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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
[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 1-8692
PACIFIC GATEWAY PROPERTIES, INC.
(Exact name of Registrant as specified in its charter)
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<CAPTION>
<S> <C>
Maryland 04-2816560
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
930 Montgomery Street, Suite 400
San Francisco, California 94133
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(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (415) 398-4800
SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT:
Name of each exchange
Title of each class on which registered
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Common Stock, $1.00 par value American Stock Exchange
per share
SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT: NONE
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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 (229.405 of this chapter) 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 [ ].
State the aggregate market value of the voting stock held by non-
affiliates of the Registrant as of February 18, 2000: Common Stock, Par Value
$1.00--$17,815,929.
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of February 18, 2000: Common Stock, Par Value
$1.00 -- 3,933,536 shares.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table sets forth certain information as of February 18,
2000 concerning the directors and executive officers of Pacific Gateway
Properties, Inc. (the "Company").
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<CAPTION>
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Steven A. Calabrese Age 39; Director of the Company since June 1997;
since prior to 1994, Managing Partner of Calabrese,
Racek and Markos, Inc., CRM Construction Inc. and CRM
Environmental Services, Inc., firms which specialize
in evaluations, management, construction and
environmental assessment services for commercial and
industrial real estate; owner and manager of a real
estate portfolio. (A)
Mark D. Grossi Age 46; Director of the Company since June 1997,
Executive Vice President and Director of Charter One
Financial, Inc., a savings and loan holding company,
and Executive Vice President and Chief Retail Banking
Officer of its subsidiary, Charter One Bank; since
prior to 1994, holder of various senior executive
positions with Charter One Bank and its predecessor;
Director of JB Oxford Holdings, Inc.; Liberty Self-
Stor, Inc. (A)
Lawrence B. Helzel Age 51; Director of the Company since May 1995; since
prior to 1994, member, Pacific Stock Exchange, Inc.
(self employed market maker, options floor); co-
founder Buylar Investment, Inc., a real estate
investment company; director of Mission West
Properties. (A)
Christopher L. Jarratt Age 38; Director of the Company since May 1997; since
prior to 1994, President, Jarratt Associates, Inc., a
company engaged in investment activities and since
September 1996, Chief Executive Officer of Third
Capital, LLC, a company engaged in various investment
and advisory activities; Chairman, Director and Chief
Executive Officer of JB Oxford Holdings, Inc.
Raymond V. Marino Age 41; Director of the Company since March 1996 and
President and Chief Executive Officer since January
1996; prior thereto from August 1992, Vice President
of the Company.
Richard M. Osborne Age 54; Director and Chairman of the Board of
Directors of the Company since May 1997; since prior
to 1994, President and Chief Executive Officer of
OsAir, Inc., a manufacturer of industrial gases for
pipeline delivery and a real property developer;
Director of USP Real Estate Investment Trust;
Director and Vice Chairman of the Board of
GLB Bancorp, Inc.; Director, Chairman of the Board
and Chief Executive Officer of Liberty Self-Stor, Inc.;
Director of NuMED Home Health Care, Inc. (B)
Martin S. Roher Age 50; Director of the Company since May 1995; since
prior to 1994, General Partner and Managing Partner
of MSR Capital Partners, a limited partnership engaged
in securities investments. (B)
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Stephen J. LoPresti Age 39; Vice President of the Company since November
1997; prior thereto, consultant for Ernst & Young
Kenneth Leventhal Real Estate Group; prior thereto,
principal and founder of LoPresti & Associates.
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(A) Member of the Audit Committee
(B) Member of the Compensation Committee
Directors hold office until the next Annual Meeting of Shareholders.
Officers hold their positions at the discretion of the Board of Directors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based upon reports it has received and other information, the Company
believes that all of its security holders, directors and officers who were
required to file reports of beneficial ownership of the Company's Common
Stock under Section 16 (a) of the Securities Exchange Act of 1934
(the "Exchange Act") in respect of 1999 and prior periods have done so and
their filings for 1999 were on a timely basis, except as previously reported.
