
and with respect to
all Options hereunder, shall determine all matters and
questions relating to
Termination of Employment, including, but not by way of
limitation, the question
of whether a Termination of Employment is for "cause" and
what actions constitute
"cause," and all questions of whether any particular leave of
absence constitutes a
Termination of Employment; provided, however, that, with
respect to Incentive
Stock Options, a leave of absence shall constitute a
Termination of Employment if,
and to the extent that, such leave of absence interrupts
employment for the purposes
of Section 422(a)(2) of the Code and the then applicable
regulations and revenue
rulings under said Section.

ARTICLE II

SHARES SUBJECT TO PLAN

Section 2.1 - Shares Subject to Plan

The shares of stock subject to Options shall be shares of
Common Stock. The
aggregate number of such shares that may be issued upon
exercise of Options shall
be 4,000,000 shares. The shares to be issued upon exercise of
Options may be
newly-issued shares or treasury shares.

Section 2.2 - Unexercised Options

If any Option expires or is canceled without having been
fully exercised, the
number of shares subject to such Option but as to which such
Option was not
exercised prior to its expiration or cancellation may again be
optioned hereunder.

Section 2.3 - Changes in Company's Shares

In the event the outstanding shares of Common Stock are
hereafter changed into or
exchanged for a different number or kind of shares or other
securities of the
Company, or of another corporation, by reason of
reorganization, merger,
consolidation, recapitalization, reclassification, stock split-up,
stock dividend or
combination of shares, appropriate adjustments shall be made
by the Committee in
the number and kind of shares for the purchase of which
Options may be granted,
including adjustments of the limitations in Section 2.1 hereof
on the maximum
number and kind of shares that may be issued on exercise of Options.

<PAGE>

ARTICLE III

GRANTING OF OPTIONS

Section 3.1 - Eligibility

Any key Employee shall be eligible to be granted Options,
subject to such rules and
conditions as the Committee may establish from time to time
in its sole and absolute
discretion.

Section 3.2 - Qualification of Incentive Stock Options

Subject to the provisions of Section 7.7 hereof, no Incentive
Stock Option shall be
granted unless such Option, when granted, qualifies as an
"incentive stock option"
under Section 422 of the Code.

Section 3.3 - Granting of Options

(a) Subject to the provisions hereof, the Committee shall
from time to time, in its
sole and absolute discretion:

(i) determine which Employees are key Employees and
select from among
the key Employees (including those to whom Options have
been previously granted
under this Plan or any other plan of the Company) such of
them as in its opinion
should be granted Options; and

(ii) determine the number of shares to be subject to
such Options granted to
such selected key Employees, and determine whether such
Options are to be
Incentive Stock Options or Non-Qualified Options; and

(iii) determine the terms and conditions of such
Options, consistent with this
Plan.

(b) In selecting the key Employees to whom Options shall
be granted hereunder,
the number of shares to be subject to such Options and the
terms and conditions of
such Options, the Committee shall have sole and absolute
discretion and shall be free
to make non-uniform and selective determinations based upon
such factors as it
deems relevant.

(c) Upon the selection of a key Employee to be granted an
Option, the Committee
shall instruct the Secretary to issue such Option and may
impose such conditions on
the grant of such Option as it deems appropriate. Without
limiting the generality of
the preceding sentence, the Committee may, in its sole and
absolute discretion and
on such terms as it deems appropriate, require as a condition
on the grant of an
Option to an Employee that such Employee surrender for
cancellation some or all
of the unexercised Options that have been previously granted
to him. An Option the
grant of which is conditioned upon such surrender may have an
option price lower
(or higher) than the option price of the surrendered Option,
may cover the same (or
a lessor or greater) number of shares as the surrendered Option,
may contain such
other terms as the Committee deems appropriate and shall be
exercisable in
accordance with its terms, without regard to the number of
shares, price, option
period or any other term or condition of the surrendered Option.

<PAGE>

ARTICLE IV

TERMS OF OPTIONS

Section 4.1 - Option Agreement

Each Option shall be evidenced by a written Stock Option
Agreement, which shall
be executed by the Optionee and an authorized Officer of the
Company and which
shall contain such terms and conditions as the Committee shall
determine, consistent
with this Plan. Stock Option Agreements evidencing Incentive
Stock Options shall
contain such terms and conditions as may be necessary to
qualify such Options as
"incentive stock options" under Section 422 of the Code.

Section 4.2 - Option Price

(a) The price of the shares subject to each Option shall be
not less than 100% of
the fair market value of such shares on the date such Option is
granted; provided,
however, that, in the case of an Incentive Stock Option, the
price per share shall not
be less than 110% of the fair market value of such shares on
the date such Option is
granted if such Option is granted to an individual then owning
(within the meaning
of Section 424(d) of the Code) more than 10% of the total
combined voting power
of all classes of stock of the Company, any Subsidiary or any
Parent Corporation.

(b) For purposes of this Plan, the fair market value of a
share of the Company's
Common Stock as of a given date shall be: (i) the closing price
of a share of
Common Stock on the principal exchange, if any, on which
shares of Common
Stock are then trading on the day previous to such date or, if
shares were not traded
on the day previous to such date, then on the next preceding
trading day during
which a sale occurred; or (ii) if such Common Stock is not
traded on an exchange
but is quoted on NASDAQ or a successor quotation system, (1)
the last sales price
(if the Common Stock is then listed as a National Market Issue
under the NASD
National Market System) or (2) the mean between the closing
representative bid and
asked prices (in all other cases) for the Common Stock, in each
case, as of the day
previous to such date as reported by NASDAQ or such
successor quotation system;
or (iii) if the Common Stock is not publicly traded on an
exchange and not quoted
on NASDAQ or a successor quotation system, the mean
between the closing bid and
asked prices for the Common Stock on the day previous to
such date, as determined
in good faith by the Committee; or (iv) if the Common Stock is
not publicly traded,
the fair market value established by the Committee acting in
good faith.

