SECURITIES AND EXCHANGE COMMISSION
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 1)
Filed by Registrant [ X]
Filed by a Party Other than Registrant [ ]
Check the Appropriate Box:
[ ] Preliminary Proxy Statement [ ] Confidential,
for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[ X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Exchange Act Rule 14a-
11(c) or 14a-12
ALPHA HOSPITALITY CORPORATION
(Name of Registrant as Specified In Its Charter)
Not applicable
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[ x ] No Fee Required.
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(l) and 0-11.
1) Title of each class of securities to which transaction
applies:
2) Aggregate Number of Securities to which transaction applies:
3) Per unit price or the underlying value of transaction
computed pursuant to Exchange Act
Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify the
filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing:
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
Copies of all communications to:
Robert H. Friedman
Olshan Grundman Frome Rozenzweig & Wolosky LLP
505 Park Avenue
16th Floor
New York, New York 10022
ALPHA HOSPITALITY CORPORATION
707 Skokie Boulevard
Suite 600
Northbrook, IL 60062
NOTICE OF MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 25, 2003
To the Stockholders of Alpha Hospitality Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting (the
"Meeting") of Stockholders of Alpha Hospitality Corporation (the
"Company"), a Delaware corporation, will be held at The Roosevelt
Hotel, Madison Avenue & 45th Street, New York, New York on
Tuesday, March 25, 2003, at 11:00 a.m. local time for the
following purposes:
(1) to elect eight (8) members to the Company's Board of
Directors;
(2) to approve the grant of options to purchase up to an
aggregate of 200,673 additional shares of the Company's
common stock, at an exercise price of $2.12 per share,
to each of Robert Berman and Scott Kaniewski pursuant
their employment agreements, as amended; and
(3) to transact any such other business as may
properly come before the Meeting or any postponement or
adjournment thereof.
The Board of Directors of the Company has fixed February 14,
2003 as the record date (the "Record Date") for the determination
of stockholders entitled to notice of, and to vote at, the
Meeting or any postponement or adjournment thereof. Accordingly,
only stockholders of record at the close of business on the
Record Date are entitled to notice of, and shall be entitled to
vote at, the Meeting or any postponement or adjournment thereof.
You are requested to fill in, date and sign the enclosed
proxy card(s), which are being solicited by the Company's Board
of Directors. Submitting a proxy will not prevent you from
voting in person, should you so desire, but will help to secure a
quorum and will avoid added solicitation costs. You may revoke
your proxy at any time before it is voted at the Meeting.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE
MEETING. YOUR VOTE IS IMPORTANT. TO ENSURE YOUR REPRESENTATION
AT THE MEETING, PLEASE COMPLETE, SIGN AND PROMPTLY MAIL YOUR
PROXY IN THE RETURN ENVELOPE PROVIDED.
By Order of the Board of Directors,
/s/ Robert A. Berman /s/ Thomas W. Aro
Robert A. Berman Thomas W. Aro
Chairman of the Board Vice President
and Chief Executive Officer and Secretary
February 21, 2003
ALPHA HOSPITALITY CORPORATION
707 SKOKIE BOULEVARD
SUITE 600
NORTHBROOK, IL 60062
__________________
PROXY STATEMENT
__________________
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AT 11:00 A.M. AT THE ROOSEVELT HOTEL, MADISON AVENUE &
45TH STREET,
NEW YORK, NEW YORK ON MARCH 25, 2003
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Alpha
Hospitality Corporation (the "Company") for use at the Annual
Meeting of Stockholders of the Company (the "Meeting") and at all
adjournments and postponements thereof. The Meeting is to be
held at 11:00 a.m. local time at The Roosevelt Hotel, Madison
Avenue & 45th Street, New York, New York on March 25, 2003. This
Proxy Statement, with the accompanying Notice of Meeting and form
of proxy, are first being sent to stockholders on or about
February 25, 2003.
A proxy card is enclosed. Even if you plan to attend the
Meeting in person, you should date, sign and return the enclosed
proxy card as soon as possible to be sure that your shares will
be voted at the Meeting. A postage prepaid envelope has been
provided for your convenience. Please note that even after
submitting your proxy card, you can revoke it and/or change your
vote prior to the Meeting as described below.
The cost of preparing, assembling, printing and mailing this
Proxy Statement and the accompanying form of proxy, and the cost
of soliciting proxies relating to the Meeting, will be borne by
the Company. Some banks and brokers have customers who
beneficially own Common Stock listed of record in names of
nominees. The Company intends to request banks and brokers to
solicit such customers and will reimburse them for their
reasonable out-of-pocket expenses for such solicitations. If any
solicitation of the holders of the Company's outstanding shares
of Common Stock or Series B Preferred Stock is deemed necessary,
the Company (through its directors and officers) anticipates
making such solicitation directly. The solicitation of proxies
by mail may be supplemented by telephone, telegram and personal
solicitation by officers, directors and other employees of the
Company, but no additional compensation will be paid to such
individuals.
Purpose of the Meeting
At the Meeting, the Company's stockholders will be asked to
consider and vote upon the following matters: (i) a proposal to
elect eight (8) members to the Board of Directors; (ii) the
proposal to grant options to purchase up to an aggregate of
200,673 shares of the Company's common stock, at an exercise
price of $2.12 per share, to each of Robert Berman, the Company's
Chairman and Chief Executive Officer and Scott Kaniewski, the
Company's Chief Financial Officer and a Director (the "Plan");
and (iii) such other business as may properly come before the
Meeting or any postponement or adjournment thereof.
Voting and Solicitation of Proxies
All shares of Common Stock and Series B Preferred Stock
represented at the Meeting by properly executed proxies, unless
received after the vote at the Meeting or previously revoked as
described below, will be voted in accordance with the
instructions thereon, or where a properly signed proxy is
returned and no instructions are given, FOR (1) the election of
all director nominees and (2) the approval of the Plan. If any
other matter should come before the Meeting, or any nominee is
not available for election, the person(s) named a proxy will have
authority to vote all proxies not marked to the contrary in their
discretion as they deem advisable. At this time, the Company
does not know of any matters that may properly come before the
Meeting other than the proposals described in this Proxy
Statement.
Any proxy may be revoked by the person giving it at any time
before it is voted. A proxy may be revoked by filing with the
Secretary of the Company (707 Skokie Boulevard, Suite 600,
Northbrook, IL 60062 either (i) a written notice of revocation
bearing a date later than the date of such proxy or (ii) a
subsequent proxy relating to the same shares, or by attending the
Meeting and voting in person (although attendance at the Meeting
will not, in and of itself, constitute revocation of a proxy).
Shares Entitled to Vote
The close of business February 14, 2003 has been fixed as
the record date (the "Record Date") for determining the
stockholders entitled to notice of and to vote at the Meeting.
As of the Record Date, there were 4,928,117 shares of Common
Stock, 44,258 shares of Series B Preferred Stock issued and
outstanding and entitled to vote and 1,730,696 shares of the
Company's Series E Preferred Stock issued and outstanding,
however Series E Preferred Stock has no voting rights. .
