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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 20, 1997
REGISTRATION NO. 333-33795
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
BEDFORD PROPERTY INVESTORS, INC.
(Exact name of Registrant as specified in its charter)
--------------------------
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MARYLAND 68-0306514
(State or other jurisdiction (I.R.S. Employer
of Identification
incorporation or organization) No.)
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270 LAFAYETTE CIRCLE
LAFAYETTE, CALIFORNIA 94549
(510) 283-8910
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
--------------------------
PETER B. BEDFORD
BEDFORD PROPERTY INVESTORS, INC.
270 LAFAYETTE CIRCLE
LAFAYETTE, CALIFORNIA 94549
(510) 283-8910
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------------
COPY TO:
WILLIAM H. HINMAN, JR.
SHEARMAN & STERLING
555 CALIFORNIA STREET
SAN FRANCISCO, CALIFORNIA 94104
(415) 616-1100
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE(S) TO THE PUBLIC: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. / /
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
PURSUANT TO RULE 429 OF THE GENERAL RULES AND REGULATIONS UNDER THE
SECURITIES ACT OF 1933, THE PROSPECTUS WHICH IS A PART OF THIS REGISTRATION
STATEMENT IS A COMBINED PROSPECTUS RELATING ALSO TO REGISTRATION STATEMENT NO.
333-15233.
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PRELIMINARY PROSPECTUS DATED NOVEMBER 20, 1997
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
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BEDFORD PROPERTY INVESTORS, INC.
DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN
--------------------------
Bedford Property Investors, Inc., a Maryland corporation (the "Company"),
hereby offers participation in its Dividend Reinvestment and Stock Purchase Plan
(the "Plan"). The Plan is designed to provide the Company's stockholders and
other investors with a convenient and economical method to purchase shares of
the Company's common stock, $.02 par value per share (the "Common Stock"), and
to reinvest all or a portion of their cash dividends in additional shares of
Common Stock. Some of the significant features of the Plan are as follows:
- Participants may purchase additional shares of Common Stock by
automatically reinvesting all or a portion of their cash dividends.
- Participants may purchase additional Common Stock by making optional cash
investments of $100 to $5,000 per month or by making an initial optional
cash investment of $1,000 to $5,000. Optional cash investments in excess
of $5,000 may be made with permission of the Company.
- Participants may acquire shares of Common Stock pursuant to the Plan
without paying any commissions and may sell shares pursuant to the Plan by
paying a transaction fee of $15.00 per transaction and a trading fee of
$.12 per share.
- Common Stock will be purchased by the administrator of the Plan (the
"Administrator") directly from the Company or in open market or privately
negotiated transactions, as determined from time to time by the Company to
fulfill requirements for the Plan. At present, the Company expects that
shares usually will be purchased directly from the Company.
- Common Stock purchased directly from the Company pursuant to an optional
cash investment of more than $5,000 (with permission of the Company) may
be priced at a discount of up to 3% from recent market prices (determined
in accordance with the Plan). The discount is initially expected to be 0%,
but may be adjusted by the Company in its discretion at any time. No
discount will be available for Common Stock purchased in the open market
or in privately negotiated transactions.
- Holders of shares currently enrolled in the Company's Automatic Dividend
Reinvestment Plan will be automatically enrolled in the new Plan.
- Holders of shares in broker or nominee names may participate in the Plan,
in which case brokers or nominees will reinvest dividends and make
optional cash investments on behalf of beneficial owners.
Participation in the Plan is entirely voluntary, and participants may
terminate their participation at any time. Stockholders that do not choose to
participate in the Plan will continue to receive cash dividends, as authorized
and declared, in the usual manner.
This Prospectus relates to 2,900,000 shares of Common Stock initially
offered for purchase under the Plan.
SEE "RISK FACTORS" BEGINNING ON PAGE 20 FOR A DISCUSSION OF CERTAIN FACTORS
RELATING TO AN INVESTMENT IN THE COMMON STOCK.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The date of this Prospectus is , 1997.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements, and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed with the Commission can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's
Regional Offices at Seven World Trade Center, 13th Floor, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material also can be obtained from the Public
Reference Section of the Commission, Washington, D.C. 20549 at prescribed rates.
The Commission maintains a World Wide Web site that contains reports, proxy and
information statements and other information statements and other information
regarding registrants that file electronically with the Commission. The address
of the site is http://www.sec.gov. Such reports, proxy statements and other
information of or concerning the Company can also be inspected at the offices of
the New York Stock Exchange, 20 Broad Street, New York, New York 10005 and the
offices of the Pacific Stock Exchange at 301 Pine Street, San Francisco,
California 94104.
The Company has filed with the Commission two Registration Statements
(Registration Nos. 333-15233 and 333-33795) on Form S-3 under the Securities Act
of 1933, as amended (the "Securities Act"), with respect to the Common Stock
offered hereby (the "Registration Statements"). This Prospectus does not contain
all the information set forth in the Registration Statements, certain portions
of which have been omitted as permitted by the rules and regulations of the
Commission, and in the exhibits thereto. Statements contained in this Prospectus
as to the content of any contract or other document are not necessarily
complete, and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statements, each such
statement being qualified in all respects by such reference and the exhibits and
schedules thereto. For further information regarding the Company and the Common
Stock offered hereby, reference is hereby made to the Registration Statements
and such exhibits and schedules, which may be examined without charge at, or
copies obtained upon payment of prescribed fees from, the Commission and its
regional offices listed above.
THIS PROSPECTUS INCORPORATES BY REFERENCE DOCUMENTS WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS (WITHOUT EXHIBITS, UNLESS SUCH
EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE) ARE AVAILABLE WITHOUT
CHARGE UPON REQUEST. REQUESTS FOR DOCUMENTS SHOULD BE DIRECTED TO BEDFORD
PROPERTY INVESTORS, INC., 270 LAFAYETTE CIRCLE, LAFAYETTE, CALIFORNIA 94549,
ATTENTION: INVESTOR RELATIONS (TELEPHONE: (510) 283-8910)
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents are incorporated by reference in this Prospectus:
1. The Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996.
2. The Registrant's Current Report on Form 8-K filed on January 9, 1997.
3. The Registrant's Current Report on Form 8-K/A filed on February 4, 1997.
4. The Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 1997.
5. The Registrant's Current Report on Form 8-K filed on July 23, 1997.
6. The Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 1997.
7. The Registrant's Current Report on Form 8-K/A filed on September 19, 1997.
8. The Registrant's Current Report on Form 8-K filed on October 21, 1997.
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9. The Registrant's Current Report on Form 8-K filed on October 31, 1997.
10. The Registrant's Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1997.
11. The description of the Registrant's Common Stock set forth in the
Registrant's registration statement on Form 8-B as filed with the Commission
on July 26, 1993, under the Exchange Act.
12. The description of the Registrant's capital stock set forth under the
caption "Description of Capital Stock of the Company" in the Registrant's
Amendment No. 2 to the registration statement on Form S-3 (Registration No.
333-33643) as filed with the Commission on October 30, 1997, under the
Securities Act.
13. The description of Maryland Law and of the Registrant's Charter and Bylaws
set forth under the caption "Certain Provisions of Maryland Law and of the
Company's Charter and Bylaws" in the Registrant's Amendment No. 2 to the
registration statement on Form S-3 (Registration No. 333-33643) as filed
with the Commission on October 30, 1997, under the Securities Act.
14. The description of federal income tax considerations set forth under the
caption "Certain Federal Income Tax Considerations" in the Registrant's
registration statement on Form S-3 as filed with the Commission on August
14, 1997, under the Securities Act.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of the filing hereof and prior to the
termination of this offering shall be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from the dates of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document that also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
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SUMMARY OF THE PLAN
THE FOLLOWING SUMMARY DESCRIPTION OF BEDFORD PROPERTY INVESTORS, INC.'S (THE
"COMPANY") DIVIDEND REINVESTMENT AND STOCK PURCHASE PLAN (THE "PLAN") IS
QUALIFIED BY REFERENCE TO THE FULL TEXT OF THE PLAN WHICH IS CONTAINED HEREIN.
TERMS USED IN THE SUMMARY HAVE THE MEANINGS ATTRIBUTED TO THEM IN THE PLAN.
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PURPOSE OF PLAN................. The purpose of the Plan is to provide the Company's
stockholders and other investors with a convenient and
economical method of purchasing shares of Common Stock
and/or investing all or a portion of their cash dividends
in additional shares of Common Stock. The Plan also
provides the Company with a means of raising additional
capital through the direct sale of Common Stock.
PURCHASE PRICE.................. The Plan provides that the shares to be purchased may be
either newly issued shares acquired from the Company or
shares purchased on the open market or in privately
negotiated transactions from third parties. Under the
Plan, the purchase price for newly issued shares is the
average of the daily high and low sales prices of the
Common Stock on the New York Stock Exchange (the NYSE)
during a Pricing Period consisting of the ten Trading Days
(as defined in Question 11) preceding the Investment Date
(as defined in Question 9) (less any applicable discount),
and for shares purchased on the open market or in
privately negotiated transactions is the weighted average
price paid for such shares to third parties on the
Investment Date.
The purchase price for shares of Common Stock purchased
pursuant to a Request for Waiver (as described below) may
reflect a discount of up to 3% (the Waiver Discount) from
the market price.
TRANSACTION FEES................ Participants may acquire shares of Common Stock pursuant
to the Plan without paying any commissions and may sell
shares pursuant to the Plan by paying a transaction fee of
$15.00 per transaction and a trading fee of $.12 per
share.
PLAN LIMITATIONS................ Optional cash investments are subject to a minimum
investment of $100 and a maximum investment of $5,000 per
month. Initial optional cash investments by investors that
are not stockholders of the Company are subject to a
minimum of $1,000 and a maximum of $5,000. The $5,000 per
month maximum may be waived only pursuant to a written
request approved by the Company (Request for Waiver).
OPTIONAL CASH INVESTMENTS....... Optional cash investments made pursuant to a Request for
Waiver are not subject to a predetermined maximum limit on
the amount of the investment or on the number of shares
that may be purchased. With respect to optional cash
investments in excess of $5,000 made pursuant to a Request
for Waiver, the Company may, in its sole discretion,
establish each month a Waiver Discount and a Threshold
Price (as defined in Question 13). The Waiver Discount,
which may vary each month between 0% and 3%, will be
established by the Company after a review of current
market conditions, the level of participation, and current
and projected capital needs. The Threshold Price will be
the minimum price applicable to purchases of Common Stock
in a given month. For each Trading Day during the Pricing
Period on which the Threshold
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Price is not satisfied, one-tenth of a Participant's
optional cash investment made pursuant to a Request for
Waiver will be returned without interest.
The reinvestment of cash dividends in additional shares of
common stock is not subject to a maximum limit, but
optional cash investments that do not exceed $5,000 as
well as dividend reinvestments will not be subject to the
Waiver Discount or to the Threshold Price. However, the
Company reserves the right to grant a discount and set a
minimum price in the future for such investments or
dividend reinvestments. Optional cash investments of less
than $100 and that portion of any optional cash investment
that exceeds $5,000, unless such limit has been waived,
will be returned to the Participant without interest.
REQUEST FOR WAIVER.............. In deciding whether to approve a Request for Waiver, the
Company will consider relevant factors including, but not
limited to, whether the Plan is then acquiring newly
issued shares of Common Stock or acquiring shares through
open market purchases or privately negotiated
transactions, the Company's need for additional funds, the
attractiveness of obtaining such funds through the sale of
Common Stock under the Plan in comparison to other sources
of funds, the purchase price likely to apply to any sale
of Common Stock under the Plan, the Participant submitting
the request, including the extent and nature of such
Participant's prior participation in the Plan and the
number of shares of Common Stock held of record by such
Participant, and the aggregate amount of optional cash
investments in excess of $5,000 for which Requests for
Waiver have been submitted by all Participants. If
Requests for Waiver are submitted for any Investment Date
for an aggregate amount in excess of the amount the
Company is then willing to accept, the Company may honor
such requests in order of receipt, pro rata or by any
other method the Company determines is appropriate.
Any person who acquires shares of Common Stock through the
Plan and resells them shortly before or after acquiring
them may be considered to be an underwriter within the
meaning of the Securities Act. The Company expects that
certain persons will acquire shares of Common Stock
pursuant to a Request for Waiver and resell such shares in
order to obtain the financial benefit of any Waiver
Discount then being offered under the Plan. The Company
has no arrangements or understandings, formal or informal,
with any person relating to a distribution of shares to be
received pursuant to the Plan. See Plan of Distribution
and Underwriters.
NUMBER OF SHARES OFFERED........ Initially, 900,000 shares of Common Stock were authorized
to be issued and registered under the Securities Act for
offering pursuant to the Plan. The Company expects to
continue the Plan indefinitely, and has authorized for
issuance and registration under the Securities Act an
additional 2,000,000 shares for offering pursuant to the
Plan.
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THE PLAN
The following questions and answers explain and constitute the Company's
Dividend Reinvestment and Stock Purchase Plan, as in effect beginning April 8,
1997.
PURPOSE
1. WHAT IS THE PURPOSE OF THE PLAN? The purpose of the Plan is to provide
the Company's stockholders and other investors with a convenient and economical
method to purchase shares of Common Stock and to reinvest all or a portion of
their cash dividends in additional shares of Common Stock. In addition, the Plan
will provide the Company with a means of raising additional capital for
acquiring new properties as suitable opportunities arise, expanding and
improving certain properties in the Company's portfolio, developing new
industrial and suburban office properties, prepaying certain indebtedness and
general corporate purposes through sales of Common Stock under the Plan. Whether
significant additional capital is raised may be affected, in part, by the
Company's decision to waive the limitations applicable to optional cash
investments and, in part, by the Company's decision to sell newly issued shares
of Common Stock to fulfill the requirements of the Plan. See Question 13
regarding the Company's criteria for granting a Request for Waiver.
