File No. 333-______
As filed with the Securities and Exchange Commission on September
12, 2000.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ALPHA HOSPITALITY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-3714474
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
12 East 49th Street
New York, New York 10017
(212) 750-3500
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
ROBERT STEENHUISEN
Chief Accounting Officer
12 East 49th Street
New York, New York 10017
(212) 750-3500
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
HERBERT F. KOZLOV, ESQ.
PARKER DURYEE ROSOFF & HAFT, P.C.
529 Fifth Avenue
New York, New York 10017
(212) 599-0500
Approximate date of proposed sale to the public: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are
being offered pursuant to dividend or interest reinvestment
plans, please check the following box. [ ]
If any of the securities being registered on this Form
are to be offered on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933, other than securities
offered only in connection with dividend or interest reinvestment
plans, check the following box. [X]
If this Form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same offering. [ ]
<PAGE>
If this Form is a post-effective amendment filed
pursuant to Rule 462(c) under the Securities Act, check the
following box and list the Securities Act registration statement
number of the earlier effective registration statement for the
same offering. [ ]
If delivery of the prospectus is expected to be made
pursuant to Rule 434, please check the following box.[ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of Maximum Maximum
Each Class Amount to Offering Aggregate Amount of
of be Price Offering Registration
Securities Registered(1) Per Share(2) Price(2) Fee
to be
Registered
<S> <C> <C> <C> <C>
Common 3,448,000 $1.3755 $4,742,724 $1,252.08
Stock, par
value $0.01
per share
</TABLE>
________________
(1) Pursuant to Rule 416(a), the Registration Statement also
relates to an indeterminate number of additional shares of the
Registrant's Common Stock that are issuable upon the conversion
of the Registrant's 4% Convertible Notes Due July 31, 2003 (the
"Notes") or upon the exercise of 3-year warrants (the "Warrants")
contemporaneously issued by Alpha and that are issuable pursuant
to anti-dilution provisions contained in the Notes and the
Warrants, respectively, which shares of Common Stock are
registered hereunder.
(2) Estimated solely for the purpose of calculating the
registration fee, as determined in accordance with Rules
457(c), using the average of the high and low sales
prices per share of Alpha's common stock as reported on
the NASDAQ SmallCap Market on September 11, 2000.
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment that
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
PROSPECTUS
SUBJECT TO COMPLETION, SEPTEMBER 12, 2000
3,448,000 Shares
ALPHA HOSPITALITY CORPORATION
Common Stock, par value $0.01 per share
This prospectus relates to 3,448,000 shares of the common
stock, par value $0.01 per share, of Alpha Hospitality
Corporation ("Alpha" or "we"). The shares of common stock being
offered by the selling stockholder may be acquired by the selling
stockholder upon conversion of up to $1,250,000 aggregate
principal amount of its 4% Convertible Notes Due July 31, 2003
(the "Notes") held by it or upon the exercise of 3-year warrants
(the "Warrants") issued by Alpha in conjunction with the sale of
the Notes and held by the selling stockholder. Alpha will not
receive any proceeds from the conversion of shares of the Notes
into shares of common stock or from the sale of shares of common
stock by the selling stockholder. Although Alpha will receive
proceeds from the exercise of the Warrants, if they are exercised
without the use of the cashless exercise option, it would not
receive any proceeds from the subsequent sale of the shares of
common stock issued upon the exercise of the Warrants.
----------------------
These securities involve a high degree of risk. See "Risk
Factors."
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The shares of common stock being offered by the selling
stockholder have not been registered for sale under the
securities laws of any state or jurisdiction as of the date of
this prospectus.
Alpha's common stock is listed for trading on The NASDAQ
SmallCap Market under the symbol "ALHY" and on the Boston Stock
Exchange under the symbol "ALH." On September 11, 2000, the
closing bid price of Alpha's common stock, as reported by The
NASDAQ SmallCap Market, was $1.00 per share.
Alpha's executive offices are located at 12 East 49th Street, New
York, New York 10017.
Its telephone number is 212-750-3500.
The date of this prospectus is September 12, 2000.
[The following language is located on the left margin of the
first page of the preliminary prospectus.]
The information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities and Alpha is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
THIS PROSPECTUS CONTAINS FORWARD LOOKING STATEMENTS
Some of the statements in this prospectus constitute forward-
looking statements. These statements involve known and unknown
risks, uncertainties and other factors that may cause our or our
industry's results, levels of activity, performance or
achievements to be significantly different from any future
results, levels of activity, performance or achievements
expressed or implied by the forward-looking statements. These
factors include, among others, those listed under "Risk Factors"
and elsewhere in this prospectus. In some cases, you can
identify forward-looking statements by the use of the words
"may," "will," "should," "expects," "plans," "intends,"
"anticipates," "believes," "estimates," "predicts," "potential,"
or "continue" or the negative of those terms or other comparable
terminology.
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee
future results, events, levels of activity, performance or
achievements. We do not assume responsibility for the accuracy
and completeness of the forward-looking statements. We do not
intend to update any of the forward-looking statements after the
date of this prospectus to conform them to actual results.
TABLE OF CONTENTS
RISK FACTORS 3
Alpha may not be successful in acquiring or developing the
business opportunities it is considering 3
Unless Alpha successfully develops business operations, it may
not be able to meet its obligations 4
Alpha has a history of losses and may never be profitable 4
If Alpha develops new ventures, it may not have the management
expertise to be successful in them 5
Alpha has significant outstanding indebtedness and other
obligations, which may impair its ability to raise additional
capital in the future 5
OTHER CONSIDERATIONS 6
USE OF PROCEEDS 9
SELLING STOCKHOLDER 9
PLAN OF DISTRIBUTION 11
LEGAL MATTERS 13
EXPERTS 13
ADDITIONAL INFORMATION ABOUT ALPHA 14
DOCUMENTS INCORPORATED BY REFERENCE 14
No dealer, salesperson or other person has been authorized
to give any information or to make any representations not
contained in this prospectus or incorporated by reference to this
<PAGE>
prospectus, and, if given or made, such information or
representations must not be relied upon as having been authorized
by Alpha. This prospectus does not constitute an offer to sell,
or a solicitation of an offer to buy, the securities offered by
this prospectus in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such jurisdiction.
The delivery of this prospectus at any time does not imply that
the information contained in this prospectus is correct as of any
time subsequent to its date.
RISK FACTORS
Before you decide to invest in Alpha's common stock
being offered by this prospectus, you should be aware that there
are various risks, including those described below. You should
carefully consider these risks as well as the more detailed
information contained in this prospectus and in the documents
incorporated in this prospectus by reference, before making your
decision.
Alpha may not be successful in acquiring or developing the
business opportunities it is considering.
Alpha must overcome significant obstacles before it can
participate in the prospective gaming opportunities it has been
considering in New York, Mississippi and Florida. For example:
Although a settlement has been reached regarding the
prospective rights of Alpha's subsidiary, Alpha Monticello, to
share in management fees and service fees from a proposed casino
project contemplated to be located in Monticello, New York, there
can be no assurance that any casino will be developed or those
such rights will otherwise result in any revenues to Alpha or its
affiliates. This is due to a number of considerations, including
those referred to below. New York Governor George E. Pataki has
proposed legislation that, if enacted, could affect the approval
process for the construction and operation of casinos on Indian
lands within New York State. Although that proposed legislation
has not made it to the floor of the State legislature, there can
be no assurance that it will not do so. It is possible that, if
the proposed legislation is presented to the legislature, the
legislature, in considering the proposal, could amend the
proposed legislation or otherwise adopt legislation that could
adversely affect the proposed development of the proposed
Monticello project. Additionally, news reports have announced a
purported agreement between the St. Regis Mohawk Tribe and Park
Place Entertainment concerning management of casino projects in
New York State. It is possible that the purported agreement
could adversely affect the proposed development of the Monticello
project.
Earlier this year, legislation was proposed in Florida that,
if enacted, would have dramatically altered the current state law
and would have imposed significant new restrictions or
limitations on the "cruise-to-nowhere" industry. Although that
bill has been withdrawn from consideration by its sponsor and
will not be brought to a vote, there can be no assurance that
this or similar legislation will not be resubmitted in the future
and, if enacted, would not be detrimental to the industry.
<PAGE>
Unless Alpha successfully develops business operations, it will
not be able to meet its obligations.
Alpha currently has no active operating business to generate
income. Alpha's management believes it has sufficient cash
resources to meet its general and administrative obligations for
the next twelve months, provided that its "cruise-to-nowhere"
operations in Florida do not result in a drain on Alpha's cash
resources. There can be no assurance that those operations will
not result in a drain on Alpha's cash resources. Alpha's long-
term ability to meet its general and administrative obligations
will depend on its ability to do one or more of the following
things:
Achieve profits from the prospective gaming operations in
New York, Mississippi or Florida;
Achieve profits from operations of any other future
business opportunities;
Combine with an entity having sufficient cash flow to meet
Alpha's obligations; or
Obtain additional funds through financing activities.
As of the date of this prospectus, Alpha has not entered
into any arrangement to participate in any business ventures or
purchase any assets, property or business, other than as
previously disclosed or discussed elsewhere in this prospectus.
Alpha cannot give any assurance that it will be able to generate
enough funds through any of these activities to meet its general
and administrative obligations.
Alpha has a history of losses and may never be profitable.
Since its inception, Alpha has suffered significant losses
from operations. Excluding non-cash compensation adjustments,
Alpha had losses from operations of approximately $5,763,000,
$7,024,000, and $1,774,000 in the fiscal years ended December
31, 1999, 1998 and 1997, respectively, and approximately
$1,155,000 for the six months ended June 30, 2000. The non-cash
compensation adjustment, which amounted to approximately
$2,786,000 of income for the six months ended June 30, 2000 and
approximately $3,251,000 of expense for the fiscal year ended
December 31, 1999, relates to deferred compensation payable to
Alpha's Chairman and CEO, which compensation that individual has
been granted the right to convert into shares of Alpha's common
stock at $2.00 per share, the price of Alpha's common stock at
the time that right was granted in 1999. As of June 30, 2000,
Alpha had an accumulated deficit of approximately $80,566,000.
Although Alpha received approximately $3,900,000 in net proceeds
from the sale of its Series D Preferred Stock in February 2000
and an additional net proceeds of approximately $1,200,000 from
the sale of the Notes and the Warrants, these proceeds were
designated for specific projects, including the "cruise to
nowhere" in Florida and other gaming-related businesses or
operations. To provide investors a positive return in the long-
term, Alpha must develop or acquire profitable operations.
There can be no assurance that Alpha will be able to develop or
acquire profitable operations.
<PAGE>
If Alpha develops new ventures, it may not have the management
expertise to be successful in them.
Alpha's affiliates and members of management have
significant experience operating casinos, hotels and related
hospitality ventures. Management has been concentrating its
investigation of potential business acquisitions in these areas,
including prospective gaming opportunities in New York,
Mississippi and Florida. If Alpha enters into another line of
business, Alpha's management may find that it lacks necessary
expertise in that business. Therefore, we cannot assure you
that, if Alpha develops or acquires new lines of business, it
will be profitable in those businesses.
Alpha has significant outstanding indebtedness and other
obligations, which may impair its ability to raise additional
capital in the future.
Alpha's outstanding long-term indebtedness, excluding debt
of Alpha's subsidiaries, consists of a note payable to an
affiliate, Bryanston Group, Inc. The balance of this note on
June 30, 2000 was approximately $1,454,000, inclusive of $46,000
of accrued interest. No default or acceleration has occurred on
this loan. Alpha cannot give any assurance that a default will
not be declared in the future. Declaration of a default could
have an adverse affect on Alpha's financial condition, business
and/or operations.
Alpha's chairman and chief executive, Stanley S. Tollman,
has agreed to defer receiving his salary until January 1, 2001.
Although the salary accumulates without interest, the total
amount owed to Mr. Tollman at September 12, 2000 was
approximately $1,726,915. Mr. Tollman has been granted the
right, subject to specific conditions, to convert up to
$2,000,000 of this accumulated salary into shares of Alpha's
common stock, at a price of $2.00 per share, no earlier than
January 14, 2001, except in the case of his death or disability.
There can be no assurance that Mr. Tollman will continue to
defer receiving his salary after January 1, 2001. In the event
that, after January 1, 2001, Mr. Tollman should insist upon
payment of his deferred salary, the large payment of cash that
would be required could have an adverse affect on Alpha's
financial condition, business and/or operations.
If either of these events were to occur, a large cash
payment would be required and Alpha's resources would be
reduced. With reduced resources, Alpha would likely find it
more difficult to fund its operations or develop its proposed
operations. Alpha would likely also find it more difficult to
raise additional capital.
<PAGE>
OTHER CONSIDERATIONS
Future sales of shares could potentially dilute your interest in
Alpha's common stock.
As of September 11, 2000, Alpha had 20,207,422 shares
of common stock outstanding. Up to an additional 848,000 shares
will be issued if holders of Alpha's publicly traded warrants
choose to exercise them. Up to 3,323,000 shares of common stock
may be issued upon conversion of the Series D Preferred Stock
and/or the Notes and up to an additional 200,000 shares of
common stock may be issued upon the exercise of the Warrants.
One result of having a conversion price based upon the market
price of Alpha's common stock is that if the market price of a
share of Alpha's common stock is less than $2.40, the number of
shares of common stock issuable upon conversion of the Notes
increases as the market price of the common stock decreases. If
the market price of Alpha's common stock exceeds $2.40, the
conversion price of the Notes and the exercise price of the
Warrants could be substantially below the market price of the
common stock on the date of conversion or exercise, as the case
may be.
Similarly, holders of other securities issued by Alpha and
exercisable for, or convertible into, shares of Alpha's common
stock may from time to time exercise or convert their securities
into common stock. Stanley S. Tollman, Alpha's chairman and
chief executive officer, has been granted the right, subject to
specific conditions, to convert up to $2,000,000 of deferred
salary into Alpha's common stock at $2.00 per share, no earlier
than January 14, 2001, except in the case of his death or
disability. The number of shares of common stock referred to in
this paragraph may be subject to increase to protect against
dilution. If holders of these other securities exercise or
convert them into shares of common stock or Mr. Tollman converts
his deferred salary into shares of common stock, the increased
number of shares available in the market would likely result in
a lower market price per-share for Alpha's common stock.
The market price of Alpha's common stock can be highly volatile.
The average daily trading volume of Alpha's common
stock has generally been light. The market price has been
highly volatile and may not be indicative of the market price in
a more liquid market. Therefore, the low volume may have had a
significant effect on the historical market price of the stock.
The market price of the stock could also be subject to
significant fluctuations in response to a number of factors, not
all of which may relate directly to Alpha's performance. Some
of these factors are: the depth and liquidity of the market for
the stock; public announcements by Alpha, its clients and
competitors; investors' perception of Alpha; rumors; and general
economic and other conditions.
Alpha cannot assure that there will be a public market in the
future for its securities.
Alpha cannot assure that its common stock will continue to
be quoted on the NASDAQ SmallCap Market or listed on the Boston
Stock Exchange. Even if these quotations or listings continue,
Alpha can provide no assurance that there will be a significant
public market. Among other requirements for continued listing
on the Nasdaq SmallCap Market, a company must have at least
$2,000,000 in net tangible assets, and the listed security must
have a minimum bid price of $1.00 per share. Our common stock
traded below $1.00 per share as recently as December 1998. The
Boston Stock Exchange's maintenance criteria require a company
to have total assets of at least $1,000,000 and total
stockholders' equity of at least $500,000. At June 30,
<PAGE>
2000, Alpha had total assets of approximately $10.7 million and
stockholders' equity of approximately $5.6 million. In the
event Alpha's common stock were delisted from the Nasdaq
SmallCap Market, trading, if any, would be conducted on the
Boston Stock Exchange and in the over-the-counter market on the
NASD's electronic bulletin board. Should this occur, an
investor could find it more difficult to dispose of or obtain
accurate quotations for the price of Alpha's securities.
If Alpha's common stock is de-listed from Nasdaq, it may be
considered a "penny stock".
SEC regulations impose additional requirements on broker-
dealers when selling penny stocks to persons other than
established customers and accredited investors. In general, an
accredited investor is a person with assets in excess of
$1,000,000 or annual income exceeding $200,000 individually or
$300,000 together with his or her spouse. The relevant SEC
regulations generally define "penny stocks" to include any non-
Nasdaq equity security with a market price (as defined in the
regulations) of less than $5 per share. Under the penny stock
regulations, a broker-dealer must make a special suitability
determination as to the purchaser and must have the purchaser's
prior written consent to the transaction. Prior to any
transaction in a penny stock covered by these rules, a broker-
dealer must deliver a disclosure schedule about the penny stock
market prepared by the SEC. Broker-dealers must also make
disclosure concerning commissions payable to both the broker-
dealer and any registered representative and provide current
quotations for the securities. Finally, broker-dealers are
required to send monthly statements disclosing recent price
information for the penny stock held in an account and
information on the limited market in penny stocks.
If Alpha's common stock were to be classified as a "penny
stock," these rules may discourage broker-dealers from effecting
transactions in Alpha's common stock or affect their ability to
sell Alpha's securities. As a result, purchasers and current
holders of Alpha's securities could find it more difficult to
sell their securities.
Compliance with government regulations may be costly or
disruptive to our proposed operations.
The prospective gaming operations that Alpha is pursuing are
regulated by federal, state and local governmental authorities.
We cannot assure you that we will be able to comply with current
or future governmental regulations everywhere we may conduct
business operations. Alpha may be required to incur substantial
costs or interrupt its activities to comply with regulations.
Present or future federal, state or local regulations may
restrict Alpha's present and possible future activities. If
Alpha is unable to comply with these or similar requirements, it
could be subject to sanctions. Any sanctions could have a
materially adverse effect upon Alpha's business.
<PAGE>
Denial or loss of a gaming license would adversely affect
Alpha's operations.
Generally, the applicable governing body in each state in
which a casino operator conducts its business must find suitable
or approve the casino operator and many of the key people
employed by or associated with the operator. If any person
associated with Alpha who is subject to approval or a
determination of suitability fails, now or in the future, to be
approved for a license or to remain qualified to hold a license,
Alpha would have to disassociate itself from that person or
Alpha could lose its license. The governing body almost always
has broad discretion in granting, renewing and revoking
licenses. Any denial, loss or suspension of any license would
have a materially adverse effect on Alpha's gaming operations
that require a license.
Alpha may compete in a highly competitive industry.
Alpha's current operations include: the development of
potential new gaming operations in New York, Mississippi and
Florida; and the acquisition or development of other business
operations. The industries in which these operations would be
conducted are highly competitive. Many of the potential
competitors in these industries have significantly greater
financial and other resources than Alpha and more experience in
the relevant industry. It is likely that this intense
competition may limit the profitability of Alpha's operations or
even render them unprofitable.
Alpha's previous gaming operations have been subject to seasonal
fluctuations.
The results of Alpha's former casino operations were
seasonal. The seasonal nature of casino operations increased
the risk that natural disasters or the loss of the casinos for
any other reason during the season of greatest activity would
have a material and adverse effect on Alpha's financial
condition and results of operations. In the event Alpha should
again have operations in the gaming industry, Alpha's business
could again be subject to similar fluctuations and risks.
Alpha's success is dependent upon the services of key officers.
Alpha's success is largely dependent upon the efforts of
Stanley S. Tollman, its president and chief executive officer.
Alpha does not maintain and does not intend to obtain a key
employee life insurance policy on the life of Mr. Tollman.
Although Mr. Tollman is only required to devote approximately
20% of his business time to the operations of Alpha, the loss of
his services could have a material and adverse effect on Alpha's
business and prospects.
Alpha's liability insurance may be insufficient.
Alpha maintains and intends to maintain general liability
insurance in amounts that management believes will be sufficient
to cover casualty risks associated with the operation of its
business. These risks include fire, property damage, personal
injury, liquor liability, etc. At present, Alpha is a defendant
in one proceeding based upon the theory of "liquor liability"
for the alleged service of alcohol to a customer. Alpha
believes that its exposure in this proceeding is adequately
covered by the levels of insurance currently maintained.
However, Alpha cannot assure that its existing insurance will be
adequate to cover any liabilities.
<PAGE>
USE OF PROCEEDS
The shares of common stock being offered hereunder are for
the account of the selling stockholder. Accordingly, Alpha will
not receive any of the proceeds from the sale of shares of common
stock by the selling stockholder. Alpha will also not receive
any proceeds upon the conversion of the Notes. Although Alpha
would receive proceeds from the exercise of the Warrants (unless
the selling shareholder elects to use the cashless exercise
option with respect to the exercise of the Warrants), it would
not receive any proceeds from the subsequent sale of shares of
common issued upon the exercise of the Warrants. See "Selling
Stockholder."
SELLING STOCKHOLDER
All of the shares of common stock being offered subject to
this prospectus are being offered by the selling stockholder
named in the table below. The number of shares in the table
represents the maximum aggregate number of shares that may be
acquired by the selling stockholder upon conversion of the
Notes, the exercise of the Warrants and/or the conversion of
Series D Preferred Stock previously issued to the selling
shareholder. As described below, the number of shares of common
stock that the selling stockholder may actually acquire upon
conversion may be less than the maximum. The selling
stockholder will determine the actual number of shares of common
stock that it will offer to sell, which may depend upon a number
of factors, including the market price of the common stock at
the time of sale.
Prior to the offering, the selling stockholder held
$1,250,000 principal amount of the Notes and Warrants
exercisable for up to 125,000 shares of Alpha's common stock, as
well as 2,750 shares of Alpha's Series D Preferred Stock issued
in February 2000. The maximum aggregate number of shares of
common stock issuable upon conversion of the Notes is 3,323,000,
all of which are being offered under this prospectus. That
maximum number, which includes any shares of common stock
issued, at Alpha's option, in payment of interest due on the
Notes, shall be reduced by the number of shares of Alpha's
common stock issued after July 31, 2000 upon the conversion of,
or in payment of dividends on, Alpha's Series D Preferred Stock
issued to the selling stockholder. As of the date of this
prospectus, none of the Notes has been converted into common
stock. The Notes may be converted at a price equal to the
lesser of (i) $2.40 and (ii) the average of the two lowest last
reported bid prices for the common stock on Nasdaq SmallCap
Market during the 30 trading days preceding, but excluding, the
date of conversion. The maximum number of 3,323,000 shares of
common stock issuable upon conversion of the Notes includes any
shares of common stock issued, at Alpha's option, in payment of
interest on the Notes.
The table below contains information furnished by the
selling stockholder concerning the beneficial ownership of
common stock of the selling stockholder as of the date of this
prospectus, which information relates exclusively to the selling
stockholder's holding of the Notes and the Warrants, as well as
outstanding shares of Alpha's Series D Preferred Stock. We have
assumed that the selling stockholder will sell the maximum
number of shares of common stock (a) into which the Notes and
the Series D Preferred Stock could potentially be converted
based upon the conversation terms and limitations applicable to
the Notes and the Series D Preferred Stock and (b) for which the
Warrants are exercisable, and the table does not reflect the
limitations on conversion of the Notes or exercise of the
Warrants described in the two
<PAGE>
paragraphs immediately following the table or any similar limitations
on conversion applicable to the Series D Preferred Stock.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
SHARES OF COMMON SHARES OF OWNED AFTER OFFERING
STOCK OWNED COMMON STOCK ----------
---------------------------------------------------
BEFORE OFFERING OFFERED NUMBER PERCENT
-------------- ---------- ----------------
<S> <C> <C> <C> <C>
Societe Generale 3,448,000 3,448,000 0 0%
</TABLE>
The number of shares of common stock issuable upon
conversion of the Notes is also limited by restrictions contained
in the Notes. The Notes and the Warrants provide that they are
convertible or exercisable only to the extent that, upon
conversion or exercise, the selling stockholder and its
affiliates would beneficially own not more than 4.9% of the
outstanding shares of common stock of Alpha. This 4.9%
limitation also applies to the selling stockholder's previously
acquired shares of Alpha's Series D Preferred Stock, which are
convertible into shares of Alpha's common stock, so that a
partial conversion of the Note and/or exercise of the Warrants,
together with conversion of shares of Alpha's Series D Preferred
Stock, cannot accidentally defeat the limit. Additionally, the
selling stockholder and its affiliates may only convert or
exercise any combination of securities, whether the Notes, the
Warrants or shares of the Series D Preferred Stock, if the total
number of shares to be received, when combined with all shares
received on account of all conversions and exercises during the
previous 60 consecutive days, will not exceed 9.9% of Alpha's
outstanding shares of common stock, determined as of the
beginning of that 60-day period; nor may the selling stockholder,
during any period of 61 consecutive days, sell shares of Alpha's
common, whether acquired upon conversion of the Notes, exercise
of the Warrants or otherwise, in excess of 9.9% of the Alpha's
issued and outstanding shares of common stock as of the first day
of that 61-day period. This 9.9% limitation is intended to
restrict the number of times within and 61-day period that the
selling stockholder can convert securities into, or exercise
securities for, Alpha's common stock, sell those shares of common
stock and then convert additional securities into, or exercise
securities for, common stock up to the 4.9% maximum. Alpha may
not waive either the 4.9% or the 9.9% limitation referred to
above.
One result of having a conversion price based upon the
market price of Alpha's common stock is that if the market price
of a share of Alpha's common stock is less than $2.40, the number
of shares of common stock issuable upon conversion of the Notes
increases as the market price of the common stock decreases. If
the market price of Alpha's common stock exceeds $2.40, the
conversion price of the Notes could be substantially below the
market price of the common stock on the date of conversion.
To the extent that any of the Notes is converted and the
resulting common stock is sold, the market price of the common
stock could decrease due to the increased number of shares then
being sold in the public market. This, in turn, may lead to
there being a proportionately greater number of shares of common
stock issuable upon subsequent conversion of any remaining Notes.
As a result, other holders of common stock could experience
substantial dilution, whether or not the shares of common stock
issued upon conversion are sold following conversion. If the
maximum number of 3,323,000 shares issuable upon conversion of
the Notes, including any shares of common stock issued, at
Alpha's option, in payment of interest on the Notes, were to be
<PAGE>
issued and any Notes remained outstanding, the interest rate on
these remaining Notes would be increased to 15% per annum and
would become payable in cash.
The Warrants are exercisable for up to 125,000 shares of
Alpha's common stock at an exercise price of $2.40 per share.
The Warrants expire on July 31, 2003.
