SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K/A
(AMENDMENT NO. 1)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998 Commission File No. 0-21754
SODAK GAMING, INC.
(Exact name of registrant as specified in its charter)
SOUTH DAKOTA 46-0407053
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
5301 S. HIGHWAY 16
RAPID CITY, SOUTH DAKOTA 57701
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (605) 341-5400
Securities registered pursuant to Section 12(b) of the Act: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock $0.001 par value
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes __X__ No _____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in the registrant's definitive proxy statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of voting stock held by non-affiliates of the
registrant as of March 19, 1999 was approximately $93,391,401 (based on the last
sale price of such stock as reported on the Nasdaq National Market).
The number of shares outstanding of the registrant's common stock, as of March
19, 1999, was: Common Stock, $0.001 par value: 22,789,908 shares.
<PAGE>
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report on Form 10-K for the
year ended December 31, 1998, as set forth below:
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
BOARD OF DIRECTORS
The following table sets forth certain information concerning the directors of
the Company:
<TABLE>
<CAPTION>
Name, Positions, and Director Term Business Experience During the Past Five Years
Offices with the Company Since Expiring in Age and Other Directorships
- ----------------------------------- -------- ----------- ---- -------------------------------------------------
<S> <C> <C> <C> <C>
Michael G. Wordeman 1989 1999 50 Chairman of the Board since 1989; Chief
Chairman of the Board Executive Officer of the Company from 1989 to
June 1998.
Roland W. Gentner 1990 1999 55 Chief Executive Officer of the Company since
Chief Executive Officer, June 1998; President of the Company since 1993;
President and Director Chief Operating Officer of the Company from 1993
to 1998; Vice President of the Company from 1991
to 1993.
Thomas Celani 1990 1999 43 President of Detroit Entertainment, LLC since
Director 1997; Partner of North American Gaming since
1993; Partner of Motor City Harley Davidson
since 1997; Chief Executive Officer and owner of
Action Distributing Company from 1982 to 1998.
Colin V. Reed 1992 1999 51 Director and member of the three-executive
Director Office of the President (since December 1998),
Chief Financial Officer (since April 1997) and
Executive Vice President (since September 1995)
of Harrah's Entertainment, Inc.; member of other
management positions with Harrah's
Entertainment, Inc. since 1987. He was a member
of the Executive Committee of Harrah's Jazz
Company and Director, Senior Vice President and
Secretary of Harrah's Jazz Finance Corp., both
of which filed petitions under Chapter 11 of the
U.S. Bankruptcy Code in November 1995; on
October 30, 1998, the Plan of Reorganization for
both companies was consummated. Mr. Reed is also
a Director of National Airlines, Inc. and JCC
Holding Company.
Manuel Lujan, Jr. 1993 1999 70 United States Secretary of the Department of the
Director Interior from 1989 to 1993; United States
Congressman for New Mexico from 1969 to 1989;
member of the Board of Directors of Public
Service Company of New Mexico and First State
Bank, Albuquerque, New Mexico.
Ronnie Lopez 1993 1999 52 President of Phoenix International Consultants
Director since 1987; Director of Bank of America-Arizona
since 1991; member of the Hispanic
Congressional Caucus Institute Board of
Directors
</TABLE>
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<PAGE>
The following table sets forth certain information concerning the executive
officers of the Company:
<TABLE>
<CAPTION>
Name, Positions, and Offices Business Experience
with the Company Age During the Past Five Years
- ------------------------------------------- ----- ------------------------------------------------------
<S> <C> <C>
Roland W. Gentner 55 Chief Executive Officer of the Company since June
Chief Executive Officer, 1998; President of the Company since 1993; Chief
President and Director Operating Officer of the Company from 1993 to 1998;
Vice President of the Company from 1991 to 1993.
Kevin Buntrock 41 Vice President of the Company since 1993.
Vice President--Corporate Development
Knute Knudson, Jr. 50 Vice President of the Company since 1993.
Vice President--Administration
Michael G. Diedrich 44 Vice President and Secretary of the Company since
Vice President, General Counsel and 1993; General Counsel of the Company since 1991.
