<PAGE> 1
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant To Section 14(a) Of The Securities Exchange Act Of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
THE SANDS REGENT
-----------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
-----------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] 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
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
[LOGO OF THE SANDS REGENT]
345 NORTH ARLINGTON AVENUE
RENO, NEVADA 89501
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MARCH 2, 1999
------------------------
To the Shareholders of The Sands Regent:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
"Meeting") of The Sands Regent, a Nevada corporation (the "Company"), will be
held at The Sands Regent Hotel/Casino, 345 North Arlington Avenue, Reno, Nevada
89501 on March 2, 1999 at the hour of 10:00 a.m. local time for the following
purposes:
(1) To consider and vote upon a proposal to amend the Company's Restated
Articles of Incorporation to effect a one-for-two reverse stock split
of the Company's outstanding common stock, $0.05 par value (the "Common
Stock") (the "Reverse Stock Split"); and
(2) To transact such other business as may properly come before the
Meeting.
Only shareholders of record at the close of business on January 22, 1999
are entitled to notice of and to vote at the Meeting or any adjournment thereof.
By Order of the Board of Directors,
PETE CLADIANOS III, Secretary
Reno, Nevada
January 25, 1999
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING REGARDLESS OF THE
NUMBER OF SHARES YOU HOLD. YOU ARE INVITED TO ATTEND THE MEETING IN PERSON, BUT
WHETHER OR NOT YOU PLAN TO ATTEND, PLEASE COMPLETE, DATE, SIGN AND PROMPTLY
RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE. IF YOU DO ATTEND THE
MEETING, YOU MAY, IF YOU PREFER, REVOKE YOUR PROXY AND VOTE YOUR SHARES IN
PERSON.
<PAGE> 3
[LOGO OF THE SANDS REGENT]
345 NORTH ARLINGTON AVENUE
RENO, NEVADA 89501
------------------------
SPECIAL MEETING OF SHAREHOLDERS
------------------------
PROXY STATEMENT
This Proxy Statement and the accompanying proxy are furnished by the Board
of Directors of The Sands Regent, a Nevada corporation (the "Company"), in
connection with the solicitation of proxies for use at the Special Meeting of
Shareholders (the "Meeting") referred to in the foregoing notice. It is
contemplated that this Proxy Statement, together with the accompanying form of
proxy, will be mailed together to shareholders on or about February 8, 1999.
Only Shareholders of record at the close of business on January 22, 1999
are entitled to notice of, and to vote at, the Meeting. On that date, there were
issued and outstanding 4,498,722 shares of Common Stock, par value $0.05 per
share (the "Common Stock"). Each share of Common Stock is entitled to one vote.
The presence, in person or by proxy, of the holders of a majority of the
shares of Common Stock outstanding and entitled to vote at the meeting is
necessary to constitute a quorum. In deciding all questions, a holder of Common
Stock shall be entitled to one vote in person or by proxy, for each share held
in his, her or its name on the record date. Approval of the amendment of the
Company's Restated Articles of Incorporation to effect the proposed one-for-two
reverse stock split of the Common Stock (the "Reverse Stock Split") will require
the affirmative vote of a majority of the outstanding shares of the Common
Stock. The ratification or approval of all other proposals will be decided by a
majority of the votes cast at the Meeting unless a greater number of votes is
required by the Company's Restated Articles of Incorporation, the Company's
Bylaws or applicable law.
All proxies received pursuant to this solicitation will be voted (unless
revoked) at the Meeting or any adjournment thereof in the manner directed by a
shareholder and, if no direction is made, will be voted FOR the Reverse Stock
Split in Proposal No. 1. If any other matters are properly presented at the
meeting for action, which is not presently anticipated, the proxy holders will
vote the proxies (which confer authority to such holders to vote on such
matters) in accordance with their best judgment. A proxy given by a shareholder
may nevertheless be revoked at any time before it is voted by delivery of a
written instrument of revocation or a duly executed proxy bearing a later date
to the Secretary of The Sands Regent, 345 North Arlington Avenue, Reno, Nevada
89501. Furthermore, any person who has executed a proxy but is present at the
Meeting may vote in person instead of by proxy, thereby canceling any proxy
previously given, whether or not written revocation of such proxy has been
given.
Votes cast by proxy or in person at the Meeting will be counted by persons
appointed by the Company to act as election inspectors for the Meeting. The
election inspectors will treat shares represented by proxies that reflect
abstentions as shares that are present and entitled to vote for purposes of
determining the presence of a quorum and for purposes of determining the outcome
of any matter submitted to the Company's shareholders for a vote. Thus,
abstentions have the effect of a vote "against" the matters to which the
abstention has been cast.
