SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
SCHEDULE l3D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
THE SANDS REGENT
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.05 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
800091100
- --------------------------------------------------------------------------------
(CUSIP Number)
with a copy to:
Stephen Feinberg Robert G. Minion, Esq.
450 Park Avenue Lowenstein, Sandler, Kohl,
28th Floor Fisher & Boylan, P.A.
New York, New York 10022 65 Livingston Avenue
(212) 421-2600 Roseland, New Jersey 07068
(201) 992-8700
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Persons
Authorized to Receive Notices and Communications)
July 16, 1997
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule l3G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. [ ]
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule l3d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
Item 2. Identity and Background.
The person filing this statement is Stephen Feinberg, whose business
address is 450 Park Avenue, 28th Floor, New York, New York 10022. Mr. Feinberg
serves as (i) the managing member of Cerberus Associates, LLC, the general
partner of Cerberus Partners, L.P. ("Cerberus"), (ii) the investment manager for
each of Cerberus International, Ltd. ("International"), Ultra Cerberus Fund,
Ltd. ("Ultra") and certain other private investment funds (the "Funds") and
(iii) the manager member of Madeleine LLC, a limited liability company organized
under the laws of New York ("Madeleine" and, collectively with Cerberus,
International and Ultra, the "Feinberg Affiliates"). Cerberus, International,
Ultra, the Funds and Madeleine are engaged in the investment in personal
property of all kinds, including but not limited to capital stock, depository
receipts, investment companies, mutual funds, subscriptions, warrants, bonds,
notes, debentures, options and other securities of whatever kind and nature.
Mr. Feinberg has never been convicted in any criminal proceeding, nor has
he been a party to any civil proceeding commenced before a judicial or
administrative body of competent jurisdiction as a result of which he was or is
now subject to a judgment, decree or final order enjoining future violations of,
or prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws. Mr. Feinberg is a
citizen of the United States.
Item 4. Purpose of Transaction.
The acquisition of the shares of common stock of the Company is for
investment purposes on behalf of Cerberus, International, Ultra and the Funds,
respectively. In addition, on July 16, 1997, Madeleine agreed to provide up to
$500,000 of financing to Desert Golden Sun, LLC, a limited liability company
organized under the laws of Nevada ("DGS"), to enable DGS to satisfy an escrow
payment obligation (the "Escrow Financing") with respect to DGS's proposed
acquisition of 2,057,618 shares of common stock of the Company from certain
shareholders of the Company pursuant to the terms of a letter agreement, dated
June 27, 1997, as amended as of July 15, 1997, by and among DGS and certain
shareholders of the Company (the "DGS Letter Agreement"). In addition, Madeleine
(or one or more of its affiliates) may in the future consider providing all or a
portion of the financing necessary to enable DGS to acquire the 2,057,618 shares
of common stock of the Company pursuant to the DGS Letter Agreement, although no
agreement to do so has been entered into between Madeleine (or any of its
affiliates) and DGS (or any other person). Also, the DGS Letter Agreement
requires the shareholders of the Company who are party thereto to use their best
efforts to assist DGS, upon consummation of the purchase of the 2,057,618 shares
of common stock of the Company, in gaining control of the Company's board of
directors (and various other matters related thereto). Although it is possible
that Stephen Feinberg will vote the shares of common stock of the Company, if
any, then held by the Feinberg Affiliates and the Funds in favor of DGS gaining
control of the Company upon DGS's consummation of the purchase of the 2,057,618
shares of common stock of the Company, neither Stephen Feinberg nor the Feinberg
Affiliates have entered into or reached any agreement with DGS or any other
person to do so and the determination of whether or not to do so by Mr. Feinberg
will be based on such factors which he at that time deems relevant, including
but not limited to whether or not Madeleine (or any of its affiliates) agrees to
provide financing to DGS in addition to the Escrow Financing to enable DGS to
acquire the 2,057,618 shares of common stock of the Company pursuant to the DGS
Letter Agreement. Other than as set forth herein, neither Stephen Feinberg nor
the Feinberg Affiliates have any present plans or intentions which relate to or
would result in any of the transactions required to be described in Item 4 of
Schedule 13D.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
As described in Item 4 above, Madeleine has agreed to provide the Escrow
Financing to DGS in connection with DGS's efforts to acquire 2,057,618 shares of
common stock of the Company from certain shareholders of the Company pursuant to
the terms of the DGS Letter Agreement and may in the future consider making
additional financing available to DGS. Other than as set forth herein, no
contracts, arrangements, understandings or similar relationships exist with
respect to the shares of common stock of the Company between Stephen Feinberg or
the Feinberg Affiliates and any person or entity.