Each share of Common Stock entitles the holder thereof to
one vote, and each share of Series B Preferred Stock entitles the
holder thereof to eight-tenths (.8) of a vote. Accordingly, a
total of 4,963,523 votes may be cast at the Meeting. The
holders of shares of Common Stock and Series B Preferred Stock
entitled to cast a majority of all votes that could be cast by
the holders of all of the outstanding shares of Common Stock and
Series B Preferred Stock, present in person or represented by
proxy at the Meeting, constitute a quorum.
A broker who holds shares in "street name" will not be
entitled to vote without instructions from the beneficial owner
of such shares. This inability to vote is referred to as a
broker non-vote. Stockholder abstentions and broker non-votes
will be counted for purposes of determining the existence of a
quorum at the Meeting.
Vote Required
If a quorum is present at the Meeting, either in person or
by proxy, then a simple majority of the votes cast will be
sufficient to (1) elect the eight director nominees and (2)
approve the Plan.
Shares Committed
The Company has been advised by various members of
management and the Board and others who, in the aggregate, hold
or otherwise have voting power with respect to 2,855,033 shares
of Common Stock (representing approximately 57.52% of the shares
of Common Stock outstanding) that they intend to vote such shares
in favor of (1) each director nominee and (2) approval of the
Plan. If the shares of Common Stock are voted, as management has
been advised they will be, in favor of each of each proposal,
approximately 2,855,033 of the total votes eligible to be cast at
the Meeting will be voted in favor of each proposal. As a result,
each proposal will be approved notwithstanding the manner in
which votes are cast by holders of any other shares of the
Company's capital stock.
No Appraisal Rights
Under the General Corporation Law of the State of Delaware,
stockholders of the Company do not have appraisal rights in
connection with any of the proposals upon which a vote is
scheduled to be taken at the Meeting.
OWNERSHIP OF SECURITIES
The following table sets forth certain information regarding
the beneficial ownership of the Company's shares of Common Stock
as of February 20, 2003 by all those known by the Company to be
beneficial owners of more than 5% of its Common Stock, each
director, each executive officer and all directors and executive
officers of Alpha as a group. Unless otherwise noted in the
footnotes to the table, the persons named in the table have sole
voting and investment power with respect to all shares of Common
Stock indicated as being beneficially owned by them. Unless
otherwise indicated, the address of each stockholder, director
and executive officer listed below is c/o Alpha Hospitality
Corporation, 707 Skokie Boulevard, Suite 600, Northbrook,
Illinois 60062.
Title of Class Name and Address No. of Percent
Shares(1) of Class(2)
Common Stock Robert A. Berman (3) 2,850,500 56.72%
$.01 par value Scott A. Kaniewski (4) 128,962 2.57
Thomas W. Aro (5) 50,000 *
Paul deBary (6) 66,103 1.34
Thomas P. Puccio (7) 19,000 *
William W. Hopson (8) 20,500 *
Morad Tahbaz (9) 17,500 *
Jay A. Holt (10) 19,000 *
Bryanston Group,
Inc.(11) 2,326,857 47.22
1886 Route 52
Hopewell Junction, N.Y.
All Current Officers and Directors
as a group without duplicating
shared beneficial interest
(8 persons)
(3,4,5,6,7,8,9,10) 3,200,065 57.52%
Preferred Stock, BP Group, Ltd.(12) 44,258 100.00
Series B 8306 Tibet Butler Dr.
$29.00 Windemere, Fl
liquidation
value
* less than 1%
(1) Except as noted below, each person exercises sole
voting and dispositive power with respect to the shares
reflected in the table, except for those shares of Common
Stock that are issuable upon the exercise of options.
Includes shares of Common Stock that may be acquired upon
exercise of options or conversion of convertible securities
that are presently exercisable or convertible or become
exercisable or convertible within 60 days.
(2) Each beneficial owner's percentage ownership is
determined by assuming that options, warrants and
convertible securities that are held by such owner (but not
those held by any other owner) and that are exercisable or
convertible within 60 days from the date hereof have been
exercised or converted.
(3) Consists of 390,127 shares owned by Robert A. Berman,
97,516 shares issuable upon the exercise of options,
2,326,857 shares owned by Bryanston Group, Inc.
("Bryanston") and 66,000 shares owned by Beatrice Tollman
(with respect to such shares owned by Bryanston and Beatrice
Tollman, Robert A. Berman has exclusive voting rights for a
three year period under the Bryanston Recapitalization
Agreement (defined below)). Robert A. Berman disclaims
beneficial ownership of any of the shares owned by Bryanston
and Beatrice Tollman for any purpose other than voting.
Debbie N. Berman, the wife of Robert A. Berman has sole
power to vote or to direct the vote and sole power to
dispose or to direct the disposition of 4,090 shares.
Robert A. Berman disclaims beneficial ownership of such
shares. Debbie N. Berman and Philip Berman, the brother of
Robert A. Berman are co-trustees for the Berman Family
Trust, which owns 12,272 shares and have joint power to vote
or to direct the vote and joint power to dispose or to
direct the disposition of the shares. Robert A. Berman
disclaims beneficial ownership of such shares.
(4) Consists of 1,440 shares owned by Scott A. Kaniewski,
28,506 shares owned by the Kaniewski Family Limited
Partnership, which he is the general partner and a 1%
limited partner (with respect to which Mr. Kaniewski has
sole voting and disposition rights) and 99,016 shares
issuable upon the exercise of options. Scott A. Kaniewski
disclaims beneficial ownership of the 28,221 shares owned by
the Kaniewski Family Limited Partnership for any other
purposes other than voting and dispositive powers. Does not
include 34,552 shares owned by the KFP Trust whose sole
trustee is Stacey B. Kaniewski, the wife of Scott A.
Kaniewski. Stacey B. Kaniewski has sole power to vote or
direct the vote and sole power to dispose or direct the
disposition of these shares. Scott A. Kaniewski disclaims
beneficial ownership of the shares owned by the KFP Trust.
(5) Includes 50,000 shares of Common Stock issuable upon the
exercise of options granted to Thomas W. Aro, all of which
options are currently exercisable.
(6) Includes 42,103 shares owned by Paul deBary and 19,000
shares of Common Stock issuable upon the exercise of options
granted, all of which options are currently exercisable.
(7) Consists of 19,000 shares of Common Stock issuable upon
the exercise of options granted to Thomas P. Puccio, all of
which options are currently exercisable.
(8) Consists of 20,500 shares of Common Stock issuable upon
the exercise of options granted to William W. Hopson, all of
which options are currently exercisable.
(9) Consists of 17,500 shares of Common Stock issuable upon
the exercise of options granted to Morad Tahbaz, all of
which options are currently exercisable.
(10) Consists of 19,000 shares of Common Stock issuable upon
the exercise of options granted to Jay A. Holt, all of which
options are currently exercisable.