The number of shares into which the Notes are convertible
and that are issuable upon the exercise of the Warrants, and the
maximum number of shares into which the Notes are convertible,
and the corresponding conversion and exercise prices are subject
to adjustment for stock splits, stock dividends,
reclassifications or other similar events or other dilutive
events.
Under an agreement between Alpha and the selling
stockholder, Alpha has agreed (i) to file the registration
statement of which this prospectus is a part for the purpose of
registering the potential resale of the shares issuable upon
conversion of the Notes and upon exercise of the Warrants, (ii)
to bear all expenses of the registration and sale of such shares
(other than any underwriting discounts and conversions) and (iii)
to indemnify the selling stockholder against some liabilities.
The selling stockholder does not have, and within the past
three years has not had, any other material relationship with
Alpha or any of its predecessors or affiliates other than as the
holder of shares of Alpha's Series D Preferred Stock purchased
from Alpha in February 2000.
PLAN OF DISTRIBUTION
The selling stockholder may offer and sell from time to time
under this prospectus the shares received by the selling
stockholder upon conversion of the Notes and/or the exercise of
the Warrants. The selling stockholder will act independently of
us in making decisions with respect to the timing, manner and
size of each sale. To the extent required, we may amend and
supplement this prospectus to describe a specific plan of
distribution.
The selling stockholder may sell the shares covered by this
prospectus by several possible means. These include, but are not
limited to, one or any combination of the types of transactions
described in the following list and the paragraphs that follow:
on the Nasdaq National Market or any other market where our
common stock may trade, at the then-prevailing prices and terms
or at prices related to the then-current market price or at
negotiated prices;
a block trade in which a broker-dealer will attempt to sell
shares as agent, but may position and resell a portion of the
block as principal to facilitate the transaction;
purchases by a broker-dealer as principal and resale by that
broker-dealer for its own account under this prospectus;
an over-the-counter distribution under the rules of the
Nasdaq SmallCap Market;
ordinary brokerage transactions and transactions in which a
broker solicits purchasers; or
<PAGE>
in privately negotiated transactions.
In addition to the list above, the selling stockholder may
also enter into hedging transactions with broker-dealers or other
financial institutions. In connection with these transactions,
broker-dealers or other financial institutions may engage in
short sales of our common stock in the course of hedging the
positions they assume with that selling stockholder. The selling
stockholder may also sell our common stock short and redeliver
the shares to close out short positions.
The selling stockholder may enter into option or other
transactions with broker-dealers or other financial institutions
that require that selling stockholder to deliver the shares
offered in this prospectus, and, in turn, the broker-dealer or
other financial institution may resell those shares under this
prospectus, as supplemented or amended to reflect the applicable
transaction.
The selling stockholder may pledge shares of common stock to
a broker-dealer or other financial institution, and, upon a
default, that broker-dealer or other financial institution may
sell the pledged shares of common stock under this prospectus, as
supplemented or amended to reflect the applicable transaction.
In addition, any shares of common stock that qualify for sale
under Rule 144 under the Securities Act may be sold under Rule
144 rather than under this prospectus.
The selling stockholder may sell shares of common stock
directly to market makers acting as principals and/or broker-
dealers acting as agents for themselves or their customers.
These broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the selling
stockholder or the purchasers of shares of common stock for whom
those broker-dealers may act as agent or to whom they sell as
principal or both. This compensation might be in excess of
customary commissions. Market makers and block purchasers that
purchase the shares of common stock will do so for their own
account and at their own risk. It is possible that the selling
stockholder will attempt to sell shares of common stock in block
transactions to market makers or other purchasers at a price per
share that may be below the then-current market price. We cannot
make assurances that all or any of the shares of common stock
will be issued to, or sold by, the selling stockholder. The
selling stockholder and any brokers, dealers or agents, upon
effecting the sale of any of the shares of common stock offered
by this prospectus, may be deemed "underwriters" as that term is
defined under the Securities Act or the Securities Exchange Act,
or the rules and regulations these acts.
The selling stockholder may sell all or any part of the shares of
common stock through an underwriter. Alpha is not aware of any
agreement the selling stockholder may have entered into with a
prospective underwriter, and there is no assurance that the
selling stockholder will enter into any agreement with a
prospective underwriter. If the selling stockholder enters into
an agreement or agreements with a prospective underwriter, the
relevant details will be set forth in a supplement or revisions
to this prospectus.
To comply with the securities laws of some states, the
shares of common stock must be sold in some jurisdictions only
through registered or licensed brokers or dealers. Also, in some
states the shares of common stock may not be sold unless they
have been registered or qualified for sale in the applicable
state or an exemption from the registration or qualification
requirement is available and there has been compliance with that
requirement.
<PAGE>
We have advised the selling stockholder that the anti-
manipulation rules of Regulation M under the Securities Exchange
Act may apply to sales of shares of common stock in the market
and to the activities of the selling stockholder and their
affiliates. In addition, we will make copies of this prospectus
available to the selling stockholder, and we informed them of the
need for delivery of copies of this prospectus to purchasers at
or prior to the time of any sale of the shares of common stock
offered under this prospectus.
At the time a particular offer of shares of common stock is
made, if required, a prospectus supplement will be distributed
that will set forth the number of shares of common stock being
offered and the terms of the offering, including the name of any
underwriter, dealer or agent, the purchase price paid by any
underwriter, any discount, commission and other item constituting
compensation, any discount, commission or concession allowed or
reallowed or paid to any dealer, and the proposed selling price
to the public.
Alpha anticipates that the selling stockholder will offer
for sale all of the shares being registered, to the extent that
those shares are issued to the selling stockholder upon its
conversion of the Notes and/or the exercise of the Warrants. See
"Selling Stockholder." Further, because it is possible that a
significant number of shares could be sold at the same time under
this prospectus, any sales, or the possibility of sales, may
depress the market price of the common stock.
Alpha will bear all costs and expenses of the registration
of the selling shareholder's shares under the Securities Act and
state securities laws. However, the selling shareholder will
bear all underwriting and brokerage commissions and underwriting
expenses, if any, attributable to the sale of its shares.
We have agreed to indemnify the selling stockholder
against certain liabilities, including liabilities under the
Securities Act of 1933.
LEGAL MATTERS
Certain legal matters in connection with the shares of
common stock being offered by this prospectus will be passed upon
for Alpha by Parker Duryee Rosoff & Haft, a Professional
Corporation, New York, New York. Herbert F. Kozlov, a director
of Alpha, is a member of this firm.
EXPERTS
The consolidated financial statements included in Alpha's
annual report on Form 10-K for the year ended December 31, 1999,
which are incorporated in this prospectus by reference, have been
audited by Rothstein, Kass & Company, P.C., independent certified
public accountants, as indicated in their report. The
consolidated financial statements are incorporated in this
prospectus by reference in reliance on the report of Rothstein,
Kass & Company, P.C., given on the authority of that firm as
experts in accounting and auditing.
<PAGEE>
ADDITIONAL INFORMATION ABOUT ALPHA
Alpha files annual, quarterly and special reports,
proxy statements and other information with the Securities and
Exchange Commission ("SEC"). You may read and copy any of the
information on file with the SEC at the SEC's public reference
rooms in Washington, D.C., New York, New York, and Chicago,
Illinois. Copies of the filed documents can be obtained by mail
from the Public Reference Section of the SEC at Room 1024, 450
Fifth Street, N.W. Washington, D.C. 20549, at prescribed rates.
You may call the SEC at 1-800-SEC-0330 for further information on
the public reference rooms. Filed documents are also available
to the public at the SEC's website at http://www.sec.gov.
Alpha has filed with the SEC a registration statement on
Form S-3 with respect to the common stock that may be sold under
this prospectus. This prospectus does not contain all of the
information set forth in that registration statement, certain
parts of which are not included in accordance with the rules and
regulations of the SEC. Copies of that registration statement
can be obtained from the Public Reference Section of the SEC at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows a company to "incorporate by reference"
information it files with the SEC, which means that Alpha can
disclose important information to you by referring you to those
documents. The information incorporated by reference is an
important part of this prospectus, and information that Alpha
files later with the SEC will automatically update and supersede
this information. Alpha incorporates by reference the documents
listed below and any future filings made with the SEC under
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934, until all of the shares offered under this prospectus
are sold.
(a) Alpha's annual report on Form 10-K for the fiscal year
ended December 31, 1999;
(b) Alpha's quarterly report on Form 10-Q for the fiscal quarter
ended March 31, 2000;
(c) Alpha's current report on Form 8-K, as filed with the
SEC on February 15, 2000;
(d) Alpha's current report on Form 8-K, as filed with the
SEC on April 28, 2000;
(e) Alpha's quarterly report on Form 10-Q for the fiscal quarter
ended June 30, 2000; and
(f) Alpha's registration statement on Form S-1, as filed with
the SEC on August 8, 1996 (with respect to the description of the
common stock).
Any statement contained in a document incorporated or deemed
to be incorporated by reference in this prospectus shall be
deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained in this
prospectus or in any other subsequently filed document that also
is or is deemed to be incorporated by reference in this
prospectus
<PAGE>
modifies or supersedes that statement. Any statement
so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this prospectus.
You may request, and Alpha will send to you, without charge,
copies of documents that are incorporated by reference in this
prospectus but that are not delivered to you (other than exhibits
to such documents that are not specifically incorporated by
reference). You may request these copies by writing or
telephoning Alpha at: Alpha Hospitality Corporation, 12 East 49th
Street, New York, New York 10017, attention: Thomas W. Aro,
telephone number (212) 750-3500.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth Alpha's estimates of the expenses
to be incurred by it in connection with the registration and sale
of the common stock being offered hereby:
SEC Registration Fee
........................................................... $ 1,252
Printing registration statement and other documents........ --
Legal fees and
expenses................................................... 15,000*
Accounting fees and
expenses................................................. 2,500*
Miscellaneous
expenses...................................................... 4,000*
Total: $22,752
*Estimated
Item 15. Indemnification of Directors and Officers.
The Delaware General Corporation Law permits Delaware
corporations to eliminate or limit the personal liability of a
director to the corporation for monetary damages arising from
certain breaches of fiduciary duties as a director. Alpha's
Certificate of Incorporation includes such a provision
eliminating the personal liability of directors to Alpha and its
stockholders for monetary damages for breach of fiduciary duty as
a director except (i) any breach of a director's duty of loyalty
to Alpha or its stockholders, (ii) for acts or omissions not in
good faith or that involve intentional misconduct or a knowing
violation of law, (iii) for any transaction from which the
director derived an improper personal benefit or (iv) for
unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General
Corporation Law. Directors are also not insulated from liability
for claims arising under the federal securities laws. The
foregoing provisions of Alpha's Certificate of Incorporation may
reduce the likelihood of derivative litigation against directors
for breaches of their fiduciary duties, even though such an
action, if successful, might otherwise have benefited Alpha and
its stockholders.
Alpha's Certificate of Incorporation also provides that Alpha
shall indemnify its directors, officers and agents to the fullest
extent permitted by the Delaware General Corporation Law. Alpha
has directors' and officers' liability insurance, and it may also
enter into indemnity agreements with its directors and officers
for the indemnification of and advancing of expenses to these
persons to the fullest extent permitted by law.
<PAGE>
Item 16. Exhibits and Financial Statement Schedules.
Exhibit
Number Description of Exhibits
4(a) Form of Common Stock Certificate of Alpha*
4(b) Securities Purchase Agreement, dated July 31,
2000, between Alpha Hospitality Corporation and Societe
Generale
4(c) Registration Rights Agreement, dated July 31,
2000, between Alpha Hospitality Corporation and Societe
Generale
4(d) Form of the Notes
4(e) Form of the Warrants
5 Opinion of Parker Duryee Rosoff & Haft, P.C.
23(a) Consent of Rothstein, Kass & Company, P.C.
23(b) Consent of Parker Duryee Rosoff & Haft, P.C.
(included in Exhibit 5 hereof)
24 Power of Attorney (included in the signature page
of Part II of this Registration Statement)
_______________________
* Incorporated by reference; filed with Alpha's
Registration Statement filed on Form SB-2 (File No. 33-64236)
with the SEC on June 10, 1993 and as amended on September 30,
1993, October 25, 1993, November 2, 1993 and November 5, 1993.
Such Registration Statement was further amended by Post Effective
Amendment on August 20, 1999.
Item 17. Undertakings.
The undersigned company hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement to include any material information with respect
to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such
information in the Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, as amended (the
"Securities Act"), each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered
that remain unsold at the termination of the offering.
(4) That, for purposes of determining any liability under
the Securities Act, each filing of Alpha's annual report
pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended, that is incorporated by
reference in the Registration Statement, shall be deemed to
be a new registration statement relating to the securities
offered herein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering
thereof.
<PAGE>
(5) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of Alpha pursuant to Item 15 of Part II of
the Registration Statement, or otherwise, Alpha has been advised
that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other
than the payment by Alpha of expenses incurred or paid by a
director, officer or controlling person of Alpha in the
successful defense of any action suit or proceeding) is asserted
by such director, officer or controlling person in connection
with the securities being registered, Alpha will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements of filing on Form S-
3 and has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of New York, State of New York, on September 12, 2000.
ALPHA HOSPITALITY CORPORATION
By: /s/ Stanley S. Tollman
Stanley S. Tollman, Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Robert Steenhuisen and
Thomas W. Aro, and each of them acting singly, his true and
lawful attorney-in-fact and agent, with full power of
substitution and resubstitution for him and in his name, place
and stead, in any and all capacities to sign any and all
amendments (including post-effective amendments) to this
Registration Statement, and to file the same, with all exhibits
thereto, and the documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-
in-fact and agents full power and authority to do and perform
each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as
he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or either of them, or
their or his substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.
In accordance with the requirements of the Securities Act of
1933, this Registration Statement was signed by the following
persons in the capacities and on the dates stated.
Signature Title Date
/s/ Stanley S. Tollman Chairman of the Board September
Stanley S. Tollman and Chief Executive 12, 2000
Officer (Principal
Executive Officer)
/s/ Thomas W. Aro Vice President, September
Thomas W. Aro Secretary and Director 12, 2000
/s/ Robert Steenhuisen Principal Accounting September
Robert Steenhuisen Officer 12, 2000
/s/ Brett Tollman Vice President and September
Brett Tollman Director 12, 2000
/s/ Matthew B. Walker Director September
Matthew B. Walker 12, 2000
/s/ Herbert F. Kozlov Director September
Herbert F. Kozlov 12, 2000
/s/ James A. Cutler Director September
James A. Cutler 12, 2000
<PAGE>
EXHIBIT 5
[LETTERHEAD OF PARKER DURYEE ROSOFF & HAFT,
A PROFESSIONAL CORPORATION]
September 12, 2000
Alpha Hospitality Corporation
12 East 49th Street
New York, New York 10017
Re: Registration Statement on Form S-3 under the Securities Act
of 1933
Ladies and Gentlemen:
In our capacity as counsel to Alpha Hospitality Corporation (the
"Company"), a Delaware corporation, we have been asked to render
this opinion in connection with a Registration Statement on Form
S-3, being filed contemporaneously herewith by the Company with
the Securities and Exchange Commission under the Securities Act
of 1933, as amended, covering an aggregate of 3,523,000 shares
(the "Shares") of Common Stock, $0.01 par value. The Shares are
issuable upon conversion of up to $1,250,000 aggregate principal
amount of the Company's 4% Convertible Notes Due July 31, 2003
(the "Notes") or upon the exercise of 3-year warrants (the
"Warrants") issued by Alpha in conjunction with the sale of the
Notes.
In connection with, and as the basis for, the opinion we render
herein, we have examined the Certificate of Incorporation and the
By-Laws of the Company, both as amended to date, the form of the
Notes and the Warrants, the Registration Statement, corporate
proceedings of the Company relating to the issuance of the Notes
and the Warrants, and such other instruments and documents as we
have deemed relevant under the circumstances.
In making the aforesaid examinations, we have assumed the
genuineness of all signatures and the conformity to original
documents of all copies furnished us as original or photostatic
copies. We have also assumed that the corporate records
furnished to us by the Company include all corporate proceedings
taken by the Company to date in connection with the Notes and the
Warrants and the proposed issuance of the Shares upon the
conversion or exercise of such securities.
Based upon and subject to the foregoing, we are of the opinion
that the Shares, when duly issued upon the due, timely and proper
conversion of the Notes or the exercise of the Warrants, as the
case may be, in accordance with respective terms and conditions
of the Notes and the Warrants, will be duly and validly
authorized and fully paid and non-assessable.
<PAGE>
We hereby consent to the use of our opinion as herein set forth
as an exhibit to the Registration Statement and to the use of our
name under the caption "Legal Matters" in the prospectus forming
a part of the Registration Statement.
Very truly yours,
/s/ PARKER DURYEE ROSOFF & HAFT
<PAGE>
Exhibit 23(a)
Rothstein, Kass & Company, P.C.
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement of Alpha Hospitality Corporation on Form S-3 of our
report dated February 10, 2000, which appears in the annual report
on Form 10-K of Alpha Hospitality Corporation for the year ended
December 31, 1999 and to the reference to our firm under the
caption "Experts" in the Prospectus.
/s/Rothstein, Kass & Company, P.C.
ROSELAND, NEW JERSEY
September 12, 2000.
<PAGE>
Exhibit 4(b)
SECURITIES PURCHASE AGREEMENT
between
ALPHA HOSPITALITY CORPORATION
and
SOCIETE GENERALE
dated as of
July 31, 2000
<PAGE>
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as
of July 31, 2000, between ALPHA HOSPITALITY CORPORATION, a
Delaware corporation (the "Company"), and Societe Generale, a
bank organized under the laws of France (the "Purchaser").
W I T N E S S E T H :
WHEREAS, the Company proposes to issue and sell an aggregate
of (x) up to $2,000,000 aggregate principal amount of its 4%
Convertible Notes Due July 31, 2003 (the "Notes") which Notes
will be convertible into shares of common stock, par value $.01
per share, of the Company (the "Common Stock"), pursuant to the
terms set forth in the Notes, the form of which is annexed hereto
as Exhibit A, and (y) warrants (the "Warrants") to purchase up to
an aggregate of 200,000 shares of Common Stock pursuant to the
terms set forth in the Warrants, the form of which is annexed
hereto as Exhibit B, on a private placement basis pursuant to an
exemption from registration under Section 4(2) of the Securities
Act of 1933, as amended, and the Purchaser desires to purchase
the Notes and the Warrants from the Company on such basis, on the
terms and subject to the conditions set forth herein; and
WHEREAS, the registered holders of the Notes and the
Warrants will have registration rights with respect to such
shares of Common Stock and/or, if applicable, other securities
issuable upon conversion of the Notes or exercise of the Warrants
(such shares of Common Stock and/or, if applicable, other
securities, the "Conversion Shares") pursuant to the terms of the
Registration Rights Agreement, dated as of the date hereof,
between the Company and the Purchaser (the "Registration Rights
Agreement");
NOW THEREFORE, in consideration of the premises,
representations, warranties, covenants and agreements contained
herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged,
intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Definitions. For purposes of this
Agreement, the following terms shall have the following
respective meanings:
"Affiliate" of a Person means another Person that directly
or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first-
mentioned Person. The term "control" (including the terms
"controlling," "controlled by" and "under common control with")
means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by
contract or otherwise.
<PAGE>
"Capital Stock" means, with respect to any Person, any and
all shares, interests, participations or other equivalents
(however designated) of corporate stock, including each class of
common stock and preferred stock, of such Person.
"Commission" means the United States Securities and Exchange
Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"First Closing" has the meaning set forth in Section 2.02.
"Governmental Authority" means any federal or state
government or political subdivision thereof and any agency or
other entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
"Material Adverse Effect" has the meaning set forth in
Section 3.01.
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture,
joint stock company, Governmental Authority or other entity of
any kind.
"SEC Reports" means, collectively, the Company's Annual
Report on Form 10-K for the year ended December 31, 1999, the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2000 and the Company's Current Reports on Form 8-K
filed on or about February 15, 2000 and March 28, 2000.
"Second Closing" has the meaning set forth in Section 2.02.
"Securities Act" means the Securities Act of 1933, as
amended.
"Transaction Documents" means, collectively, this Agreement,
the Registration Rights Agreement, the Notes and the Warrants.
"United States" has the meaning ascribed to such term in
Rule 902(p) of Regulation S under the Securities Act.
"U.S. Person" has the meaning ascribed to such term in Rule
902(o) of Regulation S under the Securities Act.
"Year 2000 Compliant" means, with respect to a Person's
information technology, the information technology is designed to
be used prior to, during, and after the calendar Year 2000 A.D.,
and the information technology used during each such time period
will accurately receive, provide and process date/time data
(including, but not limited to, calculating, comparing and
sequencing) from, into and between the twentieth and twenty-first
centuries, including the years 1999 and 2000, and leap year
calculations and will not malfunction, cease to function or
provide invalid or incorrect results as a result of date/time
data, to the extent that other information technology, used in
<PAGE>
combination with the information technology being acquired,
properly exchanges date/time data with it.
ARTICLE II
SALE AND PURCHASE
SECTION 2.01. Agreement to Sell and to Purchase; Purchase
Price. (A) On the terms and subject to the conditions set forth
in this Agreement, at the First Closing the Company hereby agrees
to issue and sell to the Purchaser and the Purchaser hereby
agrees to purchase from the Company $1,250,000 aggregate
principal amount of Notes and Warrants to purchase 125,000 shares
of Common Stock at an aggregate purchase price of $1,250,000,
payable in immediately available funds (the "First Closing
Purchase Price").
(B) On the terms and subject to the conditions set forth in
this Agreement, the Company hereby agrees to issue and sell to
the Purchaser, and the Purchaser hereby agrees to purchase from
the Company at the Second Closing, if any, up to an additional
$750,000 aggregate principal amount of Notes and additional
Warrants to purchase up to 75,000 shares of Common Stock (such
additional principal amount of the Notes and additional Warrants,
if any, shall be determined as provided in Section 2.02 hereof)
at an aggregate purchase price equal to the aggregate principal
amount of Notes being issued and sold at the Second Closing,
payable in immediately available funds (the "Second Closing
Purchase Price").
SECTION 2.02. Closings. (A) The closing of the initial
sale and purchase of the Notes and the Warrants (the "First
Closing") shall be deemed to take place concurrently with the
execution and delivery of this Agreement by the parties hereto.
At the First Closing, the following closing transactions shall
take place, each of which shall be deemed to occur simultaneously
with the First Closing: (i) the Company shall execute, issue and
deliver certificates evidencing the Notes and the Warrants to be
issued and sold at the First Closing to the Purchaser in such
denominations as the Purchaser shall reasonably request; (ii) the
Purchaser shall pay the First Closing Purchase Price by wire
transfer to the account designated by the Company in writing
prior to the First Closing; (iii) the Company shall pay the
expenses set forth in Section 6.02 hereof by wire transfer to the
account designated by the Purchaser in writing prior to the First
Closing; provided that, if the Purchaser so elects, such expenses
may be netted against payment of the First Closing Purchase Price
pursuant to clause (ii) above; (iv) the Company and the Purchaser
shall execute and deliver the Registration Rights Agreement; (v)
the Company shall deliver to the Purchaser a certificate executed
by the Secretary of the Company, signing in such capacity, dated
the date of the First Closing (a) certifying that attached
thereto are true and complete copies of the resolutions duly
adopted by the Board of Directors of the Company authorizing the
execution and delivery of the Transaction Documents and the
consummation of the transactions contemplated thereby (including,
without limitation, the issuance and sale of the Notes and the
Warrants and the reservation and issuance of the Conversion
Shares upon conversion of the Notes and exercise of the
Warrants), which authorization shall be in full force and effect
on and as of the date of such certificate, and (b) certifying and
attesting to the office, incumbency, due authority and specimen
signatures of each Person who executed any Transaction Document
for or on behalf of the Company; (vi) Parker Duryee Rosoff &
Haft, a professional corporation, counsel to the Company, shall
deliver to the
<PAGE>
Purchaser an opinion, dated the date of the First
Closing and addressed to the Purchaser, in form and substance
acceptable to the Purchaser; and (vii) the Company shall have
delivered to the Purchaser documentation executed by Bryanston
Group, Inc. ("Bryanston") and the Company in the form attached as
Exhibit C hereto.
(B) The closing of the second sale and purchase of the
Notes and Warrants (the "Second Closing"), subject to the waiver
or satisfaction of the conditions set forth below, if any, shall
take place on the earlier to occur of (i) provided that the
closing bid price for the Common Stock shall have been at least
$3.00 (subject to adjustment for stock splits, stock dividends,
reclassifications and other dilutive events occurring subsequent
to the date hereof) for at least twenty consecutive trading days
subsequent to July 31, 2000, two business days after written
notice by the Company to the Purchaser or the Purchaser to the
Company of such party's intent to consummate the Second Closing
and (ii) August 31, 2000. The principal amount of Notes and the
number of Warrants to be purchased at the Second Closing shall
equal (x) in the event the Second Closing occurs pursuant to
clause (i) above, an amount resulting in the total aggregate
principal amount of Notes issued (pursuant to the First Closing
and the Second Closing) being equal to $2,000,000 and an amount
resulting in the aggregate number of shares of Common Stock to be
issuable upon exercise of the Warrants issued (pursuant to the
First Closing and the Second Closing) being equal to 200,000 and
(y) in the event the Second Closing occurs pursuant to clause
(ii) above, an amount resulting in the aggregate principal amount
of Notes (and proportionate amount of Warrants) being equal to
the face amount of Series D Preferred Stock of the Company
converted into shares of Common Stock by the Purchaser from and
including July 31, 2000, to but excluding August 31, 2000 (unless
the Company and the Purchaser shall mutually agree to a larger or
smaller amount), but in no event shall such issuance result in
the total aggregate principal amount of Notes issued (pursuant to
the First Closing and the Second Closing) to exceed $2,000,000
and the aggregate number of shares of Common Stock to be issuable
upon exercise of the Warrants issued (pursuant to the First
Closing and the Second Closing) to exceed 200,000. In the event
the conditions to issuance set forth in the paragraph below are
not satisfied or waived and the conditions set forth in clause
(x) are not satisfied by August 31, 2000 and no additional shares
of Series D Preferred Stock of the Company have been converted by
the Purchaser by August 31, 2000, there will be no Second
Closing, and neither the Company nor the Purchaser shall have any
further obligations to the other with respect to the additional
issuance of Notes and Warrants. The terms of the Notes and
Warrants issued pursuant to the Second Closing shall be identical
(and fully fungible) in all respects with the Notes and Warrants
issued pursuant to the First Closing (other than as to the date
of issuance).
