SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1999
JANUS HOTELS AND RESORTS, INC.
(Exact name of registrant as specified in its charter)
Delaware Commission File Number: 0-22745 13-2572712
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2300 Corporate Blvd., N.W., Suite 232 33431-8596
Boca Raton, Florida (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (561) 994-4800
Securities registered pursuant to Section 12(b) of the Exchange Act of 1934:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
(Title of Class)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 |_|
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will 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-KSB
or any amendment to this form 10-KSB. |_|
The issuer's revenues for its most recent fiscal year were $51,173,422
The aggregate market value of the voting and non-voting common equity held by
non-affiliates of the issuer was approximately $14,467,000, as of March 21,
2000. It is the position of the Company that the United States Lines, Inc. and
United States Lines (S.A.), Inc. Reorganization Trust is not an affiliate.
Number of shares of common stock outstanding as of April 24, 2000: 8,671,092
Transitional Small Business Disclosure Format: Yes |_| No |X|
DOCUMENTS INCORPORATED BY REFERENCE
Form 10-KSB filed with the Commission on March 29, 2000.
<PAGE>
EXPLANATORY NOTE
The Registrant is amending its Annual Report on Form 10-KSB for the
year ended December 31, 1999 to include the information required in Part III,
Items 9 through 12, which was omitted in the original filing pursuant to General
Instruction E(3) of this Form 10-KSB.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act.
Directors, Executive Officers, Promoters and Control Persons
The directors (including current class designation) and executive
officers of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position Held Position Since
<S> <C> <C> <C>
C. Scott Bartlett, Jr. 67 Director (Class A) 1996
Louis S. Beck 54 Chairman of the Board and 1997
Chief Executive Officer (Class
A)
James E. Bishop 48 Director and President (Class 1996
C)
Lucille Hart-Brown 51 Director (Class A) 1996
Vincent W. Hatala, Jr. 69 Director (Class B) 1990
Richard P. Lerner 61 Director (Class A) 1996
Arthur Lubell 86 Director (Class B) 1990
Michael M. Nanosky 41 Director and President of 1997
Hotel Operations (Class C)
Paul Tipps 63 Director (Class B) 1997
Richard A. Tonges 44 Treasurer and Vice President 1997
of Finance
Harry Yeaggy 54 Vice Chairman of the Board 1997
(Class C)
</TABLE>
During 1999, the Board of Directors of the Company held four meetings.
No director of the Company attended less than 75% of the meetings held during
the year.
All directors of the Company hold office until their respective
successors are elected and qualified, or until their death, resignation or
removal. Officers serve at the discretion of the Board of Directors.
There are no family relationships between any directors or executive
officers of the Company.
Biographical Information Concerning Directors and Executive Officers
Class A Directors. The terms of the following Class A Directors expire at the
2000 annual meeting.
C. Scott Bartlett, Jr.
Mr. Bartlett has been a Director of the Company since August 1996. Mr.
Bartlett has served as an independent financial consultant advising financial
institutions in matters involving credit policy, loan approvals and loan
workouts since 1990. Mr. Bartlett served as Senior Vice President and Chief
Credit Officer of MTB Bank from 1992 until 1994 and currently serves as a member
of the Board of Directors of MTB Bank with expanded Board duties pursuant to
which he is paid on a per diem basis, in addition to compensation received as a
member of such Board. Mr. Bartlett served as Executive Vice President, Senior
Lending Officer and Chairman, Credit Policy Committee for National Westminster
Bank USA from 1973 until 1990. Mr. Bartlett presently serves as a director of
the following corporations: NVR, Inc. , AMEX: NVR (Audit Committee, Nominating
Committee); MTB Bank (Audit Committee); Allstate Financial Corporation, OTC:
ASFN (Chairman of Audit Committee); and Abraxas Petroleum Corporation, OTC: AXAS
(Audit Committee).
2
<PAGE>
Louis S. Beck
Mr. Beck has been a Director and Chairman of the Board of the Company since
the Company's acquisition, by way of merger, of Beck Group Management Corp. on
April 24, 1997. He is also the Company's Chief Executive Officer. He has been a
principal stockholder and Chief Executive Officer of Beck Hospitality Inc. III
and predecessor companies engaged in the hotel management business since 1972.
He has also been a principal stockholder and Chairman of the Board of Union
Savings Bank in Cincinnati, Ohio since 1986. Union Savings Bank is a
wholly-owned subsidiary of U.S. Bancorp, a savings and loan holding company of
which Mr. Beck is a director and President. In addition, since 1992 he has
served as Chairman of the Board of Guardian Savings Bank in Cincinnati, Ohio and
serves as a director and President of its holding company, Guardian Bancorp,
Inc.