ITEM 11. EXECUTIVE COMPENSATION
The Summary Compensation Table below sets forth individual compensation
information for each of the Company's last three fiscal years of the Chief
Executive Officer ("CEO") and other most highly paid executive officers who
were serving as such at the end of the Company's fiscal year ended December
31, 1999, and whose total annual salary and bonus for such fiscal year
exceeded $100,000.
SUMMARY COMPENSATION TABLE
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<CAPTION>
Long Term
Compensation
Annual Compensation Awards
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Stock All Other
Name and Principal Position Year Salary Bonus Options Compensation(1)
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<S> <C> <C> <C> <C> <C> <C>
Raymond V. Marino (2) 1999 175,000 125,000 -- 8,000
President and CEO 1998 175,000 75,000 20,000 4,800
1997 150,000 25,000 -- 4,800
Stephen J. LoPresti (3) 1999 104,167 40,000 -- 6,773
Vice President-Finance 1998 100,000 30,000 5,000 2,850
1997 90,000 -- 30,000 --
</TABLE>
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(1) Other compensation in the form of personal benefits to the named
persons has been omitted because it does not exceed the lesser of $50,000
or 10% of the total annual salary and bonus to each.
(2) Mr. Marino became President and CEO as of January 1996. Mr. Marino had
been a Vice President of the Company since August 1992. His other
compensation represents an employer discretionary contribution to his
401(k) plan.
(3) Mr. LoPresti joined the Company in November 1997 as Vice President -
Finance. His other compensation represents an employer discretionary
contribution to his 401(k) plan and leasing incentives.
OPTION TABLES
There were no grants of stock options by the Company during the fiscal
year ended December 31, 1999, to any executive officers.
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The following table sets forth the values at the end of 1999 of the
options to purchase Common Stock of the Company held by the two officers
named above.
FISCAL YEAR END OPTION VALUES
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Number of
Shares of
Common Stock Values of
Underlying Unexercised In-
Unexercised the-Money
Options at Options at
12/31/99 12/31/99 $ (1)
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Exercisable/ Exercisable/
Name Unexercisable Unexercisable
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<S> <C> <C>
Raymond V. Marino 141,175/-- 961,096/--
Stephen J. LoPresti 13,000/22,000 60,750/104,375
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(1) The closing sale price for the Company's Common Stock on December 31,
1999, as reported on the American Stock Exchange consolidated reporting
system was $10.00 per share.
EMPLOYMENT CONTRACT WITH EXECUTIVE. Raymond V. Marino was employed
by the Company in 1996 under an employment agreement which was renewed on
slightly modified terms to apply to future years and pursuant to which Mr.
Marino is to be the Chief Executive Officer, President and a Director of the
Company at an annual base salary of $150,000 plus a bonus determined by the
Board of Directors. The current employment agreement is for an initial term
of two years commencing January 2, 1997, and will automatically be extended
for additional one-year terms unless either party elects not to extend the
term. If the Company makes the election, Mr. Marino will be entitled (i) to
receive his base salary for a period of 24 months following expiration and a
bonus equal to the average of any annual bonuses he may have earned with
respect to the immediately preceding two full calendar years of his
employment of, if greater, the bonus, if any, Mr. Marino has received in
respect of his 1996 employment, and (ii) to exercise all vested options which
have been granted to him for a period of 12 months from the date of
expiration. If the Company otherwise terminates the employment agreement
without cause or if Mr. Marino terminates the employment agreement because of
a reduction in his responsibilities or compensation or a change in his
employment location, Mr. Marino will be entitled to receive the termination
compensation described above and the vesting period of any unvested options
granted to Mr. Marino will accelerate and such options and all previously
vested options will be exercisable for a period of 12 months from the date of
termination. In the event of a termination of Mr. Marino's employment at his
election within 12 months following a change in control of the Company (as
defined in the employment agreement), he will be entitled to receive the
termination compensation described above, including the acceleration of the
vesting of his options, but the period for exercising any options will be
three months from termination. If, following a change in control, Mr. Marino
agrees to remain employed under different terms of employment than those
contained in his employment agreement, he will be entitled to be paid in
addition to his compensation under the new employment arrangement his base
salary for the remainder of his then current employment term. In March 1998,
the Board of Directors amended Mr. Marino's employment agreement and
extended the term of his employment agreement through January 1, 2000 and
increased his base salary, effective January 1, 1998, to $175,000. As of
January 1, 2000, Mr. Marino's employment agreement was extended automatically
for a one year term.
