-----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, JoIKGwy1v0oLlTMAOGwbXWeebgMxjM7m3aDGOsTS6jnxOKl1sVOvYADmBMibCmu7 f0ie5FrzH39LSprL6t2MhA== 0000950147-00-000645.txt : 20000502 0000950147-00-000645.hdr.sgml : 20000502 ACCESSION NUMBER: 0000950147-00-000645 CONFORMED SUBMISSION TYPE: 10-K405/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 20000501 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SILICON GAMING INC CENTRAL INDEX KEY: 0001013170 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 770357939 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405/A SEC ACT: SEC FILE NUMBER: 000-28294 FILM NUMBER: 615561 BUSINESS ADDRESS: STREET 1: 2800 W BAYSHORE CITY: PALO ALTO STATE: CA ZIP: 94303 BUSINESS PHONE: 6508429000 MAIL ADDRESS: STREET 1: 2800 WEST BAYSHORE ROAD CITY: PALO ALTO STATE: CA ZIP: 94303 10-K405/A 1 AMENDMENT NO. 1 TO FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K/A Amendment No. 1 Mark One [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission File Number 0-28294 SILICON GAMING, INC. (Exact name of Registrant as specified in its charter) CALIFORNIA 77-0357939 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 2800 W. Bayshore Road, Palo Alto, CA 94303 (Address of principal executive offices) (650) 842-9000 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of Class Name of each exchange on which registered - -------------- ----------------------------------------- None None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.001 per share 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 Exchange 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 definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] Aggregate market value of the registrant's Common Stock held by non-affiliates as of February 29, 2000: $5,013,226 Number of shares outstanding of the issuer's common Stock, $.001 par value, as of February 29, 2000: 30,949,273 DOCUMENTS INCORPORATED BY REFERENCE: None Part III of the Registrant's Form 10-K for the fiscal year ended 12/31/99 is amended to read in its entirety as follows: ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Set forth below is information regarding the current directors, including information furnished by them as to principal occupations, certain other directorships held by them, any arrangements pursuant to which they were selected as directors or nominees and their ages as of March 1, 2000 Director Name Age Principal Occupation since ---- --- -------------------- ----- Andrew S. Pascal...... 34 President and Chief Executive Officer, 1998 Silicon Gaming, Inc. Rob Reis.............. 46 Consultant/Proprietor, Breakthroughs! 1999 Stanford Springel..... 53 Consultant; Chief Executive Officer, 1999 Omega Environmental, Inc. Andrew S. Pascal was elected President and Chief Executive Officer of the Company in February 1999. Previously Mr. Pascal had served as Executive Vice President Marketing and Game Development of the Company since October 1994. He has over 10 years of gaming industry experience with an emphasis in slot marketing, slot merchandising and slot operations. He joined SGI in October 1994 from Mirage Resorts, Incorporated, where he worked from June 1985 to October 1994. Mr. Pascal held the position of Director of Slot Operations and Marketing at The Mirage Hotel and Casino ("The Mirage"). Mr. Pascal also served on The Mirage's eight-member Operating Committee, which set operating policy and established the strategic direction for The Mirage and its employees, from September 1992 to October 1994. Prior to the opening of The Mirage, Mr. Pascal served as the Director of Slot Marketing for the Golden Nugget Casino-Hotel. Rob Reis was appointed to the board of directors of the Company effective November 24, 1999. He is currently engaged as an independent consultant with the Company for strategic business advice. From 1996 to 1998, he served as a director of the Texas Instruments Innovation Center. In 1989 Mr. Reis founded Savi Technology, Inc., and from 1989 to 1995 served as its President and Chief Executive Officer. In 1983, Mr. Reis founded Finial Technology, Inc. and from 1983 to 1987 served as its President and Chief Executive Officer. 