U. S. SECURITIES AND
EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly report pursuant to section 13 or 15 (d) of
the Securities Exchange Act of 1934
For the quarterly period ended September 30, 1999
Transition report pursuant to section 13 or 15 (d) of the
Securities Exchange Act of 1934
Commission file number 1-12522
ALPHA HOSPITALITY
CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-3714474
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
12 East 49th Street, New York, NY 10017
(Address of principal executive offices)
(212) 750-3500
(Issuer's telephone number)
Not applicable
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be
filed by Sections 13 or 15 (d) of the Securities Exchange Act
during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest practicable
date: November 15, 1999.
Common Stock, $0.01 par value: 16,803,149 shares
ALPHA HOSPITALITY CORPORATION AND
SUBSIDIARIES
INDEX
PART I
FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets
September 30, 1999 and December 31, 1998 1
Consolidated Statements of
Operations Nine Months Ended
September 30, 1999 and 1998 2
Consolidated Statements of
Operations Three Months Ended
September 30, 1999 and 1998 3
Consolidated Statements of Cash
Flows Nine Months Ended
September 30, 1999 and 1998 4-5
Notes to Consolidated Financial
Statements 6-11
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 12-16
PART II OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 4. Submission of Matters to a Vote of
Security Holders 17-18
Item 6. Exhibits and Reports on 8-K 18
Signatures 19
All items that are not applicable or to which the answer is
negative have been omitted from this report.
<PAGE>
ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash, including restricted cash of
$365 and $1,619 in
1999 and 1998, respectively. . . . . .$ 1,866 $ 3,837
Other current assets. . . . . . . . . . . 157 179
Total current assets. . . . . . . . . . 2,023 4,016
PROPERTY AND EQUIPMENT, net. . . . . . . . . 5,029 4,630
DEPOSITS AND OTHER ASSETS. . . . . . . . . . 1,539 1,550
$ 8,591 $ 10,196
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Long-term debt, current maturity . . . . $ $ 1,000
Accounts payable and accrued expenses. . 1,068 871
Accrued payroll and related liabilities. 134 1,774
Total current liabilities . . . . . . 1,202 3,645
LONG-TERM DEBT, less current maturity. . . 2,132 1,108
OTHER LIABILITIES. . . . . . . . . . . . . 2,013 280
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 75,000
shares authorized, 16,803 and
15,183 issued in 1999 and 1998,
respectively 168 152
Preferred stock, 5,000 shares authorized:
Series B, $.01 par value, 821 issued. 8 8
Series C, $.01 par value, 135 issued. 1 1
Common stock payable . . . . . . . . . . 2,861
Capital in excess of par value . . . . . 75,326 72,371
Accumulated deficit. . . . . . . . . . . (72,373) (70,230)
Total stockholders' equity. . . . . . 3,244 5,163
$ 8,591 $ 10,196
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except for per share data)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1999 1998
<S> <C> <C>
REVENUES:
Casino . . . . $ $ 4,923
Food and beverage, retail and other . . . 138 368
Total revenues . . . . . . . . . . . . 138 5,291
COSTS AND EXPENSES:
Casino . . . . 1,901
Food and beverage, retail and other . . . 91
Selling, general and administrative . . . 1,262 4,482
Interest . . . 125 1,012
Depreciation and amortization . . . . . . 33 896
Development and start-up costs. . . . . . 747 219
Total costs and expenses . . . . . . . 2,167 8,601
LOSS FROM OPERATIONS. . . . . . . . . . . . (2,029) (3,310)
OTHER INCOME (LOSS):
Loss from equity investee . . . . . . . . (1,721)
Gain on sale of assets. . . . . . . . . . 6,425
Total other income, net. . . . . . . . 4,704
INCOME (LOSS) BEFORE DEFERRED INCOME TAXES . . (2,029) 1,394
DEFERRED INCOME TAX . . . . . . . . . . . . 6,375
NET LOSS . . . . $ (2,029) $ (4,981)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING. 16,759 14,890
NET LOSS PER COMMON SHARE, BASIC AND DILUTED .$ (.12) $ (.33)
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
(Unaudited)
(in thousands, except for per share data)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1999 1998
<S> <C> <C>
REVENUES:
Management fees, interest and other . . . $ 46 $ 102
Total revenues . . . . . . . . . . . . 46 102
COSTS AND EXPENSES:
Selling, general and administrative . . . 443 724
Interest . . . 44 58
Depreciation and amortization . . . . . . 11 13
Development and start-up costs. . . . . . 254 89
Total costs and expenses . . . . . . . 752 884
LOSS FROM OPERATIONS. . . . . . . . . . . . (706) (782)
OTHER LOSS:
Equity investee. . . . . . . . . . . . . (837)
NET LOSS . . . $ (706) $ (1,619)
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING. 16,790 15,183
NET LOSS PER COMMON SHARE, BASIC AND DILUTED . $ (.04) $ (.11)
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss .$ (2,029) $ (4,981)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization. . . . 33 896
Deferred tax . . . . . . . . . . . . 6,375
Equity loss. . . . . . . . . . . . . 1,721
Gain on sale of assets . . . . . . . (6,425)
Changes in operating assets and
liabilities:
Decrease in accounts receivable . 15
Decrease in prepaid insurance . . 276
Increase in inventories . . . . . (19)
(Increase) decrease in other
current assets . 22 (119)
Increase (decrease) in accounts
payable and accrued expenses . . 247 (3,189)
Increase (decrease) in accrued
payroll and related liabilities. . 93 (112)
NET CASH USED IN OPERATING ACTIVITIES. . . . . (1,643) (5,562)
CASH FLOWS FROM INVESTING ACTIVITIES:
Payment on note receivable . . . . . . . . . (250)
Proceeds from sale of assets . . . . . . . . 11,800
Payments for property and equipment. . . . . (432) (1,100)
Cash from hotel construction escrow. . . . . 1,700
(Increase) decrease in deposits and other
assets 11 (139)
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES . (421) 12,011
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of warrants. . . . 60
Proceeds from long-term debt. . . . . . . 650
Payments to affiliate . . . . . . . . . . (3,299)
Payments on long-term debt. . . . . . . . (626) (252)
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES . 84 (3,551)
NET INCREASE (DECREASE) IN CASH . . . . . . (1,971) 2,898
CASH, beginning of period . . . . . . . . . 3,837 2,211
CASH, end of period . . . . . . . . . . . .$ 1,866 $ 5,109
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1999 1998
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION,
cash paid for interest during the period. . . . . $ 125 $ 100
SUPPLEMENTAL SCHEDULES OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Issuance of options to purchase 30 shares of
the Company's common stock as satisfaction
of accounts payable and accrued expenses. . . . $ 50
Restructuring and conversion of Bryanston
obligations:
Issuance of preferred stock . . . . . . . . . $ 9,732
Mortgage on the Jubilation gaming vessel. . . . . $ 3,000
Extinguishment of debt including accrued
interest of $3,101 . . . . . . . . $ 12,732
Non-cash consideration received in exchange
for the sale of assets:
Investment in Buyer . . . . . . . . . . . . . $ 8,500
Assumption by Buyer of the net proceeds of
pre-financing indebtedness . . . . . . . . . $ 17,900
Assumption by Buyer of certain accounts payable,
accrued expenses, payroll liabilities and
a capital lease obligation. . . . . . . $ 2,000
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
ALPHA HOSPITALITY CORPORATION AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
(in thousands)
NOTE 1 - NATURE OF BUSINESS
Alpha Hospitality Corporation (the "Company") was
incorporated in Delaware on March 19, 1993. On March 2, 1998,
the Company sold the gaming vessel, that the Company, through
a subsidiary, owned and operated in Greenville, Mississippi, a
newly-constructed adjacent hotel and other assets to Greenville
Casino Partners, L.P. ( Buyer") for approximately $40.2 million,
including a 25% partnership interest in Buyer, whose assets
include an additional casino and hotel located in Greenville,
Mississippi.
On July 8, 1999, the Company contributed its dormant
gaming vessel, Bayou Caddy's Jubilation Casino, to Casino
Ventures, LLC ( Casino Ventures") (see Note 6). Included in the
consideration, the Company received a membership interest in
Casino Ventures, whose other asset is a leasehold interest in
property located in Mhoon Landing in Tunica, Mississippi
("Tunica"). The Company expects Casino Ventures to commence
operations in Tunica in mid-year 2000.
The Company's current operations include investigating and
pursuing the development of gaming operations in New York,
Louisiana and Florida and the potential acquisition or
development of other business operations.
NOTE 2 - BASIS OF PRESENTATION AND SUMMARY
OF SELECTED SIGNIFICANT ACCOUNTING POLICIES
Financial Statements - The accompanying unaudited
consolidated financial statements of the Company and its
subsidiaries have been prepared in accordance with the
instructions to Form 10-Q and do not include all of the
information and footnotes required by generally accepted
accounting principles. All adjustments that are of a normal and
recurring nature and, in the opinion of management, necessary for
a fair presentation have been included. The unaudited
consolidated financial statements should be read in conjunction
with the audited consolidated financial statements as of December
31, 1998, included in the Company's 1998 Form 10-K.