The Second Closing shall be conditioned upon (x) the
continuing accuracy of the representations and warranties of the
Company in this Agreement, as if made as of the date of the
Second Closing (except in circumstances where such representation
or warranty relates to a specific date and allowing for the
amendment of the definition of SEC Reports to include the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 2000 and any other filing on Form 8-K filed with the
Commission after the date of this Agreement and the amendment of
any schedules to this Agreement to reflect events occurring
subsequent to July 31, 2000, in each case, however, provided that
(a) the Company provide to the Purchaser in writing a description
of revisions to such representations and warranties resulting
from such amendments and (b) the Purchaser in its
<PAGE>
sole, but reasonable, discretion deems such amendments not to constitute
material changes to the representations and warranties made in
connection with the First Closing), (y) that there shall not have
occurred and be continuing since the First Closing, any
development or event, or prospective development or event known
to the Company or any of its subsidiaries, or any litigation,
proceeding or other action seeking an injunction or other
restraining order, damages or other relief from a court or
administrative agency of competent jurisdiction pending,
threatened or, to the knowledge of the Company, contemplated, or
any action of any Governmental Authority, that has had or could
reasonably be expected to have a Material Adverse Effect (as
defined below) and (z) the closing bid price for the Common Stock
on the business day immediately preceding the date of the Second
Closing shall be at least $2.00 (subject to adjustment for stock
splits, stock dividends, reclassifications and other dilutive
events occurring subsequent to the date hereof). At the Second
Closing, the following closing transactions shall take place,
each of which shall be deemed to occur simultaneously with the
Second Closing: (i) the Company shall execute, issue and deliver
certificates evidencing the Notes and the Warrants to be issued
and sold at the Second Closing to the Purchaser in such
denominations as the Purchaser shall reasonably request; (ii) the
Purchaser shall pay the Second Closing Purchase Price by wire
transfer to the account designated by the Company in writing
prior to the Second Closing; (iii) the Company shall pay the
expenses set forth in Section 6.02 hereof by wire transfer to the
account designated by the Purchaser in writing prior to the
Second Closing; provided that, if the Purchaser so elects, such
expenses may be netted against payment of the Second Closing
Purchase Price pursuant to clause (ii) above; (iv) the Company
shall deliver to the Purchaser a certificate executed by the
Secretary of the Company, signing in such capacity, dated the
date of the Second Closing (a) certifying that attached thereto
are true and complete copies of the resolutions duly adopted by
the Board of Directors of the Company authorizing the execution
and delivery of the Transaction Documents and the consummation of
the transactions contemplated thereby (including, without
limitation, the issuance and sale of the Notes and the Warrants
and the reservation and issuance of the Conversion Shares upon
conversion of the Notes and exercise of the Warrants), which
authorization shall be in full force and effect on and as of the
date of such certificate, (b) certifying and attesting to the
office, incumbency, due authority and specimen signatures of each
Person who executed any Transaction Document for or on behalf of
the Company; and (c) confirming the matters set forth in clauses
(x) and (y) of the immediately preceding sentence; and (v)
Parker Duryee Rosoff & Haft, a professional corporation, counsel
to the Company, shall deliver to the Purchaser an opinion, dated
the date of the Second Closing and addressed to the Purchaser, in
form and substance acceptable to the Purchaser.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As a material inducement to the Purchaser to purchase the
Notes and the Warrants, the Company hereby represents and
warrants to the Purchaser that on and as of the date hereof in
respect of the First Closing and as of the date of the Second
Closing in respect of the Second Closing:
<PAGE>
SECTION 3.01. Organization and Standing. Except as
disclosed in Schedule 3.01, the Company and each of its
subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and
authority, and all authorizations, licenses, permits and
certifications necessary for it to own its properties and assets
and to carry on its business as it is now being conducted (and
as, to the extent described therein, described in the SEC
Reports) and proposed to be conducted. The Company and each of
its subsidiaries is duly qualified to transact business and is in
good standing in each jurisdiction in which the character of the
properties owned or leased by it or the nature of its businesses
makes such qualification necessary, except where the failure to
so qualify or be in good standing would not have a material
adverse effect on the business, assets, operations, properties,
condition (financial or otherwise) or prospects of the Company
and its subsidiaries, taken as a whole, or any material adverse
effect on the Company's ability to consummate the transactions
contemplated by, and to execute, deliver and perform its
obligations under, each of the Transaction Documents (a "Material
Adverse Effect").
SECTION 3.02. Securities of the Company. The authorized
Capital Stock of the Company consists of the securities set forth
on Schedule 3.02. Except as set forth in the SEC Reports or
disclosed in Schedule 3.02 or has been issued to the Purchaser,
the Company has no other authorized, issued or outstanding equity
securities or securities containing any equity features, or any
other securities convertible into, exchangeable for or entitling
any person to otherwise acquire any other securities of the
Company containing any equity features. All of the outstanding
shares of Capital Stock of the Company have been duly and validly
authorized and issued, and are fully paid and nonassessable. The
Notes and the Warrants and all of the Conversion Shares have been
duly and validly authorized. When issued against payment
therefor as provided in this Agreement, the Notes and the
Warrants will be validly issued and will constitute valid and
enforceable obligations of the Company, enforceable against the
Company in accordance with their terms (subject to the effects of
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights
generally and general principles of equity). When issued upon
conversion of the Notes and the exercise of the Warrants, the
Conversion Shares will be validly issued, fully paid and
nonassessable, free and clear of all preemptive rights, claims,
liens, charges, encumbrances and security interests of any nature
whatsoever (other than as created by or through the Purchaser).
A sufficient number of shares of Common Stock has been duly
reserved and will remain available for issuance upon conversion
of the Notes and exercise of the Warrants. Except as set forth
in the SEC Reports or as set forth in Schedule 3.02, there are no
outstanding options, warrants, conversion rights, subscription
rights, preemptive rights, rights of first refusal or other
rights or agreements of any nature outstanding to subscribe for
or to purchase any shares of Capital Stock of the Company or any
other securities of the Company of any kind binding on the
Company. Neither the issuance of the Notes or the Warrants nor
the issuance of the Conversion Shares is subject to any
preemptive rights, rights of first refusal or other similar
limitation. Except as otherwise required by law or as set forth
in Schedule 3.02, there are no restrictions upon the voting or
transfer of any shares of the Company's Capital Stock pursuant to
the Company's Certificate of Incorporation, by-laws or other
documents. Except as provided herein or by the Transaction
Documents or as set forth in Schedule 3.02, there are no
agreements or other obligations (contingent or otherwise) that
may require the Company to repurchase or otherwise acquire any
shares of its Capital Stock.
<PAGE>
SECTION 3.03. Authorization; Enforceability. The Company
has the corporate power and authority to execute, deliver and
perform the terms and provisions of each of the Transaction
Documents to be performed by it, and has taken all necessary
corporate action to authorize the execution, delivery and
performance by it of each of the Transaction Documents to be
performed by it and consummate the transactions contemplated by
each of the Transaction Documents to be performed by it. No
other corporate proceedings on the part of the Company are
necessary, and no consent of the shareholders of the Company is
required, for the valid execution and delivery by the Company of
the Transaction Documents and the performance and consummation by
the Company of the transactions contemplated by each of the
Transaction Documents to be performed by the Company. The
Company has duly executed each of the Transaction Documents.
Assuming the due execution of this Agreement and the Registration
Rights Agreement by the Purchaser, this Agreement, the
Registration Rights Agreement, the Notes and the Warrants
constitute the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with each
of its respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at
law).
SECTION 3.04. No Violation; Consents.
(a) The execution, delivery and performance by the Company
of the Transaction Documents to be performed by it and the
consummation of the transactions contemplated thereby to be
performed by the Company do not and will not (i) contravene the
applicable provisions of any law, statute, rule, regulation,
order, writ, injunction, judgment or decree of any court or
Governmental Authority to or by which the Company or any of its
subsidiaries or any of its respective property or assets is
bound, (ii) violate, result in a breach of or constitute (with
due notice or lapse of time or both) a default (which has not
been irrevocably waived (except as set forth in Schedule 3.04) or
consented to) or give rise to an event of acceleration under any
contract, lease, loan or credit agreement, mortgage, security
agreement, trust indenture or other agreement or instrument to
which the Company is a party or by which it or any of its
subsidiaries is bound or to which any of its respective
properties or assets is subject, nor result in the creation or
imposition of any lien, security interest, charge or encumbrance
of any kind upon any of the properties, assets or Capital Stock
of the Company or any of its subsidiaries, or (iii) violate any
provision of the organizational and other governing documents of
the Company or any of its subsidiaries. Schedule 3.04 sets forth
all violations, breaches and defaults that are referred to in the
parenthetical in clause (ii) above that have been irrevocably
waived (except as set forth in Schedule 3.04) or consented to.
(b) No consent, approval, authorization or order of, or
filing or registration with, any court or Governmental Authority
or other Person is required to be obtained or made by the Company
for the execution, delivery and performance of the Transaction
Documents to be performed by it or the consummation by the
Company of any of the transactions contemplated thereby to be
performed by it (other than the registration of the resale of the
Conversion Shares with the SEC and pursuant to any state "blue
sky" laws as contemplated by the Registration Rights
<PAGE>
Agreement and, in the event the Company in its sole discretion determines
to issue shares in excess of the Maximum Share Issuance, other
than any stockholder approval as may be required by the rules
applicable to companies whose common stock is quoted on NASDAQ)
except for those consents or authorizations previously obtained
and those filings previously made.
SECTION 3.05. Securities Act Representations. The Company
has not offered or sold and will not offer or sell any Notes or
Warrants in this offering other than the Notes and Warrant being
acquired by the Purchaser. Assuming the accuracy of the
Purchaser's representations pursuant to Section 4.02 hereof, the
sale of the Notes and the Warrants hereunder is, and the issuance
of the Conversion Shares upon conversion of the Notes and
exercise of the Warrants will be, exempt from the registration
requirements of the Securities Act. Neither the Company, nor any
of its Affiliates, or, to its knowledge, any Person acting on its
or their behalf has engaged in any form of general solicitation
or general advertising (within the meaning of Regulation D under
the Securities Act) in connection with the offer or sale of the
Notes, Warrants or Conversion Shares. Neither the Company, nor
any of its Affiliates, nor to its knowledge, any Person acting on
its or their behalf has, directly or indirectly, made any offers
or sales of any security or solicited any offers to buy any
security other than pursuant to this Agreement, under
circumstances that would require registration under the
Securities Act of the Notes or Warrants to be issued under this
Agreement. The Company is eligible to use Form S-3 under the
Securities Act to file the Registration Statement (as defined in
the Registration Rights Agreement). The Company has not provided
the Purchaser with any material non-public information that,
according to applicable law, rule or regulation, should have been
disclosed publicly by the Company prior to engaging in the
transaction contemplated by the Transaction Documents but that
has not been so disclosed.
SECTION 3.06. Solvency; No Default. (a) The Company is,
and upon giving effect to the transactions contemplated hereby to
be performed by it as of the First Closing or the Second Closing,
as applicable, will be, Solvent (as defined below). "Solvent"
means that, as of the date of determination, (i) the then fair
saleable value of the assets of the Company (on a consolidated
basis) exceeds the then total amount (on a consolidated basis) of
its debts and other liabilities, (including any guarantees and
other contingent, subordinated, unmatured or unliquidated
liabilities whether or not reduced to judgment, disputed or
undisputed, secured or unsecured), (ii) the Company has
sufficient funds and cash flow to pay its liability on its
existing debts as they become absolute and matured, (iii) final
judgments against the Company in pending or threatened actions
for money damages will not be rendered at a time when, or in an
amount such that, the Company will be unable to satisfy any such
judgments promptly in accordance with their terms (taking into
account (a) the maximum reasonable amount of such judgments in
any such actions (other than amounts that would be remote), (b)
the earliest reasonable time at which such judgments would be
rendered and (c) any reasonably expected insurance recovery with
respect thereto), and (iv) the Company does not have unreasonably
small capital with which to engage in its present business.
(b) The Company is not, and immediately after the
consummation of the transactions contemplated hereby to be
performed by the Company will not be, in default (which has not
otherwise been irrevocably waived (except as set forth in
Schedule 3.04) or consented to) under or in violation (which has
not otherwise been irrevocably waived (except as set forth in
Schedule
<PAGE>
3.04) or consented to) of (whether upon the passage of
time, the giving of notice or both) its organizational and other
governing documents, or any provision of any security issued by
the Company, or of any agreement, instrument or other undertaking
to which the Company is a party or by which it or any of its
property or assets is bound, or the applicable provisions of any
law, statute, rule, regulation, order, writ, injunction, judgment
or decree of any court or Governmental Authority to or by which
the Company or any of its property or assets is bound, which
default or violation, either individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
SECTION 3.07. No Brokers. No broker, finder, agent or
similar intermediary is entitled to any broker's, finder's,
placement or similar fee or other commission in connection with
the transactions contemplated hereby based on any agreement,
arrangement or understanding with the Company; provided, however,
that the Company has agreed to issue to a third party individual
for assisting in facilitating the transactions contemplated
hereby warrants exercisable for up to 100,000 shares of Common
Stock, which warrants (the "Individual Warrants") shall expire no
later than three (3) years after the date of issuance and shall
have an exercise price (subject to customary anti-dilution
protections) of not less than $2.40 per share.
SECTION 3.08. SEC Reports; Financial Condition; No Adverse
Changes. (a) The audited consolidated financial statements of
the Company and the related notes thereto as at December 31, 1999
reported on by Rothstein & Kass, LLP, independent accountants,
copies of which have heretofore been furnished to the Purchaser,
present fairly the financial condition, results of operations and
cash flows of the Company (on a consolidated basis) at such date
and for the periods set forth therein. The unaudited
consolidated balance sheets, consolidated statements of
operations and consolidated statements of cash flows at and for
the period ended March 31, 2000 (or such more recent period as
are included in financial statements contained in the SEC
Reports) (such audited and unaudited consolidated financial
statements, collectively, the "Financial Statements"), copies of
which have heretofore been furnished to the Purchaser and are
publicly available, present fairly the financial condition,
results of operations and cash flows of the Company (on a
consolidated basis) at such date and for the periods set forth
therein, subject to normal year-end adjustments with respect to
the March 31, 2000 financial statements (or such more recent
financial statements as are included in the SEC Reports). The
Financial Statements, including the related schedules and notes
thereto (if any), have been prepared in accordance with generally
accepted accounting principles as set forth in the opinions and
pronouncements of the Accounting Principles Board of American
Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board as in
effect on the date of filing of such documents with the
Commission, applied on a consistent basis (except for changes
concurred in by the Company's independent public accountants)
unless otherwise expressly stated therein. Except as disclosed
in the SEC Reports, during the period from January 1, 2000 to and
including the date hereof, there has been no sale, transfer or
other disposition by the Company of any material part of the
business, property or securities of the Company and no purchase
or other acquisition of any business, property or securities by
the Company material in relation to the financial condition of
the Company.
<PAGE>
(b) Except as are fully reflected or reserved against in
the Financial Statements and the notes thereto, there are no
liabilities or obligations with respect to the Company or any of
its subsidiaries of any nature whatsoever (whether absolute,
accrued, contingent or otherwise and whether or not due) that,
either individually or in the aggregate, after taking into
account (a) the maximum reasonable amount of any liability that
may arise on account of any litigation or any other contingent
liability or obligation (other than amounts that would be
remote), (b) the earliest reasonable time at which any such
liability or obligation may become due and (c) any reasonably
expected insurance recovery with respect thereto, could
reasonably be expected to have a Material Adverse Effect.
(c) Since December 31, 1999, except as set forth in the SEC
Reports, there has been no development or event, nor any
prospective development or event known to the Company or any of
its subsidiaries, or any litigation, proceeding or other action
seeking an injunction or other restraining order, damages or
other relief from a court or administrative agency of competent
jurisdiction pending, threatened or, to the knowledge of the
Company, contemplated, or any action of any Governmental
Authority, that has had or could reasonably be expected to have a
Material Adverse Effect.
SECTION 3.09. Use of Proceeds; Federal Regulations. No part
of the net proceeds from the sale of the Notes and the Warrants
will be used in a manner that would violate the provisions of
Regulation T, U or X of the Board of Governors of the Federal
Reserve System. The Company will not use such proceeds other
than for or in connection with the acquisition and development of
(a) an off-shore gaming and entertainment enterprise, (b) truck
stops in Louisiana and/or (c) other gaming-related business or
operation.
SECTION 3.10. Subsidiaries. As of the date hereof, the
Company has no subsidiaries other than those listed on Exhibit 21
of the Company's Annual Report on Form 10-K for the year ended
December 31, 1999 or as otherwise disclosed in SEC Reports filed
subsequent to December 31, 1999, other than (a) a newly formed
subsidiary known as Alpha Casino Management, Inc. and (b) Alpha
Florida Entertainment LLC, a recently formed Florida limited
liability company.
SECTION 3.11. Year 2000 Compliance. The Company and its
subsidiaries are Year 2000 Compliant. To the knowledge of the
Company each of the suppliers, vendors and customers material to
the operations of the Company and its subsidiaries is Year 2000
Compliant.
SECTION 3.12 No Integrated Offering. Neither the Company,
nor any of its Affiliates, nor to its knowledge any Person acting
on its or their behalf, has, directly or indirectly, made any
offers or sales of any security or solicited any offers to buy
any security under circumstances that would require registration
under the Securities Act of the offer and sale of the Notes and
the Warrants.
SECTION 3.13 No Litigation. No litigation or claim
(including those for unpaid taxes), or environmental proceeding
against the Company or any of its subsidiaries is pending,
threatened or, to the Company's best knowledge, contemplated
that, if determined adversely, would (after taking
<PAGE>
into consideration any reasonably expected insurance recovery with
respect thereto), have a Material Adverse Effect on the Company.
SECTION 3.14. Environmental Matters. The Company and each
of its subsidiaries is in compliance in all material respects
with all applicable state and federal environmental laws, and no
event or condition has occurred that may interfere in any
material respect with the compliance by the Company or any of its
subsidiaries with any environmental law or that may give rise to
any liability under any environmental law that, individually or
in the aggregate, would have a Material Adverse Effect.
SECTION 3.15. Intellectual Property. The Company (and/or
its subsidiaries) owns or has licenses to use certain patents,
copyrights and trademarks ("intellectual property") associated
with its business. The Company and its subsidiaries have all
intellectual property rights that are needed to conduct the
business of the Company and its subsidiaries as it is now being
conducted or as proposed to be conducted as disclosed in the SEC
Reports. The Company has no reason to believe that the
intellectual property rights that it (and/or its subsidiaries)
owns are invalid or unenforceable or that the use of such
intellectual property by the Company (and/or its subsidiaries')
infringes upon or conflicts with any right of any third party,
and neither the Company nor any of its subsidiaries has received
notice of any such infringement or conflict. The Company has no
knowledge of any infringement of its (and/or its subsidiaries)
intellectual property by any third party.
SECTION 3.16 Insurance. The Company and each of its
subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts
as management of the Company believes to be prudent and customary
in the businesses in which the Company and its subsidiaries are
engaged. The Company has no reason to believe that it and its
subsidiaries will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue
its business without a significant increase in cost.
SECTION 3.17. Disclosure. The representations and
warranties of the Company in this Agreement and the statements
contained in the SEC Reports and the schedules, certificates and
exhibits furnished to the Purchaser by or on behalf of the
Company in connection herewith do not contain any untrue
statement of a material fact and do not omit to state any
material fact necessary to make the statements herein or therein
not misleading. The SEC Reports contain all material information
concerning the Company required to be set forth therein, and no
event or circumstance has occurred or exists since December 31,
1999, that would require the Company to disclose such event or
circumstance in order to make the statements in the SEC Reports
not misleading as of the date of the First Closing or, as
applicable, the Second Closing, but that has not been so
disclosed. The Company hereby acknowledges that the Purchaser is
and will be relying on the SEC Reports and the Company's
representations, warranties and covenants contained herein in
making an investment decision with respect to the Notes and the
Warrants and will be relying thereon (together with future
reports filed with the Commission) in connection with any
transfer of the Notes, the Warrants and the Conversion Shares or
any acquisition of Conversion Shares upon the conversion of the
Notes or exercise of the Warrants.
<PAGE>
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER
The Purchaser hereby acknowledges, represents, warrants and
covenants to the Company as of the date hereof in connection with
the First Closing and as of the date of the Second Closing in
connection with the Second Closing as follows:
SECTION 4.01. Authorization; Enforceability; No Violations.
(a) The Purchaser is a bank, duly organized, validly
existing and in good standing under the laws of France and has
all requisite corporate power and authority to execute, deliver
and perform the terms and provisions of this Agreement and the
Registration Rights Agreement and has taken all necessary
corporate action to authorize the execution, delivery and
performance by it of this Agreement and the Registration Rights
Agreement and to consummate the transactions contemplated hereby
and thereby to be performed by it.
(b) The execution, delivery and performance by the
Purchaser of this Agreement and the consummation by the Purchaser
of the transactions contemplated hereby and thereby to be
performed by it do not and will not violate any provision of (i)
the Purchaser's organizational documents or (ii) any law,
statute, rule, regulation, order, writ, injunction, judgment or
decree to which the Purchaser is subject. The Purchaser has duly
executed and delivered this Agreement and has executed and
delivered, or concurrently herewith is executing and delivering,
the Registration Rights Agreement. Assuming the due execution
hereof and thereof by the Company, each of this Agreement and the
Registration Rights Agreement constitutes the legal, valid and
binding obligation of the Purchaser, enforceable against the
Purchaser in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law).
SECTION 4.02. Securities Act Representations; Legends.
(a) The Purchaser understands that: (i) the offering and
sale of the Notes and the Warrants to be issued and sold
hereunder is intended to be exempt from the registration
requirements of the Securities Act; (ii) neither the Notes, the
Warrants nor the Conversion Shares have been registered under the
Securities Act or any other applicable securities laws and such
securities may be resold only if registered under the Securities
Act and any other applicable securities laws or if an exemption
from such registration requirements is available; and (iii) the
Company is required to register any resale of the Notes, the
Warrants or the Conversion Shares under the Securities Act and
any other applicable securities laws only to the extent provided
in the Registration Rights Agreement.
<PAGE>
(b) The Notes and the Warrants to be acquired by the
Purchaser pursuant to this Agreement are being acquired for its
own account, for investment purposes, and not with a view to, or
for sale in connection with, any distribution thereof (other than
the resale of Conversion Shares pursuant to an effective
registration statement as contemplated by the Registration Rights
Agreement) or of Conversion Shares issuable upon conversion of
the Notes or the exercise of the Warrants in violation of the
Securities Act or any other securities laws that may be
applicable.
(c) The Purchaser is not an affiliate (as such term is
defined in the Securities Act) of the Company.
(d) The Purchaser is not a U.S. Person and, at the time the
buy order for the Notes and the Warrants being purchased
hereunder was originated, the Purchaser was outside of the United
States.
(e) The Purchaser (i) has sufficient knowledge and
experience in financial and business matters so as to be capable
of evaluating the merits and risks of its investment in the Notes
and the Warrants and is capable of bearing the economic risks of
such investment, including a complete loss of its investment in
the Notes and the Warrants; (ii) believes that its investment in
the Notes and the Warrants is suitable for it based upon its
objectives and financial needs, and the Purchaser has adequate
means for providing for its current financial needs and business
contingencies and has no present need for liquidity of investment
with respect to the Notes and the Warrants; (iii) has no present
plan, intention or understanding and has made no arrangement to
sell the Notes, the Warrants or the Conversion Shares at any
predetermined time or for any predetermined price; (iv) has not
purchased, sold or entered into any put option, short position or
similar arrangement with respect to the Common Stock, and will
not, for so long as it owns any Notes, Warrants or Conversion
Shares, purchase, sell or enter into any such put option, short
position or similar arrangement in any manner that violates the
provisions of the Securities Act or the Exchange Act.
(f) No oral or written statements or representations have
been made to the Purchaser by or on behalf of the Company in
connection with the offering and sale of the Notes and the
Warrants hereunder other than those set forth in the SEC Reports,
or as set forth herein or in the other Transaction Documents, and
the Purchaser is not subscribing for the Notes and the Warrants
as a result of, or in response to, any advertisement, article,
notice or other communication published in any newspaper,
magazine or similar media or broadcast over television or radio,
or presented at any seminar or meeting.
(g) The Purchaser acknowledges that the Securities Act
restricts the transferability of securities, such as the Notes,
the Warrants and the Conversion Shares, issued in reliance upon
the exemption from the registration requirements of the
Securities Act provided by Section 4(2) thereunder, and that,
subject to Section 5.02 hereof, the certificates representing the
Notes, the Warrants and the Conversion Shares will bear a legend
in substantially the following form, by which the Purchaser and
each subsequent holder of such securities will be bound:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (AND, AS OF THE
DATE OF ORIGINAL ISSUANCE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE,
<PAGE>
ANY UNDERLYING SECURITIES) HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAWS AND
HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH
SECURITIES LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE
OR ANY SECURITIES ISSUABLE UPON THE CONVERSION HEREOF MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED OTHER THAN (A) TO
ALPHA HOSPITALITY CORPORATION (THE "COMPANY") OR ANY SUBSIDIARY
THEREOF, (B) PURSUANT TO RULE 144 UNDER THE SECURITIES ACT, (C)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT
TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR (E) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT. THE
HOLDER OF THIS CERTIFICATE AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITY OR ANY SECURITY ISSUED UPON
CONVERSION HEREOF IS TRANSFERRED (UNLESS SUCH SECURITY IS
TRANSFERRED PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY PROPOSED TRANSFER PURSUANT TO
CLAUSES (B), (C) OR (D) ABOVE, THE COMPANY MAY REQUIRE THAT THE
TRANSFEROR FURNISH IT WITH AN OPINION OF COUNSEL CONFIRMING THAT
SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION" AND "UNITED STATES" HAVE THE RESPECTIVE MEANINGS
ASSIGNED TO THEM IN REGULATION S UNDER THE SECURITIES ACT.
(h) The Purchaser acknowledges that as the Common Stock is
currently quoted on a U.S. automated interdealer quotation
system, Rule 144A under the Securities Act may not be available
with respect to resales of the Notes, the Warrants or the
Conversion Shares.