Section 4.3 - Commencement of Exercisability

(a) No Option may be exercised in whole or in part during
the six months after
such Option is granted, except as otherwise set forth herein.

(b) Each Option granted hereunder shall be subject to such
vesting schedule
(which may be cumulative or non-cumulative), conditions,
restrictions and other
provisions as the Committee shall, in its sole and absolute
discretion, deem necessary
or appropriate, which determinations may be non-uniform and
selective and based
upon such factors as it deems relevant in its sole and absolute
discretion.

(c) Subject to the provisions hereof governing Incentive
Stock Options, the
Committee shall have the right to accelerate the vesting of any
outstanding Option,
or any portion thereof, at any time and from time to time, and
upon such terms and
conditions as it shall determine in its sole and absolute
discretion.

(d) Notwithstanding any other provision of this Plan, to the
extent that the
aggregate fair market value (determined at the time the
Incentive Stock Option is
granted) of the shares of the Company's stock with respect to
which "incentive stock
options" (within the meaning of Section 422 of the Code) are
exercisable by any
Optionee for the first time by such Optionee during any
calendar year (under this
Plan and all other incentive stock option plans of the Company,
any Subsidiary and
any Parent Corporation) exceeds $100,000, such Options shall
be treated as
Non-Qualified Options. For purposes of this Section, Options
shall be taken into
account in the order in which they were granted.

<PAGE>

(e) Notwithstanding the provisions of paragraph (a) above,
the Committee shall
have the right to issue Options hereunder that are immediately
exercisable on the
date of grant; provided, however, that in such event, the shares
of Common Stock
to be issued thereunder shall be subject to such restrictions on
transfer and forfeiture
as the Committee shall, in its sole and absolute discretion,
deem appropriate, which
determinations may be non-uniform and selective and based
upon such factors as it
deems appropriate in its sole and absolute discretion.

Section 4.4 - Expiration of Options

No Option may be exercised to any extent by anyone after
the first to occur of the
following events:

(a) the expiration of ten years from the date such Option was
granted;

(b) with respect to an Incentive Stock Option, in the case of
an Optionee owning
(within the meaning of Section 424(d) of the Code), at the time
such Option was
granted, more than 10% of the total combined voting power of
all classes of stock
of the Company, any Subsidiary or any Parent Corporation, the
expiration of five
years from the date such Option was granted;

(c) the date of the Optionee's Termination of Employment
for any reason, other
than such Optionee's death or disability (within the meaning of
Section 22(e)(3) of
the Code), unless the Committee otherwise elects to permit the
exercise of such
Option for a period of time thereafter; provided, however, that
(a) such period of
time shall end no later than ten years from the date such Option
was granted, (b) with
respect to any Incentive Stock Option, such period of time
shall not exceed three
months from such Termination of Employment and (c) the
Committee may make
such elections in such manner as it deems appropriate, which
may be non-uniform
and selective, and based upon such factors as it, in its sole and
absolute discretion,
deems relevant; provided, however, that the foregoing
restrictions with respect to an
Optionee's Termination of Employment (as well as the
restrictions set forth in
clauses (iv) and (vi) below with respect to an Optionee's
Termination of
Employment) shall not apply to any Optionee who is merely a
consultant or other
advisor to the Company or any entity that, directly or
indirectly, through one or more
intermediaries, controls, is controlled by, or is under common
control with, the
Company, as the Committee shall from time to time select in
its sole and absolute
discretion, rather than a director, officer or other employee of
the Company or any
entity that, directly or indirectly, through one or more
intermediaries, controls, is
controlled by, or is under common control with, the Company,
as the Committee
shall from time to time select in its sole and absolute
discretion;

(d) with respect to an Option held by an Optionee who is
disabled (within the
meaning of Section 22(e)(3) of the Code), the expiration of one
year from the date
of such Optionee's Termination of Employment for any reason
other than such
Optionee's death unless the Optionee dies within said one-year
period;

(e) the expiration of one year from the date of the Optionee's
death with respect
to all Options held by such Optionee; and

(f) with respect to all Options, and notwithstanding any
other provision
contained herein, the date of the Optionee's Termination of
Employment in the event
such Termination is for "cause" (as contemplated by Section
1.19 above).

Section 4.5 - Consideration

In consideration of the granting of an Option, the Committee
may require that the
Optionee agree to remain in the employ of the Company, a
Parent Corporation or a
Subsidiary for a period of one or more years after such Option
is granted. Nothing
in this Plan or in any Stock Option Agreement hereunder shall
confer upon any
Optionee any right to continue in the employ of the Company,
any Parent
Corporation or any Subsidiary or shall interfere with or restrict
in any way the rights
of the Company, any Parent Corporation or any Subsidiary, all
of which rights are
hereby expressly reserved, to discharged any Optionee at any
time for any reason
whatsoever, with or without cause.