Operations and Principles of Consolidation - The
accompanying consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries. All
significant intercompany transactions and balances have been
eliminated in consolidation.
Investment - The Company's 25% partnership interest in
Buyer is being accounted for under the equity method of
accounting.
Cash - The Company maintains its cash in bank deposit
accounts, which at times may exceed federally insured limits. The
Company has not incurred any losses in such accounts and
believes it is not exposed to any significant credit risk on cash.
Casino Revenue - Casino revenue was the net win from
gaming activities, which is the difference between gaming wagers
less the amount paid out to patrons.
Promotional Allowances - Promotional allowances primarily
consisted of food and beverage furnished gratuitously to
customers. Revenues did not include the retail amount of food
and beverage of $496 for the nine months ended September 30,
1998, provided gratuitously to customers. The cost of these
items was $224 for the nine months ended September 30, 1998.
Uses of Estimates - The preparation of financial statements
in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from
those estimates.
Impairment of Long-lived Assets- The Company periodically
reviews the carrying value of certain of its long-lived assets in
relation to historical results, as well as management's best
estimate of future trends, events and overall business climate. If
such reviews indicate that the carrying value of such assets may
not be recoverable, the Company would then estimate the future
cash flows (undiscounted and without interest charges). If such
future cash flows are insufficient to recover the carrying amount
of the assets, then impairment is triggered and the carrying value
of any impaired assets would then be reduced to fair value.
<PAGE>
ALPHA HOSPITALITY CORPORATION AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
(in thousands)
NOTE 2 - BASIS OF PRESENTATION AND SUMMARY
OF SELECTED SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
Reclassifications - Certain amounts have been
reclassified in 1998 to conform to the 1999 presentation.
NOTE 3 - PROPERTY AND EQUIPMENT
Details of property and equipment at September 30, 1999 and December 31, 1998
are as follows (see Note 6):
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Boat, barge and improvements. . . . . $ 5,372 $ 4,940
Leasehold improvements. . . . . . . . 82 82
Gaming equipment. . . . . . . . . . . 3,023 3,023
Furniture, fixtures and equipment . . 1,834 1,834
10,311 9,879
Less accumulated depreciation and
amortization. . 5,282 5,249
$ 5,029 $ 4,630
</TABLE>
NOTE 4 - LONG-TERM DEBT
Long-term debt at September 30, 1999 and December 31, 1998 was comprised of
the following:
<TABLE>
<CAPTION>
Interest
Rate 1999 1998
<S> <C> <C> <C>
Note payable to Bryanston,
an affiliate, formerly
collateralized by the Company's
inactive gaming vessel
(see Note 6) with interest
payable monthly and
principal payments, commencing
January 1, 2001, not to exceed
$1,000 per annum, with any unpaid
balance due at maturity in
April 2005 . . . . . 8% $ 1,482 $ 2,108
Mortgage note collateralized by
the Company's inactive gaming
vessel (see Note 6) with
interest payable monthly and
principal due January 10, 2001. . . 8% 650
2,132 2,108
Less current portion . . . . . 27 1,000
$ 2,132 $ 1,108
</TABLE>
Aggregate future required principal payments are approximately as follows:
Years ending September 30:
2000. . . . . . . . . . . . . . . . . $
2001. . . . . . . . . . . . . . . . . 1,650
2002. . . . . . . . . . . . . . . . . 482
$ 2,132
<PAGE>
ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in thousands)
NOTE 5 - ACCOUNTS PAYABLE AND OTHER ACCRUED EXPENSES
At September 30, 1999 and December 31, 1998, accounts payable and other
accrued expenses were comprised of the following:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Insurance . . . . . . . . . . . $ 217 $ 227
Accrued professional fees . . . 144 250
Accrued interest. . . . . . . . 3 4
Other . . . . . . . . . . . . . 704 390
$ 1,068 $ 871
</TABLE>
NOTE 6 - COMMITMENTS, CONTINGENCIES AND RELATED PARTY TRANSACTIONS
On July 8, 1999, the Company contributed its
inactive vessel, Bayou Caddy's Jubilation Casino, to Casino
Ventures, L.L.C. ("Casino Ventures") (See Notes 1, 3 and 4). At
the time of the contribution, the vessel (including its gaming
equipment, furniture and other items) had a net book value of
$4,549. In exchange, the Company received $150 in cash, a
promissory note of $1,350 and a membership interest in Casino
Ventures. The promissory note accrues interest at an initial rate
of 8.75% per annum, payable quarterly, with the principal balance
due July 8, 2002. The initial interest rate of 8.75% is adjusted
daily to prime plus one percent with a minimum rate of 8.75%.
Upon repayment of the promissory note and certain other funding
to the venture, the Company's membership interest in Casino
Ventures decreases from its current percentage of 93% to 15%.
A director of the Company is a partner in Casino Ventures and
serves as its General Manager. The consolidated financial
statements of the Company will include the accounts of Casino
Ventures until such time as the Company's membership interest
decreases to less that 50%. During the quarter ended September
30, 1999, the Company capitalized $432 of costs related to the
relocation and refurbishment of the vessel and improvements to
its anticipated site in Tunica, Mississippi. An additional $85 of
start-up costs were incurred during the same quarter. During the
quarter ended September 30, 1999, the vessel was used as
collateral to obtain funding of $650 towards the aforementioned
costs of Casino Ventures (See note 4).
The Company, through its wholly owned
subsidiary Alpha Monticello, Inc. ("AMI"), is party to a General
Memorandum of Understanding (the "Memorandum") with
Catskill Development, LLC ("CDL" and, collectively with AMI,
the "Parties") dated December 1, 1995, which, among other
things, provides for the establishment of Mohawk Management,
LLC ("MML"), a New York limited liability company, for the
purpose of entering into an agreement to manage a proposed
casino on land to be owned by the St Regis Mohawk Indian Tribe
(the "Mohawk Tribe"). The Memorandum also sets forth the
general terms for the funding and management obligations of
CDL (25% owned by Bryanston) and AMI, respectively, with
regard to MML. In January 1996, MML was formed with each
of CDL and AMI owning a 50% membership interest in MML.
On July 31, 1996, MML entered into a Gaming Facility
Management agreement with the Mohawk Tribe (the
"Management Contract") for the management of a casino to be
built on the current site of Monticello Raceway in Monticello,
New York (the "Monticello Casino"). Among other things, the
Management Contract provides MML with the exclusive right to
manage the Monticello Casino for seven (7) years from its
opening and to receive certain management fees for the provision
of such service. This agreement is subject to final approval by the
U.S. Department of the Interior and its Bureau of Indian Affairs,
the National Indian Gaming Commission and the Governor of the
State of New York. By its terms, the Memorandum between CDL
and AMI terminated on December 31, 1998, since all of the
governmental approvals necessary for the construction and
operation of the Monticello Casino were not obtained by MML.
The Management Contract between MML and the Mohawk Tribe
contains no such provision. Additionally, the Memorandum is
silent as to the effect of such expiration on the continued
existence of MML on the Parties' respective 50% ownership
therein or on the Management Contract. As of the date hereof, all
such approvals have not been obtained. On December 28, 1998,
AMI filed for arbitration, as prescribed by the Memorandum, to
resolve any disputes by the Parties. As of September 15, 1999,
AMI and CDL reached a tentative settlement and the original
memorandum or understanding is being revised. At the request
of all Parties the American Arbitration Association agreed to stay
further proceedings in the arbitration until December 1, 1999 so
that the Parties could finalize these arrangements. Upon the
effectiveness of this proposed settlement, AMI would be entitled
to receive 40% of MML's basic management fee income and 50%
of the service fee income accruing to MML for professional
services rendered.
<PAGE>
ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
(in thousands)
NOTE 6 - COMMITMENTS, CONTINGENCIES AND
RELATED PARTY TRANSACTIONS (CONTINUED)
The net result of the proposed settlement would entitle AMI to
received approximately 45% of all management fee and service
income derived from the underlying management contract.
On September 15, 1999, AMI and CDL
reached an agreement in principle to settle the dispute and to
revise the original memorandum. As part of this proposed
settlement, AMI would be entitled to receive 40% of MML's
basic management fee income and 50% of the service fee income
accruing to MML for professional services rendered. The net
result of the settlement would entitle AMI to receive
approximately 45% of all management fee and service income
derived from the underlying management contract.
In a related transaction, Bryanston Group, Inc.
("Bryanston"), subject to the receipt of all necessary
governmental approvals by AMI, has agreed to transfer to AMI
5% of its ownership interest in its real property holdings at
Monticello Raceway. That holding includes the Raceway's
building and equipment and approximately 200 acres of land.