SECTION 4.03. No Brokers. No broker, finder, agent or
similar intermediary is entitled to any broker's, finder's,
placement or similar fee or other commission in connection with
the transactions contemplated hereby based on any agreement,
arrangement or understanding with the Purchaser.
SECTION 4.04. No Influence on Business. The Purchaser
(whether in its capacity as holder of the Notes, the Warrants
and/or the Conversion Shares or otherwise) covenants and agrees
with the Company that it will not: (a) in any manner exercise or
attempt to exercise a controlling influence over the management
or policies of the Company or attempt to influence the business
activities or decisions or the Company; (b) propose a director or
slate of directors to serve on the board of directors of the
Company; (c) have or seek to have a representative of the
Purchaser be appointed to serve as a director of the Company or
participate as an observer at meetings of the board of directors
(or committees thereof) or have or seek to have any employee or
representative of the Purchaser serve as an officer, agent or
employee of the Company; (d) attempt to influence the
<PAGE>
dividend policies or practices of the Company; (e) solicit or participate
in soliciting proxies with respect to any matter presented to the
shareholders of the Company; (f) dispose or threaten to dispose
of the Notes, the Warrants or the Conversion Shares to any third
party in any manner as a condition to specific action or non-
action by the Company; or (g) enter into any joint venture,
enterprise or undertaking of any kind with the Company.
SECTION 4.05. Limitations on Resales. The Purchaser
covenants and agrees that it (together with its Affiliates) will
not transfer the Notes or the Warrants to any Person (together
with such Person's Affiliates), other than the Company or
Affiliates of the Purchaser, in a transaction or series of
transactions, in an aggregate amount in excess of such amount as
would be convertible or exercisable at the date of transfer into
in excess of 2% of the issued and outstanding shares of Common
Stock of the Company (based upon, in the case of the Notes, the
applicable Conversion Price (as defined in the Notes) and number
of shares of Common Stock of the Company issued and outstanding
on the applicable date of transfer and without giving effect to
any limitations on conversion or exercise set forth in the Notes
and the Warrants). The Purchaser further covenants and agrees
that it will not knowingly transfer to any Person (together with
such Person's Affiliates), other than the Company or Affiliates
of the Purchaser, in a transaction or series of transactions,
Conversion Shares in an aggregate amount in excess of 2% of the
issued and outstanding shares of Common Stock of the Company
(based upon the number of shares of Common Stock of the Company
issued and outstanding on the applicable date of transfer); in
furtherance thereof, the Purchaser covenants and agrees that it
shall not during any five (5) consecutive trading days transfer
Conversion Shares in secondary market transactions in which the
identity of the acquiror is not known to the Purchaser in an
amount in excess of 2% of the issued and outstanding shares of
Common Stock of the Company (based upon the number of shares of
Common Stock of the Company issued and outstanding on the
applicable date of transfer). The Purchaser covenants and agrees
that the foregoing transfers to third parties shall be made in
bona fide, arms-length transactions and that upon any such
transfer, it will not retain the power to control the disposition
of the securities transferred or, in the case of Conversion
Shares, to direct the voting with respect thereto.
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.01. Exemption from Registration; Limitation on
Issuance of Securities.
(a) The Company will not make any offer to sell, solicit
any offer to buy, agree to sell or sell any security or right to
acquire any security, except at such time and in such manner so
as not to cause the loss of any of the exemptions for the offer
and sale of the Notes or exercise of the Warrants hereunder and
for the issuance of the Conversion Shares upon conversion of the
Notes or exercise of the Warrants from the registration
requirements under the Securities Act or under the securities or
"blue sky" laws of any jurisdiction in which such offer, sale or
issuance is made. Without limiting the generality of the
foregoing, the Company will not make any offer to sell, solicit
any offer to buy, agree to sell or sell any securities similar in
tenor to the Notes and the Warrants or right to acquire any
securities similar in tenor to the Notes and the Warrants during
<PAGE>
the period commencing on the date of the First Closing and ending
thirty (30) days after the date of effectiveness of the
Registration Statement (preferred stock issued in accordance with
subsection (b) below and which is otherwise in compliance with
the first sentence of this subsection (a) shall not be deemed to
be similar in tenor to the Notes and the Warrants).
(b) In addition to the foregoing limitation on the issuance
of securities, for a period commencing on the date of the First
Closing and ending thirty (30) days after the date of
effectiveness of the Registration Statement, (i) the Company
shall not issue any securities convertible into shares of Common
Stock unless the conversion price provided therefor represents a
premium of at least 20% to the market price of the Company's
Common Stock on the date of issuance of such convertible
security; provided, however, that (A) the Company may issue up to
$3,000,000 aggregate face amount of Parallel Preferred Stock (as
defined in the Certificate of Designations Setting Forth the
Preferences, Rights and Limitations of Series D Preferred Stock
of Alpha Hospitality Corporation (the "Certificate of
Designations") and any amount of Senior Preferred Stock (as
defined in the Certificate of Designations), which Parallel
Preferred Stock and Senior Preferred Stock may provide for a
conversion price at less than a 20% premium to the market price
of the Company's Common Stock on the date of issuance of such
respective Parallel Preferred Stock and Senior Preferred Stock
and (B) the Company may issue up to $1,750,000 aggregate stated
amount of preferred stock in partial consideration for the
acquisition of the business and assets of up to two truck stop
operations located in Louisiana, which preferred stock may
provide for a conversion price at less than a 20% premium to the
market price of the Company's Common Stock on the date of
issuance of such preferred stock, (ii) the Company shall not
issue (except upon the exercise, exchange or conversion of any
security issued hereunder or prior to the date of the First
Closing exercisable or exchangeable for, or convertible into, any
shares of Common Stock or the exercise of stock options granted
under any of the Company's stock option plans in effect as of the
date of this Agreement) any shares of Common Stock at a discount
of more than (x) 5% in the case of a transaction under the
Securities Act and (y) 25% in the case of a private placement,
from the closing bid price of the Common Stock on the trading day
immediately preceding date of issuance and (iii) neither the
Company nor any affiliate shall incur any indebtedness for
borrowed money or grant any security interest or lien in or on
any of its assets; provided, however, that (A) the Company or any
affiliate may incur indebtedness for borrowed money to acquire
assets (including pursuant to any equipment, machinery or other
leasing transaction or purchase money mortgage), provided that
such indebtedness is non-recourse to the Company and such
indebtedness may be secured by, and only by, such acquired assets
(provided that, in addition to the foregoing, Casino Ventures LLC
may incur indebtedness (in an aggregate principal amount not to
exceed $4,000,000) for borrowed money and may pledge or lien any
of its assets as long as such indebtedness is non-recourse to the
Company), (B) the Company may guarantee up to $3,000,000
principal amount (plus accrued and unpaid interest) of
indebtedness assumed by one or more affiliates in connection with
the acquisition of the business and assets of up to two truck
stop operations located in Louisiana and the affiliate(s) of the
Company making such acquisition may grant a lien or security
interest in its or their assets to secure any financing related
to such acquisition (provided such financing is not, except with
respect to the aforesaid $3,000,000 principal amount (plus
accrued and unpaid interest) recourse to the Company), (C) the
Company or any affiliate of the Company may incur indebtedness
for borrowed money and may pledge or lien any of its assets in
connection with the financing of
<PAGE>
the development of the Company's
or any affiliate's interest in the proposed casino and related
projects and operations to be located in the Monticello, New York
region. Notwithstanding the foregoing, the Company shall not be
restricted at any time from (i) issuing warrants or options
exercisable for shares of Common Stock (pursuant to an employee
stock option plan or other similar compensation plan in effect on
the date of this Agreement or subsequently adopted by the
shareholders of the Company, (ii) issuing Common Stock to Stanley
Tollman in satisfaction of accrued compensation pursuant to the
terms disclosed in the SEC Reports, (iii) issuing shares of
Common Stock upon the exercise of any stock options granted under
or pursuant to an employee stock option plan or other similar
compensation plan in effect as of the date or this Agreement,
(iv) issuing shares of common stock in lieu of cash dividends on
any shares of preferred stock of the Company or (v) issuing the
Individual Warrants or shares of Common Stock upon exercise of
the Individual Warrants.
SECTION 5.02 Transfer Restrictions; Delivery of Conversion
Shares. (a) The Purchaser acknowledges that any proposed offer,
sale, pledge or other transfer of Notes, Warrants or Conversion
Shares prior to the date that is two (2) years from the date as
of which such securities were purchased hereunder (or such other
date as may be required pursuant to Rule 144 under the Securities
Act (or similar successor provision) as in effect from time to
time), in the absence of registration under the Securities Act,
is limited. Accordingly, prior to such passage of time or such
registration, the Notes, the Warrants or the Conversion Shares
may be offered, sold, pledged or otherwise transferred only to
(i) the Company, (ii) in an offshore transaction in accordance
with Rule 904 under the Securities Act, (iii) pursuant to any
other exemption from registration provided by the Securities Act,
(iv) pursuant to Rule 144 under the Securities Act or (v)
pursuant to an effective registration statement under the
Securities Act; in the case of any transfer pursuant to clause
(ii), (iii) or (iv), the Company shall be entitled to receive an
opinion of Purchaser's counsel, in form and substance reasonably
satisfactory to the Company, to the effect that registration is
not required in connection with such disposition. Any Notes or
Warrants sold to the Company may not be reissued or resold.
(b) The Company agrees to issue certificates representing
the Notes, Warrants or Conversion Shares without the legend
referenced in Section 4.02(a) above at such time as (i) the
holder thereof is permitted to dispose of such Notes, Warrants or
Conversion Shares pursuant to Rule 144 (k) under the Securities
Act (to the extent applicable), (ii) such Notes, Warrants or
Conversion Shares are sold to a purchaser or purchasers who (in
the opinion of counsel to the seller or such purchaser(s), in
form and substance reasonably satisfactory to the Company) are
able to dispose of such securities publicly without registration
under the Act and such legend is no longer required to be
included on the certificates representing the Notes, Warrants or
Conversion Shares or (iii) such Notes, Warrants or Conversion
Shares are sold pursuant to an effective registration statement
under the Securities Act.
(c) In the alternative to physical delivery of certificates
for Conversion Shares, if delivery of the Conversion Shares
pursuant to any conversion thereunder may be effectuated by
electronic book-entry through The Depositary Trust Company
("DTC"), delivery of Conversion Shares pursuant to such
conversion shall, if requested by the Purchaser (or holder of
Conversion Shares), settle by book-entry transfer through DTC by
the third trading day following the Date of
<PAGE>
Conversion (as
defined in the Notes) or the date of exercise of the Warrants
pursuant to the terms thereof, as appropriate. The parties agree
to coordinate with DTC to accomplish this objective.
SECTION 5.03. Rules 144; Current Information. For so long
as any Notes, Warrants or Conversion Shares are outstanding, the
Company will (i) cause its Common Stock to continue to be
registered under Section 12 of the Exchange Act, file all reports
required to be filed by it under the Securities Act and the
Exchange Act and will take such further actions as the Purchaser
may reasonably request, all to the extent required from time to
time to enable the Purchaser to sell Notes, Warrants and
Conversion Shares without registration under the Securities Act
pursuant to the safe harbors and exemptions provided by Rule 144
under the Securities Act (to the extent applicable), as such Rule
may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission, and (ii) furnish
the Purchaser with all reports, proxy statements and registration
statements that the Company files with the Commission or
distributes to its securityholders pursuant to the Securities Act
and the Exchange Act at the times of such filings and
distributions (unless such documents are available electronically
from the Commission or elsewhere without charge and within a
period reasonably contemporaneous with the filing thereof with
the Commission, in which case such documents need not be provided
to the Purchaser). Upon the request of the Purchaser, the
Company will deliver to the Purchaser a written statement as to
whether it has complied with the foregoing requirements.
SECTION 5.04. Reservation of Conversion Shares. The Company
shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued shares of
Common Stock or its issued shares of Common Stock held in its
treasury, or both, sufficient shares of Common Stock to provide
for the issuance of the Conversion Shares in an amount equal to
the balance of the Maximum Share Issuance (as defined in the
Notes) not then yet issued plus the number of shares issuable
upon exercise of the outstanding Warrants.
SECTION 5.05. Stock Listing. The Company shall endeavor to
have the Conversion Shares in an amount equal to the Maximum
Share Issuance plus the number of shares issuable upon exercise
of the outstanding Warrants approved for quotation or listing,
prior to issuance, upon the Approved Market (as defined in the
Notes) upon which the Common Stock is listed or traded at the
time of issuance of such Conversion Shares.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Press Releases and Disclosure. No party
hereto shall issue any press release or make any other public
disclosure related to this Agreement or any of the transactions
contemplated hereby without the prior written approval of the
other party hereto, except as may be necessary or appropriate in
the opinion of the party seeking to make disclosure to comply
with the requirements of applicable law or stock exchange rules.
If any such press release or public disclosure is so required,
the party making such disclosure shall consult with the other
party prior to making such disclosure, and the parties shall use
all reasonable efforts, acting in good faith, to agree upon a
text for such disclosure that is satisfactory to all parties.
<PAGE>
SECTION 6.02. Expenses. Except as otherwise expressly
provided for herein, the Company will pay all of its and all of
the Purchaser's expenses (including reasonable attorneys' fees
and expenses) in connection with the negotiation of the
Transaction Documents and the performance of due diligence by the
Purchaser in connection with the First Closing (whether the
transactions contemplated hereby are consummated or not) subject
to a maximum of $25,000 and all shall pay additional expenses
(including reasonable attorneys' fees) incurred in connection
with the Second Closing subject to a maximum of $7,500. Such
expenses of the Purchaser shall be payable at the date of the
applicable Closing and may be netted against the purchase price
otherwise then payable by the Purchaser. In addition to the
foregoing, as provided in the Registration Rights Agreement, the
Company will also pay all of its and all of the Purchaser's
expenses (including reasonable attorneys' fees and expenses) in
connection with the review of the Registration Statement
contemplated by the Registration Rights Agreement, the conduct of
due diligence in connection therewith (including the review of
opinions of counsel and comfort letters), and all matters related
thereto; the Company agrees to promptly pay such expenses, as
incurred by the Purchaser, subject to a maximum of $7,500.
SECTION 6.03. Notices. All notices, demands, requests,
consents, approvals or other communications required or permitted
to be given hereunder or that are given with respect to this
Agreement shall be in writing and shall be personally served or
deposited in the mail, registered or certified, return receipt
requested, postage prepaid or delivered by reputable air courier
service with charges prepaid, or transmitted by hand delivery,
telegram, telex or facsimile, addressed as set forth below, or to
such other address as such party shall have specified most
recently by written notice: (i) if to the Company, to: Alpha
Hospitality Corporation, 12 East 49th Street, New York, New York
10017, Attention: Thomas Aro, Secretary, Facsimile No.: (212) 750-
5171, with copies (which shall not constitute notice) to: Parker
Duryee Rosoff & Haft, 529 Fifth Avenue, New York, New York 10017,
Attention: Herbert Kozlov, Esq., Facsimile No.: (212) 972-9487;
and (ii) if to the Purchaser: c/o SG Cowen Securities
Corporation, 1221 Avenue of the Americas, New York, New York
10020, Attention: Guillaume Pollet, Facsimile No.: (212) 278-
5467, with copies (which shall not constitute notice) to: Jones,
Day, Reavis & Pogue, 599 Lexington Avenue, New York, New York
10022, Attention: J. Eric Maki, Esq., Facsimile No. (212) 755-
7306. Notice shall be deemed given on the date of service or
transmission if personally served or transmitted by telegram,
telex or facsimile. Notice otherwise sent as provided herein
shall be deemed given on the third business day following the
date mailed or on the next business day following delivery of
such notice to a reputable air courier service.
SECTION 6.04. Purchaser Agreements Relating to Series D
Preferred Stock.
(A) The Purchaser hereby agrees that the issuance of the
Notes and the Warrants and the shares of Common Stock issuable
upon exercise or conversion thereof (as well as the Individual
Warrants and shares of Common Stock issuable upon the exercise
thereof) pursuant to this Agreement (x) shall be deemed not to
violate any covenants of the Company contained in the Securities
Purchase Agreement, dated as of February 8, 2000, between the
Purchaser and the Company pursuant to which the Company's Series
D Preferred Stock was issued by the Company to the Purchaser or
any provisions of the Certificate of Designations and (y) shall
not result in any
<PAGE>
adjustment to the terms of such Series D
Preferred Stock, including, without limitation, an adjustment to
the conversion prices applicable thereto, and the Purchaser
hereby waives any rights that it would otherwise have with
respect to the foregoing.
(B) The Purchaser and the Company hereby agree that in no
event shall the Purchaser be entitled to receive in the aggregate
upon conversion of the Notes and the Series D Preferred Stock of
the Company, shares of Common Stock in excess of the Maximum
Share Amount (as defined in the Notes), notwithstanding that the
Company may not have otherwise issued shares of Common Stock upon
conversion of the Series D Preferred Stock equal to the Maximum
Share Amount (as defined in the Certificate Designations), and
that to effect the foregoing, the number of shares of Common
Stock constituting the Maximum Share Amount (as defined in the
Certificate of Designations) shall be accordingly adjusted. The
Purchaser agrees that it shall not transfer its shares of the
Company's Series D Preferred Stock to any third party unless the
transferee agrees in writing to the foregoing and that no further
transfer shall be allowed unless such future transferee similarly
agrees in writing to the foregoing.
SECTION 6.05. Entire Agreement. This Agreement (together
with the other Transaction Documents and all other documents
delivered pursuant hereto and thereto) constitutes the entire
agreement of the parties with respect to the subject matter
hereof and supersedes all prior and contemporaneous agreements,
representations, understandings, negotiations and discussions
between the parties, whether oral or written, with respect to the
subject matter hereof.
SECTION 6.06. Amendment and Waiver. This Agreement may not
be amended, modified, supplemented, restated or waived except by
a writing executed by the party against which such amendment,
modification or waiver is sought to been enforced. Waivers may
be made in advance or after the right waived has arisen or the
breach or default waived has occurred. Any waiver may be
conditional. No waiver of any breach of any agreement or
provision herein contained shall be deemed a waiver of any
preceding or succeeding breach thereof nor of any other agreement
or provision herein contained. No waiver or extension of time
for performance of any obligations or acts shall be deemed a
waiver or extension of the time for performance of any other
obligations or acts.
SECTION 6.07. Assignment; No Third Party Beneficiaries.
This Agreement and the rights, duties and obligations hereunder
may not be assigned or delegated by either the Company, on the
one hand, or the Purchaser, on the other hand, without the prior
written consent of the other party hereto; provided that the
Purchaser may assign or delegate its rights, duties and
obligations hereunder to any Affiliate of the Purchaser. Except
as provided in the preceding sentence, any purported assignment
or delegation of rights, duties or obligations hereunder made
without the prior written consent of the other party hereto shall
be void and of no effect. This Agreement and the provisions
hereof shall be binding upon and shall inure to the benefit of
each of the parties and their respective successors and permitted
assigns. This Agreement is not intended to confer any rights or
benefits on any Persons other than as set forth above.
SECTION 6.08. Severability. This Agreement shall be deemed
severable, and the invalidity or unenforceability
<PAGE>
of any term or
provision hereof shall not affect the validity or enforceability
of this Agreement or of any other term or provision hereof.
Furthermore, in lieu of any such invalid or unenforceable term or
provision, the parties hereto intend that there shall be added as
a part of this Agreement a provision as similar in terms to such
invalid or unenforceable provision as may be possible and be
valid and enforceable.
SECTION 6.09. Further Assurances. Each party hereto, upon
the request of any other party hereto, shall do all such further
acts and execute, acknowledge and deliver all such further
instruments and documents as may be necessary or desirable to
carry out the transactions contemplated by this Agreement.
SECTION 6.10. Titles and Headings. Titles, captions and
headings of the sections of this Agreement are for convenience of
reference only and shall not affect the construction of any
provision of this Agreement.
SECTION 6.11. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, INTERPRETED UNDER, AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED WITHIN THE STATE OF NEW YORK
WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
SECTION 6.12. Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed an original, all
of which taken together shall constitute one and the same
instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by the undersigned, thereunto duly
authorized, as of the date first set forth above.
ALPHA HOSPITALITY CORPORATION
By: /s/
Name: Thomas W. Aro
Title: Executive Vice President
SOCIETE GENERALE
By: /s/
Name: Guillaume Pollet
Title: Authorized Signatory
<PAGE>
Schedule 3.01
Subsidiaries
Casino Ventures, LLC, which may be deemed a subsidiary of the
Company, is a Mississippi limited liability company.
Alpha Florida Entertainment LLC, which may be deemed a subsidiary
of the Company, is a Florida limited liability company.
<PAGE>
Schedule 3.02
<TABLE>
<CAPTION>
Capital Stock of the Company as of July 31, 2000
Class Shares Authorized
Shares Issued and
Outstanding
<S> <C> <C>
Common Stock 75,000,000 20,207,422
Series A Preferred 5,000,000* -0-
Series B Preferred 821,496
(conversion ratio-8:1)
Series C Preferred
(conversion ratio-24:1) 135,162
Series D Preferred 4,000 2,750
</TABLE>
Outstanding Options, etc. to purchase shares of Capital Stock of
the Company as of July 31, 2000
847,579 warrants (issued as part of the Company's IPO); an
additional 3,747,750 shares of common stock are issuable upon the
exercise of outstanding options, warrants and similar rights
(including, without limitation, the right granted to Stanley
Tollman to convert up to $2,000,000 of deferred compensation into
shares of Common Stock at $2.00 per share); 6,571,968 and
3,243,888 shares of Common Stock issuable upon conversion of the
Series B Preferred Stock and Series C Preferred Stock,
respectively.
*5,000,000 shares of "blank check" preferred authorized, without
designation as to series.
Restrictions on voting or transfer of shares of the Company's
capital stock
None.
<PAGE>
Schedule 3.04
Violations, Breaches, Defaults for which irrevocable
waivers or consents have been received
None.
<PAGE>
Exhibit 4(c)
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated
as of July 31, 2000, is entered into between Alpha Hospitality
Corporation, a Delaware corporation (the "Company"), and Societe
Generale, a bank organized under the laws of France (the
"Purchaser").
WHEREAS, the Company and the Purchaser have entered into
that certain Securities Purchase Agreement (the "Subscription
Agreement"), dated as of the date hereof, pursuant to which the
Company has agreed to issue and sell to the Purchaser (i) up to
$2,000,000 aggregate principal amount of its 4% Convertible Notes
Due July 31, 2003 (the "Notes"), which Notes, together with, in
certain circumstances, accrued interest thereon, are convertible
into such number of shares (the "Shares") of Common Stock, $.01
par value per share (the "Common Stock"), of the Company as are
specified in the Notes and (ii) warrants (the "Warrants") to
purchase up to 200,000 shares of Common Stock (the "Warrant
Shares"); and
WHEREAS, pursuant to the terms of, and in partial
consideration for, the Purchaser's agreement to enter into the
Subscription Agreement, the Company has agreed to provide the
Purchaser with certain registration rights with respect to the
Conversion Shares (as defined below);
NOW, THEREFORE, in consideration of the foregoing premises,
the representations, warranties, covenants and agreements
contained herein and in the Subscription Agreement and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Capitalized terms used herein
and defined in the Subscription Agreement shall have the same
respective meanings herein as are ascribed to them therein. In
addition, the following terms shall have the meanings ascribed to
them below:
"Purchaser" shall mean the Purchaser referenced in the
preamble, and, unless the context otherwise requires, shall
include the Purchaser for so long as it owns any Registrable
Securities and any assignee or transferee of the Notes, the
Warrants or the Registrable Securities to which the registration
rights conferred by this Agreement have been transferred in
compliance with this Agreement and that is the registered holder
of the Notes, the Warrants or the Registrable Securities, as the
case may be.
"Registrable Securities" means all of the Shares, the
Warrant Shares and any other securities of the Company that are
issued or issuable upon conversion of the Notes or the exercise
of the Warrants (together, the "Conversion Shares") until (i) a
registration statement under the
<PAGE>
Securities Act covering the
offer and sale of the Conversion Shares has been declared
effective by the Commission and the Conversion Shares have been
disposed of pursuant to such effective registration statement,
(ii) the Conversion Shares are sold under circumstances in which
all of the applicable conditions of Rule 144 (or any similar
provision then in force) under the Securities Act ("Rule 144")
are met, (iii) such Conversion Shares have been otherwise
transferred and the Company has delivered a new certificate or
other evidence of ownership for the Conversion Shares not bearing
a restrictive legend or (iv) such time as, in the opinion of
counsel to the Company, which counsel shall be reasonably
acceptable to the Purchaser, such Conversion Shares may be sold
without any time, volume or manner limitation pursuant to Rule
144(k) (or any similar provision then in effect) under the
Securities Act.
"Registration Statement" means the registration statement
filed by the Company pursuant to Section 2.1(a) and any
additional registration statement filed by the Company pursuant
to Section 2.1(b).
"Underwriter" means a securities dealer that purchases any
Registrable Securities as principal in an underwritten offering
and not as part of such dealer=s market-making activities.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1. Registration Requirements. The Company shall
use its best efforts to effect the registration of the
Registrable Securities (including, without limitation, the
execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable blue sky or other
state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act) as would permit or
facilitate the sale or distribution of all the Registrable
Securities in the manner (including manner of sale) and in all
states reasonably requested by the Purchaser. Such best efforts
by the Company shall include the following:
(a) The Company will as expeditiously as possible, and in
no event later than the later to occur of (i) August 31, 2000 and
(ii) five business days subsequent to the Second Closing (as
defined in the Securities Purchase Agreement), if any (the
AFiling Deadline@), prepare and file with the Commission a
registration statement (the "Registration Statement") on Form S-
3 (if use of such form is then available to the Company pursuant
to the rules of the Commission and, if not, on such other form
promulgated by the Commission for which the Company then
qualifies and that counsel for the Company shall deem appropriate
and which form shall be available for the resale of the
Registrable Securities to be registered thereunder in accordance
with the provisions of this Agreement and in accordance with the
intended method of distribution of such Registrable Securities),
and use its commercially reasonable efforts to cause such filed
Registration Statement to become effective by the Effectiveness
Deadline. The "Effectiveness Deadline" shall mean, as
applicable, (i) in the event such Registration Statement is not
subject to review by the Commission, five (5) business days after
the date that the Company is first advised by the Commission,
whether orally or in writing, that such Registration Statement
will not be subject to review by the Commission and (ii) in the
event such Registration Statement shall be subject to review by
the Commission, ninety (90) days from the date of this Agreement;
provided that such
<PAGE>
date shall be extended for such reasonable
additional number of days (not to exceed ninety (90) days) that
the Company (i) delays the timely filing of a report previously
filed under the Exchange Act containing financial statements (or
that the Company requires in order to restate its financial
statements included in a report filed under the Exchange Act) or
(ii) delays the filing or effectiveness of the Registration
Statement in order to amend the disclosure included in the
Registration Statement, as a result of the Company or any
affiliate entering into a transaction (such as a merger or
acquisition or disposition of a business) which transaction is
required to be disclosed in the Registration Statement or which
transaction necessitates the restatement or other modification of
the financial statements contained therein (together "Delaying
Events"). The Company will as expeditiously as possible prepare
and file with the Commission such amendments and supplements to
the Registration Statement and the prospectus used in connection
therewith as may be necessary to keep the Registration Statement
effective for a period of not less than: (i) in the case of a non-
underwritten offering of Registrable Securities, until there
shall no longer be any Registrable Securities or (ii) with
respect to an underwritten offering of Registrable Securities,
ninety (90) days after the commencement of the distribution of
Registrable Securities covered by the Registration Statement (but
not before the expiration of the period referred to in Section
4(3) of the Securities Act and Rule 174 thereunder, if
applicable), and the Company will comply with the provisions of
the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during such
period in accordance with the intended methods of disposition by
the Purchaser as set forth in the Registration Statement.