<PAGE>

Section 4.6 - Adjustments in Outstanding Options

In the event the outstanding shares of the stock subject to
Options are changed into
or exchanged for a different number and/or kind of shares of
the Company or other
securities of the Company by reason of merger, consolidation,
recapitalization,
reclassification, stock split-up, stock dividend or combination
of shares, the
Committee shall make an appropriate and equitable adjustment
in the number and/or
kind of shares as to which all outstanding Options, or portions
thereof then
unexercised, shall be exercisable, to the end that after such
event the Optionees'
proportionate interests shall be maintained as before the
occurrence of such event.
Such adjustment in an outstanding Option shall be made
without change in the total
price applicable to such Option or the unexercised portion of
such Option (except
for any change in the aggregate price resulting from
rounding-off of share quantities
or prices) and with any necessary corresponding adjustment in
Option price per
share; provided, however, that, in the case of Incentive Stock
Options, each such
adjustment shall be made in such manner as not to constitute a
"modification" within
the meaning of Section 424(h)(3) of the Code. Any such
adjustment made by the
Committee shall be final and binding upon all Optionees, the
Company and all other
interested persons.

Section 4.7 - Merger, Consolidation, Acquisition, Liquidation
or Dissolution

By its acceptance of each Option, each Optionee agrees that
the Board shall have
the power and right to declare and determine, by a duly
adopted resolution of the
Board, that each Option may not be exercised after (i) the
merger or consolidation
of the Company with or into another corporation (if the
Company is not the
surviving corporation of such merger or consolidation), (ii) the
acquisition by
another corporation or person of all or substantially all of the
Company's assets or
80% or more of the Company's then outstanding voting stock
or (iii) the liquidation
or dissolution of the Company; provided, that such resolution
shall be adopted prior
to the occurrence of such merger, consolidation, acquisition,
liquidation or
dissolution.

ARTICLE V

EXERCISE OF OPTIONS

Section 5.1 - Person Eligible to Exercise

During the lifetime of the Optionee, only he may exercise
any Option (or any
portion thereof) granted to him. After the death of the
Optionee, any exercisable
portion of any Option granted to such Optionee may, prior to
the time when such
portion becomes unexercisable under this Plan or the
applicable Stock Option
Agreement, be exercised by his personal representative or by
any person empowered
to do so under such Optionee's will or under the then
applicable laws of descent and
distribution. Notwithstanding the foregoing, the Committee
may, in its sole and
absolute discretion, permit the transfer of any Non-Qualified
Option, in whole or in
part, and the exercise thereof by any transferee thereof.

Section 5.2 - Partial Exercise

At any time and from time to time prior to the time when any
exercisable Option or
exercisable portion thereof becomes unexercisable under this
Plan or the applicable
Stock Option Agreement, such Option or portion thereof may
be exercised in whole
or in part; provided, however, that the Company shall not be
required to issue
fractional shares and the Committee may require any partial
exercise to be with
respect to a specified minimum number of shares.

Section 5.3 - Manner of Exercise

An exercisable Option, or any exercisable portion thereof,
may be exercised solely
by delivery to the Secretary or his office of all of the following
prior to the time
when such Option or such portion becomes unexercisable
under this Plan or the applicable Stock Option Agreement:

<PAGE>

(a) notice in writing signed by the Optionee or other person
then entitled to
exercise such Option or portion, stating that such Option or
portion is exercised,
such notice complying with all applicable rules established by
the Committee and/or
contained in the applicable Stock Option Agreement; and

(b) (i) full payment (in cash or by check) for the shares with
respect to which
such Option or portion is thereby exercised; or

(ii) with the consent of the Committee, (A) shares of
Common Stock owned
by the Optionee duly endorsed for transfer to the Company or
(B) subject to the
requirements of Section 5.4 hereof, shares of Common Stock
issuable to the
Optionee upon exercise of the Option, in each case, with a fair
market value (as
determined under Section 4.2(b) hereof) on the date of Option
exercise equal to the
aggregate Option price of the shares with respect to which such
Option or portion
is thereby exercised; or

(iii) with the consent of the Committee, a promissory
note duly executed and
delivered by the Optionee in the principal amount of the
exercise price thereof, or
any portion thereof, in each case upon such terms and
conditions (including without
limitation, terms regarding rates of interest, payment schedule,
collateral or other
security) as the Committee may establish in its sole and
absolute discretion; or

(iv) with the consent of the Committee, any combination
of the consideration
provided in the foregoing clauses (i), (ii) and (iii);

(c) payment to the Company (or other employer
corporation) of all amounts that
it is required to withhold under federal, state or local law in
connection with the
exercise of the Option; provided, that, with the consent of the
Committee, any
combination of the consideration provided in the foregoing
clauses (i), (ii) and (iii)
of the preceding paragraph (b) may be used to make all or part
of such payment;

(d) such representations and documents as the Committee, in
its sole and absolute
discretion, deems necessary or advisable to effect compliance
with all applicable
provisions of the Securities Act and any other federal or state
securities laws or
regulations. The Committee may, in its sole and absolute
discretion, also take
whatever additional actions it deems appropriate to effect such
compliance,
including, without limitation, placing legends on share
certificates and issuing
stop-transfer orders to transfer agents and registrars; and

(e) in the event that any Option or portion thereof shall be
exercised pursuant to
Section 5.1 hereof by any person or persons other than the
Optionee, appropriate
proof of the right of such person or persons to exercise such
Option or portion
thereof.