Additionally, subject to approval by the New York State Racing
and Wagering Board, Bryanston has agreed to transfer its 25%
ownership in the Raceway's parimutuel operations to AMI.
Under the previous agreement AMI did not participate in either
of these undertakings nor the previously discussed development
fee arrangement. Included in deposits and other assets as of
September 30, 1999 and December 31, 1998, the Company
capitalized $1,366 towards the design, architecture and other costs
of the development plans for the proposed Monticello Casino.
The Company is obligated under an
employment contract with its Chairman and Chief Executive
Officer ("CEO"). Under this agreement, the Company will accrue
deferred compensation of $250 per year. The agreement is
automatically renewable for successive twelve-month periods,
unless either party shall advise the other on ninety days written
notice of his or its intention not to extend the term of the
employment. In the event of termination of employment, the
terminated officer will be retained to provide consulting services
for two years at $175 per annum. As of September 30, 1999,
deferred compensation payable to the Chairman and CEO is
approximately $1,467. On May 27 1999, the Company agreed,
subject to approval by the Company's shareholders (which
approval was obtained in September 1999), to afford the
Chairman and CEO the right to convert up to $2,000 of deferred
compensation payable into up to 1,000,000 shares of the
Company's common stock at a stock price of two dollars per
share, the closing price on that day. The Chairman and CEO's
right to convert deferred compensation to the Company's
common stock shall only be exercisable only if he continues to
defer his salary and he remains employed through and including
January 14, 2000 or such later date as the Board of Directors may
determine. In addition, these conversion rights shall not be
exercisable before January 14, 2000.
On September 30, 1999, the Chairman and
CEO agreed to defer until January 1, 2001, all cash payments
owing pursuant to his employment contract with the Company.
This includes the $1,467 payable as of September 30, 1999, and
future amounts accruing to the Chairman and CEO. This does not
effect the Chairman and CEO's rights to convert up to $2,000 of
deferred compensation payable into up to 1,000,000 shares of the
Company's common stock. Additionally, a former officer of the
Company's also has agreed to defer until January 1, 2001, all cash
payments against a $266 liability owning pursuant to his previous
employment contract with the Company. Accordingly, other
liabilities on the Company's balance sheet as of September 30,
1999 includes $1,733 of deferred compensation payable.
To comply with State requirements regarding
the Company's 25% partnership interest in Greenville Casino
Partners, L.P., the Company has received a finding of suitability
from the Mississippi Gaming Commission. The Company's
finding of suitability has a term of two years and is subject to
renewal in late November 1999.
In January 1996, Alpha Gulf Coast, Inc.
("Alpha Gulf"), the Company's wholly owned subsidiary, was
named as a defendant in an action brought in the Circuit Court of
Hinds County, Mississippi (Amos v. Alpha Gulf Coast, Inc.;
Batiste v. Alpha Gulf Coast, Inc.; Ducre V. Alpha Gulf Coast,
Inc.; Johnston v. Alpha Gulf Coast, Inc.; Rainey v. Alpha Gulf
Coast, Inc.). Based on the theory of "liquor liability" for the
service of alcohol to a customer, plaintiffs alleged that on January
16, 1995, a vehicle operated by Mr. Amos collided with a vehicle
negligently operated by Mr. Rainey, an individual who was
allegedly served alcoholic beverages by Alpha Gulf. Plaintiffs
alleged that they suffered personal injuries and seek
compensatory damages aggregating $17,100 and punitive
damages aggregating $37,500. These cases have been
consolidated for discovery purposes, although only
<PAGE>
ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
(in thousands)
NOTE 6 - COMMITMENTS, CONTINGENCIES AND
RELATED PARTY TRANSACTIONS (CONTINUED)
one case has been set for trial. The scheduled trial date is March
13, 2000 in Jackson, Mississippi. If Alpha Gulf's motion to
transfer the case to another court is successful, the trial date will
be changed. The ultimate outcome of this litigation cannot
presently be determined. Accordingly, no provision for liability
to the Company, that may result upon adjudication, has been
made in the
accompanying consolidated financial statements. The Company
believes that the risk referred to in this paragraph is adequately
covered by insurance.
The Company is involved in a dispute with
Buyer regarding an agreement dated December 17, 1997 pursuant
to which the Company sold its Bayou Caddy's Jubilee Casino and
related hotel property to Buyer. The Company claims Buyer is
liable for certain liabilities and certain accounts payable. Buyer
has counterclaimed that the Company breached some of its
warranties, failed to continue operating the casino in the normal
course of business through the date of sale and also failed to pay
certain accounts payable. Management is vigorously pursuing the
Company's own claims and is also contesting the Buyer's claims.
An arbitration hearing was held on March 15-17, 1999, and each
side has been asked to submit supplemental information. Since
then, the Company and Buyer have engaged in extensive
settlement negotiations. As of November 5, 1999, representatives
of the parties were contacting the arbitrator to request that the
arbitration be reconvened for a final determination and resolution
of the claims. The Company and its counsel believe that, based
on information presently available the arbitrator will find that the
total of the Company's claims exceed the total of Buyer's claims
so that the net result will be in the Company's favor. There can
be no assurance that , in the event of a favorable award, any
resultant monies due the Company would be collected.
Accordingly, no such award has been recorded on the Company's
books as of September 30, 1999.
The Company is a party to various other legal
actions that have arisen in the normal course of business. In the
opinion of the Company's management, the resolution of these
other matters will not have a material and adverse effect on the
financial position, results of operations or cash flows of the
Company .
On March 2, 1998, the Company entered into
a supervisory hotel management agreement with Buyer (see Note
1) for a term of ten years, pursuant to which the Company is
entitled to receive $100 per annum for management services,
payable monthly. Supervisory management fees earned for the
nine months ended September 30, 1999 and 1998, amounted to
$75 and $58, respectively.
In May 1998, the Company's Board of
Directors adopted the 1998 Stock Option Plan ("1998 Plan")
providing for incentive stock options ( ISO") and non-qualified
stock options ( NQSO"). The 1998 Plan was approved by the
stockholders of the Company in September 1999. The Company
has reserved 4,000 shares of common stock for the plan. The
exercise price of an ISO or NQSO will not be less than 100% of
the fair market value of the Company's common stock at the date
of the grant.
In May 1998 for 1998 and in December 1998
for 1999, as approved by the Company's shareholders in
September 1999, the Company granted annual compensation to
each of its three (3) outside directors of $6 per annum plus,
pursuant to the 1998 Plan, the option to purchase 25 shares, and
15 shares for each committee served upon, of the Company's
common stock. Compensation expense to the three outside
directors for the nine months ended September 30, 1999 and
1998, amounted to $13 and $7, respectively. In December 1998,
pursuant to the 1998 Plan as approved by the Company's
shareholders in September 1999, the Company granted to each of
its two (2) employee directors, excluding the Chairman, the
option to purchase 25 shares, along with 15 shares for each
committee served upon, of the Company's common stock.
Additionally, in December 1998, pursuant to the 1998 Plan as
approved by the Company's shareholders in September 1999, the
Company granted to the Company's Chairman options to
purchase 250 shares of the Company's common stock. All of
these options to purchase the Company's common stock under
the 1998 Plan, which were granted in 1998 to its outside and
employee directors, excluding the Chairman, are exercisable at a
price per share equal to the closing NASDAQ bid price on
December 12, 1998, of $1.063 per share. The exercise price for
the 250 options granted in 1998 to the Chairman to purchase the
Company's common stock are exercisable at a price per share of
$1.13, which is equal to 110% of the closing NASDAQ bid price
on December 12, 1998.
On May 27, 1999, the Company granted, under
the 1998 Plan, options to purchase up to 50 shares of the
Company's common stock to each of its three (3) outside
directors and options to purchase up to 75 shares of the
Company's common stock to each of its two employee directors,
excluding the Chairman. Additional options to purchase an
aggregate amount of 464 shares, 319 and 145 of which are
pursuant to the 1998 Plan and the 1993 Plan, respectively, of the
Company's common stock were issued
<PAGE>
ALPHA HOSPITALITY CORPORATION AND
SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
(Unaudited)
(in thousands)
NOTE 6 - COMMITMENTS, CONTINGENCIES AND
RELATED PARTY TRANSACTIONS (CONTINUED)
to certain employees of the Company and other individuals
performing previous services for the Company (see Note 7). All
of these options granted on May 27, 1999, are exercisable at a
price per share equal to the closing NASDAQ bid price on May
27, 1999, of $2.00 per share.
On September 30, 1999, Bryanston agreed to
waive its right to demand repayment of principal until Janaury 1,
2001, with regard to its note with the Company (see Note 4).
NOTE 7 - STOCKHOLDERS' EQUITY
The changes in stockholders' equity during the
nine months ended September 30, 1999, included the net loss of
$2,029 and the issuance of 1,604 shares of common stock relative
to dividends owing on the Company's preferred stock, series B.