2 Stanford Springel was appointed to the board of directors of the Company effective November 24,1999. Mr. Springel is a specialist in company turn-arounds. Since 1991, Mr. Springel has acted as an independent consultant serving in a variety of executive roles providing domestic and international turnaround management services to financially distressed companies, including (i) Omega Environmental, Inc., an environmental services company currently in Chapter 11 where, since June 1997, Mr. Springel has served as Chief Executive Officer, (ii) Interlogic Trace, Inc., ("Interlogic"), a nationwide provider of computer maintenance and repair services where, from February 1995 to December 1995, Mr. Springel served as Interim Chief Operating Officer and Interim President, (iii) Riedel Environmental Technologies, Inc. ("Riedel"), an environmental remediation and services company where, from January 1994 to March 1996, Mr. Springel served as Interim Chief Executive Officer and President and, for a period of time, as a member of the board of directors, and (iv) Ter Meulen Post, a Dutch retail catalogue company where, during 1993, Mr. Springel served as Chief Operating Officer. Both Interlogic and Riedel were in Chapter 11 during Mr. Springel's association with those companies. Since December 1995, Mr. Springel has served on the board of directors of Pinebrook Capital. There are no family relationships among executive officers or directors of the Company. SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires the Company's directors, officers and ten percent beneficial owners to file reports of ownership and changes in ownership with the SEC. Directors, officers and greater than ten percent beneficial owners are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely on its review of the copies of such forms received by it, or written representations from certain reporting persons that no Form 5s were required for such persons, the Company believes that each of its directors, officers and greater than ten percent beneficial owners during the fiscal year ended December 31, 1999 have complied with all filing requirements applicable to such person. 3 ITEM 11. EXECUTIVE COMPENSATION SUMMARY OF CASH AND OTHER COMPENSATION The following table sets forth the compensation earned by the Company's Chief Executive Officer and each of the other four most highly compensated executive officers whose compensation for the fiscal year ended December 31, 1999 exceeded $100,000 for services rendered in all capacities to the Company during the last three fiscal years (the "Named Executive Officers"). SUMMARY COMPENSATION TABLE
Annual Long-Term Compensation Compensation Awards Name and Principal Fiscal --------------------- Shares Underlying All Other Position Year Salary(1) Bonus(3) Options Granted Compensation(2) -------- ---- --------- -------- --------------- --------------- David S. Morse(4) ........ 1999 $ 59,125 -- -- -- Former Chairman of the 1998 $ 64,919 -- 155,000(5) -- Board and Acting Chief -- -- -- -- -- Executive Officer Andrew S. Pascal(6) ...... 1999 $208,265 $100,000 300,000 $ 450 Chief Executive Officer, 1998 $191,338 $ 2,300 130,000(7) $ 380 President, and Acting 1997 $162,500 $ 35,003 30,000 $ 332 Chief Financial Officer Betsy B. Sutter .......... 1999 $126,000 $ 31,500 150,000 $ 362 Vice President--Human 1998 $121,870 $ 15,000 150,400(8) $ 319 Resources(9) 1997 $ 82,385 -- 25,200 $ 198 Paul Mathews ............. 1999 $126,170 $ 46,875 150,000 $ 360 Vice President--Business 1998 $125,000 $ 6,375 163,336(10) $ 270 Development and 1997 $110,417 -- 40,000 $ 262 Government Affairs Paul D. Miltenberger ..... 1999 $150,643 $ 32,500 100,000 $ 324 Vice President-- 1998 $109,167 $ 17,721 -- Corporate Development 1997 $ 93,031 -- -- John K. Penver ........... 1999 $124,993 $ 31,250 140,000 $ 360 Vice President- 1998 $116,667 $ 11,307 -- Finance(11) 1997 $ 85,256 -- --
- ---------- (1) Salary includes any compensation deferred under Company's 401(k) plan. (2) Represents life insurance premiums paid by the Company for the benefit of the Named Executive Officer. (3) In March of 1999, a retention program was adopted by the Board that compensated the Company's executives for their continued commitment to the reorganization of the company. (4) Mr. Morse was elected Chairman of the Board in August 1998 and served as Acting Chief Executive Officer from August 1998 to February 1999. (5) Represents 5,000 shares granted to Mr. Morse in his capacity as a director and 75,000 shares granted to him as Acting Chief Executive Officer, which shares were repriced in December 1998. (6) Mr. Pascal currently serves as President and Chief Executive Officer of the Company, to which he was elected in February 1999. From January 1997 through February 1999, he served as Executive Vice President-Marketing and Game Development. (7) Represents options granted in prior years and repriced in September 1998. (8) Represents 25,200 shares granted in prior years and repriced in January 1998 and in September 1998; 50,000 shares granted in 1998 and repriced in September 1998. (9) Ms. Sutter was hired in March, 1997. (10) Represents 40,000 shares granted in prior years and repriced in January 1998 and in September 1998; 16,666 shares granted in a prior year and repriced in September 1998; 33,335 shares granted in 1998, repriced in September 1998 and subsequently cancelled in October 1998. (11) Mr. Penver was hired in February, 1997. 