(b) The number of Registrable Securities covered by the
initial Registration Statement shall equal 3,523,000 shares of
Common Stock of the Company, regardless of whether the Second
Closing shall have occurred and regardless of the principal
amount of Notes (and Warrants) issued pursuant to the Second
Closing, if any; provided that if less than the entire amount of
Warrants contemplated to be issued pursuant to the Securities
Purchase Agreement are issued, such amount of shares being
registered may be reduced to reflect the Warrants not issued. Of
such total number of shares of Common Stock covered by such
Registration Statement, 200,000 shares shall relate to shares of
Common Stock issuable upon exercise of the Warrants and the
balance shall relate to shares of Common Stock issuable upon
conversion of the Notes. In the event that in the future
Registrable Securities shall consist of securities of the Company
other than or in additional to the shares of Common Stock
referenced in the preceding sentence, the Company shall as
expeditiously as possible (and in no event more than twenty (20)
days from the date of the event that results in such change) file
a post-effective amendment to the Registration Statement (or, if
necessary file or cause to be filed a new or additional
Registration Statement) to reflect the registration of the offer
and resale of such additional or other securities and use its
commercially reasonable efforts to cause such post-effective
amendment or new or additional Registration Statement to become
effective within ninety (90) days (or in the event such
Registration Statement is not subject to review by the
Commission, five (5) business days after the date that the
Company is first advised by the Commission, whether orally or in
writing, that such Registration Statement will not be subject to
review by the Commission) from the date of the event that results
in such change. In the event the filing of a new or additional
Registration Statement is required, references herein to the
Registration Statement shall also refer to such new or additional
registration statement (except that for purposes of Section
2.1(a) above, the Filing Deadline shall refer to the
<PAGE>
end of the
twenty (20) day period referenced above and the Effectiveness
Deadline shall refer to the end of the ninety (90) day or shorter
period referenced above).
In the event the Company in its discretion elects, and if
required pursuant to the rules of the principal exchange or
market in which the Common Stock is then trading, receives
approval from its stockholders, to issue Conversion Shares in
excess of the Maximum Share Issuance (as defined in the Note) it
shall promptly file (and in no event more than fifteen (15) days
from the date of receipt of such stockholder approval or
determination to issue Conversion Shares in excess of the Maximum
Share Issuance) an additional Registration Statement to reflect
the registration of the offer and sale of such additional
Conversion Shares and use its commercially reasonable efforts to
cause such new Registration Statement to become effective within
sixty (60) days (or in the event such Registration Statement is
not subject to review by the Commission, five (5) business days
after the date that the Company is first advised by the
Commission, whether orally or in writing, that such Registration
Statement will not be subject to review by the Commission) from
the date of receipt of such stockholder approval or determination
to issue Conversion Shares in excess of the Maximum Share
Issuance. In the event of such a filing of an additional
Registration Statement, references herein to the Registration
Statement shall also refer to such additional Registration
Statement (except that for the purpose of Section 2.1(a) above,
the Filing Deadline shall refer to the date of expiration of the
fifteen (15) day period referenced above and the Effectiveness
Deadline shall refer to the date of expiration of the sixty (60)
day or shorter period referenced above). Such additional
Registration Statement shall cover a number of shares of Common
Stock equal to at least (i) 200% of the number of shares of
Common Stock issuable upon conversion of the Notes outstanding as
of the date of the filing of such Registration Statement (based
on the Conversion Price (as defined in the Note) of the Notes at
the time of filing such Registration Statement) plus (ii) the
number of shares of Common Stock issuable upon the exercise of
the Warrants outstanding as of the date of the filing of such
Registration Statement (in the case of the Warrants, net of
shares of Common Stock available for issuance upon exercise of
the Warrants pursuant to the Registration Statement referenced in
the preceding paragraph) and, in the event such Registration
Statement (and, the Registration Statement referenced in the
preceding paragraph to the extent such Registration Statement
continues to be available for issuances of shares of Common Stock
upon conversion of the Notes and exercise of the Warrants), shall
at any time no longer cover at least 125% of the number of shares
of Common Stock issuable upon conversion of the Notes then
outstanding (based upon the Conversion Price of the Notes as then
in effect or otherwise) and the number of shares of Common Stock
issuable upon the exercise of the Warrants then outstanding, the
Company shall file a further additional Registration Statement
subject to the same conditions as are set forth above in this
paragraph. If a pre-effective amendment to a Registration
Statement contemplated by this paragraph is filed, the number of
shares of Common Stock to be covered by such Registration
Statement shall be increased (but not decreased) to reflect a
decrease, if any, to the Conversion Price of the Notes as of the
date of filing of any such pre-effective amendment.
(c) The Company will, prior to filing the Registration
Statement or prospectus or any amendment or supplement thereto,
furnish to the Purchaser, counsel to the Purchaser, and each
Underwriter, if any, of the Registrable Securities covered by
such Registration Statement copies of such Registration Statement
and prospectus or any amendment or supplement thereto as proposed
<PAGE>
to be filed, together with exhibits thereto, which documents will
be subject to review and approval by the foregoing persons (such
approval not to be unreasonably withheld or delayed), and
thereafter furnish to the Purchaser, its counsel and each
Underwriter, if any, for their review and comment such number of
copies of such Registration Statement, each amendment and
supplement thereto (in each case including all exhibits thereto
and documents incorporated by reference therein), the prospectus
included in such Registration Statement (including each
preliminary prospectus) and such other documents or information
as the Purchaser, its counsel or each Underwriter may reasonably
request in order to facilitate the disposition of the Registrable
Securities.
(d) The Company will use its reasonable efforts to (i)
register or qualify such Registrable Securities under such other
securities or blue sky laws of such jurisdictions in the United
States as the Purchaser may reasonably (in light of its intended
plan of distribution) request and (ii) if applicable, cause such
Registrable Securities to be registered with or approved by such
other governmental agencies or authorities in the United States
as may be necessary by virtue of the business and operations of
the Company and do any and all other acts and things that may be
reasonably necessary or advisable to enable the Purchaser to
consummate the disposition of the Registrable Securities;
provided that the Company will not be required to (A) qualify
generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for the fulfillment of its
obligation under this paragraph (d), (B) subject itself to
taxation in any such jurisdiction or (C) consent or subject
itself to general service of process in any such jurisdiction.
(e) The Company will promptly notify the Purchaser upon the
occurrence of any of the following events in respect of the
Registration Statement or related prospectus in respect of an
offering of Registrable Securities: (i) receipt of any request
for additional information by the Commission or any other federal
or state governmental authority during the period of
effectiveness of the Registration Statement for amendments or
supplements to the Registration Statement or related prospectus;
(ii) the issuance by the Commission or any other federal or state
governmental authority of any stop order suspending the
effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose; (iii) receipt of any
notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; (iv) the
happening of any event that makes any statement made in the
Registration Statement or related prospectus or any document
incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any
changes in the Registration Statement, related prospectus or
documents so that (or the Company otherwise becomes aware of any
statement included in the Registration Statement, related
prospectus or documents that is untrue in any material respect or
that requires the making of any changes in the Registration
Statement, related prospectus or documents so that), in the case
of the Registration Statement, it will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the related
prospectus, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; and (v) the Company's reasonable determination that a
post-effective amendment to the Registration Statement would be
appropriate (in which event the Company will promptly make
<PAGE>
available to the Purchaser any such supplement or amendment to
the Registration Statement and, as applicable, the related
prospectus).
(f) The Company will enter into customary agreements
(including, if applicable, an underwriting agreement in customary
form and that is reasonably satisfactory to the Company) and take
such other actions as are reasonably required in order to
expedite or facilitate the disposition of the Registrable
Securities (the Purchaser may, at its option, require that any or
all of the representations, warranties and covenants of the
Company to or for the benefit of any applicable Underwriter also
be made to and for the benefit of the Purchaser).
(g) The Company will make available to the Purchaser (and
will deliver to the Purchaser=s counsel) and each Underwriter, if
any, subject to restrictions imposed by the United States federal
government or any agency or instrumentality thereof, copies of
all correspondence between the Commission and the Company, its
counsel or auditors and will also make available, subject to
restrictions imposed by the United States federal government or
any agency or instrumentality thereof, for inspection by the
Purchaser, any Underwriter participating in any disposition
pursuant to a Registration Statement and any attorney, accountant
or other professional retained by the Purchaser or such
Underwriter (collectively, the AInspectors@), all financial and
other records, pertinent corporate documents and properties of
the Company (collectively, the ARecords@) as shall be reasonably
necessary to enable them to exercise their due diligence
responsibility, and cause the Company=s officers and employees to
supply all information reasonably requested by any Inspectors in
connection with the Registration Statement. Records that the
Company determines, in good faith, to be confidential and that it
notifies the Inspectors are confidential shall not be disclosed
by the Inspectors unless (i) the disclosure of such Records is
necessary in the reasonable opinion of the Inspectors to avoid or
correct a misstatement or omission in the Registration Statement
or (ii) the disclosure or release of such Records is requested or
required pursuant to oral questions, interrogatories, requests
for information or documents or a subpoena or other order from a
court of competent jurisdiction or other process; provided that
prior to any disclosure or release pursuant to clause (ii), the
Inspectors shall provide the Company with prompt notice of any
such request or requirement so that the Company may seek an
appropriate protective order or waive such Inspectors' obligation
not to disclose such Records; and, provided further, that if
failing the entry of a protective order or the waiver by the
Company permitting the disclosure or release of such Records, the
Inspectors, upon written advice of counsel, are compelled to
disclose such Records, the Inspectors may disclose that portion
of the Records that counsel has advised the Inspectors that the
Inspectors are compelled to disclose. The Company may require,
as a condition to the disclosure to any Inspector of any
confidential information, that such Inspector execute and deliver
to the Company a written agreement, in form and substance
reasonably satisfactory to the Company, pursuant to which such
Inspector agrees to the confidential treatment of such
information as contemplated above. The Purchaser agrees that
information obtained by it as a result of such inspections (not
including any information obtained from a third party who is not
prohibited from providing such information by a contractual,
legal or fiduciary obligation to the Company) shall be deemed
confidential and shall not be used by it as the basis for any
market transactions in the securities of the Company or its
Affiliates unless and until such information is made generally
available to the public. The Purchaser further agrees that it
will, upon learning that disclosure of such Records is sought in
a court of competent jurisdiction,
<PAGE>
give notice to the Company and
allow the Company, at its expense, to undertake appropriate
action to prevent disclosure of the Records deemed confidential.
(h) The Company will furnish to the Purchaser and to each
Underwriter, if any, a signed counterpart, addressed to the
Purchaser and such Underwriter, of (1) an opinion or opinions of
counsel to the Company, and (2) a comfort letter or comfort
letters from the Company=s independent public accountants, each
in customary form and covering such matters of the type
customarily covered by opinions or comfort letters, as the case
may be, as the Purchaser or the managing Underwriter therefor
reasonably requests. The Company agrees that, (x) upon
effectiveness of the Registration Statement and (y) if requested
by the Purchaser, upon the effectiveness of each amendment
thereto subsequent to effectiveness of the Registration
Statement, whether by the filing of a post-effective amendment
thereto or the incorporation by reference of reports subsequently
filed with the Commission, it will cause to be delivered to the
Purchaser (i) if applicable, a comfort letter in customary form
from its independent public accountants and (ii) if applicable,
an opinion of counsel to the Company, covering customary matters,
including the absence of any untrue statement of a material fact
or omission to state any material fact required to be stated
therein or necessary to make the statements contained in the
Registration Statement and in the case of the related prospectus
(as so amended), in light of circumstance in which they were
made, not misleading.
(i) The Company will comply with all applicable rules and
regulations of the Commission, including, without limitation,
compliance with applicable reporting requirements under the
Exchange Act, and will make available to its security holders, as
soon as reasonably practicable, an earning statement covering a
period of twelve (12) months, beginning within three (3) months
after the effective date of the Registration Statement, which
earning statement shall satisfy the provisions of Section 11(a)
of the Securities Act.
(j) The Company will appoint a transfer agent and registrar
for all the Registrable Securities covered by the Registration
Statement not later than the effective date of the Registration
Statement.
(k) The Company shall take all steps necessary to enable
the Holders to avail themselves of the prospectus delivery
mechanism set forth in Rule 153 (or successor thereto) under the
Securities Act, if available.
(l) In connection with an underwritten offering, the
Company will cooperate, to the extent reasonably requested by the
managing Underwriter for the offering or the Purchaser, in
customary efforts to sell the securities under the offering,
including, without limitation, participating in Aroad shows@ on a
schedule as shall be reasonably satisfactory to, and not unduly
burdensome on, the Company; provided that the Company shall not
be obligated to participate in more than one such offering in any
twelve (12) -month period and any such participation by the
Company shall be at the expense of the managing Underwriter or
the Purchaser unless the Company shall also be offering
securities in such underwritten offering.
<PAGE>
The Company may require the Purchaser promptly to furnish in
writing to the Company such information regarding the intended
methods of distribution of the Registrable Securities as the
Company may from time to time reasonably request and such other
information as may be legally required in connection with such
registration, including, without limitation, all such information
as may be requested by the Commission or the NASD or any state
securities commission or similar authority. If the Purchaser
fails to provide such information requested in connection with
such registration within ten (10) business days after receiving
such written request, then the Company may cease pursuit of such
registration until such information is provided.
The Purchaser agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described
in Section 2.1(e) hereof, the Purchaser will forthwith
discontinue disposition of Registrable Securities pursuant to the
Registration Statement until the Purchaser=s receipt of the
copies of the supplemented or amended prospectus contemplated by
Section 2.1(e)(iv) hereof, and, if so directed by the Company,
the Purchaser will deliver to the Company all copies, other than
permanent file copies then in the Purchaser=s possession, of the
most recent prospectus covering the Registrable Securities at the
time of receipt of such notice.
SECTION 2.2. Registration Expenses. In connection with
registration hereunder, the Company shall pay the following
registration expenses incurred in connection therewith (the
ARegistration Expenses@): (i) all registration and filing fees,
(ii) fees and expenses of compliance with securities or blue sky
laws (including reasonable fees and disbursements of a single
firm of counsel in connection with blue sky qualifications of the
Registrable Securities), (iii) printing expenses, (iv) the
Company=s internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing
legal or accounting duties), (v) the fees and expenses incurred
in connection with the listing or quotation of the Registrable
Securities, (vi) fees and disbursements of counsel for the
Company and customary fees and expenses for independent certified
public accountants retained by the Company (including the
expenses of any (A) opinion letters or costs associated with
delivery by counsel to the Company of an opinion letter or
opinion letters or (B) comfort letters or costs associated with
the delivery by independent certified public accountants of a
comfort letter or comfort letters, in each case required by or
requested pursuant to Section 2.1(h) hereof), (vii) the fees and
expenses of any special experts retained by the Company in
connection with such registration and (viii) reasonable fees and
expenses of a single firm of counsel of the Purchaser with
respect to such registration (including without limitation its
review of the Registration Statement and due diligence with
respect thereto and related matters through the period that
registration is required hereunder) as contemplated by the
Subscription Agreement. The Company shall have no obligation to
pay any underwriting fees, discounts or commissions attributable
to the sale of Registrable Securities, or the cost of any special
audit required by the Purchaser, such costs to be borne by the
Purchaser.
ARTICLE III
PAYMENTS BY THE COMPANY
SECTION 3.1 Payments by the Company. In the event the
Registration Statement is not filed by the Filing Deadline or
declared effective by the Effectiveness Deadline (or after the
<PAGE>
Registration Statement has been declared effective by the
Commission, sales of all the Registrable Securities (including
any Registrable Securities required to be registered pursuant to
Section 2.1(b) hereof) cannot be made pursuant to the
Registration Statement (by reason of a stop order, the Company=s
failure to update the Registration Statement, the need to file
and have declared effective a post-effective amendment or any
other reason outside the control of the Purchaser), then the
Company will make payments to the Purchaser in such amounts and
at such times as shall be determined pursuant to this Section 3.1
as partial relief for the damages to the Purchaser by reason of
any such delay in or reduction of its ability to resell the
Registrable Securities (which remedy shall not be exclusive of
any other remedies available at law or in equity), provided that,
in the event of a Delaying Event requires the filing of a post-
effective amendment to the Registration Statement, no payment
shall be required to the extent sales of Registrable Securities
cannot be made pursuant to the Registration Statement for periods
aggregating no more than ninety (90) days in any 365-day period.
The Company shall pay to the Purchaser an amount equal to (i) (A)
.01 times (B) the aggregate principal amount of Notes held by the
Purchaser (including, without limitation, Notes that have been
converted into Registrable Securities then held by the Purchaser
but excluding any Notes as to which the Registrable Securities
received upon conversion thereof have been resold by the
Purchaser) times (ii) the sum of: (A) the number of months
(prorated per day for partial months) following the Filing
Deadline that the Registration Statement is not filed pursuant to
Section 2.1(a) or following the Effectiveness Deadline that the
Registration Statement is not declared effective by the
Commission, as the case may be, plus (B) the number of months
(prorated per day for partial months) following the Effectiveness
Deadline that sales cannot be made pursuant to the Registration
Statement after the Registration Statement has been declared
effective. Such amounts shall be paid in cash or, at the
Purchaser's option, may be received (subject to the Maximum Share
Issuance, the 4.9% Limitation and the 9.9% Limitation) in a
number of shares of Common Stock as determined based upon the
applicable Conversion Price on each date that such payment is
due. Any shares of Common Stock so issued shall constitute
Registrable Securities. If the Purchaser desires to receive the
amounts due hereunder in shares of Common Stock, it shall so
notify the Company in writing at least two (2) business days
prior to the date on which such amounts are payable, and such
shares of Common Stock shall be delivered on the last day upon
which the cash amount would otherwise be due in accordance with
the following sentence. Payments of cash pursuant hereto shall
be made within three (3) business days after the end of the
period that gives rise to such obligation, provided that, if any
such period extends for more than thirty (30) days, payments
shall be made for each such thirty (30) day period within three
(3) business days after the end of such thirty (30) day period.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1. Indemnification by the Company. The Company
agrees to indemnify and hold harmless the Purchaser, its
partners, Affiliates, officers, directors, employees and duly
authorized agents, and each Person or entity, if any, who
controls the Purchaser within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, together with
the partners, Affiliates, officers, directors, employees and duly
authorized agents of such controlling
<PAGE>
Person or entity
(collectively, the "Controlling Persons"), from and against any
loss, claim, damage, liability, reasonable attorneys' fees, costs
or expenses and costs and expenses of investigating and defending
any such claim (collectively, "Damages"), joint or several, and
any action in respect thereof to which the Purchaser, its
partners, Affiliates, officers, directors, employees and duly
authorized agents, and any such Controlling Person may become
subject under the Securities Act or otherwise, insofar as such
Damages (or proceedings in respect thereof) arise out of, or are
based upon, any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement or
prospectus relating to the Registrable Securities or any
preliminary prospectus, or arises out of, or are based upon, any
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein (in the case of any prospectus or preliminary prospectus,
in light of the circumstances in which they were made) not
misleading, except insofar as the same are based upon information
furnished in writing to the Company by the Purchaser or an
Underwriter expressly for use therein, and shall reimburse the
Purchaser, its partners, Affiliates, officers, directors,
employees and duly authorized agents, and each such Controlling
Person for any reasonable legal and other expenses reasonably
incurred by the Purchaser, its partners, Affiliates, officers,
directors, employees and duly authorized agents, or any such
Controlling Person in investigating or defending or preparing to
defend against any such Damages or proceedings as such expenses
are incurred; provided, however, that the Company shall not be
liable to the Purchaser to the extent that any such Damages arise
out of or are based upon an untrue statement or omission made in
any preliminary prospectus if (i) the Purchaser failed to send or
deliver a copy of the final prospectus with or prior to the
delivery of written confirmation of the sale by the Purchaser to
the Person asserting the claim from which such Damages arise, and
(ii) the final prospectus would have corrected such untrue
statement or alleged untrue statement or such omission or alleged
omission; provided further, however, that the Company shall not
be liable in any such case to the extent that any such Damages
arise out of or are based upon an untrue statement or alleged
untrue statement or omission or alleged omission in any
prospectus if (x) such untrue statement or omission or alleged
omission is corrected in an amendment or supplement to such
prospectus and (y) having previously been furnished by or on
behalf of the Company with copies of such prospectus as so
amended or supplemented, the Purchaser thereafter fails to
deliver such prospectus as so amended or supplemented prior to or
concurrently with the sale of a Registrable Security to the
Person asserting the claim from which such Damages arise. The
Company also agrees to indemnify any Underwriters of the
Registrable Securities, their officers and directors and each
Person or entity who controls such Underwriters on customary
terms.
SECTION 4.2. Indemnification by the Purchaser. The
Purchaser agrees to indemnify and hold harmless the Company, its
partners, Affiliates, officers, directors, employees and duly
authorized agents and each Person or entity, if any, who controls
the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, together with the
partners, Affiliates, officers, directors, employees and duly
authorized agents of such controlling Person, to the same extent
as the foregoing indemnity from the Company to the Purchaser, but
only with reference to information related to the Purchaser or
its plan of distribution furnished in writing by the Purchaser or
on the Purchaser's behalf expressly for use in any registration
statement or prospectus relating to the Registrable Securities,
or any amendment or supplement thereto, or any preliminary
prospectus. In case any action or proceeding shall be brought
against the Company or
<PAGE>
its partners, Affiliates, officers,
directors, employees or duly authorized agents or any such
controlling Person or its partners, Affiliates, officers,
directors, employees or duly authorized agents, in respect of
which indemnity may be sought against the Purchaser, the
Purchaser shall have the rights and duties given to the Company,
and the Company or its partners, Affiliates, officers, directors,
employees or duly authorized agents, or such controlling Person,
or its partners, Affiliates, officers, directors, employees or
duly authorized agents, shall have the comparable rights and
duties given to the Purchaser by Section 4.1. The Purchaser also
agrees to indemnify and hold harmless any Underwriters of the
Registrable Securities with reference to the same information as
to which it agrees to indemnify the Company referenced above,
their officers and directors and each Person who controls such
Underwriters on customary terms. The Company shall be entitled
to receive indemnities on customary terms from Underwriters,
selling brokers, dealer managers and similar securities industry
professionals participating in the distribution, to the same
extent as provided above, with respect to information so
furnished in writing by such persons specifically for inclusion
in any prospectus or the Registration Statement.
SECTION 4.3. Conduct of Indemnification Proceedings.
Promptly after receipt by any person or entity in respect of
which indemnity may be sought pursuant to Section 4.1 or 4.2 (an
"Indemnified Party") of notice of any claim or the commencement
of any action, the Indemnified Party shall, if a claim in respect
thereof is to be made against the Person against whom such
indemnity may be sought (an "Indemnifying Party"), notify the
Indemnifying Party in writing of the claim or the commencement of
such action; in the event an Indemnified Party shall fail to give
such notice as provided in this Section 4.3 and the Indemnifying
Party to whom notice was not given was unaware of the proceeding
to which such notice would have related and was materially
prejudiced by the failure to give such notice, the
indemnification provided for in Section 4.1 or 4.2 shall be
reduced to the extent of any actual prejudice resulting from such
failure to so notify the Indemnifying Party; provided, that the
failure to notify the Indemnifying Party shall not relieve it
from any liability that it may have to an Indemnified Party
otherwise than under Section 4.1 or 4.2. If any such claim or
action shall be brought against an Indemnified Party, the
Indemnifying Party shall be entitled to participate therein, and,
to the extent that it wishes, jointly with any other similarly
notified Indemnifying Party, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party. After
notice from the Indemnifying Party to the Indemnified Party of
its election to assume the defense of such claim or action, the
Indemnifying Party shall not be liable to the Indemnified Party
for any legal or other expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof other
than reasonable costs of investigation; provided that the
Indemnified Party shall have the right to employ separate counsel
to represent the Indemnified Party and its controlling persons
who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Indemnified Party
against the Indemnifying Party, but the fees and expenses of such
counsel shall be for the account of such Indemnified Party unless
(i) the Indemnifying Party and the Indemnified Party shall have
mutually agreed to the retention of such counsel or (ii) in the
reasonable judgment of the Company and such Indemnified Party,
representation of both parties by the same counsel would be
inappropriate due to actual or potential conflicts of interest
between them, it being understood, however, that the Indemnifying
Party shall not, in connection with any one such claim or action
or separate but substantially similar or related claims or
actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses
of more than one
<PAGE>
separate firm of attorneys (together with
appropriate local counsel) at any time for all Indemnified
Parties or for fees and expenses that are not reasonable. No
Indemnifying Party shall, without the prior written consent of
the Indemnified Party, effect any settlement of any claim or
pending or threatened proceeding in respect of which the
Indemnified Party is or could have been a party and indemnity
could have been sought hereunder by such Indemnified Party unless
such settlement includes an unconditional release of such
Indemnified Party from all liability arising out of such claim or
proceeding. Whether or not the defense of any claim or action is
assumed by an Indemnifying Party, such Indemnifying Party will
not be subject to any liability for any settlement made without
its consent, which consent will not be unreasonably withheld.