Section 5.4 - Certain Requirements

The Committee may, in its sole and absolute discretion, limit
or restrict the use of
shares of Common Stock issuable to the Optionee upon
exercise of his Option to
satisfy the Option price or the tax withholding consequences of
such exercise (i) to
such periods following the date of release of the quarterly or
annual summary
statement of sales and earnings of the Company and/or to such
other periods as the
Committee shall, in its sole and absolute discretion, deem
appropriate, (ii) to its
receipt of an irrevocable written election by the Optionee to
use shares of Common
Stock issuable to the Optionee upon exercise of the Option to
pay all or part of the
Option price or the withholding taxes (subject to the approval
of the Committee)
made at least six months (or such other period as the
Committee, in its sole and
absolute discretion, may determine) prior to the payment of
such Option price or
withholding taxes or (iii) in accordance with such other rules
and regulations as the
Committee may, in its sole and absolute discretion, determine
to be necessary or
appropriate from time to time.

Section 5.5 - Conditions to Issuance of Stock Certificates

The shares of stock issuable and deliverable upon the
exercise of an Option, or any
portion thereof, may be either previously authorized but
unissued shares or issued
shares that have then been reacquired by the Company. The Company

<PAGE>

shall not be required to issue or deliver any certificate or certificates for
shares of stock
purchased upon the exercise of any Option or portion thereof
prior to the fulfillment
of all of the following conditions:

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

(b) the completion of any registration or other qualification
of such shares under
any state or federal law or under the rulings or regulations of
the Securities and
Exchange Commission or any other governmental regulatory
body, that the
Committee shall, in its sole and absolute discretion, deem
necessary or advisable;
and

(c) the obtaining of any approval or other clearance from
any state or federal
governmental agency that the Committee shall, in its sole and
absolute discretion,
determine to be necessary or advisable; and

(d) the payment to the Company (or other employer
corporation) of all amounts
that it is required to withhold under federal, state or local law
in connection with the
exercise of the Option; and

(e) the lapse of such reasonable period of time following the
exercise of the
Option as the Committee, in its sole and absolute discretion,
may establish from time
to time for reasons of administrative convenience.

Section 5.6 - Rights as Shareholders

The holders of Options shall not be, nor have any of the
rights or privileges of,
stockholders of the Company in respect of any shares
purchasable upon the exercise
of any part of an Option unless and until certificates
representing such shares have
been issued by the Company to such holders.

Section 5.7 - Transfer Restrictions

If required at any time by the Committee, no shares acquired
upon exercise of any
Option by any Officer may be sold, assigned, pledged,
encumbered or otherwise
transferred until at least six months have elapsed from (but
excluding) the date that
such Option was granted. The Committee, in its sole and
absolute discretion, may
impose such other restrictions on the transferability of the
shares purchasable upon
the exercise of an Option as it deems appropriate. Any such
other restriction shall
be set forth in the respective Stock Option Agreement and may
be referred to on the
certificate or certificates evidencing such shares. The
Committee may require the
Employee to give the Company prompt notice of any
disposition of shares of stock
that are or have been acquired by exercise of an Incentive
Stock Option within two
years from the date of granting such Option or one year after
the transfer of such
shares to such Employee. The Committee may direct that the
certificates evidencing
shares acquired by exercise of an Incentive Stock Option refer
to such requirement
to give prompt notice of disposition.

ARTICLE VI

ADMINISTRATION

Section 6.1 - Stock Option Committee

The Committee shall consist of two or more Directors,
appointed by and holding
office at the pleasure of the Board. The Board may limit the
members of the
Committee to directors who are both "non-employee
directors," as defined in Rule
16b-3, and "outside directors," as defined in Section 162(m) of
the Code. Subject
to the limitations set forth in the preceding sentence, the
powers of the Committee
may, if so determined by resolution of the Board, be exercised
by the Compensation
Committee of the Board. Appointment of Committee members
shall be effective
upon acceptance of appointment. Committee members may be
removed by the
Board at any time and may resign at any time. Vacancies in
the Committee shall be
filled by the Board. The Board reserves the right to serve as
the Committee if it so
elects, and, in such event, the term "Committee" shall mean the Board.

<PAGE>

Section 6.2 - Duties and Powers of Committee

It shall be the duty of the Committee to conduct the general
administration of this
Plan in accordance with its provisions. The Committee shall
have the power to
interpret this Plan and the Options and to adopt such rules for
the administration,
interpretation and application of this Plan as are consistent
therewith and to interpret,
amend or revoke any such rules. Any such interpretations and
rules in regard to
Incentive Stock Options shall be consistent with the basic
purpose of this Plan to
grant "incentive stock options" within the meaning of Section
422 of the Code.

Section 6.3 - Majority Rule

The Committee shall act by a majority of its members in
office. The Committee
may act either by vote at a meeting or by a memorandum or
other written instrument
signed by a majority of the Committee.

Section 6.4 - Compensation; Professional Assistance; Good
Faith Actions

Members of the Committee shall receive such compensation
for their services as
members as may be determined by the Board. All expenses
and liabilities incurred
by members of the Committee in connection with the
administration of this Plan
shall be borne by the Company. The Committee may employ
attorneys, consultants,
accountants, appraisers, brokers or other persons. The
Committee, the Company and
its Officers and Directors shall be entitled to rely upon the
advice, opinions or
valuations of any such persons. All actions taken and all
interpretations and
determinations made by the Committee in good faith shall be
final and binding upon
all Optionees, the Company and all other interested persons.
No member of the
Committee shall be personally liable for any action,
determination or interpretation
made in good faith with respect to this Plan or the Options or
for any failure to act,
and all members of the Committee shall be fully protected by
the Company in
respect to any such action, determination or interpretation or
any failure to make any
determination or to otherwise act. The Committee shall have
the unrestricted right
to make non-uniform decisions and determinations in all
matters regarding this Plan
and all Options issued hereunder.