Richard P. Lerner
Mr. Lerner has been a Director of the Company since August 1996. Mr. Lerner
has been a partner with the law firm of Lambos & Junge, New York since 1996, and
is currently managing partner. Mr. Lerner was a partner with the law firm of
Lambos & Giardino, New York from 1978 to 1996. Mr. Lerner was a member of the
U.S. Lines Creditors' Committee from inception in 1986 until conclusion of the
U.S. Lines bankruptcy in 1990.
Lucille Hart-Brown
Ms. Hart-Brown has been a Director since August 1996. Ms. Hart-Brown has
served as President of Benefit Services, Inc. since June 1996. Ms. Hart-Brown
served as Administrator of Marine Engineers' Beneficial Association from 1982
until 1996. Ms. Hart-Brown was a member of the U.S. Lines Creditors' Committee
from inception in 1986 until conclusion of the U.S. Lines bankruptcy proceeding
in 1990.
Class B Directors. The following Class B Directors were elected at the Company's
1998 annual meeting for terms ending in 2001:
Arthur Lubell
Mr. Lubell was designated a creditor representative member of the Board of
Directors pursuant to the Plan of Reorganization in the U.S. Lines bankruptcy in
May 1990 and served as Treasurer of the Company from May 15, 1995 until April
24, 1997. Mr. Lubell has been a member of the law firm Lubell & Koven, New York
City, since 1960, and is counsel to Daewoo International (America) Corp., a
subsidiary of Daewoo Corporation, a former major unsecured creditor of U.S.
Lines and a current stockholder of the Company.
Paul Tipps
Mr. Tipps has been a Director of the Company since April 24, 1997. Mr.
Tipps is the co-founder of State Street Consultants, a government affairs
consulting firm, organized in 1983. Since January 1997 he has been a director of
the Federal Home Loan Bank - Cincinnati and was elected Chairman in 2000. Mr.
Tipps is a member of the Board of Directors of the John Glenn Institute for
Public Service and Public Policy of The Ohio State University.
Vincent W. Hatala, Jr.
Mr. Hatala was designated a creditor representative member of the Board of
Directors pursuant to the Plan of Reorganization in the U.S. Lines bankruptcy in
May 1990 and served as President of the Company from May 15, 1995 until August
28, 1996, and Chairman from May 15, 1995 until April 24, 1997. Mr. Hatala
operated an independent financial consulting business from 1971 until his
retirement from that business in 1990. He was a member of the U.S. Lines
Creditors' Committee from its inception until the conclusion of the U.S. Lines
bankruptcy proceeding in 1990 and served as a co-trustee of the Reorganization
Trust from 1990 to 1993.
Class C Directors. The following Class C Directors were elected at the Company's
1999 annual meeting for terms ending in 2002:
James E. Bishop
Mr. Bishop has served as a Director and President of the Company since
August 1996. Mr. Bishop was Chief Executive Officer of the Company from August
1996 until April 24, 1997 and Executive Vice President from October 1995 to
August 1996. From 1993 to 1995 he was Senior Vice President of Gates Capital
Corp., an investment banking firm. For the seventeen years prior thereto he was
an investment banker and senior manager for various public and private entities.
3
<PAGE>
Michael M. Nanosky
Mr. Nanosky has been a Director and President of Hotel Operations of the
Company since the Company's acquisition, by way of merger, of Beck Group
Management Corp. on April 24, 1997. From March 1990 until he joined the Company,
Mr. Nanosky was President of Beck Group Management Corp., a company engaged in
the hotel management business.
Harry G. Yeaggy
Mr. Yeaggy has been a Director and Vice Chairman of the Company since the
Company's acquisition, by way of merger, of Beck Group Management Corp. on April
24, 1997. He has been a principal stockholder and chief operating officer of
Beck Hospitality Inc. III and predecessor companies engaged in the hotel
management business since 1986. He has also been a director and President of
Union Savings Bank in Cincinnati, Ohio since 1986. Union Savings Bank is a
wholly-owned subsidiary of U.S. Bancorp., a savings and loan holding company of
which Mr. Yeaggy is a director and Vice President and Secretary.
Other Position:
Richard A. Tonges
Mr. Tonges has been Vice President-Finance and Treasurer of the Company
since the Company's acquisition, by way of merger, of Beck Group Management
Corp. on April 24, 1997. Prior to joining the Company, Mr. Tonges was Chief
Financial Officer of Beck Group Management Corp. since September 1978. Mr.
Tonges is a certified public accountant.
Committees of the Board of Directors
The Board of Directors of the Company has appointed three committees: the
Audit Committee, the Compensation Committee and the Operating Committee.
Audit Committee. The Audit Committee periodically reviews the Company's auditing
practices and procedures and makes recommendations to management or to the Board
of Directors as to any changes to such practices and procedures deemed necessary
from time to time to comply with applicable auditing rules, regulations and
practices, and recommends independent auditors for the Company.