SECTION 4.4. Contribution. If the indemnification provided
for in this Article IV is unavailable to the Indemnified Parties
in respect of any Damages referred to herein, then each
Indemnifying Party, in lieu of indemnifying such Indemnified
Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Damages (i) as between the
Company and the Purchaser, on the one hand, and the Underwriters,
on the other hand, in such proportion as is appropriate to
reflect the relative benefits received by the Company and the
Purchaser, on the one hand, and the Underwriters, on the other
hand, from the offering of the Registrable Securities, or if such
allocation is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits but
also the relative fault of the Company and the Purchaser, on the
one hand, and of the Underwriters, on the other hand, in
connection with the statements or omissions that resulted in such
Damages, as well as any other relevant equitable considerations,
and (ii) as between the Company, on the one hand, and the
Purchaser, on the other hand, in such proportion as is
appropriate to reflect the relative fault of the Company and of
the Purchaser in connection with such statements or omissions, as
well as any other relevant equitable considerations. The
relative benefits received by the Company and the Purchaser, on
the one hand, and the Underwriters, on the other hand, shall be
deemed to be in the same proportion as the total proceeds from
the offering (net of underwriting discounts and commissions but
before deducting expenses) received by the Company and the
Purchaser bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the prospectus. The
relative fault of the Company and the Purchaser, on the one hand,
and of the Underwriters, on the other hand, shall be determined
by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information
supplied by the Company and the Purchaser or by the Underwriters.
The relative fault of the Company, on the one hand, and of the
Purchaser, on the other hand, shall be determined by reference
to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by such
party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement
or omission.
The Company and the Purchaser agree that it would not be
just and equitable if contribution pursuant to this Section 4.4
were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other
method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as
a result of the Damages referred to in the immediately preceding
paragraph shall be deemed to include, subject to the
<PAGE>
limitations set forth above, any legal or other expenses reasonably incurred
by such Indemnified Party in connection with investigating or
defending any such action or claim. Notwithstanding the
provisions of this Section 4.4, no Underwriter shall be required
to contribute any amount in excess of the amount by which the
total price at which the Registrable Securities underwritten by
it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has
otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and the
Purchaser shall in no event be required to contribute any amount
in excess of the amount by which the total price at which the
Registrable Securities of the Purchaser were offered to the
public (less underwriting discounts and commissions) less the
amount paid by the Purchaser to the Company for the Notes and the
Warrants exceeds the amount of any damages that the Purchaser has
otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No
Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such
fraudulent misrepresentation.
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Term. The registration rights provided to
the holders of Registrable Securities hereunder shall terminate
on such date as there shall be no Registrable Securities;
provided, however, that the provisions of Article IV hereof shall
survive any termination of this Agreement.
SECTION 5.2. Rule 144. The Company covenants that it will
file all reports required to be filed by it under the Securities
Act and the Exchange Act and that it will take such further
action as registered holders of Registrable Securities may
reasonably request, all to the extent required from time to time
to enable the Purchaser to sell Registrable Securities without
registration under the Securities Act within the limitation of
the exemptions provided by (a) Rule 144, as such Rule may be
amended from time to time, or (b) any similar rule or regulation
hereafter adopted by the Commission. If at any time the Company
is not required to file such reports, it will, upon the
reasonable request of any registered holder of Registrable
Securities, make publicly available other information so long as
necessary to permit sales pursuant to Rule 144, within the
limitations of the exemption provided thereby. Upon the request
of the Purchaser, the Company will deliver to the Purchaser a
written statement as to whether it has complied with such
requirements.
SECTION 5.3. Restrictions on Sale by the Company and
Others. If, and to the extent, reasonably requested by the
managing Underwriter or Underwriters in the case of an
underwritten public offering, that includes Registrable
Securities as contemplated by Section 2.1, the Company shall use
reasonable commercial efforts to cause its Affiliates to agree
not to effect any public sale or distribution of any securities
similar to those being registered in accordance with Section 2.1
hereof, or any securities convertible into or exchangeable or
exercisable for such securities, during the thirty (30) days
prior to, and during the period beginning on the effective date
of the Registration Statement (except as part of the Registration
Statement) until all of the Registrable
<PAGE>
Securities offered
thereunder have been sold pursuant to such underwritten public
offering, provided, however, that such period shall not exceed
ninety (90) days.
SECTION 5.4. Amendment and Modification. Any provision of
this Agreement may be waived, provided that such waiver is set
forth in a writing executed by the party against whom the
enforcement of such waiver is sought. The provisions of this
Agreement, including the provisions of this sentence, may not be
amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, unless
the Company has obtained the written consent of the registered
holders of a majority of the then outstanding Registrable
Securities (for the purposes of determining whether the consent
of such holders have been obtained, the registered holder of
Notes or Warrants shall be deemed to hold the underlying
Registrable Securities issuable upon conversion or exercise
thereof (notwithstanding any limitation on conversion or
exercise). Notwithstanding the foregoing, the waiver of any
provision hereof with respect to a matter that relates
exclusively to the rights of registered holders of Registrable
Securities whose securities are being resold pursuant to a
Registration Statement and does not directly or indirectly affect
the rights of other holders of Registrable Securities may be
given by holders of a majority of the Registrable Securities
being so resold; provided that the provisions of this sentence
may not be amended, modified or supplemented except in accordance
with the provisions of the immediately preceding sentence. No
course of dealing between or among any Persons having any
interest in this Agreement will be deemed effective to modify,
amend or discharge any part of this Agreement or any rights or
obligations of any Person under or by reason of this Agreement.
SECTION 5.5. Successors and Assigns; Entire Agreement.
This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided, however, that the
benefits and right contemplated hereunder to be provided to any
holder of the Notes, the Warrants or the Registrable Securities
shall be limited to the registered holder thereof. The Purchaser
may assign its rights under this Agreement to any subsequent
holder of the Notes, the Warrants or the Registrable Securities,
provided that the Company shall have the right to require any
such subsequent holder of the Notes, the Warrants or the
Registrable Securities to execute a counterpart of this Agreement
as a condition to such holder's claim to any rights hereunder.
This Agreement, together with the Subscription Agreement, the
Notes and the Warrants sets forth the entire agreement and
understanding between the parties as to the subject matter hereof
and thereof and merges and supersedes all prior discussions,
agreements and understandings (written or oral) of any and every
nature between them with respect to such subject matter.
SECTION 5.6. Separability. In the event that any provision
of this Agreement or the application of any provision hereof is
declared to be illegal, invalid or otherwise unenforceable by a
court of competent jurisdiction, the remainder of this Agreement
shall not be affected except to the extent necessary to delete
such illegal, invalid or unenforceable provision unless that
provision held invalid shall substantially impair the benefits of
the remaining portions of this Agreement.
SECTION 5.7. Notices. All notices, demands, requests,
consents, approvals or other communications required or permitted
to be given hereunder or that are given with respect to
<PAGE>
this Agreement shall be in writing and shall be personally served or
deposited in the mail, registered or certified, return receipt
requested, postage prepaid, or delivered by reputable air courier
service with charges prepaid, or transmitted by hand delivery,
telegram, telex or facsimile, addressed as set forth below, or to
such other address as such party shall have specified most
recently by written notice: (i) if to the Company, to: Alpha
Hospitality Corporation, 12 East 49th Street, New York, New York
10017, Attention: Thomas Aro, Secretary, Facsimile No.: (212) 750-
5171; with copies (which shall not constitute notice) to: Parker
Duryee Rosoff & Haft, 529 Fifth Avenue, New York, New York 10017,
Attention: Herbert Kozlov, Esq., Facsimile No.: (212) 972-9487;
and (ii) if to the Purchaser: Societe Generale, c/o SG Cowen
Securities Corporation, 1221 Avenue of the Americas, New York,
New York 10020, Attention: Guillaume Pollet, Facsimile No.:
(212) 278-5467, with copies (which shall not constitute notice)
to: Jones, Day, Reavis & Pogue, 599 Lexington Avenue, New York,
New York 10022, Attention: J. Eric Maki, Esq., Facsimile No.
(212) 755-7306. Notice shall be deemed given on the date of
service or transmission if personally served or transmitted by
telegram, telex or facsimile. Notice otherwise sent as provided
herein shall be deemed given on the third business day following
the date mailed or on the next business day following delivery of
such notice by a reputable air courier service.
SECTION 5.8. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAW OF
THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAWS THEREOF.
SECTION 5.9. Headings. The headings in this Agreement are
for convenience of reference only and shall not constitute a part
of this Agreement, nor shall they affect their meaning,
construction or effect.
SECTION 5.10. Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed to be an original
instrument, and all of which together shall constitute one and
the same instrument.
SECTION 5.11. Further Assurances. Each party shall
cooperate and take such action as may be reasonably requested by
the other party in order to carry out the provisions and purposes
of this Agreement and the transactions contemplated hereby.
SECTION 5.12. Remedies. In the event of a breach or a
threatened breach by any party to this Agreement of its
obligations under this Agreement, any party injured or to be
injured by such breach will be entitled to specific performance
of its rights under this Agreement or to injunctive relief, in
addition to being entitled to exercise all rights provided in
this Agreement and granted by law. The parties agree that the
provisions of this Agreement shall be specifically enforceable,
it being agreed by the parties that the remedy at law, including
monetary damages, for breach of any such provision will be
inadequate compensation for any loss and that any defense or
objection in any action for specific performance or injunctive
relief that a remedy at law would be adequate is waived.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by the undersigned, thereunto duly
authorized, as of the date first set forth above.
<PAGE>
ALPHA HOSPITALITY CORPORATION
By: /s/
Name: Thomas W. Aro
Title: Executive Vice President
SOCIETE GENERALE
By: /s/
Name: Guillaume Pollet
Title: Authorized Signatory
<PAGE>
EXHIBIT 4(d)
ALPHA HOSPITALITY CORPORATION
4% CONVERTIBLE NOTE DUE JULY 31, 2003
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (AND, AS OF THE
DATE OF ORIGINAL ISSUANCE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE, ANY UNDERLYING SECURITIES) HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAWS AND
HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH
SECURITIES LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE
OR ANY SECURITIES ISSUABLE UPON THE CONVERSION HEREOF MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED OTHER THAN (A) TO
ALPHA HOSPITALITY CORPORATION (THE "COMPANY") OR ANY SUBSIDIARY
THEREOF, (B) PURSUANT TO RULE 144 UNDER THE SECURITIES ACT, (C)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT
TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR (E) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT. THE
HOLDER OF THIS CERTIFICATE AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITY OR ANY SECURITY ISSUED UPON
CONVERSION HEREOF IS TRANSFERRED (UNLESS SUCH SECURITY IS
TRANSFERRED PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY PROPOSED TRANSFER PURSUANT TO
CLAUSES (B), (C) OR (D) ABOVE, THE COMPANY MAY REQUIRE THAT THE
TRANSFEROR FURNISH IT WITH AN OPINION OF COUNSEL CONFIRMING THAT
SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION" AND "UNITED STATES" HAVE THE RESPECTIVE MEANINGS
ASSIGNED TO THEM IN REGULATIONS UNDER THE SECURITIES ACT.
Certificate No. U.S. $__________
FOR VALUE RECEIVED, Alpha Hospitality Corporation (the
"Company"), a corporation duly organized and existing under the
laws of the State of Delaware, hereby promises to pay to
___________, or its registered assigns, the principal sum of
$_________ (or such lesser amount as a result of partial
conversions of this Note as set forth on Schedule I hereto) on
July 31, 2003
<PAGE>
(unless such date is extended as provided on the
reverse hereof), and to pay interest thereon in the manner set
forth on the reverse hereof from July 31, 2000 at the rate of 4%
per annum until the principal hereof is paid or made available
for payment. Reference is hereby made to the further provisions
set forth on the reverse hereof, which provisions shall for all
purposes have the same effect as if set forth in this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed by an officer thereunto duly authorized.
Dated: ALPHA HOSPITALITY CORPORATION
By:_______________________________
Name: Thomas W. Aro
Title: Executive Vice President
<PAGE>
- REVERSE OF NOTE -
ALPHA HOSPITALITY CORPORATION
4% CONVERTIBLE NOTE DUE JULY 31, 2003
1. ISSUANCE. This Note is one of a duly authorized issue of
Notes of the Company designated as its 4% Convertible Notes Due
July 31, 2003 in an aggregate principal amount of up to
$2,000,000.
2. INTEREST. The Company shall pay interest on the principal
amount of this Note at the rate of 4% per annum, computed based
on a 360-day year consisting of twelve 30-day months; provided
that the applicable interest rate will increase to 15% per annum
under certain circumstances as described in the second paragraph
of Section 4(a) below. Interest on this Note will accrue from
July 31, 2000 until the earlier conversion in full of this Note
or the payment in full of the principal amount hereof has been
made or duly provided for in accordance with the provisions
hereof. Subject to the immediately succeeding paragraph,
interest on this Note shall be payable in arrears on the earlier
to occur of (i) the Date of Conversion (as defined in Section 4
below) of all or a portion of this Note into Common Stock (as
defined in Section 4 below) as provided herein (if this Note
shall be converted in part, then interest only with respect to
the portion of this Notes so converted shall be payable at such
time) and (ii) the Maturity Date. The "Maturity Date" shall mean
July 31, 2003; provided, however, that such date shall be
extended by two days for each day (i) in excess of 90 days from
the date of original issuance of this Note that the Registration
Statement (as defined in the Registration Rights Agreement
entered into on the date of original issuance of the Notes
between the Company and the original purchaser of the Notes (as
from time to time amended, supplemented, restated or otherwise
modified, the "Registration Rights Agreement")) is not declared
effective and (ii) subsequent to which the Registration Statement
is declared effective that the Holder is unable to sell Common
Stock pursuant to the Registration Statement. At the option of
the Company, interest may be payable to the holder of this Note
registered on the books of the Company (the "Holder") in the form
of either (i) such coin or currency of the United States of
America as at the time of payment is legal tender for payment of
public and private debts or (ii) provided, and to the extent,
that the Maximum Share Issuance (as defined in Section 4(a)
below) shall not have occurred in respect of this Note, the
number of full shares of Common Stock that the amount of accrued
interest payable would entitle such Holder to acquire based upon
a price per share equal to the Conversion Price (as defined in
Section 4(a) below) determined as if the Conversion Date were the
date on which such interest became payable. The Company shall
notify the Holder in writing within two (2) business days of the
date Notice of Conversion by the Holder is received by the
Company or five (5) business days prior to the Maturity Date, as
applicable, of the form in which the Company elects to pay
accrued interest. In the event the Company fails to timely
provide such notice, payments of interest shall be in the form of
Common Stock.
<PAGE>
In the event that, and for so long as, the interest rate on
the Note is increased to 15% per annum pursuant to Section 4
below, then notwithstanding anything set forth in this Note,
interest shall be payable in cash on a monthly basis, in arrears,
on the last business day of each month.
3. PRINCIPAL. On the Maturity Date, upon surrender of this
Note by the Holder to the Company, the Company shall pay to the
Holder the outstanding principal amount hereof in such coin or
currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts,
together with accrued interest on such outstanding principal
amount as set forth in Section 2 above.
4. CONVERSION.
(a) Conversion Price; Amount; Maximum Share Issuance.
Subject to this Section 4, the Holder of this Note has the right
to convert this Note, in whole or from time to time in part, into
shares of common stock, par value $.01 per share, of the Company
(the "Common Stock"). The price at which the Holder may convert
this Note (or any portion thereof) into shares of Common Stock
(the "Conversion Price") shall be the lesser of (i) $2.40 (the
"Maximum Conversion Price") and (ii) the average of the two
lowest Closing Prices (as defined below) of the Common Stock
during the 30 consecutive trading days immediately preceding (but
excluding) the Date of Conversion (the "Variable Conversion
Price"). The "Closing Price" with respect to the per share price
of Common Stock on any day means, in each case as reported by
Bloomberg, the last reported bid price regular way on Nasdaq
Small Cap Market (or the Nasdaq National Market, the New York
Stock Exchange or the American Stock Exchange in the event any
such market or exchange constitutes the principal market on which
the Common Stock is quoted or listed or admitted to trading)
(such four markets or exchanges, the "Approved Markets") or, if
not quoted or listed or admitted to trading on any such market or
exchange, the closing bid price in the over-the-counter market as
furnished by any New York Stock Exchange member firm that is
selected from time to time by the Company for that purpose. In
lieu of any fractional share of Common Stock to which the Holder
would otherwise be entitled upon conversion of this Note (or
portion thereof), the number of shares of Common Stock issuable
upon conversion of this Note shall be rounded up to the nearest
whole number. In the case of a dispute as to the calculation of
the Conversion Price, the Holder's calculation shall be deemed
conclusive absent manifest error.
Subject to the immediately succeeding paragraph, the maximum
number of shares of Common Stock (the "Maximum Share Issuance")
issuable upon conversion of all or any portion of the aggregate
principal amount of the Notes (including shares of Common Stock
that (x) the Company elects to issue in payment of interest as
provided in Section 2 hereof and (y) the Holder elects to receive
in the form of Common Stock, if any, pursuant to the Registration
Rights Agreement) is 3,323,000 (subject to adjustment for stock
splits, stock dividends, reclassifications or other similar
events); provided, however, that such number shall decrease from
time to time by the number of shares of Common Stock (subject to
adjustment for stock splits, stock dividends, reclassifications
or other similar events) issued by the Company subsequent to July
<PAGE>
31, 2000 upon conversion of the Company's Series D Preferred
Stock. In the event there is more than one Holder of Notes, the
unused portion of the Maximum Share Issuance shall be allocated
on a pro rata basis among the holders of the Notes based upon the
aggregate outstanding principal amount of Notes. As of the date
on which the a holder's allocation of the Maximum Share Issuance
has been issued in respect of such holder's entire outstanding
principal amount of Notes (and, accordingly, such holder is
unable to convert its remaining Notes into shares of Common
Stock), the interest rate payable on the outstanding principal
amount of Notes held by such holder shall increase to 15% per
annum (regardless of whether the allocable Maximum Share Issuance
applicable to such holder's Notes subsequently increases as a
result of conversions by other holders or otherwise). In the
event that the Company in its sole discretion elects to issue
shares of Common Stock in excess of the Maximum Share Issuance
and (i) the Company obtains shareholder approval if required by
the principal exchange or market on which the Common Stock is
then traded and (ii) the Company files and has declared effective
a registration statement covering the resale of shares of Common
Stock in excess of the Maximum Share Issuance (or the Company
files an amendment to a previously filed registration statement
so that such registration statement, as so amended, provides for
the inclusion therein for resale shares of Common Stock in excess
of the Maximum Share Issuance and such registration statement, as
so amended, is declared effective), the interest rate on the
Notes shall as of the effective date of such registration
statement be reset to 4% per annum (or remain at 4% per annum if
the Maximum Share Issuance shall not have occurred) for so long
as the Holder can sell shares of Common Stock received upon
conversion of the Notes without restriction pursuant to such
registration statement.
Except as otherwise provided herein, the Holder shall be
entitled to convert Notes at any time. The last date on which
this Note may be converted is three (3) business days prior to
the Maturity Date.
Notwithstanding any other provision of this Section 4, as of
any date prior to the Maturity Date, the aggregate number of
shares of Common Stock into which this Note, all other Notes and
all other securities convertible into Common Stock held by the
Holder of this Note and its affiliates shall be convertible,
together with the shares of Common Stock then beneficially owned
(as defined in Rule 13d-3 under the Securities Exchange Act of
1934, as amended, the "Exchange Act")) by such Holder and its
affiliates (excluding shares of Common Stock otherwise deemed
beneficially owned as a result of the convertibility of the Notes
held by the Holder or its affiliates), shall not exceed 4.9% of
the total outstanding shares of Common Stock as of such date (the
"4.9% Limitation"). In addition, notwithstanding any other
provision of this Section 4, during any consecutive 61-day period
no holder of Notes (together with its affiliates) may (x) convert
its Notes into a number of shares of Common Stock exceeding 9.9%
of the Company's issued and outstanding shares of Common Stock as
of the first day of such 61-day period or sell shares of Common
Stock (whether acquired upon conversion of the Notes or otherwise
in excess of 9.9% of the Company's issued and outstanding shares
of Common Stock as of the first day of such 61-day period) (the
"9.9% Limitation"). Notwithstanding any other provision of this
Note, the foregoing limitations on conversion may not be waived,
amended or
<PAGE>
modified except to the extent that the 4.9% Limitation
shall not apply as provided in Section 12 and Section 13 hereof.
The Company shall have no obligation to monitor compliance with
the foregoing limitations on conversion.
(b) Mechanics of Conversion. To convert this Note (or a
portion thereof) the Holder must (i) complete and sign a Notice
of Conversion in the form attached hereto as Exhibit A (the
"Notice of Conversion") and deliver the Notice of Conversion to
the Company as herein provided and (ii) prior to the date on
which delivery of Common Stock is required to be made hereunder,
(x) duly endorse and deliver this Note to the Company and (y) pay
any transfer or similar tax with respect to the delivery of this
Note, if required. The Holder shall surrender this Note and the
Notice of Conversion to the Company (with an advance copy by
facsimile of the Notice of Conversion). The date on which Notice
of Conversion is given (the "Date of Conversion") shall be deemed
to be the date of receipt by the Company of the facsimile of the
Notice of Conversion, provided that this Note is received by the
Company within five (5) business days thereafter. The Company
shall not be obligated to cause the transfer agent for the Common
Stock (the "Transfer Agent") to issue certificates evidencing the
shares of Common Stock issuable upon such conversion unless
either this Note has been received by the Company or, if this
Note has been lost, stolen or destroyed, the Holder has executed
and delivered to the Company an agreement satisfactory to the
Company to indemnify the Company from any loss incurred by it in
connection with this Note.
If the Transfer Agent is participating in the Depository
Trust Company ("DTC") Fast Automated Securities Transfer ("FAST")
program, the Company shall cause the Transfer Agent to transmit
electronically the shares of Common Stock issuable to the Holder
upon conversion of this Note by crediting the account of the
Holder's prime broker with DTC through DTC's Deposit Withdrawal
Agent Commission ("DWAC") system, within three (3) business days
after delivery to the Company of this Note by the Holder. In the
event the Holder otherwise elects in writing, however, the
Company shall cause the Transfer Agent to issue and deliver
(within such three (3) business day period) at the address of the
Holder on the books of the Company, as contemplated by the
Securities Purchase Agreement pursuant to which this Note was
originally issued (the "Securities Purchase Agreement") or as
otherwise directed pursuant to the Notice of Conversion, a
certificate or certificates for the number of shares of Common
Stock to which such Holder shall be entitled as aforesaid. In
the event the Company fails to complete such delivery as
aforesaid, it shall be responsible for actual damages incurred by
the Holder as a result thereof. The person or persons entitled
to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder
or holders of such shares of Common Stock on such date.
Notwithstanding that the Holder is required to deliver this Note,
duly endorsed, within five (5) business days after the Date of
Conversion, if this Note is not received by the Company within
ten (10) business days after the Date of Conversion, the Company
may at its option elect, by written notice given to the Holder
within fifteen (15) days after the Date of Conversion, (A) to
treat the Notice of Conversion as null and void or (B) to treat
the Notice of Conversion as binding and require the Holder to
deliver this Note. In the event the Company elects to treat the
Notice of Conversion as binding, the principal amount of this
Note with respect to which such
<PAGE>
Notice of Conversion was given
shall thereafter no longer be deemed outstanding and the Holder
thereof shall not be entitled to any rights attendant thereto,
excepting only the right to receive, upon the delivery to the
Company of this Note, the shares of Common Stock issuable upon
the conversion thereof as contemplated above.
Following conversion of this Note, or a portion thereof, the
principal, together with the interest payable on this Note, or
portion thereof so converted, will be deemed paid in full and
satisfied, and such Note or portion thereof will no longer be
outstanding. In the event this Note is converted in part, the
Company or its Transfer Agent will issue to the Holder a new Note
in a principal amount equal to the portion of this Note not
converted or shall endorse this Note to reflect such conversion.
(c) Reservation of Stock Issuable Upon Conversion. The
Company shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock or shares of
Common Stock held in treasury, or both, solely for the purpose of
effecting the conversion of this Note, such number of shares of
Common Stock as shall from time to time be sufficient to effect
the conversion of the Notes and all other securities of the
Company convertible or exchangeable into Common Stock.
(d) Adjustment to Maximum Conversion Price and Variable
Conversion Price.
(i) If, prior to the conversion of the entire
principal amount of this Note, the number of outstanding shares
of Common Stock is increased by a stock split, stock dividend of
shares of Common Stock or other shares of capital stock,
reclassification or other similar event, the Maximum Conversion
Price, and, if applicable, the Variable Conversion Price
(together, the "Conversion Prices") shall be proportionately
reduced, or if the number of outstanding shares of Common Stock
is decreased by a combination or reclassification of shares or
other similar event, the Conversion Prices shall be
proportionately increased, in each case, such that the Holder of
this Note will have the right to receive upon conversion of this
Note the number of shares of Common Stock (or other shares of
capital stock) of the Company that such Holder would have been
entitled to receive had the Holder converted this Note
immediately prior to such action. The Maximum Share Issuance and
the Minimum Trigger Price (as defined in clause (iv) below) shall
likewise be proportionately adjusted upon any increase in the
number of outstanding shares of Common Stock on account of any
stock split, stock dividend of shares of Common Stock or other
shares of capital stock, reclassification or other similar event
or upon any decrease in number of outstanding shares of Common
Stock on account of any combination or reclassification of shares
or other similar event.
(ii) If, prior to the conversion of the entire
principal amount of this Note, there shall be any merger,
consolidation, exchange of shares, recapitalization,
reorganization or other similar event (a "Conversion
Reclassification Event"), as a result of which shares of Common
Stock of the Company shall be changed into the same or a
different number of shares of the Company or the same or another
class or classes of stock or securities of the Company or another
<PAGE>
entity, then the Holder of this Note (to the extent not
theretofore converted) shall thereafter have the right to receive
upon conversion of this Note, upon the basis and the terms and
conditions specified herein, such shares of stock and/or
securities as may be issued or payable with respect to or in
exchange for the number of shares of Common Stock immediately
theretofore receivable upon the conversion of this Note
(irrespective of the limitations set forth in Section 4(a)) had
such Conversion Reclassification Event not taken place, and in
any such case appropriate provisions shall be made with respect
to the rights and interests of the Holder of this Note such that
the provisions hereof (including, without limitation, provisions
for adjustment of the Conversion Price and of the number of
shares issuable upon conversion of this Note) shall thereafter be
applicable, as nearly as may be practicable in relation to any
shares of stock or securities thereafter deliverable upon the
conversion of this Note. The Company shall not effect any
Conversion Reclassification Event unless the resulting successor
or acquiring entity (if not the Company) assumes by written
instrument the obligation to deliver to the Holder of this Note
such shares of stock and/or securities as the Holder of this Note
is entitled to receive upon conversion in accordance with the
foregoing.