ARTICLE VII

OTHER PROVISIONS

Section 7.1 - Options Not Transferable

No Option or interest or right therein or part thereof shall be
liable for, or available
for the satisfaction of, the debts, contracts or engagements of
the Optionee or his
successors in interest or shall be subject to disposition by
transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other
means, whether such
disposition be voluntary or involuntary or by operation of law
or by judgment, levy,
attachment, garnishment or any other legal or equitable
proceedings (including
bankruptcy), and any attempted disposition thereof shall be
null and void and of no
effect; provided, however, that nothing in this Section 7.1 shall
prevent transfers by
will or by the applicable laws of descent and distribution.
Notwithstanding the
foregoing, the Committee may, in its sole and absolute
discretion, permit the holder
of any Non-Qualified Option to transfer such Option, or any
portion thereof, to such
holder's spouse, lineal descendent(s) or trust established for the
benefit thereof or
any other person or entity.

Section 7.2 - Amendment, Suspension or Termination of this
Plan

The Plan may be wholly or partially amended or otherwise
modified, suspended or
terminated at any time or from time to time by the Committee,
including, without
limitation, any amendment to increase or decrease the number
of shares as to which
Options may be granted, except as otherwise set forth herein
hereunder, subject to
any requirements of stockholder approval set forth in Section
16b-3 or the applicable
provisions of the Code. Neither the amendment, suspension
nor termination of this
Plan shall, without the consent of the holder of any Option,
impair any rights or
obligations under such Option (or the Stock Option Agreement
applicable thereto)
theretofore granted, except as otherwise set forth herein (or in
the applicable Stock
Option Agreement). Subject to any applicable provisions of
Section 16b-3 and

<PAGE>

the Code, the Committee and the holder of any Option may at any
time, by mutual
consent, amend, modify or otherwise waive any of the terms
and provisions,
including the exercise price, of such holder's Option and Stock
Option Agreement.
No Option may be granted during any period of suspension nor
after termination of
this Plan, and in no event may any Option be granted under
this Plan after the first
to occur of (a) January 1, 2010 or (b) the expiration of ten
years from the date this
Plan is approved by the Company's stockholders as
contemplated under Section 7.3
hereof.

Section 7.3 - Effective Date; Approval of Plan by Stockholders

This Plan will be effective at the time it is approved or
ratified by a majority vote
of the Company's stockholders (present in person or
represented by proxy) at a duly
called and held meeting thereof (including any proper
adjournment thereof), a
quorum being present. In the event this Plan is not so
approved, this Plan shall not
become effective and shall be null and void, and any Options
issued hereunder shall
be terminated.

Section 7.4 - Effect of Plan Upon Other Option and
Compensation Plans

Except as otherwise set forth herein, the adoption of this Plan
shall not affect any
other compensation or incentive plans in effect for the
Company, any Parent
Corporation or any Subsidiary. Nothing in this Plan shall be
construed to limit the
right of the Company, any Parent Corporation or any
Subsidiary to (a) establish any
other forms of incentives or compensation for employees of the
Company, any
Parent Corporation or any Subsidiary or (b) grant or assume
options otherwise than
under this Plan in connection with any proper corporate
purpose, including, but not
by way of limitation, the grant or assumption of options in
connection with the
acquisition, by purchase, lease, merger, consolidation or
otherwise, of the business,
stock or assets of any corporation, firm or association.

Section 7.5 - Titles

Titles are provided herein for convenience only and are not
to serve as a basis for
interpretation or construction of this Plan or any provision
hereof.

Section 7.6 - Conformity to Securities Laws

This Plan is intended to conform to the extent necessary with
all provisions of the
Securities Act and the Exchange Act and any and all
regulations and rules
promulgated by the Securities and Exchange Commission
thereunder, including
without limitation Rule 16b-3. Notwithstanding anything
contained herein to the
contrary, this Plan shall be administered, and Options shall be
granted and may be
exercised, only in such a manner as to conform to such laws,
rules and regulations.
To the extent permitted by applicable law, this Plan and
Options granted hereunder
shall be deemed amended to the extent necessary to conform to
such laws, rules and
regulations.

Section 7.7 - Incentive Stock Options

With respect to Incentive Stock Options, if this Plan does not
contain any provision
now or hereafter required to be included herein under Section
422 of the Code, such
provision shall be deemed to be incorporated herein with the
same force and effect
as if such provision had been set out at length herein.
Notwithstanding anything
contained herein to the contrary, to the extent any Option that
is intended to qualify
as an Incentive Stock Option cannot so qualify, such Option, to
that extent, shall be
deemed to be a Non-Qualified Option under the Code for all
purposes of this Plan.

Section 7.8 - Exclusion from Pension and Profit-Sharing
Computation

By acceptance of an Option, the Optionee accepting same
shall be deemed to have
agreed that the grant of such Option is special incentive
compensation that will not
be taken into account, in any manner, as salary, compensation
or bonus in
determining the amount of any payment under any pension,
retirement or other
employee benefit plan of the Company or any of its
Subsidiaries, whether now
existing or hereafter arising. In addition, such Option will not
affect the amount of
any life insurance coverage, if any, provided by the Company
on the life of the
Optionee or that is payable to any beneficiary of such
Optionee under any life
insurance plan covering employees of the Company or any of
its Subsidiaries.