Item 7. Material to be Filed as Exhibits.
1. Letter Agreement, dated June 27, 1997, as amended as of July 15, 1997,
by and among Desert Golden Sun, LLC and certain shareholders of the Company.
2. Demand Promissory Note, dated July 17, 1997, made by Desert Golden Sun,
LLC in favor of Madeleine LLC.
<PAGE>
Signature
After reasonable inquiry and to the best of the undersigned's knowledge and
belief, the undersigned hereby certifies that the information set forth in this
statement is true, complete and correct.
July 19, 1997
/s/ Stephen Feinberg
___________________________
Stephen Feinberg, in his capacity as
the manager member of Madeleine LLC,
the general partner of Cerberus
Associates, LLC, the general partner
of Cerberus Partners, L.P. and as
the investment manager for each of
Cerberus International, Ltd., Ultra
Cerberus Fund, Ltd. and the Funds
ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL
CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001).
<PAGE>
Desert Golden Sun, LLC
1055 E. Tropicana Avenue
Suite 200
Las Vegas, Nevada 89119
June 27, 1997
Pete Cladianos, Jr.
345 North Arlington Avenue
Reno, Nevada 89501
Dear Pete:
By execution of this letter agreement (this "Letter Agreement"), each
of the undersigned shareholders (the "Shareholders") of The Sands Regent (the
"Company") hereby irrevocably agrees to sell (the "Purchase") to Desert Golden
Sun, LLC (the "Purchaser") the number of shares of common stock of the Company
set forth opposite such Shareholder's name on Exhibit A annexed hereto, totaling
2,057,618 shares (collectively, the "Shares"), upon the terms and conditions set
forth herein.
1. Consideration for the Purchase. As consideration for
entering into this Letter Agreement, the Purchaser shall pay
to the Shareholders an aggregate amount of $100.00. Within
Five (5) days of the date of this Letter Agreement, the
Purchaser shall place in escrow, upon terms mutually
agreeable to the parties hereto, $499,900.00 (the "Escrow
Amount"). The Purchaser shall have Twenty-One (21) days from
the date of this Letter Agreement to commence proceeding for
approval from all appropriate gaming authorities. The
Purchaser shall have Ninety (90) days from the date of this
Letter Agreement to negotiate with Wells Fargo Bank (the
"Bank"), the holder of certain debt owed by the Company, to
receive the Bank's approval of the consummation of the
transaction outlined herein or to purchase the Company's
debt from the bank. If the Purchaser does not reach
agreement with the Bank, this Letter Agreement will
terminate and the Escrow Amount will be returned to the
Purchaser. The Shareholders will not be obligated to place
the Shares in the escrow until (i) an agreement between the
Bank and the Purchaser has been reached, or (ii) the
Purchaser has placed the entire Purchase Price in escrow.
The Escrow Amount shall be immediately payable to the
Shareholders, and credited toward the Purchase Price, if, on
or before the Expiration Date, the Purchaser has received
all requisite approvals from all applicable gaming and
regulatory authorities with respect to the Purchase. The
Escrow Amount shall be payable to the Shareholders if the
Purchase is not consummated as a consequence of the
Purchaser's breach of any representation, warrant or
covenant set forth herein. The Escrow Amount shall not be
payable to the Shareholders and it shall be refunded to the
Purchaser by the Shareholders if previously distributed, if
any approvals received from gaming authorities have been
rescinded or cease to be in effect or if the Shareholders
have breached any representation, warranty or covenant set
forth herein. If the Bank rescinds its consent to the
transaction contemplated hereby or fails to consummate the
sale of the Company's debt to the Purchaser, then the
Purchaser still has the obligation to proceed to consummate
the purchase of the Stock.
2. Closing. The Purchaser shall have until November 30, 1997
(the "Expiration Date") to consummate the Purchase (the
"Closing"). The Purchaser shall notify the Shareholders of
the date of Closing by written notice.
3. Purchase Price. The Purchase shall be consummated upon
payment by the Purchaser to the Shareholders of a total of
$6,172,854 (i.e. $3.00 per Share) (the "Purchase Price") in
cash at the Closing, inclusive of the Escrow Amount,
pursuant to definitive agreements reasonably acceptable to
the parties hereto. In addition, Purchaser agrees to
compensate Shareholders for all of their costs and expenses
associated with the Purchase, including attorneys fees,
provided, however, that such costs and expenses shall not
exceed $35,000.
4. Representations of the Shareholders. Each of the
Shareholders, jointly and severally, represents, warrants
and covenants that as of the date hereof and through the
Closing (i) each Shareholder owns and will own the Shares
set forth opposite such Shareholder's name on Schedule A
hereto free and clear of any lien or encumbrance, (ii) each
Shareholder has and will have the authority to enter into
the Letter Agreement and perform its obligations hereunder
and (iii) this Letter Agreement is and will be enforceable
against each Shareholder in accordance with its terms.