The election inspectors will treat shares referred to as "broker non-votes"
(i.e., shares held by brokers or nominees as to which instructions have not been
received from the beneficial owners or persons entitled to vote and the broker
or nominee does not have discretionary voting power on a particular matter) as
shares that are
<PAGE> 4
present and entitled to vote for purposes of determining the presence of a
quorum. However, for purposes of determining the outcome of any matter as to
which the broker or nominee has physically indicated on the proxy that it does
not have discretionary authority to vote, those shares will be treated as not
present and not entitled to vote with respect to that matter (even though those
shares are considered entitled to vote for quorum purposes and may be entitled
to vote on other matters.
Notwithstanding the above, for purposes of determining the outcome of any
matter as to which the broker or nominee who does not have discretion to vote
has delivered a proxy but has failed to physically indicate on the proxy the
lack of authority to vote, the shares will be treated as present and will be
voted in accordance with the instructions on the proxy card (i.e., as a vote FOR
the amendment to the Company's Restated Articles of Incorporation to effect the
Reverse Stock Split).
SOLICITATION EXPENSES
All expenses in connection with the solicitation of proxies will be paid by
the Company. In addition to solicitation by mail, officers, directors and
regular employees of the Company who will receive no extra compensation for
their services may solicit proxies personally or by other appropriate means.
Management does not intend to use specially engaged employees or paid solicitors
for such solicitation. Management intends to solicit proxies which are held of
record by brokers, dealers, banks, or voting trustees, or their nominees, and
may pay the reasonable expenses of such record holders for completing the
mailing of solicitation materials to persons for whom they hold the shares.
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<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock, as of January 22, 1999, by (i) each
person who is known by the Company to own beneficially more than 5% of the
Company's outstanding Common Stock; (ii) each of the Company's executive
officers and directors; and (iii) all executive officers and directors as a
group. Except to the extent indicated in the footnotes to the following table,
the person or entity listed has sole voting and dispositive power with respect
to the shares which are deemed beneficially owned by such person or entity.
As of January 22, 1999, there were 4,498,722 shares of Common Stock
outstanding. Each share of Common Stock is entitled to one vote per share.
<TABLE>
<CAPTION>
SHARES PERCENT OF SHARES
BENEFICIALLY OF COMMON STOCK
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNED(2) BENEFICIALLY OWNED
--------------------------------------- ------------ ------------------
<S> <C> <C>
DIRECTORS AND NAMED EXECUTIVE OFFICERS:
Ferenc B. Szony(3)..................................... 50,000 1.1%
Louis J. Phillips...................................... -- *
Jon N. Bengtson........................................ 5,002 *
Pete Cladianos, Jr.(4)(5).............................. 1,039,947 22.2%
Pete Cladianos III(4)(6)............................... 40,909 *
Katherene Latham(4).................................... 321,560 6.9%
David R. Wood(7)....................................... 118,626 2.5%
ALL OFFICERS AND DIRECTORS AS A GROUP (7
INDIVIDUALS)......................................... 1,576,044 33.7%
5% BENEFICIAL HOLDERS:
Deborah Lundgren(8)
c/o Doug Damon, CPA
5301 Longley Lane, Building D-142
Reno, Nevada 89511................................... 688,678 14.7%
Dimension Fund Advisors, Inc.
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401....................... 273,648(9) 5.8%
Stephen Feinberg
450 Park Avenue, 28th Floor
New York, New York 10022............................. 382,800(10) 8.2%
</TABLE>
- ---------------
* less than 1%
(1) The address of each of the directors and executive officers listed in this
table is c/o The Sands Regent, 345 North Arlington Avenue, Reno, Nevada
89501.
(2) Includes shares subject to options and warrants which are exercisable
within 60 days after January 22, 1999. All percentages assume that the
options or warrants of the particular person or group in question, and no
others, have been exercised.
(3) Includes 50,000 shares subject to options which are presently exercisable.
(4) Pete Cladianos, Jr. and Katherene Latham are brother and sister. Pete
Cladianos III, Antonia Cladianos II and Leslie Cladianos are the son and
daughters of Pete Cladianos, Jr. and Allison Cladianos is the daughter of
Pete Cladianos III.
(5) Includes 386,286 shares held in trusts for the benefit of Pete Cladianos
III, 375,500 shares held in trusts for the benefit of Antonia Cladianos II,
254,596 shares held in trusts for the benefit of Leslie Cladianos and
23,565 shares held in a trust for the benefit of Allison Cladianos. Mr.
Cladianos, as trustee for such trusts, exercises sole voting and investment
power.