<PAGE>

OPTION AGREEMENT, made this 16th
day of September 1996, between
ALPHA HOSPITALITY CORPORATION, a
Delaware corporation (the "Company"), and
(the "Optionee"), an employee of, a
non-employee Director of, or a non-employee
Consultant or Advisor to, the Company or a
corporation which
is a parent corporation or a subsidiary
corporation
with respect to the Company (a "Related
Corporation") within the meaning of Section
424(e) or (f) of the Internal Revenue Code of
1986, as amended (the "Code").

The Company desires, by affording the Optionee an
opportunity to
purchase shares (the "Shares"), of its common stock, par value
$0.01
per share (the "Common Stock"), to provide the Optionee with
an
incentive to continue his services to the Company or a Related
Corporation and to intensify his interest in the success of the
Company or a Related Corporation.

NOW, THEREFORE, in consideration of the mutual
covenants
hereinafter set forth and for other good and valuable
consideration,
the parties hereto agree as follows:

1. Grant of Option. The Company hereby grants to the
Optionee,
as a matter of separate agreement and not in lieu of salary or
any
other compensation for services, the right and option (the
"Option")
to purchase all or any part of an aggregate of
Shares
on the terms and conditions herein set forth.

2. Exercise Price. The purchase price of the Shares subject
to the
Option shall be $ per share (the "Option Price").

3. Limitation on Exercisability of Option. Subject to the
provisions of Section 7 hereof, the Option shall be exercisable
as
follows:

4. Expiration of Option. Subject to the provisions of Section 7
hereof, the Option shall not be exercisable after , 20__.

<PAGE>

5. No Rights as Stockholder. The Optionee shall have none
of the rights of a stockholder with respect to any of the Shares
subject to the Option until such Shares shall be issued to him upon the
exercise of the Option.

6. Non-Assignability of Option. The Option shall not be
transferable otherwise than by will or the laws of descent and
distribution, and the Option shall be exercisable, during the
lifetime of the Optionee, only by him. More particularly (but without
limiting the generality of the foregoing), the Option may not be
assigned, transferred, pledged or hypothecated in any way
(whether by operation of law or otherwise), and shall not be subject to
execution, attachment or similar process. Notwithstanding the
foregoing, the Option may be transferred pursuant to the terms
of a "qualified domestic relations order", within the meaning of
Sections 401(a)(13) and 414(p) of the Code or within the meaning of
Title I
of the Employee Retirement Income Security Act of 1974, as
amended. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of the Option contrary to the provisions
hereof, and the levy of any execution, attachment or similar process
upon the Option, shall be null and void and without effect.

7. Death or Termination of Employment or Services.

(1) Termination. If the employment or services of an
Optionee
shall be terminated for any reason other than disability, death
or as
otherwise specified in subsection (d) below, then such Option
may be
exercised at any time within three months after such
termination,
subject to the provisions of subsection (e) of this Section 7.

(2) Death. If the holder of an Option dies while
employed by,
or while serving as either a non-employee Director of or a
non-employee Consultant or Advisor to, the Company or a
Related
Corporation, then such Option, subject to the provisions of
subsection
(e) of this Section 7, may be exercised by the estate of the
Optionee,
or by a person who acquired the right to exercise such Option
by
bequest or inheritance or by reason of the death of such
Optionee at
any time within one year after such death.

(3) Disability. If the Optionee becomes disabled (that is,
"permanent and total disability" within the meaning of Section
22(e)(3) of the Code) while employed by, or while serving as a
non-employee Director of or a non-employee Consultant or
Advisor to,
the Company or a Related Corporation, and such Optionee's
employment or services are terminated as a result of such
disability,
then such Option may, subject to the provisions of subsection
(e) of
this Section 7, be exercised at any time within one year after
his
termination of employment or termination of services due to
the disability.

(4) Cause. If the Board of Directors of the Company (the
"Board"), after full consideration of the facts presented on
behalf of
both the Company and the Optionee, finds that the Optionee
has
breached his employment or service contract or relationship
with the
Company or a Related

<PAGE>

Corporation, or has been engaged in disloyalty
to the Company or a Related Corporation including, without
limitation, fraud, embezzlement, theft, commission of a felony
or
proven dishonesty in the course of his employment or service,
or has
disclosed trade secrets or confidential information of the
Company
or of a Related Corporation, then such Option shall be
immediately
terminated and any undelivered shares shall be forfeited upon
refund
by the Company of the purchase price.

(5) Non-Exercisability. An Option may not be exercised
pursuant to this Section 7 except to the extent that the holder
was
entitled to exercise the Option at the time of termination of
employment, termination of services, or death, and in any
event may
not be exercised after the date of expiration of the Option
referred to
in Section 4.

(6) Permitted Absence. For purposes of this Section 7,
the
employment relationship of an employee of the Company or of
a
Related Corporation will be treated as continuing intact while
he is
on military or sick leave or other bona fide leave of absence
(such as
temporary employment by the Government) if such leave does
not
exceed ninety days, or, if longer, so long as his right to
reemployment or continued service is guaranteed either by
statute or
by contract.