Secretary
Clayton R. Trulson 54 Vice President and Treasurer of the Company since
Vice President--Finance 1993; Chief Financial Officer of the Company from 1992
and Treasurer to February 1996.
</TABLE>
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<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and noncash compensation for the
last three years awarded to or earned by the Chief Executive Officer of the
Company and the four highest paid executive officers of the Company:
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
--------------------- ------------------------
Securities
Underlying Restricted All other
Options Stock Compen-
Name and Principal Position Year Salary Bonus(1) Granted(2) Awards(3) sation(4)
- ----------------------------------- ---- --------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Roland W. Gentner 1998 $ 387,449 $ 203,000 - $ 243,750 $ 10,000
Chief Executive Officer (since June 1997 $ 333,480 $ - 60,000 $ - $ 9,500
1998) and Director 1996 $ 293,538 $ - 60,000 $ - $ 9,500
Michael G. Wordeman 1998 $ 215,605 $ - - $ - $ 841,021
Chairman of the Board and former 1997 $ 412,892 $ - 80,000 $ - $ 13,040
Chief Executive Officer (5) 1996 $ 380,308 $ - 80,000 $ - $ 12,666
Kevin Buntrock 1998 $ 164,350 $ 62,500 80,000 $ - $ 9,273
Vice President - Corporate 1997 $ 154,956 $ - 40,000 $ - $ 8,930
Development 1996 $ 146,769 $ - 40,000 $ - $ 9,118
Knute Knudson, Jr. 1998 $ 156,110 $ 65,000 60,000 $ - $ 8,930
Vice President -Administration 1997 $ 148,388 $ - 20,000 $ - $ 8,400
1996 $ 137,415 $ - 20,000 $ - $ 8,580
Michael G. Diedrich 1998 $ 145,090 $ 52,500 34,000 $ - $ 8,306
Vice President, General Counsel 1997 $ 134,705 $ - 16,000 $ - $ 7,800
and Secretary 1996 $ 128,385 $ - 16,000 $ - $ 8,381
Clayton R. Trulson, 1998 $ 133,895 $ 57,500 34,000 $ - $ 7,276
Vice President - Finance 1997 $ 119,760 $ - 16,000 $ - $ 6,900
and Treasurer 1996 $ 113,923 $ - 16,000 $ - $ 8,070
</TABLE>
- -----------------------------------
(1) Includes cash bonuses paid in the following year with respect to services
performed in the years indicated.
(2) Amounts represent options to purchase the number of shares of Common Stock
shown. These amounts include options repriced in 1998. On June 17, 1998,
the 1997 and 1996 options granted to Mr. Gentner totaling 120,000 shares
were canceled. Also on June 17, 1998, the 1997 and 1996 options granted to
Mr. Buntrock, Mr. Knudson, Mr. Diedrich and Mr. Trulson totaling 80,000,
40,000, 32,000 and 32,000, respectively, were canceled and 75% of the
canceled options were replaced by options with a grant price equal to the
fair market value on the date of reissuance. Total options reissued to Mr.
Buntrock, Mr. Knudson, Mr. Diedrich and Mr. Trulson were 60,000, 30,000,
24,000 and 24,000, respectively.
(3) A restricted stock award was made to Mr. Gentner on December 16, 1998. A
total of 30,000 shares were awarded. 50% of the award vested January 1,
1999 and the remaining 50% will vest on January 1, 2000. The unvested
shares issued to Mr. Gentner will terminate if Mr. Gentner's employment
terminates for certain reasons prior to vesting of such shares. The value
of the shares issued, as presented, is based on the fair market value of
the stock at the date of grant and does not take into account any
diminution in value attributable to restrictions applicable to these
shares. The value of the shares issued, based upon the stock price at
December 31, 1998, was $249,375. The consummation of the pending merger
with IGT would accelerate the vesting of these restricted stock awards.
(4) The amounts shown in this column include Company contributions to the
Company's 401(k), and in the case of Mr. Wordeman, the 1998 balance
includes amounts paid to him pursuant to the separation agreement dated
June 17, 1998. In 1997 and 1996, Mr. Wordeman's other compensation also
includes benefits attributable to an employee-owned life insurance policy.