(6) Includes 16,909 shares held in a trust for the benefit of Bradley
Cladianos, son of Pete Cladianos III and 24,000 shares subject to options
which are presently exercisable.
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<PAGE> 6
(7) Includes 108,000 shares subject to options which are presently exercisable.
(8) Ms. Lundgren is the daughter of Katherene Latham, Chairman of the Board of
Directors, and niece of Pete Cladianos, Jr., Vice Chairman of the Board of
Directors.
(9) Held with shared voting power as to 87,892 shares.
(10) 96,600 shares are owned by Cerberus Partners, L.P., a Delaware limited
partnership; 140,800 shares are owned by Cerberus International, Ltd., a
corporation organized under the laws of the Bahamas; and 18,300 shares are
owned by Ultra Cerberus Fund, Ltd., a corporation organized under the laws
of the Bahamas, all over which Mr. Feinberg possesses sole voting and
dispositive power. 127,100 shares are owned by certain other private
investment funds for which Mr. Feinberg possesses dispositive power.
PROPOSAL NO. 1
REVERSE STOCK SPLIT
MANAGEMENT RECOMMENDS THAT YOU VOTE TO APPROVE
THE REVERSE STOCK SPLIT PROPOSAL
The Board of Directors of the Company has approved the proposal for the
Reverse Stock Split (the "Reverse Stock Split Proposal"), subject to approval by
the shareholders of the Company.
Except for an adjustment which may result from the rounding up of
fractional shares as described below, each shareholder will hold the same
percentage of Common Stock outstanding immediately following the Reverse Stock
Split as each shareholder did immediately prior to the Reverse Stock Split. If
approved by the shareholders of the Company as provided herein, the Reverse
Stock Split will be effected by an amendment to the Company's Restated Articles
of Incorporation in substantially the form attached to this Proxy Statement as
Appendix A (the "Reverse Stock Split Amendment"), and will become effective upon
the filing of the Reverse Stock Split Amendment with the Secretary of State of
Nevada (the "Effective Date"). The following discussion is qualified in its
entirety by the full text of the Reverse Stock Split Amendment, which is hereby
incorporated by reference herein.
At the Effective Date, each two shares of Common Stock issued and
outstanding will automatically be reclassified and converted into one share of
Common Stock. Fractional shares of Common Stock will not be issued as a result
of the Reverse Stock Split, but instead, any fractional shares will be rounded
up to the nearest whole share. Each shareholder immediately before the Reverse
Stock Split will continue to be a shareholder immediately after the Reverse
Stock Split.
The Company expects that, if the Reverse Stock Split Proposal is approved
by the shareholders at the Meeting, the Reverse Stock Split Amendment will be
filed promptly. However, notwithstanding approval of the Reverse Stock Split
Proposal by the shareholders of the Company, the Board of Directors of the
Company may elect not to file, or to delay the filing of, the Reverse Stock
Split Amendment, if the Board of Directors determines that filing the Reverse
Stock Split Amendment would not be in the best interest of the Company and its
shareholders. In addition, the Board of Directors may make any and all changes
to the Reverse Stock Split Amendment that it deems necessary to give effect to
the intents and purposes of the Reverse Stock Split.
REASONS FOR THE REVERSE STOCK SPLIT
The primary purpose of the Reverse Stock Split is to combine the
outstanding shares of Common Stock so that the Common Stock outstanding after
giving effect to the Reverse Stock Split trades at a significantly higher price
per share than the Common Stock outstanding before giving effect to the Reverse
Stock Split. The Company believes that the Reverse Stock Split will aid the
Company in remaining eligible for listing on the Nasdaq SmallCap Market of The
Nasdaq Stock Market, Inc. (the "Nasdaq SmallCap Market").
Specifically, the Company has proposed to effect the Reverse Stock Split in
order to facilitate compliance with the minimum bid price requirement of $1.00
per share required for continued inclusion of the Common Stock on the Nasdaq
SmallCap Market, pursuant to the Nasdaq SmallCap continued Listing requirements
4
<PAGE> 7
(the "Nasdaq Listing Requirements"). Prior to its listing on the Nasdaq SmallCap
Market, the Common Stock was listed on the Nasdaq National Market. At a December
10, 1998 oral hearing with the staff of the Nasdaq Stock Market, Inc. (the
"Staff"), the Company requested that trading of the Common Stock be moved from
the Nasdaq National Market to the Nasdaq SmallCap Market. On January 4, 1999,
the Staff notified the Company that the Common Stock would begin trading on the
Nasdaq SmallCap Market, effective with the close of business, January 6, 1999,
subject to an exception from the minimum bid price requirement for continued
listing under Nasdaq Marketplace Rule 4310(c)(4). The Common Stock has continued
to be listed on the Nasdaq SmallCap Market, subject to the condition that on or
before March 5, 1999, the Company must evidence a closing bid price of at least
$1.00 per share of Common Stock and thereafter evidence a minimum closing bid
price of at least $1.00 per share of Common Stock for at least ten consecutive
days.