5. Representations of the Purchaser. The Purchaser, and Shawn
Scott individually, jointly and severally, represent,
warrant and covenant that as of the date hereof through the
Closing (i) Shawn Scott has and will have the authority to
enter into the Letter Agreement on behalf of the Purchaser,
(ii) Purchaser has the authority to perform its obligations
hereunder (iii) this Letter Agreement is and will be
enforceable against Purchaser in accordance with its terms
and (iv) the Shares will not be acquired by Purchaser with a
view to the distribution thereof within the meaning of the
Securities act of 1933, as amended.
6. Definitive Documentation: Best Efforts; Control of Board.
Each of the Shareholders jointly and severally agrees to
cause the Company to make available to the Purchaser and its
representatives, such information as the Purchaser may
reasonably request. Except as may be required by applicable
law or applicable regulatory or governmental authorities and
regulations, non-public information thus obtained by the
Purchaser will be treated as confidential and, if the
Purchase is not consummated, all documents or copies thereof
obtained by the Purchaser will be returned to the Company or
the Shareholders. Each of the Shareholders jointly and
severally agrees to use best efforts to enter into
definitive documentation prior to the Expiration Date and to
cooperate with the Purchaser and the applicable gaming and
regulatory authorities in obtaining prior to the Expiration
Date all requisite approvals from such authorities for the
Purchase. The shareholders jointly and severally agree to
use their best efforts to assist the Purchaser in gaining
control of the Company's board of directors promptly after
the Closing.
7. Operation of Business; No Other Sale. After the date hereof
and prior to the termination of the Letter Agreement, each
of the Shareholders jointly and severally agrees to cause
the Company to be operated in the ordinary course of
business. The Shareholders jointly and severally agree that
none of them will accept any other offer to obtain control
of, or ownership or, all or any portion of the Shares prior
to the Expiration Date.
8. Employment Agreements. After the Closing, Pete Cladianos,
Jr., and Pete Cladianos, III, have agreed to continue their
employment with the Company. The basic terms for employment
are set forth on Exhibit B which is attached to this Letter
Agreement and made a part of it by this reference. Pete
Cladianos, Jr., and Pete Cladianos, III, have agreed to be
bound by the terms of those agreements. The parties will
enter into formal employment agreements, the execution of
which will be a condition of Closing.
9. No Purchase of Bank Debt. The Shareholders jointly and
severally agree that they will not, directly or indirectly,
purchase the Company's debt to the Bank.
10. No Public Announcement. None of the Shareholders, on the one
hand, or the Purchaser, on the other hand, will make any
public statement or announcement with respect to the subject
matter of this Letter Agreement without the prior approval
of the other, except that in the event the parties are
unable to agree on a public statement or announcement and
legal counsel for a party is of the opinion that such
statement or announcement is required by law, then such
party may issue the legally required statement or
announcement.
11. Termination. This Letter Agreement shall terminate if the
Closing has not occurred by November 30, 1997 (the
"Expiration Date") or as provided in Sections 1 above unless
extended by mutual written agreement among the parties
hereto.
12. Enforceability. The Shareholders' obligation to sell the
Shares on the terms set forth in paragraph 3 shall be
binding upon the Shareholders during the term of this Letter
Agreement. This Letter Agreement is a binding and
enforceable agreement between the parties hereto, and each
party agrees not to institute or participate in any
proceeding seeking to establish that this Letter Agreement
does not constitute a binding and enforceable agreement. The
representations, warranties and covenants herein shall
survive the Closing. All parties shall be considered the
draftsman of the Letter Agreement in any dispute where that
issue is relevant.
13. Governing Law. This Letter Agreement may be governed by the
laws of the state of Nevada applicable to agreements made
and to be performed entirely within such State.
14. Exclusive Jurisdiction. It is agreed that the Second
Judicial District Court of the State of Nevada, in and for
the County of Washoe, shall be the sole and exclusive forum
for the resolution of any disputes arising among any of the
parties to this Letter Agreement. In the event that any
litigation commenced in the Second Judicial District Court
of the State of Nevada, in and for the County of Washoe, is
properly removable to a Federal Court under the laws of the
United States of America, such removal shall take place if
the legal basis for removal exists; provided, however, that
the parties to this Letter Agreement agree that the
exclusive venue of the Federal forum for the resolution of
any disputes shall be the United States District Court for
the District of Nevada, Northern Nevada Division, located in
Reno, Nevada.