Members: Paul Tipps (Chairman), C. Scott Bartlett, Jr. and Richard P. Lerner
Compensation Committee. The Compensation Committee meets periodically to make
recommendations to the Board of Directors concerning the compensation and
benefits payable to the Company's executive officers and other senior
executives.
Members: Lucille Hart-Brown (Chairman), Richard P. Lerner, Arthur Lubell and
Paul Tipps
Operating Committee. The Operating Committee advises and makes recommendations
to the full Board of Directors with respect to matters of policy relating to the
general conduct of the business of the Company.
Members: Louis S. Beck (Chairman), C. Scott Bartlett, Jr., James E. Bishop and
Lucille Hart-Brown
During the year ended December 31, 1999, the Compensation Committee met
one time and the Audit Committee met five times, four of which were by way of
telephone conference. The Operating Committee did not meet.
Staggered Board of Directors
The Company's Restated Certificate of Incorporation, as amended,
provides for a staggered Board of Directors having three classes: Class A, Class
B and Class C. The number of directors in each class shall consist, as nearly as
may be possible, of one-third of the authorized number of directors. The
authorized number of directors shall be determined from time to time by a
majority of the directors in office.
4
<PAGE>
A classified Board of Directors may have the effect of making it more
difficult to remove incumbent directors, providing such directors with enhanced
ability to retain their positions. A classified Board of Directors may also make
the acquisition of control of the Company by a third party by means of a proxy
contest more difficult. In addition, the classification may make it more
difficult to change the majority of directors for business reasons unrelated to
a change of control.
The Certificate provides that the above provisions regarding
classification of the Board of Directors may not be amended, altered, changed or
repealed except by the affirmative vote of at least 66-2/3% of the shares of
Common Stock entitled to vote at a meeting of the stockholders called for the
consideration of such amendment, alteration, change or repeal, unless such
proposal shall have been proposed by a majority of the Board of Directors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's executive officers and directors, and persons who own
more than 10% of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission. Based on a review of the copies of reports furnished to the Company,
the Company believes that during the year ended December 31, 1999 all filing
requirements applicable to its officers, directors and 10% beneficial owners
were met.
Item 10. Executive Compensation.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Director Compensation
The Company's non-employee directors receive an annual retainer of
$15,000 and $1,000 per meeting of the Board of Directors attended. In addition,
if a non-employee director retires from service on the Board of Directors,
either during a term or by not standing for re-election, such director is
entitled to a retirement payment of $40,000 plus $5,000 for each year remaining
in his or her term. No more than two directors are entitled to this retirement
benefit in any calendar year without the approval of the full Board of
Directors.
5
<PAGE>
Executive Compensation
The following table sets forth the compensation paid or accrued by the
Company for services rendered in all capacities for executive officers of the
Company who received compensation in excess of $100,000 during the period
January 1, 1999 to December 31, 1999.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
---------------------------------------- ---------------------------------
Awards Payouts
------------ --------------
Securities All
Name and Principal Other Annual Underlying Other
Position Year Salary Bonus (1) Compensation (2) Options/SARs Compensation(3)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Louis S. Beck, 1999 $275,000 - - - $1,722
Chairman and Chief 1998 $275,000 - - - $6,100
Executive Officer 1997 $183,333 - - - $4,561
- -------------------------------------------------------------------------------------------------------------------------
James E. Bishop, 1999 $215,000 - - - -
President 1998 $205,436 $35,000 - - -
1997 $206,173 (4) $35,000 $28,705 (5) 100,000 -
- -------------------------------------------------------------------------------------------------------------------------
Michael M. Nanonsky, 1999 $176,250 $30,000 - - $1,490
President of Hotel 1998 $175,000 $25,000 - - $2,337
Operations 1997 $ 54,000 $60,000 - - $1,660
- -------------------------------------------------------------------------------------------------------------------------
Harry G. Yeaggy, Vice 1999 $175,000 - - - $2,924
Chairman 1998 $175,000 - - - $4,236
1997 $116,667 - - - $3,068
- -------------------------------------------------------------------------------------------------------------------------
Richard A. Tonges, 1999 $125,416 $25,000 - - $1,438
Treasurer and Vice 1998 $92,605(6) $25,000 - - $2,633
President of Finance 1997 $40,875(6) - - - $2,097
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The bonuses shown for Mr. Bishop in 1997 and 1998 were awarded by the
Compensation Committee in March 1999 for services rendered during those fiscal
years.
(2) Messrs. Beck, Nanosky, Tonges and Yeaggy receive reimbursement from the
Company for automobile expenses; however, such amounts do not exceed the lesser
of $50,000 or 10% of each person's respective aggregate salary and bonus for any
of the fiscal years disclosed.
(3) The amounts shown in this column represent insurance premiums paid by
the Company with respect to permanent life insurance and disability insurance
for the benefit of each named executive officer.