PARTICIPATION OPTIONS
2. WHAT OPTIONS ARE AVAILABLE UNDER THE PLAN? Registered holders or
beneficial owners of Common Stock and other interested investors may elect to
participate in the Plan (each a "Participant"). Participants may have cash
dividends on all or a portion of their shares automatically reinvested in Common
Stock. Even if they do not reinvest dividends, Participants may make optional
cash investments to purchase Common Stock, subject to a minimum investment of
$100 and a maximum investment of $5,000 per month. Interested investors that are
not stockholders of the Company may make an initial optional cash investment in
Common Stock of not less than $1,000 and not more than $5,000. In certain
instances, however, the Company may permit greater optional cash investments.
See Question 12 regarding optional cash investments and Question 13 regarding a
Request for Waiver.
BENEFITS AND DISADVANTAGES
3. WHAT ARE THE BENEFITS AND DISADVANTAGES OF THE PLAN?
BENEFITS
- The Plan provides Participants the opportunity to automatically reinvest
cash dividends on all or a portion of their Common Stock in additional
shares of Common Stock.
- In addition to reinvestment of dividends, eligible stockholders may
purchase additional shares of Common Stock pursuant to optional cash
investments of not less than $100 and not more than $5,000 per month.
Optional cash investments may be made occasionally or at regular
intervals, as the Participants desire. Participants may make optional cash
investments even if dividends on their shares are not being reinvested
under the Plan.
- Persons not presently stockholders of the Company may become Participants
by making an initial cash investment of not less than $1,000 and not more
than $5,000 (except with the consent of the Company) to purchase shares of
Common Stock under the Plan.
- Shares purchased directly from the Company under the Plan pursuant to a
Request for Waiver may be issued at a discount to the market price without
payment of brokerage commissions.
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- Initially, optional cash investments of less than $5,000 and dividend
reinvestments will not be subject to a discount, but the Company reserves
the right to grant a discount of up to 3% in the future.
- Participants may acquire shares of Common Stock pursuant to the Plan
without paying any commissions and may sell shares pursuant to the Plan by
paying nominal fees. See Question 23.
- Dividends and any optional cash investments will be fully invested because
the Plan permits fractional shares to be credited to Participants'
accounts. Dividends on whole and on fractional shares may be reinvested in
additional shares and such shares will be credited to Participants'
accounts. See Question 7.
- Participants will avoid the need for safekeeping of certificates for
shares of Common Stock credited to their Plan accounts and may submit for
safekeeping certificates held by them and registered in their name. See
Questions 15 and 16.
- Participants that are registered holders may direct the Administrator to
sell or transfer all or a portion of their shares held in the Plan. See
Question 17.
- Periodic statements reflecting all current activity in Plan accounts,
including purchases, sales and latest balances, will simplify
record-keeping for registered holders. See Question 18.
DISADVANTAGES
- Participants may not be able to depend on the availability of a market
discount regarding shares acquired under the Plan. Initially, no discount
may be established for the purchase of shares directly from the Company,
and the granting of a discount for one month will not insure the
availability of a discount or the same discount in future months. Each
month, the Company may lower or eliminate the discount without prior
notice to Participants. The Company may also, without prior notice to
Participants, change its determination as to whether Common Stock will be
purchased by the Administrator directly from the Company or in the open
market or in privately negotiated transactions from third parties
(although the Company may not effect such a change more than once in any
three-month period). See Question 13.
- Participants that reinvest cash dividends will be treated for federal
income tax purposes as having received a dividend on the dividend payment
date; such dividend may give rise to a liability for the payment of income
tax without providing Participants with immediate cash to pay such tax
when it becomes due. See Question 20.
- Participants will not know the actual number of shares purchased under the
Plan until after the Investment Date. See Question 11 regarding the timing
of the purchase of shares.
- The purchase price per share will be an average price and, therefore, may
exceed the price at which shares are trading on the Investment Date when
the shares are issued. See Questions 11 and 12 regarding the purchase
price of the shares.
- Execution of sales of shares held in the Plan may be subject to delay. See
Questions 12 and 17.
- No interest will be paid on funds held by the Company pending reinvestment
or investment. See Questions 12 and 14.
- Shares deposited in a Plan account may not be pledged until the shares are
withdrawn from the Plan. See Question 27.
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ADMINISTRATION
4. WHO WILL ADMINISTER THE PLAN? The Plan will be administered by Mellon
Bank, N.A. or such successor administrator as the Company may designate (the
"Administrator"). The Administrator acts as agent for Participants, keeps
records of the accounts of Participants, sends regular account statements to
Participants, and performs other duties relating to the Plan. Shares purchased
for each Participant under the Plan will be held by the Administrator and will
be registered in the name of the Administrator or its nominee on behalf of the
Participants, unless and until a Participant requests that a stock certificate
for all or part of such shares be issued, as more fully described in Question
15. The Administrator also serves as dividend disbursement agent, transfer
agent, and registrar for the Common Stock. Correspondence with the Administrator
should be sent to:
ChaseMellon Shareholder Services
P. O. Box 750
Pittsburgh, Pennsylvania 15230
or, if using overnight courier service:
ChaseMellon Shareholder Services
Commerce Court
4 Station Square
Third Floor
Pittsburgh, Pennsylvania 15219
or call: (800) 774-5476
PARTICIPATION
5. WHO IS ELIGIBLE TO PARTICIPATE? A "registered holder" (which means a
stockholder whose shares of Common Stock are registered in the stock transfer
books of the Company in his or her name) or a "beneficial owner" (which means a
stockholder whose shares of Common Stock are registered in a name other than his
or her name, for example, in the name of a broker, bank or other nominee) may
participate in the Plan. A registered holder may participate in the Plan
directly; a beneficial owner must either become a registered holder by having
such shares transferred into his or her name or by making arrangements with his
or her broker, bank or other nominee to participate in the Plan on the
Participant's behalf. In addition, an interested investor that is not a
stockholder may participate in the Plan by making an initial optional cash
investment in Common Stock of not less than $1,000 or more than $5,000 unless
granted a Request for Waiver (in which case such initial investment may exceed
$5,000). See Question 6 regarding enrollment and Question 13 regarding Request
for Waiver.
The right to participate in the Plan is not transferable to another person
apart from a transfer of the underlying shares of Common Stock. The Company
reserves the right to exclude from participation in the Plan persons who utilize
the Plan to engage in short-term trading activities that cause aberrations in
the trading volume of the Common Stock.
Participants residing in jurisdictions in which their participation in the
Plan would be unlawful will not be eligible to participate in the Plan.
ENROLLMENT
6. HOW DOES AN ELIGIBLE HOLDER OF COMMON STOCK OR ANY OTHER INTERESTED
INVESTOR ENROLL IN THE PLAN AND BECOME A PARTICIPANT? All holders of shares of
Common Stock that are currently enrolled in the Company's Automatic Dividend
Reinvestment Plan will automatically become Participants in the new Plan, and
their investment election will remain the same unless they submit a new
Authorization Card to the Administrator.
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Each eligible registered holder may enroll in the Plan and become a
Participant by completing and signing an Authorization Card (enclosed herein)
and returning it to the Administrator at the address set forth in Question 4. An
Authorization Card may also be obtained at any time upon request from the
Administrator at the same address. If shares are registered in more than one
name (e.g., joint tenants, trustees), all registered holders of such shares must
sign the Authorization Card exactly as their names appear on the account
registration.
Eligible beneficial owners must instruct their brokers, banks or other
nominees in whose name their shares are held to participate in the Plan on their
behalf. If a broker, bank or other nominee holds shares of beneficial owners
through a securities depository, such broker, bank or other nominee may also be
required to provide a Broker and Nominee Form (a "B/N Form") to the
Administrator in order to participate in the optional cash investment portion of
the Plan. See Question 12.
An interested investor that is not presently a stockholder of the Company,
but desires to become a Participant by making an initial investment in Common
Stock, may join the Plan by signing an Authorization Card and forwarding it,
together with such initial investment, to the Administrator at the address set
forth in Question 4. See Question 12 regarding initial optional cash
investments.
7. WHAT DOES THE AUTHORIZATION CARD PROVIDE? The Authorization Card
appoints the Administrator as the Participant's agent for purposes of the Plan
and directs the Administrator to apply to the purchase of additional shares of
Common Stock all of the cash dividends on the specified number of shares of
Common Stock owned by the Participant on the applicable Record Date and
designated by the Participant to be included in the Plan; and to reinvest
automatically cash dividends on whole and fractional shares of Common Stock that
have been credited to the Participant's account pursuant to dividend
reinvestments or optional cash investments that have been designated to be
included in the Plan. The Authorization Card also directs the Administrator to
purchase additional shares of Common Stock with any optional cash investments
that the Participant may elect to make.
The Authorization Card provides for the purchase of additional shares of
Common Stock through the following investment options:
(1) "FULL DIVIDEND REINVESTMENT"--This option directs the Administrator to
invest in accordance with the Plan all cash dividends on all whole or
fractional shares of Common Stock then or subsequently registered in the
Participant's name. This option also permits the Participant to make
optional cash investments and directs the Administrator to apply such
investments towards the purchase of additional shares of Common Stock in
accordance with the Plan.
(2) "PARTIAL DIVIDEND REINVESTMENT"--This option directs the Administrator
to invest in accordance with the Plan all cash dividends on the specified
number of whole or fractional shares of Common Stock then registered in
the Participant's name and so designated in the appropriate space on the
Authorization Card. If this option is selected, the Participant will
continue to receive cash dividends in the usual manner on all shares of
Common Stock that have not been designated for dividend reinvestment.
This option also permits the Participant to make optional cash
investments and directs the Administrator to apply such investments
towards the purchase of additional shares of Common Stock in accordance
with the Plan.
(3) "OPTIONAL CASH INVESTMENTS ONLY"--This option permits a Participant to
make optional cash investments and directs the Administrator to apply
such investments towards the purchase of additional shares of Common
Stock in accordance with the Plan. If this option is selected, unless the
Participant designates such additional shares for participation in the
dividend reinvestment feature of the Plan, the Participant will continue
to receive cash dividends on all shares of Common Stock registered in his
or her name in the usual manner, and the Administrator will apply only
optional cash investments received from the Participant towards the
purchase of additional shares of Common Stock.
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Any one of the above three options may be selected. IN EACH CASE, CASH
DIVIDENDS WILL BE REINVESTED ON ALL SHARES DESIGNATED FOR PARTICIPATION IN THE
PLAN UNTIL THE PARTICIPANT SPECIFIES OTHERWISE OR WITHDRAWS FROM THE PLAN
ALTOGETHER, OR UNTIL THE PLAN IS TERMINATED. SEE QUESTION 19 REGARDING
WITHDRAWAL FROM THE PLAN AND QUESTION 29 REGARDING TERMINATION OF THE PLAN.
ANY PARTICIPANT WHO RETURNS A PROPERLY EXECUTED AUTHORIZATION CARD TO THE
ADMINISTRATOR WITHOUT ELECTING AN INVESTMENT OPTION WILL BE ENROLLED AS HAVING
SELECTED FULL DIVIDEND REINVESTMENT.
8. WHEN WILL PARTICIPATION IN THE PLAN BEGIN? Participation as to dividend
reinvestment will commence with the next Investment Date after receipt of the
Authorization Card, provided it is received by the Administrator on or before
the Record Date for the payment of the dividend. Participation as to optional
cash investments will commence with the next Investment Date, provided the
Authorization Card and the funds to be invested are received by the close of
business on the last business day immediately preceding the first day of the
Pricing Period for the next succeeding Investment Date. See Question 9 below and
Appendix I to determine the applicable Pricing Period and Investment Date.
Should the funds to be invested arrive after the time indicated above and before
the next succeeding Investment Date, such funds will be returned to the
Participant without interest.
Eligible stockholders and other interested investors may enroll in the Plan
at any time. Once enrolled, a Participant will remain enrolled until the
Participant discontinues participation or until the Company terminates the Plan.
See Question 19 regarding withdrawal from the Plan and Question 29 regarding
termination of the Plan.
PURCHASES
9. WHEN WILL SHARES BE ACQUIRED UNDER THE PLAN? If shares are being
acquired for the Plan directly from the Company, dividends and optional cash
investments will be reinvested or invested, as the case may be, on the fifteenth
calendar day of each month (in either case, the "Investment Date"). However, if
such fifteenth calendar day falls on a date when the NYSE is closed, the
Investment Date will be the first day following such date on which the NYSE is
open.
If shares are being acquired for the Plan through open market or privately
negotiated transactions, all dividends and all optional cash investments will be
applied to the purchase of Common Stock pursuant to the Plan as soon as
practicable on or after the applicable Investment Date.
In the past, record dates for dividends on the Common Stock have preceded
the dividend payment dates by approximately two weeks. Dividend payment dates
historically have occurred on or about the 15th day of each January, April,
July, and October. This past pattern with respect to timing of dividend record
dates and payment dates is expected to be followed generally in the future.
Please see Appendix I for information with respect to Pricing Periods,
Investment Dates, Record Dates, and other market data.
Dividends are paid as and when authorized and declared by the Company's
Board of Directors. There can be no assurance as to the authorization,
declaration or payment of a dividend, and nothing contained in the Plan
obligates the Board of Directors to authorize or declare or the Company to pay
any such dividend on Common Stock. The Plan does not represent a guarantee of
future dividends.
