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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, 1997
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)
NEW YORK 04-2816560
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
930 MONTGOMERY ST., SUITE 400
SAN FRANCISCO, CALIFORNIA 94133
(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
Securities registered pursuant to Section 12 (g) of the Act: NONE
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 (Section 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 March 20, 1998: COMMON STOCK, PAR VALUE
$1.00--$13,880,229.
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock as of March 20, 1998: COMMON STOCK, PAR VALUE
$1.00--3,899,596 SHARES.
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PART III
OF
ANNUAL REPORT ON FORM 10-K
OF
PACIFIC GATEWAY PROPERTIES, INC.
FOR THE YEAR ENDED DECEMBER 31, 1997
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The following table sets forth certain information as of April 15,
1998 concerning the directors and the executive officers of Pacific Gateway
Properties, Inc. (the "Company").
NOMINEES
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Steven A. Calabrese Age 37; director of the Company since July 1997; since
prior to 1993, 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 44; director of the Company since July 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 1993, holder of various senior executive
positions with Charter One Bank and its predecessor.
(A)
Lawrence B. Helzel Age 50; director of the Company since May 1995; since
prior to 1993, member, Pacific Stock Exchange, Inc.
(self employed market maker, options floor); co-founder
Buylar Investments, Inc., a real estate investment
company. (A)
Marshall A. Jacobs Age 78; director of the Company since February 1984;
since January 1992, Of Counsel to the law firm of
Jacobs Persinger & Parker, prior thereto, senior
partner in the firm. (B)
Christopher L. Jarratt Age 36; director of the Company since May 1997; since
September 1996, Chief Executive Officer of Third
Capital, LLC, a company engaged in various real estate
investment and advisory activities; since prior to
1993, President, Jarratt Associates, Inc., a company
engaged in commercial mortgage banking and commercial
real estate investment activities; director of TIS
Mortgage Investment Company.
Raymond V. Marino Age 39; director of the Company since March 1996 and
President and Chief Executive Officer since January
1996; prior thereto, Vice President of the Company.
Richard M. Osborne Age 52; director and Chairman of the Board of Directors
of the Company since May 1997; since prior to 1993
President and Chief Executive Officer of OsAir, Inc., a
manufacturer of industrial gases for pipeline delivery
and a real property developer; director of Brandywine
Realty Trust, Great Lakes Bank, TIS Mortgage
Investment Company and Meridian Point Realty Trust
VIII. (B)
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Martin S. Roher Age 48; director of the Company since May 1995; since
prior to 1993, general partner and managing partner of
MSR Capital Partners, a limited partnership engaged in
securities investments. (B)
EXECUTIVE OFFICERS
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Christopher M. Watson Age 39; Executive Vice President of the Company since
January 1996; prior thereto, Vice President of the
Company.
Stephen J. LoPresti Age 37; Vice President, Finance 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 1997 and prior periods have done so and their filings for 1997
were on a timely basis, except that Steven A. Calabrese was late in filing one
report of one sale in 1997 of an aggregate of 36,600 shares of Common Stock; and
Richard M. Osborne was late in filing one report of one purchase in 1997 of an
aggregate of 36,600 shares of Common Stock.
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, 1997, and whose total annual salary and bonus for such fiscal year
exceeded $100,000.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
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Stock All Other
Name and Principal Position Year Salary Bonus Options Compensation (1)
- --------------------------- ---- ------ ----- ------- ---------------
<S> <C> <C> <C> <C> <C>
Raymond V. Marino (2) 1997 $150,000 $25,000 -- $4,800
President and CEO 1996 150,000 50,000 100,000 --
1995 95,000 30,000 -- 2,850
Christopher M. Watson 1997 100,000 -- -- 100,487
1996 70,000 30,000 35,000 34,906
1995 70,000 30,000 -- 22,459
</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.
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(2) Mr. Marino became President and CEO as of January 1996. Mr. Marino had
been Vice President and Chief Executive Officer of the Company since August
1992. Mr. Marino was granted options for 20,000 shares of Common Stock as more
fully described below in "EMPLOYMENT CONTRACT WITH EXECUTIVE". His other
compensation in 1997 is a 401(k) contribution and in 1995 is a simplified
employee pension contribution.
(3) Mr. Watson joined the Company as a Vice President in September 1992 and
became Executive Vice President as of January 1996. His other compensation
consisted of lease commissions of $92,687 in 1997, $31,906 in 1996 and $17,359
in 1995, an auto allowance of $3,000 in each year, a $4,800 401(k) contribution
in 1997, and $2,100 for a simplified employee pension contribution in 1995.
OPTION TABLES
There were no options to purchase Common Stock of the Company granted
to the two officers named above during 1997. Mr. Stephen J. LoPresti was hired
as Vice President of Finance in November 1997 following the resignation of
Andrew T. Gorayeb. Mr. LoPresti was granted options to purchase 30,000 shares
of Common Stock on November 10, 1997 at $4.938 per share. Mr. LoPresti's options
will vest equally over a five year period commencing November 10, 1998. None of
Mr. LoPresti's options were exercisable at December 31, 1997.