(11) Robert A. Berman has exclusive voting rights for
Bryanston shares for a three year period under the Bryanston
Recapitalization Agreement. Robert A. Berman disclaims
beneficial ownership of any of the Bryanston shares for any
purpose other than voting.
(12) On May 17, 1998, the Company declared a dividend of
approximately 8,600 shares of Common Stock to BP Group, Ltd
("BP") with respect to, and in lieu of the cash dividend
accrued on, the outstanding shares of Series B Preferred
Stock held by BP in 1997. Such shares of Common Stock were
issued on January 5, 1999. In addition, during 2000, the
Company declared and issued to BP approximately 2,400 and
11,100 additional shares of common stock in lieu of the cash
dividend payable with respect to BP's shares of Series B
Preferred Stock for the 1999 and 1998 calendar years,
respectively. In April 2001, the Company declared and
issued dividends for the 2000 year with respect to BP's
shares of Series B Preferred Stock amounting to 17,061
shares of common stock. In February 2002, the Company
declared and issued dividends for the 2001 year with respect
to BP's shares of Series B Preferred Stock amounting to 12,
995 shares of common stock. Patricia Cohen is the sole
stockholder of BP. This table does not include 35,406
shares of common stock issuable upon conversion of 44,258
shares of Series B Preferred Stock owned by BP. All of such
shares of Preferred Stock are currently convertible into
shares of common stock.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's By-Laws currently provide that the number of
directors constituting the entire Board of Directors shall
consist of not more than eight (8) to be elected at each Annual
Meeting of Shareholders of the Company. Pursuant to Proposal No.
1, the nominees listed below have been nominated to serve as
directors (subject to their respective earlier removal, death or
resignation) until the 2004 Annual meeting of Shareholders and
until their successors are elected and qualified. Unless such
authority is withheld, proxies will be voted for the election of
the persons named below, who are all now serving as directors and
each of whom has been designated as a nominee. If, for any reason
not presently known, any person is not available to serve as
director, another person who may be nominated will be voted for
in the discretion of the proxies.
REQUIRED VOTE
If a quorum is present at the Meeting, either in person or
by proxy, directors shall be elected by a plurality of the votes
cast, in person or by proxy, at the Annual Meeting. Abstentions
and broker non-votes will not be counted.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
THE ELECTION OF EACH OF THE NOMINEES.
The following table sets forth for each director nominee.
YEAR FIRST
ELECTED
NAME AGE DIRECTOR POSITION
Robert A. Berman 43 2002 Chairman of the Board,
Chief Executive
Officer and Director
Thomas W. Aro 60 1994 Vice President,
Secretary and Director
Scott A. Kaniewski 39 2002 Chief Financial Officer and
Director
Paul deBary 56 2002 Director
William Hopson 58 2002 Director
Thomas P. Puccio 58 2002 Director
Morad Tahbaz 46 2003 Director
Jay Holt 57 2003 Director
Robert Berman has been a private investor for the past
fifteen years. As Managing Director of Watermark Investments
Limited from 1994 to 2000, he oversaw a number of private
partnerships investing in real estate, technology and basic
industries. From 1998 to 1999, Mr. Berman was a Vice Chairman
and Director of Executone Information Systems, a
telecommunications company. From 1995 to 1999, he served as
Chairman of the Board and Chief Executive Officer of Hospitality
Worldwide Services, Inc., a hotel services company with average
annual sales above $150 million. Mr. Berman has served as a
director and Chief Executive Officer of the Company since
February 2002.
Thomas W. Aro has served as a Director of the Company since
February 1, 1994, and as Vice President of the Company since its
formation in 1993 and as Secretary of the Company since May 1998.
Mr. Aro also serves as Chief Operating Officer of the Company's
gaming subsidiaries and has over 30 years experience in the
hospitality and gaming industries. Mr. Aro received his BS from
the University of Arizona and is a certified public accountant.
Scott Kaniewski, who has served as a director of the Company
since February 2002 and the Chief Financial Officer of the
Company since May 2002, was a director of Watermark Investments
Limited from 1995 to 2000. From 1995 to 1999, he served as a
Director of Hospitality Worldwide Services, Inc. and President of
its real estate advisory group from 1998 to 1999. From 1989 to
1995, he held several positions with VMS Realty Partners, a real
estate investment and development company, including Vice
President of Hotel Investments. Mr. Kaniewski received his BS
from Indiana University and is a certified public accountant.
Paul deBary is a Managing Director at Marquette deBary Co.,
Inc., a New York based broker-dealer, where he serves as a
financial advisor for state and local government agencies, public
and private corporations and non-profits. Prior to assuming his
current position, Mr. deBary served as Managing Director in the
Public Finance Department of Prudential Securities from 1994 to
1997. He was a partner in the law firm of Hawkins, Delafield &
Wood in New York from 1975 to 1994. Mr. deBary received an AB in
1968, and MBA and JD in 1971 from Columbia University. He is a
member of the American Bar Association, the New York State Bar
Association, the Association of the Bar of the City of New York
and the National Association of Bond Lawyers and serves a
President and as a Director of the Society of Columbia graduates.
He is a limited partner with a 2.97% interest in Watertone
Holdings, LP. Mr. deBary has served as a director of the
Company since March 2002.
William W. Hopson, who has served as a director of the
Company since March 2002, is a partner in the law firm of Stites
& Harbison in Atlanta, Georgia. From 1991 to 1999, Mr. Hopson
was a partner with the firm of Stephens, Humphries & White, LLP.
He served as President and Chairman of the Board of Pace
Construction from 1987 to 1991, was the Executive Vice President
of The Beck Company from 1984 to 1986, Executive Vice President
Development and Construction with W.B. Johnson Properties (Ritz-
Carlton) from 1981 to 1984 and Executive Vice President/Eastern
Division Manager for Henry C. Beck Company from 1968 to 1981. Mr.
Hopson received his BBC in 1967 from Auburn University and his JD
in 1991 from Georgia State University. He is a member of the
Associated General Contractors, American Bar Association,
Associated Builders and Contractors, Georgia Bar Association and
the American Trial Lawyers.
Thomas P. Puccio, who has served as a director of the
Company since December 2002, practices law in his own firm in New
York City. Prior to forming his own firm, he was practice area
administrator and senior partner at Milbank Tweed Hadley and
McCoy, a corporate law firm with headquarters in New York, and
prior thereto a partner at Stroock & Stroock & Lavan in its New
York office. He is a member of several federal district and
circuit courts, the Supreme Court of the United States, and the
New York and District of Columbia bars. Mr. Puccio served with
the United States Department of Justice for thirteen years in
various capacities including Chief of the Criminal Division and
Executive Assistant U.S. Attorney in the Eastern District of New
York and Chief of the New York Federal Organized Crime Strike
Force. In private practice Mr. Puccio has represented numerous
"Fortune 500" corporations, unions and individuals in a wide
variety of litigation matters. He currently serves as Trustee of
Local 295 of the International Brotherhood of Teamsters, having
been appointed by Eastern District Federal Judge Eugene Nickerson
as a result of a civil RICO case brought by the United States
Attorney's Office in the Eastern District.