(5) Mr. Wordeman retired as Chief Executive Officer effective June 30, 1998.
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<PAGE>
STOCK OPTIONS
The Company maintains a 1993 Long-Term Incentive and Stock Option Plan (the
"1993 Option Plan"). The Company may grant stock options and other stock-based
awards to executive officers and other employees and consultants of the Company
under the 1993 Option Plan. The following table sets forth information with
respect to options granted to the named executive officers in 1998:
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
Potential Realization Values
% of Total at Assumed Annual Rates
Options of Stock Price Appreciation for
Number Granted to Exercise Option Term(3)
of Options Employees Price Expiration -------------------------------
Name Granted in 1998 per Share Date 5% 10%
- ---------------------- ------------ ------------ -------------- ------------ --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Gentner - n/a n/a n/a n/a n/a
Mr. Wordeman - n/a n/a n/a n/a n/a
Mr. Buntrock 20,000 (1) 5.0% $ 6.00 6/17/08 $ 75,467 $ 191,249
Mr. Buntrock 60,000 (2) 15.1% $ 6.00 6/17/08 $ 226,402 $ 573,747
Mr. Knudson 30,000 (1) 7.6% $ 6.00 6/17/08 $ 113,201 $ 286,874
Mr. Knudson 30,000 (2) 7.6% $ 6.00 6/17/08 $ 113,201 $ 286,874
Mr. Diedrich 10,000 (1) 2.5% $ 6.00 6/17/08 $ 37,734 $ 95,625
Mr. Diedrich 24,000 (2) 6.1% $ 6.00 6/17/08 $ 90,561 $ 229,499
Mr. Trulson 10,000 (1) 2.5% $ 6.00 6/17/08 $ 37,734 $ 95,625
Mr. Trulson 24,000 (2) 6.1% $ 6.00 6/17/08 $ 90,561 $ 229,499
</TABLE>
- -----------------------------------
(1) The options vest in four equal annual installments beginning June 17, 1999.
(2) On June 17, 1998, the 1997 and 1996 options granted to Mr. Gentner, Mr.
Buntrock, Mr. Knudson, Mr. Diedrich and Mr. Trulson were canceled and were
replaced with options equal to 75% of shares canceled for all except Mr.
Gentner. The reissued options vested 50% on June 17, 1998 and the remaining
50% vest in two equal annual installments beginning June 17, 1999 (see
"Option Repricing").
(3) The potential realizable value is calculated assuming that the fair market
value of the Common Stock on the date of the grant as determined by the
Board of Directors appreciates at the indicated annual rate compounded
annually for the entire term of the option, and that the option is
exercised and the Common Stock received therefor is sold on the last day of
the term of the option for the appreciated price. The 5% and 10% rates of
appreciation are mandated by the rules of the Securities and Exchange
Commission and do not represent the Company's estimate or projection of
future increases in the price of the Common Stock.
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<PAGE>
The following table sets forth information with respect to the exercise of
options and the value of options held by executive officers as of December 31,
1998:
AGGREGATED OPTION EXERCISES IN 1998 AND OPTION VALUES AT DECEMBER 31, 1998
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised In-the-Money
Options Exercised Options at December 31, 1998 Options at December 31, 1998(1)
----------------------------- ---------------------------- ---------------------------------
Shares Acquired Value
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- --------------------- --------------- ------------ ------------- ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Mr. Gentner 0 $0.00 47,188 8,500 $ 47,175 $ 15,725
Mr. Wordeman 0 $0.00 138,532 - $ 69,375 $ -
Mr. Buntrock 0 $0.00 44,012 56,000 $ 99,254 $ 130,250
Mr. Knudson 0 $0.00 25,012 49,000 $ 54,816 $ 113,813
Mr. Diedrich 0 $0.00 21,012 25,500 $ 45,441 $ 59,406
Mr. Trulson 0 $0.00 26,524 25,500 $ 54,601 $ 59,406
</TABLE>
- --------------------------------------
(1) Amounts represent the difference between the aggregated option price of
unexercised options and a $8.3125 market price on December 31, 1998, which
was the closing price of the Company's Common Stock as reported on the last
trading date of 1998.