Approximately 1,483 of the issued shares of common stock
related to the dividends owed with respect to 1997, with the
remaining 122 of issued shares to be applied to dividends that are
owed with respect to the 1998 dividend. Additional changes
were $60 of proceeds from the exercise of warrants entitling
holders to purchase 16 shares of the Company's common stock
and the issuance
of options to purchase 30 shares of the Company's common stock
as satisfaction of certain accounts payable and accrued expenses
(see Note 6).
The Company's cumulative preferred stock,
series B, has voting rights of eight votes per preferred share, is
convertible into eight shares of common stock for each share of
preferred stock and carries a dividend of $2.90 per share, payable
quarterly, which increases to $3.77 per share if the cash dividend
is not paid within 30 days of the end of each quarter. In the event
the dividend is not paid at the end of the Company's fiscal year
(December 31), the dividend will be payable in shares of the
Company's common stock. As of November 15, 1999,
dividends in arrears on the cumulative preferred, series B stock
amounted to 1,943 shares with respect to 1998 and $2,323 with respect to
1999. The holders of the preferred stock, series B, have agreed
to a deferral of the issuance of the shares with respect to 1998.
The Company's preferred stock series C, has
voting rights of twenty-four votes per preferred share, is
convertible into twenty-four shares of common stock for each
share of preferred stock and carries a dividend of $5.65 per share.
In addition, the terms of the preferred shares include a provision
allowing the Company the option of calling the preferred shares
based upon the occurrence of certain capital events that realize a
profit in excess of $5,000. In the event the dividend is not paid
by the end of the Company's fiscal year, the dividend will be
payable in shares of the Company's common stock. As of
November 15, 1999, dividends in arrears on the cumulative
preferred stock, series C, amounted to 255 shares with respect to
1998 and $573 with respect to 1999. The sole holder of the
preferred stock, series C, has agreed to a deferral of the issuance
of the shares with respect to 1998.
In September 1999, the shareholders of the
Company approved a proposal by the Company's Board of
Directors to amend the Company's Certificate of Incorporation to
increase the number of authorized shares of the Company's
common stock from 25,000 to 75,000 and to increase the number
of authorized shares of the Company's preferred stock from
1,000 to 5,000.
<PAGE>
ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (dollars in thousands)
The following discussion of the historical
consolidated financial condition and results of the operations of
the Company should be read in conjunction with the Consolidated
Financial Statements and the Notes to such financial statements
included elsewhere in this Form 10-Q. This Form 10-Q contains
forward-looking statements, which involves risks and
uncertainties primarily relative to the speculative nature of the
Company's proposed casino development projects and the
potential future acquisitions of new business operations,
including those that have not yet been identified. The Company's
actual results may differ significantly from the results discussed
in these forward-looking statements.
Results of Operations
Casino Operations
On March 2, 1998, the Company sold
substantially all of the assets of Alpha Gulf and Greenville Hotel,
including the casino barge, boarding barge, related gaming and
other equipment, furniture and improvements and related permits,
licenses, leases and other agreements, to Greenville Casino
Partners, L.P. ("Buyer"). In exchange for such assets, the
Company received from Buyer total consideration of $40,200,
including approximately $11,800 in cash, the assumption of
approximately $2,000 of certain accounts payable, accrued
expenses, payroll liabilities and a capital lease obligation, a 25%
partnership interest in Buyer and the assumption of the
Company's obligations to repay $17,900.
Alpha Gulf
The following table sets forth the statements of operations for Alpha Gulf,
before intercompany charges, deferred income tax and gain on sale of assets
for the nine and three months ended September 30, 1999 and 1998:
<TABLE>
<CAPTION>
Nine Months Three Months
Ended September 30, Ended September 30,
(unaudited) (unaudited)
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Revenues:
Casino . . . . . . . . .$ $ 4,923 $ $
Food, beverage and other. 6 113 3 6
Total revenues . . . . 6 5,036 3 6
Operating expenses:
Casino . . . . . . . . . 1,901
Food, beverage and other. 91
Selling, general and
administrative. 189 2,971 44 161
Total operating
expenses. 189 4,963 44 161
Income (loss) from
operations. (183) 73 (41) (155)
Other expenses:
Loss from equity
investee. . 1,721 837
Interest . . 797
Depreciation and
amortization . 18 882 6 9
Total other expenses . 18 3,400 6 846
Loss before intercompany
charges, deferred
income tax and gain on
sale of assets. $ (201) $ (3,327) $ (47) $ (1,001)
</TABLE>
<PAGE>
ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (dollars in thousands)(CONTINUED)
Nine and Three Months Ended September 30, 1999:
The 1998 activity for casino, food and beverage
revenues and expenses represents Alpha Gulf's operation of its
Bayou Caddy's Jubilee Casino through the date of its sale on
March 2, 1998. For the nine and three months ended September
30, 1999, Alpha Gulf did not operate the Bayou Caddy's Jubilee
Casino. Accordingly, the 1998 revenues and operating expenses
are greater than 1999.
Selling, general and administrative expenses for the
nine and three months ended September 30, 1999, consisted of
payroll and related expenses of approximately $83 and $25,
respectively, occupancy costs of approximately $27 and $9,
respectively, a general corporate overhead allocation of $44 and
$0, respectively, and other operating expenses of $35 and $10,
respectively.
Included in the consideration received in exchange
for the sale of the Bayou Caddy's Jubilee Casino, Alpha Gulf
received a 25% partnership interest in Buyer, whose primary
assets include: the Las Vegas Casino, the Bayou Caddy's Jubilee
Casino, the Key West Inn and the Greenville Inn and Suites. The
current complement of gaming devices is 25 table games and 800
slots which represents 54.4% of the devices in the Greenville
market. The two hotels offer 56 rooms and 41 rooms and suites,
respectively. Since the acquisition of substantially all of the assets
of Alpha Gulf and Greenville Hotel, management has been
advised that Buyer has incurred significant operating losses
resulting in a substantial working capital deficiency and partners'
deficiency of approximately $1.4 million through December 31,
1998. Buyer decided to close temporarily the Las Vegas Casino
in October 1998 in an effort to decrease expenses and improve
the operating performance of the Bayou Caddy's Jubilee Casino.
Nonetheless, management has been advised that Buyer continues
to incur operating losses in 1999. Currently, management has
been advised that Buyer plans to reopen the Las Vegas Casino
during 1999 if sufficient capital can be raised to allow both of its
boats to be operated contiguously under one gaming license.
Buyer believes that the contiguous operation of the two casinos
will yield increased market share and operating cash flows.
Additionally, management has been advised that Buyer is
pursuing other capital sources and modifying its debt service
requirements in a manner intended to provide additional working
capital. However, there can be no assurance that Buyer will be
able to attract the necessary capital, modify its debt service
requirements or otherwise fund the cost of mooring and operating
these boats in a contiguous manner. Furthermore, Buyer's
independent public accountants' have issued their report, dated
March 26, 1999, with an explanatory paragraph relating to
Buyer's ability to continue as a going concern. In light of these
developments and in accordance with its policy on impairment of
long-lived assets, the Company adjusted the carrying value of its
remaining 25% partnership interest in Buyer to zero during the
fourth quarter of 1998.
Interest expense for the nine and three months
ended September 30, 1998, was primarily attributable to the pre-closing
financing, related to the sale of substantially all of the
assets of Alpha Gulf and Alpha Greenville Hotel, notes payable
to Bryanston and a capital lease. The pre-closing financing and
the capital lease were extinguished in March 1998 with the
proceeds from the March 2, 1998 sale of substantially all of the
assets of Alpha Gulf and Greenville Hotel. The amounts due to
Bryanston were extinguished September 30, 1998, pursuant to a
restructuring and refinancing of the Company's debts with
Bryanston.
Other Operations:
In connection with the sale of the hotel on March 2,
1998, the Company entered into a supervisory management
agreement with Buyer for a term of ten (10) years whereby the
Company will be entitled to receive $100 per annum for
management services.
The Company, through a separate subsidiary, also
owned a casino (the Jubilation Casino) previously located in
Lakeshore, Mississippi, which has been closed since July 1996.
In August 1998, the Company relocated that casino to Mobile,
Alabama, where it was moored at a terminal pursuant to a month
to month lease through July 1999 (see Future Operations -
Casino Ventures). The costs for continuing administration,
insurance, settlements with former employees and the mooring
and casino relocation of the vessel incurred during the nine and
three months ended September 30, 1999 were $156 and $11,
respectively, compared to $588 and $300 for the same periods in
1998. Interest expense in 1999 is primarily related to debt on the
idle vessel, including the period subsequent to its July 8, 1999
contribution to Casino Ventures (see Future Operations - Casino
Ventures).