Morad Tahbaz was named a director of the Company on
February 15, 2003. Mr. Tahbaz is currently the president of
Catskill Development, LLC ("Catskill"). Mr. Tahbaz also serves
on the board of directors of Air Methods Corporation (NASD:AIRM)
since he was elected in 1994. He is a co-founder and General
Partner of Americas Partners, an investment and venture capital
firm. Mr. Tahbaz serves as a Managing Director of Americas Tower
Partners, the developer of Americas Tower, a one million square
foot, 50-story office tower in New York City. Since 1983, Mr.
Tahbaz has also served as Senior Vice President of The New York
Land Company, a real estate acquisitions and development firm.
From 1980 to 1982, he was the Project Manager for Colonial
Seaboard, Inc., a residential development company in New Jersey.
Mr. Tahbaz received his Bachelor's Degree in Philosophy and Fine
Arts from Colgate University and attended the Institute for
Architecture and Urban Studies in New York City. He holds a
Master's Degree in Business Administration from Columbia
University Graduate School of Business. Mr. Tahbaz lectured on
real estate development and finance at the Columbia Graduate
School of Business from 1984 to 1988.
Jay Holt was named director of the Company on February 20,
2003. Mr. Holt is currently a corporate finance and business
development consultant. Prior to his current role, Mr. Holt
served as the former head of the Structured and Project Finance
Department of Deutsche Bank from 1990 to 1995. He was a partner
at the law firm of Hawkins, Delafield & Wood in New York City
from 1978 - 1988. During 1975 - 1977, Mr. Holt also served as a
fiscal aide to New York State Governor Hugh L. Carey during the
New York City financial crisis. Mr. Holt received a BA from
Baylor University and his JD from New York University.
Committees and Meetings of the Board of Directors
The Board has two committees - the Audit Committee and the
Compensation/ Stock Option Committee.
The Audit Committee, which is comprised of Paul deBary,
William Hopson and Jay Holt, is responsible for reviewing, with
both the Company's independent certified public accountants and
management, the Company's accounting and reporting principles,
policies and practices, as well as the Company's accounting,
financial and operating controls and staff. Each of Messrs.
deBary, and Holt is independent from the Company, as independence
is defined in Rule 4200(a)(15) of the National Association of
Securities Dealers' ("NASD") listing standards. The Audit
Committee has reviewed and discussed the audited financial
statements of the Company with management, has discussed with the
independent auditors the matters required to be discussed by SAS
61, as may be modified or supplemented. Additionally, the Audit
Committee has received the written disclosures and the letter
from the independent accountants required by Independence
Standards Board Standard No. 1 (Independence Standards Board
Standard No. 1, Independence Discussions with Audit Committees),
as may be modified or supplemented, and has discussed with the
independent accountant the independent accountant's independence.
Based upon such review and discussion, the Audit Committee
recommended to the Board of Directors that the audited financial
statements be included in the Company's Annual Report on Form 10-
KSB for the last fiscal year for filing with the SEC. The Board
of Directors has adopted a written charter for the Audit
Committee, a copy of which was sent to stockholders in 2001.
Stockholders may obtain a copy of the Audit Committee charter,
free of charge, by writing to the Company's Comptroller at c/o
Alpha Hospitality Corporation, 707 Skokie Boulevard, Northbrook,
IL 60062, or calling him at (847) 418-3804.
The Compensation/Stock Option Committee, which is comprised
of Scott Kaniewski, Thomas Aro and William Hopson is responsible
for establishing and reviewing the appropriate compensation of
directors and officers of the Company, for reviewing employee
compensation plans and for considering and making grants and
awards under, and administering, the Company's 1993 and 1998
Stock Option Plans. There were no meetings of the committee
during 2002.
During the 2002 fiscal year, there were two formal meetings
of the Company's Audit Committee. During such fiscal year, there
was also five meetings of the Board (2/12/02, 3/25/02, 5/23/02,
8/13/02 and 8/21/02, at which all of the Directors were present,
and there were eight unanimous written consents of the Board
(1/31/02, 2/4/02, 3/12/02, 4/1/02, 7/24/02, 7/25/03, 11/26/02 and
12/16/02).
Employment Agreements
On February 12, 2002 the Company entered into employment
agreements with each of Robert Berman and Scott Kaniewski,
providing for annual salaries of $300,000 and $200,000,
respectively, (which are subject to deferral under certain
circumstances and have been deferred to date) and options to
purchase, at an exercise price of $17.49 per share, up to an
aggregate of 95,016 shares of the Company's Common Stock, which
number of shares are subject to increase to an aggregate of up to
295,689 upon shareholder approval. These options originally
vested over a three year period. One third of the option shares
vest eighteen months from the date of closing or September 12,
2003, an additional one third vested twenty-four months from the
date of closing or March 12, 2004 and the balance fully vested on
March 12, 2005. On January 9, 2003, the Board modified the
employment agreements of each of Robert Berman and Scott
Kaniewski. The modifications, among others, include the
immediate vesting of the options under their respective
employment agreements and a reduction in the exercise price to
$2.12 per share. The Board determined that the purpose of the
stock options were not being adequately achieved with respect to
these employees holding unvested options that were exercisable at
prices above current market value and that it was in the best
interests of the Company and its shareholders that the Company
retain and motivate such employees. The current employment
contracts are for a fixed period of 36 months without provisions
for renewal stipulated.
Certain Relationships and Related Transactions
Watertone
In March 2002, the Company closed its transaction with
Watertone Holdings, LP ("Watertone") providing for the
acquisition of 47.5% of Watertone's economic interests in the
casino and racetrack business components of the business of
Catskill Development, L.L.C. ("Catskill"). Messrs. Berman and
Kaniewski are principals in Watertone and Mr. DeBary has a
minority and non-controlling interest in Watertone.
As a result of the acquisition, the Company's interest in
any net revenues derived from Catskill's casino business
increased effectively from 40% to approximately 49% and its
interest in net revenues derived from the racetrack increased
effectively from 25% to approximately 37%. In consideration for
such economic interests, the Company has issued 575,874 shares of
its Common Stock.
Mr. Robert Berman, the Company's Chairman of the Board and
Chief Executive Officer, beneficially owns 389,527 shares of the
Company's stock received by Watertone. Mrs. Debbie Berman, Robert
Berman's wife, and the children of Robert Berman beneficially
owns 4,090 shares and 12,272 shares, respectively. Each of
Robert Berman, Debbie Berman and the children of Robert Berman
disclaims beneficial ownership of such shares owned by the other
of them.