6
<PAGE>
(4) This figure includes an annual annuity payment of $10,000 paid by the
Company to the named executive officer and a payment of $3,960, representing the
income tax cost attributable to the annuity premium.
(5) In 1997 the Company reimbursed Mr. Bishop $2,203 for dental and medical
expenses and $26,502 for moving expenses incidental to the relocation of the
Company's executive officers from New Jersey to Boca Raton, Florida.
(6) The amounts shown as salary for Mr. Tonges for the years 1997 and 1998
were paid by the Company to Beck Hospitality Inc. III ("Beck III"), the employer
from whom Mr. Tonges actually received payment. The Company and Beck III shared
the compensation expense attributable to Mr. Tonges pursuant to an allocation
arrangement.
Employment Agreements
The Company entered into written employment agreements with Messrs.
Beck, Yeaggy and Nanosky, all dated April 24, 1997 and James E. Bishop dated
April 4, 1997, as amended by amendment dated April 1, 1999. The agreements with
Messrs. Beck, Yeaggy and Nanosky were for terms of three years, ending on April
23, 2000 and have not been formally extended.
Mr. Beck is employed as Chairman of the Board, and is paid an annual
salary of $275,000, which may be increased from time to time at the discretion
of the Board of Directors. He may also be paid a bonus in an amount determined
by the Board of Director in its discretion and is entitled to such benefits as
the Board of Directors shall adopt. In the employment agreement the Company has
acknowledged that Mr. Beck is the owner, an officer and director of other
businesses that engage in the hotel business. Mr. Beck has agreed not to engage
in any business that competes with the Company. Matters involving potential
conflicts of interests will be referred by management to the Audit Committee of
the Board of Directors for consideration. The Audit Committee is comprised
entirely of independent directors.
Mr. Yeaggy is employed as Vice Chairman of the Board and is paid an
annual salary of $175,000, which may be increased from time to time at the
discretion of the Board of Directors. His employment agreement is otherwise
substantially similar to the employment agreement between Mr. Beck and the
Company.
The employment agreement with Mr. Bishop is for a term which ends on
April 23, 2001, and is automatically renewed for additional one year periods,
unless terminated by the Company on one year's prior notice. He is employed as
President of the Company with general supervisory authority of the business of
the Company and its subsidiaries and charged with the responsibility of
preparing and implementing a strategic plan and seeking out and consummating
acquisitions, under the supervision of and in accordance with policies set by
the Chairman of the Board and the Board of Directors. Mr. Bishop is paid an
annual salary of $215,000, which may be increased from time to time at the
discretion of the Board of Directors. He is also entitled to an annual bonus in
an amount to be determined in accordance with the Company's then current bonus
or incentive compensation plan. Mr. Bishop is also entitled to a comprehensive
medical indemnity policy for himself and his family, an annual allowance of
$2,000 for additional out-of-pocket medical payments, an annual allowance of
$2,000 for dental expenses, an annual payment of $10,000 for the purchase of an
annuity, grossed up for the income tax cost, term life insurance coverage in the
amount of $1,000,000 to the extent the same is available at normal market rates,
long-term disability insurance coverage and such other benefits as the Board of
Directors shall adopt and approve for him. In the event of a change in control
of the Company, Mr. Bishop is entitled to a lump sum payment of $300,000.
Mr. Nanosky is employed as President of Hotel Operations of the Company
and is charged with the responsibilities typical of a division president. He is
paid an annual salary of $205,000, which may be increased from time to time at
the discretion of the Board of Directors. He is also entitled to an annual bonus
of up to $100,000 based upon the Company's success in achieving budgeted goals
for the Company's hotel properties and operations. Mr. Nanosky is also entitled
to a comprehensive medical indemnity policy for himself and his family, "split
dollar" life insurance coverage in the amount of $480,000, long-term disability
insurance coverage and such other benefits as the Board of Directors shall adopt
and approve for him.
Stock Options
In August 1996, the Board of Directors and stockholders of the Company
adopted the 1996 Stock Option Plan (the "Plan") and reserved 300,000 shares of
Common Stock for issuance thereunder. The Plan provides for the granting to
employees (including employee directors and officers) of options intended to
qualify as incentive stock options within the meaning of ss.422 of the Internal
Revenue Code of 1986, as amended (the "Code"), and for the granting of
nonstatutory stock options to employees and consultants. The Plan is currently
administered by the Company's Compensation Committee.