Mr. LoPresti has a severance arrangement with the Company under
which he is entitled to receive one year's base salary plus any accrued
vacation and a pro rata share of any bonus in the year in which a change of
control occurs if the Company terminates his employment within one year
following a change of control. In the event of a termination of Mr.
LoPresti's employment at his election within three months following a change
of control of the Company, and
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subject to Mr. LoPresti's cooperation and assistance during a transition
period following a change of control which shall not exceed 120 days, he will
be entitled to receive the termination compensation described above.
Directors who are not officers of the Company receive an annual fee of
$7,500 (except for the Chairman, who receives an annual fee of $25,000
effective January 1, 1999) and supplemental fees of $750 for each meeting of
the Board or a committee thereof attended, and $375 for each telephone
meeting, plus out-of-pocket expenses incurred in connection with services
rendered to the Company and travel and lodging for each Board meeting.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. Messrs.
Osborne and Roher, all of whom are outside directors, served on the
Compensation Committee 1999. No director or executive officer of the Company
serves on the Compensation Committee of the Board of Directors or the Board
of Directors of any company for which Messrs. Osborne and Roher serve as
executive officers or directors.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The responsibilities of the Compensation Committee include making
recommendations to the Board concerning the compensation package of the Chief
Executive Officer and reviewing his recommendations concerning compensation
of other Company officers. The Committee also administers the Company's
stock option plans.
The Committee favors the fairly typical structure of a compensation
package for executive officers comprised of a base salary, short-term
incentive compensation in the form of an annual bonus and long-term incentive
compensation through the grant of Common Stock purchase options. The Company
is relatively small with only two executive officers and the levels of
compensation for them have been fixed largely based upon perceptions of
compensation levels of comparable personnel in the San Francisco Bay Area.
CHIEF EXECUTIVE OFFICER COMPENSATION. In March 1998, the Company
reached an agreement with Mr. Marino concerning his employment as Chief
Executive Officer retroactive to January 1998 in recognition of the positive
performance of the Company and extended the agreement on a slightly modified
basis through January 1, 2000. The terms of the agreement as now in effect
are described above under the caption "EMPLOYMENT CONTRACT WITH EXECUTIVE".
Mr. Marino's base salary and option grant were established through arm's
length negotiations at levels which were believed, without independent study,
to be comparable to what would have been available to Mr. Marino at a company
similar to the Company.
Mr. Marino's bonus in 1999 ($125,000, which was 71% of his base salary)
was based upon the Board's assessment of his efforts including, but not
limited to, the following:
- - Negotiating the final settlement and windup of the Company's
involvement in Rincon Center Associates.
- - Ongoing lease up of the Company's vacant space and further reductions
in operating costs and corporate overhead.
- - Achieving certain funds from operations per share targets established
by the Board.
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Section 162(m) of the Internal Revenue Code of 1986 (the "Code"),
enacted in 1993, generally disallows a tax deduction to public companies for
compensation over $1,000,000 paid to each of the Company's chief executive
officer and the four other most highly compensated executive officers.
Because of the range of compensation paid by the Company to its executive
officer, the Compensation committee has not established any policy regarding
annual compensation to such executive officers in excess of $1,000,000.
THE COMPENSATION COMMITTEE
Richard M. Osborne, Chairman
Martin S. Roher
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PACIFIC GATEWAY PROPERTIES, INC. (PGP)
PERFORMANCE GRAPH
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG PGP, DOW JONES GLOBAL MARKET INDEX-US AND DOW JONES REAL
ESTATE INVESTMENT INDEX-US
FISCAL YEAR ENDING DECEMBER 31ST
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1994 1995 1996 1997 1998 1999
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Pacific Gateway Properties, Inc. $100 $ 72 $ 81 $120 $164 $267
Dow Jones Equity Market Index $100 $138 $169 $227 $292 $351
Dow Jones Real Estate Market Index $100 $114 $139 $168 $103 $128
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Assumes $100 invested on 12/31/94 in PGP
Common Stock, the Dow Jones Global Market Index-US
*Total return assumes reinvestment of dividends
** Fiscal year ending December 31.
The above graph compares the performance of the Company with that of
the Dow Jones Equity Market Index-US and the Dow Jones Real Estate Investment
Index-US.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information concerning the
beneficial ownership shares of Common Stock of the Company by persons who the
Company knows to own beneficially more than 5% of the outstanding Common
Stock and by directors and executive officers of the Company.