The Company believes, but cannot assure, that the Reverse Stock Split will
enable the Common Stock to trade above the minimum bid price established by the
Nasdaq Listing Requirements, however, there can be no assurance that the Company
will succeed in convincing Nasdaq that it will be able to meet or continue to
meet the Nasdaq Listing Requirements. If, as a result of the Reverse Stock Split
and the Company's hearing with the Staff, the Company's Common Stock remains
eligible for listing on the Nasdaq SmallCap Market, there can be no assurance
that the Common Stock will continue to trade above the minimum bid price or that
the Company will continue to meet each of the other Nasdaq Listing Requirements.
See "-- Other Nasdaq Requirements."
The Company believes that maintaining the listing of the Common Stock on
the Nasdaq SmallCap Market is in the best interests of the Company and its
shareholders. Inclusion in the Nasdaq SmallCap Market increases liquidity and
may potentially minimize the spread between the "bid" and "asked" prices quoted
by market makers. Further, a Nasdaq SmallCap Market listing may enhance the
Company's access to capital and increase the Company's flexibility in responding
to anticipated capital requirements. The Company believes that prospective
investors will view an investment in the Company more favorably if its shares
qualify for listing on the Nasdaq SmallCap Market.
The Company also believes that the current per share price level of the
Company's Common Stock has reduced the effective marketability of the Company's
shares because of the reluctance of many leading brokerage firms to recommend
low priced stock to their clients. Certain investors view low-priced stock as
unattractive, although certain other investors may be attracted to low-priced
stock because of the greater trading volatility sometimes associated with such
securities. In addition, a variety of brokerage house policies and practices
tend to discourage individual brokers within those firms from dealing in
low-priced stock. Some of those policies and practices pertain to the payment of
brokers commissions and to time-consuming procedures that function to make the
handling of low-priced stocks unattractive to brokers from an economic
standpoint.
In addition, since brokerage commissions on low-priced stock generally
represent a higher percentage of the stock price than commissions on higher
priced stock, the current share price of the Common Stock can result in
individual shareholders paying transaction costs (commissions, markups, or
markdowns) which are a higher percentage of their total share value than would
be the case if the share price were substantially higher. This factor also may
limit the willingness of institutions to purchase the Common Stock at its
current low share price. The Board of Directors believes that the Reverse Stock
Split will enhance the Company's flexibility in the future for financing and
capitalization needs. There can, however, be no assurance that the Reverse Stock
Split will have any of the foregoing effects.
In the event that the Company's Common Stock is delisted from the Nasdaq
SmallCap Market, sales of the Company's Common Stock would likely only be
conducted in the over-the-counter market or potentially in regional exchanges.
This may have a negative impact on the liquidity and price of the Common Stock
and investors may find it more difficult to purchase or dispose of, or to obtain
accurate quotations as to the market value of, the Company's Common Stock.
In addition, if the Common Stock is not listed on the Nasdaq SmallCap
Market and the trading price of the Common Stock were to remain below $5.00 per
share, trading in the Company's Common Stock would
5
<PAGE> 8
also be subject to the requirements of certain rules promulgated under the
Securities Exchange Act of 1934, as amended, which require additional disclosure
by broker-dealers in connection with any trades involving a stock defined as a
penny stock (generally, any non-Nasdaq equity security that has a market price
of less than $5.00 per share, subject to certain exceptions). The additional
burdens imposed upon broker-dealers from effecting transactions in the Common
Stock could limit the market liquidity of the Common Stock and the ability of
investors to trade the Company's Common Stock.
For all the above reasons, the Company believes that the Reverse Stock
Split is in the best interests of the Company and its shareholders. However,
there can be no assurances that the Reverse Stock Split will have the desired
consequences. The Company anticipates that, following the consummation of the
Reverse Stock Split, the Common Stock will trade at a price per share that is
significantly higher than the current market price of the Common Stock. THERE
CAN BE NO ASSURANCE THAT THE TOTAL MARKET CAPITALIZATION OF THE COMMON STOCK
AFTER THE PROPOSED REVERSE STOCK SPLIT WILL BE EQUAL TO THE TOTAL MARKET
CAPITALIZATION BEFORE THE PROPOSED REVERSE STOCK SPLIT OR THAT THE MARKET PRICE
FOLLOWING THE REVERSE STOCK SPLIT WILL EITHER EXCEED OR REMAIN IN EXCESS OF THE
CURRENT MARKET PRICE.