10. WHAT IS THE SOURCE OF SHARES TO BE PURCHASED UNDER THE PLAN? All
dividends reinvested through the Plan and all optional cash investments will be
used to purchase either newly issued shares directly from the Company or shares
on the open market or in privately negotiated transactions from third parties,
or a combination of both. Shares purchased directly from the Company will
consist of authorized but unissued shares of Common Stock. The Company may,
without prior notice to Participants, change its determination as to whether
Common Stock will be purchased by the Administrator directly from the Company or
in the open market or in privately negotiated transactions from third parties
(although the Company may not effect such a change more than once in any
three-month period).
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11. AT WHAT PRICE WILL SHARES BE PURCHASED? All shares purchased directly
from the Company with reinvested dividends or optional cash investments will be
acquired at a price to the Participant of the average of the daily high and low
sales prices computed up to seven decimal places, if necessary, of the Common
Stock as reported on the NYSE for the ten Trading Days (as defined below)
immediately preceding the applicable Investment Date. A "Trading Day" means a
day on which trades in Common Stock are reported on the NYSE. The period
encompassing the first ten Trading Days immediately preceding the next following
Investment Date constitutes the relevant "Pricing Period."
All shares purchased by the Administrator from third parties will be
acquired as soon as practicable on or after the applicable Investment Date at a
price to the Participant of the weighted average purchase price for such shares,
including brokerage fees and commissions, computed up to seven decimal places,
if necessary, paid by the Administrator for the Common Stock.
Shares purchased pursuant to a Request for Waiver may be subject to a
Threshold Price and a Waiver Discount as more fully described in Question 13
below.
12. HOW ARE OPTIONAL CASH INVESTMENTS MADE? All registered holders,
including brokers, banks and nominees with respect to shares registered in their
name on behalf of beneficial owners that have submitted signed Authorization
Cards, are eligible to make optional cash investments at any time.
A broker, bank or nominee, as holder on behalf of a beneficial owner, may
utilize an Authorization Card for optional cash investments unless it holds the
shares in the name of a securities depository. In that event, the optional cash
investment must be accompanied by a B/N Form.
The B/N Form provides the sole means whereby a broker, bank or other nominee
holding shares on behalf of beneficial owners in the name of a securities
depository may make optional cash investments on behalf of such beneficial
owners. In such case, the broker, bank or other nominee must use a B/N Form for
transmitting optional cash investments on behalf of the beneficial owners. A B/N
Form must be delivered to the Administrator at the address specified in Question
4 each time that such broker, bank or other nominee transmits optional cash
investments on behalf of the beneficial owners. B/N Forms will be furnished by
the Administrator upon request.
Other interested investors that are not stockholders of the Company, but
have submitted Authorization Cards, are also eligible to make an initial
investment in Common Stock through an optional cash investment.
The Administrator will apply all optional cash investments for which good
funds are received on or before the first business day before the Pricing Period
to the purchase of shares of Common Stock on the next following Investment Date,
or if shares are acquired on the open market or in privately negotiated
transactions, as soon as practicable on or after such Investment Date.
NO INTEREST WILL BE EARNED ON OPTIONAL CASH INVESTMENTS HELD PENDING
INVESTMENT. THE COMPANY SUGGESTS THEREFORE THAT ANY OPTIONAL CASH INVESTMENT A
PARTICIPANT WISHES TO MAKE BE SENT SO AS TO REACH THE ADMINISTRATOR AS CLOSE AS
POSSIBLE TO THE FIRST BUSINESS DAY PRECEDING THE PRICING PERIOD FOR THE NEXT
FOLLOWING INVESTMENT DATE. ANY QUESTIONS REGARDING THESE DATES SHOULD BE
DIRECTED TO THE ADMINISTRATOR AT THE ADDRESS OR TELEPHONE NUMBER SET FORTH IN
QUESTION 4.
All optional cash investments received by the Administrator after the close
of business on the last business day immediately preceding the first day of the
Pricing Period and before the next succeeding Investment Date will promptly be
returned to the Participant without interest.
Participants should be aware that since investments under the Plan are made
as of specified dates, one may lose any advantage that otherwise might be
available from being able to select the timing of an investment. NEITHER THE
COMPANY NOR THE ADMINISTRATOR CAN ASSURE A PROFIT OR PROTECT AGAINST A LOSS ON
SHARES OF COMMON STOCK PURCHASED UNDER THE PLAN.
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ALL OPTIONAL CASH INVESTMENTS MADE BY CHECK SHOULD BE MADE PAYABLE TO MELLON
BANK, N.A. AND MAILED TO MELLON AT THE ADDRESS LISTED IN QUESTION 4. OTHER FORMS
OF PAYMENT, SUCH AS WIRE TRANSFERS, MAY BE MADE, BUT ONLY IF APPROVED IN ADVANCE
BY THE ADMINISTRATOR. INQUIRIES REGARDING OTHER FORMS OF PAYMENTS AND ALL OTHER
WRITTEN INQUIRIES SHOULD BE DIRECTED TO THE ADMINISTRATOR AT THE ADDRESS LISTED
IN QUESTION 4.
13. WHAT LIMITATIONS APPLY TO OPTIONAL CASH INVESTMENTS?
MINIMUM/MAXIMUM LIMITS. For any Investment Date, optional cash investments
made by stockholders of the Company are subject to a minimum of $100 and a
maximum of $5,000, and optional cash investments made by interested investors
who are not then stockholders of the Company are subject to a minimum initial
investment of $1,000 and a maximum of $5,000. See Question 9 regarding the
determination of Investment Dates for optional cash investments. Optional cash
investments of less than the allowable monthly minimum amount and that portion
of any optional cash investment that exceeds the allowable monthly maximum
amount will be returned promptly to Participants without interest, except as
noted below.
REQUEST FOR WAIVER. Optional cash investments in excess of $5,000 per month
may be made only pursuant to a Request for Waiver accepted by the Company.
Participants who wish to submit an optional cash investment in excess of $5,000
for any Investment Date must obtain the prior written approval of the Company
and a copy of such written approval must accompany any such optional cash
investment. A Request for Waiver should be directed to the Company via telephone
at (510) 299-4251. THE COMPANY HAS SOLE DISCRETION TO GRANT ANY APPROVAL FOR
OPTIONAL CASH INVESTMENTS IN EXCESS OF THE ALLOWABLE MAXIMUM AMOUNT. In deciding
whether to approve a Request for Waiver, the Company will consider relevant
factors including, but not limited to, whether the Plan is then acquiring newly
issued shares directly from the Company or acquiring shares in the open market
or in privately negotiated transactions from third parties, the Company's need
for additional funds, the attractiveness of obtaining such additional funds
through the sale of Common Stock as compared to other sources of funds, the
purchase price likely to apply to any sale of Common Stock, the Participant
submitting the request, the extent and nature of such Participant's prior
participation in the Plan, the number of shares of Common Stock held of record
by such Participant and the aggregate amount of optional cash investments in
excess of $5,000 for which Requests for Waiver have been submitted by all
Participants. If Requests for Waiver are submitted for any Investment Date for
an aggregate amount in excess of the amount the Company is then willing to
accept, the Company may honor such requests in order of receipt, pro rata or by
any other method that the Company determines to be appropriate. With regard to
optional cash investments made pursuant to a Request for Waiver, the Plan does
not provide for a predetermined maximum limit on the amount that a participant
may invest or on the number of shares that a participant may purchase.
THE COMPANY RESERVES THE RIGHT TO MODIFY, SUSPEND OR TERMINATE PARTICIPATION
IN THE PLAN BY OTHERWISE ELIGIBLE REGISTERED HOLDERS OR BENEFICIAL OWNERS OF
COMMON STOCK FOR ANY REASON WHATSOEVER, INCLUDING ELIMINATION OF PRACTICES THAT
ARE NOT CONSISTENT WITH THE PURPOSES OF THE PLAN.
THRESHOLD PRICE. The Company may establish for any Pricing Period a minimum
price (the "Threshold Price") applicable to optional cash investments made
pursuant to Requests for Waiver. At least three business days prior to the first
day of the applicable Pricing Period, the Company will determine whether to
establish a Threshold Price, and if a Threshold Price is established, its
amount, and will so notify the Administrator. This determination will be made by
the Company in its discretion after a review of current market conditions, the
level of participation in the Plan, and current and projected capital needs.
If established for any Pricing Period, the Threshold Price will be stated as
a dollar amount that the average of the high and low sale prices of the Common
Stock on the NYSE for each Trading Day of the relevant Pricing Period must equal
or exceed. In the event that the Threshold Price is not satisfied for a Trading
Day in the Pricing Period, then that Trading Day will be excluded from the
Pricing Period and all trading prices for that day will be excluded from the
determination of the Purchase Price. A day will also
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be excluded if no trades of Common Stock are made on the NYSE for that day.
Thus, for example, if the Threshold Price is not satisfied for three of the ten
Trading Days in a Pricing Period, then the purchase price will be based upon the
remaining seven Trading Days in which the Threshold Price was satisfied.
In addition, a portion of each optional cash investment will be returned for
each Trading Day of a Pricing Period in which the Threshold Price is not
satisfied or for each day in which no trades of Common Stock are reported on the
NYSE. The returned amount will equal one-tenth of the total amount of such
optional cash investment (not just the amount exceeding $5,000) for each Trading
Day that the Threshold Price is not satisfied. Thus, for example, if the
Threshold Price is not satisfied or no such sales are reported for three of the
ten Trading Days in a Pricing Period, 3/10 (i.e., 30%) of such optional cash
investment will be returned to the Participant without interest.
The establishment of the Threshold Price and the possible return of a
portion of the investment applies only to optional cash investments made
pursuant to a Request for Waiver. Setting a Threshold Price for a Pricing Period
shall not affect the setting of a Threshold Price for any subsequent Pricing
Period. For any particular month, the Company may waive its right to set a
Threshold Price. Neither the Company nor the Administrator shall be required to
provide any written notice to Participants as to the Threshold Price for any
Pricing Period. Participants may, however, ascertain whether a Threshold Price
has been set or waived for any given Pricing Period by telephoning the Company
at (510) 299-4251.
WAIVER DISCOUNT. Each month, at least three business days prior to the
first day of the applicable Pricing Period, the Company may establish a discount
from the market price applicable to optional cash investments made pursuant to a
Request for Waiver. Such discount (the "Waiver Discount") may be between 0% and
3% of the purchase price and may vary each month, but once established will
apply uniformly to all optional cash investments made pursuant to a Request for
Waiver for that month. The Waiver Discount will be established in the Company's
sole discretion after a review of current market conditions, the level of
participation in the Plan, and current and projected capital needs. Participants
may obtain the Waiver Discount applicable to the next Pricing Period by
telephoning the Company at (510) 299-4251. Setting a Waiver Discount for a
particular month shall not affect the setting of a Waiver Discount for any
subsequent month. The Waiver Discount will apply to the entire optional cash
investment and not just the portion of such investment that exceeds $5,000. The
Waiver Discount will apply only to optional cash investments of $5,000 or more,
but the Company reserves the right to establish, in the future, a discount from
the market price for reinvestment of cash dividends and optional cash
investments of $5,000 or less.
14. WHAT IF A PARTICIPANT HAS MORE THAN ONE ACCOUNT? For the purpose of the
limitations discussed in Question 13, the Company may aggregate all dividend
reinvestments and optional cash investments for Participants with more than one
account using the same social security or taxpayer identification number. For
Participants unable to supply a social security or taxpayer identification
number, their participation may be limited by the Company to only one Plan
account.
Also for the purpose of such limitations, all Plan accounts that the Company
believes to be under common control or management or to have common ultimate
beneficial ownership may be aggregated. Unless the Company has determined that
reinvestment of dividends and optional cash investments for each such account
would be consistent with the purposes of the Plan, the Company will have the
right to aggregate all such accounts and to return, without interest, within
thirty days of receipt, any amounts in excess of the investment limitations
applicable to a single account received in respect of all such accounts.
CERTIFICATES
15. WILL CERTIFICATES BE ISSUED FOR SHARE PURCHASES? All shares purchased
pursuant to the Plan will be held together in the name of the Administrator or
its nominee and credited to each individual account in "book entry" form. This
service protects against the loss, theft, or destruction of certificates
representing shares. Upon written request of a Participant or upon withdrawal of
a Participant from the Plan or upon
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termination of the Plan, the Administrator will have certificates issued and
delivered for all full shares credited to that Participant's account.
Certificates will be issued only in the same names as those enrolled in the
Plan. In no event will certificates for fractional shares be issued. See
Questions 16 and 17.
16. MAY A PARTICIPANT ADD SHARES OF COMMON STOCK TO HIS OR HER ACCOUNT BY
TRANSFERRING STOCK CERTIFICATES THAT THE PARTICIPANT POSSESSES? Any Participant
may send to the Plan for safekeeping all Common Stock certificates which such
Participant holds. The safekeeping of shares offers the advantage of protection
against loss, theft or destruction of certificates as well as convenience, if
and when shares are sold through the Plan. All shares represented by such
certificates will be kept for safekeeping in "book entry" form and combined with
any full and fractional shares then held by the Plan for the Participant.
To deposit certificates for safekeeping under the Plan, a Participant must
submit a letter of transmittal, which will be provided by the Administrator upon
request. Stock certificates and the letter of transmittal as well as all written
inquiries about the safekeeping service should be directed to the Administrator
at the address listed in Question 4.
Shares deposited for safekeeping may be withdrawn by the Participant by
submitting a written request to the Administrator.
If a Participant's total holdings fall below one share, the Administrator
will liquidate the fractional share, remit the proceeds to the Participant, less
any applicable fees, and close the Participant's Plan account.