<PAGE>
ALPHA HOSPITALITY CORPORATION AND
SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (dollars in thousands)(CONTINUED)
Future Operations:
General:
Proposals or prospects for new casinos, other
gaming activities or other opportunities may be presented to the
Company, or the Company may otherwise become aware of such
opportunities (any such new casinos, other gaming activities or
other opportunities being hereinafter sometimes referred to as
("New Opportunities"). The Company will continue to investigate
and evaluate New Opportunities and, subject to available
resources, may choose to pursue and develop one or more New
Opportunities if the same is deemed to be in the best interest of
the Company and its stockholders. However, there can be no
assurance that any New Opportunities will be presented to, or
otherwise come to the attention of, the Company, that the
Company will elect to pursue or develop any New Opportunities
or that any New Opportunities that the Company may elect to
pursue or develop will actually come to fruition or (even if
brought to fruition) will be profitable.
As a result of the sale of Bayou Caddy's Jubilee
Casino, the Company has been effectively transformed to serve
as a holding company and a vehicle to effect acquisitions, whether
by merger, exchange of capital stock, acquisition of assets or
other similar business combination ("Business Combination")
with an operating business ("Acquired Business"). To the extent
the Company's financial and other resources are not devoted to,
or reserved for, the development of any New Opportunities, the
business objective of the Company will be to effect a Business
Combination with an Acquired Business that the Company
believes has significant growth potential. The Company intends
to seek to utilize available cash, equity, debt or a combination
thereof in effecting a Business Combination. While the Company
may, under certain circumstances, explore possible Business
Combinations with more than one prospective Acquired Business,
in all likelihood, until other financing provides additional funds,
or its stature as an operating company matures, the Company may
be able to effect only a single Business Combination in
accordance with its business objective, although there can be no
assurance that any such transaction will be effected.
Casino Development:
The Company, through its wholly owned subsidiary
Alpha Monticello, Inc. ("AMI"), is party to a General
Memorandum of Understanding (the "Memorandum") with
Catskill Development, LLC ("CDL" and, collectively with AMI,
the "Parties") dated December 1, 1995, which, among other
things, provides for the establishment of Mohawk Management,
LLC ("MML"), a New York limited liability company, for the
purpose of entering into an agreement to manage a proposed
casino on land to be owned by the St Regis Mohawk Indian Tribe
(the "Mohawk Tribe"). The Memorandum also sets forth the
general terms for the funding and management obligations of
CDL (25% owned by Bryanston) and AMI, respectively, with
regard to MML. In January 1996, MML was formed with each
of CDL and AMI owning a 50% membership interest in MML.
On July 31, 1996, MML entered into a Gaming Facility
Management agreement with the Mohawk Tribe (the
"Management Contract") for the management of a casino to be
built on the current site of Monticello Raceway in Monticello,
New York (the "Monticello Casino"). Among other things, the
Management Contract provides MML with the exclusive right to
manage the Monticello Casino for seven (7) years from its
opening and to receive certain management fees for the provision
of such service. This agreement is subject to final approval by the
U.S. Department of the Interior and its Bureau of Indian Affairs,
the National Indian Gaming Commission and the Governor of the
State of New York. By its terms, the Memorandum between CDL
and AMI terminated on December 31, 1998, since all of the
governmental approvals necessary for the construction and
operation of the Monticello Casino were not obtained by MML.
The Management Contract between MML and the Mohawk Tribe
contains no such provision. Additionally, the Memorandum is
silent as to the effect of such expiration on the continued
existence of MML on the Parties' respective 50% ownership
therein or on the Management Contract. As of the date hereof, all
such approvals have not been obtained. On December 28, 1998,
AMI filed for arbitration, as prescribed by the Memorandum, to
resolve any disputes by the Parties. As of September 15, 1999,
AMI and CDL reached a tentative settlement and the original
memorandum or understanding is being revised. At the request
of all Parties the American Arbitration Association agreed to stay
further proceedings in the arbitration until December 1, 1999 so
that the Parties could finalize these arrangements. Upon the
effectiveness of this proposed settlement, AMI would be entitled
to receive 40% of MML's basic management fee income and 50%
of the service fee income accruing to MML for professional
services rendered. The net result of the proposed settlement
would entitle AMI to received approximately 45% of all
management fee and service income derived from the underlying
management contract.
<PAGE>
ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (dollars in thousands)(CONTINUED)
Future Operations (CONTINUED)
Casino Development: (CONTINUED)
On September 15, 1999, AMI and CDL reached an
agreement in principle to settle the dispute and to revise the
original memorandum. As part of this proposed settlement, AMI
would be entitled to receive 40% of MML's basic management
fee income and 50% of the service fee income accruing to MML
for professional services rendered. The net result of the
settlement would entitle AMI to receive approximately 45% of all
management fee and service income derived from the underlying
management contract.
In a related transaction, Bryanston Group, Inc.
( Bryanston"), subject to the receipt of all necessary
governmental approvals by AMI, has agreed to transfer to AMI
5% of its ownership interest in its real property holdings at
Monticello Raceway. That holding includes the Raceway's
building and equipment and approximately 200 acres of land.
Additionally, subject to approval by the New York State Racing
and Wagering Board, Bryanston has agreed to transfer its 25%
ownership in the Raceway's parimutuel operations to AMI.
Under the previous agreement AMI did not participate in either
of these undertakings nor the previously discussed development
fee arrangement. Included in deposits and other assets as of
September 30, 1999 and December 31, 1998, the Company
capitalized $1,366 towards the design, architecture and other costs
of the development plans for the proposed Monticello Casino.
Louisiana Truckstop/Video Poker:
In December 1998, the Company entered into a
memorandum of understanding with Equity Services, Inc.
("Equity") to exchange the Company's then-dormant Jubilation
vessel plus cash for the ownership of an operating truckstop and
video poker room in Port Allen, Louisiana. The proposed
transaction as originally contemplated in the memorandum of
understanding will not proceed. However, the parties have been
continuing their discussions with respect to the possible
acquisition of other truckstop/video poker properties Equity has
under development. There can, however, be no assurance that
these discussions will results in a any agreement with respect to
a prospective acquisition.
Haulover Beach Park and Marina:
On May 7, 1999, a subsidiary of the Company,
Alpha Florida Entertainment, Inc. ( Alpha Florida") was notified
by Miami-Dade County (the County") that it had received the
final approval on a lease to dock and operate a day cruise vessel
out of the County's Haulover Beach Park and Marina adjacent to
Bal Harbour, Florida. The exclusive lease is for five years. The
County may renew this exclusive agreement for two periods of
five years each. For this exclusivity, the Company has agreed to
pay the County a minimum guaranteed monthly base rent, a per-passenger fee and a
percentage of retail merchandise sold in the
facility. The lease commences upon the inaugural cruise.
A prospective bill was introduced into the House of
Representatives which could dramatically alter the federal law
governing the cruise to nowhere industry. It does not appear that
the bill will garner the necessary support needed to bring it to a
vote, however there can be no assurance that a vote will not be
taken and, if taken, would not be detrimental to the industry.
Alpha, in concert with the lessor, is waiting for final disposition
of this issue before proceeding on this undertaking.
Casino Ventures:
On July 8, 1999, the Company, through its
subsidiary, Jubilation Lakeshore, Inc., entered into an agreement
with Casino Ventures, LLC ("Casino Ventures"), pursuant to
which the Company contributed its inactive gaming vessel, Bayou
Caddy's Jubilation Casino to Casino Ventures in exchange for
$150 in cash, a promissory note of $1,350 plus a membership
interest in Casino Ventures. Upon repayment of the promissory
note and other funding to the venture, the Company's
membership interest in Casino Ventures decreases from its
current percentage of 93% to 15%. The consolidated financial
statements of the Company will include the accounts of Casino
Ventures until such time as the Company's membership interest
decreases to less than 50%.
The vessel will be refurbished and has been
redeployed to Mhoon Landing in Tunica, Mississippi ( Tunica").
During the quarter ended September 30, 1999, the Company
capitalized $432 of costs related to the relocation and refurbishing
of the vessel
<PAGE>
ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (dollars iN thousands)(CONTINUED)
Future Operations (CONTINUED)
Casino Ventures:
and improvements to its redeployment site in Tunica. An
additional $85 of start-up costs were incurred during the same
quarter. Casino Ventures' interest expense for the quarter ended
September 30, 1999, not eliminated in consolidation, amounted
to $10. This was substantially attributable to a $650 mortgage
note payable secured by the vessel.
The Company expects Casino Ventures to
commence operations in Tunica in mid-year 2000. The Company
is not required to make any further capital contributions to Casino
Ventures.
Liquidity and Capital Resources
For the nine months ended September 30, 1999, the
Company had net cash used in operating activities of $1,661. The
uses were the result of a net loss of $2,029 plus depreciation of
$33 and a net decrease in working capital of $449. The decrease
in working capital consisted primarily of a net decrease in other
current assets of $22, an increase in accounts payable and other
accrued expenses of $247 and an increase in payroll and related
liabilities of $93.