7
<PAGE>
The Plan provides for the granting of both Incentive Stock Options
("ISOs") and nonstatutory stock options (an "NSO") and in connection with such
options the granting of stock appreciation rights (an "SAR") or additional stock
options, known as progressive stock options, in the event the grantee exercises
such stock options by surrendering shares of Common Stock of the Company (a
"PSO"). SARs enable a holder to surrender a SAR and to receive a payment in cash
equal to the difference between the fair market value of the Common Stock on the
date of surrender of the related SAR and the SAR price. NSOs and SARs may be
issued to any key employee or officer of the Company or its subsidiaries, or any
other person who is an independent contractor, agent or consultant of the
Company or its subsidiaries but not any director of the Company who is not an
employee of the Company. ISOs may be issued to key employees and officers of the
Company and its subsidiaries, but not to any independent contractor, agent or
consultant. The Compensation Committee also determines the times at which
options become exercisable, their transferability and the dates, not more than
ten years after the date of grant, on which options will expire. Options have no
value unless the price of the Common Stock appreciates after the date of grant
and the holder satisfies applicable vesting requirements.
Stock Appreciation Rights
Effective April 24, 1997, the Company granted an SAR to Mr. Bishop, the
President of the Company, in connection with his employment agreement with
respect to 100,000 shares of Common Stock at an exercise price of $3.25 per
share, which vests 20,000 shares per year over a period of five years,
commencing that date, subject to accelerated vesting under certain
circumstances. Each 20,000 SAR segment has an exercise period of six years.
Effective April 24, 1997, Messrs. Hatala, Lubell, Bartlett, Lerner, Tipps and
Ms. Hart-Brown and two former members of the Board of Directors were granted
SARs with respect to 5,000 shares at an exercise price of $3.25 per share
(collectively, the "Director SARs"). Mr. Lerner subsequently waived all rights
with respect to his Director SARs. The Director SARs may be exercised during the
period October 25, 1997 through April 23, 2003. In no event may the appreciated
value per share paid in respect of the Director SARs exceed $7.00 per share.
Effective December 18, 1998, the Company granted an SAR with respect to 25,000
shares at an exercise price of $2.48 per share, to Mr. Tipps, a Director of the
Company, in consideration of services performed for the Company. This SAR
expires on December 17, 2003. None of the foregoing SARs were granted under the
Plan.
Option/SAR Grants in Last Fiscal Year
During 1999, no options or SARs were granted under the Plan or
otherwise by the Company to any of the executive officers listed in the Summary
Compensation Table and no options granted were exercised.
Option Exercises and Fiscal Year-End Values
Shown below is information with respect to the aggregated option/SAR
exercises in 1999 and the option/SAR values for the fiscal year-ended December
31, 1999.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number Of
Shares Securities Value Of
Acquired Underlying Unexercised
On Value Unexercised Options In-The-Money Options
Exercise Realized at FY-End (#) at FY-End ($)
Name (#) ($) Exercisable Exercisable
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
James E. Bishop 0 0 4,000 $0
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END SAR VALUES
Number Of Value Of
Securities Unexercised
Shares Underlying In-The-Money
Acquired Unexercised SARs SARs
On Value at FY-End (#) at FY-End ($)
Exercise Realized
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James E. Bishop 0 0 60,000 40,000 $0 $0
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Report of Compensation Committee
The Compensation Committee of the Board of Directors of the Company
presents this report on the compensation policies of the Company for its
executive officers.
The Company's compensation program for executives consists of three key
elements: (i) a base salary, (ii) a performance-based annual bonus, and (iii)
periodic grants of stock options or other stock-based awards. This program
ensures that executive officers are compensated in a way that advances both the
short-term and long-term interests of stockholders. The variable annual bonus
permits individual performance to be recognized on an annual basis, and is
based, in significant part, on an evaluation of the contribution made by the
officer to the Company's performance. Stock options relate long-term
remuneration directly to stock price appreciation realized by all of the
Company's stockholders.
Base Salary. In making a determination whether to adjust base salaries,
the Committee will take into account such factors as competitive industry
salaries, the contribution and experience of the officer and the length of the
officer's service. Each of the Company's key executive officers' present base
salaries were set under employment contracts which became effective upon the
Company's commencement of its hotel business in late April 1997. In March 1999,
the Committee recommended an increase in the base salary of the Company's
President, Mr. Bishop from $200,000 to $215,000.
Annual Bonus. At its meeting in March 1999, the Committee authorized
bonuses of $35,000 to Mr. Bishop, on account of his services during the years
ended December 31, 1997 and December 31, 1998. The aggregate sum of $70,000 was
paid to Mr. Bishop during 1999. In 1998, the Committee had determined to defer
consideration of bonuses for Mr. Bishop until it was in a better position to
evaluate the Company's strategic growth and development plan. The Committee has
not acted on the award of bonuses on account of the Company's performance during
the year ended December 31, 1999.
Stock Options. The Committee did not grant any stock options during the
year ended December 31, 1999. Future grants may be made to executive officers
upon initial employment, in recognition of an individual's performance, upon
promotion to a position of higher responsibility or in connection with the
execution of a new or amended employment agreement.