SALE OF SHARES
17. CAN PARTICIPANTS SELL SHARES HELD UNDER THE PLAN? Participants may
request that all or a portion of the shares held in their accounts by the Plan
(including shares held for safekeeping) be sold. Following receipt of written
instructions from a Participant, the Administrator will sell, through an
independent broker or institution, those shares and will remit a check for the
proceeds of such sale, less applicable brokerage commissions, service charges
and any taxes. Prior written instructions from the Participant must be received
at least 48 hours preceding the sale. Shares will be sold at least once per week
by the Plan at then current market prices in transactions carried out through
one or more brokerage firms. This procedure for selling shares may be
particularly attractive to holders of small amounts of Common Stock because the
Plan can combine odd lots and small numbers of shares into larger blocks to be
sold, and thereby take advantage of lower brokerage costs that otherwise might
not be available to individual Participants in the sale of their shares.
REPORTS
18. WHAT REPORTS WILL BE SENT TO PARTICIPANTS IN THE PLAN? Unless a
Participant participates in the Plan through a broker, bank or nominee, each
Participant will receive from the Administrator a detailed statement of the
Participant's account following each account transaction. These detailed
statements will show total cash dividends received, total optional cash
investments received, total shares purchased (including fractional shares),
price paid per share, and total shares held in the Plan. These statements should
be retained by the Participant to determine the tax cost basis for shares
purchased pursuant to the Plan. Any Participant that participates in the Plan
through a broker, bank or nominee should contact such party for such a
statement.
WITHDRAWAL
19. HOW MAY PARTICIPANTS WITHDRAW FROM THE PLAN? A Participant may withdraw
from enrollment in the Plan by giving written notice to the Administrator, and
thereafter all cash dividends on shares owned by such Participant will be sent
to the Participant. In order to withdraw from participation prior to the usual
dividend payment dates in January, April, July or October, written notice must
be received by the Record
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Date for the payment of such dividend. Upon withdrawal, stock certificates for
any full shares can be requested in the Participant's name or, upon receipt of
written instructions, shares will be sold for the Participant. See Question 17.
Any fractional shares held in the Plan at the time of withdrawal will be
converted to cash on the basis of the then current market price of the Common
Stock.
TAXES
20. WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATING IN THE
PLAN? A Participant will be treated for federal income tax purposes as having
received a distribution in an amount equal to the fair market value of the
shares acquired with reinvested dividends pursuant to the Plan. For federal
income tax purposes, the fair market value of shares acquired with reinvested
dividends under the Plan will be equal to 100% of the average of the high and
low sale prices of Common Stock as reported on the NYSE on the Investment Date.
The fair market value on the Investment Date is likely to differ from the
purchase price. A Participant's tax basis in the dividend shares will equal the
fair market value on the Investment Date. Such distributions will be taxable as
a dividend to the extent of the Company's current or accumulated earnings and
profits. To the extent the distribution is in excess of the Company's current or
accumulated earnings and profits, the distribution will be treated first as a
tax-free return of capital, reducing the tax basis in a Participant's shares,
and the distribution in excess of a Participant's tax basis will be taxable as
gain realized from the sale of its shares.
The taxation of deemed distributions associated with optional cash purchases
is not entirely clear. The Internal Revenue Service has issued rulings that a
Participant will be treated as having received a distribution, upon the purchase
of shares with an optional cash investment, in an amount equal to the excess, if
any, of the fair market value of the shares acquired on the Investment Date over
the optional cash investment. Such shares will have a tax basis equal to the
amount of the payment plus the excess, if any, of the fair market value of the
shares purchased over the amount of the payment. The fair market value on an
Investment Date is likely to differ from the purchase price for the Pricing
Period immediately preceding the related Investment Date (which is used to
determine the number of shares acquired). Such distributions deemed to be made
will be taxable as a dividend to the extent of the Company's current or
accumulated earnings and profits. To the extent the distribution is in excess of
the Company's current or accumulated earnings and profits, the distribution will
be treated first as a tax-free return of capital, reducing the tax basis in a
Participant's shares, and the distribution in excess of a Participant's tax
basis will be taxable as gain realized from the sale of its shares.
When a Participant receives certificates for whole shares credited to the
Participant's account under the Plan, the Participant will not realize any
taxable income. However, a Participant that receives a cash adjustment for a
fraction of a share may realize a gain or loss with respect to such fraction. A
gain or loss may also be realized by the Participant whenever whole shares are
sold, either pursuant to the Participant's request, upon withdrawal from the
Plan or after withdrawal from the Plan. The amount of such gain or loss will be
the difference between the amount that the Participant realizes for the shares
or fraction of a share and the tax basis of the Participant in the shares.
A Participant's holding period for shares acquired pursuant to the Plan will
begin on the day following the Investment Date.
The foregoing is only a summary of the federal income tax consequences of
participation in the Plan and does not constitute tax advice. This summary does
not reflect every possible outcome that could result from participation in the
Plan and, therefore, Participants are advised to consult their own tax advisors
with respect to the tax consequences applicable to their particular situation.
OTHER PROVISIONS
21. WHAT HAPPENS IF A PARTICIPANT SELLS OR TRANSFERS SHARES OF STOCK OR
ACQUIRES ADDITIONAL SHARES OF STOCK? If a Participant has elected to have
dividends automatically reinvested in the Plan and subsequently sells or
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transfers all or any part of the shares registered in the Participant's name,
automatic reinvestment will continue as long as shares are registered in the
name of the Participant or held for the Participant by the Administrator or
until termination of enrollment. Similarly, if a Participant has elected the
"Full Dividend Reinvestment" option under the Plan and subsequently acquires
additional shares registered in the Participant's name, dividends paid on such
shares will automatically be reinvested until termination of enrollment. If,
however, a Participant has elected the "Partial Dividend Reinvestment" option
and subsequently acquires additional shares that are registered in the
Participant's name, dividends paid on such shares will not be automatically
reinvested under the Plan. See Question 7. Participants may, however, change
their dividend reinvestment elections by submitting new Authorization Cards.
22. HOW WILL A PARTICIPANT'S SHARES BE VOTED? For any meeting of
stockholders, each Participant will receive proxy materials in order to vote all
shares held by the Plan for the Participant's account. All shares will be voted
as designated by the Participant or may be voted in person at the meeting of
stockholders.
23. WHO PAYS THE EXPENSES OF THE PLAN? Participants will incur no brokerage
commissions or service charges in connection with the reinvestment of dividends
and in connection with all purchases made pursuant to optional cash payments
under the Plan. The Company will pay all other costs of administration of the
Plan. Additionally, Participants may elect to send the certificates for their
other shares of the Company's Stock to the Administrator for safekeeping, and
there is no fee for this service. However, Participants who request that the
Administrator sell all or any portion of their shares must pay a transaction fee
of $15.00 per transaction and a trading fee of $.12 per share to the
Administrator.
24. WHAT ARE THE RESPONSIBILITIES OF THE COMPANY OR THE ADMINISTRATOR UNDER
THE PLAN? Neither the Company nor the Administrator will be liable for any act
done in good faith or for any good faith omission to act, including, without
limitation, any claims of liability arising out of a failure to terminate a
Participant's account upon such Participant's death or adjudication of
incompetence prior to the receipt of notice in writing of such death or
adjudication of incompetence, the prices at which shares are purchased for the
Participant's account, the times when purchases are made or fluctuations in the
market value of the Common Stock. Neither the Company nor the Administrator has
any duties, responsibilities or liabilities except as expressly set forth in the
Plan or as imposed by applicable laws, including, without limitation, federal
securities laws.
The Participant should recognize that the Company cannot assure a profit or
protect against a loss on the shares purchased by a Participant under the Plan.
25. WHAT HAPPENS IF THE COMPANY ISSUES A STOCK DIVIDEND OR DECLARES A STOCK
SPLIT? Any Common Stock distributed by the Company as a result of a stock
dividend or a stock split on shares held under the Plan for a Participant will
be credited to the Participant's account, but the Administrator may curtail or
suspend any other transaction processing for a short period of time following
the record date for such action to permit the Administrator to calculate the
number of shares to be added to each account.
26. IF THE COMPANY HAS A RIGHTS OFFERING RELATED TO THE COMMON STOCK, HOW
WILL A PARTICIPANT'S ENTITLEMENT BE COMPUTED? A Participant's entitlement in a
rights offering related to the Common Stock will be based upon the number of
whole shares credited to the Participant's account. Rights based on a fraction
of a share credited to a Participant's Plan account will be sold for that
account and the net proceeds will be invested as an optional cash payment on the
next Investment Date. In the event of a rights offering, transaction processing
may be curtailed or suspended by the Administrator for a short period of time
following the record date for such action to permit the Administrator to
calculate the rights allocable to each account.
27. MAY SHARES IN A PARTICIPANT'S ACCOUNT BE PLEDGED? No shares credited to
a Participant's account may be pledged and any such purported pledge will be
void. If a Participant wishes to pledge shares, those shares must be withdrawn
from the Plan.
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28. MAY A PARTICIPANT TRANSFER ALL OR A PART OF THE PARTICIPANT'S SHARES
HELD IN THE PLAN TO ANOTHER PERSON? A Participant may transfer ownership of all
or part of his or her shares held in the Plan through gift, private sale or
otherwise, by mailing to the Administrator at the address in Question 4 a
properly executed stock assignment, along with a letter with specific
instructions regarding the transfer and both an Authorization Card and a Form
W-9 (Certification of Taxpayer Identification Number) completed by the
transferee. Requests for transfer of shares held in the Plan are subject to the
same requirements as the transfer of Common Stock certificates, including the
requirement of a medallion signature guarantee on the stock assignment. The
Administrator will provide Participants with the appropriate forms upon request.
If any stock certificates bearing a restrictive legend are contained in the
Participant's Plan account, the Administrator will comply with the provisions of
such restrictive legend before effecting a sale or transfer of such restricted
shares.
A Participant may also transfer all or a portion of his or her shares into
an account established for another person within the Plan. In order to effect
such a "book-to-book" transfer, the transferee must complete an Authorization
Card to open a new account within the Plan (See Question 7). The Authorization
Card should be sent to the Administrator along with a written request to effect
the "book-to-book" transfer indicating the number of shares to be transferred to
the new account.
29. MAY THE PLAN BE CHANGED OR TERMINATED? While the Plan is intended to
continue indefinitely, the Company reserves the right to amend, modify, suspend
or terminate the Plan at any time. Participants will be notified in writing of
any modifications made to the Plan.
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THE COMPANY
Bedford Property Investors, Inc., a Maryland corporation, is a
self-administered and self-managed equity REIT engaged in the business of
owning, managing, acquiring and developing industrial and suburban office
properties proximate to selected metropolitan areas primarily in the Western
United States. As of September 30, 1997, the Company owned and operated, either
directly or through one of its wholly-owned subsidiaries, 63 properties
aggregating approximately 5.3 million rentable square feet and comprised of 45
industrial properties (the "Industrial Properties"), 17 suburban office
properties (the "Suburban Office Properties") and one retail property (the
"Retail Property"). The Industrial Properties, the Suburban Office Properties
and the Retail Property are hereinafter referred to individually as a "Property"
and collectively as the "Properties." As of September 30, 1997, the Properties
were approximately 97% occupied by over 400 tenants. The Company's Properties
are located in Northern and Southern California, Oregon, Washington, Arizona,
Nevada, Utah, Colorado, Texas and Kansas.
The Company seeks to grow its asset base through the acquisition of
industrial and suburban office properties and portfolios of such properties, as
well as through the development of new industrial and suburban office
properties. The Company's strategy is to operate in suburban markets that are
experiencing, or are expected by the Company to experience, economic growth. The
Company also seeks markets that are subject to limitations on the development of
similar properties. The Company believes that employment growth is a reliable
indicator of future demand for both industrial and suburban office space. In
addition, the Company believes that certain supply-side constraints, such as
limited availability of undeveloped land in a market, increase a market's
potential for higher average rents over time. The Company is currently targeting
selected markets in which the Company's Properties are located as well as
selected markets in which the Company has expertise. The Company believes that
due to recent economic improvements in these markets, and related improvements
in the commercial property markets, an investment in industrial and suburban
office properties in these markets, and in particular in California, provides
the potential for attractive returns through increased occupancy levels, rents
and real estate values.
The Company is led by a professional management team who have on average
over 20 years of experience in the ownership, management, acquisition and
development of industrial and suburban office properties. Peter B. Bedford, the
Company's Chairman and Chief Executive Officer, 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 ownership, management,
acquisition and development of an aggregate of approximately 19 million square
feet of industrial, office and retail properties, as well as land in 14 states.
Until October 14, 1997, BPLP, a Delaware limited partnership beneficially
owned by an investment fund managed by AEW Capital Management was the holder of
all of the outstanding shares of the Company's Convertible Preferred Stock. On
October 14, 1997, BPLP elected to convert these shares of Convertible Preferred
Stock into 4,166,667 shares of Common Stock.
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RISK FACTORS
WHEN USED IN THIS PROSPECTUS, THE WORDS "BELIEVES," "ANTICIPATES," "EXPECTS"
AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS.
SUCH STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES WHICH COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY, INCLUDING, BUT NOT LIMITED TO, THOSE SET
FORTH BELOW. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE
FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF. THE COMPANY
UNDERTAKES NO OBLIGATION TO PUBLICLY RELEASE THE RESULTS OF ANY REVISIONS TO
THESE FORWARD-LOOKING STATEMENTS WHICH MAY BE MADE TO REFLECT EVENTS OR
CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT THE OCCURRENCE OF
UNANTICIPATED EVENTS.
In addition to the other information contained or incorporated by reference
in this Prospectus, prospective investors should carefully consider the
following factors before purchasing the Common Stock offered pursuant to the
Plan.
GEOGRAPHIC CONCENTRATION; DEPENDENCE ON CALIFORNIA ECONOMY
As of September 30, 1997, approximately 55% of the Company's total
annualized base rent was generated by its Properties located in the State of
California. As a result of this geographic concentration, the performance of the
commercial real estate markets and the local economies in various areas within
California could affect the value of such Properties and the rental income from
such Properties and, in turn, the Company's results of operations. In addition,
the geographic concentration of the Company's Properties in California in close
proximity to regions known for their seismic activity exposes the Company to the
risk that operating results could be materially affected by a significant
earthquake. See "--Risks Inherent in Real Estate Investments--Effect of
Uninsured Loss."
HISTORICAL LOSSES; POSSIBILITY OF FUTURE LOSSES
As a result of investments made under the Company's prior management team,
the Company had losses of $12.3 million, $5.5 million, $21.9 million and
$286,000 for fiscal years 1990 through 1993, respectively, before taking into
account the gain on the extinguishment of debt in 1992 and gains on sales of
investments and joint venture partnerships in 1993. Although such losses were
due in large part to investments which the Company subsequently divested, there
can be no assurance that the Company will not incur significant losses in the
future. As of September 30, 1997, the Company's consolidated balance sheet
reflected accumulated losses and distributions in excess of net income
aggregating approximately $62.5 million, resulting from the losses referred to
above and the fact that aggregate dividends to stockholders have exceeded net
income.
RISKS INHERENT IN REAL ESTATE INVESTMENTS
GENERAL
Real property investments are subject to numerous risks. The yields
available from an equity investment in real estate depend on the amount of
income generated and costs incurred by the related properties. If properties in
which the Company invests do not generate sufficient income to meet costs,
including debt service, tenant improvements, third-party leasing commissions and
capital expenditures, the Company's results of operations and ability to make
distributions to its stockholders will be adversely affected. Revenues and
values of the Company's properties may be adversely affected by a number of
factors, including the national economic climate, the local economic climate,
local real estate conditions (such as an oversupply of space or a reduction in
demand for real estate in an area), the attractiveness of the properties to
tenants, competition from other available space, the ability of the Company to
provide adequate maintenance and insurance and to cover other operating costs,
government regulations and changes in real estate, zoning or tax laws, interest
rate levels, the availability of financing and potential liabilities under
environmental and other laws. Historically, the Company has had tenants leasing
space in the Properties who occasionally have been delinquent in their payments.
Further, because the Company
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generally does not have extensive historical or financial information on the
tenants in its recently acquired Properties, there may be tenants in the
Company's recently acquired Properties who, unknown to the Company, were
delinquent in the payment of their rent in the past. As substantially all of the
Company's income is derived from rental income from real property, the Company's
results of operations and ability to make distributions to stockholders would be
adversely affected if a number of the Company's tenants or one or more of the
Company's significant tenants were unable to meet their obligations to the
Company or failed to renew their leases with the Company, or if the rental rates
upon reletting or renewal of leases were significantly lower than current rates
or if the Company were unable to lease a significant amount of space on
economically favorable terms or at all. In addition, certain significant
expenditures associated with each equity investment (such as debt service, real
estate taxes and maintenance costs) are generally not reduced when circumstances
cause a reduction in rental income from the investment. Should such events
occur, the Company's results of operations and ability to make distributions to
stockholders could be adversely affected.
LEASE EXPIRATIONS; RENEWAL OF LEASES AND RELETTING OF UNLEASED SPACE
As of September 30, 1997, leases representing 3%, 17%, 12% and 15% of the
Company's total annualized base rent were scheduled to expire during 1997, 1998,
1999 and 2000, respectively. The Company will be subject to the risk that, upon
expiration, certain of these or other leases will not be renewed, the space may
not be relet, or the terms of renewal or reletting (including the cost of
required renovations or concessions to tenants) may be less favorable than
current lease terms. In addition, the Company expects to incur costs in making
improvements or repairs to its Properties required by new or renewing tenants
and expenses associated with brokerage commissions payable in connection with
the reletting of space. Similarly, rental income may be reduced due to vacancies
resulting from lease expirations or by construction of tenant improvements
required by renewing or new tenants. If the Company is unable to promptly renew
leases or relet space or to fund expenses relating to tenant turnover, if the
terms of any such renewal or reletting are less favorable than current lease
terms, or if the expenses relating to tenant turnover are greater than expected,
the foregoing could have a material adverse effect on the Company and its
ability to make distributions to stockholders.
DEPENDENCE ON CERTAIN TENANTS
As of September 30, 1997, twenty of the Company's tenants accounted for
approximately 44% of its total annualized base rent. If the Company were to lose
any one or more of such tenants, or if any one or more of such tenants were to
declare bankruptcy or to fail to make rental payments when due, there could be a
material adverse effect on the Company and its ability to make distributions to
stockholders. See "--Bankruptcy of Tenants."
BANKRUPTCY OF TENANTS
At any time, a tenant could seek the protection of the bankruptcy laws,
which might result in the modification or termination of such tenant's lease and
cause a reduction in the cash flow of the Company. In addition, a tenant from
time to time may experience a downturn in its business which may weaken its
financial condition and result in its failure to make rental payments when due.
In the event of default by or bankruptcy of a tenant, the Company may experience
delays in enforcing its rights as lessor and may incur substantial costs in
protecting its investment. The default, bankruptcy or insolvency of a major
tenant may have an adverse effect on the Company and its ability to make
distributions to stockholders. Moreover, a substantial number of the Company's
tenants are professionals or small- or medium-sized businesses, which are
generally more susceptible to the foregoing risks than are large,
well-capitalized enterprises.
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RISKS ASSOCIATED WITH REAL ESTATE ACQUISITION AND DEVELOPMENT
The Company intends to actively seek to acquire industrial and suburban
office properties and portfolios of such properties, which may include the
acquisition of other companies and business entities owning such properties.
Although the Company will engage in due diligence with respect to each new
acquisition, there can be no assurance that the Company will be aware of all
potential liabilities and problems associated with such properties, and the
Company may have limited contractual recourse, or no contractual recourse,
against the sellers of such properties. In that regard, the Company only
recently acquired a number of its Properties, and there can be no assurance that
the Company is aware of all potential liabilities and problems associated with
these recently acquired Properties. Moreover, it is likely that in the future,
the majority of the Company's properties and portfolios of properties will be
acquired on an "as is" basis, with limited recourse against the sellers. In
addition, acquisitions of new properties entail risks that the investments will
fail to perform in accordance with expectations, and estimates of the costs of
improvements to bring an acquired property up to the Company's standards, and
standards established for the market position intended for that property, may
prove inaccurate. To the extent that the Company acquires properties with
substantial vacancies (as it has in the past), there is a risk that the Company
will be unable to lease vacant space in a timely manner or at all, and that the
costs of obtaining tenants (such as tenant improvements, lease concessions and
brokerage commissions) could prove more costly than anticipated.
The Company will be subject to a number of risks relating to the development
of any industrial and suburban office property projects it decides to develop,
including the risks that financing for such development may not be available on
favorable terms, that a project may not be completed or may not be completed on
schedule or for the amount planned (resulting in increased debt service expense
and construction costs) and that newly constructed properties may not be leased
on profitable terms or at all. Timely construction may be adversely affected by
the failure to obtain governmental permits, by environmental matters, by local
or national strikes and by local or national shortages in building materials or
supplies or fuel for equipment. Any of the foregoing could adversely affect the
Company and its ability to make distributions to stockholders.
EFFECT OF UNINSURED LOSS
The Company currently carries general liability coverage with primary limits
of $1 million per occurrence and $2 million in the aggregate, as well as a $20
million umbrella liability policy. The Company carries property insurance on a
replacement value basis covering both the cost of direct physical damage and the
loss of rental income. Separate flood and earthquake insurance is provided with
an annual aggregate limit of $10 million, subject to varying deductibles of 5%
to 10% of total insurable value per building with respect to earthquake
coverage. Certain types of losses, however (such as losses due to acts of war,
nuclear accidents or pollution), may be either uninsurable or not economically
insurable. Likewise, certain losses could exceed the limits of the Company's
insurance policies or could cause the Company to bear a substantial portion of
those losses due to deductibles under those policies. Should an uninsured loss
occur, the Company could lose both its invested capital in and anticipated cash
flow from the property and would continue to be obligated to repay any
outstanding indebtedness incurred to acquire such property. In addition, a
majority of the Properties are located in areas that are subject to earthquake
activity. Although the Company has obtained earthquake insurance policies for
all of its Properties, should one or more Properties sustain damage as a result
of an earthquake, the Company may incur substantial losses up to the amount of
the deductible under its earthquake policy and, additionally, to the extent that
the damage exceeds the policy's maximum coverage. Although the Company has
obtained owner's title insurance policies for each of the Properties, the title
insurance may be in an amount less than the current market value of certain of
the Properties. If a title defect results in a loss that exceeds insured limits,
the Company could lose all or part of its investment in, and anticipated gains
(if any) from, such Property.
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SUBSTANTIAL INCREASE IN DIVIDEND REQUIREMENTS; POSSIBLE INABILITY TO SUSTAIN
DIVIDENDS
Any new shares of Common Stock issued pursuant to the Plan will further
substantially increase the cash required to continue to pay cash dividends at
current levels. Any Common Stock or preferred stock that may in the future be
issued to finance acquisitions, upon exercise of stock options or otherwise,
would have a similar effect. See "--Shares Available for Future Sale." The
Company's ability to pay dividends will depend in large part on the performance
of its Properties and other properties that it may acquire in the future. In
addition, the Company's existing credit facility (the "Credit Facility") places
certain limitations on the Company's ability to pay quarterly dividends to
stockholders. The Company is currently renegotiating these and other provisions
in its Credit Facility, although there can be no assurance that such
renegotiations will result in the Company acquiring additional flexibility in
its ability to pay dividends.
In addition, the Company's ability to pay dividends is based upon a number
of uncertainties. In particular, the Company only recently acquired a number of
its Properties and, therefore, has a limited operating history with respect to
those Properties. The Company's ability to pay dividends depends in large part
upon whether these recently acquired Properties, as well as the Company's other
Properties and future acquisitions, perform in accordance with expectations.
Likewise, the Company's ability to pay dividends will depend upon, among other
things, occupancy levels at its Properties, its ability to enter into new leases
upon expiration of current leases and costs associated with the renewal or
reletting of space, expenditures with respect to existing and newly acquired
Properties, the amount of its debt and the interest rate thereon, default or
bankruptcy by tenants, and other costs relating to its Properties, as well as
the continued absence of significant expenditures relating to environmental or
other regulatory matters. Most of these matters are beyond the control of the
Company and it is unlikely that the Company's expectations with respect to these
matters will prove accurate in all respects. A significant difference between
such expectations and actual results could have a material adverse effect on the
Company and its ability to pay dividends.
The Company's ability to pay dividends on the Common Stock is further
limited by the laws of Maryland, its state of incorporation. Under the Maryland
General Corporate Law, as amended (the "MGCL"), a Maryland corporation may not
make a distribution if, after giving effect to such distribution, either (i) the
corporation would not be able to pay indebtedness of the corporation as such
indebtedness becomes due in the usual course of business or (ii) the
corporation's total assets would be less than the sum of the corporation's total
liabilities plus (unless the corporation's charter provides otherwise, which the
Company's charter (the "Charter") does with respect to dividends but does not
with respect to distributions by redemption or other acquisition of shares or
otherwise) the amount that would be needed, if the corporation were to be
dissolved at the time of distribution, to satisfy the preferential rights upon
dissolution of stockholders whose preferential rights are superior to those
receiving the distribution. Thus, the Company cannot make a distribution, except
by dividend, on the Common Stock if, after giving effect to the distribution,
the Company's total assets would be less than the sum of the Company's
liabilities plus the amount that would be needed to satisfy the preferential
rights upon dissolution of the holders of any shares of preferred stock then
outstanding if the Company were to be dissolved at the time of the distribution.
TAX RISKS; RISKS ASSOCIATED WITH REIT STATUS
ADVERSE CONSEQUENCES OF THE FAILURE TO MAINTAIN QUALIFICATION AS A REIT
The Company believes that it has operated so as to qualify as a REIT under
the Internal Revenue Code of 1986, as amended (the "Code"), commencing with the
taxable year 1985. However, no assurance can be given that the Company will be
able to continue to operate in a manner enabling it to remain so qualified or
that it will not be found to have failed to qualify as a REIT for a prior tax
year. In that regard (as discussed below), it is uncertain whether the Company
properly requested written statements from certain stockholders for tax year
1993 as required by the regulations issued by the United States Treasury
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Department (the "Treasury Regulations") under the Code. Qualification as a REIT
involves the application of highly technical and complex Code provisions which
have only a limited number of judicial and administrative interpretations, and
the determination of various factual matters and circumstances not entirely
within the Company's control may have an impact on its ability to maintain its
qualification as a REIT. For example, in order to qualify as a REIT, at least
95% of the Company's gross income in any year must be derived from qualifying
sources and the Company must make distributions to stockholders aggregating
annually at least 95% of its REIT taxable income (excluding net capital gains).
In addition, no assurance can be given that new legislation, Treasury
Regulations, administrative interpretations or court decisions will not
significantly change the tax laws with respect to the Company's qualification as
a REIT or the federal income tax consequences of such qualification. The
Company, however, is not aware of any proposal to amend the tax laws that would
significantly and adversely affect the Company's ability to continue to operate
as a REIT.
As a condition to maintaining its status as a REIT, the Code, and the
Treasury Regulations promulgated thereunder, contain a requirement (the "Five or
Fewer Requirement") that, during the last half of each taxable year, not more
than 50% in value of the REIT's outstanding stock be owned, directly or
indirectly, by five or fewer individuals (defined in the Code to include certain
entities). For purposes of the Five or Fewer Requirement, the Code generally
permits a look-thru rule that treats shares of stock in a REIT held by certain
tax-exempt entities as held directly by their beneficiaries. In order to
determine if a REIT satisfies the Five or Fewer Requirement, the Treasury
Regulations require a REIT to request written statements concerning the
ownership of its capital stock from certain stockholders of record (the
"Stockholder Polling Requirements"). For tax year 1993 (and possibly for certain
prior years which tax counsel referred to below believes are outside the normal
period for federal tax audit), it is uncertain whether the Company properly
requested the written statements required by the Stockholder Polling
Requirements from certain clearing organizations holding Common Stock as
nominees for the beneficial owners of such shares. However, the Company did
employ stockholder polling procedures for tax year 1993 which it believes went
beyond what is required by the Treasury Regulations under the Code in providing
stockholder ownership information for purposes of determining whether the
Company had satisfied the Five or Fewer Requirement. In that regard, the Company
has received an opinion of Shearman & Sterling, counsel to the Company, to the
effect that, based on various assumptions and factual representations made by
the Company, the Company has not, by virtue of the Stockholder Polling
Requirements, failed to qualify as a REIT with respect to tax year 1993.
However, such opinion is not binding on the Internal Revenue Service (the
"IRS"). If the IRS were to successfully challenge such compliance, the Company
would lose its status as a REIT as of the first taxable year in which it was
considered not to have complied with such requirements.
If the Company fails to maintain its qualification as a REIT, or is found
not to have qualified as a REIT for any prior year, the Company would not be
entitled to deduct dividends paid to its stockholders and would be subject to
federal income tax (including any applicable alternative minimum tax) on its
taxable income at regular corporate rates. In addition, unless entitled to
relief under certain statutory provisions, the Company would also be
disqualified from treatment as a REIT for the four taxable years following the
year during which qualification was lost. This treatment would reduce amounts
available for investment or distribution to stockholders because of the
additional tax liability to the Company for the year or years involved. In
addition, the Company would no longer be required by the Code to make any
distributions. As a result, disqualification of the Company as a REIT could have
a material adverse effect on the Company and its ability to make distributions
to stockholders. To the extent that distributions to stockholders have been made
in anticipation of the Company's qualifying as a REIT, the Company might be
required to borrow funds or to liquidate certain of its investments to pay the
applicable tax.
EFFECT OF DISTRIBUTION REQUIREMENTS
To maintain its status as a REIT, the Company is required each year to
distribute to its stockholders at least 95% of its taxable income (excluding net
capital gains). In addition, the Company is subject to a 4%
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nondeductible excise tax on the amount, if any, by which certain distributions
paid by it with respect to any calendar year are less than the sum of 85% of its
ordinary income and 95% of its capital gain net income for the calendar year
plus any amount of such income not distributed in prior years. Although the
Company anticipates that cash flow from operations will be sufficient to enable
it to pay its operating expenses and meet the distribution requirements
discussed above, there can be no assurance that this will be the case and it may
be necessary for the Company to incur borrowings or otherwise obtain funds to
satisfy the distribution requirements associated with maintaining its
qualification as a REIT. In addition, differences in timing between the receipt
of income and the payment of expenses in arriving at taxable income of the
Company could require the Company to incur borrowings or otherwise obtain funds
to meet the distribution requirements that are necessary to maintain its
qualification as a REIT. There can be no assurance that the Company will be able
to borrow funds or otherwise obtain funds if and when necessary to satisfy such
requirements.
TRANSFER AND OWNERSHIP LIMITATIONS
For the purpose of preserving the Company's REIT qualification, the
Company's Charter provides that no holder is permitted to own, either actually
or constructively under the applicable attribution rules of the Code, more than
5% (in value) of the aggregate outstanding shares of all classes of stock of the
Company or more than 5% (in number or value, whichever is more restrictive) of
the outstanding shares of Common Stock, with certain exceptions. In addition, no
holder is permitted to own, either actually or constructively under the
applicable attribution rules of the Code, any shares of any class of the
Company's stock if such ownership would cause more than 50% in value of the
Company's outstanding stock to be owned by five or fewer individuals, would
result in the Company's stock being beneficially owned by less than 100 persons
(determined without reference to any rule of attribution) or would otherwise
result in the Company's failure to qualify as a REIT. Acquisition or ownership
(actual or constructive) of the Company's stock in violation of these
restrictions results in automatic transfer of such stock to a trust for the
benefit of a charitable beneficiary or, under certain specified circumstances,
the violative transfer may be deemed void ab initio or the Company may choose to
redeem the violative shares. Mr. Bedford and BPLP are subject to higher
ownership limitations than the other stockholders. Specifically, Mr. Bedford is
not permitted to own more than 15% of the lesser of the number or value of the
outstanding shares of Common Stock and BPLP is not permitted to own more than
58% of the lesser of the number or value of the outstanding shares of Common
Stock.
The constructive ownership rules are complex and may cause Common Stock
owned beneficially or constructively by a group of related individuals and/or
entities to be constructively owned by one individual or entity. As a result,
the acquisition of less than 5% of the number or value of outstanding Common
Stock (or the acquisition of an interest in an entity which owns Common Stock)
by an individual or entity could cause that individual or entity (or another
individual or entity) to constructively own Common Stock in excess of the limits
described above, and thus subject such stock to the ownership restrictions in
the Charter.
DEPENDENCE ON KEY PERSONNEL
The Company is highly dependent on the efforts of its senior officers, and
in particular Peter B. Bedford, its Chairman and Chief Executive Officer. While
the Company believes that it could find replacements for these key personnel,
the loss of their services could have a material adverse effect on the Company.
In addition, the Credit Facility provides that it is an event of default
thereunder if Mr. Bedford ceases for any reason to be the Chairman or Chief
Executive Officer of the Company and a replacement reasonably satisfactory to
the lenders thereunder has not been appointed by the Board of Directors within
six months thereafter. Mr. Bedford and the Company have entered into an amended
employment agreement pursuant to which Mr. Bedford has agreed to serve as
Chairman of the Board and Chief Executive Officer on a substantially full-time
basis until the agreement's expiration on September 18, 2000. This agreement
will be automatically renewed for additional consecutive one-year terms unless
either party gives the other notice of non-renewal.
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COMPETITION
Numerous industrial and suburban office properties compete with the
Company's Properties in attracting tenants. Some of these competing properties
are newer, better located or better capitalized than the Company's Properties.
Many of the Company's investments, particularly the Suburban Office Properties,
are located in markets which have a significant supply of available space,
resulting in intense competition for tenants and lower rents. The number of
competitive properties in a particular area could have a material adverse effect
on the Company's ability to lease space in the Properties or at newly acquired
or developed properties. In addition, numerous real estate companies (including
other REITs) compete with the Company in making bids to acquire new properties.
Many of these companies are larger and have substantially greater financial
resources than the Company. The activities of these competitors could cause the
Company to pay a higher purchase price for a new property than it otherwise
would have paid, or may prevent the Company from purchasing a desired property
at all.
REGULATORY COMPLIANCE
ENVIRONMENTAL MATTERS
Under various federal, state and local laws, ordinances and regulations, an
owner or operator of real estate is liable for the costs of removal or
remediation of certain hazardous or toxic substances released on, above, under
or in such property. Such laws often impose such liability without regard to
whether the owner knew of, or was responsible for, the presence of such
hazardous or toxic substances. The costs of such removal or remediation could be
substantial. Additionally, the presence of such substances, or the failure to
properly remediate such substances, may adversely affect the owner's ability to
borrow using such real estate as collateral. All of the Properties have had
Phase I environmental site assessments (which involve inspection without soil
sampling or groundwater analysis) by independent environmental consultants and
have been inspected for hazardous materials as part of the Company's acquisition
inspections. None of the Phase I assessments has revealed any environmental
conditions requiring material expenditures for remediation. The Phase I
assessment for Milpitas Town Center indicates that the groundwater under that
Property either has been, or may in the future be, impacted by the migration of
contaminants originating off-site. According to information available to the
Company, the responsible party for this off-site source has been identified and
has begun remediation pursuant to a cleanup program mandated by a California
environmental authority and the cleanup program is backed by an insurance policy
from CIGNA up to $10 million. The Company does not believe that this
environmental matter will impair the future value of Milpitas Town Center in any
significant respect, or that the Company will be required to fund any portion of
the cost of remediation, although there can be no assurance in this regard. No
assurance can be given that these Phase I assessments or the Company's
inspections have revealed all environmental liabilities and problems relating to
its Properties.
Certain environmental laws impose liability on a previous owner of property
to the extent that hazardous or toxic substances were present during the prior
ownership period. A transfer of the property does not relieve an owner of such
liability. Thus, the Company may be liable in respect of properties and joint
venture interests previously sold or otherwise divested.
The Company believes that it is in compliance in all material respects with
all federal, state and local laws regarding hazardous or toxic substances. To
date, compliance with federal, state and local environmental protection
regulations has not had a material effect upon the Company. However, there can
be no assurance that costs of investigating and remediating environmental
matters with respect to properties currently or previously owned by the Company
or properties which the Company may acquire in the future, or other expenditures
or liabilities (including claims by private parties) resulting from hazardous
substances present in, on, under or above such properties or resulting from
circumstances or other actions or claims relating to environmental matters, will
not have a material adverse effect on the Company and its ability to make
distributions to stockholders.
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AMERICANS WITH DISABILITIES ACT COMPLIANCE; GOVERNMENT REGULATION; RISK OF
INCREASED REGULATORY COMPLIANCE COSTS
Under the Americans with Disabilities Act (the "ADA"), effective in 1992,
all public accommodations and commercial facilities are required to meet certain
federal requirements related to access and use by disabled persons. Compliance
with the ADA requires removal of access barriers, and noncompliance may result
in imposition of fines by the U.S. government or an award of damages to private
litigants. Although the Company believes that the Properties are substantially
in compliance with these requirements, the Company may in the future incur costs
to comply with the ADA with respect to both existing Properties and properties
which may be acquired in the future, which could have an adverse effect on the
Company and its ability to make distributions to stockholders.
The Properties are, and properties which the Company may acquire in the
future will be, subject to various other federal, state and local regulatory
requirements such as local building codes and other similar regulations. Failure
to comply with these requirements could result in the imposition of fines by
governmental authorities or awards of damages to private litigants. The Company
believes that the Properties are currently in substantial compliance with all
applicable regulatory requirements, although expenditures at properties owned by
the Company may be required to comply with changes in these laws. No material
expenditures are contemplated at this time in order to comply with any such laws
or regulations; however, there can be no assurance that these requirements will
not be changed or that new requirements will not be imposed that would require
significant unanticipated expenditures by the Company, which could have an
adverse effect on the Company and its ability to make distributions to
stockholders. Similarly, changes in laws increasing the potential liability for
environmental conditions existing on the Properties may result in significant
unanticipated expenditures, which could adversely affect the Company and its
ability to make distributions to stockholders.
RISKS OF DEBT FINANCING
DEPENDENCE ON CREDIT FACILITY AND MORTGAGE FINANCING
The Credit Facility, which as of September 30, 1997 had an outstanding
balance of $97.6 million, permits the Company to borrow and issue letters of
credit thereunder. Borrowings under the Credit Facility bear interest at a
floating rate and the Company may from time to time incur or assume other
indebtedness which bears interest at a floating rate. In the event of interest
rate increases, the Company's results of operations may be adversely affected.
In that regard, the Company's results of operations for the last several years
have benefitted from historically low levels of interest rates and could be
adversely affected by a rise in interest rates. As of September 30, 1997, the
Credit Facility was secured by mortgages on 32 Properties (which Properties
collectively accounted for approximately 50% of the Company's annualized base
rent as of September 30, 1997), along with the rental proceeds from such
Properties. As of September 30, 1997, these 32 properties comprised
approximately 44% of the Company's total assets. In addition, during 1997, the
Company obtained mortgage loans which, as of September 30, 1997 were in the
aggregate principal amount of $60.5 million. As of September 30, 1997, these
mortgage loans were collateralized by 17 Properties (which Properties
collectively accounted for approximately 28% of the Company's annualized base
rent as of September 30, 1997). As of September 30, 1997, these 17 Properties
comprised approximately 22% of the Company's total assets. The Company is
currently under negotiations to restructure its Credit Facility as an unsecured
line, although there can be no assurance that such renegotiations will prove
successful. If the Company fails to meet its obligations under the Credit
Facility or the aforementioned mortgage loans, or any other debt instruments it
may enter into from time to time, including failure to comply with financial
covenants, the holders of such indebtedness generally would be entitled to
demand immediate repayment of the principal thereof and to foreclose upon any
collateral securing such indebtedness.
26
<PAGE>
The Credit Facility currently expires on June 1, 2000, when the principal
amount of all outstanding borrowings must be paid. Since the term of the Credit
Facility is limited, the Company's ability to continue to fund acquisitions and
provide funds for working capital and other cash needs following the expiration
or utilization of the Credit Facility will depend primarily on its ability to
obtain additional private or public equity or debt financing.
The Company is subject to the risks normally associated with debt financing,
including the risk that the Company's cash flow from operations will be
insufficient to meet required payments of principal and interest, the risk that
the Company will not be able to refinance existing indebtedness or that the
terms of any such refinancing will not be as favorable as the terms of such
indebtedness, and the risk that the Company may be unable to finance future
acquisitions or capital expenditures on favorable terms, or at all. In addition,
the Company is subject to the risk that its failure to maintain its REIT status
may constitute an event of default under the Credit Facility. In addition, the
Credit Facility provides that it is an event of default thereunder if Mr.
Bedford ceases for any reason to be Chairman or Chief Executive Officer of the
Company and a replacement reasonably satisfactory to the lender under the Credit
Facility has not been appointed by the Board of Directors within six months
thereafter. See "--Dependence on Key Personnel." In addition, default under or
acceleration of any debt instrument could, pursuant to cross-default clauses,
cause or permit the acceleration of other indebtedness. Any such default or
acceleration could have a material adverse effect on the Company and its ability
to make distributions to stockholders and to maintain its qualification as a
REIT under the Code and could threaten the continued viability of the Company.
POLICIES ON INDEBTEDNESS SUBJECT TO CHANGE
The Company currently has a policy of limiting its total consolidated
indebtedness to 50% of the aggregate market value of the outstanding shares of
Common Stock plus the total consolidated indebtedness of the Company. The
organizational documents of the Company, however, do not contain any limitation
on the amount or percentage of indebtedness the Company may incur. Accordingly,
the Board of Directors could alter its policy of limiting the extent of its
borrowing. If this policy were changed, the Company could become more highly
leveraged, resulting in an increase in debt service that could adversely affect
the Company and its ability to make distributions to stockholders and in an
increased risk of default on its obligations. Moreover, although the Company
will consider factors other than market capitalization in making decisions
regarding the incurrence of debt (such as the purchase price of properties to be
acquired with debt financing, the estimated market value of properties upon
refinancing, and the ability of particular properties and the Company as a whole
to generate cash flow to cover expected debt service), there can be no assurance
that the aforementioned ratio will be such that the Company, after meeting debt
service obligations thereon, would be able to continue to make stockholder
distributions at current levels.
REGISTRATION RIGHTS
Pursuant to a registration rights agreement, Mr. Bedford has the right to
require the Company to register up to 250,000 shares under the Securities Act
for offer and sale to the public (including by way of an underwritten public
offering) and to cause such shares to be included in any registration statement
filed by the Company. The right of Mr. Bedford to register shares of Common
Stock and sell them in the public market could have a material adverse effect on
both the market price for the Common Stock and the Company's ability to raise
additional equity capital in the future. See "--Shares Available for Future
Sale."
EFFECT OF MARKET INTEREST RATES ON PRICE OF COMMON STOCK
One of the factors that will influence the market price of the shares of
Common Stock in public markets will be the annual yield on the price paid for
shares of Common Stock from distributions by the Company. An increase in market
interest rates may lead prospective purchasers of the Common Stock to
27
<PAGE>
seek a higher annual yield from their investments. Such circumstances may
adversely affect the market price of the Common Stock.
CONCENTRATION OF VOTING POWER
As of November 15, 1997, BPLP was the beneficial owner of 4,166,667 shares
of Common Stock of the Company, representing approximately 19.3% of the
outstanding shares of Common Stock at that date. In addition, as of November 15,
1997, Mr. Bedford may be deemed to have been the beneficial owner of 1,011,663
shares of Common Stock of the Company (including then-exercisable options to
purchase 101,250 shares and 50,000 shares owned by the Grindstone Trust, as to
which Mr. Bedford disclaims beneficial ownership), representing approximately
4.7% of the outstanding shares of Common Stock at that date. While BPLP and Mr.
Bedford do not individually or in the aggregate have majority control of the
Company, they both currently have, and likely will continue to have, significant
influence with respect to the election of directors and approval or disapproval
of significant corporate actions.
EXEMPTION FROM THE MARYLAND BUSINESS COMBINATION LAW
Under the MGCL, certain "business combinations" (including certain issuances
of equity securities) between a Maryland corporation and any person who
beneficially owns 10% or more of the voting power of the corporation's shares or
an affiliate of the corporation who, at any time within the two-year period
prior to the date in question, was the beneficial owner of 10% or more of the
voting power of the then-outstanding voting stock of the corporation (an
"Interested Stockholder") or an affiliate thereof are prohibited for five years
after the most recent date on which the Interested Stockholder becomes an
Interested Stockholder. Thereafter, all such business combinations must be
approved by two super-majority votes of the stockholders unless, among other
conditions, the corporation's common stockholders receive a minimum price (as
defined in the MGCL) for their shares and the consideration is received in cash
or in the same form as previously paid by the Interested Stockholder for its
common shares. Mr. Bedford and BPLP currently beneficially own more than 10% of
the Company's voting shares and would, therefore, be subject to the business
combination provisions of the MGCL. However, as permitted by the MGCL, the Board
of Directors has elected to exempt any business combination with any person from
these provisions of the MGCL. Consequently, unless such exemption is amended or
repealed by the Board of Directors, the five-year prohibition and the
super-majority vote requirements described above will not apply to any business
combination between any Interested Stockholder and the Company. As a result, the
Company may in the future enter into business combinations with Mr. Bedford,
BPLP or other Interested Stockholders, without compliance by the Company with
the super-majority vote requirements and other provisions of the statute. The
exemption from these provisions may be amended or repealed by the Board of
Directors at any time.
ANTI-TAKEOVER EFFECT OF CERTAIN PROVISIONS OF THE CHARTER, THE BYLAWS AND
MARYLAND LAW
The Company's Charter authorizes the Board of Directors to cause the Company
to issue additional shares of Common Stock, Preferred Stock, Convertible
Preferred Stock and to set the preferences, rights and other terms of such
preferred stock without the approval of the holders of the Common Stock.
Although the Board of Directors has no intention to issue any shares of
Preferred Stock at the present time, it may establish one or more series of
Preferred Stock that could, depending on the terms of such series, delay, defer
or prevent a change in control of the Company or other transaction that may be
in the best interests of the stockholders.
The Charter contains other provisions that may delay, defer or prevent a
transaction or a change in control of the Company that might involve a premium
price for the holders of the Common Stock or otherwise be in the best interests
of the stockholders or that could otherwise adversely affect the interests of
the holders of the Common Stock, and the Bylaws may be amended by the Board of
Directors to include provisions that would have a similar effect, although the
Board presently has no such intention. The
28
<PAGE>
Charter contains provisions limiting the transferability and ownership of shares
of the stock of the Company, which may have the effect of delaying, deferring or
preventing a transaction or a change in control of the Company that might
involve a premium price for the holders of the Common Stock or otherwise be in
their best interests or that could have dividend, voting or other rights that
could adversely affect the interests of holders of Common Stock.
Although, as described above in "--Exemption from the Maryland Business
Combination Law," the Board of Directors has elected to exempt the Company from
the "business combination" provisions of the MGCL, such exemption may be amended
or repealed by the Board of Directors at any time. Such action by the Board of
Directors would impose the "business combination" restrictions of the MGCL on
Interested Stockholders, which could delay, defer or prevent a transaction or
change in control of the Company that might involve a premium price for the
Company's stock or otherwise be in the best interests of the stockholders or
that could otherwise adversely affect the interests of the stockholders.
In addition, the MGCL restricts the voting rights of shares deemed to be
"control shares." Under the MGCL, "control shares" are those which, when
aggregated with any other shares held by the acquiror, entitle the acquiror to
exercise voting power within specified ranges. Although the Bylaws provide that
the control share provisions of the MGCL shall not apply to any acquisition by
any person of shares of stock of the Company, such provision of the Bylaws may
be amended or eliminated by the Board of Directors at any time in the future.
Moreover, any such amendment or elimination of such provision of the Bylaws may
result in the application of the control share provisions of the MGCL not only
to control shares which may be acquired in the future, but also to control
shares previously acquired. The control share provisions of the MGCL could
delay, defer or prevent a transaction or change in control of the Company that
might involve a premium price for the Company's stock or otherwise be in the
best interests of the stockholders or that could otherwise adversely affect the
interests of the stockholders.
SHARES AVAILABLE FOR FUTURE SALE
No prediction can be made as to the effect, if any, that future sales of
shares of Common Stock, or the availability of such shares for future sales,
will have on the market price of the Common Stock prevailing from time to time.
Sales of substantial amounts of Common Stock, or the perception that such sales
could occur, may adversely affect the prevailing market price for the Common
Stock.
CHANGES IN POLICIES
The major policies of the Company, including its policies with respect to
maintaining its qualification as a REIT and with respect to dividends,
acquisitions, debt and investments, are established by the Board of Directors.
Although it has no present intention to do so, the Board of Directors may amend
or revise these and other policies from time to time without a vote of or notice
to the stockholders of the Company. Accordingly, holders of the shares of Common
Stock will have no control over changes in policies of the Company, including
any policies relating to the payment of dividends or to maintaining
qualification as a REIT.
USE OF PROCEEDS
The Company will use the net cash proceeds from the issuance of shares of
Common Stock pursuant to the Plan to acquire new properties as suitable
opportunities arise, to expand and improve certain properties in the Company's
portfolio, to develop new industrial and suburban office properties, to repay
certain indebtedness and for general corporate purposes. Pending application of
any net proceeds, the Company will invest such proceeds in interest-bearing
accounts and short-term, interest-bearing securities, which are consistent with
the Company's intention to continue to qualify for taxation as a REIT. Such
investments may include, for example, government and governmental agency
securities, certificates of deposit and interest-bearing bank deposits.
29
<PAGE>
PLAN OF DISTRIBUTION AND UNDERWRITERS
Pursuant to the Plan, the Company may be requested to approve optional cash
investments in excess of the allowable maximum amounts pursuant to Requests for
Waiver on behalf of Participants that may be engaged in the securities business.
In deciding whether to approve such a request, the Company will consider
relevant factors including, but not limited to, whether the Plan is then
acquiring newly issued shares of Common Stock or acquiring shares through open
market purchases or privately negotiated transactions, the Company's need for
additional funds, the attractiveness of obtaining such funds by the sale of
Common Stock under the Plan in comparison to other sources of funds, the
purchase price likely to apply to any sale of Common Stock, the Participant
submitting the request, including the extent and nature of such Participant's
prior participation in the Plan and the number of shares of Common Stock held of
record by such Participant, and the aggregate number of Requests for Waiver that
have been submitted by all Participants. Persons who acquire shares of Common
Stock through the Plan and resell them shortly after acquiring them, including
coverage of short positions, under certain circumstances, may be participating
in a distribution of securities that would require compliance with Regulation M
under the Exchange Act and may be considered to be underwriters within the
meaning of the Securities Act. The Company will not extend to any such person
any rights or privileges other than those to which it would be entitled as a
Participant, nor will the Company enter into any agreement with any such person
regarding such person's purchase of such shares or any resale or distribution
thereof. The Company may, however, approve requests for optional cash
investments by such persons in excess of allowable maximum limitations. If such
requests are submitted for any Investment Date for an aggregate amount in excess
of the amount the Company is willing to accept, the Company may honor such
requests in order of receipt, pro rata or by any other method which the Company
determines to be appropriate.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Ballard Spahr Andrews & Ingersoll, Baltimore, Maryland. Certain legal
matters related to the sale of the Shares will be passed upon for the Company by
Shearman & Sterling, San Francisco, California. In addition, the description of
federal income tax consequences contained in the section entitled "Certain
Federal Income Tax Considerations," which section is included in the
registration statement on Form S-3 (Registration No. 333-33643), and
incorporated herein by reference, is based upon the opinion of Shearman &
Sterling.
EXPERTS
The consolidated financial statements and financial statement schedule of
Bedford Property Investors, Inc. as of December 31, 1996 and 1995 and for each
of the years in the three-year period ended December 31, 1996; the Combined
Historical Summary of Gross Income and Direct Operating Expenses of O'Toole
Business Center, Signal Systems Building and 6500 Kaiser Drive for the year
ended December 31, 1995, the Historical Summary of Gross Income and Direct
Operating Expenses of Orillia Office Park, the Combined Historical Summary of
Gross Income and Direct Operating Expenses of Executive Center at South Bank,
Bedford Fremont Business Center, U.S. Bank Centre, Scripps Wateridge Corporate
Center and Phoenix Airport Center for the year ended December 31, 1996, and the
Historical Summary of Gross Income and Direct Operating Expenses of Oracle
Center for the four months ended December 31, 1996 have been incorporated by
reference herein and in the Registration Statements in reliance upon the reports
of KPMG Peat Marwick LLP, independent certified public accountants, incorporated
by reference herein, and upon the authority of said firm as experts in
accounting and auditing. The reports on the Summary of Gross Income and Direct
Operating Expenses for O'Toole Business Center, Signal Systems Building, 6500
Kaiser Drive, Orillia Office Park, Executive Center at South Bank, Bedford
Fremont Business Center, U.S. Bank Centre, Scripps Wateridge Corporate Center,
Phoenix Airport Center and Oracle Center (collectively referred to as the
"Summaries') contain a paragraph that states that the
30
<PAGE>
Summaries were prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission, as described in note A
thereto. The Summaries are not intended to be a complete presentation of income
and expenses of O'Toole Business Center, Signal Systems Building, 6500 Kaiser
Drive, Orillia Office Park, Executive Center at South Bank, Bedford Fremont
Business Center, U.S. Bank Centre, Scripps Wateridge Corporate Center, Phoenix
Airport Center and Oracle Center.
31
<PAGE>
APPENDIX I
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
(C) (D) (E) (F) (G)
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
THRESHOLD PRICE
AND WAIVER OPTIONAL CASH
DISCOUNT, IF ANY, INVESTMENTS MUST PRICING PERIOD
CYCLE EXPECTED RECORD DATE WILL BE SET BY BE RECEIVED BY START DATE INVESTMENT DATE
----- -------------------------- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C>
B N/A November 25, 1997 November 28, 1997 December 1, 1997 December 15, 1997
A January 1, 1998 December 26, 1997 December 30, 1997 December 31, 1997 January 15, 1998
B N/A January 28, 1998 January 30, 1998 February 2, 1998 February 16, 1998
B N/A February 25, 1998 February 27, 1998 March 2, 1998 March 16, 1998
A April 1, 1998 March 26, 1998 March 30, 1998 March 31, 1998 April 15, 1998
B N/A April 28, 1998 April 30, 1998 May 1, 1998 May 15, 1998
B N/A May 27, 1998 May 29, 1998 June 1, 1998 June 15, 1998
A July 1, 1998 June 26, 1998 June 30, 1998 July 1, 1998 July 15, 1998
B N/A July 29, 1998 July 31, 1998 August 3, 1998 August 17, 1998
B N/A August 26, 1998 August 28, 1998 August 31, 1998 September 15, 1998
A October 1, 1998 September 28, 1998 September 30, 1998 October 1, 1998 October 15, 1998
B N/A October 28, 1998 October 30, 1998 November 2, 1998 November 16, 1998
B N/A November 25, 1998 November 30, 1998 December 1, 1998 December 15, 1998
A January 1, 1999 December 28, 1998 December 30, 1998 December 31, 1998 January 15, 1999
B N/A January 27, 1999 January 29, 1999 February 1, 1999 February 16, 1999
B N/A February 24, 1999 February 26, 1999 March 1, 1999 March 15, 1999
A April 1, 1999 March 26, 1999 March 30, 1999 March 31, 1999 April 15, 1999
B N/A April 28, 1999 April 30, 1999 May 3, 1999 May 17, 1999
B N/A May 26, 1999 May 28, 1999 June 1, 1999 June 15, 1999
A July 1, 1999 June 28, 1999 June 30, 1997 July 1, 1999 July 15, 1999
B N/A July 28, 1999 July 30, 1999 August 2, 1999 August 16, 1999
</TABLE>
- ------------------------------
A. Optional cash investments and reinvestment of dividends.
B. Optional cash investments only.
C. The Record Date for dividend reinvestment months (indicated by the letter
"A" in the Cycle column) will be established by the Board of Directors.
D. The Threshold Price and the Waiver Discount, if any, will be established
three business days prior to the first day of the Pricing Period.
E. Optional cash investments are due by the close of business on the last
business day immediately preceding the first day of the Pricing Period.
F. The Pricing Period will be the ten consecutive Trading Days ending on the
Trading Day immediately preceding the Investment Date.
G. The Investment Date will be the fifteenth calendar day of each month,
provided, however, that if such fifteenth calendar day falls on a date when
the NYSE is closed, the Investment Date will be the next succeeding day on
which the NYSE is open.
A-1
<PAGE>
U. S. EQUITY MARKETS CLOSED
<TABLE>
<CAPTION>
1997 1998 1999
--------------- --------------- ---------------
<S> <C> <C> <C>
New Years Day................................................ January 1 January 1 January 1
Presidents Day............................................... February 17 February 16 February 15
Good Friday.................................................. March 28 April 10 April 2
Memorial Day................................................. May 26 May 25 May 31
Independence Day............................................. July 4 July 4 July 4
Labor Day.................................................... September 1 September 7 September 6
Thanksgiving Day............................................. November 27 November 26 November 25
Christmas Day................................................ December 25 December 25 December 25
</TABLE>
A-2
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS. IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OTHER PERSON. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR
IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION..................................................... 2
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE......................... 2
SUMMARY OF THE PLAN....................................................... 4
THE PLAN.................................................................. 6
Purpose................................................................. 6
Participation Options................................................... 6
Benefits and Disadvantages.............................................. 6
Administration.......................................................... 8
Participation........................................................... 8
Enrollment.............................................................. 8
Purchases............................................................... 10
Certificates............................................................ 13
Sale of shares.......................................................... 14
Reports................................................................. 14
Withdrawal.............................................................. 14
Taxes................................................................... 15
Other Provisions........................................................ 15
THE COMPANY............................................................... 18
RISK FACTORS.............................................................. 19
USE OF PROCEEDS........................................................... 29
PLAN OF DISTRIBUTION AND UNDERWRITERS..................................... 30
LEGAL MATTERS............................................................. 30
EXPERTS................................................................... 30
APPENDIX I................................................................ A-1
</TABLE>
BEDFORD PROPERTY
INVESTORS, INC.
COMMON STOCK
---------------------
PROSPECTUS
---------------------
DIVIDEND REINVESTMENT AND
STOCK PURCHASE PLAN
------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses, payable by Bedford
Property Investors, Inc. (the "Registrant") in connection with the sale of
Common Stock being registered. All amounts are estimates except the SEC
registration fee, the NASD filing fee and the listing fees for the New York
Stock Exchange and the Pacific Stock Exchange.
<TABLE>
<S> <C>
SEC Registration Fee.............................................. $ 12,065
NASD Filing Fee................................................... $ 4,482
Legal Fees and Expenses........................................... $ 75,000
Printing and Engraving Costs...................................... $ 40,000
Accounting Fees and Expenses...................................... $ 20,000
Blue Sky Fees and Expenses........................................ $ 3,000
New York Stock Exchange Listing Fee............................... $ 14,750
Pacific Stock Exchange Listing Fee................................ $ 5,000
Miscellaneous..................................................... $ 5,703
---------
Total......................................................... $ 180,000*
---------
---------
</TABLE>
- ------------------------
* Estimated total expenses exclude an estimated $35,000 of annual recurring
costs for the operation of the Plan.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The MGCL permits a Maryland corporation to include in its charter a
provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages except for liability
resulting from (a) actual receipt of an improper personal benefit or profit in
money, property or services or (b) active and deliberate dishonesty established
by a final judgment as being material to the cause of action. The Charter of the
Registrant contains such a provision which eliminates such liability to the
maximum extent permitted by the MGCL.
The Charter of the Registrant authorizes it, to the maximum extent permitted
by Maryland law, to obligate itself to indemnify and to pay or reimburse
reasonable expenses in advance of final disposition of a proceeding to (a) any
present or former director or officer or (b) any individual who, while a
director of the Registrant and at the request of the Registrant, serves or has
served another corporation, partnership, joint venture, trust, employee benefit
plan or any other enterprise as a director, officer, partner or trustee of such
corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise. The Bylaws of the Registrant obligate it, to the maximum extent
permitted by Maryland law, without requiring a preliminary determination of the
ultimate entitlement to indemnification, to indemnify and to pay or reimburse
reasonable expense in advance of final disposition of a proceeding to (a) any
individual who is a present or former director or officer of the Registrant and
who is made a party to the proceeding by reason of his service in that capacity
or (b) any individual who, while a director of the Registrant and at the request
of the Registrant, serves or has served another corporation, partnership, joint
venture, trust, employee benefit plan, or other enterprise and who is made a
party to the proceeding by reason of his service in that capacity. The
Registrant's Charter and Bylaws also permit the Registrant to indemnify and
advance expenses to any person who served a predecessor of the Registrant in any
of the capacities described above and to any employee or agent of the Registrant
or a predecessor of the Registrant.
The MGCL requires a corporation (unless its charter provides otherwise,
which the Registrant's Charter does not) to indemnify a director or officer who
has been successful, on the merits or otherwise, in
II-1
<PAGE>
the defense of any proceeding to which he is made a party by reason of his
service in that capacity. The MGCL permits a corporation to indemnify its
present and former directors and officers, and certain other parties, against
judgments, penalties, fines, settlements and reasonable expenses actually
incurred by them in connection with any proceeding to which they may be made a
party by reason of their service in those or other capacities unless it is
established that (a) the act or omission of the indemnified party was material
to the matter giving rise to the proceeding and (i) was committed in bad faith
or (ii) was the result of active and deliberate dishonesty, (b) the indemnified
party actually received an improper personal benefit in money, property or
services or (c) in the case of any criminal proceeding, the indemnified party
had reasonable cause to believe that the act or omission was unlawful. However,
a Maryland corporation may not indemnify for an adverse judgment in a suit by or
in the right of the corporation or for a judgment of liability on the basis that
a personal benefit was improperly received, unless in either case a court orders
indemnification and then only for expenses. In addition, the MGCL permits a
corporation to advance reasonable expenses to a director or officer upon the
corporation's receipt of (a) a written affirmation by the director or officer of
his good faith belief that he has met the standard of conduct necessary for
indemnification by the corporation and (b) a written undertaking by him or on
his behalf to repay the amount paid or reimbursed by the corporation if it shall
ultimately be determined that the standard of conduct was not met.
Peter B. Bedford's employment agreement provides that the Registrant shall
indemnify Mr. Bedford to the fullest extent permitted by law, provided that the
indemnification applies to Mr. Bedford only so long as he acts in good faith and
is not found to be guilty of recklessness or willful or wanton misconduct.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Registrant
pursuant to the foregoing provisions, the Registrant has been informed that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
ITEM 16. EXHIBITS
(a) Exhibits
The following exhibits are filed herewith or incorporated herein by
reference.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
4.1 Specimen Stock Certificate (incorporated herein by reference to Exhibit 4.1 to the Registrant's
Registration Statement on Form S-2, Commission File No. 333-921).
4.2 Charter of the Registrant, as amended (incorporated herein by reference to Exhibit 3.1 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997).
4.3 Amended and Restated Bylaws of the Registrant (incorporated herein by reference to Exhibit 3.2 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995).
5.1* Opinion of Ballard Spahr Andrews & Ingersoll as to the legality of the Registrant's Common Stock.
8.1 Opinion of Shearman & Sterling as to certain tax matters (incorporated herein by reference to Exhibit
8.1 to the Registrant's Registration Statement on Form S-3, Commission File No. 333-33643).
23.1 Consent of KPMG Peat Marwick LLP, independent certified public accountants.
23.2* Consent of Ballard Spahr Andrews & Ingersoll (included in the opinion filed as Exhibit 5.1).
23.3 Consent of Shearman & Sterling (included in the opinion filed as Exhibit 8.1).
24.1* Power of Attorney (included on page II-4 of this Registration Statement).
</TABLE>
- ------------------------
* Previously filed.
II-2
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of the
securities offered would not exceed that which was registered) may be
reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the change in volume represents no more
than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in this Registration Statement;
provided, however, that paragraphs (a)(l)(i) and (a)(l)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") that are incorporated by reference in this Registration
Statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions referred to in Item 15 or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Lafayette, California, on the 20th day
of November, 1997.
BEDFORD PROPERTY INVESTORS, INC.
By: /s/ HANH KIHARA
-----------------------------------------
Hanh Kihara
VICE PRESIDENT AND CONTROLLER
POWERS OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Amendment No. 1 to the Registration Statement has been signed by the following
persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
Chairman of the Board and November 20, 1997
* Chief Executive Officer
- ------------------------------ (Principal Executive
Peter B. Bedford Officer)
Senior Vice President and November 20, 1997
/s/ SCOTT R. WHITNEY Chief Financial Officer
- ------------------------------ (Principal Financial
Scott R. Whitney Officer)
/s/ HANH KIHARA Vice President and November 20, 1997
- ------------------------------ Controller (Principal
Hanh Kihara Accounting Officer)
*
- ------------------------------ Director November 20, 1997
Claude M. Ballard
*
- ------------------------------ Director November 20, 1997
Anthony Downs
*
- ------------------------------ Director November 20, 1997
Thomas G. Eastman
*
- ------------------------------ Director November 20, 1997
Anthony M. Frank
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
*
- ------------------------------ Director November 20, 1997
Thomas H. Nolan, Jr.
*
- ------------------------------ Director November 20, 1997
Martin I. Zankel
</TABLE>
*By: /s/ HANH KIHARA
-------------------------
Hanh Kihara
(ATTORNEY-IN-FACT)
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
4.1 Specimen Stock Certificate (incorporated herein by reference to Exhibit 4.1 to the Registrant's
Registration Statement on Form S-2, Commission File No. 333-921).
4.2 Charter of the Registrant, as amended (incorporated herein by reference to Exhibit 3.1 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 1997).
4.3 Amended and Restated Bylaws of the Registrant (incorporated herein by reference to Exhibit 3.2 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1995).
5.1* Opinion of Ballard Spahr Andrews & Ingersoll as to the legality of the Registrant's Common Stock.
8.1 Opinion of Shearman & Sterling as to certain tax matters (incorporated herein by reference to Exhibit
8.1 to the Registrant's Registration Statement on Form S-3, Commission File No. 333-33643).
23.1 Consent of KPMG Peat Marwick LLP, independent certified public accountants.
23.2* Consent of Ballard Spahr Andrews & Ingersoll (included in the opinion filed as Exhibit 5.1).
23.3 Consent of Shearman & Sterling (included in the opinion filed as Exhibit 8.1).
24.1* Power of Attorney (included on page II-4 of this Registration Statement).
</TABLE>
- ------------------------
* Previously Filed
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Bedford Property Investors, Inc.:
We consent to the use of our report dated February 25, 1997, relating to the
consolidated financial statements and financial statement schedule of Bedford
Property Investors, Inc., incorporated by reference herein, and to the reference
to our firm under the heading "Experts" in the prospectus.
We also consent to the use of our reports dated January 31, 1997, relating
to the combined historical summary of gross income and direct operating expenses
of O'Toole Business Center, Signal Systems Building and 6500 Kaiser Drive;
August 1, 1997, relating to the historical summary of gross income and direct
operating expenses of Orillia Office Park; August 1, 1997, relating to the
combined historical summary of gross income and direct operating expenses of
Executive Center at South Bank, Bedford Fremont Business Center, U.S. Bank
Centre, Scripps Wateridge Corporate Center and Phoenix Airport Center; and
September 26, 1997, relating to the historical summary of gross income and
direct operating expenses of Oracle Center (collectively, the Summaries),
incorporated by reference herein. Our reports on the Summaries contain a
paragraph that states that the Summaries were prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission, as described in note A to the Summaries. The Summaries are not
intended to be complete presentations of the income and expenses of O'Toole
Business Center, Signal Systems Building, 6500 Kaiser Drive, Orillia Office
Park, Executive Center at South Bank, Bedford Fremont Business Center, U.S. Bank
Centre, Scripps Wateridge Corporate Center, Phoenix Airport Center and Oracle
Center.
/s/ KPMG Peat Marwick LLP
San Francisco, California
November 20, 1997