4 STOCK OPTION GRANTS The following table sets forth further information regarding individual grants of options for the Company's Common Stock during the year ended December 31, 1999 for each Named Executive Officer. Such grants were made pursuant to the Company's 1994 Stock Option Plan and 1997 Non-Qualified Stock Option Plan. In accordance with the rules of the Securities and Exchange Commission ("SEC"), the table sets forth the hypothetical gains or "option spreads" that would exist for the options at the end of their respective ten- year terms based on assumed annualized rates of compound stock price appreciation of 5% and 10% from the dates the options were granted to the end of the respective option terms. Actual gains, if any, are dependent on the future performance of the Company's Common Stock and overall market conditions. There can be no assurance that the potential realizable values shown in this table will be achieved. OPTION GRANTS IN LAST FISCAL YEAR
Potential Realizable Value at Assumed Annual Number of % of Total Rates of Stock Price Shares Options Appreciation for Option Underlying Granted to Exercise Term(4) Options Employees Price Expiration --------------------------- Name Granted(1)(2) in 1998 Per Share(3) Date 5% 10% ---- ------------- ------- ------------ ---- ----------- ----------- David S. Morse ........ 0.0000 Andrew S. Pascal ...... 300,000 8.7266 $ 0.75 03/09/09 $141,501.00 $358,592.00 Betsy B. Sutter ....... 150,000 4.3633 $ 0.75 03/09/09 $ 70,751.00 $179,296.00 Paul Mathews .......... 150,000 4.3633 $ 0.75 03/09/09 $ 70,751.00 $179,296.00 Paul D .Miltenberger .. 100,000 2.9089 $ 0.75 03/09/09 $ 47,167.00 $119,531.00 John K. Penver ........ 40,000 1.1636 $ 0.50 03/12/09 $ 12,578.00 $ 31,875.00 100,000 2.9089 $ 0.75 04/22/09 $ 47,167.00 $119,531.00
- ---------- (1) Options granted in 1999 were granted under the 1994 Stock Option Plan, the 1996 Outside Directors' Stock Option Plan and the 1997 Non-Qualified Stock Option Plan. The Board of Directors has discretion, subject to plan limits, to modify the terms of outstanding options. (2) With the exception of the options for 5,000 shares that were granted to Mr. Morse in 1998 under the 1996 Outside Directors' Plan, which provides that options become exercisable upon vesting, each option is fully exercisable from the time of grant, subject to the Company's right to repurchase any unvested shares at the original exercise price in the event of the optionee's termination. Shares vest at the rate of 1/4 of the shares after one year and then 1/48 of the total number of shares each month thereafter. Each option expires ten years from the date of grant. Under the 1997 Outside Directors' Plan, shares vest monthly over 36 months. (3) The per-share exercise price of options granted represents the fair market value of the underlying shares of Common Stock on the dates the respective options were granted as reported on the NASDAQ National Market, or the OTC Bulletin Board, as applicable. (4) Amounts represent hypothetical gains that could be achieved for the respective options if exercised at the end of the option term. The assumed 5% and 10% rates of stock price appreciation are provided pursuant to the rules of the Securities and Exchange Commission and do not represent the Company's estimate or projection of the future Common Stock price. 5 AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES The following table sets forth certain information regarding the exercise of options by the named Executive Officers during 1999 and unexercised stock options held by each of the Named Executive Officers as of December 31, 1999: Number of Securities Underlying Value of Unexercised Unexercised Options at In-the-Money Options at December 31, 1999 December 31, 1999(1) ----------------------------- ----------------------------- Exercisable(2) Unexercisable Exercisable(2) Unexercisable -------------- ------------- -------------- ------------- Andrew S. Pascal... 