(iii) In addition to the adjustments set forth
above, if the Company distributes to all holders of its Common
Stock any of its assets (including cash) or debt securities or
any rights or warrants to purchase securities other than Common
Stock, then the Conversion Prices shall be adjusted in such a
manner as shall be agreed to by the Company and the Holders of a
majority of the outstanding principal amount of the Notes as
shall fairly preserve the economic rights and benefits of the
Holders as contemplated by this Note. In the event that within
15 days of any such event, the Company and the Holder do not
reach an agreement as to the appropriate adjustment, the Company
shall retain, and pay for, a nationally recognized investment
bank or accounting firm to determine the appropriate adjustment
as soon as possible, but in any event not later than 45 days
after the date of such event.
No adjustment to the Conversion Prices pursuant to any
of the events or circumstances set forth herein shall be made
unless such adjustment shall be in an amount of at least two
cents ($0.02); provided, however, that any adjustment that would
otherwise be required to be made hereunder but for the fact that
it is less than two cents ($0.02) shall be carried forward and
made part of any subsequent adjustment that (a) when aggregated
with prior adjustment(s) that have not been made because it was
(or each of them was) less than two cents ($0.02), shall be in
excess of two cents ($0.02) or (b) is in excess of two cents
($0.02).
(iv) In the event that, at any time after the date of
the issuance of this Note (the "Initial Issuance Date") and this
Note remains outstanding, the Company shall (other than (i) upon
the exercise, exchange or conversion of any securities of the
Company that are exercisable or exchangeable for, or convertible
into, shares of Common Stock and that are outstanding as of the
Initial Issuance Date (including, without limitation, the right
granted to Stanley Tollman to convert deferred compensation into
shares of Common Stock), (ii) upon the exercise of stock options
granted under or pursuant to any stock option plan approved by
shareholders of the Company, (iii) upon the conversion of any of
the Notes (or portion thereof) or any shares of
<PAGE>
preferred stock
issued by the Company prior to the Initial Issuance Date, (iv)
upon the issuance of shares of Common Stock in lieu of cash
dividends on any shares of preferred stock of the Company, (v)
upon the issuance of shares of Common Stock in lieu of interest
on the Notes or, provided that such shares of Common Stock are
issued at a price at least equal to the market value of such
shares at the time of their issuance, other debt instruments of
the Company, or (vi) upon the exercise of the Individual Warrants
(as defined in the Securities Purchase Agreement)) (A) issue
shares of Common Stock without consideration (other than in the
form of a dividend) or at a price per share less than the Closing
Price on the Initial Issuance Date (such Closing Price, the
"Minimum Trigger Price"), (B) issue options, rights or warrants
to subscribe for or purchase Common Stock that provide for (upon
the exercise thereof) the issuance of shares of Common Stock
without consideration or at a price per share, which when added
to the price or other consideration received for such options,
rights or warrants, is less than the Minimum Trigger Price or (C)
issue securities convertible into Common Stock having a
conversion price less than the Minimum Trigger Price, the
Conversion Prices to be in effect after the date of such issuance
shall be adjusted by multiplying the Conversion Prices in effect
immediately prior to the date of any such issuance referenced
above by a fraction, of which the numerator shall be the number
of shares of Common Stock outstanding on the date of such
issuance plus the number of shares of Common Stock that the
aggregate offering price of the total number of shares of Common
Stock so to be issued (or the aggregate issue price of the
convertible securities so to be issued) would purchase at the
Minimum Trigger Price and of which the denominator shall be the
number of shares of Common Stock outstanding on the date of such
issuance plus the number of additional shares of Common Stock to
be issued (or into which the convertible securities so to be
issued are initially convertible). In case the price for such
securities may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be
conclusive. Such adjustment shall be made successively whenever
the date of such issuance is fixed and, in the event that such
options, rights, warrants or convertible securities (or portions
thereof) expire or are otherwise discharged or redeemed without
being exercised or converted, any adjustment in the Conversion
Prices on account of the issuance of the same shall be reversed.
(v) Adjustments to the Maximum Conversion Price
pursuant to this Section 4, subject to the last sentence of
subsection (iv) above, shall be permanent. Adjustment to the
Variable Conversion Price pursuant to this Section 4 shall be
made only to the extent an event requiring adjustment occurs
during the period that the Variable Conversion Price is required
to be calculated to determine the Conversion Price by making
adjustments to the applicable Closing Prices within such period.
(vi) If any adjustment under this Section 4(d) would
create a fractional share of Common Stock or a right to acquire a
fractional share of Common Stock, such fractional share shall be
disregarded and the number of shares of Common Stock issuable
upon conversion shall be the next higher number of shares.
<PAGE>
(e) Adjustments or Additions to Rights Attendant to this
Note. If at any time after the Initial Issuance Date, the
Company shall issue notes that are convertible into Common Stock
at varying prices based upon the market price of the Common Stock
at the time of conversion ("New Convertible Notes"), which new
notes contain terms that the Holder determines are more favorable
than the terms of this Note, the Holder may elect to have all,
but not less than all, of such terms replace the applicable
provisions set forth herein. In the event such election is not
made, the antidilution provisions of Section 4(d) shall apply.
The Company shall advise the Holder of the terms of any New
Convertible Notes within five (5) business days of the issuance
thereof, and the Holder shall have thirty (30) business days
after receipt of such notice to make such election, such election
by the Holder shall be effective immediately upon notice by the
Holder to the Company.
5. RANKING. The Notes constitute senior unsecured indebtedness
of the Company, rank pari passu in right of payment with other
unsubordinated and unsecured indebtedness of the Company and rank
senior in right of payment to all subordinated indebtedness of
the Company.
6. REGISTERED HOLDER. The Company may for all purposes treat
the holder of this Note registered on its books and records as
the Holder, notwithstanding any notice or claim of any other
Person with respect to any interest in this Note.
7. DENOMINATIONS. Notes (and any Note issued in exchange,
upon transfer or upon conversion) may be issued in a minimum
principal amount of $100,000 (or such lesser amount upon a
conversion in part of a Note, provided such lesser amount
represents such Holder's entire holding of Notes).
8. EVENTS OF DEFAULT.
(a) An "Event of Default" under this Note occurs if:
(1) the Company defaults in effecting a conversion of
this Note in accordance with the provisions hereof and such
default continues for a period of 10 days;
(2) the Company defaults in the payment of the
principal of or interest on this Note when due and any such
default continues for a period of 10 days;
(3) the Company fails to comply in any material
respect with any of its agreements in this Note or the provisions
of the Securities Purchase Agreement or the Registration Rights
Agreement (other than those referred to in clauses (1) and (2)
above), and such failure continues for 30 days after the notice
specified below;
(4) indebtedness of the Company or any subsidiary of
the Company that, as of the date of this Agreement or at any
subsequent time, constitutes a "significant subsidiary" as
defined under Securities and Exchange Commission Regulation S-X
and, as of the date of this
<PAGE>
Agreement or at any subsequent time,
taken alone, has a net worth of at least $500,000 (a "Significant
Subsidiary") is not paid within any applicable grace period after
maturity or is accelerated by the holders thereof because of a
default, the total amount of such indebtedness unpaid or
accelerated exceeds $1,000,000 and such default continues for 10
days after the notice specified below;
(5) the Company or any Significant Subsidiary pursuant
to or within the meaning of any federal or state bankruptcy,
insolvency or other law for the relief of debtors ("Bankruptcy
Law"):
(A) commences a voluntary case or proceeding;
(B) consents to the entry of an order
for relief against it in an involuntary case or
proceeding;
(C) consents to the appointment of any
receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law (a
"Custodian") of it or for any substantial part of its
property; or
(D) makes a general assignment for the benefit of
its creditors; or
(E) takes any comparable action under any foreign laws
relating to insolvency;
(6) a court of competent jurisdiction enters an order
or decree under any Bankruptcy Law that:
(A) is for relief against the Company
or any Significant Subsidiary in an involuntary case or
proceeding;
(B) appoints a Custodian of the
Company or any Significant Subsidiary or for any
substantial part of its property; or
(C) orders the winding up or
liquidation of the Company or any Significant
Subsidiary;
or similar relief is granted under any foreign laws and the order
or decree remains unstayed and in effect for 60 days;
(7) the Common Stock is not quoted or listed or
admitted to trading on an Approved Market;
(8) a going private transaction under Rule 13e-3 under
the Exchange Act; or
<PAGE>
(9) any final judgment or decree for the payment of
money in excess of $1,000,000 (to the extent not covered by
insurance) is rendered against the Company or any Significant
Subsidiary and is not discharged and either (A) an enforcement
proceeding has been commenced by any creditor upon such judgment
or decree or (B) there is a period of 60 days following such
judgment during which such judgment or decree is not discharged,
waived or the execution thereof stayed and, in the case of (B),
such default continues for 10 days after the notice specified
below.
The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary
or involuntary or is effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body.
A default under clause (3), (4), (7), (8) or (9) above is
not an Event of Default until the Holder of this Note notifies
the Company of such default and the Company does not cure such
default within the time specified after receipt of such notice.
Such notice must specify the default, demand that it be remedied
and state that such notice is a "Notice of Default."
The Company shall deliver to the Holder of this Note, within
30 days after the occurrence thereof, written notice of any event
that with the giving of notice, the lapse of time or both would
become an Event of Default under clause (3), (4), (7), (8) or (9)
above, its status and what action the Company is taking or
proposes to take with respect thereto.
(b) If an Event of Default (other than an Event of Default
specified in clause (5) or (6) above) occurs and is continuing,
the Holder of this Note may declare the principal of and accrued
interest on this Note to be immediately due and payable, and upon
such declaration an amount equal to 125%, in the case of an Event
of Default specified in clause (1), (2), (3) (to the extent the
Event of Default relates to an agreement of the Company
compliance with which is within the Company's control) or (8), or
100%, in the case of all other Events of Default, of such
principal and 100% of such interest shall be immediately due and
payable as if the Maturity Date had occurred. If an Event of
Default specified in clause (5) or (6) above occurs, the
principal of and interest on this Note shall ipso facto become
and be immediately due and payable without any declaration or
other act on the part of the Holder of this Note.
9. NO AMENDMENT. No provision of this Note may be amended,
altered or modified without the written agreement of the Holder
and the Company.
10. NO VOTING RIGHTS. This Note shall not entitle the Holder
hereof to any of the rights of a stockholder of the Company,
including without limitation, the right to vote, to receive
dividends and other distributions, or to attend any meetings of
stockholders or any other proceedings of the Company.
<PAGE>
11. LOST OR DESTROYED NOTE. If this Note shall be mutilated,
lost, stolen or destroyed, the Company shall execute and deliver,
in exchange and substitution for and upon cancellation of a
mutilated Note, or in lieu of or in substitution for a lost,
stolen or destroyed Note, a new Note for the principal amount of
this Note so mutilated, lost, stolen or destroyed but only upon
receipt of evidence of such loss, theft or destruction of such
Note, and of the ownership thereof, and indemnity, if requested,
all reasonably satisfactory to the Company.
12. CHANGE OF CONTROL. A "Change of Control Transaction" shall
mean, (i) the sale, conveyance or disposition of all or
substantially all of the assets of the Company, (ii) a
consolidation or merger of the Company with or into any other
"Person" (as defined in the Exchange Act) (whether or not the
Company is the surviving Person, but other than a merger or
consolidation whereby the stockholders of the Company immediately
preceding the merger or consolidation continue to own greater
than 50% of the voting power attributable to the capital stock of
the surviving Person in such merger or consolidation that is
normally entitled to vote in the election of directors, managers
or trustees, as applicable) or (iii) any Person or any "group"
(as such term is used in Section 13(d) of the Exchange Act)
becomes the beneficial owner or is deemed to beneficially own (as
described in Rule 13d-3 under the Exchange Act but without regard
to the 60-day exercise period) in excess of 50% of the Company's
voting power of the capital stock of the Company normally
entitled to vote in the election of directors of the Company
(other than (A) any Person or any such group that held such
voting power as of the Initial Issuance Date or (B) any group
that holds such voting power subsequent to the Initial Issuance
Date, provided that the Persons that constitute such group
include the Person or a majority of the members of, and at least
50% of the voting power held by, a group referenced in the
foregoing clause (A)).
Upon the notice or occurrence of, or announcement of the
Company's intent (or a third party's or parties' intent in the
case of Change of Control Transaction of the type set forth in
clause (iii) of the definition of a Change of Control
Transaction) to engage in, a Change of Control Transaction, the
Notes shall be convertible in full notwithstanding any
limitations set forth in Section 4 hereof other than the 9.9%
Limitation; provided that the Holder's ability to convert this
Note shall cease three (3) trading days prior to the consummation
of a Change of Control Transaction of the type set forth in
clauses (i) and (ii) of the definition thereof. In addition,
upon either the notice of, or the announcement of the Company's
intent to engage in, a Change of Control Transaction of the type
set forth in clauses (i) and (ii) of the definition thereof, the
Holder shall have the right, up to and including the third
trading day prior to the date of effectiveness of such Change of
Control Transaction, to (x) elect to convert this Note (subject
to the 9.9% Limitation) into a number of shares equal to 125% of
the amount into which this Note would otherwise be convertible or
(y) cause the Company to redeem this Note at 125% of the sum of
the principal amount thereof plus 100% of accrued interest
thereon (or any combination of clauses (x) and (y)), which
conversion or redemption, in the case of such Change of Control
Transaction, shall be conditioned upon and shall be effective
immediately prior to consummation of such Change of Control
Transaction. If the Holder does not make such an election, the
outstanding principal amount of this Note shall be deemed
automatically converted
<PAGE>
into shares of Common Stock immediately
prior to the consummation of such Change of Control Transaction,
and the Holder shall receive the same consideration that a holder
of Common Stock is entitled to receive in connection with such
Change of Control Transaction as if it held shares of Common
Stock as of such date.
The Company shall promptly mail written notice to the Holder
of either the occurrence of, or the announcement of the Company's
intent to engage in, a Change of Control Transaction (with a copy
sent by facsimile), but in any event such notice (other than, if
applicable, in the case of a Change of Control Transaction of the
type set forth in clause (iii) of the definition of a Change of
Control Transaction) shall not be given less than twenty (20)
days prior to the effective date of such Change of Control
Transaction.
13. REDEMPTION AT THE OPTION OF THE COMPANY. The Company shall
have right at any time, subject to the following sentence, upon
not less than thirty (30) days nor more than forty-five (45) days
prior written notice to the Holders of the Notes, to redeem all
(but not less than all) of the Notes then outstanding, provided
that, unless the Maximum Share Issuance shall have occurred, the
Holders shall have been entitled to sell the Conversion Shares
(as defined in the Registration Rights Agreement) pursuant to the
Registration Statement (as defined in the Registration Rights
Agreement) for a period of at least sixty (60) consecutive
trading days prior to delivery of such notice of redemption and
through the entire thirty (30) day period immediately following
the date the notice of redemption is given and the Holders shall
(notwithstanding the 4.9% Limitation but subject to the 9.9%
Limitation) be entitled to convert the Notes throughout the
entire period subsequent to the giving of notice up to one (1)
business day preceding the date of redemption. In order for the
Company to redeem the Notes: (i) no Event of Default or event
which upon the giving of notice, passage of time or both would
constitute an Event of Default shall have occurred and be
continuing as of each of the date of notice of redemption and the
date of redemption, (ii) neither such notice of redemption nor
the redemption shall constitute an Event of Default or an event
which upon the giving of notice, passage of time or both would
constitute an Event of Default and (iii) as of each of the date
of notice of redemption and the date of redemption, the Company
shall be Solvent (as defined in the Securities Purchase
Agreement) and neither of such notice of redemption nor such
redemption shall result in the Company no longer being Solvent.
Any notice of redemption given by the Company shall be
irrevocable, subject, however, to the conditions set forth in the
immediately preceding sentence. The redemption price payable by
the Company shall be an amount in cash equal to 120% of the
outstanding principal amount of the Notes being redeemed, plus
accrued interest on the Notes through the date of redemption,
which shall be set forth in the notice of redemption.
Notwithstanding anything contained herein to the contrary, the
Company shall not be obligated to make payment with respect to
any portion of any Note with respect to which a notice of
redemption has been given until the later to occur of (1) two (2)
business days after such Note has been delivered and surrendered
for redemption to the Company or (2) the date set forth in the
notice of redemption as the date of redemption.
<PAGE>
To the extent that this Note has been called for redemption,
from and after the date set for redemption thereof (and assuming
the Company shall have available and be prepared to pay the
redemption price therefor) the Holder of this Note shall have no
rights to convert, or otherwise exercise any rights with respect
to, this Note, excepting only the right to receive payment for
this Note upon its surrender for redemption.
14. GOVERNING LAW. This Note shall be governed by, enforced
under and construed in accordance with the laws of the State of
New York, without giving effect to the principles of conflicts of
laws thereof.
15. BUSINESS DAY DEFINITION. For purposes hereof, the term
"business day" shall mean any day on which banks are generally
open for business in the City of New York.
16. NOTICE. Any notice or other communication required or
permitted to be given hereunder shall be given as provided herein
or delivered against receipt if to (i) the Company at 12 East
49th Street, New York, New York 10017, Facsimile No.: (212) 750-
5171, Attention: Thomas W. Aro (or to such other address of which
notice has been given as herein provided), with copies (which
shall not constitute notice) to: Parker Duryee Rosoff & Haft,
529 Fifth Avenue, New York, New York 10017, Facsimile No.: (212)
972-9487, Attention: Herbert F. Kozlov, Esq., and (ii) the
Holder of this Note, to such Holder at its last address as shown
on the Note register (or to such other address as any such party
shall have furnished to the Company in writing). Any notice or
other communication mailed or otherwise delivered shall be deemed
given at the time of receipt thereof.
17. WAIVER.
(a) The Company hereby waives, except as provided herein,
presentment for payment, notice of dishonor, protest and notice
of protest and, in the event of default hereunder, the Company
agrees to pay all costs of collection, including reasonable
attorneys' fees.
(b) Any waiver by the Company or the Holder hereof of a
breach of any provision of this Note shall not operate as or be
construed to be a waiver of any other breach of such provision or
of any breach of any other provision of this Note. The failure
of the Company or the Holder hereof to insist upon strict
adherence to any term of this Note on one or more occasions shall
not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any
other term of this Note. Any waiver must be in writing.
18. UNENFORCEABLE PROVISIONS. If any provision of this Note is
invalid, illegal or unenforceable, the remaining provisions of
this Note shall remain in effect, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless
remain applicable to all other persons and circumstances.
<PAGE>
SCHEDULE I
REDUCTION OF PRINCIPAL AMOUNT ON CONVERSION
The following reductions of the principal amount of this
Note upon partial conversions thereof have been made:
Principal Notation Made
Amount of Aggregate Principal by or on Behalf
Date of Conversion Reduction Amount resulting of Company
<PAGE>
EXHIBIT A
NOTICE OF CONVERSION
(To be executed by the Holders in order to convert the Note or
portion thereof)
The undersigned hereby irrevocably elects to convert [the entire
principal amount] [$_________ principal amount] of Note No.
______ into shares of Common Stock, $.01 par value (the "Common
Stock"), of Alpha Hospitality Corporation (the "Company") as of
the Date of Conversion (which shall be the first date of receipt
by the Company of this Notice of Conversion, whether by facsimile
or otherwise). If shares are to be issued in the name of a
person other than the undersigned, the undersigned will pay all
transfer taxes payable with respect thereto and is delivering
herewith such certificates as are reasonably requested by the
Company or its Transfer Agent. No fee will be charged to the
Holder for any conversion, except for transfer taxes, if any.
The undersigned represents and warrants that all offers and sales
by the undersigned of the shares of Common Stock issuable to the
undersigned upon conversion of the Note shall be made pursuant to
registration under the Securities Act or in compliance with an
exemption from registration under the Securities Act. The
undersigned also represents and warrants that the number of
shares of Common Stock to be received upon conversion, together
with the shares of Common Stock beneficially owned by the
undersigned (and its affiliates) on the Date of Conversion
(excluding shares of Common Stock otherwise deemed beneficially
owned as a result of the convertibility of such Notes (and
warrants to purchase Common Stock) held by the undersigned and
its affiliates), if applicable, do not exceed 4.9% of the
outstanding shares of Common Stock of the Company (as set forth
in the Company's most recent filing with the Securities and
Exchange Commission unless the Company shall notify the Holder
that a greater or lesser number of shares is outstanding).
If the stock certificate is to be made out in another person's
name, fill in the form below:
______________________________________________________
______________________________________________________
______________________________________________________
(Print or type other person's name, address and zip code)
______________________________________________________
(Insert assignee's U.S. social security or tax
identification number, if any)
Conversion calculations:
_______________________________
Date of Conversion
______________________________
Applicable Conversion Price
Total number of shares $_____________________________
(assuming interest payable Accrued Interest
in shares of Common Stock)
[Name of Holder]
By:___________________________
Name:
Title:
<PAGE>
ASSIGNMENT FORM
To assign this Note, fill in the form below:
I or we assign and transfer this Note to
_______________________________________
________________________________________
________________________________________
________________________________________
(Print or type assignee's name, address and zip code)
________________________________________
(Insert assignee's social security or tax
identification number, if any)
and irrevocably appoint _____________________ as agent to
transfer this Note on the books of the Company. The agent may
substitute another to act for him.
Date: _____________ ___________________________________
(Sign exactly as your name
appears on the face of this Note)
<PAGE>
EXHIBIT 4(e)
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (AND, AS OF THE
DATE OF ORIGINAL ISSUANCE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE, ANY UNDERLYING SECURITIES) HAVE NOT BEEN REGISTERED
UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY OTHER APPLICABLE SECURITIES LAWS AND
HAVE BEEN ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH
SECURITIES LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE
OR ANY SECURITIES ISSUABLE UPON THE CONVERSION HEREOF MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED OTHER THAN (A) TO
ALPHA HOSPITALITY CORPORATION (THE "COMPANY") OR ANY SUBSIDIARY
THEREOF, (B) PURSUANT TO RULE 144 UNDER THE SECURITIES ACT, (C)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT
TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OR (E) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT. THE
HOLDER OF THIS CERTIFICATE AGREES THAT IT WILL GIVE TO EACH
PERSON TO WHOM THIS SECURITY OR ANY SECURITY ISSUED UPON
CONVERSION HEREOF IS TRANSFERRED (UNLESS SUCH SECURITY IS
TRANSFERRED PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY PROPOSED TRANSFER PURSUANT TO
CLAUSES (B), (C) OR (D) ABOVE, THE COMPANY MAY REQUIRE THAT THE
TRANSFEROR FURNISH IT WITH AN OPINION OF COUNSEL CONFIRMING THAT
SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN
A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION" AND "UNITED STATES" HAVE THE RESPECTIVE MEANINGS
ASSIGNED TO THEM IN REGULATION S UNDER THE SECURITIES ACT.
WARRANT
to Purchase Shares of Common Stock of
ALPHA HOSPITALITY CORPORATION
Certificate No.
THIS IS TO CERTIFY THAT , or its registered
assigns, is entitled to purchase in whole or in part from time to
time from ALPHA HOSPITALITY CORPORATION, a Delaware corporation
(the "Company"), at any time up to 5:00 p.m., New York time, on
July 31, 2003 (the "Expiration Date"), shares of Common
<PAGE>
Stock, par value $.01, of the Company (the "Common Stock") at a
purchase price of $2.40 per share of Common Stock (the "Exercise
Price"), subject to the terms and conditions herein. Each
exercise made hereunder must be for a minimum of the lesser of
(x) one thousand (1,000) shares of Common Stock and (y) the
entire remaining number of shares of Common Stock covered by this
Warrant. All capitalized terms used herein without definition
shall have the respective meanings assigned thereto in the
Securities Purchase Agreement, dated as of July 31, 2000, entered
into between the Company and the original purchaser of the
Company's 4% Convertible Notes due July 31, 2003.
SECTION 1. Exercise of Warrant. At any time until
5:00 p.m., New York time, on the Expiration Date, the registered
holder of this Warrant (the "Holder") may exercise this Warrant,
on one or more occasions, in whole or in part, by delivering to
the Company, (a) a written notice of the Holder's election to
exercise this Warrant in substantially the form of Annex A
hereto, which notice (the "Exercise Notice") shall specify the
number of shares of Common Stock to be purchased and may be
delivered by facsimile transmission, (b) a certified or bank
check or checks payable to the Company, or by wire transfer of
immediately available funds, in an aggregate amount equal to the
aggregate Exercise Price for the number of shares of Common Stock
as to which this Warrant is being exercised (unless the Holder
elects to effect a Cashless Exercise (as hereinafter defined)
pursuant to this Section 1) and (c) this Warrant. Subject to
applicable law, in the event the Holder may resell shares of
Common Stock acquired upon exercise of this Warrant without
restriction pursuant to an effective registration statement or
otherwise, the Company shall cause the transfer agent with
respect to its Common Stock, which transfer agent is
participating in the Depositary Trust Company ("DTC") Fast
Automated Securities Transfer ("FAST") program, to electronically
transmit the shares of Common Stock issuable to the Holder upon
exercise of this Warrant by crediting the account of the Holder's
prime broker with DTC through DTC's Deposit Withdrawal Agent
Commission ("DWAC") system, within three (3) business days after
exercise of this Warrant by the Holder. In the event the Holder
otherwise elects in writing, however, or such shares of Common
Stock can not be resold without restriction, the Company shall,
as promptly as practicable and in any event within three (3)
business days thereafter, cause the transfer agent to deliver to
the Holder a stock certificate or certificates representing the
aggregate number of shares of Common Stock issuable to the Holder
as a result of such exercise. The stock certificate or
certificates representing shares of Common Stock so delivered
shall be in such denominations as may be specified in the
Exercise Notice and shall be registered in the name of the Holder
or, subject to compliance with Section 7.03 below, such other
name or names as shall be designated in such Exercise Notice.