15. Counterparts. This Letter Agreement may be executed in
counterparts, each of which shall be an original, and all of
which together shall constitute one and the same Letter
Agreement.
16. Attorney's Fees. If a legal action or other proceeding is
brought for enforcement of the Letter Agreement because of
an alleged dispute, breach, default, or misrepresentation in
connection with any of the provisions of this Letter
Agreement, the successful or prevailing party shall be
entitled to recover reasonable attorney's fees and costs
incurred, both before and after judgment, in addition to any
other relief to which they may be entitled.
If this Letter Agreement accurately reflects our understanding, please so
indicate by signing the original and duplicate of this letter and returning a
fully executed copy to the undersigned.
Very truly yours,
Desert Golden Sun, LLC
By: /s/ Shawn Scott
________________________
Shawn Scott, Manager
/s/ Pete Cladianos Jr. /s/ Pete Cladianos Jr.
______________________________ ______________________________
PETE CLADIANOS, JR., Trustee PETE CLADIANOS, JR., Trustee of the
of the Pete Cladianos, Jr. Trust Pete Cladianos, Jr. Trust
FBO Allison Cladianos FBO Leslie Cladianos
/s/ Pete Cladianos, Jr. /s/ Katherene Johnson Latham
___________________________________ ___________________________________
PETE CLADIANOS, JR., Trustee KATHERENE JOHNSON LATHAM, Trustee
of the Antonia Cladianos II Grantor of the Katherene J. Latham 1988
Retained Annuity Trust Trust (Living Trust)
/s/ Pete Cladianos, Jr. /s/ Deborah R. Lundgren
___________________________________ ___________________________________
PETE CLADIANOS, JR., Trustee DEBORAH R. LUNDGREN, Trustee
of the Pete Cladianos, Jr. Trust of the Deborah R. Lundgren 1986
FBO Antonia Cladianos II Trust (Living Trust)
/s/ Pete Cladianos, Jr. /s/ Deborah R. Lundgren
___________________________________ ___________________________________
PETE CLADIANOS, JR., Trustee DEBORAH R. LUNDGREN, Trustee
of the Katherene Johnson Latham Trust of the Gregory Kent Lundgren Trust
FBO Antonia Cladianos II
/s/ Pete Cladianos, Jr. /s/ Deborah R. Lundgren
___________________________________ ___________________________________
PETE CLADIANOS, JR., Trustee DEBORAH R. LUNDGREN, Trustee
of the Second Amended of the Pete Cladianos, Jr. Trust
Antonia Cladianos II Trust FBO Gregory K. Lundgren
/s/ Pete Cladianos, Jr. /s/ Deborah R. Lundgren
___________________________________ ___________________________________
PETE CLADIANOS, JR., Trustee DEBORAH R. LUNDGREN, Trustee
of the Pete Cladianos III Grantor of the Katherene Johnson Latham
Retained Annuity Trust Trust FBO Gregory K. Lundgren
/s/ Pete Cladianos, Jr. /s/ Pete Cladianos, Jr.
___________________________________ ___________________________________
PETE CLADIANOS, JR., Trustee DEBORAH R. LUNDGREN, Trustee
of the Pete Cladianos Jr. Trust of the Katherene R. Lundgren Trust
FBO Pete Cladianos III
/s/ Pete Cladianos, Jr. /s/ Deborah R. Lundgren
___________________________________ ___________________________________
PETE CLADIANOS, JR., Trustee DEBORAH R. LUNDGREN, Trustee
of the Katherene Johnson Latham Trust of the Pete Cladianos, Jr. Trust
FBO Pete Cladianos III FBO Katherene R. Lundgren
/s/ Pete Cladianos, Jr. /s/ Deborah R. Lundgren
___________________________________ ___________________________________
PETE CLADIANOS, JR., Trustee DEBORAH R. LUNDGREN, Trustee
of the Second Amended of the Katherene Johnson Latham
Pete Cladianos III Trust Trust FBO Katherene R. Lundgren
/s/ Pete Cladianos, Jr. /s/ Deborah R. Lundgren
___________________________________ ___________________________________
PETE CLADIANOS, JR., Trustee DEBORAH R. LUNDGREN, Custodian
of the Leslie Cladianos Grantor for Katherene R. Lundgren under
Retained Annuity Trust Nevada Uniform Transfers to Minors
Act
/s/ Pete Cladianos, Jr. /s/ Pete Cladianos, Jr.