Chief Executive Officer Compensation. As Chairman and Chief Executive
Officer, Mr. Beck is compensated pursuant to the employment agreement he entered
into in April 1997 which provides for a base salary of $275,000. The Committee
will consider increases in the base salary and bonuses based upon the
development and implementation of the Company's strategic growth and development
plan.
Members of the Compensation Committee
Lucille Hart-Brown, Chairman
Richard P. Lerner
Arthur Lubell
Paul Tipps
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee is or has been an
officer or employee of the Company, except Mr. Lubell, who was Treasurer of the
Company from 1995 to 1997.
9
<PAGE>
Item 11. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth certain information with respect to the
beneficial ownership of the capital stock of the Company as of April 20, 2000
for (i) each person who is known by the Company to beneficially own more than 5%
of any class of capital stock; (ii) each named executive officer listed in the
Summary Compensation Table below; (iii) each director of the Company; and (iv)
all directors and executive officers of the Company as a group. Except as
otherwise indicated, each listed person has sole voting power and investment
power over the respective shares owned.
<TABLE>
<CAPTION>
Amount and Nature Amount and Nature Percent of Percent of
of Beneficial of Beneficial Class of Class of
Name and Address of Ownership of Ownership of Common Preferred
Beneficial Owner (1) Common Stock Preferred Stock Stock Stock
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Louis S. Beck (2) 2,927,499 12,866.06 33.8% 77%
- ----------------------------------------------------------------------------------------------------------------------
Harry G. Yeaggy (3) 1,182,500 5,022.02 13.6% 30%
- ----------------------------------------------------------------------------------------------------------------------
Vincent W. Hatala, Jr. - - - -
- ----------------------------------------------------------------------------------------------------------------------
Arthur Lubell - - - -
- ----------------------------------------------------------------------------------------------------------------------
Richard P. Lerner - - - -
- ----------------------------------------------------------------------------------------------------------------------
James E. Bishop (4) 4,000 - * -
- ----------------------------------------------------------------------------------------------------------------------
C. Scott Bartlett, Jr. 5,000 - * -
- ----------------------------------------------------------------------------------------------------------------------
Lucille Hart-Brown - - - -
- ----------------------------------------------------------------------------------------------------------------------
Richard A. Tonges - - - -
- ----------------------------------------------------------------------------------------------------------------------
Michael M. Nanosky - - - -
- ----------------------------------------------------------------------------------------------------------------------
Paul Tipps - - - -
- ----------------------------------------------------------------------------------------------------------------------
The United States Lines, Inc. and 816,944 - 9.4% -
United States Lines (S.A.), Inc.
Reorganization Trust, John Paulyson,
Trustee (5)
184-186 North Avenue East
Cranford, New Jersey 07016
- ----------------------------------------------------------------------------------------------------------------------
Beck Hospitality Inc. III (6) 310,000 1,100 3.6% 7%
8534 E. Kemper Road
Cincinnati, Ohio 45249
- ----------------------------------------------------------------------------------------------------------------------
Daewoo Corporation (7) 623,911 - 7.2% -
c/o Lubell & Koven
350 Fifth Avenue
New York, New York 10118
- ----------------------------------------------------------------------------------------------------------------------
All directors and executive officers 3,808,999 16,788.08 43.9% 100%
as a group (11 persons)
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Represents less than 1%.
- ------------
(1) Unless otherwise noted, the address of each of the listed persons is
c/o the Company, 2300 Corporate Boulevard, N.W., Suite 232, Boca Raton, Florida
33431-8596.
(2) Includes (i) 2,617,499 shares of Common Stock and 10,938.06 shares of
Preferred Stock held by Elbe Financial Group, LLC ("Elbe") and (ii) 310,000
shares of Common Stock and 1,100 shares of Preferred Stock held by Beck
Hospitality Inc. III. Mr. Beck controls Elbe and is its sole beneficial owner.
Mr. Beck is an officer, director and controlling shareholder of Beck Hospitality
Inc. III. He has sole voting power over 2,617,499 shares of Common Stock and
shared voting power over 310,000 shares of Common Stock.
10
<PAGE>
(3) Includes 310,000 shares of Common Stock and 1,100 shares of Preferred
Stock held by Beck Hospitality Inc. III. Mr. Yeaggy is an officer, director and
shareholder of Beck Hospitality Inc. III. Mr. Yeaggy has sole voting power over
872,500 shares of Common Stock and shared voting power over 310,000 shares of
Common Stock.
(4) Includes options to purchase 4,000 shares of Common Stock that are
currently exercisable.