Shares of Common Stock shall be deemed to have been
issued and the Holder or, subject to compliance with Section 7.03
below, any other Person so designated to be named therein shall
be deemed to have become a Holder of record of such shares,
including, to the extent permitted by law, the right to vote such
shares or to consent or to receive notice as a stockholder, as of
the date on which the last to occur of the date of receipt of the
Exercise Notice, the date of the payment of the Exercise Price to
the Company (unless the Holder elects to effect a Cashless
Exercise) and the date this Warrant is received by the Company as
aforesaid. If this Warrant shall have been exercised only in
part, the Company shall, at the time of delivery of shares of
Common Stock, execute and deliver to the Holder a new Warrant
evidencing the rights of the Holder to purchase the shares of
Common Stock represented by the unexercised portion of this
Warrant, which new Warrant shall in all other respects be
identical to this Warrant, or, if the
<PAGE>
Company elects, it shall
make appropriate notation on this Warrant and the same returned
to the Holder.
Upon exercise of this Warrant, in whole or in part, the
Holder may elect to receive a reduced number of shares of Common
Stock in lieu of tendering the Exercise Price in cash ("Cashless
Exercise"). In such case, the number of shares of Common Stock
to be issued to the Holder shall be computed using the following
formula:
X = Y(A-B)
A
where: X = the number of shares of Common Stock to be
issued to the Holder;
Y = the number of shares of Common Stock for which an
election to exercise under this Warrant has been made;
A = The Market Price (as hereinafter defined) of one
share of Common Stock on the trading day immediately
prior to the date that the Exercise Notice is duly
surrendered to the Company for full or partial
exercise; and
B = the Exercise Price.
The "Market Price" per share of Common Stock or any
other security at any date means (i) the average closing bid
price for such security for the five consecutive trading days
immediately prior to the date of determination on the New York
Stock Exchange or such other U.S. national securities exchange,
as reported by the Nasdaq Stock Market, Inc. or, if not so
reported by The Nasdaq Stock Market, Inc., the average of the
high bid and low asked quotations for one share of such security
as reported by the National Quotations Bureau Incorporated or
similar organization for such five consecutive trading days, (ii)
if the closing price for such security cannot be calculated in
the manner specified in clause (i) at the relevant time, the fair
market value of one share of such security as of the date of
determination as determined in an opinion letter delivered to the
Company (and made available to the Holders of the Warrants) by an
independent appraisal firm appointed by the Company (and
reasonably acceptable to the Holders of this Warrant).
All shares of Common Stock issuable upon the exercise
of this Warrant shall, upon payment therefor in accordance
herewith, be duly and validly issued, fully paid and
nonassessable and free and clear of any liens (unless created by
or through the Holder of this Warrant). The Company shall not be
required to issue a fractional share of Common Stock upon
exercise of this Warrant. As to any fraction of a share that the
Holder would otherwise be entitled to purchase upon such
exercise, the Company shall pay a cash adjustment in respect of
such fraction in an amount equal to the same fraction of the
applicable Market Price determined in accordance with the
foregoing.
SECTION 2. Transfer, Division and Combination.
Subject to Section 7.03 hereof, transfer of this Warrant and all
rights hereunder, in whole or in part, shall be registered on the
books of the Company, upon surrender of this Warrant to the
Company, together with a written assignment of this Warrant,
substantially in the form of Annex B hereto, duly executed by the
Holder or its agent or attorney. Upon such surrender, the
Company shall, subject to Section 7.03 hereof, (a) execute and
deliver a new Warrant or Warrants in the name of the
<PAGE>
assignee or
assignees and in the denominations specified in such instrument
of assignment, (b) issue to the assignor a new Warrant evidencing
the portion of this Warrant not so assigned and (c) promptly
cancel this Warrant.
SECTION 3. Antidilution Provisions.
3.01 Changes in Common Stock. In the event that at
any time and from time to time the Company shall, (i) pay a
dividend or make a distribution on its Common Stock in shares of
Common Stock or other shares of capital stock of the Company,
(ii) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, (iii) combine its
outstanding shares of Common Stock into a smaller number of
shares of Common Stock or (iv) increase or decrease the number of
shares of Common Stock outstanding by reclassification of its
Common Stock, then the number of shares of Common Stock issuable
upon exercise of this Warrant immediately after the happening of
such event shall be adjusted so that, after giving effect to such
adjustment, the Holder of this Warrant shall be entitled to
receive the number of shares of Common Stock upon exercise of
this Warrant that the Holder would have been entitled to receive
had this Warrant been exercised immediately prior to the
happening of such event (or, in the case of a dividend or
distribution of shares of Common Stock, immediately prior to the
record date therefor). An adjustment made pursuant to this
Section 3.01 shall become effective immediately after the
distribution date, retroactive to the record date therefor in the
case of a dividend or distribution in shares of Common Stock, and
shall become effective immediately after the effective date in
the case of a subdivision, combination or reclassification.
3.02 Cash Dividends and Other Distributions. In the
event that at any time and from time to time the Company shall
distribute to holders of Common Stock (i) any dividend or other
distribution (including any dividend or distribution made in
connection with a consolidation or merger in which the Company is
the surviving corporation) of cash, evidences of its
indebtedness, shares of its capital stock or any other properties
or securities or (ii) any options, warrants or other rights to
subscribe for or purchase any of the foregoing (other than (A)
any dividend or distribution described in Section 3.01, (B) any
rights, options, warrants or securities described in Section 3.03
or Section 3.04 and (C) any cash dividends or other cash
distributions from current or retained earnings provided that
such dividends do not exceed $1.0 million in any fiscal year,
then the number of shares of Common Stock that may be acquired
upon exercise of this Warrant immediately prior to such record
date for any such dividend or distribution shall be increased to
a number determined by multiplying the number of shares of Common
Stock that may be acquired upon the exercise of this Warrant
immediately prior to such record date for any such dividend or
distribution by a fraction, the numerator of which shall be the
Market Price per share of Common Stock as of such record date and
the denominator of which shall be such Market Price per share of
Common Stock less the sum of (x) the amount of cash, if any,
distributed per share of Common Stock and (y) the then fair value
(as determined in good faith by the Company's Board of Directors,
whose determination shall be evidenced by a board resolution that
will be sent to Holders upon request) of the portion, if any, of
the distribution applicable to one share of Common Stock
consisting of evidences of indebtedness, shares of stock,
securities, other property, warrants, options or subscription or
purchase rights; and the Exercise Price shall be adjusted to a
number determined by dividing the Exercise Price immediately
prior to such record date by the above fraction.
<PAGE>
Such adjustments shall be made, and shall only become effective,
whenever any dividend or distribution is made; provided, however,
that the Company is not required to make an adjustment pursuant
to this Section 3.02 if at the time of such distribution the
Company makes the same distribution to Holders of Warrants as it
makes to holders of Common Stock pro rata based on the number of
shares of Common Stock for which such Warrants are exercisable.
No adjustment shall be made pursuant to this Section 3.02 if such
adjustment would have the effect of decreasing the number of
shares of Common Stock issuable upon exercise of this Warrant or
increasing the Exercise Price.
3.03 Common Stock Issue. In the event that at any
time or from time to time the Company shall (other than (i) upon
the exercise, exchange or conversion of any securities of the
Company that are exercisable or exchangeable for, or convertible
into, shares of Common Stock and that are outstanding as of the
date of the issuance of this Warrant (the "Initial Issuance
Date") (including, without limitation, the right granted to
Stanley Tollman to convert deferred compensation into shares of
Common Stock), (ii) upon the exercise of stock options granted
under or pursuant to any stock option plan approved by
shareholders of the Company, (iii) upon the conversion of any of
the Notes (or portion thereof) or any shares of preferred stock
issued by the Company prior to the Initial Issuance Date, (iv)
upon the issuance of shares of Common Stock in lieu of cash
dividends on any shares of preferred stock of the Company or (v)
upon the issuance of shares of Common Stock in lieu of interest
on the Notes or, provided that such shares of Common Stock are
issued at a price at least equal to 100% of the market value of
such shares, other debt instruments of the Company) issue shares
of Common Stock for a consideration per share that is less than
the Minimum Trigger Price (as defined in the Notes) per share of
Common Stock, the number of shares of Common Stock that may be
acquired upon the exercise of this Warrant immediately after such
issuance shall be determined by multiplying the number of shares
of Common Stock issuable upon exercise of this Warrant
immediately prior to such issuance by a fraction, the numerator
of which shall be the sum of (A) the number of shares of Common
Stock outstanding on the date of such issuance plus (B) the
number of additional shares of Common Stock to be issued and the
denominator of which shall be the sum of (X) the number of shares
of Common Stock outstanding on the date of such issuance plus (Y)
the number of shares of Common Stock that the aggregate offering
price of the total number of shares of Common Stock so to be
issued would purchase at the Minimum Trigger Price. In the event
of any such adjustment, the Exercise Price shall be adjusted to a
number determined by dividing the Exercise Price immediately
prior to such issuance by the aforementioned fraction. Such
adjustment shall be made, and shall only become effective,
whenever such shares are issued. No adjustment shall be made
pursuant to this Section 3.03 if such adjustment would have the
effect of decreasing the number of shares of Common Stock
issuable upon exercise of this Warrant or increasing the Exercise
Price. In case the consideration for any shares of Common Stock
may be paid in whole or in part in a form other than cash, the
value of such consideration shall be as determined in good faith
by the Board of Directors of the Company, whose determination
shall be conclusive. Such adjustment shall be made successively
whenever the date of such issuance is fixed.
3.04 Issuance of Rights or Options. In the event that
at any time or from time to time the Company shall issue rights,
options or warrants to acquire, or securities convertible or
exchangeable into, Common Stock (other than the issuance by the
Company of stock options under or pursuant to any stock option
plan approved by shareholders of the Company and the
<PAGE>
issuance of
the Individual Warrants (as defined in the Securities Purchase
Agreement)) entitling the holders thereof to acquire shares of
Common Stock at an exercise or conversion price per share that
(when aggregated, as applicable, with the price or other
consideration received for any such rights, options or warrants
exercisable for Common Stock or for such securities convertible
or exchangeable into Common Stock) for consideration per share
that is less than the Minimum Trigger Price, the number of shares
of Common Stock that may be acquired upon exercise of this
Warrant immediately after such issuance shall be determined by
multiplying the number of shares of Common Stock that may be
acquired upon exercise of this Warrant immediately prior to such
issuance by a fraction, the numerator of which shall be the sum
of (A) the number of shares of Common Stock outstanding on the
date of such issuance plus (B) the number of additional shares of
Common Stock to be issued (or into which the convertible or
exchangeable securities so to be issued are initially
convertible), and the denominator of which shall be the sum of
(X) the number of shares of Common Stock outstanding on the date
of such issuance plus (Y) the number of shares of Common Stock
that the aggregate offering price of the total number of shares
of Common Stock so to be issued (or the aggregate issue price of
the convertible or exchangeable securities so to be issued) would
purchase at the Minimum Trigger Price. In the event of any such
adjustment, the Exercise Price shall be adjusted to a number
determined by dividing the Exercise Price immediately prior to
such issuance by the aforementioned fraction. Such adjustment
shall be made, and shall only become effective, whenever such
rights, options, warrants or securities are issued. No
adjustment shall be made pursuant to this Section 3.04 if such
adjustment would have the effect of decreasing the number of
shares of Common Stock issuable upon exercise of this Warrant or
increasing the Exercise Price. In case the price for such
securities may be paid in a consideration part or all of which
shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board
of Directors of the Company, whose determination shall be
conclusive. Such adjustment shall be made successively whenever
the date of such issuance is fixed and, notwithstanding the
foregoing, in the event that such options, rights, warrants or
exchangeable or convertible securities (or portions thereof)
expire or are otherwise discharged or redeemed without being
exercised or converted, any adjustment to the number of shares
issuable upon exercise of this Warrants and the Exercise Price on
account of the issuance of the same shall be reversed.
3.05 Combination; Liquidation. (a) Except as provided
in Section 3.05(b), in the event of a Combination (as hereinafter
defined), the Holder shall have the right to receive upon
exercise of this Warrant the kind and amount of shares of capital
stock or other securities or property that the Holder would have
been entitled to receive upon completion of or as a result of
such Combination had such Warrant been exercised immediately
prior to such event or to the relevant record date for any such
entitlement. Unless paragraph (b) is applicable to a
Combination, the Company shall provide, as a condition to such
Combination, that the surviving or acquiring Person (the
"Successor Company") in such Combination will enter into an
agreement confirming the Holders' rights pursuant to this Section
3.05(a) and providing for adjustments, that shall be as nearly
equivalent as may be practicable to the adjustments provided for
in this Section 3. The provisions of this Section 3.05(a) shall
similarly apply to successive Combinations involving any
Successor Company.
A "Combination" means an event in which the Company
consolidates with or merges with or into another Person.
<PAGE>
(b) In the event of (i) a Combination where
consideration to the holders of Common Stock in exchange for
their shares is payable solely in cash or (ii) the dissolution,
liquidation or winding-up of the Company, the Holder of this
Warrant shall be entitled to receive, upon surrender of this
Warrant, such cash distributions on an equal basis with the
holders of Common Stock, as if this Warrant had been exercised
immediately prior to such event, less the product of the Exercise
Price times the number of shares of Common Stock with respect to
which this Warrant was then exercisable.
In the event of any Combination described in this
Section 3.05(b), the surviving or acquiring Person and, in the
event of any dissolution, liquidation or winding-up of the
Company, the Company shall distribute as promptly as practicable
under the circumstances to the Holder upon surrender of this
Warrant, the funds, if any, necessary to pay the Holder the
amounts to which the Holder is entitled as described above.
3.06 Other Events. If any event occurs as to which
the foregoing provisions of this Section 3 are not strictly
applicable or, if strictly applicable, would not, in the good
faith judgment of the Company's Board of Directors, fairly and
adequately protect the rights of the Holders of the Warrants in
accordance with the essential intent and principles of such
provisions, then such Board of Directors shall make such
adjustments in the application of such provisions, in accordance
with such essential intent and principles, as shall be reasonably
necessary, in the good faith opinion of such Board of Directors,
to protect the rights of the Holders of the Warrants as
aforesaid, but in no event shall any such adjustment have the
effect of increasing the Exercise Price or decreasing the number
of shares of Common Stock issuable upon exercise of this Warrant.
3.07 Superseding Adjustment. Upon the expiration of
any rights, options, warrants or conversion or exchange
privileges that resulted in adjustments pursuant to this
provision 3, if any thereof shall not have been exercised, the
number of shares of Common Stock issuable upon the exercise of
this Warrant shall be readjusted pursuant to the applicable
section of Section 3 as if (i) the only shares of Common Stock
issuable upon exercise of such rights, options, warrants,
conversion or exchange privileges were the shares of Common
Stock, if any, actually issued upon the exercise of such rights,
options, warrants or conversion or exchange privileges and (ii)
shares of Common Stock actually issued, if any, were issuable for
the consideration actually received by the Company upon such
exercise plus the aggregate consideration, if any, actually
received by the Company for this issuance, sale or grant of all
such rights, options, warrants or conversion or exchange
privileges whether or not exercised and the Exercise Price shall
be readjusted inversely; provided, however, that no such
readjustment shall have the effect of decreasing the number of
shares of Common Stock issuable upon the exercise of this Warrant
below the number of shares of Common Stock issuable upon the
exercise of this Warrant, or increasing the Exercise Price to an
amount below the Exercise Price in effect, immediately prior to
any adjustment made therein on account of such issuance, sale or
grant of such rights, options, warrants or conversion or exchange
privileges.
3.08 Minimum Adjustment. The adjustments required by
the preceding sections of this Section 3 shall be made whenever
and as often as any specified event requiring an adjustment shall
occur, except that no adjustment of the Exercise Price or the
number of shares
<PAGE>
of Common Stock issuable upon exercise of this
Warrant that would otherwise be required shall be made unless and
until such adjustment either by itself or with other adjustments
not previously made increases or decreases by at least 1% the
Exercise Price or the number of shares of Common Stock issuable
upon exercise of this Warrant immediately prior to the making of
such adjustment. Any adjustment representing a change of less
than such minimum amount shall be carried forward and made as
soon as such adjustment, together with other adjustments required
by this Section 3 and not previously made, would result in a
minimum adjustment. For the purpose of any adjustment, any
specified event shall be deemed to have occurred at the close of
business on the date of its occurrence. In computing adjustments
under this Section 3, fractional interests in Common Stock shall
be taken into account to the nearest one-tenth of a share.
3.09 Notice of Adjustment. Whenever the Exercise
Price or the number of shares of Common Stock and other property,
if any, issuable upon exercise of the Warrants is adjusted, as
herein provided, the Company shall deliver to the Holder of this
Warrant a certificate setting forth, in reasonable detail, the
event requiring the adjustment and the method by which such
adjustment was calculated (including a description of the basis
on which (i) the Company's Board of Directors determined the then
fair value of any evidences of indebtedness, other securities or
property or warrants, options or other subscription or purchase
rights and (ii) the Market Price of the Common Stock was
determined, to the extent such determinations were required
hereunder), and specifying the Exercise Price and the number of
shares of Common Stock issuable upon exercise of this Warrant
after giving effect to such adjustment.
3.10 Notice of Certain Transactions. In the event
that the Company shall propose to (a) pay any dividend payable in
securities of any class to the holders of its Common Stock or to
make any other non-cash dividend or distribution to the holders
of its Common Stock, (b) offer the holders of its Common Stock
rights to subscribe for or to purchase any securities convertible
into shares of Common Stock or shares of stock of any class or
any other securities, rights or options, (c) issue to the holders
of its Common Stock any (i) shares of Common Stock, (ii) rights,
options or warrants entitling the holders thereof to subscribe
for shares of Common Stock or (iii) securities convertible into,
or exchangeable or exercisable for, shares of Common Stock (in
the case of (i), (ii) and (iii), if such issuance or adjustment
would result in an adjustment hereunder), (d) effect any capital
reorganization, reclassification, consolidation or merger, (e)
effect the voluntary or involuntary dissolution, liquidation or
winding-up of the Company or (f) make a tender offer or exchange
offer with respect to the Common Stock, the Company shall within
five days after any such event send the Holder a notice of such
proposed action or offer unless the same is publicly announced.
Such notice shall, to the extent the same has not been publicly
announced, specify the record date for the purposes of such
dividend, distribution or rights, or the date such issuance or
event is to take place and the date of participation therein by
the holders of Common Stock, if any such date is to be fixed, and
shall, to the extent the same has not been publicly announced and
if the same would have any effect on the Common Stock and on the
number of shares of Common Stock, the number and kind of any
other shares of stock and other property issuable upon exercise
of this Warrant and the Exercise Price (after giving effect to
any adjustment pursuant to Section 3 that will be required as a
result of such action), specify such effect. Such notice shall
be given as promptly as possible and (x) in the case of any
action covered by clause (a) or (b) above, at least 10 days prior
to the record date
<PAGE>
for determining holders of the Common Stock
for purposes of such action or (y) in the case of any other such
action, at least 20 days prior to the date of the taking of such
proposed action or the date of participation therein by the
holders of Common Stock, whichever shall be the earlier.
Notwithstanding anything contained herein to the contrary, the
Company shall not provide to the Holder any material non-public
information in order to satisfy its obligations pursuant to this
Section 3.10.
3.11 Adjustment to Warrant Certificate. This Warrant
Certificate need not be changed because of any adjustment made
pursuant to this Section 3, and any Warrant issued after such
adjustment may state the same Exercise Price and the same number
of shares of Common Stock issuable upon exercise of the Warrant
as are stated in this Warrant. The Company, however, may at any
time in its sole discretion make any change in the form of this
Warrant that it may deem appropriate to give effect to such
adjustments and that does not affect the substance of this
Warrant, and any Warrant thereafter issued or countersigned,
whether in exchange or substitution for this Warrant or
otherwise, may be in the form as so changed.
SECTION 4. Taking of Record; Stock and Warrant
Transfer Books. In the case of all dividends or other
distributions by the Company to the holders of its Common Stock
with respect to which any provision hereof refers to the taking
of a record of such holders, the Company shall in each such case
take such a record as of the close of business on a business day.
SECTION 5. Expenses, Transfer Taxes and Other Charges.
The Company shall pay any and all expenses (other than transfer
taxes) and other charges, including all costs associated with the
preparation, issue and delivery of stock or warrant certificates,
that are incurred in respect of the issuance or delivery of
shares of Common Stock upon exercise of this Warrant pursuant to
Section 1 hereof or in connection with any division or
combination of this Warrant pursuant to Section 2 hereof. The
Company shall not, however, be required to pay any tax that may
be payable in respect of any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that in
which this Warrant is registered, and no such issue or delivery
shall be made unless and until the Person requesting such issue
has paid to the Company the amount of any such tax, or has
established, to the satisfaction of the Company, that such tax
has been paid.
SECTION 6. No Voting Rights. This Warrant shall not
entitle the Holder to any voting or other rights as a stockholder
of the Company.
SECTION 7. Miscellaneous.
7.01 Office of Company. So long as any of this
Warrant remains outstanding, the Company shall maintain an office
in the United States of America where this Warrant may be
presented for exercise, transfer, division or combination as in
this Warrant provided. Such office shall be at 12 East 49th
Street, New York, New York 10017, or at the office of such
registrar and transfer agent as the Company may from time to time
designate, unless and until the Company shall designate and
maintain some other office for such purposes and give notice
thereof to all Holders.
<PAGE>
7.02 Notices Generally. Any notices and other
communications pursuant to the provisions hereof shall be sent in
accordance with Section 6.03 of the Securities Purchase
Agreement.
7.03 Restrictions on Transferability; Restriction on
Exercise. (A) This Warrant and the shares of Common Stock
issuable upon conversion of this Warrant shall be transferable
only in a transaction that is in compliance with the provisions
of the Securities Act and applicable state securities or "blue
sky" laws, and the Holder and each of its successors and assigns
shall be bound by the provisions of this Section 7.03. In the
event this Warrant is not registered under the Securities Act and
applicable state securities or "blue sky" laws, the Company may
condition the sale, transfer or other disposition of this Warrant
(or any interest herein) upon receipt of a legal opinion, in form
and substance, and by counsel, reasonably acceptable to the
Company, to the effect that such sale, transfer or other
disposition is being made pursuant to an exemption from, or in a
transaction not subject to, any registration requirement under
the Securities Act and applicable state securities or "blue sky"
laws. In the event the shares of Common Stock or other
securities issuable upon the exercise of this Warrant are not
registered under the Securities Act and applicable state
securities or "blue sky" laws, the Company may condition the
sale, transfer or other disposition of such shares or other
securities (or any interest herein) upon receipt of a legal
opinion, in form and substance, and by counsel, reasonably
acceptable to the Company, to the effect that such sale, transfer
or other disposition is being made pursuant to an exemption from,
or in a transaction not subject to, any registration requirement
under the Securities Act and applicable state securities or "blue
sky" laws.
(B) Notwithstanding any other provision of this
Warrant, as of any date prior to the Expiration Date, the
aggregate number of shares of Common Stock into which this
Warrant, together with any other shares of Common Stock then
beneficially owned (as defined in the Securities Exchange Act of
1934, as amended) by the Holder and its affiliates (excluding
shares of Common Stock otherwise deemed beneficially owned as a
result of the convertibility of the Notes and held by the Holder
or its affiliates), shall not exceed 4.9% of the total
outstanding shares of Common Stock as of such date (the "4.9%
Limitation"). The Company shall have no obligation to monitor
compliance with the foregoing limitation.
7.04 Governing Law. This Warrant shall be governed
by, and construed in accordance with, the law of the State of New
York without giving effect to conflicts of law principles
thereof.
7.05 Limitation of Liability. No provision hereof, in
the absence of affirmative action by the Holder to purchase
shares of Common Stock, and no mere enumeration herein of the
rights or privileges of the Holder, shall give rise to any
liability of the Holder for the Exercise Price or as a
stockholder of the Company, whether such liability is asserted by
the Company, by any creditor of the Company or any other Person.
<PAGE>
IN WITNESS WHEREOF, the Company has duly executed this
Warrant.
Dated:
ALPHA HOSPITALITY CORPORATION
By
Name: Thomas W. Aro
Title: Executive Vice President
<PAGE>
Annex A
ELECTION TO PURCHASE
(To Be Executed Upon Exercise of Warrant)
The undersigned hereby irrevocably elects to exercise
the right, represented by this Warrant, to receive
shares of Common Stock of Alpha Hospitality Corporation and
[herewith tenders payment of the Exercise Price for such shares
in the amount of $ ] [hereby elects to
effect a Cashless Exercise] in accordance with the terms of this
Warrant.
The undersigned requests that [certificates for such
shares in denominations of be registered in
the name of whose address is
and that such shares be
delivered to , whose address is
]. [Such shares be
delivered to [the undersigned] [other person] electronically
through DTC].
The undersigned represents and warrants that the number
of shares of Common Stock to be received pursuant to this
Election to Purchase, together with the shares of Common Stock
beneficially owned by the undersigned (and its affiliates) on the
date of this Election to Purchase (excluding shares of Common
Stock otherwise deemed beneficially owned as a result of the
convertibility of the 4% Convertible Notes due July 31, 2003 held
by the undersigned and its affiliates), if applicable, do not
exceed 4.9% of the outstanding shares of Common Stock of the
Company (as set forth in the Company's most recent filing with
the Securities and Exchange Commission unless the Company shall
notify the Holder that a greater or lesser number of shares is
outstanding).
Capitalized terms used but not defined herein shall
have the respective meanings ascribed to them in the Warrant to
which Election to Purchase is attached.
[Name of Holder]
By:
Name:
Title:
NOTE: The above signature(s) must
correspond
with the name written upon
the face of
this Warrant in every
particular,
without alteration or
enlargement or any
change whatever.
Date:
<PAGE>
Annex B
ASSIGNMENT
(To be signed only upon assignment of this Warrant)
FOR VALUE RECEIVED, hereby
sells, assigns and transfers
unto whose address is
and whose
social security number or other identifying number is
, the within
Warrant, together with all right, title and interest represented
thereby, and does hereby irrevocably constitute and appoint
, attorney, to transfer
said Warrant on the books of the within-named Company, with full
power of substitution in the premises.
By:
Name:
Title:
NOTE: The above signature(s) must
correspond
with the name written upon
the face of
this Warrant in every
particular,
without alteration or
enlargement or any
change whatever.
Date:
