-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VleraF52ju8Ksx7nIHAiD8R21E6vhVCmc0UFkCoE6vU2zyQ/9PyS00NNORvmndWd wqKf6N5DLssUVrAZxmLEZw== 0000897101-99-000449.txt : 19990430 0000897101-99-000449.hdr.sgml : 19990430 ACCESSION NUMBER: 0000897101-99-000449 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990429 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SODAK GAMING INC CENTRAL INDEX KEY: 0000903856 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PROFESSIONAL & COMMERCIAL EQUIPMENT & SUPPLIES [5040] IRS NUMBER: 460407053 STATE OF INCORPORATION: SD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 000-21754 FILM NUMBER: 99604252 BUSINESS ADDRESS: STREET 1: 5301 S HWY 16 CITY: RAPID CITY STATE: SD ZIP: 57701 BUSINESS PHONE: 6053415400 MAIL ADDRESS: STREET 1: SODAK GAMING INC STREET 2: 5301 S HIGHWAY 16 CITY: RAPID CITY STATE: SD ZIP: 57701 10-K/A 1 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. 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:
Name, Positions, and Director Term Business Experience During the Past Five Years Offices with the Company Since Expiring in Age and Other Directorships - ----------------------------------- -------- ----------- ---- ------------------------------------------------- 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
-2- The following table sets forth certain information concerning the executive officers of the Company:
Name, Positions, and Offices Business Experience with the Company Age During the Past Five Years - ------------------------------------------- ----- ------------------------------------------------------ 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.
-3- 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:
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) - ----------------------------------- ---- --------- --------- ---------- ---------- ---------- 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
- ----------------------------------- (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. -4- 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
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% - ---------------------- ------------ ------------ -------------- ------------ --------------- -------------- 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
- ----------------------------------- (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. -5- 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
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 - --------------------- --------------- ------------ ------------- ------------- -------------- ------------- 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
- -------------------------------------- (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
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 - ------------------------- --------- ------------- ------------ ----------- ---------- ------------------ 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
- ------------------------------------- (1) Represents 75% of canceled options. -6- 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. -7- 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. -8- 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. -9- 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:
Shares of the Company's Common Stock ----------------------------------------------- Options Exercisable Beneficially Percent Name and Address Owned within 60 days Owned(1) of Class - ---------------------------------------- ----------- -------------- -------------- ----------- 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%
- ------------------------------------------- *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- 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. -11- 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) -12- -----END PRIVACY-ENHANCED MESSAGE-----