(5) The Reorganization Trust is the record owner of 816,944 shares of
Common Stock for the benefit of former unsecured creditors of United States
Lines, Inc. (U.S. Lines) whose claims have not been resolved. In accordance with
an order of the United States Bankruptcy Court for the Southern District of New
York (In re United States Lines, Inc., Case No. 86B 12240), the Trustee of the
Reorganization Trust votes such shares, on each proposal before shareholders, in
the same proportion "for" or "against" (or "withhold" in the case of director
elections) such proposal as shareholders (other than the Trust) who actually
vote in person or by proxy, but disregarding for this purpose (i) shareholders
who do not vote or who vote "abstain" and (ii) shares of Common Stock issued
after March 16, 1997. The 3,799,999 shares held by Messrs. Beck, Yeaggy or their
affiliates are shares issued after March 16, 1997.
(6) Messrs. Beck and Yeaggy own 75% and 25%, respectively, of the stock of
Beck Hospitality Inc. III and are officers and directors of that corporation.
Beck Hospitality Inc. III has sole voting and investment power over 310,000
shares of Common Stock. Messrs. Beck and Yeaggy have reported they share voting
and investment power over these shares.
(7) Daewoo Corporation, a public corporation of South Korea with
headquarters in Seoul, was the largest unsecured creditor in the U.S. Lines
bankruptcy and, accordingly, the recipient of the greatest number of shares
through the Reorganization Trust.
Item 12. Certain Relationships and Related Transactions.
During 1999 the Company managed one hotel which was owned by a third
party in which Messrs. Beck and Yeaggy had an interest. The hotel was sold to an
unrelated party in December 1999 but is still managed by the Company.
Interest of Messrs. Beck and Yeaggy in a Property Subject to a Mortgage Held by
the Company
The Company has a financial participation in the form of a promissory
note secured by a mortgage on a KOA Campground in Kissimee, Florida (the "KOA
Note"), which is owned by an affiliate of Messrs. Beck and Yeaggy. The principal
balance of the KOA Note as of March 31, 2000 is $3,308,935. The KOA Note
provides for monthly principal payments based upon a twenty-year amortization.
The note matures on May 1, 2000, but its maturity date is automatically extended
for an additional three years on a one time basis, if the note is not in default
on the original maturity date. As of April 1, 2000 the KOA Note was not in
default. The KOA Note bears interest at a fixed rate of 8% per annum. Messrs.
Beck and Yeaggy have jointly and severally guaranteed the payment of the note.
The Company does not regard this guaranty as material to the ultimate
satisfaction of the KOA Note on the basis that the value of the KOA Campground
exceeds the underlying mortgage indebtedness.
Interest of Messrs. Beck and Yeaggy in Service Providers to the Company
The Company has a service agreement for a hotel property management
system with Computel Computer Systems, Inc. ("Computel"), a corporation
wholly-owned by Messrs. Beck and Yeaggy, for ten of the hotels owned or managed
by the Company. The agreement automatically renews for successive terms of one
year, unless one party notifies the other to the contrary at least three months
prior to the scheduled termination date. Computel is paid a monthly fee of $275
per hotel location for its basic property management software package plus one
computer terminal. For each additional terminal at a hotel location there is an
additional charge of $75 per month. Additional monthly fees are charged for
add-on software for such services as guest messaging, call accounting interface,
franchise central reservation interface and movie interface. The Company
believes that these are market-rate fees. The Company projects aggregate
payments to Computel of approximately $ 70,000 during 2000. On each annual
renewal of the agreement, Computel is entitled to increase its fees commensurate
with the fees charged to other customers. As a result of requirements of one of
the Company's franchisers, during 1998 a number of the hotels owned or managed
by the Company changed to a computer reporting system controlled by a party
unaffiliated with the Company, which resulted in a decrease in the volume of
business with Computel.
11
<PAGE>
Personnel at the hotels owned by the Company and some of the hotels
managed by the Company are provided by Hospitality Employee Leasing Program,
Inc. ("HELP"), a corporation also wholly-owned by Messrs. Beck and Yeaggy. The
Company pays HELP an administrative fee of $10.15 per pay period per employee.
The owners of managed hotels pay HELP administrative fees of $8.00 to $10.15 per
pay period per employee. The Company believes that these are market-rate fees.
Based on the Company's present operations, the Company projects aggregate fees
of approximately $193,900 in respect of owned hotels, and aggregate fees of
approximately $356,300 in respect of managed hotels, to HELP during 2000.
Interest of Messrs. Beck and Yeaggy in Premises Occupied by the Company
The Company subleases office space in Cincinnati, Ohio and Boca Raton,
Florida from affiliates of Messrs. Beck and Yeaggy. The Sublease agreements are
on a triple-net basis and provide for annual rental payments of $25,248 and
$18,240 respectively. The Company believes that these are market rate rentals.
Interest of Messrs. Beck and Yeaggy in Best Western, Kings Quarters
The Company has an 85% general partnership interest in Kings Dominion
Lodge, a Virginia general partnership, the sole asset of which is the hotel
known as the Best Western, Kings Quarters, which is adjacent to the Kings
Dominion Amusement Park near Richmond, Virginia. The remaining 15% general
partnership interest is held by Elbe Properties, an Ohio general partnership
whose partners are Messrs. Beck and Yeaggy.