Cash used in investing activities of $421consists of
$432 of payments for property and equipment and $11 from a
decrease in deposits and other assets.
Cash provided by financing activities of $84 was
attributable to $650 of proceeds from long-term debt, $60 of
proceeds from the exercise of warrants to purchase the
Company's common stock less $626 of repayments of the note
payable to Bryanston.
The cruise vessel to be utilized in connection with
the Haulover Beach Park and Marina transaction may require
financing. In the event it is required, there can be no assurances
such financing will be obtained by the Company.
Although the Company is subject to continuing
litigation, the ultimate outcome of which cannot presently be
determined, management believes any additional liabilities that
may result form these cases in excess of insurance coverage will
not be in an amount that will materially increase the liabilities of
the Company as presented in the attached consolidated financial
statements.
Year 2000 Compliance
The Company does not anticipate making
significant expenditures in connection with Year 2000 and
believes that Year 2000 will not have a materially adverse effect
on the Company's operations.
<PAGE>
ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to the Company's Annual Report
on Form 10-K for the year ended December 31, 1998 on file with
the Securities and Exchange Commission.
There have been no other material developments to
any existing legal proceeding during the current quarterly period.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) On September 16, 1999, the Company had its annual meeting.
(b) The following Directors were elected:
For Withheld
Stanley S. Tollman 20,727,373 88,067
Thomas W. Aro 20,726,423 89,017
James A. Cutler 20,726,423 89,017
Herbert F. Kozlov 20,727,423 88,017
Brett G. Tollman 20,727,373 88,067
Matthew B. Walker 20,727,423 88,017
(c) The second order of business was the proposal to amend the
Company's Certificate of Incorporation to increase the number of authorized
shares of the Company's common stock from 25,000,000 shares to 75,000,000
shares and to increase the number of authorized shares of the Company's
preferred stock from 1,000,000 shares to 5,000,000 shares. Such proposal was
approved by the following vote:
For Against
17,379,181 3,436,259
(d) The third order of business was the proposal to adopt the Company's 1998
Stock Option Plan. Such proposal was approved by the following vote:
For Against Abstained
20,499,218 206,936 109,286
(e) The fourth order of business was the 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. Such proposal was approved
by the following vote:
For Against Abstained
20,433,687 266,062 105,691
(f) The fifth order of business was the proposal to amend the Company
Certificate of Incorporation to enable and authorize the Board of Directors
to adopt, amend or repeal By-Laws of the Company. Such proposal was approved
by the following vote:
For Against
17,341,581 3,473,899
(g) The sixth order of business was the 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 per share, which per share
price was the current market price at the time the Board of Directors
adopted this proposal. Such proposal was approved by the following vote:
For Against Abstained
20,504,751 201,803 108,886
<PAGE>
ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (CONTINUED)
(h) The seventh order of business was the approval of the appointment of
Rothstein, Kass & Co. P.C. as the Company's independent certified public
accountant for the ensuing year. Such proposal was approved by the following
vote:
For Against Abstained
20,607,074 106,225 102,141
ITEM 6. EXHIBITS AND REPORTS ON 8-K
(a) 3.01 Amended Certificate of Incorporation
3.02 Amended and Restated By-Laws
<PAGE>
ALPHA HOSPITALITY CORPORATION AND SUBSIDIARIES
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: November 15, 1999 /s/ STANLEY S. TOLLMAN
Stanley S. Tollman
Chairman and CEO
Dated: November 15, 1999 /s/ ROBERT STEENHUISEN
Robert Steenhuisen
Chief Accounting Officer
<PAGE>
Exhibit 3.01
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
ALPHA HOSPITALITY CORPORATION
The undersigned corporation, in order to amend its Certificate of Incorporation,
hereby certifies as follows:
FIRST: The name of the corporation is ALPHA HOSPITALITY
CORPORATION.
SECOND: The corporation hereby amends its Certificate of
Incorporation as follows:
Article FOURTH of the Certificate of Incorporation is hereby amended
to read as follows:
"FOURTH: The total number of shares of stock that the Corporation
shall have the authority to issue as 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 stockholdcr 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."
Article ELEVENTH of the Certificate of Incorporation is hereby
amended to read as follows:
"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 bylaw; 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."
<PAGE>
THIRD: The amendments effected herein were authorized by the affirmative
vote of the holders of a majority of the outstanding shares
entitled to vote thereon at a special meeting of the
stockholders of the corporation which was duly called and held,
upon notice in accordance with Sections 222 and 242
of the General Corporation Law of the State of Delaware.
FOURTH: Thc undersigned hereby acknowledges that the capital of said
corporation shall not be reduced under or by reason of the amendments
effected herein.
IN WITNESS WHEREOF, I hereunto sign my name and affirm that the statements
made herein are true under the penalties of perjury, this 22nd day of
September 1999.
/s/ Thomas W. Aro
Thomas W. ARO, Secretary
<PAGE>
Exhibit 3.02
AMENDED AND RESTATED BY-LAWS
OF
ALPHA HOSPITALITY CORPORATION
ARTICLE I
STOCKHOLDERS
SECTION 1.1. Annual Meetings. An annual meeting of stockholders to elect
directors and
transact such other business as may properly be presented to the meeting shall
be held at such place as the
Board of Directors may from time to time fix, if that day shall be a legal
holiday in the jurisdiction in which
the meeting is to be held, then on the next day not a legal holiday or as soon
thereafter as may be practical, determined by the Board of Directors.
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
receipt of a written request to do so specifying the matter or matters,
appropriate for action at such a
meeting, proposed to be presented at the meeting and signed by holders of
record of a majority of the shares
of stock that would be entitled to be voted on such matter or matters if the
meeting were held on the day
such request is received and the record date for such meeting were the close of
business on the preceding
day. 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.
SECTION 1.3. Notice of Meeting For each meeting of stockholders
written notice shall be given stating the place, date and hour and, in the case
of a special meeting, the
purpose or purposes for which the meeting is called. Except as otherwise
provided by Delaware law, the
written notice of any meeting shall be given not less than 10 or more than
60 days before the date of the
meeting to each stockholder entitled to vote at such meeting. If mailed, notice
shall be deemed to be given
when deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the Corporation.
SECTION 1.4. Quorum. Except as otherwise required by Delaware law or the
Certificate of Incorporation, the holders of record of a majority of the shares
of stock entitled to be voted present in
person or represented by proxy at a meeting shall constitute a quorum for the
transaction of business at the
meeting, but in the absence of a quorum the holders of record present or
represented by proxy at such
meeting may vote to adjourn the meeting from time to time, without notice other
than announcement at the
meeting, until a quorum is obtained. At any such adjourned session of the
meeting at which there shall be
present or represented the holders of record of the requisite number of shares,
any business may be transacted that might have been transacted at the meeting
as originally called.
SECTION 1.5. Chairman and Secretary at Meeting. At each meeting of
stockholders the Chairman, or in his absence the person designated in writing by
the Chairman, or if no person is so
designated, then a person designated by the Board of Directors, shall preside as
chairman of the meeting; if no person is so
<PAGE>
designated, then the meeting shall choose a chairman
by plurality vote. The Secretary, or
in his absence a person designated by the chairman of the meeting, shall act
as secretary of the meeting.
SECTION 1.6. Voting; Proxies. Except as otherwise
provided by Delaware law or the Certificate of Incorporation, and subject to the
provisions of Section 1.10:
(a) Each stockholder shall at every meeting of the stockholders be
entitled to one vote for each share of capital stock held by him.
(b) Each stockholder entitled to vote at a meeting of stockholders
or to express consent or dissent to corporate action in writing without a
meeting may authorize another person or persons
to act for him by proxy, but no such proxy shall be voted or acted upon after
three years from its date, unless the proxy provides for a longer period.
(c) Directors shall be elected by a plurality vote.
(d) Each matter, other than election of directors,
properly presented to any meeting shall be decided by a majority of
the votes cast on the matter.
(e) Election of directors and the vote on any other matter
presented to a meeting shall be by written ballot only if so ordered by the
chairman of the meeting or if so requested by any
stockholder present or represented by proxy at the meeting entitled to vote
in such election or on such matter, as the case may be.
SECTION 1.7. Adjourned Meetings. A meeting of stockholders may be adjourned
to another time or place as provided in Section 1.4. Unless the Board of
Directors fixes a new record date,
stockholders of record for an adjourned meeting shall be as originally
determined for the meeting from
which the adjournment was taken. If the adjournment is for more than 30 days,
or if after the adjournment
a new record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to
each stockholder of record entitled to vote. At the adjourned meeting any
business may be transacted that
might have been transacted at the meeting as originally called.
SECTION 1.8. Consent of Stockholders in Lieu of Meeting. Any action that may
be taken at any annual or special meeting of stockholders may be taken without
a meeting, without prior notice and
without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that
would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. Notice of the taking of such action shall be given
promptly to each stockholder that would have been entitled to
vote thereon at a meeting of stockholders and that did not consent thereto in
writing.