Mr. Scott Kaniewski, the Company's Chief Financial Officer
and a Board Member, beneficially owns 1,725 shares of the
Company's stock received by Watertone. Mrs. Stacey Kaniewski,
Scott Kaniewski's wife, and the children of Scott Kaniewski
beneficially own 16,819 and 45,954 shares, respectively. Each of
Scott Kaniewski, Stacey Kaniewski and the children of Scott
Kaniewski disclaims beneficial ownership of such shares owned by
the other of them.
Bryanston
Bryanston Group, Inc. ("Bryanston"), a major shareholder of
the Company is 50% owned by Beatrice Tollman, former Chairman
Stanley S. Tollman's spouse. On June 26, 1996, Bryanston
converted the amount due on a working capital loan (approximately
$19,165,000) made by Bryanston to the Company into shares of the
Company's Series B Preferred Stock. The Company was charged a 5%
transaction fee by Bryanston (approximately $958,000), which was
also converted into shares of Series B Preferred Stock. The
conversion was effective June 26, 1996, and the total of
approximately $20,123,000 was converted into 693,905 shares of
Series B Preferred Stock based on the fair market value of a
share of Common Stock on the date of conversion ($3.625).
Each share of outstanding Series B Preferred Stock (i) has a
liquidation value of $29.00 per share; (ii) has a cash dividend
rate of 10% of the liquidation value, which rate increases to 13%
of the liquidation value if the cash dividend was not paid within
30 days of the end of each fiscal year and in such event is
payable in shares of Common Stock; and (iii) is convertible into
..8 shares of Common Stock. On December 17, 1997, the Company
declared a 1996 dividend payable to Bryanston in approximately
73,000 shares of Common Stock, which were issued in April 1998.
On May 12, 1998, the Company declared a 1997 dividend payable to
Bryanston in approximately 151,900 shares of Common Stock, which
were issued on January 5, 1999. During 2001, the Company
declared and issued 42,600 and 183,100 additional shares of
Common Stock in lieu of cash dividends payable with respect to
Bryanston's shares of Series B Preferred Stock for the 1999 and
1998 calendar years, respectively. In April 2001, the Company
declared and issued dividends for the 2000 year with respect to
Bryanston's shares of Series B Preferred Stock amounting to
299,610 shares of Common Stock. In February 2002, the Company
declared and issued dividends for the 2001 calendar year with
respect to Bryanston's shares of Series B Preferred Stock
amounting to 241,202 shares of common stock. In addition, in
February 2002, Bryanston converted its shares of Series B
Preferred Stock into 621,790 shares of Common Stock.
On June 30, 1998, the Company restructured its existing
obligations to Bryanston by extinguishing its notes payable of
$7,800,000, $1,399,000 and $432,000 plus accrued interest on the
notes aggregating $3,098,000, in exchange for the issuance of
Series C Preferred Stock, and a $3,000,000 mortgage note on the
Company's idle gaming vessel located in Mobile, Alabama. Upon
contribution of the idle gaming vessel in July 1999 to Casino
Ventures, the $3,000,000 mortgage note was converted to a
promissory note. The Series C Preferred Stock had voting rights
of 2.4 votes per preferred share, was convertible into 2.4 shares
of Common Stock and carried an annual dividend of $5.65 per
share. In addition, the terms of the preferred shares included a
provision allowing the Company the option of calling the
preferred shares based upon the occurrence of certain capital
events that realize a profit in excess of $5,000,000. In January
2002, the Company declared and issued dividends for the 1998,
1999, 2000 and 2001 years with respect to Bryanston's shares of
Series C Preferred stock amounting to a total of 161,128 shares
of Common Stock. In addition, in February 2002, Bryanston
converted its shares of Series C Preferred Stock into 324,389
shares of Common Stock. Additionally, in January 2002, in
extinguishment of the remaining balance of $1,448,773 of
principal and interest on the aforementioned $3,000,000
promissory note on the Company's idle gaming vessel and an
additional $455,151 liability pertaining to a transfer of a
portion of Bryanston's interest in Catskill to the Company,
Bryanston received 237,991 shares of Common Stock.
During 2001 and 2002, Bryanston advanced $2,593,349 to the
Company, which was due on demand and accrued interest at a rate
of 8% per annum. In April 2002, the Company repaid $1,250,000.
On December 10, 2002, the Company executed an agreement
with Bryanston and certain other affiliates (the "Bryanston
Recapitalization Agreement") regarding certain obligations due
from and claims against the Company. The Company's remaining
indebtedness to Bryanston was $1,570,126. The Company also owed
Stanley Tollman ("Tollman"), the Company's former Chairman,
$1,528,167 and Monty Hundley ("Hundley"), the Company's former
President, $266,667 in deferred compensation. The parties agreed
to release the Company from all claims in exchange for shares of
the Company's Series E Preferred Stock having a total aggregate
liquidation value of $3,364,960. The Series E Preferred Stock is
non-voting and non-convertible, has no fixed date of redemption
or liquidation, and provides for cumulative dividends at 8% per
annum. Dividends to holders of the Company's Common Stock and
other uses of the Company's net cash flow are subject to
priorities for the benefit of the Series E Preferred Stock. The
Series E Preferred Stock is subject to redemption at the option
of the Company at any time at a price equal to its liquidation
value plus accrued dividends to the date of redemption.
Included in the Bryanston Recapitalization Agreement was the
acquisition of Bryanston's remaining interests in Catskill,
including its voting membership interest and preferred capital
account. Bryanston agreed to transfer such interests and release
the Company from all claims in exchange for additional shares of
Series E Preferred Stock with an aggregate liquidation value of
$13,942,000. The agreement also grants the Company the option at
any time, without notice, to purchase or redeem all or any
portion of (i) the Series E Preferred Stock issued to Bryanston,
Tollman and Hundley as described above, at a price equal to the
liquidation value, plus accrued dividends to the date of
redemption and (ii) subject to shareholder approval, Bryanston's
Common Stock at a price of $2.12 per share. This agreement
covers all the newly issued Series E Preferred Stock and all
2,326,857 shares of Common Stock currently owned by Bryanston.
In lieu of any such purchase or redemption in cash, the Company
has the right to purchase or redeem the Bryanston Common Stock
and Preferred Shares, as a whole or in part at any time, upon the
delivery of a subordinated promissory note to each party for the
purchase price of the number of shares then being redeemed. Such
promissory note is to be unsecured, bear interest at the rate of
7% per annum, and is payable in fixed installments commencing on
January 15, 2004 through maturity on January 15, 2006. The
Company has also entered into a similar agreement to redeem
66,000 shares of the Company's Common Stock from Beatrice Tollman
at a price of $2.12 per share. Bryanston and Beatrice Tollman
have also granted a three year, irrevocable proxy to vote all of
the shares of Common Stock held by them, but now subject to
redemption, with full powers of substitution and revocation, to
Robert Berman, the Company's Chief Executive Officer.