OPTION REPRICING
The Compensation Committee of the Board of Directors determined in June
1998 that the exercise price of a significant portion of the then-outstanding
stock options was at such a high level that the incentives associated with such
options had been substantially diminished. Based upon this judgment, the
Committee authorized the Company to offer to all employees, other than Mr.
Gentner and Mr. Wordeman, who then held outstanding stock options granted in
1996 and 1997, the opportunity to cancel those options and replace 75% of
canceled options with options with a grant price equal to the fair market value
on the date of issuance. The replacement options vested 50% on the date of grant
and the remaining 50% vest in two equal installments beginning one year from the
date of grant.
The following table sets forth information concerning repricing of options
held by executive officers during the ten-year period ending December 31, 1998.
TEN YEAR OPTIONS REPRICING
<TABLE>
<CAPTION>
Market Price Exercise Length of Original
Number of of Stock at Price at New Option Term
Date of Options After Time of Time of Exercise Remaining at Date
Name Repricing Repricing(1) Repricing Repricing Price of Repricing
- ------------------------- --------- ------------- ------------ ----------- ---------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Kevin Buntrock 06/17/98 30,000 $ 6.00 $ 12.69 $ 6.00 7.7 years
Vice President - 06/17/98 30,000 $ 6.00 $ 16.38 $ 6.00 8.6 years
Corporate Development
Knute Knudson, Jr. 06/17/98 15,000 $ 6.00 $ 12.69 $ 6.00 7.7 years
Vice President - 06/17/98 15,000 $ 6.00 $ 16.38 $ 6.00 8.6 years
Administration
Michael G. Diedrich 06/17/98 12,000 $ 6.00 $ 12.69 $ 6.00 7.7 years
Vice President, General 06/17/98 12,000 $ 6.00 $ 16.38 $ 6.00 8.6 years
Counsel and Secretary
Clayton R. Trulson 06/17/98 12,000 $ 6.00 $ 12.69 $ 6.00 7.7 years
Vice President - 06/17/98 12,000 $ 6.00 $ 16.38 $ 6.00 8.6 years
Finance and Treasurer
</TABLE>
- -------------------------------------
(1) Represents 75% of canceled options.
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<PAGE>
LONG-TERM INCENTIVE PLAN AWARDS
Other than its 1993 Option Plan, the Company does not maintain any
long-term incentive plans.
DIRECTOR COMPENSATION
The non-employee directors of the Company are currently compensated through
an annual grant of options to purchase 10,000 shares of the Company's Common
Stock at the fair market price of the Common Stock on the date of the option
grant. Non-employee directors are also paid $1,500 per month and $2,000 for each
board meeting they attend during the term for which they serve on the Company's
Board of Directors. In addition, board members are reimbursed for travel and
other expenses incurred in attending board meetings.
EMPLOYMENT AGREEMENTS
On March 10, 1999, the Company entered into an employment agreement with
the Chief Executive Officer, Roland W. Gentner, which supersedes Mr. Gentner's
prior employment agreement. The new agreement provides for a one year initial
term beginning on the effective date of the merger (for a discussion on the
pending merger of the Company with IGT, see page 3 of the Company's 1998 Annual
Report on Form 10-K filed March 30, 1999), and for additional one year terms
thereafter unless Mr. Gentner or the Company chooses not to extend the
employment term. The agreement provides for an annual base salary of $400,000
and an annual cash bonus equal to a percentage of Mr. Gentner's base salary
ranging from 30% to 120%, depending on whether the Company achieves its
performance goals for the year. On the effective date of the merger, IGT will
grant Mr. Gentner 50,000 shares of restricted IGT stock that will become vested
two years after the merger, except that Mr. Gentner will not be entitled to the
shares of restricted stock if his employment terminates due to his death or
disability, or before the one year anniversary of the date of the merger, his
employment is terminated by the Company for "cause" (as defined in the
agreement) or Mr. Gentner resigns without "good reason" (as defined in the
agreement). If Mr. Gentner is terminated without "cause," if Mr. Gentner
terminates his employment for "good reason," or if Mr. Gentner's employment
terminates as a result of his death or disability, he is entitled to receive
severance pay equal to his salary through the end of the term plus a pro rata
portion of his annual bonus. If Mr. Gentner is terminated for "cause" or if Mr.