___________________________________ __________________________________
PETE CLADIANOS, JR., Trustee PETE CLADIANOS, JR., Trustee
of the Katherene Johnson Latham Trust of the Pete Cladianos, Jr. Living
FBO Leslie Cladianos Trust
PETE CLADIANOS, JR. PETE CLADIANOS, III
<PAGE>
EXHIBIT "A"
<TABLE>
Shareholder Date of Trust Number of
Shares
<S> <C> <C>
Pete Cladianos, Jr. Trust FBO Allison 12/09/91 6,293
Cladianos, Pete Cladianos, Jr., Trustee
Antonia Cladianos II Grantor Retained Annuity 08/13/93 100,000
Trust, Pete Cladianos, Jr., Trustee
Pete Cladianos, Jr. Trust FBO Antonia 12/22/86 17,013
Cladianos II, Pete Cladianos, Jr., Trustee
Katherene Johnson Latham Trust FBO Antonia 12/22/86 10,567
Cladianos II, Pete Cladianos, Jr., Trustee
Second Amended Antonia Cladianos II Trust 02/22/87 213,376
Pete Cladianos, Jr., Trustee
Pete Cladianos III Grantor Retained Annuity 08/13/93 100,000
Trust, Pete Cladianos, Jr., Trustee
Pete Cladianos, Jr. Trust FBO Pete Cladianos 12/22/86 17,013
III, Pete Cladianos, Jr., Trustee
Katherene Johnson Latham Trust FBO Pete 12/22/86 10,567
Cladianos III, Pete Cladianos, Jr., Trustee
Second Amended Pete Cladianos III Trust, Pete 02/19/87 224,162
Cladianos, Jr., Trustee
Leslie Cladianos Grantor Retained Annuity 08/13/93 200,000
Trust, Pete Cladianos, Jr., Trustee
Pete Cladianos, Jr. Trust FBO Leslie 11/26/91 17,103
Cladianos, Pete Cladianos, Jr., Trustee
Katherene Johnson Latham Trust FBO Leslie 12/08/92 2,949
Cladianos, Pete Cladianos, Jr., Trustee
Pete Cladianos, Jr. Living Trust, Pete 05/25/89 156,041
Cladianos, Jr., Trustee
Katherene J. Latham 1988 Trust (Living 08/08/88 345,674
Trust), Katherene J. Latham, Trustee
Deborah R. Lundgren 1986 Trust (Living 09/03/86 547,026
Trust), Deborah R. Lundgren, Trustee
Gregory Kent Lundgren Trust Deborah R. 03/29/93 28,175
Lundgren, Trustee
Pete Cladianos, Jr. Trust FBO Gregory K. 12/01/88 10,659
Lundgren, Deborah R. Lundgren, Trustee
Katherene Johnson Latham Trust FBO Gregory K. 12/01/88 6,083
Lundgren, Deborah R. Lundgren, Trustee
Katherene R. Lundgren Trust, Deborah R. 03/29/93 28,175
Lundgren, Trustee
Pete Cladianos, Jr., Trust FBO Katherene R. 12/22/86 10,659
Lundgren, Deborah R. Lundgren, Trustee
Katherene Johnson Latham Trust FBO Katherene 12/22/86 6,083
-----
R. Lundgren, Deborah R. Lundgren, Trustee
2,057,618
=========
</TABLE>
<PAGE>
EXHIBIT "B"
The employment agreements would be structured as follows:
Terms of agreements to be 72 months.
For Pete Cladianos, Jr., compensation will be $20,000 per month for the
first 36 months and $15,000 per month for the next 36 months. For Pete
Cladianos, III, compensation will be $10,000 per month for the first 36
months and $15,000 for the next 36 months. These amounts will be
adjusted annually to reflect changes in the Consumer Price Index.
Both will receive:
Company rental car provide through rental care agency for the term.
Membership in Prospectors Club for the term.
Membership in Montreux or similar comparable facility for the term.
Health Insurance at a level comparable to current coverage for the
term.
Declining term life insurance in an amount equal to the remaining
unpaid balance of the agreed salary for the term.
Indemnity from the lawsuit regarding the Copa Casino from The Company.
The agreements will be structured in a way that if Pete Cladianos, Jr.,
and Pete Cladianos, III, determine that it would be more advantageous to shift
workload to one or the other of them, that compensation will be adjusted to take
into account that determination.
The agreements will not become effective until approved by the
Company's board of directors. The buyer agrees to use his best efforts to secure
approval of the board. In the event the agreements are disapproved or modified
by the board of directors, Purchaser will make a payment to Pete Cladianos, Jr.,
and Pete Cladianos, III, equal to the value of the agreements outlined above,
or, if the modified agreements are acceptable to Pete Cladianos Jr., and Pete
Cladianos, III, in their sole discretion, the difference between the value of
the agreements outlined above and the value of the modified agreements.