EFFECT OF THE REVERSE STOCK SPLIT PROPOSAL
Although the Company expects to file the Reverse Stock Split Amendment with
the Nevada Secretary of State's office promptly following approval of the
Reverse Stock Split Proposal at the Meeting, the actual timing of such filing
(and whether such filing is made) will be determined by the Board of Directors
based upon their evaluation as to when such action will be most advantageous to
the Company and its shareholders. Notwithstanding approval of the Reverse Stock
Split Proposal by the shareholders of the Company, the Board of Directors may
elect not to file, or to delay the filing of, the Reverse Stock Split Amendment,
if the Board of Directors determines that filing the Reverse Stock Split
Amendment would not be in the best interest of the Company and its shareholders.
After the Reverse Stock Split, each shareholder shall own one-half as many
shares (but the same percentage of the outstanding shares) as such shareholder
owned before the Reverse Stock Split; provided, however, that any fractional
share shall be rounded upward to the nearest whole share. Each shareholder of
the Company immediately before the Reverse Stock Split will continue to be a
shareholder immediately after the Reverse Stock Split. The number of shares of
Common Stock that may be purchased upon the exercise of outstanding options,
warrants, and other securities convertible into, or exercisable or exchangeable
for, shares of Common Stock, (collectively, "Convertible Securities") and the
per share exercise or conversion prices thereof, will be adjusted appropriately
as of the Effective Date, so that the aggregate number of shares of Common Stock
issuable in respect of Convertible Securities immediately following the
Effective Date will be one-half of the number issuable in respect thereof
immediately prior to the Effective Date, and the aggregate exercise or
conversion prices thereunder shall remain unchanged.
The Reverse Stock Split may also result in some shareholders owning "odd
lots" of less than 100 shares of Common Stock received as a result of the
Reverse Stock Split. Brokerage commissions and other costs of transactions in
odd lots may be higher, particularly on a per-share basis, than the cost of
transactions in even multiples of 100 shares.
The par value of the Common Stock will remain at $.05 per share following
the Reverse Stock Split, and the number of shares of the Common Stock
outstanding will be reduced. As a consequence, the aggregate par value of the
outstanding Common Stock will be reduced, while the aggregate capital in excess
of par value attributable to the outstanding Common Stock for statutory and
accounting purposes will be correspondingly increased. The Reverse Stock Split
will not affect the Company's total shareholders' equity. If the Reverse Stock
Split is effected, all share and per share information would be retroactively
adjusted following the Effective Date to reflect the Reverse Stock Split for all
periods presented in future filings.
The Board considered reducing the number of shares of authorized Common
Stock in connection with the Reverse Stock Split but determined that the
availability of additional shares may be beneficial to the
6
<PAGE> 9
Company in the future. The availability of additional authorized shares will
allow the Board to issue shares for corporate purposes, if appropriate
opportunities should arise, without further action by shareholders or the time
delay involved in obtaining shareholder approval (unless approval is required by
law or regulation). Such purposes could include effecting future acquisitions of
other businesses or meeting requirements for working capital or capital
expenditures through the issuance of shares. To the extent that any additional
shares (or securities convertible into common stock) may be issued on other than
a pro rata basis to current shareholders, the present ownership position of
current shareholders may be diluted. The Common Stock has no preemptive rights.
In addition, if another party should seek to acquire or take over control of the
Company, and the Board does not believe such transaction is in the best interest
of the Company and its shareholders, some or all of the authorized shares could
be issued to another party to try to block such transaction.
EXCHANGE OF STOCK CERTIFICATES; NO FRACTIONAL SHARES
The combination and reclassification of shares of Common Stock pursuant to
the Reverse Stock Split will occur automatically on the Effective Date without
any action on the part of shareholders of the Company and without regard to the
date certificates representing shares of Common Stock prior to the Reverse Stock
Split are physically surrendered for new certificates. Every two (2) shares of
issued Common Stock would be converted and reclassified into one (1) share of
post-Split Common Stock, and any fractional interests resulting from such
reclassification would be rounded upward to the nearest whole share. For
example, a holder of one hundred (100) shares prior to the Effective Date would
be the holder of fifty (50) shares at the Effective Date, and the holder of one
thousand (1000) shares prior to the Effective Date would be the holder of five
hundred (500) shares at the Effective Date.
As soon as practicable after the Effective Date, transmittal forms will be
mailed to each holder of record of certificates for shares of Common Stock to be
used in forwarding such certificates for surrender and exchange for certificates
representing the number of shares of Common Stock such shareholder is entitled
to receive as a consequence of the Reverse Stock Split. The transmittal forms
will be accompanied by instructions specifying other details of the exchange.