The following table sets forth the values at the end of 1997 of the options
to purchase Common Stock of the Company held by two of the officers named above.
None of these officers exercised any options in 1997.
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Values of
Number of Unexercised In-
Unexercised the-Money
Options at Options at
12/31/97 12/31/97 (1)
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Exercisable/ Exercisable/
Name Unexercisable Unexercisable
---- ------------- -------------
<S> <C> <C>
Raymond V. Marino 98,705/22,470 $213,743/$47,848
Christopher M. Watson 25,705/30,470 $49,210/$67,753
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</TABLE>
(1) The closing sale price for the Company's Common Stock on December 31, 1997,
as reported on the American Stock Exchange consolidated reporting system
was $4.88 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 or, 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
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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. On March 16, 1998, the Board of
Directors notified Mr. Marino that his employment agreement would be extended
until January 1, 2000. In addition, effective January 1, 1998, Mr. Marino's
base salary would be $175,000 plus a bonus determined by the Board of Directors.
Mr. Marino was also granted additional options to purchase 20,000 shares of
Common Stock on March 16, 1998 at $6.0625 per share. According to the amendment
to the employment agreement options to purchase 10,000 shares of Common Stock
will be exercisable on January 1, 1999 and December 31, 1999, respectively.
Mr. Watson and Mr. LoPresti have a severance arrangement with the
Company under which they are entitled to receive one year's base salary if the
Company terminates their employment within one year following a change in its
control.
Directors who are not officers of the Company receive an annual fee of
$7,500 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. Mr.
Jacobs is Of Counsel to the law firm of Jacobs Persinger & Parker. Such law
firm has performed services for the Company for which it was paid $101,271 in
1997 and may perform services for the Company in 1998.
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
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
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<S> <C> <C> <C> <C> <C> <C>
Pacific Gateway Properties $100 $143 $152 $110 $124 $183
- ------------------------------------------------------------------------------------------------------------
Dow Jones Equity Market Index $100 $110 $111 $152 $188 $251
- ------------------------------------------------------------------------------------------------------------
Dow Jones Real Estate Market Index $100 $117 $111 $138 $185 $221
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</TABLE>
Assumes $100 invested on 12/31/92 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 Global Market Index-US (Formerly the Dow Jones Equity Market Index) and
the Dow Jones Real Estate Investment Index-US.
5
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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 of 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 the directors and executive officers of the Company.
<TABLE>
<CAPTION>
Shares Percent
Beneficially of
Owned (1) Class
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<S> <C> <C> <C>
Richard M. Osborne Trust 1,576,938 (2) 40.4
Turkey Vulture Fund XIII, Ltd.
and Liberty Self Stor, Ltd.
7001 Center Street
Mentor, OH 44060
Mark D. Grossi 264,800 6.8
30962 Riviera Lane
Westlake, OH 44145
Third Capital, LLC 200,000 (3) 5.1
314 Church Street
Nashville, TN 37201
DIRECTORS AND EXECUTIVE
OFFICERS
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Steven A. Calabrese 39,800 1.0
Mark D. Grossi 264,800 6.8
Lawrence B. Helzel 40,000 *
Marshall A. Jacobs 200 *
Christopher L. Jarratt 200,000 (3) 5.1
Raymond V. Marino 98,705 (4) 2.5
Richard M. Osborne 1,576,938 (2) 40.4
Martin S. Roher 175,000 (5) 4.5
Christopher M. Watson 25,705 (4) *
All directors and executive
officers (9 persons)
as a group 2,221,148 57.0
</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
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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 March 2, 1998.
(2) According to information provided in Form 5, Annual Statement of Changes in
Beneficial Ownership dated February 10, 1998, 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 (7.8%) and Liberty beneficially owns
1,271,406 shares (32.6%). 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.
(3) 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.
(4) Represents shares issuable upon exercise of options to purchase Common
Stock which were exercisable at March 2, 1998 or which may become
exercisable within 60 days thereafter.
(5) 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.
(6) Represents 27,600 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.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
See Item 11 for information concerning the relationship between the
Company and the law firm of Jacobs Persinger & Parker, to which Marshall A.
Jacobs, a director of the Company, is Of Counsel.
The Board of Directors of the Company held five meetings in 1997. The
Board does not have a Nominating Committee. The duties of the Audit Committee
of the Board are to oversee the audit function of the Company's independent
certified public accountants, to periodically review significant financial
information relating to the Company and to act as a communication link between
the Board and such certified public accountants. The duties of the Compensation
Committee of the Board are to make recommendations to the Board with respect to
the compensation package of the Chief Executive Officer, to review the Chief
Executive Officer's recommendations as to the compensation packages of the other
officers of the Company and to award grants under and otherwise administer the
Company's stock option plans. The Audit Committee met two times in 1997. The
Compensation Committee met once in 1997. During 1997, each director attended
all of the meetings of the Board of Directors and committees of which he was a
member.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company 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 24, 1998
-----------------------------------
Date
8