<PAGE>
Desert Golden Sun, LLC
1055 E. Tropicana Avenue
Suite 200
Las Vegas, Nevada 89119
July 15, 1997
Pete Cladianos, Jr.
345 North Arlington Avenue
Reno, Nevada 89501
Dear Pete:
By execution of this letter agreement amendment ("Amendment "), each of
the undersigned shareholders (the "Shareholders") of The Sands Regent (the
"Company") hereby agrees to amend the Letter Agreement dated June 27, 1997,
between Desert Golden Sun, LLC (the "Purchaser") and the Shareholders (the
"Letter Agreement"). Any capitalized words not defined herein will have the
meaning ascribed to them in the Letter Agreement. Sections 1 and 6 of the Letter
Agreement are amended in their entirety to read as follows:
1. Consideration for the Purchase. As consideration for
entering into this Letter Agreement, the Purchaser shall pay
to the Shareholders an aggregate amount of $100.00. Within
Five (5) days of the date of this Letter Agreement, the
Purchaser shall place in escrow, upon terms mutually
agreeable to the parties hereto, $499,900.00 (the "Escrow
Amount"). The Purchaser shall have Twenty-One (21) days from
the date of this Letter Agreement to commence proceeding for
approval from all appropriate gaming authorities.
The purchaser shall have until the Closing to to negotiate
with Wells Fargo Bank (the "Bank"), the holder of certain
debt owed by the Company (the "Debt"), to receive the Bank's
approval of the consummation of the Purchase or to purchase
the Debt from the Bank. The Purchaser may also choose to
attempt to reach an agreement with the Company to protect
the Company from any action by the Bank to accelerate the
maturity date of the Debt due to the Closing. If the
Purchaser does not receive approval from the Bank and does
not reach agreement with the Company, either the
Shareholders or the Purchaser shall have the right to
terminate this Agreement;
The Escrow Amount shall be immediately payable to the
Shareholders, and credited toward the Purchase Price, if, on
or before the Expiration Date, the Purchaser has received
all requisite approvals from all applicable gaming and
regulatory authorities with respect to the Purchase. The
Escrow Amount shall be payable to the Shareholders if the
Purchase is not consummated as a consequence of the
Purchaser's breach of any representation, warrant or
covenant set forth herein. The Escrow Amount shall not be
payable to the Shareholders and it shall be refunded to the
Purchaser by the Shareholders if previously distributed, if
any approvals received from gaming authorities have been
rescinded or cease to be in effect or if the Shareholders
have breached any representation, warranty or covenant set
forth herein, or if the Purchaser is not able to reach
agreement with the Bank or the Company regarding the Debt as
outlined in the above paragraph.
6. Definitive Documentation: Best Efforts; Control of Board.
Each of the Shareholders jointly and severally agrees to
cause the Company to make available to the Purchaser and its
representatives, such information as the Purchaser may
reasonably request. Except as may be required by applicable
law or applicable regulatory or governmental authorities and
regulations, non-public information thus obtained by the
Purchaser will be treated as confidential and, if the
Purchase is not consummated, all documents or copies thereof
obtained by the Purchaser will be returned to the Company or
the Shareholders. Each of the Shareholders jointly and
severally agrees to use best efforts to enter into
definitive documentation prior to the Expiration Date and to
cooperate with the Purchaser and the applicable gaming and
regulatory authorities in obtaining prior to the Expiration
Date all requisite approvals from such authorities for the
Purchase. The shareholders jointly and severally agree to
use their best efforts to assist the Purchaser in gaining
control of the Company's board of directors promptly after
the Closing. The Shareholders agree, prior to Closing, to
take all actions within their power, to move the next annual
meeting of the shareholders of the Company to as soon as is
practicable after the Closing, and to ensure that a majority
of the board of directors will be elected at that annual
meeting.
If this Amendment accurately reflects our understanding, please so
indicate by signing the original and duplicate of this letter and returning a
fully executed copy to the undersigned.
Very truly yours,
Desert Golden Sun, LLC
By: /s/ Shawn Scott
______________________________
Shawn Scott, Manager
/s/ Pete Cladianos, Jr. /s/ Pete Cladianos, Jr.