Upon receipt of such transmittal form, each shareholder should surrender the
certificates representing shares of Common Stock prior to the Reverse Stock
Split, in accordance with the applicable instructions. Each holder who
surrenders certificates will receive new certificates representing the whole
number of shares of Common Stock that such shareholder holds as a result of the
Reverse Stock Split including shares resulting from the rounding up of any
fractional shares. Shareholders will not be required to pay any transfer fee or
other fee in connection with the exchange of certificates.
SHAREHOLDERS SHOULD NOT SEND THEIR STOCK CERTIFICATES
UNTIL THEY RECEIVE A TRANSMITTAL FORM.
As of the Effective Date, each certificate representing shares of Common
Stock outstanding prior to the Effective Date (an "old certificate") will be
deemed canceled and, for all corporate purposes, will be deemed only to evidence
ownership of the number of shares of Common Stock into which the shares of
Common Stock evidenced by such certificate have been converted by the Reverse
Stock Split.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following summary of material U.S. federal income tax considerations
regarding the Reverse Stock Split is based on current law, is for general
information only and is not tax advice. The tax treatment of a shareholder with
respect to the Reverse Stock Split will vary depending on his or her particular
situation, and this discussion does not purport to deal with all aspects of U.S.
federal income taxation that may be relevant to particular shareholders in light
of their personal investment or tax circumstances or to certain types of
shareholders (such as dealers in securities, insurance companies, foreign
individuals and entities, financial institutions, shareholders holding
securities as part of a conversion transaction or a hedge or hedging transaction
or as a position in a straddle for tax purposes, and tax-exempt entities) who
may be subject to
7
<PAGE> 10
special treatment under the federal income tax laws. This discussion also does
not consider the effect of any state, local, foreign or other tax laws that may
be applicable.
The information in this section is based on the Internal Revenue Code of
1986, as amended (the "Code"), current, temporary and proposed Treasury
Regulations thereunder, the legislative history of the Code, judicial decisions,
and current administrative rulings and practices of the Internal Revenue Service
(the "IRS") (including its practices and policies as expressed in certain
private letter rulings which are not binding on the IRS except with respect to
the particular taxpayers who requested and received such rulings), all as in
effect on the date hereof. No assurance can be given that future legislation,
Treasury Regulations, administrative interpretations and practices and/or court
decisions will not adversely affect existing interpretations. Any such change
could apply retroactively to transactions preceding the date of the change. No
ruling from the IRS with respect to the matters discussed herein has been
requested. Thus, no assurance can be provided that the statements set forth
herein (which are, in any event, not binding on the IRS or courts) will not be
challenged by the IRS or will be sustained by a court if so challenged.
SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISERS AS TO THE PARTICULAR
TAX CONSEQUENCES TO THEM OF THE REVERSE STOCK SPLIT, INCLUDING THE FEDERAL,
STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES TO THEM OF THE REVERSE STOCK
SPLIT AND OF POTENTIAL CHANGES IN APPLICABLE TAX LAWS.
The Company believes that the Reverse Stock Split would be a tax-free
recapitalization under Code Section 368(a)(1)(E) to the Company and, except as
discussed below, to its stockholders to the extent that outstanding shares of
Common Stock are exchanged for a reduced number of shares of Common Stock. If
the Reverse Stock Split qualifies as a recapitalization under Code Section
368(a)(1)(E), except as discussed below, no gain or loss should be recognized by
a shareholder who receives only Common Stock upon the Reverse Stock Split. The
aggregate tax basis of the shares of Common Stock held by a shareholder
following the Reverse Stock Split will equal the shareholder's aggregate basis
in the Common Stock held immediately prior to the Reverse Stock Split and
generally will be allocated among the shares of Common Stock held following the
Reverse Stock Split on a pro-rata basis. Shareholders who have used the specific
identification method to identify their basis in shares of Common Stock combined
in the Reverse Stock Split should consult their own tax advisors to determine
their basis in the post-Reverse Stock Split shares of Common Stock received in
exchange therefor. Shares of Common Stock received by a shareholder should have
the same holding period as the Common Stock surrendered, provided that all such
shares of Common Stock were held by the shareholder as capital assets on the
Effective Date. Although not free from doubt, the results described above should
apply to a shareholder who receives a portion of his or her Common Stock as a
result of the rounding up of a fractional share to a whole share. However, it is
possible that the receipt of additional Common Stock due to rounding could be
wholly or partly taxable.
