<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
SCHEDULE l3D
Under the Securities Exchange Act of 1934
THE SANDS REGENT
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.10 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
800091100
- --------------------------------------------------------------------------------
(CUSIP Number)
David R. Wood
The Sands Regent
345 N. Arlington, Ave.
Reno, Nevada 89501
(702) 348-2298
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(Name, Address and Telephone Number of Persons
Authorized to Receive Notices and Communications)
July 16, 1997
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(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> 2
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1) Names of Reporting Persons (S.S. or I.R.S. Identification Nos. of Above
Persons):
Katherene Johnson Latham
SSN: ###-##-####
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2) Check the Appropriate Box if a Member of a Group (See Instructions):
(a) Not
(b) Applicable
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3) SEC Use Only
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4) Source of Funds (See Instructions): Not Applicable (See Item 3)
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5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e):
Not Applicable
- --------------------------------------------------------------------------------
6) Citizenship or Place of Organization: Nevada, United States
Number of 7) Sole Voting Power: *
Shares Beneficially 8) Shared Voting Power: *
Owned by
Each Reporting 9) Sole Dispositive Power: *
Person With: 10) Shared Dispositive Power: *
- --------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each Reporting Person: 323,860
- --------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions):
Not Applicable
- --------------------------------------------------------------------------------
13) Percent of Class Represented by Amount in Row (11): 7.2%*
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14) Type of Reporting Person (See Instructions): IN
- ---------------------
* 2 shares (0.0%) of The Sands Regent common stock are owned by Katherene
Johnson Latham; 328,858 shares of The Sands Regent common stock are owned by
the Katherene J. Latham 1988 Trust, dated 8/8/88. Katherene Johnson Latham
is the sole trustee of the trust and possesses full investment authority.
See Item 5 for further information on the computation of percentages set
forth herein.
<PAGE> 3
Item 1. Security and Issuer.
This statement relates to the common stock, par value $.10 per share,
of The Sands Regent (the "Company"), whose principal executive offices are
located at 345 North Arlington Avenue, Reno, Nevada 89501.
Item 2. Identity and Background.
The person filing this statement is Katherene Johnson Latham; and the
Katherene J. Latham 1988 Trust, dated 8/8/88 (the "Trust")
All shares reported herein were acquired by the Reporting Person's
Family prior to the public registration of The Sands Regent in February 1985.
The address of the Shareholders is 345 North Arlington Avenue, Reno, Nevada
89501
During the past five years, neither Katherene Johnson Latham nor the
Trust have been convicted in any criminal proceeding, nor have they 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. Katherene Johnson Latham is a citizen
of the United States.
Item 3. Source and Amount of Funds or Other Consideration.
All common Shares owned, as reported herein, were received in exchange
for shares of Common Stock of Zante, Inc., a wholly owned subsidiary of the
Issuer. Such exchanges took place prior to the registration of the Common Stock
of The Sands Regent under Section 12(g) of the Securities and Exchange Act of
1934, as amended.
Subsequent to the above mentioned exchanges, various non-monetary
transfers, primarily gifts, have taken place between the Reporting Person,
family members and the Trust.
Item 4. Purpose of Transaction.
Item 4 to the Schedule 13D is hereby amended in pertinent part as
follows.
Letter Agreement
On June 27, 1997, as amended July 16, 1997, the Reporting Person
entered into a Letter Agreement with Desert Golden Sun, LLC, a Nevada
limited-liability company ("DGC"), and certain other shareholders of the Issuer
whereby the Reporting Person agreed upon the happening of certain events and
conditions to sell all of the 323,860 Common Shares beneficially owned by them
to DGC. Information in Item 6 concerning the Letter Agreement is incorporated
herein by reference. The Letter Agreement is filed as an exhibit pursuant to
Item 7.
<PAGE> 4
Item 5. Interest in Securities of the Issuer.
As of the close of business on July 27, 1997, there were issued and
outstanding 4,498,722 shares of common stock of the Company. As of July 27,
1997, the Reporting Person and the Trust owned 323,860 of such shares, or 7.2%
of those outstanding. Katherene Johnson Latham has the sole power to vote an
dispose of the 323,860 Common Shares. Katherene Johnson Latham does not have any
shared power to vote, direct the vote, dispose or direct the disposition of any
other Common shares.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
On June 27, 1997, as amended July 16, 1997, the Reporting Person
entered into a Letter Agreement with DGC and certain other shareholders of the
Issuer. The Letter Agreement provides that DGC will purchase all of the
outstanding Common shares of the Reporting Person, the Trust, and certain other
shareholders of the Issuer upon the happening of certain events and conditions.
The Letter Agreement is attached hereto as Exhibit 1 and is incorporated herein
by reference.
Item 7. Material to be Filed as Exhibits.
Exhibit 1. Letter Agreement dated June 27, 1997, as amended July 16,
1997.
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 29, 1997
/s/ Katherene Johnson Latham
----------------------------------------------
Katherene Johnson Latham, individually; and as
trustee of the Katherene J. Latham 1988 Trust
Dated 8/8/88.
ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE
FEDERAL CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001).
<PAGE> 5
EXHIBIT 1
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
<PAGE> 6
Pete Cladianos, Jr.
June 27, 1997
Page 7
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
<PAGE> 7
Pete Cladianos, Jr.
June 27, 1997
Page 8
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
<PAGE> 8
Pete Cladianos, Jr.
June 27, 1997
Page 9
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.
<PAGE> 9
Pete Cladianos, Jr.
June 27, 1997
Page 10
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 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
<PAGE> 10
Pete Cladianos, Jr.
June 27, 1997
Page 11
of the Katherene Johnson Latham Trust of the Gregory Kent Lundgren Trust
FBO Antonia Cladianos II
<PAGE> 11
Pete Cladianos, Jr.
June 27, 1997
Page 12
/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
/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
<PAGE> 12
Pete Cladianos, Jr.
June 27, 1997
Page 13
/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
/s/ Pete Cladianos, Jr. /s/ Pete Cladianos, III
- ------------------------------------- -------------------------------------
PETE CLADIANOS, JR. PETE CLADIANOS, III
<PAGE> 13
<PAGE> 14
EXHIBIT "A"
<TABLE>
<CAPTION>
Shareholder Date of Number of
- ----------- ------- ---------
Trust Shares
----- ------
<S> <C> <C>
Pete Cladianos, Jr. Trust FBO 12/09/91 6,293
Allison Cladianos, Pete
Cladianos, Jr., Trustee
Antonia Cladianos II Grantor 08/13/93 100,000
Retained Annuity Trust, Pete
Cladianos, Jr., Trustee
Pete Cladianos, Jr. Trust FBO 12/22/86 17,013
Antonia Cladianos II, Pete
Cladianos, Jr., Trustee
Katherene Johnson Latham Trust 12/22/86 10,567
FBO Antonia Cladianos II, Pete
Cladianos, Jr., Trustee
Second Amended Antonia 02/22/87 213,376
Cladianos II Trust Pete
Cladianos, Jr., Trustee
Pete Cladianos III Grantor 08/13/93 100,000
Retained Annuity Trust, Pete
Cladianos, Jr., Trustee
Pete Cladianos, Jr. Trust FBO 12/22/86 17,013
Pete Cladianos III, Pete
Cladianos, Jr., Trustee
Katherene Johnson Latham Trust 12/22/86 10,567
FBO Pete Cladianos III, Pete
Cladianos, Jr., Trustee
Second Amended Pete Cladianos 02/19/87 224,162
III Trust, Pete Cladianos,
Jr., Trustee
Leslie Cladianos Grantor 08/13/93 200,000
Retained Annuity Trust, Pete
Cladianos, Jr., Trustee
Pete Cladianos, Jr. Trust FBO 11/26/91 17,103
Leslie Cladianos, Pete
Cladianos, Jr., Trustee
Katherene Johnson Latham Trust 12/08/92 2,949
FBO Leslie Cladianos, Pete
Cladianos, Jr., Trustee
</TABLE>
<PAGE> 15
<TABLE>
<S> <C> <C>
Pete Cladianos, Jr. Living 05/25/89 156,041
Trust, Pete Cladianos, Jr.,
Trustee
Katherene J. Latham 1988 Trust 08/08/88 345,674
(Living Trust), Katherene J.
Latham, Trustee
Deborah R. Lundgren 1986 Trust 09/03/86 547,026
(Living Trust), Deborah R.
Lundgren, Trustee
Gregory Kent Lundgren Trust 03/29/93 28,175
Deborah R. Lundgren, Trustee
Pete Cladianos, Jr. Trust FBO 12/01/88 10,659
Gregory K. Lundgren, Deborah
R. Lundgren, Trustee
Katherene Johnson Latham Trust 12/01/88 6,083
FBO Gregory K. Lundgren,
Deborah R. Lundgren, Trustee
Katherene R. Lundgren Trust, 03/29/93 28,175
Deborah R. Lundgren, Trustee
Pete Cladianos, Jr., Trust FBO 12/22/86 10,659
Katherene R. Lundgren, Deborah
R. Lundgren, Trustee
Katherene Johnson Latham Trust 12/22/86 6,083
----------
FBO Katherene R. Lundgren,
Deborah R. Lundgren, Trustee
2,057,618
=========
</TABLE>
<PAGE> 16
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> 17
Desert Golden Sun, LLC
1055 E. Tropicana Avenue
Suite 200
Las Vegas, Nevada 89119
July 16, 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
<PAGE> 18
Pete Cladianos, Jr.
July 28, 1997
Page 16
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
<PAGE> 19
Pete Cladianos, Jr.
July 28, 1997
Page 19
/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
/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
<PAGE> 20
/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
/s/ Pete Cladianos, Jr. /s/ Pete Cladianos, III
- ----------------------------------- -----------------------------------
PETE CLADIANOS, JR. PETE CLADIANOS, III