SECTION 1.9. List of Stockholders Entitled to Vote. At least 10 days before
every meeting of stockholders a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical
order and showing the address of each stockholder and the number of shares
registered in the name of each
stockholder, shall be prepared and shall be open to the examination of any
stockholder for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting,
at a place within the city where the meeting is to be held. Such list shall
be produced and kept at the time
<PAGE>
and place of the meeting during the whole time thereof and may be inspected by
any stockholder who is present.
SECTION 1.10. Fixing of Record Date In order that the Corporation may
determine the
stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or
to express consent to corporate action in writing without a meeting, or
entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the Board of
Directors may fix, in advance, a record date, which shall not be more than 60 or
less than 10 days before the date of such meeting, nor more than 60 days prior
to any other action. If no record date is fixed, the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall
be at the close of business on the day next preceding the day on which notice is
given, or, if notice is
waived, at the close of business on the day next preceding the day on which the
meeting is held; the record
date for determining stockholders entitled to express consent to corporate
action in writing without a
meeting, when no prior action by the Board of Directors is necessary, shall be
the day on which the first
written consent is expressed; and the record date for any other purpose
shall be at the close of business on
the day on which the Board of Directors adopts the resolution relating thereto.
<PAGE>
ARTICLE II
DIRECTORS
SECTION 2.1. Number; Term of Office; Qualifications:
Vacancies. The number of directors that shall constitute the whole Board of
Directors shall be three, which
number may be changed from time to time as determined by action of the
Board of Directors taken by the
affirmative vote of a majority of the whole Board of Directors. Directors
shall be elected at the annual
meeting of stockholders to hold office, subject to Sections 2.2 and 2.3,
until the next annual meeting of
stockholders and until their respective successors are elected and qualified.
Vacancies and newly created
directorships resulting from any increase in the authorized number of
directors may be filled by a majority
of the directors then in office, although less than a quorum, or by the
sole remaining director, and the
directors so chosen shall hold office, subject to Sections 2.2 and 2.3,
until the next annual meeting of
stockholders and until their respective successors are elected and qualified.
SECTION 2.2. Resignation. Any director of the Corporation may resign at
any time by
giving written notice of such resignation to the Board of Directors,
the Chairman or the Secretary of the
Corporation. Any such resignation shall take effect at the time specified
therein or, if no time be specified,
upon receipt thereof by the Board of Directors or one of the above-named
officers; and, unless specified
therein, the acceptance of such resignation shall not be necessary to make
it effective. When one or more
directors shall resign from the Board of Directors effective at a future
date, a majority of the directors then
in office, including those who have so resigned, shall have power to fill
such vacancy or vacancies, the vote
thereon to take effect when such resignation or resignations shall become
effective, and each director so
chosen shall hold office as provided in these By-Laws in the filling of other
vacancies.
SECTION 2.3. Removal. Any one or more directors may be removed, with or
without cause, by the vote or written consent of the holders of a majority of
the shares entitled to vote at an election of directors.
SECTION 2.4. Regular and Annual Meetings; Notice. Regular meetings of
the Board of Directors shall be held at such time and at such place, within or
without the State of Delaware, as the Board of Directors may from time to time
prescribe. No notice need be given of any regular meeting, and a notice,
if given, need not specify the purposes thereof. A meeting of the Board of
Directors may be held without
notice immediately after an annual meeting of stockholders at the same place as
that at which such meeting was held.
SECTION 2.5. Special Meetings: Notice. A special meeting of the
Board of Directors may be called at any time by the Board of Directors, its
Chairman, the Executive Committee, the President or
any person acting in the place of the President and shall be called by
any one of them or by the Secretary
upon receipt of a written request to do so specifying the matter or matters,
appropriate for action at such
a meeting, proposed to be presented at the meeting and signed by at
least two directors. 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. Notice of such meeting stating
the time and place thereof shall
be given (a) by deposit of the notice in the United States mail,
first class, postage prepaid, at least two days
before the day fixed for the meeting addressed to each director at
his address as it appears on the
Corporation's records or at such other address as the director may
have furnished the Corporation for that
<PAGE>
purpose, or (b) by delivery of the notice similarly addressed for dispatch
by telegraph, cable or radio or by
delivery of the notice by telephone or in person, in each case at least
24 hours before the time fixed for the meeting.
SECTION 2.6. Chairman of the Board: Presiding Officer and Secretary
at Meetings. The
Board of Directors may elect one of its members to serve at its
pleasure as Chairman of the Board. Each
meeting of the Board of Directors shall be presided over by the
Chairman of the Board or in his absence
by the President, if a director, or if neither is present by such member
of the Board of Directors as shall be
chosen at the meeting. The Secretary, or in his absence an Assistant Secretary,
shall act as secretary of the
meeting, or if no such officer is present, a secretary of the meeting
shall be designated by the person presiding over the meeting.
SECTION 2.7. Quorum. A majority of the whole Board of Directors
shall constitute a
quorum for the transaction of business, but in the absence of a
quorum a majority of those present (or if only
one be present, then that one) may adjourn the meeting, without notice
other than announcement at the
meeting, until such time as a quorum is present. Except as otherwise
required by the Certificate of Incorporation or the By-Laws, the vote of the
majority of the directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors.
SECTION 2.8. Meeting by Telephone. Members of the Board of Directors or of any
committee thereof may participate in meetings of the Board of Directors
or of such committee by means
of conference telephone or similar communications equipment by means
of which all persons participating
in the meeting can hear each other, and such participation shall constitute
presence in person at such meeting.
SECTION 2.9. Action Without Meeting. Unless otherwise restricted by
the Certificate of Incorporation, any action required or permitted to be
taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if all members of the
Board of Directors or of such
committee, as the case may be, consent thereto in writing and the
writing or writings are filed with the
minutes of proceedings of the Board of Directors or of such committee.
SECTION 2.10. Executive and Other Committees. The Board of Directors may, by
resolution passed by a majority of the whole Board of Directors,
designate an Executive Committee and one
or more other committees, each such committee to consist of one or more
directors as the Board of Directors
may from time to time determine. Any such committee, to the extent
provided in such resolution or
resolutions, shall have and may exercise all the powers and authority
of the Board of Directors in the
management of the business and affairs of the Corporation, including the
power to authorize the seal of the
Corporation to be affixed to all papers that may require it but no such
committee shall have such power of
authority in reference to amending the Certificate of Incorporation,
adopting an agreement of merger or
consolidation, recommending to the stockholders the sale, lease or exchange
of all or substantially all of the
Corporation's property and assets, recommending to the stockholders a
dissolution of the Corporation or
a revocation of a dissolution, or amending the By-Laws; and unless
the resolution shall expressly so
provide, no such committee shall have the power or authority to declare
a dividend or to authorize the
issuance of stock. In the absence or disqualification of a member of
a committee, the member or members
thereof present at any meeting and not disqualified from voting, whether
or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors
to act at the meeting in the
place of any such absent or disqualified member. Each such committee other
than the Executive Committee
shall have such name as may be determined from time to time by the
Board of Directors.
<PAGE>
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 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.
ARTICLE III
OFFICERS
SECTION 3.1. Election; Qualification. The officers of the Corporation
shall be a Chairman of the Board, a President, one or more Vice Presidents, a
Secretary and a Treasurer, each of whom
shall be selected by the Board of Directors. The Board of Directors may elect a
Controller, one or more Assistant Secretaries, one or more Assistant Treasurers,
one or more Assistant Controllers and such other
officers as it may from time to time determine. Two or more offices may be held
by the same person.
SECTION 3.2. Term of Office. Each officer shall hold office from the
time of his election and qualification to the time at which his successor is
elected and qualified, unless he shall die or resign or
shall be removed pursuant to Section 3.4 at any time sooner.
SECTION 3.3. Resignation. Any officer of the Corporation may resign at any
time by giving written notice of such resignation to the Board of Directors,
the President or the Secretary of the
Corporation. Any such resignation shall take effect at the time specified
therein or, if no time be specified,
upon receipt thereof by the Board of Directors or one of the abovenamed
officers; and, unless specified
therein, the acceptance of such resignation shall not be necessary to
make it effective.
SECTION 3.4. Removal. Any officer may be removed at any time, with
or without cause, by the vote of two directors if there are three directors
or less, or the vote of a majority of the whole Board
of Directors if there are more than three directors.
SECTION 3.5. Vacancies. Any vacancy however caused in any office of
the Corporation may be filled by the Board of Directors.
SECTION 3.6. Compensation. The compensation of each officer shall be
such as the Board of Directors may from time to time determine.
