<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement / / Confidential, for Use of
the Commission Only (as
permitted by Rule 14a-6
(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
Bedford Property Investors, Inc.
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(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
- --------------------------------------------------------------------------------
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
was calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
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(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 3
[BEDFORD LETTERHEAD]
Dear Stockholder:
The directors and officers join me in extending to you a cordial invitation to
attend our Annual Meeting of Stockholders. This meeting will be held on
Thursday, May 16, 1996 at 1:00 p.m. at the Lafayette Park Hotel, 3287 Mount
Diablo Boulevard, Lafayette, California.
Enclosed please find the Notice of Meeting, Proxy Statement, and one of two
separate Proxy Cards, one to be used by Common Stockholders and the other to be
used by Preferred Stockholders. At this Meeting we are seeking to elect seven
directors, two of whom will be elected by the Preferred Stockholders, voting
separately as a single class, and five of whom will be elected by the Common
Stockholders, voting separately as a single class. In addition, the Common
Stockholders will also be asked to approve amendments to the Company's 1992
Directors' Stock Option Plan to (i) increase the number of shares reserved for
issuance thereunder from 250,000 to 500,000 and (ii) change the maximum
expiration date of options granted thereunder from five to ten years and to
ratify the appointment of KPMG Peat Marwick LLP as the Company's independent
public accountants for the upcoming year.
Your management and Board of Directors unanimously recommend that you vote FOR
all nominees for directors and FOR the other proposals.
Please take time to review and vote on each proposal. Your vote is important.
Please remember to return your Proxy Card.
I hope to see you at the Annual Meeting.
Very truly yours,
Peter B. Bedford
Chairman of the Board and
Chief Executive Officer
<PAGE> 4
BEDFORD PROPERTY INVESTORS, INC.
270 LAFAYETTE CIRCLE
LAFAYETTE, CA 94549
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 16, 1996
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TO THE STOCKHOLDERS:
The Annual Meeting of Stockholders of Bedford Property Investors,
Inc., a Maryland corporation (the "Company"), will be held at the Lafayette Park
Hotel, 3287 Mount Diablo Boulevard, Lafayette, California, on Thursday, May 16,
1996 at 1:00 p.m. local time, to consider the following proposals:
1. Election of five directors by the holders of the Common
Stock for the ensuing year (the "Common Stock Directors");
2. Election of two directors by the holders of the Preferred
Stock for the ensuing year (the "Preferred Stock Directors");
3. To approve amendments to the Company's 1992 Directors'
Stock Option Plan to (i) increase the number of shares reserved for issuance
thereunder from 250,000 to 500,000 and (ii) change the maximum expiration date
of options granted thereunder from five to ten years;
4. To ratify the appointment by the Board of Directors of the
Company's independent public accountants for the year ending December 31, 1996;
and
5. To transact such other business as may properly come before
the meeting.
Only stockholders of record at the close of business on April 12,
1996 are entitled to notice of and to vote at the meeting and any adjournment
thereof.
STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
THE PRESENCE AT THE MEETING, IN PERSON OR BY PROXY, OF HOLDERS OF A MAJORITY OF
SHARES OF STOCK ISSUED AND OUTSTANDING AND ENTITLED TO VOTE AT THE MEETING
SHALL CONSTITUTE A QUORUM. THIS PROXY STATEMENT IS ACCOMPANIED BY ONE OF TWO
FORMS OF PROXY CARD: ONE CARD FOR USE BY THE HOLDERS OF THE COMPANY'S COMMON
STOCK AND THE OTHER CARD FOR USE BY THE HOLDERS OF THE COMPANY'S PREFERRED
STOCK. IF YOU CANNOT ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN
THE ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE AS PROMPTLY AS POSSIBLE.
By Order of the Board of Directors
JENNIFER I. MORI
Secretary
April , 1996
Lafayette, California
<PAGE> 5
BEDFORD PROPERTY INVESTORS, INC.
270 LAFAYETTE CIRCLE
LAFAYETTE, CA 94549
---------------------------
PROXY STATEMENT
---------------------------
MAY 16, 1996
ANNUAL MEETING OF STOCKHOLDERS
INTRODUCTION
------------
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors (the "Board of Directors" or the "Board") of Bedford
Property Investors, Inc., a Maryland corporation (the "Company"), of proxies
from the holders (the "Common Stockholders") of the Company's issued and
outstanding shares of Common Stock, par value $.02 per share (the "Common
Stock"), and from the holders (the "Preferred Stockholders" and, collectively
with the Common Stockholders, the "Stockholders") of the Company's Series A
Convertible Preferred Stock, par value $.01 per share (the "Preferred Stock"),
to be exercised at the Annual Meeting of Stockholders to be held on Thursday,
May 16, 1996, at 1:00 p.m., local time, and at any adjournment(s) or
postponement(s) of such meeting (the "Annual Meeting"), for the purposes set
forth in the accompanying Notice of Annual Meeting of Stockholders. Unless
otherwise indicated, all information contained in this Proxy Statement,
including, but not limited to, Common Stock share numbers, share prices and per
share amounts, reflects a one-for-two reverse stock split of the Common Stock
effected on March 29, 1996.
The purpose of the Annual Meeting is to consider and act upon the
following proposals:
1. Election of five directors by the holders of the Common Stock
for the ensuing year (the "Common Stock Directors");
2. Election of two directors by the holders of the Preferred
Stock for the ensuing year (the "Preferred Stock Directors");
3. To approve amendments to the Company's 1992 Directors' Stock
Option Plan (the "1992 Directors' Stock Option Plan") to (i) increase the number
of shares reserved for issuance thereunder from 250,000 to 500,000 and (ii)
change the maximum expiration date of options granted thereunder from five to
ten years;
4. To ratify the appointment by the Board of Directors of the
Company's independent public accountants for the year ending December 31, 1996;
and
<PAGE> 6
2
5. To transact such other business as may properly be brought
before the Annual Meeting and any postponements or adjournments thereof.
This Proxy Statement and the enclosed Proxy Card are being mailed to
the Stockholders on or about April , 1996.
The holders of record of the shares of Common Stock at the close of
business on April 12, 1996 (the "Record Date") are entitled to notice of and to
vote at the Annual Meeting in relation to proposals 1, 3 and 4, above, on which
they will vote as a class. The holders of record of Preferred Stock at the close
of business on the Record Date are entitled to notice of and to vote at the
Annual Meeting only in relation to proposal 2, on which they will vote as a
separate class. At the close of business on the Record Date, shares of Common
Stock and 8,333,334 shares of Preferred Stock were outstanding, each of which is
entitled to cast one vote (collectively, the Common Stock and Preferred Stock
are referred to herein as the "Outstanding Stock").
The presence at the Annual Meeting, in person or by proxy, of
Stockholders holding shares entitled to cast a majority for each proposal of all
the votes entitled to be cast at the Annual Meeting shall constitute a quorum
for the transaction of business at the Annual Meeting. Abstentions and broker
non-votes (i.e., votes not cast by a broker or other record holder in "street"
or nominee name solely because such record holder does not have discretionary
authority to vote on the matter) will be counted toward the presence of a
quorum. The Common Stock Directors will be elected by a favorable vote of a
plurality of the shares of Common Stock present and entitled to vote, in person
or by proxy, at the Annual Meeting. Similarly, the Preferred Stock Directors
will be elected by a favorable vote of a plurality of the shares of Preferred
Stock voted at the Annual Meeting. Accordingly, abstentions or broker non-votes
as to the election of directors will not affect the election of the candidates
receiving the plurality of votes. All of the other proposals to come before the
Annual Meeting require the affirmative vote of a majority of shares of the
Common Stock held by Common Stockholders who are present or represented by
proxy at the Annual Meeting. Abstentions as to one or more of such proposals
will have the same effect as votes against such proposal. Broker non-votes,
however, will be treated as unvoted for purposes of determining approval of
such proposals and will not be counted as votes for or against such proposals.
Under the Maryland General Corporation Law ("MGCL"), holders of shares
of Outstanding Stock will not be entitled to appraisal rights with respect to
such shares with respect to any of the proposals.
All expenses in connection with the solicitation of proxies will be
borne by the Company. In addition to solicitation by mail, officers and
directors of the Company may also solicit proxies by mail, telephone, facsimile
or in person. Additionally, the Company may retain the services of a
professional proxy solicitation firm to assist in the solicitation of proxies,
at a cost of approximately $5,000 plus expenses, which would be borne by the
Company.
This proxy statement is accompanied by one of two forms of proxy card:
one card is for use by the Common Stockholders and the other card is for use by
the Preferred Stockholders. The shares of Common Stock represented by properly
executed Common Stock proxy cards will be voted at the Annual Meeting as
indicated or, if no instruction is given, in favor of proposals 1, 3 and 4. The
shares of outstanding Preferred Stock represented by all properly executed
Preferred Stock proxy cards will be voted at the
<PAGE> 7
3
Annual Meeting as indicated or, if no instruction is given, in favor of proposal
2. The Company does not presently know of any other business which may come
before the Annual Meeting. Any person giving a proxy has the right to revoke it
at any time before it is exercised (a) by filing with the Secretary of the
Company a duly signed revocation or proxy bearing a later date or (b) by voting
in person at the Annual Meeting.
<PAGE> 8
4
PROPOSAL 1
ELECTION OF COMMON STOCK DIRECTORS
The Company's Charter provides that the Preferred Stockholders have the
right, subject to expansion in certain situations, to elect two members of the
Board of Directors annually and that the Common Stockholders have the right to
elect the remaining directors. The Company's Board of Directors is currently
composed of seven members. Accordingly, the Common Stockholders, voting as a
class, have the right to elect five members to the Board of Directors to serve
until the next annual meeting of Stockholders and until their respective
successors are duly elected and qualified.
The Board of Directors has nominated the five individuals set forth
below to serve as directors of the Company. Management knows of no reason why
any of these nominees would be unable or unwilling to serve, but if any nominee
should be unable or unwilling to serve, the Common Stock proxies will be voted
for the election of such other persons for the office of director as management
may recommend in the place of such nominee.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMMON STOCKHOLDERS VOTE
"FOR" THE FIVE NOMINEES LISTED BELOW.
<TABLE>
<CAPTION>
Name Age Business Experience During Past Five Years Director Since
- ---- --- ------------------------------------------ --------------
<S> <C> <C> <C>
Claude M. Ballard 65 Mr. Ballard is a Trustee of The Urban Land 1992
Institute, and a Limited Partner of the Goldman
Sachs Group, L.P. Mr. Ballard also serves on the
Board of Directors of CBL & Associates, a REIT,
and Taubman Centers, Inc., a REIT. He is also a
Trustee of Mutual Life Insurance Company of New
York, the Chairman of Merit Equity Partners, Inc., a
property acquisition and management company, and
a Director of Horizon Hotels, Inc., a hotel
ownership and management company. Mr. Ballard
attended Memphis State University and the
University of Tennessee.
</TABLE>
<PAGE> 9
5
<TABLE>
<CAPTION>
Name Age Business Experience During Past Five Years Director Since
- ---- --- ------------------------------------------ --------------
<S> <C> <C> <C>
Peter B. Bedford 58 Mr. Bedford has been Chairman of the Board since 1991
May 1992 and Chief Executive Officer since
November 1992. Mr. Bedford has been engaged in
the commercial real estate business, primarily in the
Western United States, for over 30 years and has
been responsible for the acquisition, ownership,
development and management of an aggregate of
approximately 18 million square feet of industrial,
office and retail properties, as well as land in 14
states, primarily as founder and President of Bedford
Property Holdings Limited ("BPHL"), a privately-
held diversified real estate holding company. Mr.
Bedford is the sole stockholder of BPHL. Mr.
Bedford serves on the board of directors of
BankAmerica Corporation, Bixby Ranch Company, a
real estate investment company, and First American
Title Guarantee Co., a title insurance company. Mr.
Bedford received his B.A. in Economics from
Stanford University.
Anthony M. Downs 64 Mr. Downs is a Senior Fellow at the Brookings 1992
Institution, a non-profit policy research organization,
and is a consultant to Salomon Brothers Inc, Aetna
Realty Investors, the real estate investment
subsidiary of Aetna Life and Casualty Company, and
the Federal National Mortgage Association. Mr.
Downs serves on the Board of Directors of each of
Pittway Corporation, a holding company with equity
interests in publishing and manufacturing entities,
General Growth Properties, Inc., a REIT,
Massachusetts Mutual Life Insurance Co., the Urban
Institute, the NAACP Legal Educational Defense
Fund, Inc. and the National Housing Partnership
Foundation, a developer of low-income housing.
Mr. Downs received a B.A. in International
Relations and Political Theory from Carlton College
and an M.A. and Ph.D. in Economics from Stanford
University.
</TABLE>
<PAGE> 10
6
<TABLE>
<CAPTION>
Name Age Business Experience During Past Five Years Director Since
- ---- --- ------------------------------------------ --------------
<S> <C> <C> <C>
Anthony M. Frank 64 Mr. Frank served as Postmaster General of the 1992
United States from 1988 to 1992 and as Chairman
and Chief Executive Officer of First Nationwide
Bank from 1971 to 1988. Prior to that time, he was
Chairman of the Federal Home Loan Bank of San
Francisco, Chairman of the California Housing
Finance Agency, Chairman of the Independent
Bancorp of Arizona, and the first Chairman of the
Federal Home Loan Mortgage Corporation Advisory
Board. Currently, he is Chairman of Acrogen, Inc.,
a biotechnology company, consultant/director of
TransAmerica HomeFirst, a residential mortgage
company, and serves on the Board of Directors of
each of Crescent Real Estate Equities, a REIT,
Security Assurance, a municipal bond insurer, Irvine
Apartment Communities, a REIT, Charles Schwab &
Co., a brokerage firm, Temple-Inland, Inc., a forest
products company, General American Investors
Company, Inc., a publicly-traded closed-end
investment fund, Living Centers of America, Inc., a
company engaged in the operation of long-term
health care centers, and Cotelligent, Inc., a
temporary services company. Mr. Frank received a
B.A. from Dartmouth College and an M.B.A. from
the Tuck School of Business at Dartmouth.
Martin I. Zankel, Esq. 61 Mr. Zankel is the Senior Partner of the law firm of 1992
Bartko, Zankel, Tarrant & Miller. Mr. Zankel was
Chairman of the Board of Directors, Chief Executive
Officer and President of Landsing Pacific Fund,
Inc., a REIT. Mr. Zankel received a B.S. from the
University of Pennsylvania, The Wharton School of
Commerce and Finance, and a J.D. from University
of California, Hastings College of the Law.
</TABLE>
<PAGE> 11
7
COMPENSATION OF DIRECTORS
Members of the Board of Directors who are not employees of the Company
are currently paid an annual retainer fee of $12,500 and an additional fee of
$2,500 for each Board meeting attended. Any Director attending in person a duly
constituted meeting of a committee of the Board of Directors of which such
Director is a member receives, in addition to any other fees to which he or she
may be entitled, a separate meeting attendance fee equal to $2,500 for his or
her attendance in person at any such committee meeting not held on the same day,
the day preceding or the day following a regular or special meeting of the Board
of Directors. Any member of the Board of Directors who participates in a regular
or special meeting of the Board of Directors by conference telephone or similar
communications equipment receives $600 for each such meeting. Directors are
reimbursed for out-of-pocket expenses in connection with attendance at meetings.
If a member of the Board of Directors travels to conduct a site inspection of a
property to be acquired by the Company, such Director is paid $1,000 per day and
reimbursed for related travel expenses. Directors receive no other compensation
for their services on behalf of the Company (except under the 1992 Directors'
Stock Option Plan). See "Proposal 3 - Plan Description."
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors held four regular meetings and one special
meeting during 1995. Each member of the Board of Directors attended at least 75%
of the aggregate number of meetings of the Board of Directors and the committees
of which he was a member during the last year.
The Company has an Audit Committee which consists of Messrs. Ballard
(Chairman), Downs, Frank and Nolan. The Audit Committee reviews the internal
controls of the Company and reviews the services performed and to be performed
by the independent auditors of the Company during the year. The members of the
Audit Committee also meet regularly with the independent auditors to review the
quarterly financial statements of the Company and to review the scope and
results of the annual audit. The Audit Committee met twice during 1995.
The Company also has a Compensation Committee which consists of Messrs.
Downs (Chairman), Frank, Eastman and Zankel. The Compensation Committee is
responsible, with respect to stock options, for the administration of stock
option plans of the Company, including the Employee Stock Option Plan and the
1992 Directors' Stock Option Plan. The Compensation Committee met three times
during 1995.
The Company also has a Nominating Committee which consists of Messrs.
Frank (Chairman), Ballard, Eastman and Zankel. The Nominating Committee is
responsible for submitting nominations for the various officers and for
directors, elections for whom are held at the annual meeting of Stockholders.
The Nominating Committee does not consider nominees proposed by Stockholders.
The Nominating Committee did not hold a meeting in 1995.
<PAGE> 12
8
Messrs. Eastman and Nolan were placed on the Board in September 1995 in
connection with the sale of the Preferred Stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee during 1995 were Messrs.
Downs, Frank, Eastman and Zankel. None of these individuals were officers or
employees of the Company at any time during the year ended December 31, 1995,
nor have any of these individuals ever been an officer of the Company or any of
its subsidiaries. In addition, none of the executive officers of the Company
served on the compensation committee of another entity or as a director of an
entity which employs any of the members of the Compensation Committee.
Martin I. Zankel, a director of the Company, and his associates
provided legal services to the Company for which his firm was paid, in the
aggregate, $52,000 in 1995.
<PAGE> 13
9
PROPOSAL 2
ELECTION OF PREFERRED STOCK DIRECTORS
The Company's Charter provides that the Preferred Stockholders, voting
as a class, have the right, subject to expansion in certain situations, to elect
two members of the Board of Directors annually, to serve until the next annual
meeting of Stockholders and until their respective successors are duly elected
and qualified.
The Board of Directors has nominated the two individuals set forth
below to serve as directors of the Company. Management knows of no reason why
either of these nominees would be unable or unwilling to serve, but if either
nominee should be unable or unwilling to serve, the Preferred Stock proxies will
be voted for the election of such other persons for the office of director as
management may recommend in the place of such nominee.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE PREFERRED STOCKHOLDERS VOTE
"FOR" THE TWO NOMINEES LISTED BELOW.
<TABLE>
<CAPTION>
Name Age Business Experience During Past Five Years Director Since
- ---- --- ------------------------------------------- --------------
<S> <C> <C> <C>
Thomas G. Eastman 49 Mr. Eastman is a founder and co-chairman of 1995
Aldrich Eastman Waltch, a national real estate
investment adviser. He is a board member and
former Chairman of the National Association of
Real Estate Investment Managers. He is a Member
of the Urban Land Institute and its Finance and
Membership Committees. He is a Member of the
Executive Committee of the Institutional Real Estate
Clearinghouse. Mr. Eastman received a B.A. from
Stanford University and an M.B.A. from Harvard
University.
Thomas H. Nolan, Jr. 38 Mr. Nolan serves on the Board of Directors of, and 1995
directs the management of commingled investment
fund portfolios for, Aldrich Eastman Waltch, a
national real estate investment adviser. Mr. Nolan
joined Aldrich Eastman Waltch in 1984. Mr. Nolan
serves on the Board of Directors of Crocker Realty
Trust, Inc., a REIT, and the Partnership Committee
of the Taubman Realty Group L.P. Mr. Nolan
earned a B.B.A. in Business Administration from
the University of Massachusetts.
</TABLE>
<PAGE> 14
10
PROPOSAL 3
ADOPTION OF AMENDMENTS TO THE
1992 DIRECTORS' STOCK OPTION PLAN
On March 15, 1996, the Board of Directors unanimously adopted, subject
to Common Stockholder approval, amendments to the 1992 Directors' Stock Option
Plan (i) increasing the number of shares reserved for issuance thereunder from
250,000 to 500,000 and (ii) changing the maximum expiration date for options
issued thereunder from five to ten years. The Common Stockholders are asked to
approve the adoption of these amendments to the 1992 Directors' Stock Option
Plan.
DESCRIPTION OF THE PROPOSAL
Currently, the 1992 Directors' Stock Option Plan provides that options
to purchase a total of 250,000 shares of Common Stock may be issued thereunder
with a maximum expiration date of five years from the date of the relevant
grant. As of September 18, 1995, all of these options had been issued. The
proposed amendments to the 1992 Directors' Stock Option Plan increase the number
of shares available for issuance thereunder by 250,000 shares to a total of
500,000 shares and increase the maximum expiration date from five to ten years
from the date of grant. The Board and management believe that these changes will
serve to better align the interests of directors with those of the Stockholders
and facilitate the retention and attraction of highly qualified directors by the
Company. The 1992 Directors' Stock Option Plan was adopted in order to permit
equity participation in the Company by its directors as consideration for their
service on the Board and to provide an equity incentive associated with the
success of the Company's business. Increasing the number of shares of Common
Stock reserved under, and increasing the maximum term of options granted under,
this plan would allow it to continue to fulfill these objectives.
Both employee and non-employee directors of the Company are eligible to
receive options under the 1992 Directors' Stock Option Plan. The following table
shows, assuming that all of the nominees are elected at the Annual Meeting, the
number of options which will be granted to the listed groups under the 1992
Directors' Stock Option Plan in 1996.
<TABLE>
<CAPTION>
NUMBER OF OPTIONS(1)
-----------------
<S> <C>
Chief Executive Officer 5,000
All executive officers as a group 5,000
All directors who are not executive officers as a group 30,000
All employees (other than executive officers) as a group -0-
</TABLE>
(1) The exercise price for each option is the fair market value of the Common
Stock on the date of grant.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMMON STOCKHOLDERS VOTE
"FOR" THESE AMENDMENTS OF THE 1992 DIRECTORS' STOCK OPTION PLAN.
<PAGE> 15
11
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of the
Company's Common Stock present or represented at the Annual Meeting will be
required to amend the 1992 Directors' Stock Option Plan.
PLAN DESCRIPTION
Under the Company's 1992 Directors' Stock Option Plan, members of the
Board of Directors, whether or not employees of the Company, are eligible to
receive grants of non-qualified stock options to purchase Common Stock. The
aggregate number of shares of Common Stock reserved for issuance under the 1992
Directors' Stock Option Plan is currently 250,000. As of September 18, 1995,
options to purchase all 250,000 shares of Common Stock reserved under this plan
had been granted.
The 1992 Directors' Stock Option Plan is administered by the
Compensation Committee of the Board of Directors. Pursuant to the 1992
Directors' Stock Option Plan, each first-year director is granted an option for
25,000 shares of Common Stock effective on the date on which such person becomes
a director, and an additional option for 5,000 shares on the date of each
successive annual meeting, provided such director is re-elected to the Board.
Each option granted under the 1992 Directors' Stock Option Plan has an exercise
price equal to the fair market value of the underlying Common Stock on the date
of grant. Payment of the option exercise price must be made in cash.
On May 20, 1992, subject to subsequent approval of the 1992 Directors'
Stock Option Plan by the Company's Stockholders, each of the five Common Stock
Directors was granted an option for 25,000 shares of Common Stock at an exercise
price of the then market price (as defined in the 1992 Directors' Stock Option
Plan) of $5.33 per share. On June 9, 1993, each of the same five Directors was
granted an additional option for 5,000 shares of Common Stock at the then market
price of $7.712 per share. On May 18, 1994, each of the same five Directors was
granted an additional option for 5,000 shares of Common Stock at the then market
price of $12.966 per share. On September 13, 1995, each of the same five
Directors was granted an additional option of 5,000 shares of Common Stock at
the then market price of $11.816 per share. On September 18, 1995, 25,000
options were granted to the two Preferred Stock Directors at the then market
price of $11.85 per share. This last grant exhausted the supply of Common Stock
reserved for issuance under the 1992 Directors' Stock Option Plan.
Options granted under the 1992 Directors' Stock Option Plan vest six
months from the date of grant. The 1992 Directors' Stock Option Plan expires by
its own terms in 2002. The maximum term of options granted under the 1992
Directors' Stock Option Plan is five years. If Proposal 3 is approved, the
maximum term of options granted under the 1992 Directors' Stock Options Plan
would be ten years. Approval of Proposal 3 would also have the effect of
extending the maximum term of outstanding options by five years. As of March 18,
1996, all options granted under the 1992 Directors' Stock Option Plan were
exercisable. As of March 29, 1996, no options granted under the 1992 Directors'
Stock Option Plan had been exercised. As of March 29, 1996, the market value of
the Common Stock underlying the outstanding options under the 1992 Directors'
Stock Option Plan was $3,812,500, based on the closing price on the New York
Stock Exchange of $15.25 per share.
<PAGE> 16
12
If a director ceases to serve as a director of the Company, options
outstanding under the 1992 Directors' Stock Option Plan may be exercised within
three months after he or she ceases to serve as a director of the Company to the
extent such options were exercisable on the date of termination. If a director
ceases to serve on the Board of Directors due to a total and permanent
disability, options outstanding under the 1992 Directors' Stock Option Plan may
be exercised within 12 months after termination to the extent that such options
were exercisable at the date of termination. If a director should die while
serving on the Company's Board of Directors, options may be exercised at any
time within 12 months after death, but only to the extent the options were
exercisable at the date of death.
An option granted under the 1992 Directors' Stock Option Plan is
nontransferable by the holder otherwise than by will or the laws of descent or
distribution, and is exercisable during the holder's lifetime only by the
optionee, or in the event of the optionee's death, by the optionee's estate or
by a person who acquires the right to exercise the option by bequest or
inheritance.
In the event any change is made in the Company's capitalization, such
as a stock split or reverse stock split, appropriate adjustment will be made to
the purchase price and the number of shares of Common Stock subject to each
option.
The Board may amend or terminate the 1992 Directors' Stock Option Plan
from time to time in such respects as the Board may deem advisable; provided
that, to the extent necessary to comply with Rule 16b- 3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or any other
successor law or regulation, the Company shall obtain Common Stockholder
approval of any amendment to the 1992 Directors' Stock Option Plan in such a
manner and to such a degree as is required by applicable law, rules or
regulations. Any amendment or termination of the 1992 Directors' Stock Option
Plan shall not affect options already granted and such options shall remain in
full force and effect as if the 1992 Directors' Stock Option Plan had not been
amended or terminated, without the director-optionee's consent.
Any provisions of the 1992 Directors' Stock Option Plan that affect
terms required to be specified in the Plan by Rule 16b-3 promulgated under the
Exchange Act shall not be amended more than once every six months, other than as
required by other applicable law, rules or regulations.
FEDERAL TAX INFORMATION
The following is only a summary of the effect of federal income tax
consequences of transactions under the 1992 Directors' Stock Option Plan. This
summary is not intended to be exhaustive, and does not discuss the tax
consequences of a participant's death or the income tax laws of any
municipality, state or foreign country in which an optionee may reside.
Options granted under the 1992 Directors' Stock Option Plan are
nonstatutory stock options. An optionee will not recognize any taxable income at
the time he or she is granted a nonstatutory stock option. Upon exercise of the
option, the optionee will generally recognize compensation income for federal
tax purposes measured by the excess, if any, of the then fair market value of
the shares over the option price. Upon resale of such shares by the optionee,
any difference between the sales price and the exercise price, to the extent not
recognized as compensation income as provided above, will be treated as capital
gain or loss, and will qualify for long-term capital gain or loss treatment if
the shares have been held for more than
<PAGE> 17
13
one year. The Company will be entitled to a tax deduction in the amount and at
the time that the optionee recognizes ordinary income with respect to shares
acquired upon exercise of a nonstatutory option.
<PAGE> 18
14
PROPOSAL 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, Certified Public Accountant, served as
independent auditors of the Company for the fiscal year ended December 31, 1995.
The Board of Directors, acting upon the recommendation of its audit committee,
has appointed KPMG Peat Marwick LLP to audit the financial statements of the
Company for the year ending December 31, 1996. A representative of KPMG Peat
Marwick LLP is expected to be present at the Annual Meeting and will have the
opportunity to make a statement if he so desires and will be available to
respond to appropriate questions from Stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMMON STOCKHOLDERS VOTE
"FOR" RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT
AUDITORS OF THE COMPANY.
<PAGE> 19
15
INFORMATION REGARDING EXECUTIVE OFFICERS
EXECUTIVE OFFICERS OF THE COMPANY
The following five persons serve as executive officers of the Company:
<TABLE>
<CAPTION>
Name Age Business Experience During Past Five Years Officer Since
- ---- --- ------------------------------------------ -------------
<S> <C> <C> <C>
Peter B. Bedford 58 Mr. Bedford has been Chairman of the Board since 1992
May 1992 and Chief Executive Officer since
November 1992. Mr. Bedford has been engaged in
the commercial real estate business, primarily in the
Western United States, for over 30 years and has
been responsible for the acquisition, ownership,
development and management of an aggregate of
approximately 18 million square feet of industrial,
office and retail properties, as well as land in 14
states, primarily as founder and President of
Bedford Property Holdings Limited ("BPHL"), a
privately-held diversified real estate holding
company. Mr. Bedford is the sole stockholder of
BPHL. Mr. Bedford serves on the board of
directors of BankAmerica Corporation, Bixby
Ranch Company, a real estate investment company,
and First American Title Guarantee Co., a title
insurance company. Mr. Bedford received his B.A.
in Economics from Stanford University.
Donald A. Lorenz 46 Mr. Lorenz became Executive Vice President of the 1994
Company in September 1994 and Chief Financial
Officer in July 1995. Previously, Mr. Lorenz
served as CEO of Tri-Ox, a manufacturing
company, from 1993 to 1994. He served as
Executive Vice President of BPHL from 1989 to
1994, the Managing Partner of Armstrong, Gilmour
and Associates, a certified public accounting firm,
from 1979 to 1989 and Audit Manager with KPMG
Peat Marwick LLP from 1971 to 1978. Mr. Lorenz
has been a certified public accountant since 1973.
Mr. Lorenz received a B.S. in Business
Administration from California State University -
Hayward.
</TABLE>
<PAGE> 20
16
<TABLE>
<CAPTION>
Name Age Business Experience During Past Five Years Officer Since
- ---- --- ------------------------------------------ -------------
<S> <C> <C> <C>
James R. Moore 55 Mr. Moore joined the Company as Vice President 1995
of Property/Asset Management in September 1995.
From 1983 to 1994, he was Managing Director of
the San Francisco office of Cushman and
Wakefield, an international commercial real estate
services firm. Mr. Moore was also a branch
manager and commercial real estate broker at
Cushman and Wakefield. He has served on the
Board of Trustees of The Lindsay Museum since
1984. Mr. Moore has studied at the Commercial
Investment Real Estate Institute and has lectured at
the University of San Francisco and San Francisco
State University. He received a B.A. in History
from the University of California at Berkeley, an
M.B.A. from the University of San Francisco and is
currently working toward a Doctor of Business
Administration at Golden Gate University.
Robert E. Pester 39 Mr. Pester has been Vice President of Acquisitions 1994
of Bedford Acquisitions, Inc. since February 1994.
Prior to joining Bedford Acquisitions, Inc., he was
a real estate investment consultant from 1992 to
1993, President of the Development Division of
BPHL from 1989 to 1992 and Vice President of
Cushman & Wakefield in Northern California from
1980 to 1989. Mr. Pester received a B.S. in
Economics and in Political Science from the
University of California at Santa Barbara.
Hanh Kihara 48 Ms. Kihara has been the Controller of the Company 1993
since May 1993. Prior to joining the Company she
was Controller and Assistant Controller of BPHL
from 1990 to 1993. From 1986 to 1990, Ms. Kihara
was a Manager of Armstrong, Gilmour and
Associates, a certified public accounting firm. Ms.
Kihara has been a certified public accountant since
1989. Ms. Kihara received a B.S. in Administration
and Accounting from California State University --
Hayward.
</TABLE>
<PAGE> 21
17
COMPENSATION OF NAMED EXECUTIVE OFFICERS
The following table sets forth information regarding compensation paid
by the Company for services rendered during the past three years for the four
most highly compensated executive officers of the Company who were employed by
the Company as of December 31, 1995 (collectively, the "Named Executive
Officers"). No executive officer other than the Named Executive Officers earned
more than $100,000 on an annualized basis in any year. The salary of the Vice
President - Acquisitions was, as of December 31, 1994, paid by BPI Acquisitions,
then a separate division of the Company which was funded by Mr. Bedford, and as
of January 1, 1995 was paid by Bedford Acquisitions, Inc. See "Certain
Relationships and Related Transactions -- Funding of Acquisition and Financing
Costs." Prior to July 1992, the Company's affairs were managed by Kingswood
Realty Advisors, Inc., and the Company had no salaried employees.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM
-------------------
COMPENSATION
------------
SECURITIES
UNDERLYING
OPTIONS/SARS
------------
ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS SARS COMPENSATION(7)
- --------------------------- ---- ------ ----- ------- ---- ------------
<S> <C> <C> <C> <C> <C> <C>
Management of Bedford Property Investors:
Peter B. Bedford(1).......................... 1995 $150,000 $ 50,000 5,000(5) -0- $6,418
Chief Executive Officer 20,000(6) -0-
1994 $150,000 -0- 5,000(5) -0- $3,897
1993 $129,615 -0- 5,000(5) -0- $ 42
Donald A. Lorenz(2).......................... 1995 $150,000 $ 87,133 25,000(6) -0- $2,668
Executive Vice President and 1994 $ 25,000 -0- -0- -0- $ 38
Chief Financial Officer
James R. Moore(3)............................ 1995 $ 50,000 -0- -0- -0- $ 41
Vice President Property/Asset
Management
Management of Bedford Acquisitions, Inc.:
Robert E. Pester(4).......................... 1995 $150,000 $149,933 25,000(6) -0- $2,668
Vice President - Acquisitions 1994 $133,558 -0- 10,000(6) 5,000 $ 90
</TABLE>
- ----------------------
(1) Mr. Bedford did not commence employment with the Company until February
1993. He began serving as a director of the Company in February 1991.
(2) Mr. Lorenz did not commence full time employment with the Company until
January 1, 1995. From September 1, 1994 to December 31, 1994 he was a
part-time employee.
<PAGE> 22
18
(3) Mr. Moore commenced employment with the Company on September 1, 1995. His
annual salary is $150,000.
(4) Mr. Pester commenced employment with the Company in February 1994.
Commencing January 1, 1995, Mr. Pester was employed by Bedford
Acquisitions, Inc. See "Certain Relationships and Related Transactions
-- Funding of Acquisitions and Financing Costs."
(5) Represents stock options granted pursuant to the 1992 Directors' Stock
Option Plan.
(6) Represents stock options granted pursuant to the Employee Stock Option
Plan.
(7) Includes auto allowance (in an aggregate amount of $6,900 for 1995, $3,800
for 1994 and $0 for 1993), premiums paid by the Company for term life
insurance (in an aggregate amount of $395 for 1995, $225 for 1994 and $0
for 1993) and matching contributions under the Company's 401(k) Plan (in
an aggregate amount of $4,500 for 1995). The Company's 401(k) Plan was
implemented in 1995.
OPTION GRANTS
The following table sets forth certain information concerning options
granted during 1995 to the Named Executive Officers.
<TABLE>
<CAPTION>
OPTION GRANTS IN 1995
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION ---------------------------
NAME GRANTED FISCAL YEAR PRICE DATE 5% 10%
---- ------- ------------- -------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Peter B. 5,000(1) N/A $11.816 3/13/2001 $ 16,320 $ 36,070
Bedford.......... 20,000(2) 23% $ 11.50 9/13/2005 $144,600 $366,600
Donald A. 25,000(3) 29% $ 11.50 9/13/2005 $180,750 $458,250
Lorenz...........
James R. 0 0 -- -- $ 0 $ 0
Moore............
Robert E. 25,000(3) 29% $ 11.50 9/13/2005 $180,750 $458,250
Pester...........
</TABLE>
(1) Stock Options granted pursuant to 1992 Directors Stock Option Plan, which
options vest and become exercisable six months from the date of grant.
(2) Stock Options granted pursuant to Employee Stock Option Plan, which
options vest and become exercisable at a rate of 25% per year after the
date of grant.
(3) In September 1995, the Company established a Management Stock Acquisition
program. Under the program, options exercised by key members of management
within thirty days of the grant date may be exercised either in cash or
with a note payable to
<PAGE> 23
19
the Company. Mr. Lorenz and Mr. Pester both exercised their options
granted in 1995 pursuant to this program. See "Certain Relationships and
Related Transactions -- Indebtedness of Management."
AGGREGATE OPTION EXERCISES IN 1995 AND VALUES AT YEAR-END 1995
The following table sets forth information regarding the number of
shares acquired and value realized for options exercised by the Named Executive
Officers during the year ended December 31, 1995 and the number and aggregate
dollar value of unexercised options held at the end of 1995.
AGGREGATED OPTIONS/SAR
EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTIONS/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF SECURITIES
NUMBER OF SECURITIES UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS/SARS AT YEAR-END OPTIONS AT YEAR-END(1)
ACQUIRED ON VALUE -------------------------------- ---------------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Peter B. Bedford......... -0- -0- 47,500 37,500 $676,854 $534,375
Donald A. Lorenz......... 25,000 $50,000 -0- -0- -0- -0-
Robert E. Pester......... 25,000 -0- 5,000 10,000 $ 71,250 $142,500
James R. Moore........... -0- -0- -0- -0- -0- -0-
</TABLE>
- ----------------------
(1) For all unexercised in-the-money options, assumes a fair market value at
December 31, 1995 of $14.25 per share of Common Stock, which is the last
transaction in the Common Stock on the New York Stock Exchange as of that
date.
EMPLOYMENT AGREEMENT WITH PETER B. BEDFORD
On February 16, 1993, the Company entered into an employment agreement
with Mr. Bedford, Chairman and Chief Executive Officer, and amended the
agreement on September 18, 1995. Pursuant to the amended employment agreement,
Mr. Bedford has agreed to serve as Chairman and Chief Executive Officer of the
Company on a substantially full-time basis until the agreement's expiration on
September 18, 2000. After September 18, 2000, the agreement will be
automatically renewed for additional one-year terms unless either party gives
the other notice of non-renewal. Under the employment agreement, the Company
agrees to pay Mr. Bedford a salary of not less than $150,000 per annum, plus an
automobile and parking allowance. The amended employment agreement provides for
a severance payment to Mr. Bedford equal to one year's salary in the event that
the Company terminates his employment without cause or Mr. Bedford resigns under
specified circumstances, or due to a change in control of the Company.
<PAGE> 24
20
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Overview
During 1995 the members of the Compensation Committee were Messrs.
Downs, Frank and Zankel. Additionally, Mr. Eastman was appointed to the
Compensation Committee at the December 12, 1995 Board meeting. The Compensation
Committee is responsible for the general compensation policies of the Company,
and in particular is responsible for setting and administering the policies that
govern executive compensation. The Compensation Committee evaluates the
performance of management and determines the compensation levels for all
executive officers.
The primary objectives of the Company's compensation policies and
programs are (i) to attract and retain key executives, (ii) to reward
performance by these executives which benefits the Stockholders, and (iii) to
align the financial interests of the Company's executive officers directly with
those of the Company's Stockholders. The primary elements of executive officer
compensation are base salary, annual cash bonus, and stock option awards. The
salary is based on factors such as related experience, level of responsibility,
and comparison to similar positions in comparable companies. The annual cash
bonuses are based on the Company's performance measured against attainment of
financial and other objectives, and on individual performance. Stock option
awards are intended to align the executive officer's interest with those of the
Stockholders, and are determined based on the executive officer's level of
responsibility, number of options previously granted, and contributions toward
achieving the goals and objectives of the Company. Additional information on
each of these compensation elements follows.
Salaries
Base salaries for the executive officers are adjusted annually,
following a review by the Chairman and Chief Executive Officer (the "CEO") of
the Company. In completing the review, performance of the individual with
respect to specific objectives is evaluated, as are increases in responsibility
and salaries for similar positions. Comparisons are made to the total
compensation packages of other publicly traded real estate investment trusts of
similar size, with a comparable number of properties and employees. These
comparisons are completed through a review of various public filings as well as
through a review of the results of the REIT Executive Compensation Survey
sponsored by the National Association of Real Estate Investment Trusts (NAREIT).
When all reviews are completed, the CEO makes a recommendation to the
Compensation Committee for its review and final approval.
With respect to the CEO, the Compensation Committee considers a number
of factors in setting his compensation, the most important of which are the
level of compensation paid to chief executive officers of other real estate
investment trusts, the success of the Company's recent acquisitions of new
properties, and his importance to the Company's efforts to raise capital in the
public markets. The current base salary for Mr. Bedford, the Company's CEO, is
less than the average for chief executive officers of similar real estate
investment trusts. However, his total compensation is deemed appropriate in view
of the stock options he holds and his significant equity ownership.
<PAGE> 25
21
In light of the relatively low salaries of the Company's executive
officers, the Compensation Committee has not developed a position regarding the
Internal Revenue Code provision limiting deductions for salaries to $1 million
per person.
Annual Bonuses
Annual bonuses are awarded on a discretionary basis and reflect both
Company and individual performance. The Compensation Committee considers
numerous qualitative and quantitative factors in determining these bonus awards,
including the amount of equity capital raised, the success of the Company's
acquisition program and the growth in the Company's funds from operations, after
adjustment for lease commissions, tenant improvements and other capital
expenditures.
Stock Option Awards
Stock options are an integral part of each executive officer's
compensation and are utilized by the Company to provide an incentive to the
officer, and to align the interests of the executive with those of the
Stockholders by providing him with a financial interest in the Company. Options
granted by the Compensation Committee under the Company's Employee Stock Option
Plan are made at fair market value on the date of the grant, vest over various
time periods of up to five years and expire after ten years. In making grants,
the Compensation Committee takes into account the executive officer's
contributions to the Company, scope of responsibilities, salary and the number
of options previously granted. The executive officers were granted a significant
number of options in 1995, as the Compensation Committee sought to implement its
overall strategy of aligning the financial interests of the executive officers
with those of the Stockholders.
STOCK PRICE PERFORMANCE GRAPH
The following line graph illustrates a five-year comparison of the
cumulative total stockholder return on the Common Stock against the cumulative
total return of the Standard & Poor's 500 Composite Stock Index and the SNL
Securities Corporate Performance Index Value of all publicly-traded real estate
investment trusts ("REITs") holding greater than a 75% equity interest in their
REIT-qualifying assets. The graph assumes that $100 was invested on December 31,
1990 in the Common Stock and the indices, and that all dividends were reinvested
throughout the period.
STOCK PRICE PERFORMANCE
EDGAR REPRESENTATION OF DATA POINTS
USED IN PRINTED GRAPHIC
YEAR ENDING
<TABLE>
<CAPTION>
12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Bedford Property Investors 100.00 71.17 88.96 142.11 169.24 234.57
S&P 500 100.00 130.47 140.41 154.56 156.28 207.25
Equity REITs 100.00 137.08 159.33 190.53 197.26 228.59
</TABLE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and any person who owns more than
ten percent (10%) of a registered class of the Company's equity securities, to
file reports of ownership on Form 3 and changes in ownership on Form 4 or 5 with
the Securities and Exchange Commission (the "SEC"). Such officers, directors and
ten percent (10%) stockholders are also required by SEC rules to furnish the
Company with copies of all Section 16(a) forms that they file.
<PAGE> 26
22
Based solely on its review of copies of such reports received or
written representations from certain reporting persons, the Company believes
that all Section 16(a) filing requirements applicable to its officers,
directors and ten percent (10%) stockholders during the fiscal year ended
December 31, 1995 were complied with.
<PAGE> 27
23
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information as of March 31, 1996, with
respect to directors, certain employees of the Company and each person who is
known by the Company to own beneficially more than 5% of the shares of its
Preferred Stock and its Common Stock, and with respect to shares of Common Stock
owned beneficially by all directors and officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
TITLE OF CLASS NAME AND ADDRESS BENEFICIALLY OWNED CLASS
- -------------- ---------------- ------------------ -----
<S> <C> <C> <C>
Preferred Stock Bed Preferred No. 1 8,333,334 100%
Limited Partnership
225 Franklin Street
Boston, MA 02110-2803
Common Stock Peter B. Bedford 914,663(1) 29.5%
Common Stock Anthony M. Downs 40,250(2) 1.3%
Common Stock Anthony M. Frank 44,000(3) 1.4%
Common Stock Claude M. Ballard 40,500(4) 1.3%
Common Stock Martin I. Zankel 50,000(5) 1.6%
Common Stock Thomas G. Eastman 25,000(6) (7)
Common Stock Thomas H. Nolan, Jr. 25,000(8) (7)
Common Stock Robert E. Pester 38,000(9) 1.2%
Common Stock Donald A. Lorenz 25,850 (7)
Common Stock Hanh Kihara 6,563(10) (7)
Common Stock All directors and officers as a group 1,209,826(11) 36.4%
(12 persons)
</TABLE>
- -----------------------------
(1) Includes 150,000 shares owned by Mr. Bedford's children (as to which
Mr. Bedford has sole voting power and may be deemed to be the
beneficial owner) and 58,750 shares of Common Stock subject to options
exercisable within 60 days of March 31, 1996.
(2) Includes 40,000 shares subject to options exercisable within 60 days
of March 31, 1996.
(3) Includes 40,000 shares subject to options exercisable within 60 days
of March 31, 1996.
(4) Includes 40,000 shares subject to options exercisable within 60 days
of March 31, 1996.
(5) Includes 40,000 shares subject to options exercisable within 60 days
of March 31, 1996.
(6) Includes 25,000 shares subject to options exercisable within 60 days
of March 31, 1996.
(7) Less than 1%.
(8) Includes 25,000 shares subject to options exercisable within 60 days
of March 31, 1996.
(9) Includes 6,250 shares subject to options exercisable within 60 days
of March 31, 1996.
<PAGE> 28
24
(10) Includes 5,563 shares subject to options exercisable within 60 days
of March 31, 1996.
(11) Includes options to purchase 280,563 shares which are currently
exercisable or become exercisable within 60 days of March 31, 1996.
<PAGE> 29
25
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
FUNDING OF ACQUISITION AND FINANCING COSTS
Due to the Company's limited financial resources, its activities
relating to the acquisition of new properties and debt and equity financings are
currently performed by Bedford Acquisitions, Inc., ("Bedford Acquisitions"), a
corporation wholly owned by Peter B. Bedford, the Company's Chairman and Chief
Executive Officer, pursuant to a written contract dated January 1, 1995. The
contract provides that Bedford Acquisitions is obligated to provide services to
the Company with respect to the Company's acquisition and financing activities,
and that Bedford Acquisitions is responsible for the payment of its expenses
incurred in connection therewith. Such expenses include certain costs incurred
by the Company on behalf of Bedford Acquisitions including the cost of officers
and directors insurance coverage under the Company's insurance policy. Bedford
Acquisitions must submit to the Company a direct cost estimate for the Company's
approval relating to each acquisition or financing, setting forth the estimated
timing and amount of all projected Bedford Acquisitions costs relating to the
acquisition or financing. Pursuant to the contract, Mr. Bedford is obligated to
make the payments of Bedford Acquisitions' expenses described above if Bedford
Acquisitions fails to make any such payments in a timely fashion, provided that
Mr. Bedford is not obligated to pay any such amounts exceeding $1 million or
following a termination of Bedford Acquisitions' obligations based on the
expiration or termination of the term of the contract. The contract provides
that Bedford Acquisitions is to be paid a fee in an amount equal to the lesser
of (i) 1 1/2% of the gross amount raised in financings or the aggregate purchase
price of property acquisitions, or (ii) an amount equal to (a) the aggregate
amount of approved expenses funded by Bedford Acquisitions through the time of
such acquisition or financing minus (b) the aggregate amount of fees previously
paid to Bedford Acquisitions pursuant to such arrangement. In no event will the
aggregate amount of fees paid to Bedford Acquisitions exceed the aggregate
amount of costs funded by Bedford Acquisitions. The agreement with Bedford
Acquisitions has a term of one year, is renewable at the option of the Company
for additional one year terms, and will expire no later than January 1, 1998.
From February 1993 through December 1994, the Company's activities
relating to debt and equity financings and the acquisition of new properties
were handled under arrangements similar to the current arrangement with Bedford
Acquisitions through BPI Acquisitions, a separate division within the Company.
This division operated under an arrangement with Mr. Bedford whereby he provided
acquisitions and financing personnel, allocable overhead costs and the costs of
all due diligence conducted prior to an acquisition. Upon the completion of a
financing or the acquisition of a property, Mr. Bedford was paid a fee by the
Company substantially identical to that described above. In no event could the
aggregate amount of fees paid to Mr. Bedford exceed the aggregate amount of
costs funded by Mr. Bedford.
As of December 31, 1995, the Company had paid Mr. Bedford and Bedford
Acquisitions an aggregate of approximately $3,046,000 for acquisition and
financing activities performed since February 1993 pursuant to the foregoing
arrangements which was approximately $375,000 less than 1.5% of the gross amount
raised in completed financings and the aggregate purchase price of acquired
properties. Of this amount, approximately $2,143,000 was paid during 1995. The
Company believes that since the fees charged under the foregoing arrangements
(i) have been and continue to be comparable to those
<PAGE> 30
26
charged by other sponsors of real estate investment entities or other third
party service providers and (ii) have been and continue to be charged only for
services on acquired properties or completed financings, such fees were and
continue to be properly includable in direct acquisition costs and capitalized
as part of the asset or financing activities. If the Company were to discontinue
this arrangement, its acquisition and financing activities would have to be paid
by the Company, as incurred, out of cash from operations or borrowings and
certain of such costs would be reflected as operating expenses in its statement
of operations rather than being capitalized. For example, without the
above-described arrangements with Mr. Bedford and Bedford Acquisitions, the
Company may have incurred substantial operating expenses relating to acquisition
and financing activities; if the Company had employed the same personnel and
incurred the same expenses as Bedford Acquisitions, net income and Funds from
Operations for the year ended December 31, 1995 each would have been reduced by
approximately $600,000 (or $.14 per common and common equivalent share) compared
to the corresponding amounts actually reported for that period. The Company
intends to discontinue this fee arrangement if and when its operating results
permit it to sustain acquisition and financing activities internally. However,
the termination of this arrangement prior to that time would likely require the
Company to decrease its acquisition and financing efforts, which could have a
material adverse effect on the Company's ability to grow.
RECENT ACQUISITIONS WITH AFFILIATES
In October 1995, the Company completed the acquisition of 6600 College
Boulevard, a single-story office building consisting of approximately 79,316
rentable square feet in Overland Park, Kansas. The building was acquired from
AEW #25 Trust for $6.4 million. AEW #25 Trust is an affiliate of Bed Preferred
No. 1 Limited Partnership ("BPLP"), which purchased 8,333,334 shares of the
Preferred Stock for $50 million in September 1995. Thomas G. Eastman and Thomas
H. Nolan, Jr., the directors of the Company who are affiliated with BPLP, had no
role on behalf of the Company in this acquisition.
In December 1995, the Company acquired the Landsing Pacific Portfolio,
which comprised substantially all of the real estate assets of the Landsing
Pacific Fund, Inc., a publicly-traded REIT based in San Mateo, California. The
Company paid approximately $49.7 million for the Landsing Pacific Portfolio. At
all times relevant to the transaction, Martin I. Zankel, a director and
stockholder of the Company, was Chairman of the Board of Directors, Chief
Executive Officer and President of the Landsing Pacific Fund, Inc. Mr. Zankel
had no role on behalf of the Company in this acquisition and was excused from
all Board deliberations regarding this matter.
OTHER TRANSACTIONS
<PAGE> 31
27
On June 8, 1994, Kingswood Realty Advisors, Inc. ("Kingswood") filed a
petition in the United States Bankruptcy Court for the Northern District of
California for protection from its creditors under Chapter 11 of the United
States Bankruptcy Code (the "Bankruptcy Code"). On September 8, 1994, Kingswood
converted its case to an action under Chapter 7 of the Bankruptcy Code.
Kingswood's case was closed and a final decree entered by the Court on February
2,1, 1996. Mr. Bedford was president, director and sole shareholder of
Kingswood.
Martin I. Zankel, a member of the Board of Directors of the Company,
and his associates provide legal services to the Company for which his firm was
paid, in the aggregate, $52,000 in 1995.
INDEBTEDNESS OF MANAGEMENT
In September 1995, the Company established a Management Stock
Acquisition program. Under the program, options exercised by key numbers of
management within thirty days of the grant date may be exercised either in cash
or with a note payable to the Company. Such note bears interest at 7.5% or the
Applicable Federal Rate as defined by the Internal Revenue Service, whichever is
higher. The note is due in five years or within ninety days from termination of
employment, with interest payable quarterly. During 1995, Mr. Lorenz and Mr.
Pester, both executive officers of the Company, each exercised options for
25,000 shares of Common Stock in exchange for notes payable to the Company. The
notes, of $287,500 each, bear interest at 7.5% per annum. As of March 31, 1996,
$254,593.18 and $196,308.44 in principal amount were outstanding under the notes
owed by Mr. Lorenz and Mr. Pester, respectively.
<PAGE> 32
28
OTHER INFORMATION
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, may be obtained, without charge, by writing to Jennifer
I. Mori, Secretary, Bedford Property Investors, Inc., 270 Lafayette Circle,
Lafayette, CA 94549.
OTHER MATTERS
The Board of Directors knows of no matter to be presented at the Annual
Meeting other than those set forth in the Notice of Meeting and described in
this Proxy Statement. If, however, any other business should properly come
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote in accordance with their best judgment on such matters.
<PAGE> 33
29
STOCKHOLDER PROPOSALS
Proposals of Stockholders intended to be presented at the annual
meeting of Stockholders to be held in 1997 must be received by the Company at
its principal executive offices no later than March 17, 1997 for inclusion in
the Company's Proxy Statement and form of proxy relating to that meeting. Such
proposals must meet the requirements of the rules of the Securities and Exchange
Commission relating to stockholder proposals.
By Order of the Board of Directors,
April __, 1996 ___________________________________
Jennifer I. Mori
Secretary
<PAGE> 34
PRELIMINARY COPY
(THIS PROXY IS TO BE USED BY COMMON STOCKHOLDERS ONLY)
BEDFORD PROPERTY INVESTORS, INC.
PROXY FOR 1996 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED BY MANAGEMENT
The undersigned stockholder of Bedford Property Investors, Inc., a
Maryland corporation (the "Company"), hereby appoints Jennifer I. Mori and
Donald A. Lorenz, and each of them, as proxies for the undersigned, with full
power of substitution in each of them, to attend the 1996 Annual Meeting of
Stockholders of the Company to be held on Thursday, May 16, 1996 at 1:00 p.m. at
the Lafayette Park Hotel, 3287 Mount Diablo Boulevard, Lafayette, California,
and at any adjournment(s) or postponement(s) thereof, to cast on behalf of the
undersigned all votes that the undersigned is entitled to cast at such meeting
and otherwise to represent the undersigned at the meeting, with the same effect
as if the undersigned were present. The undersigned hereby revokes any proxy
previously given with respect to such shares.
1. Election of Common Stock Directors Nominees: Claude M. Ballard;
Peter B. Bedford; Anthony M. Downs; Anthony M. Frank; Martin I.
Zankel.
/ / FOR / / AGAINST / / ABSTAIN
For all (Except Nominee(s) written below.)
- - - - - - - - - - - - - - - - - - - - -
2. Approval of the Amendment to the Company's 1992 Directors'
Stock Option Plan to increase the number of shares reserved
for issuance thereunder from 250,000 to 500,000 and change
the maximum expiration date of options granted thereunder
from five to ten years.
/ / FOR / / AGAINST / / ABSTAIN
3. Ratification of appointment by the Company's Board of Directors of
KPMG Peat Marwick LLP to serve as Company's independent auditors for
fiscal year ended December 31, 1996.
/ / FOR / / AGAINST / / ABSTAIN
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders and the accompanying Proxy Statement.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH
THE SPECIFICATIONS MADE. IF THIS PROXY IS EXECUTED BUT NO SPECIFICATION IS MADE,
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSALS
AND OTHERWISE IN THE DISCRETION OF THE PROXIES AT THE MEETING OR ANY
ADJOURNMENT(S) OR POSTPONEMENT(S) THEREOF.
/ / MARK HERE IF YOU PLAN TO ATTEND THE MEETING
Please sign exactly as name appears hereon and date. If
the shares are held jointly, each holder should sign.
When signing as an attorney, executor, administrator,
trustee, guardian or as an officer signing for a
corporation, please give full title under signature.
Dated ______________________________, 1996
_______________________________________________________
Signature
_______________________________________________________
Signature, if held jointly
Votes must be indicated by filling in X in Black or Blue ink. Sign, Date and
Return the Proxy Card Promptly Using the Enclosed Envelope.
<PAGE> 35
PRELIMINARY COPY
(THIS PROXY IS TO BE USED BY PREFERRED STOCKHOLDERS ONLY)
BEDFORD PROPERTY INVESTORS, INC.
PROXY FOR 1996 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED BY MANAGEMENT
The undersigned stockholder of Bedford Property Investors, Inc., a
Maryland corporation (the "Company"), hereby appoints Jennifer I. Mori and
Donald A. Lorenz, and each of them, as proxies for the undersigned, with full
power of substitution in each of them, to attend the 1996 Annual Meeting of
Stockholders of the Company to be held on Thursday, May 16, 1996 at 1:00 p.m. at
the Lafayette Park Hotel, 3287 Mount Diablo Boulevard, Lafayette, California,
and at any adjournment(s) or postponement(s) thereof, to cast on behalf of the
undersigned all votes that the undersigned is entitled to cast at such meeting
and otherwise to represent the undersigned at the meeting, with the same effect
as if the undersigned were present. The undersigned hereby revokes any proxy
previously given with respect to such shares.
1. Election of Preferred Stock Directors
Nominees: Thomas G. Eastman; Thomas H. Nolan, Jr.
/ / FOR / / AGAINST / / ABSTAIN
For both (Except Nominee written below)
- - - - - - - - - - - - - - - - - - - - -
The undersigned acknowledges receipt of the Notice of Annual Meeting of
Stockholders and the accompanying Proxy Statement.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH
THE SPECIFICATIONS MADE. IF THIS PROXY IS EXECUTED BUT NO SPECIFICATION IS MADE,
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR THE FOREGOING PROPOSAL
AND OTHERWISE IN THE DISCRETION OF THE PROXIES AT THE MEETING OR ANY
ADJOURNMENT(S) OR POSTPONEMENT(S) THEREOF.
/ / MARK HERE IF YOU PLAN TO ATTEND THE MEETING
Please sign exactly as name appears hereon and date. If
the shares are held jointly, each holder should sign.
When signing as an attorney, executor, administrator,
trustee, guardian or as an officer signing for a
corporation, please give full title under signature.
Dated ______________________________, 1996
_______________________________________________________
Signature
_______________________________________________________
Signature, if held jointly
Votes must be indicated by filling in X in Black or Blue ink. Sign, Date and
Return the Proxy Card Promptly Using the Enclosed Envelope.