Morad Tahbaz, a director of the Company, is the President of
Catskill Development, LLC. On February 4, 2003, the Company
entered into a Letter of Intent with Catskill Development, LLC,
its partner in developing gaming activities at the Monticello
Raceway (the "Raceway") and other related entities. The
agreement provides for us to acquire a 48 year ground lease on
the Raceway and contiguous properties, together with all of
Catskill's development and management rights with respect to the
site and related gaming activities, in exchange for an 80.25%
position in the Company's common stock.
Other
William Hopson and Thomas P. Puccio, both directors of the
Company are partners in law firms that provide legal services to
Catskill Development, LLC. In 2001 and 2002, Catskill
Development, LLC paid $628,335 and $625,000, respectively, to
William Hopson's law firm. In 2001 and 2002, Catskill
Development, LLC paid $302,370 and $354,476, respectively, to
Thomas Puccio's law firm.
Paul deBary, a director of the Company, provided management
consulting and restructuring advice to the Company during 2002.
The Company paid him 30,000 shares issued at a market price of
$2.12 per share. On February 20, 2003, Paul deBary agreed to
return 5,000 shares to the Company.
All current transactions between the Company and its
officers, directors and principal stockholders or any affiliates
thereof are, and in the future such transactions will be, on
terms no less favorable to the Company than could be obtained
from unaffiliated third parties.
Stockholder Vote Required. If a quorum is present at the
Meeting, either in person or by proxy, the affirmative vote of a
plurality of the votes cast shall be sufficient to elect to the
Board each nominee on the Company's slate of directors.
Abstentions and broker non-votes will not be counted.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR THE ELECTION TO THE
BOARD OF DIRECTORS OF THE COMPANY OF EACH
OF THE NOMINEES.
PROPOSAL 2
TO APPROVE A PROPOSAL TO ISSUE TO ROBERT BERMAN AND SCOTT
KANIEWSKI PURSUANT TO THEIR RESPECTIVE EMPLOYMENT AGREEMENTS, AS
AMENDED, OPTIONS TO PURCHASE, AT AN EXERCISE PRICE OF $2.12 PER
SHARE, UP TO AN AGGREGATE OF AN ADDITIONAL 401,346 SHARES OF THE
COMPANY'S COMMON STOCK
Background
On February 12, 2002, the Company entered into employment
agreements with each of Robert Berman and Scott Kaniewski,
providing for annual salaries of $300,000 and $200,000,
respectively, (which is subject to deferral under certain
circumstances) and options to purchase, at an exercise price of
$17.49 per share, up to an aggregate of 95,016 shares of the
Company's Common Stock, which number of shares are subject to
increase to an aggregate of up to 295,689 upon shareholder
approval.
These options are granted to the individuals at $17.49 per
share and vest over a three-year period. One third of the option
shares vest eighteen months from the date of closing or September
12, 2003, an additional one third vests twenty-four months from
the date of closing or March 12, 2004 and the balance fully vest
on March 12, 2005.
The granting of the option package was material to the
inducement of Messrs. Berman and Kaniewski in the negotiations
for their respective employment contracts. Their annual salaries
are currently being deferred pursuant to the terms of the
agreements. The option package includes an exercise price
significantly higher than the current value of the Company's
Common Stock and the options vest over a three year period.
On January 9, 2003, the Board modified the employment
agreements of each of Robert Berman and Scott Kaniewski. The
modifications, among others, include the immediate vesting of the
options granted to them under their respective employment
agreements and a reduction in the exercise price to $2.12 per
share. The Board determined that the purpose of the stock options
were not being adequately achieved with respect to these
employees holding unvested options that were exercisable at
prices above current market value and that it was in the best
interests of the Company and its shareholders that the Company
retain and motivate such employees.
The Company's Board of Directors believe the terms of their
compensation agreement are no more liberal than market for
similar types of compensation packages for similar type companies
and are a benefit to the Company. Therefore the Board of
Director recommends a vote for the proposal.
New Plan Benefits
Dollar Value Number of Options
Name and Position at $7.77 per
option
Robert A. Berman
Chairman and Chief $1,559,229 200,673
Executive Officer
Scott A. Kaniewski
Chief Financial Officer $1,559,229 200,673
and Director
Total $3,118,458 401,346
Tax Treatment of Options
No taxable income will be recognized by the option holder
upon receipt of the option, and the Company will not be entitled
to a tax deduction for such grant.
Upon the exercise of the option, the option holder will
include in taxable income for Federal income tax purposes the
excess in value on the date of exercise of the shares acquired
upon exercise of the option over the exercise price. Upon a
subsequent sale of the shares, the option holder will derive
short-term or long-term gain or loss, depending upon the option
holder's holding period for the shares, commencing upon the
exercise of the option, and upon the subsequent appreciation or
depreciation in the value of the shares.
The Company generally will be entitled to a corresponding
deduction at the time that the participant is required to include
the value of the shares in his income. However, under certain
circumstances, the Company's ability to take the deduction may be
limited under provisions set forth in Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"). That
section disallows a deduction by a publicly held corporation for
compensation paid to certain employees (i.e., the chief executive
officer and the four highest compensated officers as of the last
day of the taxable year) for compensation for the taxable year in
excess of $1 million. The rule does not apply to "qualified
performance based compensation" that meets the requirements of
Treasury regulations promulgated pursuant to Code Section 162(m).
The options granted to Messrs. Berman and Kaniewski may not
qualify for this exception.
As of February 20, 2003, the market value of these options
(closing price less option price) is as set forth in the table
above and the expiration date of said options is February 8, 2007
(five years from the date of issuance).
Stockholder Vote Required. If a quorum is present at the
Meeting, either in person or by proxy, the affirmative vote of a
majority of the votes cast shall be sufficient to approve the
proposed grant of options to purchase up to 200,673 additional
shares of the Company's Common Stock, at an exercise price of
$2.12 per share, to each of Robert Berman and Scott Kaniewski
pursuant to their employment agreements, as amended. Abstentions
will have the same effect as votes against such proposal and
broker non-votes will not be counted.
THE BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR THE APPROVAL OF
THE GRANT TO EACH OF ROBERT BERMAN AND SCOTT KANIEWSKI
OPTIONS TO PURCHASE, AT AN EXERCISE PRICE OF $2.12 PER SHARE, UP
TO
AN ADDITIONAL 200,673 SHARES OF THE COMPANY'S COMMON STOCK
EXECUTIVE COMPENSATION
Executive Officers
The executive officers of the Company are:
Robert A. Berman Chairman of the Board and Chief
Executive Officer
Scott A. Kaniewski Chief Financial Officer and
Treasurer
Thomas W. Aro Vice President and Secretary
Information regarding the responsibilities of and the terms
of the positions held by Robert A. Berman, Scott A. Kaniewski,
and Thomas W. Aro are set forth on page 6 of this proxy statement
in the text of Proposal 1.
Summary Compensation Table
The following table sets forth all cash compensation for
services rendered in all capacities to the Company and its
subsidiaries for the fiscal years ended December 31, 2002, 2001
and 2000, paid to the Company's current and prior Chief Executive
Officer and two executive officers (collectively the "Named
Executive Officers") whose total compensation exceeded $100,000
per annum. No other executive officers' compensation exceeded
$100,000 during the above fiscal years.