SECTION 3.7. Chairman of the Board. The Chairman of the Board shall
be the co-chief executive officer of the Corporation and the chairman
of all meetings of the Board of Directors. He shall
keep in close touch with the administration of the affairs of the Corporation
and supervise its general policies. He shall see that the acts of the executive
officers conform to the policies of the Corporation as
determined by the Board and shall perform such other duties as may from time to
time be designated to him by the Board.
SECTION 3.8. President. The President shall be the co-chief executive
officer of the
Corporation and shall have general charge of the business and affairs of
the Corporation, subject however
to the right of the Board of Directors to confer specified powers on officers
and subject generally to the
direction of the Board of Directors and the Executive Committee, if any.
<PAGE>
SECTION 3.9. Vice President. Each Vice President shall have such powers
and duties as
generally pertain to the office of Vice President and as the Board
of Directors or the President may from
time to time prescribe. During the absence of the president or his
inability to act, the Vice President, or if
there shall be more than one Vice President, then that one designated by
the Board of Directors, shall
exercise the powers and shall perform the duties of the President, subject
to the direction of the Board of Directors and the Executive Committee, if any.
SECTION 3.10. Secretary. The Secretary shall keep the minutes of
all meetings of stockholders and of the Board of Directors. He shall be
custodian of the corporate seal and shall affix it or
cause it to be affixed to such instruments as require such seal and attest the
same and shall exercise the Powers and shall perform the duties incident to the
office of Secretary, subject to the direction of the Board
of Directors and the Executive Committee, if any.
SECTION 3.11. Other Officers. Each other officer of the Corporation
shall exercise the
powers and shall perform the duties incident to his office, subject to
the direction of the Board of Directors and the Executive Committee, if any.
ARTICLE IV
CAPITAL STOCK
SECTION 4.1. Stock Certificates. The interest of each holder of stock
of the Corporation shall be evidenced by a certificate or certificates in such
form as the Board of Directors may from time to time prescribe. Each certificate
shall be signed by or in the name of the Corporation by the Chairman, the
President or a Vice President and by the Treasurer or an Assistant Treasurer or
the Secretary or an Assistant
Secretary. Any of or all the signatures appearing on such certificate
or certificates may be a facsimile. If
any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon
a certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued,
it may be issued by the Corporation with the same effect as if he were
such officer, transfer agent or registrar at the date of issue.
SECTION 4.2. Transfer of Stock. Shares of stock shall be transferable
on the books of the
Corporation pursuant to applicable law and such rules and regulations
as the Board of Directors shall from time to time prescribe.
SECTION 4.3. Holders of Record. Prior to due presentment for
registration of transfer the
Corporation may treat the holder of record of a share of its stock as the
complete owner thereof exclusively
entitled to vote, to receive notifications and otherwise entitled to all
the rights and powers of a complete owner thereof, notwithstanding notice
to the contrary.
SECTION 4.4. Lost. Stolen. Destroyed or Mutilated Certificates. The
Corporation shall
issue a new certificate of stock to replace a certificate theretofore issued by
it alleged to have been lost,
destroyed or wrongfully taken, if the owner or his legal representative (i)
requests replacement, before the
Corporation has notice that the stock certificate has been acquired by
a bona fide purchaser; (ii) files with
the Corporation a bond sufficient to indemnify the Corporation against
any claim that may be made against
it on account of the alleged loss or destruction of any such stock
certificate or the issuance of any such new
<PAGE>
stock certificate; and (iii) satisfies such other terms and conditions
as the Board of Directors may from time to time prescribe.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Indemnity. (a) The Corporation shall indemnify,
subject to the requirements
of subsection (d) of this Section, any person who was or is a party or
is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or
investigative (other than an action by or in the right of the
Corporation), by reason of the fact that he is or
was a director, officer, employee or agent of the Corporation, or is or
was serving at the request of the
Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust
or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with
such action, suit or proceeding if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of
the Corporation and, with respect to any criminal action or proceeding,
had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit or
proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall
not, of itself, create a presumption that
the person did not act in good faith and in a manner which he reasonably
believed to be in or not opposed
to the best interests of the Corporation and, with respect to any
criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
(b) The Corporation shall indemnify, subject to the requirement
s of subsection (d) of this Section, any person who was or is a party or is
threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor
by reason of the fact that he is or was a director, officer, employee or
agent of the Corporation or is or was
serving at the request of the Corporation as a director, officer,
employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of such
action or suit if he acted
in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the
Corporation and except that no indemnification shall be made in respect
of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Corporation
unless and only to the extent
that the Court of Chancery of the State of Delaware or the court in which
such action or suit was brought
shall determine upon application that, despite the adjudication of
liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses
which the Court of Chancery of the State of Delaware or such other
court shall deem proper.
(c) To the extent that a director, officer, employee or
agent of the Corporation,
or a person serving in any other enterprise at the request of the
Corporation, has been successful on the
merits or otherwise in defense of any action, suit or proceeding referred
to in subsection (a) and (b) of this
Section, or in defense of any claim, issue or matter therein, the
Corporation shall indemnify him against
expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith.
(d) Any indemnification under subsections (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 indemnification of the director, officer, employee or
agent is proper in the circumstances
<PAGE>
because he has met the applicable standard of conduct set forth in
subsections (a) and (b) 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 such action, suit or proceeding,
or (2) if such a quorum is not
obtainable, or, even if obtainable a quorum of disinterested directors,
or (3) by independent legal counsel in a written opinion, or (4)
by the stockholders.
(e) Expenses incurred by a director, officer, employee
or agent in defending a
civil or criminal action, suit or proceeding may be paid by the
Corporation in advance of the final
disposition of such action, suit or proceeding as authorized by the Board
of Directors upon receipt of an
undertaking by or on behalf of the director, officer, employee or agent
to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified
by the Corporation as authorized in this Section.
(f) The indemnification and advancement of expenses
provided by or granted
pursuant to, the other subsections of this Section shall not limit the
Corporation from providing any other
indemnification or advancement of expenses permitted by law nor shall
it be deemed exclusive of any other
rights to which those seeking indemnification may be entitled under
any by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office.
(g) The Corporation may purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or who is or was serving at
the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted
against him and incurred by him in any
such capacity, or arising out of his status as such, whether or not the
Corporation would have the power to
indemnify him against such liability under the provisions of this Section.
(h) The indemnification and advancement of expenses
provided by, or granted
pursuant to this section shall, unless otherwise provided when
authorized or ratified, continue as to a person
who has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators of
such a person.
(i) For the purposes of this Section, references to
"the Corporation" shall include,
in addition to the resulting corporation, any constituent corporation
(including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would
have had power and authority to indemnify its directors, officers,
employees or agents, so that any person
who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving
at the request of such constituent corporation as a director,
officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise,
shall stand in the same position under the
provisions of this Section with respect to the resulting or
surviving corporation as he would have with
respect to such constituent corporation if its separate existence had continued.
(j) This Section 5.1 shall be construed to give the
Corporation the broadest power
permissible by the Delaware General Corporation Law, as it now stands
and as heretofore amended.
SECTION 5.2. Waiver of Notice. Whenever notice is required by the
Certificate of
Incorporation, the By-Laws or any provision of the General Corporation Law
of the State of Delaware, a
<PAGE>
written waiver thereof, signed by the person entitled to notice, whether
before or after the time required for
such notice, shall be deemed equivalent to notice. Attendance of a person
at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting
for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not
lawfully called or convened. Neither the business to be transacted at,
nor the purpose of, any regular or
special meeting of the stockholders, directors or members of a committee
of directors need be specified in any written waiver of notice.
SECTION 5.3. Fiscal Year. The fiscal year of the
Corporation shall start on such date as the Board of Directors shall from
time to time prescribe.
SECTION 5.4. Corporate Seal. The corporate seal shall be in such
form as the Board of
Directors may from time to time prescribe, and the same may be used
by causing it or a facsimile
thereof to be impressed or affixed or in any other manner reproduced.
ARTICLE VI
AMENDMENT OF BY-LAWS
SECTION 6.1. Amendment. The By-Laws may be altered, amended or repealed by the
stockholders or by the Board of Directors by a majority vote.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Alpha Hospitality Corporation Form 10Q for the quarter ended September 30, 1999
</LEGEND>
<CIK> 0000906780
<NAME> Alpha Hospitality Corporation
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<S> <C>
<PERIOD-TYPE> 9-MOS
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<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
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<TOTAL-ASSETS> 8,591
<CURRENT-LIABILITIES> 1,202
<BONDS> 2,159
0
9
<COMMON> 168
<OTHER-SE> 3,067
<TOTAL-LIABILITY-AND-EQUITY> 3,244
<SALES> 0
<TOTAL-REVENUES> 138
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,042<F1>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 125
<INCOME-PRETAX> (2,029)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,029)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,029)
<EPS-BASIC> (.12)
<EPS-DILUTED> 0
<FN>
<F1>Includes selling, general and administrative of $1,262, depreciation and
amortization of $33 and development and startup costs of $747.
</FN>
</TABLE>