8. Adjustments. Upon the occurrence of any of the following
events, an Optionee's rights with respect to the Option shall be
adjusted as hereinafter provided:

(1) Stock Dividends and Stock Splits. If the shares of
Common Stock shall be subdivided or combined into a greater
or
smaller number of shares or if the Company shall issue any
shares of
Common Stock as a stock dividend on its outstanding
Common
Stock, the number of Shares deliverable upon the exercise of
the
Option shall be appropriately increased or decreased
proportionately,
and appropriate adjustments shall be made in the purchase
price per
share to reflect such subdivision, combination or stock
dividend.

(2) Consolidations or Mergers. If the Company is to be
consolidated with or acquired by another entity in a merger,
sale of
all or substantially all of the Company's assets or otherwise (an
"Acquisition"), the Board or the board of directors of any
entity
assuming the obligations of the Company under the Plan (the
"Successor Board"), shall, as to outstanding Options under the
Plan
(including this Option), either (i) make appropriate provision
for the
continuation of such Options by substituting on an equitable
basis for
the shares then subject to such Options either (A) the
consideration
payable with respect to the outstanding shares of Common
Stock in
connection with the Acquisition, (B) shares of stock of the
surviving
corporation or (C) such other securities as the Successor Board
deems
appropriate, the fair market value of which shall approximate
the fair
market value of the Shares subject to such Options
immediately
preceding the Acquisition; or (ii) upon written notice to the
optionees, provide that the Option must be exercised, to the
extent
then exercisable, within a specified number of days of the date
of
such notice, at the end of which period the Option shall
terminate; or
(iii) terminate all Options, including this Option, in exchange
for a
cash payment equal to the excess of the fair market value of
the
shares subject to such Options (to the extent then exercisable)
over
the exercise price thereof.

<PAGE>

(3) Recapitalization or Reorganization. In the event of a
recapitalization or reorganization of the Company (other than a
transaction described in subsection (b) above) pursuant to
which
securities of the Company or of another corporation are issued
with
respect to the outstanding shares of Common Stock, the
Optionee
upon exercising the Option shall be entitled to receive for the
purchase price paid upon such exercise the securities he or she
would
have received if he or she had exercised the Option prior to
such
recapitalization or reorganization.

(4) Dissolution or Liquidation. In the event of the
proposed
dissolution or liquidation of the Company, the Option will
terminate
immediately prior to the consummation of such proposed
action or
at such other time and subject to such other conditions as shall
be
determined by the Board.

(5) Issuances of Securities. Except as expressly provided
herein, no issuance by the Company of shares of stock of any
class,
or securities convertible into shares of stock of any class, shall
affect,
and no adjustment by reason thereof shall be made with respect
to,
the number or price of Shares subject to the Option. No
adjustments
shall be made for dividends paid in cash or in property other
than
securities of the Company.

(6) No Fractional Shares. Any adjustment in the number
of
Shares shall apply proportionately to only the unexercised
portion of
the Option granted hereunder. If fractions of a Share would
result
from any such adjustment, the adjustment shall be revised to
the next
lower whole number of Shares.

9. Method of Exercise of Option. Subject to the terms and
conditions of this Agreement, the Option may be exercised by
written
notice to the Company at its principal office, presently located
at 12
East 49th Street, 24th Floor, New York, NY 10017, Att:
President.
Such notice shall state the election to exercise the Option and
the
number of Shares in respect of which it is being exercised,
shall be
signed by the person or persons so exercising the Option and
shall be
accompanied by full payment of the purchase price thereof
either (a)
in United States dollars in cash or by check, (b) at the
discretion of
the Board, through delivery of shares of Common Stock
having a fair
market value equal as of the date of the exercise to the cash
exercise
price of the Option, (c) at the discretion of the Board, by
delivery of
the grantee's personal recourse note bearing interest payable
not less
than annually at no less than 100% of the lowest applicable
Federal
rate, as defined in Section 1274(d) of the Code, (d) at the
discretion
of the Board and consistent with applicable law, through the
delivery
of an assignment to the Company of a sufficient amount of the
proceeds from the sale of the Common Stock acquired upon
exercise
of the Option and an authorization to the broker or selling
agent to
pay that amount to the Company, which sale shall be at the
holder's
direction at the time of exercise, or (e) at the discretion of the
Board,
by any combination of (a), (b), (c) and (d) above. Except as
expressly provided above in Section 8 with respect to changes
in
capitalization and stock dividends, no adjustment shall be made
for
dividends or similar rights for which the record date is before
the
date such stock certificate is issued. In the event that
certificates of
shares of the Company's Common Stock delivered to the
Company
represent a number of shares in excess of the number of shares
required to make payment for the Option Price of the Shares (or relevant

<PAGE>

portion thereof) with respect to which the Option is to be
exercised by payment in shares of Common Stock, the stock
certificate issued to the Optionee shall represent (A) the Shares
in
respect of which payment is made, and (B) such excess number
of
shares. The certificate or certificates for the Shares as to which
the
Option shall have been so exercised shall be registered in the
name
of the person or persons so exercising the Option and shall be
delivered as aforesaid to or upon the written order of the
person or
persons exercising the Option. In the event the Option shall be
exercised pursuant to Sections 7(b) or 7(c) hereof, by any
person or
persons other than the Optionee, such notice shall be
accompanied by
appropriate proof of the right of such person or persons to
exercise
the Option. All Shares that shall be purchased upon the
exercise of
the Option as provided herein shall be fully paid and
nonassessable.