Securities
Restricted Underlying
Name and Principal Stock Options All Other
Position Year Salary Awards /SARS Compensation
Robert A. Berman (1) 2002 $263,150 -- 95,016(2) --
Chairman of the 2001 $ 0 -- -- --
Board of Directors, 2000 $ 0 -- -- --
Chief Executive
Officer and President
Scott A. Kaniewski(2)2002 $175,433 -- 95,016(2) --
Chief Financial 2001 0 -- -- --
Officer 2000 0 -- -- --
Thomas W. Aro 2002 $191,994 -- -- --
Vice President and 2001 $215,000 -- 4,000 --
Secretary 2000 $206,500 -- 42,000 --
Stanley S. Tollman(3)2002 $250,000 -- -- --
Former Chairman of 2001 $250,000 -- -- --
the Board of
Directors 2000 $250,000 -- 50,000 --
(1) Robert A. Berman and Scott A, Kaniewski's salaries are
currently being deferred pursuant to the terms of their
respective employment agreements.
(2) Robert A. Berman and Scott A. Kaniewski were granted
options to purchase, at an exercise price of $17.49 per share, up
to an aggregate of 190,032 shares of the Company's Common Stock
(which number of shares will be subject to increase to an
aggregate of up to 591,378 upon shareholder approval). On January
9, 2003, the Board modified the employment agreements of each of
Robert Berman and Scott Kaniewski. The modifications, among
others, include the immediate vesting of the options under their
respective employment agreements and a reduction in the exercise
price to $2.12 per share. The Board determined that the purpose
of the stock options were not being adequately achieved with
respect to these employees holding unvested options that were
exercisable at prices above current market value and that it was
in the best interests of the Company and its shareholders that
the Company retain and motivate such employees.
(3) No portions of the cash salaries to which Stanley S.
Tollman was entitled during the periods indicated had been paid;
rather, the expense and liability had been accrued without
interest. Mr. Tollman agreed to waive his right to receive any
salary for the year 2002, 2001 and 2000.
Option/SAR Grants in Last Fiscal Year.
The following table sets forth certain information regarding
Common Stock option grants made to the Named Executive Officers
during 2002.
Name Number of Percent of Exercise Expiration
Securities Total or Base Date
Underlying Options/SARs Price
Options/SAR Granted to ($/Sh)
s Granted Employees in
(#) Fiscal Year
Robert A. 95,016(1) 50% $17.49 February
Berman 12, 2007
Scott A. 95,016(1) 50% $17.49 February
Kaniewski 12, 2007
(1) See footnote 2 on the summary compensation table above.
Aggregated Options/SAR Exercises in Last Fiscal Year and Fiscal
Year End Option/SAR Values
The following table sets forth certain information
regarding unexercised Common Stock options held by each of the
Named Executive Officers as of December 31, 2002. None of the
Named Executive Officers exercised any Common Stock options
during the fiscal year ended December 31, 2002:
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options at
Shares Options at Fiscal Year End Fiscal Year End (1)
Acquired Value
On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
Robert A. Berman -- -- 0 95,016 0 0
Scott A. Kaniewski -- -- 0 95,016 0 0
Thomas W. Aro -- -- 46,000 -- 0 0
In June 2001, November 2000 and December 1998, the Company
determined that the purposes of the Company's stock option plans
were not being adequately achieved with respect to those
employees and consultants holding options that were exercisable
at prices above current market value and that it was in the best
interests of the Company and its shareholders that the Company
retain and motivate such employees and consultants. Therefore,
in order to provide such optionees the opportunity to exchange
their above market value options for options exercisable at the
current market value in 2001, 2000 and 1998, respectively, the
Company cancelled all options that were outstanding under the
1998 and 1993 stock option plans at that time and reissued the
options at an exercise price equal to the closing NASDAQ bid
prices on the respective dates in July 2001, November 2000 and
December 1998.
The following table sets forth certain information with
respect to all such cancellations and reissuances with respect to
options held by any executive officer from March 19, 1993 (date
of inception) through December 31, 2002:
Number of Length of
Market Original
Securities Price of Exercise Option Term
Underlying stock at Price at Remaining
Cancellation/ Options time of time of New at Date of
Reissuance Cancelled/ Canceling/ Canceling/ Exercise Canceling/
Date Reissued Reissuing Reissuing Price Reissuing
Thomas W. Aro 12/12/98 60,000(1) $1.063(1) $ 3.25(1) $1.063(1) 6 years
12/12/98 100,000(1) $1.063(1) $ 2.00(1) $1.063(1) 6 years
10/12/00 75,000(1) $1.375(1) $ 2.00(1) $1.375(1) 8 years
10/12/00 130,000(1) $1.375(1) $ 4.25(1) $1.375(1) 8 years
6/13/01 6,000 $4.40 $10.63 $4.40 6 years
6/13/01 10,000 $4.40 $10.63 $4.40 6 years
6/13/01 5,500 $4.40 $13.75 $4.40 8 years
6/13/01 7,500 $4.40 $13.75 $4.40 8 years
6/13/01 13,000 $4.40 $13.75 $4.40 6 years
(1) Represents amounts and prices prior to 1-for-10 reverse split
in June 2001.
Compensation of Directors. On May 12, 1998, with
shareholder approval granted in September 1999, the Board
approved an annual compensation arrangement whereby each of the
three outside directors will be entitled to receive $6,000 per
annum plus options to purchase up to 2,500 shares, and an
additional 1,500 shares for each committee served upon, of the
Company's Common Stock at an exercise price equal to the current
market price at the date the option is granted. In 2001, the
Company granted to its outside directors options to purchase an
aggregate amount of up to 16,500 shares of its Common Stock for
the year 2001 at an exercise price of $4.40 per share, which
options can be exercised at any time up to 2011. Similarly, in
1999 and 1998, the Company granted to its outside directors
options to purchase an aggregate amount of up to 15,000 and
28,500 shares, respectively, of its Common Stock at an exercise
price of $42.50 and $10.63, respectively, per share, which can be
exercised any time up to 2009 and 2008, respectively. The amount
granted in 1999 was for services to be rendered in the year 2000.
The amount granted in 1998 consisted of options to purchase
aggregate amounts of up to 13,500 and 15,000 shares for the 1998
and 1999 years of service, respectively. As compensation to its
employee directors, the Company, per the plan, granted options to
purchase an aggregate amount of up to 8,000 shares for the year
2001 at an exercise price of $4.40 per share and 9,500 shares for
each of the years 2000 and 1999 at exercise prices of $42.50 and
$10.63, respectively, per share. In 2002, the outside directors
received no cash compensation, as their salaries were deferred.