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Shares Percent
Beneficially of
Owned (1) Class
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<S> <C> <C>
GEM Value Fund/PGP LLC 401,700(2) 9.2
900 North Michigan Avenue
Suite 1900
Chicago, Illinois 60611
Richard M. Osborne Trust 1,576,938(3) 36.2
Turkey Vulture Fund XIII, Ltd.
and Liberty Self Stor II, Ltd.
8500 Station Street, Suite 113
Mentor, Ohio 44060
Mark D. Grossi 264,800 6.1
Third Capital, LLC 200,000(4) 4.6
314 Church Street
Nashville, TN 37201
DIRECTORS AND EXECUTIVE
OFFICERS
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Steven A. Calabrese 47,100(5) 1.1
Mark D. Grossi 264,800 6.1
Lawrence B. Helzel 50,800 1.2
Christopher L. Jarratt 200,000(4) 4.6
Stephen J. LoPresti 13,000 *
Raymond V. Marino 141,175(6) 3.2
Richard M. Osborne 1,576,938(3) 36.2
Martin S. Roher 175,000(7) 4.0
All directors, nominees and
executive officers (8 persons)
as a group 2,268,813 51.8%
</TABLE>
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* Less than 1%
(1) Beneficial ownership is the direct or indirect ownership of Common
Stock of the Company including the right to control the vote or
investment of or acquire such Common Stock within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934. Unless
otherwise indicated each beneficial owner has sole voting and
investment power with respect to the shares shown and reported
ownership is as of April 3, 2000.
(2) Consists of 300,000 shares of Series 1 Convertible Preferred Stock and
101,700 shares of Common Stock.
(3) According to the information provided in Amendment No. 1 to Schedule
13D dated April 28, 1997 and Amendment No. 2 to Schedule 13D dated
September 2, 1997 filed by the Richard M. Osborne Trust (the "Trust"),
Turkey Vulture Fund XIII, Ltd. (the "Fund") and Liberty Self-stor,
Ltd. ("Liberty") as a group, and other information provided to the
Company, the Trust beneficially owns 100 shares, the Fund
beneficially owns 305,432 shares and Liberty beneficially owns
1,271,406 shares. Richard M. Osborne as sole trustee of the Trust,
sole manager of the Fund and sole managing member of Liberty may
be deemed to beneficially own all of said 1,576,938 shares.
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(4) Based upon information provided in Schedule 13D dated May 19, 1997
filed by Third Capital, LLC. Represents shares of Common Stock
issuable upon exercise of presently exercisable warrants issued to
Third Capital, LLC by the Richard M. Osborne Trust.
Christopher L. Jarratt is Chief Executive Officer of Third
Capital, LLC and may be deemed to beneficially own said securities.
(5) Represents 34,900 shares held by CCAG Limited, a family limited
partnership ("CCAG"); 6,500 shares beneficially owned by Mr.
Calabrese's wife as to which shares Mr. Calabrese disclaims beneficial
ownership; and 5,700 shares held by Mr. Calabrese as custodian for
his children. Mr. Calabrese is managing partner of CCAG and may be
deemed to beneficially own said shares.
(6) Represents shares issuable upon exercise of options to purchase Common
Stock which were exercisable at December 31, 1999 or which may become
exercisable within 60 days thereafter.
(7) The shares are owned by MSR Capital Partners. Mr. Roher is the sole
general partner of MSR Capital Partners and may be considered to
beneficially own such shares.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15() of the Securities
Exchange Act of 1934, the Registrant has duly caused this amendment to be
signed by the undersigned thereunto duly authorized.
PACIFIC GATEWAY PROPERTIES, INC.
(Registrant)
By: /s/Raymond V. Marino
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Raymond V. Marino, President and
Chief Executive Officer
April 25, 2000
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Date