10. Restrictions on Issuance.

(1) Investment Intent. Unless prior to the exercise of the
Option, the Shares issuable upon such exercise have been
registered
with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, the notice of exercise shall
be
accompanied by a representation or agreement of the
individual
exercising the Option to the Company to the effect that such
shares
are being acquired for investment and not with a view to the
resale
or distribution thereof or such other documentation as may be
required by the Company, unless in the opinion of counsel to
the
Company, such representation, agreement or documentation is
not
necessary to comply with said Act.

(2) Regulatory Compliance. The Company shall not be
obligated to issue and deliver any Shares until they have been
listed
on each securities exchange on which the Common Stock may
then
be listed nor until there has been qualification under or
compliance
with such state or federal laws, rules or regulations as the
Company
may deem applicable. The Company shall use reasonable
efforts to
obtain such listing, qualification and compliance.

11. Withholding of Additional Income Taxes. Upon the
exercise
of an Option, the Company may withhold taxes in respect of
amounts
that constitute compensation includable in gross income. The
Committee in its discretion may condition the exercise of an
Option
on the Optionee's making satisfactory arrangement for such
withholding. Such arrangement may include payment by the
Optionee in cash or by check of the amount of the withholding
taxes
or, at the discretion of the Committee, by the Optionee's
delivery of
previously held shares of Common Stock or the withholding
from the
Shares otherwise deliverable upon exercise of an Option
Shares
having an aggregate fair market value equal to the amount of
such withholding taxes.

12. No Contract of Employment. The grant of the Option
pursuant to this Agreement shall not be construed to imply or
to
constitute evidence of any agreement, express or implied, on
the part
of the Company or any Related Corporation to retain the
Optionee in
the employ of the Company or of a Related Corporation and/or
as a member of the Board or in any other capacity.

<PAGE>

13. Governing Law. This Option Agreement shall be
construed in accordance with and governed by the laws of the State of
Delaware.

IN WITNESS WHEREOF, the Company has caused this
Agreement to be duly executed by its officer thereunto duly
authorized, and the Optionee has hereunto signed this
Agreement, all on the day year first above written.

ALPHA HOSPITALITY CORPORATION

By:
Name:
Title:

AGREED TO AND ACCEPTED:

Optionee

<PAGE>

ALPHA HOSPITALITY CORPORATION
12 East 49th Street
New York, New York 10017

_____________________

This Proxy is Solicited on Behalf of the Board of Directors
_____________________

The undersigned hereby appoints Stanley Tollman and
Thomas W. Aro as Proxies, each with the
power to appoint his substitute, and hereby authorizes them,
and each of them acting singly, to
represent and vote, as designated below, all the shares of
Common Stock of Alpha Hospitality
Corporation ("Alpha") held of record by the undersigned on
August 6, 1999 at the combined Annual
and Special Meeting of Stockholders to be held on September
16, 1999, or any adjournment thereof.

1. To elect the following individuals as members to the
Board of Directors of the Company:
Stanley S. Tollman FOR ABSTAIN AGAINST
Thomas W. Aro FOR ABSTAIN AGAINST
Brett G. Tollman FOR ABSTAIN AGAINST
James A. Cutler FOR ABSTAIN AGAINST
Matthew B. Walker FOR ABSTAIN AGAINST
Herbert F. Kozlov FOR ABSTAIN AGAINST

2. To consider and vote upon a proposal to amend Alpha's
Certificate of Incorporation to (a)
increase the number of authorized shares of Alpha's
Common Stock from 25,000,000 shares
to 75,000,000 shares and (b) increase the number of
authorized shares of the Company's
"blank check" Preferred Stock from 1,000,000 shares to
5,000,000 shares.
FOR ABSTAIN AGAINST

3. To consider and vote upon a proposal to adopt the 1998
Stock Option Plan.
FOR ABSTAIN AGAINST

4. To consider and vote upon a proposal to amend the
Company's by-laws to permit the
granting of compensation to members of the Company's
Board of Directors (or any
committee thereof) as determined by the Board of
Directors, without separate stockholder
approval.
FOR ABSTAIN AGAINST

5. To consider and vote upon a proposal to amend the
Company's Certificate of Incorporation
to enable and authorize the Board of Directors to adopt,
amend or repeal by-laws of the
Company.
FOR ABSTAIN AGAINST

6. To consider and vote upon a proposal to allow Stanley S.
Tollman, the Company's Chief
Executive Officer, to convert up to $2,000,000 in accrued
but unpaid salary into up to
1,000,000 shares of the Company's Common Stock at a
rate of $2.00 per share.

FOR ABSTAIN AGAINST

7. Ratification of Rothstein, Kass & Company, P.C. as the
Company's independent certified
public accountant.
FOR ABSTAIN AGAINST

This proxy, when properly executed, will be voted in the
manner directed by the undersigned
stockholder. If no direction is made, this proxy will be voted
FOR Proposals 1, 2, 3, 4, 5, 6
and 7. A vote to "ABSTAIN" will not be counted towards
the requisite affirmative vote to
approve Proposals 2 and 5

PLEASE MARK, SIGN, DATE AND RETURN THE
PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.

Please sign exactly as name appears below.
When shares are held by joint tenant both should sign.
When signing attorney, executor, administrator, trustee or guardian,
okease give full title as such. If a corporation, please sign in full
corporate name by the President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.

Signature

Signature if held jointly

Dated: , 1999