__________________________________ ___________________________________
PETE CLADIANOS, JR., Trustee PETE CLADIANOS, JR., Trustee of the
of the Pete Cladianos, Jr. Trust Pete Cladianos, Jr. Trust
FBO Allison Cladianos FBO Leslie Cladianos
/s/ Pete Cladianos, Jr. /s/ Katherene Johnson Latham
__________________________________ _______________________________________
PETE CLADIANOS, JR., Trustee KATHERENE JOHNSON LATHAM, Trustee
of the Antonia Cladianos II Grantor of the Katherene J. Latham 1988 Trust
Retained Annuity Trust (Living Trust)
/s/ Pete Cladianos, Jr. /s/ Deborah R. Lundgren
__________________________________ _______________________________________
PETE CLADIANOS, JR., Trustee DEBORAH R. LUNDGREN, Trustee
of the Pete Cladianos, Jr. Trust of the Deborah R. Lundgren 1986 Trust
FBO Antonia Cladianos II (Living Trust)
/s/ Pete Cladianos, Jr. /s/ Deborah R. Lundgren
____________________________________ _______________________________________
PETE CLADIANOS, JR., Trustee DEBORAH R. LUNDGREN, Trustee
of the Katherene Johnson Latham Trust of the Gregory Kent Lundgren Trust
FBO Antonia Cladianos II
/s/ Pete Cladianos, Jr. /s/ Deborah R. Lundgren
____________________________________ _______________________________________
PETE CLADIANOS, JR., Trustee DEBORAH R. LUNDGREN, Trustee
of the Second Amended of the Pete Cladianos, Jr. Trust
Antonia Cladianos II Trust FBO Gregory K. Lundgren
/s/Pete Cladianos, Jr. /s/ Deborah R. Lundgren
____________________________________ _______________________________________
PETE CLADIANOS, JR., Trustee DEBORAH R. LUNDGREN, Trustee
of the Pete Cladianos III Grantor of the Katherene Johnson Latham Trust
Retained Annuity Trust FBO Gregory K. Lundgren
<PAGE>
/s/Pete Cladianos, Jr. /s/ Deborah R. Lundgren
___________________________________ _______________________________________
PETE CLADIANOS, JR., Trustee DEBORAH R. LUNDGREN, Trustee
of the Pete Cladianos Jr. Trust of the Katherene R. Lundgren Trust
FBO Pete Cladianos III
/s/Pete Cladianos, Jr. /s/ Deborah R. Lundgren
___________________________________ _______________________________________
PETE CLADIANOS, JR., Trustee DEBORAH R. LUNDGREN, Trustee
of the Katherene Johnson Latham Trust of the Pete Cladianos, Jr. Trust
FBO Pete Cladianos III FBO Katherene R. Lundgren
/s/ Pete Cladianos, Jr. /s/ Deborah R. Lundgren
___________________________________ _______________________________________
PETE CLADIANOS, JR., Trustee DEBORAH R. LUNDGREN, Trustee
of the Second Amended of the Katherene Johnson Latham Trust
Pete Cladianos III Trust FBO Katherene R. Lundgren
/s/Pete Cladianos, Jr. /s/ Deborah R. Lundgren
___________________________________ _______________________________________
PETE CLADIANOS, JR., Trustee DEBORAH R. LUNDGREN, Custodian
of the Leslie Cladianos Grantor for Katherene R. Lundgren under Nevada
Retained Annuity Trust Uniform Transfers to Minors Act
/s/Pete Cladianos, Jr. /s/ Pete Cladianos, Jr.
___________________________________ _______________________________________
PETE CLADIANOS, JR., Trustee PETE CLADIANOS, JR., Trustee
of the Katherene Johnson Latham Trust of the Pete Cladianos, Jr. Living Trust
FBO Leslie Cladianos
PETE CLADIANOS, JR. PETE CLADIANOS, III
<PAGE>
DEMAND PROMISSORY NOTE
$500,000.00 New York, New York
July 16, 1997
ON DEMAND, the undersigned, Desert Golden Sun, LLC, a Nevada limited
liability company (the "Borrower"), HEREBY PROMISES TO PAY to the order of
Madeleine LLC (the "Lender"), (i) the principal sum of Five Hundred Thousand
Dollars ($500,000.00) or, if less, the aggregate unpaid principal amount of the
Loan (as hereinafter defined) made by the Lender to the Borrower, and (ii)
interest on any and all principal amounts remaining unpaid hereunder from time
to time outstanding, from the date hereof until such principal amounts become
due, to be added to the principal amount of the Loan (commencing on July 1,
1997) while any principal amount remains unpaid hereunder and on the day of
demand, at rate per annum of 15%.
I. (a) Any amount of principal of and (to the extent permitted by law) interest
on any Loan that is not paid on demand shall bear interest from the day when due
until such amount is paid in full, payable on demand, at an interest rate per
annum of 20% (the "Default Rate"). All interest shall be computed on the basis
of a year of 360 days for the actual number of days (including the first day but
excluding the last day) elapsed. Notwithstanding any other provision of this
Note, interest paid or becoming due hereunder shall in no event exceed the
maximum rate permitted by applicable law.