430,000 0 0 0 Betsy B. Sutter.... 225,200 0 0 0 Paul Mathews....... 206,666 0 0 0 Paul Miltenberger.. 175,000 0 0 0 John Penver........ 179,700 0 0 0 - ---------- (1) Market value of underlying securities at year end ($0.125) minus the exercise price. (2) With certain exceptions, all options are fully exercisable, subject to the Company's right to repurchase any unvested shares at the original exercise price in the event of the optionee's termination. EMPLOYMENT, SEVERANCE AND CHANGE OF CONTROL AGREEMENTS Not applicable. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth certain information regarding beneficial ownership of the Company's Common Stock as of March 1, 2000 by (i) each person known by the Company to own beneficially more than five percent of the outstanding shares of Common Stock, (ii) each director of the Company, (iii) each of the executive officers named in the "Executive Compensation -- Summary Compensation Table" on page 7 and (iv) all directors and current executive officers as a group. Shares of Common Stock Beneficially Owned(1) ---------------------- Five Percent Shareholders, Directors Percentage and Executive Officers Number(2) Ownership - ------------------------------------ --------- --------- Andrew S. Pascal...................................... 11,999,562 27.94 Paul D. Mathews....................................... 8,085,140 20.71 Betsy B. Sutter....................................... 1,117,009 3.48 John Penver........................................... 1,504,675 4.64 Paul Miltenberger..................................... 1,423,534 4.40 All directors and current executive officers as a group (7 persons)(3).................. 24,129,920 43.81 6 - ---------- (1) Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, shares of Common Stock subject to options or warrants held by that person that are currently exercisable or will become exercisable within 60 days after March 1, 2000 are deemed outstanding, while such shares are not deemed outstanding for purposes of computing percentage ownership of any other person. In general, options granted under the 1994 Stock Option Plan are fully exercisable from the date of grant, subject to the Company's right to repurchase any unvested shares at the original exercise price upon termination of employment. Unless otherwise indicated in the footnotes below, the persons and entities named in the table have sole voting and investment power with respect to all shares beneficially owned, subject to community property laws where applicable. (2) On November 24, 1999, the Company adopted the "1999 Long Term Compensation Plan" pursuant to a resolution of the Board of Directors. On the 7th of February, 2000, the officers along with many of the employees, were granted new options that took effect in fiscal year 2000. The schedule of beneficial shares reflects the effects of this plan with regards to the officers listed thereunder. Options granted under the 1999 Long Term Compensation plan vest 20% on date of issuance, and the remainder vest 1/48th each calendar month after issuance, unless earlier terminated. (3) Includes 6,989,470 shares issuable upon exercise of stock options that are currently exercisable or will become exercisable within 60 days after March 1, 2000 from the options that were granted on February 7th, 2000, under the 1999 Long Term Compensation Plan. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS On November 24, 1999, Mr. Andrew Pascal, the President and CEO, and Mr. Paul Matthews, the Vice President of Business Development and Government Affairs, each issued non-recourse promissory notes to the Company in the principal amount of $117,431.17, as payment for 7,828,745 shares of common stock issued to each of Messrs. Pascal and Matthews under the Silicon Gaming, Inc. 1999 Long Term Compensation Plan. Messrs. Pascal and Matthews each pledged the shares as collateral against the payment of the promissory notes. As of April 28, 2000, the principal amount outstanding on each promissory note was $117,431.17. The notes each accrue interest at the rate of 6.39% per annum and mature on October 30, 2009. 7 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to report to be signed on its behalf by the undersigned, thereunto duly authorized. Silicon Gaming, Inc. By: /s/ Andrew S. Pascal ------------------------------------ Andrew S. Pascal President, Chief Executive Officer, Acting Chief Financial Officer and director Date: May 1, 2000 -----END PRIVACY-ENHANCED MESSAGE-----