Under the partnership agreement for Kings Dominion Lodge, the Company
is the managing partner and has the authority to direct the day-to-day affairs
of the partnership's business. The managing partner may not construct any
buildings on the real property owned by the partnership without the consent of
the other partner. Any sale of an interest in the partnership requires the
consent of the other partner. The partnership agreement also provides for
periodic distributions of free cash flow except to the extent that any
distribution would impair the business of the partnership.
Limited Guarantees by Messrs. Beck and Yeaggy of Indebtedness of the Company
Messrs. Beck and Yeaggy have personally guaranteed obligations of the
Company to various banks in the aggregate principal amount of $5,225,675 as of
March 31, 2000. These obligations are also secured by mortgages on the Company's
hotels known as Days Inn East (Cincinnati); Holiday Inn Express, Juno Beach;
Knight Inn Lafayette (Indiana) and Days Inn, Pompano Beach. In addition, Messrs.
Beck and Yeaggy have personally guaranteed the obligations of the Company in
connection with seven loans secured by mortgages on the hotels known as Best
Western, Kings Quarters, Days Inn RTP (Raleigh), Days Inn Crabtree (Raleigh),
Best Western Cambridge (Ohio), Days Inn Cambridge (Ohio), Red Roof Inn Kings
Island (Ohio) and Days Inn Kings Island (Ohio). The obligations of Messrs. Beck
and Yeaggy pursuant to their guarantees in connection with these loans are
limited to payment of the outstanding debt in the event of fraud or material
misrepresentation by the borrowing entities, and indemnification in connection
with certain specific liability and costs for the lender, such as environmental
liability and liability caused by the gross negligence or willful misconduct of
the borrowing entity, the failure to pay property taxes when due, the
misapplication of insurance and condemnation proceeds, damage or waste to the
property subject to lender's mortgage, and costs incurred by the lender as a
result of certain actions taken by the borrowing entity after an event of
default.
Allocation of Compensation Expenses
Charles W. Thornton, Corporate Counsel of the Company, works for and is
compensated by an affiliate of Messrs. Beck and Yeaggy, and bills the Company
for time based on an hourly rate. The Company believes that the rate charged by
Mr. Thornton is fair and reasonable.
Restrictions on Transfers of Stock Owned by Messrs. Beck and Yeaggy and
Registration Rights
Messrs. Beck and Yeaggy, in the aggregate, directly and indirectly own
approximately 44% of the outstanding shares of the Company's Common Stock. They
have agreed that until April 23, 2001, they will not transfer, in any manner,
any shares of the Common Stock, without the consent of the Company's Board of
Directors. The Company shall have no obligation to consent to a transfer unless
it shall have received an opinion of counsel to the effect that the transfer
does not give rise to an "ownership change" under Code ss. 382 or otherwise
affect the availability to the Company of its "net operating loss carryforwards"
and any other applicable tax attributes for Federal income tax purposes. In
addition to the foregoing transferability restrictions that have been consented
to by Messrs. Beck and Yeaggy, the Company has imposed equivalent
transferability restrictions upon certain other "5-percent shareholders" for
purposes of Code ss. 382.
12
<PAGE>
Messrs. Beck and Yeaggy have been granted certain registration rights
with respect to the Company's securities owned by them. On a one-time basis they
may demand registration, at the Company's expense, of shares of Preferred Stock
owned by them. In addition, if the Company proposes to register any of its
securities in connection with a public offering of such securities (other than
in connection with certain limited purpose registrations), Messrs. Beck and
Yeaggy may request that the Preferred Stock be registered incidental thereto.
Following the termination of the transferability restrictions referred to above,
on a one-time basis, Messrs. Beck and Yeaggy may also demand registration, at
the Company's expense, of their shares of Common Stock. In addition, if
following the termination of the transferability restrictions referred to above,
the Company proposes to register any of its securities in connection with a
public offering of such securities (other than in connection with certain
limited purpose registrations), Messrs. Beck and Yeaggy may request that their
Common Stock be registered incidental thereto.
Item 13. Exhibits, Lists and Reports on Form 8-K.
The information required by Part III, Item 13 of Form 10-KSB is
incorporated by reference from the Registrant's Form 10-KSB, which was filed
with the Securities and Exchange Commission on March 29, 2000.
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
JANUS HOTELS AND RESORTS, INC.
Dated: April 28, 2000 /s/ James E. Bishop
-------------------------------
James E. Bishop
President
Dated: April 28, 2000 /s/ Richard A. Tonges
-------------------------------
Richard A. Tonges
Treasurer and Vice President of Finance
(Principal Financial and Accounting Officer)
13