Gentner terminates his employment without "good reason" he is entitled to
receive severance pay equal to any accrued salary plus a pro rata portion of
this annual bonus. If Mr. Gentner's employment terminates due to his death or
disability before the second anniversary of the date of the merger, he will be
entitled to receive the proceeds from a $1,000,000 life insurance policy in lieu
of the 50,000 shares of restricted IGT stock.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
The Securities and Exchange Commission has implemented a rule which
requires a company to disclose information with respect to reports that are
required to be filed under Section 16 of the Securities Exchange Act of 1934, as
amended, by directors, officers and 10% shareholders of such company, if any of
such reports are not filed timely. Based solely upon a review of the copies of
such reports furnished to the Company during the year ended December 31, 1998,
the Company believes that all required filings applicable to executive officers
and directors were complied with, with the following exception: Forms 4 for the
1998 granting of directors' options to Directors Reed, Lopez, Celani and Lujan
were untimely filed.
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<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
OVERVIEW. The Compensation Committee of the Board of Directors (the
"Compensation Committee") reviews and establishes compensation strategies and
programs to ensure that the Company attracts, retains, properly compensates and
motivates qualified executives and other key employees. The Compensation
Committee consists of two non-employee directors. The Compensation Committee
typically meets each year in February or March, primarily to review and
determine bonuses for executives and other key personnel, and otherwise meets on
an as-needed basis. In the year ended December 31, 1998, the Compensation
Committee met five times.
The Compensation Committee believes that the Company's success depends
greatly on the efforts of its officers and other key personnel. The Compensation
Committee also believes the Company must compete with a number of other
businesses for qualified personnel. For these reasons, the Company seeks to
attract, retain and motivate its key employees with compensation that is
competitive within the overall business community and the gaming industry,
provided that performance of the Company and the individual warrant such
compensation.
EXECUTIVE COMPENSATION PROGRAM. As a person's level of responsibility
increases, greater portions of total compensation are based on performance (as
opposed to base salaries and benefits), competitive considerations give way to
performance considerations in justifying the absolute pay levels and the mix of
total compensation shifts toward stock, which aligns the long-term interests of
executives with those of shareholders.
At the senior executive levels, base salaries are average by industry
standards and are adjusted annually. The focus is on TOTAL compensation. which
consists of base salaries and "incentive compensation," the latter of which is
comprised of both cash and stock options. The total amount of incentive
compensation which the Board of Directors authorizes to be distributed each year
is a function of the executive population covered and the profit performance of
the Company as a whole in relation to the prior year. In determining the size of
the annual incentive compensation pool the Board takes into consideration both
absolute results and peer company comparisons of return on shareholders equity,
growth in earnings per share and market share. Accordingly, the intent is to
have the incentive compensation pool for each year go up or down on a leveraged
basis tied to performance measures.
COMPENSATION OF CHIEF EXECUTIVE OFFICER. The Compensation Committee
believes that the compensation arrangements with Mr. Gentner are consistent with
the Company's overall approach to executive compensation and serve to meet the
Company's goal of retaining and motivating a highly qualified Chief Executive
Officer. The Compensation Committee believes that the cash and equity incentives
provide Mr. Gentner with a long-term incentive to remain with the Company, to
contribute actively to the Company's continued growth and development and to
manage the Company consistent with the interests of its shareholders. As a
long-term incentive, the Compensation Committee believes Mr. Gentner's current
equity holdings will motivate performance even if, in any particular year,
pretax earnings decline from prior years' levels.