On January 9, 2003, the Board modified the exercise price for
William Hopson and Paul deBary options to $2.12, increased the
annual compensation for outside directors to $20,000 per year and
granted 30,000 shares to Paul deBary for providing management
consulting and restructuring advice to the Company. On February
20, 2003, Paul deBary agreed to return 5,000 shares to the
Company. In addition, the Board approved a grant of options to
purchase 15,000 shares of the Company's Common Stock to Thomas
Puccio, Morad Tahbaz and Jay Holt at a price of $2.12. The
Board also granted to the Directors options to purchase an
aggregate amount of 30,500 shares of its Common Stock for the
year 2003 at an exercise price of $2.12 per share, which options
can be exercised at any time up to 2013.
Audit Fees and Other Fees
Friedman, Alpren & Green advised the Audit Committee that it
provided $245,773 of audit services and $20,868 of other services
during the Company's fiscal year ended December 31, 2002. Other
services included: (i) tax research and assistance; (ii) tax
extension preparation; and (iii) out-of-pocket expenses. The
Audit Committee has advised the full Board of Directors that it
did not believe the Company's audit was impaired by Friedman,
Alpren & Green' provision of such services. As a result, the
Board of Directors believes that Friedman, Alpren & Green was an
independent accountant with respect to the Company.
Financial Information Systems Design and Implementation Fees
None
Representatives from the Company's independent auditor are
expected to be in attendance at the annual meeting and be
available for questions. Shareholders will have the opportunity
to make statements or ask questions and representatives from the
Company will be available to answer their questions.
Corporate Performance Graph. The following graph shows a
comparison of cumulative total stockholders' returns from
December 31, 1996 through December 31, 2002 for the Company, the
Russell 2000 Index ("Russell") and the Dow Jones Entertainment
and Leisure -- Casino Index ("DJ Casino"). The graph assumes
the investment of $100 in shares of Common Stock, securities
represented by the Russell Index or DJ Casino Index on December
31, 1996 and that all dividends were reinvested. No dividends
have been declared or paid on the Company's Common Stock.
Additional Information. The Company is subject to the
informational requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, Proxy Statements and other information
with the Securities and Exchange Commission (the "SEC"). Proxy
Statements, reports and other information can be inspected and
copied at the public reference facilities of the SEC at its
principal office at Judiciary Plaza, 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549. The SEC also maintains a web site
at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding
registrants that file electronically with the SEC.
Any statement contained herein (or in a document
incorporated by reference herein) shall be deemed to be modified
or superseded for purposes of this Proxy Statement to the extent
that a statement contained in any subsequently filed document
that also is (or is deemed to be) incorporated by reference
herein modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Proxy
Statement. All documents filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of this Proxy Statement and prior to the date of the Meeting
shall be deemed to be incorporated by reference in this Proxy
Statement and to be a part hereof from the respective dates of
filing of such documents.
The Company will provide, without charge, to each
stockholder to whom this Proxy Statement is delivered and who so
requests, a copy of any or all of the information that has been
incorporated by reference in this Proxy Statement (exclusive of
exhibits to such information unless such exhibits are
specifically incorporated by reference into such information).
Any such request should be made orally or in writing to Alpha
Hospitality Corporation, Secretary, 707 Skokie Boulevard, Suite
600, Northbrook, IL, 60062, telephone (847) 418-3804. Within one
business day of receipt of such a request, the Company will
provide, by first class mail or other equally prompt means, a
copy of the information as requested.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the
Company's directors, its executive (and certain other) officers,
and any persons holding ten percent or more of the Company's
Common Stock must report on their ownership of the Company's
Common Stock and any changes in that ownership to the Securities
and Exchange Commission and to the National Association of
Securities Dealers, Inc. Automated Quotation System. Specific due
dates for these reports have been established. Based upon the
Company's review of Forms 3, 4 and 5 and amendments thereto, if
any, furnished to the Company under Rule 16a-3(e) during and with
respect to the Company's most recent fiscal year and any written
representations provided to the effect that no Form 5 is
required, no person that, at any time during the Company's last
fiscal year, was an officer, director or beneficial owner of more
the 10 percent of the Company's Common Stock reported on any of
the foregoing forms failed to file, on a timely basis, any
reports required by Section 16(a) of the Exchange Act.
STOCKHOLDER PROPOSALS
Stockholders' proposals intended to be presented at the
Company's next Annual Meeting of Stockholders, pursuant to the
provision of Rule 14a-8 promulgated under the Exchange Act, must
be received at the Company's offices not later than October 23,
2003 for inclusion in the Company's Proxy Statement and form of
proxy relating to that Meeting.
2001 ANNUAL REPORT
As the Company chose not to hold an annual meeting in 2002,
copies of its Annual Report on Form 10-K for the fiscal year
ended December 31, 2001 were never distributed to stockholders.
In light of this fact, any stockholder wishing to receive a copy
of the Company's annual Report on Form 10-K for the fiscal year
ended December 31, 2001 may obtain one, free of free of charge,
by writing to the Company's Comptroller at c/o Alpha Hospitality
Corporation, 707 Skokie Boulevard, Northbrook, IL 60062, or
calling him at (847) 418-3804.
ALPHA HOSPITALITY CORPORATION
707 Skokie Boulevard
Suite 600
Northbrook, IL 60062
_________________
This Proxy is Solicited on Behalf of the Board of Directors
_____________________
The undersigned hereby appoints Robert Berman and Thomas W.
Aro as Proxies, each with the power to appoint his substitute,
and hereby authorizes them, and each of them acting singly, to
represent and vote, as designated below, all the shares of Common
Stock of Alpha Hospitality Corporation (the "Company") held of
record by the undersigned February 14, 2003 at the Annual Meeting
of Stockholders to be held on March 25, 2003 or any adjournment
or postponement thereof.
Please specify your vote by checking the box to the left of your
choice for each respective proposal.
(1) To elect the following individuals as members to the Board
of Directors of the Company:
Robert A. Berman FOR WITHHOLD
Thomas W. Aro FOR WITHHOLD
Paul A. deBary FOR WITHHOLD
William W. Hopson FOR WITHHOLD
Scott A. Kaniewski FOR WITHHOLD
Thomas P. Puccio FOR WITHHOLD
Morad Tahbaz FOR WITHHOLD
Jay A. Holt FOR WITHHOLD
(2) To approve the proposal to grant options to purchase up
to an aggregate of 200,673 additional shares of the
Company's common stock, at an exercise price of $2.12
per share to each of Robert Berman and Scott Kaniewski
pursuant their employment agreements, as amended.
FOR AGAINST ABSTAIN
This proxy, when properly executed, will be voted in the
manner directed by the undersigned stockholder. If no direction
is made, this proxy will be voted FOR the two Proposals.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
Please sign exactly as name appears below. When shares are
held by joint tenants, both should sign. When signing as
attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign in full
corporate name by the President or other authorized officer. If
a partnership, please sign in partnership name by authorized
person.
__________________________________________
Signature
__________________________________________
Signature if held jointly
Dated: , 2003