OTHER NASDAQ REQUIREMENTS
In addition to the minimum bid price per share requirement described above,
the Common Stock's continued listing on the Nasdaq SmallCap Market is subject to
the maintenance of other quantitative and non-quantitative requirements, as set
forth in the Nasdaq Listing Requirements. In particular, the Nasdaq Listing
Requirements require that a company currently included in the Nasdaq SmallCap
Market meet each of the following standards to maintain its continued listing:
(i) either (A) net tangible assets of $2 million, (B) market capitalization of
$35 million, or (C) net income (in the latest fiscal year or two of the last
three fiscal years) of $500,000; (ii) public float of at least 500,000 shares,
with a market value of at least $1 million; (iii) minimum bid price of $1; (iv)
at least 300 round lot beneficial shareholders; (v) at least two market makers;
and (vi) compliance with certain corporate governance requirements. Although the
Company believes that it will meet such requirements on the first full trading
day after the Reverse Stock Split has become effective, there can be no
assurances that such will be the case, or that other factors will not cause the
Company to fail to meet such requirements.
8
<PAGE> 11
THE REVERSE STOCK SPLIT PROPOSAL MUST BE APPROVED BY A MAJORITY OF THE
OUTSTANDING SHARES OF COMMON STOCK. MANAGEMENT RECOMMENDS THAT YOU VOTE TO
APPROVE THE REVERSE STOCK SPLIT PROPOSAL.
SHAREHOLDER PROPOSALS FOR THE NEXT ANNUAL MEETING
Shareholder proposals intended to be presented at the next Annual Meeting
must be received by the Company for inclusion in the Company's Proxy Statement
and form of proxy relating to that meeting no later than June 7, 1999. Proposals
should be addressed to the attention of Pete Cladianos III, Secretary of The
Sands Regent, 345 North Arlington Avenue, Reno, Nevada, 89501, and should be
sent Certified Mail -- Return Receipt Requested. The Company expects to hold its
1999 Annual Meeting of Shareholders on November 1, 1999. New Securities and
Exchange Commission rules regarding shareholder proposals became effective on
June 29, 1998. Pursuant to these new rules, if the Company has not received
notice on or before August 21, 1999 of any matter a shareholder intends to
propose for a vote at the 1999 Annual Meeting of Shareholders, then a proxy
solicited by the Board of Directors may be voted on such matter in the
discretion of the proxy holder, without discussion of the matter in the proxy
statement soliciting such proxy and without such matter appearing as a separate
item on the proxy card.
OTHER MATTERS
As of the date of this Proxy Statement, the management knows of no other
matters other than those described above which will be presented for action at
the Meeting. If any other matters properly come before the Meeting, or any
adjournments, the people voting the management proxies will vote them in
accordance with their best judgment and discretionary authority to do so is
included in the proxy.
By Order of the Board of Directors
PETE CLADIANOS III, Secretary
Reno, Nevada
January 25, 1999
9
<PAGE> 12
APPENDIX A
CERTIFICATE OF AMENDMENT OF
RESTATED ARTICLES OF INCORPORATION OF
THE SANDS REGENT
The Sands Regent, a Nevada corporation (this "Corporation"), under the
hands of its duly elected and acting Chief Executive Officer/President and
Secretary, does hereby certify:
A. That pursuant to unanimous written consent, the Board of Directors
of this Corporation adopted a resolution setting forth the amendment
herein, and declaring its advisability and calling for submission at a
special meeting of the shareholders entitled to vote for the consideration
thereof as follows:
Article IV of this Corporation's Restated Articles of Incorporation
is hereby further amended by adding at the end thereof, the following:
Simultaneous with the effective date of this Certificate of
Amendment (the "Effective Date"), all issued and outstanding shares
of Common Stock ("Existing Common Stock") shall be and hereby are
automatically combined and reclassified as follows: each two (2)
shares of Existing Common Stock shall be combined and reclassified
(the "Reverse Split") as one (1) share of issued and outstanding
Common Stock ("New Common Stock"), provided, that there shall be no
fractional shares of New Common Stock. In the case of any holder of
any number of shares of Existing Common Stock which, when divided by
two (2), does not result in a whole number (a "Fractional Share
Holder"), the fractional share interest of New Common Stock held by
any Fractional Share Holder as a result of the Reverse Split shall be
rounded up to the nearest whole share of New Common Stock.
The Corporation shall, through its transfer agent provide
certificates representing New Common Stock to holders of Existing
Common Stock in exchange for certificates representing Existing
Common Stock. From and after the Effective Date, certificates
representing shares of Existing Common Stock are hereby canceled and
shall represent only the right of the holders thereof to receive New
Common Stock.