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<PAGE>
SECTION 162(m) OF THE INTERNAL REVENUE CODE. Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code"), generally limits the corporate
deduction for compensation paid to executive officers named in the proxy to one
million dollars, unless the compensation is performance-based. The Compensation
Committee's policy concerning the tax deductibility of executive compensation is
that generally all such compensation will be designed to be tax deductible under
Section 162(m) of the Code. However, the Compensation Committee reserves the
right to pay nondeductible compensation where the Compensation Committee
believes it would be in the best interests of the Company, such as to attract or
retain a key executive.
THOMAS CELANI and MANUEL LUJAN, JR.,
The Members of the Compensation Committee
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Celani, a member of the Compensation Committee, was formerly an officer
of the Company.
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<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth certain information regarding the ownership
of Common Stock as of March 19, 1999 by: (i) each person who is known by the
Company to own beneficially more than 5% of the outstanding Common Stock, (ii)
each director of the Company, (iii) each officer of the Company named in the
Summary Compensation Table and (iv) by all executive officers and directors as a
group:
<TABLE>
<CAPTION>
Shares of the Company's Common Stock
-----------------------------------------------
Options
Exercisable Beneficially Percent
Name and Address Owned within 60 days Owned(1) of Class
- ---------------------------------------- ----------- -------------- -------------- -----------
<S> <C> <C> <C> <C>
Roland W. Gentner 2,255,600 55,688 2,311,288 9.93%
5301 S. Highway 16
Rapid City, SD 57701
Michael G. Wordeman 3,308,000 148,532 3,456,532 14.85%
1370 Neck Yoke Rd.
Rapid City, SD 57702
Thomas Celani 3,114,000 42,000 3,156,000 13.56%
34900 Grand River
Farmington Hills, MI 48335
Harrah's Operating Company, Inc.(2) 3,192,488 - 3,192,488 13.72%
206 N. Virgina Street
Reno, NV 89501
Colin V. Reed(2) 61,000 34,000 95,000 *
Manuel Lujan, Jr. 9,000 30,000 39,000 *
Ronnie Lopez 1,075 42,000 43,075 *
Kevin Buntrock 42,204 50,012 92,216 *
Knute Knudson, Jr. 42,205 29,012 71,217 *
Michael G. Diedrich 47,414 24,512 71,926 *
Clayton R. Trulson 60,619 30,024 90,643 *
All executive officers and directors as a
group (10 persons)(2) 12,133,605 485,780 12,619,385 54.22%
</TABLE>
- -------------------------------------------
*Less than 1%
(1) Includes shares which may be purchased upon exercise of options exercisable
within 60 days of March 19, 1999.
(2) Harrah's Entertainment, Inc. is the beneficial owner of Harrah's Operating
Company's interest in the Common Stock. Colin V. Reed is Harrah's designee
on the Company's Board of Directors and may be deemed to be the beneficial
owner of the Common Stock.
-10-
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Colin V. Reed, a director of the Company, is a director and executive
officer of Harrah's Entertainment, Inc., which, through its wholly owned
subsidiary, Harrah's Operating Company, Inc., currently manages the Harrah's
Phoenix Ak-Chin casino and entertainment complex near Phoenix, Arizona. Harrah's
Operating Company, Inc. owns approximately 14% of the Company's Common Stock.
Harrah's Operating Company, Inc. is required to pay to the Company 131/3% of
Harrah's management fee from the Harrah's Phoenix Ak-Chin pursuant to the terms
of a Stockholders Agreement dated October 30, 1992, which was superseded by an
Indian Gaming Development Agreement dated February 5, 1998.
Ronnie Lopez, a director of the Company, is a principal of Phoenix
International Consultants. The Company has engaged Phoenix International
Consultants since May 1993 to provide consulting services in the area of
government and foreign relations. The Company paid Phoenix International
Consultants a total of $120,000 in 1998 for such services. The Company's
consulting arrangement with Phoenix International Consultants may be terminated
by either party at will.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
Sodak Gaming, Inc.
Dated: April 27, 1999 \s\ Clayton R. Trulson
-------------------------------
Clayton R. Trulson
Vice President - Finance and Treasurer
(Principal Financial and Accounting Officer)
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