(b) This Note evidences the loan (the "Loan") that the Lender made to the
Borrower on the date hereof. The Lender may conclusively rely on the borrowing
resolutions of the Borrower's managing member previously delivered to the
Lender, as such resolutions may be amended or superseded from time to time,
provided that any such amending or superseding resolutions shall have been
certified by the Secretary or an Assistant Secretary of the Borrower, and a copy
thereof, so certified, shall have been delivered to the Lender. The Loan shall
be conclusively presumed to have been made to or for the benefit of the
Borrower.
(c) The Lender shall maintain an account on its books in the name of the
Borrower (the "Loan Account") on which the Borrower will be charged with the
Loan, including all accrued interest, all fees, all expenses incurred by Lender
in connection with this Note and the transactions contemplated thereby and any
other obligations of Borrower to Lender. The Borrower authorizes the Lender to
charge the Loan Account with such interest, fees, expenses and other obligations
and acknowledge that such charges will be made at Lender's discretion and shall
constitute a further Loan to the Borrowers.
(d) If any amount payable hereunder shall be due on a Saturday, Sunday or
other day on which natural banks are required or authorized to close (any other
day being a "Business Day"), such payment may be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of interest payable hereon.
(e) Both principal and interest are payable in lawful money of the United
States and in immediately available funds at the offices of the Lender located
at 450 Park Avenue, 28th Floor, New York, N.Y. 10022, or at such other place as
the Lender shall designate in writing to the Borrower. Payments received by the
Lender after 2:00 p.m. New York City time on a Business Day will be deemed to be
received on the next Business Day.
(f) The Borrower may prepay the Loan under this Note, in whole at any time,
without penalty or premium, such prepayment to be accompanied by the payment of
accrued interest to the date of such prepayment on the amount prepaid.
II. The Borrower represents and warrants as follows: (a) it is a limited
liability company duly organized, validly existing and in good standing under
the laws of the State of Nevada; (b) the execution, delivery and performance by
the Borrower of this Note and each other instrument, agreement and other
document delivered by the Borrower to the Lender in connection with this Note
(the Note, together with all such other agreements, instruments and other
documents, are hereinafter referred to individually as a "Document" and
collectively as the "Documents") are within the Borrower's powers, have been
duly authorized by all necessary action, and do not contravene the Borrower's
operating agreement; (c) no authorization or approval or other action by, and no
notice to or filing with, any governmental authority or regulatory body is
required for the due execution, delivery and performance by the Borrower of any
Document; and (d) each Document constitutes the legal, valid and binding
obligation of the Borrower, enforceable against the Borrower in accordance with
its terms.
III. The Lender may at any time (in its sole and absolute discretion) (i)
declare the outstanding principal amount of this Note and all other amounts due
under this Note to be immediately due and payable, whereupon the outstanding
principal amount of all Loans under this Note and all such other amounts shall
become and shall be forthwith due and payable, without diligence, presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived, and (ii) exercise any and all of its other rights under applicable law,
under this Note and under the other Documents.
IV. All payments made by the Borrower under this Note will be made without
setoff, counterclaim or other defense.
V. (a) All notices or other communications provided for hereunder shall be in
writing (including telecommunications) and shall be mailed, telecopied, telexed,
telegraphed or delivered to the Borrower at the address of the Borrower set
forth next to its signature, or at such other address as may hereafter be
specified by the Borrower to the Lender (at its address set forth herein) in
writing. All notices and communications shall be effective (i) if mailed, when
received or three days after mailing, whichever is earlier, (ii) if telecopied,
when transmitted, and (iii) if delivered, upon delivery.
(b) No failure on the part of the Lender to exercise, and no delay in
exercising, any right, power, privilege or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise thereof by the Lender
preclude any other or further exercise thereof or the exercise of any other
right, power, privilege or remedy of the Lender. No amendment or waiver of any
provision of this Note, nor consent to any departure by the Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Lender, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
(c) Any provision hereof which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.
(d) The Borrower hereby agrees to pay on demand all costs and expenses
(including, without limitation, all fees, expenses and other client charges of
counsel to the Lender) incurred by the Lender in connection with (i) the
preparation, execution, delivery, administration and amendment of this Note and
the other Documents, and (ii) the enforcement of the Lender's rights, and the
collection of all amounts due, hereunder.
(e) This Note shall be governed by, and construed in accordance with, the
laws of the State of New York.
DESERT GOLDEN SUN, LLC
By:/s/ Shawn Scott
_________________________________
Name: Shawn Scott
Title: Managing Member
Address:
1055 East Tropicana Ave., Suite 200
Las Vegas, Nevada 89119
Attention: Mr. Shawn Scott
Telephone: 702-891-9400
Telecopier: 702-891-9401