From and after the Effective Date, the term "New Common Stock"
as used in this Article IV shall mean Common Stock as provided in
this Restated Articles of Incorporation. The par value of the Common
Stock shall remain Five Cents ($0.05) per share.
B. That pursuant to the Board action, as required by N.R.S. 78.390,
notice of meeting of shareholders thus called and, together with a written
proxy, was given to all shareholders of record of the Corporation having
voting power, and there has been secured shareholder vote in person or by
proxy a majority determination in favor of the proposed amendment of each
class of stock outstanding and entitled to vote thereon.
C. That this duly executed Certificate of Amendment correctly sets
forth the text of the Restated Articles of Incorporation as amended to the
date of this Certificate of Amendment.
D. That there were issued and outstanding the following number of
shares of authorized capital stock of the Corporation entitled to vote on
the proposed amendment:
<TABLE>
<CAPTION>
CLASS AUTHORIZED ISSUED AND OUTSTANDING
----- ---------- ----------------------
<S> <C> <C>
Common.... 20,000,000 4,498,722
Preferred.. 5,000,000 None
</TABLE>
A-1
<PAGE> 13
E. That the following number of shares, which number represented a
majority of the voting power entitled to vote, by proxy or in person at the
special meeting held on March 2, 1999, did vote in favor of the amendment
referenced herein.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF STOCK VOTING
CLASS VOTING IN FAVOR IN FAVOR OF AMENDMENT
----- ---------------- --------------------------
<S> <C> <C>
Common Stock
--------- ---------
</TABLE>
A-2
<PAGE> 14
IN WITNESS WHEREOF, the undersigned have executed this Certificate of
Amendment as of March 2, 1999.
The Sands Regent,
a Nevada corporation
By:
------------------------------------
Ferenc B. Szony
President and Chief Executive
Officer
By:
------------------------------------
Pete Cladianos III
Secretary
A-3
<PAGE> 15
- ------------------------------------------------------------
State of Nevada
County of Washoe
On 1999, personally appeared before me, a Notary Public,
Ferenc B. Szony, who acknowledged that he executed the above instrument.
--------------------------------------
Signature of Notary
(Notary Seal)
State of Nevada
County of Washoe
On 1999, personally appeared before me, a Notary Public, Pete
Cladianos III, who acknowledged that he executed the above instrument.
--------------------------------------
Signature of Notary
(Notary Seal)
A-4
<PAGE> 16
THE SANDS REGENT
PROXY -- SPECIAL MEETING OF SHAREHOLDERS -- MARCH 2, 1999
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned, a shareholder of THE SANDS REGENT, a Nevada corporation
(the "Company"), does hereby appoint Ferenc B. Szony and David R. Wood, and each
of them, the true and lawful attorneys and proxies, with full power of
substitution, for and in the name, place and stead of the undersigned, to vote,
as designated below, all of the shares of stock of the Company which the
undersigned would be entitled to vote if personally present at the Special
Meeting of Shareholders of the Company to be held at The Sands Regent
Hotel/Casino, 345 North Arlington Avenue, Reno, Nevada 89501, on March 2, 1999,
at 10:00 a.m., local time, and at any adjournment or adjournments thereof.
Please mark
[X] votes as in
this example
UNLESS OTHERWISE DIRECTED, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
RECOMMENDATIONS OF THE BOARD OF DIRECTORS.
1. Approval of the Reverse Stock Split Proposal
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
<PAGE> 17
2. To vote with discretionary authority with respect to all other matters which
may come before the meeting.
The undersigned hereby revokes any proxy or proxies heretofore given and
ratifies and confirms all that the proxies appointed hereby, or either one of
them, or their substitutes, may lawfully do or cause to be done by virtue
hereof. Both of said proxies or their substitutes who shall be present and act
at the meeting, or if only one is present and acts, then that one, shall have
and may exercise all of the powers hereby granted to such proxies. The
undersigned hereby acknowledges receipt of a copy of the Notice of Special
Meeting and Proxy Statement, both dated January 25, 1999.
[ ] MARK HERE FOR ADDRESS CHANGE AND INDICATE CHANGE:
Dated:_____________, 1998
-------------------------
Signature(s)
-------------------------
Signature(s)
NOTE: Your signature
should appear the same as
your name appears hereon.
In signing as attorney,
executor, administrator,
trustee or guardian,
please indicate the
capacity in which
signing. When signing as
joint tenants, all
parties in the joint
tenancy must sign. When a
proxy is given by a
corporation, it should be
signed by an authorized
officer and the corporate
seal affixed. No postage
is required if returned
in the enclosed envelope
and mailed in the United
States.
